Dan Kowalyshyn figures he owes about $200,000 more than what his four-bedroom house is worth today. It faces a cul-de-sac where three of the six homes have been lost to foreclosure since his $570,000 purchase in 2006.
The software developer has decided to keep up on his mortgage payments because he sees signs of improvement outside his window. Trucks drive by to deliver lumber for houses being constructed by PulteGroup Inc., KB Home, and Meritage Homes Corp.
“Either those builders are insane or they’re getting some traction selling new homes,” Kowalyshyn, 40, said in a telephone interview from his house in Eastvale, California, 45 miles (72 kilometers) east of Los Angeles. “I think we’re seeing the beginning of a recovery.”
KB Home has four communities in Eastvale, with prices starting at $272,990, according to its website. The homes are selling at a profit, Reffner said.
“We think Eastvale is a great market,” he said.
Kowalyshyn said he considered alternatives to keeping up payments on his home, including selling at a loss or walking away from his property to let the bank take it back. To buy a house closer to his Los Angeles office — a 100-mile round-trip commute from Eastvale that costs four gallons of gas a day and about $50 a month in tolls — he’d pay more money for less space.
“I’m a numbers guy,” he said. “I’ve done a statistical analysis of all my options. I talked to a lawyer. My conclusion is the best choice, at least short term, is to stay and see what happens.”
After several false starts, housing is flashing the strongest signals yet of a sustainable rebound. While foreclosures continue to depress prices, buyers are wading back into the market, lured by rising employment and record-low mortgage rates. Six years into the biggest real estate collapse since the Great Depression, housing may become a net contributor to the U.S. economy for the first time since 2005.
“There are definitely green shoots in the housing market, no argument about that,” said Peter de Bruin, an economist at ABN Amro Group Economics in Amsterdam. He is the most accurate forecaster of new-home sales, along with his colleague Maritza Cabezas, in the two years ended Feb. 1, according to data compiled by Bloomberg. “Housing will contribute modestly to recovery this year and we will see a sustained recovery in 2013” that probably will continue through 2015, he said.
The rate of price declines is reaching the leveling off point this year, even as the the flow of foreclosed homes to market will probably accelerate following a Feb. 9 settlement between the five largest mortgage servicers and state attorneys general over their methods for repossessing homes, said Paul Dales, an economist with Capital Economics Ltd. in London.
“The bottom is behind us,” said Dales, top ranked for his home-price estimates by Bloomberg. “I don’t think we will return to anything like the exceptional booming market we had five years ago. We will have a very steady, slow recovery but a recovery nonetheless.”