The Case-Shiller Home Price report is out, and the 20-city index climbed 4.31 per cent year-over-year, beating expectations.
However, some cities saw stronger price gains than others. And some cities, like Chicago and New York, saw prices decline.
So, what’s behind this?
One key reason for the discrepancy is the legal process for foreclosing on a home, explains Bank of America Merrill Lynch’s Michelle Meyer.
“Broadly, states with a non-judicial process witnessed a sharper decline in home prices at the beginning of the downturn, but are currently enjoying price appreciation,” said Meyer recently to Business Insider. “This is due to a more efficient disposition of delinquent supply, leaving lean inventory in many markets.
“In contrast, states with a judicial process, such as Florida, Illinois, and New York, are still struggling to clear the pipeline of distressed loans. As a result, home prices in the Chicago and New York metro areas have continued to edge lower.”
Meyer sent us this chart when we asked her for her chart of the year. It shows the breakdown of foreclosure inventory into states with a judicial vs. non-judicial foreclosure process.
CoreLogic, which tracks foreclosure activity, reports that foreclosure activity in October continues to be high in the judicial states. Below is a chart comparing the two types of states.
Here’s a brief description of the judicial foreclosure process via MBAA:
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