According to Capital Economics, the second leg of the US housing downturn will continue throughout the year and could be nasty if a vicious circle of falling prices and rising foreclosures continues. "The second downward leg in house prices that began last year will continue throughout this year and take prices to a new cycle low, some 5 percent below current levels," Paul Dales, a senior economist at Capital Economics, said. "Incredibly favorable valuations and exceptionally low mortgage rates will not prevent this fall in prices. Valuations and affordability are much less important when demand is constrained by poor economic conditions and the effects of the previous plunges in asset prices," Dales explained. In the US, 25 percent of households are in negative equity with another 25 percent not having enough equity to qualify for a new mortgage, said Dales, who also warned that those who can move are less likely to do so as prices fall. Even rising sales will not stop the fall in prices, he added.
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Monday, February 28, 2011
Saturday, February 26, 2011
Toll Brothers posts profit Is this an Indication of the Future?
Luxury homebuilder Toll Brothers reported a quarterly profit as it offered fewer buyer incentives and benefited from a tax break. The company, whose shares rose more than 3 percent, was also able to finish selling certain less-profitable communities, which boosted its margins. Revenue rose 3 percent to $334.1 million, compared with analysts' estimates of $317.2 million. The company's average home price rose 7 percent to $586,000, but Toll expects that to decline to within a range of $540,000 and $565,000 for the rest of the year. In the fifth year of the housing slump, most homebuilders continue to suffer as they compete in a market oversupplied with cut-rate foreclosures and short sales that are a legacy of a housing boom fueled by subprime lending and speculation.
While Toll's high-end products do not compete as directly with foreclosures as some rivals, which focus on the first-time homebuyer, the company is still struggling to close sales with buyers concerned that the home will lose value. The latest results include a tax benefit of $20.4 million. Without that, the company lost $17 million, compared with a year-earlier loss of $56.8 million, excluding special items.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
While Toll's high-end products do not compete as directly with foreclosures as some rivals, which focus on the first-time homebuyer, the company is still struggling to close sales with buyers concerned that the home will lose value. The latest results include a tax benefit of $20.4 million. Without that, the company lost $17 million, compared with a year-earlier loss of $56.8 million, excluding special items.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, February 25, 2011
Real Estate World is all over the Spectrum
MBA - mortgage applications up
Mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 18, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 13.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14.8 percent compared with the previous week. The Refinance Index increased 17.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 9.6 percent compared with the previous week and was 6.9 percent lower than the same week one year ago. “Ongoing turmoil in the Middle East brought interest rates lower last week. Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week,” said Michael Fr
atantoni, MBA’s Vice President of Research and Economics.
The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 1.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.7 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent from 6.0 percent of total applications from the previous week.
Housing Data is Questionable
"Most consider President's Day weekend as the official start of the spring housing season. There is, therefore, no more crucial time than now to have reliable data at our disposal for home sales, prices and inventories. How else do buyers, sellers and investors know how to proceed? Unfortunately, the housing crash itself has undermined the veracity of those readings. With the boom and the bust came the attention. Housing brought our economy down, and in doing so, boosted itself to the headlines. As with any big story, a cottage industry sprang up around it. Data providers came out of the woodwork, and as online sale and foreclosure web sites proliferated, so too did their ability to add to that data pool.
The result is double edged: On the downside, some data providers are less-than accurate, but on the upside, their sheer numbers provide a system of checks and balances, tempering the most outrageous assertions. So it seems sort of appropriate that today, as a new controversy swarms around potential errors in home sales figures from the National Association of Realtors, the exalted and much-contested S&P/Case-Shiller Home Price Index is released. It reports that home prices are dangerously close to an official double dip. Other data providers have been asserting recently that S&P/Case-Shiller is too bullish (and of course too bearish).
As for the Realtors' data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, 'overblown,' the Realtors themselves admit there is a problem. They are 're-benchmarking' their sales calculation process. 'The last re-benchmarking to the existing-home sales series was based on 2000 Census data, so NAR is undertaking a re-benchmarking using independent sources,' says NAR's Walter Molony. 'We are consulting with various outside housing economists, government agencies, and some academic experts on the methodology to determine if there is, in fact, any drift in NAR’s existing home sales data, and, if so, by how much.' Molony says at this point they believe any drift in the data to be 'relatively minor,' and he goes on to say CoreLogic's assumptions may be 'too high.'
Bottom line, though, if NAR overstated sales, then inventories are far higher than we think they are (inventory, or months supply, is based on a calculation of properties for sale and the current sales pace). We already have a great deal of uncertainty in the inventory numbers because of the so-called 'shadow inventory' of foreclosures and bank owned homes. Why do all these numbers matter in the real world of Sunday open houses and local market closings? Because sales and inventories drive prices and they drive expectations...the latter, perhaps, more important in the current market where consumer confidence is all but non-existent."
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 18, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 13.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14.8 percent compared with the previous week. The Refinance Index increased 17.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 9.6 percent compared with the previous week and was 6.9 percent lower than the same week one year ago. “Ongoing turmoil in the Middle East brought interest rates lower last week. Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week,” said Michael Fr
atantoni, MBA’s Vice President of Research and Economics.
The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 1.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.7 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent from 6.0 percent of total applications from the previous week.
Housing Data is Questionable
"Most consider President's Day weekend as the official start of the spring housing season. There is, therefore, no more crucial time than now to have reliable data at our disposal for home sales, prices and inventories. How else do buyers, sellers and investors know how to proceed? Unfortunately, the housing crash itself has undermined the veracity of those readings. With the boom and the bust came the attention. Housing brought our economy down, and in doing so, boosted itself to the headlines. As with any big story, a cottage industry sprang up around it. Data providers came out of the woodwork, and as online sale and foreclosure web sites proliferated, so too did their ability to add to that data pool.
The result is double edged: On the downside, some data providers are less-than accurate, but on the upside, their sheer numbers provide a system of checks and balances, tempering the most outrageous assertions. So it seems sort of appropriate that today, as a new controversy swarms around potential errors in home sales figures from the National Association of Realtors, the exalted and much-contested S&P/Case-Shiller Home Price Index is released. It reports that home prices are dangerously close to an official double dip. Other data providers have been asserting recently that S&P/Case-Shiller is too bullish (and of course too bearish).
As for the Realtors' data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, 'overblown,' the Realtors themselves admit there is a problem. They are 're-benchmarking' their sales calculation process. 'The last re-benchmarking to the existing-home sales series was based on 2000 Census data, so NAR is undertaking a re-benchmarking using independent sources,' says NAR's Walter Molony. 'We are consulting with various outside housing economists, government agencies, and some academic experts on the methodology to determine if there is, in fact, any drift in NAR’s existing home sales data, and, if so, by how much.' Molony says at this point they believe any drift in the data to be 'relatively minor,' and he goes on to say CoreLogic's assumptions may be 'too high.'
Bottom line, though, if NAR overstated sales, then inventories are far higher than we think they are (inventory, or months supply, is based on a calculation of properties for sale and the current sales pace). We already have a great deal of uncertainty in the inventory numbers because of the so-called 'shadow inventory' of foreclosures and bank owned homes. Why do all these numbers matter in the real world of Sunday open houses and local market closings? Because sales and inventories drive prices and they drive expectations...the latter, perhaps, more important in the current market where consumer confidence is all but non-existent."
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, February 23, 2011
Home Prices Fall Again
In December, home prices continued to slip, and the declines were very widespread. The Case-Schiller Composite 10 City index (C-10) fell 0.36% on a seasonally adjusted basis, and is down 1.22% from a year ago. The broader Composite 20 City index (which includes the cities in the C-10) fell by 0.41% on the month and is down 2.40% from a year ago.
This is the second month in this second leg down in housing prices that the year-over-year change has been negative for both composites; it will not be the last. Of the 20 cities, only six posted gains on the month. The biggest gains were in DC, up 1.14% on the month, followed by Dallas, up 0.80% and Boston, up 0.61%.
There were 14 metropolitan areas where prices fell on the month. Worst hit were Tampa and Detroit, each suffering a 2.14% decline on the month. They were followed by Phoenix, down 1.03%, Seattle (down 0.95%) and Portland (down 0.62%). Year over year, just two metro areas saw gains and 18 suffered losses. This is the six straight month-to-month decline in the composites. It thus looks like a new downtrend in housing prices is well established.
Look at Seasonally Adjusted Numbers
There is a seasonal pattern to home prices, and thus it is better to look at the seasonally adjusted numbers than the unadjusted numbers. Most of the press makes the mistake of focusing on the unadjusted numbers. While the 2.40% fall in the C-20 year over year in isolation is not the end of the world, it means that most of the small rebound in housing prices we saw from the spring of 2009 to the summer of 2010 has now evaporated.
Eleven cities posted new post peak lows, meaning that the first-time homebuyer bounce in prices has now more than totally evaporated in those areas. From the April 2006 peak of the housing market, the C-10 is down 31.25% while the C-20 is off by 31.17%. Relative to the low of April 2009, the C-10 is now up just 2.43%, and the C-20 has only a 0.80% margin before it is posting new post bubble lows.
The Case Schiller data is the gold standard for housing price information, but it comes with a very significant lag. This is December data we are talking about, after all, and it is actually a three-month moving average, so it still includes data from October and November.
The second leg in the housing price downturn is not over. Housing prices are going to fall again in coming months. The first graph from (http://www.calculatedriskblog.com/) tracks the history of the C-10 and C-20 indexes. Note that on both indexes we are almost back to the post-crash lows. It seems likely to me that we will set new lows before the second leg down is over.
Which Cities Fared Best/Worst?
On a year-over-year basis, with the exception of Washington DC (up 4.11%), the strongest cities are in California. However, even there the year-over-year gains are pretty much gone. San Diego is still in positive territory with a 1.70% rise. However, Los Angeles has fallen back into negative territory with a decline of 0.26%, and San Francisco is down 0.43%. Still, the only other city to hold its year-over-year decline to less than one percent was Boston, down 0.82%.
There were eight metropolitan areas where the year-over-year declines were more than 5%. Detroit fared the worst with a 9.15% decline (you can still have big percentage declines even as one approaches zero). The same is true for Phoenix, down 8.38% over the last year and showing no signs at all of rising from the ashes.
Atlanta has been hit almost as hard as if “Uncle Billy Sherman” was paying another visit to the city, down 8.00%. Portland is down 7.83%, and Chicago, facing an ill wind, it is down another 7.40% from a year ago. In other words, significant year-over-year declines are happening in just about every corner of the country.
The graph (also from this source) below tracks the cumulative declines for each city over time. If the red bar is shorter to the downside than the yellow bar for a city, it indicates that prices in that city rose during 2010.
In every city, prices are below where they were in April 2006, but there is a huge variation. Las Vegas is the hardest hit, with prices down 58.04% from the peak, followed by Phoenix down 55.20%. Three more cities are down more than 40%: Miami down 49.01%, Detroit off 48.16%, and Tampa with a 45.45% decline.
At the other end of the spectrum are Dallas, where prices are down only 6.11%, Charlotte off 8.48% and Denver where they are down 10.02%. (Note: the percentage declines I am quoting are from April 2006, when the national peak was hit; the numbers in the graph are relative to that city’s individual peak, so there is a little bit of difference.)
Homebuyer Credits Long Gone
The homebuyer tax credit was propping up home prices, but now with that support gone, prices are resuming their downtrend. People had until June 30 to close on their houses, and they had to agree to the transaction by April 30. That pulled sales into those months that might otherwise have happened later on. The credit was up to $8,000, so almost nobody would want to close their deal in early July and simply leave that money on the table.
The tax credit is a textbook example of a third party subsidizing a transaction. When that happens, both the buyer and the seller will get some of the benefit. The buyer gets his when he files his tax return next year, the seller gets hers in the form of a higher price for the house.
Since the tax credit is now over, that artificial prop to housing prices has been taken away. Sales of existing houses simply collapsed in July, after the credit expired, and have remained depressed ever since. The extremely high ratio of homes for sale to the current selling pace is sure to put significant downward pressure on prices.
There is still quite a bit of “shadow inventory” out there as well. That is, homes where the owner is extremely delinquent in his mortgage payments and unlikely ever to make up the difference, but that the bank has not yet foreclosed on or foreclosed houses that have not yet been listed for sale.
Take a good hard look at the third graph (also from this source) and tell me what you think is going to happen to housing prices over the next few months. A normal market has about six months of supply available; during the bubble, the months of supply generally ran closer to four months, and prices were soaring. It was not until inventories climbed above the six month mark that prices started to fall. The really collapsed as the months of supply moved into the double digits.
The extensive government support for the housing market — including the tax credit, but also the Fed buying up $1.25 Trillion in mortgage paper to artificially depress mortgage rates — helped boost sales and bring the months of supply back down. Now that support is over, the months of supply are still elevated, and thus housing prices are falling. Unfortunately this graph is not updated with the December price data, and we will not get the months of supply data for existing homes until tomorrow.
The tax credit was not a very effective means of stimulus, but it did help prop up prices, and that is a pretty important accomplishment, even if it proves to be ephemeral. The credit cost the government about $30 billion. A large part of that money went to people who would have bought anyways, but perhaps would have done so in July or August rather than May or June.
New Homes = Big Stimulus
To the extent it rewarded people for doing what they would have done anyway, it did nothing to stimulate the economy. Also, turnover of existing houses really does not do a lot to improve the economy. It is the building of new houses that generates economic activity.
It is not just about the profits of D.R. Horton (DHI: 12.01 -0.79 -6.17%). A used house being sold does not generate more sales of lumber by International Paper (IP: 27.735 -1.285 -4.43%) or any of the building products produced by Berkshire Hathaway (MAS: 13.005 -0.295 -2.22%). It does not put carpenters and roofers to work. New homes do.
While housing prices are important to the economy, the level of turnover in used houses is not. Home equity is, or at least was, the most important store of wealth for the vast majority of families.
The Current State of Home Equity
Houses are generally a very leveraged asset — much more so than stocks. Using your full margin in the stock market still means you are putting 50% down. In housing, putting 20% down is considered conservative, and during the bubble was considered hopelessly old fashioned. As a result, as housing prices declined, wealth declined by a lot more. For the most part we are not talking vast fortunes here, but rather the sort of wealth that was going to finance the kids college educations and a comfortable retirement.
With that wealth gone, people have to put away more of their income to rebuild their savings if they still want to be able to send the kids to college or to retire. The decline in housing wealth is a very big reason why retail sales have been so weak. With everyone trying to save, aggregate demand from the private sector is way down. If customers are not going to spend and buy products, employers have no reason to invest to expand capacity. They have no reason to hire more workers.
Also, as housing prices fell, millions of homeowners found themselves owing more on their houses than the houses were worth. That greatly increases the risk of foreclosure. If the house is worth more than the mortgage, the rate of foreclosure should be zero. Regardless of how bad your cash flow situation is — due to job loss, divorce or health problems, for example — you would always be better off selling the house and getting something, even if it is less than you paid for the house than letting the bank take it and get nothing.
By propping up the price of houses, the tax credit did help slow the increase in the rate of foreclosures. Still, a quarter of all houses with mortgages are worth less than the value of the mortgage today. Another five percent or so are worth less than five percent more than the value of the mortgage. If prices start to fall again, those folks well be pushed under water as well.
The final graph below (from this source) shows where the underwater people are by state. Red means houses underwater, medium and dark blue indicate people with solid equity stakes in their homes.
On the other hand, it is not obvious that propping up the prices of an asset class is really something that the government should be doing. After all, it is hurting those who don’t have homes and would like to buy one.
Support for housing goes far beyond just the tax credit. The biggest single support is the deductibility of mortgage interest from taxes. Since homeowners are generally wealthier and have higher incomes than those who rent, this is a case of the lower middle class subsidizing the upper middle class. Also, even if they are homeowners, people with lower incomes are more likely to take the standard deduction rather than itemize their taxes. The mortgage interest deduction only applies if you itemize.
There has been much discussion of trying to rationalize the tax system and bringing down tax rates, but to do so the base would have to be broadened through the elimination of deductions. The mortgage interest deduction is one of the biggest of these. An attempt that leaves the mortgage interest deduction in place would have to be mere tinkering around the edges. While the concept of lower rates and fewer deductions is a good one, transitioning from here to there in the current weak housing market is going to be difficult to say the least.
The real problem though is that, now that the tax credit is over, prices will find their more natural level. Fortunately, relative to the level of incomes and to the level of rents, housing prices are now in line with their long-term historical averages, not way above them as they were last year.
In other words, houses are fairly priced — not exactly cheap by historical standards, but not way overvalued either. That will probably limit how much price fall over the next six months to a year to about 5% more from here, rather than the 30% decline we saw from the top of the bubble. That, however, is more than enough of a decline to do some serious damage.
A Weak Report, but Not Unexpected
The Case Schiller report was weak, but in line with what the consensus expected. The second leg down in housing prices is underway, but fortunately will probably be a much shorter leg than the first one.
Still, that is bad news for the economy. Used homes make very good substitutes for new homes, and with a massive glut of used homes on the market, there is little or no reason to build any new ones. Residential investment is normally the main locomotive that pulls the economy out of recessions. It is derailed this time around and there seems to be little the government can do to get it back on track.
Case-Schiller: Home Prices Fall Again
By Dirk Van Dijk on February 22, 2011
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
This is the second month in this second leg down in housing prices that the year-over-year change has been negative for both composites; it will not be the last. Of the 20 cities, only six posted gains on the month. The biggest gains were in DC, up 1.14% on the month, followed by Dallas, up 0.80% and Boston, up 0.61%.
There were 14 metropolitan areas where prices fell on the month. Worst hit were Tampa and Detroit, each suffering a 2.14% decline on the month. They were followed by Phoenix, down 1.03%, Seattle (down 0.95%) and Portland (down 0.62%). Year over year, just two metro areas saw gains and 18 suffered losses. This is the six straight month-to-month decline in the composites. It thus looks like a new downtrend in housing prices is well established.
Look at Seasonally Adjusted Numbers
There is a seasonal pattern to home prices, and thus it is better to look at the seasonally adjusted numbers than the unadjusted numbers. Most of the press makes the mistake of focusing on the unadjusted numbers. While the 2.40% fall in the C-20 year over year in isolation is not the end of the world, it means that most of the small rebound in housing prices we saw from the spring of 2009 to the summer of 2010 has now evaporated.
Eleven cities posted new post peak lows, meaning that the first-time homebuyer bounce in prices has now more than totally evaporated in those areas. From the April 2006 peak of the housing market, the C-10 is down 31.25% while the C-20 is off by 31.17%. Relative to the low of April 2009, the C-10 is now up just 2.43%, and the C-20 has only a 0.80% margin before it is posting new post bubble lows.
The Case Schiller data is the gold standard for housing price information, but it comes with a very significant lag. This is December data we are talking about, after all, and it is actually a three-month moving average, so it still includes data from October and November.
The second leg in the housing price downturn is not over. Housing prices are going to fall again in coming months. The first graph from (http://www.calculatedriskblog.com/) tracks the history of the C-10 and C-20 indexes. Note that on both indexes we are almost back to the post-crash lows. It seems likely to me that we will set new lows before the second leg down is over.
Which Cities Fared Best/Worst?
On a year-over-year basis, with the exception of Washington DC (up 4.11%), the strongest cities are in California. However, even there the year-over-year gains are pretty much gone. San Diego is still in positive territory with a 1.70% rise. However, Los Angeles has fallen back into negative territory with a decline of 0.26%, and San Francisco is down 0.43%. Still, the only other city to hold its year-over-year decline to less than one percent was Boston, down 0.82%.
There were eight metropolitan areas where the year-over-year declines were more than 5%. Detroit fared the worst with a 9.15% decline (you can still have big percentage declines even as one approaches zero). The same is true for Phoenix, down 8.38% over the last year and showing no signs at all of rising from the ashes.
Atlanta has been hit almost as hard as if “Uncle Billy Sherman” was paying another visit to the city, down 8.00%. Portland is down 7.83%, and Chicago, facing an ill wind, it is down another 7.40% from a year ago. In other words, significant year-over-year declines are happening in just about every corner of the country.
The graph (also from this source) below tracks the cumulative declines for each city over time. If the red bar is shorter to the downside than the yellow bar for a city, it indicates that prices in that city rose during 2010.
In every city, prices are below where they were in April 2006, but there is a huge variation. Las Vegas is the hardest hit, with prices down 58.04% from the peak, followed by Phoenix down 55.20%. Three more cities are down more than 40%: Miami down 49.01%, Detroit off 48.16%, and Tampa with a 45.45% decline.
At the other end of the spectrum are Dallas, where prices are down only 6.11%, Charlotte off 8.48% and Denver where they are down 10.02%. (Note: the percentage declines I am quoting are from April 2006, when the national peak was hit; the numbers in the graph are relative to that city’s individual peak, so there is a little bit of difference.)
Homebuyer Credits Long Gone
The homebuyer tax credit was propping up home prices, but now with that support gone, prices are resuming their downtrend. People had until June 30 to close on their houses, and they had to agree to the transaction by April 30. That pulled sales into those months that might otherwise have happened later on. The credit was up to $8,000, so almost nobody would want to close their deal in early July and simply leave that money on the table.
The tax credit is a textbook example of a third party subsidizing a transaction. When that happens, both the buyer and the seller will get some of the benefit. The buyer gets his when he files his tax return next year, the seller gets hers in the form of a higher price for the house.
Since the tax credit is now over, that artificial prop to housing prices has been taken away. Sales of existing houses simply collapsed in July, after the credit expired, and have remained depressed ever since. The extremely high ratio of homes for sale to the current selling pace is sure to put significant downward pressure on prices.
There is still quite a bit of “shadow inventory” out there as well. That is, homes where the owner is extremely delinquent in his mortgage payments and unlikely ever to make up the difference, but that the bank has not yet foreclosed on or foreclosed houses that have not yet been listed for sale.
Take a good hard look at the third graph (also from this source) and tell me what you think is going to happen to housing prices over the next few months. A normal market has about six months of supply available; during the bubble, the months of supply generally ran closer to four months, and prices were soaring. It was not until inventories climbed above the six month mark that prices started to fall. The really collapsed as the months of supply moved into the double digits.
The extensive government support for the housing market — including the tax credit, but also the Fed buying up $1.25 Trillion in mortgage paper to artificially depress mortgage rates — helped boost sales and bring the months of supply back down. Now that support is over, the months of supply are still elevated, and thus housing prices are falling. Unfortunately this graph is not updated with the December price data, and we will not get the months of supply data for existing homes until tomorrow.
The tax credit was not a very effective means of stimulus, but it did help prop up prices, and that is a pretty important accomplishment, even if it proves to be ephemeral. The credit cost the government about $30 billion. A large part of that money went to people who would have bought anyways, but perhaps would have done so in July or August rather than May or June.
New Homes = Big Stimulus
To the extent it rewarded people for doing what they would have done anyway, it did nothing to stimulate the economy. Also, turnover of existing houses really does not do a lot to improve the economy. It is the building of new houses that generates economic activity.
It is not just about the profits of D.R. Horton (DHI: 12.01 -0.79 -6.17%). A used house being sold does not generate more sales of lumber by International Paper (IP: 27.735 -1.285 -4.43%) or any of the building products produced by Berkshire Hathaway (MAS: 13.005 -0.295 -2.22%). It does not put carpenters and roofers to work. New homes do.
While housing prices are important to the economy, the level of turnover in used houses is not. Home equity is, or at least was, the most important store of wealth for the vast majority of families.
The Current State of Home Equity
Houses are generally a very leveraged asset — much more so than stocks. Using your full margin in the stock market still means you are putting 50% down. In housing, putting 20% down is considered conservative, and during the bubble was considered hopelessly old fashioned. As a result, as housing prices declined, wealth declined by a lot more. For the most part we are not talking vast fortunes here, but rather the sort of wealth that was going to finance the kids college educations and a comfortable retirement.
With that wealth gone, people have to put away more of their income to rebuild their savings if they still want to be able to send the kids to college or to retire. The decline in housing wealth is a very big reason why retail sales have been so weak. With everyone trying to save, aggregate demand from the private sector is way down. If customers are not going to spend and buy products, employers have no reason to invest to expand capacity. They have no reason to hire more workers.
Also, as housing prices fell, millions of homeowners found themselves owing more on their houses than the houses were worth. That greatly increases the risk of foreclosure. If the house is worth more than the mortgage, the rate of foreclosure should be zero. Regardless of how bad your cash flow situation is — due to job loss, divorce or health problems, for example — you would always be better off selling the house and getting something, even if it is less than you paid for the house than letting the bank take it and get nothing.
By propping up the price of houses, the tax credit did help slow the increase in the rate of foreclosures. Still, a quarter of all houses with mortgages are worth less than the value of the mortgage today. Another five percent or so are worth less than five percent more than the value of the mortgage. If prices start to fall again, those folks well be pushed under water as well.
The final graph below (from this source) shows where the underwater people are by state. Red means houses underwater, medium and dark blue indicate people with solid equity stakes in their homes.
On the other hand, it is not obvious that propping up the prices of an asset class is really something that the government should be doing. After all, it is hurting those who don’t have homes and would like to buy one.
Support for housing goes far beyond just the tax credit. The biggest single support is the deductibility of mortgage interest from taxes. Since homeowners are generally wealthier and have higher incomes than those who rent, this is a case of the lower middle class subsidizing the upper middle class. Also, even if they are homeowners, people with lower incomes are more likely to take the standard deduction rather than itemize their taxes. The mortgage interest deduction only applies if you itemize.
There has been much discussion of trying to rationalize the tax system and bringing down tax rates, but to do so the base would have to be broadened through the elimination of deductions. The mortgage interest deduction is one of the biggest of these. An attempt that leaves the mortgage interest deduction in place would have to be mere tinkering around the edges. While the concept of lower rates and fewer deductions is a good one, transitioning from here to there in the current weak housing market is going to be difficult to say the least.
The real problem though is that, now that the tax credit is over, prices will find their more natural level. Fortunately, relative to the level of incomes and to the level of rents, housing prices are now in line with their long-term historical averages, not way above them as they were last year.
In other words, houses are fairly priced — not exactly cheap by historical standards, but not way overvalued either. That will probably limit how much price fall over the next six months to a year to about 5% more from here, rather than the 30% decline we saw from the top of the bubble. That, however, is more than enough of a decline to do some serious damage.
A Weak Report, but Not Unexpected
The Case Schiller report was weak, but in line with what the consensus expected. The second leg down in housing prices is underway, but fortunately will probably be a much shorter leg than the first one.
Still, that is bad news for the economy. Used homes make very good substitutes for new homes, and with a massive glut of used homes on the market, there is little or no reason to build any new ones. Residential investment is normally the main locomotive that pulls the economy out of recessions. It is derailed this time around and there seems to be little the government can do to get it back on track.
Case-Schiller: Home Prices Fall Again
By Dirk Van Dijk on February 22, 2011
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Tuesday, February 22, 2011
Big Bank JP Morgan Cheats Military Families
One of the nation's biggest banks — JP Morgan Chase — admits it has overcharged several thousand military families for their mortgages, including families of troops fighting in Afghanistan. The bank also tells NBC News that it improperly foreclosed on more than a dozen military families.
The admissions are an outgrowth of a lawsuit filed by Marine Capt. Jonathan Rowles. Rowles is the backseat pilot of an F/A 18 Delta fighter jet and has served the nation as a Marine for five years. He and his wife, Julia, say they’ve been battling Chase almost that long.
The dispute apparently caused the bank to review its handling of all mortgages involving active-duty military personnel. Under a law known as the Servicemembers Civil Relief Act (SCRA), active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure. Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they’re in harm's way.
A Chase official told NBC News that some 4,000 troops may have been overcharged. What’s more, the bank discovered it improperly foreclosed on the homes of 14 military families.
“We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here,” Chase chief communications officer Kristin Lemkau said in a statement to NBC News.
She said that beginning this week Chase will be mailing a total of about $2 million in refunds to families that may have been overcharged. She says most of the families improperly foreclosed on have gotten or will get their homes back. A bank official described what happened here as “grim,” but emphasized the mistakes were inadvertent, not malicious.
When it comes to foreclosures happening within the military community, there is no excuse for JP Morgan-Chase to not understand the longstanding protections given to military members through laws of the SCRA. The fact is, the SCRA has roots going back to the Civil War.
The history of the Servicemembers Civil Relief Act (SCRA):
The Servicemembers Civil Relief Act (SCRA) is formerly known as "Soldiers' and Sailors' Civil Relief Act (SSCRA). Despite the act's official title (SSCRA) dating back 1940, its origins can be traced as far back as the Civil War when Congress passed a total moratorium on civil actions brought against Union soldiers and sailors. In basic terms, this meant that any legal action involving a civil matter was put on hold until after the soldier or sailor returned from the war. Examples of civil matters included breach of contract, bankruptcy, foreclosure or divorce proceedings.
The SSCRA was largely unchanged from its enactment in 1940. On December 19, 2003, President Bush signed into law the new-and-improved Servicemembers Civil Relief Act (SCRA). This law is a complete revision of the SSCRA but clarified the language, incorporated many years of judicial interpretation, and updated the SSCRA to reflect new developments in American life since 1940.
In other words, it was simplified.
The most recent amendment to the SCRA to provide foreclosure protection to servicemembers occurred in section 2203 of the Housing and Economic Recovery Act of 2008.
Ignoring the protections of the SCRA is not only wrong, it is punishable by law with fines or imprisonment.
Why did it take five years in a courtroom setting for JP Morgan-Chase to finally decide to take the protections of the SCRA seriously?
Because foreclosures are big business. It was all a part of their cost of doing business. Without being held accountable for their actions, it was also worth the risk.
Most servicemembers have better things to do with their time and energy than to fight a 5-year court battle. They would rather remain busy serving their country. Besides, one battlefield is more than enough.
JP Morgan-Chase was probably hoping for that.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
The admissions are an outgrowth of a lawsuit filed by Marine Capt. Jonathan Rowles. Rowles is the backseat pilot of an F/A 18 Delta fighter jet and has served the nation as a Marine for five years. He and his wife, Julia, say they’ve been battling Chase almost that long.
The dispute apparently caused the bank to review its handling of all mortgages involving active-duty military personnel. Under a law known as the Servicemembers Civil Relief Act (SCRA), active-duty troops generally get their mortgage interest rates lowered to 6 percent and are protected from foreclosure. Chase now appears to have repeatedly violated that law, which is designed to protect troops and their families from financial stress while they’re in harm's way.
A Chase official told NBC News that some 4,000 troops may have been overcharged. What’s more, the bank discovered it improperly foreclosed on the homes of 14 military families.
“We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here,” Chase chief communications officer Kristin Lemkau said in a statement to NBC News.
She said that beginning this week Chase will be mailing a total of about $2 million in refunds to families that may have been overcharged. She says most of the families improperly foreclosed on have gotten or will get their homes back. A bank official described what happened here as “grim,” but emphasized the mistakes were inadvertent, not malicious.
When it comes to foreclosures happening within the military community, there is no excuse for JP Morgan-Chase to not understand the longstanding protections given to military members through laws of the SCRA. The fact is, the SCRA has roots going back to the Civil War.
The history of the Servicemembers Civil Relief Act (SCRA):
The Servicemembers Civil Relief Act (SCRA) is formerly known as "Soldiers' and Sailors' Civil Relief Act (SSCRA). Despite the act's official title (SSCRA) dating back 1940, its origins can be traced as far back as the Civil War when Congress passed a total moratorium on civil actions brought against Union soldiers and sailors. In basic terms, this meant that any legal action involving a civil matter was put on hold until after the soldier or sailor returned from the war. Examples of civil matters included breach of contract, bankruptcy, foreclosure or divorce proceedings.
The SSCRA was largely unchanged from its enactment in 1940. On December 19, 2003, President Bush signed into law the new-and-improved Servicemembers Civil Relief Act (SCRA). This law is a complete revision of the SSCRA but clarified the language, incorporated many years of judicial interpretation, and updated the SSCRA to reflect new developments in American life since 1940.
In other words, it was simplified.
The most recent amendment to the SCRA to provide foreclosure protection to servicemembers occurred in section 2203 of the Housing and Economic Recovery Act of 2008.
Ignoring the protections of the SCRA is not only wrong, it is punishable by law with fines or imprisonment.
Why did it take five years in a courtroom setting for JP Morgan-Chase to finally decide to take the protections of the SCRA seriously?
Because foreclosures are big business. It was all a part of their cost of doing business. Without being held accountable for their actions, it was also worth the risk.
Most servicemembers have better things to do with their time and energy than to fight a 5-year court battle. They would rather remain busy serving their country. Besides, one battlefield is more than enough.
JP Morgan-Chase was probably hoping for that.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Monday, February 21, 2011
Bank of America Forms New Foreclosure Unit
Bank of America has been making a number of changes to its mortgage business so as to handle the flood of foreclosures in a better way.
The bank has introduced a new unit called Legacy Asset Servicing. The unit will be led by Terry Laughlin.
This unit is focused on resolving issues that involve faulty paperwork.
It should be noted the faulty paperwork had forced the bank to temporarily suspend foreclosures nationwide for around 2 months in October.
The new unit is going to handle all troubled and defaulted loans along with discontinued mortgage items.
Terry Laughlin would be overseeing the bank’s foreclosure programs and mortgage modification along with his existing duties of resolving residential mortgage representation and warranties repurchase claims.
North Carolina Bank’s recent robo-signing issue led to the establishment of this new and separate division for handling the bank’s troubled loans.
The bank said in a statement that the issues that came to light in September and October of last year led the company to initiate a “self-assessment of default servicing.”
The bank also said, “While the review of the foreclosure process found that the underlying grounds for foreclosure decisions has been accurate, Bank of America implemented a series of improvements – including staffing, customer impact, and quality controls.”
Brian Moynihan, BofA’s president and CEO said, “This alignment allows two strong executives and their teams to continue to lead the strongest home loans business in the industry, while providing greater focus on resolving legacy mortgage issues. We believe this will best serve customers – both those seeking and those who face mortgage challenges – as well as our shareholders and the communities we serve.”
On exiting the reverse mortgage origination business, Doug Jones, the consumer sales and institutional mortgage services executive said in a statement, “We made the strategic decision to exit the reverse business due to competing demands and priorities that require investments and resources be focused on other key areas of our business.”
From our experience with Bank of America "they do not know which end is up" I hope this helps.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
The bank has introduced a new unit called Legacy Asset Servicing. The unit will be led by Terry Laughlin.
This unit is focused on resolving issues that involve faulty paperwork.
It should be noted the faulty paperwork had forced the bank to temporarily suspend foreclosures nationwide for around 2 months in October.
The new unit is going to handle all troubled and defaulted loans along with discontinued mortgage items.
Terry Laughlin would be overseeing the bank’s foreclosure programs and mortgage modification along with his existing duties of resolving residential mortgage representation and warranties repurchase claims.
North Carolina Bank’s recent robo-signing issue led to the establishment of this new and separate division for handling the bank’s troubled loans.
The bank said in a statement that the issues that came to light in September and October of last year led the company to initiate a “self-assessment of default servicing.”
The bank also said, “While the review of the foreclosure process found that the underlying grounds for foreclosure decisions has been accurate, Bank of America implemented a series of improvements – including staffing, customer impact, and quality controls.”
Brian Moynihan, BofA’s president and CEO said, “This alignment allows two strong executives and their teams to continue to lead the strongest home loans business in the industry, while providing greater focus on resolving legacy mortgage issues. We believe this will best serve customers – both those seeking and those who face mortgage challenges – as well as our shareholders and the communities we serve.”
On exiting the reverse mortgage origination business, Doug Jones, the consumer sales and institutional mortgage services executive said in a statement, “We made the strategic decision to exit the reverse business due to competing demands and priorities that require investments and resources be focused on other key areas of our business.”
From our experience with Bank of America "they do not know which end is up" I hope this helps.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, February 18, 2011
Foreclosures UP Deliquencies DOWN
MBA - foreclosures up delinquencies down
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22% of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93% this quarter from 9.39% last quarter. The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.27%, down seven basis points from last quarter and up seven basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63%, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57%, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 13.56% on a non-seasonally adjusted basis, a 22 basis point decline from 13.78% last quarter.
Jay Brinkmann, MBA's chief economist said "These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US. Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02% at the end of the first quarter of 2010 to 3.63% at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible."
"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner. Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year. Absent a significant economic reversal, the delinquency picture should continue to improve during 2011, Brinkmann said.
Mike Fratantoni, MBA's vice president for single family research said "While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high. The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois.
With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter." "The share of loans in foreclosure in California and Florida combined was 36.0%, a decrease from 37.3% in the third quarter, and 39.3% a year ago. Over 24% of the loans in Florida are one payment or more past due or in the process of foreclosure, the highest rate in the nation, followed by Nevada at over 22%, compared to an average of 13.6% for the nation. Only eleven states saw an increase in their foreclosure start rate with Maryland seeing the largest increase."
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types. The seasonally adjusted delinquency rate stood at 4.51% for prime fixed loans, 11.23% for prime ARM loans, 21.26% for subprime fixed loans, 25.32% for subprime ARM loans, 12.26% for FHA loans, and 6.67% for VA loans. The% of loans in foreclosure, also known as the foreclosure inventory rate, increased 24 basis points to 4.63%, which ties the survey's record high, last reached in the first quarter of 2010. All loan types saw an increase in the% of loans in foreclosure. The foreclosure inventory rate for prime fixed loans, which, make up the largest portion of the survey (accounting for 63% of the loans), increased 22 basis points to 2.67%.
This was the highest rate recorded for prime fixed in the history of the survey. The rate for prime ARM loans increased 17 basis points from last quarter to 10.22%. Subprime fixed loans saw an increase of 104 basis points to 9.92%, which is a new record high in the survey. The rate for subprime ARM loans increased 26 basis points to 22.04%, while the rate for FHA loans increased eight basis points to 3.30% and the rate for VA loans increased 21 basis points to 2.35%.
The foreclosure starts rate decreased nine basis points for prime fixed loans to 0.84%, five basis points for subprime fixed loans to 2.73%, and 22 basis points for FHA loans to 1.02%. The foreclosure starts rate increased two basis points for prime ARM loans to 2.38%, 15 basis points for subprime ARM loans to 4.24%, and two basis points for VA loans to 0.88%. Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results. The non-seasonally adjusted delinquency rate decreased for all loan types since the fourth quarter of 2009. The delinquency rate decreased 135 basis points for prime fixed loans, 124 basis points for prime ARM loans, 284 basis points for subprime fixed loans, 152 basis points for subprime ARM loans, 154 basis points for FHA loans, and 91 basis points for VA loans.
The non-seasonally adjusted foreclosure starts rate increased 21 basis points for prime fixed loans, 26 basis points for prime ARM loans, and seven basis points for VA loans, but is down 47 basis points for subprime ARM loans, 26 basis points for FHA loans, and remains unchanged for subprime fixed loans on a year over year basis. Forty five states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Washington, Rhode Island and the District of Columbia. The largest decreases were in Florida, Connecticut, and Maryland. Nevada and Arizona top the rankings in terms of foreclosure starts and loans in foreclosure across most loan types.
Bernanke worries about a cash bubble
Speaking in Paris to a Bank of France conference, Federal Reserve Chairman Ben Bernanke said the uneven flow of funds into the United States from 2003 to 2007 was one of the key factors that led to the meltdown in financial markets in 2008. He did not say the current flow of capital poses a threat of that magnitude. But he warned that while the global financial crisis is receding, "capital flows are once again posing some notable challenges for international macroeconomic and financial stability." He did not specify specific nations by name in his brief remarks, but he appeared to be referring to the continued large investment in U.S. assets by China. He argued that countries with large trade surpluses must do more to let their exchange rates be set by markets rather than intervening to keep their currencies low.
He added that nations with large trade gaps must increase national savings by cutting large budget deficits. But Bernanke said the collapse that followed the inflating of the housing bubble was not the fault of countries that flooded the United States with cash. Instead, he blamed the United States, saying "the primary cause of the breakdown was the poor performance of the financial system and financial regulation in the country receiving the capital inflows, not the inflows themselves."
"Fewer Americans are falling behind on their mortgage payments; in fact, the fewest in two years. Mortgages just one payment past due (30 days) fell to their lowest level since just before the recession began. Is it delays in paperwork from the so called 'robo-signing' (faulty paperwork) foreclosure servicing scandal? No. It's actual fundamentals in the economy and the mortgage market. Go figure. As we got toward the end of 2010 we began to see another drop in weekly claims for unemployment insurance. I think that's a key driver of the short term delinquencies,' notes Jay Brinkmann, chief economist at the Mortgage Bankers Association. But even more significant is the improved underwriting that began after the mortgage market crashed. 'The loans that are in the system now on average are better quality than what was in there before,' says Brinkmann, who explains that loans usually go bad in the first three years of life.
We're now past the delinquency peak on loans that were underwritten during the worst, headiest phase of the housing boom in 2006 and 2007. 'These new loans are less likely to go bad,' Brinkmann adds. The national delinquency rate fell 10% in the fourth quarter of last year to 8.22%, according to the Mortgage Bankers Association's latest survey. That's still high by historical standards, but it's a huge improvement. It's also good to see that the FHA delinquency rate improved slightly, from 12.62% to 12.26% (also still high). The biggest issue going forward is not new delinquencies, but the huge pipeline of loans already in the foreclosure process. It stands at 4.63%, tying the survey's record high. This is due to foreclosure paperwork issues that have stalled the process, especially in the key state of Florida, where nearly one quarter of all mortgages are either delinquent or in foreclosure.
"With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter,' says the MBA's Michael Fratantoni. As these foreclosures do make it through the process, and most will, they will put additional pressure on home prices, but for those of you with the long view, the drop in new delinquencies does present a glimmer of hope, perhaps a light at the end of the tunnel."
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22% of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93% this quarter from 9.39% last quarter. The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.27%, down seven basis points from last quarter and up seven basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63%, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57%, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 13.56% on a non-seasonally adjusted basis, a 22 basis point decline from 13.78% last quarter.
Jay Brinkmann, MBA's chief economist said "These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US. Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02% at the end of the first quarter of 2010 to 3.63% at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible."
"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner. Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year. Absent a significant economic reversal, the delinquency picture should continue to improve during 2011, Brinkmann said.
Mike Fratantoni, MBA's vice president for single family research said "While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high. The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois.
With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter." "The share of loans in foreclosure in California and Florida combined was 36.0%, a decrease from 37.3% in the third quarter, and 39.3% a year ago. Over 24% of the loans in Florida are one payment or more past due or in the process of foreclosure, the highest rate in the nation, followed by Nevada at over 22%, compared to an average of 13.6% for the nation. Only eleven states saw an increase in their foreclosure start rate with Maryland seeing the largest increase."
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types. The seasonally adjusted delinquency rate stood at 4.51% for prime fixed loans, 11.23% for prime ARM loans, 21.26% for subprime fixed loans, 25.32% for subprime ARM loans, 12.26% for FHA loans, and 6.67% for VA loans. The% of loans in foreclosure, also known as the foreclosure inventory rate, increased 24 basis points to 4.63%, which ties the survey's record high, last reached in the first quarter of 2010. All loan types saw an increase in the% of loans in foreclosure. The foreclosure inventory rate for prime fixed loans, which, make up the largest portion of the survey (accounting for 63% of the loans), increased 22 basis points to 2.67%.
This was the highest rate recorded for prime fixed in the history of the survey. The rate for prime ARM loans increased 17 basis points from last quarter to 10.22%. Subprime fixed loans saw an increase of 104 basis points to 9.92%, which is a new record high in the survey. The rate for subprime ARM loans increased 26 basis points to 22.04%, while the rate for FHA loans increased eight basis points to 3.30% and the rate for VA loans increased 21 basis points to 2.35%.
The foreclosure starts rate decreased nine basis points for prime fixed loans to 0.84%, five basis points for subprime fixed loans to 2.73%, and 22 basis points for FHA loans to 1.02%. The foreclosure starts rate increased two basis points for prime ARM loans to 2.38%, 15 basis points for subprime ARM loans to 4.24%, and two basis points for VA loans to 0.88%. Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results. The non-seasonally adjusted delinquency rate decreased for all loan types since the fourth quarter of 2009. The delinquency rate decreased 135 basis points for prime fixed loans, 124 basis points for prime ARM loans, 284 basis points for subprime fixed loans, 152 basis points for subprime ARM loans, 154 basis points for FHA loans, and 91 basis points for VA loans.
The non-seasonally adjusted foreclosure starts rate increased 21 basis points for prime fixed loans, 26 basis points for prime ARM loans, and seven basis points for VA loans, but is down 47 basis points for subprime ARM loans, 26 basis points for FHA loans, and remains unchanged for subprime fixed loans on a year over year basis. Forty five states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Washington, Rhode Island and the District of Columbia. The largest decreases were in Florida, Connecticut, and Maryland. Nevada and Arizona top the rankings in terms of foreclosure starts and loans in foreclosure across most loan types.
Bernanke worries about a cash bubble
Speaking in Paris to a Bank of France conference, Federal Reserve Chairman Ben Bernanke said the uneven flow of funds into the United States from 2003 to 2007 was one of the key factors that led to the meltdown in financial markets in 2008. He did not say the current flow of capital poses a threat of that magnitude. But he warned that while the global financial crisis is receding, "capital flows are once again posing some notable challenges for international macroeconomic and financial stability." He did not specify specific nations by name in his brief remarks, but he appeared to be referring to the continued large investment in U.S. assets by China. He argued that countries with large trade surpluses must do more to let their exchange rates be set by markets rather than intervening to keep their currencies low.
He added that nations with large trade gaps must increase national savings by cutting large budget deficits. But Bernanke said the collapse that followed the inflating of the housing bubble was not the fault of countries that flooded the United States with cash. Instead, he blamed the United States, saying "the primary cause of the breakdown was the poor performance of the financial system and financial regulation in the country receiving the capital inflows, not the inflows themselves."
"Fewer Americans are falling behind on their mortgage payments; in fact, the fewest in two years. Mortgages just one payment past due (30 days) fell to their lowest level since just before the recession began. Is it delays in paperwork from the so called 'robo-signing' (faulty paperwork) foreclosure servicing scandal? No. It's actual fundamentals in the economy and the mortgage market. Go figure. As we got toward the end of 2010 we began to see another drop in weekly claims for unemployment insurance. I think that's a key driver of the short term delinquencies,' notes Jay Brinkmann, chief economist at the Mortgage Bankers Association. But even more significant is the improved underwriting that began after the mortgage market crashed. 'The loans that are in the system now on average are better quality than what was in there before,' says Brinkmann, who explains that loans usually go bad in the first three years of life.
We're now past the delinquency peak on loans that were underwritten during the worst, headiest phase of the housing boom in 2006 and 2007. 'These new loans are less likely to go bad,' Brinkmann adds. The national delinquency rate fell 10% in the fourth quarter of last year to 8.22%, according to the Mortgage Bankers Association's latest survey. That's still high by historical standards, but it's a huge improvement. It's also good to see that the FHA delinquency rate improved slightly, from 12.62% to 12.26% (also still high). The biggest issue going forward is not new delinquencies, but the huge pipeline of loans already in the foreclosure process. It stands at 4.63%, tying the survey's record high. This is due to foreclosure paperwork issues that have stalled the process, especially in the key state of Florida, where nearly one quarter of all mortgages are either delinquent or in foreclosure.
"With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter,' says the MBA's Michael Fratantoni. As these foreclosures do make it through the process, and most will, they will put additional pressure on home prices, but for those of you with the long view, the drop in new delinquencies does present a glimmer of hope, perhaps a light at the end of the tunnel."
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Thursday, February 17, 2011
Mortgage Servicing Crackdown Expected
U.S. banking regulators are close to finalizing new national guidelines that will impact mortgage servicing shops after an interagency investigation revealed "significant weaknesses in mortgage servicing related to foreclosure oversight and operations," said John Walsh, the Acting Comptroller of the Currency, in prepared statements to be delivered before a Senate Banking panel today. "In general, the examinations found critical deficiencies and shortcomings in foreclosure governance processes, foreclosure document preparation processes, and oversight and monitoring of third-party law firms and vendors," Walsh said.
"These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole." Walsh said even though the process of outlining new guidelines for servicers is at its early stage, regulators intend to address some of the pressing issues they discovered while investigating the servicing process — namely a lack of national standards for the foreclosure process and borrower confusion over whom to contact in foreclosure cases due to uncertain protocols.
Walsh's report on the investigation of loan servicing firms comes on the heels of a major announcement from the Mortgage Electronic Registration System, or MERS. MERS, which is an electronic registry of mortgage records, informed members late Wednesday that they are now prohibited from foreclosing on residential loans using the MERS name. MERS has long been the target of foreclosure defense attorneys and consumer advocates for creating a foreclosure process that fails to create transparent oversight and protocols.
Walsh said as part of their comprehensive examination of servicing shops, regulators examined Lender Processing Services Inc. (LPS), MERSCORP, the parent company of MERS, and MERS itself. After reviewing the servicing shops and examining bank self assessments, as well as 2,800 foreclosure cases, Walsh said investigators concluded that there were "significant weaknesses in mortgage servicing related to foreclosure oversight and operations." He said regulators have yet to finalize their proposed guidelines, but that will be the next step in the process.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
"These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole." Walsh said even though the process of outlining new guidelines for servicers is at its early stage, regulators intend to address some of the pressing issues they discovered while investigating the servicing process — namely a lack of national standards for the foreclosure process and borrower confusion over whom to contact in foreclosure cases due to uncertain protocols.
Walsh's report on the investigation of loan servicing firms comes on the heels of a major announcement from the Mortgage Electronic Registration System, or MERS. MERS, which is an electronic registry of mortgage records, informed members late Wednesday that they are now prohibited from foreclosing on residential loans using the MERS name. MERS has long been the target of foreclosure defense attorneys and consumer advocates for creating a foreclosure process that fails to create transparent oversight and protocols.
Walsh said as part of their comprehensive examination of servicing shops, regulators examined Lender Processing Services Inc. (LPS), MERSCORP, the parent company of MERS, and MERS itself. After reviewing the servicing shops and examining bank self assessments, as well as 2,800 foreclosure cases, Walsh said investigators concluded that there were "significant weaknesses in mortgage servicing related to foreclosure oversight and operations." He said regulators have yet to finalize their proposed guidelines, but that will be the next step in the process.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, February 16, 2011
Foreclosure Sales Rise Dramatically in Key States
Foreclosure Sales Rise Dramatically in Key States
Published: Tuesday, 15 Feb 2011 | 2:33 PM ET
By: Diana Olick
CNBC Real Estate Reporter
Last week a foreclosure report from RealtyTrac showed the process was still completely skewed by the so-called "robo-signing" (faulty paperwork) issues at some of the nation's largest mortgage servicers that were uncovered last fall. Another report today from ForeclosureRadar.com, which only tracks a few states out West, shows some important micro-moves that will have a big impact on the Spring housing market.
ForeclosureRadar.com shows that foreclosure sales, that is, either bank repossessions or sales to third parties (usually at the courthouse steps and often investors) jumped dramatically in January from the previous month in some crucial states.
In California, bank repossessions jumped 51.5 percent, in Arizona 56.2 percent, in Nevada up 36.8 percent.
"We have not seen this level of activity on the courthouse steps for months," says Sean O'Toole, CEO and Founder of ForeclosureRadar.com. "The increase in foreclosures is just in time to provide a fresh supply of entry level homes for the spring home buying season."
More inventory is not what this housing market needs, especially not what home builders need, and especially in those hard hit states where there is already do much foreclosure and builder inventory. Home builder sentiment hasn't budged in four months, according to a new report today from the National Association of Home Builders. One of the main reasons for the chronic low confidence is competition from foreclosures.
Something else important to note is something I've mentioned before, but really became clear in January's numbers. Notices of Default (NOD), the first phase of the foreclosure process, fell off dramatically in January in California especially.
"Remember, December was a holiday month, and a holiday moratorium month," mortgage consultant Mark Hanson tells me. "There may have been 14 or 15 [work] days in December, therefore, in California with 23.5K NOD, that's 1680 per day. In January there were 21 days and 25.1K NOD. That's only 1195 a day."
So bottom line. Average daily NOD rate for CA fell from 1680 per day to 1195 per day from December to January, or 29 percent, according to Hanson.
Why are the banks holding off? Likely trying to be ultra-careful to avoid lawsuits, or trying to manage the pipeline as they now pump out the foreclosure sales. One thing we do know, the drop in NOD's is not because the market/economy suddenly turned around. They're coming.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Published: Tuesday, 15 Feb 2011 | 2:33 PM ET
By: Diana Olick
CNBC Real Estate Reporter
Last week a foreclosure report from RealtyTrac showed the process was still completely skewed by the so-called "robo-signing" (faulty paperwork) issues at some of the nation's largest mortgage servicers that were uncovered last fall. Another report today from ForeclosureRadar.com, which only tracks a few states out West, shows some important micro-moves that will have a big impact on the Spring housing market.
ForeclosureRadar.com shows that foreclosure sales, that is, either bank repossessions or sales to third parties (usually at the courthouse steps and often investors) jumped dramatically in January from the previous month in some crucial states.
In California, bank repossessions jumped 51.5 percent, in Arizona 56.2 percent, in Nevada up 36.8 percent.
"We have not seen this level of activity on the courthouse steps for months," says Sean O'Toole, CEO and Founder of ForeclosureRadar.com. "The increase in foreclosures is just in time to provide a fresh supply of entry level homes for the spring home buying season."
More inventory is not what this housing market needs, especially not what home builders need, and especially in those hard hit states where there is already do much foreclosure and builder inventory. Home builder sentiment hasn't budged in four months, according to a new report today from the National Association of Home Builders. One of the main reasons for the chronic low confidence is competition from foreclosures.
Something else important to note is something I've mentioned before, but really became clear in January's numbers. Notices of Default (NOD), the first phase of the foreclosure process, fell off dramatically in January in California especially.
"Remember, December was a holiday month, and a holiday moratorium month," mortgage consultant Mark Hanson tells me. "There may have been 14 or 15 [work] days in December, therefore, in California with 23.5K NOD, that's 1680 per day. In January there were 21 days and 25.1K NOD. That's only 1195 a day."
So bottom line. Average daily NOD rate for CA fell from 1680 per day to 1195 per day from December to January, or 29 percent, according to Hanson.
Why are the banks holding off? Likely trying to be ultra-careful to avoid lawsuits, or trying to manage the pipeline as they now pump out the foreclosure sales. One thing we do know, the drop in NOD's is not because the market/economy suddenly turned around. They're coming.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Sunday, February 13, 2011
S.A.F.E Act Changes In Kentucky
BIG NEWS IN KENTUCKY!!! The Kentucky Department of Financinal Institutions ("DFI") has announced that the Secure And Fair Enforecement for Mortgage Licensing Act (a/k/a the S.A.F.E. Act) does NOT apply to INVESTOR BUYERS!
This is a new interpretation of the SAFE Act in Kentucky. In the past, we were told that Investor Buyers were not allowed to purchase with Private Financing or Seller Financing unless 1) the lender (seller or private lender) was licensed in Kentucky as a loan officer; 2) the lender was an owner occupant of the property being sold and financed at the time of the sale; OR 3) the lender was closely related to the Buyer.
The definition of a "mortgage loan" in the SAFE Act refers to a loan given primarily for "personal, family or household use." However, the Kentucky DFI originally did not recognize "investor buyers" as exempt under the Kentucky SAFE Act. That has now changed. Even though the law hasn't changed, the DFI's interpretation of the law has.
Therefore, effective immediately, Investor Buyers are able to obtain seller financing or private financing without the lender being a licensed loan officer, an owner occupant seller or a close relative.
The intent of the SAFE Act was to protect "consumers" (defined as someone purchasing for personal, family or household use). In our opinion, Kentucky's DFI correctly exempts investors because they don't fit this definition.
We have been pushing for this answer from Kentucky's DFI for nearly a year now. And finally, we have what we wanted.
Hopefully, in the future there will be an exemption that allows private lenders or sellers to give up to 3 or so loans in a 12 month period, but that literally is going to require "an Act of Congress." But it does appear that Congress is moving in that direction.
From: Borders & Borders Attorneys
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Tuesday, February 8, 2011
Cash Buyers Lift Housing
Richard Stoker, with wife, Jane, is buying three Miami Beach condos.
Buyers in markets around the U.S. are snapping up homes in all-cash deals, betting that prices are at or near bottom and breathing life into some of the nation's most battered housing markets.
Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year, according to an analysis from real-estate portal Zillow.com. In the fourth quarter of 2006, they represented just 13% of deals. Meanwhile, downtown Miami prices rose 15% in 2010 from a year earlier, according to the Miami Downtown Development Authority.
WSJ's Mitra Kalita reports more and more homebuyers are selling investments to pay cash for real estate, sensing a bottom in the housing market.
The percentage of buyers in Phoenix paying cash hit 42% in 2010—more than triple the rate in 2008, according to Raymond James's equity research division.
Nationally, 28% of sales were all-cash transactions last year, according to the National Association of Realtors. The rate was 14% in October 2008, when the trade group began tracking the measure.
The jump in real-estate purchases made with cash is another sign of the revival of animal spirits in the U.S. economy.
The Dow Jones Industrial Average rose 69.48 points Monday, or 0.6%, to 12161.63, and the Standard & Poor's 500-stock index rose 8.18 points, or 0.6%, to 1319.05.
Monday's announcements of $13 billion in acquisitions lifted stocks on hopes of more deals, share buybacks and dividends as companies regain momentum in an improving economy.
Journal Community
The two stock indexes have soared more than 80% since early March 2009.
The Federal Reserve reported that Americans increased their use of credit cards in December for the first time since August 2008, showing that consumers are getting less skittish about opening their wallets. Investors also were soothed Monday by encouraging signs in Egypt, including last weekend's reopening of banks.
Residential real estate has been slower to bounce back than stocks, but the presence of apparent bargains is luring in newly confident buyers.
Richard Stoker, a retired sales executive, recently plunked down cash for two condominiums in Miami Beach, and plans to close on one more in coming days. He loves the complex's ocean views, four swimming pools and activities such as yoga and Pilates.
But what also motivated the purchase, said the 73-year-old, was that "the prices were just irresistible. Florida's been hit pretty hard." To pay the $1.8 million, $1.2 million and $1 million prices on the condos, Mr. Stoker and his wife, Jane, cashed out of some financial investments and sold a Roy Lichtenstein painting and an Alexander Calder mobile.
Mr. Stoker could have taken out mortgages, but decided to pay cash. "It was a good time to lighten up in the art market and take on real estate at a favorable price," he said.
The harder a market has been hit, say economists, the higher the percentage of cash deals. Last summer, piano teacher Virginia Hall-Busch told a real-estate agent she met through the Rotary Club to keep her posted on deals on historic houses in Stone Mountain, Ga.
A few days later, Ms. Hall-Busch, 62, got a call about a 1918 bungalow with three bedrooms and one bathroom listed for "short sale," which in the real-estate world means at a price lower than what's owed on it. The home had been on the market for $159,000, then dropped to $129,000 and then to $79,900.
"I offered them 50," she said. "I figured, it wasn't like I needed a place to live. I can afford to be a little cocky here."
Ms. Hall-Busch closed in October for $52,500 and began renovations within weeks.
"When you have a bad economy, it's hard on lots of people," she said. "But right now if you've got the money to put down on a house, long term it's going to be good thing."
Some of the cash purchases reflect a tight lending environment, where even people with good credit and ample down payments are sometimes turned away for conventional borrowing.
"The rates are great but the underwriting is brutal," said Henry Schlangen, an agent with real-estate firm Pacific Union International who buys and sells for clients, mainly in Napa Valley, Calif.
"They hang these people upside down and shake them till they see what falls out of their pockets. So people are buying with cash and maybe they'll 'refi' later."
Mr. Schlangen, who deals in higher-end properties such as vineyard estates, estimated that 95% of his deals last year were all-cash, up from about half in previous years. "The deals that are consummating, these are buyers who feel they got a great deal," he said, noting a surge of buyers from China.
Cash buyers can often command 5% to 10% more off the asking price than a potential buyer using a mortgage, said Mohammed Siddiq, a real-estate professional in Fort Lauderdale, Fla. Sellers prefer cash deals since they close more quickly and avoid risks such as a buyer's job loss or a bank's changing its mind.
And while many buyers making low-ball offers dig their heels, Mr. Siddiq said he has started to see bidding wars and slightly increasing prices.
Nationally, it isn't clear whether prices have bottomed. The Case-Shiller index of housing prices in 20 cities showed a steep decline in prices until 2009, when they appeared to bottom and began to trend upward. But in the second half of last year, prices began falling again. A Zillow index, meanwhile, never noted the uptick.
Since mid-October, Canyon Ranch in Miami Beach, the development Mr. Stoker bought into, has sold 35 units, with a third of the buyers from overseas and many others retiring from the Northeast.
The Stokers have a home in Potomac, Md., but spend most of the year in Florida. Mr. Stoker doesn't plan to rent out any of his new properties, saying he and his wife will live in one with two dogs, his son might live in another and the third will house an older dog and guests.
By S. MITRA KALITA
Jason Henry for The Wall Street Journal
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Buyers in markets around the U.S. are snapping up homes in all-cash deals, betting that prices are at or near bottom and breathing life into some of the nation's most battered housing markets.
Cash buyers represented more than half of all transactions in the Miami-Fort Lauderdale area last year, according to an analysis from real-estate portal Zillow.com. In the fourth quarter of 2006, they represented just 13% of deals. Meanwhile, downtown Miami prices rose 15% in 2010 from a year earlier, according to the Miami Downtown Development Authority.
WSJ's Mitra Kalita reports more and more homebuyers are selling investments to pay cash for real estate, sensing a bottom in the housing market.
The percentage of buyers in Phoenix paying cash hit 42% in 2010—more than triple the rate in 2008, according to Raymond James's equity research division.
Nationally, 28% of sales were all-cash transactions last year, according to the National Association of Realtors. The rate was 14% in October 2008, when the trade group began tracking the measure.
The jump in real-estate purchases made with cash is another sign of the revival of animal spirits in the U.S. economy.
The Dow Jones Industrial Average rose 69.48 points Monday, or 0.6%, to 12161.63, and the Standard & Poor's 500-stock index rose 8.18 points, or 0.6%, to 1319.05.
Monday's announcements of $13 billion in acquisitions lifted stocks on hopes of more deals, share buybacks and dividends as companies regain momentum in an improving economy.
Journal Community
The two stock indexes have soared more than 80% since early March 2009.
The Federal Reserve reported that Americans increased their use of credit cards in December for the first time since August 2008, showing that consumers are getting less skittish about opening their wallets. Investors also were soothed Monday by encouraging signs in Egypt, including last weekend's reopening of banks.
Residential real estate has been slower to bounce back than stocks, but the presence of apparent bargains is luring in newly confident buyers.
Richard Stoker, a retired sales executive, recently plunked down cash for two condominiums in Miami Beach, and plans to close on one more in coming days. He loves the complex's ocean views, four swimming pools and activities such as yoga and Pilates.
But what also motivated the purchase, said the 73-year-old, was that "the prices were just irresistible. Florida's been hit pretty hard." To pay the $1.8 million, $1.2 million and $1 million prices on the condos, Mr. Stoker and his wife, Jane, cashed out of some financial investments and sold a Roy Lichtenstein painting and an Alexander Calder mobile.
Mr. Stoker could have taken out mortgages, but decided to pay cash. "It was a good time to lighten up in the art market and take on real estate at a favorable price," he said.
The harder a market has been hit, say economists, the higher the percentage of cash deals. Last summer, piano teacher Virginia Hall-Busch told a real-estate agent she met through the Rotary Club to keep her posted on deals on historic houses in Stone Mountain, Ga.
A few days later, Ms. Hall-Busch, 62, got a call about a 1918 bungalow with three bedrooms and one bathroom listed for "short sale," which in the real-estate world means at a price lower than what's owed on it. The home had been on the market for $159,000, then dropped to $129,000 and then to $79,900.
"I offered them 50," she said. "I figured, it wasn't like I needed a place to live. I can afford to be a little cocky here."
Ms. Hall-Busch closed in October for $52,500 and began renovations within weeks.
"When you have a bad economy, it's hard on lots of people," she said. "But right now if you've got the money to put down on a house, long term it's going to be good thing."
Some of the cash purchases reflect a tight lending environment, where even people with good credit and ample down payments are sometimes turned away for conventional borrowing.
"The rates are great but the underwriting is brutal," said Henry Schlangen, an agent with real-estate firm Pacific Union International who buys and sells for clients, mainly in Napa Valley, Calif.
"They hang these people upside down and shake them till they see what falls out of their pockets. So people are buying with cash and maybe they'll 'refi' later."
Mr. Schlangen, who deals in higher-end properties such as vineyard estates, estimated that 95% of his deals last year were all-cash, up from about half in previous years. "The deals that are consummating, these are buyers who feel they got a great deal," he said, noting a surge of buyers from China.
Cash buyers can often command 5% to 10% more off the asking price than a potential buyer using a mortgage, said Mohammed Siddiq, a real-estate professional in Fort Lauderdale, Fla. Sellers prefer cash deals since they close more quickly and avoid risks such as a buyer's job loss or a bank's changing its mind.
And while many buyers making low-ball offers dig their heels, Mr. Siddiq said he has started to see bidding wars and slightly increasing prices.
Nationally, it isn't clear whether prices have bottomed. The Case-Shiller index of housing prices in 20 cities showed a steep decline in prices until 2009, when they appeared to bottom and began to trend upward. But in the second half of last year, prices began falling again. A Zillow index, meanwhile, never noted the uptick.
Since mid-October, Canyon Ranch in Miami Beach, the development Mr. Stoker bought into, has sold 35 units, with a third of the buyers from overseas and many others retiring from the Northeast.
The Stokers have a home in Potomac, Md., but spend most of the year in Florida. Mr. Stoker doesn't plan to rent out any of his new properties, saying he and his wife will live in one with two dogs, his son might live in another and the third will house an older dog and guests.
By S. MITRA KALITA
Jason Henry for The Wall Street Journal
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Monday, February 7, 2011
Foreclosures Expected to Peak in 2011
NEW YORK -- The bleakest year in foreclosure crisis has only just begun.
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home's value, industry analysts forecast.
"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year by lenders.
The outlook comes after banks repossessed more than 1 million homes in 2010, RealtyTrac said Thursday. That marked the highest annual tally of properties lost to foreclosure on records dating back to 2005.
One in 45 U.S. households received a foreclosure filing last year, or a record high of 2.9 million homes. That's up 1.67 percent from 2009.
For December, 257,747 U.S. homes received at least one foreclosure-related notice. That was the lowest monthly total in 30 months. The number of notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.
The pace slowed in the final two months of 2010 as banks reviewed their foreclosure processes after allegations surfaced in September that evictions were handled improperly. Under increased scrutiny by the government, lenders temporarily halted taking actions against borrowers severely behind on their payments.
However, most banks have since resumed their eviction processes, and the first quarter will likely show a rebound in foreclosure activity, Sharga said.
Foreclosures are expected to remain elevated through the year as homeowners contend with stubbornly high unemployment, tougher credit standards for refinancing and falling home values. Sharga said he expects prices to dip another 5 percent nationally before finally bottoming out. The decline will push more borrowers underwater on their mortgages. Already, about one in five homeowners with a mortgage owe more than their home is worth.
The pain likely will be the most acute in states that have already been hit hard. That includes former housing boom states Nevada, Arizona, Florida and California, along with states that are suffering most from the economic downturn, including Michigan and Illinois.
Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before. One in every 11 households received a foreclosure filing last year in the state. In December, foreclosure activity increased 18 percent from November with a 71 percent spike in bank repossessions.
Arizona and California also showed sharp December increases in the number of homes banks took back, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.
One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.
California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top ten states with the highest foreclosure rates.
More than half of the country's foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan. Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.
RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions -- warnings that can lead up to a home eventually being lost to foreclosure.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home's value, industry analysts forecast.
"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year by lenders.
The outlook comes after banks repossessed more than 1 million homes in 2010, RealtyTrac said Thursday. That marked the highest annual tally of properties lost to foreclosure on records dating back to 2005.
One in 45 U.S. households received a foreclosure filing last year, or a record high of 2.9 million homes. That's up 1.67 percent from 2009.
For December, 257,747 U.S. homes received at least one foreclosure-related notice. That was the lowest monthly total in 30 months. The number of notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.
The pace slowed in the final two months of 2010 as banks reviewed their foreclosure processes after allegations surfaced in September that evictions were handled improperly. Under increased scrutiny by the government, lenders temporarily halted taking actions against borrowers severely behind on their payments.
However, most banks have since resumed their eviction processes, and the first quarter will likely show a rebound in foreclosure activity, Sharga said.
Foreclosures are expected to remain elevated through the year as homeowners contend with stubbornly high unemployment, tougher credit standards for refinancing and falling home values. Sharga said he expects prices to dip another 5 percent nationally before finally bottoming out. The decline will push more borrowers underwater on their mortgages. Already, about one in five homeowners with a mortgage owe more than their home is worth.
The pain likely will be the most acute in states that have already been hit hard. That includes former housing boom states Nevada, Arizona, Florida and California, along with states that are suffering most from the economic downturn, including Michigan and Illinois.
Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before. One in every 11 households received a foreclosure filing last year in the state. In December, foreclosure activity increased 18 percent from November with a 71 percent spike in bank repossessions.
Arizona and California also showed sharp December increases in the number of homes banks took back, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.
One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.
California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top ten states with the highest foreclosure rates.
More than half of the country's foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan. Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.
RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions -- warnings that can lead up to a home eventually being lost to foreclosure.
American Eagle Realty can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Subscribe to:
Posts (Atom)