Pending home sales rose strongly in May with all regions experiencing gains from a year ago, pointing to higher housing activity in the second half of the year, according to the National Association of REALTORS®.
The Pending Home Sales Index rose 8.2 percent to 88.8 in May from an upwardly revised 82.1 in April and is 13.4 percent higher than the 78.3 reading in May 2010. The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
This is the first time since April 2010 that contract activity was above year-ago levels, and the monthly gain was the strongest increase since last November when the index rose 10.6 percent.
Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said.
“Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn., Indianapolis, Minneapolis, Houston, and Seattle,” Yun added.
Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal, sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”
“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.
Regional Performance
▪ The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago.
▪ In the Midwest, the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010.
▪ Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago.
▪ In the West, the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.
Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.
Source: NAR
Wednesday, June 29, 2011
Freddie Mac: Better Days Ahead in Housing
Freddie Mac’s chief economist is optimistic that the housing market and economy will improve in the second half of 2011.
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
Freddie Mac Chief Economist Frank Nothaft said mortgage rates will likely remain historical lows of between 4.5 percent and 5 percent for the remainder of the year. Also, he expects more buyers to stop waiting on the sidelines as recent price drops in home prices have improved affordability.
Nothaft said consumers’ uncertainty about the economy has caused them to delay home purchases and other “big-ticket items.”
"Some potential buyers who have the means to buy are awaiting clearer signs that home values have firmed," Nothaft says.
But Nothaft says they should be getting their signs in the second half of the year, with projected job gains, and a growing, improved economy.
"Even though near-term concerns over income and sales growth are restraining consumer spending, business hiring, and new building, a number of positive signs in the economy indicate that growth will continue and is likely to accelerate in the second half of this year," Nothaft said. "Look for a gradual improvement in housing activity in the coming year.”
Source: “Freddie Mac Economist Sees Sunny Economy in Second Half,” HousingWire (June 27, 2011)
Monday, June 27, 2011
Green Buildings Net Higher Profits, Group Says
Green commercial buildings are more profitable, nabbing higher rates, boasting higher occupancies, and attracting more investors, according to Capital Markets Partnership, a nonprofit coalition of investment banks, investors, and governments.
As such, CMG plans to jump-start a secondary market to buy and sell green building securities for all types of buildings, Forbes reports. The group has created underwriting standards that have been tested by some of the biggest banks.
“Green buildings are complicated, and if you don’t define standards, you could devalue collateral” says Mike Italiano, CEO of Capital Markets Partnership and a founder the U.S. Green Building Council. “And coming off the largest devaluation of collateral in history, we need to avoid that."
Italiano maintains “there’s a 20-year business model here which has been calculated to create a trillion dollar economic stimulus, 8 million new jobs, and $400 billion in new wages.”
President Obama also is recently promoting the value of green building through the Better Buildings Initiative. The initiative, which offers tax incentives, aims to make existing commercial and multifamily buildings more energy efficient.
Source: “Green Building Financing Offers More Profits, Fewer Risks,” Forbes (June 14, 2011)
As such, CMG plans to jump-start a secondary market to buy and sell green building securities for all types of buildings, Forbes reports. The group has created underwriting standards that have been tested by some of the biggest banks.
“Green buildings are complicated, and if you don’t define standards, you could devalue collateral” says Mike Italiano, CEO of Capital Markets Partnership and a founder the U.S. Green Building Council. “And coming off the largest devaluation of collateral in history, we need to avoid that."
Italiano maintains “there’s a 20-year business model here which has been calculated to create a trillion dollar economic stimulus, 8 million new jobs, and $400 billion in new wages.”
President Obama also is recently promoting the value of green building through the Better Buildings Initiative. The initiative, which offers tax incentives, aims to make existing commercial and multifamily buildings more energy efficient.
Source: “Green Building Financing Offers More Profits, Fewer Risks,” Forbes (June 14, 2011)
Tuesday, June 21, 2011
More Lawmakers Fight 20% Down Payment
A proposed 20 percent down payment rule for qualified residential mortgages is too high, argues a growing group of lawmakers in the House of Representatives.
Late last week, about 240 lawmakers in the House sent a second letter to federal regulators urging them to lower the down payment rule on QRMs. Last month, about 150 lawmakers had signed a letter urging the same.
"The resultant reduction in demand for housing, due to an overly burdensome government dictate, would only add to the challenges the housing market faces, and could threaten a full-fledged economic recovery from years to come," the most recent letter reads.
The 20 percent down payment rule arises from an effort of several federal agencies that have been trying to urge more responsible lending and borrowing. The agencies created a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.)
QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent down payment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates.
A 20 percent down payment requirement would cause more first-time buyers to flee from the already fragile housing market, analysts at Capital Economics say.
The National Association of REALTORS® also has been an outspoken critic of the proposal, saying that a 20 percent down payment requirement would jeopardize a housing recovery.
Late last week, about 240 lawmakers in the House sent a second letter to federal regulators urging them to lower the down payment rule on QRMs. Last month, about 150 lawmakers had signed a letter urging the same.
"The resultant reduction in demand for housing, due to an overly burdensome government dictate, would only add to the challenges the housing market faces, and could threaten a full-fledged economic recovery from years to come," the most recent letter reads.
The 20 percent down payment rule arises from an effort of several federal agencies that have been trying to urge more responsible lending and borrowing. The agencies created a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.)
QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent down payment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates.
A 20 percent down payment requirement would cause more first-time buyers to flee from the already fragile housing market, analysts at Capital Economics say.
The National Association of REALTORS® also has been an outspoken critic of the proposal, saying that a 20 percent down payment requirement would jeopardize a housing recovery.
Existing-Home Sales Drop with Market Constraints
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 3.8 percent to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5 million in April, and are 15.3 percent below a 5.68 million pace in May 2010 when sales were surging to beat the deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings.
“Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”
Yun said the market also is being constrained by the lending community. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”
There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Yun explained.
The national median existing-home price for all housing types was $166,500 in May, down 4.6 percent from May 2010. Distressed homes – typically sold at a discount of about 20 percent – accounted for 31 percent of sales in May, down from 37 percent in April; they were 31 percent in May 2010.
“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said.
“Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effective shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010. “Although low mortgage interest rates are welcome, they are less meaningful compared to the tightness of loan underwriting standards,” Yun noted.
Total housing inventory at the end of May fell 1 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9-month supply in April.
All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.
First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.
Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.24 million in May from 4.38 million in April, and are 15.4 percent below a surge to 5.01 million one year ago. The median existing single-family home price was $166,700 in May, down 4.5 percent from May 2010.
Existing condominium and co-op sales fell 8.1 percent to a seasonally adjusted annual rate of 570,000 in May from 620,000 in April, and are 14.7 percent below the 668,000-unit pace in May 2010. The median existing condo price was $165,400 in May, which is 5.8 percent below a year ago.
Existing-home sales by region:
Northeast - declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010. The median price in the Northeast was $241,500, up 6.1 percent from a year ago.
Midwest - existing-home sales dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago. The median price in the Midwest was $136,400, which is 8.5 percent below May 2010.
South - existing-home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010. The median price in the South was $149,200, down 3.1 percent from a year ago.
West - unchanged at an annual pace of 1.17 million in May but are 10 percent lower than a year ago. The median price in the West was $192,300, which is 12.6 percent below May 2010.
Source: NAR
Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings.
“Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May,” he said. “Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year.”
Yun said the market also is being constrained by the lending community. “Even with recent economic softness, this is a disappointing performance with home sales being held back by overly restrictive loan underwriting standards,” he said. “There’s been a pendulum swing from very loose standards which led to the housing boom to unnecessarily restrictive practices as an overreaction to the housing correction – this overreaction is clearly holding back the recovery.”
There were notable regional differences in home sales. “A large decline in Midwestern existing-home sales can be attributed partly to the flooding and other severe weather patterns that occurred, but this also implies a temporary nature of soft market activity,” Yun explained.
The national median existing-home price for all housing types was $166,500 in May, down 4.6 percent from May 2010. Distressed homes – typically sold at a discount of about 20 percent – accounted for 31 percent of sales in May, down from 37 percent in April; they were 31 percent in May 2010.
“The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops,” Yun said.
“Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas,” Yun noted.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. “We’re concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent,” he said. “We don’t need to throw the baby out with the bath water – increasing downpayment requirements would effective shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010. “Although low mortgage interest rates are welcome, they are less meaningful compared to the tightness of loan underwriting standards,” Yun noted.
Total housing inventory at the end of May fell 1 percent to 3.72 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, up from a 9-month supply in April.
All-cash transactions stood at 30 percent in May, down from 31 percent in April; they were 25 percent in May 2010; investors account for the bulk of cash purchases.
First-time buyers purchased 35 percent of homes in May, down from 36 percent in April; they were 46 percent in May 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in May compared with 20 percent in April; they were 14 percent in May 2010.
Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.24 million in May from 4.38 million in April, and are 15.4 percent below a surge to 5.01 million one year ago. The median existing single-family home price was $166,700 in May, down 4.5 percent from May 2010.
Existing condominium and co-op sales fell 8.1 percent to a seasonally adjusted annual rate of 570,000 in May from 620,000 in April, and are 14.7 percent below the 668,000-unit pace in May 2010. The median existing condo price was $165,400 in May, which is 5.8 percent below a year ago.
Existing-home sales by region:
Northeast - declined 2.5 percent to an annual level of 770,000 in May and are 13.5 percent below May 2010. The median price in the Northeast was $241,500, up 6.1 percent from a year ago.
Midwest - existing-home sales dropped 6.4 percent in May to a pace of 1.02 million and are 22.7 percent below a year ago. The median price in the Midwest was $136,400, which is 8.5 percent below May 2010.
South - existing-home sales fell 5.1 percent to an annual level of 1.85 million in May and are 14.4 percent below May 2010. The median price in the South was $149,200, down 3.1 percent from a year ago.
West - unchanged at an annual pace of 1.17 million in May but are 10 percent lower than a year ago. The median price in the West was $192,300, which is 12.6 percent below May 2010.
Source: NAR
Monday, June 20, 2011
Wells Fargo Stops Reverse Mortgage Loans
Wells Fargo Home Mortgage announced that it will stop taking applications for new reverse mortgage loans by the end of the month due to the unpredictable nature of home values.
Reverse mortgages generally are sold to those over age 62 who want to tap into their home equity to pay for personal expenses like medical bills. Reverse mortgages don’t have to be repaid until the home owner sells the property or passes away, which is how it differs from home equity loans.
The company will continue to service customers who already have existing reverse mortgages, but will no longer take new applications as of June 30.
Wells Fargo joins a growing number of banks that are getting out of the reverse mortgage origination business due to the sluggish real estate market, which has made it more difficult for banks to determine home values and how much they should lend in the reverse mortgages. Bank of America announced in February that it also would stop processing new reverse mortgage loans.
Reverse mortgages generally are sold to those over age 62 who want to tap into their home equity to pay for personal expenses like medical bills. Reverse mortgages don’t have to be repaid until the home owner sells the property or passes away, which is how it differs from home equity loans.
The company will continue to service customers who already have existing reverse mortgages, but will no longer take new applications as of June 30.
Wells Fargo joins a growing number of banks that are getting out of the reverse mortgage origination business due to the sluggish real estate market, which has made it more difficult for banks to determine home values and how much they should lend in the reverse mortgages. Bank of America announced in February that it also would stop processing new reverse mortgage loans.
30-Year Rates Inch Up Slightly for the Week
After eight weeks of declines, the average 30-year fixed-rate mortgage, a popular choice among home buyers, edged up this week but still remains low by historical standards. Meanwhile, the 15-year mortgage continued to reach new lows for the year, Freddie Mac reports in its weekly mortgage market survey.
Here’s a closer look at how rates fared for the week.
30-year fixed-rate mortgage averaged 4.50 percent, up just slightly from last week’s 4.49 percent. Last year at this time, the 30-year rate mortgage averaged 4.75 percent.
15-year fixed-rate mortgage averaged 3.67 percent for the week, which is down from last week’s 3.68 percent. That marks its lowest level since November 2010. Last year at this time, the 15-year rate mortgage averaged 4.20 percent.
5-year adjustable-rate mortgage averaged 3.27 percent, down from last week’s 3.28 percent average. A year ago at this time, the 5-year ARM averaged 3.89 percent.
Overall, "mortgage rates were little changed this week as financial market participants shrugged off the recent inflation reports,” says Frank Nothaft, chief economist of Freddie Mac.
Source: “Mortgage Rates Mixed; 30-Year Fixed Ticks Up to 4.50 Percent,” Freddie Mac (June 16, 2011)
Here’s a closer look at how rates fared for the week.
30-year fixed-rate mortgage averaged 4.50 percent, up just slightly from last week’s 4.49 percent. Last year at this time, the 30-year rate mortgage averaged 4.75 percent.
15-year fixed-rate mortgage averaged 3.67 percent for the week, which is down from last week’s 3.68 percent. That marks its lowest level since November 2010. Last year at this time, the 15-year rate mortgage averaged 4.20 percent.
5-year adjustable-rate mortgage averaged 3.27 percent, down from last week’s 3.28 percent average. A year ago at this time, the 5-year ARM averaged 3.89 percent.
Overall, "mortgage rates were little changed this week as financial market participants shrugged off the recent inflation reports,” says Frank Nothaft, chief economist of Freddie Mac.
Source: “Mortgage Rates Mixed; 30-Year Fixed Ticks Up to 4.50 Percent,” Freddie Mac (June 16, 2011)
Wednesday, June 15, 2011
Banks Giving Agents Short Sale Leads?
Banks are becoming more open to providing real estate professionals with “warm leads” of willing borrowers for short sales in order to boost the number of successful workouts, according to a panel at HousingWire’s REO Expo in Fort Worth, Texas.
This is a "completely new phenomenon," Marie Chung, director of REO and Short Sale Services at Modern Realty, told conference attendees of this “top down” approach to short sales.
What’s changing: Instead of real estate brokers having to cold call defaulting borrowers to offer their short sale services, more banks and mortgage servicers are becoming more open to giving brokers information of borrowers willing to participate in a short sale. The lenders contact the borrowers first and then pass on information of those willing to cooperate in a short sale to real estate professionals, the panel said.
"Our short sale closings increased about 20 percent," Jaysen Greenleaf, director of client relations and business development at Phoenix Asset Management, told conference attendees about the change to banks giving them leads.
This is a "completely new phenomenon," Marie Chung, director of REO and Short Sale Services at Modern Realty, told conference attendees of this “top down” approach to short sales.
What’s changing: Instead of real estate brokers having to cold call defaulting borrowers to offer their short sale services, more banks and mortgage servicers are becoming more open to giving brokers information of borrowers willing to participate in a short sale. The lenders contact the borrowers first and then pass on information of those willing to cooperate in a short sale to real estate professionals, the panel said.
"Our short sale closings increased about 20 percent," Jaysen Greenleaf, director of client relations and business development at Phoenix Asset Management, told conference attendees about the change to banks giving them leads.
Tuesday, June 14, 2011
7 Highest-Performing Major Housing Markets
Several real estate markets are starting to show signs of improvement with home prices in the last quarter as the industry demonstrates more signs of stabilizing, according to Clear Capital's latest monthly Home Data Index Market Report.
REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.
“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."
The High Performers
Seven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.
1. Washington, D.C.-Arlington, Va.-Alexandria, Va.
Quarter-to-quarter home price change: 4.5%
Year-to-year price changes (May 2010-May 2011): 4.9%
REO saturation: 17.5%
2. St. Louis, Mo.
Quarter-to-quarter home price change: 2.2%
Year-to-year price changes: -11.4%
REO saturation: 35.3%
3. Pittsburgh, Pa.
Quarter-to-quarter home price change: 1.6%
Year-to-year price changes: 0.3%
REO saturation: 10.9%
4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.
Quarter-to-quarter home price change: 1.5%
Year-to-year price changes: 1.4%
REO saturation: 9.6%
5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.
Quarter-to-quarter home price change: 1.4%
Year-to-year price changes: -13.2%
REO saturation: 22.4%
6. Miami-Ft. Lauderdale-Miami Beach, Fla.
Quarter-to-quarter home price change: 0.6%
Year-to-year price changes: -5.2%
REO saturation: 39.6%
7. San Jose-Sunnyvale-Santa Clara, Calif.
Quarter-to-quarter home price change: 0.5%
Year-to-year price changes: -5%
REO saturation: 25%
Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.
Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011)
REO saturation rates have improved in the majority of the country’s largest markets. However, many areas are still battling year-over-year price declines. Clear Capital’s index reports that quarter-over-quarter home price declines were 2.3 percent in the latest quarter, which is less than half compared to the previous month.
“The latest market report results through May suggest that home prices are starting to ease back from the heavy declines seen over the winter,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are still far away from the strong demand needed to fully turn things around for the housing market. However, it is clear from the initial spring sales data that prices are softening, suggesting stabilization in the market."
The High Performers
Seven of the top 15 markets posted quarter-over-quarter property price gains in this month's report, compared to none in last month’s, according to Clear Capital. Here are the seven highest-performing major real estate markets, according to the report.
1. Washington, D.C.-Arlington, Va.-Alexandria, Va.
Quarter-to-quarter home price change: 4.5%
Year-to-year price changes (May 2010-May 2011): 4.9%
REO saturation: 17.5%
2. St. Louis, Mo.
Quarter-to-quarter home price change: 2.2%
Year-to-year price changes: -11.4%
REO saturation: 35.3%
3. Pittsburgh, Pa.
Quarter-to-quarter home price change: 1.6%
Year-to-year price changes: 0.3%
REO saturation: 10.9%
4. New York, N.Y.-Long Island, N.Y.-No. New Jersey, N.J.
Quarter-to-quarter home price change: 1.5%
Year-to-year price changes: 1.4%
REO saturation: 9.6%
5. Virginia Beach, Va.-Norfolk, Va.-Newport News, Va.
Quarter-to-quarter home price change: 1.4%
Year-to-year price changes: -13.2%
REO saturation: 22.4%
6. Miami-Ft. Lauderdale-Miami Beach, Fla.
Quarter-to-quarter home price change: 0.6%
Year-to-year price changes: -5.2%
REO saturation: 39.6%
7. San Jose-Sunnyvale-Santa Clara, Calif.
Quarter-to-quarter home price change: 0.5%
Year-to-year price changes: -5%
REO saturation: 25%
Tthe lowest-performing market for the fifth straight month was Detroit-Warren-Livonia, Mich., with a 13.2 percent decrease in quarter-over-quarter home price change and a 58 percent REO saturation rate.
Source: “Clear Capital Reports Quarterly Home Price Decline Slows; Signs of Market Stability as Summer Approaches,” Clear Capital (June 9, 2011)
Thursday, June 9, 2011
Which Social Network Is Rated Most Important?
Nearly 60 percent of survey respondents say that it is important to have a LinkedIn account--more than any other social network, according to “S-Net (The Impact of Social Media),” a report from ROI Research Inc. of nearly 3,000 active social networkers.
And those surveyed say they use LinkedIn a lot, too. With those who have an active LinkedIn account, half of those surveyed say they visit the site at least weekly, and 20 percent visit the site at least daily.
“Factors including LinkedIn’s recent IPO announcement, the May uptick in national unemployment, and signs of a slowed market certainly contribute to LinkedIn’s attractiveness among social networkers,” says Daina Middleton, CEO of Performics, which released the survey results.
The survey also found:
•Social networkers listen to what their peers have to say about brands and businesses they like--or don’t. Sixty percent say they are at least somewhat likely to take action when a friend posts something about a product/service, company, or brand. Slightly more than half agree that others can influence business decisions made by companies and brands by sharing their opinions on social networking sites.
•Fifty-three percent frequently or occasionally use social networking sites to give feedback about a brand or business.
•The public is divided on using social networks to give and get advice about other companies. Fifty percent of respondents say they use social networks to give advice and another 50 percent say they use it to get advice about services and companies.
Source: “New Social Media Study: Nearly 60 Percent Say LinkedIn Is Most Important Social Network Account,” RISMedia (June 9, 2011)
And those surveyed say they use LinkedIn a lot, too. With those who have an active LinkedIn account, half of those surveyed say they visit the site at least weekly, and 20 percent visit the site at least daily.
“Factors including LinkedIn’s recent IPO announcement, the May uptick in national unemployment, and signs of a slowed market certainly contribute to LinkedIn’s attractiveness among social networkers,” says Daina Middleton, CEO of Performics, which released the survey results.
The survey also found:
•Social networkers listen to what their peers have to say about brands and businesses they like--or don’t. Sixty percent say they are at least somewhat likely to take action when a friend posts something about a product/service, company, or brand. Slightly more than half agree that others can influence business decisions made by companies and brands by sharing their opinions on social networking sites.
•Fifty-three percent frequently or occasionally use social networking sites to give feedback about a brand or business.
•The public is divided on using social networks to give and get advice about other companies. Fifty percent of respondents say they use social networks to give advice and another 50 percent say they use it to get advice about services and companies.
Source: “New Social Media Study: Nearly 60 Percent Say LinkedIn Is Most Important Social Network Account,” RISMedia (June 9, 2011)
Wednesday, June 8, 2011
Housing Shortage Is Likely Coming, Report Says
Within the next decade, 16 million new housing units will be needed to meet population growth and shifting demands, according to Harvard University’s Joint Center for Housing Studies in its latest annual "State of the Nation's Housing" report.
That means household growth, which has dropped drastically in recent years, will need to greatly reverse its trend to meet the forecasted spike in demand. From 2007-2010, household growth averaged about 500,000 per year--less than half the 1.2 million annual pace averaged prior from 2000-2007.
To absorb the current rate of foreclosed and distressed homes plaguing most markets, a more normal rate of household formation is critical, according to the report. However, household growth partially has stalled as young adults have delayed home ownership and immigration has slowed.
As such, in recent years, builders have drastically cut production of new homes.
"With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets," the report notes. "Over the longer term, the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes."
The report predicts a need for greater housing units for several reasons. For example, the report projects demand for 1 million new homes a year is needed to meet population growth in the coming decade. The report also predicts a surge in smaller homes, estimating that 3.8 million baby boomers will be looking to downsize their homes within the next decade. Also in adding to the increase in housing units needed, Immigration growth, the need to replace existing homes, and demand for second homes will contribute to rising demand, the report notes. Therefore, researchers conclude at least 16 million new housing units will be needed over the next decade.
Source: “Harvard: Real Estate Recovery Hinges on Return of Demand,” Inman News (June 6, 2011)
That means household growth, which has dropped drastically in recent years, will need to greatly reverse its trend to meet the forecasted spike in demand. From 2007-2010, household growth averaged about 500,000 per year--less than half the 1.2 million annual pace averaged prior from 2000-2007.
To absorb the current rate of foreclosed and distressed homes plaguing most markets, a more normal rate of household formation is critical, according to the report. However, household growth partially has stalled as young adults have delayed home ownership and immigration has slowed.
As such, in recent years, builders have drastically cut production of new homes.
"With inventories of new homes at historic lows, a turnaround in demand could quickly result in tighter markets," the report notes. "Over the longer term, the number of younger households is set to rise sharply, supporting growth in the population that fuels growth in both new renters and first-time buyers. The path of the economy and evolution of the mortgage market will determine when and if this increased demand materializes."
The report predicts a need for greater housing units for several reasons. For example, the report projects demand for 1 million new homes a year is needed to meet population growth in the coming decade. The report also predicts a surge in smaller homes, estimating that 3.8 million baby boomers will be looking to downsize their homes within the next decade. Also in adding to the increase in housing units needed, Immigration growth, the need to replace existing homes, and demand for second homes will contribute to rising demand, the report notes. Therefore, researchers conclude at least 16 million new housing units will be needed over the next decade.
Source: “Harvard: Real Estate Recovery Hinges on Return of Demand,” Inman News (June 6, 2011)
Which Housing Values Have Suffered the Most?
Lower priced homes have been harder hit than higher priced homes in the sluggish housing market, according to a study by Harvard University’s Joint Center for Housing Studies.
High-priced homes have lost 38 percent of their value since values peaked in 2006. Lower priced homes, on the other hand, have dropped 63 percent since peaking in 2007.
Why such a difference? Daniel McCue, senior research analyst for the Joint Center, says it’s because lower priced homes appreciated much more before reaching its peak and therefore had further to drop than higher priced homes.
For example, in San Francisco, lower end homes nearly tripled in price before peaking. High-end homes, meanwhile, did not even double before reaching its peak. McCue attributes this partially to lenders making more loans available to lower income households during the housing peak days, which increased demand and prices.
Foreclosures have also plagued low-income areas, more so than higher income areas, according to the study. Foreclosures in low-income neighborhoods are more than double that of high-income neighborhoods, according to the Joint Center for Housing Studies.
Prices range drastically among major housing market so what’s considered “high-priced” and “low-priced” in the study varies greatly from market to market. For example, in Atlanta low-tier homes were considered under $122,533 and high-tier homes above $221,679; in San Francisco, low-tier homes were considered $312,546 and high-tier homes over $573,577.
High-priced homes have lost 38 percent of their value since values peaked in 2006. Lower priced homes, on the other hand, have dropped 63 percent since peaking in 2007.
Why such a difference? Daniel McCue, senior research analyst for the Joint Center, says it’s because lower priced homes appreciated much more before reaching its peak and therefore had further to drop than higher priced homes.
For example, in San Francisco, lower end homes nearly tripled in price before peaking. High-end homes, meanwhile, did not even double before reaching its peak. McCue attributes this partially to lenders making more loans available to lower income households during the housing peak days, which increased demand and prices.
Foreclosures have also plagued low-income areas, more so than higher income areas, according to the study. Foreclosures in low-income neighborhoods are more than double that of high-income neighborhoods, according to the Joint Center for Housing Studies.
Prices range drastically among major housing market so what’s considered “high-priced” and “low-priced” in the study varies greatly from market to market. For example, in Atlanta low-tier homes were considered under $122,533 and high-tier homes above $221,679; in San Francisco, low-tier homes were considered $312,546 and high-tier homes over $573,577.
Monday, June 6, 2011
Suburbs Being Reshaped by Lack of Kids
Children playing outside is a natural picture of the American suburban landscape. But in 2011, people are wondering — where did all the kids go?
William Frey, demographer at the Brookings Institution, calls children in the suburbs an “endangered species.”
The dropping children population is reshaping the look of suburbs, experts say. As more women delay having children and more families have fewer children, the childhood population under the age of 18 has dropped in 95 percent of U.S. counties since 2000, according to an analysis by USA Today of 2010 Census data. Despite a 9.7 percent growth in the overall population, the number of households with children under age 18 has remained at 38 million since 2000 — that’s fewer than the number of households with dogs (which stands at 43 million).
"All of a sudden, there may technically be no children in the neighborhood," says James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, Rutgers University.
So what’s this all mean for suburbia? In some areas of the country, schools have closed from declining enrollments, some child-oriented businesses are closing, and housing needs are shifting.
"Lots of singles, lots of elderly, fewer kids — what this does really is free people in their location decisions to a certain extent if they're not bound by school and safety aspects," says Armando Carbonell, chair of the department of planning and urban form at the Lincoln Institute of Land Policy. "It can mean growth in the central city where schools might have been a concern. More households will be able to locate to places without the attributes of the suburbs."
William Frey, demographer at the Brookings Institution, calls children in the suburbs an “endangered species.”
The dropping children population is reshaping the look of suburbs, experts say. As more women delay having children and more families have fewer children, the childhood population under the age of 18 has dropped in 95 percent of U.S. counties since 2000, according to an analysis by USA Today of 2010 Census data. Despite a 9.7 percent growth in the overall population, the number of households with children under age 18 has remained at 38 million since 2000 — that’s fewer than the number of households with dogs (which stands at 43 million).
"All of a sudden, there may technically be no children in the neighborhood," says James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, Rutgers University.
So what’s this all mean for suburbia? In some areas of the country, schools have closed from declining enrollments, some child-oriented businesses are closing, and housing needs are shifting.
"Lots of singles, lots of elderly, fewer kids — what this does really is free people in their location decisions to a certain extent if they're not bound by school and safety aspects," says Armando Carbonell, chair of the department of planning and urban form at the Lincoln Institute of Land Policy. "It can mean growth in the central city where schools might have been a concern. More households will be able to locate to places without the attributes of the suburbs."
What's That '+1 Button' All Over the Internet?
Google recently launched the “+1 button” and you’ll spot it on a range of Web sites from YouTube and Blogger to the Washington Post and many others. Google added the +1 button to its search engine three months ago but is now making the “+1 button” available to other Web sites to add.
So what is it?
The button is similar to Facebook’s Like button. You click the +1 button when you think “this is pretty cool” or when you want to say “you should check this out” when viewing Web sites, according to Google.
The button gives you the ability to vote on Web sites and advertisements (the button can appear next to the headline of search ads), and the information is then used to tailor search results for you and your contacts.
For example, "with a single click you can recommend that raincoat, news article, or favorite sci-fi movie to friends, contacts, and the rest of the world,” writes Google software engineer Evan Gilbert in a blog post. “The next time your connections search, they could see your +1's directly in their search results, helping them find your recommendations when they're most useful."
You’ll need to be signed into your Google Account to see when friends and contacts have endorsed certain Web pages using the +1 button.
Google says it hopes the added button will help improve click-through rates for content and advertising and is encouraging Web site owners to add the button to their Web pages to get their search results to stand out more.
So what is it?
The button is similar to Facebook’s Like button. You click the +1 button when you think “this is pretty cool” or when you want to say “you should check this out” when viewing Web sites, according to Google.
The button gives you the ability to vote on Web sites and advertisements (the button can appear next to the headline of search ads), and the information is then used to tailor search results for you and your contacts.
For example, "with a single click you can recommend that raincoat, news article, or favorite sci-fi movie to friends, contacts, and the rest of the world,” writes Google software engineer Evan Gilbert in a blog post. “The next time your connections search, they could see your +1's directly in their search results, helping them find your recommendations when they're most useful."
You’ll need to be signed into your Google Account to see when friends and contacts have endorsed certain Web pages using the +1 button.
Google says it hopes the added button will help improve click-through rates for content and advertising and is encouraging Web site owners to add the button to their Web pages to get their search results to stand out more.
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