Wednesday, December 11, 2013
Tuesday, December 3, 2013
CoreLogic a leading residential property information, analytics and services provider, today released its October CoreLogic Home Price Index (HPI(®)) report. On a month-over-month basis, including distressed sales, home prices increased by only 0.2 percent in October 2013 compared to September 2013*. Year over year, home prices nationwide, including distressed sales, increased 12.5 percent in October 2013 compared to October 2012. This change represents the 20(th) consecutive monthly year-over-year increase in home prices nationally.
Excluding distressed sales, home prices increased 0.4 percent month over month in October 2013 compared to September 2013. On a year-over-year basis, excluding distressed sales, home prices increased by 11 percent in October 2013 compared to October 2012. Distressed sales include short sales and real-estate owned (REO) transactions.
The CoreLogic Pending HPI indicates that November 2013 home prices, including distressed sales, are expected to remain at the same level month over month as October 2013, with a projected increase of 12.2 percent on a year-over-year basis from November 2012. Excluding distressed sales, November 2013 home prices are poised to rise just 0.4 percent month over month from October 2013 and 11.3 percent year over year from November 2012. The CoreLogic Pending HPI is a proprietary and exclusive metric that provides the most current indication of trends in home prices. It is based on Multiple Listing Service (MLS) data that measure price changes for the most recent month.
"In October, the year-over-year appreciation rate remained strong, but the month-over-month appreciation rate was barely positive, indicating that house price appreciation has slowed as expected for the winter," said Dr. Mark Fleming, chief economist for CoreLogic. "Based on our pending HPI, the monthly growth rate is expected to moderate even further in November and December. The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks."
"In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013," said Anand Nallathambi, president and CEO of CoreLogic. "The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates."
Highlights as of October 2013:
-- Including distressed sales, the five states with the highest home price appreciation were: Nevada (+25.9 percent), California (+22.4 percent), Georgia (+14.2 percent), Michigan (+14.1 percent) and Arizona (+14 percent). -- Including distressed sales, the only state to show depreciation was New Mexico (-0.5 percent). -- Excluding distressed sales, the five states with the highest home price appreciation were: Nevada (+22.5 percent), California (+18.5 percent), Utah (+13.3 percent), Florida (+13 percent) and New York (+12.4 percent). -- Excluding distressed sales, no states posted home price depreciation in October. -- Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to October 2013) was -17.3 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -13.1 percent. -- The five states with the largest peak-to-current declines, including distressed transactions, were Nevada (-40.7 percent), Florida (-37.4 percent), Arizona (-31.5 percent), Rhode Island (-29.3 percent) and West Virginia (-28 percent). -- 96 of the top 100 Core Based Statistical Areas (CBSAs)** measured by population showed year-over-year increases in October 2013.
Posted by Greg Flowers at 1:13 PM
Thursday, November 14, 2013
If the real estate recovery is a baseball game, we're in the fourth or fifth inning.
So what will the rest of the game look like?
Experts from the Urban Land Institute unveiled their view of how the rest of the recovery will play out in their Emerging Trends in Real Estate report, released this week at the land use and planning nonprofit's annual conference in Chicago.
The group highlighted a number of housing trends we can expect to see playing out over the next few years, based on surveys and interviews with real estate developers, investors, lenders, servicers and builders.
(1). Millennials are moving the market, but not as homeowners
Though the so-called Millennial generation has been much-maligned in the media, real estate movers and shakers are increasingly interested in where this generation is headed -- quite literally. A number of the cities have seen increased economic activity in the real estate sector led by this generation, particularly Austin, Seattle, Portland and the Twin Cities in Minneapolis.
Minneapolis' place as number nine on a list of the top 10 cities for developers came as a surprise to Andrew Warren, director of PwC, a research and advising firm that co-authored the report with ULI.
"This is a city that's attractive to younger generations," he said, adding that its diverse economic base is helping to bring in a lot of college grads that don't want to leave the Midwest.
However, this same group isn't forming new households, and they're not buying as many homes as their parents' generation were at their age.
(2). Second-tier cities will lead the recovery next year
Investors, developers and builders are losing some interest in the so-called 24-hour gateway cities -- San Francisco and New York City -- and have developed more interested in cities like Dallas and Portland, where there are more housing deals to be had.
For example, in 2011 only New York City and Washington, D.C. had good prospects for real estate investors and developers, according to the ULI report, but now Austin, Boston, Dallas, Houston, Miami, Orange County, Portland, San Francisco, San Jose and Seattle make that list -- and D.C. actually dropped out.
(3). Real estate recovery still hinges on job growth
The slow pace of job growth as well as income and wage growth is still holding back the real estate recovery and that's not likely to change quickly.
Many cities in the Bay Area and in Texas have seen strong housing recoveries based on the strength of their economy, said Stephen Blank, ULI senior resident fellow for finance, so places with low unemployment can expect better recoveries next year, while places still haunted by economic issues won't.
(4). The "smile investing" philosophy is back
Real estate developers are interested once again in a so-called smile investment philosophy, Warren said. According to the philosophy, developers and investors start looking at cities in the Northeast and moving south to cities along the Sun Belt -- Florida, Texas, Arizona -- and then coming back up to the Northwest -- Northern California, Oregon and Washington state. So expect to see more activity in those areas than in the Midwest.
(5). Multi-family apartment building will wane
With rapidly rising demand for apartments during the recession -- boosted by increased demand from homeowners-turned-renters -- multi-family building surged. But that's likely to quiet down in 2014, as supply and demand have swapped places -- and there may actually have been too much multi-family building in 2013, Blank said.
(6). Condo development is still on the back-burner
The recovery in the condo market hasn't matched that of the single-family market, and developers aren't willing to take the risk on putting up new condo buildings.
Instead, builders and developers are taking a dual-track option: They build a rental apartment building with an eye on switching it to condos in 12 to 16 months, depending on market conditions, Warren said.
High-end apartment buildings are also proving problematic for developers, as the interest from well-heeled potential renters simply hasn't been consistently strong.
(7). Inventory is coming back
The experts at ULI are predicting that 2014 will be the last year that low inventory will aid property prices. Distressed inventory is drying up and sellers are looking at better profits than they have in years.
(8). The buyer's market is long gone
Homes right now are priced to please sellers. "For buyers, they're priced to disappoint," Blank said.
Sellers now know they can squeeze buyers eager to buy before interest rates and home prices shoot up even further.
(9). Shadow banking is emerging
There's optimism among those surveyed by ULI that lending standards will loosen next year, but Blank isn't as sure.
To fill the void, a concept called "shadow banking" has started to emerge and may take on a larger role in the lending market next year. Shadow banking is similar to traditional bank lending, but it's done outside banks and can therefore get around bank regulations.
Borrowers going this route will find a hodge-podge of private funds, wealthy individuals, family offices, and refugees from other lending markets, according to the report.
(10). The suburban is going urban
There's not a lot of interest in developing suburban areas, Warren said. But where there is, it's surrounding more urban-minded projects located in spots where amenities and public transportation are easily accessible.
Posted by Greg Flowers at 12:06 PM
Thursday, November 7, 2013
Tuesday, October 29, 2013
Foreclosures and default notices, which deluged California and the Bay Area just a few years ago, have now slowed to a trickle as the economy and the housing market stabilize.
Rising home prices, increased job creation and government foreclosure-prevention efforts caused mortgage distress to plummet in the Bay Area and California in the third quarter, a real estate service reported Tuesday.
"We are getting close to normal, to the extent we can define normal in a boom-bust state," said Andrew LePage, an analyst with San Diego's DataQuick, which produced the report. "Assuming the economic recovery stays on track, this is the final mop-up stage of the foreclosure mess - with the caveat that there are still thousands of distressed cases in limbo."
In the nine-county Bay Area, a total of 1,035 homes and condos were sold at foreclosure auctions in July, August and September, about a third of the 3,224 foreclosures at the same time last year, according to DataQuick. At the height of the housing crisis, in the second quarter of 2008, the number of Bay Area foreclosures - 12,093 - was more than tenfold higher.
Statewide, the 8,030 foreclosures in the third quarter likewise were about a third of last year's number.
Default notices, the first step in the foreclosure process, also fell dramatically.
In the Bay Area, lenders sent 2,776 notices of default in the third quarter, down 62 percent from the same time last year. Default notices for the region peaked at 19,983 in the second quarter of 2009.
Statewide, the 20,314 default notices were down 59 percent from a year earlier.
Home price surgeWhile a range of factors are wiping out foreclosures, the robust surge in home prices has made the biggest difference this year, LePage said. "Far fewer people are underwater," he said. "That gives them options; they can sell, refinance or get some family help. Their situations don't seem as hopeless." Even people who still owe more than their home is worth aren't as deep in the hole, so it's less likely they will walk away from their homes. "If, a few years back, you were 40 percent underwater and now you're maybe 5 to 10 percent underwater, you are more likely to hang in there, as there's light at the end of the tunnel," LePage said.
There are still lingering concerns. Many distressed homeowners have mortgage modifications, in which lenders reduced their monthly payments. Whether they can meet those obligations, whether lenders will make the changes permanent and whether other struggling homeowners can get their payments reduced, are all factors that remain up in the air.
"We don't know what the outcome will be for those thousands of properties," LePage said. "But the shadow inventory (potential future foreclosures) is nowhere near what it was three or four years ago. Could we see a large wave of foreclosure activity reminiscent of the one we just went though? Even in the worst-case scenario, that does not seem likely."
Counselors' viewsCounselors who help struggling homeowners said the change is palpable.
"We see about half as many" new clients this year compared with last, said Katrina Vizinau, coordinator of the Restoring Ownership Opportunities Together program at the Community Housing Development Corp. of North Richmond, which works in Contra Costa, Alameda and Solano counties.
The most common circumstances are either people who have been rejected by their servicer for a loan modification after several months of applying, or people who have a modification but can no longer afford even the reduced payment, she said.
Earl and Lorna Phillips of San Francisco are among homeowners still struggling to hang on. The couple have an adjustable-rate mortgage on their Richmond District home with escalating payments that they find unaffordable.
After Earl Phillips, a school bus driver, had two bouts of serious illness, they fell behind on the mortgage and property taxes. Separately, their loan servicer misplaced some payments when it merged with their previous bank and charged them late fees and penalties, he said.
While they caught up on payments, their efforts to get a loan modification have been fruitless, Phillips said. But their situation also crystallizes the change in types of distress.
Equity but bad creditTheir home is worth $950,000; they owe $650,000, meaning they have substantial equity. Phillips said they cannot refinance because their credit was so tarnished by the late payments.
"Everyone tells me, because you're not underwater and you have equity, the bank feels you should just sell your house," he said. The couple make ends meet by sharing their house with their son, his wife and three children.
Negative amortizationGale Rosboro of San Francisco also has an adjustable-rate mortgage that allowed her to make minimum payments that didn't cover the interest due and instead increased her principal owed. Such negative amortization loans, which tripped up many homeowners, are no longer offered.
Rosboro said her mortgage debt started at $409,000 seven years ago but because she made the minimum payments, it now has hit $609,000, while her house is worth about $650,000. The monthly amount owed has risen continuously.
"I haven't missed a payment, but I'm always behind," she said. "I haven't sent the September payment yet, for instance, because you have 30 days. "She's been turned down for a loan modification numerous times, despite having stable income from her job teaching literacy and ESL at the San Bruno County Jail. Rosboro said she wants to hang on to the house for the sake of her three daughters. "I hope they won't have to struggle like I did," she said.
Posted by Greg Flowers at 11:54 AM
Friday, October 11, 2013
It's not breaking news that the California housing market is heating up, but now the California Association of Realtors is confirming it on the record, predicting that the trend will continue upward into 2014.
In its latest forecast, CAR predicts primary home buyers will make a comeback after a period of tough competition with investors for what has been a limited supply of homes on the market. "We've come up against an exceptionally low-inventory situation in California for at least the last year and half, and it has started to take a bite out of sales" says Leslie Appleton-Young, the association's chief economist. She says the market is still "robust" but predicts a 2.1 percent drop in the number of homes sold this year over last year due to limited supply.
But two trends are changing that, says Appleton-Young. One is a rapid rise in home values. It's lifting many underwater homeowners — those who owed more in mortgage payments than their homes were worth — providing them with the opportunity to sell. Appleton-Young says that's beginning to boost the number of real estate listings.
The second is a shift in investor behavior. For the past three or four years, investors have bought homes and rented them out. Now, Appleton-Young says they're starting to "flip" the houses — buying, fixing and putting them back on the market — more frequently. The forecast projects home sales to reach 430,300 units in California this year and rise 3.2 percent next year to reach 444,000 units.
The median price of a California home will also increase, according to the forecast: 28 percent this year over last year to $408,600, and then another 6 percent in 2014 to $432,800. So is all of this heated activity sending California into a housing bubble of the kind that preceded the 2008 financial crisis? Appleton-Young's first answer is "never say never," but she believes the dynamics of today's housing market are very different from the bubbly times. For one, it's a lot harder to get a home loan. "The underwriting that goes into loan origination today does not look anything like the underwriting that we had in 2003-6, where you essentially had a pulse and got a loan," Appleton-Young said.
Posted by Greg Flowers at 8:58 AM
Friday, October 4, 2013
Posted by Greg Flowers at 12:14 PM