Are better days ahead for commercial real estate? A new report by Real Capital Analytics shows the number of distressed commercial properties is plateauing and expected to continue to do so in the new year. Distressed properties — which include commercial properties that are in default, foreclosure, or repossessed by lenders — had totaled $171.6 billion in October 2011, a decrease from topping off at $191.5 billion in March 2010, according to Real Capital Analytics.
“The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year,” according to a recent article in the Washington Post.
At $41.9 billion, the office sector continues to have the largest number of distressed commercial properties. But that number has been steadily declining — about 11.8 percent less than its peak reached in October 2010.
The apartment sector has the second-highest level of distressed commercial properties with $35.6 billion in troubled loans, according to the Washington Post article. Land and other property types have about $29.8 billion in distressed assets.
The metro areas with the largest number of commercial properties in distress is Manhattan, in which the total volume of distress properties stands at $11.8 billion, followed by L.A.-Orange County with $10 billion. Meanwhile, Houston has the lowest at $111 per capita.
Source: “Amount of Distressed Real Estate Could be on Way Down,” Washington Post (Dec. 26, 2011)
Thursday, December 29, 2011
Gov’t Reviews Proposals for Foreclosure-Rental Program
The Federal Housing Finance Agency (FHFA) received more than 400 proposals on how it should handle the high number of foreclosures that are plaguing many markets across the country. The proposals suggest various ideas on how the FHFA can go about turning thousands of repossessed homes that Fannie Mae and Freddie Mac own into rentals, in trying to curb losses, stabilize neighborhoods, and prevent further drops to housing values.
Fannie and Freddie service more than half of all U.S. home mortgages so any foreclosure-to-rental program could have a significant impact on the housing market, real estate experts say. The FHFA received more than 4,000 submissions during its call for proposals — however, only about 10 percent were deemed valid, the agency said.
“FHFA is proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012,” Corinne Russell, an FHFA spokeswoman, told Bloomberg. FHFA has declined to discuss specific submissions or a timeline for the program.
But proposals for the foreclosure-rental program reportedly documented joint-venture partnerships, sales, and auctions.
As of Sept. 30, Fannie Mae has 122,616 foreclosures with a carrying value of $11 billion — costing Fannie $733 million to maintain in the third quarter alone, according to a Securities and Exchange Commission filing. Meanwhile, Freddie Mac owns 59,6161 foreclosures, costing it $221 million to operate and manage in the third quarter.
Source: “Deutsche Bank Offers U.S. Plans for Renting Foreclosed Homes,” Bloomberg (Dec. 27, 2011)
Fannie and Freddie service more than half of all U.S. home mortgages so any foreclosure-to-rental program could have a significant impact on the housing market, real estate experts say. The FHFA received more than 4,000 submissions during its call for proposals — however, only about 10 percent were deemed valid, the agency said.
“FHFA is proceeding prudently but with a sense of urgency to lay the groundwork for the development of good initial transactions in early 2012,” Corinne Russell, an FHFA spokeswoman, told Bloomberg. FHFA has declined to discuss specific submissions or a timeline for the program.
But proposals for the foreclosure-rental program reportedly documented joint-venture partnerships, sales, and auctions.
As of Sept. 30, Fannie Mae has 122,616 foreclosures with a carrying value of $11 billion — costing Fannie $733 million to maintain in the third quarter alone, according to a Securities and Exchange Commission filing. Meanwhile, Freddie Mac owns 59,6161 foreclosures, costing it $221 million to operate and manage in the third quarter.
Source: “Deutsche Bank Offers U.S. Plans for Renting Foreclosed Homes,” Bloomberg (Dec. 27, 2011)
FHA Extends Anti-Flipping Waiver to Speed Sales
The Federal Housing Administration is extending its “anti-flipping” waiver through the end of 2012, which allows buyers to purchase homes that have already been sold in the last 90 days.
The waiver, which was soon set to expire, is “intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” Carol J. Galante, the acting Federal Housing Administration commissioner, said in a statement. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”
An anti-flipping rule originally took effect in 2003 to stop a spike in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days. But the U.S. Department of Housing and Urban Development decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing blight in neighborhoods across the country and hampering nearby property values.
The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so. Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase, according to HUD.
"It's certainly an inducement to move real estate and reduce inventories," says Don Cameron, a real estate investor who owns a franchise of We Buy Ugly Houses in South Florida. "Why wait 90 days before you can close on a home?"
The waiver, however, still prevents predatory flipping, and sellers must justify any increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (such as by providing extra documentation on renovation expenses). Sales also must be in “arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.”
Source: “Government Extends Waiver of Anti-Flipping Law, Allowing Homes to be Bought and then Sold in 90 Days,” McClatchy-Tribune Regional News (Dec. 29, 2011) and HUD.gov
The waiver, which was soon set to expire, is “intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” Carol J. Galante, the acting Federal Housing Administration commissioner, said in a statement. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”
An anti-flipping rule originally took effect in 2003 to stop a spike in home flipping that was being blamed on driving up home prices during the housing boom. The rule prevented FHA-backed loans from being used to purchase homes that had been owned by a seller for less than 90 days. But the U.S. Department of Housing and Urban Development decided to reconsider the 90-day limit in 2010 after skyrocketing foreclosures and abandoned homes were causing blight in neighborhoods across the country and hampering nearby property values.
The temporary waiver to the anti-flipping rule will allow buyers and investors to quickly resell refurbished homes and not have to wait 90 days to do so. Since the waiver took place in 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on homes resold within 90 days of the last purchase, according to HUD.
"It's certainly an inducement to move real estate and reduce inventories," says Don Cameron, a real estate investor who owns a franchise of We Buy Ugly Houses in South Florida. "Why wait 90 days before you can close on a home?"
The waiver, however, still prevents predatory flipping, and sellers must justify any increases in value if the sales price of the property is 20 percent more than what the seller had recently purchased it for (such as by providing extra documentation on renovation expenses). Sales also must be in “arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.”
Source: “Government Extends Waiver of Anti-Flipping Law, Allowing Homes to be Bought and then Sold in 90 Days,” McClatchy-Tribune Regional News (Dec. 29, 2011) and HUD.gov
3 Cities Where Prices Appreciated the Most in 2011
Some cities saw big increases in home prices this year. The ones that saw the largest levels of appreciation often had the lowest foreclosure rates in the country, or did not peak midway through the past decade.
For example, in Charleston, W. Va., home values soared nearly 18 percent over the first 10 months of the year, the largest rise among the 384 metro areas tracked by CoreLogic.
AOL Real Estate recently profiled cities that saw the largest price appreciation this year. The top three are:
1. Charleston, W. Va.
Home value change January to October: +17.95 percent
2. Holland-Grand Haven, Mich.
Home value change January to October: +11.89 percent
3. Bloomington, Ind.
Home value change January to October: +11.82 percent
See which other cities made the list.
Source: “Biggest Home Price Increases of 2011,” AOL Real Estate (December 2011)
For example, in Charleston, W. Va., home values soared nearly 18 percent over the first 10 months of the year, the largest rise among the 384 metro areas tracked by CoreLogic.
AOL Real Estate recently profiled cities that saw the largest price appreciation this year. The top three are:
1. Charleston, W. Va.
Home value change January to October: +17.95 percent
2. Holland-Grand Haven, Mich.
Home value change January to October: +11.89 percent
3. Bloomington, Ind.
Home value change January to October: +11.82 percent
See which other cities made the list.
Source: “Biggest Home Price Increases of 2011,” AOL Real Estate (December 2011)
Pending Home Sales Rise Again
Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of REALTORS®.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.
The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” he said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.
“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.
Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.
The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.
Source: NAR
The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 7.3 percent to 100.1 in November from an upwardly revised 93.3 in October and is 5.9 percent above November 2010 when it stood at 94.5. The October upward revision resulted in a 10.4 percent monthly gain.
The last time the index was higher was in April 2010 when it reached 111.5 as buyers rushed to beat the deadline for the home buyer tax credit. The data reflects contracts but not closings.
Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. “Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” he said. “Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.
“November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead,” Yun added.
Pending home sales are not affected by the recently published rebenchmarking of existing-home sales because the index uses a different methodology based directly on contract signings, and is adjusted for seasonality.
The PHSI in the Northeast rose 8.1 percent to 77.1 in November but is 0.3 percent below November 2010. In the Midwest the index increased 3.3 percent to 91.6 in November and is 9.5 percent above a year ago. Pending home sales in the South rose 4.3 percent in November to an index of 103.8 and remain 8.7 percent above November 2010. In the West the index surged 14.9 percent to 121.2 in November and is 2.9 percent higher than a year ago.
Source: NAR
Wednesday, December 28, 2011
Safest Places to Live
Where are the most “secure places” -- large or mid-size metro areas -- in the nation to live? The annual Farmers Insurance Group of Companies ranked nearly 400 communities based on safety and security in its eighth annual study on the “most secure places to live for 2011.”
The rankings take into account such factors as crime statistics, natural disasters, housing depreciation, foreclosures, air quality, environmental hazards, life expectancy, and car accidents.
According to the Farmers Insurance Group of Companies, here are the most secure places to live among large metro areas with populations of 500,000 or more:
1. Pittsburgh, Pa.
2. Rochester, N.Y.
3. El Paso, Texas
4. Syracuse, N.Y.
5. Bethesda-Gaithersburg–Frederick, Md.
6. Buffalo-Niagara Falls, N.Y.
7. Wichita, Kan.
8. Omaha, Neb.-Council Bluffs, Iowa
9. Denver-Aurora, Colo.
10. Austin-Round Rock, Texas
The most secure places to live among mid-size cities with populations between 150,000 and 500,000 are:
The rankings take into account such factors as crime statistics, natural disasters, housing depreciation, foreclosures, air quality, environmental hazards, life expectancy, and car accidents.
According to the Farmers Insurance Group of Companies, here are the most secure places to live among large metro areas with populations of 500,000 or more:
1. Pittsburgh, Pa.
2. Rochester, N.Y.
3. El Paso, Texas
4. Syracuse, N.Y.
5. Bethesda-Gaithersburg–Frederick, Md.
6. Buffalo-Niagara Falls, N.Y.
7. Wichita, Kan.
8. Omaha, Neb.-Council Bluffs, Iowa
9. Denver-Aurora, Colo.
10. Austin-Round Rock, Texas
The most secure places to live among mid-size cities with populations between 150,000 and 500,000 are:
- Kennewick–Richland–Pasco, Wash.
2. Boulder, Colo.
3. Fargo, N.D.–Moorhead, Minn.
4. Olympia, Wash.
5. Binghamton, N.Y.
6. Sioux Falls, S.D.
7. Bellingham, Wash.
8. Lincoln, Neb.
9. Fort Collins–Loveland, Colo.
10. Rochester, Minn.
Rental Boom Takes Shape
The multifamily market continues to post gains.
"Rents are rising, vacancies are falling, household formations are growing and rental supply is limited," according to a recent report, “2012: The Year of the Landlord,” issued by Morgan Stanley. "We believe the demand for rental properties will continue to grow."
Vacancies of rental properties dropped to 9.8 percent in the third quarter of this year compared to 10.3 percent earlier this year.
Led by strong gains in multifamily housing, groundbreaking for new-housing market soared 9.3 percent in November. Construction of multifamily homes of at least two units increased 25.3 percent in November, the Commerce Department reported last week. Starts for structures with five or more units has increased more than 30 percent from October and is nearly double year-over-year levels, Reuters reports.
Rental costs are also on their way up, increasing 2.4 percent over last year compared with an increase of 0.6 percent in 2010, Reuters reports.
Source: “America Becoming a Nation of Renters,” Reuters (Dec. 27, 2011)
"Rents are rising, vacancies are falling, household formations are growing and rental supply is limited," according to a recent report, “2012: The Year of the Landlord,” issued by Morgan Stanley. "We believe the demand for rental properties will continue to grow."
Vacancies of rental properties dropped to 9.8 percent in the third quarter of this year compared to 10.3 percent earlier this year.
Led by strong gains in multifamily housing, groundbreaking for new-housing market soared 9.3 percent in November. Construction of multifamily homes of at least two units increased 25.3 percent in November, the Commerce Department reported last week. Starts for structures with five or more units has increased more than 30 percent from October and is nearly double year-over-year levels, Reuters reports.
Rental costs are also on their way up, increasing 2.4 percent over last year compared with an increase of 0.6 percent in 2010, Reuters reports.
Source: “America Becoming a Nation of Renters,” Reuters (Dec. 27, 2011)
7 Cities Where List Prices Are Falling the Most
Nationally, median list prices have mostly been flat since June, but some markets are still seeing some decreases in home prices, according to the latest data from Realtor.com of 146 metro markets.
The following are the cities where list prices have fallen the most from October to November:
1. Detroit
Month-over-month decrease: -4.61%
Year-over-year decrease: -12.47%
Median list price: $84,900
2. Monmouth-Ocean, N.J.
Month-over-month decrease: -4.32%
Year-over-year decrease: -3.05%
Median list price: $300,444
3. Santa Barbara-Santa Maria-Lompoc, Calif.
Month-over-month decrease: -3.52%
Year-over-year decrease: -1.95%
Median list price: $539,250
4. Pueblo, Colo.
Month-over-month decrease: -3.45%
Year-over-year increase: 0.29%
Median list price: $139,900
5. Tulsa, Okla.
Month-over-month decrease: -3.38%
Year-over-year decrease: -5.34%
Median list price: $140,000
6. Peoria-Pekin, Ill.
Month-over-month decrease: -3.18%
Year-over-year increase: 3.71%
Median list price: $139,900
7. Charleston, W. Va.
Month-over-month decrease: -3.09%
Year-over-year increase: 6.67%
Median list price: $159,900
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
The following are the cities where list prices have fallen the most from October to November:
1. Detroit
Month-over-month decrease: -4.61%
Year-over-year decrease: -12.47%
Median list price: $84,900
2. Monmouth-Ocean, N.J.
Month-over-month decrease: -4.32%
Year-over-year decrease: -3.05%
Median list price: $300,444
3. Santa Barbara-Santa Maria-Lompoc, Calif.
Month-over-month decrease: -3.52%
Year-over-year decrease: -1.95%
Median list price: $539,250
4. Pueblo, Colo.
Month-over-month decrease: -3.45%
Year-over-year increase: 0.29%
Median list price: $139,900
5. Tulsa, Okla.
Month-over-month decrease: -3.38%
Year-over-year decrease: -5.34%
Median list price: $140,000
6. Peoria-Pekin, Ill.
Month-over-month decrease: -3.18%
Year-over-year increase: 3.71%
Median list price: $139,900
7. Charleston, W. Va.
Month-over-month decrease: -3.09%
Year-over-year increase: 6.67%
Median list price: $159,900
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
What's in Store for Housing in 2012?
The worst for the housing market may finally be over, according to housing experts in a recent article in Kiplinger. After median home price have dropped nearly 40 percent nationwide, a rebound is taking shape -- although, housing experts say, the market may stay flat for awhile before gradually ticking up.
According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:
Home prices stabilize: Mark Zandi, chief economist at Moody's Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”
Housing affordability high: Housing affordability -- the ratio of median home prices to median family income -- will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.
Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 -- at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.
Sales increases: The National Association of REALTORS® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.
Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.
Source: “What’s Ahead for Home Prices in 2012,” Kiplinger (January 2012)
According to housing experts in a recent Kiplinger article, here are some predictions for the real estate market in the coming year:
Home prices stabilize: Mark Zandi, chief economist at Moody's Analytics, predicts that home prices nationwide may still drop another 3 to 5 percent in 2012, but the new year will most likely finally bring a leveling off of home prices before gains start to take shape in 2013. When markets do begin to stabilize in the new year, “price appreciation tends to spread unevenly, creating a lot of confusion about where the recovery is occurring and when,” David Stiff, chief economist at Fiserv Case-Shiller, told Kiplinger. “Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.”
Housing affordability high: Housing affordability -- the ratio of median home prices to median family income -- will likely remain at record levels in 2012. Homes in many cities are “substantially undervalued,” the Kiplinger article notes. That may even lead to a mini bubble with double-digit spikes in prices, such as an increase of 10 to 15 percent in a given year in some markets, housing experts say.
Low mortgage rates: Helping to keep affordability high, low mortgage rates are expected to continue on in 2012 -- at least the first part of the year, economists predict. The 30-year fixed-rate mortgage, the most popular among home buyers, has been hovering under a 4-percent average the past few weeks, staying in record low territory. Rates are expected to stay between 4 to 5 percent in 2012, predicts Guy Cecala, publisher of Inside Mortgage Finance, an industry publication.
Sales increases: The National Association of REALTORS® has already been showing a tick up in sales taking shape with increases in existing-home sales during the summer and early fall of 2011. High inventories of homes continue to flood the market but a drastic slowdown in new-home building the past three years is “gradually easing the surplus,” the Kiplinger article notes.
Foreclosures: Foreclosures remain the problem and still plague many markets. After a slowdown with lenders processing the paperwork, foreclosures have began to pick up once again. About 1.84 million home loans are 90 days or more delinquent and 2.17 million have finished the foreclosure process but aren’t up for sale yet, according to RealtyTrac data. Alex Villacorta, director of research and analytics at Clear Capital, told Kiplinger that he predicts regardless of the downward price pressure caused from foreclosures, overall home prices won’t fall as long as lenders bring additional foreclosures to the housing market at a steady pace.
Source: “What’s Ahead for Home Prices in 2012,” Kiplinger (January 2012)
'Blockbuster Sales' Abound in 2011
The wealthy were taking advantage of the housing market in 2011, snagging homes at record-breaking prices particularly in markets like San Francisco, Manhattan, and the Hamptons.
“We think the reason the high-end market is doing well is [that] investors think this is the bottom of the market,” Philip A. White, chief operating officer of Sotheby’s International Realty, a network of luxury real estate companies, told BusinessWeek in a recent article.
Here’s a recap of some of this year’s “blockbuster sales” in the luxury home market, according to BusinessWeek:
▪ Russian tech billionaire Yuri Milner earlier this year purchased a 25,500 square foot single-family home in Silicon Valley for $100 million, the highest price paid for a single-family home in the U.S. (Read more: Priciest Home in the Nation Sells for $100 Million)
▪ Proving that not all REOs come cheap, in December, a bank-owned penthouse overlooking San Francisco’s Art District sold for $28 million, making it the priciest condo sale in the city’s history. The final sales price of the home was a fraction of the $70 million price that the original owner first tried listing the condo at back in 2008 before the home fell into foreclosure. Bank of America, which then took possession of the condo, originally listed the home at $35 million before agreeing to the $28 million sales price. (Read more: Priciest REO Sold)
▪ The Spelling Manor, the mega-house belonging to the late Aaron Spelling widow Candace Spelling, lingered on the market since 2008 before finally selling this year for a whopping $85 million. The Holmby Hills, Calif., home was originally listed for a record $150 million, marking a 43.3 percent discount at time of sale. The home made headlines this year when it sold to Petra Ecclestone, the 22-year-old daughter of Formula One Chief Executive Bernie Ecclestone.
▪ At $13,000 per square foot, the sale of a 6,744-square-foot apartment in New York City is shattering records. Russian billionaire Dmitriy Rybolovlev is reportedly paying the full asking price of $88 million for a New York City condo for his 22-year-old daughter, considered the highest individual transaction ever recorded in New York City. (Read more: Record $88 Million Sale for NYC Condo)
Source: “In 2011, Rich Homebuyers Went Bargain Hunting,” Bloomberg BusinessWeek (Dec. 20, 2011)
“We think the reason the high-end market is doing well is [that] investors think this is the bottom of the market,” Philip A. White, chief operating officer of Sotheby’s International Realty, a network of luxury real estate companies, told BusinessWeek in a recent article.
Here’s a recap of some of this year’s “blockbuster sales” in the luxury home market, according to BusinessWeek:
▪ Russian tech billionaire Yuri Milner earlier this year purchased a 25,500 square foot single-family home in Silicon Valley for $100 million, the highest price paid for a single-family home in the U.S. (Read more: Priciest Home in the Nation Sells for $100 Million)
▪ Proving that not all REOs come cheap, in December, a bank-owned penthouse overlooking San Francisco’s Art District sold for $28 million, making it the priciest condo sale in the city’s history. The final sales price of the home was a fraction of the $70 million price that the original owner first tried listing the condo at back in 2008 before the home fell into foreclosure. Bank of America, which then took possession of the condo, originally listed the home at $35 million before agreeing to the $28 million sales price. (Read more: Priciest REO Sold)
▪ The Spelling Manor, the mega-house belonging to the late Aaron Spelling widow Candace Spelling, lingered on the market since 2008 before finally selling this year for a whopping $85 million. The Holmby Hills, Calif., home was originally listed for a record $150 million, marking a 43.3 percent discount at time of sale. The home made headlines this year when it sold to Petra Ecclestone, the 22-year-old daughter of Formula One Chief Executive Bernie Ecclestone.
▪ At $13,000 per square foot, the sale of a 6,744-square-foot apartment in New York City is shattering records. Russian billionaire Dmitriy Rybolovlev is reportedly paying the full asking price of $88 million for a New York City condo for his 22-year-old daughter, considered the highest individual transaction ever recorded in New York City. (Read more: Record $88 Million Sale for NYC Condo)
Source: “In 2011, Rich Homebuyers Went Bargain Hunting,” Bloomberg BusinessWeek (Dec. 20, 2011)
Take Advantage of the Winter Market
"There’s a misunderstanding that winter is quiet," Andrea Webb, an agent with Keller Williams in Montclair, N.J., told The Star-Ledger (New Jersey) in a recent article.
Real estate pros report that the weeks between now and the Super Bowl can be some of the most hectic in getting a head-start on what’s traditionally considered the busy spring buying season.
"Most good associates use the months of November and December as an opportunity to get organized for the coming spring market, which can arrive as early as January," Gary Large, president of the New Jersey Association of REALTORS®, told The Star-Ledger.
More real estate pros reportedly recommend to their sellers to host open houses during the cooler months because they’ll face less competition. Also, they say, more serious buyers often come out during the winter months, such as corporate clients who are needing to relocate within the first quarter of the year.
"We try to encourage the sellers to pretty much get their house on the market early in January to beat the rush, because most people tend to wait until the spring," Marilyn Bailey with Prudential New Jersey Properties in Morristown, N.J., told The Star-Ledger. "It’s a nice time of year to shop — not as many buyers are out there, so you’re not competing with other offers as much."
Real estate pros are also using the winter months to focus on networking (such as through holiday parties that can create plenty of opportunities for meeting new clients or gaining referrals) and taking continuing-education classes to ramp up their skill sets before the spring buying season hits, agents report.
Source: “In a Down Housing Market, Real Estate Agents get a Head Start Now for a Busy Spring Season,” The Star-Ledger (New Jersey) (Dec. 25, 2011)
Real estate pros report that the weeks between now and the Super Bowl can be some of the most hectic in getting a head-start on what’s traditionally considered the busy spring buying season.
"Most good associates use the months of November and December as an opportunity to get organized for the coming spring market, which can arrive as early as January," Gary Large, president of the New Jersey Association of REALTORS®, told The Star-Ledger.
More real estate pros reportedly recommend to their sellers to host open houses during the cooler months because they’ll face less competition. Also, they say, more serious buyers often come out during the winter months, such as corporate clients who are needing to relocate within the first quarter of the year.
"We try to encourage the sellers to pretty much get their house on the market early in January to beat the rush, because most people tend to wait until the spring," Marilyn Bailey with Prudential New Jersey Properties in Morristown, N.J., told The Star-Ledger. "It’s a nice time of year to shop — not as many buyers are out there, so you’re not competing with other offers as much."
Real estate pros are also using the winter months to focus on networking (such as through holiday parties that can create plenty of opportunities for meeting new clients or gaining referrals) and taking continuing-education classes to ramp up their skill sets before the spring buying season hits, agents report.
Source: “In a Down Housing Market, Real Estate Agents get a Head Start Now for a Busy Spring Season,” The Star-Ledger (New Jersey) (Dec. 25, 2011)
Where Can You Find the Cheapest Homes?
Buyers can snag plenty of deals in housing today. Falling home values and record-low interest rates continue to push affordability to record highs.
Nationally, the median list price for a home is $189,900, up 4.05 percent year-over-year, according to Realtor.com data from November of 146 metro areas.
The following cities offer the lowest median list prices in the nation as of November:
Nationally, the median list price for a home is $189,900, up 4.05 percent year-over-year, according to Realtor.com data from November of 146 metro areas.
The following cities offer the lowest median list prices in the nation as of November:
- Detroit: $84,900
- South Bend, Ind.: $102,000
- Dayton-Springfield, Ohio: $109,900
- Fort Wayne, Ind.: $109,900
- Toledo, Ohio: $109,900
- Las Vegas, Nev.-Ariz.: $122,000
- Cleveland-Lorain-Elyria, Ohio: $129,900
- Lakeland-Winter Haven, Fla.: $129,900
- Akron, Ohio: $129,900
- Ocala, Fla.: $129,500
- Springfield, Ill.: $129,250
- Wichita, Kan.: $130,828
Some Good Signs for the Real Estate Market
Sales ticked up for existing homes and new homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode.
In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.
"Inventories of new homes are very low: There's nothing on the shelf, so any increase in new home sales will translate directly into new housing starts," Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. "That means putting people back to work."
Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher.
Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)
In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new houses once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.
The median sales price of a new home in November was $214,100, the Census Bureau reported, and the inventory of new houses nationwide decreased to a six-month supply at the current sales pace.
"Inventories of new homes are very low: There's nothing on the shelf, so any increase in new home sales will translate directly into new housing starts," Bob Denk, senior economist at the National Association of Home Builders, told CNNMoney. "That means putting people back to work."
Other recent good news for the housing market: November sales of existing homes increased 12 percent year-over-year, new-home building starts were up nearly 21 percent year-over-year, and mortgage rates reached new record lows last week, pushing housing affordability even higher.
Source: “New Home Sales Edge Up,” CNNMoney (Dec. 23, 2011)
Friday, December 23, 2011
Banks Lay Groundwork for Commercial Comeback
Some community bankers are gearing up for increased activity on the commercial real estate (CRE) front in 2012. A recent Federal Reserve Board survey of senior loan officers found that more than 13 percent of respondents noticed stronger CRE demand in the fourth quarter, up from 1.8 percent a year earlier.
"Barring Europe imploding, we do generally expect the economy to continue to improve and the real estate market to continue to improve," says Ryan Severino, senior economist at Reis Inc., a commercial real estate research firm in New York. "If someone is thinking about ramping up their [CRE] lending process, now would not be a bad time to do it."
Umpqua Holdings recently reported that it is enhancing its CRE divisions in certain cities. Many of those cities have lost many local competitors when the real estate market collapsed, and survivors want to take advantage on a recovery.
"We think the markets are starting to, and will continue to, come back," says John Swanson, who is leading Umpqua's new commercial real estate division. "Now is the time to bring in some experienced CRE people. With the downturn and reduction in many CRE groups over the last two-to three-plus years, I've had an impressive list of candidates to choose from."
Source: "More Banks Laying Groundwork for CRE Comeback," American Banker (Dec. 22, 2011)
Source: nformation Inc.
"Barring Europe imploding, we do generally expect the economy to continue to improve and the real estate market to continue to improve," says Ryan Severino, senior economist at Reis Inc., a commercial real estate research firm in New York. "If someone is thinking about ramping up their [CRE] lending process, now would not be a bad time to do it."
Umpqua Holdings recently reported that it is enhancing its CRE divisions in certain cities. Many of those cities have lost many local competitors when the real estate market collapsed, and survivors want to take advantage on a recovery.
"We think the markets are starting to, and will continue to, come back," says John Swanson, who is leading Umpqua's new commercial real estate division. "Now is the time to bring in some experienced CRE people. With the downturn and reduction in many CRE groups over the last two-to three-plus years, I've had an impressive list of candidates to choose from."
Source: "More Banks Laying Groundwork for CRE Comeback," American Banker (Dec. 22, 2011)
Source: nformation Inc.
23% Off? 8 Cities With Big Housing Discounts
Sellers have reduced their prices and buyers can snag deep discounts on houses in some areas of the country. Trulia identified several cities in 2011 in which sellers have slashed their home prices the most, offering the largest average discounts (as a percentage), based on non-foreclosure homes listed for sale at its site.
Median Sales Price: $69,000
Median Sales Price: $57,000
Median Sales Price: $115,000
Median Sales Price: $146,000
Median Sales Price: $82,000
Median Sales Price: $93,000
Median Sales Price: $173,000
Median Sales Price: $140,000
See what other cities are offering big discounts.
Source: “Trulia’s Top 10 Cities and Homes for Extreme Bargain Shoppers,” Trulia Blog (Dec. 19, 2011)
1. Detroit
Average Market Discount: 23 percentMedian Sales Price: $69,000
2. Cleveland
Average Market Discount: 14 percentMedian Sales Price: $57,000
3. Baltimore
Average Market Discount: 11 percentMedian Sales Price: $115,000
4. Miami, Fla.
Average Market Discount: 11 percentMedian Sales Price: $146,000
5. Memphis, Tenn.
Average Market Discount: 10 percentMedian Sales Price: $82,000
6. Milwaukee, Wis.
Average Market Discount: 10 percentMedian Sales Price: $93,000
7. Atlanta
Average Market Discount: 10 percentMedian Sales Price: $173,000
8. New Orleans
Average Market Discount: 10 percentMedian Sales Price: $140,000
See what other cities are offering big discounts.
Source: “Trulia’s Top 10 Cities and Homes for Extreme Bargain Shoppers,” Trulia Blog (Dec. 19, 2011)
Mortgage Rates Reach New Record Lows
Just in time for the holidays: Mortgage rates reached new all-time lows this week, pushing home buyer affordability even higher, Freddie Mac reports in its weekly mortgage market survey.
"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”
Here’s a closer look at mortgage rates for the week ending Dec. 22:
"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today's home buyers are paying over $1,200 less per year on a $200,000 loan,” Frank Nothaft, chief economist at Freddie Mac, said in a statement. “This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January.”
Here’s a closer look at mortgage rates for the week ending Dec. 22:
- 30-year fixed-rate mortgages: averaged 3.91 percent this week, with an average 0.7 point, beating last week’s 3.94 percent record. A year ago at this time, 30-year rates averaged 4.81 percent.
- 15-year fixed-rate mortgages: averaged 3.21 percent, with an average 0.8 point, matching last week’s all-time low. Last year at this time, the 15-year mortgage averaged 4.15 percent.
- 5-year adjustable-rate mortgages: averaged 2.85 percent this week, with an average 0.6 point, a new record after dropping from last week’s 2.86 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent.
- 1-year ARMs: averaged 2.77 percent this week, with an average 0.6 point, also a new record after falling from last week’s 2.81 percent average. A year ago at this time, the 1-year ARMs averaged 3.40 percent.
Thursday, December 22, 2011
BofA Settles for $335M on Lending Bias Charges
Bank of America has agreed to pay a record $335 million in a settlement over charges that its Countrywide Financial unit discriminated against Hispanic- and African-American borrowers from 2004 to 2008. The settlement marks the largest residential fair-lending settlement on record, the Justice Department said.
Bank of America, which purchased the struggling Countrywide in 2008, has continued to face costly lawsuits over the former bank’s lending practices.
According to Justice Department investigators, the latest allegations against Countrywide involve the company's loan officers charging more than 200,000 minority borrowers higher fees and rates than they did to white borrowers who had similar credit histories. Countrywide was also accused of steering more than 10,000 minority borrowers into risky subprime loans when white borrowers with similar credit backgrounds received fixed, less risky loans.
For example, in 2007, investigators say Countrywide officers charged Hispanic loan applicants in Los Angeles $545 more, on average, in fees for a $200,000 loan than white applicants. What’s more, independent brokers were accused of charging Hispanics $1,195 more on Countrywide loans, according to the Justice Department’s investigation.
Countrywide denied the Justice Department’s allegations and any wrongdoing. Bank of America said the allegations were prior to Bank of America’s purchase of Countrywide in 2008.
“We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities,” Dan Frahm, Bank of America spokesman, told The New York Times. “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”
The settlement still must be approved by a federal judge in California before it’s final.
Source: “Countrywide Will Settle a Bias Suit,” The New York Times (Dec. 21, 2011)
Bank of America, which purchased the struggling Countrywide in 2008, has continued to face costly lawsuits over the former bank’s lending practices.
According to Justice Department investigators, the latest allegations against Countrywide involve the company's loan officers charging more than 200,000 minority borrowers higher fees and rates than they did to white borrowers who had similar credit histories. Countrywide was also accused of steering more than 10,000 minority borrowers into risky subprime loans when white borrowers with similar credit backgrounds received fixed, less risky loans.
For example, in 2007, investigators say Countrywide officers charged Hispanic loan applicants in Los Angeles $545 more, on average, in fees for a $200,000 loan than white applicants. What’s more, independent brokers were accused of charging Hispanics $1,195 more on Countrywide loans, according to the Justice Department’s investigation.
Countrywide denied the Justice Department’s allegations and any wrongdoing. Bank of America said the allegations were prior to Bank of America’s purchase of Countrywide in 2008.
“We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities,” Dan Frahm, Bank of America spokesman, told The New York Times. “We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues.”
The settlement still must be approved by a federal judge in California before it’s final.
Source: “Countrywide Will Settle a Bias Suit,” The New York Times (Dec. 21, 2011)
Distressed Properties Continue to Hamper Other Sales
The pressure on overall home prices from distressed properties is still haunting the housing market, according to the latest Campbell/Inside Mortgage Finance HousingPulse tracking survey. However, home buyer demand is growing, the survey finds. The average time on the market for REOs is more than 10 weeks, which is at its lowest point in more than a year.
The average price for a short sale during November was $209,200. The average sales price for move-in ready REOs was $189,700, and $98,600 for damaged REOs sold.
Distressed properties represented 46.1 percent of all home purchase transactions in November, according to the survey, while short sales accounted for 17.6 percent of purchase transactions.
Distressed sales are continuing to make it difficult to appraise non-distressed properties, according to the Campbell/Inside Mortgage Finance Survey.
Source: “Even with More Buyers Looking, Distressed Properties Stay Low,” HousingWire (Dec. 20, 2011)
The average price for a short sale during November was $209,200. The average sales price for move-in ready REOs was $189,700, and $98,600 for damaged REOs sold.
Distressed properties represented 46.1 percent of all home purchase transactions in November, according to the survey, while short sales accounted for 17.6 percent of purchase transactions.
Distressed sales are continuing to make it difficult to appraise non-distressed properties, according to the Campbell/Inside Mortgage Finance Survey.
Source: “Even with More Buyers Looking, Distressed Properties Stay Low,” HousingWire (Dec. 20, 2011)
10 Cities Where List Prices Soared Last Month
Median list prices nationwide have risen 4.05 percent on a year-over-year basis, according to November housing data of 146 metro areas from Realtor.com. Fewer cities are reporting year-over-year list price declines, “suggesting a growing optimism on the part of sellers about 2012 market conditions,” according to Realtor.com.
So where have prices risen the most in the last month? The following are the 10 cities that saw the largest median list price increases from October to November.
Year-over-year increase: 14.27 percent
Median list price: $169,000
Year-over-year increase: 10.54 percent
Median list price: $164,700
Year-over-year increase: 29.50 percent
Median list price: $259,000
Year-over-year decrease: -2.50 percent
Median list price: $144,200
Year-over-year decrease: -2.57 percent
Median list price: $379,000
Year-over-year increase: 21.63 percent
Median list price: $224,900
Year-over-year increase: 3.02 percent
Median list price: $204,900
Year-over-year increase: 2.41 percent
Median list price: $174,000
Year-over-year increase: 16.56 percent
Median list price: $240,000
Year-over-year increase: 15.26 percent
Median list price: $219,000
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
So where have prices risen the most in the last month? The following are the 10 cities that saw the largest median list price increases from October to November.
1. Central Fla.-Regional Statistical Area
Month-to-month median increase: 5.63 percentYear-over-year increase: 14.27 percent
Median list price: $169,000
2. Phoenix-Mesa, Ariz.
Month-to-month increase: 4.46 percentYear-over-year increase: 10.54 percent
Median list price: $164,700
3. Miami, Fla.
Month-to-month increase: 3.60 percentYear-over-year increase: 29.50 percent
Median list price: $259,000
4. Tampa-St. Petersburg-Clearwater, Fla.
Month-to-month increase: 3 percentYear-over-year decrease: -2.50 percent
Median list price: $144,200
5. New York, N.Y.
Month-to-month increase: 2.71 percentYear-over-year decrease: -2.57 percent
Median list price: $379,000
6. Fort Myers-Cape Coral, Fla.
Month-to-month increase: 2.69 percentYear-over-year increase: 21.63 percent
Median list price: $224,900
7. Iowa City, Iowa
Month-to-month increase: 2.50 percentYear-over-year increase: 3.02 percent
Median list price: $204,900
8. Tucson, Ariz.
Month-to-month increase: 2.41 percentYear-over-year increase: 2.41 percent
Median list price: $174,000
9. Sarasota-Bradenton, Fla.
Month-to-month increase: 2.13 percentYear-over-year increase: 16.56 percent
Median list price: $240,000
10. West Palm Beach-Boca Raton, Fla.
Month-to-month increase: 1.86 percentYear-over-year increase: 15.26 percent
Median list price: $219,000
By Melissa Dittmann Tracey for REALTOR® Magazine’s Daily News
NAR Revises Housing Figures: What This Really Means
Home sales activity from 2007 through 2010 was lower than originally thought, with sales and inventory down by 14 percent more than originally reported, according to recently revised housing figures by the National Association of REALTORS®.
The revisions were made to NAR sales and inventory data since 2007. NAR notes, however, that the revisions did not change the month-to-month characterization of market conditions, nor were any changes made to reported home prices or month’s supply.
That’s important note, because this change doesn’t really affect “anything happening today in the economy, current home sales and prices, and already-accounted-for losses from the housing crash,” wrote Diana Olick, a CNBC real estate reporter.
“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service data or local supply-and-demand balance, or to local home prices,” NAR’s Chief Economist Lawrence Yun, said in a statement.
“It appears that about half of the revisions result solely from a decline in for-sale-by-owners, with more sellers turning to REALTORS® to market their homes when the market softened,” Yun said. “The FSBO market was overwhelmed during the housing downturn, and since most FSBOs are not reported in MLSs, national estimates of existing-home sales began to diverge based on previous assumptions.” For example, in 2000, according to NAR, FSBOs accounted for 16 percent of the market share, but that number fell to 9 percent in 2010.
“There are still considerable headwinds facing housing’s recovery, not the least of which are foreclosures, and potential buyers have to factor that into their decision making,” CNBC’s Olick wrotes in another recent article. “They should not, however, be spooked by nasty new numbers that really just put an exclamation point on what we already knew … that housing went from an unprecedented boom to an unprecedented bust and took down our economy with it.”
Sources: “Home-Sales Revisions to Hurt: More Distress in Market,” CNBC (Dec. 21, 2011) and the National Association of REALTORS®
The revisions were made to NAR sales and inventory data since 2007. NAR notes, however, that the revisions did not change the month-to-month characterization of market conditions, nor were any changes made to reported home prices or month’s supply.
That’s important note, because this change doesn’t really affect “anything happening today in the economy, current home sales and prices, and already-accounted-for losses from the housing crash,” wrote Diana Olick, a CNBC real estate reporter.
“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service data or local supply-and-demand balance, or to local home prices,” NAR’s Chief Economist Lawrence Yun, said in a statement.
Why the Numbers Were Off
The new figures were released this week after NAR reviewed and revised its methodology, after noticing a shift between how sales are reported by multiple listing services and how sales are determined by a U.S. Census benchmark beginning in 2007. The shift occurred, according to NAR, due to growth in MLS coverage areas where sales data is collected, geographic population shifts, and double counting due to the same properties appearing on several different MLSs. A big part of the divergence in the data was also caused by fewer For Sale by Owner sales.“It appears that about half of the revisions result solely from a decline in for-sale-by-owners, with more sellers turning to REALTORS® to market their homes when the market softened,” Yun said. “The FSBO market was overwhelmed during the housing downturn, and since most FSBOs are not reported in MLSs, national estimates of existing-home sales began to diverge based on previous assumptions.” For example, in 2000, according to NAR, FSBOs accounted for 16 percent of the market share, but that number fell to 9 percent in 2010.
‘Don’t Be Spooked’ by New Numbers
The housing data revisions have been widely reported among the media, and some are concerned that home buyers and sellers may get spooked by the new data, showing the housing crisis was worse than previously thought. But the revisions need to be kept in perspective, housing experts say.“There are still considerable headwinds facing housing’s recovery, not the least of which are foreclosures, and potential buyers have to factor that into their decision making,” CNBC’s Olick wrotes in another recent article. “They should not, however, be spooked by nasty new numbers that really just put an exclamation point on what we already knew … that housing went from an unprecedented boom to an unprecedented bust and took down our economy with it.”
Sources: “Home-Sales Revisions to Hurt: More Distress in Market,” CNBC (Dec. 21, 2011) and the National Association of REALTORS®
Wednesday, December 21, 2011
Americans Eager to Buy, Sellers Aren’t Happy?
Nearly 80 percent of home buyers say now is a great time to buy a home, but sellers say it’s not a great time to sell, according to a new study, “The Great Recession and Attitudes Toward Homebuying,” released this week by the Mortgage Bankers Association. In fact, homeselling sentiment has fallen to record lows.
As for home buyers, they certainly have plenty to be happy about -- housing prices have fallen and interest rates are at record lows, pushing affordability to record levels and allowing buyers to snag great deals on housing.
But sellers, on the other hand, are getting discouraged that they can’t find buyers for their homes at a desirable sales price as well as the large overhang of mortgages past due or in foreclosure, according to the report.
"In economic terms, as market values have fallen, potential sellers have not adjusted their price expectations downward fast enough to bring buyer and seller sentiment in line with one another," Gary Engelhardt, a professor at Syracuse University who authored the study, said in a statement.
Sellers still can’t accept that their home values have fallen and they are no longer able to get the prices from the past, according to the study.
Meanwhile, “despite high unemployment and slow economic growth, the bulk of American households believe that now is a good time to buy a home,” Engelhardt said. The strongest positive sentiments toward buying was found among young, educated, white, and Hispanic households, according to the study.
“The pattern of home-buying sentiment during the current recession looks very similar to that of past recessions,” Engelhardt notes. “Home buyer sentiment falls as the unemployment rate increases, and improves as job growth returns and housing becomes more affordable. What distinguishes the current recession, though, is the dramatic decline in home-selling sentiment. From 1992 through 2005, positive home-selling sentiment fluctuated between 40 and 60 percent. Since 2005, sentiment has dropped precipitously, to around 7 percent currently, even while home-buying sentiment remains high.”
Source: “The Great Recession and Attitudes Toward Homebuying,” Mortgage Bankers Association (December 2011)
As for home buyers, they certainly have plenty to be happy about -- housing prices have fallen and interest rates are at record lows, pushing affordability to record levels and allowing buyers to snag great deals on housing.
But sellers, on the other hand, are getting discouraged that they can’t find buyers for their homes at a desirable sales price as well as the large overhang of mortgages past due or in foreclosure, according to the report.
"In economic terms, as market values have fallen, potential sellers have not adjusted their price expectations downward fast enough to bring buyer and seller sentiment in line with one another," Gary Engelhardt, a professor at Syracuse University who authored the study, said in a statement.
Sellers still can’t accept that their home values have fallen and they are no longer able to get the prices from the past, according to the study.
Meanwhile, “despite high unemployment and slow economic growth, the bulk of American households believe that now is a good time to buy a home,” Engelhardt said. The strongest positive sentiments toward buying was found among young, educated, white, and Hispanic households, according to the study.
“The pattern of home-buying sentiment during the current recession looks very similar to that of past recessions,” Engelhardt notes. “Home buyer sentiment falls as the unemployment rate increases, and improves as job growth returns and housing becomes more affordable. What distinguishes the current recession, though, is the dramatic decline in home-selling sentiment. From 1992 through 2005, positive home-selling sentiment fluctuated between 40 and 60 percent. Since 2005, sentiment has dropped precipitously, to around 7 percent currently, even while home-buying sentiment remains high.”
Source: “The Great Recession and Attitudes Toward Homebuying,” Mortgage Bankers Association (December 2011)
Existing-Home Sales Continue to Climb in November
Existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors®. Also released today were periodic benchmark revisions with downward adjustments to sales and inventory data since 2007, led by a decline in for-sale-by-owners.
Although rebenchmarking resulted in lower adjustments to several years of home sales data, the month-to-month characterization of market conditions did not change. There are no changes to home prices or month’s supply.
The latest monthly data shows total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, increased 4.0 percent to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2 percent above the 3.94 million-unit pace in November 2010.
Lawrence Yun, NAR chief economist, said more people are taking advantage of the buyer’s market. “Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010 – a genuine sustained sales recovery appears to be developing,” he said. “We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long-term plans.”
According to Freddie Mac, the national average commitment ratefor a 30-year, conventional, fixed-rate mortgage fell to a record low 3.99 percent in November from 4.07 percent in October; the rate was 4.30 percent in November 2010. Records date back to 1971.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, said housing affordability conditions have set a new record high. “With record low mortgage interest rates and bargain home prices, NAR’s housing affordability index shows that a median-income family can easily afford a median-priced home,” he said.
“With consumer price inflation rising by more than 3 percent this year, consumers are looking to lock in steady payments by taking out long-term fixed-rate mortgages. However, the problem remains that some financially qualified families who are willing to stay well within their means are being denied the opportunity to buy in today’s market by the overly restrictive mortgage underwriting situation,” Veissi said.
An elevated level of contract failures continues to hold back a broader sales recovery. Contract failures were reported by 33 percent of NAR members in November, unchanged from October but notably above a year ago when it was 9 percent.
Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including lower conforming mortgage loan limits, home inspections, and employment losses.
Also released today are benchmark revisions to historic existing-home sales. The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to gross domestic product.
“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service (MLS) data or local supply-and-demand balance, or to local home prices,” Yun explained.
A divergence developed over time between sales reported by MLSs and sales determined by a U.S. Census benchmark; the variance began in 2007. Reasons include growth in MLS coverage areas from which sales data is collected, and geographic population shifts. “It appears that about half of the revisions result solely from a decline in for-sale-by-owners (FSBOs), with more sellers turning to Realtors® to market their homes when the market softened. The FSBO market was overwhelmed during the housing downturn,and since most FSBOs are not reported in MLSs, national estimates of existing-home sales began to diverge based on previous assumptions,” Yun said.
NAR consumer survey data in 2000 showed FSBOs accounted for a 16 percent market share, which fell to a record low 9 percent in 2010.
“In essence, Realtors® began to capture a greater market share. In addition to a decline in FSBO transactions, more builders began marketing new properties through real estate brokers that weren’t completely filtered from the existing-home data,” Yun said. “Some property listings on more than one MLS, and issues related to house flipping, also contributed to the downward revisions.” The new independent benchmark was discussed with government agencies and outside housing market experts, and will allow for annual revisions in the future.
Total housing inventory at the end of November fell 5.8 percent to 2.58 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from a 7.7-month supply in October. “Since setting a record of 4.04 million in July 2007, inventories have trended down and supplies are moving close to price stabilization levels,” Yun said.
The national median existing-home price for all housing types was $164,200 in November, down 3.5 percent from a year ago. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 29 percent of sales in November (19 percent were foreclosures and 10 percent were short sales), compared with 28 percent in October and 33 percent in November 2010.
All-cash sales accounted for 28 percent of purchases in November; they were 29 percent in October and 31 percent in November 2010. Investors make up the bulk of cash transactions.
Investors purchased 19 percent of homes in November, little changed from 18 percent in October and 19 percent in November 2010. First-time buyers accounted for 35 percent of transactions in November, up from 34 percent in October and 32 percent in November 2010.
Single-family home sales rose 4.5 percent to a seasonally adjusted annual rate of 3.95 million in November from 3.78 million in October, and are 12.9 percent above the 3.50 million-unit level in November 2010. The median existing single-family home price was $164,100 in November, down 4.0 percent from a year ago.
Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 470,000 in November and are 6.8 percent higher than the 440,000-unit pace one year ago. The median existing condo price was $164,600 in November, which is 0.2 percent below November 2010.
Regionally, existing-home sales in the Northeast jumped 9.8 percent to an annual pace of 560,000 in November and are 7.7 percent above a year ago. The median price in the Northeast was $240,200, which is 0.1 percent below November 2010.
Existing-home sales in the Midwest rose 4.3 percent in November to a level of 960,000 and are 15.7 percent higher than November 2010. The median price in the Midwest was $133,400, down 4.0 percent from a year ago.
In the South, existing-home sales increased 2.4 percent to an annual pace of 1.74 million in November and are 12.3 percent above a year ago. The median price in the South was $143,300, which is 2.1 percent below November 2010.
Existing-home sales in the West rose 3.6 percent to an annual level of 1.16 million in November and are 11.5 percent higher than November 2010. The median price in the West was $195,300, down 8.4 percent below a year ago.
Source: National Association of Realtors®
Although rebenchmarking resulted in lower adjustments to several years of home sales data, the month-to-month characterization of market conditions did not change. There are no changes to home prices or month’s supply.
The latest monthly data shows total existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, increased 4.0 percent to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2 percent above the 3.94 million-unit pace in November 2010.
Lawrence Yun, NAR chief economist, said more people are taking advantage of the buyer’s market. “Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010 – a genuine sustained sales recovery appears to be developing,” he said. “We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long-term plans.”
According to Freddie Mac, the national average commitment ratefor a 30-year, conventional, fixed-rate mortgage fell to a record low 3.99 percent in November from 4.07 percent in October; the rate was 4.30 percent in November 2010. Records date back to 1971.
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami, said housing affordability conditions have set a new record high. “With record low mortgage interest rates and bargain home prices, NAR’s housing affordability index shows that a median-income family can easily afford a median-priced home,” he said.
“With consumer price inflation rising by more than 3 percent this year, consumers are looking to lock in steady payments by taking out long-term fixed-rate mortgages. However, the problem remains that some financially qualified families who are willing to stay well within their means are being denied the opportunity to buy in today’s market by the overly restrictive mortgage underwriting situation,” Veissi said.
An elevated level of contract failures continues to hold back a broader sales recovery. Contract failures were reported by 33 percent of NAR members in November, unchanged from October but notably above a year ago when it was 9 percent.
Contract failures are cancellations caused by declined mortgage applications, failures in loan underwriting from appraised values coming in below the negotiated price, or other problems including lower conforming mortgage loan limits, home inspections, and employment losses.
Also released today are benchmark revisions to historic existing-home sales. The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to gross domestic product.
“From a consumer’s perspective, only the local market information matters and there are no changes to local multiple listing service (MLS) data or local supply-and-demand balance, or to local home prices,” Yun explained.
A divergence developed over time between sales reported by MLSs and sales determined by a U.S. Census benchmark; the variance began in 2007. Reasons include growth in MLS coverage areas from which sales data is collected, and geographic population shifts. “It appears that about half of the revisions result solely from a decline in for-sale-by-owners (FSBOs), with more sellers turning to Realtors® to market their homes when the market softened. The FSBO market was overwhelmed during the housing downturn,and since most FSBOs are not reported in MLSs, national estimates of existing-home sales began to diverge based on previous assumptions,” Yun said.
NAR consumer survey data in 2000 showed FSBOs accounted for a 16 percent market share, which fell to a record low 9 percent in 2010.
“In essence, Realtors® began to capture a greater market share. In addition to a decline in FSBO transactions, more builders began marketing new properties through real estate brokers that weren’t completely filtered from the existing-home data,” Yun said. “Some property listings on more than one MLS, and issues related to house flipping, also contributed to the downward revisions.” The new independent benchmark was discussed with government agencies and outside housing market experts, and will allow for annual revisions in the future.
Total housing inventory at the end of November fell 5.8 percent to 2.58 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from a 7.7-month supply in October. “Since setting a record of 4.04 million in July 2007, inventories have trended down and supplies are moving close to price stabilization levels,” Yun said.
The national median existing-home price for all housing types was $164,200 in November, down 3.5 percent from a year ago. Distressed homes – foreclosures and short sales typically sold at deep discounts – accounted for 29 percent of sales in November (19 percent were foreclosures and 10 percent were short sales), compared with 28 percent in October and 33 percent in November 2010.
All-cash sales accounted for 28 percent of purchases in November; they were 29 percent in October and 31 percent in November 2010. Investors make up the bulk of cash transactions.
Investors purchased 19 percent of homes in November, little changed from 18 percent in October and 19 percent in November 2010. First-time buyers accounted for 35 percent of transactions in November, up from 34 percent in October and 32 percent in November 2010.
Single-family home sales rose 4.5 percent to a seasonally adjusted annual rate of 3.95 million in November from 3.78 million in October, and are 12.9 percent above the 3.50 million-unit level in November 2010. The median existing single-family home price was $164,100 in November, down 4.0 percent from a year ago.
Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 470,000 in November and are 6.8 percent higher than the 440,000-unit pace one year ago. The median existing condo price was $164,600 in November, which is 0.2 percent below November 2010.
Regionally, existing-home sales in the Northeast jumped 9.8 percent to an annual pace of 560,000 in November and are 7.7 percent above a year ago. The median price in the Northeast was $240,200, which is 0.1 percent below November 2010.
Existing-home sales in the Midwest rose 4.3 percent in November to a level of 960,000 and are 15.7 percent higher than November 2010. The median price in the Midwest was $133,400, down 4.0 percent from a year ago.
In the South, existing-home sales increased 2.4 percent to an annual pace of 1.74 million in November and are 12.3 percent above a year ago. The median price in the South was $143,300, which is 2.1 percent below November 2010.
Existing-home sales in the West rose 3.6 percent to an annual level of 1.16 million in November and are 11.5 percent higher than November 2010. The median price in the West was $195,300, down 8.4 percent below a year ago.
Source: National Association of Realtors®
CoreLogic: Shadow inventory remains flat
Current residential shadow inventory as of October 2011 remained at 1.6 million units – representing a supply of five months – down from a seven-month supply of 1.9 million units one year earlier, according to CoreLogic. It’s the same level reported in July 2011.
Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.
CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.
Data highlights:
* As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.
* Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).
* Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
* Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.
* Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.
“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.
The full report can be found at http://www.corelogic.com/ShadowInventoryOct2011.
Source: PR Newswire 2011
Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.
CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.
Data highlights:
* As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.
* Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).
* Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
* Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.
* Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.
“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.
The full report can be found at http://www.corelogic.com/ShadowInventoryOct2011.
Source: PR Newswire 2011
Fla.’s existing home, condo sales up in November
Florida’s existing home and existing condo sales continued its positive upswing in November, according to the latest housing data released by Florida Realtors®. Existing home sales increased 11 percent last month with a total of 12,993 homes sold statewide compared to 11,664 homes sold in November 2010, according to Florida Realtors.
“It’s really clear that two things are happening in Florida real estate,” said Florida Realtors Chief Economist Dr. John Tuccillo. “No. 1, sales are moving upward – not by a large increase, but definitely, positively on an upward trend. Second, prices are stabilizing. Now, it doesn’t mean that prices have turned around but they are stabilizing, and that’s vital for the market to gain equilibrium.
“The more important factor is that sales are increasing and in large part, that’s due to lenders becoming more educated on how to deal with distressed properties more effectively and in a more timely manner – and that’s helping the Florida real estate markets recover.”
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in November; 10 MSAs had higher existing condo sales.
The statewide median sales price for existing homes remained relatively flat last month at $130,100; a year ago, it was $130,600. According to analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in October 2011 was $161,600, down 5.8 percent from the previous year, according to NAR. In California, the October statewide median resales price was $278,060; in Massachusetts, it was $275,000; in Maryland, it was $221,765; and in New York, it was $215,900.
In Florida’s year-to-year comparison for condos, 5,590 units sold statewide in November, a 2 percent gain over the 5,464 units sold in November 2010. The statewide existing condo median sales price last month was $86,700; a year earlier, it was $83,000 for a 4 percent increase. The national median existing condo sales price in October was $160,300, according to NAR.
“In recent weeks, we’ve seen encouraging reports of jobs growth and improvements in Florida’s economy,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates have remained at record lows and home prices appear to be stabilizing in many local markets across the state – all positive signs for the housing recovery.”
According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.99 percent in November, down from the 4.30 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Related: NAR: Existing home sales continue to climb in November
Source: Florida Realtors®
“It’s really clear that two things are happening in Florida real estate,” said Florida Realtors Chief Economist Dr. John Tuccillo. “No. 1, sales are moving upward – not by a large increase, but definitely, positively on an upward trend. Second, prices are stabilizing. Now, it doesn’t mean that prices have turned around but they are stabilizing, and that’s vital for the market to gain equilibrium.
“The more important factor is that sales are increasing and in large part, that’s due to lenders becoming more educated on how to deal with distressed properties more effectively and in a more timely manner – and that’s helping the Florida real estate markets recover.”
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in November; 10 MSAs had higher existing condo sales.
The statewide median sales price for existing homes remained relatively flat last month at $130,100; a year ago, it was $130,600. According to analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in October 2011 was $161,600, down 5.8 percent from the previous year, according to NAR. In California, the October statewide median resales price was $278,060; in Massachusetts, it was $275,000; in Maryland, it was $221,765; and in New York, it was $215,900.
In Florida’s year-to-year comparison for condos, 5,590 units sold statewide in November, a 2 percent gain over the 5,464 units sold in November 2010. The statewide existing condo median sales price last month was $86,700; a year earlier, it was $83,000 for a 4 percent increase. The national median existing condo sales price in October was $160,300, according to NAR.
“In recent weeks, we’ve seen encouraging reports of jobs growth and improvements in Florida’s economy,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates have remained at record lows and home prices appear to be stabilizing in many local markets across the state – all positive signs for the housing recovery.”
According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.99 percent in November, down from the 4.30 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Related: NAR: Existing home sales continue to climb in November
Source: Florida Realtors®
Tuesday, December 20, 2011
Beware of Down Payment Gift-Giving Rules
Last year, 27 percent of first-time home buyers received a financial gift from relatives or friends that they applied toward a down payment on a new home — up from 22 percent in 2009, according to data from the National Association of REALTORS®.
While gift-giving a down payment has increased, those who receive such gifts need to make sure they follow IRS and banks’ gift-giving rules.
1. Home owners still need to come up with at least some of the down payment on their own. A spokesperson with Freddie Mac told Newsday that loans backed by Freddie Mac require that when the loan-to-value is greater than 80 percent, the buyer will need to come up with at least 5 percent of the purchase price from his or her own funds. For Fannie Mae loans, Fannie allows all down payment funds to come as a gift on one-unit principal residences. “The thing that is tricky about this is that few people know whether the loan will get sold to Fannie or Freddie,” the Newsday article notes.
2. You may need to document where the down payment money came from. “A gift letter should be signed and dated and include the giver’s name, address, and telephone number, along with his or her relationship to the borrower,” according to Total Mortgage Services in the Newsday article.
3. If you’ve had the gift for a long time, you likely won’t need to document it. If the gift has been in your bank account for three months or longer, it’s considered “seasoned” and doesn’t require a gift letter, lenders say.
Source: “Rules for ‘Gifts’ to Home Buyers,” Newsday (December 2011)
While gift-giving a down payment has increased, those who receive such gifts need to make sure they follow IRS and banks’ gift-giving rules.
1. Home owners still need to come up with at least some of the down payment on their own. A spokesperson with Freddie Mac told Newsday that loans backed by Freddie Mac require that when the loan-to-value is greater than 80 percent, the buyer will need to come up with at least 5 percent of the purchase price from his or her own funds. For Fannie Mae loans, Fannie allows all down payment funds to come as a gift on one-unit principal residences. “The thing that is tricky about this is that few people know whether the loan will get sold to Fannie or Freddie,” the Newsday article notes.
2. You may need to document where the down payment money came from. “A gift letter should be signed and dated and include the giver’s name, address, and telephone number, along with his or her relationship to the borrower,” according to Total Mortgage Services in the Newsday article.
3. If you’ve had the gift for a long time, you likely won’t need to document it. If the gift has been in your bank account for three months or longer, it’s considered “seasoned” and doesn’t require a gift letter, lenders say.
Source: “Rules for ‘Gifts’ to Home Buyers,” Newsday (December 2011)
U.S. housing starts surge, though level remains low
A surge in apartment construction gave U.S. builders more work in November. But 2011 is still shaping up to be one of the worst years in history for homebuilders.
The Commerce Department says builders broke ground on a seasonally adjusted annual rate of 685,000 homes last month, a 9.3 percent jump from October. That’s the highest level since April 2010.
Still, that’s far below the 1.2 million homes that economists say would be built each year in a healthy housing market.
Building permits, a gauge of future construction, rose by 5.7 percent. The increase was spurred by more apartment permits.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Over the past year, apartment permits have surged roughly 63 percent. Single-family permits have increased just 6.6 percent in that time.
Home construction and sales are in the midst of one of its worst years ever. Demand for new homes is weak. Record-low mortgage rates and plunging home prices have done little to help.
Builders are struggling to compete with deeply discounted foreclosures and short sales. Short sales occur when lenders allow homes to be sold for less than what’s owed on the mortgage. Few homes are selling.
After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.
In October, sales of new homes rose slightly, largely because builders cut their prices in the face of weak demand.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their houses.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a resale. That’s nearly twice the markup typical in a healthy housing market.
The homebuilders’ trade group said this week that its survey of industry sentiment rose in December to 21, the highest level since May 2010. Still, any reading below 50 indicates negative sentiment about the housing market. The index hasn’t reached 50 since April 2006, the peak of the housing boom.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
The Commerce Department says builders broke ground on a seasonally adjusted annual rate of 685,000 homes last month, a 9.3 percent jump from October. That’s the highest level since April 2010.
Still, that’s far below the 1.2 million homes that economists say would be built each year in a healthy housing market.
Building permits, a gauge of future construction, rose by 5.7 percent. The increase was spurred by more apartment permits.
Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Over the past year, apartment permits have surged roughly 63 percent. Single-family permits have increased just 6.6 percent in that time.
Home construction and sales are in the midst of one of its worst years ever. Demand for new homes is weak. Record-low mortgage rates and plunging home prices have done little to help.
Builders are struggling to compete with deeply discounted foreclosures and short sales. Short sales occur when lenders allow homes to be sold for less than what’s owed on the mortgage. Few homes are selling.
After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.
In October, sales of new homes rose slightly, largely because builders cut their prices in the face of weak demand.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their houses.
Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a resale. That’s nearly twice the markup typical in a healthy housing market.
The homebuilders’ trade group said this week that its survey of industry sentiment rose in December to 21, the highest level since May 2010. Still, any reading below 50 indicates negative sentiment about the housing market. The index hasn’t reached 50 since April 2006, the peak of the housing boom.
Source: The Associated Press, Derek Kravitz, AP real estate writer.
Monday, December 19, 2011
Not All REOs Come Cheap: Priciest REO Sold
The average foreclosed home sells for $182,489, according to RealtyTrac. But not all REOs come cheaper than other homes on the market: A bank-owned penthouse condo overlooking San Francisco’s Art District recently sold for $28 million, making it the priciest condo sale in the city’s history, MSNBC reports.
The condo was originally listed by Bank of America for $35 million. The bank picked up the deed for the home in lieu of foreclosure in July.
While the steep price tag is high for most average foreclosures or even other home sales for that matter, the bank’s asking price was still half of what the original owner — developer Victor MacFarlane — tried to get for the condo in 2008. Even after a price cut in 2009 to $49 million, MacFarlane still was not able to find a buyer for the condo.
The 20,000-square-foot penthouse features six bedrooms, seven baths and four half-baths, a full gym, a 13-seat movie theatre, a waterfall in the foyer, and a 2,500-square-foot master bedroom.
Source: “Buyer Found for Nation’s Priciest Bank-owned Home,” MSNBC (Dec. 16, 2011)
The condo was originally listed by Bank of America for $35 million. The bank picked up the deed for the home in lieu of foreclosure in July.
While the steep price tag is high for most average foreclosures or even other home sales for that matter, the bank’s asking price was still half of what the original owner — developer Victor MacFarlane — tried to get for the condo in 2008. Even after a price cut in 2009 to $49 million, MacFarlane still was not able to find a buyer for the condo.
The 20,000-square-foot penthouse features six bedrooms, seven baths and four half-baths, a full gym, a 13-seat movie theatre, a waterfall in the foyer, and a 2,500-square-foot master bedroom.
Source: “Buyer Found for Nation’s Priciest Bank-owned Home,” MSNBC (Dec. 16, 2011)
Payroll tax cut bill boosts cost of new mortgages
Who is paying for the two-month extension of the payroll tax cut working its way through Congress? The cost is being dropped in the laps of most people who buy homes or refinance beginning next year.
The typical person who buys a $200,000 home or refinances that amount starting on Jan. 1 would have to pay roughly $17 more a month for their mortgage, thanks to a fee increase included in the payroll tax cut bill that the Senate passed Saturday. The White House said the fee increases would be phased in gradually.
The legislation provides a two-month extension of a payroll tax cut and long-term unemployment benefits that would otherwise expire on Jan. 1. It would also delay for two months a cut in Medicare reimbursements for doctors; the cut is currently scheduled to take effect on New Year’s Day.
However, the House intends to vote down the two-month extension of the payroll tax cut, Speaker John Boehner said Monday, and request immediate negotiations on a full-year renewal that can provide “certainty for people who are trying to create jobs.”
“I don’t believe the differences between the House and Senate are that great,” Boehner said at a news conference, although he provided no estimate on how long it might take to produce a compromise.
To cover its $33 billion price tag, the Senate-passed measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around 0.3 percentage point, would rise by 0.1 percentage point under the bill. The increase will also apply to people whose mortgages are backed by the Federal Housing Administration, which typically serves lower-income and first-time buyers.
The higher fee would not apply to people who currently have mortgages unless they refinance beginning next year.
Because of the weak housing market and the huge numbers of foreclosures in the last few years, private insurers have not competed strongly for business with Fannie Mae and Freddie Mac, which have the backing of the federal government. As a result, Fannie Mae, Freddie Mac and the FHA back about 9 in 10 new home mortgages.
President Barack Obama and many congressional Democrats and Republicans want to curb Fannie Mae’s and Freddie Mac’s dominance in the mortgage market. Obama earlier this year proposed raising the mortgage guarantee fees they charge as one way to do that.
Source:The Associated Press, Alan Fram. All rights reserved.
The typical person who buys a $200,000 home or refinances that amount starting on Jan. 1 would have to pay roughly $17 more a month for their mortgage, thanks to a fee increase included in the payroll tax cut bill that the Senate passed Saturday. The White House said the fee increases would be phased in gradually.
The legislation provides a two-month extension of a payroll tax cut and long-term unemployment benefits that would otherwise expire on Jan. 1. It would also delay for two months a cut in Medicare reimbursements for doctors; the cut is currently scheduled to take effect on New Year’s Day.
However, the House intends to vote down the two-month extension of the payroll tax cut, Speaker John Boehner said Monday, and request immediate negotiations on a full-year renewal that can provide “certainty for people who are trying to create jobs.”
“I don’t believe the differences between the House and Senate are that great,” Boehner said at a news conference, although he provided no estimate on how long it might take to produce a compromise.
To cover its $33 billion price tag, the Senate-passed measure increases the fee that the government-backed mortgage giants, Fannie Mae and Freddie Mac, charge to insure home mortgages. That fee, which Senate aides said currently averages around 0.3 percentage point, would rise by 0.1 percentage point under the bill. The increase will also apply to people whose mortgages are backed by the Federal Housing Administration, which typically serves lower-income and first-time buyers.
The higher fee would not apply to people who currently have mortgages unless they refinance beginning next year.
Because of the weak housing market and the huge numbers of foreclosures in the last few years, private insurers have not competed strongly for business with Fannie Mae and Freddie Mac, which have the backing of the federal government. As a result, Fannie Mae, Freddie Mac and the FHA back about 9 in 10 new home mortgages.
President Barack Obama and many congressional Democrats and Republicans want to curb Fannie Mae’s and Freddie Mac’s dominance in the mortgage market. Obama earlier this year proposed raising the mortgage guarantee fees they charge as one way to do that.
Source:The Associated Press, Alan Fram. All rights reserved.
Flood insurance extended six months
On Friday, Congress agreed to extend National Flood Insurance Program (NFIP) to May 31, 2012. It was part of H.R. 2055, a large spending appropriations bill that authorizes funding for a number of federal programs through the end of the fiscal year.
The U.S. House passed the bill on Friday, followed by the Senate on Saturday. To become law, it still needs President Obama’s signature, which is expected.
The National Association of Realtors® (NAR) ended its Call for Action intended to push Congress to extend flood insurance for five years. NAR says it will continue to push for a five-year extension before the program again expires in six months through H.R. 1309, a bill previously introduced in the U.S. House.
For updates on flood insurance extension, including information that the president signed the bill and it’s now law, refer to the NFIP website.
Source: Florida Realtors®
The U.S. House passed the bill on Friday, followed by the Senate on Saturday. To become law, it still needs President Obama’s signature, which is expected.
The National Association of Realtors® (NAR) ended its Call for Action intended to push Congress to extend flood insurance for five years. NAR says it will continue to push for a five-year extension before the program again expires in six months through H.R. 1309, a bill previously introduced in the U.S. House.
For updates on flood insurance extension, including information that the president signed the bill and it’s now law, refer to the NFIP website.
Source: Florida Realtors®
Friday, December 16, 2011
Mortgage Rates Sink to Record Lows Again
Fixed mortgage rates dropped even more this week, continuing the trend in reaching new record lows this year, Freddie Mac reports in its weekly mortgage market survey. The 30-year fixed-rate mortgage averaged 3.94 percent this week while 15-year rates sank to 3.21 percent — both all-time lows from their previous record lows set on Oct. 6. The 5-year adjustable-rate mortgage also set a new record this week.
The Federal Reserve at a meeting this week reaffirmed its commitment from this summer that it would keep interest rates low for the next two years.
Here’s a closer look at rates for the week ending Dec. 15.
The Federal Reserve at a meeting this week reaffirmed its commitment from this summer that it would keep interest rates low for the next two years.
Here’s a closer look at rates for the week ending Dec. 15.
- 30-year fixed-rate mortgages: averaged 3.94 percent — a new record low — with an average 0.8 point, dropping from last week’s 3.99 percent average. A year ago, 30-year rates averaged 4.83 percent.
- 15-year fixed-rate mortgages: averaged 3.21 percent — also a new record low — with an average 0.8 points, a drop from last week’s 3.27 percent average. Last year at this time, 15-year rates averaged 4.17 percent.
- 5-year adjustable-rate mortgages: averaged 2.86 percent this week, with an average 0.6 point, dropping from last week’s 2.93 percent average. Last year at this time, 5-year ARMs averaged 3.77 percent.
- 1-year ARMs: averaged 2.81 percent with an average 0.6 point, inching up slightly from last week’s 2.80 percent average. Last year at this time, 1-year ARMs averaged 3.35 percent.
What’s the Most Expensive City for Home Buyers?
Nationwide, the median home price for the third quarter of 2011 was $176,000, according to Paycheck to Paycheck, an online interactive database compiled by the Center for Housing Policy. But in San Francisco, which claimed the top spot for most expensive city for home buyers, the median price was $585,000. The Center for Housing Policy tracks wage information for 74 occupations and compares it to the cost of housing — for owning and renting — in more than 200 metro areas.
Here are the top 10 most expensive cities, according to the report:
1. San Francisco
Third quarter 2011 median home price: $585,000
Fourth quarter 2009 median home price: $625,000
2. New York
Third quarter 2011 price: $450,000
Fourth quarter 2009 price: $425,000
3. San Jose, Calif.
Third quarter 2011 price: $443,000
Fourth quarter 2009 price: $465,000
4. Honolulu
Third quarter 2011 price: $425,000
Fourth quarter 2009 price: $450,000
5. Santa Ana, Calif.
Third quarter 2011 price: $405,000
Fourth quarter 2009 price: $435,000
6. Santa Cruz, Calif.
Third quarter 2011 price: $395,000
Fourth quarter 2009 price: $431,000
7. Bridgeport, Conn.
Third quarter 2011 price: $390,000
Fourth quarter 2009 price: $348,000
8. Suffolk-Nassau, N.Y.
Third quarter 2011 price: $378,000
Fourth quarter 2009 price: $380,000
9. Cambridge, Mass.
Third quarter 2011 price: $370,000
Fourth quarter 2009 price: $326,000
10. Ocean City, N.J.
Third quarter 2011 price: $353,000
Fourth quarter 2009 price: $330,000
Source: “Paycheck to Paycheck,” Center for Housing Policy (December 2011)
Here are the top 10 most expensive cities, according to the report:
1. San Francisco
Third quarter 2011 median home price: $585,000
Fourth quarter 2009 median home price: $625,000
2. New York
Third quarter 2011 price: $450,000
Fourth quarter 2009 price: $425,000
3. San Jose, Calif.
Third quarter 2011 price: $443,000
Fourth quarter 2009 price: $465,000
4. Honolulu
Third quarter 2011 price: $425,000
Fourth quarter 2009 price: $450,000
5. Santa Ana, Calif.
Third quarter 2011 price: $405,000
Fourth quarter 2009 price: $435,000
6. Santa Cruz, Calif.
Third quarter 2011 price: $395,000
Fourth quarter 2009 price: $431,000
7. Bridgeport, Conn.
Third quarter 2011 price: $390,000
Fourth quarter 2009 price: $348,000
8. Suffolk-Nassau, N.Y.
Third quarter 2011 price: $378,000
Fourth quarter 2009 price: $380,000
9. Cambridge, Mass.
Third quarter 2011 price: $370,000
Fourth quarter 2009 price: $326,000
10. Ocean City, N.J.
Third quarter 2011 price: $353,000
Fourth quarter 2009 price: $330,000
Source: “Paycheck to Paycheck,” Center for Housing Policy (December 2011)
Which Home Improvement Projects Offer the Best Returns?
When it comes to remodeling, exterior replacement projects have routinely rewarded home owners with more bang for their buck. This year is no different: REALTORS® recently rated many exterior improvements as among the most valuable home investment projects as part of the 2011-12 Remodeling Cost vs. Value Report.
“This year’s Remodeling Cost vs. Value Report shows the value of putting your home’s best façade forward, so to speak,” said National Association of REALTORS® President Moe Veissi. “Inexpensive exterior replacement projects are not only crucial to a home’s regular upkeep, but are also expected to recoup close to 70 percent of costs. Specific exterior projects such as siding, window and door replacements are part of regular home maintenance, so many homeowners are already undertaking them. These projects also do not require expensive materials and they have the added bonus of instantly adding curb appeal.”
HouseLogic.com, NAR’s consumer Web site, includes dozens of remodeling projects, from kitchens and baths to siding replacements, which indicate the recouped value of the project based on a national average. According to the Cost vs. Value, seven of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. REALTORS® judged an upscale fiber-cement siding replacement as the project expected to return the most money, with an estimated 78 percent of costs recouped upon resale.
Two additional siding replacement projects were in the top 10, including foam-backed vinyl siding, expected to return 69.6 percent of costs, and upscale vinyl siding, expected to recoup 69.5 percent of costs. Three door replacements were also among the top exterior replacement projects. The steel entry door replacement is the least expensive project in the report, costing little more than $1,200 on average and expected to recoup 73 percent of costs.
The upscale garage door replacement jumped seven spots to number six this year, primarily due to the average cost of the project declining more than 15 percent nationally. The upscale and midrange garage door replacement projects are expected to return more than 71 percent of costs. One window replacement project — upscale vinyl — rounded out the last exterior replacement project in the top 10, expected to recoup 69.1 percent of costs.
The 2011-12 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels, and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 14th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood LLC, was completed in cooperation with NAR.
Source: NAR
“This year’s Remodeling Cost vs. Value Report shows the value of putting your home’s best façade forward, so to speak,” said National Association of REALTORS® President Moe Veissi. “Inexpensive exterior replacement projects are not only crucial to a home’s regular upkeep, but are also expected to recoup close to 70 percent of costs. Specific exterior projects such as siding, window and door replacements are part of regular home maintenance, so many homeowners are already undertaking them. These projects also do not require expensive materials and they have the added bonus of instantly adding curb appeal.”
HouseLogic.com, NAR’s consumer Web site, includes dozens of remodeling projects, from kitchens and baths to siding replacements, which indicate the recouped value of the project based on a national average. According to the Cost vs. Value, seven of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. REALTORS® judged an upscale fiber-cement siding replacement as the project expected to return the most money, with an estimated 78 percent of costs recouped upon resale.
Two additional siding replacement projects were in the top 10, including foam-backed vinyl siding, expected to return 69.6 percent of costs, and upscale vinyl siding, expected to recoup 69.5 percent of costs. Three door replacements were also among the top exterior replacement projects. The steel entry door replacement is the least expensive project in the report, costing little more than $1,200 on average and expected to recoup 73 percent of costs.
The upscale garage door replacement jumped seven spots to number six this year, primarily due to the average cost of the project declining more than 15 percent nationally. The upscale and midrange garage door replacement projects are expected to return more than 71 percent of costs. One window replacement project — upscale vinyl — rounded out the last exterior replacement project in the top 10, expected to recoup 69.1 percent of costs.
The 2011-12 Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels, and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 14th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood LLC, was completed in cooperation with NAR.
Source: NAR
Thursday, December 15, 2011
Scheduled home auctions hit 9-month high in Nov.
Fewer U.S. homes entered the foreclosure process or were taken back by banks in November, reflecting a seasonal pullback in foreclosure activity by lenders and mortgage servicers.
But for some homeowners already behind on their mortgage payments, the end-of-year slowdown isn’t likely to provide much of a reprieve.
The number of homes in foreclosure and scheduled to be auctioned hit a nine-month high last month, foreclosure listing firm RealtyTrac Inc. said Thursday.
The surge came about because of a spike three months earlier in homes entering the foreclosure process for the first time. And unless those borrowers find a way to get current on their mortgage payments, many of those homes will likely be sold at auction or end up being taken back by the lender.
“Despite a seasonal slowdown similar to what we’ve seen each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves,” said RealtyTrac CEO James Saccacio.
All told, foreclosure auctions were scheduled on 96,540 U.S. homes last month, RealtyTrac said. That’s up 13 percent from October, but still down 17 percent from November last year.
Some states posted far higher monthly increases in scheduled home auctions last month. In California, they were up 63 percent, while in Washington they climbed 56 percent.
Those homes could end up back on the market as foreclosures or short sales, when a homeowner sells their property for less than what they owe on their mortgage. And that means more pressure on home values, because foreclosures and short sales typically sell for a lot less than other homes.
U.S. foreclosure activity slowed sharply starting in October of last year, after problems surfaced with the way many lenders were handling foreclosures. Specifically, signing off on home foreclosures without first verifying documents – a practice referred to as “robo-signing.”
Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
The pace of foreclosure activity continued to slow much of this year as major lenders worked toward a possible settlement of government probes into the industry’s mortgage-lending practices.
Those settlement talks, led by a group of state attorneys general, have suffered some setbacks in recent months after officials in California and Massachusetts broke with the rest of the states. There also has been disagreement among the states’ prosecutors over what terms to offer the banks.
Still, there have been signals that foreclosure activity will be increasing in coming months.
Banks stepped up action in August against homeowners whose mortgage had gone unpaid. The number of homes receiving an initial notice of default that month jumped 33 percent from July. Default notices also rose between September and October.
That helped set the stage for the sharp increase in scheduled foreclosure auctions last month and will likely contribute to an anticipated bump in home repossessions early next year, Saccacio said.
Home repossessions hit their lowest level since March 2008 last month, according to RealtyTrac. In all, banks took back 56,124 homes last month, down 17 percent from October and from November a year ago.
Banks are now on track to repossess some 810,000 homes this year, down from more than 1 million last year, according to RealtyTrac. The firm had originally anticipated lenders would repossess some 1.2 million homes this year.
High unemployment, a sluggish housing market and falling home values remain a major factor in homeowners falling behind on their mortgage payments. Many borrowers also have simply stopped paying their mortgage because they are underwater – a term for owing more on a mortgage than the home is worth.
At the end of September, 10.7 million, or 22.1 percent of all U.S. homes with a mortgage, were underwater, according to CoreLogic. And an additional 2.4 million borrowers had less than 5 percent equity in their homes, the firm said.
In all, 224,394 U.S. properties received a foreclosure-related notice last month, down 3 percent from October and down 14 percent from November last year, RealtyTrac said. That amounts to one in every 579 households.
Initial default notices declined 8 percent from October and were down 9 percent from November last year.
At the state level, Nevada had the nation’s highest foreclosure rate last month with one in every 175 households receiving a foreclosure notice – more than three times the national average.
California, which alone accounted for 28 percent of all U.S. homes receiving a foreclosure notice last month, had the second-highest foreclosure rate. Arizona was third.
Rounding out the top 10 states with the highest foreclosure rate in November are Utah, Georgia, Michigan, Florida, Illinois, Ohio and South Carolina.
Source: The Associated Press, Alex Veiga, AP real estate writer.
But for some homeowners already behind on their mortgage payments, the end-of-year slowdown isn’t likely to provide much of a reprieve.
The number of homes in foreclosure and scheduled to be auctioned hit a nine-month high last month, foreclosure listing firm RealtyTrac Inc. said Thursday.
The surge came about because of a spike three months earlier in homes entering the foreclosure process for the first time. And unless those borrowers find a way to get current on their mortgage payments, many of those homes will likely be sold at auction or end up being taken back by the lender.
“Despite a seasonal slowdown similar to what we’ve seen each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves,” said RealtyTrac CEO James Saccacio.
All told, foreclosure auctions were scheduled on 96,540 U.S. homes last month, RealtyTrac said. That’s up 13 percent from October, but still down 17 percent from November last year.
Some states posted far higher monthly increases in scheduled home auctions last month. In California, they were up 63 percent, while in Washington they climbed 56 percent.
Those homes could end up back on the market as foreclosures or short sales, when a homeowner sells their property for less than what they owe on their mortgage. And that means more pressure on home values, because foreclosures and short sales typically sell for a lot less than other homes.
U.S. foreclosure activity slowed sharply starting in October of last year, after problems surfaced with the way many lenders were handling foreclosures. Specifically, signing off on home foreclosures without first verifying documents – a practice referred to as “robo-signing.”
Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
The pace of foreclosure activity continued to slow much of this year as major lenders worked toward a possible settlement of government probes into the industry’s mortgage-lending practices.
Those settlement talks, led by a group of state attorneys general, have suffered some setbacks in recent months after officials in California and Massachusetts broke with the rest of the states. There also has been disagreement among the states’ prosecutors over what terms to offer the banks.
Still, there have been signals that foreclosure activity will be increasing in coming months.
Banks stepped up action in August against homeowners whose mortgage had gone unpaid. The number of homes receiving an initial notice of default that month jumped 33 percent from July. Default notices also rose between September and October.
That helped set the stage for the sharp increase in scheduled foreclosure auctions last month and will likely contribute to an anticipated bump in home repossessions early next year, Saccacio said.
Home repossessions hit their lowest level since March 2008 last month, according to RealtyTrac. In all, banks took back 56,124 homes last month, down 17 percent from October and from November a year ago.
Banks are now on track to repossess some 810,000 homes this year, down from more than 1 million last year, according to RealtyTrac. The firm had originally anticipated lenders would repossess some 1.2 million homes this year.
High unemployment, a sluggish housing market and falling home values remain a major factor in homeowners falling behind on their mortgage payments. Many borrowers also have simply stopped paying their mortgage because they are underwater – a term for owing more on a mortgage than the home is worth.
At the end of September, 10.7 million, or 22.1 percent of all U.S. homes with a mortgage, were underwater, according to CoreLogic. And an additional 2.4 million borrowers had less than 5 percent equity in their homes, the firm said.
In all, 224,394 U.S. properties received a foreclosure-related notice last month, down 3 percent from October and down 14 percent from November last year, RealtyTrac said. That amounts to one in every 579 households.
Initial default notices declined 8 percent from October and were down 9 percent from November last year.
At the state level, Nevada had the nation’s highest foreclosure rate last month with one in every 175 households receiving a foreclosure notice – more than three times the national average.
California, which alone accounted for 28 percent of all U.S. homes receiving a foreclosure notice last month, had the second-highest foreclosure rate. Arizona was third.
Rounding out the top 10 states with the highest foreclosure rate in November are Utah, Georgia, Michigan, Florida, Illinois, Ohio and South Carolina.
Source: The Associated Press, Alex Veiga, AP real estate writer.
Freddie Mac's 2012 Outlook: Housing to Slowly Gain Ground
Freddie Mac released its U.S. Economic and Housing Market Outlook with five projections for 2012.
Frank Nothaft, Freddie Mac's vice president and chief economist, said there are indications that the economy and housing market are slowly gaining ground. "Sustained and increased job growth beyond the average monthly payroll gains of 130,000 so far this year ending in November are essential," he said in a statement.
Nothaft also expects mortgage rates to remain low through the middle of 2012, and for rentals to continuing leading housing market improvements.
"All told, next year will be another bumpy ride," he said.
Five outlook highlights:
Frank Nothaft, Freddie Mac's vice president and chief economist, said there are indications that the economy and housing market are slowly gaining ground. "Sustained and increased job growth beyond the average monthly payroll gains of 130,000 so far this year ending in November are essential," he said in a statement.
Nothaft also expects mortgage rates to remain low through the middle of 2012, and for rentals to continuing leading housing market improvements.
"All told, next year will be another bumpy ride," he said.
Five outlook highlights:
- Economic growth will likely strengthen to about 2.5 percent in 2012.
- The U.S. unemployment rate will decline but likely remain above 8 percent.
- Mortgage rates will likely remain very low, at least through mid-2012.
- Housing activity will be better in 2012, but not robust.
- Expect less single-family originations but more multifamily lending in 2012.
Banks Post Higher Profits off Each Loan
Banks are making more profits on each loan they originate — a 377 percent increase in just a six-month period, according to the Mortgage Bankers Association.
On average, mortgage banks made a profit of $1,263 for each loan they originated during the third quarter — that’s up from $575 per loan in the second quarter of 2011. In the first quarter, they made $346 per loan.
“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s associate vice president of industry analysis. “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume.”
Refinancings made up the biggest bulk of originations — by dollar volume it was 45 percent in the third quarter compared to 36 percent in the second quarter.
Source: “Mortgage Banks’ Profits on Originations Soar 377 Percent,” RISMedia (Dec. 14, 2011)
On average, mortgage banks made a profit of $1,263 for each loan they originated during the third quarter — that’s up from $575 per loan in the second quarter of 2011. In the first quarter, they made $346 per loan.
“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s associate vice president of industry analysis. “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume.”
Refinancings made up the biggest bulk of originations — by dollar volume it was 45 percent in the third quarter compared to 36 percent in the second quarter.
Source: “Mortgage Banks’ Profits on Originations Soar 377 Percent,” RISMedia (Dec. 14, 2011)
Southeast Florida Monthly Market Update, November 2011
Market Update for the "BIG 5" Hialeah, Miami
Lakes, Miami Gardens, Miramar and Pembroke Pines in Florida
Market update for the cities of Miramar and Pembroke Pines:
Total Sold for Dade and Broward Counties
Take hold of your previous Monthly Market Update here goo.gl/N2G3s
Market update for the cities of Hialeah, Miami Lakes, Miami
Gardens:
| Area 20 | |||
| Total Active Listings: | 69 | ||
| Total Value Dollar Volume: | $11,470,799.00 | ||
| Average List Price: | $166,243.00 | ||
| Median List Price: | $130,000.00 | ||
| Change from Previous Month (N. of Units) | -10% | ||
| Change from Previous Month (Dollar Vol.) | -18% | ||
| Total Sold Properties: | 128 | ||
| Total Dollar Volume Sold: | $15,823,798.00 | ||
| Average Sold Price: | $123,623.00 | ||
| Median Sold Price: | $85,250.00 | ||
| Change from Previous Month (N. of Units) | 15% | ||
| Change from Previous Month (Dollar Vol.) | 6% | ||
| Total Pending Sale: | 163 | ||
| Total Dollar Pending Volume: | $22,579,418.00 | ||
| Average Pending Price: | $138,524.00 | ||
| Median Pending Price: | $110,000.00 | ||
| Change from Previous Month (N. of Units) | -19% | ||
| Change from Previous Month (Dollar Vol.) | -11% | ||
Market update for the cities of Miramar and Pembroke Pines:
| Area 3990 | |||
| Total Active Listings: | 35 | ||
| Total Value Dollar Volume: | $12,200,992.00 | ||
| Average List Price: | $348,600.00 | ||
| Median List Price: | $339,900.00 | ||
| Change from Previous Month (N. of Units) | 25% | ||
| Change from Previous Month (Dollar Vol.) | 17% | ||
| Total Sold Properties: | 35 | ||
| Total Dollar Volume Sold: | $10,649,895.00 | ||
| Average Sold Price: | $304,283.00 | ||
| Median Sold Price: | $300,000.00 | ||
| Change from Previous Month (N. of Units) | -10% | ||
| Change from Previous Month (Dollar Vol.) | -9% | ||
| Total Pending Sale: | 45 | ||
| Total Dollar Pending Volume: | $13,074,678.00 | ||
| Average Pending Price: | $290,548.00 | ||
| Median Pending Price: | $272,000.00 | ||
| Change from Previous Month (N. of Units) | 165% | ||
| Change from Previous Month (Dollar Vol.) | 151% | ||
Total Sold for Dade and Broward Counties
| Dade County | |||
| Total Sales Count: | 2020 | ||
| Total Sales Dollar Volume: | $590,818,705.00 | ||
| Change from Previous Month (N. of Units) | -6% | ||
| Change from Previous Month (Dollar Vol.) | 2% | ||
| Broward County | |||
| Total Sales Count: | 2170 | ||
| Total Sales Dollar Volume: | $422,877,173.00 | ||
| Change from Previous Month (N. of Units) | -4% | ||
| Change from Previous Month (Dollar Vol.) | -7% | ||
The above data is for Residential Real Estate Only, Market
Data from SEF MLS
For an update on your market area please contact usTake hold of your previous Monthly Market Update here goo.gl/N2G3s
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