Winner: Bay Area apartment landlords
Landlords in most major markets were grinning from ear to ear this year, as apartments filled up and rents continued their upward climb. Two-thirds of the country's largest markets are essentially at maximum occupancy, says Greg Willett, vice president of research and analysis for MPF Research.
The happiest landlords were in Northern California, where rent growth led the nation. Rents in San Jose and San Francisco have jumped 7.8% and 7.4% respectively in the past year, according to MPF, with nearby Oakland clocking in at 6.7%.
Landlords here are better able to raise rents than other similarly full markets, because of the exponentially high cost of buying a home in the Bay Area.
Winner: Flippers
The flip was back in full force this year, as investors used their cash to buy undervalued properties to spruce up and sell. Even as the number of available foreclosures waned, these entrepreneurs began turning their attention to the supply of merely rundown homes in solid neighborhoods.
"We're still seeing a lot of inexpensive houses and derelict properties on the market, which are being scooped up by flippers," says Joshua Dorkin, CEO and founder of BiggerPockets.com.
Investors were able to outmaneuver most first-time homebuyers, natch, on the stock of cheap starter homes and fixers, landing returns of 20% or more on their investments.
Winner: Homebuyers
2012 was a phenomenal year to buy a house. Those who were able to buy had access to record-low mortgage rates and bottom-of-the-market prices, which enabled them to get more house for their money.
Sure, there wasn't a huge supply of homes to choose from in many markets, but those credit-worthy buyers who found a house — and were prepared to stay a few years — could feel confident that their investment would only gain in value.
Winner: Owners who refinanced
Record-low interest rates also created a refi boom, as applications grew at the fastest rate since 2005, according to the Mortgage Bankers Association.
Refinancings now represent about 80% of total mortgage applications. In years past, mortgage refinance represented only a 20% to 30% share, says Rick Sharga, executive vice president of Carrington Mortgage Holdings.
Winner: Investors in single-family home rentals
If investors aren't flipping properties to buyers looking for their next home, they're buying them up en masse for use as rentals.
In 2012, institutional investors, frustrated by their returns on Wall Street and the high prices for apartment portfolios, entered the single-family home-rental business.
Loser: Underwater homeowners who couldn't refinance
When HARP 2.0 rolled out this spring, it was a blessing for many borrowers whose home was worth far less than what they owed. More than 709,000 loans were refinanced through the program through September, according to the FHFA.
However, not everyone was able to take advantage of the government program, including:
- Borrowers who had a loan that wasn't owned or guaranteed by Freddie Mac or Fannie Mae.
- Borrowers whose loan was sold to Freddie after May 31, 2009.
- Borrowers who had missed a payment in the past 12 months.
- Borrowers who had a credit score of less than 620.
Without the ability to participate in the program, these underwater borrowers have a long, hard road back to home equity.
Loser: Investment property owners in Las Vegas, Florida and other sunshine markets
Investors who gambled on the fun and sun in highly developed places such as Daytona Beach, Fla., and Las Vegas during the boom and failed to get out still can't catch a break.
In high-rolling Vegas, the clubs may be hopping, but prices aren't budging, according to Local Market Monitor. Here, the average home price of $121,788 is down 60% from the peak in 2006, and has remained unchanged this year, despite upticks in most parts of the country. The news won't be much better in 2013. LMM predicts a modest 1% appreciation — not enough of a gain to make a difference for most owners.
Likewise, Daytona Beach saw no appreciation in the past year, and its average price of $131,445 is down 49% from its peak in 2006. In the next year, LMM predicts zero — that's right, nada – appreciation.
Other suffering markets include Atlantic City, N.J.; Wilmington, N.C.; and Myrtle Beach, S.C.
Loser: Victims of foreclosure abuse
While many troubled borrowers in default avoided property seizure this year as foreclosure processing slowed to a trickle, borrowers who were improperly foreclosed on in years past got very little in the way of restitution from this year's $25 billion National Mortgage Settlement, struck by attorneys general in 49 states and the nation's largest mortgage servicers.
Those who applied only had to check a box online to indicate which of three categories caused their foreclosure: financial hardship, loan-modification problems or foreclosure errors.
But everyone who applied will get a check for the same amount next year — a mere $2,000 or less, depending on how many borrowers filed — no matter the circumstances of the case. That's cold comfort for homeowners whose lenders failed to process their loan-modification application or those who were paying on a trial loan modification but were foreclosed upon anyway.
There was another alternative to seek payback for abuses. Borrowers who were in the foreclosure process between January 2009 and calendar year 2010 were also eligible for the separate Independent Foreclosure Review running through the end of this year, which can determine compensation for the victims of abuses or errors. That could award up to $125,000 if a borrower wasn't behind on payments and the bank foreclosed — or nothing at all. Some of the abuses, such as giving a groundless answer for a modification denial, would yield a borrower $15,000, an amount some view as inadequate.
Real-estate winners and losers of 2012
Loser: Homeowners devastated by superstorm Sandy
The economic pain and suffering from superstorm Sandy, which made landfall on the New Jersey coast Oct. 29, wiping out hundreds of thousands of homes, is far from over. Governors in New York and New Jersey estimate they need at least $71.3 billion in relief to recover from the devastation and prevent similar damage from future storms.
Loser: REO brokers
The past few years had been banner ones for many brokers of distressed or bank-owned properties, but this year was a downright bummer. U.S. REO (real-estate owned) sales, which peaked in 2009, dropped for the third consecutive year to about 500,000, leaving many agents and brokers with a lot more time on their hands.
A slowdown in processing foreclosures was partly to blame, but many bank-owned properties are also being sold in bulk to big hedge funds to be used as rentals. And more lenders are agreeing to take less than the value of the note, as borrowers opt for short sales of their properties.
Click Here to read Melinda's full article on MSN.
