June HousingTrends

Posted on July 1, 2016 by grim

From the Otteau Group:

NJ Purchase Contracts Rise Again in May

Home purchase demand in New Jersey increased for the 21st consecutive month in May rising to nearly 11,000 home-purchase contracts. This was the highest number of purchase contracts recorded in the month of May since 2005, reflecting a 9% increase compared to the same month one year ago. Considering the 15% increase (y-o-y) in May of 2015, home sales in the month of May have increased by more than 24% over the past 2 years.

On a year-to-date basis (January-May) home purchase demand in New Jersey continues to expand, increasing by 17%. The majority of this year’s increase has been concentrated in homes priced below $400,000, as first-time ‘Millennial’ buyers begin to transition from rentership to homeownership, while the number of contracts concentrated in luxury homes priced higher than $2,500,000 has declined by 3%. Reasons for this trend include a greater number of younger-age first home buyers, trade-down purchases by older-age empty-nesters, and relaxed mortgage lending standards which have reduced minimum down-payment amounts.

Shifting to the supply side of the equation, the supply of homes being offered for sale continues to be relatively low which is limiting choices for home buyers. The number of New Jersey homes being offered for sale declined by more than 4,000 (-7%) in May compared to one year ago. This is about 21,000 (-28%) fewer homes on the market compared to the cyclical high in 2011. Today’s unsold inventory equates to 4.8 months of sales (non-seasonally adjusted), which is lower than one year ago when it was 5.7 months.

Currently, the majority (86%) of New Jersey’s 21 counties have less than 8.0 months of supply, which is a balance point for home prices. Hudson County is presently experiencing the strongest market conditions in the state with fewer than 3 months of supply, followed by Essex, Morris, Union and Somerset Counties, which all have fewer than 4 months of supply. None of the counties have an unsold inventory level equivalent to a supply of 12 months or greater, however those with the largest amount of unsold inventory are concentrated in the southern portion of the state including Cape May (10.1), Cumberland (10.7) and Atlantic (11.6).

Posted in Economics, Housing Recovery, New Jersey Real Estate | 64 Comments

Pending Home Sales pause in May

Posted on June 30, 2016 by grim

From CNBC:

Pending home sales down 3.7%, marking first annual drop in two years

The final push of the spring housing season turned out weaker than expected. Signed contracts to buy existing homes fell 3.7 percent in May compared to April, according to the National Association of Realtors.

April’s reading was revised down. These so-called pending home sales were 0.2 percent lower than May of 2015, the first annual drop since August of 2014.

“With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity,” said Lawrence Yun, chief economist for the Realtors. “Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.”

That competition has pushed home prices higher faster than expected and far faster than income growth. Prices have reached new peaks in seven major metropolitan markets (Denver, Dallas, Portland Oregon, San Francisco, Seattle, Charlotte, and Boston), according to the latest report from S&P/Case-Shiller. Homes are also spending far less time on the market, averaging just 30 days in May, compared to 40 days a year ago.
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Regionally, pending home sales in the Northeast dropped 5.3 percent for the month and are now unchanged from a year ago. In the Midwest sales slipped 4.2 percent in May, and are 1.8 percent below May 2015. Sales in the South declined 3.1 percent for the month but are 0.6 percent higher than last May. The West saw a 3.4 percent monthly drop, and sales are 0.1 percent below a year ago.

Posted in Economics, Housing Recovery, National Real Estate | 68 Comments

Home prices set new highs in April (but not us)

Posted on June 29, 2016 by grim

From the Record:

Home prices in N.Y. metro area continue gradual increases

Home prices in the region are rising, but at only half the rate of the national averages, the S&P/Case-Shiller home price index reported Tuesday.

As the nation continues to recover from the worst housing downturn in decades, single-family values rose 2.6 percent in the New York metropolitan area in the 12 months ending in April, compared with 5 percent nationwide, Case-Shiller reported. Prices in the region are at about the same levels they reached in September 2004, while national prices are at the levels of October 2005. And values are still below their peaks of mid-2006 — about 10 percent nationwide and 16.5 percent below in the region.

Home values haven’t rebounded as smartly in the area as in the nation as a whole, in part because they didn’t crater as far during the housing crash. In addition, foreclosures continue to weigh on the New Jersey market, which was slower to deal with the crisis than the nation as a whole. According to the New Jersey Realtors, single-family home prices rose 1 percent in Bergen County in April, to a median $465,000, and 7 percent in Passaic, to a median $300,000.

April’s price gains were especially strong in the West, led by Dallas, Denver, Portland and Seattle. Northeastern and Midwestern cities, including Washington, New York and Chicago, had gains of 3 percent or less.

David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said the national numbers reflect “a strong price performance” over the past six months. “The home price increases reflect the low unemployment rate, low mortgage interest rates, and consumers’ generally positive outlook,” Blitzer said. “One result is that an increasing number of cities have surpassed the high prices seen before the Great Recession. Currently, seven cities – Denver, Dallas, Portland OR, San Francisco, Seattle, Charlotte, and Boston – are setting new highs.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 70 Comments

Spy house still empty, Fitz-Hume and Millbarge disapprove.

Posted on June 28, 2016 by grim

From the NY Times:

‘Spy House,’ a Decrepit Reminder of Betrayal, Sits Empty in New Jersey

Amid the 75 houses inside the oak-lined, no-outlet neighborhood, a single home stands unoccupied, a celebrity eyesore.

Inside the house, the baseboards have been torn from the walls, with wires visibly protruding. The back deck is deteriorating, and the foundation may be pitched slightly toward the wildlife preserve adjacent to the back yard.

Around here, in a section of town called Fieldstone, everyone knows the peach-colored colonial with a sagging facade as the spy house, where a flock of Federal Bureau of Investigation agents arrested the Murphy family six years ago, on June 27, 2010.

Richard and Cynthia Murphy were really Vladimir and Lidiya Guryev, Russian spies, part of a Northeast corridor cell that was soon sent back to Moscow by the United States government in an exchange. The Guryevs and their two talented, popular daughters, Katie and Lisa, became an inspiration for the FX show “The Americans.”

They are long gone, but the unoccupied house remains a frustrating story of its own and an unwanted symbol of betrayal for the community.
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“The whole thing is pretty creepy on a psychological level,” said Elizabeth Lapin, who lives about 60 yards from the spy house. “The spies resumed a normal life in Moscow, and we’re left with this reminder. The neighborhood was wounded, and it became part of a TV show. Until the house has another family, the story isn’t written.”
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The F.B.I. tore the place apart on the day the Guryevs were arrested, after dragging them away in handcuffs.

That began a Dickensian, bureaucratic process: More than a year passed before the family’s green Honda Civic was repossessed from the driveway; two more years went by before the place was technically put up for sale by the United States Marshals Service in April 2013.

The 1,830-square-foot home with a “recently updated kitchen” was originally listed at $444,900, and several neighbors expressed interest. Later, the price was reduced to $365,500. Would-be buyers, however, were told by the broker, Fast Track Real Estate Company of Waldwick, N.J., that the property was either in escrow or not for sale. Structural questions lingered, and potential buyers wondered if the deed was fully cleared.
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Then last month, on May 16, Santander Bank, based in Boston, acquired the deed as a lienholder.

The Russians, it turned out, owed money.
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The sales process was reset to square one this spring. The federal government had by then remitted about $38,000 in property taxes on the spy house over the last three years. The Marshals Service also kept the home winterized and occasionally sent landscapers to mow the lawn.

But when Santander first took over, the property was ignored and the weeds grew higher. Public Service Electric & Gas had taken to parking its equipment in the driveway. A contractor came to look at the crumbling front steps but did not return.

“It’s not safe,” said Chris Delaney, who lives across the street from the spy house. “It could catch fire. You worry if there will be people squatting in there, and what bothers me the most is it’s a giant waste of money. What was the government doing for five years?”
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“We have been working with the approved brokers and we are ensuring that the property is being maintained in preparation for sale,” a Santander spokeswoman wrote in an email.

Posted in Comp Killer, New Jersey Real Estate | 54 Comments

Will it ever sell? Probably not.

Posted on June 27, 2016 by grim

From Forbes:

New Jersey’s Most Expensive Home is Back on the Market for $48.8 Million

Eight miles from Manhattan, a 30,000-square-foot estate is quietly hidden on six acres in the exclusive neighborhood of Alpine, New Jersey. Home to celebrities, doctors, professional athletes and more, the private Alpine community’s former residents include the likes of Chris Rock, Sean “Diddy” Combs, Stevie Wonder, and Britney Spears.

The 12-bedroom and 19-bathroom Stone Mansion is currently owned by Richard Kurtz, chief executive of Kamson Corporation. The home is listed exclusively with Sharon Kurtz of Sotheby’s Prominent Properties in a marketing partnership with Compass in New York City. Celebrity home staging expert Meridith Baer was brought in to style the mansion before putting the property up for sale. With a client list including Julia Roberts and Christina Aguilera, the home features Baer’s custom upholstery line and purchases from vendors around the world for several rooms, including the living room and master bedroom suite.

Posted in Housing Recovery, New Jersey Real Estate | 56 Comments

Foreclosure bill doesn’t go far enough to prevent zombies

Posted on June 25, 2016 by grim

From HousingWire:

Senate to consider wide-ranging bill to address zombie foreclosure “crisis”

Mortgage lenders and servicers could soon have a whole new set of responsibilities for maintaining foreclosed homes, as Sen. Bob Menendez, D-NJ, introduced a new bill on Friday that would address what his office calls the “zombie foreclosure crisis.”

Zombie foreclosures are homes that are vacant or abandoned during the foreclosure process, and in the last several years, several states have undertaken efforts to stem the rising tide of abandoned homes.

In many cases, the town or city in which the property is located is left on the hook for maintaining the abandoned property due to the property being left in “legal limbo,” Menendez’s office said.

Late last year, Menendez and his fellow New Jersey senator, Cory Booker, D-NJ, sent a letter to the heads of the Department of Housing and Urban Development, the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency and others, telling the agencies that the prevalence of zombie foreclosures in the state is seriously impacting the state’s residents and its economy.

According to Menendez’s office, New Jersey had the highest foreclosure rate in the nation in 2015 with over 35,000 foreclosure filings. Menendez also noted a recent report from RealtyTrac, which showed that he state has the most vacant zombie foreclosures in the nation with 4,003.

“Zombie foreclosures threaten our communities and scare away new homebuyers and investors, which leads to neighborhood blight and plummeting values of surrounding properties,” Menendez said Friday.

“We need to do all we can to keep families in their homes and ensure mortgage lenders are invested in the communities they serve,” Menendez added. “This legislation stands up for New Jersey’s struggling homeowners, and prevents the banks from turning their backs on borrowers, on their neighbors, and on the community at large.”
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Menendez announced the bill in East Orange, New Jersey, surrounded by housing advocates and local officials, all of whom pledged their support for Menendez’s bill.

“Our neighbors and neighborhoods are still trying to recover from the foreclosure crisis and the outbreak of zombie foreclosures that have menaced our communities,” said Staci Berger, president and chief executive officer of the Housing and Community Development Network of New Jersey.

Posted in Foreclosures, Housing Recovery, National Real Estate, New Jersey Real Estate | 17 Comments

Investors out as cash sales fall?

Posted on June 24, 2016 by grim

From HousingWire:

CoreLogic: Fewer buyers paying cash for properties

Cash sales made up 33% of total home sales in March 2016, a decrease of 2.4 percentage points annually, according to a recent report by CoreLogic.

Monthly, cash sales fell by 2.8 percentage points from February. For the first three months of 2016, cash sales averaged 34.7%, the lowest start to any year since 2008.

Though below the peak of 46.6% in January 2011, cash sales are up from the pre-crisis average of 25%. If cash sales continue to fall at the same rate it did in March, they could hit the pre-crisis level by mid-2018.

Real estate owned sales had the highest percentage of cash sales at 57.2%. Resales came in second with 32.9%, followed by short sales at 30.6% and newly constructed homes at 14.4%.

While REO sales have the highest percentage of cash sales, REO transactions accounted for only 6.8% of all market sales in March. When cash sales hit their peak in 2011, REO sales made up 23.9% of market sales.

Resales, while having less of a percentage of cash sales than REOs, make up more of the market share at about 80%, and therefore have a larger impact.

Posted in Employment, Housing Recovery, National Real Estate | 106 Comments

Home sales strong in May

Posted on June 23, 2016 by grim

From the Record:

Home sales climb in May to the highest level since before the recession

In a sign of growing demand for housing, eager home buyers scooped up properties quickly this spring: Sales of existing homes in May reached their highest levels since before the recession, the National Association of Realtors said Wednesday.

The increased demand, coupled with reduced inventory, is sparking a return to bidding wars in some towns, North Jersey real estate agents say.

At the same time, lack of supply is “severely limiting choices and pushing prices out of reach for plenty of prospective first-time buyers,” Lawrence Yun, NAR chief economist, said in a statement.

And prices overall remain below the levels of the housing boom a decade ago, which has kept many potential sellers from putting their homes on the market, further shrinking the supply of homes for sale.

In North Jersey, through May, single-family sales are up about 20 percent in Bergen County and 28 percent in Passaic, according to the New Jersey Realtors. And inventories have shrunk more than 28 percent in both counties over the past year. Both counties have about a six-month supply of homes at the current sales pace, compared with 4.7 months nationwide. Anything below six months is considered an indicator of prices rising in the near future.

Nationally, according to the NAR, homes have been selling, on average, in 32 days, the lowest number since the group began tracking it in 2011. Homes aren’t selling quite as quickly in the region, according to the New Jersey Realtors. Properties that sold in May had been on the market about two months in Bergen — down 20 percent from a year earlier — and three months in Passaic, which was unchanged from last year.
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Even with the increased demand, however, prices have not taken off. Nationally, according to the NAR, the median price for a single-family home rose 4.6 percent over the past year. In Bergen County, prices ticked down 1.1 percent over that period, to a median $460,000 in May. Prices in Passaic rose 5.3 percent to a median $300,000. Home values in North Jersey remain about 17 percent below their peaks in mid-2006.

Posted in Housing Recovery, National Real Estate, New Jersey Real Estate | 89 Comments

Housing expensive, rent or buy.

Posted on June 21, 2016 by grim

From APP:

With rent of $1,160 a month in Asbury Park taking up most of her family’s income, Susan Aquino began to search for a new apartment that would give her some breathing room.

The hunt didn’t last very long.

“We were looking for two bedrooms, and they were … $1,500 to $1,700 between October and March,” said Aquino, 43.

Aquino is part of a troublesome story playing out across New Jersey and the U.S. in the 10 years since the housing bubble peaked and then burst in a ruinous crash: As real estate has climbed back, homeowners are thriving while renters are struggling.

For many longtime owners, times are good. They’re enjoying the benefits of growing equity and reduced mortgage payments from ultra-low interest rates.

But for America’s growing class of renters, surging costs, stagnant pay and rising home values have made it next to impossible to save enough to buy.

The possible consequences are bleak for a state already grappling with economic inequality: Whatever wealth most Americans possess mainly comes from home equity. An enlarged renter class means fewer Americans can build that same wealth and financial security.
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Nearly two-thirds of adults still own homes. And some who rent do so by choice. Yet ownership has become a more distant dream for the many Americans who still regard it as a route to prosperity and pride. The problem has become especially severe in areas that offer the best job prospects as well as those that have been battered by foreclosures.

“It doesn’t paint a pretty picture,” said Svenja Gudell, chief economist at Zillow, the online real estate database company. “You’re really blocking out a group of buyers from owning a home. They’re truly living paycheck to paycheck, and that does not put them into a good position to buy.”
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New Jersey’s homeownership rate has dropped more precipitously – from a peak of 71.3 percent in the first quarter of 2005 to 60.9 percent 11 years later, according to data from Patrick J. O’Keefe, director of economic research for CohnReznick, an accounting firm.

That demand has driven up rents, which in turn have prevented or delayed people from buying first homes.

The government says if you spend more than 30 percent of your pretax pay on housing, you are “cost-burdened.” The total number of renters in that category has jumped more than 30 percent in the past decade, to 21.2 million. Half of all renters are now considered cost-burdened, compared with just 24 percent in 1960.

In the New York-Newark-Jersey City metropolitan statistical area, which includes Monmouth and Ocean counties, the trend is the same. Some 51.6 percent of renters are considered cost-burdened, up from 48.5 percent when the Great Recession technically ended in 2009, the AP data shows.

By comparison, 40.1 percent of homeowners are considered cost-burdened, down from 41.1 percent in 2009, according to AP’s data.

Posted in Demographics, Economics, Housing Recovery, New Jersey Real Estate | 229 Comments

Tan Man Walks

Posted on June 20, 2016 by grim

From Bloomberg:

Countrywide’s Mozilo Off Hook as U.S. Said to Abandon Suit

U.S. prosecutors have abandoned their case against Angelo Mozilo, a leader in selling the risky subprime mortgages that fueled the financial crisis, after a two-year quest to bring a civil suit against him.

The Justice Department sent a letter informing Mozilo, the co-founder of Countrywide Financial Corp., that it isn’t moving ahead with any action against him, according to people familiar with the matter. That effectively ends nearly a decade of U.S. scrutiny of a man who became a face of risky lending practices and later an emblem of the government’s mixed success in holding individuals accountable.

In recent years, the 77-year-old has been living in a 12,692-square-foot house in Santa Barbara, California, investing in real estate and writing a book about his life so his grandchildren will “know the truth.” Interviewed in late 2014, shortly after news of prosecutors’ civil pursuit became public, he denied any wrongdoing and said the national real-estate collapse, not Countrywide’s lending, was at the root of the crisis.
“Countrywide or Mozilo didn’t cause any of that,” he said at the time.

Justice Department officials in Washington and Los Angeles made the decision not to move forward with civil cases against Mozilo and other Countrywide executives, according to people familiar with the matter.

The Justice Department, through a spokesman, declined to comment.

“We are pleased and gratified with the Department of Justice decision” to close the investigation without any further litigation, said David Siegel, an attorney for Mozilo.
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Countrywide, which was bought by Bank of America Corp. in 2008, originated more than $408 billion of worth of loans in 2007, at the height of the housing market. Many of them went to poorly vetted and risky borrowers, the Justice Department has said.

After the 2008 crash in housing — and the accompanying meltdown of complex financial instruments containing nonperforming mortgage loans — the Justice Department opened widespread investigations into industry practices. Prosecutors in the U.S. Attorney’s office in Los Angeles dug deeply into Countrywide’s actions, including Mozilo’s stock sales in the months leading up to the bursting of the mortgage bubble. They brought no criminal case against him.

Lawmakers and public-interest groups complained that executives walked away from the housing bust enriched and mostly unscathed. Mozilo — who earned at least $500 million over a decade leading up to the crisis, according to compensation-research firm Equilar Inc. — paid a $67.5 million penalty to the Securities and Exchange Commission in 2010, without admitting or denying wrongdoing. Bank of America covered a portion of his penalties.

Posted in Foreclosures, Mortgages, Risky Lending | 57 Comments

A bad May for NJ jobs

Posted on June 18, 2016 by grim

From the Record:

NJ lost 6,800 jobs in May; unemployment rate ticks up

New Jersey lost 6,800 jobs last month, increasing the state’s unemployment rate to 4.9 percent, slightly higher than the national average, the Department of Labor and Workforce Development said Thursday.

The May job losses were owed largely to a strike by Verizon workers, “which idled approximately 5,000 workers in the information sector,” the labor department said.

“Like the national economic recovery, the New Jersey economic recovery is experiencing a slight pause. This is only temporary, however, and we have every reason to expect growth throughout the remainder of 2016,” James Wooster, chief economist for the state Treasury Department, said in a statement.

The rise in the unemployment follows a recent trend after Governor Christie celebrated recovery from the Great Recession. Christie boasted of the state’s unemployment rate dropping to 4.3 percent, below the national average, and of New Jersey having more people employed than at any time in history.

But over the last two months New Jersey’s unemployment has slowly edged up as the national average has dropped. In May the national unemployment rate was 4.7 percent, according to the Bureau of Labor Statistics.

Posted in Economics, Employment, New Jersey Real Estate | 42 Comments

Guess who is back?

Posted on June 17, 2016 by grim

From the NYT:

Bidding Wars in the Suburbs

The listing Nadia Krivickova and Michael Krivicka had been waiting for popped up early last September: a pristine 2,500-square-foot 1924 colonial with a child-friendly backyard in the lower Westchester County village of Pelham Manor. Then living in an apartment in Manhattan, the couple (she’s an accountant, he’s a founder of Thinkmodo, which creates viral video campaigns) were in need of more space for their two toddlers. After their real estate agent, Arthur L. Scinta, an associate broker with Houlihan Lawrence, advised them to move quickly, they went to see the house the very next day.

By 5 p.m., they had submitted an offer for the full asking price of $942,000. The sellers wanted to give it more time. After several days, the couple raised their offer to $999,000. The sellers wanted another week. “We asked them to give us a number they would take it off the market for,” Ms. Krivickova said. “They said no.”

The couple really wanted the house. They huddled with Mr. Scinta, who analyzed recent sales prices of similar properties to help them strike a balance between a strong offer and an overzealous offer, which, if it exceeded the bank’s appraisal, could cause problems with financing.

Finally, on a Monday morning, they submitted their highest offer: $1,087,000, a full 15 percent premium. Mr. Scinta heard back that afternoon.

“Arthur called and told us there were nine other offers,” Ms. Krivickova said. “But we got it — by three or four grand.” And fortunately, the bank appraisal came in on the nose.
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The bidding wars that have become the norm in New York City are now also common in select suburbs within easy commuting distance. Buyers priced out of the city are heading for the ’burbs, driving up demand and creating a more fraught buying process in close-in towns that have long enjoyed reputations for good school systems, lively downtowns and ready access to the city.

“The city is this pot of water that’s spilling over on the sides, and that excess demand is going to the suburbs,” said Jonathan Miller, the president of Miller Samuel, a New York appraisal and research firm. “It’s all being driven by the lack of affordability.”
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Across Westchester, northern New Jersey, parts of Long Island and lower Fairfield County, Conn., the competition is fiercest for move-in-ready homes toward the lower end of the price scale — under $1 million in some markets, under $2 million in others — in places within a 40-minute rail commute to the city. Walking distance to a lively downtown, a train station or both heightens the appeal.

Well-priced homes in good condition in these markets often draw multiple offers within days of coming on the market. An analysis of first-quarter sales this year conducted by Miller Samuel showed the highest percentages of Westchester properties (23 percent to 44 percent) selling at or above asking price — signs of likely bidding wars — in places like Larchmont, Irvington, Bronxville, White Plains and Pelham. The average premium ranged from 1.7 percent to 4 percent, actually lower than a year ago at the same time, when buyers were paying more like 5 percent or 6 percent over the asking price.
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Mr. Miller’s firm does not cover New Jersey. But there, “the housing market is looking better than it has in a very long time,” said Jeffrey Otteau, the president of the Otteau Valuation Group in East Brunswick, N.J. Among the briskest markets are Hoboken, Glen Ridge, Maplewood, Montclair and South Orange, judging by their very low levels of inventory, he added.

Posted in Demographics, Economics, Housing Recovery, New Jersey Real Estate, NYC | 99 Comments

Brookings: Student loan debt not holding back homeownership

Posted on June 16, 2016 by grim

From Brookings:

The dividing line between haves and have-nots in home ownership: Education, not student debt

There is widespread concern that student loans are a drag on the housing market. Leading economic thinkers, including Larry Summers and Joe Stiglitz, have linked the slowdown in homeownership among young people to high levels of student debt.[i] They recommend easing loan burdens to keep student debt from acting as a brake on the economy.

But is student debt really hampering the housing recovery?

Frequently-cited analyses from the Federal Reserve Bank of New York do not provide compelling evidence for this hypothesis, since they rely on data in which college attendance is unobserved. The results are biased by unobserved variation in educational attainment, which is correlated with both home ownership and student borrowing. Better data from the Board of Governors of the Federal Reserve System nullify their key finding.[ii]

First, some background. A few years back, a blog post from the Federal Reserve Bank of New York fanned fears that student debt was holding back the economic recovery.[iii] The post compared homeownership rates of those with and without student debt. The key graph showed that, during the recession, homeownership took a sharp nosedive among 30-year-olds holding student debt, dropping faster than it did among those who did not hold student debt.[iv]

Many read into this graph that student debt is dragging down the housing investments of the college-educated, making them worse off than those who went to college and did not borrow.

But this graph and its underlying data do not (and cannot) show that debt is decreasing home ownership among the college-educated. Why not? These data contains zero information about education. Lumped together in the “No student loan debt” group are a) people who went to college yet did not borrow and b) people who never went to college. The composition of both of these groups is changing over time.

This odd comparison reflects the limitations of the data on which it is based: credit reports. Credit reports do contain detailed information about debt, including student loans, mortgages, credit cards and car loans. But they say little about the borrower herself. In particular, they include zero information about education.
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Researchers at the Board of Governors of the Federal Reserve System (Alvaro Mezza, Kamila Sommer and Shane Sherlund) pulled together the data needed for precisely this comparison.

The researchers combined credit reports with data on college attendance from the National Student Clearinghouse (NSC). These NSC data are nearly a national census of college attendance and are used extensively by researchers.[v] The NSC data include college enrollment information for all college students, not just those who borrow.

The results are striking.[vi]

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 101 Comments

April foreclosures and delinquencies show continued improvement

Posted on June 15, 2016 by grim

From HousingWire:

April foreclosure inventory down about 25% from last year

Foreclosure inventory continues to decline, decreasing 23.4% annually in April, while completed foreclosures declined by 15.8% annually, according to the April 2016 National Foreclosure Report released by CoreLogic, a property information, analytics and data-enabled services provider.

Completed foreclosures averaged 37,000 nationally, down from 43,000 in April 2015. This is down 68.9% from its peak of 117,813 in September 2010.

Whereas foreclosure inventory represents the number of homes at some point in the foreclosure process, completed foreclosures are the homes lost to foreclosure.

“The number of homeowners who have negative equity has fallen by two-thirds since its 2010 peak, and the number of borrowers in foreclosure proceedings has also continued to drop,” CoreLogic President and CEO Anand Nallathambi said.

“Despite this progress, about four million homeowners remained underwater at the end of the first quarter, and these borrowers are more vulnerable to foreclosure proceedings if they should fall delinquent,” Nallathambi said.

That said, rising home prices caused 268,000 homeowners to regain equity in the first quarter of 2016, pushing the total number of mortgaged residential properties with equity to 92%, according to data from CoreLogic.

Last month, the number of homes in some stage of foreclosure and the number of seriously delinquent mortgages were at levels not seen since late 2007, according to the March 2016 National Foreclosure Report from CoreLogic.

April continued the trend and hit yet another low not seen since 2007, when foreclosures averaged 21,000.

In April, total homes in the national foreclosure inventory included about 406,000 homes, about 1.1% of homes with a mortgage. This is down from April 2015’s 530,000 homes, or 1.4% of all homes with a mortgage.

Posted in Foreclosures, Housing Recovery, National Real Estate | 61 Comments

Will the next bubble be the biggest yet?

Posted on June 14, 2016 by grim

From CNBC:

Experts sharply divided over whether surging home prices signal new bubble

We’re living in a very different housing world today — from tighter credit to stricter regulations — compared with the dark days of the crash, but rising residential prices are starting to spark concern again, according to a major real estate investor and a leading real estate attorney who appeared Friday on CNBC.

But Ethan Penner, managing partner at Mosaic Real Estate Investors, and Shari Olefson, attorney and director of The Carnegie Group think tank, disagree about whether the crosscurrents in the property market are pointing to a bubble.

The housing market has been putting out a lot of mixed signals in this spring buying and selling season. On the one hand, there’s solid, strong demand for housing. But on the other, low supply has pushed prices through the roof again, leading to weaker-than-expected home sales.

Penner told “Squawk Box” that he’s not worried about these factors causing a bubble. “We are clearly at very high pricing by historical standards. But that’s true of every financial asset. And in my mind, it’s more of a reflection of [Federal Reserve] interest rates policy than anything else.”

Average housing prices rose 5.2 percent in March, according to the S&P/Case-Shiller national home price index, which was just 4 percent shy of its 2006 peak after falling nearly 30 percent by 2012.

Olefson sees bubbles in some markets, citing the rate of housing price increases outpacing wage rises as a red flag.

Another factor sopping up supply and increasing prices is the return of the house flippers. Trying to take advantage of rising prices, investors are scooping up properties for cash, which tends to be more attractive to sellers. That’s leaving mortgage-dependent buyers out in the cold.

The other side of the low-supply coin are the 4 million would-be sellers stuck in place because they’re underwater, according to property analytics firm CoreLogic. In fact, about 18 percent of all homeowners with a mortgage have less than 20 percent equity, so they’re not selling yet.
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Additionally, Olefson said she’s concerned about how the 2008 housing crash has changed the way Americans think about homeownership.

“We have removed the stigma associated with foreclosures. Before the bubble and the crisis, nobody really knew what would happen if they went into foreclosure. No one knew what a short sale was. That is [now] common vernacular,” she contended.

“When Americans start looking at housing as something to speculate on,” she said, “that’s actually the biggest indicator I think in this modern-day housing world of a bubble.”

Penner countered by saying speculation should not be viewed as an overly worrisome sign. “Speculative orientations exist in every market all the time.”

Posted in Housing Bubble, Housing Recovery, National Real Estate | 122 Comments