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Existing-home sales jump 4.3% in January, inventory level dips
By Kerri Panchuk • February 22, 2012 • housingwire.comExisting-home sales on all single-family homes, townhomes, condos and co-ops rose 4.3% during the month of January, making it the third sales increase in the past four months, the National Association of Realtors said Wednesday.
In January, home sales hit a seasonally adjusted annual rate of 4.57 million units, compared to a pace of 4.38 million units in December and 4.54 million units in the year-ago period.
As sales increased, inventory levels declined 0.4% from December with only 2.31 million existing homes on the market last month, representing a 6.1-month supply, down from the December inventory hold rate of 6.4 months.
“The broad inventory condition can be described as moving into a rough balance, not favoring buyers or sellers,” said Lawrence Yun, chief economist for NAR. “Foreclosure sales are moving swiftly with ready homebuyers and investors competing in nearly all markets. A government proposal to turn bank-owned properties into rentals on a large scale does not appear to be needed at this time."
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NAR said buying power — driven by lower prices and cheap interest rates — are pulling more buyers into the market, creating a dose of optimism before the spring homebuying season.
NAR remains cautiously optimistic as the real estate industry heads into the warm-weather selling season.
Meanwhile, sales prices are down 2% from January 2011, with the median existing home-price hitting $154,700 last month. Distressed homes made up of short sales and foreclosures accounted for 35% of January sales, up from 32% in December.
NAR also highlighted the role of investors, with investment-related buyers purchasing 23% of homes sold in January. That's up from 21% in December.
First-time homebuyer activity also rose to 33% of all activity, compared to 29% a year ago and 31% in December, NAR said.
CoreLogic Records 4.7% Drop in Home Prices in 2011
BY: CARRIE BAY - 02/02/2012 - DSNEWS.COMYear-end data from CoreLogic shows home prices fell by 4.7 percent over 2011. It marks the fifth consecutive year the company has recorded an annual decline in residential property values.
CoreLogic performed a separate calculation, which illustrates just how big an impact distressed sales are having on home prices. The company excluded all short sale and REO transactions from 2011 and found that when the distress factor is taken out, prices declined by just 0.9 percent.
Commenting on the company’s latest results, Mark Fleming, CoreLogic’s chief economist said, “While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices.”
Montana tops CoreLogic’s list of states with the highest appreciation last year (based on overall prices, including distressed sales). There, home prices rose 4.4 percent.
Rounding out the top five list for price gains are Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent), and New York (+1.7 percent).
At the other end of the spectrum, Illinois takes the top seed for the highest level of depreciation in 2011 (also including distressed sales), with an 11.3 percent decline.
The hard-hit states of Nevada (-10.6 percent), Georgia (-8.3 percent), and Ohio (-7.7 percent) also landed on the list, with Minnesota (-7.5 percent) capturing the No. 5 spot for home price depreciation last year.
At the national level, CoreLogic says home prices ended 2011 down 33.7 percent from their peak in April 2006.
Here again, the company illustrated the weight of distressed sales, noting that when short sale and REOtransactions are factored out, the home price decline from April 2006 through December 2011 narrows to 24.0 percent.
The five states with the largest declines from the peak (including distressed transactions) are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).
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January 2012 Foreclosure Rate Heat Map
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Some Recent Real Estate Reports
By www.appraisernews.com January 2012The S&P/Case-Shiller Home Price Indices showed month to month declines in 19 of the 20 cities covered in the most recent monthly report released on December 27th. The 10 and 20 City Composites showed respective monthly declines of 1.1% and 1.2% month to month along with respective year to year declines of 3.0% and 3.4%. David M. Blitzer, Chairman of the Index Committee at S&P Indices, said that “There was weakness in the monthly statistics…” while noting “…the only good news is some improvement in the annual rates of change in home prices…”.
Writing for CNNMoney on the day the Case-Shiller report was released, December 27th, Les Christie noted that this was the sixth consecutive month of declines reported by Case-Shiller. He quoted Pat Newport, a housing market analyst for HIS Global Insight as saying that "The numbers are pretty bad and will get even worse over the next two years." Mr. Newport attributed the past and prospective declines to tight lending standards and the glut of foreclosed properties selling at distressed prices.
Bloomberg’s Timothy R. Homan discussed the Case-Shiller findings and their reporter Matt Miller interviewed Robert Shiller that day. Mr. Shiller found some positives amidst the negative data and suggested that the historically low interest rates suggest it “…might be a good time to buy” for those who will be staying put for a number of years and can weather some additional market declines in the next several years. Links to both Bloomberg reports are found here:
International Business Times had an interesting report on December 22nd titled “10 Trends in U.S. Housing in 2011 and What to Look for in 2012” and a link to this is found here:
Foreclosure sales still pummeling home prices
By Les Christie CNNMoney.com December 21, 2011NEW YORK (CNNMoney) -- Five years after the subprime mortgage meltdown started to hit, foreclosure sales are still hurting the housing market.
Nearly five years into the crisis, foreclosures are still weighing heavily on home prices.
A whopping 46% of homes sold in November were either short sales or REOs -- as homes repossessed by lenders are called, according to a survey by Campbell/Inside Mortgage Finance.
One problem: Distressed homes sell for a lot less than homes sold by conventional sellers. The average price for a short sale (when borrowers owe the bank more than their homes are worth) was $209,000 in November. For a regular sale, the average was about $259,000.
The numbers are even worse for REOs, which averaged about $190,000 for properties in move-in condition.
For a damaged REO, the price was just $99,000. That's a common problem, since homeowners who've been foreclosed on don't typically devote resources to upkeep.
"The huge glut of distressed properties coming to market is why there will be no home price rebound this coming year and maybe into 2013," said Guy Cecala of Inside Mortgage Finance, a publisher of mortgage information and news.
There's another problem: getting financing for REOs in poor shape can be difficult, according to Cecala. Lenders don't like to issue mortgages for homes in need of extensive repairs.
And in an insidious twist, as distressed properties are sold, they can also bring down the price of homes that aren't in trouble. That's because mortgage appraisers assessing a regular home's value typically compare it to short sales and REOs in the area.
Since distressed properties sell for so much less, using them as comparables drags the appraised values of regular homes way down.
"It's the No. 1 reason why transactions fall through," said Cecala. "If you can't get an appraisal to support the price, the deal will won't close."
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National Association of Realtors Admits to Double Counting Some Home Sales Resulting in Overstated Sales Figures for Five Years
December 20th, 2011 by Sean Collins - AppraiserNews.comIn a statement to Reuters last week, NAR spokesman Walter Malony reportedly stated that: “All the sales and inventory data that has been reported since January 2007 is being downwardly revised. Sales were weaker than people thought”.
On December 14th, the NAR posted a video and “Q and A on Re-Benchmarking of Home Sales” in which they discussed the matter. The video and Q and A discussed the problem of “data drift” and how “…there could be double or triple counting of a single home sale transaction” due to a single property being listed and sold on several Multiple Listing Systems. The NAR addressed some of the ways in which they would change their methods of collecting and processing information. They also seemed to be saying that the errors were not that important because the “trend lines” were the same as before and that “Like weather, the only thing that truly matters for consumers are outlooks on data from their local market area.”
After what appears to be an attempt to downplay the significance of the errors, the Q and A noted that: “The national data is important for policymakers to measure the broad strength and weakness of the housing market as they impact the national economy.”
The over-statement of sales by the NAR was substantial and appears to have continued for approximately five years, supposedly ending in October of this year. AppraiserNews.com is of the opinion that this is no time for the NAR to try to gloss over the extent of the problem, their credibility is truly at stake. If their data is to remain “important for policymakers” they will have to seriously address their deficiencies and make their chief economist, Lawrence Yun, choose whether he really is an economist and not a cheerleader whose commentary is not credible. In their video of December 14th, Mr. Yun starts to drift away into lala land with comments about “hopefully banks will start lending” and remarks about increased sales in 2012 along with a modest increase in values. The Q and A states:
“NAR takes its role as a leading source for housing information very seriously, and toward that end, NAR research will announce results of a year-long re-benchmarking process for existing-home sales on Wednesday, December 21.”
We shall see. A link to the NAR video and Q and A is found here: National Association of Realtors, Existing Home Sales Methodology, Benchmarking FAQ
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Delinquencies Still Falling but Foreclosures at an All-Time High
BY: CARRIE BAY 12/1/2011 DSNEWS.comData released by Lender Processing Services (LPS) Thursday shows mortgage delinquencies are continuing to decline, now nearly 30 percent below their January 2010 peak.
Loans in the process of foreclosure, on the other hand, are steadily rising. LPS says foreclosure inventories reached an all-time high at the end of October, making up 4.29 percent of all active mortgages.
The average days delinquent for loans in foreclosure extended as well during the month of October, setting a new record of 631 days since last payment, while the average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.
This is largely a result of the fact that foreclosure sale rates in non-judicial states have been proceeding at four to five times that of judicial, LPS explained.
Non-judicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in non-current loans percentages. Arizona led the way with a 23.9 percent annual drop in non-current mortgages. California wasn’t far behind with a 20.2 percent decline, and in Nevada, non-current loans are down 19.1 percent from a year earlier.
LPS’ October data also showed that mortgage originations are on the rise, reaching levels not seen since mid-2010. Mortgage prepayment rates have also spiked, as much of the new origination is related to borrower refinancing. LPS says loans originated in 2009 and later are the primary drivers of the increase in refinances.
While origination activity for Federal Housing Administration (FHA) loans is down, GSE and FHA originations still account for the vast majority of all new loans – nearly nine out of every 10 new mortgages, according to LPS.
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Foreclosures on the rise again
By Chris Isidore November 10, 2011 CNNMoney.comNEW YORK (CNNMoney) -- The number of foreclosures climbed in October, as mortgage lenders started to work through the paperwork problems that had delayed new filings for much of the last year.
Foreclosure filings were reported on 230,678 properties nationwide in October, a 7% increase from September, reported RealtyTrac, an online marketplace for foreclosed properties. Despite the increase, filings were still 31% below year-earlier levels, though.
RealtyTrac said one in every 563 U.S. homes had either a default notice, a scheduled auction or a bank repossession filing during the month.
"The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we've been in for the past year as lenders corrected foreclosure paperwork and processing problems," said James Saccacio, RealtyTrac's CEO.
A year ago, several major banks -- including Ally, Bank of America (BAC, Fortune 500), and JPMorgan Chase JPM, Fortune 500) -- acknowledged problems with paperwork they were using to file foreclosure actions against delinquent homeowners. They announced various changes in practices and temporary moratoriums in new filings while they worked through the problems.
The states with highest foreclosure rates during the month were Nevada, California, Arizona, Florida and Michigan. Combined, these states accounted for 53% of the national total.
Las Vegas finally gave up its dubious title as the foreclosure champion, after leading all other metropolitan areas in the rate of new filings over the previous 22 months.
IS LAS VEGAS HOUSING MARKET READY FOR COMEBACK?
New foreclosure filings in Vegas plunged 36% compared to September, caused primarily by an 80% drop in new default notices. The retreat in foreclosures took it down to fifth place nationwide, and turned Stockton, Calif., into the new foreclosure epicenter.
Still the improvement in the Las Vegas real estate market wasn't enough to topple Nevada from its status as the state with the highest foreclosure rate. Its pace of one filing for every 180 homes kept it ahead of No. 2 California for the 58th straight month.
The best hopes for stopping foreclosures is an improvement in the overall economy, especially the battered real estate and labor markets. But with so many foreclosed homes weighing on the market, and with unemploymentstill at 9% and consumer confidence low, even mortgage rates near record lows aren't enough to fix the problems caused by the bursting of the housing bubble.
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How Appraisals Are Derailing Home Sales
By ANNAMARIA ANDRIOTIS - Smart Money Nov. 4, 2011New requirements are resulting in more cancelled or delayed contracts.
Three months ago, real estate agent Gary Rogers says he was conducting a fairly routine home sale. Then he received the home appraisal's report, which valued the three-bedroom colonial in Waltham, Mass., at $430,000, rather than the $448,000 selling price the buyer and seller had agreed to. Unless the buyer agreed to put up more money, or the seller to lower the price, the deal was off. Fortunately, after nearly two weeks, Rogers says the two sides agreed to meet in the middle.
In the past, appraisals rarely disrupted a home sale. But realtors and housing experts say new requirements and a difficult housing market are doing just that. Year-to-date through September, one third of realtors have said appraisals resulted in buyers and sellers delaying or canceling contracts or renegotiating to a lower sales price, according to the National Association of Realtors. That's up from 29% in all of 2010 and up from less than 10% prior to 2009.
Indeed, lenders say they're requiring more thorough home appraisals. Appraisers determine the value of a home largely by reviewing the prices at which similar homes nearby sold for in recent months. During the housing boom, appraisers could cite as few as three recently sold homes; today, lenders are often requiring two to three times that, says David Stevens, president and CEO of the Mortgage Bankers Association. To meet that quota, appraisers say they sometimes have to use homes that aren't similar and may be foreclosures or short sales, though they are taking into account what this property would have sold for if it wasn't a distressed sale, says a spokesman for the Appraisal Institute, an association of real estate appraisers. "Appraisers have become much more cautious," says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.
To be sure, a more thorough appraisal process does have its benefits. It lets a buyer know whether they're offering too much to buy a particular home. "For buyers, the appraisal is a check and balance -- it's there to ensure the buyer isn't overpaying and the lender isn't over-lending," says McCabe.
It may also make houses cheaper for buyers -- though not without more hassle. If the appraisal value comes in below the agreed buying price, the lender will typically offer a smaller mortgage. For example, on the house that Rogers sold, the buyer would have gotten a mortgage for $358,400, or 80% of $448,000. But when the appraisal value came in at $430,000, the lender adjusted the mortgage amount to 80% of the appraisal figure, or $344,000. The contract the buyer and the seller had signed, however, stated the higher buying price of $448,000, and the buyer (and potentially the seller) had the option to decide if they wanted to make up the $18,000 difference.
Here are ways to make the process easier, say experts, and how to deal with complications.
How sellers can prepare:
Before putting their home on the market, sellers should research what similar homes near them are selling for by looking at online listings, visiting open houses and speaking with realtors, says Rogers. "It's always good to get more than one opinion," he says. They can also ask for their own home appraisal, which could give them a sense of how close (or far off) the figures are. The cost of an appraisal varies but typically ranges from $250 to $600.
How buyers can protect themselves:
When buyers make an offer, they should include statements in the contract guaranteeing they'll receive their initial down payment (typically 3% to 5% of the agreed buying price of the home) back if full mortgage financing doesn't come through for the agreed price or the appraisal value is below the offer that's in the contract, says McCabe. Separately, the buyer (who's required to pay for the home appraisal) should ask for the appraisal report and look at what properties the appraiser used as comparisons, says Rogers. It should, he says, include homes that are in the same neighborhood and the same style. In other words, a colonial home shouldn't be compared to a ranch.
What to do if appraisal value comes in below the purchase price:
In this situation, experts say buyers have several options. If they're no longer interested in the home, they can walk away. (However, without a contingency clause -- see previous section -- they risk losing their initial down payment.) But if they still intend to buy the house and they can prove the report excluded similar, nearby properties or had some other issue, they can appeal or ask their lender for a second appraisal.
If those strategies don't work, the buyer and the seller can consider working out an agreement on their own. Lastly, to report a problem with an appraiser, consumers can contact their state's appraisal board.
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Home prices heading for triple-dip
By Les Christie October 31, 2011 CNNMoney.comShould home values meet Fiserv's expectations, it would make it the third (and lowest) trough for home prices since the housing bubble burst.
The first post-bubble bottom was hit in 2009, when prices fell to 31% below peak. The First-Time Homebuyer Credit helped perk prices up by mid-2010, but by the time the credit expired, prices fell again.
In the second dip, which was reached last winter, prices were down 33% before staging a mild rally that was artificially spurred as banks slowed the processing of foreclosures following the robo-signing scandal, which found that loan servicers were rapidly signing foreclosures without properly vetting them.
Now that the scandal is mostly resolved, lenders are speeding more cases through the foreclosure pipeline and back onto the market, weighing on home prices even further.
Earlier this month, RealtyTrac reported the first quarterly increase in foreclosure filings in three quarters. Even more discouraging: new default notices were up 14%.
There's also a "shadow inventory" of homes in foreclosure that have yet to go back onto the market.
The specter that those foreclosed homes could flood the market at any time and drive prices significantly lower is a huge concern, said Mark Dotzour, an economist for Texas A&M University. "That's the elephant in the room," he said, noting that there are 6 million home currently in shadow inventory.
Biggest losers
Many of the regions that will be hardest hit were already beaten up during the previous two dips.
Naples, Fla., for example, is expected to take the biggest hit of any metro area, a price drop of another 18.9% by the end of next June, according to Fiserv. Home prices in the area have already fallen 61% from the peak.
Other cities expected to be hit hard include the not-so-lucky Las Vegas, which is expected to see home prices fall another 15.9% for a total loss of 66%; Riverside, Calif., is projected to fall another 14.8% (for a total decline of 61%); Miami is expected to decline by 13.2% (total loss: 57%), and Salinas, Calif. could drop by another 13% (for a total loss of 66%).
There will be some winners, however, led by Madera, Calif. and Carson City, Nev., which will each gain 15.5%. That's some consolation for hard-hit residents: The average home in each of these metro areas has lost more than half its value.
Other metro areas Fiserv expects to recover nicely are Yuma, Ariz. (up 9.5%), Yuba City, Calif. (9.2%) and Farmington, N.M. (8.3%).
Slow recovery ahead
Even after the housing market begins its comeback in mid-2012, the recovery is predicted to be modest at best. Nationwide, Fiserv is projecting that home prices will climb just 2.4% between June 2012 and June 2013.
A few individual metro areas will do better, with 31 of the 385 markets Fiserv monitors expected to pile up double-digit gains. Another 71 markets are expected to post increases of 5% or better.
Many of the markets that will record the biggest increases are vacation or retirement communities that had taken some of the biggest hits during the bust.
The biggest "winner" will be Ocala, Fla., with a 22.4% spike for the 12 months ending June 30, 2013. Ocala was one of the hardest hit communities in the U.S. over the past several years, with home prices falling some 50%.
Others anticipated gainers will be Napa, Calif., which Fiserv projects will improve by 20.9% over that same period; Panama City, Fla. (an estimated 18.2% jump) and Bremerton, Wash. and Carson City, Nev. (both expected to see home prices climb 17.9%).
Some cities will continue to fade, however. Fort Lauderdale, Fla.'s forecast is for a 9.2% drop through next June and another 6.7% the 12 months after that. Its neighbor, Miami, will endure 13.5% and 5.2% declines, respectively.
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Home prices rise for 5th straight month
By Les Christie October 25, 2011 CNNMoney.com
NEW YORK (CNNMoney) -- Home prices continued a winning streak in August, the fifth straight month of price gains, but remain lower on a year-over-year basis.A gauge of home prices featuring 20 major cities, the S&P/Case Shiller index, reported Tuesday that prices rose 0.2% in August but were still down 3.8% year over year.
"Even though the [year-over-year] rates are improving, national home prices are still below where they were a year ago," said David Blitzer, a spokesman for S&P.
Overall, the market is treading water and there doesn't seem to be any reason to suspect that's going to change soon.
"As long as the economy remains weak, foreclosures are still a problem and lending standards stay stringent, we're not going to see much movement in home prices," said Mike Larson, a real estate analyst for Weiss Research.
"You just haven't gotten yet the rocket fuel needed to send housing soaring again," he said.
Among individual metro areas, Washington saw the biggest gain -- 1.6% in August. Detroit and Chicago were close behind at 1.4%. In the past 12 months, Washington prices have gone up 0.3%. In Detroit prices were up 2.4% since August 2010, more than any other area.
The Atlanta metro area recorded the steepest decline, down 2.4% for the month. Year-over-year prices were off 6.3%. Minneapolis home prices recorded the worst 12-month drop of 8.5%.
The home price report comes on the heels of changes in the Home Affordable Refinance Program (HARP) announced Monday by the Obama administration. The changes will enable many homeowners to refinance high-interest mortgages more easily, making their monthly payments more affordable. The plan should enable some to avoid default.
Ed Mermelstein, a New York-based real estate attorney, broker and developer, doubts that the HARP changes will have much impact on home prices or sales.
"The economy and jobs have to come back. That's what's going to help the housing market," he said.
Larson pointed out that even if they work as planned, HARP's main focus is helping existing homeowners stay in their homes; it won't spur new sales.
Newport said he thinks that housing market weakness will continue improving.
"The key reason is that more distressed homes are coming onto the market and will be selling," he said. "That tends to drag home prices down."
Fiserv, which provides real estate financial analytics to industry, is projecting a further home price decline of 3.6% through the end of June 2012.
If that forecast comes true, it would mean home prices will plumb a new, post-bubble bottom over the next nine months, down 34% from the mid-2006 peak.
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Homeownership Decline Outpaces All but Great Depression
By: Carrie Bay - 10/7/2011 - DSNEWS.comThe national homeownership rate fell by 1.1 percentage points between 2000 and 2010. The U.S. Census Bureausays it’s the steepest drop since the period from 1930 to 1940, when the rate plummeted by 4.2 percentage points.
Housing woes are, without question, taking a bite out of the American Dream.
Unprecedented levels of foreclosures have forced more than 3 million homeowners out of their homes over the past four years. And with $7 trillion in home equity wiped out since 2005, many are leery of putting their hard-earned dollars toward an investment that is still depreciating.
The Census Bureau said in its report released this week that the U.S. homeownership rate slipped to 65.1 percent in 2010. Even with the sharp decline over the previous 10 years, that rate is the second highest on record since homeownership data collection began in 1890, behind only the year 2000.
All but one metropolitan area had more homeowners than renters in 2010. With a homeownership rate of 49.5 percent, Manhattan, Kansas, was the only metro where renters outnumbered homeowners.
While homeowners were the majority in most of the nation’s metro areas, they were outnumbered by renters in many of the country’s largest cities, including the four most populous cities. Last year, New York renters made up 69.0 percent of households, followed by Los Angeles (61.8%), Chicago (55.1%), and Houston (54.6%).
The national housing inventory increased by 15.8 million units, or 13.6 percent, from 2000 to 2010. While housing supplies increased in all states during the decade, they grew fastest in the South and West.
According to the 2010 Census, there were 131.7 million housing units in the United States. Of these, 116.7 million had people living in them. The remaining 15.0 million units — 11.4 percent — were vacant.
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