NJ REO increase isn’t high enough

Posted on May 15, 2014 by grim

From HousingWire:

Foreclosure filings down 1%, bank repos up 4%

Property foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 115,830 properties in April, a 1% decline from the previous month and down 20% from April 2013.

RealtyTrac’s U.S. Foreclosure Market Report shows one in every 1,137 U.S. housing units with a foreclosure filing in April.

However, bank repossessions in April increased 4% from the previous month, although they were still down 14% from a year ago. There were a total of 30,056 bank repossessions nationwide in April.

Bank repossessions increased from the previous month in 26 states and were up from a year ago in 16 states, including New York (142% increase), Oregon (91% increase), New Jersey (58% increase), Illinois (55% increase), Indiana (52% increase), Maryland (45% increase), Connecticut (44% increase), California (27% increase), and Nevada (15% increase).

“The rise in bank repossessions in many states is a sign that those markets are working through the final remnants of foreclosures left over from the recent housing crisis,” said Daren Blomquist, vice president at RealtyTrac. “Many of these bank-owned homes are bottom-of-the-barrel properties in terms of location or condition, but they will provide some much-wanted inventory of homes for sale in some markets in the coming months. Investors and other buyers willing to do more extensive rehab will likely be best-suited for these incoming REOs.”

Posted in Foreclosures, National Real Estate, New Jersey Real Estate | 188 Comments

Midweek Laugh (or Cry)

Posted on May 14, 2014 by grim

From AOL Money UK:

Posh car ‘pushes up house prices’

Having a posh car in the driveway can push up property prices, according to a survey.

As many as a third of people reckon having a luxury motor outside their home can add to the value of their house, the poll by car rental company Avis found.

Around a third of the 2,000 adults surveyed also thought a flash car would help sell a property.

This seemingly necessary accessory was most valued in Wolverhampton, where respondents reckoned it would add as much as £6,100 to a property.

The majority (57%) admitted they took notice of a luxury car in the drive when viewing a new home. A top-end model gave the impression it was a safe and desirable place to live and the property was an attractive one.

Car models seen as being the best to have parked outside a property include Mercedes-Benz, Audi and BMW.

Open-topped vehicles were also seen as a boon, particularly when trying to entice women buyers.

Posted in Humor | 153 Comments

Deciphering the mortgage slowdown

Posted on May 13, 2014 by grim

From the Philly Inquirer:

Reasons for fewer mortgages so far in 2014

Applications for mortgages to buy houses have been lagging so far this year – 16 percent below the pace for 2013.

Yet, for the first time since 2009, applications to purchase are exceeding deals to refinance mortgages.

The lower numbers for home-buying mortgages reflect continued weakness in the real estate market, even though the 30-year fixed rate fell Thursday to 4.21 percent – its low for the year so far.

There are many reasons, according to economist Mark Zandi, chief economist of Moody’s Analytics in West Chester.

Refinancing activity has dried up with higher mortgage rates, he said, and lending standards are tight, especially for first-time buyers.

“There is sticker shock due to a combination of higher rates and house prices,” as well as “underlying reticence to purchase a home, given the housing bust,” Zandi said, as evidenced by single-family rental being “real competition to buyers.”
…
Data from at least two sources, and some anecdotal evidence, show an increase in the number of all-cash, non-investor buyers in the first quarter of 2014.

There have always been cash purchases in the higher-end housing market.

Toll Bros. CEO Douglas V. Yearley Jr. said just that in a meeting last week in New York when asked about the effects tighter lending was having on the luxury-home builder.

Yearley said 20 percent of the Horsham-based company’s buyers are all cash, while those who take out mortgages put down 30 percent.

Guy A. Matteo, an agent with Re/Max Preferred in Newtown Square, agreed, saying that all-cash buyers comprise “a small percentage of my overall business – mostly higher end.”
…
Tighter credit requirements haven’t helped, said Jerome Scarpello, of Leo Mortgage in Ambler.

“Lenders have been told that if a borrower’s debt-to-income is over 43 percent, they lend at their own risk and do not have the safe-harbor protections of the agencies,” Scarpello said.

There is a misconception among many first-time home buyers that they will not qualify for financing under the new credit guidelines, which is not the case, said Malcolm Hollensteiner, director of retail lending sales and production at TD Bank.
…
One reason for the sluggish real estate market most often mention by Philadelphia-area agents and brokers is the shortage of inventory, which Zandi attributes to “a disconnect between potential buyers and sellers and the appropriate price.”

All-cash, then, might be a negotiating tool in some cases.

Martin Millner, of Coldwell Banker Hearthside in Yardley, said a listing in Lower Makefield, priced around $470,000, “generated multiple offers, and the buyer we contracted with is paying cash.”

RealtyTrac reported that, nationally, 42.7 percent of first-quarter sales were all-cash, compared with 19.1 percent in the same period a year ago, with Pennsylvania at 42.1 percent versus 21.8 percent in 2013, and New Jersey 40.6 percent versus 19.1 percent.

Posted in Demographics, Economics, Employment, Foreclosures | 110 Comments

Bubble or not?

Posted on May 12, 2014 by grim

From the Washington Post:

Why homes are hitting bubble-era prices without bubble-era headaches

Home values in a few states have surpassed the price peaks reached during the housing boom, but that doesn’t mean a return to the days of frothy pricing.

In March, Colorado, North Dakota, South Dakota, Texas, Wyoming and the District of Columbia exceeded their old highs, the mortgage firm CoreLogic reported Tuesday based on its own price index. Still, there’s no reason to fear a price bubble in those markets, said Mark Fleming, the group’s chief economist.

Home values in those states are reacting to improved economies in their respective regions, Fleming said. For instance, prices are doing well in Texas, Colorado and the Dakotas because significant growth in the energy business is attracting an influx of new residents to those states, just as a reliable supply of work continues to draw people to the D.C. area. There’s nothing to worry about when home prices rise in line with economic fundamentals, Fleming said.

Increased demand for homes leads to price growth, especially when the supply is tight. “You only need a little positive price appreciation and strong demographics going in your favor in those areas to surpass the prior peak,” Fleming said. “None of those were bubble markets.”
…
“In places that remain way down from their peak, there are still quite a few borrowers that are upside down,” meaning they owe more on their mortgages than their homes are worth, said Sam Khater, CoreLogic’s chief deputy economist. “Those markets still suffer from distress despite the price gains.”

Many of those states experienced extraordinary double-digit price increases during the past two years only because investors stepped in, bought distressed properties at huge discounts and helped put a bottom under the market. But now that home prices and mortgage rates are climbing, the investors are retreating and the price gains are moderating.

CoreLogic estimates that prices will rise 6.7 percent percent in the coming year.

Posted in Demographics, Economics, Employment, Housing Recovery, National Real Estate | 117 Comments

Home prices continue to rise in NJ

Posted on May 9, 2014 by grim

From the Otteau Group:

NJ Home Prices Increase for the 6th Consecutive Quarter

The combined effects of pent-up home purchase demand and tight inventory levels are causing continuing home price increases in New Jersey. Median home prices in the state rose by 4.8% in Q1 compared to one year ago. This marks the 6th consecutive quarterly increase since the housing recovery began. The median home price in New Jersey increased to $275,148 in Q1 up from $262,661 one year earlier.

The recovery in home prices has however occurred primarily in the northern part of the state while southern New Jersey continues to see a much slower recovery. The median home price in northern New Jersey increased to $303,089 in Q1 up from $286,482 one year earlier, whereas home prices in the southern part of the state increased to $187,818 from $185,053 in the prior year.

Posted in Housing Recovery, New Jersey Real Estate | 171 Comments

Housing market awash in cash – what recession?

Posted on May 8, 2014 by grim

From HousingWire:

It’s official: The investors are back

Tighter credit standards may be squeezing out the average buyer, but that just means that there are more properties available for investors. And investors are capitalizing on the increasing supply more frequently than they have since 2011.

According to RealtyTrac’s U.S. Institutional Investor & Cash Sales Report for the first quarter, the share of all-cash sales climbed to 42.7% of the total sales in the first three months of 2014.

That’s the highest since RealtyTrac began tracking cash purchases in 2011. It’s also up from 37.8% in the fourth quarter of 2013 and up significantly from 2013’s first quarter, when cash purchases made up only 19.1% of the market.

“Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,” said Daren Blomquist, vice president at RealtyTrac. “The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers — including individual investors, second-home buyers and even owner-occupant buyers — to fill the vacuum of demand left by institutional investors.”
…
As Blomquist said, institutional investors (entities that have purchased at least 10 properties in a calendar year) made up a much smaller share of the market in the first quarter. Institutional investors accounted for 5.6% of all U.S. residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013 to the lowest level since the first quarter of 2012.

The top five markets for all-cash purchases were all in Florida. The number one market for all-cash purchases was Cape Coral-Fort Myers, where cash purchases made up 73.6% of the sales in the first quarter. The rest of the top five were Miami (67.1%), Sarasota (65.1%), Palm Bay (64.1%), and Lakeland (61.8%).

Other major metro areas with more than 50% all-cash sales included New York (57.0%), Columbia, S.C., (56.1%), Memphis (54.9%), Detroit (53.5%), Atlanta (53.2%) and Las Vegas (52.2%).

Posted in Demographics, Economics, Housing Recovery | 126 Comments

What if the millennials actually want to own?

Posted on May 7, 2014 by grim

Posted in Demographics, Economics | 118 Comments

Rent vs Buy debate continues

Posted on May 6, 2014 by grim

From the WSJ:

The New Math of Renting vs. Buying

Buying a home has long been part of the American dream. But rising prices have made renting less expensive in many places.

People often aspire to own a home for reasons that have little to do with money, and rental options are limited in some communities. Yet owning property can limit your flexibility to move when you want and ties up a lot of your money.
…
The monthly cost of renting was lower than buying in 20 large metropolitan areas at the end of last year, the most recent period for which data are available, according to figures provided exclusively to The Wall Street Journal by Deutsche Bank. That is up from 15 large metropolitan areas a year earlier.

The bank calculates the costs in 54 markets based on average local rents and median home-sale prices, which it uses to estimate monthly mortgage payments for a hypothetical buyer in the 25% federal income-tax bracket.

Renting had been less expensive than buying on average across all the areas Deutsche Bank tracks since at least the early 1990s. But that changed during the financial crisis, as home prices plummeted and interest rates on mortgages dropped. The current rally in home prices appears to be pushing the housing market back toward the historical norm.
…
Many Americans see buying a home as an essential step in a successful life, and owning one can bring significant financial benefits.

The most obvious upside is that a home can significantly increase in value. The median sales price of existing single-family homes rose 81% from 1993 through 2013, according to the NAR.

The potential payoff can loom large in a buyer’s mind when home prices are going up rapidly, as they have recently. “We’ve already seen six to seven years of normal appreciation in the last 12 months” in many markets, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

Many homeowners also can deduct mortgage interest from their income-tax bills along the way.
…
Given the wide array of potential benefits, homeowners are sometimes surprised to learn that buying isn’t always the smartest financial option.

To begin with, the monthly cost of renting can be lower, even for a home of similar size and quality in the same community.

Renters, for example, don’t pay property taxes, homeowner’s insurance and, in most cases, maintenance costs. These expenses can cost homeowners about 3% of the price of their home annually, experts say.

While those costs can be folded into monthly rent, apartment renters often pay a smaller share as landlords spread the costs among many tenants, says Stijn Van Nieuwerburgh, director of the Center for Real Estate Finance Research at New York University. If a window breaks or the toilet plugs up, your landlord—not you—pays for the repairs.
…
To calculate whether buying or renting makes more sense financially, you need to have a sense of your monthly costs in each case, including rent, mortgage payments, taxes, insurance and other related expenses that may apply to each option—as well as whether you would be more likely to spend or invest any savings from renting.

The verdict could differ considerably within a city, suburb or town, based on the location and the style and size of the homes you are exploring.

The Deutsche Bank data reflect an attempt to do that math across metropolitan areas, and essentially function as a general guide to each market.

Would-be buyers should proceed carefully. First, they should try to get a sense of how hot the local real-estate market is and whether buyers generally still have the upper hand, which is often the case far from the coasts and outside large cities.

Posted in Demographics, Economics, National Real Estate | 137 Comments

Black Knight sees distressed housing improvement

Posted on May 5, 2014 by grim

From HousingWire:

Black Knight: Negative equity, distressed loans falling

Home prices have risen over the past two years and many distressed loans have worked their way through the system, the percentage of Americans in negative equity positions on their mortgage has declined considerably, Black Knight Financial Services’ “First Look” report for March shows.

Meanwhile, those loans already in the foreclosure process have been aging substantially.

According to Kostya Gradushy, Black Knight’s manager of Loan Data and Customer Analytics, both data trends point to a healthier housing market. ?

“Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers,” said Gradushy. “Looking at current combined loan-to-value, we see that while four years ago 34% of borrowers were in negative equity positions, today that number has dropped to just about 10% of active mortgage loans.”

While negative equity levels have declined for both judicial vs. non-judicial foreclosure states from the peak of the crisis, non-judicial states are now at just under 8%, as compared to 13.4% in their judicial counterparts. Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality – credit scores of 700 or above.

Four years ago, that category of borrowers represented over a third of active mortgages.

Posted in Demographics, Economics, Foreclosures | 115 Comments

Housing has Buffett stumped

Posted on May 4, 2014 by grim

From CNBC:

Housing recovery slower than I thought: Buffett

Warren Buffett told CNBC he’s surprised that housing is not that strong yet.

“The pickup in housing has been slower than I would have anticipated,” the Berkshire Hathaway chairman and CEO said in the interview that aired Friday. “It’s [also] true in the secondary market for houses. The prices have recovered some.”

In February 2012, Buffett told “Squawk Box” he thought single-family homes were a very attractive investment. If held for a long period and purchased at low rates, he said, houses can be a better investment than even stocks.

Fast forward to spring 2014, Buffett said that housing is better than it was a couple of years ago, “but if you look at transactions and pending transactions in March, it’s not booming.”

Posted in Demographics, Economics, Housing Recovery, National Real Estate | 29 Comments

Ok, maybe I’m a little bit worried

Posted on May 2, 2014 by grim

From the NY Post:

Uptown rental market is so hot, this guy made $24 million flipping buildings he bought two years ago

A major New York City landlord is cashing in on the raging rental market uptown.

Treetop Development, a big uptown property owner, has flipped 12 buildings on the Upper West Side for $60 million — nearly double the $36 million it paid for them just two years ago.

Treetop CEO Adam Mermelstein, who started out prerecession building condo projects in New Jersey before investing in rental buildings in Manhattan, said he sold the properties, clustered on blocks between Columbus and Amsterdam Aves. and 105th and 115th Sts., to capitalize on the neighborhood’s rising rents.

Mermelstein made some renovations, including gutting 40 of the 152 apartments. Still, he would have achieved significant returns simply by sitting on the buildings.

Indeed, rents in the area have risen dramatically, to a median price of $1,776 a month for a one-bedroom apartment, up 7.6% from 2013. And snagging an apartment, especially a rent-stabilized pad, is trickier than ever. Less than 1% of area apartments were available in March — a low vacancy rate.

Posted in Economics, Housing Bubble | 138 Comments

Flipping? Huh?

Posted on May 1, 2014 by grim

From HousingWire:

Looking for a 30% profit? Flip a house

Despite the percentage of flipped homes shrinking to 3.7% of the total homes sold, the profits from flipping a house are up to 30%. The share of flipped house sales was down from 4.1% in the fourth quarter of 2013 and down from 6.5% in the first quarter of 2013.

While the share of flipped homes is shrinking, the average sales price of single-family homes flipped in the first quarter was $55,574 higher than the average original purchase price. That’s up from a year ago when the average gross profit per flip was $51,805, according to the Q1 2014 U.S. Home Flipping Report from RealtyTrac.

That gross profit provided flippers with an unadjusted ROI of 30% of the average original purchase price. The average gross profit per flip a year ago was an unadjusted ROI of 28%.
…
Slowing home price appreciation early this year in many of the most popular flipping markets put some investors in danger of flying too close to the sun,” said Daren Blomquist, vice president at RealtyTrac.

“But investors appear to have recalibrated their flipping strategy, accounting for the slower home price appreciation even if that means fewer flips. This is another good sign that this housing recovery is behaving much more rationally than the last housing boom, which was built largely on unfounded speculation rather than fact-based calculations.”

The average time to complete a flip rose to 101 days, up fro an average of 92 days in the previous quarter and up from an average of 79 days for flips completed in the first quarter of 2013.

The major cities that had the highest share of flips in the first quarter were New York (10.2%), Jacksonville, Fla., (10.0%), San Diego (7.1%), Las Vegas (6.7%) and Miami (5.9%).

The cities that provided the highest average gross ROI percentage were Pittsburgh (89%), Philadelphia (56%), Memphis (51%), Detroit (48%), and Seattle (48%).
…
Other major metros with year-over-year decreases in flipping as a share of all sales included New York (down 37%), Phoenix (down 39%), Riverside-San Bernardino (down 22%), Atlanta (down 57%), Chicago (down 29%) and Las Vegas (down 9%).

The cities that recorded the most total flips in the first quarter were New York (1,791), Phoenix (894), Los Angeles (828), Miami (749), and Riverside-San Bernardino (627).

Posted in Economics, Housing Recovery, National Real Estate, New Development | 112 Comments

Home prices slow in February, but still show strong YOY gains

Posted on April 30, 2014 by grim

From Bloomberg:

Home-Price Gains in U.S. Cities Cooled in February

Home prices in 20 U.S. cities rose at a slower pace in the year ended February as the residential real-estate market cooled.

The S&P/Case-Shiller index of property values increased 12.9 percent from February 2013, the smallest 12-month gain since August, after rising 13.2 percent in the year ended in January, a report from the group showed today in New York. The median projection of 33 economists surveyed by Bloomberg called for a 13 percent advance.

Growth in property values eased as rising mortgage rates and severe winter weather restrained demand for dwellings in the first few months of the year. Cooling price appreciation combined with an improving job market will probably help home sales regain momentum later in the year.

“The days of very robust home-price gains are over,” said Thomas Costerg, a New York-based economist at Standard Chartered Plc, who projected the index would rise 12.8 percent. “Elevated price gains are a headwind, especially for first-time buyers. Prices will slow going forward, and the housing market needs that to recalibrate supply and demand.”

Economists’ estimates in the Bloomberg survey ranged from gains of 11.6 percent to 14 percent. The S&P/Case-Shiller index is based on a three-month average, which means the February figure was also influenced by transactions in January and December.

Home prices adjusted for seasonal variations increased 0.8 percent in February from the prior month, matching the Bloomberg survey median. Unadjusted prices were unchanged.

The year-over-year gauge, based on records dating back to 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

All of the 20 cities in the index showed a year-over-year gain, led by a 23.1 percent jump in Las Vegas and a 22.7 percent advance in San Francisco. Cleveland showed the smallest year-over-year increase, with prices rising 3 percent.

Posted in Economics, Housing Recovery, National Real Estate | 132 Comments

Pending Home Sales jump in March

Posted on April 29, 2014 by grim

From Bloomberg:

Pending Sales of U.S. Existing Homes Rise Most Since 2011

Contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season.

The pending home sales index rose 3.4 percent, the most since May 2011 and the first gain in nine months, after a 0.5 percent drop in February that was smaller than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent increase. The gauge is 7.4 percent below a year earlier.

Housing demand has weakened since the middle of last year as rising prices and borrowing costs put ownership out of reach for some prospective buyers. An improving employment outlook and easier access to credit would help entice more house hunters to sign purchase contracts.

“The backdrop in general for housing remains reasonably positive,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, who projected a 2.5 percent gain. “The labor market is improving, confidence generally has been edging up and mortgage rates are still pretty low.”

Estimates in the Bloomberg survey of 35 economists ranged from a 2 percent decline to a 7 percent increase after a previously reported 0.8 percent drop in February.

Posted in Economics, Housing Recovery, National Real Estate | 100 Comments

You spin me right round baby

Posted on April 28, 2014 by grim

From the Record:

Analysis: N.J. job stats in the best light

Employment statistics are a telling barometer of the health of the economy, and even small changes are scrutinized.

Monthly announcements, from Washington and each state, report the two key figures — jobs added or lost, and the unemployment rate — and the underlying statistics that shape them.

Yet New Jersey’s monthly jobs report under Governor Christie, who has made the recovery of the state economy a top priority, appears designed as much to boost the appearance of well-being as it is to convey the raw — and often unpleasant — economic facts on the ground as the economy continues to struggle.

Sometimes a key statistic is buried in the body of the press release, as other, less-timely figures are elevated to the headline or first paragraph. Long-term trends that put the state’s economy in a better light are emphasized, and sometimes contextual information — comparing the state’s unemployment rate to the nation’s better rate, for example — is omitted. And the release usually includes an upbeat quote from the Treasury Department’s chief economist, Charles Steindel, a Christie appointee.

In January, for example, the state reported a loss of 36,300 jobs in December, a massive decline that approached twice the biggest single month’s loss — 22,300 jobs lost in March 2009 — in the entire recession.

Yet the figure didn’t make it into the release headline, or even the first paragraph. Both focused on a drop in the jobless rate, from 7.8 to 7.3 percent, the second big drop in consecutive months. The release quoted Steindel saying: “Despite these preliminary estimates, we anticipate that the New Year will see resumption in New Jersey’s job growth.”

Neither that release, nor a previous one highlighting the decline in the jobless unemployment rate in November, mentioned that, as economists pointed out, the drop was driven almost entirely by people leaving the labor force — not by unemployed workers getting jobs.
…
James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said the Christie administration’s handling of the jobs release is no different from his predecessors.

“That’s always been the case. If it’s a bad jobs report for the month, they will take a different angle,” he said. “They will always try to put a positive spin on it. … So it’s really business as usual.”

But Patrick O’Keefe, director of economic research at the accounting firm CohnReznick, who watches the state job figures closely, says the tactic is more pronounced under Christie.

“What we see now, of late, is a selective reading of numbers through what appears to be a political prism, not an analytical prism,” said O’Keefe, who described elements of the most recent release as “trying to put some rouge on the pig, and the pig remains ugly.”

Posted in Economics, Politics | 73 Comments