Close to twelve million borrowers are now in a negative equity position on their homes because so many other borrowers were unable to afford their mortgages. The logical assumption would then be that as foreclosures ease, organic home prices will rebound. But what if the current, unique state of the housing market turns that assumption on its head? Foreclosure sales now make up a full one third of the market nationally and far higher percentages in states like California, Florida, Nevada, and Georgia. The supply of these properties has actually been dropping, pushing prices higher, even in the distressed category. There is huge investor and first-time home buyer demand for distressed properties at the low end of the market, and that has helped stabilize prices. “We believe the distressed part of the housing market has already bottomed,” said Morgan Stanley analyst Oliver Chang on CNBC’s Squawkbox. “The bid that we see from the investor is the reason for this bottom.” He sees further declines in organic home prices. Why? Banks have been very slow to release their repossessed (REO) inventory onto the market, not to mention that foreclosure processing delays have literally millions of properties still sitting in foreclosure limbo.There is a dwindling supply of foreclosures and rising investor demand. Analysts keep pointing to overall falling inventories, but the current existing home sales pace doesn’t account for that drop.The fact is that with so much of the supply distressed, and so few organic sellers putting their homes up for sale, the inventory drop is artificially skewed to the recent lack of movement in foreclosures and a crisis of confidence among potential organic home sellers. Okay, so what about the fact that banks are ramping up the process now, which could put more properties on the market? That could boost supply, were it not for a new government program to sell foreclosures in bulk to large investors. Chang says over $1 billion in investor capital has been raised over just the past six weeks to take advantage of this new program, and he claims this could add up to 1.8 million jobs. Property managers, renovators, rental agents, he says would benefit from these bulk rental investments. Mortgage analyst Mark Hanson, however, disagrees. He claims that individual investors will likely spend more on upgrades/renovations than bulk investors and will then sell to owner-occupants at a higher price, thereby not only stabilizing but increasing overall home values, while also juicing jobs. “Due to epidemic effective negative equity (not having enough equity to pay a Realtor and put a down payment on a new house) the repeat buyer cohort has been cut in half since 2007. They now make up the minority of national resales," says Hanson.“Investors and first-time buyers ARE the real estate market," he adds. "Investors and first timers want REO and short sales. Anything done to prevent the flow of distressed property will hurt the volume of existing home sales and all of the economic benefit that comes along with them. An REO-to-rent program will bring about record lows in monthly existing home sales volume. And volume precedes price.” Hanson believes that when the distressed supply is choked off, by selling REO in bulk to rent, not re-sell, then the only thing you have left is meager organic sales. “The housing market will implode,” he adds. Yes, lower supply, in a normal market, would generally mean a return to home price appreciation, but that’s not the way today’s market is working because organic demand is still so weak and is hampered by tight credit. There is even less demand for mid- to higher-priced homes.“$200K to $300K is the new normal for home builders,” says Rick Palacios of John Burns Real Estate Consulting. “Since new home prices peaked in 2007, new single-family sales of over $500K have been more than cut in half, dropping from 13% to just 6% of all new home transactions. The existing home market is much the same, with the bulk of sales and demand in the very low price tiers. It just goes to show that in the historic recovery from an historic housing crash, the usual rules just don’t apply. Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick
Showing posts with label Could. Show all posts
Showing posts with label Could. Show all posts
Monday, February 27, 2012
Fewer Foreclosures Could Mean Lower Home Prices
For years now we have been harping on how distressed home sales put downward pressure on home prices all around them. Close to twelve million borrowers are now in a negative equity position on their homes because so many other borrowers were unable to afford their mortgages. The logical assumption would then be that as foreclosures ease, organic home prices will rebound. But what if the current, unique state of the housing market turns that assumption on its head? Foreclosure sales now make up a full one third of the market nationally and far higher percentages in states like California, Florida, Nevada, and Georgia. The supply of these properties has actually been dropping, pushing prices higher, even in the distressed category. There is huge investor and first-time home buyer demand for distressed properties at the low end of the market, and that has helped stabilize prices. “We believe the distressed part of the housing market has already bottomed,” said Morgan Stanley analyst Oliver Chang on CNBC’s Squawkbox. “The bid that we see from the investor is the reason for this bottom.” He sees further declines in organic home prices. Why? Banks have been very slow to release their repossessed (REO) inventory onto the market, not to mention that foreclosure processing delays have literally millions of properties still sitting in foreclosure limbo.There is a dwindling supply of foreclosures and rising investor demand. Analysts keep pointing to overall falling inventories, but the current existing home sales pace doesn’t account for that drop.The fact is that with so much of the supply distressed, and so few organic sellers putting their homes up for sale, the inventory drop is artificially skewed to the recent lack of movement in foreclosures and a crisis of confidence among potential organic home sellers. Okay, so what about the fact that banks are ramping up the process now, which could put more properties on the market? That could boost supply, were it not for a new government program to sell foreclosures in bulk to large investors. Chang says over $1 billion in investor capital has been raised over just the past six weeks to take advantage of this new program, and he claims this could add up to 1.8 million jobs. Property managers, renovators, rental agents, he says would benefit from these bulk rental investments. Mortgage analyst Mark Hanson, however, disagrees. He claims that individual investors will likely spend more on upgrades/renovations than bulk investors and will then sell to owner-occupants at a higher price, thereby not only stabilizing but increasing overall home values, while also juicing jobs. “Due to epidemic effective negative equity (not having enough equity to pay a Realtor and put a down payment on a new house) the repeat buyer cohort has been cut in half since 2007. They now make up the minority of national resales," says Hanson.“Investors and first-time buyers ARE the real estate market," he adds. "Investors and first timers want REO and short sales. Anything done to prevent the flow of distressed property will hurt the volume of existing home sales and all of the economic benefit that comes along with them. An REO-to-rent program will bring about record lows in monthly existing home sales volume. And volume precedes price.” Hanson believes that when the distressed supply is choked off, by selling REO in bulk to rent, not re-sell, then the only thing you have left is meager organic sales. “The housing market will implode,” he adds. Yes, lower supply, in a normal market, would generally mean a return to home price appreciation, but that’s not the way today’s market is working because organic demand is still so weak and is hampered by tight credit. There is even less demand for mid- to higher-priced homes.“$200K to $300K is the new normal for home builders,” says Rick Palacios of John Burns Real Estate Consulting. “Since new home prices peaked in 2007, new single-family sales of over $500K have been more than cut in half, dropping from 13% to just 6% of all new home transactions. The existing home market is much the same, with the bulk of sales and demand in the very low price tiers. It just goes to show that in the historic recovery from an historic housing crash, the usual rules just don’t apply. Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick![]()
Close to twelve million borrowers are now in a negative equity position on their homes because so many other borrowers were unable to afford their mortgages. The logical assumption would then be that as foreclosures ease, organic home prices will rebound. But what if the current, unique state of the housing market turns that assumption on its head? Foreclosure sales now make up a full one third of the market nationally and far higher percentages in states like California, Florida, Nevada, and Georgia. The supply of these properties has actually been dropping, pushing prices higher, even in the distressed category. There is huge investor and first-time home buyer demand for distressed properties at the low end of the market, and that has helped stabilize prices. “We believe the distressed part of the housing market has already bottomed,” said Morgan Stanley analyst Oliver Chang on CNBC’s Squawkbox. “The bid that we see from the investor is the reason for this bottom.” He sees further declines in organic home prices. Why? Banks have been very slow to release their repossessed (REO) inventory onto the market, not to mention that foreclosure processing delays have literally millions of properties still sitting in foreclosure limbo.There is a dwindling supply of foreclosures and rising investor demand. Analysts keep pointing to overall falling inventories, but the current existing home sales pace doesn’t account for that drop.The fact is that with so much of the supply distressed, and so few organic sellers putting their homes up for sale, the inventory drop is artificially skewed to the recent lack of movement in foreclosures and a crisis of confidence among potential organic home sellers. Okay, so what about the fact that banks are ramping up the process now, which could put more properties on the market? That could boost supply, were it not for a new government program to sell foreclosures in bulk to large investors. Chang says over $1 billion in investor capital has been raised over just the past six weeks to take advantage of this new program, and he claims this could add up to 1.8 million jobs. Property managers, renovators, rental agents, he says would benefit from these bulk rental investments. Mortgage analyst Mark Hanson, however, disagrees. He claims that individual investors will likely spend more on upgrades/renovations than bulk investors and will then sell to owner-occupants at a higher price, thereby not only stabilizing but increasing overall home values, while also juicing jobs. “Due to epidemic effective negative equity (not having enough equity to pay a Realtor and put a down payment on a new house) the repeat buyer cohort has been cut in half since 2007. They now make up the minority of national resales," says Hanson.“Investors and first-time buyers ARE the real estate market," he adds. "Investors and first timers want REO and short sales. Anything done to prevent the flow of distressed property will hurt the volume of existing home sales and all of the economic benefit that comes along with them. An REO-to-rent program will bring about record lows in monthly existing home sales volume. And volume precedes price.” Hanson believes that when the distressed supply is choked off, by selling REO in bulk to rent, not re-sell, then the only thing you have left is meager organic sales. “The housing market will implode,” he adds. Yes, lower supply, in a normal market, would generally mean a return to home price appreciation, but that’s not the way today’s market is working because organic demand is still so weak and is hampered by tight credit. There is even less demand for mid- to higher-priced homes.“$200K to $300K is the new normal for home builders,” says Rick Palacios of John Burns Real Estate Consulting. “Since new home prices peaked in 2007, new single-family sales of over $500K have been more than cut in half, dropping from 13% to just 6% of all new home transactions. The existing home market is much the same, with the bulk of sales and demand in the very low price tiers. It just goes to show that in the historic recovery from an historic housing crash, the usual rules just don’t apply. Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick
Sunday, February 26, 2012
Cowboy Towns: You could buy an entire South...
× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Wednesday, February 15, 2012, by Sarah Firshein
? Previous: The S.C. Mansion that Served as Robert E. Lee's Pied-à-Terre
? Next: Nine Truly Lovely Green Rooms in the New House Beautiful
Sunday, January 8, 2012
Richard Cordray Appointment Could Play Big for Housing
President Obama used a recess appointment to name Richard Cordray as the nation's chief consumer watchdog.Barely a few hours after the White House confirmed that President Obama would use a controversial recess appointment to install former Ohio Attorney General Richard Cordray as the director of the Consumer Financial Protection Bureau, both Obama and Cordray were sitting at the dining room table of Endia and William Eason; the Easons, both in their 90s, nearly lost their home due to “trickery and abuse” by a non-bank mortgage broker. “The Easons need someone who will stand up for them,” President Obama told a crowd later at a Cleveland high school. “Millions of Americans need someone who will look out for their interests. They need someone like Richard.” Part of Richard Cordray’s job will be to increase oversight of mortgage brokers, which has already started with new underwriting standards mandated by the Dodd-Frank financial reform legislation. His appointment will finally allow the CFPB to start regulating non-depository firms (non-bank lenders), which up to now it could not. “And that could have a big impact,” says Guy Cecala, CEO and Publisher of Inside Mortgage Finance. “A lot of these firms – ranging from mortgage brokers to large lenders like PHH – have effectively escaped regulation in the past. Now they will not only have to submit to reporting but also lending regulations previously only extended to depository institutions.” That will likely take a while, as Cordray settles in, but there are more near-term implications of the appointment, like that he could potentially help finalize a deal with the state attorneys general and the big banks over the so-called “robo-signing” scandal. “As a former AG, he could use that to his advantage in the ongoing negotiations with the AGs,” notes Edward Mills, policy analyst at FBR. “Beyond a settlement, what we would be looking for are updated disclosure documents that are easier for consumers to understand and a definition of what is a “qualified mortgage” – which sets in place new consumer protections on all mortgages.” And even beyond the short and long term implications of Cordray’s new role at the CFPB is the significance of the recess appointment itself on something even more crucial to housing: The Federal Housing Finance Agency, overseer of Fannie Mae and Freddie Mac. The FHFA has been run by an acting director, Edward DeMarco, for several years. DeMarco has stood in the way of various government attempts to use Fannie Mae, Freddie Mac and the FHA to help troubled borrowers and resuscitate the overall housing market. He has consistently argued that his job is to protect the books of these mortgage giants, not to ameliorate the dyspeptic housing market. If the President can use the recess appointment for Cordray, then he could potentially use it to replace the very controversial DeMarco. “A different FHFA director might take a more expansive view of what is needed to help housing,” notes Jaret Seiberg, financial services policy analyst at Guggenheim Securities. “That opens the door to much bigger refinancing programs than what have been adopted so far. For borrowers, that means lower rates which helps the economy, helps housing and helps the President’s re-election effort.” Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick Tuesday, December 20, 2011
AM Linkage: Funding the Mission Bowling Club; Where to Dine On Christmas; Facebook's Gigantic HQ Could Cause Traffic Problems; More!
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Thursday, December 1, 2011
PM Linkage: Could Texts Prevent Parking Tickets; Decorating Streetcars For the Holidays; Graffiti Blues; More!
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Saturday, June 18, 2011
Ego Booster: For people named Alex, could there...
× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Wednesday, June 8, 2011, by Rob Bear
? Previous: Episode Two: Hypnotism, a Pick-up Truck, and Really Old Tile
? Next: Stilted House Made of Telephone Poles May Land Owner in Jail
Saturday, June 4, 2011
PM Linkage: Slowing Down Folsom and Howard; What BART Could Have Been; Dog Walkers March; More!
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Friday, April 15, 2011
Artistry: Chair Made From Southern Comfort Bottles Could Get You Drunk
× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Tuesday, April 5, 2011, by Sarah Firshein Photos via BRC Designs
Core 77 is taking a look at the ingenius work of Benjamin Rollins Caldwell, a South Carolina-based furniture designer who's about to unveil his BNR01110100 011000010110 001001101100 01100101-01 table (nicknamed the "Binary Table 01") at the International Contemporary Furniture Fair in NYC in May. It's made entirely of old computer parts—including things that still click, spin, and slide—topped with a piece of glass. We got to looking through the BRC website and stumbled upon another of Caldwell's masterful creations, this time an acyrlic chair filled with 282 mini-bottles of Southern Comfort. (We hear echoes of frat parties off somewhere in the distance...) Anyway, no word whether or not Caldwell raided a minibar for the project, but it's called the Impractically Comfortable Side Chair and it was produced in a limited edition of five. Sad, but the booze has to run out sometime! We've pulled photos of it, as well as that computer table and a bed inspired by organ pipes, for the photogallery above. Drink up!
· "Binary Table 01" by BRC Designs [Core77 via Boing Boing]
· BRC Designs [official site]
· Impractically Comfortable Side Chair [BRC Designs]
· Binary Low Table [BRC Designs]
· Organ Bed [BRC Designs]
Thursday, February 3, 2011
2011 Could Be The Worst Year In The History Of <b>Real Estate</b>
2011 Could Be The Worst Year In The History Of Real Estate
Man, am I glad that I don’t rely solely upon real estate for an income. In fact, I’m really glad we began to diversify when we did. By most accounts, 2011 might be the worst real estate market we’ve seen in a long time…if not the worst ever!
In 2010, banks foreclosed on 1 Million homes. The forecast for 2011 is a 500% increase. The numbers are scary as banks are set to foreclose on over 5 Million homes this year. That’s devastating for the housing sector.
About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home’s value, industry analysts forecast.
“2011 is going to be the peak,” said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc.
The outlook comes after banks repossessed more than 1 million homes in 2010, RealtyTrac said Thursday. That marked the highest annual tally of properties lost to foreclosure on records dating back to 2005.
One in 45 U.S. households received a foreclosure filing last year, or a record high of 2.9 million homes. That’s up 1.67 percent from 2009.
For December, 257,747 U.S. homes received at least one foreclosure-related notice. That was the lowest monthly total in 30 months. The number of notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.
The pace slowed in the final two months of 2010 as banks reviewed their foreclosure processes after allegations surfaced in September that evictions were handled improperly. Under increased scrutiny by the government, lenders temporarily halted taking actions against borrowers severely behind on their payments.
Foreclosures are expected to remain elevated through the year as homeowners contend with stubbornly high unemployment, tougher credit standards for refinancing and falling home values.
Sharga said he expects prices to dip another 5 percent nationally before finally bottoming out. The decline will push more borrowers underwater on their mortgages.
Already, about one in five homeowners with a mortgage owe more than their home is worth.
The pain likely will be the most acute in states that have already been hit hard. That includes former housing boom states Nevada, Arizona, Florida and California, along with states that are suffering most from the economic downturn, including Michigan and Illinois.
Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before. One in every 11 households received a foreclosure filing last year in the state. In December, foreclosure activity increased 18 percent from November with a 71 percent spike in bank repossessions.
Arizona and California also showed sharp December increases in the number of homes banks took back, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.
One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.
California, Utah, Georgia, Michigan, Idaho, Illinois and Colorado rounded out the top ten states with the highest foreclosure rates.
More than half of the country’s foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan.
Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.
RealtyTrac tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.
Despite this news, I’m sure we’ll see the obligatory response from the National Association Of Realtors and their ilk that now’s a great time to buy a home.
The same old tired mantra is really getting old. Just yesterday, Pete Flint from Trulia said he thinks that the overall real estate market is coming back.
So while 58% of those polled don’t see a recovery happeneing until 2012 and 20% not expecting a recovery until 2015…just who is going to buy all of this inventory?
More importantly, which doesn’t seem to get talked about by the NAR. Where are the buyers, who are willing to jump in, going to get the mortgages to make these home purchases?
Well at least from an investment perspective, there’s going to be a whole lot of prospective tenants out there. If you have cash and buy right you’re going to be able to make a serious ROI.
Hmmm…buying and holding. Now there’s something one might want to look into over the next few years. Just saying.
window.fbAsyncInit = function() { FB.init({appId: "122437427778213", status: true, cookie: true, xfbml: true});}; (function() { var e = document.createElement("script"); e.async = true; e.src = document.location.protocol + "//connect.facebook.net/en_US/all.js"; document.getElementById("fb-root").appendChild(e);}());Barry Cunningham - who has written 5227 posts on Real Estate Radio USA.
Barry Cunningham is one of the Co-Editors of iNEWS and offers a cutting edge and some may say an opinionated view of today's news and current events. Never one to be shy about giving his take on what's happening in the world of sports, politics and business.
Sunday, January 23, 2011
Office Spaces: If These Walls Could Talk: Studio of Charles and Ray Eames
× Like us and you'll find top breaking news in your Facebook newsfeed. Sign up for our daily email newsletter and get top stories and breaking news delivered to your inbox. Monday, January 10, 2011, by Sarah
Photo courtesy of Courtesy Gestalten/Co.Design
Today Co.Design publishes a terrific feature on The Story of Eames Furniture, Marilyn and Jon Neuhart's painstakingly researched new tome that sheds light on every single piece of furniture ever created within the the hallowed hallways of Charles and Ray Eameses' design studio (above). Food for (ever so humbling) thought:
"When someone such as Yves Behar talks about a simple office chair being an 'epic challenge' that required 10 years of practice to even contemplate, they're responding to the legacy that Eames created, with their fanatical devotion to ergonomics and function. Sit in a shell chair or an Eames lounger; feel the way it seems to intuit your posture and bone structure. That's the truest statement of the remarkable process that lived in just a few rooms, in a California studio that created the modern furniture industry."
· The Definitive History of the Eames Studio, and Its Works of Genius [Co.Design]
· A Brief History of the Most Important Chair You'll Ever Sit On [Curbed National]
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