(MOBILE, Ala.) If you're a homeowner, then you know the painful truth: The value of your home may have fallen as much as 33 percent over the last few years. So have we finally turned the corner? The experts say it could be another 8 years before home prices recover to their 2005 peak.
Kathy Fuller is a foreclosure and short sale specialist, a term that didn't even exist just five short years ago. Since then, the housing market has experienced losses not seen since the great depression.
"They passed a bill that the American dream was available to everybody, and they gave mandates to make it happen," Fuller said.
Pandora's Box was ripped open, lenders were writing loans to people who simple couldn't afford a mortgage. That dream quickly turned to a financial nightmare for millions of families across the country.
"All we need is the signature," Fuller said. "Interest only loans, signature only loans, no proof of income."
By 2010, banks were foreclosing at the rate of one in every 45 homes.
"You sit at a table in their kitchen, and their talking and they're crying and they're upset. You can just see the emotion," Fuller said.
As 2012 rolled around, those emotions began to change. The momentum picked-up. The job market improved, the foreclosure rate fell dramatically, and home sales picked up. So why isn't the value of your home also going up?
"Those foreclosures and short sales are thrown in there," Fuller said. "They effect all of us."
That house down the block, that has sat empty for the last year or so finally sold. It was a foreclosure, and it was quite a bargain for the buyer. That sale has just sent your homes value- and the value of all your neighbors home plummeting. Thirty-five percent of all homes sold in January were foreclosures and that number was up from December.
The foreclosure rate is dropping. So where are all these distressed properties coming from? Well, the banks have a glut of homes to sell. They didn't want too many on the market at once, so they have created whats called a "shadow inventory."
Some experts believe the foreclosure process will accelerate as more of that inventory is released for sale.
Alabama is faring much better than the rest of the country ranking 38th in the number of homes in foreclosure. According to Realty Trac, foreclosure activity is down in the state.
Filings last month dropped 9.3 percent from a year ago. Now for the bad news: from December to January, foreclosures jumped by a third. Why? Well after slowing sharply last year while lenders sorted out foreclosure abuse claims, banks are again back at full speed, foreclosing on families at the rate of about one out of every 1,500 households.