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Phoenix leads the Way!

Stuart Lewis — Thu, 03 May 2012 20:08:00 GMT

Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

05/02/2012 By: Carrie Bay

The Arizona capital of Phoenix was one of the hardest hit markets by the housing crisis, with home values plunging nearly 60 percent from 2006 through mid-2011 and foreclosure filings soaring.

As recently as June 2011 Phoenix held the second highest metro foreclosure rate in the country, behind only Las Vegas, according to RealtyTrac. By the end of 2011, it had dropped to No. 6, and by March 2012, slipped to No. 9.

Adam Artunian, senior research analyst with John Burns Real Estate Consulting (JBREC), says it wasn’t too long ago that Phoenix was considered ground zero of the housing market’s collapse. “Phoenix has orchestrated a dramatic turnaround in recent months and has considerably outpaced other distressed markets such as Las Vegas, Riverside-San Bernardino, and Sacramento,” according to Artunian.

So what’s going on in the Valley of the Sun that’s so different from the rest of the country? What market forces are strong enough to lift the nation’s sixth most populous city from the depths of the downturn?

Analysts and local real estate professionals alike attribute the market’s turnaround to investors who are snapping up properties to fix and flip or fix and rent.

While Phoenix has always been an attractive investment market, Artunian says investors have literally flooded the area since the downturn and now make up close to 45 percent of all buyers.

Investor demand is so strong in fact that Artunian says first-time buyers are having difficulty competing with investors who are paying with all cash. Local agents are reporting bidding wars among prospective buyers, with homes going for more than the asking prices.

Artunian notes that single-family rental rates are now averaging $12,500 a year. With the selling price of a distressed home usually well below the median home price of $127,000, he says investors can expect to achieve between a 5 percent and 10 percent annual return, after operating expenses and before any home price or rental appreciation.

Investor demand has served to drive up home prices in the area. According to Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, the median price of single-family homes in the Phoenix area rose to $134,900 in March of this year, up more than 20 percent from a year earlier.

He says the increase signals a shift in the mix of properties being sold, with fewer low-price foreclosures moving through the market. Median and per square foot pricing is moving up as traditional sales account for a greater percentage of activity, Orr explained.

The average price per square foot for homes in Phoenix during the first quarter of this year was $956, according to the online real estate marketplace Trulia. That’s an increase of 999.9 percent compared to the same period last year.

Local investors say homes priced at the lower end of the market – under $100,000 – are becoming increasingly harder to find, and once you do find a bargain-priced gem, it’s snapped up and off the market before you know it.

Artur Ciesielski, a Realtor and partner with inPhoenix Realty Group, noted in a recent blog post that the nose-dive in Phoenix home prices since the bubble burst is now fueling investor appetite, especially in a market with such high rental demand.

“Expect investor demand to continue and to be part of the demand that is driving prices up,” Ciesielski writes, “and forget about shadow inventory, it’s not coming.”

The housing inventory in Phoenix has fallen to a mere 2.4 months, down from nearly 5 months just one year ago and over 12 months in early 2008. According to JBREC, months-of-supply has not been this low in Phoenix since late 2005 when sales activity was at feverish levels.

Listings of existing homes for sale have fallen 43 percent since March 2011, and local practitioners are now calling “shadow inventory” nothing more than a myth. They say if banks were holding properties off the Phoenix market, now would be the time to release them and it’s just not happening.

Where are all the real estate investors descending from? Artunian points to Canada. While there are a growing number of local investors taking advantage of current conditions, he says Canadians are increasingly flush with cash, many because of their own real estate boom in recent years.

That combined with a favorable currency exchange rate has given them “unusual buying power,” according to Artunian. He cites data from the Cromford Report, a local real-estate publication, which shows one in every 25 sales registered in February went to a buyer that listed a Canadian address.

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Pending Home Sales increase for March

Stuart Lewis — Thu, 26 Apr 2012 16:26:00 GMT

Pending Sales of U.S. Existing Homes Increased 4.1% in March

By Lorraine Woellert - Apr 26, 2012 11:34 AM ET

Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market.

The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.

Play Video

April 26 (Bloomberg) -- Mort Zuckerman, chairman and chief executive officer of Boston Properties Inc., talks about the U.S. labor market and the outlook for real estate. Zuckerman, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses News Corp. Chairman Rupert Murdoch’s testimony at a U.K. media-ethics inquiry.

April 26 (Bloomberg) -- Bloomberg's Margaret Brennan reports that signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market. She speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

An improved labor market and mortgage rates near historic lows are helping to stabilize housing. At the same time, the industry remains the economy’s weakest link, depressed by the threat of more foreclosures, stricter lending standards, and lower property values.

“It’s good news,” said Sean Incremona, senior economist at 4Cast Inc. in New York. “It does suggest that improvement in the housing market is continuing.”

Estimates for March pending sales ranged from a drop of 3.7 percent to an increase of 4 percent in the Bloomberg survey.

Stocks climbed after the figure, with the Standard & Poor’s 500 Index rising 0.1 percent to 1,392.57 at 11:33 a.m. in New York. The S&P Supercomposite Homebuilders (S15HOME) Index increased 2.1 percent. PulteGroup Inc. rallied 5.1 percent after the homebuilder’s loss was less than forecast.

Leading Indicator

Pending home sales are considered a leading indicator of progress in real estate because they track contract signings. Purchases of existing homes are tabulated when a contract closes, typically a month or two later, and made up about 93 percent of the housing market last year.

Compared with a year earlier, March pending home sales climbed 10.8 percent after a 14.9 percent surge in February.

Two of four regions saw an increase in pending home sales from the prior month, led by an 8.7 percent jump in the West, today’s report showed, while the South posted a 5.9 percent gain.

Housing is showing uneven signs of progress. This week, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, reported a February increase in home prices, up 0.4 percent from a year earlier, the first annual gain since July 2007.

Home Prices

The S&P/Case-Shiller index of property values fell 3.5 percent for the year ended in February.

Sales of previously owned houses in March fell for the third time in four months, from a 4.6 million annual rate to 4.48 million, the National Association of Realtors reported earlier this month.

Demand for new homes also dipped in March. Homes sold at a 328,000 annual rate, down from an upwardly revised 353,000 in February, which was the highest in almost two years, the Commerce Department reported.

To hold down borrowing costs, Federal Reserve policy makers say they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist.

‘Depressed’

“Despite some signs of improvement, the housing sector remains depressed,” Federal Reserve officials said in a policy statement yesterday.

Underlying the uneven housing numbers is an overall improvement in consumer confidence, said Farooq Kathwari, chief executive officer of Ethan Allen Interiors Inc. (ETH)

“I would go mad, crazy,” looking at housing data every day, Kathwari said in an April 24 earnings call. “So I don’t look at them every day because I’ve got to plan three, six months, a year from now,”

The home furnishings company, based in Danbury, Connecticut, reported an 8 percent year-over-year increase in net sales for the quarter ended March 31, to $175.9 million. “Three, four years back we decided to build a 240,000 square foot plant in Mexico. If we had not done it, we would not be able to deliver the products we have,” Kathwari said.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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National Association of Realtors offers opinion of home sales slowdown

Stuart Lewis — Fri, 20 Apr 2012 19:08:00 GMT

Economists Respond to March's Fall in Existing Home Sales

04/19/2012 By: Esther Cho

The National Association of Realtors (NAR) reported Thursday that existing home sales decreased 2.6 percent, in March, to a seasonally adjusted annual rate of 4.48 million units, falling short of the 4.62 million economists had forecast. In response to this data, economists representing different institutions provided their insight to explain what the recent numbers might indicate.

Patrick Newport, U.S. economist, IHS Global Insight

“Existing home sales declined in March mainly because fewer investors bought homes. Sales to those looking for a home to live in have been flat (and weak) for the past six months, despite low borrowing rates, low home prices and rising rents. A critical

question is whether sales are set to take off soon, given the improving economy. Our view is that sales will improve during the course of this year, but unless credit conditions loosen significantly, a takeoff will not take place.”

NAR reported investors bought 21 percent of the homes sold in March, down from 23 percent in February.

Paul Diggle, property economist, Capital Economics

“March’s decline in existing home sales probably reflects the normal month by month volatility rather than renewed underlying weakness. The increase in households’ confidence in the outlook for the housing market, coupled with a gradual improvement in the pace of the economic recovery, should drive a rise in home sales later this year….It is possible that the pattern within the quarter has been driven by the weather, with falls in the most recent two months reflecting a degree of payback after January’s gain.”

Mark Vitner, senior economist and Anika R. Khan, economist, Wells Fargo

“Existing home sales dropped 2.6 percent, but are up 5.2 percent from a year ago. While existing sales are down for the second consecutive month, we are likely continuing to see payback from increases earlier this year. That said, we could see one more month of disappointing data, but we still contend the recent declines are not indicative of the trend. Stabilization will become more apparent once we return to normal weather.”

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Short Sale Speedup

Stuart Lewis — Tue, 10 Apr 2012 17:07:00 GMT

BofA Makes Changes to Trim Short Sale Timeline

04/09/2012 By: Carrie Bay

Bank of America is making changes to its short sale procedures and introducing an improved task flow within the short sale technology module from Equator, BofA’s short sale management platform of choice. The goal: to reduce the timeframe for a short sale decision to less than three weeks.

Starting Saturday, April 14, real estate professionals working with BofA will be required to submit five documents for short sales initiated with an offer:

Purchase Contract including Buyer’s Acknowledgment and Disclosure
HUD-1
IRS Form 4506-T
Bank of America Short Sale Addendum, which includes the Agent Certification form
Bank of America Third-Party Authorization Form

The acknowledgement and disclosure form, short sale addendum, and the form for third-party authorization are available through the company’s online Agent Resource Center.

The third-party authorization form is a new standardized document developed specifically for BofA. Previously, the lender accepted third-party authorization forms in differing formats and from a variety of sources when transacting a short sale.

Bank of America says it recognized a need for greater compliance and consistency with this important document and has now created its own form to standardize the third-party authorization process. The two-page document

requires signed acknowledgments from all borrowers and designated representatives in a short sale. Beginning April 14, BofA will accept only the official Bank of America Third-Party Authorization Form for short sales.

The bank’s new short sale process will enable real estate agents, brokers, attorneys, and other short sale specialists involved in pre-foreclosure transactions to complete tasks such as document collection, valuations, and underwriting simultaneously.

With these steps running concurrently, the timeline from initiation to closing is reduced. In fact, Bank of America says it will now be able to provide a decision on a short sale offer in 20 days. Typically, BofA’s short sale process has taken anywhere from 45 days upwards.

In continuing to streamline the decision process, should the buyer walk away from the sale, Bank of America is giving agents five days to submit a backup offer. Previously, the backup offer window was 14 days. Interested buyers are limited to two counteroffers and will receive a response from the lender within three days.

BofA notes that all email messaging between designated selling agents and their Bank of America short sale specialist will continue to occur within the Equator system. Agents will receive a standard notice via email to log into the system and retrieve their messages.

In order to implement the myriad of changes, BofA’s Equator platform will be down for 10-12 hours the night of Friday, April 13 into the early morning of Saturday, April 14.

Real estate agents and other short sale professionals are invited to review a Bank of America webinar outlining the coming changes. BofA is also offering task-by-task training on the new Equator process via a webinar to be aired on Thursday, April 19 from 4-5 p.m. (EST). Additional information can be found through the company’s online Agent Resource Center.

Bank of America’s short sale and REO executive Bob Hora says the company expects short sales to continue to increase and is taking steps to ensure it is providing decisions quickly and real estate agents are alerted of status as soon as possible

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Mortgage Loans Increase as Credit Scores Rise

Stuart Lewis — Mon, 09 Apr 2012 20:03:00 GMT

Credit Scores Rising, LTVs Dropping on New Mortgages: Report

04/06/2012 By: Carrie Bay

Mortgage lenders remain cautious in terms of credit quality, down payments, and valuations, as evidenced by the findings outlined in the new Origination Insight Report generated by Ellie Mae.

The company found that the average credit score for loans approved by lenders and closed is steadily rising, while acceptable loan-to-value (LTV) ratios are declining.

Ellie Mae’s report series tracks the current lending environment for refinance and purchase mortgages and provides metrics on the kinds of loans getting done and on the challenges consumers and lenders are facing. The company intends to issue the report monthly.

Ellie Mae’s inaugural Origination Insight Report discusses changes in mortgage lending activity over the month of February 2012, as compared to the company’s historical data from the prior six months.

The average credit score on loans that closed was 750 in February, up from 740 six months before. Meanwhile, the average loan-to-value (LTV) ratio was 76 percent, a decrease of 3 percent from August 2011.

The average FICO score for borrowers who were denied a loan in February was 699, according to Ellie Mae’s analysis. The average LTV of denials was 83 percent.

“If you look at the full report on our website, you’ll see the impact of the higher underwriting requirements for refinance that were in place in February,” said Jonathan Corr, COO for Ellie Mae.

“Last month, if your FICO score was below 720 or you had a down payment or equity of less than 25 percent, there

was a good chance that your refinance application for a conventional loan was denied or you were offered a significantly less attractive interest rate, Corr explained.

He also noted that borrowers denied a mortgage refinancing during the month had a front-end debt-to-income (DTI) ratio – which is calculated as total housing payment divided by total gross income – of 27 percent and a back-end DTI – measured as all monthly debt, including the mortgage, divided by gross income – of 43 percent.

Those borrowers that were approved for a loan and closed in February demonstrated a front-end/back-end DTI of 23/34.

Ellie Mae also offered up a snapshot of the types of mortgage loans closed in February. Sixty-seven percent were refinances and 33 percent were for the purchase of a home.

The Federal Housing Administration (FHA) garnered 25 percent of the new market share in February, while conventional loans made up 67 percent of the month’s closings.

The timeline from application to closing for the average loan was 44 days in February and 43 for a refinance, up 10 percent and 16 percent, respectively, over where the industry was six months ago. Corr says these timeframes track with the increases in demand seen at the end of 2011.

To get a meaningful view of lender “pull-through,” Ellie Mae reviewed loan applications initiated within the previous 90 days to calculate a closing rate and found that nearly 48 percent of all applications closed. There was a higher percentage of purchase mortgages closing (60%) than refinances (42%).

In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20 percent of all U.S. mortgage originations. The company’s Origination Insight Report mines its data from a sampling of approximately 33 percent of all applications initiated on the Encompass origination platform.

Given the size of this sample and Ellie Mae’s market share, the company believes the Origination Insight Report is “a strong proxy of the underwriting standards that are being employed by lenders across the country.”

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Were Springing Forward in Outlook

Stuart Lewis — Tue, 03 Apr 2012 16:06:00 GMT

Spring Outlook: Reports From the Field Suggest Better Days Ahead

04/02/2012 By: Carrie Bay

Despite the fact that key market indicators released in recent weeks have shown declines in home sales, anecdotal reports from real estate agents in the field suggest “better days are ahead for the industry,” according to commentary released Monday by the economic team at Wells Fargo Securities, LLC.

Even builders – who’ve endured possibly the steepest drop-off in business over this downturn – are optimistic heading into the spring, the economists note.

As a result, Wells’ economic team has nudged its forecast for home sales slightly higher, as the spring selling season appears to have gotten off to a strong start. They are now expecting sales of existing homes to top out at 4.50 million in 2012 and rise to 4.65 million in 2013. These annual projections compare to 4.26 million existing homes sold in 2011.

“While employment conditions have clearly improved and consumer confidence and spending have risen, we remain concerned about the lack of real after-tax income growth.

That said, the anecdotal evidence is hard to dismiss,” the economists write.

Most real estate agents are reporting “significant gains in buyer interest and sales,” and these gains are organic rather than incentive induced, according to the Wells Fargo economic team.

Unfortunately, they note that conservative appraisals and tight mortgage underwriting continue to undermine a large number of deals, however, they “suspect that the undertow from these two hindrances will subside over the course of this year, as the fog surrounding shadow inventories lightens up a bit and more lenders come back to the market.”

Unseasonably warm weather led to upticks in existing-home sales in December and January. Those gains were paid back with a 0.9 percent decline in February, but the economic group at Wells says the underlying trend remains positive and they expect to see further improvements as the spring homebuying season kicks off.

Distressed transactions still make up a considerable portion of overall sales activity and will continue to pressure prices through at least the first half of 2012, they note in the report. Real home prices are now back down to 1999 levels, as are price-to-rent ratios, according to the economists.

“We expect home prices to definitively bottom by the middle of this year, as the backlog of foreclosures finally begins [to] clear,” writes Wells Fargo’s economic team. “For properties not in foreclosure, prices have probably already bottomed, but should remain relatively low” given the competition from foreclosures.

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Consumer Spending on the Rise

Stuart Lewis — Mon, 02 Apr 2012 14:21:00 GMT

Spending Growth Outpaces Income in February, Savings Rate Declines

03/30/2012 By: Mark Lieberman, Five Star Institute Economist

Consumer spending grew 0.8 percent in February, the Bureau of Economic Analysis (BEA) reported Friday, fueling expectations for a stronger first-quarter economic surge than economists had forecast. Personal spending grew faster than the 0.6 percent market consensus.

Personal income, BEA reported, grew just 0.2 percent in February, half the rate of growth expected by economists. In dollars, spending increased $86 billion in February while income – from all sources – grew $28.2 billion.

Spending for the first two months of the quarter averaged $10.9 billion, a new 15 percent increase over consumer spending in the first quarter. Consumer spending represents about 70.6 percent of the nation’s gross domestic product.

Personal savings as a percentage of disposable (after tax) income fell to 3.7 in February from 4.3 percent in January.

Despite continuing low interest rates, personal interest payments increased 2 percent in February to $161.1 billion, topping $160 billion for the first time since last September.

Per capita disposable income, which had fallen slightly in January, increased in February to an annualized rate of $37,606.

Wages and salaries rose 0.3 percent in February, BEA said, after increasing 0.4 percent in January. Manufacturing wages and salaries slowed in February while salaries in the service sector picked up. The increase in wage and salary income is inconsistent with the pick-up in jobs reported by the Bureau of Labor Statistics for February.

Wage and salary growth accounted for 71 percent of the growth income while “transfer payments” – various government programs including Social Security, Medicare, Medicaid and unemployment insurance – represented just under 11 percent of the total increase. Unemployment insurance payments dropped for the second straight month.

The increase in spending was evenly divided between goods and on services, but most of the increase in spending on goods came in the “non-durable” category, hinting at a lingering unwillingness by consumers to make purchase which require borrowing.

The Personal Consumption Expenditure (PCE) Price Index – often considered the Federal Reserve’s favored measure of inflation – increased 0.3 percent and is now 2.3 percent above its year ago level. Meanwhile, The Core PCE Index rose 0.1 percent and is up 1.9 percent in the last year. Core consumer inflation has been rising for the past 12 months

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2013 Home Prices to Increase

Stuart Lewis — Thu, 29 Mar 2012 19:02:00 GMT

Experts Expect to See Broad Improvements, Home Prices to Rise in 2013

03/28/2012 By: Esther Cho

The Urban Land Institute released its Real Estate Consensus Forecast Wednesday morning, and overall, the 38 real estate economists and analysts surveyed projected broad improvements for the economy.

With signs of improvement in the housing sector already emerging, participants expect to see housing starts nearly double by 2014 and project home prices will begin to rise in 2013.

The average home price, which has declined somewhere between 1.8 percent and 4.1 percent over each of the past three years, according to FHFA data, is expected to stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.

Single-family housing starts are expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014.

The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014.

GDP is expected to grow by 2.5 percent in 2012 and grow to 3.2 percent in 2014.

But, with the improving economy is inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates for institutional-quality investments (NCREIF cap rates), which are expected to remain steady at 6 percent in 2012 and 2013 and then rise slightly to 6.2 percent in 2014.

By property type, National Council of Real Estate Investment Fiduciaries (NCREIF) total returns in 2012 are expected to be strongest for apartments (12.1 percent), followed by industrial (11.5 percent), office (10.8 percent), and retail (10 percent).

By 2014, returns are expected to be strongest for office (10 percent) and industrial (10 percent), followed by apartments (8.8 percent) and retail (8.5 percent).

ULI CEO Patrick L. Phillips advised that while the ULI Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad.

“While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years.,” said Phillips.

Non-housing sector growth, according to the ULI Forecast, which was conducted from February 23 to March 12, 2012

-For the apartment sector, year-end vacancy rates are expected to decline further in 2012 to 5 percent, and then rise slightly to 5.1 percent in 2013 and to 5.3 percent in 2014.

-Apartments are expected to show strong rental rate growth, rising 5 percent in 2012, then slowing down to 4 percent in 2013, and 3.8 percent in 2014.

-Issuance of commercial mortgage-backed securities (CMBS) is expected to increase from $33 billion in 2011 to $40 billion in 2012, $58 billion in 2013, and $75 billion in 2014.

-Ten-year treasury rates are projected to rise to 2.4 percent by the end of 2012, 3.1 percent for 2013, and 3.8 percent for 2014.

-Future equity REIT returns are expected to rise to 10 percent in 2012, then drop to 9 percent in 2013, and 8 percent in 2014.

-Returns for institutional-quality direct real estate investments are expected to trend lower, with returns of 11 percent in 2012, 9.5 percent in 2013, and 8.5 percent in 2014.

-Hotel occupancy rates are projected to increase to 57 percent by 2012, 58.2 percent by 2013, and 59.2 percent by 2014.

-For the industrial/warehouse sector, vacancy rates are expected to decline steadily over the next three years to 12.8 percent by the end of 2012, 12.1 percent in 2013, and 11.5 percent by the end of 2014

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Sales in California on the Rise

Stuart Lewis — Mon, 19 Mar 2012 15:48:00 GMT

Sales in California Up in February, Median Prices Down

03/16/2012 By: Esther Cho

Home sales in California showed signs of improvement for February compared to the previous month of January and year before in February 2011, according to data from the California Association Of Realtors (C.A.R.).

For February, sales were up 2.1 percent from January’s revised 517,120 and up 5.5 percent from the revised 500,480 sales pace recorded a year ago. The statewide sales figure represents the total number of homes sold during 2012 if sales maintained the February pace throughout the year, with adjustments for seasonal factors.

While the state followed the national trend of declining home prices, C.A.R. reported other signs are pointing towards stabilization.

“While the median home price dipped in February, the year-over-year decline was the smallest recorded since December 2010,” said C.A.R. President LeFrancis Arnold. “This

may be a signal of a possible stabilization in home prices, which should bode well for prospective buyers who have been on the sidelines waiting for prices to level out and may entice them to jump into the market.”

The statewide median price of an existing, single-family home dropped 0.6 percent to $266,660 in February compared to January’s $268,280 median price. The median price was down 1.7 percent a year ago, with a revised $271,370 median price recorded in February 2011.

The number of single-family detached homes that closed in California totaled 528,010 in February, according to information collected by C.A.R. from more than 90 local realtor associations and MLSs statewide.

“February sales posted a stronger than usual performance with sales in major metropolitan areas such as Los Angeles, Orange County, San Diego, and San Francisco all logging double-digit gains from the previous year,” said C.A.R. VP and chief economist Leslie Appleton-Young.

California’s housing inventory also declined in February, with the Unsold Inventory Index for single-homes down to 5.3 months in February, compared to a revised 5.7 months in January and down from the 7.5-month supply in February 2011. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

The median number of days it took to sell a single-family home fell to 58.9 days in February 2012, down from a revised 64.7 days for the same period a year ago.

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Confidence Rises in Market

Stuart Lewis — Fri, 16 Mar 2012 20:18:00 GMT

Mortgage Rates Head Higher on Positive Economic Data

03/15/2012 By: Carrie Bay

Rates for all mortgage loan products headed higher this week as positive employment indicators rolled in, with job growth over the last six months the strongest it’s been since 2006. That, coupled with the Greek debt restructuring on the international front and the results of the Federal Reserve’s stress tests pointing to a stronger financial banking system, boosted investor confidence and drove bond yields higher.

“An upbeat employment report for February caused U.S. Treasury bond yields to increase over the week and mortgage rates followed,” according to Frank Nothaft, Freddie Mac’s chief economist.

Studies from both Freddie Mac and Bankrate showed the same measurable increases across-the-board.

The GSE reports the average rate for a 30-year conforming mortgage at 3.92 percent (0.8 point) for the week ending March 15, up from 3.88 percent last week. Despite the increase, the average 30-year fixed rate mortgage has been below 4.00 percent for 15 consecutive

weeks in Freddie Mac’s study, helping to keep homebuyer affordability high. The GSE averages rate data from 125 lenders across the country.

Bankrate’s study zeros in on rate quotes from the 10 largest lenders in the 10 largest markets. That analysis put the 30-year rate at an average of 4.15 percent (0.40 point) this week, up from 4.11 percent last week.

The average 15-year fixed mortgage stepped up from 3.34 percent last week to 3.38 percent (0.33 point), according to Bankrate, while the jumbo 30-year fixed mortgage jumped to a three-month high of 4.73 percent, soaring 10 basis points from 4.63 percent last week.

Adjustable-rate mortgages (ARMs) were mostly higher as well in Bankrate’s study, with the average 5-year ARM rising to 3.14 percent (0.33 point) and the 7-year ARM climbing to 3.33 percent.

Freddie Mac’s study found the 15-year fixed mortgage averaging 3.16 percent (0.8 point) this week, up from 3.13 percent last week.

The GSE reports the average rate for a 5-year ARM to have ascended 2 basis points to 2.83 percent (0.8 point) this week, and the 1-year ARM posting a 6 basis point increase to 2.79 percent (0.6 point).

Dan Green is a loan officer with Waterstone Mortgage in Cincinnati and a regular blogger on issues affecting the housing market, and mortgage rates in particular. He says rates have been low because of the weak U.S. economy and with the economy now showing signs of strengthening, we should expect mortgage rates to continue to rise.

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BanK Of America Offers $100,000 Principal Reductions in Settlement

Stuart Lewis — Wed, 14 Mar 2012 13:47:00 GMT

BofA to Offer Principal Reductions of More than $100K 03/12/2012 By: Krista Franks Brock

Some Bank of America borrowers may be in for principal reductions in amounts exceeding $100,000, according to the latest developments in the settlement the bank and four other large servicers made with state and federal regulators. Of the five servicers participating in the settlement, BofA is set to pay the largest portion of the total $25 billion settlement. The bank will pay $3.24 billion to the government and $8.58 billion to borrowers. Of BofA’s total, $1 billion is part of a separate settlement regarding loan origination issues for Countrywide, which BofA acquired in 2008. While the other four servicers in the national settlement are being required to diminish principal so underwater borrowers have loan-to-value ratios of 120 percent or less, BofA will be reducing principal for about 200,000 homeowners to fall in line with current market values. For some deeply underwater borrowers, this may result in reductions of more than $100,000. The expanded principal reductions may prevent BofA from paying $850 million in penalties, according to the Wall Street Journal. Fitch Ratings responded to the news stating that the 200,000 principal reductions will be “neutral to negative for some RMBS bondholders and potentially beneficial for the bank.” Fitch suggests the loans most likely to qualify for the extended principal reductions will be those originated between 2005 and 2007. “Because the bank has already reserved for penalties, any reversals could help BAC’s income going forward,” Fitch stated. “While the agreement will help the bank reduce the amount of penalties it owes over time, the aggregate best case benefit is moderate from a financial perspective.”

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Home Affordability Index Reaches New High!

Stuart Lewis — Thu, 08 Mar 2012 17:02:00 GMT

Home Affordability Index Reaches Record-High Level 03/07/2012 By: Esther Cho

Home affordability has reached the highest peak since 1970, which is when the data was first recorded, according to National Association of Realtor’s (NAR) housing affordability index. The index rose to 206.1 in January, and an index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median- priced single-family home, assuming a 20 percent down payment and 25 percent of gross income for mortgage principal and interest payments. “This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” said Moe Veissi, NAR president. While projections about future mortgage rates and home prices have been mixed, NAR expects little change and anticipates affordability levels will stay high through 2012. “Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country,” Veissi said. “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.” The index is based on the relationship between median home price, median family income, and the average mortgage interest rate.

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Could Foreclosure Backlog be Clearing?

Stuart Lewis — Wed, 07 Mar 2012 15:00:00 GMT

Foreclosures Spike in January: Is the Backlog Clearing? 03/06/2012 By: Carrie Bay Data through the end of January shows significant movement in both foreclosure starts and sales, and it has some market watchers saying the lull in foreclosure activity seen over the past year-and-a-half may very well be coming to an end. Lender Processing Services’ (LPS) latest market report says foreclosure starts jumped 28 percent between December and January, and foreclosure sales soared 29 percent. “While one month of data does not necessarily indicate a trend, this surge could suggest the backlogged foreclosure pipeline is beginning to move,” LPS said in its report. The January data also shows that the percentage of repeat foreclosures hit a new all-time high, with 47 percent of all foreclosure starts during the month involving a mortgage that had been delinquent before, cured, and then fell back into foreclosure again.

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Underwater Mortgages

Stuart Lewis — Fri, 02 Mar 2012 17:36:00 GMT

Report: 22.8 Percent of U.S. Homes Are Underwater

03/01/2012 By: Esther Cho

The number of homes with negative equity, also known as underwater homes, went up for the 2011 fourth quarter to 11.1 million, or 22.8 percent, CoreLogic revealed in a release.

Third quarter numbers showed 10.7 million properties to be in negative equity, or 22.1 percent.

Borrowers with less than 5 percent equity in their homes, also known as near-negative equity, stood at 2.5 million for the fourth quarter. In total, those with negative equity and near-negative equity equaled 27.8 percent of all residential properties.

This figure was also up from the third quarter, when negative and near-negative equity had a combined totaled of 27.1 percent.

Nationally, the total mortgage debt outstanding on underwater properties stood at $2.8 trillion in the fourth quarter, compared to $2.7 trillion in the previous quarter.

“Due to the seasonal declines in home prices and slowing foreclosure pipeline which is depressing home prices, the negative equity share rose in late 2011,” said Mark Fleming,

chief economist with CoreLogic. “The negative equity share is back to the same level as Q3 2009, which is when we began reporting negative equity using this methodology.”

Fleming further explained that the high level of negative equity coupled with the inability to pay is the “double trigger” of default, but with the economic recovery, there should be a reduction in the “inability to pay trigger.”

The states with the highest level of negative equity were Nevada (61 percent), Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent). These five states had a combined average 44.3 percent of the share of negative equity, whereas the remaining states have a combined average negative equity share of 15.3 percent.

Out of the 11.1 million borrowers with underwater mortgages, 6.7 million had first liens with negative equity, and the remaining 4.4 million had first and second liens.

The average mortgage balance for the first lien borrowers was $219,000, with an underwater average of $51,000, and a loan-to-value ratio of 130 percent. Those who were upside down with first and second liens had an average mortgage balance of $306,000, were upside down by about $84,000, and had an LTV of 138 percent.

Nearly 18 million borrowers had an LTV between 80 percent and 125, making them eligible for HARP 1.0. With the implementation of HARP 2.0 in December 2011, the 125 percent cap was removed, widening eligibility for refinancing under the government program to 22 million borrowers based on LTV alone.

CoreLogic included 48 million properties with a mortgage, which accounts for over 85 percent of all mortgages in the U.S., when putting together the report.

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Credit Standards Loosen to Help Market Comeback

Stuart Lewis — Mon, 27 Feb 2012 21:36:00 GMT

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

01/24/2012 By: Krista Franks

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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Builders Confidence Increases in Dec

Stuart Lewis — Tue, 14 Feb 2012 19:48:00 GMT

U.S. Homebuilder Confidence Highest Since 2007

Confidence Among U.S. Homebuilders Climbs to Highest

Emile Wamsteker/Bloomberg

A worker constructs a new home at the Toll Brothers Inc. Morris Chase Estates development in Mount Olive Township, New Jersey, on Nov. 26, 2011.

A worker constructs a new home at the Toll Brothers Inc. Morris Chase Estates development in Mount Olive Township, New Jersey, on Nov. 26, 2011. Photographer: Emile Wamsteker/Bloomberg

Confidence among U.S. homebuilders rose in January to the highest level in more than four years as sales and buyer traffic improved.

The National Association of Home Builders/Wells Fargo sentiment gauge increased to 25 this month, exceeding the median forecast of economists surveyed by Bloomberg News and reaching the highest level since June 2007, the Washington-based group said today. Readings lower than 50 mean more respondents still said conditions were poor.

Record-low borrowing costs, a growing population and reduced prices may drive demand for homes this year even as another round of foreclosures threatens to weigh on the market. The confidence measure, which increased for a fourth straight month, improved in all four regions of the U.S.

This is “yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide,” Bob Nielsen, chairman of the National Association of Home Builders and a builder from Reno, Nevada, said in a statement.

The median forecast of 44 economists surveyed by Bloomberg News projected the index would climb to 22 from December’s reading of 21. Estimates ranged from 20 to 25. The gauge, which was first published in January 1985, averaged 54 in the five years leading to the 18-month recession in December 2007. It reached a record low of 8 in January 2009.

Other reports today showed factory production climbed in December by the most in a year and wholesale prices unexpectedly dropped.

Manufacturing Accelerates

Manufacturing output increased 0.9 percent last month, more than double the 0.4 percent gain in November, figures from the Federal Reserve showed. Assembly lines churned out more business equipment and construction materials, according to the report, showing the improvement in housing is staring to ripple through the world’s largest economy.

The producer price index fell 0.1 percent in December, the second decline in the past three months, according to data from the Labor Department.

The builders group’s index of current single-family home sales increased to 25 this month, also the highest since June 2007, from a reading of 22 in December. The figure shows new construction of single-family houses may rebound after what may be the weakest year since records began in 1959. Starts may have finished 2011 at 423,000 dwellings, according to Bloomberg News calculations. The worst year was 2009, when 445,100 homes were started. The Commerce Department’s construction report is due tomorrow.

Improving Expectations

A measure of sales expectations for the next six months increased to 29 in January, the highest since September 2009, from 26, today’s report showed. The gauge of buyer traffic rose to 21, the highest since June 2007.

Builders in the Northeast led the increase, with that region’s index rising 9 points to 23 this month. In the West, the measure climbed 5 points to 21, while smaller gains were reported for the Midwest and South.

“Builders are seeing greater interest among potential buyers as employment and consumer confidence slowly improve in a growing number of markets,” NAHB Chief Economist David Crowe said in a statement.

Nonetheless, “caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market,” Crowe said.

Survey Breakdown

The confidence survey asks builders to characterize current sales as “good,” “fair” or “poor” and to gauge prospective buyers’ traffic. It also asks participants to gauge the outlook for the next six months.

At Lennar Corp. (LEN), the third-largest U.S. builder by revenue, orders jumped 20 percent in the three months ended Nov. 30. Demand rose to 3,027 homes for the company’s fourth quarter from 2,520 a year earlier, Lennar said Jan. 11

“As I look ahead to 2012, I’m cautiously optimistic that we’re seeing a real bottom form and that we will begin to see signs of recovery,” Stuart Miller, chief executive officer at Miami-based Lennar, said on a Jan. 11 conference call.

To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz

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Renting vs Buying..Take a Second Look

Stuart Lewis — Tue, 24 Jan 2012 19:54:00 GMT

Falling home prices have sent many would-be buyers to the sidelines. If all goes well, record low interest rates and rising rents may soon prompt some of them to take a second look at buying. Unfortunately, that's a big "if," according to Paul Diggle, a housing economist at Capital Economics.

Much of the decision to buy a house still depends on your personal finances and preferences, your career or family life, or level of financial security. But if you’re comparing just the cost of owning and renting, buying a house may soon be the better choice, according to Diggle. Until recently, home ownership was no bargain compared to renting, according to his analysis. A 33 percent drop fall in home prices, a plunge in mortgage rates and 15 percent rise in rents since the housing crash has evened the scales. Today, the median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check. If mortgage rates keep falling and rents keep rising, the equation will tip even further toward o

But that analysis doesn’t include the total cost of owning versus renting. A full accounting includes closing costs, maintenance, insurance and property taxes, tax savings from mortgage deductions, gains or losses from home equity, among other factors. Renters have to think things about broker fees and future rent hikes. You also have to make some assumptions about future trends in housing prices and rents.

When you take those factors into account — which Diggle has done with a homegrown “calculator” — someone who plans on staying put for seven years would come out ahead by about $9,000 if they bought a median-priced home rather than being a tenant in a median-priced rental. Diggle’s calculation assumes that rents keep rising by about 3 percent a year and that house prices stay flat in 2012 and 2013 and then begin rising in 2014 at about 3 percent a year.

If house prices fall further, all bets are off, said Diggle. In that case, the renters come out ahead. “At the moment, (that) downside scenario is more likely to materialize than the upside one,” he said. Even if Diggle's calculator were to signal a “strong buy” for home ownership, he doesn’t expect that would spark a buyers' stampede. Most first-time buyers or households who lost a home to foreclosure don’t have the 20 percent down payment many lenders are insisting on. They may also have trouble getting a mortgage with a credit score of 700 or more — a higher bar than the 650 score that was the norm for the past two decades. “A large share of the population has dropped out of the pool of potential buyers,” he said. “Given that the choice between owning and renting a home is a luxury than many Americans simply do not have, the fact that this does appear to be the time to buy will have only a minimal effect on actual sales. Accordingly, we expect only a modest housing recovery over the next few years.

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Voters Weigh In On Housing

Stuart Lewis — Fri, 20 Jan 2012 17:15:00 GMT

Voters Issue Warnings to Politicians on Housing

Daily Real Estate News | Thursday, January 12, 2012

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A majority of American voters say they value home ownership and oppose any steps by the government that make it more difficult to own a home, according to a nationwide poll of 1,500 likely voters, commissioned by the National Association of Home Builders. In fact, the poll revealed a word of caution to any politicians running for office or re-election that they better not put roadblocks in the way of home owners’ — or those aspiring to be home owner’s — if they want to win votes.

About 96 percent of home owners surveyed say they are happy with their decision to own a home, and even 84 percent of home owners who owe more on their mortgage than their home is currently worth say they are happy with home ownership. However, certain actions or threats by lawmakers lately are putting up roadblocks to home ownership, the voters say.

"The American electorate is sending a clear message that owning a home remains a cornerstone of the American dream and preserving a federal commitment to home ownership is essential to maintain a thriving middle class and get housing and the economy back on track," said Neil Newhouse, a partner of Public Opinion Strategies who conducted the survey.

2 Warnings From Voters

Here are two main messages that voters had for lawmakers, according to the survey:

1. Leave the mortgage interest deduction alone. Seventy-three percent of voters say they oppose eliminating the mortgage interest deduction or reducing it in any way across income levels. In fact, 68 percent of voters say they would be less likely to vote for a congressional candidate who proposed to end the mortgage interest deduction — which held true across party lines.

2. Do more to help home owners and those who want to be. Three out of four voters — including home owners and renters — say it’s “appropriate” and “reasonable” for the federal government to provide tax incentives to promote home ownership. Two-thirds of those surveyed say that the federal government should do more to help qualified home buyers get a long-term or 30-year fixed-rate mortgage.

Also, nearly seven out of 10 voters who are not currently home owners say they want to buy a home one day but too many roadblocks still remain. The biggest obstacles to home ownership reported were job uncertainty and saving for a down payment and closing costs, according to the survey.

"Even in a down housing market, home ownership remains a core American value, with the vast majority of citizens who do not currently own a home saying they want to buy a home," Bob Nielsen, president of the National Association of Home Builders, said in a statement. "Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation's long-term commitment to home ownership."

Source: National Association of Home Builders

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Housing Forecast for 2012

Stuart Lewis — Fri, 20 Jan 2012 16:31:00 GMT

Housing to Give U.S. Economy Modest Push in ’12, Fannie Mae Says

By Prashant Gopal and Jody Shenn - Jan 13, 2012 9:00 A

Housing to Give U.S. Economy Modest Push in ’12

Emile Wamsteker/Bloomberg

A "sold" sign stands in the front yard of a new home under construction at the Toll Brothers Inc.

A "sold" sign stands in the front yard of a new home under construction at the Toll Brothers Inc. Photographer: Emile Wamsteker/Bloomberg

Home sales and construction will improve this year, contributing “modestly” to economic expansion after acting as a drag on growth since 2006, according to a Fannie Mae (FNMA) forecast released today.

Sales of new and existing homes are likely to increase 3.5 percent and housing starts are projected to rise 16 percent, fueled by improvement in apartment development and a rebound in single-family house construction, according to the report by Douglas Duncan, Fannie Mae’s chief economist, and Orawin Velz, a director in its Economics and Mortgage Market Analysis group.

“With an expected improvement in housing activity in 2012, residential investment should start contributing to growth, albeit only modestly initially,” Duncan and Velz wrote.

The housing market has been held back by weak demand as high unemployment and concerns about job security prevent buyers from taking advantage of falling home prices and borrowing costs, Duncan said in an interview yesterday at Bloomberg’s New York offices.

“We see an incremental increase only in the number of residential units that get moved through sale,” Duncan said. “It’s another sort of holding pattern.”

Mortgage rates will continue to provide support for the market, rising only slightly in 2012, according to the report. The average rate for a 30-year fixed loan fell to 3.89 percent in the week ended yesterday, the lowest in records dating to 1971.

Originations to Decline

Mortgage originations in 2012 are expected to decline to $1.01 trillion from an estimated $1.36 trillion last year as refinancing “declines sharply,” according to the report. The refinancing portion is likely to drop to about 53 percent from about 66 percent last year because many homeowners have already taken advantage of lower rates, Duncan said.

The expansion this year of President Barack Obama’s three- year-old Home Affordable Refinance Program for Fannie Mae and Freddie Mac (FMCC) loans with little or no home equity will add about $200 billion to $300 billion to refinancings, Duncan said. This year’s expected decline in mortgage originations would be steeper without the expansion, he said.

To contact the reporters on this story: Prashant Gopal in New York at pgopal2@bloomberg.net; Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

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Home Foreclosures May Be on The Rise

Stuart Lewis — Mon, 16 Jan 2012 16:36:00 GMT

Banks may seize more than 1 million U.S. homes this year after legal scrutiny of their foreclosure practices slowed actions against delinquent property owners in 2011, RealtyTrac Inc. said.

About 1.89 million properties received notices of default, auction or repossession last year, down 34 percent from 2010 and the lowest number since 2007, the Irvine, California-based data seller said today in a statement. One in 69 U.S. households received a filing.

While the seizure process has been “highly dysfunctional,” there were “strong signs in the second half of 2011 that lenders are finally beginning to push through some of the delayed foreclosures in select local markets,” RealtyTrac Chief Executive Officer Brandon Moore said in the statement.

The number of home repossessions is likely to rise about 25 percent from the more than 804,000 properties seized last year as lenders resume foreclosure actions, Daren Blomquist, a spokesman for RealtyTrac, said in a telephone interview. Settlement talks are continuing with state attorneys general over documentation flaws, known as “robo-signing,” that surfaced in October 2010.

About 400,000 additional homes would have been repossessed without the slowdown, Blomquist said. The ramp-up in foreclosure proceedings that began in 2011’s second half is likely to continue this year, Moore said in the statement.

Foreclosure filings totaled almost 2.7 million last year as some properties got multiple notices, RealtyTrac said.

Highest in Nevada

Nevada (STEHNV) had the nation’s highest rate of foreclosure filings per household for the fifth straight year, at one in 16, while total filings were down 31 percent from 2010. A new state law that took effect in October requires lenders to file an additional affidavit before starting the foreclosure process.

Arizona had the second highest foreclosure rate, with one in 24 households receiving a notice, and California ranked third at one in 31. Georgia was fourth, with one in 37, and Utah fifth at one in 43, according to RealtyTrac.

Michigan, Florida, Illinois, Colorado and Idaho also ranked among the states with the 10 highest rates in 2011.

Las Vegas had the highest rate among metropolitan areas with populations over 200,000, at one foreclosure filing per 14 households. Stockton, Modesto, Vallejo-Fairfield and Riverside- San Bernardino, all in California, ranked second through fifth.

Phoenix; Merced, California; Reno, Nevada; Bakersfield, California; and Sacramento, California, rounded out the top 10, said RealtyTrac, which sells default data from more than 2,200 counties representing 90 percent of the U.S. population.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

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What are Buyers and Sellers Telling Us...

Stuart Lewis — Sat, 14 Jan 2012 17:21:00 GMT

Just an observation…

What we are seeing locally is a shift in consumer confidence as it pertains to the Real Estate market on the Cape. In looking back, we have discussed the financial impact on the local market based on the action and fallout from the financial sector. We have weathered storms, adjusted our thinking, and tried to redefine how we deal with all the changes. In moving forward, people have decided to shift the stress of this behind them rather than letting it remain as the main emphasis in our everyday thinking.

What I am hearing from both the selling and buying sides of customers is an increased confidence that the worst is behind us, and it’s time to move on with our lives. So many of my clients have commented to me they have had their lives in a holding pattern, and have decided its time to shed the pressures and stress. This stress has been significant, and people know the toll it has taken both emotionally and physically – it is time for a cleansing process to begin.

Sellers are sharing that they felt frozen in a specific state of mind, and it was blocking their ability to plan on the future. They want to move into the next journey of their life, and get on with changes they have been thinking about for the past few years. There is a realization that enough is enough, and the price reductions they are entertaining or putting into place are coming at the correct time – in 2011 the final sale price was only 10% off of the listing price as opposed to 15% in 2010, but sellers have to have their home at that right price to bring in the offers.

Buyers are now coming forward and acting with confidence… they understand prices have adjusted, especially when dealing with properties on the Outer Cape. Old school buyers who have been sitting with their watch-list properties are seeing other savvy buyers taking them right out from under their nose as they sit on the side lines with ‘analysis paralysis’. My buyers tell me they want to move on with their lives…with historically low interest rates it's not important they wait for something on their watch-list to come down $10,000. They too are tired of the holding pattern – their life balance is more important than sitting on the sidelines watching the game being enjoyed by others.

If you or a friend are ready to take those necessary next steps, I look forward to working with you!

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Who you are in the decision making process...

Stuart Lewis — Sat, 14 Jan 2012 16:37:00 GMT

So…Who are you, and where do you fit in below? As a single or couple looking, its important to know your style in the decision making process..

Achievers 25% Looking for a high end home that reflects their success:

exercise rooms, studies, gourmet kitchens, sumptuous

baths, and au-pair rooms are priority features

Authenticks 20% A home that provides a retreat, where they can unwind,

and pursue personal interests. Open, airy floor plans and

big windows help them feel connected with nature

Heartlanders 20% Traditional American home styles that blend in with the

community such as Cape Cods in New England, or

Colonial homes in the south. They like subdivisions, open

floor plans are ok, but dislike post modern designs

Trenders 20% Hot neighborhoods and convenient urban neighborhoods

often outweigh a homes design. They do appreciate

vintage designs as well as modern ones if the location

and the price is right

Self Sufficients 15% Home design isn’t critical to this group, although

traditional styles are probably favorites. They will con-

sider fixer uppers, and proximity to recreation might

be a big plus to their style

Source. Dennis Cahill, Cleveland State University

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Pre Approval vs Pre Qualification

Stuart Lewis — Sat, 14 Jan 2012 16:27:00 GMT

Pre-Qualified vs. Pre-Approval

With the changes in the fundamentals of the mortgage industry since the Wall Street crisis last fall, the process of buying a home today has changed. Before the modifications in the mortgage industry, due to the changes in the financial market, home buyers bid on a home, and submitted a loan application once an agreed price was accepted between the sellers and buyers. In today’s market, the process has reversed.

In the current market, sellers and real estate agents will request that the buyer has been pre-approved by a local lender for the specific home/condo they are submitting an offer for. This shows the credibility of the buyers that they are prepared and serious, and that the buyer is fully qualified to purchase the home and received a letter from a local lender. The letter is critical showing the buyer has met the lenders basic criteria of satisfactory credit, employment verified, and assets substantiated.

Pre-qualified, on the other hand, leaves doubt in the sellers and agents mind that the buyer has not been properly screened to qualify for the purchase. The bank could be an out of town lender not familiar with the local market and property types and styles, may have not reviewed a credit report, and in most cases may not have the company authority to issue a letter supporting the buyer’s ability to qualify for the mortgage. Sellers are interested in serious, qualified buyers, who have the written confirmation from a lender before they will seriously negotiate an offer.

Do your homework before starting the process. Have a letter or the ability to obtain a letter from your loan representative within a short time period, and make the buying process less stressful. Find out what you’re qualified for before your search rather than learning of the surprises later.

Information gatherer from About.com Home buying and selling

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Incentives for New York City Renters Fade

Stuart Lewis — Thu, 12 Jan 2012 18:13:00 GMT

Manhattan Apartment Rents Jump 9.5% as Buyers Hold Off

By Oshrat Carmiel - Jan 12, 2012 12:01 AM ETEnlarg

Manhattan Apartment Rents Jump 9.5% as Would-Be Buyers Hold

Spencer Platt/Getty Images

Work starts up on a construction site on 57th street in New York City.

Work starts up on a construction site on 57th street in New York City. Photographer: Spencer Platt/Getty Images

Manhattan apartment rents jumped 9.5 percent in the fourth quarter as landlords emboldened by increasing demand cut concessions and pushed price increases in what’s traditionally the slowest leasing season.

The median effective rent, or what tenants pay after landlord-sponsored incentives, rose to $3,121 a month from $2,849 a year earlier, according to a report today by appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The number of new leases increased 10 percent to 7,942 as competition made tenants quicker to sign deals.

Stricter mortgage-lending standards and weak consumer confidence are limiting home purchases and driving demand for rentals, said Jonathan Miller, president of New York-based Miller Samuel. Manhattan apartment sales fell 12 percent in the fourth quarter from a year earlier as Europe’s debt crisis and sluggish U.S. job growth dimmed buyer appetites, Miller Samuel and Prudential said on Jan. 4.

“It’s somewhat unprecedented that you have this robust rental market and yet we still have this economy that is not fully recovered,” Miller said in a telephone interview. “It’s because credit remains very tight.”

Apartments were rented within 37 days on average in the fourth quarter, the second-fastest pace in 17 years of Miller Samuel data. The three months through June was the quickest period, with properties averaging 33 days on the market.

Manhattan leasing tends to slow in the colder months, when corporate hiring winds down and there are fewer new college graduates searching for housing, Miller said. Over the last 20 years, the number of fourth-quarter leases has declined an average of 18 percent from the previous three months, according to Miller. This year, the number of deals signed in the three months through Dec. 31 almost matched the third-quarter total, he said.

Fewer Sweeteners

The surge in demand meant landlords could raise prices while eliminating incentives for would-be tenants, said Gary Malin, president of New York brokerage Citi Habitats, which also released a report on the rental market today. In 2011, 10 percent of deals brokered by Citi Habitats in 2011 included sweeteners such as a month’s free rent, down from 31 percent the year before.

Landlords also could afford to be choosier in accepting tenants, according to Caroline Bass, a broker with Citi Habitats.

“People were being incredibly strict for the winter season,” she said.

Kenneth Stojak, a recent transplant from South Carolina, sought Bass’s help in overcoming two things that made landlords hesitant: he owns a 115-pound dog and he doesn’t have a job.

Dog Surcharge

Stojak, 37, who left his post as chief financial officer of the Salty Dog Cafe on Hilton Head Island, was flexible. He’d considered third-floor walk-ups, was willing to pay as much as $2,300 and didn’t insist on a particular neighborhood. He had money in the bank to pay a full year’s rent and a guarantor backing him up.

After two rejections and a search of almost two months, he found a renovated 400-square-foot (37-square-meter) studio on 95th Street between Park and Lexington avenues. He agreed to the $2,100 rent, which included a $100-a-month surcharge for his dog, a 6-year-old French mastiff named Sonoma Wesson Porterhouse.

“You can’t be too proud coming into this market,” Stojak said. “You have to eat some humble pie and like what you get.”

Manhattan’s apartment vacancy rate at the end of the year was 1.1 percent, down from 1.2 percent in the fourth quarter of 2010, according to Citi Habitats.

Nationwide, apartment vacancies dropped to a 10-year low of 5.2 percent in the fourth quarter, allowing for rent increases that are likely to continue this year, Reis Inc. (REIS) said in a Jan. 5 report.

“Because the economy was so up and down, I think certain people put off their buy-side decisions temporarily until they figure out what’s going on,” Malin said. “Maybe you feel more comfortable dating your property rather than marrying it.”

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

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Surge in Consumer Confidence for December

Stuart Lewis — Tue, 27 Dec 2011 17:12:00 GMT

Consumer confidence hits 8-month high in December

WASHINGTON (Reuters) - Consumer confidence rose more than expected in December, hitting an eight-month high, as Americans grew more upbeat about the labor market and their financial situation.

The Conference Board, an industry group, said its index of consumer sentiment increased to 64.5 from a downwardly revised 55.2 in November.

Economists had expected a reading of 58.3 from a previously reported 56.0 in November.

The rise in sentiment offered hope for a pick-up in consumer spending after a tepid performance in November.

Labor market conditions have improved in recent months, with the unemployment rate falling to a 2-1/2 year low in November and applications for first time jobless benefits at the lowest since April 2008.

The survey's present situation index rose to 46.7 this month --- the highest since September 2008 -- from 38.3 in November. The expectations index surged to 76.4 from 66.4 in November.

"Consumers are more optimistic that business conditions, employment prospects and their financial situations will get better," the Conference Board said in a statement.

"While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes."

(Reporting By Lucia Mutikani; Editing by Kenneth Barry)

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