From Zillow:
Real Estate Predictions & the Hottest Housing Markets for 2014
Discuss:
Four Bold Housing Predictions for 2014
1. U.S. home values will increase by 3 percent
2. Mortgage rates will reach 5 percent by the end of the year
3. It will be easier for borrowers to get a mortgage in 2014
4. Homeownership rates will fall to their lowest point in nearly two decades
From the NYT:
Banks Fail to Comply With Parts of Mortgage Settlement, Report Says
Three of the nation’s largest mortgage lenders are still failing to comply with key requirements of a national settlement over mortgage abuses, according to a new report that suggests that some borrowers are still trapped in a tangle of red tape and errors as they try to save their homes from foreclosure.
Citibank, Bank of America and JPMorgan Chase failed seven tests of the settlement’s requirements, according to a report from Joseph A. Smith Jr., the court-appointed monitor of the settlement terms. The rules say mortgage servicers must eliminate mistakes, misinformation and lengthy delays from the process of granting loan modifications.
Wells Fargo passed all the tests in the first half of this year, as did Ocwen, which now services the bulk of the mortgages once held by Ally Financial.
This report does not include new tests that were developed in response to complaints that homeowners are still bounced from representative to representative, or that foreclosure proceedings begin while a loan modification request is still pending. Those tests take effect next year.
The mortgage settlement, which resolved complaints about improper and fraudulent loan documents, was agreed to by 49 states and five mortgage lenders. It provided two major remedies: one, the lenders would make financial reparations to states and homeowners valued at $25 billion, and two, they would improve their labyrinthine customer service for frustrated homeowners seeking help.
The banks have fulfilled the bulk of the financial obligations ahead of schedule. But the new report says that in the first half of this year, there were failures in areas like ensuring that a loan was actually delinquent at the time that a foreclosure was initiated, and that the homeowner had been given accurate information in writing, and notifying homeowners of missing documents in their file in a timely manner.
Banks are subject to fines of up to $5 million if they do not improve their performance on a failed test. The banks report their own performance on 29 loan servicing tests and their findings are then reviewed in a random sampling by outside consultants overseen by the monitor. A certain number of errors are permitted, normally 5 percent, before the bank is deemed to have failed.
From HousingWire:
Sellers no longer sitting pretty
As more inventory hits the housing market and buyers rebel against rising home prices, the real estate market is likely to shift from seller dominance to one that is more counterbalanced by buyer reluctance to acquire homes deemed too expensive.
The tighter inventory conditions of this recent spring and summer are going away as the spring months of next year start to approach, analysts say. Right now, builders are trying to make up for a lack of inventory with new homes, Lawrence Yun, chief economist for the National Association of Realtors, claimed.
According to the latest Home Price Index report from CoreLogic, home prices, including distressed sales, increased by only 0.2% in October when compared to September.
“In October, the year-over-year appreciation rate remained strong, but the month-over-month appreciation rate was barely positive, indicating that house price appreciation has slowed as expected for the winter,” said Mark Fleming, chief economist for CoreLogic.
“Based on our pending HPI, the monthly growth rate is expected to moderate even further in November and December. The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10% of their respective historical price peaks,” Fleming said.
The report comes with both good and bad news. It is good news certainly for the owners and home sellers who are getting the appreciation and housing equity increases, in addition to helping the economy in terms of consumer spending, Yun explained.
However, the report is not as positive for homebuyers. “There are still in my view a lot of potential homebuyers getting blocked out from buying due to rising home prices,” Yun said.
He added, “It is a clear signal that sellers cannot keep jacking up the prices since there is a lack of buyers. More housing inventory is coming into the market from new home construction, but it is still a sluggish pace.”
If prices increase, homebuyers may choose to step out of the market if sellers do not adjust their list prices.
Here it is! The first look at pending home sales (contracts) for Northern NJ.
(Source GSMLS, except Bergen- NJMLS)
November Pending Home Sales (Contracts)
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Bergen County
November 2011 – 523
November 2012 – 543
November 2013 – 627 (Up 15.5% YOY, Up 19.9% Two Year)
Essex County
November 2011 – 226
November 2012 – 235
November 2013 – 335 (Up 42.6% YOY, Up 48.2% Two Year)
Hunterdon County
November 2011 – 77
November 2012 – 82
November 2013 – 113 (Up 37.8% YOY, Up 46.8% Two Year)
Morris County
November 2011 – 278
November 2012 – 301
November 2013 – 349 (Up 15.8% YOY, Up 25.5% Two Year)
Passaic County
November 2011 – 158
November 2012 – 165
November 2013 – 219 (Up 32.7% YOY, Up 38.6% Two Year)
Somerset County
November 2011 – 172
November 2012 – 161
November 2013 – 251 (Up 55.9% YOY, Up 45.9% Two Year)
Sussex County
November 2011 – 87
November 2012 – 89
November 2013 – 128 (Up 43.8% YOY, Up 47.1% Two Year)
Union County
November 2011 – 234
November 2012 – 236
November 2013 – 294 (Up 24.6% YOY, Up 25.6% Two Year)
Warren County
November 2011 – 64
November 2012 – 60
November 2013 – 94 (Up 56.7% YOY, Up 46.9% Two Year)
From Business Insider:
Nouriel Roubini Just Identified A Ton Of Housing Markets That Look Like Bubbles To Him
Economist Nouriel Roubini is sounding a big warning about global housing bubbles.
In a new piece for Project Syndicate, he identifies at least 17:Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the UK (well, London). In emerging markets, bubbles are appearing in Hong Kong, Singapore, China, and Israel, and in major urban centers in Turkey, India, Indonesia, and Brazil.
Signs that home prices are entering bubble territory in these economies include fast-rising home prices, high and rising price-to-income ratios, and high levels of mortgage debt as a share of household debt. In most advanced economies, bubbles are being inflated by very low short- and long-term interest rates. Given anemic GDP growth, high unemployment, and low inflation, the wall of liquidity generated by conventional and unconventional monetary easing is driving up asset prices, starting with home prices.
Roubini notes that some countries are trying to contain these bubbles through policies like “lower loan-to-value ratios, stricter mortgage-underwriting standards, limits on second-home financing, higher counter-cyclical capital buffers for mortgage lending, higher permanent capital charges for mortgages, and restrictions on the use of pension funds for down payments on home purchases.”
…
For now, Roubini doesn’t see the bubble(s) bursting any time soon.…the global economy’s new housing bubbles may not be about to burst just yet, because the forces feeding them – especially easy money and the need to hedge against inflation – are still fully operative. Moreover, many banking systems have bigger capital buffers than in the past, enabling them to absorb losses from a correction in home prices; and, in most countries, households’ equity in their homes is greater than it was in the US subprime mortgage bubble.
From the Record:
Even wealthy hit by foreclosures
Nine years after spending millions to build their dream home in Franklin Lakes, Kevin and Cheri Schmidt lost it recently to foreclosure.
The Schmidts have sued their bank, saying it’s to blame for their trouble. The bank declined to comment, saying it doesn’t discuss pending litigation.
Although foreclosures mostly affect lower- and middle-income households, the Schmidts’ story shows that families in upscale towns have also felt the pain of losing a home as the economy and housing market cratered. A check of upcoming foreclosure auctions in Bergen County found properties in Saddle River, Old Tappan and Ridgewood, among other more affluent towns.
According to RealtyTrac, a California company that tracks the foreclosure market, about 4 percent of Bergen County’s current foreclosure cases involve properties valued at over $1 million.
Kevin Schmidt, now 63, has had a long career as a builder and inventor. He and his wife were able to build their sprawling home — which included a pool, home theater, home gym and three-car garage — without a mortgage because he had just sold an invention, the cleaning product Dishwasher Magic, to another company for more than $5 million. They spent $800,000 to buy the lot, and an estimated $3 million to knock down the house on the property and build the new home.
What followed was a run of business setbacks and bad timing, as Kevin Schmidt embarked on several real estate ventures just before the housing market collapsed in the worst crash since the Depression.
In 2007, the couple borrowed against their property, taking out two loans totaling $2.9 million from Oak Ridge-based Lakeland Bank Corp., to get tax write-offs and cash to finance construction projects. The Schmidts say one of the loans had only a three-year term, and when it came due, the Schmidts asked the bank to combine it with their mortgage to lengthen the loan term, and lower the interest rate. They say a bank employee agreed to do so, if the Schmidts sold an investment property in Wyckoff.
…
The couple have moved to a rental and started a new business venture, IceBoxx, machines that create and bag ice cubes in supermarkets.The state’s largest housing counseling organization, New Jersey Citizen Action, says that it has seen a number of homeowners like the Schmidts, dealing with foreclosures of high-priced homes.
“These were people who never would have imagined themselves in a situation like this,” said Phyllis Salowe-Kaye, head of Citizen Action. “But there’s no equity left in the house, and they can’t understand what they did wrong.”
From the Insurance Journal:
Prospects Dim for Bills to Delay Flood Insurance Rate Hikes
Efforts to delay implementation of changes in the federal flood insurance program have run into roadblocks on both sides of Capitol Hill.
The leaders of the House Financial Services Committee say they are standing behind last year’s bipartisan legislation to put the flood insurance program on sounder financial footing even as the implementation of the law has sparked a chorus of complaints from constituents fearing spikes in premiums and plummeting home values.
In the Senate, attempts to call a quick floor vote on legislation to delay the changes in the program — designed to force higher premiums on properties especially at risk of flooding — appear to face opposition from both Democrats and Republicans.
Sen. Mary Landrieu, D-La., wants to add the measure to an unrelated defense policy bill, but Majority Leader Harry Reid, D-Nev., is restricting the ability of senators to offer unrelated amendments. Meanwhile, Republicans are unlikely to allow a vote that could give Landrieu, who faces a tough re-election bid next year, the chance to claim political credit.
The curbs on taxpayer-subsidized flood insurance rates are a case study in what happens when Washington takes away a government-sponsored benefit that helps a relatively small group of people.
About 1.1 million homeowners — or 1 in 5 in the program — have received taxpayer-subsidized rates and the government has financed about 60 percent of losses on their properties. Most people can retain the subsidies but can’t pass them along to people buying their home, a restriction that’s especially burdensome to lower-income older homeowners seeking to sell their houses.
The changes also promise to make it unaffordable for people in chronic flood zones to keep their homes, and they have put a damper on home sales in areas where benefits extended to current homeowners can’t be passed along to prospective buyers.
The quandary is especially felt by conservative Republicans torn between their philosophy of limited government and helping constituents facing sharply higher flood insurance premiums. Lawmakers trying to delay the law’s implementation cite horror stories of people slapped with unaffordable premium increases on modestly priced homes.
Supporters of the law say it’s mostly operating as intended, which is to hit at-risk homeowners with actuarially sound rate increases.
“What we’re trying to do is separate fact from fiction here. And we’re hearing a lot of rumors. And some of those rumors … it turns out are not as represented,” said Rep. Randy Neugebauer, R-Texas, who chaired a hearing Tuesday of the Financial Services Committee’s housing and insurance subcommittee. “We do know that there are some people out there who are going to experience higher premiums. But, you know, that was the purpose.”
From the Star Ledger:
State to end program for homeowners fighting foreclosure as federal money nears end
After a shaky start, New Jersey has disbursed more than two-thirds of the federal funds it received in 2010 as part of the Hardest Hit program to help prevent foreclosures and will soon end the program.
The state Division of Consumer Affairs reported it had distributed more than $206 million of the $300.5 million it received as one of the 18 states designated as Hardest Hit under the Troubled Asset Relief Program.
New Jersey funneled the money into the state’s Division of Consumer Affairs’ NJ HomeKeeper, a foreclosure program that targets the unemployed.
The DCA confirmed yesterday it will stop accepting applications by Saturday.
Tammori Petty, a spokeswoman for the agency, said $53.4 million remained to help homeowners avoid foreclosure. The remainder of the money had been directed toward administrative and educational purposes.
Petty said the program has assisted 5,068 homeowners who were in danger of losing their homes to foreclosure.
Since the program was launched in 2011, the agency received more than 12,200 applications. About 5,500 homeowners were denied aid for varying reasons, Petty said.
The DCA recently capped the maximum assistance at $24,000, Petty said, “to be able to assist more homeowners.”
About 58 percent of those who got help were more than 90 days behind on their mortgage payments, said Petty.
When the HomeKeeper program started 2011 it drew criticism for the snail-like pace at which it helped homeowners. By mid-year, 1,300 homeowners had applied, and no loans had been approved. By the end of that year, 56 loans were closed and little more than 10 percent of the money had been distributed.
From Bloomberg:
Home Prices in 20 U.S. Cities Rise Most Since February 2006
Home prices in 20 U.S. cities rose by the most since February 2006 in the 12 months through September, showing the housing market sustained progress even as borrowing costs climbed.
The S&P/Case-Shiller index of property values advanced 13.3 percent after increasing 12.8 percent a month earlier, the group said today in New York. The median forecast in a Bloomberg survey of 31 economists called for a 13 percent advance.
Sellers are standing firm on asking prices as buyers compete for a limited number of available properties. Higher home values are helping propel gains in Americans’ net worth, boosting confidence among homeowners and creating momentum for consumer spending.
“Housing demand has clearly improved this year,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York who projected a 13.2 percent year-over-year increase. “The housing market has benefited from fewer foreclosures over the last year, the share of distressed housing transactions is back to pre-crisis levels, and that has helped to boost home prices in many parts of the country.”
Bloomberg survey estimates ranged from increases of 12.4 percent to 13.5 percent. The S&P/Case-Shiller index is based on a three-month average, which means the September data were influenced by transactions in July and August.
…
All of the 20 cities in the index showed an increase in year-over-year prices, led by gains of 29.1 percent in Las Vegas and 25.7 percent in San Francisco. The smallest gain was in New York, which showed a 4.3 percent advance.
From the Jersey Journal:
Jersey City, Hoboken waterfront condo values on the rise, experts say
Real-estate prices of condos along the Jersey City and Hoboken waterfronts are on the rise, with the number of sales up 36 percent from 2010, local real-estate agents say.
One condo in Jersey City saw its value shoot up nearly 40 percent since its last sale two years ago, while another condo just sold for the highest resale price ever in Hoboken’s Hudson Tea Building, the agents say.
As of Nov. 20, 420 condos near the Jersey City and Hoboken waterfronts were sold this year, at an average list price of $700,000, according to real-estate listing service Hudson County MLS. That’s up from 374 in 2011, when the average list price was $557,000.
Kristin Marie Ehrgott, a Realtor who lives and works out of Hoboken, attributes the rising value to “a perfect storm” of continued low interest rates, low inventory and the lure of lower real-estate prices than seen across the Hudson River.
“We’re seeing a lot of buyers getting priced out of Manhattan,” Ehrgott told The Jersey Journal. “For pure inventory and options, people started moving into New Jersey.”
…
Alky Danikas, an economic and finance professor at St. Peter’s University, said higher real-estate values in Jersey City and Hoboken may not hold any significance for the larger economy.“To say what’s happening in Jersey City or Hoboken will apply to Union is not necessarily true,” Danikas said. “Or in West New York or in Bayonne.”
Real-estate values are “very, very local driven,” he said, adding that home values in areas of the country that were most hard hit by the 2008 economic collapse — south Florida, Nevada — have still not improved.
“Those recoveries haven’t happened yet,” Danikas said.
From the WSJ:
Rising Interest May Crash the House Party
When cash is trash, the housing market is happy.
That was the case during the mid-2000s boom when lenders required little or no money down. It is also true today, but for different reasons: Not only has unprecedented central-bank stimulus kept mortgage rates artificially low, it has pushed record numbers of financial investors to buy into housing.
More recently, interest rates have risen since talk began in May that the Federal Reserve could “taper” its bond-buying activity. Combined with rising prices—they are up about 12% year over year on average nationwide—it has helped push a measure of housing affordability developed by the National Association of Realtors to a five-year low.
Higher rates usually hit home sales with a lag, making data on pending home sales from the NAR—the next reading is due Monday—a key tool in gauging buying momentum. With the proportion of homes being sold for cash rising, it is now a more reliable housing barometer than weekly data on mortgage applications.
A report this summer by Goldman Sachs estimated 57% of residential-home sales through 2012 and early 2013 were paid for in cash compared with just 19% in 2005. That is despite the fact that the average 30-year mortgage rate so far this year is nearly two percentage points lower than back then.
Interestingly, the surge in cash buying hasn’t blunted a steep drop in pending sales. They fell in September for a fourth consecutive month to the lowest level since last December.
…
The NAR sees home sales next year staying at about this year’s level while mortgage rates end 2014 about a percentage point higher than today and two points higher than this past spring.Based on recent trends, it may have to trash that forecast.
From the NYT:
Delinquency Rates on the Decline
As the economy improves, the number of borrowers who are seriously behind on their mortgage payments continues to decline. The enhanced outlook is such that even those in delinquency are feeling more optimistic about their circumstances and homeownership in general.
The share of borrowers delinquent by 60 days or more is down in all 50 states compared with a year ago, according to an analysis of 52 million mortgages by TransUnion, a credit information service.
The national delinquency rate, 4.09 percent, is down from 5.33 percent at this time last year, according to TransUnion. That is still well above the 1.5 to 2 percent delinquency rate that was the norm in the 1990s, before the housing bubble. But it marks the seventh consecutive quarter of improvement, said Tim Martin, TransUnion’s group vice president for domestic housing.
…Although an expected rise in interest rates may hamper some delinquent borrowers’ ability to resolve their financial problems, delinquencies will most likely continue to fall in coming months as the problematic older loans work their way out of the system, he said.
Foreclosures are also down significantly nationwide. According to CoreLogic, a residential property information provider, completed foreclosures in September, at 51,000, numbered 39 percent fewer than in September 2012. The foreclosure inventory, which includes all homes in some stage of foreclosure, was down 33 percent, to 902,000 from 1.4 million homes.
Access to refinancing continues to be a significant problem for delinquent borrowers, according to the latest Fannie Mae National Housing Survey, a monthly snapshot of 1,000 consumers. Almost 30 percent of the delinquent borrowers surveyed said they had tried unsuccessfully to refinance in the last three years. (These were borrowers who were 60 days or more behind, but not in foreclosure.) Among those who said they had chosen not to refinance, the main obstacles were an inability to qualify or to obtain affordable terms.
From the WSJ:
The first reports on the New York City area job market since the federal government shutdown showed a mixed picture of the regional economy, with sluggish job growth in New Jersey and a rise in technology and creative-industry positions in the five boroughs.
he data released Thursday showed that New Jersey lost 1,400 private-sector jobs in October, part of a three-month series of reports showing either modest gains or job losses in the private sector since the last time employment was measured, in August, according to the New Jersey Department of Labor and Workforce Development. The federal government shutdown in October caused a delay in jobs and labor force data being sent to state departments of labor.
Weak private-sector job growth could pose a challenge for New Jersey Gov. Chris Christie, who is seen as a contender for the 2016 GOP nomination for president. The state’s unemployment rate fell 0.2 percentage points to 8.4% in October, but that remained well above the national rate of 7.3%. The state’s relatively slow job growth comes amid stronger numbers for the national economy, which added 204,000 jobs in October, despite the turmoil in Washington.
“When you contrast that with what is happening nationally, it’s worrisome,” said Joseph Seneca, a Rutgers University economist, who said the preliminary numbers could be revised upward.
Mr. Christie’s office said New Jersey has added more than 143,000 private-sector jobs since February 2010, which puts it in the middle of the pack among states. Some of the state’s key industries—pharmaceuticals, manufacturing and financial services—have been either stagnant or moving employees elsewhere, economists said.
…
New York state experienced modest private-sector job growth since August, mostly driven by an increase in New York City, where technology and advertising appear at last to be having a noticeable impact on job growth, economists said.The city added 33,700 jobs between September and October, slightly better than expected based on the historical average, according to the New York state Department of Labor. Advertising and computer systems design both hit near all-time highs in October, while finance jobs grew slightly, as they continued to lag the city’s recovery.
The unemployment rate rose to 8.7% in October from the month earlier in New York City, which has had a stubbornly high rate of unemployment despite strong job growth.
Officials in Mayor Michael Bloomberg’s administration have argued that is because more people have either re-entered the workforce or come to the city seeking work as the economy has strengthened
Connecticut, which has lagged both New York and New Jersey, added 1,000 private-sector jobs in October. The state’s unemployment rate decline to 7.9% in October from 8.1% in August.
“The September and October reports are sending mixed signals about Connecticut’s labor markets,” said Andy Condon, director of the office of research at the Connecticut Department of Labor. “The weeks leading up to the federal government shutdown, evidently, led to increased economic uncertainty and hiring indecision across the state.”
From Bloomberg:
Sales of U.S. Existing Homes Drop to Lowest in Four Months
Purchases of previously-owned U.S. homes fell in October to the lowest level in four months as limited supply and higher mortgage rates restrained momentum in the housing-market recovery.
Sales dropped 3.2 percent to a 5.12 million annual rate, the fewest since June, according to data released today by the National Association of Realtors in Washington. The median forecast of 76 economists surveyed by Bloomberg projected a 5.14 million pace. The partial federal shutdown last month may have delayed some closings, the group also said.
Concern that fiscal gridlock in Washington will damage the economy combined with the increase in borrowing costs amid expectations Federal Reserve policy makers will soon dial back monetary stimulus have slowed the rebound in housing. Sustained payroll gains would help repair confidence and enable more Americans to buy real estate.
“The housing data has downshifted in recent months, presumably because of the pop in mortgage rates beginning in the spring,” Thomas Simons, an economist at Jefferies LLC in New York, said in an e-mailed note. “Low inventories may also be impeding sales.”
Sales forecasts in the Bloomberg survey ranged from 4.9 million to 5.35 million. The September reading was unrevised at 5.29 million pace.
…
The median price of an existing property increased 12.8 percent in October from the year before to $199,500, today’s figures showed.The jump in property values reflects a changing in the “mix” of sales toward higher-end properties, NAR Chief Economist Lawrence Yun said at a press conference as the figures were released. There is a very limited supply of houses priced at $100,000 or less, leading to a 16 percent drop in sales in that category over the past year, he said. In contrast, sales of homes costing $250,000 or more are up 20 percent to 30 percent over the same period, he said.
November Home Sales due out from the NAR at 10am this morning. Consensus estimates are for a big drop in SAAR, down from the 5.29m annual pace in October to 5.13m. Estimates range from a dismal 5m to a 5.3m rate.
Post will be updated when the NAR releases more information.
