Thursday, October 30, 2014

Housing’s Zombies Still Lurk, But Bite Lessens


DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 30, 2014
The number of homes in the foreclosure process that are vacant – known as zombie foreclosures – are lessening their trail of destruction on housing markets. Zombie foreclosures made up about 18 percent of all active foreclosures (or 117,298) in the third quarter, down from 23 percent (or 152,033) a year ago, according to RealtyTrac’s Third Quarter 2014 Zombie Foreclosure Report.
The homes are vacated by home owner before the foreclosures are completed.
“The most effective preventative vaccine for the blight caused by vacant, abandoned foreclosures has proven to be a short and efficient foreclosure process,” said Daren Blomquist, vice president at RealtyTrac. “Absent that, the best antidote for a zombie foreclosure infestation is a pro-active land bank program like that in Cleveland and more recently Chicago designed to aggressively take possession of vacant foreclosures and rehab or demolish them.”
The state that saw the largest declines in zombie foreclosures in the third quarter compared to a year ago was Missouri, where such foreclosures have fallen by 73 percent. Zombie foreclosures have also fallen in Virginia, by 59 percent; California (down 56 percent); Massachusetts (down 46 percent); New Hampshire (down 45 percent); and Illinois (down 44 percent).
At a metro-level among cities with populations over 200,000, 138 metros saw declines in zombie foreclosures in the third quarter, led by Portland, Ore. (down 53 percent); Cleveland (down 52 percent); Phoenix (down 52 percent); and Boston (down 52 percent).
But the zombies are still lurking in many housing markets.
“Markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie foreclosure breeding ground,” Blomquist says. "As we see a backlog of delayed distress finally hit the foreclosure pipeline in some of those markets, the problem is coming more to light.”
In the third quarter, 16 states saw increases in owner-vacated foreclosures compared to a year ago, with some housing markets seeing zombies swell by up to 75 percent in the past year. The states that saw the largest increases were New Jersey (up 75 percent); North Carolina (up 65 percent); Oklahoma (up 37 percent); and New York (up 30 percent).
The following are the top 10 markets for zombie foreclosures (including the total owner vacated):
  1. New York-Northern Jersey-Long Island, N.Y.-N.J.-Pa.: 13,366
  2. Miami-Fort Lauderdale-Pompano Beach, Fla.: 9,869
  3. Tampa-St. Petersburg-Clearwater, Fla.: 7,509
  4. Chicago-Naperville-Joliet, Ill.-Ind.-Wis.: 7,326
  5. Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.: 5,405
  6. Orlando-Kissimmee, Fla.: 3,732
  7. Jacksonville, Fla.: 2,462
  8. Las Vegas-Paradise, Nev.: 1,694
  9. Atlatna-Sandy Springs-Marietta, Ga.: 1,684
  10. Palm Bay-Melbourne-Titusville, Fla.: 1,384
Source: RealtyTrac


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Tuesday, October 28, 2014

Pending Home Sales Up, But Credit an Issue

DAILY REAL ESTATE NEWS | TUESDAY, OCTOBER 28, 2014
Pending home sales inched up slightly in September, and for the first time in 11 months, they were above year-ago levels, according to the National Association of REALTORS®' Pending Home Sales Index. However, tight credit conditions continue to be a barrier for many borrowers, NAR notes.
The Pending Home Sales Index rose 0.3 percent in September to 105. That's 1 percent above the September 2013 reading and the second-highest level since that time.
Opening the Credit Box
But sales are being held back because of potential buyers who are still unable to qualify for a mortgage. About 15 percent of REALTORS® in September indicated that the main reason for not closing on a deal was because their clients could not obtain financing.
Lawrence Yun, NAR's chief economist, says the final qualified residential mortgage rule will likely improve access to credit next year.
"The rule provides clarity for lenders and is a win for creditworthy consumers by ensuring they continue to have access to safe and affordable loan products without overly burdensome down payment requirements," Yun says.
Also, low mortgage rates, moderating price growth, and sustained inventory levels should help more buyers enter the market, Yun says.
"Housing supply for existing homes was up in September by 6 percent from a year ago, which is preventing prices from rising at the accelerated clip seen earlier this year," Yun notes.
In September, the Pending Home Sales Index rose in the South and Northeast but decreased in the Midwest and West.
Pending home sales were up by the highest percentage in the South — 1.4 percent month-over-month to a reading of 118.5. That was 1.7 percent above September 2013. Pending home sales also rose in the Northeast by 1.2 percent to 87.5 and are 2.9 percent above year-ago levels.
Meanwhile, pending home sales fell 1.2 percent in the Midwest to 101.2 in September and are now 4 percent below year-over-year levels for that region. Pending sales also fell in the West, dropping 0.8 percent last month to 101.3 but are still 3.6 percent above a year ago.


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New-Home Sales Inch to 6-Year High

DAILY REAL ESTATE NEWS | MONDAY, OCTOBER 27, 2014
For the third consecutive month, sales of newly built single-family homes edged up, “demonstrating steady growth in the housing market,” says Kevin Kelly, chairman of the National Association of Home Builders. However, housing analysts caution that the sector remains fragile.
New-home sales inched up slightly by 0.2 percent in September to a seasonally adjusted annual rate of 467,000 units—the highest level since June 2008, according to new data from the U.S. Department of Housing and Urban Development and U.S. Census Bureau. The median price of new homes in September was $259,000, a 4 percent drop year-over-year.
"We expect the housing market recovery to remain relatively gradual over the coming months," Gennadiy Goldberg, an economist at TD Securities in New York, told Reuters.
In September, the inventory of new homes rose to 207,000—a 5.3-month supply at the current sales pace. Most economists consider 6 months a healthy balance between supply and demand. The slow-growing inventory of new homes points to builders gaining confidence in the market, says NAHB Chief Economist David Crowe.
Regionally, new-home sales rose the most in the Midwest, posting a 12.3 percent gain month-over-month, followed by a 2 percent rise in the South. Sales stayed flat in the Northeast and fell 8.9 percent in the West.
The government revised August’s reported new-home sales figures, reflecting the fact that sales actually posted a sharp decline last month, as opposed to what had been originally reported. August’s sales numbers were revised down to 466,000 units from the originally reported 504,000 units.


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Friday, October 24, 2014

Rates Haven’t Been This Low Since 2013

DAILY REAL ESTATE NEWS | FRIDAY, OCTOBER 24, 2014
The 30-year fixed-rate mortgage took another dip this week, staying below the 4 percent threshold and keeping borrowing costs at the lowest rate in more than a year. It marks the fifth consecutive week that mortgage rates decreased.
Freddie Mac reports the following national averages with mortgage rates for the week ending Oct. 23:
  • 30-year fixed-rate mortgages: averaged 3.92 percent, with an average 0.5 point, reaching a new low for the year and dropping from last week’s 3.97 percent. Last year at this time, 30-year rates averaged 4.13 percent.
  • 15-year fixed-rate mortgages: averaged 3.08 percent, with an average 0.5 point, dropping from last week’s 3.18 percent average. A year ago, 15-year rates averaged 3.24 percent.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.91 percent, with an average 0.5 point, dropping from last week’s 2.92 percent average. Last year at this time, 5-year ARMs averaged 3 percent.
  • 1-year ARMs: averaged 2.41 percent, with an average 0.4 point, rising from last week’s 2.38 percent average. A year ago, 1-year ARMs averaged 2.60 percent.
Source: Freddie Mac


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Thursday, October 23, 2014

Home Equity Rebound Slows its Pace

DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 23, 2014
More home owners are eeking out equity again on their properties, but with slowing home appreciation, millions of home owners may still be at risk of foreclosure.
Equity-rich properties – those with at least 50 percent equity – grew to 10.8 million, or 20 percent of all properties with a mortgage, in the third quarter, according to RealtyTrac’s third quarter U.S. Home Equity & Underwater Report. That percentage is up from 19 percent of properties in the second quarter of 2014.
Another 8.5 million properties – or 16 percent of all homes with a mortgage -- are teetering on the edge of equity, with between 10 percent of negative equity and 10 percent of positive equity.
But many home owners have yet to regain equity. There are 8.1 million U.S. residential properties seriously underwater – in which the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market vale, according to RealtyTrac. The number of properties with negative equity has fallen to the lowest level since RealtyTrac began tracking such data in 2012. The peak was in the second quarter of 2012 when 12.8 million properties – or 29 percent of all properties with a mortgage – were seriously underwater.
“The decrease in underwater properties is promising but the estimated $1.4 trillion in negative equity means that the flood waters are not receding as quickly as they were before, corresponding to slowing home appreciation,” says Daren Blomquist, vice president at RealtyTrac. “Slower price appreciation means 8 million home owners seriously underwater could still have a long road back to positive equity.”
To paint a picture of the typical underwater home owner, RealtyTrac found it’s often a home owner who bought or refinanced during the housing bubble years (from 2004 to 2008), owns a home worth less than $200,000, and who lives in the Sun Belt or Rust Belt.
On the other hand, the highest percentage of equity rich home owners were those who bought or refinanced between 1994 and 1998; have properties valued at $500,000 or more; and tend to live in New York, California, and Washington, D.C.
The States With the Highest Levels of Negative Equity
The following states had the highest percentage of residential properties seriously underwater in the third quarter, according to RealtyTrac:
  • Nevada: 31%
  • Florida: 28%
  • Illinois: 26%
  • Michigan: 25%
  • Rhode Island: 22%
The metro area (with population of 500,000 or more) with the highest percentage of properties seriously underwater was Las Vegas at 34 percent.
The Equity-Rich Markets
The following metros had the highest percentage of equity-rich properties – those with at least 50 percent equity or more – during the third quarter:
  • San Jose, Calif.: 45%
  • San Francisco: 41%
  • Honolulu: 36%
  • Los Angeles: 32%
  • New York, N.Y.: 31%
Source: RealtyTrac


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5 Markets to Watch for Investors in 2015

DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 23, 2014
Typical investor magnets like San Francisco, New York City, Boston, and Seattle are getting new competition from some rapidly growing markets. The coastal cities are no longer the top choices for investors: Other markets are stepping in as the ones to watch for 2015, according to Emerging Trends in Real Estate 2015, a report co-published by PwC US and the Urban Land Institute. The report is based on a survey of more than 1,000 leading real estate experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers, and consultants.
Houston and Austin edged out San Francisco for the top spots this year, proving to be the top picks for real estate prospects in 2015. Charlotte, N.C., nabbed a seventh place spot on the ranking list, edging out Seattle and Boston; while Nashville, ranked No. 14, topped Manhattan.
“Investors are looking closely at opportunities beyond the core markets,” says ULI Global Chief Executive Officer Patrick L. Phillips. “These cities are positioning themselves as highly competitive, in terms of livability, employment offerings, and recreational and cultural amenities,”
The report ranked the following five markets as the ones “to watch in 2015”, based on survey respondents and their outlook on each market:
  1. Houston: “Investors believe that the energy industry will continue to drive market growth and that will support real estate activity in 2015,” the report notes. “Houston was ranked number one in both investment and development expectations for next year; housing market expectations are ranked number two.”
  2. Austin: “Interviewees like the industrial base, the appeal to the millennial generation, and the lower cost of doing business in Austin,” the report notes. “The market was a top choice for both the office sector and the single-family housing sector and the number two ranked market for retail.”
  3. San Francisco: Falling from its No. 1 spot last year, survey participants note the city is still poised for growth but other cities are catching up. “The strong local economy and improved domestic and international travel have made San Francisco the number one choice for hotel investment in 2015,” the report notes. “Respondents ranked the office market number three and the retail market number four.”
  4. Denver: Proving to be one of the most popular markets with the millennial generation, “Denver’s industry exposure to the technology and energy industries has also attracted investor interest,” according to the report. “The results of the survey put Denver retail at number five and office at number six.”
  5. Dallas/Fort Worth: “The market continues to be attractive to real estate investors because of its strong job growth, which benefits from the low cost of living and doing business,” according to the report. “Single-family housing in the market is the highest ranked property sector – and it also has the highest ranked industrial sector (number four) among the top five markets from this year’s survey.”



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Wednesday, October 22, 2014

More Owners Delay Remodeling Projects, Again

DAILY REAL ESTATE NEWS | WEDNESDAY, OCTOBER 22, 2014
Remodeling and home improvement spending posted a strong rebound last year, but the rebound was short-lived, a new report says. Remodeling projects and expenditures are back on the decline this year as housing market conditions and fading tax incentives cause more home owners to delay projects once again. 
Getting Back Remodeling Bucks
The primary driver of home remodeling expenditures is the pace of single-family existing home sales, writes Robert Dietz, an economist with the National Association of Home Builders, in an article at U.S. News & World Report. Between the summer of 2013 and March of this year, existing-home sales fell, Dietz says, despite a recent rebound. As such, Dietz says the remodeling market has seen declines in the annual pace of improvement spending since December 2013. 
“Existing home owners are most likely to improve a home prior to placing the home on the market, and new home owners find the best time to make substantial changes to a home is immediately after purchase,” Dietz notes. 
The pace of remodeling in August was down more than 10 percent year-over-year, according to U.S. Census Bureau data. 
Dietz points not only to the stall in home sales but also to the expiration at the end of 2013 of a set of federal energy-efficiency tax credits for the slowdown in remodeling expenditures. The tax credits helped home owners to offset the cost of replacing older windows, hot water tanks, and appliances with new energy-efficient models. 
“Despite these economic and policy headwinds, the prospects for the remodeling sector appear more positive for 2015,” Dietz notes. An index of professional remodeler sentiment shows a gain in confidence, particularly as the existing single-family sales market improves. The National Association of REALTORS® is forecasting a 7.7 percent growth in existing sales in 2015.
“Underlying these market improvements is the fact that our nation’s housing stock continues to age, and aging homes require upgrading and modification,” Dietz notes. The median age of owner-occupied homes was 35 years old, according to the 2011 American Housing Survey (in the 1985 AHS survey, the median age was 23). 
Source: “In Need of Housing Improvement,” U.S. News & World Report (Oct. 20, 2014)


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