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Daily Real Estate News | Thursday, December 13, 2012

U.S. foreclosure starts have dropped 28 percent from a year ago and are now at their lowest level since December 2006, marking a 71-month low, RealtyTrac reports.

The latest data offers “more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago,” says Daren Blomquist, vice president at RealtyTrac. “But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago — and much longer in some cases. We’re likely not completely out of the woods when it comes to foreclosure starts, either, as lenders are still adjusting to new foreclosure ground rules set forth in the National Mortgage Settlement along with various state laws and court rulings.”

According to the latest data from RealtyTrac, foreclosure starts dropped from a year ago in 28 states — most notably in Oregon (which saw an 84 percent drop), Pennsylvania (67 percent), California (63 percent), Arizona (59 percent), and Georgia (51 percent).

Meanwhile, foreclosure starts rose from a year ago in 18 states, including New Jersey (a 538 percent increase), Arkansas (455 percent), New York (209 percent), Washington (97 percent), and Connecticut (95 percent).

Source: RealtyTrac

Related articles

• RealtyTrac: Hawaii foreclosures fell 73% from last year, but ‘starts’ nearly doubled (bizjournals.com)
• U.S. new foreclosures lowest in six years in Nov -RealtyTrac (uk.reuters.com)

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The big discounts in the housing market are fading, and investors are taking notice that time is ticking. Blackstone Group LP, the world’s largest private-equity firm, says that investors likely have less than two years to buy up foreclosed U.S. homes as prices rise and supplies shrink.

“Prices are starting to move faster,” Jonathan Gray, global head of real estate for Blackstone, told Bloomberg. “That’s one of the risks that emerge as more people like us get into the space and as individual homeowner confidence grows. Frankly, buying a home today is pretty compelling.”

Blackstone has spent about $1.5 billion on 10,000 foreclosed homes this year alone. It is the biggest buyer of single-family homes in the nation. According to Blackstone, the investment firm purchases $100 million in these kinds of properties per week. The strategy is to purchase foreclosed single-family homes at steep discounts and turn them into rentals.

“The recovery in house prices could surprise people,” Gray told Bloomberg. “They have just gotten beaten down so much and we’re not building enough to keep up with the population growth. Affordability is there. I think as home owners get a little bit of confidence, we will steadily have more people lean toward buying homes, faster home-price appreciation, which will be good for this investment strategy and good for the economy at large.”

Source: “Blackstone Sees 2-Year Window to Buy Distressed Homes: Mortgages,” Bloomberg (Nov. 14, 2012)
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The latest industry reports are showing housing prices on the rise, and it has made more sellers want to raise their asking price, according to industry insiders.

Shrinking inventories of for-sale homes with pent-up demand is allowing sellers to charge about 5 percent more than they could have just six months ago, Everett King, president of ERA King Real Estate in Birmingham, Ala., told USA Today.

Real estate companies are reporting that sellers are having more luck with their higher asking prices, too. For example, in Tucson, Ariz., home sellers are getting 96 percent of their asking price on average, USA Today reports.

Still, others caution that sellers can’t get too unrealistic with their price expectations. The economy is still sluggish and unemployment is still high. Plus, Stan Humphries, Zillow.com’s chief economist, cautions that a shortage of lower-price homes for sale in many markets may be inflating asking prices.

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With rates for 30-year mortgages hovering below 4 percent since last October, all kinds of homeowners are trying to get their monthly mortgages reduced, say lenders and mortgage experts.

Along with months of record-breaking low interest rates, other factors are driving the refinancing boom: a competitive lending market and changes in some federal refinancing programs for struggling homeowners.  It’s prompted many established homeowners with old-school, high-interest mortgages to decide it’s time to refi.

• To determine whether you should refinance, look at how long you plan to be in your current home and whether the upfront costs outweigh the monthly savings.  Generally the primary reasons for refinancing a mortgage are to:
  • Lower monthly mortgage payments.
  • Eliminate the unpredictability of an adjustable-rate mortgage by switching to a fixed rate.
  • Free up home equity cash for home improvements, college costs or other expenses.
  • Shorten the loan term, say from a 30- to a 15-year mortgage, which can save thousands in interest payments.
• It pays to compare quotes from several lenders because they offer different rates and fees. Start with your current lender or sit down with a local loan originator. You can also do refinance comparisons online, using mortgage calculators at sites like Bankrate.com or those of individual banks and lenders.
• If you’re a struggling homeowner, ask your lender about changes in the federal Home Affordable Refinance Program and FHA refinance programs that have made refinancing options more plentiful.

Read the full story

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More home buyers are finding they’re losing their power position in the real estate market and that when they submit an offer for a home, they may not be alone in the bidding. In fact, buyers who submit low offers may not even get a courtesy of a callback nowadays.

One Florida couple says they put in seven offers on homes over two months — most at or above asking price — before they were finally able to get a $365,000 Sarasota home.

A drop in the inventory of for-sale homes around the country is prompting more competition among home buyers. Inventory in June is 24 percent below year-ago levels.

“I’ve had listings get 45 offers,” Sin-Yi Chao Lambertson, a real estate broker in Glendora, Calif., told Money Magazine.

Money Magazine recently offered potential buyers the following tips if they want to get the winning bid on a home:

• Get pre-approved, not prequalified: Pre-approval for a loan based on a buyer’s credit, income, and assets is viewed as better than getting pre-qualified, which is just an estimate of how much that buyer may be able to borrow.
• Find an experienced REALTOR®: Money Magazine advised home buyers to find a real estate professional who knows how to handle multiple-offer situations and can advise how much to offer and help buyers determine if they’re getting a home at a fair price.
• Watch the contingencies: “The best offer isn’t always the one with the best price,” says George Miller, a Sarasota, Fla., real estate agent. Buyers who put in too many contingencies with their offer may lose out.

Source: “Winning in a Seller’s Housing Market,” Money Magazine (Sept. 12, 2012)
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• The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 51 percent in the second quarter of 2012, down from 56 percent in first-quarter 2012, but matched the 51 percent recorded in second quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
• C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.  C.A.R. also reports affordability indices for regions and select counties within the state.  The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
• Home buyers needed to earn a minimum annual income of $62,390 to qualify for the purchase of a $316,230 statewide median-priced, existing single-family home in the second quarter of 2012. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,560, assuming a 20 percent down payment and an effective composite interest rate of 3.92 percent.  The effective composite interest rate in first-quarter 2012 was 4.16 percent and 4.85 percent in the second quarter of 2011.
• The San Francisco Bay Area experienced the largest quarterly declines in housing affordability, resulting from double-digit price increases with little movement in the interest rate.  However, when compared with the previous year, changes to the affordability index were minimal, thanks to a near-one percent drop in the effective composite interest rate.
• At an index of 78 percent, San Bernardino County was the most affordable county of the state. At the other end, San Mateo County edged out San Francisco County (24 percent) to be the least affordable, with only 23 percent of households able to purchase the county’s median-priced home.

Read the full story

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• China New-Home Prices Rebound After Interest-Rate Cuts

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A new study shows that in more than three-fourths of 200 metro areas in the U.S., home owners would “break even” financially by owning a home after three years or less than if they opted to rent instead.

The recent study by Zillow factors in home ownership costs — including down payments, closing costs, mortgage payments, property taxes, utilities, and maintenance costs — and compares it to the costs of renting. The study supports other recent findings that show with rents are on the rise nationwide that home ownership is becoming increasingly affordable with record low mortgage rates and falling home values.

“Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5 percent over the past year,” says Stan Humphries, Zillow’s chief economist.

Zillow found that even in some markets, such as Miami, a person buying a home would only have to stay in that home for about 1.6 years for it to prove better than renting one there, due to the rising costs of renting in the city. Tampa, Fla., and Memphis, Tenn., also were found to be some of the top cities where owning a home trumps renting by the most, according to Zillow.

Meanwhile, San Jose, Calif., home owners have the longest time until they reach a “break even” point on their homes. Home owners there would have to wait 8.3 years before their home purchase would trump renting, according to the Zillow study.

Source: “Buying Beats Renting in Most Cities,” CNNMoney (Aug. 2, 2012)

Read More

Related articles

• Buying beats renting in most U.S. cities
• Bay Area housing values jump in second quarter, Zillow says.
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Existing-home prices continued to show gains but sales fell in June with tight supplies of affordable homes limiting first-time buyers, according to the National Association of REALTORS®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, declined 5.4 percent to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May, but are 4.5 percent higher than the 4.18 million-unit level in June 2011.

Lawrence Yun, NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.68 percent in June from 3.80 percent in May. The rate was 4.51 percent in June 2011; recordkeeping began in 1971.

The national median existing-home price for all housing types was $189,400 in June, up 7.9 percent from a year ago. This marks four back-to-back monthly price increases from a year earlier, which last occurred in February to May of 2006. June’s gain was the strongest since February 2006 when the median price rose 8.7 percent from a year prior.

Distressed homes — foreclosures and short sales sold at deep discounts — accounted for 25 percent of June sales (13 percent were foreclosures and 12 percent were short sales), unchanged from May but down from 30 percent in June 2011. Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent. “The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling,” said Yun.

NAR President Moe Veissi said there’s been a steady growth in buyer interest. “Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly,” he said. “The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices. Nonetheless, incorrectly priced homes will not attract buyers.”

Total housing inventory at the end June fell another 3.2 percent to 2.39 million existing homes available for sale, which represents a 6.6-month supply at the current sales pace, up from a 6.4-month supply in May. Listed inventory is 24.4 percent below a year ago when there was a 9.1-month supply.

First-time buyers accounted for 32 percent of purchasers in June, compared with 34 percent in May and 31 percent in June 2011. “A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity,” Yun said.

All-cash sales edged up to 29 percent of transactions in June from 28 percent in May; they were 29 percent in June 2011. Investors, who account for the bulk of cash sales, purchased 19 percent of homes in June, up from 17 percent in May; they were 19 percent in June 2011.

Single-family home sales declined 5.1 percent to a seasonally adjusted annual rate of 3.90 million in June from 4.11 million in May, but are 4.8 percent above the 3.72 million-unit pace in June 2011. The median existing single-family home price was $190,100 in June, up 8.0 percent from a year ago.

Existing condominium and co-op sales fell 7.8 percent to a seasonally adjusted annual rate of 470,000 in June from 510,000 in May, but are 2.2 percent higher than the 460,000-unit level a year ago. The median existing condo price was $183,200 inJune, which is 6.9 percent above June 2011.

Regionally, existing-home sales in the Northeast dropped 11.5 percent to an annual pace of 540,000 in June but are 1.9 percent above June 2011. The median price in the Northeast was $253,700, down 1.8 percent from a year ago.

Existing-home sales in the Midwest slipped 1.9 percent in June to a level of 1.02 million but are 14.6 percent higher than a year ago. The median price in the Midwest was $157,600, up 8.4 percent from June 2011.

In the South, existing-home sales declined 4.4 percent to an annual pace of 1.73 million in June but are 5.5 percent above June 2011. The median price in the South was $165,000, up 6.6 percent from a year ago.

Existing-home sales in the West fell 6.9 percent to an annual level of 1.08 million in June and are 3.6 percent below a year ago. The median price in the West was $233,300, up 13.3 percent from May 2011. Given tight supply in in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges.

Source: NAR

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The post June Existing-Home Prices Rise Again appeared first on O'Dell Realty.

• HARP borrowers typically refinance with the banks that originally serviced their loans, because those banks already have their information and, according to the Mortgage Bankers Association, “There’s potential for it to be a less painful process.”
• Still, tighter lending standards precipitated by the mortgage crisis have made for an arduous application process.
• Mortgage brokers are reporting an increase in business from those looking to streamline the process.  According to one broker, a benefit of working with a mortgage broker is that they have direct contact with the banks and can keep track of the application as it goes through many hands at the bank.
• Borrowers also might want to consider refinancing with a community bank, especially those that do not service HARP-eligible borrowers and are able to respond quicker to non-HARP refinance requests.

Read the full story 

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• HARP 2 Refinance Loans Surged Since Beginning of Year

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• Why Your Bank Wants You to Refinance

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Daily Real Estate News | Thursday, June 28, 2012

The number of home owners with severely delinquent mortgages — 90-plus days past due or in foreclosure — fell 37 percent in May compared to its peak in January 2010, according to a new report out by Equifax. Seventy percent of those delinquencies are loans opened between 2005 through 2007, Equifax notes in its May National Consumer Credit Trends Report.

“That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions,” says Amy Crew Cutts, Equifax chief economist. ”What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014.”

According to the report, severely delinquent non-agency loans have seen the largest drops. Non-agency severely delinquent loans fell 45 percent in May to $320 million compared to its peak in January 2010 of $580 million. Meanwhile, agency-sourced mortgages — those that are backed by Fannie Mae, Freddie Mac, the Federal Housing Administration, and Veterans Administration — declined 9 percent in May to $130 billion compared to its peak in January 2010 of $142 billion.

The report also showed that mortgage write-offs have dropped 28 percent in May from their peak in 2010. Also, home mortgage balances have fallen 12.5 percent to $8.6 trillion compared to its record-setting $9.8 trillion reached in October 2008.

Source: Equifax

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• Equifax: Late mortgage payments down significantly

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