Archive for April, 2010

Shadow Inventory Finally Starting To Hit the Market

Doctor Housing Bubble reports Moving from the Shadows – More Distress Inventory Selling and Making it to Market in Southern California. Notice of Defaults Still High. 3 Cities in the Spotlight: Cerritos, Culver City, and Paramount.

…It was estimated that HAMP would help 3 to 4 million homeowners but currently only 228,000 loans are now in “permanent modification” although many re-default within a year.  Many banks have now shifted and inventory is now moving its way to the public MLS.  This trend is now showing up with many more homes coming to market.  It may be the case that banks realize that with the federal $8,000 tax credit ending, and the California $10,000 credit starting in May, they have a short window to move inventory at higher prices because of these juicy incentives…

Authored by Forth Hoyt | Discussion: 3 Comments »

Foreclosure Numbers Surge – Five Year Record

Foreclosures surge- more bank owned properties coming!

Foreclosures surge- more bank owned properties coming!

NATIONAL FORECLOSURES SURGE

Well, I wonder what this will mean to our home prices that seem to have stabilized?  Now, these are national statistics on foreclosures, but foreclosureradar.com has expressed exactly the same trends here in California and the Sacramento area too…

According to news.Yahoo:

LOS ANGELES – A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.

Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.

“We’re finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing,” Sharga said. “We expect the pace to accelerate as the year goes on.”

In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.

Homeowners continue to fall behind on payments because they’ve lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.

The Obama administration’s $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.

About 231,000 homeowners have completed loan modifications as part of the Obama administration’s flagship foreclosure prevention program through March. That’s about 21 percent of the 1.2 million borrowers who began the program over the past year.

But another 158,000 homeowners who signed up have dropped out — either because they didn’t make payments or failed to return the necessary documents. That’s up from about 90,000 just a month earlier.

Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.

The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.

Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.

Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.

All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.

Foreclosure filings rose on an annual and quarterly basis in Arizona, however.

One in every 49 homes there received a foreclosure-related notice during the quarter.

Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.

California accounted for the biggest slice overall of homes facing foreclosure — roughly 23 percent of the nation’s total. One in every 62 properties received a foreclosure filing in the first quarter.

Authored by Forth Hoyt | Discussion: No Comments »

The Sacramento Housing Market: Is There Another Bubble?

Sacramento housing market outlook; The double dip?

A lot of people have been saying lately that there may be another crash coming nationally. More Foreclosures than last year, more short sales, higher interest rates and worse economic times coming… What will the effects be on the Sacramento Real Estate Market?  What more will the Sacramento housing market need to endure still?

Many sources say that the housing recovery in hard hit states like California, Nevada, Florida and Arizona are ten years off, here’s why:

United States Longest Running Housing Graph- can you say bubble?

United States Longest Running Housing Graph- can you say bubble?

The New York Times:  Don’t Bet the Farm on the Housing Recovery

MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?

Alas, the evidence is equivocal at best.

The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

If only it were that simple.

Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.

Consider some leading indicators. The National Association of Home Builders index of traffic of prospective home buyers measures the number of people who are just starting to think about buying. In the past, it has predicted market turning points: the index peaked in June 2005, 10 months before the 2006 peak in home prices, and bottomed in November 2008, six months before the 2009 bottom in prices.

The index’s current signals are negative. After peaking again in September 2009, it has been falling steadily, suggesting that home prices may have reached another downward turning point.

But why? Unfortunately, it is hard to pinpoint causes for a change in demand for housing. The factors clearly include government economic policy, like interest-rate changes and tax credits. But these moves don’t line up neatly with major turning points in the market.

Sociological processes may be driving these changes. Trends in news media coverage, for example, generate conversations in barbershops and hotel lobbies, which in turn alter the conventional wisdom about investing.

Consider how that process might have worked during the run-up to the 2006 turning point in home prices. In May 2005, two months before the peak in the N.A.H.B. traffic index, Consumer Reports magazine had a cover article, “Your Home: How to Protect Your Biggest Investment,” that conveyed a very bullish sentiment.

“Despite years of dire warnings from some economists that the housing boom is about to end, it hasn’t,” the magazine said. “Indeed, last year prices rose even more — about 11 percent nationally.”

The article went on to give advice: “You can no more time the real estate market than you can the stock market,” it said. “If you need a house, and can afford one, go ahead and buy.”

The article extended to the housing market the conventional wisdom that then prevailed about the stock market — namely, that it was quite efficient, without identifiable bubbles and bursts. According to this theory, there was an identifiable profit opportunity: buy and hold stocks, and by extension, housing, and watch your wealth grow.

But as 2005 continued, the conventional wisdom began to change. Some people in the United States were by then aware of the 2004-5 home price decline in Britain. Some were learning a new lexicon: “housing bubble,” “housing crash” and “subprime mortgage.” Newspapers and magazines began to include some derisive reviews of a March 2005 book by David Lereah, “Are You Missing the Real Estate Boom?” And accounts began to appear of the risky behavior of an army of real estate flippers.

In May 2005, I included in the second edition of my book, “Irrational Exuberance,” a new data series of real United States home prices that I constructed, going back to 1890. I was amazed to discover that no one had published such a long-term series before.

This data revealed that the home price boom was anomalous, by historical standards. It looked very much like a bubble, and a big one. The chart was reproduced many times in newspapers and magazines, starting with an article by David Leonhardt in The New York Times in August 2005.

In short, a public case began to be built that we really were experiencing a housing bubble. By 2006 a variety of narratives, taken together, appear to have produced a different mind-set for many people — creating a tipping point that stopped the growth in demand for homes in its tracks.

THE question now is whether a strong case has been built for a new bull market since the home-price turning point in May 2009. Though there is no way to be precise, I don’t believe it has.

Since that turning point, most public discourse on housing has not been about a new long-term view of the market. Instead, it focused initially on whether the recession was over and on the extraordinary measures the government was taking to support the housing market.

Now we’re shifting into a new phase. The recession is generally viewed as being over, and those extraordinary measures are being lifted.

On March 31, the Federal Reserve ended its program of buying more than $1 trillion of mortgage-backed securities, and the homebuyer tax credit expires on April 30.

Recent polls show that economic forecasters are largely bullish about the housing market for the next year or two. But one wonders about the basis for such a positive forecast.

Momentum may be on the forecasts’ side. But until there is evidence that the fundamental thinking about housing has shifted in an optimistic direction, we cannot trust that momentum to continue.

Authored by Forth Hoyt | Discussion: No Comments »

Mortgages Move Higher as Fed Quits Buying

Uncle Sam Quits Buying And Rates Move Upward

Uncle Sam Quits Buying And Rates Move Upward


Mortgage Rates Will Continue To Trend Higher As Economy Improves, Feds Quit Buying Mortgage Backed Securities

Courtesy; Evangeline Scott, Summit Funding and MMG Weekly

“YOU DON’T KNOW WHAT YOU GOT UNTIL IT’S GONE – AND I FOUND OUT A LITTLE TOO LATE…”Reserve’s Mortgage Backed Security buying program The words from Chicago’s hit song from the 80’s sums up the market’s sentiment on the ending of the Federal , and the resulting volatility for home loan rates that has already begun.

The Fed did what they set out to do – purchasing $1.25 Trillion in Mortgage Backed Securities, and succeeding in their plan to lower home loan rates and help stabilize the housing sector. And even though they stretched out the length of the program slightly – in order to soften the impact of the end of the program – the training wheels are now off, the safety net is gone, and home loan rates have already moved higher. In fact – as the Fed will now gradually become a seller of their massive holdings of Mortgage Backed Securities – rates are very likely to continue to move higher still.

Even after home loan rates took a jump higher last week, they still remain at reasonably low levels – which makes right now a crucial time to take advantage of the opportunities that exist, including the Homebuyers Tax Credit which is down to its last month. To take advantage of the generous credit, purchase contracts must be signed by the end of April. If you or someone you know has questions about this credit – please don’t wait to get in touch with me.

Adding to last week’s volatility, the official Jobs Report was released last Friday – and according to the report, 162,000 jobs were created in March, making it the biggest one-month increase in three years. Additionally, there were upward revisions to January and February, which brought the last two months’ net job losses to near zero.

———————–
Chart: Nonfarm Payrolls (By Month)

While it was good to see some positive numbers, we’re not exactly out of the woods just yet, as there were some concerning aspects of this Jobs Report. For example, Average Hourly Earnings actually fell 0.1% in March. This could be viewed as a negative sign, indicating that there’s no pressure on companies to pay workers more to retain them. It also shows continued temporary hiring at a lower pay scale.

The official Unemployment Rate remained steady at 9.7%, but when factoring in the “underemployed”, including people who accepted part-time work because full-time work is simply not available, the rate of unemployment overall rose from 16.8% to 16.9%. This is a big number that continues to weigh on the labor market.

Also in the news last week, the US Savings rate moved down to its lowest Level since October 2008. Check out the mortgage market guide view article below for some simple ways to boost your savings.

Forecast for the Week

This week’s economic calendar may seem slow after the wave of economic news last week. But there are still some big items on tap, starting off right away Monday morning when the Pending Home Sales report gives us a look at the health of the housing industry.

Tuesday brings us the Meeting Minutes from the latest Fed Meeting. Although we already know what the Fed’s policy announcement was, the markets will be looking at the discussion contained in the Meeting Minutes as an indication of what Fed members are thinking and what they may do in the future.

On Thursday we’ll get another look at Initial Jobless Claims. Last week, Initial Jobless Claims were reported basically in line with expectations and down from the previous week’s number, and Continuing Jobless Claims declined as well. With those numbers and last week’s official Jobs Report in mind, the market will be watching to see if the labor market can continue to make positive strides.

Finally, in addition to those reports, the Treasury Department will auction off $82 Billion in Treasuries. And since most of those will be longer maturities that compete with Mortgage Backed Securities, the auctions could add volatility to the markets depending on how they are received.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Mortgage Bond prices plunged last week and rates increased .25%.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Apr 09, 2010)

Japanese Candlestick Chart

Authored by Forth Hoyt | Discussion: No Comments »

More Commercial Real Estate Loans Go Delinquent

My wife and I have been doing Commercial Broker Price Opinions, trying to break our way into the Commercial REO arena by building relationships with banks who need to figure out the market value of their collateral.  So I have naturally been looking more and More at news information concerning Commercial Defaults.

Found this article recently at Mortgage Orb and thought I would pass it along.

The percentage of commercial mortgage-backed security (CMBS) loans 30 or more days delinquent, in foreclosure or in real estate owned (REO) status jumped 89 basis points (bps) in March – the highest monthly increase since summer 2009, according to new data from Trepp LLC.

“After February’s numbers showed delinquencies beginning to moderate, there was some guarded optimism,” the firm states in TreppWire, its monthly delinquency report. “February’s increase had been the smallest bump in nine months. March data threw cold water on any notion that CMBS delinquencies might be nearing their peak.”

Removing the Stuyvesant Town foreclosure from consideration, delinquencies were still up 49 bps, Trepp says. The percentage of CMBS loans 30+ days delinquent or in foreclosure have grown from 6.49% in January to 7.61% in March.

The percentage of seriously delinquent loans (i.e., 60+, in foreclosure, REO or nonperforming balloons) stood at 6.66% at the end of the month – up 69 bps from February.

Authored by Forth Hoyt | Discussion: No Comments »





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