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Feb 27, 2011 | No Comments | Sean Mills
This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).
The Composite 10 index is off 31.2% from the peak and still 2.4% above the May 2009 post-bubble bottom.
The Composite 20 index is also off 31.2% from the and only 0.8% above the May 2009 [...]
This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).
The Composite 10 index is off 31.2% from the peak and still 2.4% above the May 2009 post-bubble bottom.
The Composite 20 index is also off 31.2% from the and only 0.8% above the May 2009 post-bubble bottom and will probably be at a new post-bubble low in January.
The next graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.
From S&P:
Eleven MSAs posted new index level lows in December 2010, since their 2006/2007 peaks. These cities are Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland (OR), Seattle and Tampa.
Prices are now falling just about everywhere, and more cities are hitting new post-bubble lows. Both composite indices are still slightly above the post-bubble low, but the indexes will probably be at new lows in early 2011.
Source Article Calculated Risk
Feb 24, 2010 | No Comments | Sean Mills
From FirstAmerican Core Logic:
…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at [...]
From FirstAmerican Core Logic:
…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.
Negative equity means the mortgage balance is higher than the value of the home.
The bulk of underwater properties are concentrated in five states: California, Florida, Nevada, Arizona and Michigan. Nevada leads the way in terms of most homes with negative equity at a whopping 70 percent.
“Home-ownership” is badly defined by, for instance, the Census Bureau, which considers all “owner-occupied housing units” in its calculation of the home-ownership rate.
But the rate would be far lower if one simply calculated the amount of equity that Americans have in their homes. Since this is the portion of real estate for which they don’t pay anything, it is the only portion that is truly “owned.”
Subtract folks who owe more on their homes than they are worth and the home-ownership rate drops from 67% to 43%.
Update: Reader Dan Hess offers a better calculation in the comments. He correctly notes that underwater homes are 24% of homes with mortgages, not 24% of all homes as I implied in the math above. Backing out these homes would reduce the homeownership rate to 57%. Though backing out ALL mortgage debt, even on homes with owner equity, would lower the ownership rate even more.
This buy amoxicillin online isn’t merely academic. Having equity in their homes is a big reason homeowners keep paying their mortgage, which is necessary for banks to stay solvent.
Source Article
Jan 19, 2010 | No Comments | Sean Mills
Well I have been off looking at investments again and so I have been neglecting my duties here at Real Estate Smart Talk. I will try to be better in the future. One prediction for the future we will not see significant levels of REO sales it appears the banks are diligent working on the loan [...]
Well I have been off looking at investments again and so I have been neglecting my duties here at Real Estate Smart Talk. I will try to be better in the future. One prediction for the future we will not see significant levels of REO sales it appears the banks are diligent working on the loan mods for all the distressed owners but instead short sales will rule the next cycle. Let me know what you think. -Sean
A few articles of interest …
From Diana Olick at CNBC: Short Sale ‘Fraud’ Follow. This is a followup to her earlier article: Big Banks Accused of Short Sale FraudThis alleged activity by banks – paying 2nd lien holders without proper disclosure – appears outrageous. Based on Olick’s reporting, this practice appears to be widespread. Kudos to Olick and hopefully the regulators are reading.
From DataQuick: Southland home sales, median price up over last year. As DataQuick notes the median price increase was due to a change in mix – as always I recommend ignoring the median price.
Southern California home sales in December remained above year-ago levels for the 18th consecutive month, bolstered by gains in many mid- to high-end communities. \
…
The December sales tally was the highest for that month since 24,209 homes sold in December 2006, but it was still 11.2 percent below the average for a December – 25,143 sales – over the past 22 years.
…
December’s foreclosure resales remained well below peak levels but were still a large force in the market, edging higher than the prior month for the first time since last February. Foreclosure resales – houses and condos sold in December that had been foreclosed on in the prior 12 months – were 39.6 percent of resales, up from 39.0 percent in November but down from 53.5 percent in December 2008. They hit a high of 56.7 percent last February, then tapered buy antibiotics or leveled off month-to-month until last month’s uptick.
…
Government-insured FHA loans, a popular choice among first-time buyers, accounted for 39.6 percent of all home purchase mortgages in December.
Absentee buyers – mostly investors and some second-home purchasers – bought 19.2 percent of the homes sold in December. Buyers who appeared to have paid all cash – meaning there was no indication that a corresponding purchase loan was recorded – accounted for 24.9 percent of December sales, based on an analysis of public records.
The market is still mostly first time homebuyers and investors.
And the high percentage of FHA buyers is a good lead into the third story …
From Nick Timiraos at the WSJ: Souring Mortgages, Weak Market Force FHA to Walk a Tightrope
Source Article Calculated Risk
Souring FHA-insured mortgages are threatening the agency’s finances. Congress is pressuring [FHA commissioner, Mr. Stevens] to tighten the easy-money standards that once helped people like him, and he is expected to announce revisions as early as this week.
Jan 8, 2010 | No Comments | Sean Mills
We knew it was coming it was just a matter of time as most states are bankrupt and looking to fill the holes one way or another. I think in California we will see an amendment to the old Howard Jarvis Prop 13 legislation seperating residential from commercial in regards to going after an increased [...]
We knew it was coming it was just a matter of time as most states are bankrupt and looking to fill the holes one way or another. I think in California we will see an amendment to the old Howard Jarvis Prop 13 legislation seperating residential from commercial in regards to going after an increased supplemental tax. As you know prop 13 passed in the late 1970’s put a maximum supplemental tax of 2% annually on real estate in California thereby capping the amount the government could receive from property taxes. Other states have left residential alone due to the large public outcry and have gone after the easier pickings of commercial real estate, case in point Iowa. I will go a little farther and to say not just single family residences will be left alone but 1-4 unit properties. Only time will tell.-Sean
Several major commercial real estate groups are fighting a proposed federal tax provision that they say would have a devastating effect on real estate investment partnerships.
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Dec 21, 2009 | No Comments | Sean Mills
A ’shadow’ inventory of properties close to foreclosure or seized but not yet for sale has been growing.
A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the nation’s housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, [...]
A ’shadow’ inventory of properties close to foreclosure or seized but not yet for sale has been growing.
A supply of 1.7 million homes headed for sale because of foreclosure or delinquency looms over the nation’s housing market, which could dampen progress toward recovery should the Obama administration fail in its efforts to aid struggling homeowners, researchers said.
A variety of measures to keep discounted bank-owned properties off the market — including moratoriums on foreclosures by major lenders and federal initiatives aimed at keeping people in their homes with mortgage payments they can afford — has helped increase a backlog of so-called shadow inventory 55% in the year ended Sept. 30, according to a report released Thursday by First American CoreLogic, a Santa Ana-based real estate research firm.
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Dec 7, 2009 | No Comments | Sean Mills
That’s the underlying message from a University of Arizona law professor, whose new paper is hitting a nerve as the nation’s housing crisis enters its fourth year.
Brent White denies advocating walking away from a mortgage that is bigger than the value of a home. Nonetheless, he lays out a case of how it can be [...]
That’s the underlying message from a University of Arizona law professor, whose new paper is hitting a nerve as the nation’s housing crisis enters its fourth year.
Brent White denies advocating walking away from a mortgage that is bigger than the value of a home. Nonetheless, he lays out a case of how it can be done, and his suggestions have gone viral, popping up online, in newspapers and on television.
It’s a move that can save some people money, but at the expense of wrecking their credit.
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Oct 8, 2009 | No Comments | Sean Mills
Oct. 8 (Bloomberg) — The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.
“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in [...]
Oct. 8 (Bloomberg) — The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.
“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.
The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The jump has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said.
Representative Scott Garrett, a New Jersey Republican, introduced legislation this month to boost the FHA’s minimum down payment to 5 percent from 3.5 percent to drugs online help shore up the agency’s insurance fund, a move that could add to the housing market’s burdens as it struggles to recover.
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Oct 2, 2009 | No Comments | Sean Mills
I am hopeful no one here will see this as really news just more of a confirmation of where we are and where we are headed.-Sean
Robert Shiller, the Yale University economist who famously predicted the housing bust, was awarded the Deutsche Bank Prize in Financial Economics today. In this interview with Nina Koeppen, he talks [...]
I am hopeful no one here will see this as really news just more of a confirmation of where we are and where we are headed.-Sean
Robert Shiller, the Yale University economist who famously predicted the housing bust, was awarded the Deutsche Bank Prize in Financial Economics today. In this interview with Nina Koeppen, he talks about the state of the housing market and the implications of low interest rates.
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| Robert Shiller is awarded Deutsche Bank Prize in Financial Economics 2009. (Center for Financial Studies) |
Is the slump in U.S. home prices bottoming out?
Shiller: The situation has definitely changed. With our numbers — the S&P/Case Shiller home price index — going up sharply. It looks like a major turnaround. We’ve been watching that for three months now, and we have some concern that it could be an aberration and temporary. But, at this point, it seems to be evident in just about every city in the U.S. That suggests it’s real. But it probably isn’t the beginning of a major boom, just because the economy is in such bad shape. There’s also a chance that it will reverse. It’s still only three months old, so it’s very hard to be sure at this point. The most likely scenario is that it won’t continue at this high rate of increase, but that it will neither go down a lot, nor up a lot.
So the index will move sideways for a while?
Shiller: Yes, for a while, meaning five years.
What are the main factors driving U.S. house prices? What could push them up, or cause another slump?
Shiller: Propecia The main factor is the world economic crisis and the efforts of governments around the world to stimulate the economy. Parts of those efforts have been directed at the housing market. In the U.S., there is an 8,000 dollar first-time home buyer’s tax credit which expires at the end of November. That’s a reason for concern, as it comes to an end. Also, the Federal Reserve has a plan to buy $1.25 trillion worth of mortgage-backed securities to support the housing market. They are most of the way through the program and anticipate phasing it out at some time in 2010 – that’s another thing that will go away. We’ve yet to see how the housing market will continue. Part of the problem is that people are buying now rather than later. When later comes, there could be a downturn in the market.
Is there an oversupply of houses in the U.S.?
Shiller: That’s been a problem. The inventory of unsold houses has been high, but has come down a bit. On top of that, there will be more foreclosures, more homes are going to be dumped on the market as people default. Now, that may show down as home prices will start going up again. But I suspect that this isn’t going to happen. Also, banks have more REO, or real estate owned, that they’re holding on to for the time being. But eventually those REOs are going to be dumped on the market. So that’s why it doesn’t look particularly encouraging from a supply consideration.
Wall Street Journal
Oct 1, 2009 | No Comments | Sean Mills
SEASONALLY ADJUSTED DATA
In the week ending Sept. 26, the advance figure for seasonally adjusted initial claims was 551,000, an increase of 17,000 from the previous week’s revised figure of 534,000. The 4-week moving average was 548,000, a decrease of 6,250 from the previous week’s revised average of 554,250.
The advance seasonally adjusted insured unemployment rate was [...]
SEASONALLY ADJUSTED DATA
In the week ending Sept. 26, the advance figure for seasonally adjusted initial claims was 551,000, an increase of 17,000 from the previous week’s revised figure of 534,000. The 4-week moving average was 548,000, a decrease of 6,250 from the previous week’s revised average of 554,250.
The advance seasonally adjusted insured unemployment rate was 4.6 percent for the week ending Sept. 19, unchanged from the prior week’s unrevised rate of 4.6 percent.
To read the whole report: Source prescription medications Article
Oct 1, 2009 | No Comments | Sean Mills
U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.
Home loan applications fell a seasonally adjusted 2.8 percent in the Sept. 25 week, driven down by a 6.2 percent drop in [...]
U.S. mortgage applications fell last week despite the lowest loan rates in four months, the Mortgage Bankers Association said on Wednesday, in another sign that housing will likely recover slowly from its three-year plunge.
Home loan applications fell a seasonally adjusted 2.8 percent in the Sept. 25 week, driven down by a 6.2 percent drop in demand for purchase loans and a 0.8 percent decline in refinancing requests.
Borrowing costs inched closer to record lows, with average 30-year rates dipping 0.03 percentage point to 4.94 percent.
The 30-year rates were the lowest since the week ended May 22, at 4.81 percent, after hitting an all-time low of 4.61 percent in March, according to the industry group.
A year ago, before intensive government interventions, 30-year rates averaged 6.33 percent.
Signs of life have emerged in both home sales Buy Propecia and prices, helped by government stimulus programs including an $8,000 first-time home buyer tax credit.
The outlook for housing is split, however. Some in the industry predict another sales slide if the tax credit is not renewed and others say there will be a gradual recovery slowed by the usual winter sales malaise.
“We’re going to see another leg down, and if we lose the tax credit it will be a significant leg down,” said John Burns, president of John Burns Real Estate Consulting in Irvine, California.
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