Has the Housing Market Finally Reached Bottom?

If home buyers or home owners are waiting for the housing market to hit bottom before acting, they may have already missed it. “The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc., told Bloomberg about the real estate market. “Home sales—both new and existing—and housing starts are now off the bottom.” Several economists are saying the bottom of the housing market has already been reached, and the market has been showing several signs of progress, including home prices stabilizing and demand increasing. The economists say they’re optimistic about a recovery in the housing market, despite threats of a foreclosure wave coming. One of the biggest signs that a sustainable housing market recovery is taking shape: Consumer confidence is up. "Today's consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes," Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York, told Bloomberg. Indeed, real estate professionals have been reporting increased activity among home shoppers this spring, too. "This year's selling season is shaping up to be the strongest we've seen in years," says Margaret Kelly, RE/MAX's chief executive officer. "Although we don't expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold." Source: “Housing Declared Bottoming in U.S.,” Bloomberg News (April 25, 2012)

March Pending Home Sales Rise, Market Recovering

Pending home sales increased in March and are well above a year ago, another signal the housing market is recovering, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings. The index is now at the highest level since April 2010 when it reached 111.3. Lawrence Yun, NAR chief economist, said 2012 is expected to be a year of recovery for housing. “First quarter sales closings were the highest first quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he said. “The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses,” Yun said. Pending Home Sales Index by Region: Northeast: slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. Midwest: declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago. South: rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. West: increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago. Source: NAR

3 Hidden Costs of the Foreclosure Crisis

Although U.S. foreclosure activity may be declining, the problem is far from over. There have been 5 million foreclosures since 2007, reports the Center for Responsible Lending, which estimates that between 3 million and 5 million more will occur over the next couple of years. In 2003, one in 38 U.S. home owners were seriously delinquent on their mortgage payments or in foreclosure, but today those numbers are one in 10. Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity. Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the "invisible victims" of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development. Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure. And many communities are strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including swimming pools, senior centers, and local law enforcement. Source: "Three Hidden Costs of the Foreclosure Crisis," MarketWatch (April 24, 2012)

Good, Bad Reflected in New-Home Sales Data

Sales of new single-family homes dropped to their lowest level in March since November 2011, but analysts say there were glimmers of hope behind the Census Department’s data released Tuesday, which showed a much stronger winter selling-season than originally reported. New-home sales were at a 328,000 seasonally adjusted annual rate in March, a drop of 7.1 percent compared to February. Still, new-home sales were up 7.5 percent in March compared to a year earlier. The Census Department also on Tuesday announced that it had revised its figures for the three months prior, showing new-home sales were much better during that time than originally thought. The government originally reported that new homes sold in February at an annual rate of 313,000. That figure was revised to 353,000, which marked new-home sales strongest pace since April 2010. New-home sales increased 7.3 percent in February from January. Originally, the government had reported new-home sales had fallen in that period 1.6 percent. The Census Department also revised new-home sales in December and January to higher numbers. Source: “New Home Sales Down 7.1% in March, but February Totals Revised,” The Los Angeles Times (April 24, 2012)

Where Sellers Are Most Unrealistic With List Prices

House prices have fallen in many areas of the country during the last five years, forcing sellers to get more realistic. But some sellers still are hoping to get more for their home, despite market conditions. SmartMoney, in using housing data from the National Association of REALTORS®, found which metro areas appear to be the least realistic with their asking prices. They based their analysis on the gap between the median list price and median sales price in March housing data. The least realistic cities for asking prices, according to SmartMoney, are: Atlanta: a 40 percent gap between the median list price ($150,000) and median sales price ($90,600). Jacksonville, Fla.: a 34 percent gap between the median list price ($184,775) and median sales price ($121,600) Washington, D.C.: a 13 percent gap between the median list price ($359,900) and the median sales price ($313,300) Meanwhile, sellers seem to be the most realistic with their list prices in Las Vegas, according to the SmartMoney analysis. In Las Vegas, the median sales price is $121,800, which is slightly above the median list price of $120,000. SmartMoney includes a disclaimer in its analysis, reminding readers that the study was based on median prices, where half the homes are below that price and half are above. Source: “Cities Where Sellers Are the Least Realistic,” MSN Real Estate (April 24, 2012)

House Committee Approves Bill to Repeal Dodd-Frank Bailout Fund

The House Financial Services Committee signed off on legislation Wednesday that would repeal bailout funds under the Dodd-Frank Act and more than half the Consumer Financial Protection Bureau’s (CFPB) budget.

Clearing the legislation by a party-line vote, committee members billed it as a way to slash $35 billion from the national deficit.

“Our nation is in a spending-driven debt crisis. The solution isn’t to tax Americans more, it’s for Washington to spend less,” Rep. Spencer Bachus (R-Alabama), who chairs the committee, said in a statement.

The committee said it rejected an amendment offered by Rep. Barney Frank (D-Massachusetts) to replenish bailout funds for systemically important institutions in the event of another financial crisis.

Just what would the bill accomplish?

According to the nonpartisan Congressional Budget Office, it would save taxpayers $10 billion over the next decade by slashing revenue for federal programs and agencies like the Home Affordable Modification Program (HAMP) and CFPB.

The bill proposed doing away with bailout mechanisms under Dodd-Frank, appropriating only $200 million for the CFPB – which has a current budget of $547 million – for the next fiscal year, and undoing HAMP entirely.

HAMP remains an embattled program. The special inspector general for the Troubled Asset Relief Program – under which lawmakers established it in 2009 – found in a recent report that 782,609 permanent loan modifications fell short of the 3 to 4 million homeowners that administration officials said it would help.

News that it disbursed only $2.54 billion of an available $30 billion to homeowners in distress continues to give ammunition to more conservative lawmakers with a desire to do away with it.

Sources tell us that it is unlikely the bill will become law this year. The House will need to take up the bill for a full-chamber vote and the Democratic Senate will need to conference it with similar legislation


By: Ryan Schuette

Lenders that Sell Short Sales Faster and for Less, According to RealtyTrac

Pursuing a short sale is often thought of as a painstaking process, and it’s not uncommon to hear of complaints about slow responses from servicers and last minute rejections on offers. Fortunately, not all lenders/servicers are the same when it comes to dealing with short sales, and RealtyTrac compiled a list of data revealing which institutions tend to move through the process quicker and for less.

Fannie Mae, Freddie Mac, and FHA had the shortest timelines at 193 days in January 2012, a decrease compared to a year ago in January 2011, when short sales averaged 248 days. Ally Financial came in second at 321 days, reducing its timeline as well from 393 days a year ago.

PNC Financial Group was third, taking 353 days, though the bank takes longer than it did a year ago when the it took 206 days. Wells Fargo came in fourth (385 days). Bank of New York Mellon took the fifth longest (402 days), followed by Bank of America (403 days) and Sun Trust (404 days). The short sale timeline includes the time a property starts the foreclosure process to the time it’s sold as a pre-foreclosure property.

Recently, Fannie Mae and Freddie Mac announced new guidelines to take effect in June requiring servicers to respond within 30 days after receiving a short sale offer or a borrower application. Bank of America recently announced that its providing a decision on a short sale offer in 20 days.

In terms of pricing, Fannie Mae, Freddie Mac, and FHA sold homes for the least amount in January 2012, averaging $128,642, a drop from year ago prices in January 2011 when they averaged $160,982. Deutsche Bank’s average price was $132,996, followed by Sun Trust Banks ($144,024), and CitiGroup ($148,411), and PNC Financial Group Inc ($149,332). Bank of America Wells Fargo were the bottom two on the top 10 list, averaging $158,632 and $167,371, respectively, for January 2012.

As for the number of short sales, Bank of America completed the most in January 2012, with 5,276, followed by Chase (2,967), Wells Fargo (2,788), MERS (1,429), and Bank of New York Mellon (1,401).



By: Esther Cho