Prediction season in full swing

Posted in Demographics, Economics, Employment, NYC | 61 Comments

From HousingWire:

5 predictions for NYC real estate in 2015

David Behin is the co-founder of CityFunders and MNS Real Estate, one of the ten largest full service brokerages in New York City.

He’s had a hand in more than $3 billion in real estate transactions within the New York tri-state area, and here are his five predictions for New York City real estate in 2015.


1) Manhattan office migration

As Manhattan office rates continue to soar, look for businesses to move their headquarters to Long Island City, the BK Tech Triangle, and Sunset Park.

2) The condo dichotomy

With a saturation of the high-end condo market in Manhattan, look for prices to rise slower than in recent years. Brooklyn, on the other hand, will see condo prices and sales hit record numbers.

3) Building bills

All aspects of development (hard costs and professional services) will experience rising costs – contributing to an eventual slowdown in construction.

4) Capital market

Hedge funds and wealth managers in search of asset retention will increase the flow of investment capital into NYC real estate, which will be perceived as a safe haven within their portfolios.

5) The growth of “Pod”casting

In an effort to appeal to younger renters in search of affordable living arrangements, the fastest growing sector will be micro and pod apartments. (These are the apartment version of “tiny houses.”)

Delinquency rates continue to decline

Posted in Economics, Housing Recovery, Mortgages, Risky Lending | 113 Comments

From NMP:

Mortgage Delinquency Rates Continue to Shrink

The total balance of seriously delinquent first mortgages–defined as 90 days past due or in foreclosure–was $198.8 billion in November, a decrease of more than 29.8 percent year-over-year and the lowest level in more than five years, according to the latest National Consumer Credit Trends Report issued by Atlanta-based Equifax.

Equifax also found that delinquent first mortgages–defined as those 30 days or more past due – represented 4.54 percent of outstanding balances in November, a decrease from 5.87 percent from the same time a year ago. Total balances on home equity installment loans was $139.9 billion in November, a decrease of 15.9 percent from the same time a year ago, while the total number of loans outstanding dropped to 4.6 million;

Equifax also reported that total balances outstanding on home equity lines of credit (HELOCs) in November was $515.4 billion, down 3.6 percent from same time a year ago; the current level represents a five-year low. The total number of HELOCs outstanding fell to 11.1 million, the lowest total in 10 years, Equifax added.

Delinquent balances–defined as 30 days or more past due–on HELOCs represented 2.37 percent of outstanding balances in November, down from 2.70 percent a year ago, while delinquent balances on home equity installment loans fell 0.77 percentage points from November 2013 to 2.45 percent last month.

The latest Equifax data mirrors similar projections released last week by Chicago-based TransUnion, which stated the national mortgage loan delinquency rate–defined as the ratio of borrowers 60 or more days past due–is projected to decline to 3.12 percent by the end of this year and 2.51 percent by the end of 2015, marking the lowest level since hitting 2.61 percent in the third quarter of 2007, prior to the Great Recession. TransUnion recorded the mortgage delinquency rate at 3.36 percent at the end of the third quarter of this year.

National mortgage delinquency peaked at 6.93% in Q1 2010. Since that peak, the delinquency rate has dropped almost every quarter, with minor bumps occurring in Q3 and Q4 2011.

“While we project that delinquencies will approach pre-recession levels, it should be noted that they will likely remain above the historic norm of 1.5 to two percent; mortgage delinquency was rising even before the official ‘start’ of the recession,” Chaouki stated. “It is also important to note that the housing environment is far different now than it was when we last observed rates this low. Regulatory requirements and scrutiny, recent home value appreciation and consumers’ prioritization of payments have all changed the landscape of consumer mortgage lending.”

What Recovery?

Posted in Demographics, Economics, Employment, Housing Recovery | 69 Comments

From MarketWatch:

Americans are 40% poorer than before the recession

The Great Recession is officially over, but Americans are still 40% poorer today than they were in 2007, the year before the global financial crisis.

The net worth of American families — the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a new report released on Friday by the nonprofit think-tank Pew Research Center in Washington, D.C.

“The Great Recession, fueled by the crises in the housing and financial markets, was universally hard on the net worth of American families,” the report found.

The wealth of most Americans has stood still. In November 2014, the average weekly wage was $853 versus $833 for November 2013, according to the Bureau of Labor Statistics. But things are improving somewhat when it comes to housing. Nationwide, only 8% of borrowers have homes that are underwater as of October 2014, down from a peak of 35%, or 18 million homes, in February 2011, according to Black Knight Financial Services in Jacksonville, Fla., which tracks mortgage performance. But 8% still impacts 4 million homes.

Stagnant wages and rising property prices don’t bode well for first-time buyers without wealthy parents. The homeownership rate for non-Hispanic white households fell to 73.9% in 2013 from 75.3% in 2010, Pew found, and fell to 47.4% in 2013 from 50.6% in 2010 for minorities. It takes an average of 12.5 years to save up a 20% down payment — the usual requirement by banks — with a personal savings rate of 5.6%, according to real-estate firm RealtyTrac.

Foreclosure “rescue” worse than foreclosure

Posted in Foreclosures, New Jersey Real Estate | 34 Comments

From the Star Ledger:

Man who stole struggling people’s homes sentenced to 20 years

A 58-year-old Bloomfield man was sentenced Friday to 20 years in state prison for cheating Sussex County homeowners in financial distress by transferring ownership of their properties to himself without their consent, according to the Morris County prosecutor.

On Oct. 14, a Sussex County jury found Kosch guilty of five counts of theft, two counts of fraud and one count of possession of personal identifying information, Knapp said in a statement.

The charges stemmed from Kosch’s operation of Floaters, LLC, a business involved in foreclosure rescues and the purchase of real estate in various Sussex towns, according to Knapp.

Kosch “targeted individuals in financial distress who had moved out of their homes,” Knapp said. He forged signatures transferring properties to himself or to Floaters, LLC, and then rented out the properties and collected the rental income, Knapp said.

Kosch was also found in possession of personal identifying information belonging to more than 100 people for the purpose of locating other property owners, according to Knapp. on

No information was immediately available on the amount Kosch stole or how much he must pay in restitution to his victims.

What’s a little fraud between friends

Posted in Mortgages, National Real Estate, Risky Lending | 63 Comments

From the NYT:

Falsified Mortgage Applications on the Rise

Falsified applications are now the most common type of mortgage fraud, their incidence having risen steadily for the last three years, according to LexisNexis Risk Solutions’ annual mortgage fraud report.

The report, scheduled for release on Monday, breaks down the composition of verified mortgage fraud activity in 2013 as reported by lenders, insurers and other subscribers to a LexisNexis database known as MIDEX. The database tracks only fraud involving industry professionals, such as loan officers, real estate agents and appraisers.

“Eighty percent of all mortgage fraud involves a professional,” said Tim Coyle, the company’s senior director of financial services and an author of the report. “It almost has to — it’s a very complex game.”

Seventy-four percent of the investigated loans reported in 2013 involved application fraud, up from 69 percent in 2012, and 61 percent in 2011. Application fraud involves misrepresenting a borrower’s background or circumstances by providing a lender with false information about crucial factors, such as income, employment or intent to occupy the property. Identity theft or invalid Social Security numbers may also come into play.

Mr. Coyle attributed the rising incidence of application fraud to tight credit conditions that make it harder for borrowers to qualify and for industry professionals to profit. Credit fraud also increased last year, according to Jennifer Butts, the manager of data insight and also an author of the report. Credit fraud, such as undisclosed debt on a credit history or misrepresentation on the credit report, occurred in 17 percent of reported fraud investigations, which was a big jump from 5 percent in 2012, she said.

Appraisal fraud, however, dropped to a five-year low of 15 percent of reported loans. Mr. Coyle credited federal regulations adopted several years ago aimed at preventing corruption of the appraisal process by professionals with a financial stake in the mortgage transaction.

The report also ranks the states according to the seriousness of their mortgage fraud problem relative to their share of origination volume. Florida ranked first as having the worst fraud problem for the fifth consecutive year, followed by Nevada and New Jersey.

2015 – Year of the millennial?

Posted in Demographics, Economics, Employment, Housing Recovery | 71 Comments

From Fortune:

4 predictions for the housing market in 2015

1. The demographic wave of Millennials will help boost prices: The U.S. has been stuck in a demographic rut, which has dragged down the demand for homes. For the past decade, the largest portion of the American population was made up of Baby Boomers, folks who long ago settled down and started families. But late last year, the Census Bureau announced that the cohort of now-23-year-old Americans is the largest in the country, followed by 24 and 22-year olds, respectively. As this ascendent generation ages another year, more of them will start families and look to buy homes of their own. Jonathan Smoke, chief economist at, argues that this generation will “drive two-thirds of household formations over the next five years.”

2. Young people will continue to demand housing where it’s tough to build: At the S&P Panel, Nobel Prize-winning economist Robert Shiller pointed out that since the housing crisis, the total value of owner-occupied housing has remained flat. This is because builders have not been constructing many single-family homes at all, a situation that the U.S. economy hasn’t faced since the Great Depression.

Single-family home construction has been so subdued in part because the Millennial generation as a whole prefers to live where housing is expensive and where building is difficult.

3. Mortgage rates will rise: While many analysts were convinced that mortgage rates would rise this year on the back of an improving economy and the winding down of the Fed’s bond-buying stimulus program, the market didn’t comply. The year started out with news that the U.S. economy shrank in the first quarter, which put the market on edge. Next came news of unrest in Ukraine and slow growth in Japan and Europe, putting more downward pressure on interest and mortgage rates.

4. Home price increases will decelerate, but affordability will decline: The housing recovery slowed markedly in 2014. Home prices in October 2014 were up by 6.4% year-over-year, after climbing 10.6% in 2013. Economists polled by Fortune were nearly unanimous in predicting that home values would continue to rise, but even slower than they did this year. That’s because the rebound from the bursting of the housing bubble has just about run out of steam, with Trulia’s Kolko estimating that homes are only 3% undervalued relative to fundamentals nationally.

3% is back

Posted in Mortgages, Politics, Risky Lending | 114 Comments

From MarketWatch:

Feds hope 3%-down-mortgages will boost struggling housing market

After announcing plans in October to boost lending for first-time and middle class borrowers by reducing down payment requirements, Fannie Mae and Freddie Mac this week detailed guidelines to banks that they hope will jump-start an otherwise struggling housing market.

Two months ago, at the Mortgage Bankers Association’s annual meeting in Las Vegas, Federal Housing Finance Agency director Mel Watt discussed his agency’s desire to see the federal government lift some lending and credit restrictions that had been put in place as part of the Dodd-Frank financial reform law in the aftermath of the housing crash. This week, Fannie Mae and Freddie Mac unveiled programs that focus on authorizing government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac to begin buying loans that have up to 97% loan-to-value ratios (LTV), instead of the previous maximum of 95% LTV, which means borrowers can put down as little as 3% with banks having the backing of the GSEs for those loans.

That could help cash-strapped borrowers afford homes by requiring less up-front cash. There will also be a non-cashout refinance option available. A non-cashout refinance means that you can refinance the principal for a lower rate but you can’t take equity out.

The loans will typically have lower interest rates than those offered by FHA, which also offers loans with 3% down payments, but they typically have higher interest rates because credit scores for those loans are lower, said Mark Livingstone, a mortgage broker with Cornerstone First Financial in Washington, D.C. “The Fannie Mae option is so much more attractive if the borrower has the [ higher] credit score,” he said.

Few bargains buying, fewer bargains renting

Posted in Demographics, Economics, National Real Estate | 108 Comments

From HousingWire:

Zillow: Renting is twice as expensive as buying

It’s more affordable to buy a home now in most U.S. metros than it was 15 years ago, even for millennials putting down less money on a home, according to a Zillow analysis of third-quarter income and home value data.

Renters, however, continue to pay an increasing share of their income to their landlords as rents soar and incomes remain flat.

On average, homebuyers making the nation’s median income and purchasing the typical U.S. home spend 15.3% of their income on their monthly house payment, down from the historical norm of 22.1% during the pre-bubble period from 1985 to 1999.

In contrast, renters spent 29.9% of their monthly income on rent in the third quarter of 2014, up from 24.9% historically.

Younger buyers, earning less money in many areas and making smaller down payments on a home, should expect to spend slightly more of their income on mortgage payments – 17.4%.

Homes for younger buyers remain affordable thanks to continued low mortgage interest rates and their tendency to shop for less expensive homes.

Continuously rising rents across the country could drive more people into the home-buying market, but they also make it more difficult for first-time buyers to save for a down payment. Washington, D.C., renters can expect to spend 27.1% of their income on rent, up from 16.2% historically. In Miami, rent as a percentage of income has risen from 26.5% before the bubble to 44.5% currently.

Mortgage rates hit 13 month lows

Posted in Housing Recovery, Mortgages, National Real Estate | 64 Comments

From MarketWatch:

Long-term mortgage rates hit lowest level since May 2013

Long-term mortgage rates have reached their lowest level in more than a year, giving families an opportunity to secure cheap home loans, according to data released Thursday.

On the back of “underwhelming” economic news, the average rate for the popular 30-year fixed-rate mortgage just dropped to 3.89%, the lowest reading since May 2013, according to a Thursday report from federally controlled mortgage-buyer Freddie Mac. The rate is now about half a percentage point greater than the near-record-low hit last year.

While the market is unlikely to see long-term rates revisit last year’s bottom, current low levels may stick around through January, giving families a chance to lock in affordable monthly home payments, said Frank Nothaft, Freddie’s chief economist.

“I don’t see a whole lot of movement in long-term interest rates,” Nothaft said.

After rate fluctuations over the past year, mortgage applications to buy a home are about 20% below a May 2013 peak, while refinancing applications are down 74%, according to the Mortgage Bankers Association.

While low rates should support borrowers’ interest in refinancing, the recent drop by itself won’t be enough to spur a large jump in home buying. In addition to the cost of borrowing, families that want to buy a home must consider major factors such as careers and kids. But a sub-4% rate for a 30-year-mortgage would be a nice welcome mat for the hot home-sales market in the spring.

“Whenever we have a drop in rates, that can only be good for housing demand,” Nothaft said. “I do expect that it will continue to support a high level of affordability in most markets for those families with that have the financial wherewithal to buy a home.”

Then again, although rates are low, they are higher than record bottoms, and may not do much for housing activity.

“People are impressed by record-lows, and don’t want to miss an opportunity to take out a mortgage when interest rates can only go up…What is happening now doesn’t seem so salient,” Robert Shiller, Nobel Prize-winning economist and housing-market expert, wrote in an email to MarketWatch.

Jobs? Not here.

Posted in Economics, Employment, New Jersey Real Estate | 67 Comments

From the Record:

Job surge skipping New Jersey so far

In the biggest surge in almost three years, employers nationwide added 321,000 jobs in November — a leap forward that threatens to leave New Jersey further behind.

Friday’s strong Labor Department report shows national job growth accelerating and that it now is above 2 percent year to date, outdistancing New Jersey’s lukewarm pace of 0.73 percent so far in 2014, as the state grapples with the lingering effects of Superstorm Sandy and the downsizing of key industries such as pharmaceuticals and telecom.

The report also raises questions about when job gains will start to translate into bigger paychecks for Americans, whose incomes have stagnated as the nation slowly recovers from the Great Recession.

The unemployment rate was unchanged in November at 5.8 percent. Professional and business services, retail, and education and health services led job gains. The government also said 44,000 more jobs than originally estimated were added in September and October. So far this year, the nation has gained about 2.65 million jobs.

It was the 10th straight month employers created more than 200,000 jobs, the longest such stretch since the mid-1990s.

But in terms of employment, the picture has been less hopeful in New Jersey, where November job numbers are to be released Dec. 18.

In October, the state shed 4,500 jobs, and the unemployment rate was 6.5 percent; it has been higher than the national rate most of the time since 2011.

So far this year, the state has gained about 22,900 jobs, putting it on pace to beat last year’s lackluster total of 18,800 jobs. This year’s rate is well below the pace of 2012, when New Jersey added almost 44,000 jobs. And New Jersey has recovered only about 46 percent of the nearly 260,000 jobs it lost during the 2007-09 recession.

Joseph Seneca, a Rutgers University economist, said that in the next couple of months, New Jersey may get “a sizable echo effect from the very strong job gains in the U.S. labor market this year.”

“However, the lingering effects of Sandy, the large loss of casino jobs, the lack of a bounce back of manufacturing jobs and the absence of energy-related job growth [seen in other states] have all worked against the state this year,” he said.

Foreclosure crisis continues to abate, NJ now tops by a longshot

Posted in Foreclosures, National Real Estate, New Jersey Real Estate | 158 Comments

From HousingWire:

CoreLogic: September completes 41,000 foreclosures

There were 41,000 completed foreclosures nationally, down from 55,000 in October 2013, according to CoreLogic’s (CLGX) October National Foreclosure Report.

This marks a year-over-year decrease of 26.4% and is down 65% from the peak of completed foreclosures in September 2010.

Month-over-month, completed foreclosures were down by 34.1% from the 62,000 reported in September 2014.

To put it in perspective, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.

Since the financial crisis began in September 2008, there have been approximately 5.3 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7 million homes lost to foreclosure.

“While there has been a large improvement in the reduction of foreclosure inventory, completed foreclosures remain high and serve as one of the obstacles to new single-family construction,” said Sam Khater, deputy chief economist for CoreLogic. “Until the flow of completed foreclosures declines to normal levels, new-home construction will not pick up because builders have little incentive to compete with foreclosure stock.”

As of October 2014, approximately 605,000 homes nationally were in some stage of foreclosure, known as the foreclosure inventory. This is compared to 875,000 in October 2013, a year-over-year decrease of 30.9% and representing 36 consecutive months of year-over-year declines.

2015 doesn’t seem so bad

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 143 Comments

From Forbes:

Housing In 2015: Consumers Upbeat, But Recovery Faces A Tricky Handoff

What does 2015 have in store for the housing market? Nine years after the housing bubble peaked and three years after home prices bottomed, the boom and bust still cast a long shadow. None of the five measures we track in our Housing Barometer is back to normal yet, though three are getting close. The rebound effect drove the recovery after the bust, but is now fading. Prices are no longer significantly undervalued and investor demand is falling. Ideally, strong economic and demographic fundamentals like job growth and household formation would take up the slack. But the virtuous cycle of gains in jobs and housing is relatively weak, and that will slow the recovery in 2015.

Consumers are as optimistic about the housing market as at any point since the recovery started. Nearly three-quarters — 74% — of respondents agreed that home ownership was part of achieving their personal American Dream – the same level as in our 2013 Q4 survey and slightly above the levels of the three previous years. For young adults, the dream has revived: 78% of 18-34 year-olds answered yes to our American Dream question, up from 73% in 2013 Q4 and a low of 65% in 2011 Q3.

Furthermore, 93% of young renters plan to buy a home someday. That’s unchanged from 2012 Q4 despite rising home prices and worsening affordability.

Which real estate activities do consumers think will improve in 2015? All of them – but especially selling. Fully 36% said 2015 will be much or a little better than 2014 for selling a home. Just 16% said 2015 will be much or a little worse, a difference of 20 percentage points. The rest of the respondents said 2015 would be neither better nor worse, or weren’t sure. More consumers said 2015 will be better than 2014 for buying too. But the margin over those who said 2015 will be worse was not as wide.

Pressure to roll back FHA fees

Posted in Housing Recovery, Mortgages, Politics | 129 Comments

From the Record:

FHA faces more pressure to reduce borrowers’ annual fees

After more than doubling home buyers’ annual fees in the wake of the housing bust, the Federal Housing Administration is facing pressure to roll back the fees, especially now that its insurance fund is in the black again.

The homeowners affected are typically lower- and moderate-income borrowers because FHA loans allow for lower credit scores and lower down payments than other mortgages.

The annual insurance premium paid by most FHA borrowers has risen to 1.35 percent, up from 0.55 percent in 2010 — or more than $300 a month on a $300,000 mortgage. The higher premiums helped to shore up the FHA insurance fund, but they also push up the cost of buying a home, and industry groups say that has slowed the real estate recovery.

Both the National Association of Realtors and the Mortgage Bankers Association have called on the FHA to consider lowering the annual premiums. They were recently joined by the Center for American Progress, a Washington-based progressive group.

The National Association of Realtors estimated that last year, nearly 400,000 creditworthy borrowers were unable to buy homes because of the higher FHA premiums.

“By lowering its fees, FHA could provide greater access to homeownership for historically underserved groups,” the group said.

In response, the FHA issued a statement saying it is “regularly evaluating a number of factors to ensure our premiums are at the right levels.”

“As a result of the most recent annual report, we are looking through new information and will use that to inform any future decisions,” said a statement from the FHA’s parent agency, the U.S. Department of Housing and Urban Development.

The FHA’s annual report, released recently, said its mortgage insurance fund has a $4.8 billion surplus, after two years of having a balance below zero because of loans gone bad. But, at 0.4 percent of the total FHA insurance outstanding, the fund is still below the 2 percent level required by law. The fund is an extra safety cushion, required by Congress, on top of the annual reserves set aside each year to cover the loans insured in that year.

I really need you to hit this number

Posted in Mortgages, National Real Estate, Risky Lending | 137 Comments

From the WSJ:

Dodgy Home Appraisals Are Making a Comeback

Home appraisers are inflating the values of some properties they assess, often at the behest of loan officers and real-estate agents, in what industry executives say is a return to practices seen before the financial crisis.

An estimated one in seven appraisals conducted from 2011 through early 2014 inflated home values by 20% or more, according to data provided to The Wall Street Journal by Digital Risk Analytics, a subsidiary of Digital Risk LLC. The mortgage-analysis and consulting firm based in Maitland, Fla., was hired by some of the 20 largest lenders to review their loan files.

The firm reviewed more than 200,000 mortgages, parsing the homes’ appraised values and other information, including the properties’ sizes and similar homes sold in the areas at the times. The review was conducted using the firm’s software and staff appraisers.

Bankers, appraisers and federal officials in interviews said inflated appraisals are becoming more widespread as the recovery in the housing market cools. While home prices are increasing generally, their appreciation is slowing, and sales have been weak despite low interest rates. The dollar amount of new mortgages issued this year is expected to be down 39% from last year, at about $1.12 trillion, according to the Mortgage Bankers Association.

That has put increasing pressure on loan officers, who depend on originating new mortgages for their income, as well as real-estate agents, who live on sales commissions. That in turn is raising the heat on appraisers, whose valuations can make or break a sale. Banks generally won’t agree to a mortgage if the purchase price or the refinancing amount is higher than the appraised value.

Almost 40% of appraisers surveyed from Sept. 15 through Nov. 7 reported experiencing pressure to inflate values, according to Allterra Group LLC, a for-profit appraiser-advocacy firm based in Salisbury, Md. That figure was 37% in the survey for the previous year.

Freddie Mac has found cases of appraisers submitting a suspiciously high number of reports in one day, as well as reports for properties in places where they aren’t certified or licensed to operate, according to a spokesman. It has also received tips from employees at lenders and other insiders warning of inflated valuations, he said.

The firm is looking “into whether or not some of the lines have been crossed from compliance to noncompliance with regard to appraisal independence,” he said. “We are watching it closely and are very aware of the issues.”

Housing to moderate as investors pull back and home buyers sidelined

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 78 Comments

From HousingWire:

Housing losing momentum? Not if but when

Moderation in the housing market is now in its 11th straight month, according to the latest home data index from Clear Capital.

National home price gains fell to 6.7% year-over-year and 1.0% quarter-over-quarter.

Meanwhile Distressed Saturation fell to just 16.8% suggesting the shortage of lower priced inventory is the catalyst for stalling gains. National trends were echoed at the regional level, with the West seeing the strongest moderation across the country. In fact, for the first time since the start of the recovery three years ago, the West’s yearly rates of growth fell below 10%, a sure sign of more moderation to come over the next several months for the nation.

“Performing-only sale trends are a bellwether for what’s to come in 2015 ” said Dr. Alex Villacorta, vice president of research and analytics at Clear Capital. “Think of home price growth since the housing collapse as a bouncing ball, where each successive bounce causes some energy to be lost and eventually movement stalls. We see this on a few different levels. First, we see the delta between performing-only and all sales, including distressed sales, merging. This confirms markets are no longer driven as much by investor demand for discounted distressed assets.”

They also warn that improvements in the broader economic landscape have not instilled confidence in traditional homebuyers (first-time, move-up, second home owners). The general lack of demand in the performing-only segment, coupled with a dwindling supply of distressed inventory, leaves the future of home prices squarely in the hands of traditional homebuyers, who have yet to show any signs of re-engaging.

Reduced reliance on distressed sales and diminishing gains in the performing-only sale segment could be too much for the recovery to overcome as we enter winter. The recovery is at a tipping point. Markets need non investor demand to ramp up, and homebuyer confidence restored. Should this turn into a negative feedback loop, the likelihood for quarterly price declines at the national level could turn into yearly price declines by the end of 2015.