Tuesday, May 26, 2009
Tuesday, May 19, 2009
A not-so-awful bad housing report
Government report shows surprising sharp drop in housing starts and building permits, but single-home data show signs of stabilization.
NEW YORK (CNNMoney.com) -- Initial construction of U.S. homes and building permits both sank to record lows in April, according to a government report released Tuesday, but the same report also showed signs of stabilization in the single-family core of the housing market.
"Markets trade on headlines but the details of this report are less bad," said Ian Shepherdson, Chief U.S. Economist at High Frequency Economics, in a research note.
While the housing sector overall remains weak, the headline numbers of this report were dragged to record lows by the staggering multifamily sector.
"The devil is in the details here," said Mike Larson, real estate and interest rate analyst at Weiss Research, in a research note.
"The weakness in April was concentrated in the multifamily sector of the market - condos, apartments, and so on," said Larson. "That likely stems from the ongoing condo glut and the tighter financing conditions we've seen in the commercial real estate arena."
Record lows: Housing starts fell 12.8% to a seasonally adjusted annual rate of 458,000, down 12.8% from a revised 525,000 in March, according to the Commerce Department. The reading is the lowest level since the government began keeping records in 1959. The second lowest reading came in January, when the rate of housing starts was 488,000.
Economists were expecting housing starts to come in at 520,000, according to a consensus estimate compiled by Briefing.com. Compared to the same month last year, privately owned housing starts were 54.2% below the revised April 2008 rate of 1,001,000.
Applications for building permits, an indicator of future construction activity, fell 3.3% to a seasonally adjusted annual rate of 494,000 in April. The measure for building permits was also a record low, going back to January 1960, the furthest back the government has records. Economists were expecting permits to come in at 530,000 in April, according to the Briefing.com consensus.
Silver lining: The silver lining in an otherwise grim report was that new construction of single-family homes, considered the core of the housing market, rose 2.8% in April over the prior month, to an annual rate of 368,000. New construction of multi-family homes with 5 units or more sank to an annual rate of 78,000, down 42% from a revised 135,000 in March.
Similar to housing starts, the majority of the drop off in building permits was centered in multi-family homes. Building permits for single family homes rose 3.6% in April to a seasonally adjusted rate of 373,000. Building permits for multi-family units with five or more units fell 21% to an annualized rate of 103,000.
"All the drop in both starts and permits is in the hyper-volatile and hyper-depressed multi-family sector," said Shepherdson. Despite month-to-month volatility, the single family housing market has showed signs of a revival.
Going forward: Stability in the single-family sector combined with a recent uptick in builder confidence, according to a report from the National Association of Home Builders/Wells Fargo released Monday, indicate the rate of deceleration in the construction market could begin to slow.
"Homebuilders are more optimistic, according to the NAHB survey, so it seems reasonable to expect the rate of decline of new construction to slow," said Shepherdson.
Larson said that the single-family market would still have to contend with a glut of inventory, "but these figures add to the evidence of potential stabilization in that part of the industry."
Another economist echoed the sentiment that the report could point to a bottoming out in the sector.
"Single-family activity managed a second straight gain, giving some credence to a bottoming process," said Adam York, economist at Wachovia, in a research note. Even as the single-family sector shows signs of life, York expects the multifamily sector to "likely remain under pressure."
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.Sussex County Home Sales - as of May 18, 2009
Single Family - 414
Condo / Town Home - 143
Mobile - 57
Multi-Family - 3
Lots / Land - 102
Farms - 2
Commercial - 15
The total closed real estate transactions for 2009 thus far is 736. The average list price as of April 30, 2009 was $314,740, and the average sales price was $293,773. Homes are selling at 93.3% of list price and are averaging 196 days on the market. We anticipate sales to remain strong and prices steady. There is light at the end of the tunnel, and we can see it!
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Monday, May 4, 2009
Housing Numbers: Green Shoots or Red Flags?
Two new pieces of data out today suggest, at face value at least, an improvement in the housing market.
First, construction spending rose 0.3 percent in March. Now granted, that's not an awful lot, but it's the first time that number has been positive in six months. The trouble is, single family construction dropped 8.6 percent after falling a record 11 percent in February. Nonresidential construction, however, came in strong and actually unexpectedly strong.
Okay, great then about nonresidential, except that the gains came in commercial buildings, educational buildings and manufacturing, which are all overbuilt already for today's real estate climate. "March's gains were likely from ongoing projects that were started when the outlook was brighter than it is today," writes economist Patrick Newport of IHS Global Insight.
Of course on the bright side, you could argue that continued drops in residential construction spending is a good thing for the market, given how high new home inventories are right now. The less we build, the faster we get back to normal levels of supply and demand. That's the bright side, if you are not actually a home builder.
The second piece of data, Pending Home Sales from the National Association of Realtors, also came in higher than expected. An increase of 3.2 percent month to month in contracts signed for existing homes could signal a coming boost in existing home sales. Of course, "while pending home sales have historically been a one-month leading indicator to existing home sales, with a 71% correlation using a one-month lag," writes JP Morgan analyst Michael Rehaut, "we note that since October, the relationship has been more volatile. Specifically, Feb.’s Pending Home Sales rose 2.0%, but March Existing Home Sales fell 3.0%." Rehaut adds that rising unemployment and weak consumer confidence will keep these levels depressed through the year.
Most agree that the increase in demand is driven by continued demand for foreclosures, a huge increase in affordability, low mortgage rates and the $8000 first time home buyer tax credit. Credit-Suisse analyst Dan Oppenheim in looking for a correlating rise in existing home sales in April, based on these pending numbers, a 3.9 percent increase to be precise. Since the largest gains appear to be in the South and West (homes to your biggest boom and bust states), we can probably expect to see even a bigger percentage of sales coming from foreclosures or short sales. And that's not bad.
The faster we get rid of the distressed inventory, the faster we can get regular, higher-priced homes some action.
Posted By:Diana Olick, http://www.cnbc.com/id/30563800
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Pending Home Sales Up 3.2% In March
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Is Now the Time for Some Home Buyers to Make a Deal?
"Most of the big declines in home prices have occurred," says Lawrence Yun, the chief economist at the National Association of Realtors. "Any more will probably be minimal."
Part of the reason is that homeowners are becoming more realistic in listing their asking price.
"Home prices are where they should be," says Robert Abbott, co-owner and VP of Abbott & Caserta Realtors in northern New Jersey. "Sellers are accepting the current reality and are pricing more realistically."
The latest Case-Shiller report shows that home prices in 20 cities dropped 18.6 percent in February from a year earlier. But for the first time in 16 months, that rate of decline eased from the prior month.
A look at the median home prices across the U.S. shows that some prices have actually risen in recent weeks, according to the National Association of Realtors.
Region January '09 February '09
Northeast $227,000 $251,000 (up)
South $143,300 $146,700 (up)
Midwest $131,000 $131,000 (same)
West $215,000 $204,600 (down)
The median prices are still down from the same time in 2008, but that's more a reflection of what were over inflated prices, says Abbott.
"We're experiencing an adjustment in prices," Abbott says. "From my area, we've been in a down market since 2005 and I think we are now at a stabilized place."
The current price level of homes seems to be drawing more buyers into the market, says Jim Gillespie, CEO of Coldwell Banker.
"We are seeing a lot of activity across the nation," says Gillespie. "Of course we're in the Spring market, but we've seen more buyers in the market now than at this same time last year."
More people are not only 'kicking the tires' but actually buying right now, says Abbott.
"We are showing significant activity when it comes to sales," Abbott says. "The number of days for a house on the market are going down."
But not all levels of housing are seeing the benefit, according to Cindy McLellan, a real estate broker in Denver, Colorado.
"Lower levels of home prices are seeing more of the activity," says McLellan. "Higher priced homes, those in the $1 million range and above, are still taking some time to sell. High enders still have trouble getting jumbo loans and sellers are till trying to make a profit."
McLellan says it's the first time home buyers that are driving the market. "With the $8,000 tax break from the Obama Administration and lower interest rates, first time buyers really have an incentive to buy and they are."
Not everyone thinks housing prices have bottomed or might not even go lower. Fred Skolich, president of Skolich Real Estate in New Jersey says prices remain in flux.
"I think they are still going to come down," says Skolich. "We're in the middle of the Spring market. After we get away from that, I think you’ll see some further adjustments in price."
"There's no need to rush," says J. Andrew Hansz, an associate professor with the department of finance and real estate at the University of Texas at Arlington. "It's a buyer's market right now. If you need a place, it's a good time, but buyers are in control."
But home buyers waiting on the sidelines to time the market could be making a mistake, says Skolich. "You might wait for a lower price, but then interest rates could go up," Skolich says. "It's like a stock, you don't know if you're really buying at the bottom or not."
And those prospective buyers making low offers, might find themselves in a bidding war, says NAR's Yun.
"I think some buyers are trying to steal property by offering low prices," says Yun. "But even in those markets that plunge, buyers are coming back and making bids."
"We've seen some bidding wars" says Robert Abbott. "It's very competitive especially when the home is priced right."
Whether someone is in the market to buy, just looking or waiting for prices to drop even more, analysts say the current state of housing is the best it's been for some time.
"I'm not just saying this because I'm in real estate, but I think it’s as great a time to buy as I have seen in my 34 years in the business," says Coldwell Banker's Gillespie. "Houses are affordable, there are plenty of homes to choose from and you have record low interest rates on 30 year mortgages."
© 2009 CNBC.com, http://www.cnbc.com/id/30455148/
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Sussex County, Delaware Home Sales - as of May 1, 2009
The local market is picking up. We are seeing an increase in showings, and even writing competitive contracts (i.e. multiple contracts). This is great news and a good sign the market, at least locally, is beginning to turn around. Below is a breakdown of what sold last week.
Single Family - 350
Condo / Town home - 117
Mobile - 48
Multi Family - 3
Lots / Land - 86
Farms - 2
Commercial - 12
There were an additional 55 homes sold in the past week, bringing the total for the year to 618 thus far. I do not have the statistics for April yet, so will post them as soon as they become available. I must say tho that is encouraging news indeed.
Tuesday, April 28, 2009
Real Estate Outlook: Indicators of Recovery
You may not be quite ready to accept the idea that housing on a national basis has moved beyond bottoming out and is now in slow recovery mode.
But think about this: Even if you're bearish on the market, you've got to notice that some extraordinarily positive signs are popping up that point to recovery.
New mortgage applications last week for home purchases and refinancings were up 77 percent from the same week in April 2008, according to the Mortgage Bankers Association. That's a statistic that's hard to ignore!
Mortgage rates continue to average well below 5 percent -- 4.7 percent last week on average for 30-year fixed-rate loans and 4.5 percent for 15 year loans. Rates like these are a major factor pushing applications way up, no question, but sharply lower housing prices in many markets are an important part of the equation as well.
Nearly 600,000 homebuyers have already claimed either the $7,500 tax credit from last year, or the $8,000 credit for this year, according to IRS data cited by the National Association of Home Builders.
Many of these buyers are true first timers, but plenty of others are people who are now jumping back into real estate after not owning for a few years, drawn in by today's much more affordable prices and financing.
The rebound underway in mortgages is even creating a mini hiring boom! The Bank of America has just announced that it will be adding 5,000 new positions around the country -- just to deal with its red hot mortgage business, which closed nearly 400,000 new loans during the first quarter. Other big lenders are hiring loan officers and processors again too.
Hard-hit local housing markets continue to roar back with sales gains. On Florida's west coast, in the Sarasota and Bradenton areas, sales were up 28 percent in March over last year, and pending sales -- pointing to more purchases in the pipeline but not yet closed -- were up 27 percent.
Inventories of unsold houses in the Sarasota-Bradenton area are down 31 percent, to the lowest level since December 2005, according to a report from Trendgrafix.
Nationally, house prices have begun moving up again after many months of declines. According to the Federal Housing Finance Agency, prices rose by seven tenths of a percent on average last month - after falling by six and a half percent during the previous 12 months.
By Kenneth Harney, Published: April 28, 2009, http://realtytimes.com/rtpages/20090428_realestateoutlook.htm
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.Home prices down, but rate of loss eases
S&P/Case-Shiller index of 20 major cities falls for 31st straight month, but annual rate is not a record low for the first time since October 2007.
NEW YORK (CNNMoney.com) -- The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months, according to a report issued Tuesday.
However, the rate of decline slowed, with the S&P/Case-Shiller 20-city home price index not hitting a record low for year-over-year drop for the first time since October 2007.
"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David Blitzer, chairman of the index committee at Standard and Poor's.
The index fell 18.6% from February 2008, compared with a 19% year-over-year decline in January. The index was also down 2.2% from January. The index has not recorded a price rise since July 2006 and has fallen 30.7% since that peak.
"I don't think it's great news," said real estate analyst Mike Larson of Weiss Research. "It's just a moderation in the monthly declines and it fits in with the pattern we're seeing of things getting less bad."
"But it's still a weak market. The patient has moved out of intensive care unit but it's still in the long-term care ward," he added.
Moderation: This is the second time in the past several months that the decline trend has seemed to moderate, according to Ken Goldstein, an economist with the Conference Board.
"The first occurrence proved to be a ledge on the way down to the bottom," he said. "We're probably closer to the bottom now."
The leveling off has had a positive impact on consumer confidence, which jumped suddenly this month, although still at historically poor levels.
"Consumers are no longer in despair," said Goldstein. "They're just depressed."
More and more markets are reaching a balance point, according to Bernard Markstein, senior economist with the National Association of Home Builders (NAHB), where prices should level off. He cites other stats, such as stabilizing new and existing home sales, that indicate we're coming to an end of the housing market meltdown.
"By the end of the year, we should be on the slow road to recovery," he said.
Cities: Of the 20 cities tracked by the index, 16 recorded a slower decline in February than the month before.
No index city has fared as poorly as Phoenix, where prices have fallen 35.2% over the past 12 months and 4.5% in January. Prices are down 51% from their peak.
But Phoenix is hardly unique, according to Larson. He said that if you ask any real estate agent in any of the once overheated markets, he or she will tell you that prices in many neighborhoods are off 40% to 50% from their highs.
Las Vegas, which has recorded more foreclosures than any other city, is close behind Phoenix with a 31.7% year-over-year loss and a drop of 3.6% for the month. Prices there are off 48.4% from their peak.
Other big losers include San Francisco, down 31% over the past 12 months and 3.3% for the month; Miami, down 20.5% year-over-year and 3% month-over-month; and Los Angeles, 24.1% lower on an annual basis and down 2% on a monthly basis.
The housing bust has touched some of the cities on the list less severely. In Dallas, prices were down 4.5% annually and 0.2% monthly. Denver showed a 5.7% annual drop and a 1.7% monthly dip, and Boston was 7.2% lower on a yearly basis and 1.3% monthly.
That price declines did not accelerate in February is certainly a positive change, according to Goldstein, showing that the housing crisis is beginning to let up a little.
"Still, we're in a deep hole, one that will be tough to climb out of," he said.
By Les Christie, CNNMoney.com staff writer
Last Updated: April 28, 2009: 12:08 PM ET
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Hope seen, despite home sales downturn
Realtors say home resales fell 3% in March, but analysts point to signs of a stabilizing market.
NEW YORK (CNNMoney.com) -- Sales of existing homes fell in March, according to an industry report released Thursday, but analysts say the housing market is showing signs of stabilization.
The National Association of Realtors said that existing home sales fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February.
March sales were down 7.1% year over year, and came in weaker than the 4.65 million rate forecast by analysts surveyed by Briefing.com.
Despite last month's decline, existing home sales appear to be stabilizing, according to Ian Shepherdson, economist at High Frequency Economics.
"Sales are volatile month-to-month, but the trend appears to be flattening off," Shepherdson said in a research note.
Single family home sales, which are considered the core of the market, fell at a 10% annualized rate in the first quarter of 2009, after a 17.4% drop in the last three months of 2008. At the current sales pace, existing-home sales will be down "only" 2% in the second quarter, according to Shepherdson.
First-time buyers made up 53% of existing home sales in March. Charles McMillan, NAR's president, said first-time buyers are "crucial" to a recovery in the overall housing market.
"The housing market always heals from the bottom up, and with large numbers of first-time buyers entering the market it will become a little easier for sellers to trade up or down," McMillan said in a statement.
Meanwhile, sales of "distressed properties" accounted for over half of all transactions in March. Foreclosed homes typically sell for 20% less than traditional homes, according to NAR.
"Clearly foreclosure activity is driving the marketplace," said Adam York, an economist at Wachovia Economics Group, in a research report. "Buyers are clearly looking for 'bargains,' if they are looking at all."
Existing home sales in the West declined 4.2% in March. Sales in the South and the Northeast also fell, while sales in the Midwest were unchanged.
The national median existing-home price was $175,200 in March, up 4.2% from $168,200 in February. Still, the median existing-home price was down more than 12% since March 2008, when it was $200,100.
The total number of existing homes on the market at the end of March fell 1.6% to 3.74 million units. At the current sales pace, it would take an estimated 9.8 months to sell that inventory of properties. That's up slightly from 9.7 months in February and January.
"The inventory overhang has stabilized too," Shepherdson said. But the number of existing homes on the market remains historically high, and prices will continue to fall rapidly "for the foreseeable future," he said.
First Published: April 23, 2009: 10:06 AM ET
By Ben Rooney, CNNMoney.com staff writer
Last Updated: April 23, 2009: 1:52 PM ET
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
New home sales show signs of revival
Despite a decline in March, the annual rate remains above what economists expect after an even stronger than originally reported February.
NEW YORK (CNNMoney.com) -- Sales of newly constructed homes are showing indications, ever so slight, that the housing decline may be near an end, a government report showed Friday.
The Commerce Department said new home sales fell 0.6% last month to a seasonally adjusted annual rate of 356,000. But that was from a rate of 358,000 in February that was revised up from the originally reported at 337,000 -- the level economists were expecting for March.
The net revision to the prior three months equals an increase of 31,000 units, according to Wachovia Economics Group.
"This is clearly a better-than-expected number," said Michael Larson, a real estate analyst at Weiss Research. "Technically, yes, sales declined, but the last three months were revised higher and the raw number came in better than expectations."
"All signs are pointing to stabilization in market conditions, which is due to lower prices," Larson said. "We still have a problem with unemployment, and that's why any rebound we see will be muted."
Another signs of a bottom in the market: The estimated number of new homes for sale at the end of last month was a seasonally adjusted 311,000, according to the Commerce Department. Last month, it was 328,000 unsold homes.
At the current sales pace, it would take 10.7 months to sell through that inventory, according to the report. That's down from the previous month, when the estimated months of inventory was 11.2, and was nearly 2 months below January's level of 12.5.
"While the inventory correction will likely overshoot to the downside, we are getting closer to stability in the marketplace," said Adam York, economist at Wachovia Economics Group, in a research note. He added that new home inventory is now approaching late 1990s levels.
"As we have long said, getting the new home market back into equilibrium is an important precursor to broader housing market improvement," York said.
The median sales price of new houses sold in March was $201,400, down 3.5%from the revised $208,700 in February and 12.1% from March 2008, when it was $229,300.
"Median prices fell for the third straight month as builders fought the rising tide of foreclosure sales for buyers' attention," said York.
As buyers bargain shop for deals on foreclosed properties, homebuilders have drastically scaled back production to meet falling demand.
On Thursday, the National Association of Realtors said sales of
existing homes fell 3% in March, after an unexpected rise the month before.
First Published: April 24, 2009: 10:17 AM ET
By Ben Rooney, CNNMoney.com staff writer
Last Updated: April 24, 2009: 11:31 AM ET
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
NAR President speaks about existing home sales
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Home Prices Approaching a Bottom in Period Ahead
“There may be issues associated with the foreclosure moratorium. In January and February there were a lot fewer foreclosures than in previous months,” Lawler said while discussing current home price trends in a panel discussion at last week’s NAHB Construction Forecast Conference.
He also added that the FHFA calculated more transactions in areas across the nation where home prices are doing better. “That helped push up prices some,” he said.
From the fourth quarter of 2007 through the fourth quarter of 2008, FHFA reported that home prices fell 8% nationally, Lawler said, while the S&P Case-Shiller Home Price Index reported a drop of 18%.
Part of the discrepancy, Lawler said, is that the FHFA uses the prices of homes backed by mortgages or sold by Fannie Mae and Freddie Mac, and that subprime, jumbo and FHA mortgages are not included in the agency’s home price index. Another difference is that the FHFA encompasses rural areas while the S&P/Case-Shiller home price data are concentrated on major metropolitan markets.
A study last year by the Federal Deposit Insurance Corporation (FDIC) to ascertain the total number of home-price boom-and-bust markets found that of 104 markets that experienced a “boom” in 2006, just three were still considered boom markets in 2008 and only one, Detroit, was listed as a “bust.”
The analysis defined a boom market as one that had experienced a real price gain of 30% or more in three years. A market was considered a bust if had posted a nominal price decline of at least 15% in five years. “The data show that home prices are essentially where they were in 2003,” said Richard Brown, chief economist of the FDIC.
Citing the S&P Case-Shiller Future Prices Index, Brown said that futures prices, which have lagged actual home price declines, suggest a floor in U.S. home prices by early 2010.
To help shore up home prices, Brown said a broader stabilization of the financial system — including policies to provide liquidity to mortgage markets and bolster the capital of banks — is necessary to provide more mortgage credit and to get financial institutions to start lending again. He also said that the number of foreclosures must be whittled down “to arrest some of the downward pressure on home prices.”
Nation's Building News, Photos by Morris Semiatin, http://www.nbnnews.com/NBN/issues/2009-04-27/Economics+&+Finance/3.html
Sussex County Home Sales - as of April 27, 2009
The real estate market continues to move -- slowly, but continously. In the past two weeks, there have been 74 new closed real estate transactions. Below is a break down of what has sold this year.
Single Family - 323
Condo / Town Home - 106
Mobile Home - 41
Multi- Family - 2
Lots / Land - 79
Farms - 2
Commerical - 10
The total closed real estate transactions for the yaer thus far is 563. The average list price as of March 31 was $313,762, and the average sales price was $294,587. Homes are selling at 93.9% of list price and are averaging 198 days on the market.
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Tuesday, April 21, 2009
Mortgage aid program will likely help millions
Some questions and answers about how it could affect payments, taxes
NEW YORK - It's welcome relief for homeowners struggling with mortgage payments.
The new federal program to let people refinance or modify their mortgages is expected to help millions of Americans lower monthly payments and avoid foreclosure. So what strings are attached?
You might be concerned about the impact to your credit report or the tax implications, for instance. Others who are still paying low introductory rates might fear their monthly bills could skyrocket.
Here are some questions and answers on concerns people might have about the Making Home Affordable program.
Q: How will my credit profile be affected?
A: Refinancing generally doesn't affect your score since it's simply a rewritten mortgage, according to Norm Magnuson of the Consumer Data Industry Association, a trade group based in Washington.
This is especially true of refinancing under the federal program, since one of the terms of eligibility is that homeowners can't have missed a payment in the past year.
It's not yet clear what impact a federal loan modification — an adjustment to terms of an existing mortgage, rather than a new one — will have on credit profiles, however, Magnuson said. Regulators haven't yet determined how the loan modifications will be reported, if at all.
If you're applying for a loan modification under Making Home Affordable, it means you've already missed payments and hurt your credit profile. A loan modification should improve your credit profile in the long-run since the idea is to get you on track for meeting payments.
It might also free up money to pay off other debts.
Q: Is it possible my payments will be higher?
A: If you're still paying a low, introductory rate, it's possible your monthly mortgage payment will increase slightly under the federal refinancing program. But the idea is to avoid the big interest rate spikes that typically come with adjustable-rate mortgages.
After applying for the Making Home Affordable program, your lender should give you a "good faith estimate" that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn't an improvement.
You can also check out the payment reduction estimator on the government's Web site at http://www.makinghomeaffordable.gov/.
Q: Should I wait to see if mortgage interest rates come down in a couple of months before applying?
A: Probably not, since mortgage rates are at historic lows.
Last week, rates on 30-year mortgages inched upward to 4.87 percent, but that's still close to the lowest level in decades. Waiting for the rate to go any lower might backfire, said Ken Inadomi, director of the New York Mortgage Coalition.
Even introductory rates shouldn't be that much lower than fixed rates these days — in some cases, they may even be higher. So it's probably in your best interest to apply for refinancing now.
In case you decide to wait: The Making Home Affordable program expires on June 10, 2010.
Q: What are the tax implications?
A: Charges for refinancing a mortgage are tax deductible. The total cost should be evenly divided to be deducted over the life of the mortgage, Inadomi said. Other costs, such as attorney or appraisal fees, are not deductible.
You'll also have to adjust your mortgage interest deduction if you get a lower rate.
Q: Can I try to refinance or modify my mortgage on my own, without going through the program?
A: Working directly with a lender shouldn't be a problem if you think you're not eligible for the federal program. Just beware of getting a third party involved, especially if they ask for an upfront fee.
Last week, government officials warned homeowners of scammers that charge fees of $1,000 to $3,000 to help with loan modifications. Officials say such operations almost always are fraudulent, and that help is available for free from government-approved housing counselors.
Officials said the scams often go by official-sounding names designed to make borrowers think they are using the Obama administration's program.
http://www.msnbc.msn.com/id/30197516/
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Demand for home purchase loans jumps
Increase could help gauge the outlook for spring buying season
NEW YORK - U.S. mortgage applications rose last week, as demand for home purchase loans jumped even as interest rates edged up from recent record lows, data from an industry group showed on Wednesday.
Demand for home purchase loans, an indicator of home sales, far outweighed demand for refinancing. The increase may help gauge what is in store for the hard-hit U.S. housing market this spring, the peak home buying season.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended April 3 increased 4.7 percent to 1,250.6.
Cameron Findlay, chief economist at LendingTree.com based in Charlotte, North Carolina, said home loan demand at his company has remained strong and steady the last several weeks.
“In addition, the quality of the borrowers coming to us has remained high with high FICO scores and low loan-to-value ratios,” he said on Tuesday. “This is an encouraging sign as responsible borrowers looking to purchase or refinance their homes are getting the help they need with low rate, high-quality loans.”
FICO scores refer to borrowers’ credit ratings.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.73 percent, up 0.12 percentage point from the a record low the previous week but well below 5.78 percent a year ago. The survey has been conducted weekly since 1990.
“As rates remain at historic lows, we anticipate this trend will continue as more borrowers take the time to shop around for competitive rates on home loans,” he said.
The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the recession-hit economy, as well as the rest of the world.
Low mortgage rates have generated demand for home refinancing loans and should continue to do so, although when it comes to demand for loans to buy homes, the low rates had only a moderate impact until last week.
The MBA’s seasonally adjusted purchase index rose 11.1 percent to 297.7. The index, however, dropped 22.6 percent from its year-ago level of 384.7.
Overall mortgage applications last week were 72.4 percent above their year-ago level. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 13.3 percent.
Bob Walters, chief economist at Quicken Loans, an online mortgage lender in Livonia, Michigan, said home loan activity continued to improve as consumers took advantage of attractively low interest rates.
“While credit guidelines remain stringent, there are plenty of qualified folks who are putting more money back in their pockets by locking in a low rate,” he said.
“Incentives like the first-time home buyer tax credit are helping to generate increased purchase activity,” he said.
The Mortgage Bankers Association’s seasonally adjusted index of refinancing applications increased 3.2 percent to 6,813.5. The index was up 150.1 percent from its year-ago level of 2,724.7.
The refinance share of applications decreased to 77.9 percent from 79.1 percent, while the adjustable-rate mortgage share of activity was unchanged at 1.5 percent.
Fixed 15-year mortgage rates averaged 4.49 percent, up from 4.45 percent the previous week. Rates on one-year ARMs increased to 6.23 percent from 6.20 percent.
http://www.msnbc.msn.com/id/30107144/
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
Signs of life in the housing sector
Sales are picking up in some of the nation’s hardest-hit regions
Last year the Cape Coral area of Florida had the highest foreclosure rate in the country. Banks moved to seize more than 1 in 10 residential properties in the Gulf Coast community of 165,000. The reverberations are still being felt. Newly built McMansions sit vacant, dusty monuments to the great real estate boom. Smaller homes have been ransacked. Apartment buildings have been boarded up. Former owners are stripping whatever items they can from their homes before the locks get changed, says Kirsten Prizzi, a local real estate agent at AC Global Realty. "Knobs, appliances. Someone was selling windows."
But a curious thing is happening in this blighted former boomtown: Buyers are swooping in. First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany. Sales in February outpaced those at the peak of the boom, with some houses getting more than 50 offers and selling above their asking price. "I look for markets that are downtrodden," says Rich Lehrer, a retiree and self-proclaimed "emerging-market investor" from Wilmington, N.C., who wants to buy several properties in the area. "I'm expecting to get better yields than I would get on my cash."
Cape Coral isn't the only bright spot in housing land. Some of the very regions that led the U.S. housing market into the abyss are beginning to show signs of life. Sales on the Gulf Coast of Florida, California's Inland Empire near Los Angeles, and the Las Vegas metropolitan area surged by more than 80 percent in February vs. the same month last year.
So what's going on? In all of these markets, banks are dumping foreclosed properties, attracting cash-rich speculators looking for cut-rate bargains. "Why wait [for a bottom] if it's the right deal?" says Brent McAlee, a 31-year-old Las Vegas resident who recently paid $140,000 for a three-bedroom home that fetched around $350,000 a few years ago. He hopes to rent it out for $1,300 a month.
What's more, first-time buyers are finally rushing in, lured not only by plunging prices but also government incentives like ultralow interest rates and hefty tax breaks. Such sweeteners are just too tasty for some to pass up, at least in markets that have already plunged by 50 percent or more.
Frenetic buying in a few depressed areas doesn't mean the national bust is over — far from it. But it does herald the start of a new phase in the boom-and-bust recovery cycle. Economists might call it equilibrium:
Prices have fallen so much in some areas that shoppers are getting interested again, improving the balance between buyers and sellers. That doesn't mean prices will surge anytime soon. But heavy buying should at least begin to put a floor under prices. "Are we at the bottom?" asks Christopher Thornberg, an economist with Beacon Economics. "We are getting close."
If Thornberg is right, one might expect other markets to begin the bottoming out process in the coming months. Just as California, Florida, and Las Vegas led the nation into the housing bust, those areas could provide the template for a national recovery. "One of the big problems we have across the nation is a lack of confidence," says Adam York, an economist with Wachovia (WFC) in Charlotte, N.C. "As these former bubble markets bounce off the bottom in terms of sales, it could give some hope to [other markets] that the declines are going to end."
Plenty of caveats are in order, because there are peculiar bear-market factors at work. The fact that inventories are falling precipitously in California — to just 6.5 months' supply from 15.3 months a year earlier — would seem to augur well. Historically, "prices respond very dramatically to inventory," says William C. Wheaton, director of research at the Massachusetts Institute of Technology's Center for Real Estate.
But inventories are falling fastest in markets where speculators and first-time buyers are driving the action. Those parties don't have to put their own homes on the market to make a deal. It remains vexingly difficult for home-owners who have bought in the past five or so years to sell one property and buy another.
On top of that, government incentives of up to $8,000 in tax credits for first-time buyers and low mortgage rates engineered by the Federal Reserve are luring shoppers who otherwise would be sitting out. If the government were to take away the punch bowl, markets that seem to be bottoming could well turn down again.
Hard-hit markets
What's more, banks have tightened their lending standards so much that only the most qualified buyers are finding it easy to get loans. Until financing loosens up, the housing market can't possibly take off.
It's best to view the brisk sales in some markets as glimmers of hope in a national market that seems likely to remain weak for a while. Sales continue to fall in many areas, especially those that didn't get hit until recently. In Charlotte, where home prices were rising until a few months ago, sales dropped 38 percent in February over the previous year. Nationally, the S&P/Case-Shiller index that tracks home prices in the top 20 metro areas was down 19 percent in January from a year earlier and 29 percent from its 2006 peak. "The market is still doing badly," cautions Robert J. Shiller, a professor of economics at Yale University and a creator of the index. But, he adds, "there's always light at the end of the tunnel."
That light could be growing brighter in Las Vegas. Home sales began to drop in Sin City before they fell in most other parts of the country. Now Vegas is deeply mired in recession. Unemployment has risen to 10.1 percent, far above the national average. More than 80 percent of the homes for sale are distressed properties, either those where the owner faces foreclosure or those already owned by a bank. Median prices have fallen from $315,000 in June 2006 to $155,603 today, roughly the same level as in 2002.
The lure: low interest rates
Those dizzying price drops are attracting the likes of Mark and Claudia McLaughlin. The couple, who work for the New York State Corrections Dept. and live in Westernville, N.Y., plan to retire in Las Vegas in six years or so. They're eager to find a place while prices are still low. In late March they went house hunting with an agent, checking out 18 homes between $75,000 and $100,000. "We figure we'll buy something now and get a good price on it," says 55-year-old Mark McLaughlin. "We'll rent it out, and it'll pay for itself." They won't need to sell their upstate New York home for years, by which time that local market might have improved.
The Garvins, too, are doubling down while keeping their current home. In 2004, hotel finance manager J.D. Garvin and his wife, Nona, a nurse, paid $202,000 for a 1,200-square-foot townhouse in Las Vegas, which would probably sell for half that today. After the birth of their first child last year, they decided they needed more space. So in late January they bought a 3,800-square-foot home for $300,000 in the suburb of Henderson, Nev.
With prices still low, the Garvins decided to find a tenant for their first home rather than sell it. The rent almost covers the monthly mortgage on their first property. Says 30-year-old J.D. Garvin: "We feel good about the fact that we're paying a little bit more than the other mortgage — and the house is three times as big."
For the Garvins, who weren't eligible for the government tax credit, record-low interest rates were a big enticement. With the rate on their 30-year fixed-rate mortgage at 4.75 percent, the payment on their $292,000 loan is around $1,600 a month. Nationally, the rate on a 30-year fixed-rate loan averages around 4.85 percent, the lowest on record.
In California, politicians are adding to the federal inducements. The legislature has passed a $10,000 tax credit available to anyone who buys a newly built home. (Existing homes don't qualify.)
The tax break lured Marisol Monroy to make the switch from renter to owner. Monroy had been sitting nervously on the fence for more than a year as friend after friend faced foreclosure in Southern California. In March the married mother of three bought a four-bedroom home in a new development in Fontana, part of the once-bustling Inland Empire. Her monthly payment, including taxes and insurance: $2,100, only $600 more than the rent on her three-bedroom apartment in Placentia. Monroy figured her kids would hate moving but says they're excited to get into their new home: "They're counting down the days on the calendar."
Real estate investors are sensing their moment, too. Speculators get a bad name during boom times for driving prices into the stratosphere. But in the depths of a bust, they're needed to help clear out inventory and stabilize prices. John Hoehl has trekked down from Vermont to scope out investment properties in Cape Coral — where some foreclosure properties are selling for just $30,000. So far, he's bid on three properties, scooping up a three-bedroom house on the water for $150,000. "At this rate we're going to see a big shortage of inventory by summer, and that will trigger prices to rise," says Paula Hellenbrand, president of the Cape Coral Association of Realtors. Local agent Marc Joseph of Foreclosure-ToursRUs.com has bought two boats to take prospects in search of waterfront properties on "foreclosure cruises."
The buying would be brisker still were it not for the banks. Financing remains a wet blanket both for first-timers and speculators. With banks toughening their lending standards, it helps for first-time buyers to come with as much cash as possible. Dean Brittingham and her partner, Nancy Rocks, put a solid 20 percent down on a $350,000, Mediterranean-style home in Santa Rosa, Calif.—and they still had problems. An investor had bought the three-bedroom house just a few months before for $187,000. The quick flip on the distressed property raised red flags for their mortgage lender, which insisted on a second appraisal. As the couple jumped through that hoop, they missed a deadline and decided to start the process all over at a different bank. The two finally closed on the property in March. "Our agent said it's a brand-new time," says Brittingham. "Everything's different."
Speculators, too, are dealing with tight financing — sometimes by looking beyond banks. During the boom, Robert Close made a tidy profit building homes that cost as much as $640,000 in the Inland Empire. Now he's focused on working with a small group of investors to buy and fix up foreclosed properties. Because many banks won't lend money for homes that need major repairs, Close pays cash — or turns to what's known as "hard money," independent financiers who charge interest rates as high as 12 percent.
But Close says he can make money even with such high interest rates — a sign that prices may be too low. He typically shells out $75,000 for each house, plus $20,000 for repairs. He then rents it out for up to $1,500 a month, producing double-digit returns on his investment. In the past seven months Close has picked up 34 properties, taking care to avoid the homes he built. "I guess I'm superstitious," he says. "I don't want to press my luck." That kind of cautious speculation is a far cry from the go-go days. But after a three-year bust, it's a sign that some markets might be moving in the right direction.
http://www.msnbc.msn.com/id/30032506//
Beach to Bay Real Estate Center is a full service real estate brokerage servicing buyers, sellers and renters at the Delaware beach areas. We handle all forms of real estate, including residential, commercial, and lots and land, in addition to bank owned, short sales and auctioned properties and representation; mortgage needs including refinances, new home purchases, second homes, first time homebuyer programs and reverse mortgages; maintain professional relationships with local settlement attorneys, insurance companies, contractors, and inspection companies; and are affiliated with a preservation and restoration company. Beach to Bay services all of Sussex County, and southern Kent County, with a strong focus on the beach resort areas of Rehoboth Beach (19971), Lewes (19958), Bethany Beach (19930), Dewey Beach (19971), Milton (19968), Millsboro (19966) and more.
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