Tag: Foreclosure

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Real Estate News

Black Knight – Mortgage Monitor

Black Knight – Mortgage Monitor:

tappable equity at
all-time high, but tax code changes could impact
homeowners’ utilization
– As of Q3 2017, approximately 42 million homeowners
with a mortgage have nearly $5.4 trillion in equity
available to borrow against, assuming a maximum 80%
total loan-to-value ratio
– Over 80% of all mortgage holders now have available
equity to tap via a first-lien cash-out refinance or
home equity line of credit (HELOC)
– Under the recently passed tax reform plan, interest
on HELOCs is no longer deductible, increasing the
post-tax expense of such products for those who itemize
– HELOCs have been an attractive option for borrowers
to utilize available equity without sacrificing low
first- lien interest rates; with interest on these
products no longer deductible, the value proposition
has changed
– In many cases, for borrowers with high unpaid
princ ipal balances (UPB), taking out low-dollar lines
of credit, the math still favors HELOCs
– However, for low-to-moderate UPB borrowers taking
out larger amounts of equity – assuming interest on
cash-out refinances remains deductible – the post-tax
math may now favor such products instead, even if it
results in a slight increase to first lien interest
rates

The Data & Analytics division of Black Knight, Inc.
released its latest Mortgage Monitor Report, based on
data as of the end of November 2017. This month, Black
Knight finds that tappable equity – the amount of
equity available for homeowners to borrow against
before reaching a maximum 80% total loan-to-value (LTV)
ratio – is at an all-time high. However, as Black
Knight Data & Analytics Executive Vice President Ben
Graboske explained, recent changes to the US tax code
may have implications for homeowners’ utilization of
that equity. “As of the end of Q3 2017, 42 million
homeowners with a mortgage now have an aggregate of
nearly $5.4 trillion in equity available to borrow
against,” said Graboske. “That is an all-time high, and
up more than $3 trillion since the bottom of the market
in 2012. Over 80% of all mortgage holders now have
available equity to tap, whether via first-lien
cash-out refinances or home equity lines of credit
(HELOCs). We’ve noted in the past that as interest
rates rise from historic lows, HELOCs represented an
increasingly attractive option for these homeowners to
access their available equity without relinquishing
interest rates below today’s prevailing rate on their
first-lien mortgages. However, with the recently passed
tax reform package, interest on these lines of credit
will no longer be deductible, which increases the
post-tax expense of HELOCs for those who itemize. While
there are obviously multiple factors to consider when
identifying which method of equity extraction makes
more financial sense for a given borrower, in many
cases, for those with high unpaid principal balances
who are taking out lower line amounts, the math still
favors HELOCs. However – assuming interest on cash-out
refina nces remains deductible – for low-to-moderate UPB
borrowers taking out larger amounts of equity, the
post-tax math for those who will still itemize under
the increased standard deduction may now favor cash-out
refinances instead, even if the result is a slight
increase to first-lien interest rates.

“As rates continue to rise and the cost associated with
increasing the rate on an entire first-lien balance
rises as well, the benefit pendulum will likely swing
back toward HELOCs. Even so, the change could certainly
impact HELOC lending volumes and loan amounts in the
coming months and years. To a certain degree, the same
question holds true for cash-out refinances, since tax
debt for homeowners who will no longer itemize becomes
generally more expensive without mortgage interest
deduction in the equation. These refinances will likely
be an attractive source of secured debt in the future,
but increased post-tax costs may have a negative impact
on originations. That said, it still remains to be seen
whether and to what extent tax costs will impact
borrower decisions in terms of either HELOCs or
cash-out refinances. At this point, only time will
tell.” The increase in equity, driven by rising home
prices, has also continued to shrink the population of
underwater borrowers who owe more on their mortgages
than their homes are worth. The number of underwater
borrowers declined by 800,000 over the first nine
months of 2017, a 37% decline in negative equity since
the start of the year. Only 2.7% of homeowners with a
mortgage (approximately 1.36 million borrowers) now owe
more than their home is worth, the lowest such rate
since 2006. Though still elevated from pre-recession
levels, the negative equity rate continues to
normalize. Even so, home prices in large portions of
the country remain below pre-recession peaks. While 36
states and 70% of Core Based Statistical Areas (CBSAs)
have now surpassed pre-recession home price peaks, 43
of the nation’s 100 largest markets still lag behind.

As was reported in Black Knight’s most recent First
Look news release, other key results include:
– Total US loan delinquency rate: 4.55%
– Month-over-month change in delinquency rate: 2.54%
– Total US foreclosure pre-sale inventory rate: 0.66%
– Month-over-month change in foreclosure pre-sale
inventory rate: -3.15%
– States with highest percentage of non-current loans:
MS, FL, LA, AL, WV
– States with lowest percentage of non-current loans:
MT, MN, OR, ND, CO
– States with highest percentage of seriously
delinquent loans: MS, FL, LA, TX, AL

Wall Street new year rally pauses as healthcare, bank
stocks weigh

The benchmark S&P 500 opened lower for the first time
in 2018 on Monday, as losses in healthcare and
financial stocks cut short Wall Street’s strongest
start to a year in a decade. The S&P and the Nasdaq
last week recorded its strongest first four trading
days in a year since 2006, and the Dow industrials
posted its best since 2003. “We had a strong market in
the past week, and what generally happens in the first
week sets the trend for the remainder of the year. Now
that it’s established, there could be some profit-
taking,” said Peter Cardillo, chief market economist at
First Standard Financial in New York. At 9:41 a.m. ET,
the S&P 500 was down 2.84 points, or 0.10%, at
2,740.31. The Dow Jones Industrial Average was down
31.55 points, or 0.12%, at 25,264.32, and the Nasdaq
Composite was down 4.19 points, or 0. 06%, at 7,132.37.
The Dow and the Nasdaq still eked out record highs
briefly after open. The dollar inched higher against a
basket of major peers with data showing that slower US
jobs growth did little to dent expectations for further
interest rate increases this year.

Capital Region totals exceed height of subprime crisis
A decade after the subprime mortgage crisis put
millions of Americans out of their homes, dozens of
houses are still falling into foreclosure each month in
the Capital Region. The trend continues despite a
much-improved economy, more-careful mortgage industry
practices and an infrastructure of support that has
been created for borrowers facing the loss of their
homes. “We have noticed that the number of foreclosures
have not gone back to pre-Great Recession levels,” said
James Flacke, executive director of Better
Neighborhoods Inc., a Schenectady nonprofit that
provides assistance to homeowners facing mortgage
foreclosure. Statistics compiled by ATTOM Data
Solutions show the following combined foreclosure
totals for Albany, Fulton, Montgomery, Saratoga,
Schenectady and Schoharie counties:
2006: 156
2007: 386
2008: 495
2009: 451
2010: 554
2011: 211
2012: 330
2013: 377
2014: 625
2015: 902
2016: 1,056
2017: 777
The 2017 total is for 11 months — December numbers were
not yet available. The other years count all 12 months.
And the totals are only mortgage foreclosures by
lenders — foreclosures by municipalities for nonpayment
of taxes are not included.

The head of another non-profit that offers housing
counseling, the Affordable Housing Partnership in
Albany, said the foreclosure rate never really slowed
after the subprime crisis. “The basic reasons are still
loss of income, primarily, or health reasons, or
divorce,” Executive Director Susan Cotner said. “The
big economic downturn crisis has passed but still
people struggle with their mortgages all the time.”
ATTOM found that New York had the 10th highest rate of
foreclosure among the 50 states as of September: one
foreclosure for every 1,671 housing units. ATTOM also
found that foreclosure activity of all types — default
notices, repossessions and auctions — in the third
quarter of 2017 was at its lowest level in 11 years
nationwide. The Capital Region apparently has not been
following the downward trend. There were 1,681 such
notices issued in the Capital Region from Nov. 21 to
Dec. 20, 1,500 one month earlier, and 1,528 two months
earlier. They had been averaging about 1,400 a month.

Oil approaches 2015 highs on fewer US rigs,

OPEC
Oil prices rose on Monday, coming close to new
three-year highs on a slight decline in the number of
US rigs drilling for new production and sustained OPEC
output cuts. US West Texas Intermediate crude futures
had risen to $61.94 a barrel by 1140 GMT, 50 cents
above their last settlement. WTI last week reached
$62.21, the highest since May 2015. Brent crude futures
were at $67.95 a barrel, 33 cents above their last
close. Brent hit $68.27 last week, the highest since
May 2015. Traders said the gains were due to a slight
decline in the number of US rigs drilling for new
production. The rig count eased by five in the week to
Jan. 5 to 742, according to data from oil services firm
Baker Hughes. Despite this, US production is expected
soon to rise above 10 million barrels per day, largely
thanks to soaring output from shale drillers. Only
Russia and Saudi Arabia produce more.

Trump expected to dilute Dodd-Frank in 2018

Analysts at Goldman Sachs think two issues will be the
subject of reform in 2018. “First, a few smaller issues
stand a good chance of enactment,” said the global
analytics team in an email to clients. “Among these are
health legislation that would incrementally stabilize
the ACA and banking legislation that would make
incremental changes to the Dodd-Frank Act. So, say
“Adios, Dodd-Frank,” Goldman says the president is
coming for you. Here’s the rest of the prediction:
“Second, Congress faces new fiscal deadlines. Spending
authority expires January 19 and the debt limit must be
raised by March. These deadlines could lead to
near-term uncertainty but are also likely to lead to
some additional fiscal stimulus. We expect spending
caps to be lifted and a third round of disaster relief
funding to be approved as part of the process.”

See you at the top!

Categories
Real Estate News

Black Knight – May Mortgage Monitor: underwater borrower population below two million for first time since 2006

Black Knight – May Mortgage Monitor: underwater
borrower population below two million for first time
since 2006

– The number of underwater borrowers declined by 16%
in the first three months of 2017
– 350,000 borrowers regained equity in Q1 2017,
bringing the total underwater population down to 1.8
million
– The underwater population has fallen by nearly one
million borrowers since last year, a 35% annual decline
– Nearly half of remaining underwater borrowers live
in the bottom 20% of homes by price in their markets
– Tappable equity has risen by $695 billion from last
year, bringing total lendable equity to just under $5
trillion
– Over 40 million Americans have tappable equity
available in their homes today; the largest population
on record

The Data and Analytics division of Black Knight
Financial Services, Inc. released its latest Mortgage
Monitor Report, based on data as of the end of May
2017. This month, Black Knight finds that rising home
prices have both decreased the number of borrowers
underwater on their mortgages while increasing the
amount of tappable – or lendable – equity available to
homeowners. As Black Knight Data & Analytics Executive
Vice President Ben Graboske explained, continued growth
in the equity landscape has also improved the net worth
of many – but not all – homeowners with mortgages.
“The steady upward trajectory of home prices continues
to improve the equity positions of many homeowners,”
said Graboske. “This is plainly visible in the number
of borrowers who are underwater on their mortgages,
owing more than their homes are worth. Over the past
year, we&rs quo;ve seen a 35% decline in the total underwater
population, with a 16% decline in that population over
the first three months of 2017 alone. Home prices rose
2.3% in the first quarter, as compared to 1.8% over the
same period last year, helping an additional 350,000
borrowers regain equity in their homes. As of today,
there are 1.8 million underwater borrowers remaining,
the first time this population has fallen below two
million since 2006. “What stands out is the disparity
we see in this improvement. As has been the case for
some time now, negative equity has become more and more
a localized phenomenon. But it’s also becoming
concentrated among a particular class of homeowner.
Nearly half of all borrowers who remain underwater own
homes in the lowest 20% of prices in their respective
markets. While the nation as a whole now has a negative
equity rate of just 3.6%, among owners in that lowest
price tier, it’s over eight%. In fact, these
lowest-price-tier properties are more than twice as
likely to be underwater as those in the next price tier
up, and 6.5 times more likely to be underwater than
those living in the top 20% of the market. This is the
highest differential we’ve seen between high and low
price tiers since we began keeping track in 2005. In
some areas, the disparity between the lowest price tier
and the highest is staggering. In Detroit, for example,
borrowers whose homes are in the lowest 20% of prices
are 50 times more likely to be underwater than those in
the top 20%.”

Rising home prices are also increasing the amount of
equity available for homeowners to borrow against.
Looking solely at borrowers with at least 20% equity in
their homes, Black Knight found that total tappable (or
lendable) equity increased by $695 billion dollars over
the last year. “Over 40 million Americans with a
mortgage now have tappable equity available in their
homes,” Graboske continued. “This is the largest this
population has ever been. Growth over the last year
brought the total lendable equity market to just under
$5 trillion as of the end of Q1 2017. If home prices
continue to rise at or near their current rate of
appreciation, tappable equity will likely hit record
highs by this summer. Though nearly half of the
country’s 100 largest metropolitan areas have already
reached record levels of tappable equity, as a whole
these areas remain geographically con centrated. The
majority are found in more coastal areas, specifically
in large city centers. In fact, more than half of the
nation’s tappable equity lies in the 10 largest metro
areas. California alone contains nearly 40% of
available equity. While the growth in tappable equity
is obviously good news for both homeowners and lenders
alike, it does represent some risk as well. Investors
in mortgages and mortgage servicing rights – as well as
others with a stake in the broader mortgage market –
need to be prepared to account for a higher share of
equity-driven prepayment risk, as well as an increased
chance of borrowers adding on second liens that primary
loan servicers and investors may not be aware of.” As
was reported in Black Knight’s most recent First Look
release, other key results include:
– Total US loan delinquency rate: 3.79%
– Month-over-month change in delinquency rate: -7.13%
– Total US foreclosure pre-sale inventory rate: 0.83%
– Month-over-month change in foreclosure pre-sale
inventory rate: -2.97%
– States with highest percentage of non-current loans:
MS, LA, AL, WV, ME
– States with the lowest percentage of non-current*
loans: OR, ID, MN, ND, CO
– States with highest percentage of seriously
delinquent loans:MS, LA, AL, AR, TN

Amazon is quietly rolling out its own Geek Squad to set
up gadgets in your home

For 15 years, Best Buy’s Geek Squad installation and
repair service has served as one key advantage over
Amazon that the e-commerce giant seemed unlikely to
match.But over the last few months, Amazon has quietly
been hiring an army of in-house gadget experts to offer
free Alexa consultations as well as product
installations for a fee inside customer homes, multiple
sources told Recode, and job postings confirm. The new
offering, which has already rolled out in seven markets
without much fanfare, is aimed at helping customers set
up a “smart home” — the industry term used to describe
household systems like heating and lighting that can be
controlled via apps, and increasingly by voice. While
Amazon has a marketplace for third parties to offer
home services like TV mounting and plumbing, these new
smart-hom e-related services seem important enough to
Amazon that it is hiring its own in-house experts. And
perhaps for good reason. Smart-home gadgets make up one
of the fastest-growing segments of the consumer
electronics industry, but they can be difficult to set
up and integrate with each other. That hurdle has led
to higher-than-normal return rates, experts say, so
Amazon is likely looking at the in-home services as one
way to lower that number. Perhaps more importantly,
controlling the smart home by voice is one of the most
promising use cases for Alexa, the virtual assistant
built into the Echo line of gadgets, which Amazon is
betting heavily on. So it’s not totally surprising that
Amazon would make the effort to close the education gap
for these products by sending its own hires into
customer homes. An Amazon spokesman declined to
comment. Amazon is charging $99 for installation
services like setting up an Ecobee4 Alexa-enabled smart
thermostat, though some services are discounted by 20%
this week. Multi-device set-ups that take more than an
hour may cost more. In eligible cities, shoppers can
book the installations during the checkout process.

New York City’s ‘Billionaire’s Row’ is dead — and a
record-breaking foreclosure could be the ‘nail in the
coffin’

A full-floor penthouse in the landmark One57 condo
building is headed to the auction block after it was
seized under foreclosure, Bloomberg reported. This is
most likely the largest foreclosure in the history of
high-end real estate in New York City, experts say. “I
don’t know of a foreclosure that’s larger than that,”
Donna Olshan, president of Olshan Realty, told
Bloomberg. The apartment, which was the eighth-priciest
sold in the building, will go to auction on July 19. It
was purchased for $50.9 million in 2014, with a $35.3
million mortgage loan from Banque Havilland. It was due
to be paid in full a year after purchase, but no such
payment was made by the shell company the unit was
registered under. Havilland is now forcing the auction
to recoup the funds it’s missing , plus interest,
according to court filings. One57 is emblematic of New
York City’s Billionaire’s Row, a stretch of 57th Street
near Central Park, which in recent years has become a
magnet for new condos courting high-priced investment.
One57 is considered the most expensive of the new
buildings, with record-breaking sales that included a
$100.5 million top-floor penthouse. This is the second
apartment in the building to face foreclosure in the
last two months. A unit on the 56th floor, which sold
for $21.4 million in July 2015, hit the auction block
on June 14. It’s unclear if the property has changed
hands yet.

Oil pares losses, but rising supply a worry
Oil dipped on Monday, paring some earlier losses
triggered by rising drilling activity in the United
States and no let-up in supply growth from both OPEC
and non-OPEC exporters, but the outlook remained
gloomy. Brent crude futures were last down 11 cents on
the day at $46.60 a barrel by 1430 GMT, while US crude
futures were last down 13 cents at $44.10 a barrel.
“The market is in trouble and looks very vulnerable to
lower numbers,” PVM brokerage said in a note. The
Organization of the Petroleum Exporting Countries has
agreed with some non-OPEC members to curtail production
until March 2018 but the move has failed to eliminate a
global glut of crude. Several key OPEC ministers will
meet non-OPEC Russia on July 24 in St Petersburg,
Russia, to discuss the situation in oil markets. Kuwait
said on Sunday that Nigeria and Libya had been invited
to the meeting and their production could be capped
earlier than November, when OPEC is scheduled to hold
formal talks, according to Bloomberg. Libya said on
Monday it was ready for dialog but added that its
political, economic and humanitarian situation should
be taken into account in talks on caps. Brent prices
are 17% below their 2017 opening despite strong
compliance by OPEC with the production-cutting accord.

Categories
Real Estate News

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.

Categories
Real Estate News

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.

Categories
Real Estate News

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.

Categories
Real Estate News

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).