Published on: Jan 27, 2016 @ 8:18 am
CoreLogic – distressed sales accounted for 12% of homes
sold nationally in November 2015
– Of total sales in November 2015, distressed sales
made up 11.9% and real estate-owned (REO) sales made up
8.7%
– Maryland remains the state with the largest share of
distressed sales among all states at 20.3%
– Denver-Aurora-Lakewood, Colo. had the lowest
distressed sales share among the largest Core Based
Statistical Areas (CBSAs) at 3.1%
Distressed sales, which include REOs and short sales,
accounted for 11.9% of total home sales nationally in
November 2015, down 1.9 percentage points from November
2014 and up 1.4 percentage points from October 2015.
This month-over-month increase was expected due to
seasonality, and the magnitude of the change was in
line with previous Novembers. Within the distressed
category, REO sales accounted for 8.7% and short sales
accounted for 3.2% of total home sales in November
2015. The REO sales share was 1.5 percentage points
below the November 2014 share and is the lowest for the
month of November since 2007. The short sales share
fell below 4% in mid-2014 and has remained in the 3-4%
range since then. At its peak in January 2009,
distressed sales totaled 32.4% of all sales, with REO
sales representing 27.9% of that share. While
distressed sales play an important role in clearing the
housing market of foreclosed properties, they sell at a
discount to non-distressed sales, and when the share of
distressed sales is high, it can pull down the prices
of non-distressed sales. There will always be some
level of distress in the housing market, and by
comparison, the pre-crisis share of distressed sales
was traditionally about 2%. If the current
year-over-year decrease in the distressed sales share
continues, it will reach that “normal” 2-percent mark
in mid-2019.
All but nine states recorded lower distressed sales
shares in November 2015 compared with a year earlier.
Maryland had the largest share of distressed sales of
any state at 20.2%[1] in November 2015, followed by
Connecticut (19.1%), Florida (19%), Michigan (18.9%)
and Illinois (17.8%). North Dakota had the smallest
distressed sales share at 2.7%. Nevada had a 5.4
percentage point drop in its distressed sales share
from a year earlier, the largest decline of any state.
California had the largest improvement of any state
from its peak distressed sales share, falling 59.2
percentage points from its January 2009 peak of 67.4%.
While some states stand out as having high distressed
sales shares, only North Dakota and the District of
Columbia are close to their pre-crisis levels (within
one percentage point). Of the 25 largest CBSAs based
on mortgage loan count, Orlando-Kissimmee-Sanford, Fla.
had the largest share of distressed sales at 21.2%,
followed by Tampa-St. Petersburg-Clearwater, Fla.
(20.7%), Baltimore-Columbia-Towson, Md. (20.4%),
Chicago-Naperville-Arlington Heights, Ill. (20.4%) and
Miami-Miami Beach-Kendall, Fla. (20.3%).
Denver-Aurora-Lakewood, Colo. had the smallest
distressed sales share among the largest CBSAs at 3.1%.
Las Vegas-Henderson-Paradise, Nev. had the largest
year-over-year drop in its distressed sales share,
falling by 5.5 percentage points from 20.3% in November
2014 to 14.8% in November 2015. Riverside-San
Bernardino-Ontario, Calif. had the largest overall
improvement in its distressed sales share from its peak
value, dropping from 76.3% in February 2009 to 10.9% in
November 2015.
Oil prices attempt to trim losses
Oil futures pared losses on Wednesday, echoing a modest
stock market recovery, but analysts said a surprise
ballooning in US inventories and little chance of the
world’s major producers agreeing to cut output would
likely temper any rallies. Fresh evidence of slowing
growth in top commodities consumer China, along with
caution before the outcome of the US Federal Reserve’s
first policy meeting of the year, earlier knocked
around $1 off the price of oil. Senior OPEC and
Russian officials on Tuesday stepped up vague talk of
possible joint action to eliminate one of the largest
oil surpluses in modern times, although few market
watchers believed this would result in any cuts to
output. Brent crude was last down 26 cents at $31.54 a
barrel by 1347 GMT (8:47 a.m. ET), having hit a session
low of $30.83, in lockstep with European equities
edging off the day’s lows. US futures fell 65 cents to
$30.80 a barrel. Oil has risen from last week’s 2003
lows after speculators unwound some of the record-high
bearish positions they had racked up over the last six
months. “There is dove-tailing of moves in oil with
moves in equities that is happening and of course the
equity markets, we’ve seen, are so prone to risk
aversion,” BNP Paribas global head of commodity
strategy Harry Tchilinguirian said. “Right now oil is
buffeted between short-covering, cross-asset
correlations and its own weak fundamentals.” Oil
prices have fallen nearly 16% in January, bringing
total losses since the start of the decline in mid-2014
to 77%. US crude stocks rose by 11.4 million barrels
last week to 496.6 million, the American Petroleum
Institute said, topping analyst expectations for an
increase of 3.3 million barrels.
Mortgage applications down
Mortgage applications increased 8.8% from one week
earlier, according to data from the Mortgage Bankers
Association’s (MBA) Weekly Mortgage Applications Survey
for the week ending January 22, 2016. This week’s
results include an adjustment to account for the Martin
Luther King holiday. The Market Composite Index, a
measure of mortgage loan application volume, increased
8.8% on a seasonally adjusted basis from one week
earlier. On an unadjusted basis, the Index increased
0.3% compared with the previous week. The Refinance
Index increased 11% from the previous week. The
seasonally adjusted Purchase Index increased 5% from
one week earlier. The unadjusted Purchase Index
increased 0.4% compared with the previous week and was
22% higher than the same week one year ago. The
refinance share of mortgage activity decreased to 59.0%
of total applications from 59.1% the previous week. The
adjustable-rate mortgage (ARM) share of activity
increased to 6.9% of total applications. The FHA share
of total applications decreased to 12.7% from 13.7% the
week prior. The VA share of total applications
increased to 11.1% from 10.8% the week prior. The USDA
share of total applications remained unchanged from
0.7% the week prior.
Franchisees fight back against $15 wages
The International Franchise Association, the industry’s
largest trade group, wants the Supreme Court to take up
its challenge to portions of Seattle’s $15 minimum wage
law. Seattle’s City Council in June 2014 voted to
raise the minimum wage in increments, hitting $15 an
hour by 2017 for businesses with at least 500 staffers.
The $15 level is more than double the federal hourly
minimum of $7.25.
The International Franchise Association and five
Seattle franchisees quickly sued Seattle, which like
New York City has moved to treat smaller franchised
businesses like larger companies. They argued that the
mandated $15 pay unfairly lumps franchised businesses
with large employers. The association and franchisees
want to be recognized as smaller businesses to get more
time to raise pay incrementally to $15 by 2021. “Our
appeal has never sought to prevent the City of
Seattle’s wage law from going into effect,” franchise
association President Robert Cresanti said in a
statement this week. “Our appeal to the Supreme Court
will be focused solely on the discriminatory treatment
of franchisees under Seattle’s wage law and the
motivation to discriminate against interstate
commerce.” The association said a response is due from
the city of Seattle within 30 days, and the Supreme
Court is expected to announce this spring whether it
will hear the case.
In March 2015, a federal judge threw out the franchise
groups’ lawsuit, and the decision was upheld in
September by the 9th US Circuit Court of Appeals. For
now, Seattle wages are tiered. The wages range from
$10.50 to $13 an hour, depending on the size of the
employer and whether the company pays toward medical
benefits. A representative from Seattle Mayor Ed
Murray’s office could not be immediately reached for
comment. The impact of higher mandated pay on
franchisees is contentious. A recent survey from the
conservative Employment Policies Institute, a
conservative nonprofit research organization, found
franchisees are more harmed than nonfranchised
businesses when implementing wage hikes. The survey of
more than 600 businesses found franchisees are more
likely to take “offsetting steps including reducing
staff, reducing hours and using automation to manage
the increased labor costs caused by minimum wage
increases” than are nonfranchised businesses. This
trend was more pronounced in the fast food and hotel
sectors — more than 80% of franchised fast food owners
said they would be more likely to reduce hiring, versus
58% of non-fast-food restaurant owners. And nearly 90%
of franchised hotels said they would raise room rates,
compared with 70% of nonfranchised hotels.
Policymakers will compound the damage of a $15 minimum
wage by arbitrarily targeting businesses with a
recognizable brand for uniquely-harsh wage mandates,”
Michael Saltsman, the Washington, D.C.-based
institute’s research director, said in a statement.
Zillow – rapid reaction: December new home sales
– Sales of newly built homes rose more than 10% in
December from November, to 544,000 units sold (SAAR),
the best month for new home sales since February 2015
and second best since 2008.
– Similar to existing home sales, some sales that may
have otherwise closed in November may have been pushed
into December because of new settlement and disclosure
rules.
– The seasonally adjusted median price of a new home
fell 4.3% from December 2014, to $285,200, the biggest
annual decline since early 2012.
New home sales had a strong December, recording their
best month since February 2015 and second-best since
2008, according to the US Census Bureau. Additionally,
for the first time since July 2015, both new and
existing home sales for the month moved in the same
direction, reversing a months-long trend in which one
would rise, and the other would fall. But even with the
strong finish, sales of newly built homes are still
running slightly below their February level and were
roughly flat over the course of 2015. Additionally,
like existing home sales, new home sales in December
were likely boosted by recently adopted changes in
settlement and disclosure rules that pushed closings
that may have occurred in November into December. The
price of new homes, which have been fetching a large
premium over existing homes as builders focus on a
higher-end clientele, fell 4.3% year-over-year in
December (seasonally adjusted) to $285,200, the biggest
annual decline since early 2012. This is some — modest
— good news for buyers struggling to find a home to buy
and get a hold in the market.
WSJ – what’s ahead for jumbo-loan borrowers in 2016
The jumbo-mortgage market reached new highs in 2015 and
recent turmoil in global stocks is unlikely to slow it
down much in 2016, industry experts say. Lenders
provided an estimated $320 billion in jumbo mortgage
financing in 2015, which translates to 19% of all
mortgage lending, says Guy Cecala, CEO and publisher of
Inside Mortgage Finance. That’s up slightly from 18% of
the market in 2014 and the highest market share since
2002, he says. While a down stock market might mean
less available cash for some home buyers to purchase an
expensive home, historically people also have shifted
assets to real estate as a safer investment, Mr. Cecala
says. “Whether that plays out depends on how long the
stock market stays down,” he adds. The market dip is
likely to keep interest rates below 4% for a while
longer, which also could make borrowing large sums more
attractive, says Keith Gumbinger, vice president of
mortgage-rate website HSH.com. The Federal Reserve also
is less likely to raise short-term rates this spring,
he adds. Mr. Gumbinger expects the Fed to raise
short-term rates no more than two to three times in
2016, with the average 30-year, fixed-rate jumbo not
topping 4 5/8%. Five-year, adjustable-rate mortgages
could go up to 4%, he adds.
Fear of rising rates and home prices could spur a
homebuying frenzy in the spring, says Ray Rodriguez,
regional mortgage sales manager for Cherry Hill,
N.J.-based TD Bank. Existing borrowers with
adjustable-rate mortgages nearing the end of their
fixed-rate may also rush to refinance, he adds. Still,
overall refinance rates are expected to be lower than
in 2015 since so many borrowers have already
refinanced, says David Adamo, CEO of Stamford,
Conn.-based Luxury Mortgage. An unexpected rate dip in
winter-spring 2015 triggered a refinance frenzy.
Loosened credit-qualifications rules will continue in
2016, but nothing like what occurred in the 2000s that
led to the mortgage crisis, Mr. Adamo says. Last year,
minimum FICO scores for jumbos dropped to 660 for some
lenders, for example, and down payments could be as low
as 15% or even 10%. Still, borrowers with a credit
score of 740 or above who put 20% down can expect to
get the best interest rates. Jumbo borrowers have
loans that exceed conforming limits of government-back
loans, $417,000 in most places and $625,500 in some
high-cost areas. The Federal Housing Finance Agency
didn’t raise baseline limits last year because home
prices haven’t returned to prerecession levels
nationwide. But 39 counties in the US—covering Denver,
Nashville and Napa, Calif., among others—were bumped
into the high-cost category, so borrowers there now
qualify for more financing.
Also last year, the Consumer Finance Protection Bureau
introduced new documents that aim to make it easier to
compare different mortgage offerings. Many lenders were
concerned that a new rule requiring a three-day waiting
period for borrowers to receive and review the
documents would delay closings or kill deals, but
lenders, real-estate agents and borrowers largely
adapted to the change, says John Schleck, Bank of
America’s online and centralized sales executive. “We
spent a lot of time getting ready and it paid off,” he
adds. Finally, more borrowers will be able to conduct
business virtually this year, a trend expected to rise
rapidly in future years, says Victor Ciardelli, CEO of
Chicago, Ill.-based Guaranteed Rate. That trend isn’t
limited to online lenders either. For example, Wells
Fargo Home Mortgage rolled out a new feature for its
YourLoanTracker service in which borrowers can receive
and upload documentation via a mobile or other digital
device, as well as track loan progress, says Brad
Blackwell, executive vice president and portfolio
business manager for the company. Unless the bottom
falls out of the economy, jumbo lenders predict
continued demand, Mr. Cecala says. Regional banks and
nonbank lenders were able to expand their jumbo
mortgage volume largely because of continued enthusiasm
on the part of big banks to buy and hold them in
portfolio. Wells Fargo remains the nation’s largest
jumbo lender, both for originations and purchasing
loans from other lenders to hold in portfolio. “We have
a strong appetite for jumbo lending,” Mr. Blackwell
says.