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WSJ – farmland prices decline across parts of midwest

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

WSJ – farmland prices decline across parts of midwest

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

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

 

Empire State manufacturing activity rooted in
contraction

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

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

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

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

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

Global oil prices mixed

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

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

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.