Wednesday, April 25, 2012
Tuesday, April 24, 2012
Sunday, April 22, 2012
Short Sales Surpass Foreclosures as Banks Agree to Deals
By John Gittelsohn - Apr 17, 2012
The number of U.S. home short sales surpassed foreclosure deals for the first time as banks became more agreeable to selling houses for less than the amount owed on their mortgages, according to Lender Processing Services Inc. (LPS) Short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by the Jacksonville, Florida-based company show. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures. A for sale sign is displayed in front of a bank-owned home in West Palm Beach, Florida. Photographer: Mark Elias/Bloomberg April 17 (Bloomberg) -- U.S. housing starts in March dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. Michael McKee and Betty Liu report on Bloomberg Television's "InsideTrack." (Source: Bloomberg) “It’s a fairly recent phenomenon that short sales have been increasing,” Jonathon Weiner, a vice president in the applied analytics division of Lender Processing Services, said in a telephone interview. “Short sales should be the dominant way of disposing of assets” in distress, he said. Lenders are catching up to short sales after being slow to provide the staffing and incentives necessary to complete the deals, Weiner said. The transactions typically fetch a higher price for banks than sales of homes that have gone through foreclosure. In January, foreclosed homes sold for an average of 29 percent less than comparable non-distressed properties, compared with a 23 percent discount for short sales, according to Lender Processing Services. The gap has narrowed as short sales become more common, Weiner said. The growing percentage of short sales, which don’t require going through the drawn-out foreclosure process, is a sign that the U.S. is making progress in working through its inventory of distressed properties, Weiner said. The increase in short sales also may help values find a floor quicker. “Our baseline scenario is that home prices will hit a bottom at the end of this year,” he said. The Federal Housing Finance Agency ordered loan servicers to respond to all short-sale offers within 30 days, and approve or reject them within 60 days, in an effort to expedite a process that can take months longer than conventional home sales, the agency said in a statement today. The FHFA, which oversees mortgage companies Fannie Mae and Freddie Mac, wants to improve the short-sale process “to prevent foreclosure, keep homes occupied and help maintain stable communities,” Edward J. DeMarco, the agency’s acting director, said in the statement. Freddie Mac and Fannie Mae completed 125,456 short sales last year, the most recent period for which figures are available. Banks including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) last year began giving cash inducements as high as $35,000 to selected homeowners who agreed to a short sale as a way of speeding up the process. Bank of America Corp. paid $19.9 million in the first two months of this year for 22,534 homeowners to relocate after short sales and deeds in lieu of foreclosure, when borrowers agree to return the property deed in exchange for debt forgiveness, the Charlotte, North Carolina-based company said March 16. Its short sales rose 31 percent in January and February from a year earlier. Banks have struggled to reduce losses from delinquent mortgages. Almost 4.4 percent of homes with loans had received a notice of foreclosure sale at the end of 2011, the 11th consecutive quarter the rate has been higher than 4 percent, according to the Mortgage Bankers Association. Foreclosure filings, including notices of defaults and bank repossessions, fell 16 percent in the first quarter from a year earlier after lenders under legal scrutiny slowed actions against delinquent homeowners, RealtyTrac Inc. reported April 12. Lender Processing Services, a 2008 spinoff from title- insurance company Fidelity National Financial Inc. (FNF), counts short sales by tallying mortgage and property transfer documents filed with county recorders, Weiner said. Other reports haven’t shown the same magnitude of short- sale growth. The National Association of Realtors reported that 13 percent of transactions were short sales and 22 percent were foreclosures in January. In February, short sales increased to 14 percent and foreclosure-related transactions declined to 20 percent, the group said March 21. The Realtors collect their data from transactions on the Multiple Listing Service, a database of homes on the market, and a survey of about 3,000 members, said Walter Molony, a spokesman for the association. “The February data is showing a bit of an uptick,” he said in an e-mail from Washington. “We’re hearing the process is going a bit more smoothly now, so that comes as no surprise.” The U.S. Department of Housing and Urban Development reported a preliminary 19,600 short sales in January, compared with the Lender Processing Services tally of 48,721. An April 6 HUD report showed that the number of short sales rose 4.3 percent from a year earlier as the number of real estate owned, or REO, sales -- another name for foreclosure sales -- fell 39 percent. Before agreeing to accept a loss on a short sale, lenders usually require homeowners to show evidence of hardship, such as inability to afford their mortgage payments or the need to relocate for a job, said Weiner of Lender Processing Services. Short sales outnumbered foreclosures in states with some of the largest shares of homes facing foreclosure, such as Arizona, California, Florida, Nevada and New Jersey, Lender Processing Services reported. In New Jersey, short sales have exceeded REO deals every month since June 2010. In January, short sales accounted for more than 15 percent of the 3,033 New Jersey homes sold, compared with 3.9 percent for foreclosures. It took 966 days for banks to repossess a home in New Jersey, second only to New York, according to RealtyTrac. Both states require judicial hearings for foreclosure approval. In New York, where it takes 1,056 days to repossess a home, 7.9 percent of purchases in January were short sales while 2.3 percent involved bank-owned properties. “In general, markets where larger incentives are provided usually have extended foreclosure timelines, such as Florida,” Tom Goyda, a spokesman for Wells Fargo, said in an e-mail from Ellisville, Missouri. Wells Fargo, which doesn’t disclose its short-sale totals, offers homeowners as much as $20,000 to relocate, he said.Distressed-Property Inventory
Cash Incentives
Falling Foreclosures
Showing an ‘Uptick’
California, Arizona
To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
Saturday, April 21, 2012
Thursday, April 19, 2012
Tuesday, April 17, 2012
California Home Prices Going Up, Inventory Down, C.A.R. Reports .
By: Esther Cho
After 16 months of year-over-year declines, median home prices in California posted a gain, according to the California Association of Realtors.). The median price of a single-family home for March 2012 was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February’s median price of $266,660. The month-over-month increase was the largest since March 2004. When breaking up prices by specific regions, the San Francisco Bay area was an exception, seeing a year-over-year decrease of 1.6 percent, but a 9.1 percent month-over-month increase. “In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average,” said C.A.R. VP and chief economist Leslie Appleton-Young. “These low inventory levels demonstrate that the pilot program is not necessary in California.” The pilot program involves the sale of government-owned REOs in bulk to institutional investors who will convert them into rental properties. According to C.A.R., in California, the program would call for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties. Recently, 19 California congressmen sent a letter to Edward DeMarco, acting director of FHFA, asking him to make California an exception to the program. C.A.R. reported that California’s housing inventory declined, with the Unsold Inventory Index for existing, single-family homes down to 4.1 months in March, compared to a revised 5.4 months in February and a 5.4 month supply in March 2011. Los Angeles county had a 4.3 month supply, and Riverside county had an even lower number, with 3.8 months of inventory. San Mateo and Santa Clara counties had notably low inventories as well, at 2.4 and 2.5 months, respectively. Not only is California’s housing inventory down, but according to C.A.R., it takes less days to sell a home there, with the time it took to sell a single-family home dropping to 53.1 days in March 2012, compared to 58.9 days in February and 57 days for March 2011.
Monday, April 9, 2012
In Two Years, Real Estate will Rock
Housing starts will nearly double and home prices will begin to rise in 2013, with prices increasing significantly in 2014.
Thursday, April 5, 2012
Do Your Part: Top 7 Green Cleaning Secrets
By Terri Bennet
Spring is here and that means it’s time for a good spring cleaning. Instead of bringing in chemical cleaners to do the dirty work, opt for a deep, green clean. Using safer cleaning products helps create a healthier home and a healthier family. Today, I’m sharing
Monday, April 2, 2012
Experts Expect to See Broad Improvements, Home Prices to Rise in 2013
By: Esther Cho
The Urban Land Institute released its Real Estate Consensus Forecast Wednesday morning, and overall, the 38 real estate economists and analysts surveyed projected broad improvements for the economy. With signs of improvement in the housing sector already emerging, participants expect to see housing starts nearly double by 2014 and project home prices will begin to rise in 2013. The average home price, which has declined somewhere between 1.8 percent and 4.1 percent over each of the past three years, according to FHFA data, is expected to stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014. Single-family housing starts are expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014. The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014. GDP is expected to grow by 2.5 percent in 2012 and grow to 3.2 percent in 2014. But, with the improving economy is inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates for institutional-quality investments (NCREIF cap rates), which are expected to remain steady at 6 percent in 2012 and 2013 and then rise slightly to 6.2 percent in 2014. By property type, National Council of Real Estate Investment Fiduciaries (NCREIF) total returns in 2012 are expected to be strongest for apartments (12.1 percent), followed by industrial (11.5 percent), office (10.8 percent), and retail (10 percent). By 2014, returns are expected to be strongest for office (10 percent) and industrial (10 percent), followed by apartments (8.8 percent) and retail (8.5 percent). ULI CEO Patrick L. Phillips advised that while the ULI Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad. “While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years.,” said Phillips. Non-housing sector growth, according to the ULI Forecast, which was conducted from February 23 to March 12, 2012 -For the apartment sector, year-end vacancy rates are expected to decline further in 2012 to 5 percent, and then rise slightly to 5.1 percent in 2013 and to 5.3 percent in 2014. -Apartments are expected to show strong rental rate growth, rising 5 percent in 2012, then slowing down to 4 percent in 2013, and 3.8 percent in 2014. -Issuance of commercial mortgage-backed securities (CMBS) is expected to increase from $33 billion in 2011 to $40 billion in 2012, $58 billion in 2013, and $75 billion in 2014. -Ten-year treasury rates are projected to rise to 2.4 percent by the end of 2012, 3.1 percent for 2013, and 3.8 percent for 2014. -Future equity REIT returns are expected to rise to 10 percent in 2012, then drop to 9 percent in 2013, and 8 percent in 2014. -Returns for institutional-quality direct real estate investments are expected to trend lower, with returns of 11 percent in 2012, 9.5 percent in 2013, and 8.5 percent in 2014. -Hotel occupancy rates are projected to increase to 57 percent by 2012, 58.2 percent by 2013, and 59.2 percent by 2014. -For the industrial/warehouse sector, vacancy rates are expected to decline steadily over the next three years to 12.8 percent by the end of 2012, 12.1 percent in 2013, and 11.5 percent by the end of 2014.