Category: Real Estate News

CoreLogic – distressed sales accounted for 12% of homes sold nationally in November 2015

Post author By admin
Post date January 27, 2016
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Published on: Jan 27, 2016 @ 8:18 am

CoreLogic – distressed sales accounted for 12% of homes
sold nationally in November 2015

– Of total sales in November 2015, distressed sales
made up 11.9% and real estate-owned (REO) sales made up
8.7%

– Maryland remains the state with the largest share of
distressed sales among all states at 20.3%

– Denver-Aurora-Lakewood, Colo. had the lowest
distressed sales share among the largest Core Based
Statistical Areas (CBSAs) at 3.1%

Distressed sales, which include REOs and short sales,
accounted for 11.9% of total home sales nationally in
November 2015, down 1.9 percentage points from November
2014 and up 1.4 percentage points from October 2015.
This month-over-month increase was expected due to
seasonality, and the magnitude of the change was in
line with previous Novembers. Within the distressed
category, REO sales accounted for 8.7% and short sales
accounted for 3.2% of total home sales in November
2015. The REO sales share was 1.5 percentage points
below the November 2014 share and is the lowest for the
month of November since 2007. The short sales share
fell below 4% in mid-2014 and has remained in the 3-4%
range since then. At its peak in January 2009,
distressed sales totaled 32.4% of all sales, with REO
sales representing 27.9% of that share. While
distressed sales play an important role in clearing the
housing market of foreclosed properties, they sell at a
discount to non-distressed sales, and when the share of
distressed sales is high, it can pull down the prices
of non-distressed sales. There will always be some
level of distress in the housing market, and by
comparison, the pre-crisis share of distressed sales
was traditionally about 2%. If the current
year-over-year decrease in the distressed sales share
continues, it will reach that “normal” 2-percent mark
in mid-2019.

All but nine states recorded lower distressed sales
shares in November 2015 compared with a year earlier.
Maryland had the largest share of distressed sales of
any state at 20.2%[1] in November 2015, followed by
Connecticut (19.1%), Florida (19%), Michigan (18.9%)
and Illinois (17.8%). North Dakota had the smallest
distressed sales share at 2.7%. Nevada had a 5.4
percentage point drop in its distressed sales share
from a year earlier, the largest decline of any state.
California had the largest improvement of any state
from its peak distressed sales share, falling 59.2
percentage points from its January 2009 peak of 67.4%.
While some states stand out as having high distressed
sales shares, only North Dakota and the District of
Columbia are close to their pre-crisis levels (within
one percentage point). Of the 25 largest CBSAs based
on mortgage loan count, Orlando-Kissimmee-Sanford, Fla.
had the largest share of distressed sales at 21.2%,
followed by Tampa-St. Petersburg-Clearwater, Fla.
(20.7%), Baltimore-Columbia-Towson, Md. (20.4%),
Chicago-Naperville-Arlington Heights, Ill. (20.4%) and
Miami-Miami Beach-Kendall, Fla. (20.3%).
Denver-Aurora-Lakewood, Colo. had the smallest
distressed sales share among the largest CBSAs at 3.1%.
Las Vegas-Henderson-Paradise, Nev. had the largest
year-over-year drop in its distressed sales share,
falling by 5.5 percentage points from 20.3% in November
2014 to 14.8% in November 2015. Riverside-San
Bernardino-Ontario, Calif. had the largest overall
improvement in its distressed sales share from its peak
value, dropping from 76.3% in February 2009 to 10.9% in
November 2015.

Oil prices attempt to trim losses

Oil futures pared losses on Wednesday, echoing a modest
stock market recovery, but analysts said a surprise
ballooning in US inventories and little chance of the
world’s major producers agreeing to cut output would
likely temper any rallies. Fresh evidence of slowing
growth in top commodities consumer China, along with
caution before the outcome of the US Federal Reserve’s
first policy meeting of the year, earlier knocked
around $1 off the price of oil. Senior OPEC and
Russian officials on Tuesday stepped up vague talk of
possible joint action to eliminate one of the largest
oil surpluses in modern times, although few market
watchers believed this would result in any cuts to
output. Brent crude was last down 26 cents at $31.54 a
barrel by 1347 GMT (8:47 a.m. ET), having hit a session
low of $30.83, in lockstep with European equities
edging off the day’s lows. US futures fell 65 cents to
$30.80 a barrel. Oil has risen from last week’s 2003
lows after speculators unwound some of the record-high
bearish positions they had racked up over the last six
months. “There is dove-tailing of moves in oil with
moves in equities that is happening and of course the
equity markets, we’ve seen, are so prone to risk
aversion,” BNP Paribas global head of commodity
strategy Harry Tchilinguirian said. “Right now oil is
buffeted between short-covering, cross-asset
correlations and its own weak fundamentals.” Oil
prices have fallen nearly 16% in January, bringing
total losses since the start of the decline in mid-2014
to 77%. US crude stocks rose by 11.4 million barrels
last week to 496.6 million, the American Petroleum
Institute said, topping analyst expectations for an
increase of 3.3 million barrels.

Mortgage applications down

Mortgage applications increased 8.8% from one week
earlier, according to data from the Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications Survey
for the week ending January 22, 2016. This week’s
results include an adjustment to account for the Martin
Luther King holiday. The Market Composite Index, a
measure of mortgage loan application volume, increased
8.8% on a seasonally adjusted basis from one week
earlier. On an unadjusted basis, the Index increased
0.3% compared with the previous week. The Refinance
Index increased 11% from the previous week. The
seasonally adjusted Purchase Index increased 5% from
one week earlier. The unadjusted Purchase Index
increased 0.4% compared with the previous week and was
22% higher than the same week one year ago. The
refinance share of mortgage activity decreased to 59.0%
of total applications from 59.1% the previous week. The
adjustable-rate mortgage (ARM) share of activity
increased to 6.9% of total applications. The FHA share
of total applications decreased to 12.7% from 13.7% the
week prior. The VA share of total applications
increased to 11.1% from 10.8% the week prior. The USDA
share of total applications remained unchanged from
0.7% the week prior.

Franchisees fight back against $15 wages
The International Franchise Association, the industry’s
largest trade group, wants the Supreme Court to take up
its challenge to portions of Seattle’s $15 minimum wage
law. Seattle’s City Council in June 2014 voted to
raise the minimum wage in increments, hitting $15 an
hour by 2017 for businesses with at least 500 staffers.
The $15 level is more than double the federal hourly
minimum of $7.25.

The International Franchise Association and five
Seattle franchisees quickly sued Seattle, which like
New York City has moved to treat smaller franchised
businesses like larger companies. They argued that the
mandated $15 pay unfairly lumps franchised businesses
with large employers. The association and franchisees
want to be recognized as smaller businesses to get more
time to raise pay incrementally to $15 by 2021. “Our
appeal has never sought to prevent the City of
Seattle’s wage law from going into effect,” franchise
association President Robert Cresanti said in a
statement this week. “Our appeal to the Supreme Court
will be focused solely on the discriminatory treatment
of franchisees under Seattle’s wage law and the
motivation to discriminate against interstate
commerce.” The association said a response is due from
the city of Seattle within 30 days, and the Supreme
Court is expected to announce this spring whether it
will hear the case.

In March 2015, a federal judge threw out the franchise
groups’ lawsuit, and the decision was upheld in
September by the 9th US Circuit Court of Appeals. For
now, Seattle wages are tiered. The wages range from
$10.50 to $13 an hour, depending on the size of the
employer and whether the company pays toward medical
benefits. A representative from Seattle Mayor Ed
Murray’s office could not be immediately reached for
comment. The impact of higher mandated pay on
franchisees is contentious. A recent survey from the
conservative Employment Policies Institute, a
conservative nonprofit research organization, found
franchisees are more harmed than nonfranchised
businesses when implementing wage hikes. The survey of
more than 600 businesses found franchisees are more
likely to take “offsetting steps including reducing
staff, reducing hours and using automation to manage
the increased labor costs caused by minimum wage
increases” than are nonfranchised businesses. This
trend was more pronounced in the fast food and hotel
sectors — more than 80% of franchised fast food owners
said they would be more likely to reduce hiring, versus
58% of non-fast-food restaurant owners. And nearly 90%
of franchised hotels said they would raise room rates,
compared with 70% of nonfranchised hotels.
Policymakers will compound the damage of a $15 minimum
wage by arbitrarily targeting businesses with a
recognizable brand for uniquely-harsh wage mandates,”
Michael Saltsman, the Washington, D.C.-based
institute’s research director, said in a statement.

Zillow – rapid reaction: December new home sales

– Sales of newly built homes rose more than 10% in
December from November, to 544,000 units sold (SAAR),
the best month for new home sales since February 2015
and second best since 2008.

– Similar to existing home sales, some sales that may
have otherwise closed in November may have been pushed
into December because of new settlement and disclosure
rules.

– The seasonally adjusted median price of a new home
fell 4.3% from December 2014, to $285,200, the biggest
annual decline since early 2012.

New home sales had a strong December, recording their
best month since February 2015 and second-best since
2008, according to the US Census Bureau. Additionally,
for the first time since July 2015, both new and
existing home sales for the month moved in the same
direction, reversing a months-long trend in which one
would rise, and the other would fall. But even with the
strong finish, sales of newly built homes are still
running slightly below their February level and were
roughly flat over the course of 2015. Additionally,
like existing home sales, new home sales in December
were likely boosted by recently adopted changes in
settlement and disclosure rules that pushed closings
that may have occurred in November into December. The
price of new homes, which have been fetching a large
premium over existing homes as builders focus on a
higher-end clientele, fell 4.3% year-over-year in
December (seasonally adjusted) to $285,200, the biggest
annual decline since early 2012. This is some — modest
— good news for buyers struggling to find a home to buy
and get a hold in the market.

WSJ – what’s ahead for jumbo-loan borrowers in 2016

The jumbo-mortgage market reached new highs in 2015 and
recent turmoil in global stocks is unlikely to slow it
down much in 2016, industry experts say. Lenders
provided an estimated $320 billion in jumbo mortgage
financing in 2015, which translates to 19% of all
mortgage lending, says Guy Cecala, CEO and publisher of
Inside Mortgage Finance. That’s up slightly from 18% of
the market in 2014 and the highest market share since
2002, he says. While a down stock market might mean
less available cash for some home buyers to purchase an
expensive home, historically people also have shifted
assets to real estate as a safer investment, Mr. Cecala
says. “Whether that plays out depends on how long the
stock market stays down,” he adds. The market dip is
likely to keep interest rates below 4% for a while
longer, which also could make borrowing large sums more
attractive, says Keith Gumbinger, vice president of
mortgage-rate website HSH.com. The Federal Reserve also
is less likely to raise short-term rates this spring,
he adds. Mr. Gumbinger expects the Fed to raise
short-term rates no more than two to three times in
2016, with the average 30-year, fixed-rate jumbo not
topping 4 5/8%. Five-year, adjustable-rate mortgages
could go up to 4%, he adds.

Fear of rising rates and home prices could spur a
homebuying frenzy in the spring, says Ray Rodriguez,
regional mortgage sales manager for Cherry Hill,
N.J.-based TD Bank. Existing borrowers with
adjustable-rate mortgages nearing the end of their
fixed-rate may also rush to refinance, he adds. Still,
overall refinance rates are expected to be lower than
in 2015 since so many borrowers have already
refinanced, says David Adamo, CEO of Stamford,
Conn.-based Luxury Mortgage. An unexpected rate dip in
winter-spring 2015 triggered a refinance frenzy.
Loosened credit-qualifications rules will continue in
2016, but nothing like what occurred in the 2000s that
led to the mortgage crisis, Mr. Adamo says. Last year,
minimum FICO scores for jumbos dropped to 660 for some
lenders, for example, and down payments could be as low
as 15% or even 10%. Still, borrowers with a credit
score of 740 or above who put 20% down can expect to
get the best interest rates. Jumbo borrowers have
loans that exceed conforming limits of government-back
loans, $417,000 in most places and $625,500 in some
high-cost areas. The Federal Housing Finance Agency
didn’t raise baseline limits last year because home
prices haven’t returned to prerecession levels
nationwide. But 39 counties in the US—covering Denver,
Nashville and Napa, Calif., among others—were bumped
into the high-cost category, so borrowers there now
qualify for more financing.

Also last year, the Consumer Finance Protection Bureau
introduced new documents that aim to make it easier to
compare different mortgage offerings. Many lenders were
concerned that a new rule requiring a three-day waiting
period for borrowers to receive and review the
documents would delay closings or kill deals, but
lenders, real-estate agents and borrowers largely
adapted to the change, says John Schleck, Bank of
America’s online and centralized sales executive. “We
spent a lot of time getting ready and it paid off,” he
adds. Finally, more borrowers will be able to conduct
business virtually this year, a trend expected to rise
rapidly in future years, says Victor Ciardelli, CEO of
Chicago, Ill.-based Guaranteed Rate. That trend isn’t
limited to online lenders either. For example, Wells
Fargo Home Mortgage rolled out a new feature for its
YourLoanTracker service in which borrowers can receive
and upload documentation via a mobile or other digital
device, as well as track loan progress, says Brad
Blackwell, executive vice president and portfolio
business manager for the company. Unless the bottom
falls out of the economy, jumbo lenders predict
continued demand, Mr. Cecala says. Regional banks and
nonbank lenders were able to expand their jumbo
mortgage volume largely because of continued enthusiasm
on the part of big banks to buy and hold them in
portfolio. Wells Fargo remains the nation’s largest
jumbo lender, both for originations and purchasing
loans from other lenders to hold in portfolio. “We have
a strong appetite for jumbo lending,” Mr. Blackwell
says.

Tags CoreLogic, distressed sales, homebuyin, Mortgage applications, Mortgage Bankers Association, mortgage-rate, New York City, REOs, Short sales, The International Franchise Association, WSJ, Zillow

Real Estate News

WSJ – farmland prices decline across parts of midwest

Post author By admin
Post date November 16, 2015
No Comments on WSJ – farmland prices decline across parts of midwest

Published on: Nov 16, 2015 @ 10:35 am

WSJ – farmland prices decline across parts of midwest

Farmland values fell in parts of the Midwest in the
third quarter, reflecting a downdraft in the
agricultural sector driven by three years of lower crop
prices, according to Federal Reserve reports on
Thursday. The average price of “quality” farmland in
the St. Louis Fed’s district, which includes parts of
Illinois, Indiana and Missouri, dropped 2.6% from a
year earlier, as farm incomes weakened considerably,
the Fed bank said. In the Kansas City Fed’s district,
which includes Kansas and Nebraska, irrigated-cropland
values declined 1%, while the average price of
nonirrigated land rose 0.4%, the bank said. Irrigated
farmland depends on man-made water systems rather than
rainfall. In the Chicago Fed’s district, which
includes Illinois and Iowa, prices for farmland
remained largely the same in the third quarter compared
with a year ago, and rose 1% versus the second quarter
of this year, the bank said. The reports largely
underline a slowdown in the agricultural economy that
has softened farmers’ demand for cropland after a
years long run-up in prices. Both crop prices and land
values rose sharply for much of the past decade, driven
higher by drought and burgeoning demand for grain from
ethanol producers and overseas buyers. That led flush
farmers to bid up land values. This autumn, however,
farmers for the third straight year are harvesting
bumper corn and soybean crops, further elevating global
supplies and adding pressure to prices that have fallen
by more than half since 2012. Midwestern bankers
surveyed by the Fed banks in both the St. Louis and
Kansas City districts said farm income fell
significantly in the third quarter, and many expect a
continued cooling of land values in the current quarter
as farmers adjust to leaner times. “Because of some
concern about the fall harvest and the recent dip in
livestock prices, agricultural bankers have a rather
dour view of farm income prospects in the fourth
quarter of 2015,” the St. Louis Fed said in its report
on Thursday.

The Chicago Fed said most Midwestern lenders it
surveyed think farmland values will drop in the current
quarter, implying that the lack of an overall decline
in the third quarter “was merely a pause in a
longer-term correction,” wrote David Oppedahl, senior
business economist at the Chicago Fed, in Thursday’s
report. The report cited stable prices for corn in the
third quarter, as well as a lack of available farms for
sale as likely factors propping up land values in the
Chicago region. Agricultural land values in Iowa and
Illinois, the two largest corn-producing states, both
declined from a year earlier, though the losses were
offset by higher prices in Wisconsin and Michigan.
Average ranchland values rose both in the St. Louis and
Kansas City Fed’s district, though bankers in both
regions expect prices for the land used to raise
livestock to decline versus year-ago levels in the
current quarter. Both the Chicago and Kansas City Fed
districts said financial conditions for farmers
weakened in the third quarter, with loan repayment
rates down and expected to decline further as the year
wraps up. Mr. Oppedahl said an index of repayment rates
for loans excluding real estate in the Chicago region
could drop to the lowest level since 1999, while more
farmers facing financial strain could be forced to hold
farm sales or sell off assets in the next three to six
months compared with year-ago levels. “Land values
have definitely been declining,” said Brandon Rutledge,
34 years old, who grows corn and soybeans and raises
livestock in Le Roy, Ill. Less farmland than normal is
going on the market in Mr. Rutledge’s area because
nearby land prices have dropped, he said. The farmer
added that he plans to drive a hard bargain with seed
suppliers and apply less fertilizer to his cropland to
cut costs and stay profitable for this year. Still, he
said, “it’s going to be tight.”

Empire State manufacturing activity rooted in
contraction

Business conditions in the state of New York continued
to deteriorate in November, declining for a fourth
straight month despite recent signs of stabilization in
the US manufacturing sector, according to the Federal
Reserve Bank of New York. The Empire State’s business
conditions index came in at -10.7 this month, compared
with -11.4 in October and -14.7 in September.
Economists surveyed by The Wall Street Journal expected
the gauge to improve to -5. A reading above zero
reflects expansion; a reading below that level denotes
contraction. The index is still firmly in
contractionary territory and again fell short of the
bounce economists expected. The US manufacturing
sector remains under pressure from weaker global demand
and from the stronger US dollar, which makes exports
more expensive. Recent reports from some pockets of the
country have shown modest improvement, though producers
in the northeast have continued to report unfavorable
conditions. The gauge follows the government’s latest
employment report, which showed no change in overall
manufacturing hiring activity last month but a slight
improvement in the length of employees’ workweek. The
New York Fed survey is the first monthly factory report
released by regional Fed banks. Economists use the Fed
surveys to forecast the health of the national
industrial sector as captured in the monthly
manufacturing report released by the Institute for
Supply Management, next due out Dec. 1.

NAR – drone landscape still evolving as realtor, other
commercial use grows

The Federal Aviation Administration continues its work
to integrate unmanned aerial systems, also known as
drones, into the National Airspace System, and Realtors
stand ready to take advantage of their many benefits.
That’s according to panelists at the “Using a Drone in
Your Business: Knowing Your Risk” session held as part
of the 2015 REALTORS Conference & Expo. “This
technology is an incredible tool for real estate
professionals, but can be dangerous if the wrong person
is in control,” said session moderator Kolleen Kelley,
Realtor and 2015 Risk Management Committee vice chair.
Other panelists included Eric Myers, vice president of
Victor O. Shinnerer & Company; Lesley M. Walker,
National Association of Realtors associate counsel; and
Dean Griffith with FAA’s Office of the Chief Counsel.
The panelists spoke about the extensive benefits of
using drones in real estate, but also warned the
audience that following the rules is of critical
importance to mitigate potential risks and liabilities.
Wide-scale commercial use of drones is currently
prohibited, but the FAA has streamlined a waiver
process for individuals and businesses interested in
using drones for commercial purposes. So-called Section
333 waivers are already in use by dozens of Realtors
and other operators currently using drones for their
business.

Panelists widely agreed that the use of drones for
commercial purposes will only grow with time, even as
issues related to safety, privacy, insurance and the
regulatory framework continue to evolve. They advised
the audience about the importance of hiring approved
operators with strong risk management practices,
sufficient insurance coverage and, most importantly, a
Section 333 waiver from the FAA. The speakers also
reminded Realtors to be thoughtful about agreements
with outside companies to ensure that ownership of any
photographs taken is clear, as intellectual property
laws and rules still apply. Walker pointed to NAR’s
policy statement in noting that the association
supports the integration of unmanned aerial systems
into the National Airspace System, or NAS, and a clear
regulatory framework for interested Realtors to
responsibly make drones a part of their business. This
includes making safety a top priority, and earlier this
year NAR joined an industry “Know Before you Fly”
campaign and partnered with the National
Telecommunications and Information Administration’s
“Multistakeholder Process: Unmanned Aircraft Systems”
to further highlight the importance of safety,
security, and privacy in commercial drone use.

The FAA is currently moving through a rulemaking
process to address the integration of drones into the
NAS, which Griffith noted FAA hopes to complete by June
2016. In September, NAR President Chris Polychron,
executive broker of 1st Choice Realty in Hot Springs,
Arkansas, testified before a US House Judiciary
Subcommittee on the value of drones in real estate.
“Commercial drones represent an opportunity to create
jobs and businesses, as well as to support the business
of real estate,” said Polychron. “NAR is pleased to see
this important issue get the attention it deserves and
will continue working with the FAA to advance clear
regulations that are affordable for users, safe for
their communities, and mindful of the safety and
privacy of individuals.”

Global oil prices mixed

As of 9:30 a.m. ET, US crude oil prices slid 0.59% to
$40.52 a barrel, while Brent, the international
benchmark, declined 1.01% to $44.02 a barrel. Oil
prices edged up on Monday on geopolitical concerns
after Friday’s deadly attacks in Paris claimed by
Islamic militants, but gains were muted due to a global
crude glut. France carried out large-scale air strikes
against Islamic State sites in Syria overnight, giving
oil market investors reason to step up buying activity
after a week in which crude benchmark prices fell as
much as 8%. “Some risk premium is factored into the
market after the terror attacks in Paris. We had an
oversold market, so it is a technical recovery as
well,” said Frank Klumpp, oil analyst at
Stuttgart-based Landesbank Baden-Wuerttemberg.
Front-month Brent crude prices were up 34 cents at
$44.81 a barrel at 0415 ET. US futures traded 36 cents
higher at $41.10 a barrel. An OPEC delegate from a
Gulf producing country said he believed that in the
mid-term oil prices could get some support due to
rising tensions especially if the international
community takes more steps to reduce smuggling of oil
and hits oil facilities under Islamic State’s control
in Syria and Iraq. But oil and other commodities could
also come under renewed pressure on fears the attacks
will further slow the global economy. Many analysts
also continue to believe prices will remain under
pressure due to abundant stocks of oil and slowing
economic growth. “Our outlook is skewed negative into
(the first half of next year). Macro headwinds remain,
crude oil inventories are building,” Morgan Stanley
said.

Tags Empire State, FAA, Federal Aviation Administration, Federal Reserve, global demand, Oil prices, REALTORS, WSJ

Real Estate News

RealtyTrac – US foreclosure activity down 4% in February to lowest level since July 2006 despite 9% rise in REOs

Post author By admin
Post date March 20, 2015
No Comments on RealtyTrac – US foreclosure activity down 4% in February to lowest level since July 2006 despite 9% rise in REOs

Published on: Mar 20, 2015 @ 10:00 am

RealtyTrac released its US Foreclosure Market Report
for February 2015, which shows foreclosure filings —
default notices, scheduled auctions and bank
repossessions —

were reported on 101,938 US properties
in February, a decrease of 4% from revised January
numbers and down 9% from a year ago to the lowest level
since July 2006. The report also shows a US foreclosure
rate of one in every 1,295 housing units with a
foreclosure filing in February. “Given that August
2006 was the peak of the housing bubble, this
eight-and-a-half year low in foreclosure activity is a
significant milestone and a sign that nationwide
foreclosure activity is on track to return to historic
norms this year — and is possibly even headed below
historic norms given the skinny-jeans-tight lending
standards over the past five years,” said Daren
Blomquist, vice president at RealtyTrac. “In markets
where foreclosures were processed more efficiently we
are seeing foreclosure numbers now below pre-crisis
levels in some cases. Conversely, the cleanup of
deferred distress is continuing in markets where a
logjam of in-limbo foreclosures is still lingering from
the housing crisis — as evidenced by rebounding
foreclosure activity in those markets.” Despite the
national decrease from a year ago, 24 states posted a
year-over-year increase in overall foreclosure
activity, including Massachusetts (up 53%; fifth
consecutive month with an increase) and New York (up
19%; sixth consecutive month with an increase).

Nationwide, 48,079 properties started the foreclosure
process for the first time in February, down 5% from
revised January numbers and down 7% from a year ago.
Despite the national decrease in foreclosure starts, 22
states posted year-over-year increases in foreclosure
starts, including Nevada (up 153%; fourth consecutive
month with an increase), Massachusetts (up 116%; 11th
consecutive month with an increase), and Texas (up 5%;
five out of last six months with increase).
Nationwide, 45,880 properties were scheduled for a
future foreclosure auction in February, down 13% from
revised January numbers and down 4% from a year ago to
the lowest level since July 2006. Despite the national
decrease in scheduled foreclosure auctions — which can
act as the foreclosure start in some states — 25 states
posted a year-over-year increase in scheduled
foreclosure auctions, including New York (up 146%;
ninth consecutive month with an increase),
Massachusetts (up 88%; third consecutive month with an
increase), New Jersey (up 38%; 15th consecutive month
with an increase), and Washington (up 17%; five out of
last seven months with an increase). Nationwide,
24,305 properties were repossessed by lenders via
foreclosure (REO) in February, up 9% from revised
January numbers but down 20% from a year ago. February
was the 27th consecutive month where REOs nationwide
decreased on an annual basis. Despite the national
decrease in REOs compared to a year ago, 15 states
posted year-over-year increases in REOs, including
Maryland (up 70%; fifth consecutive month with an
increase), New York (up 24%; four out of last five
months with an increase), Ohio (up 23%; third
consecutive month with an increase), and North Carolina
(up 18%; three out of last four months with an
increase).

Maryland foreclosure activity decreased 1% compared to
a year ago in February, but the state still posted the
nation’s highest foreclosure rate: one in every 564
housing units with a foreclosure filing. Nevada
foreclosure activity in February increased 12% from a
year ago driven primarily by a spike in foreclosure
starts, and the state’s foreclosure rate was second
highest in the nation for the second month in a row.
One in every 569 Nevada housing units had a foreclosure
filing during the month. Florida posted the nation’s
third highest state foreclosure rate — one in every 570
housing units with a foreclosure filing — despite a 35%
decrease in foreclosure activity from a year ago.
Other states with foreclosure rates among the top 10
highest nationwide in February were Indiana (one in
every 871 housing units with a foreclosure filing),
Idaho (one in every 877 housing units), New Jersey (one
in every 895 housing units), Illinois (one in every 906
housing units), Delaware (one in every 957 housing
units), Ohio (one in every 1,000 housing units), and
North Carolina (one in every 1,088 housing units).

Oil prices fall amid record inventories

Oil prices fell Thursday on expectations that
record-high crude inventories would continue to grow.
Light, sweet crude for April delivery settled down 70
cents, or 1.6%, to $43.96 a barrel on the New York
Mercantile Exchange. Brent, the global benchmark, fell
$1.48, or 2.6%, to $54.43 a barrel on ICE Futures
Europe. A global glut of crude sent prices plummeting
in the second half of 2014, and analysts estimate the
market is currently oversupplied by between one million
and 1.5 million barrels a day. The oversupply has been
especially concentrated in recent months in the US,
where stored supplies of crude have climbed for 10
straight weeks and currently sit at their highest level
in about 80 years, according to the Energy Information
Administration. Traders have grown concerned that
inventories could reach maximum capacity in some
regions, a situation that could cause further price
drops if some buyers stop purchasing crude because they
have nowhere to store it. Genscape Inc., a data
provider, told its subscribers Thursday that Cushing
supplies rose by 2.2 million barrels in the week ended
Tuesday, according to a person familiar with the
report. Oil prices had gained on Wednesday, breaking
a six-session losing streak, on the back of a sharp
decline in the dollar after the Federal Reserve
indicated it was in no hurry to raise interest rates.
But the dollar was on the rise again on Thursday. Oil
is priced in dollars and becomes less attractive for
holders of foreign currencies as the dollar
appreciates. Gasoline futures fell 2.48 cents, or
1.4%, to $1.7743 a gallon, while diesel futures slipped
5.02 cents, or 2.8%, to $1.7223 a gallon.

DataQuick – California February home sales

An estimated 25,585 new and existing houses and condos
sold in California in February 2015. That was up 1.0%
month over month from 25,325 sales in January 2015 and
down 0.4% year over year from 25,680 sales in February
2014. February home sales have varied from a low of
20,513 sales in 2008 to a high of 48,409 sales in 2004.
The February 2015 sales were the lowest for that month
since 2008, and they were 18.7% lower than the February
average of 31,454 sales since 1988, when CoreLogic
DataQuick data began. The median price paid for a home
in California in February 2015 was $378,000, up 0.5%
month over month from $376,000 in January 2015 and up
6.5% year over year from $355,000 in February 2014.
February 2015 marked the 36th consecutive month in
which the state’s median sale price increased on a
year-over-year basis. The peak year-over-year price
gain during that period was 29.2% in July 2013. Since
then price gains have trended lower and since July 2014
the year-over-year increases have been single-digit –
between about 6% and 7% from October 2014 through
February 2015. The February 2015 median sale price
was 21.9% lower than California’s peak median price of
$484,000, reached in March/April/May 2007.

Of the existing homes sold statewide in February 2015,
6.8% were properties that had been foreclosed on during
the previous 12 months. That was up from a revised 6.7%
in January 2015 and down from 8.0% in February 2014.
Statewide foreclosure resales peaked at 58.8% in
February 2009. Short sales made up an estimated 6.2%
of homes that resold in February 2015, down slightly
month over month from 6.7% in January 2015 and down
year over year from 9.0% in February 2014. Short sales
are transactions in which the sale price fell short of
what was owed on the property. The typical monthly
mortgage payment for California homebuyers in February
2015 was $1,394, up from $1,379 in January 2015 and
down from $1,405 in February 2014. Adjusted for
inflation, the February 2015 typical payment was 39.7%
below the typical payment in the spring of 1989, which
was the peak of the prior real estate cycle. It was
51.1% below the current cycle’s peak in June 2006 and
51.2% above the January 2012 trough of the current
cycle.

Mid-Atlantic manufacturing activity unexpectedly falls
Growth in factory activity in the US mid-Atlantic
region fell for a fourth straight month in March to its
lowest level in more than a year, a regional Federal
Reserve survey showed on Thursday. The Philadelphia
Federal Reserve Bank said its business activity index
slipped to 5.0 this month, the lowest since February
2014, from February’s 5.2. Economists polled by Reuters
had forecast an increase to 7.1. Any reading above
zero indicates expansion in the region’s manufacturing.
The survey covers factories in eastern Pennsylvania,
southern New Jersey and Delaware. It is seen as one of
the first monthly indicators of the health of US
manufacturing leading up to the national report by the
Institute for Supply Management. Just four months ago,
in November, the Philadelphia Fed gauge had notched its
highest reading since December 1993, but has fallen
each month since then.

CoreLogic – dollar volume of negative equity increased
$7 billion from Q3 to Q4 2014

According to the latest CoreLogic Equity Report,
released today, the nationwide negative equity share
increased from 10.4% in Q3 2014 to 10.8% in Q4 2014,
and the number of underwater borrowers (or those in
negative equity) increased from 5.2 million to 5.4
million. The total dollar amount of negative equity was
up $7 billion from Q3 2014, totaling $348.8 billion in
Q4 2014. Quarter over quarter, 29 states exhibited
increases in the negative equity share through Q4 2014.
Figure 1 illustrates the 25 states with the largest
percentage-point change in the negative equity share
from the previous quarter. Illinois experienced the
largest increase, up by 1.8 percentage points from Q3
2014 to Q4 2014, followed by Connecticut (+1.4%), New
Jersey (+1.4%) and Ohio (+1.3%). Nevada had the largest
decrease (-1.3%) from the previous quarter. At the
metro level, Chicago had the highest total of
underwater dollars as of Q4 2014 at $17 billion,
followed by New York at $16 billion and Los Angeles at
$10 billion. Of the 10 CBSAs shown in Figure 2, seven
have negative equity shares above the national share of
10.8%. Also according to the latest CoreLogic
analysis, mortgage default rates fell slightly in Q4
2014. Nationally, homes with positive equity had a
default rate of 0.5% and homes with negative equity had
a default rate of 3.1%.

Negative equity shares show stark differences when
broken out by price tiers. Trends suggests that there
is a high concentration of negative equity mortgages in
the low end of the housing market. Homes valued at less
than $100,000, for example, had a negative equity share
of 22% in Q4 2014, which is more than twice the
national share of 10.8%. Homes valued between $100,000
and $200,000 had the second highest negative equity
share of 13.6%. On the other end of the scale, homes
valued at more than $200,000 had only a 6.4% negative
equity share, but made up 56% of the negative equity
dollars nationwide. Quarter over quarter, the number
of properties that were owner-occupied and had less
than 20-percent equity, thus considered under-equitied,
increased by 4.1%, or 345,239 homes, to the current
level of 8.7 million properties in Q4 2014.
Under-equitied non owner-occupied properties,
similarly, increased by 3.6%, or 45,501 homes, quarter
over quarter to the Q4 2014 level of 1.3 million homes.

MBA – 2014 rankings of commercial/multifamily mortgage
firms’ origination volumes

The Mortgage Bankers Association (MBA) today released
its annual ranking of commercial/multifamily mortgage
firms by origination volume. The MBA study is the only
one of its kind to present a comprehensive set of
listings of 127 different commercial/multifamily
mortgage originators, their 2014 volumes and the
different roles they play. The report, Commercial Real
Estate/Multifamily Finance Firms – Annual Origination
Volumes, presents origination volumes in more than 140
categories, including by role, by investor group, by
property type, by financing structure type, and by the
location of the originating office. The top ten
commercial/multifamily mortgage originators in 2014
were: Wells Fargo; J.P. Morgan Chase & Company; Eastdil
Secured; HFF, L.P.; Meridian Capital Group, LLC;
KeyBank; CBRE Capital Markets, Inc.; Deutsche Bank
Securities Inc.; PNC Real Estate; and Bank of America
Merrill Lynch. The report lists total originations
across eleven different investor groups. Ten different
companies were the top originator for at least one of
the different groups. The top three originators overall
and by each investor group are listed below:

Total Origination Volumes- Wells Fargo, J.P. Morgan
Chase & Company and Eastdil Secured;

– Commercial Mortgage-backed Securities (CMBS)-
Deutsche Bank Securities Inc., Eastdil Secured and J.P.
Morgan Chase & Company;

– Commercial Bank Portfolios- J.P. Morgan Chase &
Company, PNC Real Estate, and Meridian Capital Group,
LLC;

– Life Insurance Company Portfolios- MetLife Real
Estate Investors, HFF, L.P., and Prudential Mortgage
Capital Company;

– Fannie Mae- Walker & Dunlop, Wells Fargo, and
Berkadia;

– Freddie Mac- CBRE Capital Markets, Inc., Berkadia,
and Walker & Dunlop;

– FHA/Ginnie Mae: Red Mortgage Capital, LLC,
Greystone, and Berkadia;

– Pension Funds- TIAA-CREF, Cornerstone Real Estate
Advisers, and CBRE Capital Markets, Inc.;

– Credit Companies- CBRE Capital Markets, HFF, L.P.,
and Marcus & Millichap Capital Corporation;

– REITS, Mortgage REITS, and Investment Funds-
KeyBank, Eastdil Secured, and NorthStar Realty Finance;

– Specialty Finance Firms- JLL, Mesa West Capital,
LLC, and Meridian Capital

– “Other Investors”- Wells Fargo, HFF, L.P., and
Morgan Stanley.

By dollar volume, the top five originators for third
parties in 2014 were Eastdil Secured; HFF, L.P.;
Meridian Capital Group, LLC; CBRE Capital Markets; and
Deutsche Bank Securities Inc.

– The top five lenders in 2014 were Wells Fargo, J.P.
Morgan Chase & Company, KeyBank, Deutsche Bank
Securities Inc., and Bank of America Merrill Lynch.

DataQuick – Bay Area February home sales decline;
smaller gain for median sale price

CoreLogic released its February 2015 San Francisco Bay
Area housing market report. The number of homes sold
was slightly lower than in January and was the lowest
for the month of February in seven years. The median
price paid for a home also fell slightly from January
and the gain from a year earlier was the smallest since
the median sale price began rising on a year-over-year
basis nearly three years ago. A total of 4,376 new and
existing houses and condos sold in the nine-county Bay
Area in February 2015. That was down 1.1% month over
month from 4,423 sales in January 2015 and down 10.9%
year over year from 4,911 sales in February 2014,
according to CoreLogic DataQuick data. February 2015
sales were the lowest for that month since February
2008, when 3,989 homes sold. The peak for February home
sales was in 2002, when 8,901 homes sold. The February
2015 sales tally was 28.6% below the historical
February average of 6,129 sales. The median price paid
for a home in the Bay Area was $565,000 in February
2015. That was down 1.2% month over month from $572,000
in January 2014 and up 4.6% year over year from
$540,000 in February 2014.

The region’s median sale price has risen year over year
for 35 straight months, beginning in April 2012. During
the 25 months between June 2012 and June 2014, those
gains were double-digit, reaching as high as 33.5%. The
annual gains were either single-digit or low
double-digit between July 2014 and October 2014, and
since November 2014 the year-over-year increases in the
median sale price have been single-digit. The February
2015 median sale price’s 4.6% year-over-year gain
compared with February 2014 marked the smallest annual
increase for any month since the median price began
rising year over year in April 2012. In comparison, the
February 2014 median sale price rose 33.3% from
February 2013. The Bay Area median sale price peaked
at $665,000 in June and July 2007 and dropped to a
post-boom low of $290,000 in March 2009. “February is
always a bit odd from a numbers standpoint. March
should provide a better view of emerging trends this
year,” said Andrew LePage, CoreLogic DataQuick data
analyst. “That said, it is easy to see that supply is
still constrained. It’s also clear the mortgage market
remains off-kilter. Home loans are readily available
for those who have good credit, a W-2 income and who
are applying for a government-backed mortgage. But it
can still be challenging for others, such as the
self-employed and retired, even for those with a high
income or significant assets, or both.”

Other February 2015 Bay Area housing market highlights
include the following:

– Adjustable-rate mortgages (ARMs), an indicator of
mortgage availability, accounted for 20.5% of the Bay
Area’s home purchase loans in January, down from a
revised 22.0% in December 2014, and down from 25.1% in
January 2014. ARMs hit a low of 3.0% of purchase loans
in January 2009 and reached a post-housing-bust peak of
27.8% in April 2014. Since 2000, ARMs have accounted
for about 46% of all Bay Area purchase loans.

– Foreclosure resales accounted for 4.5% of all
resales in February, up from a revised 4.4% in January
2015 and down from 5.0% in February 2014. Foreclosure
resales in the Bay Area peaked at 52.0% in February
2009, while the monthly average over the past 17 years
is about 10%. Foreclosure resales are purchased homes
that have been previously foreclosed upon in the prior
12 months.

– Short sales accounted for an estimated 4.8% of Bay
Area resales in February, down from a revised 5.2% in
January 2015 and down from 6.3% in February 2014. Short
sales are transactions in which the sale price fell
short of what was owed on the property.

– Absentee buyers – mostly investors – purchased 24.8%
of all Bay Area homes sold in February, up from a
revised 23.8% in January 2015 and up from 23.8% in
February 2014. The peak absentee share was 28.7% in
February 2013, and the monthly average since 2000, when
CoreLogic DataQuick absentee data began, is about 17%.

– Cash buyers accounted for 26.7% of home sales in
February, up from a revised 23.6% in January 2015 and
down from 28.4% in February 2014. The peak was 32.3% in
February 2013, and the monthly average since 1988 is
about 14%.

– The typical monthly mortgage payment for Bay Area
home buyers in February 2015 was $2,083. Adjusted for
inflation, that payment was 26.9% below the typical
payment in spring 1989, the peak of the prior real
estate cycle. It was 46.0% below the current cycle’s
peak in July 2007 and 65.5% above the February 2012
bottom of the current cycle.

Tags auctions, Bank of America Merrill Lynch, bank repossessions, California, crude, DataQuick, default notices, Deutsche Bank Securities Inc., Foreclosure, J.P. Morgan Chase & Company, KeyBank, Mortgage Bankers Association, Negative equity, Oil prices, RealtyTrac, Traders, Wells Fargo

Real Estate News

Zillow – new homes have ‘plenty of runway’ in 2015

Post author By admin
Post date March 5, 2015
No Comments on Zillow – new homes have ‘plenty of runway’ in 2015

Published on: Mar 5, 2015 @ 09:51 am

A proliferation of data and new data analysis methods
are changing the way builders buy, sell and develop
vacant land, according to experts, and builders are

cautiously optimistic that easier credit and more
flexibility will help the new homes market rebound in
2015. Several groups of real estate experts,
executives of large residential builders and land
advisors spoke this week at a building and building
products symposium held at Barclay’s New York City
headquarters. The state of the land market – a key
factor in determining what kinds of housing gets built,
where and at what price – was a common theme throughout
the various discussions. “The real opportunity of land
goes beyond the land itself,” said Steve Benson, CEO of
Phoenix-based land-banking and advisory firm Community
Development Capital Group. “Builders are looking at
land as much more than a piece of dirt now.”
Landowners and buyers alike are using multiple data
sources to examine what is being built in other areas,
which designs work best for certain parcels and which
builders are best suited to maximize certain features
of a given piece of land, Benson said. Rather than
plowing ahead and building a certain set of homes on a
given piece of land, developers today may be more apt
to sell their land to a different type of developer
rather than undergo a project themselves, or choose to
build a different type of home than they normally
would, based on data. “Real estate has always been
about location, location, location,” Benson said. “But
with land especially, it’s future location, future
location, future location. Today, data helps inform
that equation for builders much more than in the past.”

High land costs, and perhaps unrealistic value
assessments by landowners, are a big reason why
developers are having difficulty developing more
entry-level, lower-cost communities and homes, said
Greg Vogel, CEO and founder of Land Advisors
Organization, a Scottsdale, Ariz.-based land brokerage.
Developable tracts of land appreciated very quickly in
value during 2012 and 2013 in anticipation of a
building boom in 2014 that largely has yet to
materialize, Vogel said, calling 2014 “a dud” compared
to expectations for new development. But strong recent
years have convinced today’s landowners – tomorrow’s
land sellers – that their land may be worth more than
it is. “[Land] sellers are very sticky on the up,”
Vogel said, in reference to land price appreciation.
“We’ll offer a price, and they’ll tell us, ‘See you
next year.’” As a result, builders are increasingly
forced to put higher-priced homes on the developable
lots they do control, in order to recoup their higher
land-acquisition costs. This will create challenges for
larger builders looking to cater to lower-end and
first-time buyers, who are expected to enter the market
in higher numbers in coming years as younger buyers, in
particular, get married and start families. Most
observers agreed that it’s just a question of time
until we see millennial demand pick up. “If the
entry-level buyer does come back, I’m not sure there
will be a lot of opportunities to develop those kinds
of communities right away,” Vogel said.

Price Vs. Pace Vs. Margin

Beyond the kinds of large, multi-acre tracts on the
edge of cities and towns favored by big, publicly
traded homebuilding companies, smaller in-fill lots
located in downtowns and established communities also
represent opportunities for builders, particularly
smaller, private developers. Private developers can
build higher-density projects with a smaller overall
number of units on infill sites, Vogel said, though
these homes cannot compete on price with those built by
larger firms. But what they lack in price strength,
these developments can make up for in design
flexibility. “Private firms excel at being able to
simply hire an architect and ask, ‘What can you do with
this site?’” Vogel said. “And with those kinds of
projects, they don’t have to worry about competing with
the bigger builder down the street or on the other side
of town.” In recent years, data indicate that builders
seem content to trade high sales volumes in exchange
for lower volumes, but higher sales prices. Vogel said
the way to get higher sales volume is simply to have
more speculatively built homes completed and available
for sale in the first place. “If you have a house
ready to go, you’ll get a higher pace of sales,” Vogel
said. But the key question builders ask is not monthly
sales pace versus final sales prices, Benson said, but
instead is sales price versus profit margin at a given
pace. If a builder is selling three homes per month,
then that builder knows that overhead costs will total
a certain amount at that pace. If they wanted to adjust
the pace of sales to six homes per month, they need to
adjust their overhead costs and maximize their
efficiencies accordingly, which many may be unwilling
to do if they’re comfortable at a given margin.

“Plenty of Runway”

In order to begin building more homes, the one thing
builders would like to see more than anything else –
more than lower land costs and higher wages among
buyers – is simply more economic confidence among
potential buyers, said John Burns, CEO of John Burns
Real Estate Consulting. According to a recent Burns
survey, roughly one-third of builders said more
confidence topped their 2015 wish list. That bodes
well for 2015 and beyond, as recent Zillow research
indicates housing confidence, in particular, is on its
way up, especially among younger renters who may be
looking to buy in the next few years. But not all
demand for new homes is expected to come from younger,
entry-level and first-time homebuyers in coming months
and years. Douglas Yearley, CEO of Pennsylvania-based
residential construction firm Toll Brothers, said there
are plenty of existing homeowners looking to move up
into a larger or nicer home. The typical home built by
Toll Brothers sells for roughly $700,000, Yearley said,
certainly on the higher end of the price spectrum but
not outrageously so. “There’s plenty of runway left in
what we do,” Yearley said. Builders were also hopeful
that slowly easing access to mortgage credit would
convince more would-be buyers to enter the market.
Steve Hilton, CEO of Scottsdale-based homebuilder
Meritage Homes Corp., said there is currently more
demand for new homes than his company is able to
qualify, an indication that if credit conditions were
looser more homes could be sold. Hilton also indicated
there could be a kind of chicken or egg problem
preventing the credit market from easing further, as
borrowers with lower credit sometimes don’t apply in
the first place. “There’s a kind of perception gap
we’re seeing,” Hilton said. “We see a lot of people
with a 680 credit score, which is historically pretty
good, thinking that they can’t get a loan. So they
don’t apply in the first place. There’s a lot of good
loans out there that aren’t getting made.”

US consumer spending falls, inflation pressures muted

US consumer spending fell for a second straight month
in January, likely as lower gasoline prices continued
to weigh on receipts at service stations. The Commerce
Department said on Monday consumer spending slipped
0.2% after falling 0.3% in December. Economists polled
by Reuters had forecast consumer spending, which
accounts for more than two-thirds of US economic
activity, dipping 0.1% in January. When adjusted for
inflation, consumer spending increased 0.3% after
December’s 0.1% dip. Income increased 0.3% after a
similar rise in December. Income at the disposal of
households after accounting for inflation advanced
0.9%, the largest increase since December 2012. The
saving rate increased to 5.5%, the highest since
December 2012. Lower gasoline prices continued to put
downward pressure on inflation, with key consumer price
gauges slipping further below the Federal Reserve’s 2%
target. A price index for consumer spending braked to
show a 0.2% rise in the 12 months through January, the
weakest reading since October 2009. The personal
consumption expenditures (PCE) price index had
increased 0.8% in December. Excluding food and energy,
the so-called core PCE price index increased 1.3% in
the 12 months through January.

Urban Institute: the renter next door

An unexpected side effect of the mortgage crisis has
been the replacement in many neighborhoods of
single-family homeowners with renters. An article from
the Urban Institute, took a closer look at the 14.2
million single-family rental units in the US and found
that renters are living in smaller, older and slightly
less suburban homes than homeowners, and are poorer,
more racially and ethnically diverse and younger than
homeowners. From 2007 on in the aftermath of the
mortgage crisis, investors (mostly small) bought many
of the 7.5 million owner-occupied homes that were in
foreclosure or had experienced a short sale, and
converted them to rental properties. The result was a
huge increase in the number of occupied single-family
rental properties in the aftermath of the crisis, from
10.5 million units in 2005 to 14.2 million in 2013, a
35% increase, according to the American Housing Survey.
Rental units comprised 61% of the 6.1 million unit net
increase in single-family housing stock from 2005 to
2013, with the remainder split between vacant
single-family units (21%) and owner-occupied
single-family units (17%).

US 4Q economic growth rate revised lower

US economic growth braked more sharply than initially
thought in the fourth quarter amid a slow pace of stock
accumulation by businesses and a wider trade deficit,
but the underlying fundamentals remained solid. Gross
domestic product expanded at a 2.2% annual pace,
revised down from the 2.6% pace estimated last month,
the Commerce Department said on Friday. The economy
grew at a 5% rate in the third quarter. The
fourth-quarter revision was generally in line with
expectations. With both business and consumer spending
expanding in the fourth quarter, growth in final sales
to domestic purchasers was revised to a 3.2% pace from
the previous 2.8% rate. Businesses accumulated $88.4
billion worth of inventory in the fourth quarter, far
less than the $113.1 billion the government had
estimated last month. That resulted in the GDP growth
contribution from inventories being revised down to
one-tenth of a percentage point from 0.8 percentage
point previously. Residential construction spending
was revised down, while government spending was not as
weak in the fourth quarter as previously reported.

Tags builders, credit, first-time homebuyer, housing, Real Estate, rental properties, single-family, Zillow

Real Estate News

Remodeling market looking up

Post author By admin
Post date February 2, 2015
No Comments on Remodeling market looking up

Published on: Feb 2, 2015 @ 10:21 am

According to a report released by the Harvard
University Joint Center for Housing Studies,

spending
in the US remodeling market will grow by 4% to 5% this
year to at least $330 billion, spanning work on both
owned homes and rentals. That’s a slower growth rate
than in previous years of the recovery, but it would be
enough to make 2015 the richest year for remodeling
spending of the past 15, surpassing the previous high
point of $324 billion in 2007. The main reason: A
similar easing of home-price appreciation. The median
resale price of existing homes last month of $209,500
marked a 6% increase from a year earlier. In
comparison, the increase in 2013 was nearly 10%.
Homeowners are less likely to push ahead with an
ambitious, pricey renovation if their home equity
isn’t growing as rapidly anymore. Another factor
sapping a bit of momentum from the robust remodeling
market is that homeowners don’t have as much
motivation now as they did in previous years to install
energy-efficient windows, doors and other features in
their house. Part of that is because federal tax
credits for such improvements have waned. An additional
influence is that energy costs, particularly for gas
for heating homes, have declined markedly in recent
months. Meanwhile, the remodeling market has listed in
recent years toward bigger-ticket, discretionary jobs,
including kitchen and bathroom upgrades. The share of
overall remodeling spending attributable to such
discretionary projects accounted for 30% of remodeling
spending on owned homes in 2013, up by roughly a
percentage point from 2011, Mr. Baker said. He
anticipates that share will continue to grow this year,
though he hasn’t forecast a specific percentage.

WSJ – US consumer spending down 0.3% in December

US consumer spending fell in December, a sign of
caution among American households despite lower
gasoline prices and steady hiring. Personal spending,
which measures outlays for everything from hardware to
healthcare, decreased a seasonally adjusted 0.3% from
the prior month, the Commerce Department said Monday,
the first such fall since last January. November
spending was revised down to a 0.5% gain from the
initially estimated 0.6% advance. Personal income,
reflecting money collected from wages, investments and
government aid, increased 0.3%. Real disposable income,
which accounts for taxes and inflation, rose 0.5% in
December. Economists surveyed by The Wall Street
Journal had forecast a 0.3% decline in household
outlays and a 0.2% rise in personal income. Consumer
spending accounts for about 70% of economic activity in
the US and is a key driver of growth. Separate figures
out Friday indicated US households boosted spending by
the most in nearly nine years during the final three
months of 2014, a bright spot in an otherwise mixed
report showing gross domestic product advanced at a
2.6% pace in the fourth quarter.

CoreLogic – ability-to-leverage drives foreclosure
risk

Leverage is known to play an important role in loan
default, but while theoretical research on leverage
exists; to our knowledge there has been virtually no
long-term data driven empirical analysis on the impact
of leverage on residential foreclosure. We assembled
data from various sources to fill that void and examine
the role leverage plays in mortgage foreclosures over
the last five decades. This is an especially timely
topic given that policy makers have recently attempted
to thaw the tight lending environment by reducing the
price and expanding the quantity of low down payment
real estate credit. CoreLogic research highlights four
key findings. First, while homeownership rates today
are the same level as five decades ago, foreclosure
risk is two to three times higher. Second, the primary
driver of default risk over this period has been
leverage. Leverage has played such a strong role that
has rendered changes in income and savings as
insignificant drivers of default from a long-term macro
perspective. Third, the stabilization in foreclosure
rates in the 1970s and 1980s was driven by high
inflation rates, which propelled nominal home prices
and reduced aggregate LTV, thus lowering default risk
– a reminder of real estate’s role as a hedge
against inflation. Fourth, the centerpiece of
government regulations to help make the mortgage market
safer for consumers was an income based ability-to-pay
rule manages delinquency risk, but is less aimed at the
market’s foreclosure risk. Therefore, leverage as the
most important driver of foreclosure performance over
the last five decades remains unaddressed for the
market. In the future, policy makers may need to
consider exploring their ability to manage the leverage
cycle to promote residential financial stability.

The Longview of Homeownership, Leverage and
Foreclosures

In the 1930s, the creation of Federal Housing
Administration (FHA) and Fannie Mae dramatically
expanded access to mortgage credit. As a result, the US
homeownership rates significantly increased from 44% in
1940 to 62% by 1960. Between the early 1960s and early
1990s homeownership rates stabilized in a narrow range
between 62% and 65%. In the mid-1990s pro-homeownership
policies led to an expansion in mortgage credit and the
homeownership rate peaked in 2004 at 69%. Since then
homeownership rates declined through the recession and
stood at 64% as of Q4 2014. While the homeownership
rate today is similar to the early 1960s, foreclosure
rates have significantly increased. Between 1960 and
1965 the conventional foreclosure rate averaged 0.6%
and the FHA foreclosure rate averaged 1.4%. In 2014,
the conventional foreclosure rate was 1.5% and the FHA
foreclosure rate was 2.6%. Despite the fact that
homeownership was the same last year as for the early
1960s, conventional foreclosure rates were about 2.5
times higher and FHA foreclosure rates were nearly two
times higher. These much higher foreclosure rates are
not a function of the fact that the market is still
healing from the Great Recession because even as of
2004, well before foreclosure rates spiked, the level
of risk for both conventional and FHA mortgage was
three times higher than during the 1960s.

The Role of Leverage in Default Risk

Given that homeownership rates today are at similar
levels as the early 1960s, what has driven the higher
foreclosure rates? To better understand the drivers of
the higher foreclosure rates, we modeled foreclosure
rates as a function of savings, unemployment,
inflation, aggregate current LTV for all mortgage loans
outstanding and real median household income. The model
revealed only two primary factors and one very
secondary factor that noticeably influenced foreclosure
rates. The LTV ratio and unemployment rate stood out as
the most important variables, with the LTV ratio by far
being the most important variable. The model’s
findings are consistent with the dual trigger theory of
foreclosures that lack of equity and economic shocks
(typically unemployment) that tip a household into
foreclosure. When homeowners have insufficient equity
and their LTV is above 100%, they become vulnerable to
adverse economic shocks. For example, if a borrower
loses their job and have insufficient income to pay the
mortgage, they will typically try to sell their home.
However, if the value of the property is below the
current unpaid principal balance, they will be unable
to sell the home and pay back their mortgage, which may
tip them into foreclosure. The model’s finding is
also consistent with emerging theoretical literature
over the last decade that indicates leverage cycles are
an underappreciated driver of default. Mortgage
leverage increased in the early 1950s as down payment
requirements fell, which helped drive homeownership
higher, but also drove foreclosure rates higher.
Between the early-to-mid 1960s and mid-1980s, leverage
stabilized, which led to stable foreclosure rates. The
stabilization in leverage occurred because high
inflation rates led to rapid increases in nominal home
values, otherwise leverage would have continued to
increase. Moreover, the rise in inflation caused an
increase in nominal incomes which made the pre-existing
fixed monthly mortgage payment easier to meet.

Leverage Drives Foreclosure Rates

During the early to mid-1990s, leverage began to
increase again due to the emphasis to support
homeownership via lower down payment lending. During
the early 2000s, leverage rose even faster due to cash
out refinances and home equity lending which rapidly
increased. When home prices crashed, leverage spiked
and along with the increase in unemployment rates
caused foreclosures to soar. Over the past four years
that process reversed and leverage has declined. Since
the trough in home prices in March 2011, prices have
increased 29% through November 2014, which reduced
aggregate LTV from 61% in 2011 to 46% in 2014. To
illustrate the impact of the home price recovery on
foreclosure rates, the model was used to break down how
much of the recent decline was due to price increases
versus all other variables combined. Between 2011 and
2014, foreclosure rates fell by 1.5 percentage points
and the rise in prices has accounted for 1.4 percentage
points of the decline. In other words, 91% of the drop
in the foreclosure rate is due to the drop in leverage
via higher home prices. Unemployment and the remaining
variables accounted for the small remaining portion of
the decline.

Conclusion and Policy Implication

CoreLogic findings illustrate how important leverage
has been both historically and in today’s recovery.
While leverage is the dominant driver of foreclosure
trends, the unemployment rate captures the impact of
short-term economic cyclical fluctuations. A less
important but still influential factor has been periods
of accelerating inflation, which ease the burden of the
monthly mortgage payment and masked the rise in
leverage via higher nominal home prices. Interestingly,
the savings rate and household income were not at all
important, which was a surprise given that traditional
underwriting focuses on affordability. Over the next
year the continuing improvement in prices should help
further reduce leverage, but the renewed emphasis on
low down payment lending may in the future beyond 2015
lead to an increase in leverage. While the Federal
Reserve utilized traditional monetary policy and
unconventional tools to guide the economy through the
recession and the recovery, one lever that is not
utilized in federal regulatory policy is a leverage
target, which has been used by over 20 countries with
success. The Qualified Mortgage (QM) rule focused on
the borrower’s ability to repay and it will lead to
better performing mortgages; however the QM lacked a
leverage standard. While the QM rule will help improve
mortgage performance, it is aimed squarely at
delinquency risk and less at foreclosure risk. That
means that the most important driver of mortgage
performance over the last five decades has remained
unaddressed for the market and will likely need to be
addressed in the future.

US factory activity falls to lowest level in 12 months

US factory activity continued to decelerate in January,
registering its slowest growth in a year, according to
a survey released Monday by the Institute for Supply
Management. The ISM’s manufacturing purchasing
managers index fell to a seasonally adjusted 53.5 in
January from 55.1 in December. Fourteen of the 18
industries in the survey reported growth, but
January’s reading was the index’s lowest reading
since January 2014. Economists surveyed by The Wall
Street Journal had expected the PMI would slow to 54.3.
A reading over 50 indicates expansion, while a reading
below 50 signals contraction. “The tone of this
report was disappointing, as it points to some further
leakage in growth momentum after the surge late last
year and it is an indication that the economy may be
off to a slow start this quarter,” TD Securities
economist Millan Mulraine said in a note to clients.
The ISM’s gauge slowed in the final months of 2014,
from 57.9 in October to 57.6 in November and 55.1 in
December. Still, the index has remained at or above 50
continuously since December 2012. In January, the
index’s decline was broad based. The new-orders index
was 52.9 compared with 57.8 in December. The production
index was 56.5 versus 57.7 in December. The employment
index was 54.1 in January compared with 56.0 in
December. The prices index was 35 last month, compared
with 38.5 in December. The exports index was 49.5 in
January compared with 52.0 in December.

Pinto: we’re building toward another mortgage
meltdown

Ed Pinto, one of the smartest minds looking at housing,
and the resident fellow and co-director of the American
Enterprise Institute’s International Center on Housing
Risk, writes in the Wall Street Journal that the White
House is steering housing back into the dangerous
waters it’s just coming out of. The Obama
administration’s troubling flirtation with another
mortgage meltdown took an unsettling turn on Tuesday
with Federal Housing Finance Agency Director Mel
Watt’s testimony before the House Financial Services
Committee. Mr. Watt told the committee that, having
received “feedback from stakeholders,” he expects
to release by the end of March new guidance on the
“guarantee fee” charged by Fannie Mae and Freddie
Mac to cover the credit risk on loans the federal
mortgage agencies guarantee. Here we go again. In the
Obama administration, new guidance on housing policy
invariably means lowering standards to get mortgages
into the hands of people who may not be able to afford
them. Earlier this month, President Obama announced
that the Federal Housing Administration (FHA) will
begin lowering annual mortgage-insurance premiums “to
make mortgages more affordable and accessible.” While
that sounds good in the abstract, the decision is a bad
one with serious consequences for the housing market.

Real Estate News

Industrial production in December

Post author By admin
Post date January 23, 2015
No Comments on Industrial production in December

Published on: Jan 23, 2015 @ 9:42 am

US manufacturing output rose modestly in

December, slowing
from the torrid gains registered a month earlier but still
signaling that American industry is weathering the impact of
a strong dollar and weaker overseas markets. Factory output
rose 0.3% last month, the Federal Reserve said on Friday.
That marks the fourth straight month of growth although the
pace was slower than the revised 1.3% expansion in November.
The output reading is consistent with a survey of factory
manager sentiment released on Jan. 2 that pointed to a
weaker pace of growth in activity last month. Economists
polled by Reuters had forecast manufacturing output rising
0.2% in December. Mining output jumped by 2.2%, reflecting
an increase in oil and gas extraction, although a drop in
drilling and well-servicing activity tempered the gains.
The gains in manufacturing and mining were not enough to
compensate for a sharp 7.3% drop in utilities output, and
overall industrial production edged down 0.1%, its first
decline in four months. The decline in utilities was driven
be steep falls in sales of electricity and natural gas.

Zillow – owners’ equivalent rent and the housing bubble:
feature or bug?

The Bureau of Labor Statistics (BLS) released its December
2014 Consumer Price Index (CPI) data, one of the two main
data series used to measure how prices change in the United
States. CPI data are produced from the results of the BLS
Consumer Expenditure Survey (CES). The CPI data include a
number of sub-indices for particular goods, including
estimates of housing prices. For homeowners, the CPI series
on Owners’ Equivalent Rent (OER) is designed to gauge how
much homeowners’ shelter costs contribute to changing
prices. This is particularly difficult since, unlike other
goods such as groceries or cars, most homeowners’ monthly
housing costs do not change much on a month to month basis
due to the prevalence of fixed-rate mortgages. To get a
better sense of how much homeowners’ shelter costs are
changing, the CES asks homeowners the following question:
“If someone were to rent your home today, how much do you
think it would rent for monthly, unfurnished and without
utilities.” One unique feature of the OER series is that,
unlike most housing price or housing value indexes including
the Zillow Home Value Index (ZHVI), during the 2000s the OER
series did not suggest a rapid run-up in shelter costs in
advance of the Great Recession, or a steep drop in shelter
costs during the housing bust. Instead, the OER series grew
steadily from 2000 through 2009 – roughly in line with the
growth of all prices – before flattening out in 2009 and
2010. Since 2010, the OER series has resumed its pre-crisis
trend. Part of the difference between OER and most other
housing indices is the formulation of the question. The CES
question mixes purchase prices and rent prices. Since rents
grew slowly during the housing bubble but grew quickly
during the housing bust, owners may have been focusing more
on trends in their local rental market rather than trends in
their local purchase market when responding to the survey.
Regardless, the absence of an obvious housing bubble or bust
in the OER series, and its differences to most other home
price/value indices, raises questions about what exactly is
being measured.

DataQuick – Southern California home sales and median sale
price rise

CoreLogic today released its December Southern California
housing market report. The number of homes sold increased
sharply from the month of November and rose modestly from
the same time a year earlier, marking one of just two months
in 2014 to post a year-over-year gain in sales. The region’s
median sale price also increased from November and rose year
over year for the 33rd consecutive month, although that
annual gain was the lowest since the string of price
increases began in spring 2012. A total of 19,205 new and
resale houses and condos sold in Los Angeles, Riverside, San
Diego, Ventura, San Bernardino and Orange counties in
December 2014. That was up month over month 22.8% from
15,643 sales in November 2014, and up year over year 4.3%
from 18,415 sales in December 2013, according to CoreLogic
DataQuick data. Sales usually increase from November to
December. On average, Southern California sales have risen
13.1% between those two months since 1988, when CoreLogic
DataQuick data began. On a year-over-year basis, sales in
2014 fell each month except in September (+1.2%) and
December. The total number of homes sold in Southern
California in all of 2014 fell 8.7% compared with 2013.
December home sales have ranged from a low of 13,240 in 2007
to a high of 36,865 in 2003. December 2014 sales were 20.2%
below the December average of 24,067 sales since 1988. “One
month doesn’t make a trend, but December’s uptick in home
sales might indicate renewed interest in housing thanks to
lower mortgage rates and job growth in recent months,” said
Andrew LePage, data analyst for CoreLogic DataQuick. “The
gain came despite a continued decline in the share of homes
sold to investors and cash buyers. If demand continues to
build we’ll need more supply to keep up with it. One of the
big questions hanging over the housing market is whether
higher demand and home values will lead to a lot more people
listing their homes for sale, as well as more new-home
construction, which remains well below average.”

The median price paid for all new and resale houses and
condos sold in the six-county region in December 2014 was
$415,000, up 0.7% month over month from $412,000 in November
and up 5.1% year over year from $395,000 in December 2013.
The median hasn’t moved much since September 2014, when it
was $413,000. The median’s peak for 2014 was $420,000 in
August. The region’s median sale price has increased on a
year-over-year basis for the past 33 consecutive months, but
the 5.1% annual gain in December 2014 was the smallest since
April 2012, when the $290,000 median rose 3.6% from a year
earlier. Southern California’s December median sale price
was 17.8% below the peak median price of $505,000 reached in
March, April, May and July of 2007. Among the region’s six
counties, the December 2014 median in Orange County
($591,000) was the closest – within about 8% – to its peak
of $645,000 in June 2007. Home prices in Southern
California have been rising at different rates depending on
price segment. In December, the lowest-cost third of the
region’s housing stock experienced a 12.9% year-over-year
increase in the median price paid per square foot for resale
single-family detached houses. The annual gain was 6.3% for
the middle third of the market and 2.3% for the top,
most-expensive third. The number of homes that sold for
$500,000 or more in December 2014 rose 10.1% compared with
December 2013. Sales below $500,000 rose 3.4% year over
year, and sales below $200,000 dropped by 20.6%.

Among the other Southern California housing market
highlights from December 2014:

– Foreclosure resales represented 5.0% of the resale market
in December. That was down from a revised 5.5% in November
2014 and down from 5.8% in December 2013. In recent months
the foreclosure resale rate has been the lowest since early
2007. In the current cycle, foreclosure resales hit a high
of 56.7% in February 2009. Foreclosure resales are purchased
homes that have been previously foreclosed upon in the prior
12 months.
– Short sales made up an estimated 6.2% of resales in
December, down from a revised 6.4 in November 2014 and down
from 10.2% in December 2013. Short sales are transactions in
which the sale price fell short of what was owed on the
property.
– Absentee buyers – mostly investors – bought 23.4% of the
homes sold in December. That was down from a revised 23.8%
in November 2014 and down from 26.9% in December 2013. The
December 2014 absentee level ties the October 2014 level as
the lowest for any month since October 2010, when 22.1% of
homes were sold to absentee buyers. The peak absentee share
was 32.4% in January 2013, and the monthly average since
2000, when CoreLogic DataQuick absentee data began, is about
19%. Absentee buyers include those who purchase vacation
homes or other properties that public property records
suggest are not used as primary residences.
– Cash buyers accounted for 23.8% of December home sales,
down from a revised 24.3% in November 2014 and down from
28.8% in December 2013. The December 2014 cash level was the
lowest for any month since January 2009, when 22.0% of homes
were bought with cash. The peak was 36.9% in February 2013,
and the monthly average since 1988 is 16.7%.
– Southern California home buyers committed a total of
$4.43 billion of their own money in the form of down
payments or all-cash purchases in December. That was up from
a revised $3.47 billion in November 2014. The out-of-pocket
total peaked in May 2013 at $5.41 billion.
Jumbo loans, or mortgages above the old conforming limit of
$417,000, accounted for 31.3% of purchase lending in
December, up from a revised 30.5% in November 2014 and up
from 28.5% in December 2013. The July/August 2014 level of
32.3% was the highest since the credit crunch struck in
August 2007. Prior to August 2007, jumbo loans accounted for
around 40% of the home-loan market. The jumbo level dropped
to as low as 9.3% in January 2009.
– Adjustable-rate mortgages (ARMs) represented 12.1% of
home purchase loans in December, up from 12.0% in November
2014 and down from 13.0% in December 2013. The ARM share
dropped to as low as 1.9% of home purchase loans in May
2009. Since 2000, a monthly average of about 30% of purchase
loans have been ARMs.
– All lenders combined provided a total of $6.19 billion in
mortgage money to Southern California home buyers in
December, up from a revised $4.88 billion in November 2014
and up from $5.40 billion in December 2013.
– The typical monthly mortgage payment for Southern
California home buyers in December was $1,558, down slightly
from $1,560 in November 2014 and down from $1,594 in
December 2013. Adjusted for inflation, the December 2014
typical payment was 35.6% below the typical payment in the
spring of 1989, the peak of the prior real estate cycle. It
was also 47.3% below the current cycle’s peak in July 2007.

Oil prices slip

Brent crude oil prices fell below $50 a barrel on Monday
after the global economic outlook darkened and Iraq
announced record oil production. The world’s biggest energy
consumer, China, faces significant downward pressure on its
economy, its premier Li Keqiang was quoted by state radio as
saying on Monday. China is expected this week to report
growth slowing to 7.2% from a year ago, the weakest since
the depths of the last global economic crisis. Data from
China’s National Bureau of Statistics showed on Sunday house
prices fell for a fourth straight month. Brent crude traded
at $49.42 a barrel by 1445 GMT, down 75 cents. US crude was
down 84 cents at $47.85 a barrel. Oil prices have dropped
by more than half since last June as output around the world
soared while demand growth slowed. Although the
International Energy Agency (IEA) said last week a reversal
in the trend was possible this year, it added that prices
may fall further before rising. “There’s still more supply
than demand and that’s a situation that will not change in
just a few weeks,” said Hans van Cleef, energy economist at
ABN Amro.

DataQuick – Bay Area home sales and prices rise in December
2014

CoreLogic today released its December San Francisco Bay Area
housing market report. Home buying picked up steam late in
2014, with December posting strong month-over-month and
year-over-year sales gains. Price appreciation remained
lower than it had been earlier in 2014, but the median sale
price, which has moved little since late last summer, was
still nearly 10% higher than it was the same time a year
earlier. A total of 7,456 new and resale houses and condos
sold in the nine-county Bay Area in December 2014. That was
up month over month 24.2% from 6,003 in November 2014 and up
year over year 14.1% from 6,532 in December 2013, according
to CoreLogic DataQuick data. A rise in sales from November
to December is normal for the season. Bay Area sales have
risen an average of 9.6% between those two months since
1988, when CoreLogic DataQuick data began. The region’s
monthly home sales have ranged between 7,000 and 8,000 for
seven of the last nine months. Since 1988, December sales
have varied from a low of 5,065 in 2007 to a high of 12,349
in 2003, and the December 2014 sales were 12.1% below the
December average of 8,482.

The median price paid for a home in the Bay Area was
$603,000 in December 2014. That was up month over month by
0.3% from $601,000 in November 2014 and up year over year
9.9% from $548,500 in December 2013. December 2014 was the
33rd consecutive month with a year-over-year gain in the
median sale price. However, those annual increases slipped
from double-digit to single-digit in the last two months of
2014. In December 2013 the region’s $548,500 median was
23.9% higher than in December 2012. The Bay Area median
sale price peaked at $665,000 in June and July 2007 and
dropped to a post-boom low of $290,000 in March 2009. “The
Bay Area’s residential real estate market ended 2014 on a
cautiously optimistic note, with moderate year-over-year
increases in both median price and sales counts,” said John
Karevoll, CoreLogic DataQuick analyst. “Supply continues to
be constrained, and the mortgage market remains difficult.
As long-term trends, cash sales and investor purchases are
declining slowly, but they are still significant market
factors. We know that there is a significant amount of
pent-up demand lying in wait, and there is a good chance the
market could see a surge this spring and summer as more
homes are put up for sale.”

Other December 2014 Bay Area housing market highlights
include the following:

– Adjustable-rate mortgages (ARMs), an important indicator
of mortgage availability, accounted for 22.3% of the Bay
Area’s home purchase loans in December 2014, down from a
revised 23.6% in November 2014, and up from 22.2% in
December 2013. ARMs hit a low of 3.0% of purchase loans in
January 2009 and reached a post-housing-bust peak of 27.8%
in April 2014. Since 2000, ARMs have accounted for 46.2% of
all Bay Area purchase loans.
– Jumbo loans, or mortgages above the old conforming limit
of $417,000, accounted for 54.1% of purchase lending in
December 2014, down from a revised 56.4% in November 2014,
and up from 48.2% in December 2013. Jumbo usage dropped to
as low as 17.1% in January 2009. It reached 56.4% in May
2014 and has stayed close to that percentage since. Prior to
the August 2007 credit crunch, jumbo loans accounted for
more than 60% of the Bay Area’s home purchase loans.
– Foreclosure resales accounted for 3.7% of all resales in
December 2014, up from 2.8% in November 2014, and down from
4.6% in December 2013. Foreclosure resales in the Bay Area
peaked at 52.0% in February 2009, while the monthly average
over the past 17 years is 9.6%.
– Foreclosure resales are purchased homes that have been
previously foreclosed upon in the prior 12 months.
– Short sales made up an estimated 4.0% of Bay Area resales
in December 2014, up from a revised 3.9% in November 2014
and down from 7.9% in December 2013. Short sales are
transactions in which the sale price fell short of what was
owed on the property.
– Absentee buyers – mostly investors – purchased 18.3% of
all Bay Area homes in December 2014, up insignificantly from
a revised 18.2% in November 2014 and down from 22.5% in
December 2013. The November 2014 absentee level was the
lowest for any month since August 2010, when it was 17.8%.
The peak absentee share was 28.7% in February 2013, and the
monthly average since 2000, when CoreLogic DataQuick
absentee data began, is 15.7%.
– Cash buyers accounted for 19.0% of home sales in December
2014 – the lowest for any month since the cash buyer level
was 18.5% in October 2008. The December 2014 absentee level
was down slightly from a revised 19.3% in November 2014 and
down from 23.5% in December 2013. The peak was 32.3% in
February 2013, and the monthly average since 1988 is 13.7%.
– Bay Area home buyers used $2.18 billion of their own
money in the form of a down payment or as an outright cash
purchase in December 2014. They borrowed $3.06 billion in
mortgage money from lenders.
– The typical monthly mortgage payment for Bay Area home
buyers in December 2014 was $2,264. Adjusted for inflation,
that payment was 21.6% below the typical payment in spring
1989, the peak of the prior real estate cycle. It was 42.0%
below the current cycle’s peak in July 2007 and 77.1% above
the February 2012 bottom of the current cycle.

Real Estate News

WSJ – study reignites debate about broker interests

Post author By admin
Post date December 1, 2014
No Comments on WSJ – study reignites debate about broker interests

Published on: Dec 1, 2014 @ 7:22 am

A new study by George Washington University’s Center
for Real Estate

and Urban Analysis has rekindled the
debate over whether there are conflicts of interest at
some of the country’s largest commercial real estate
brokerages. Brokers who represent only office tenants
have argued for years that conflicts exist at firms
that represent both landlords and tenants—and that
their tenant clients often suffer as a result. Brokers
at the so-called full-service firms that represent both
have argued back that such potential conflicts aren’t
an issue, partly because they typically disclose such
relationships to all of their clients. The George
Washington study, written by Peter Smirniotopoulos, an
adjunct professor, supports the critics of the
full-service firms, arguing that conflicts may not be
resolved through current disclosure practices. “The
conflicts of interest issue has not been addressed in
any systematic way benefiting tenants,” the study
says. “If legal ethics prohibit an attorney or a law
firm from representing both the landlord and a tenant
[in a lease]…how can the divergent interests of those
same parties nonetheless be adequately represented by
the same [real estate firm]?”

Executives at full-service firms who have read the
study, which was released late last month, have
challenged its conclusions, pointing out that their
professional ethics require them to represent their
clients’ best interests, whether they are landlords
or tenants. They also noted that the study was
undertaken by the Center for Real Estate and Urban
Analysis in partnership with Boston-based Cresa, one of
the largest firms that represents only tenants and a
big critic of the full-service firms. Mr.
Smirniotopoulos, who also is a consultant in the real
estate industry, said in an interview that Cresa
provided a “gift letter” that helped finance the
research. But the Center has complete control over the
study’s scope and objectivity. “It had to be
consistent with scholarly work,” he said. New York
City long has been at the center of the
conflict-of-interest debate because Julien Studley, one
of the pioneers of the business of representing only
tenants, founded his firm here. Earlier this year, that
firm was acquired by Savills PLC in a deal that valued
Studley at up to $260 million. While Savills is full
service, its US division—now named Savills
Studley—has remained a tenant-only shop. “The
industry is replete with conflicts,” said Mitchell
Steir, the head of Savills Studley, which represents a
number of major tenants in New York. “Each side
deserves an advocate.”

Cresa’s office in New York has been a relatively
small player, but it has grown since it was taken over
by Mark Jaccom, who worked at Studley at an earlier
stage in his career. Mr. Jaccom said the New York Cresa
office employs about 45 people and will represent
tenants in about 1.5 million square feet of deals this
year, up from 600,000 square feet in 2013. The deals
brokered by Cresa this year included Affinity Health
Plan’s lease of about 95,000 square feet of space at
Simone Development’s Metro Center Atrium in the
Bronx, Mr. Jaccom said. Brokerages that only represent
tenants use the conflict-of-interest issue to lure
business from full-service firms. “You question how
hard [full-service firms] push the landlord who gives
them tens of millions of square feet of business for a
tenant looking for 20,000 square feet,” Mr. Jaccom
said. But executives at the firms with the largest
offices in New York say that tenants clearly like the
service they get from full-service operations. “We
represent more tenants for more space than any other
firm,” said a spokesman for CBRE Group Inc. “That
speaks volumes for the value that we deliver for
them.”

Executives at the top firms also pointed out that
tenants get more insight into the market when brokerage
firms also represent landlords. “Having a broad
perspective from all angles in the market coupled with
a strong adherence to confidentiality is a clear
advantage to our clients,” a spokeswoman for JLL said
in an email. Some brokers at full-service firms
acknowledged that the potential for conflicts of
interest exists. But they said it happens very rarely
because both tenants and brokers are becoming more
sophisticated. The issues raised in the George
Washington report “are valid issues,” said Peter
Hennessy, head of the New York region for Cassidy
Turley. “But the level of sophistication of brokers
is such that they’re able to manage the conflict
issue,” he said. The report recommends further
study, better self-regulation and the development of a
“model code of conduct” in the commercial brokerage
industry.

WSJ – ISM manufacturing index slows slightly in
November

The US manufacturing expansion slowed only a bit in
November, even as foreign producers struggled,
according to a survey released Monday by the Institute
for Supply Management (ISM). The ISM’s manufacturing
purchasing managers index fell slightly to 58.7 in
November from 59.0 in October. Of the 18 industries in
the survey, 14 reported growth. Economists surveyed by
The Wall Street Journal had expected the latest PMI to
drop to 58.0. Other factory sectors around the world
aren’t doing as well as US goods producers. In
November, China’s two factory readings and the
Eurozone PMI were barely above 50. The readings for
Germany, France and Italy stood at contractionary
levels. In the US, however, manufacturing is still
fairly robust although a little off the boil from
September and October. “Comments from the panel are
upbeat about strong demand and new orders, with some
expressing concerns about West Coast port slowdowns and
the threat of a potential dock strike,” the ISM
report said. The new orders index edged up to 66.0 in
November after it jumped to 65.8 in October. Moreover,
the exports index rebounded to 55.0 from 51.5 in
October. The ISM production index slowed to 64.4 after
it hit a multi-year high of 64.8 in October. Labor
demand remained solid last month. The employment index
eased to 54.9 from 55.5. The ISM’s prices paid index
plunged to 44.5 from 53.5. The ISM said it was the
first report of falling input prices since July 2013.
US manufacturers continued to build inventories last
month. The ISM inventory index stood at 51.5 from 52.5
in October.

The great divide in California’s housing market

The divide in California’s housing market is vast and
shows no signs of stopping. According to an article in
Zero Hedge, the upper end of the housing is market on
fire, while everyone else struggles. For majority of
the borrowers, record-low mortgage rates are not enough
to boost originations and offset tight lending
standards. But the luxury housing market in California
depicts a completely different story. “It’s pretty
mind-blowing, to be honest,” Los Angeles real estate
agent Cindy Ambuehl told the LA Times. “The luxury
market has been completely on fire.” “It’s just
a completely different story between the two segments
of the market,” said Selma Hepp, senior economist for
the California Assn. of Realtors. “Those who are
doing well are doing really well.” To put this in
perspective, the article noted that in the third
quarter, 1,431 homes worth over $2 million were sold in
the six-county Southland, up 14% from a year ago. In
the second quarter, 1,436 of such homes were sold, the
highest number ever. Sales of homes worth over $10
million are on track this year to double the prior
record set during the peak of the last housing bubble.
Meanwhile, for the overall California housing market,
Madeline Schnapp, director of economic research for
Property Radar, said in its September housing report,
“The California real estate market is stuck in low
gear. High prices and relatively tough lending
standards have pushed many would be homeowners to the
sidelines.”

For many Americans, retirement won’t be golden

The blissful vision of retirement may die hard, but the
financial contours of most Americans’ post-career years
are changing rapidly and radically. Born of the
optimism during the post-World War II economic boom,
when private and public pension systems expanded,
“retirement” for decades became a distinct period when
people could expect to spend more time with
grandchildren, indulge in their hobbies and generally
enjoy the fruits of their labor. But demographic,
economic and political factors have altered that
landscape. Although the needs of longer-lived retirees
are increasing, most notably from a health-care
perspective, traditional sources of income are
dwindling. Gone are defined-benefit pension plans and
retiree health benefits, and going are Social Security
benefits. Retirement costs are rising, while expected
returns on personal savings are falling. The upshot is
that Americans of all ages and most income levels will
have to alter their plans. They will have to work
longer and change their lifestyles both before and
during retirement. And in many cases, they will have
to rein in their expectations about their “golden”
years. “Retirement was a 20th-century idea that won’t
exist in the same way in this century,” said certified
financial planner Ric Edelman, chairman and CEO of
Edelman Financial Services, which has about 25,000
clients.

For millions of Americans, the retirement outlook is
bleak. The latest annual study of the retirement
readiness of baby boomers and Generation X by the
Employee Benefits Research Institute found that 38% of
Americans in the lowest-income quartile of those
generations will likely run out of money during their
first year of retirement. By year 10, 64% of them will
be penniless and 11% of those in the next-lowest
quartile will be in the same predicament. When
long-term-care costs—the biggest wild card—is
factored in, the numbers get worse. “It’s astounding
how fast retirees in the lowest-income quartile will
run out of money,” said Jack VanDerhei, research
director at EBRI. “An abundance of other people are
going to become indigent when they need nursing care,
and no one knows who is going to pay for it.”

Tags housing market, Real Estate, retirement, WSJ

Real Estate News

MBA – mortgage applications down

Post author By admin
Post date November 26, 2014
No Comments on MBA – mortgage applications down

Published on: Nov 26, 2014 @ 8:31 am

Mortgage applications decreased 4.3% from one week
earlier,

according to data from the Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications
Survey for the week ending November 21, 2014. The
previous week’s results had included an adjustment
for the Veterans Day holiday. The Market Composite
Index, a measure of mortgage loan application volume,
decreased 4.3% on a seasonally adjusted basis from one
week earlier. On an unadjusted basis, the Index
increased 5% compared with the previous week. The
Refinance Index decreased 4% from the previous week.
The seasonally adjusted Purchase Index decreased 5%
from one week earlier. The unadjusted Purchase Index
increased 1% compared with the previous week and was
10% lower than the same week one year ago. The
refinance share of mortgage activity increased to 63%
of total applications from 61% the previous week. The
adjustable-rate mortgage (ARM) share of activity
increased to 7.0% of total applications. The FHA share
of total applications decreased to 9.4% this week from
9.9% last week. The VA share of total applications
decreased to 10.3% this week from 11.5% last week. The
USDA share of total applications remained unchanged at
0.8% this week. The average contract interest rate for
30-year fixed-rate mortgages with conforming loan
balances ($417,000 or less) decreased to 4.15% from
4.18%, with points increasing to 0.25 from 0.24
(including the origination fee) for 80% loan-to-value
ratio (LTV) loans. The effective rate decreased from
last week.

Consumer sentiment down November

US consumer sentiment rose in November to its highest
level in more than seven years on improvements in the
current economic condition, including lower gas prices
and improving job prospects, a survey released on
Wednesday showed. The Thomson Reuters/University of
Michigan’s final November reading on the overall index
on consumer sentiment came in at 88.8, its highest
reading since July 2007 on a final basis. The reading
was up from the 86.9 the month before but slightly
below the preliminary reading of 89.4. Despite the
uptick, it was below the median forecast of 90.0 among
economists polled by Reuters. “Consumers more
frequently reported hearing about positive rather than
negative economic developments in the November survey,
with reports of improving employment the dominant news
item,” survey director Richard Curtin said in a
statement. “While there was no change in evaluations
of the current performance of the economy or the
year-ahead outlook – both remained at positive levels –
the longer term economic outlook improved
substantially.” The survey’s barometer of current
economic conditions rose to 102.7 from 98.3, just below
a forecast of 103.0. The survey’s gauge of consumer
expectations edged up to 79.9 from the 79.6 in October
and was short of the expected 80.8. The survey’s
one-year inflation expectation slipped to 2.8%, the
lowest year-ahead inflation rate expected since October
2010, from the 2.9% in the prior month. The survey’s
five-to-10-year inflation outlook was at 2.6% from 2.8%
in October.

NAR – pending home sales drop in October

Pending home sales declined in October but remained at
a healthy level of activity and are above
year-over-year levels for the second straight month,
according to the National Association of Realtors
(NAR). The Pending Home Sales Index, a forward-looking
indicator based on contract signings, decreased 1.1% to
104.1 in October from an upwardly-revised 105.3 in
September, but is 2.2% higher than October 2013
(101.9). The index is above 100—considered an average
level of contract activity—for the sixth consecutive
month. The median existing-home price for all housing
types in October was $208,300, which is 5.5% above
October 2013. Monthly median price growth has averaged
5.8% in 2014 (through October) after averaging 11.5%
last year. The PHSI in the Northeast inched 0.5% to
87.9 in October, and is now 3.4% above a year ago. In
the Midwest the index slightly declined 0.6% to 100.6
in October, and is now 3.0% below October 2013.
Pending home sales in the South decreased 1.0% to an
index of 118.3 in October, but is still 3.9% above last
October. The index in the West fell 3.2% in October to
98.1, but remains 4.1% above a year ago.

Durable goods orders up in October

US durable-goods orders rose last month on a surge in
military spending, but underlying data pointed to broad
weakness in business investment. Orders for durable
goods–products like earth movers and refrigerators
designed to last at least three years–rose a
seasonally adjusted 0.4% in October from a month
earlier, the Commerce Department said Wednesday. That
partly reversed a 0.9% drop in September. Economists
surveyed by The Wall Street Journal had expected
overall orders to fall 0.5%. The rise largely
reflected a 45.3% surge in demand for defense aircraft
and parts. But that masked weak demand for other goods.
Excluding transportation, orders fell 0.9%, the
biggest drop since December 2013. Excluding
defense-related products, orders fell 0.6%. Orders for
nondefense capital goods excluding aircraft-a measure
of business spending on equipment and software–fell
1.3% in October after dropping at the same rate in
September. Orders for machinery, computer products,
fabricated metal products and primary metals all fell
last month.

The broader trend suggests demand for long-lasting
goods continues to rise as more Americans gain jobs and
firms gain confidence to invest. So far this year,
orders for durable goods have risen 7.5% compared with
2013. Orders for nondefense capital goods excluding
aircraft have climbed 5.4%. But the latest monthly
figures also suggest the economy may be cooling from
its fast growth pace in the spring and summer. The US
economy grew at an annualized pace of 3.9% in July
through September, concluding a six-month stretch that
marked the strongest growth in more than a decade, the
government reported this week. Many economists expect
economic growth to slow to between 2% and 3% in the
fourth quarter, and Wednesday’s report could reaffirm
those expectations. Troubles in Japan and Europe are
threatening to dent US exports and hurt sales at
American factories. But US companies and consumers are
also being helped by lower fuel costs after a fall in
global oil prices. And they appear to be gaining enough
confidence to invest as Americans sustain higher
spending. A Federal Reserve report earlier this month
suggested economic growth could slow this quarter. US
industrial production-the output of factories,
utilities and mines-fell 0.1% in October from the prior
month.

US new home sales rise in October

Sales of new US single-family homes rose for a third
straight month in October, but a downward revision to
the prior month’s sales pace indicated the housing
market recovery would remain gradual. The Commerce
Department said on Wednesday that sales gained 0.7% to
a seasonally adjusted annual rate of 458,000 units.
September’s sales pace was revised down to 455,000
units from 467,000 units. Economists polled by Reuters
had forecast new home sales rising to a 472,000-unit
pace last month. New home sales, which account for
about 8% of the housing market, tend to be volatile
month to month. Compared to October last year, sales
were up 1.8%. Housing remains constrained by slow wage
growth, which is resulting in a slow pace of household
formation. Last month, new home sales rose 7.1% in the
Northeast and surged 15.8% in the Midwest. In the
populous South, sales fell 1.9% and were down 2.7% in
the West. With sales rising modestly, the stock of new
houses available on the market rose 1.0% last month to
the highest level since June 2010. At October’s sales
pace it would take 5.6 months to clear the supply of
houses on the market, up from 5.5 months in September.
Six months’ supply is normally considered a healthy
balance between supply and demand. The median new home
price jumped 15.4% from a year ago to a record
$305,000.

Midwest manufacturing growth slows

The Institute for Supply Management-Chicago’s gauge
of manufacturing activity in the US Midwest fell to
60.8 in November from 66.2 the month prior. Economists
expected a shallower drop to 63. Readings above 50
point to expansion, while those below indicate
contraction.

NAR – commercial real estate demand holding steady

Despite a slowing global economy, forward economic
momentum in the US should keep commercial real estate
activity on firmer footing, according to the National
Association of Realtors (NAR) quarterly commercial real
estate forecast. Lawrence Yun, NAR chief economist,
says commercial activity should progress at a gradual
pace heading into 2015. “Solid economic growth in the
third quarter proved that the second quarter wasn’t
an anomaly, as business spending increased, commercial
construction rose and the labor market continued to
make positive strides,” he said. “Job growth is the
catalyst to improved demand for commercial real estate
leasing and new construction projects.” However, Yun
does caution that softening in the global economy will
likely widen the trade deficit in the US and could
trigger some weakening in the overall economy. “GDP
growth in the fourth quarter will be sluggish at around
2% behind stalling exports. Although GDP will likely
climb to near 3% in 2015, the current pace of job
growth could slow and ultimately impact commercial real
estate activity if sluggishness in the global economy
persists,” he said.

National office vacancy rates are forecast to decrease
0.5% over the coming year due to job growth exceeding
inventory coming onto the market. Improved
manufacturing activity should lead to a declining
vacancy rate for industrial space (0.4%), while retail
space is forecast to decline 0.2% behind a boost in
consumer spending from personal income gains and lower
gas prices. “Low housing inventory and the sizeable
demand for rentals will continue to spur multifamily
construction as well as keep rents rising above
inflation through next year,” says Yun. NAR’s
latest Commercial Real Estate Outlook offers overall
projections for four major commercial sectors and
analyzes quarterly data in the office, industrial,
retail and multifamily markets. Historic data for metro
areas is provided by REIS Inc., a source of commercial
real estate performance information.

Office Markets

Office vacancy rates are forecast to slightly decline
from 15.7% in the fourth quarter to 15.6% through the
fourth quarter of 2015. The markets with the lowest
office vacancy rates in the fourth quarter are
Washington, D.C., at 9.3%; New York City, 9.6%; Little
Rock, Ark., 11.6%; San Francisco, 12.2%; and Seattle,
at 12.8%. Office rents are projected to increase 2.4%
in 2014 and 3.3% next year. Net absorption of office
space in the US, which includes the leasing of new
space coming on the market as well as space in existing
properties, is likely to total 35.6 million square feet
this year and 48.8 million in 2015.

Industrial Markets

Industrial vacancy rates are expected to fall from 8.8%
in the fourth quarter to 8.4% in the fourth quarter of
2015. The areas with the lowest industrial vacancy
rates currently are Orange County, Calif., with a
vacancy rate of 3.6%; Los Angeles, 3.7%; Seattle, 5.8%;
Miami, 6.0; and Palm Beach, Fla., at 6.5%. Annual
industrial rents should rise 2.4% this year and 2.9% in
2015. Net absorption of industrial space nationally is
expected to total 110.7 million square feet in 2014 and
102.5 million square feet next year.

Retail Markets

Vacancy rates in the retail market are expected to
decline from 9.7% currently to 9.5% in the fourth
quarter of 2015. Currently, the markets with the
lowest retail vacancy rates include San Francisco, at
3.5%; Fairfield County, Conn., 3.9%; San Jose, Calif.,
4.6%; Orange County, Calif., 5.2%; and Long Island,
N.Y., at 5.3%. Average retail rents are forecast to
rise 2.0% in 2014 and 2.5% next year. Net absorption of
retail space is likely to total 11.4 million square
feet this year and jump to 18.9 million in 2015.

Multifamily Markets

The apartment rental market – multifamily housing –
should see vacancy rates slightly increase from 4.0%
currently to 4.3% in the fourth quarter of 2015.
Vacancy rates below 5% are generally considered a
landlord’s market, with demand justifying higher
rent. Areas with the lowest multifamily vacancy rates
currently are Orange County, Calif., and Sacramento,
Calif., at 2.2%; Providence, R.I., and New Haven,
Conn., at 2.3%; and Hartford, Conn., at 2.5%. Average
apartment rents are projected to rise 4.0 this year and
3.9% in 2015. Multifamily net absorption is expected to
total 216,300 units in 2014 and 171,200 next year.

RealtyTrac – US median home price in October increases

RealtyTrac today released its October 2014 Residential
& Foreclosure Sales Report, which shows the median
sales price of US single family homes and condos in
October was $193,000, up 2% from the previous month and
up 16% from a year ago to the highest level since
September 2008 — a 73-month high. “This US
recovery is largely being driven by investors, and as
the lower-priced, often distressed inventory most
appealing to investors dries up in a given market,
investor activity will slow down in that market and
move to other markets with more ideal inventory
available,” said Daren Blomquist, vice president at
RealtyTrac. “This has created a ripple-effect
recovery moving out from traditional investor hot spots
such as Phoenix, Atlanta and many California markets
and into markets such as Charlotte, Columbus, Ohio,
Dallas and Oklahoma City. “More than 32% of all
single family homes and condos purchased so far in 2014
are non-owner occupied compared to 68% that are
owner-occupied,” Blomquist added. “That is the
highest share of investor purchases since we began
tracking in 2001.”

The October median sales price — which included both
distressed sales of homes in some stage of foreclosure
and non-distressed sales — was up 37% from a trough
of $141,000 in March 2012 but still 19% below the
previous peak of $237,537 in August 2006. Among 97
metropolitan statistical areas with a population of
500,000 or more with sufficient home price data, 20
have reached new post-recession median sales price
peaks in 2013 or 2014, including Denver, Pittsburgh,
Columbus, Ohio, and Charlotte. “Home prices have
risen substantially in the lower price ranges —
generally under $400,000. The median sales price of
distressed homes — those in the foreclosure process
or bank-owned — was $128,701 nationwide in October,
36% below the median sales price of non-distressed
properties, $200,000. But distressed home prices
increased at a faster pace, up 18% from a year ago
while non-distressed home prices were up 11% during the
same time period. “The demand is strong for a
lessening distressed inventory and pushing prices to
their highest level since 2008,” said Mike Pappas,
CEO and president of the Keyes Company, covering the
South Florida market. “Additionally, due to the long
delay in our judicial foreclosure system we are now
seeing a higher quality of distressed inventory being
liquidated, although overall home prices have begun to
gradually level off over the past few months as the
market normalizes.”

Markets with highest home price appreciation

Among metro areas with a population of 500,000 or more
and sufficient home price data, those with the biggest
annual increase in median sales price were Toledo, Ohio
(up 33%), Detroit (up 27%), Cleveland (up 21%),
McAllen-Edinburg-Mission, Texas (up 21%), and Dayton,
Ohio (up 20%). Other major markets with double-digit
appreciation compared to a year ago included Memphis,
Tenn. (up 18%), Austin, Texas (up 17%), Miami (up 16%),
Houston (up 16%), Cincinnati (up 15%), and Chicago (up
15%). “While price appreciation has leveled off
month to month, home prices have increased
significantly from a year ago and we expect this trend
to continue,” said Craig King, COO of Chase
International, covering the Lake Tahoe and Reno, Nev.,
markets. The median sales price in Reno was unchanged
from September to October but up 15% from a year ago
— the 29th consecutive month with a year-over-year
increase in the market. “A number of things have
lined up regionally to provide game changing growth as
we look forward,” continued King. “The world is
aware that Tesla is making a move in to Northern Nevada
with their Gigafactory, but there are other huge
projects on tap as well. Collectively, these projects
could account for population gains of 20 to 25% in the
region over the next four to five years. With limited
inventory the demand for housing will be
unprecedented.”

Markets with accelerating home price appreciation

Home price appreciation accelerated in 45 of the 97
(46%) metro areas nationwide with a population of half
a million or more and with sufficient home price data.
Markets with the fastest-accelerating appreciation
included Cincinnati (15% annual appreciation this year
compared to 4% annual depreciation last year),
Cleveland (21% annual appreciation this year compared
to 2% annual appreciation last year), Nashville (13%
annual appreciation this year compared to 1% annual
appreciation last year), Charlotte (10% annual
appreciation this year compared to 1% annual
depreciation last year), and Columbus, Ohio (14% annual
appreciation this year compared to 3% annual
appreciation last year. Other major markets with
accelerating home price appreciation were Chicago (15%
annual appreciation this year compared to 11% a year
ago), Dallas (11% annual appreciation this year
compared to 7% a year ago), Pittsburgh (8% annual
appreciation compared to 5% a year ago), Seattle (10%
annual appreciation this year compared to 7% a year
ago), Tampa (15% annual appreciation this year compared
to 12% a year ago) and Baltimore (2% annual
appreciation this year compared to 0% a year ago).
“The continued rise in Seattle median home prices is
largely a result of a strong local economy, low housing
supply, and high buyer demand,” said OB Jacobi,
president of Windermere Real Estate, covering the
Seattle market. The percentage of distressed home sales
in Seattle has returned to pre-mortgage crisis levels,
with activity being driven by the hardships that have
always instigated short sales, such as job loss,
divorce, illness, and job relocation. Most of the
distressed properties have shifted into the outlying
areas around Seattle and are selling for well under the
median home price.”

Markets with slowing home price appreciation

Home price appreciation slowed compared to a year ago
in 52 of the 97 (54%) metro areas nationwide with a
population of half a million or more and with
sufficient home price data. Some of the
fastest-appreciating markets in 2013 have seen
substantial slowdowns in price appreciation this year,
including Phoenix (6% annual appreciation in October
2014 compared to 25% a year ago), Los Angeles (9%
annual appreciation this year compared to 24% a year
ago), Oxnard-Thousand Oaks-Ventura in Southern
California (7% annual appreciation this year compared
to 24% a year ago), Jacksonville, Fla. (4% annual
appreciation this year compared to 23% a year ago),
Boston (3% annual appreciation this year compared to
21% a year ago), and San Diego (8% this year compared
to 19% a year ago). Other major markets with
decelerating home price appreciation in October were
New York (1% annual appreciation this year compared to
4% a year ago), Philadelphia (4% annual depreciation
this year compared to 5% annual appreciation a year
ago), Houston (16% annual appreciation this year
compared to 27% a year ago), Miami (16% annual
appreciation this year compared to 20% a year ago),
Atlanta (13% annual appreciation this year compared to
25% a year ago), and San Francisco (12% annual
appreciation this year compared to 34% a year ago).

Las Vegas, Central California and Central Florida post
highest distressed sale share

Short sales and distressed sales — in foreclosure or
bank-owned — combined accounted for 13.8% of all
residential property sales in October, up slightly from
13.7% the previous month, but down from 14.7% in
October 2013. Markets with the highest percentage of
distressed and short sales combined were Las Vegas
(33.6%), Stockton, Calif., (33.6%), Modesto, Calif.,
(31.7%), Lakeland, Fla., (28.9%), and Orlando (28.4%).

Short sales share close to pre-recession levels
nationwide, up from a year ago in 12 states

Short sales accounted for 5.0% of all residential
property sales in October, unchanged from the previous
month and a year ago and not far above the
pre-recession average of 4.5% a month in 2006. Markets
with the highest percentage of short sales were in
Orlando (14.2%), Lakeland, Fla., (13.0%), Palm
bay-Melbourne-Titusville, Fla., (11.8%), Cape
Coral-Fort Myers, Fla., (11.8%), and Las Vegas (11.5%).
Twelve states saw an increase in short sales share
compared to a year ago, including New Jersey (7.1%
compared to 4.6% a year ago), Illinois (9.9% compared
to 6.6% a year ago), Maryland (9.3% compared to 7.2% a
year ago), Ohio (5.4% compared to 4.7% a year ago),
Nevada (10.8% compared to 9.8% a year ago), California
(4.6% compared to 4.3% a year ago), Michigan (6.5%
compared to 6.2% a year ago) and Arizona (5.8% compared
to 5.6% a year ago).

Bank-owned sales share matches lowest level since
January 2011

Sales of bank-owned properties nationwide accounted for
7.5% of all US residential sales in October, the same
as previous month but down from 9.1% a year ago. The
share of bank-owned sales in September and October was
the lowest share since January 2011. Markets with the
highest percentage of bank-owned sales were in
Stockton, Calif. (23.5%), Modesto, Calif., (19.3%),
Bakersfield, Calif., (18.8%), Las Vegas (18.6%),
Riverside-San Bernardino, Calif., (18.3%), and Phoenix
(16.4%). “Distressed sales remain a small percentage
of the overall marketplace in Southern California as
prices stabilize and market health continues to
improve,” said Chris Pollinger, senior vice president
of sales at First Team Real Estate, covering the
Southern California market.

Foreclosure auction sales share increases most in
Midwest, Rust Belt cities

Sales at the public foreclosure auction accounted for
1.3% of all US residential property sales in October,
up from 1.2% in September and up from 0.7% in October
2013. Markets with the highest percentage of sales at
foreclosure auction were Lakeland, Fla. (5.4%), Orlando
(4.2%), Palm Bay-Melbourne-Titusville (4.1%), Miami
(4.1%), Tampa (4.0%) and Las Vegas (3.5%). Markets
with the biggest annual increases in share of
foreclosure auctions were Des Moines (1.9% compared to
0.1% a year ago), Akron, Ohio (2.1% compared to 0.1% a
year ago), Philadelphia (1.9% compared to 0.1% a year
ago), Chattanooga, Tenn., (1.3% compared to 0.1% a year
ago), and Fresno, Calif., (0.9% compared to 0.1% a year
ago). Major metros with an annual increase in share of
foreclosure auction sales included Dallas (1.8%
compared to 0.4% a year ago), Cincinnati (1.2% compared
to 0.3% a year ago), Columbus (3.0% compared to 0.7% a
year ago), San Antonio (1.5% compared to 0.4% a year
ago), Cleveland (2.2% compared to 0.6% a year ago),
Houston (1.6% compared to 0.6% a year ago),
Jacksonville, Fla., (3.5% compared to 1.4% a year ago),
Oklahoma City (1.3% compared to 0.8% a year ago),
Virginia Beach (1.4% compared to 0.8% a year ago), and
Atlanta (2.3% compared to 3.3% a year ago).

Tags Foreclosure, Industrial, Mortgage applications, Multifamily Markets, new home sales, Office Markets, pending home sales, Retail Markets, Short sales, single-family homes, vacancy rates

CoreLogic – distressed sales accounted for 12% of homes sold nationally in November 2015

Oil prices attempt to trim losses

Mortgage applications down

Zillow – rapid reaction: December new home sales

WSJ – what’s ahead for jumbo-loan borrowers in 2016

WSJ – farmland prices decline across parts of midwest

Empire State manufacturing activity rooted in contraction

NAR – drone landscape still evolving as realtor, other commercial use grows

Global oil prices mixed

RealtyTrac released its US Foreclosure Market Report for February 2015, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions —

Oil prices fall amid record inventories

DataQuick – California February home sales

CoreLogic – dollar volume of negative equity increased $7 billion from Q3 to Q4 2014

MBA – 2014 rankings of commercial/multifamily mortgage firms’ origination volumes

A proliferation of data and new data analysis methods are changing the way builders buy, sell and develop vacant land, according to experts, and builders are

Price Vs. Pace Vs. Margin

“Plenty of Runway”

US consumer spending falls, inflation pressures muted

Urban Institute: the renter next door

US 4Q economic growth rate revised lower

According to a report released by the Harvard University Joint Center for Housing Studies,

CoreLogic – ability-to-leverage drives foreclosure risk

The Longview of Homeownership, Leverage and Foreclosures

The Role of Leverage in Default Risk

Leverage Drives Foreclosure Rates

Conclusion and Policy Implication

US factory activity falls to lowest level in 12 months

US manufacturing output rose modestly in

Other December 2014 Bay Area housing market highlights include the following:

A new study by George Washington University’s Center for Real Estate

WSJ – ISM manufacturing index slows slightly in November

The great divide in California’s housing market

For many Americans, retirement won’t be golden

Mortgage applications decreased 4.3% from one week earlier,

Consumer sentiment down November

NAR – pending home sales drop in October

Durable goods orders up in October

US new home sales rise in October

Midwest manufacturing growth slows

NAR – commercial real estate demand holding steady

Office Markets

Industrial Markets

Retail Markets

Multifamily Markets

RealtyTrac – US median home price in October increases

Markets with highest home price appreciation

Markets with accelerating home price appreciation

Markets with slowing home price appreciation

Las Vegas, Central California and Central Florida post highest distressed sale share

Short sales share close to pre-recession levels nationwide, up from a year ago in 12 states

Bank-owned sales share matches lowest level since January 2011

Foreclosure auction sales share increases most in Midwest, Rust Belt cities

CoreLogic – distressed sales accounted for 12% of homes
sold nationally in November 2015

Empire State manufacturing activity rooted in
contraction

NAR – drone landscape still evolving as realtor, other
commercial use grows

RealtyTrac released its US Foreclosure Market Report
for February 2015, which shows foreclosure filings —
default notices, scheduled auctions and bank
repossessions —

CoreLogic – dollar volume of negative equity increased
$7 billion from Q3 to Q4 2014

MBA – 2014 rankings of commercial/multifamily mortgage
firms’ origination volumes

A proliferation of data and new data analysis methods
are changing the way builders buy, sell and develop
vacant land, according to experts, and builders are

According to a report released by the Harvard
University Joint Center for Housing Studies,

CoreLogic – ability-to-leverage drives foreclosure
risk

The Longview of Homeownership, Leverage and
Foreclosures

Other December 2014 Bay Area housing market highlights
include the following:

A new study by George Washington University’s Center
for Real Estate

WSJ – ISM manufacturing index slows slightly in
November

Mortgage applications decreased 4.3% from one week
earlier,

Las Vegas, Central California and Central Florida post
highest distressed sale share

Short sales share close to pre-recession levels
nationwide, up from a year ago in 12 states

Bank-owned sales share matches lowest level since
January 2011

Foreclosure auction sales share increases most in
Midwest, Rust Belt cities