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IN THE NEWS Michigan rank: 38 90+ Day Delinquency Rate Foreclosure Rate September 2013 2.3% Unemployment Rate 1.1% 9.0% year ago 2.7% 1.9% 9.2% year-over-year change -15.6% -42.8% -2.2% Top County OsCeOla COunTy 90+ Day Delinquency Rate September 2013 Foreclosure Rate 2.3% 2.1% year ago 2.2% 2.4% year-over-year change 2.9% -9.8% Top Core-Based statistical area alMa, MI 90+ Day Delinquency Rate Foreclosure Rate September 2013 3.5% 2.0% year ago 4.3% 3.1% year-over-year change -18.6% -37.2% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the September 2013 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary September 2013 figures released by the Bureau of Labor Statistics. All other data courtesy of LPS Data & Analytics. WOLVERINE REAL ESTATE SERVICES wishes you a Wonderful HOLIDAY SEASON We look forward to 2014 when we'll celebrate our 25th anniversary as a national provider of property preservation and inspection services. 26711 Woodward Ave, Suite 305 Huntington Woods, MI 48070 (800) 875-7170 www.fieldinspection.com "Let us be your eyes in the field" 82 Despite Bankruptcy, Detroit's Housing Market Thrives The city that previously made national headlines for its failing economy and bankruptcy filing is now in the spotlight for its rapidly rebounding housing market. Detroit topped two lists of highest-performing housing markets last month—one from Realtor. com and one from Clear Capital. Realtor.com named the city the top turnaround town in its quarterly "Turnaround Towns Report" based on median list price, inventory, and median age of inventory. And Clear Capital ranked Detroit at the top of its Home Data Index Market Report, based on its quarterly price growth through the month of October. "Once the poster child for America's ailing auto industry, Detroit has turned around its housing markets," Realtor.com stated. "Instead of sinking when the city of Detroit had just filed for bankruptcy, its housing markets took on a quiet resurgence." Home prices in the Motor City fell 4.8 percent over the third quarter but leapt 44.3 percent for the 12 months ending in September, according to Realtor.com's report. Clear Capital observes home prices on a rolling quarter and revealed a 7.8 percent home price increase in Detroit over the threemonth period ending in October, accompanied by a 31.6 percent annual increase. Realtor.com also revealed falling inventory and inventory age in the bankrupt city. Detroit's housing inventory in the third quarter of this year was 24.5 percent below inventory levels in the third quarter of last year. The median age of inventory in Detroit's housing market declined 22.9 percent over the same period, according to Realtor.com. Clear Capital analysts are quick to point out that "relatively small price gains will more heavily influence percentage gains in Detroit than in higher priced markets." Detroit's median home price is currently $120,000, a little more than half the national median home price, which stands at $210,000, according to Clear Capital. Looking to the root of Detroit's sudden housing market turnaround, Clear Capital points to declining REO saturation, while Realtor.com emphasizes investor activity. While Detroit continues to rank No. 1 in the nation for REO saturation with a current rate of 29.9 percent, Clear Capital says this ratio is down significantly from 64.6 percent in 2009—a 34.7 percentage point decline. When asked what is driving Detroit's strong housing recovery, Realtor.com president Errol Samuelson responded that investors have "made a notable play in Detroit." "We've seen reports of significant international investment in Detroit over the past several months, and before the bankruptcy, so these are sophisticated investors—willing to take bigger risks and move quickly in markets that have not yet stabilized," Samuelson said. Rapid price gains often lead to bubble fears, but both Samuelson and Dr. Alex Villacorta, VP of research and analytics at Clear Capital, concur Detroit is not headed for a bubble. "While it has seen more than 30 percent growth over the year, the market would need to see another 262 percent growth to hit peak prices," Villacorta explained. Villacorta says Detroit home prices have fallen in line with its pre-2006 historical trends. "Following 2006, prices fell nearly 77 percent, so what we're seeing is a response to a severe price correction," he said. Both economists also point to Detroit's still-struggling economy, which may tamper improvement in the housing market moving forward. The bankrupt city still stands on shaky legs, suffering with unemployment above 9 percent and median incomes at "nearly half of national median incomes," according to Clear Capital. "Another factor to watch is how the city of Detroit manages its fiscal recovery over the next several months," Samuelson said, pointing to the city council's past recovery plan rejections, most recently the Barclays loan. "Uncertainty around recovery plans could cause investor sentiment to wane," he warned. Ally Settles with Government Agencies over Toxic Mortgages Ally Financial Inc. has reached settlements with the Federal Housing Finance Agency (FHFA) and the FDIC for all pending litigation related to toxic mortgages. According to a statement from Ally, the settlements require pending litigation against the bank to be dismissed, and FHFA- and FDIC-released claims will no longer be exceptions to liability releases secured by Ally in a settlement with Residential Capital (ResCap), which was put into Chapter 11 bankruptcy last year.