Foreclosures Up 57% Since March 2007
Foreclosure filings continue to increase, up 5 percent in March over February, and up 57 percent from March 2007. This includes default notices, auction sale notices, and bank repossessions.
“What we’re really looking at is ongoing fallout from people overextending themselves to buy homes they couldn’t afford and using highly toxic loan products to get into the houses in the first place,” Rick Sharga, vice president of marketing at RealtyTrac, an online publisher of foreclosure data.
Sharga predicts a record number of foreclosures in the third or fourth quarter of this year, reflecting a round of rate increases on subprime mortgages in May and June.
Nevada, California and Florida posted the highest rate of foreclosure filings in March, followed by Arizona, Colorado, Georgia, Ohio, Michigan, Massachusetts, and Maryland.
California, Florida, and Ohio report the highest actual number of foreclosures. Other states in the top 10 for total properties with filings are Texas, Georgia, Michigan, Arizona, Illinois, Nevada and Colorado.
Source: Reuters News, Lynn Adler, and RealtyTrac (04/15/2008)
Poll: Most Say It’s Good Buyer’s Market
Now is a good time to buy, say 59 percent of those surveyed in an Associated Press-AOL Money & Finance poll.
But long-term confidence in the housing market doesn’t keep some home owners from having concerns about the current situation.
67 percent think it is harder for first-time home buyers than it was five years ago.
60 percent say they will delay buying a home for two years.
11 percent are certain or very likely to buy soon.
40 percent believe housing prices will rise soon
35 percent think the prices of homes in their neighborhood are about right
50 percent of home owners in the Northeast say houses are still overpriced,
10 percent of those in the Midwest think homes are underpriced.
Gus Faucher, director of macroeconomics for Moody’s Economy.com, a consulting firm, said his company believes home sales are at or near bottom, but home values will continue to fall until early next year.
Even so, he said, many people bought their homes before the run-up in values that started around 2001, so they’re still in good shape. Unless the home owner must sell now or can’t afford the payments, the current downturn “doesn’t have that much of an impact,” he said.
Source: The Associated Press, Alan Fram (04/14/2008)
Hiking at Dreamy Draw Park
Just some pictures from a hike at Dreamy Draw Park here in Phoenix. Trying out a new camera too.
Why Selling Now Makes Sense
Home owners who are reluctant to sell because prices have fallen, should do the math, and realize that the market downturn could work in their favor, say practitioners in hard-hit, but still pricey Boston.
Their reasoning may work in many other parts of the country as well.
“People are finding houses at prices they thought they’d never see again,” says David W. O’Neil of Century 21 Spindler & O’Neil Associates in suburban Boston.
O’Neil points out to potential sellers that if the house a buyer covets used to be $500,000 but its price has fallen 20 percent to $400,000, it is a deal, even if the buyer’s own home also has lost 20 percent of its value.
In general, the toughest sell is people who bought about four years ago at the height of the market, says Zur Attias of The Attias Group at Barrett & Co. in Concord, Mass. But even for these home owners, selling now may make sense as long as they can at least break even.
He argues that almost everyone forgoes something, and probably several things, that he or she wanted when buying a house. For instance, the home may be in the right school district, but on a busy street. Or it may in a great neighborhood, but it’s a Cape, not a Colonial. These are things Attias calls “unchangeables.”
He says it’s a good time to sell if a seller can get rid of the most negative unchangeables in his current home, and replace them with better unchangeables in a new home. Once the market really turns around, the growth will be bigger in the better house, he predicts.
Source: The Boston Globe, Vanessa Parks and Jonathan Wiggs (04/13/2008)
Consequences for ‘Walk-Away’ Borrowers
The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender.
Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.
Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.
Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven.
Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.
Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)
Mortgage Rates Hold Steady
The average interest on the benchmark mortgage rate held below the 6-percent threshold for the fourth consecutive week as 30-year loans remained at 5.88 percent this week, according to Freddie Mac.
”Once again, mortgage rates held relatively steady this week amid release of subdued economic data,” says Freddie Mac chief economist Frank Nothaft, who cited a government report on the number of jobs that were eliminated by businesses last month.
There was little movement involving the other mortgage rates as 15-year, fixed loans held steady at 5.42 percent, five-year adjustable-rate mortgages fell 0.03 percent to 5.56 percent, and one-year ARMs declined 0.01 percent to 5.18 percent.
Source: Chicago Sun-Times (04/11/08)
Final Innings of Credit Crisis?
Morgan Stanley CEO John Mack says he believes the global credit crisis is probably “in the final innings.”
“We’re keeping powder dry,” he says. “We feel the risks on the market, the run on Bear Stearns, and we think it is important to have very liquid positions and we’re working toward that.”
Mack says Morgan Stanley views opportunities in the same mortgage market that caused Wall Street’s pain this year. He expects more bad news will come out as the world’s banks recover from the subprime mortgage crisis, particularly from “overseas and some small retail banks in this country.”
But he adds that he’s optimistic the mortgage market is turning and that could provide opportunity.
Source: The Associated Press, Joe Bel Bruno (04/08/08)
NAR: Existing-Home Sales to Level Off
Little change is expected in existing-home sales over the next few months, before improving notably during the second half of the year, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Lawrence Yun, NAR chief economist, says the market will come into clearer focus this summer.
“Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he says. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, slipped 1.9 percent to 84.6, from an upwardly revised reading of 86.2 in January. The index was 21.4 percent lower than the February 2007 index of 107.6.
“The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun says.
By the Region
Here’s what the index reveals across the nation with existing-home sales:
Northeast: rose 3.2 percent in February to 71.8 but remains 25.4 percent below a year ago.
Midwest: declined 3.7 percent to 82.7 and is 17.4 percent lower than February 2007.
South: fell 5.5 percent in February to 85 and is 30.3 percent below a year ago.
West: dropped 9.8 percent in February to 84.6 and is 17.1 percent below February 2007.
Home Sales Forecast
Existing-home sales are likely to rise from an annual pace of 4.9 million in the first quarter to 5.9 million in the fourth quarter. With relatively weak activity in the first part of the year, existing-home sales for all of 2008 is forecast at 5.39 million, increasing 6.6 percent to 5.74 million in 2009.
“Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year,” Yun says.
The aggregate existing-home price will probably ease by 1.4 percent to a median of $215,800 for all of 2008 before rising 3.7 percent to $223,800 next year.
Yun says that there will continue to be wide variations in regional housing market conditions.
“Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana, and Arkansas,” he says. With lower interest rates and flat home prices in many areas, NAR’s housing affordability index is forecast to rise 14 percentage points to 127 in 2008.
New-home sales are projected to fall 25.7 percent to 576,000 in 2008 before rising 4.6 percent to 602,000 next year. Housing starts, including multifamily units, are estimated to drop 26.3 percent to 999,000 this year, and slip another 0.5 percent to 994,000 in 2009. The median new-home price will probably fall 3.6 percent to $238,400 in 2008, and then rise 4 percent next year to $247,800.
Other predictions on factors that can impact the housing market:
Mortgage rates: 30-year fixed-rate mortgages, which has fluctuated recently, should average 5.8 percent in the second and third quarters, but trend up to an average of 6.3 percent in 2009.
Growth in the U.S. gross domestic product: expected to be 1.4 percent in 2008 and 2.4 percent next year.
Unemployment rate: forecast to average 5.4 percent this year and 5.6 percent in 2009.
Inflation: (as measured by the Consumer Price Index) is projected at 3.4 percent in 2008 and 2.2 percent next year. Inflation-adjusted disposable personal income is likely to grow 1.2 percent this year and 3.0 percent in 2009.
“The economy will not grow in first half of the year,” Yun says. “However, the combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half.”
Existing-Home Sales to Stabilize Before Upturn in Second Half of 2008
WASHINGTON, April 08, 2008
Little change is expected in existing-home sales over the next few months, before improving notably during the second half of the year, according to the latest forecast by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said the market will come into clearer focus this summer. “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said. “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets. The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”
The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in February, slipped 1.9 percent to 84.6 from an upwardly revised reading of 86.2 in January, and was 21.4 percent lower than the February 2007 index of 107.6. “The slip in pending home sales implies we’re not out of the woods yet, though an era of successive deep sales declines appears to be over,” Yun said.
The PHSI in the Northeast rose 3.2 percent in February to 71.8 but remains 25.4 percent below a year ago. In the Midwest, the index declined 3.7 percent to 82.7 and is 17.4 percent lower than February 2007. The index in the South fell 5.5 percent in February to 85.0 and is 30.3 percent below a year ago. In the West, the index dropped 9.8 percent in February to 84.6 and is 17.1 percent below February 2007.
Existing-home sales are likely to rise from an annual pace of 4.9 million in the first quarter to 5.9 million in the fourth quarter. With relatively weak activity in the first part of the year, existing-home sales for all of 2008 are forecast at 5.39 million, increasing 6.6 percent to 5.74 million in 2009.
“Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year,” Yun said. The aggregate existing-home price will probably ease by 1.4 percent to a median of $215,800 for all of 2008 before rising 3.7 percent to $223,800 next year.
Yun noted that there will continue to be wide variations in regional housing market conditions. “Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana and Arkansas,” he said. With lower interest rates and flat home prices in many areas, NAR’s housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.
New-home sales are projected to fall 25.7 percent to 576,000 in 2008 before rising 4.6 percent to 602,000 next year. Housing starts, including multifamily units, are estimated to drop 26.3 percent to 999,000 this year, and slip another 0.5 percent to 994,000 in 2009. The median new-home price will probably fall 3.6 percent to $238,400 in 2008, and then rise 4.0 percent next year to $247,800.
The 30-year fixed-rate mortgage, which has fluctuated recently, should average 5.8 percent in the second and third quarters, but trend up to an average of 6.3 percent in 2009.
“The economy will not grow in first half of the year,” Yun said. “However, the combination of recent fiscal stimulus enactment and the lagged impact of monetary policy will help jump start the economy in the second half.” Growth in the U.S. gross domestic product (GDP) is expected to be 1.4 percent in 2008 and 2.4 percent next year. The unemployment rate is forecast to average 5.4 percent this year and 5.6 percent in 2009.
Inflation, as measured by the Consumer Price Index, is projected at 3.4 percent in 2008 and 2.2 percent next year. Inflation-adjusted disposable personal income is likely to grow 1.2 percent this year and 3.0 percent in 2009.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
High Price Doesn’t Guarantee Perfection
In the first quarter of 2008, average apartment prices in Manhattan rose by 33.5 percent to $1.7 million. In the same period, the number of apartments that closed for more than $10 million rose by 318 percent, according to calculations based on public records and provided by Brown Harris Stevens, a luxury residential real estate firm.
Surprisingly, those kinds of prices don’t guarantee perfection, experts say. For instance, practitioners selling these kinds of properties have noted:
A unit in the famed Essex House – 2,800 square feet for sale for about $10 million – had a towel on the windowsill to soak up a leak.
An apartment at 15 Central Park West going for $15 million has a tiny kitchen, causing several potential buyers to reject the unit.
A $6 million building on the Upper East Side has low ceilings, no views, and storage is $275,000 extra.
Source: The New York Times, Susan Dominus (04/07/08)
