Posts Tagged ‘Home Values’
Should Everyone Get Bonus For Paying Mortgage On Time?
As home values continue to fall and more borrowers fall into a negative equity position on their home loans, those who stand to lose, banks and investors, are working to keep borrowers current.
Communities to get first shot at foreclosed homes
Major mortgage lenders will now give state and local governments the right to buy foreclosed properties before they go on the market, giving them “a leg up” on speculators who have often thwarted local redevelopment efforts, Housing Secretary Shaun Donovan announced Wednesday. The First Look program will give communities a 48-hour heads up on foreclosed properties and the ability to buy them at a 1 percent discount, Donovan said. The effort is intended to help improve the $7 billion Neighborhood Stabilization Program, he said. “First Look is good for our housing market because it will bring much-needed speed” to the sale of bank-owned homes, Donovan said. Data show that vacant homes are more than three times more destructive to neighboring home values than those early in the foreclosure process. USA TODAY reported in July that more than $1 billion in Neighborhood Stabilization Program funds were unspent two years after Congress authorized the program. Short staffing and confusion over rules were partly to blame, but local governments also said lenders wouldn’t deal their foreclosed properties. Often, cities can’t move as quickly as private companies in buying homes – especially in highly visible areas or where they’re trying to assemble multiple properties in a land bank. “You can’t be successful in neighborhood stabilization unless you control all the pieces on the chess board,” said Craig Nickerson, president of the National Community Stabilization Trust, which runs the clearinghouse. The participating mortgage lenders account for 75 percent of foreclosed homes, Donovan said. They include Bank of America, Chase, Citibank, Wells Fargo and Freddie Mac. The banks won’t offer all their foreclosures. “We’re not going to run all our inventory through this engine,” said Steven Nesmith, senior vice president of Ocwen Financial Corp. He said about 20 percent will be offered to governments and non-profits. The plan might come too late to help communities involved in the first round of funding. Many have just days to write contracts or risk losing their federal funding. In all, 143 communities have less than a month to spend their federal money. If they don’t, the Department of Housing and Urban Development will freeze their unused funds – as much as $354 million nationally – and could take the money back. Palm Bay, Fla., has until Friday to spend its $5.2 million, and might fall $200,000 short. “Just with our purchasing requirements, we do not move as quickly as the private sector,” said David Watkins, the city’s growth management director. If First Look had been available from the beginning, he said, “we might be at least three or four months ahead of where we are now.” © Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Gregory Korte
Nearly 50 percent leave Obama mortgage-aid program
Nearly half of the 1.3 million homeowners who enrolled in the Obama administration’s flagship mortgage-relief program have fallen out. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say. More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year. “The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics. Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market. Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That’s about 48 percent of the ones who had enrolled since March 2009. And it is up from more than 40 percent through June. Another 421,804, or roughly 32 percent of those who started the program, have received permanent loan modifications and are making their payments on time. RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 percent from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says. Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac. Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That’s a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales - when lenders let homeowners sell for less than they owe on their mortgages. Zandi predicts another 1.5 million foreclosures or short sales in 2011. “We still have a lot more foreclosures to come and further home price declines,” Zandi said. He said home prices, which have already fallen 30 percent since the peak of the housing boom, would drop by another 5 percent by next spring. Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork. The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out. Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500. Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer. The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures. Copyright © 2010 The Associated Press, Martin Crutsinger, AP economics writer.
Homeowner confidence in real estate market dips
Homeowners are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second-quarter Homeowner Confidence Survey. One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom. When asked about local home values over the next six months, more than one-quarter (28 percent) of U.S. homeowners said home values would decrease, up from 20 percent in the first quarter. Additionally, less than one-third (30 percent) believes home values in their local market will increase, down from 42 percent in the first quarter. Despite the increasing pessimism, a large number of homeowners anxiously await the opportunity to sell. Five percent of U.S. homeowners say they are very likely to put their home on the market in the next six months if they see signs of a real estate market turnaround. This translates into 3.8 million homes with the potential to come into the market. By comparison, 5.2 million existing homes were sold in all of 2009. Looking backward, homeowners also became slightly more pessimistic about the performance of their own homes’ values in the past year. Less than a quarter (24 percent) of homeowners said their home had increased in value in the past year, compared to 27 percent in the first quarter. In reality, 34 percent of homes increased in value in the second quarter, according to the Zillow Q2 Real Estate Market Reports. “As homeowners have been inundated recently with news of declining home sales post-tax credit, it’s no surprise that they would become more pessimistic about the future of home values,” said Dr. Stan Humphries, chief economist at Zillow.com. “Homeowners have become much more responsive to current market conditions than they were just two years ago, when a more typical reaction was denial. “Given this sentiment, we’re surprised so many homeowners believe their market has already bottomed. Although our Q2 reports indicated signs of stabilization in 30 percent of markets we cover, we’re concerned that this was at least partly due to the homebuyer tax credits. We’re already seeing payback for the credits in the form of declining home sales, and this trend will push up inventory levels and exert downward pressure on home values. Add in the inventory from the millions of sidelined sellers and we’ll take more steps back. Our forecast remains largely unchanged: We’re in for an L-shaped recovery that will likely keep annualized home value appreciation very low for the next three to five years.” Homeowner perception by region Looking further into the future, the majority of homeowners believe their own homes’ values will either increase (27 percent) or stay the same (35 percent) in the next 12 months, while 12 percent expect a decrease and 26 percent don’t know. Of those who expect their home’s value to increase, the median expectation is a rise of 6 percent, although that varies by geography. Northeastern and Western homeowners who expect an increase anticipate a median rise of 10 percent, while Southern and Midwestern homeowners expect a median increase of 5 percent. Those who expect their home’s value to decrease in the next year anticipate a median decrease of 10 percent. © 2010 Florida Realtors®
Unemployment drives more home sellers to cut price
A new report from Trulia.com shows that 25 percent of homes on the market in July had price cuts as sellers tried to attract buyers who are dealing with high unemployment rates, lower wages, tighter lending practices and falling home values. For-sale homes also face competition from foreclosures. In the 50 biggest U.S. cities, the amount cut from residential prices rose to $30.1 billion as of Aug. 1 from $27.3 billion the prior month; and in half of these cities, prices were reduced on 30 percent of homes. However, the average discount was the same as in June: 10 percent. The most price cuts were reported in Minneapolis, where 42 percent of listings saw price reductions, while the share of sellers slashing prices rose 56 percent to 18 percent in Las Vegas. “Sellers need to continue to be very aggressive with pricing to compete against all the low-priced short sales and foreclosures that they’ll be on the market with, for a long time to come,” says Tara Nelson of Trulia. In Florida, only two cities made the top 50 list for price cuts, however, with only No. 11, Jacksonville, surpassing the national average – 32 percent of listings there had a price reduction that averaged 12 percent. Miami made the top 50 list at No. 41, with 23 percent of listings facing a reduction of 14 percent. © Copyright 2010 INFORMATION, INC.
South Florida home values see nation’s biggest drop in a year
South Florida home values suffered the worst decline of 25 large metropolitan areas in the second quarter of this year, falling 15 percent compared with 2009, according to a national real estate report. The data, released Monday by analysts at Zillow, found that the median home value in Palm Beach, Broward and Miami-Dade counties fell to $146,500, down nearly 7 percent from the beginning of this year and a whopping 52 percent from housing’s peak values in 2006. Nationally, median home value, including townhomes and condominiums, dipped 3.2 percent from the same time in 2009. Zillow’s chief economist, Stan Humphries, called Monday’s study a “mixed bag,” with several areas in California seeing a continued increase in values. In Los Angeles, home values jumped 5 percent compared with 2009. San Diego homes saw a 7 percent increase. “Markets in other parts of the country, like Miami and Phoenix, are not yet showing signs of reaching a bottom in home values,” Humphries said. “High supply continues to be a challenge in states like Florida and Arizona.” A separate report released Monday by analysts at Miami-based Condo Vultures showed a 4.6 percent increase in housing inventory in South Florida since May, with 68,254 single-family houses, condos and townhomes on the market. Humphries predicts home values will bottom out nationally during the latter half of this year. “But we continue to be cautious about the impact of declining home sales,” Humphries said. The Phoenix area showed a 12 percent decline in median home value compared with last year, while Detroit values plummeted 14 percent. The Zillow Home Value Index measures the median value of all homes, not just sales. In Palm Beach County, values for single-family homes showed only a 1 percent decline, while Martin and St. Lucie had declines of 5 percent and 4 percent, respectively. South Florida’s homes are treading water in one measurement, managing so far this year not to sink further into negative equity. Zillow found that 44 percent of South Florida single-family homes with mortgages are underwater – real estate slang for owing more on a loan than the home is worth. That’s about the same percentage as the beginning of the year and just below the second quarter of 2009, when 47 percent of homes were underwater. In the Treasure Coast, 55 percent of homes with mortgages were underwater during the second quarter of this year, compared with 56 percent earlier in 2010. Nationally, 21.5 percent of homes with mortgages had negative equity in the second quarter. Humphries said foreclosures and bank takeovers help clean out the inventory of negative equity homes, but the typically lower sale prices of those homes also continues to weigh down values of neighboring properties. Peter Zalewski, a principal for Condo Vultures, is more optimistic about Florida’s market turning around even with rising inventories. He believes financing opportunities are increasing, meaning more people will be able to buy. “I think that 2009 will be the year most people realize was the bottom,” he said. “I would be surprised if there was another big increase in underwater homes.” Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Picking Out the Best Option From Lists of Home Foreclosures
When looking at lists of home foreclosures, a homebuyer should not only pay attention to the cheapest houses included in the list but should also consider the potential of these properties to provide future benefits. A buyer might enjoy the immediate advantage of buying a cheap dwelling, but in the long run might have to take losses due to decreasing home values and lack of equity. Location Considerations It is highly possible that the cheapest homes found in listings are those that are located in poorly developed and blighted areas. The question is; should a home buyer take advantage of these low prices and purchase a home from these locations? He probably should not. Regardless of whether he plans to use the home as a residence or as a form of future investment, the decision might not be justified. Houses located in areas suffering from blight are not highly recommended as places of residence since crime rates will likely be high. The future might not also offer too many opportunities for a sell-off since it might take these areas some years to recover and the property might already be deteriorating by then. Best Places to Buy Among the residential properties included in lists of home foreclosures, those that are located in metro areas that have the most stable economic conditions are buyers' best options. These include Texas, Indiana, South Carolina and North Carolina. These states have enjoyed a steady employment rate and economic condition and their housing markets are relatively in good conditions compared with other metro areas. These states also did not suffer from sudden upswings in home prices prior to the foreclosure crisis, so values of homes have not declined too drastically either. Such market characteristics can offer home buyers the possibility of increased property value in the not too distant future. They will be able to explore the option of selling their properties in a few years time without fear of getting a selling price that is less than the amount they paid to purchase their homes. Lists of home foreclosures should not only be evaluated through home prices but also in terms of location and potential future benefits. Home buyers would be better off buying at a slightly higher price if the future offers a surer benefit. Joseph B. Smith has been educating buyers on the finer points of Lists of home foreclosures at ForeclosureListingsNationWide.com for over five years. Contact Joseph B. Smith through ForeclosureListingsNationWide.com if you need help finding information about Lists of home foreclosures.
