Distressed Inventory Fading Fast as Housing Market Strengthens

08/29/2013 By: Esther Cho 

As the housing market heals, foreclosure inventory is depleting quickly, CoreLogic reported Thursday.

In July, about 949,000 homes were in some stage of foreclosure, down 32 percent from 1.4 million a year ago. Foreclosure inventory also showed a 4.4 percent decline from June. Year-to-date, foreclosure inventory is down by 20 percent.
Currently, about 2.4 percent of homes with a mortgage are in foreclosure inventory, the lowest level since March 2009.
In addition to shrinking foreclosure inventory, CoreLogic also reported steep declines in completed foreclosures and serious delinquencies.
According to the data provider’s estimate, about 49,000 properties were lost to foreclosure in July, down 25 percent from 65,000 in July 2012.

From June to July, completed foreclosures fell by 8.6 percent from 53,000 in the prior month.
At 5.4 percent, the serious delinquency rate decreased to the lowest level since December 2008, according to CoreLogic. The rate represents fewer than 2.2 million mortgages.
“Continued strength in the housing market will contribute to our outlook for ongoing improvement in the stock of distressed assets through the end of this year,” said Mark Fleming, chief economist for CoreLogic.
According to CoreLogic, the decreases were apparent across the country, with every state reporting an annual decline in foreclosures.
“Not surprisingly, non-judicial states have come the farthest the fastest in reducing shadow inventory and lowering delinquency rates,” noted Anand Nallathambi, president and CEO of CoreLogic.
Florida took the lead again as the state with the highest number of completed foreclosures. Over the last 12 months, about 110,000 homes were lost to foreclosure in Florida. California followed with 65,000 completed foreclosures. Other states in the top five were Michigan (61,000), Texas (45,000), and Georgia (41,000).
Florida also held the highest percentage of homes in foreclosure inventory, at 8.1 percent. New Jersey’s foreclosure inventory rate of 5.9 percent put it at second, with New York (4.7 percent), Connecticut (4.0 percent), and Maine (4.0 percent) filling out the top five.
However, in 36 states, foreclosure inventory sits below the national rate of 2.4 percent.

Trulia: Housing in Third Phase of Recovery, Awaiting Fourth

08/28/2013 By: Krista Franks Brock 

The housing market is now 64 percent of the way back to “normal,” and we are entering the third phase of the recovery, according to Trulia’s monthly Housing Barometer.

The first two phases of the recovery began in 2009 and 2012, respectively. The milestone marking the first phase was when sales and construction first started to pick up. The second phase began when home prices reached bottom and began to increase.
The third phase began this spring after housing inventory bottomed out and both inventory and mortgage rates began to climb, according to Trulia.

What we’re waiting on now, according to Trulia, is the fourth phase, in which “young adults finally start moving out of their parents’ homes.”
“Until this happens, construction and new home sales will remain well below normal – even though prices and existing-home sales are now very close to their normal, sustainable levels,” Trulia stated.
Existing home sales are 94 percent of the way back to “normal,” pre-bubble levels, according to Trulia’s Housing Barometer, which measures three indicators – existing home sales, construction starts, and the delinquency-plus-foreclosure rate.
Existing home sales rose 17 percent year-over-year in July to their second-highest level in six years.
Construction starts and the delinquency-plus-foreclosure rate are improving but are not as close to normal yet.
Construction starts are 41 percent of the way back to normal after a 6 percent monthly increase in July.
Single-family home starts rose 20 percent year-to-date in July, while multi-family starts rose 33 percent.
The delinquency-plus-foreclosure rate is a little more than half-way back to normal—56 percent of the way as of July.
The rate stands at 9.23 percent, the second-lowest level in nearly five years, according to Trulia.

Home Sales Stage a Comeback in July

08/27/2013 By: Tory Barringer 

After observing a slowdown in sales throughout June—typically the peak selling month for the year—online brokerage Redfin reported a rebound in July, though other market indicators continue to cool.

According to Redfin’s data, “this July saw a healthy jump in homes sold throughout most of the 19 markets covered in this report,” improving 3 percent month-over-month and 17.6 percent year-over-year from a rather disappointing July 2012.
In fact, according to the Seattle-based brokerage, July 2013 saw the highest number of homes sold in the past four years, with the 19 markets together seeing about 94,000 sales.
“July’s numbers are probably the result of buyers shaking off the impact of mortgage interest rate increases, and opting to lock in rates before they rise further,” explained analyst Tommy Unger. “Chicago led the nation with

nearly 12,000 homes sold, up a strong 5.7 percent in July, and 36.9 percent year over year.”
While sales numbers picked up, Redfin believes the gains won’t last.
“With less inventory, higher interest rates and continued buyer fatigue, August won’t see the same 7 percent month-over-month sales increase as in 2011 and 2012,” Unger said. “In fact, based on current closed and pending sales, we expect a slight month-over-month drop in home sales for next month.”
At the same time, reports on home price growth and inventory were less positive in July.
Nationally, home prices per square foot were up 1.1 percent from June and 19.3 percent from July 2012, Redfin reported. However, a closer examination shows four of the 19 areas tracked posting monthly price decreases: Austin (-2.6 percent); Washington, D.C. (-2.5 percent); Philadelphia (-1.5 percent); and Boston (-0.9 percent).
Meanwhile, the number of homes for sale in July fell 4.6 percent month-over-month, outdoing the 4 percent drop recorded at the same time last year. Year-over-year, inventory fell 30.6 percent. With the exception of San Jose (which reported a 7.1 percent monthly increase in for-sale homes), inventory was down on a monthly basis in all tracked markets.
“The slight increase in inventory from May to June was partially attributable to the lower sales volume,” Unger said. “Now, it looks like inventory is back on its seasonal decline heading into fall.”

Time on Market Decreases in July, with Homes Receiving Multiple Offers

08/23/2013 By: Krista Franks Brock 

 

Homes are selling quickly with multiple offers and favorable prices, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey released Friday.

The survey tracked time on market, number of offers, and sales-to-list-price ratio for non-distressed sales in July. California performed exceptionally well in all three categories, while parts of the Midwest underperformed.

The average number of weeks a home spent on the market in the three-month period ending in July was 8.6 weeks, down from 9.2 weeks in May.
Non-distressed homes that sold in July received an average of 2.3 offers.
Sellers received close to their full asking price in July. The sales-to-list-price ratio was 98 percent for the month, up from 97.6 percent in May.
In California homes spent about 4.5 weeks on the market, received an average of 4.1 offers, and sold on average for more than their asking price – about 101.8 percent.
In contrast, markets in the Midwest lagged the national averages.
The Industrial Midwest—Missouri, Illinois, Indiana, Ohio, and Michigan—performed worst in terms of time on market. Homes in these states averaged 11.3 weeks on the market.
Homes in the Farmbelt states—North Dakota, South Dakota, Nebraska, Kansas, Minnesota, Iowa, and Wisconsin—received the lowest numbers of offers in July—about 1.4 offers per home.
When it came to prices, Florida earned the lowest ranking. Non-distressed homes sold for 95 percent of their asking price in July, in comparison to California’s 101.8 percent.

Rising Interest Rates!

Fixed Mortgage Rise as Market Reacts to Fed Taper Talk

08/22/2013 By: Tory Barringer 

Fixed mortgage rates jumped this week as markets awaited the release of minutes from the Federal Open Market Committee’s (FOMC) July meeting, which contained hints of when the Federal Reserve might start reducing its bond purchases.

According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.58 percent (0.8 point) for the week ending August 22, up from last week’s 4.40 percent. A year ago at this time, the 30-year FRM averaged 3.66 percent.
The 15-year FRM averaged 3.60 percent (0.7 point), up from 3.44 percent previously.
Adjustable rate movements trended downward. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.21 percent (0.5 point), down from 3.23

percent in the last survey. The 1-year ARM averaged 2.67 percent (0.5 point), flat week-over-week.
Recounting the minutes of the FOMC’s meeting, Freddie Mac chief economist Frank Nothaft noted “the committee members were broadly comfortable with a plan to start reducing its bond purchases later this year, although a few emphasized the importance of being patient.”
“Meeting participants acknowledged mortgage rate increases might restrain housing market activity, but several members expressed confidence the housing recovery would be resilient in the face of higher rates,” Nothaft said. “In fact, existing home sales increased in July to the strongest pace since November 2009 and homebuilder confidence in August rose to its highest reading since November 2005. Both increases occurred after mortgage rates had risen from their spring-time lows.”
Meanwhile, Bankrate.com reported a two-year high for the 30-year fixed average in its own weekly survey. The 30-year fixed reached 4.74 percent, Bankrate observed, while the 15-year fixed jumped to 3.75 percent.
On the adjustable rates side, the 5/1 ARM climbed to 3.69 percent.
“While nothing is official yet, and likely won’t be at least until we get to the other side of the jobs report in early September, the markets have clearly priced in the expectation of Fed tapering at that point,” Bankrate said in a release.

Fannie Mae: Economic Growth to Continue; Fed Tapering Poses Risk

 08/22/13

After trudging along throughout the first half of the year, economic growth is gaining momentum as expected, according to an Economic and Housing Outlook from Fannie Mae’s Economic & Strategic Research (ESR) group.

“Our macroeconomic and housing forecast shows very little change from July, and the steady pickup during the past few months validates our expectations for the second half of the year,” said Fannie Mae chief economist Doug Duncan.
Looking ahead, the group expects GDP growth will average 2.0 percent for the year, accelerating to 2.6 percent in 2014 as fiscal drags peel away and the housing recovery continues.

“The biggest risk to this forecast is the expected reduction in the Federal Reserve’s asset purchases, which would likely put additional upward pressure on interest rates and lead to some volatility in capital markets,” Duncan explained. “Although the nature and timing of the tapering are still to be determined, we continue to expect the Fed will scale back its asset purchases and end the program by spring.”
Duncan also noted the country “may see some fiscal tightening this fall as the debate over federal spending and the debt ceiling takes place.”
However, while the financial picture isn’t completely clear, sustainable growth in consumer spending and the employment sector are expected to help offset downside risks from the Fed’s tapering of purchases.
At the same time, the group remarked that “[t]he housing recovery appears to have weathered some of the uncertainty, although additional growth is expected to be modest rather than robust while the market awaits an easing of credit conditions in the presence of rising interest rates.”
For now, the team is sticking to its forecast of continued improvements in home prices, though the pace of growth is expected to slow significantly from the last year.
Originations are expected to drop off from an estimated $2.03 trillion in 2012 to $1.75 trillion in 2013 and $1.09 trillion next year. In that time, refinance volume is projected to drop off to $345 billion by the end of 2014—less than half of expected purchase origination volume.

Zillow Home Value Index Rise

Zillow Home Value Index Rises to Near 7-Year High

08/20/2013 By: Tory Barringer

Annual home value appreciation hit the 6 percent mark for the first time in nearly seven years in July, according to Zillow’s Real Estate Market Reports for the month.

The Zillow Home Value Index reached $161,600 in July, up 0.4 percent from June and an even 6.0 percent from July 2012. July marked the 14th straight month of annual home value gains.
“After three straight months of annual home value appreciation above 5 percent, the U.S. housing market recovery has proven it is on very sound footing,” said Zillow chief economist Dr. Stan Humphries. “We have entered a new phase in the recovery when we can begin to turn away from ugly recent history and turn toward what the housing market of the future will look like and how it will act.”

Despite these strides, however, Humphries noted that this is no time for policymakers and industry professionals to rest on their laurels.
“It may be tempting to look at how the market is currently performing and think that tackling GSE reform and other large issues is no longer necessary. But while we can afford to turn away from the recent past, we cannot afford to forget it, and simply ignoring these problems only dooms us to repeat them,” he said. “How we handle these all-important policy debates will be critical in keeping the housing market on sound footing for years to come.”
Of the 393 metros tracked in July, 289 (73.5 percent) reported month-over-month price appreciation, and 303 (77.1 percent) showed annual appreciation. All 30 of the largest metro areas registered both monthly and yearly appreciation, and all “have hit their bottom and are expected to show appreciation in the next 12 months,” Zillow said.
Metros with the largest annual increases in July included Sacramento (33.1 percent), Las Vegas (30.8 percent), and San Francisco (27.8 percent).
For the 12-month period ending July 2014, national home values are forecast to rise another 4.8 percent to approximately $169,308, according to the Zillow Home Value Forecast. Of the largest metro areas, Sacramento, Riverside, and San Francisco are expected to show the most appreciation over the next year.

FHA Trims Waiting Period for Borrowers Who Experienced Foreclosure

08/19/2013 By: Esther Cho 

The Federal Housing Administration (FHA) is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.

Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.

For borrowers who went through recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”
In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond their control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.
Additionally, borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.
According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.
The new guidance is for case numbers assigned on or after August 15, 2013, and is effective through September 30, 2016.

Ideas for getting your house ready to sell

Get the House Ready
A house that "sparkles" on the surface will sell faster than its shabby neighbor, even though both are structurally well-maintained.
From experience, REALTORS® also know that a "well-polished" house appeals to more buyers and will sell faster and for a higher price. Additionally, buyers feel more comfortable purchasing a well-cared for home because if what they can see is maintained, what they can't see has probably also been maintained. In readying your house for sale, consider:

• how much should you spend
• exterior and curb appeal
• preparing the interior

How much should you spend
In preparing your home for the market, spend as little money as possible. Buyers will be impressed by a brand new roof, but they aren't likely to give you enough extra money to pay for it. There is a big difference between making minor and inexpensive "polishes" and "touch-ups" to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen. Your REALTOR®, who is familiar with buyers' expectations in your neighborhood, can advise you specifically on what improvements need to be made. Don't hesitate to ask for advice.
Maximizing exterior and curb appeal
Before putting your house on the market, take as much time as necessary (and as little money as possible) to maximize its exterior and interior appeal. Tips to enhance your home’s exterior and curb appeal:

• Keep the lawn edged, cut and watered regularly.
• Trim hedges, weed lawns and flowerbeds, and prune trees regularly.
• Check the foundation, steps, walkways, walls and patios for cracks and crumbling.
• Inspect doors and windows for peeling paint.
• Clean and align gutters.
• Inspect and clean the chimney.
• Repair and replace loose or damaged roof shingles.
• Repair and repaint loose siding and caulking.
• In Northern winters, keep walks neatly cleared of snow and ice.
• During spring and summer months consider adding a few showy annuals, perhaps in pots, near your front entrance.
• Re-seal an asphalt driveway.
• Keep your garage door closed.
• Store RVs or old and beaten up cars elsewhere while the house is on the market.
• Apply a fresh coat of paint to the front door.

Maximizing interior appeal
Enhance your home’s interior by:

• Giving every room in the house a thorough cleaning, as well as removing all clutter. This alone will make your house appear bigger and brighter. Some homeowners with crowded rooms have actually rented storage garages and moved half their furniture out, creating a sleeker, more spacious look.

• For Your Home Want to give your home a new look? Find advice and inspiration in our decorating section.

  Hiring a professional cleaning service, once every few weeks while the house is on the market. This may be a good investment for owners who are busy elsewhere.
• Removing the less frequently used, even daily used items from kitchen counters, closets, and attics, making these areas much more inviting. Since you're anticipating a move anyhow, holding a garage sale at this point is a great idea.
• If necessary, repainting dingy, soiled or strongly colored walls with a neutral shade of paint, such as off-white or beige. The same neutral scheme can be applied to carpets and linoleum.
• Checking for cracks, leaks and signs of dampness in the attic and basement.
• Repairing cracks, holes or damage to plaster, wallboard, wallpaper, paint, and tiles.
• Replacing broken or cracked windowpanes, moldings, and other woodwork. Inspecting and repairing the plumbing, heating , cooling, and alarm systems.
• Repairing dripping faucets and showerheads. Buying showy new towels for the bathroom, to be brought out only when prospective buyers are on the way.
• Sprucing up a kitchen in need of more major remodeling by investing in new cabinet knobs, new curtains, or a coat of neutral paint.

Mortgage Rates Unchanged from last week

Mortgage Rates Stabilize, with 30-Year Unchanged from Prior Week

08/15/2013 By: Tory Barringer

Having spent the last several months bouncing around, average fixed mortgage rates were little changed over the last week as market speculation settled.

Freddie Mac’s Primary Mortgage Market Survey showed the 30-year fixed-rate mortgage (FRM) averaging 4.40 percent (0.7 point) for the week ending August 15, flat from last week. Last year at this time, the 30-year FRM averaged 3.62 percent.
The 15-year FRM this week averaged 3.44 percent (0.6 point), up very slightly from 3.43 percent in the last survey.

Adjustable rates were a little more mobile. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.23 percent (0.5 point) this week—up from 3.19 percent—while the 1-year ARM averaged 2.67 percent (0.4 point), up from 2.62 percent.
“Fixed mortgage rates have been bouncing around over the past few weeks on market speculation that the Fed will taper some of its monetary stimulus,” explained Frank Nothaft, chief economist and VP at Freddie Mac. “In fact, 65 percent of economists surveyed by Bloomberg expect the Fed to reduce the amount of bond purchases at its September 17th and 18th monetary policy committee meetings.”
Nothaft also noted that the average 30-year fixed rate is now 1.1 percentage points above their all-time low recorded in November 2012—translating into $125 more per month in mortgage payments on a $200,000 loan.
Bankrate.com also reported slight movements in average fixed rates. According to Bankrate’s weekly national survey, the 30-year fixed averaged 3.57 percent this week (up 1 basis point), while the 15-year fixed averaged 3.61 percent (down a single point).
The 5/1 ARM was 3.61 percent, up more significantly from 3.53 percent, Bankrate reported.

Housing Affordability dips a bit in the second quarter

Housing Affordability Drops to 4-Year Low as Rates, Prices Rise

08/14/2013 By: Krista Franks Brock 

While rising home prices across the nation may be good news as they imply recovering markets, the trend may dampen housing affordability. Having been historically high for the past few years, affordability dipped somewhat in the second quarter of this year, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity index.

Increasing prices and mortgage rates “contributed to affordability slipping to the lowest level in four years,” said David Crowe, chief economist at NAHB.
Nationally, the median home price rose from $185,000 in Q2 2012 to $202,000 over the most recent quarter.
At the same time, affordability fell from 73.7 percent in this year’s first quarter to 69.3 percent—meaning 69.3 percent of Americans earning the national median income could afford a home sold during the quarter.

The second quarter marks the first time since 2008 the index has fallen below 70 percent, according to NAHB.
“Such movement would be less concerning if it were not for ongoing discussions regarding potential changes to the mortgage interest deduction and federal support for the secondary mortgage market, both of which play enormous roles in keeping homeownership affordable,” Crowe said.

Sharp rise in housing confidence

Confidence in Housing Rises Sharply Among Millennials

08/13/2013 By: Esther Cho 

Double digit price gains in 2nd Quarte

Report: 31% of Metro Areas Post Double-Digit Price Gains in Q2

08/12/2013 By: Esther Cho 

Out of 163 metro areas across the country, 31 percent experienced double-digit annual home price gains in the second quarter, according to a report from the National Association of Realtors (NAR).

During the second quarter last year, only 14 percent of markets showed double-digit yearly increases.
Overall, 87 percent of the metro areas tracked saw median prices for existing-homes rise compared to last year, while 12 percent experienced declines, NAR data showed.
At the same time, the national median price rose 12.2 percent to $203,500 compared to last year. The annual increase represents the strongest gain in over seven years.
Lawrence Yun, NAR’s chief economists, says tight inventory is driving up prices.
“Areas with tighter supplies generally are seeing the strongest price growth, including markets such as

Sacramento, Atlanta, Las Vegas, Naples, San Francisco and Los Angeles,” Yun added.
On the other hand, Yun explained price increases are more modest in judicial states.
“In areas where foreclosed inventory still looms because distressed properties are mired in a slow process, lender and market uncertainty are holding back price growth. This includes areas such as New York City; Hartford; Conn.; and some markets in New Jersey,” he said.
Yun also noted “[h]igher interest rates are now causing sales to level out.”
NAR data also found distressed homes (foreclosures and short sales) in the second quarter represented 17 percent of sales in the second quarter, down from 26 percent during the same quarter a year ago.
Meanwhile, available supply for existing homes decreased to 5.1 months in the second quarter compared to 6.4 months a year ago, and the total number of homes on the market stood at 2.19 million in the second quarter, down 7.6 percent from a year ago.
“Supplies in the low 5-month range can be expected for the foreseeable future,” Yun said. “Steady increases in new home construction will help to relieve shortage conditions going into 2014, which would moderate price growth.”
Despite low inventory, existing-home sales increased in the second quarter, rising to a seasonally adjusted annual rate of 5.06 million, up from 4.94 million in the prior quarter and a significant leap from 4.51 million a year ago.