NicK White | Cultura | Getty ImagesSales of existing homes declined in May, according to a new report from the National Association of Realtors, not just because the overall housing market is struggling, but because there are simply not enough homes to buy. There are currently 2.49 million for sale, a drop of 20 percent from a year ago. To make matters worse, supply is lowest on the low end, where so much of the investor activity has been over the past several years. This lack of supply has seriously skewed the readings on home prices for the second straight month. The median price of an existing home, as reported by the Realtors, rose 7.9 percent in May annually, but NAR chief economist Lawrence Yun was quick to point out that this does not mean the average home owner gained that much equity; it is simply a big shift in the type of home that is selling. Sales of homes priced under $100,000 dropped two percent from a year ago, while sales of homes priced between $250,000 and $500,000 shot up nearly 29 percent (though still at low volumes historically). Again, this is due to lack of supply on the low end, specifically distressed homes. While there are still plenty of delinquent mortgages and homes in the foreclosure process, 5.57 million according to a new report from Lender Processing Services, the big bank servicers are still trying to go back and modify many of these loans. There is also still a huge backlog of foreclosures in judicial states like New Jersey, Florida and New York. Inventories of foreclosed properties in non-judicial states (where you don’t need a judge in the foreclosure process), like Arizona, have dropped to under a three-month supply. Realtors say they did not see the usual spring bump in supply, as fewer regular homeowners put their homes on the market this year. The big question is, why not? Mortgage rates just hit yet another record low at 3.66 percent on the 30-year fixed, according to Freddie Mac. Home prices are stabilizing, if not gaining. Low supply should be a signal to homeowners that they could possibly get a bidding war. Still, nothing. “They want to participate in the recovery by holding on to their property longer,” surmised Yun on why sellers are reluctant to list. Fear is clearly a factor, as is negative equity. Between 11 and 12 million borrowers still owe more on their homes than they can sell them for, and many more borrowers in a near negative equity position; that means they can’t get enough equity out of their homes to cover the Realtor fees and the moving costs, nor to put down on a new home. That’s why the market is ripe for first time buyers, but they are not stepping up either, at just 34 percent of purchases. In a normal market, they would make up 45 percent. That, again, is part fear, but largely tight credit. Mortgages may be cheap, but they are not easy. The supply situation has gotten so bad in Northern Virginia that the Realtors there launched a new campaign this week titled, “Ask Me,” trying to get potential sellers to contact agents to find out, “Is it the right time for me to sell or buy a home?” The Northern Virginia Association of Realtors, in the release, claims there is less than 2 months’ supply of available homes for sale in the market, a 37 percent drop from a year ago. Unemployment is trending down, and sellers have been able to get 97 percent of their list price, according to NVAR. The Realtors there are literally begging for more supply. This supply situation proves just how tenuous and unique the current housing recovery is. It is heavily dependent on investor activity, not real, organic buying, selling and moving up. An investor purchase registers one sale, but a regular sale represents at least two, as the seller will likely buy another home, and so on and so on. Investors are certainly necessary to clear all the distress left over from the housing crash, but until we see not just more sales but more sellers out in the market, the housing recovery will remain in low gear. Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick
Showing posts with label Crisis. Show all posts
Showing posts with label Crisis. Show all posts
Friday, June 29, 2012
New Housing Crisis: Not Enough to Buy
NicK White | Cultura | Getty ImagesSales of existing homes declined in May, according to a new report from the National Association of Realtors, not just because the overall housing market is struggling, but because there are simply not enough homes to buy. There are currently 2.49 million for sale, a drop of 20 percent from a year ago. To make matters worse, supply is lowest on the low end, where so much of the investor activity has been over the past several years. This lack of supply has seriously skewed the readings on home prices for the second straight month. The median price of an existing home, as reported by the Realtors, rose 7.9 percent in May annually, but NAR chief economist Lawrence Yun was quick to point out that this does not mean the average home owner gained that much equity; it is simply a big shift in the type of home that is selling. Sales of homes priced under $100,000 dropped two percent from a year ago, while sales of homes priced between $250,000 and $500,000 shot up nearly 29 percent (though still at low volumes historically). Again, this is due to lack of supply on the low end, specifically distressed homes. While there are still plenty of delinquent mortgages and homes in the foreclosure process, 5.57 million according to a new report from Lender Processing Services, the big bank servicers are still trying to go back and modify many of these loans. There is also still a huge backlog of foreclosures in judicial states like New Jersey, Florida and New York. Inventories of foreclosed properties in non-judicial states (where you don’t need a judge in the foreclosure process), like Arizona, have dropped to under a three-month supply. Realtors say they did not see the usual spring bump in supply, as fewer regular homeowners put their homes on the market this year. The big question is, why not? Mortgage rates just hit yet another record low at 3.66 percent on the 30-year fixed, according to Freddie Mac. Home prices are stabilizing, if not gaining. Low supply should be a signal to homeowners that they could possibly get a bidding war. Still, nothing. “They want to participate in the recovery by holding on to their property longer,” surmised Yun on why sellers are reluctant to list. Fear is clearly a factor, as is negative equity. Between 11 and 12 million borrowers still owe more on their homes than they can sell them for, and many more borrowers in a near negative equity position; that means they can’t get enough equity out of their homes to cover the Realtor fees and the moving costs, nor to put down on a new home. That’s why the market is ripe for first time buyers, but they are not stepping up either, at just 34 percent of purchases. In a normal market, they would make up 45 percent. That, again, is part fear, but largely tight credit. Mortgages may be cheap, but they are not easy. The supply situation has gotten so bad in Northern Virginia that the Realtors there launched a new campaign this week titled, “Ask Me,” trying to get potential sellers to contact agents to find out, “Is it the right time for me to sell or buy a home?” The Northern Virginia Association of Realtors, in the release, claims there is less than 2 months’ supply of available homes for sale in the market, a 37 percent drop from a year ago. Unemployment is trending down, and sellers have been able to get 97 percent of their list price, according to NVAR. The Realtors there are literally begging for more supply. This supply situation proves just how tenuous and unique the current housing recovery is. It is heavily dependent on investor activity, not real, organic buying, selling and moving up. An investor purchase registers one sale, but a regular sale represents at least two, as the seller will likely buy another home, and so on and so on. Investors are certainly necessary to clear all the distress left over from the housing crash, but until we see not just more sales but more sellers out in the market, the housing recovery will remain in low gear. Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_Olick
Tuesday, March 20, 2012
PriceChopper: Identity Crisis at the SOMA Grand
× 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. Thursday, March 15, 2012, by Sally Kuchar Was: $1,998,000
Now: $1,888,000
You Save: $110,000
Now: $1,888,000
You Save: $110,000
This SOMA Grand condo is being described as a "dazzling Philippe Starck-style top floor corner penthouse," and we would really like to know how Philippe Starck would feel about having his unique and innovative style associated with this property. The 2-bed, 2-bath, 1,660 square foot "penthouse" last sold in in January of 2010 for $1,145,000. Why did it get plopped back on the market for almost a million more bucks? "$800K+ (per owner) custom designer finishes." Which we hope you rip right out upon moving in. This place is averaging $1,137 per square foot, which almost doubles the neighborhood average of $663. Pair that with the monthly HOA dues of $851.38 and we think this condo might have another price chop in its future. 2-car parking in the garage is included in the sale.
· 1160 Mission Street, #2313 [Redfin]
Tuesday, May 31, 2011
The Debt Crisis and Mortgage Rates
If you're not talking about the head of the IMF today, then the only thing left really is the debt ceiling, which we officially reached today ($14.294 trillion for anyone who's counting). While estimates are that it will take until August for the US to actually default on its debt obligations, the concern in the short term is how Wall Street sees the situation and how that will be reflected in the bond market and in mortgage interest rates. So I asked a few experts: Michael Barr/Fmr. Asst. Treasury Secretary for Financial Institutions "If the US continues to bump up against the debt limit but Treasury uses "extraordinary measures" to keep the US from exceeding the limit, then the damage is likely to be modest and short-term. I would expect rates to rise, temporarily, by up to low single-digit basis points. It is a bit hard to forecast exactly what the effect will be. Prior experience suggests low single digit bps, but there are a number of factors in play today that were not present in previous debt ceiling crises: fragile economy, fragile housing finance sector, fragile home prices and sales, F/F in conservatorship, no securitization to speak of, higher debt to GDP ratio, turmoil in Europe (exacerbated by DSK's arrest), extremely high levels of US dollar reserves already in China, extremely low Treasury rates. Long term, if we actually default, it is simply devastating, and permanent."Peter Boockvar/Miller Tabak: "I think the market has spoken and the almost 50 bps drop in the 10 year note yield since mid April is clear evidence that the debt ceiling debate has had zero impact on market psychology. Everyone assumes that a deal of some sort will occur and the market impact will be nothing. More impactful in the direction of lower yields has been concerns with growth and a flight to safety due to renewed concerns with Europe." Glenn Kelman, CEO Redfin "We see people being very sensitive to the cost of money; they're very concerned about the debt crisis, they're very concerned about all these rumors that the US could have a money supply problem, so we think that interest rates are the real X factor to watch." Treasury Secretary Timothy Geithner made it clear what would happen should the U.S. ultimately default: "Because Treasurys represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale."Questions? Comments? document.write("");document.write("RealtyCheck"+"@"+"cnbc.com");document.write('');And follow me on Twitter @Diana_OlickWednesday, January 5, 2011
How To Profit From The Credit Crisis
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