Wednesday, March 21, 2012

FHFA: Local Laws to Blame for Slow Foreclosures

Federal Housing Finance Agency general counsel Alfred Pollard warned thatstate and local laws meant to aid home owners at risk of foreclosure actually delay the process, hurting the housing finance system and neighborhoods.
He cited such laws as in Washington, D.C., where mediation can prolong the foreclosure process by as many as 132 days, and in Worcester, Mass., where a $5,000 bond must be posted at the time of foreclosure to ensure the home will be maintained.
Pollard said states and localities must "review the balance between home owner protections and the movement to efficient and professionally undertaken foreclosures."
Source: "FHFA Blames Local Laws for Slow Foreclosure Process," American Banker (March 20, 2012)

New-Home Market Shows Steady Improvement

After a surge last month, housing starts dropped in February by 1.1 percent, the Commerce Department reported Tuesday. However, the slip was offset by a hopeful sign for builders that a recovery is still on track: Permits for future construction soared 5.1 percent, reaching its highest level in more than three years.
Permits for single-family homes increased 4.9 percent alone, the highest since April 2010, while permits for multi-family homes rose 5.6 percent, the Commerce Department reported.
The future gauge of building is a welcome sign for the building industry, which last year suffered one of its worst years on record for construction.
In comparing residential construction from this February to February 2011, construction is up 34.7 percent.
February’s modest decrease in housing starts was mostly due to a drop in single-family home construction, which makes up the biggest bulk of new construction. Single-family home construction dropped 9.9 percent in February. Meanwhile, multi-family housing continues to be a bright spot in the sector, soaring 21.1 percent in February due to an increase indemand for rental apartments.
Builder confidence has picked up in recent months and held steady, holding at near a five-year high in March, according to an index by the National Association of Home Builders/Wells Fargo.
"While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving," says Barry Rutenberg, chairman of the National Association of Home Builders. However, builders still cite hurdles that persist in the recovery, particularly the tightening of credit for builders and buyers and the inventory of distressed properties pulling down overall home prices.
Source: “U.S. Housing Starts Dip; Permits Near 3-1/2 Year High,” Reuters News (March 20, 2012) and the National Association of Home Builders

Housing Market Reaches Turning Point, Economists Say

Economists say the housing market is starting to heal, but too many people aren't aware of it because they're judging a housing recovery on the wrong sign: What’s happening with home prices.
Paul Dales at Capital Economics says higher prices won’t be the sign that the housing market is on the mend — that can be a lagging indicator — but rather an increase in overall home sales. And that's showing signs of improvement: Existing home sales in 2011 rose to 4.26 million compared to 4.19 million in 2010. In the last six months alone, home sales have increased 13 percent.
As a recent article at Fortune points out, “The evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions. The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties comes off the market as opposed to any steady rise in prices, which some think won't happen for another few years.”
Source: “The One Number to Watch for a Housing Recovery,” Fortune (March 20, 2012)

Capital Economics Expects Recovery to Continue Even with Higher Rates

By: Esther Cho 03/19/2012
Even with recent reports of rising mortgage rates and falling home prices, Capital Economics stated it still expects the housing recovery to be under way.
The research firm cites two reasons in a report on why mortgage rates won’t threaten recovery: rates can only rise so far when tighter monetary policy is still years away, and homes will still be affordable even if mortgage rates were to rise back to normal levels.
Last week ending March 15, Freddie Mac reported the 30-year fixed rate at 3.92 percent, an increase from the 3.88 percent reported the prior week, but still below 4 percent for 15 consecutive weeks.
“We doubt that higher mortgage rates will derail a housing recovery that in the last six months has seen total
home sales rise by 13 percent and the NAHB homebuilder activity index more than double to 28,” the research firm stated.
In addition to those recent reports, home prices are still dropping, with data from Zillow showing prices declined 4.6 percent from January 2011 to January 2012.
“Also, the fall in house prices over the last five years has been so large that even more normal mortgage rates would leave housing looking very affordable. And with housing appearing undervalued relative to disposable incomes per capita, valuations are also very favorable,” Capital Economics stated.
An economic outlook report from Fannie Mae echoed a similar sentiment about the direction of the housing market in a report Monday and stated, “GDP revisions for the fourth quarter of 2011 indicated a stronger underlying pace of demand with higher consumer spending and business investment.”
After four months of private sector payroll growth, the GSE named employment growth as an important factor in housing recovery.
Even with declining home prices, Capital Economics explained it can take up to six months for changes in demand and supply to have their full impact on house prices because even with attractive asking prices, it can still take a few months to find a buyer and another month or so before the contract is closed.

Fannie: Single-Family Rental Growth Won't Infringe on Multifamily

By: Krista Franks Brock 03/19/2012
As the government begins to tiptoe into the REO-to-rental arena after many months’ deliberation and input from thousands of industry participants, Fannie Mae released a data note on the single-family rental market.
Overall, single-family renters increased by 2.7 percentage points from 2005 to 2010, according to data Fannie Mae compiled from the American Community Survey.
However, the percentage of single-family renters varied greatly from market-to-market, with 9.8 percent in the New York City metro area and 57.8 percent in the Stockton metro area.
According to Fannie Mae, this variance is expected “because of differences in factors such as foreclosure rates, or changes in employment and median income.”
While single-family renting increased by 2.7 percentage points, multifamily renters decreased by about as much, 3 percent from 2005 to 2010, according to the American Community Survey.
This may suggest that the single-family rental sector is cutting into the market share of multifamily housing. However, Fannie Mae says “the single-family renter does not fit neatly into the age and income demographic that typically drives multifamily rental demand.”
While 43.8 percent of all renters in 2010 paid more than 35 percent of their income toward their rent, a slightly higher percentage – 44.1 percent – of those renting single-family homes spent more than 35 percent of their income on rent.
Fannie’s report points out that those ages 35 to 54 comprise 49.7 percent of the rental market, while the same age group comprises 63.1 percent of the owner’s market.
At 56.8 percent, the age group also accounts for a little more than half of the single-family rental market.
Additionally, single-family rental households are often larger than multifamily rental households.
Therefore, Fannie Mae does not expect single-family renting to infringe on the multifamily market share and attributes the recent growth in single-family renting to “an increase in vacant single-family housing, a decline in the homeownership rate, and a growing renter constituency with demand for a rental unit that provides the benefits of the single-family structure.”

First-time Buyers Become Reality Stars

Better Homes and Gardens Real Estate has launched a new online and TV reality series starring first-time home buyers on the house hunt.
The series, “Home, First Home,” launched online at YouTube this week. It will also air nationally on the syndicated show, “The Better Show,” in 150 markets across the country until June.
The series offers viewers an “opportunity to share in the joy of purchasing a home, while learning about the many steps involved in achieving this milestone,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate.
The show also weaves in tips from Better Homes and Gardens Real Estate agents about the buying and selling process.
You can watch some of the episodes at the company’s YouTube channel.
Source: Better Homes and Gardens Real Estate

REO Discounts to Grow Even Bigger?

Foreclosures are expected to pick-up as soon as banks begin to clear their backlog of troubled loans. RealtyTrac is projecting a 25 percent increase in foreclosures in 2012.
If an increase does occur, some housing experts wonder how it will impact overall home prices and whether the discounts for REOs will be even larger this time around.
For example, in metro areas like Las Vegas, the average foreclosure sells at 6.1 percent less than a non-foreclosure home. In Miami, the foreclosure discount is 7.1 percent, according to data by LPS Applied Analytics. In some places, it’s even more.
“A spike in sales of bank-owned homes can be bad news for other sellers,” The Wall Street Journal reports. “And foreclosure sales make it hard for prices to rise overall since they boost sales activity at the lower end of the market.”
This time around, however , housing experts don’t expect the discounts in distressed properties to grow.
“More often than not, prices are determined more by demand than supply,” Paul Dales, senior U.S. economist at Capital Economics, told The Wall Street Journal. Areas with a high number of REOs may have greater demand for REOs in good condition and less supply for other properties. Plus, Capital Economics predicts that demand will improve nationwide this year as the housing markets starts to recover.
Source: “Will the ‘Foreclosure Discount’ Grow This Year?” The Wall Street Journal (March 14, 2012)

Top 10 Most Searched Housing Markets Online

Chicago continues to be the most searched for housing market at, according to February search data. There was little change in the top 10 searched housing markets in February, compared to the prior month except Tampa-St. Petersburg-Clearwater, Fla., moved up in the rankings from No. 7 to No. 5.
The following are the top 10 most searched for housing markets at in February:
1. Chicago
Median list price: $189,800
2. Detroit
Median list price: $84,900
3. Los Angeles-Long Beach, Calif.
Median list price: $325,000
4. Philadelphia, Pa.-N.J.
Median list price: $225,000
5. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $144,900
6. Phoenix-Mesa, Ariz.
Median list price: $174,900
7. Atlanta
Median list price: $154,900
8. Dallas
Median list price: $194,500
9. Orlando, Fla.
Median list price: $154,500
10. Las Vegas, Nev.-Ariz.
Median list price: $122,900
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News