Posts Tagged ‘Second Quarter’
Sales of foreclosure properties on the rise
Foreclosures accelerated in the second quarter, driving down home prices and accounting for nearly half of all sales in several states. Nationally, homes sold at foreclosure accounted for 24 percent of all residential sales in the second quarter of 2010, RealtyTrac reports. The average price of properties sold while in some stage of foreclosure was more than 26 percent below the average for properties not in the foreclosure process. “It’s obvious foreclosures remain a major drag across the U.S.,” says Robert Dye, senior economist at PNC Financial Services Group. “Pioneering buyers with low mortgage rates will continue to take advantage of these properties. It’s going to take quite awhile to work through this inventory. It will take a few years, not months.” A total of 248,534 U.S. properties in some stage of foreclosure – default, scheduled for auction or bank-owned – were sold to third parties in the second quarter. That’s up almost 5 percent from the first quarter, but down 20 percent from second-quarter 2009. Some states were especially hard hit. Foreclosure sales accounted for nearly 56 percent of all sales in Nevada in the second quarter, the highest percentage of any state. Ranked second was Arizona, where foreclosure sales accounted for 47 percent of all sales. In California, 43 percent of sales were foreclosure properties. Other states where foreclosures were large shares of all sales were Rhode Island, 37 percent; Massachusetts, 35 percent; Florida, 34 percent; and Michigan, 33 percent. The uptick in foreclosures comes despite a federal effort to help homeowners struggling to retain their homes get modified mortgages with more affordable payments, as well as efforts by lenders to reduce payments for some borrowers. “It’s clear this will be with us for some time,” says Lawrence Yun, chief economist with the National Association of Realtors. Foreclosures used to be rising because so many borrowers had taken on mortgages they couldn’t afford, he says. “The further we go, more foreclosures will be related to the job market rather than people who overstretched,” Yun says. “There will be more traditional reasons for the foreclosures.” Foreclosure sales could pick up now that a federal tax credit for home buyers has expired, economists say. The credit gave borrowers the flexibility to bid on houses at higher prices. Without the credit, demand for lower-priced foreclosed homes could pick up. And that could pull down overall prices further. “Prices will fall and will put more people into negative equity, which causes more people to (go into) foreclosure,” says Mark Zandi at Moody’s Analytics.com. Copyright 2009 USA TODAY
Fannie Mae Wants You to Buy
The GSE wants very badly to unload the 129,310 single family bank-owned properties — or REOs, as they're called — it held at the end of the second quarter.
NAR: Bill could speed up short sales
Homeowners underwater on their mortgage may find relief through a bill strongly supported by the National Association of Realtors®. The bill, if passed by Congress and signed by President Obama, would force lenders to respond to a short sale request within 45 days. The legislation, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010,” was filed yesterday in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). “The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” says NAR President Vicki Cox Golder. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times. As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners … as well as the nation’s economy.” The number of potential short sale properties is rising across the country. According to NAR data, in the second quarter of 2010, four states have a significant share of properties with short-sale potential: Florida has 27 percent, Nevada 32 percent, California 28 percent, and Arizona 24 percent. “Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said. “Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives.” Golder says she commends Reps. Andrews and Rooney for their efforts on the bill and urges Congress to pass the bill quickly. © 2010 Florida Realtors®
Commercial real estate yields spur investors
Yields on U.S. commercial real estate are nearing a record high compared to Treasury bonds. Many investors take that as a signal to buy property. Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, as calculated by the National Council of Real Estate Investment Fiduciaries. That was 4.29 percentage points higher than the yield on 10-year government bonds as of June 30 and 4.75 percentage points higher than Treasury yields as of Aug. 31. Current returns are near the record 5.39 percentage points in the first quarter of 2009, when the U.S. was dealing with the worst economic downturn since the Great Depression. The spread shrank to less than 80 basis points when commercial real estate prices peaked in 2007. “The data indicate that real estate is poised for a rebound,” says Gerardo Lietz, who advises pension funds on property investments. Source: Bloomberg, Hui-yong Yu
Home prices up 1% in June
U.S. home prices rose in June for the third straight month amid a burst of homebuying due to tax incentives that have since expired. The Standard & Poor’s/Case-Shiller 20-city home price index posted a 1 percent increase in June from May and was up 4.2 percent from a year ago. Home prices nationally were up 4.8 percent in the second quarter compared with the first quarter, largely due to government tax credits of up to $8,000 that caused sales to surge. Seventeen cities showed price gains on a monthly basis. Prices in Seattle and Portland (Oregon) were flat from a month ago, while prices in Las Vegas fell. Nationally, prices have risen 6 percent from their April 2009 bottom. But they remain 28 percent below their July 2006 peak. Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer.
Number of underwater mortgages in U.S. fell in 2nd Quarter
Real estate data provider CoreLogic says the number of U.S. homes with mortgages that exceed what the property is worth declined slightly in the second quarter versus the first three months of this year. The firm said Thursday there were 11 million homes with so-called underwater mortgages at the end of June. That's down from 11.2 million at the end of March. The firm attributed the decline primarily to homes being repossessed by lenders. In all, 23 percent of U.S. homes with mortgages were underwater at the end of June. Nevada had the highest rate of underwater mortgages of any state at 68 percent, followed by Arizona at 50 percent and Florida at 46 percent. Copyright © 2010 The Associated Press, Alex Veiga, AP real estate 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®
Tax credit boosts building permits
Federal homebuyer tax credits are being credited for a 45 percent boost in new housing permits in the second quarter in Volusia and Flagler counties. "We're happy to see the movement and the promotion for homeownership," said Greg Blose, executive director of the Volusia Building Industry Association. "But we're keeping (the second-quarter increase) in perspective. Looking month to month, we expect a slide in the third quarter." Federal tax credits of at least $8,000 for first-time buyers and up to $6,500 for owners who move expire Sept. 30 for deals signed before the end of April. During the April-May-June quarter, builders in the two-county area pulled 322 permits for new single-family and multifamily units. That's up 45 percent from the 222 pulled during the same period a year ago, according to figures released this week by Hanley Wood Market Intelligence. Volusia saw a 6 percent gain while Flagler saw a 296 percent increase. Much of Flagler's jump is due to the 72 multifamily units at the Beach Village Apartments on State Road 100. Flagler County had zero multifamily permits in the second quarter of 2009. Multifamily permits in Volusia County were down 19 percent to 21, from 26 last year. Single-family permits rose in both counties. Volusia builders pulled 182 single-family permits, up 10 percent from the 166 issued last year. Flagler builders pulled 47 single-family permits, up nearly 56 percent from 30 last year. The 45 percent increase in permits in the two-county area was better than the state's 21 percent increase to 9,996 permits and the nation's 8 percent increase to 166,200 permits for the second quarter. Still, the numbers are low because of too many foreclosures and short sales closing at prices below what a new home costs to build, said Jason de Lorenzo with the Flagler County Home Builders Association. "The lack of jobs is the driving force here right now. We've been steady at 10 to 13 permits a month for about two years." If there is a positive trend, it's that the few permits are being spread out among more builders and not just a few, de Lorenzo said. "That shows me that there are customers and not just the large builders building spec homes." The opposite is the case in Volusia County where large national builders, including KB Home, Taylor-Morrison and Maronda Homes, are pulling the most permits, Blose said. "It's still a rough economy," he said. "The larger builders have the money, but some upper-end builders are also working." Through the first half of the year, Port Orange-based Paytas Homes has pulled 16 permits, equaling the same number of permits for all of 2009, said Jim Mather, Paytas production manager. "Most of our activity has been in the upper end. They're the ones who can afford to build a home for future retirement without having to sell their home up north right away," Mather said. "When they were nervous, they didn't spend. They feel more relaxed now and more confident about spending." But even the higher-end builders have cut prices and home sizes to attract customers. "The higher prices just don't work anymore," said David Kohn, president of ABD Developers, which has two model homes under construction in the gated Toscana community off Old Kings Road in Palm Coast. "These are $360,000 and $370,000 when we used to build in the $600,000s." Kohn said the models are not in response to short-term trends but to be ready for an optimistic positive turn in the market next year.
