LPS Report Shows Falling Delinquency, Foreclosure Rates

09/26/2013 By: Hugh Moore 

The total United States mortgage loan delinquency rate fell to 6.2 percent in August according to a new report by Lender Processing Services (LPS). August’s rate represented a 3.31 percent decrease from the previous month and a 9.71 percent decrease from August 2012.

The report examined data from LPS’s loan-level database representing approximately 70 percent of the overall market.
The total U.S. foreclosure pre-sale inventory rate stood at 2.66 percent, a 5.74 percent decrease from the previous month and a 34.08 percent decrease from August 2012.
The states with the highest percentage of non-current loans were Florida, Mississippi, New Jersey, New York, and Maine.
The states with the lowest percentage of non-current loans were Montana, Colorado, Wyoming, South Dakota, and North Dakota.
LPS will provide more detail in its monthly Mortgage Monitor Report, which will appear on the company’s website by October 7.

Report Shows Home Price Rebound in Nearly 25 Percent of Key Markets

09/25/2013 By: Tory Barringer 

 

Property data through July shows home prices have rebounded completely in more than one-fifth of the nation’s top regional markets, according to a report from Homes.com.

According to the site’s latest report, 22 of the top 100 markets in the United States reported price increases of more than 100 percent from their respective troughs, up from 19 the month prior.
Marketing analyst Nicole Selvaggi explained that most of the markets that have come back completely “never suffered the significant numbers of foreclosures and short

sales that characterized the housing economy from 2007 to 2012,” and seven of the top 20 have benefited greatly from energy development from oil, gas, shale, or coal.
“As a result, these markets experienced a very different housing scenario, with lower peaks and higher troughs than other markets in the same region,” Selvaggi said.
At this point, 44 markets have seen a rebound of at least 50 percent, up from 41 in the last report.
In addition to the rebound, all 100 of the markets tracked in the Homes.com Local Market Index Report reported increases in home prices on both a monthly and yearly basis.
In terms of yearly growth, many of California’s most highly populated markets (including the Los Angeles, San Diego, and San Francisco areas) were among the top metros, with five additional smaller cities making the top list.
“Rising home prices in California’s coastal areas (Los Angeles, San Diego, and San Francisco), could be ‘pushing buyers inland to more affordable Riverside and San Bernardino counties,’” Selvaggi said, quoting an analysis from John Burns, CEO of John Burns Real Estate Consulting.

Housing Analyst Raises Concerns of Artificial Price Appreciation

09/20/2013 By: Tory Barringer 

As home price appreciation continues at accelerated levels, John Burns Real Estate Consulting is warning clients in certain areas to keep in mind the artificial boosting effect that home “flippers” bring to the market.

“Home price appreciation has been so rampant, particularly in California and Florida, that flippers and get-rich-quick scam artists are flourishing again,” said Chris Cagan, VP at John Burns. “Just as in the mania of 2004-06, flippers make money when the party is raging, but inevitably, someone loses when the party is busted.”

Using anecdotal data for prices paid, repair costs, and selling prices for flipped homes across the nation, Cagan calculated an average net profit of 32 percent, “wildly [surpassing] the reality of the recovering market.”
Part of the growth in flipping activity, he remarked, stems from its growing popularity in the media.
“Flipping has moved beyond a segment of professionals working with undervalued and distressed properties; seminars, tours, and television shows encourage people to invest with flippers or to flip homes themselves. As in the boom of the previous decade, many people see easy money to be made,” he said.
Those perceived gains, however, aren’t realistic in a market in which prices are rising at 10 percent per year. Given the degree to which prices have risen due to house flipping, Cagan says smart investors must recognize the risk in the market.
“Today, the fundamentals for continued price appreciation are very good in the majority of markets,” he said. “However, do not assume that recent successes will continue forever, and be cognizant of the fact that artificial demand—flippers flipping to other flippers is the ultimate artificial demand—can distort your market.”

August Existing Home Sales At Pre-Recession High

09/19/2013 By: Mark Lieberman, Five Star Institute Economist 

 

Existing home sales rose an unexpected 6.5 percent in August to an annual sales rate of 5.48 million, the highest level since February 2007 – ten months before the onset of the Great Recession — the National Association of Realtors reported Thursday. Economists surveyed by Bloomberg expected existing home sales to drop to 5.255 million from July’s originally reported July’s 5.39 million sales pace which was unchanged in today’s report.

The increase in sales came as the median price of an existing single family home in August dipped slightly from July, down $300 to $212,100. It was the second straight month-month price drop.
The inventory of homes for sale edged up to 2.25 million from 2.24 million in July, computing to a 4.9 month supply down from 5.0 in July and the lowest since February’s 4.7 month supply.
The sales increase came as mortgage rates continue to rise with buyers seeking to complete transactions before rates went up further. According to Freddie Mac, the rate for 30-year fixed rate loan in August was 4.46 percent (the average of the weekly rates), up from 4.37 percent in July.
The sales data came shortly after a the Federal Open Market Committee said tighter rates could be hindering the economic recovery and announced it would continue its monetary stimulus policy designed to “maintain downward pressure on longer-term interest rates [and] support mortgage markets.”
The NAR warned the strong sales pace might be a “temporary peak”, the association’s chief economist said “rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead.”
He warned “tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”
The stronger sales pace came despite a drop in the NAR’s forward-looking pending home sales index for June which dropped to 110.9 from 111.3 in May. The index fell again in July to 109.5.

The sales gain was driven by stronger activity in the South and Midwest where the sales pace increased by 80,000 and 40,000 respectively. The sales pace slipped 30,000 in the West and was unchanged in the Northeast. The median price rose month-month in the South and Midwest but fell month-month in the West and Northeast. The NAR usually cautions against month-month price comparisons which it said, “do not compensate for seasonal changes, especially for the timing of family buying patterns
With the August report, sales pace topped 5 million for the fourth month in a row for the first time since August-November 2007. The August sales rate was 640,000 or 13.2 percent ahead of August 2012, the 19th straight of year-year gains.
Existing home sales continue to be plagued though by a tight inventory. The number of homes on the in August was down 150,000 from a year earlier, the 30th straight month of annual inventory decline. The months’ supply of homes for sale in August – computed using the homes for sale and the sales pace — was down 1.1 months from a year earlier. The months’ supply has been down year-year for 26 straight months.
While down month-month in August, the median price was up $27,200 or 14.7 percent from a year earlier, the strongest dollar and percentage year-year gain since October 2005. Nonetheless, the median price of an existing single family home is down – 7.9 percent – from its July 2006 peak of $230,300
The median price in August though topped $200,000 for fourth month in a row for the first time since May-August 2008.
According to the NAR, distressed homes – foreclosures and short sales – accounted for 12 percent of August sales, down from 15 percent in July, the lowest share since monthly tracking began in October 2008; they were 23 percent in August 2012. The decline in the share of distressed sales accounts for some of the year-year increase in the median price, since distressed homes sell at discounted prices. Eight percent of August sales were foreclosures, NAR said, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in August, while short sales were discounted 12 percent.
According to the Realtor group, the median time on market for all homes was 43 days in August, up from 42 days in July and 37 days in June, but less than the 70 days in August 2012. Non-distressed homes were on the market for 41 days, NAR said, while short sales were on the market for a median of 96 days and foreclosures for 52 days. Under half – 43 percent — of homes sold in August were on the market for less than a month.
With the recent increase in rates, all-cash sales made up 32 percent of transactions in August, up from 31 percent in July and June but down from 33 percent in May. NAR reported. All-cash sales were 27 percent in August 2012.
First-time homebuyers accounted for 28 percent of August sales, down from 29 percent in July and from 31 percent a year ago.

Redfin Predicts Volatile Housing Market

09/17/2013 By: Hugh Moore 

  

The housing market has lost some of its momentum recently according to a new study by the Redfin Research Center. Pent-up demand and low mortgage rates contributed to a robust real estate market since the beginning of the year, but higher prices and higher rates have diminished demand in recent months.

“In August, 26.4 percent of active listings had their prices lowered, the highest in four years,” said Tommy Unger, the report’s author. “With buzz of a strong housing market and home prices on the rise, sellers had unrealistic expectations about the price they could get for their home. With the relatively sudden softening in buyer demand, many sellers had to ultimately reduce their prices.”
Unger predicts that mortgage rates will play the central role in determining housing prices moving forward.
“We expect mortgage rates may show volatility this autumn as the Federal Reserve weighs whether to begin tapering its stimulus program,” Unger said. “If rates do rise sharply in September and October, buyers are likely to temporarily step out of the market. This probably would lead prices and sales to dip sharply around the holiday season. If rates remain stable, however, we would expect prices to flatten this autumn and sales to wind down slowly as the holiday season nears. Inventory, on the other hand, is likely to slowly drop in line with seasonal trends.”

Housing Scorecard Suggests Improvement

09/13/2013 By: Hugh Moore 

The housing recovery continues to gather momentum, indicating an ongoing economic upswing according to the Housing Scorecard released by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today. Improving market indicators include home prices, purchases of new homes, and sales of existing homes according to the report.

“As indicated in the August housing scorecard, the Administration continues to work to stabilize the housing market and help responsible homeowners get back on their feet,” said HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski. “With the number of underwater homeowners decreasing by more than 40%, it is clear that we are moving in the right direction. As we regain

stability in our housing markets, it is important to remember that we still have a long way to go in making sure that our housing finance system is strong for future generations.”
“The standards set by the Making Home Affordable program have changed the mortgage servicing industry, as have our quarterly assessments of servicer performance” said Treasury Assistant Secretary for Financial Stability Tim Massad. “While there has been significant progress, there is still more improvement needed in servicer behavior. And while the housing market has recovered substantially, there are still homeowners struggling to avoid foreclosure and it is vital that we continue to try to help them.”
Home prices continued to show strong annual gains, according to the report. The FHFA purchase-only index rose 7.7 percent from last year, and the seasonally adjusted purchase-only index has increased for the last 17 consecutive months.
The Housing Scorecard highlighted the government’s foreclosure mitigation programs, including the Home Affordable Modification Program (HAMP), which has provided more than 1.2 million permanent modifications as of July. Also, it noted that grantees of the Neighborhood Stabilization Program reported completion of more than 25,000 rehabilitated housing units.

Report: Housing Stable Despite 'Bubble-Like' Gains in August

09/10/2013 By: Tory Barringer 

 

August price gains were reminiscent of those last seen during the peak of the bubble—but analysts at Clear Capital insist there’s nothing to fear at this point.

The company reported in its latest Home Data Index that prices were up 10.2 percent year-over-year in August. By Clear Capital’s metrics, the last time the nation saw double-digit yearly price growth was mid-2006, the height of the bubble. (Other sources, including the monthly Case-Shiller Indices, have been reporting regular double-digit growth for some time.)
However, with prices still off 32.5 percent from their previous highs (putting them in line with prices circa 2002), the firm isn’t concerned about the possibility of a new bubble.

“With the continued strengthening of home price trends in August, the need for perspective on market activity is even more important,” said Dr. Alex Villacorta, VP of research and analytics at Clear Capital.
Looking under the surface trends, Villacorta notes the low-tier price segment of the housing market saw quarterly gains of 2.0 percent—the lowest since April 2012—indicating that sector is already on a more moderate growth path. Growth for the low-tier segment peaked in April 2013 at 4.1 percent.
“Considering the low tier price segment of the housing market led the recovery, the cooling in this segment will likely transfer through to the broader housing market,” Villacorta said, also observing that the industry is heading out of its busy season and into the slower fall and winter months. “That’s not to say the recovery is slated to stall, rather growth patterns are likely to return to more historical rates of growth, between 4.0 percent to 5.0 percent, rather than align with bubble-like growth.
“At the end of the day, this is still great news for housing,” he continued. “Today’s housing market is not irrational or out of balance within the broader context of housing trends, but as we learned, sustaining this pace of growth is simply not healthy. Our call for moderation is the next phase of a more mature recovery.”

Mortgage Rates, Low Inventory Greatest Obstacles for Homebuyers

09/06/2013 By: Tory Barringer 

Ascending mortgage rates are starting to weigh on homebuyers nearly as much as low inventory, according to Redfin’s most recent Real-Time Homebuyer Survey.

For its report, Redfin surveyed 1,772 active homebuyers across the 22 markets it covers. Respondents hailed from all over the country.
Out of those polled, 56 percent said rising rates have impacted their ability to buy a home “somewhat,” while an additional 7 percent said rates are impacting them “a lot.” When asked how rates have affected their home search, 33 percent said they’re speeding up their search before rates get too high, 20 percent said they’re slowing their search, and 1 percent have stopped looking altogether.

In addition, more homebuyers pointed to rising mortgage rates as one of their major concerns with buying a home right now, with 53 percent giving that response. However, inventory shortage was still the chief concern, earning 58 percent of responses.
At the same time, when asked about their motivation for buying a home this year, only 37 percent of buyers cited low mortgage rates, down from 56 percent last quarter. Thirty-eight percent answered “life event,” 33 percent said “rising costs,” and 25 percent said they are “tired of waiting.”
On the positive side, buyers seem to believe the market is shifting back toward a balance. The share of buyers who believe now is a good time to sell in their neighborhood fell to 63 percent from 66 percent in the last survey, marking the first drop in three quarters.
Still, though, only 24 percent of buyers said now is a good time to buy, a drop from 32 percent in the last survey.
Finally, home price expectations were a little more muted than they have been in past surveys. Thirteen percent of respondents said they expect home prices in their area to “rise a lot” over the next year, down from 23 percent in the prior survey. Just more than half (51 percent) expect prices to “rise a little” (down from 57 percent).

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.

Delinquencies Continue Decline; Highest Among Alt-A, Subprime Loans

09/03/2013 By: Krista Franks Brock 

 

Delinquencies and foreclosures are continuing to decline with higher concentrations among Alt-A and subprime loans, according to the latest Mortgage Market Monitor from Lender Processing Services (LPS).

Foreclosures are down 31 percent year-over-year in July, while delinquencies are down 9 percent, according to LPS data.
Both delinquencies and foreclosures declined over the 12-month period among all types of loans, except Alt-A and subprime loans.
Delinquencies rose 1 percent among Alt A loans and 3 percent among subprime loans.
In fact, more than one-third of current delinquencies are made up of these two loan categories.
LPS reported foreclosure starts year-to-date as of the end of July are their lowest since 2007, and “[g]iven that nearly 50

percent of these are repeat foreclosures means that the picture is even more positive than a surface reading of the numbers might suggest,” said Herb Blecher, SVP of data and analytics at LPS.
Distressed sales are also making up a diminishing share of home sales nationwide, according to LPS. For the first half of this year, distressed sales made up 10 percent of home sales, down from 16 percent over the first half of last year.
The percentage of noncurrent loans—both delinquencies and foreclosures—continues to remain highest in judicial states. Seven of the top 10 noncurrent rates are in judicial states, with Florida topping the list.
However, Mississippi—a nonjudicial state – took the No. 2 spot this month.
The other two nonjudicial states in the top 10 were Nevada and Rhode Island, which claimed the sixth and seventh spots on the list.
Nationally, 9.2 percent of mortgage loans are noncurrent, which is a 16.9 percent decline from last year.
LPS also highlighted prepayment trends among the rising interest rate environment in its report.
“[E]ven with that increasing interest rate pressure, July’s monthly prepayment rates are still about where they were this time last year, when rates were at historic lows,” Belcher said.
“In fact, they are roughly at the same levels as the heights of the ‘mini refinance booms’ in 2010,” he said.
However, “as interest rates continue to climb, we can expect that both prepayments and associated originations will decline,” he added.