Homeownership rates for the nation as a whole fell from a high of 69 percent in 2007 to 66 percent today. (Each percentage point represents 1.4 million households). Among Americans under 25, homeownership actually increased slightly, from 21.9 in 2000 to 23.5 percent in 2011, and homeownership among those over 65 also increased, from 80.3 percent to 81.1 percent over the 11 year period, according to a recent analysis by economists at the National Association of Realtors.

Forty-somethings and those in their late twenties lost about four percentage points in their homeownership rates.

However, those in their thirties have lost about seven percentage points from the peak in 2005 to 2011. Those ages 35 to 39 saw their homeownership rate fall from a peak of 66.6 percent in 2005 to 59.4 percent in 2011; for those 30 to 35, homeownership declined from a peak of 56.8 percent to 49.9 percent last year.

“It is also this group where there is potential for re-entering into the homeownership market in the near future,” said NAR Chief Economist Lawrence Yun.

Last year the total number of properties affected by foreclosure filings fell 34 percent year-over-year. Foreclosure activity in 2011 was 33 percent below the total in 2009 and 19 percent below the 2008 total, according to RealtyTrac’s year-end report.

At the same time, the average processing timeline for foreclosures grew to 348 Nationwide and over 800 days in judicial states like New York, New Jersey and Florida. State laws, regulations and lender procedures put in place following the 2010 robo-signing scandal account in part for the delays.

Separately, ForeclosureRadar reported today that Nevada’s new foreclosure law, which caused foreclosure starts to plummet in October, is now impacting foreclosure sales as well. “Nevada’s new foreclosure rules appear on track to bring a near complete halt to foreclosures in that state,” said Sean O’Toole, CEO of ForeclosureRadar.

The national foreclosure rate fell to 1.45 percent of U.S. housing units (one in 69) that had at least one foreclosure filing during the year, down from 2.23 percent in 2010, 2.21 percent in 2009, and 1.84 percent in 2008.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac. “The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages - particularly in states with a judicial foreclosure process.

“There were strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets. We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010.”

December activity hit a 49-month low, scheduled auctions up in fourth quarter. Foreclosure filings were reported on 205,024 U.S. properties in December, a decrease of 9 percent from the previous month and down 20 percent from December 2010. December’s total of filings was the lowest since November 2007 - a 49-month low. December Default notices (NOD, LIS) decreased 19 percent from the previous month and were down 23 percent from December 2010; Scheduled foreclosure auctions (NTS, NFS) decreased 12 percent from the previous month and were down 24 percent from December 2010; and bank repossessions (REO) increased 10 percent from the previous month but were still down 12 percent from December 2010.

Foreclosure filings were reported on 586,133 U.S. properties in the fourth quarter, a 4 percent decrease from the previous quarter and down 27 percent from the fourth quarter of 2010. Fourth quarter default notices were down 6 percent from the previous quarter and down 22 percent from the fourth quarter of 2010; scheduled foreclosure auctions increased 4 percent from the previous quarter but were still down 32 percent from the fourth quarter of 2010; and REOs decreased 11 percent from the previous quarter and were down 24 percent from the fourth quarter of 2010.

Nevada, Arizona, California post top state foreclosure rates for year More than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year despite a 31 percent decrease in foreclosure activity from 2010. Nevada foreclosure activity dropped 35 percent from the third quarter to the fourth quarter. Despite a 28 percent drop in foreclosure activity from November to December - caused largely by a 41 percent drop in scheduled foreclosure auctions - Arizona registered the nation’s second highest state foreclosure rate for the third year in a row, with 4.14 percent of its housing units (one in 24) with at least one foreclosure filing in 2011.

California also experienced a substantial month-over-month drop in initial foreclosure notices in December - default notices there were down 38 percent from the previous month - but the state still registered the nation’s third highest foreclosure rate for all of 2011. One in every 31 California housing units (3.19 percent) had at least one foreclosure filing during the year, down from 4.08 percent in 2010 and 4.75 percent in 2009.

Georgia posted the nation’s fourth highest state foreclosure rate, with 2.71 percent of housing units (one in 37) with at least one foreclosure filing in 2011, and Utah posted the nation’s fifth highest state foreclosure rate, with 2.32 percent of its housing units (one in 43) with a foreclosure filing during the year.

Other states with 2011 foreclosure rates ranking among the nation’s 10 highest were Michigan (2.21 percent), Florida (2.06 percent), Illinois (1.95 percent), Colorado (1.78 percent), and Idaho (1.77 percent).

U.S. properties foreclosed in the fourth quarter took an average of 348 days to complete the foreclosure process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010. The length of the average foreclosure process has increased 24 percent from 281 days in the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures in earnest as the result of the so-called robo-signing controversy.

The average foreclosure process in New York has increased 37 percent during the same time period, and New York properties foreclosed in the fourth quarter took an average of 1,019 days to complete the foreclosure process - the longest of any state. New Jersey had the nation’s second longest average foreclosure process, at 964 days, and Florida the nation’s third longest average foreclosure process, at 806 days. Foreclosure activity in both these states dropped more than 60 percent from 2010 to 2011. All three states with the longest foreclosure timelines employ the judicial foreclosure process.

Texas continued to register the shortest average foreclosure process of any state, at 90 days - still an increase from 86 days in the third quarter and from 81 days in the fourth quarter of 2010. Other states with average foreclosure process among the nation’s shortest in the fourth quarter were Delaware (106 days), Kentucky (108 days), Virginia (132 days), and Louisiana (134 days).

Yet he’s frustrated by what he sees in the year to come. At the top of his list of concerns is negative equity.

With nearly one out of four homeowners with a mortgage underwater today- he’s frustrated. It’s virtually the same percentage as four years ago and Walsh thinks that the government needs to enact policies that would support the stagnant purchase market. Federal efforts, such as HARP 2.0, mostly aim to encourage refinancing. He feels we need a more comprehensive solution to our housing woes. The problem is so big and complex that it has defied the best efforts of the federal government and the nation’s financial sector.

Walsh also stated that if the European debt crisis is solved we could see interest rates rise very quickly and he holds little hope for progress during this election year in reforming Fannie Mae and Freddie Mac. Furthermore, he’s concerned about the slow purchase mortgage market, which probably won’t improve until the employment picture improves significantly.

However, there’s one step the government could take that would cost virtually nothing and reduce the costs of buying a home for thousands. He’d like to see the government raise Fannie, Freddie and FHA loan limits to $729,750 for all markets, not just high-priced ones.

“Why should the higher limits be limited to a few areas? Higher loan limits would make tens of thousands of homes eligible for FHA and GSE financing. It would save GSE and FHA borrowers a lot of money via refinancing and would boost the purchase market, with FHA borrowers able to purchase homes with down payments starting at 3.5%. “The trickle-down effect of these additional purchase transactions would help stabilize the housing market and would benefit the overall economy” he said.

In the Outlook 2012 series, leaders in real estate and mortgage finance share their views on the year to come.

In Realtor.com’s November ranking of 152 markets, Atlanta ranked 150^th in terms of year-over-year list prices, with 7.65 percent decline. The latest S&P/Case-Shiller Home Price Indices report, home values in Atlanta fell 5 percent from September to October and 11.7 percent from October 2010 to October 2011, leading the nation in Case-Shiller’s monthly report.

The foreclosure wave began last spring, accompanied by a drop in home sales. High unemployment, economic fears and tight lending standards for buyers were blamed. Hopes were high that the crisis would pass quickly.

“The number of sales has increased over the last three months. We have every reason to believe the numbers are going to rise in the next couple of months,” said Mitch Kaminer, president-elect of the Atlanta Board of Realtors told Inman News last May. “The market is stable. We’re waiting for things to start coming back up. Absorption of foreclosures and short sales will start that ball up.”

Instead, the situation has worsened. Prices fell further and by September were down 9′8 percent year over year. REOs reached 42.2 percent of all home sales by the end of the year..

When the Case-Shiller numbers hit the media December 27, it made big news. In a subsequent commentary on Housing Views, the Standard and Poor’s blog, David Stiff, chief economist and vice president at Fiserv, tried to sort things out.

“Taking a closer look at Fiserv’s real estate transaction data for Atlanta, I determined that there was a significant increase in the sales volume of bank-owned properties in August, September and October in the Atlanta metro area.

“Changes in the volume of bank-owned sales can cause changes in average prices that will be reflected in the S&P/Case-Shiller Home Price Indexes. And, if bank-owned sales are concentrated within one price segment (e.g., low-priced homes), shifts in bank-owned sales volumes can cause the S&P/Case-Shiller indexes to shift relative to the aggregate indexes. During the housing bubble collapse, in many metro area markets, the proportions of bank-owned sales vs. all sales have fluctuated substantially over time (but not consistently across different metro areas). Bank-owned sales volumes also tend to drop less in winter months (than regular sales volumes), so their proportion of total sales often increases from October through March, leading to larger seasonal swings in the S&P/Case-Shiller Home Price Indices in markets with large numbers of foreclosed properties.

“Atlanta non-REO sales volumes also increased in August and September, but on a smaller percentage basis than REO sales. Consequently, the proportion of REO sales increased. Changes in the REO proportion of sales have been causing fluctuations in average prices in many markets, especially those with large foreclosure inventories,” he said.

With the new year, Atlanta hopes its trials are over but the jury is still out. Inventory plunged to historic lows last year and is now down 28 percent year-to-year, but prices are still falling at last report.

As 2011 ends, the number of Realtors stands at just slightly over one million, down 25 percent from its peak of 1,363,493 in July 2007. Realtors’ ranks declined 5.4 percent in 2011, from 1,079,687 at the end of November 2010 to 1,021,338 a year later.

States losing the greatest percentage of Realtors during 2011 were Oregon (-10.35 percent), Georgia (10.28 percent), Minnesota (-9.94 percent), New Mexico (-9.28 percent) and South Carolina (-8.47 percent). The District of Columbia has lost the least in 2011, only 0.12 percent, according to membership data from the National Association of Realtors

The total number of licensed agents and brokers also has declined, from about 2.6 million in 2006 to about 2.3 million today.

During the housing boom from 2002 t0 2006, the number of professionals grew rapidly. In California, for example, in 2006 there was a real estate agent for every 52 adults in the state, a 57 percent increase over the previous 5 years. Today, the number of licensed agents in the state has fallen to about the same level as 2004.

The agents signed up during the boom five years ago earned less than more established ones. “One way to see that there are too many Realtors is to look at the breakdown of pay,” wrote BusinessWeek’s Peter Coy in 2006. “While the top quarter or so is making good money, there’s a huge army of Realtors at the bottom who would make more money with a full-time job at McDonald’s. Nearly a third earned under $25,000 in 2004, according to a National Association of Realtors study. By the way, a lot of the lowest-paid Realtors are the newbies who don’t have references and repeat clients. The median income for people who had been in the field for two years or less in 2004 was $13,000.”

Many of the agents who left the business over the past five years were also younger than those who have survived. As a result, the median age of Realtors is increasing, from 54 years in 2010 to 56 years this year.

Despite the thinning of the ranks, the median income of Realtors dropped almost 35 percent over the last eight years. The median income for Realtors last year was $34,100, a 4.5 percent decline from 2009. Realtor income has fallen every year since 2002 when the peak income hit $52,200.

The Office of the Comptroller of the Currency reported yesterday that the increase in new foreclosures and the increase in average time required to complete foreclosures sales has resulted in the number of foreclosures in process increasing by 4.1 percent, or 1,327,077 loans.

During the quarter, services also exhausted alternatives to foreclosure for the large inventory of seriously delinquent mortgages working through the loss mitigation process. The increase in new foreclosures and the increase in average time required to complete foreclosure, the OCC said.

The OCC said mortgage servicers “lifted voluntarily moratoria implemented in late 2010,” when the robo-signing controversy initially came to light. Newly initiated foreclosures, however, declined 11.8 percent from third quarter 2010.

“This quarterly increase results from the large number of seriously delinquent mortgages working their way through the loss mitigation process toward foreclosure. The number of foreclosures in process increased 0.5 percent from the previous quarter and 7.6 percent from a year earlier as the length of time required to complete foreclosure lengthens,” the agency said.

Overall, the performance of first-lien mortgages serviced by large national banks and federal savings association was stable, but delinquencies remained elevated during the third quarter of 2011.

At the end of the third quarter of 2011, 88 percent of the 32.4 million loans in the portfolio were current and performing at the end of the third quarter, almost unchanged from the previous quarter. The percentages of mortgages that were 30-to-59 days delinquent and mortgages that were seriously delinquent (loans 60 or more days delinquent or delinquent mortgages to bankrupt borrowers) did not change from the previous quarter. However, both categories of delinquencies have declined from a year earlier.

The OCC report includes about 62 percent, or 32.4 million, of all first-lien mortgages in the U.S. worth $5.6 trillion in outstanding balances.

A new analysis of price tiers over the past five years by Clear Capital found that lower priced homes experienced declines of 45 percent on average, outpacing the national average of 39 percent.

Higher priced homes, however, have lost only 25 percent of their value since the crash. However, higher priced homes lost more real value. Dollar wise, higher priced homes lost roughly $120,000 worth of value, while lower priced homes lost an average of $60,000.

Alex Villacorta, Clear Capital’s director of research and analytics, said that higher prices homes held their value better during the initial decline in 2006-2007 and in the initial years that followed. More recently, demand for entry level homes by first time buyers during the tax credit period and by investors has

“The lower end was first to go in terms of values and the top tier held out longer,” said Villacorta. In time, more expensive homes lost value and have lost more dollar wise than lower tier homes, he said.

Clear Capital’s data includes REO saturation levels on a market by market basis, and Villacorta said recently they have seen prices in some markets establish an equilibrium between REO and fair market value properties on a price per square foot basis. When markets have reached a mid-point equilibrium between fair market and REO values the gap between price tiers shrinks diminishing the depressive effect foreclosures have on fair market properties and allowing all properties in a market to appreciate over time.

However other markets, like Atlanta, are currently seeing a surge of REO activity in greater volumes than ever, making it impossible for prices to reach equilibrium. As a result, they are diverging and the gaps between price tiers are growing larger, he said.

Villacorta said Clear Capital will release more data and a forecast in its year-end report next month.

Are the structural changes that are reshaping Florida’s real estate markets a bellwether for the nation as a whole?

Jack McCabe, the outspoken Deerfield Beach, FL economist who foresaw the last decade’s real estate boom and bust now has a dire scenario for the nation that’s based on Florida’s experience.

“We are headed to a rental society and a slow- to no-growth economy unless the housing market, the foundation of American spending and a major part of U.S. gross domestic product, is revived,” he wrote in an October column in the Sarasota Herald-Tribune titled “The American Dream Recovery Program: a working solution that puts the American people first.”

In an interview with Real Estate Economy Watch, McCabe outlined the Florida trends that are changing the very nature of homeownership, and the fabric of community life in the state.

“Florida is becoming a different place to live. There is a big paradigm shift in how homeownership is viewed,” he said.

Foreclosures are still flooding Florida’s markets. The state’s judicial system has some 371,009 open foreclosure cases. Another 60,000 or so are in default. There are some 1.24 million potential foreclosures and short sales, McCabe estimates. The percentage of homeowners has dropped more in the last 10 years than any time in history.

McCabe advocates a program of systematic modifications beginning with principal write downs based on re-appraisals for current market value, a new tax credit for new homes and revived purchases of mortgage backed securities by Fannie and Freddie to keep families in their homes and foreclosures off the market. Without these steps, he believes, the transition of Florida communities from ownership to rental will come even faster.

Meanwhile, demand from the state’s traditional source of second home owners is drying up. Many of today’s retirees are thousands of dollars in debt on their home, can’t buy a retirement home, don’t want to tap the nest egg and they can’t move to Florida. So they just go down to Florida for a few months and rent, he said. Resort and retirement communities are transitioning from owner/occupant to rental.

In parts of Florida, foreign buyers are now a major part of the market. Some 80 percent of sales in Miami/Dade are to foreign nationals and over 70 percent are cash transactions. In other parts of the state, Canadians and Brits are major buyers. Properties are marketed abroad and McCabe knows of several South Florida condo developments where buyers must pay incrementally as the projects are built, foregoing the need for financing. “These are designed from the outset for foreign ownership,” he said.

“What’s happening in Florida’s retirement market is the tip of the iceberg. It’s a bellwether and we are already seeing the changes underway,” said McCabe, pointing to changing attitudes towards homeownership, especially among young people. “Young people are viewing homeownership negatively compared to other investments.”

However, McCabe is not giving up. “We’ve bailed out the banks, bailed out the automakers, bailed out the airlines, and in the past many other businesses considered important to the American economy,” he said in his Sarasota column.

“The American Dream Recovery Program is a working solution that puts the American people first. ”

Distressed properties accounted for a hefty 46.1 percent of home purchase transactions in November as reported in the HousingPulse Distressed Property Index (DPI), using a three-month rolling average. Significantly, November marked the 23rd month in a row that the DPI has been above 40 percent.

At the same time, however, homebuyer demand for housing appears surprisingly strong, especially for lower-priced foreclosed properties or real estate owned (REO). Time on market for move-in ready REO was just 10.1 weeks in November, the lowest in 15 months, according to HousingPulse. Time on market for damaged REO was even lower at 9.0 weeks in November, also the lowest in 15 months.

Short sales were the largest segment of the distressed property market during the month of November, accounting for 17.6% of total home purchase transactions tracked in the HousingPulse survey. Move-in ready REO was the next largest group of distressed properties with a 15.2% share, followed by damaged REO with a 13.3% share of total transactions. Non-distressed home purchases accounted for the remaining 53.9% of home purchases in November.

Average pricing for distressed property was substantially lower than for non-distressed property. The average short sale sold for $209,200 in November, while the average move-in ready REO sold for $189,700. Damaged REO sold for far lower at $98,600. At the same time, non-distressed properties sold for $258,900.

Real estate agents responding to this month’s HousingPulse survey commented on the appraisal system and how the low prices for distressed properties impact overall home prices. “The foreclosure/short sale markets are making it difficult to get non-distressed homes to appraise. This is holding off a market comeback in my area,” reported an agent in Maryland.

“We could sell the homes for more but the appraisals are an issue since they are using short sales and foreclosures as comps,” explained an agent in Florida. “Given the multiple offers and the short time on the market, one would expect that prices would be on the increase; however, appraisal guidelines are holding it back,” complained an agent located in Michigan.

The appraisal system for mortgage originations uses comparative values from both distressed and non-distressed properties, with appraisers often not knowing the interior condition of foreclosed homes or the special circumstances of short sales. Prices agreed-to in purchase and sales contracts are sometimes not being supported by appraisals for mortgage financing that use faulty comparative values. These properties then sell to cash buyers for less, causing declines in average home prices.

Lender Processing Services reported today that in November the national delinquency rate (loans 30 days past due but not in foreclosure) increased by 2.7 percent from October to 8.15 percent of all mortgages. However, the delinquency rate is still 9.6 percent below last year at this time.

LPS’ delinquencies hit a year low in March, at 7.78 percent, then rose over the summer and fell again to 7.93 percent in October, which was 10.2 percent below 2010.

The foreclosure pre-sale inventory fell 3 percent from October but is 2 percent above last year.

Some 4,144,000 million properties are 30 days or more past due, but not in foreclosures. The number of properties that are 90 or more days delinquent, but not in foreclosure reached 1,809,000. The grand total of all properties in foreclosure or delinquent 30 days or more is 6,260,000.

November 2011 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans. States with highest percentage of non-current loans were FL, MS, NV, NJ, and IL. States with the lowest percentage of non-current* loans: MT, SD, WY, AK, ND.