Sunday, May 13, 2012
Friday, May 11, 2012
Home prices hit new lows in 9 of 20 markets
Home prices fell from January to February in 16 out of 20 markets tracked by the S&P/Case-Shiller Home Price Indices, with nine markets posting new lows for the downturn.
Miami (0.6 percent), Phoenix (1.2 percent) and San Diego (0.2 percent) were the only metros to record positive monthly returns, while Dallas was flat.
Taken as a whole, the 20-city composite index showed prices down 3.5 percent from a year ago -- a slightly less drastic decline than the 3.9 percent annual deprectiation seen in January, but a new low for the downturn.
The 20-city composite puts average U.S. home prices back to where they were in late 2002, down 35 percent from
their peak in the summer of 2006.
Five markets -- Denver, Detroit, Miami, Minneapolis and Phoenix -- registered positive annual returns, although prices in Phoenix were still down 54.2 percent from their peak.
The nine markets hitting new lows were Atlanta, Charlotte, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa.
S&P/Case-Shiller Home Price Indices February 2012
| Metro area | February 2012 index level (January 2000=100) | Change January to February | Change from year ago |
| Atlanta | 83.29 | -2.5% | -17.3% |
| Boston | 146.23 | -1.1% | -2.4% |
| Charlotte | 108.13 | -0.4% | -1.8% |
| Chicago | 105.39 | -2.5% | -6.9% |
| Cleveland | 94.14 | -1.7% | -4.4% |
| Dallas | 112.67 | 0.0% | -1.0% |
| Denver | 121.81 | -0.9% | 0.5% |
| Detroit | 68.60 | -1.3% | 1.5% |
| Las Vegas | 89.89 | -0.4% | -8.5% |
| Los Angeles | 159.49 | -0.8% | -5.2% |
| Miami | 139.49 | 0.6% | 0.8% |
| Minneapolis | 110.16 | -1.0% | 0.4% |
| New York | 159.58 | -0.8% | -3.0% |
| Phoenix | 104.12 | 1.2% | 3.3% |
| Portland | 129.60 | -0.3% | -3.0% |
| San Diego | 149.07 | 0.2% | -3.9% |
| San Francisco | 124.64 | -0.7% | -4.1% |
| Seattle | 128.99 | -0.8% | -2.9% |
| Tampa | 123.91 | -0.2% | -2.9% |
| Washington | 175.74 | -0.8% | -2.3% |
| Composite-10 | 146.90 | -0.8% | -3.6% |
| Composite-20 | 134.20 | -0.8% | -3.5% |
Source: S&P Indices & Fiserv
Phoenix and Atlanta stand out in terms of their contrasting relative strength and weakness in the early 2012 housing market, said David M. Blitzer, chairman of the Index Committee at S&P Indices.
"At one end of the spectrum, we have Atlanta posting a double-digit, and lowest on record, annual rate at -17.3 percent," Blitzer said in a statement. "Atlanta has now recorded five consecutive months of double-digit negative annual rates and seven consecutive monthly declines. On the other hand, Phoenix has posted two consecutive months of positive annual rates, with its latest being +3.3 percent, and five consecutive positive monthly returns."
Average home prices in Atlanta, Cleveland, Detroit and Las Vegas continue to register below January 2000 levels.
Zillow Chief Economist Stan Humphries said foreclosure resales continue to pull down home prices.
"Looking forward, we think homes sales will continue to trend upward, which ultimately will result in a slower rate of home-value depreciation," Humphries said. "But any housing recovery will be dependent on job growth.
Continued progress in this area is essential to keeping the housing recovery, such as it is, on track."
Wednesday, May 9, 2012
Interest Rate Update
5 signs that it's a good time to sell
Why desperate homeowners could find relief this year
By Dian Hymer
Inman News®
By Dian Hymer
Inman News®
Traditionally, most homes have sold during the spring months. In the current volatile housing market, the time of year is not the most reliable predictor of the best time to sell.
Homes certainly show better in spring than they do on a dark and dreary winter day. Lately, however, weather patterns are hard to predict.
The weather has some effect on home sales. It can slow things down if incessant rain keeps sellers from being able to prepare their homes for sale. However, a bigger influence on the housing market is the overall economic situation and its impact on buyers' psyche.
Normally, the home-sale market ramps up in March or April and stays busy until the beginning of July when the market tends to slow down for the summer. The 2011 home sales went counter to this. The market was active at the beginning of the year, but stalled in April. If you waited until spring to sell last year, you would have missed the best selling opportunity of the first half of 2011.
The early slowdown was partially due to the expiration of the homebuyer stimulus package. The homebuyer tax credit program accelerated home purchases creating a mini bubble in 2010 that was followed by a significant slowdown in home sales.
Negative economic news played a big part in the sluggish home sales during most of last year. The stock market was unpredictable, and the earthquake in Japan had repercussions for many industries. Plus, Greece was on the brink of bankruptcy, and the future of the European Union was in doubt.
Bad economic news and massive uncertainty lowers consumer confidence. Buyers need to have jobs, but they also need to feel confident in their future to take on a major purchase like a house.
HOUSE HUNTING TIP: The best time to sell is when consumer confidence is on the upswing; interest rates are low; unemployment is decreasing; the economic news is mild; and there are more buyers in your local market niche than there are sellers. A high-demand, low-inventory market gives sellers an edge.
The Conference Board Consumer Confidence Index fell in March 2012 to 70.2 (1985=100), down from 71.6 in February, when it was up sharply.
Lynn Franco, director of The Conference Board Consumer Research Center, attributed the improvement in consumer confidence in February to less pessimism about current business and employment conditions and more optimism about the short-term outlook for the economy and job prospects despite a rise in gas prices. Franco said the moderate decline seen in March was "due solely to a less favorable short-term outlook."
Interest rates are currently at historic lows and are expected to stay low for the rest of the year. Even with low rates, buyers have had difficulty qualifying due to rigid mortgage approval underwriting.
Capital Economics, an analytics firm, expects the housing crisis to end this year partially due to lenders loosening credit. According to Capital Economics, one indicator of loosening is that banks are now lending 82 percent of loan-to-value (LTV), compared with a low of 74 percent LTV reached in mid-2010. This means qualified buyers need less cash to buy, which should lead to more sales this year, although higher home prices are not expected.
These positive indicators combined with a drop in homes for sale at the end of 2011 and a decrease in unemployment may provide an opportunity for sellers in spring 2012, provided their homes are priced right for the market. A major surprise on the economic front could change the picture.
THE CLOSING: Regardless of the economic indicators, the best time to sell is when the time is right for you.
Monday, May 7, 2012
Fannie, Freddie accelerating short sales
Loan servicers must make decision in 30 days -- unless they need 60
By Inman NewsFannie Mae and Freddie Mac will require loan servicers who need more than 30 days to make a decision on a short-sale offer to provide weekly status updates and give a thumbs-up or thumbs-down no later than 60 days after receiving an offer.
The new short-sale timelines, announced this week by Fannie and Freddie's regulator, the Federal Housing Finance Agency, take effect in June as the first step in a broader effort to "develop enhanced and aligned strategies for facilitating short sales, deeds-in-lieu and deeds-for-lease in order to help more homeowners avoid foreclosure."
FHFA said it expects additional changes to be in place by the end of the year that address borrower eligibility and evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders, and mortgage insurance.
Freddie Mac issued more specifics on its new short-sale timeline, which applies not only to offers on properties in Freddie Mac's traditional short-sale program, but to requests from borrowers to be considered for a short sale or deed-in-lieu of foreclosure under the Home Affordable Foreclosures Alternatives (HAFA) program.
Although Freddie Mac expects loan servicers to make a decision within 30 days, it recognizes that servicers may need more time to obtain a broker price opinion or approval from a private mortgage insurer before accepting a short-sale offer or approving a HAFA borrower response package (BRP).
If a loan servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower's response.
Freddie Mac, which completed 45,623 short sales last year, said the new requirements are the latest step to comply with direction from the FHFA to set consistent servicing and delinquency management requirements.
"Short sales are more complex than routine home sales since they may involve multiple parties and long-distance negotiating," said Tracy Mooney, Freddie Mac senior vice president, single-family servicing and REO, in a statement. "Freddie Mac's new timelines are intended to help make the decision process more transparent and timely for short sales under the Obama administration's HAFA program or Freddie Mac's traditional short-sale option."
Last week, Bank of America announced its cut decision times on short-sale offers to no more than 20 days, down from 45 days or longer. If offers fall through, agents have five days instead of 14 days to submit a backup offer.
Saturday, May 5, 2012
The housing crash was no accident; maybe it’s time to start assigning blame!
By Michelle Lenahan
If you have ever been in an auto accident, you know that insurance adjusters from both sides examine the accident to determine the comparative negligence. If the fault was fifty percent yours, you are responsible for 50 percent of the damage.
Having tracked hundreds of thousands of foreclosures, we have yet to see a single case where the owner was making their payments, did everything right, and still lost their house. This seems to be lost on most that see foreclosures as “the problem”.
We have long said foreclosures are not the problem, negative equity is. Despite what you may hear about the housing crisis, negative equity was not caused by a downturn in the economy, nor job loss. A run away credit bubble caused it. While we believe banks and government deregulation were primarily to blame, do homeowner’s really have no responsibility?
Let’s look at two real life examples:
Owner purchases a property in 2004 for no money down. Over the next two years she pulled out $140,000 of equity. In 2007 she defaults on the loan. In 2011 the bank takes the property back in foreclosure. One year later, 2012, she is finally evicted from the property after living there for five years without making a payment. She is now in the news for breaking back into the home to fight what she says is an “unlawful foreclosure”. The lender was forced to secure the property with steel doors and window coverings to keep her out. What really are her damages? What consideration does she deserve? What consequences should she suffer?
An eighty-year-old couple in poor health needs money for medical bills. They are collecting social security and yet qualify for three back-to-back option ARM loans in a three-year period, resulting in outstanding debt of $500,000. Each time they refinanced, the loan fees and prepayment penalties nearly exceeded the amount they received at close of escrow. Now that the payments are increasing, they can no longer afford to stay in the home they have owned for 30 years. Clearly they were refinancing of their own free will, using the cash they received, but were also put into loans they could obviously not afford. Who is at fault here? Should they be entitled to live out their final years in the home?
Both of these examples are of people who took cash out of their homes. Should the rules be different for them, then for those who purchased with no money down and never took cash out, but are now upside down? And what about those who did everything “right” and put 20 percent or more down, yet now find themselves underwater?
These are real questions of fairness that we rarely see addressed.
First it seems to us that it would be fair and equitable, to not allow any principle reductions on cash out. Instead we think the underwater, cash out, portion of any mortgage should be converted to unsecured debt. This allows lenders to fully pursue collection, while allowing borrowers the right to eliminate the debt in bankruptcy without fear of losing their home. If the borrower doesn’t want this option, then they can try to negotiate a short sale, or deal with the consequences of foreclosure – fair all around.
As for principle balance reductions, those should be strictly limited to amounts used to purchase a home, where the home has since fallen in value, through NO direct fault of the borrower. This is fair because banks were in a far better position to realize that prices were unsustainable at the peak, then the average homeowner, who kept hearing that prices would only go up, or that there was no bubble.
What’s most unfathomable to me is why anyone condones breaking the law by suggesting its ok to break and enter into homes that have been foreclosed on. Even if one intends to take a stand, is that really the right way? And is foreclosure actually bad for homeowners? Why in the world would anyone take a stand against a process that, at least in California, allows you in many cases to walk away from a huge debt with nothing but a hit to your credit report. In some countries not paying one’s debts means jail time.
The saddest thing I see today, is that the worst actors, who signed up for the worst loans, and cry the most about unjust foreclosures are the most likely to get help from the banks. While prime borrowers with great credit, traditional 30-year financing who didn’t use their house as an ATM, and showed respect for the law, rarely get a decent loan modification no matter the circumstances, and often have short sale requests declined.
What do you think? Can you honestly say only the banks are to blame?
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