NJ HomeKeeper hits its stride

Posted on February 13, 2013 by grim

From the Record:

Foreclosure-prevention loans helping more in NJ, state says

Once criticized as ineffective, the state’s main foreclosure-prevention effort has improved its performance and is now helping 250 troubled homeowners each month, Lt. Gov. Kim Guadagno announced Tuesday.

The program, called N.J. HomeKeeper, drew sharp criticism last year from lawmakers and housing advocates, who said that it was failing to serve enough homeowners. From its inception in May 2011 to June 2012, it had spent less than 10 percent of its $300-million, federally funded budget, and had helped only about 500 homeowners.

Even the department that ran the program, the state Department of Community Affairs, acknowledged its shortcomings, and took steps to make HomeKeeper more effective. Since last fall, the department has increased staffing, expanded eligibility for homeowners, and done more to publicize the program.

As a result, Guadagno said Tuesday, the HomeKeeper program has now committed nearly $96 million in assistance to more than 2,300 homeowners since May 2011.

“While it is gratifying to see our hard work result in more families staying in their homes, we recognize there are still more people in need of assistance,” Guadagno said in a statement.
…
Assemblyman Gary Schaer, D-Passaic, who had criticized HomeKeeper’s failings, praised Constable Tuesday for “putting the program on the right track.” But Schaer also said more needs to be done, especially in light of economic stresses such as superstorm Sandy and continued high unemployment in the state.

“The question we need to ask ourselves, given the thousands of people in foreclosure, is whether 250 people a month is enough?” Schaer said. “That 250 figure should be 500.”
…
Under HomeKeeper, homeowners at risk of foreclosure because of under- or unemployment can get a zero-interest loan of up to $48,000. The loan can be forgiven if the homeowner stays in the house for 10 years.

Posted in Economics, Foreclosures, New Jersey Real Estate, Risky Lending | 60 Comments

Realtors: NJ home prices do well in Q4

Posted on February 11, 2013 by grim

From the Star Ledger:

Home prices continue rise in New Jersey, elsewhere

The median price of a home showed the strongest year-over year growth since 2005, according a fourth quarter report from the National Association of Realtors.

And although New Jersey has lagged behind in the housing recovery in recent surveys, several sections in the Garden State showed strong increases, outperforming the rest of the Northeast region.
…
Home prices nationwide rose 10 percent in December from a year earlier. In the Northeast, the increase was 0.7 percent.

But in New Jersey, the Trenton-Ewing region outpaced the national median with a 12.6 percent increase, where the median price of a home went from $240,000 to $250,000. The Newark-Union market saw a 6.8 percent rise, while five of the six other regions in the state saw prices climb. Only Edison dropped by 2.5 percent.

New Jersey Association of Realtors Chief Executive Officer Jarrod C. Grasso said, “Considering our state’s climb from the residual effects of Hurricane Sandy, the cold winter months and New Jersey’s continued distended foreclosure inventory, we still have some time before we catch up to the national rate of home price growth. However, we are on the right path.”

Walter Molony, a spokesman for the NAR, said the 10 percent increase is above that seen in a traditionally healthy housing market, according to data going back to 1968. Normally, home prices increase 1 to 2 percent above inflation.
…
“We’re seeing an over-correction in prices, but it’s not alarming,” he said. “If it continued at this pace, though, ultimately, it would affect upward mobility.”

Distressed housing — foreclosures and short sales — accounted for less that a quarter of all transactions in fourth quarter sales, according to the NAR, down from 30 percent the year before.

From Bloomberg:

Home Prices Rise in 88% of U.S. Cities as Recovery Gains

Prices for single-family homes climbed in almost 88 percent of U.S. cities in the fourth quarter as the housing recovery broadened.

The median sales price rose from a year earlier in 133 of 152 metropolitan areas measured, the National Association of Realtors said in a report today. In the third quarter, 120 areas had gains.

An improving job market and low interest rates are driving up prices by fueling demand for a tightening supply of listings. The national median price for an existing single-family home was $178,900 in the fourth quarter, up 10 percent from the same period last year. That was the biggest gain since 2005, according to the Realtors group.
…
In the New York, Northern New Jersey and Long Island metropolitan area, prices increased 3.6 percent.

Posted in Economics, Housing Recovery, New Jersey Real Estate | 131 Comments

Opportunity of a lifetime – or not worth it at any cost?

Posted on February 11, 2013 by grim

From the Star Ledger:

Damage from Hurricane Sandy spurs some Jersey Shore homeowners to sell

The piles of debris that towered in the front yards of flood-damaged homes are gone and the rumble of generators powering cold, damp homes has quieted.
But there’s a new symbol of Hurricane Sandy’s wrath popping up along the Jersey Shore: For Sale signs.

More than three months after the storm drove a surge of water into homes and uprooted the lives of thousands of residents, some homeowners grappling with the cost of repairing their homes — and rebuilding to new federal height regulations — are hoping someone else wants to buy their slice of the shore.

While some residents are making the “very personal decision” to put their homes on the market now, Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University said last week he didn’t expect many homeowners to sell.

“Jersey Shore people are a pretty hardy bunch,” he said. “If they can, economically, most of them tend to come back whether it’s this year or another year.”

But residents deciding to leave now expect to sell their homes for a fraction of what they were worth before the storm.

“I’m disgusted. They gave us money to fix it, but now we can’t raise it. We’re losing a lot of money,” said Irene Murphy, who lives on Valencia Drive in Brick with her husband, Tom. “I’m heartbroken.”

Murphy said the property, which they purchased in 1998, had an assessed value of $337,000 before the storm, but she now expects to sell it for $150,000 less than that price.
…
The home would have to be raised at least five feet, which would cost about $50,000, Tom Murphy said. “We’d love to be able to restore the house and say, ‘restore the shore,’ but we can’t afford to restore the shore,” he said.
…
That’s the reality Adrian Parish started to face last month, when she affixed a “For Sale” sign to the front of the bayfront property in Toms River that’s been in her family for 47 years.
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Parish said the house and land was assessed at $892,000 before the storm. “Now, I would be thrilled, I would be ecstatic to get $400,000 to go live somewhere else,” she said.
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Mike Ehrenkranz lives just a few doors from Parish. About two weeks ago, he stuck a “For Sale by Owner” sign onto the front of his home. The bay broke through the back of his house, dumping more than four feet of water through the main living area. “We’re not so sure we want to stay on the water anymore,” he said.

Though the house and property was worth about $800,000, he said now he’d be “lucky to get $500,000.”

Ehrenkranz said he’s received about 20 inquiries since he put up his sign, but nothing firm yet. He’s also fielded a few offers from builders, but he said they were way too low — in the $300,000 range.
…
But the threat of another storm like Sandy hasn’t deterred potential buyers, O’Brien said. “It’s a mix of people that are looking to build higher and drier, more efficiently and to the proper elevation,” she said.

Posted in Economics, Housing Recovery, Shore Real Estate | 74 Comments

Retiring … on the house

Posted on February 10, 2013 by grim

From MarketWatch:

Will your house pay for your retirement?

You sell your home at a huge profit, then use the proceeds to upgrade your golden years from comfy to plush. That scenario, which might have seemed realistic when the housing boom was at a full-throated roar, seems a little starry-eyed today with home values still depressed. But according to a survey released this week by Ameriprise Financial, 47% of people aged 50 to 70 “expect to use their home equity to help fund their retirement.” The pollsters say that share appears to have risen significantly since before the recession, even though housing prices declined in the interim.

The findings are particularly interesting because this survey group isn’t exactly crying poor. The average respondent in the survey had $700,000 in investable assets, not including real estate, and 78% had at least $250,000 saved for retirement. (The minimum for participation was $100,000.) In a conversation with Ann Carrns of the New York Times Bucks blog, Ameriprise executive Suzanna de Baca speculates that the rising expectations for home equity might reflect the lingering effects of the stock market crash: “Despite the fact they have reduced home equity, the shortfall between what they’ve saved and what they need is greater.”

Some folks will probably be successful at making their homes work for them, of course—and for boomers who’ve been staying put for quite a while, the prospect is more realistic. Prices nationally are still down about 27% from their 2006 peaks, but those who bought 10 years ago or more are likely to be sitting on some price appreciation. Those homesteaders are also more likely to have built up more equity, which will help them sidestep another obstacle facing many boomers – the fact that more are approaching retirement with mortgage debt. Among families where the head of household was between 55 and 64 years old, 54% had mortgage debt in 2010, up from only 37% in 1989.

Posted in Economics, National Real Estate | 29 Comments

Warm up the bulldozers?

Posted on February 8, 2013 by grim

From the Star Ledger:

Gov. Christie: New Jersey considering buying flood-prone neighborhoods

Gov. Chris Christie said today he wants the state to use a portion of the federal Sandy aid money coming to New Jersey to buy up whole neighborhoods prone to flooding.

At a press conference with U.S. Housing and Urban Development Secretary Shaun Donovan today in Sea Bright, Christie said he would only entertain offers of buyouts for large swaths of contiguous properties, not individual parcels, to maximize mitigating flood hazards.

In the first of three rounds of HUD funding from the $50 billion federal Sandy aid package to the Northeast, New Jersey received $1.83 billion in Community Development Block Grants. Another $11 billion in those grants will be distributed in two rounds to the states walloped by Sandy.

Jennifer Herrick, whose Sayreville home was flooded twice in the 32 months before Hurricane Sandy hit on Oct. 29, said she welcomes the news, but remains “cautiously optimistic.”

She said the town has hired a buyout facilitator to help residents who want to sell their chronically flooded homes. So far, she said, about 180 owners in three different neighborhoods have submitted letters of interest in buyouts.
…

This first round of grants, though, will not be used for buyouts. Christie said. The first batch of money will go toward rebuilding and elevating homes damaged in the storm, he said. Another portion will be used for an aggressive marketing campaign for the Jersey Shore, he has said.

Donovan said some HUD money can be used for buyouts, but the bulk of it will go to rebuilding. He and Christie stressed the buyouts, through the state Blue Acres program, would have to be voluntary and would have to be large scale.

“This has to be a decision that the community comes together because you’re asking a family to give up a place they’ve lived for 50 or 100 years or even longer. That’s in some ways the toughest decision a family ever makes,” Donovan said. “There are communities (where) buyouts make sense because the community chooses to do that.”
…
He said he will not condemn properties.

“It’s certainly not something where I’m going to make the decision to condemn certain areas in this state and tell people they cannot rebuild. I’m very uncomfortable with using that authority,” he said. “We have it if we need to but I don’t think in this circumstance it’s the right thing to do. It’s much more appropriate to let the community come to some type of consensus and if they do then I certainly would be willing to sit with (Donovan) and discuss the possibility of using some of this money.”

Posted in Economics, New Jersey Real Estate, Politics, Shore Real Estate | 231 Comments

These guys would have fit right in here

Posted on February 7, 2013 by grim

From the NY Times:

S.& P. E-Mails on Mortgage Crisis Show Alarm and Gallows Humor

The executive at Standard & Poor’s was clear: “This market is a wildly spinning top which is going to end badly.”

That sober assessment of certain mortgage-related investments, delivered to colleagues in a confidential memo in December 2006, is now part of a trove of internal e-mails and documents that have come to light in a federal suit against S.& P., the nation’s largest credit ratings agency.

The correspondence, made public in court documents late Monday, provide a glimpse at the inner workings of an institution that the Justice Department says fraudulently inflated credit ratings, with dire consequences for the entire economy. In a series of e-mails, tensions appeared to be escalating inside the firm’s headquarters in Lower Manhattan as it publicly professed that its ratings were valid, even as the home loans bundled into mortgage-backed securities, or M.B.S., were failing at accelerating rates.

One comes from an S.& P. analyst in March 2007 borrowing from the Talking Heads song “Burning Down the House,” creating new lyrics: “Subprime is boi-ling o-ver. Bringing down the house.” S.& P. said prosecutors cherry-picked e-mails and that it would vigorously defend itself from “these unwarranted claims.”

In another 2007 e-mail, an analyst responds to a question about his new job: “Job’s going great. Aside from the fact that the M.B.S. world is crashing, investors and the media hate us and we’re all running around to save face … no complaints.”

Together, the documents show a portrait of some executives pushing to water down the firm’s rating models in the hope of preserving market share and profits, while others expressed deep concerns about the poor performance of the securities and what they saw as a lowering of standards.

The United States attorney general, Eric H. Holder Jr., joined by attorneys general from 16 states, unveiled the case on Tuesday in Washington, accusing S.& P. and its parent, the McGraw-Hill Companies, of intentionally propping up ratings of shaky mortgage investments and setting them up for a crash when the financial crisis struck.

The government is seeking $5 billion in penalties to cover losses to investors like state pension funds and federally insured banks and credit unions. The amount would be more than five times what S.& P. made in 2011.
…
As the housing market deteriorated in early 2007, the gallows humor in the e-mails intensified. Banks that had created mortgage-backed securities were unloading them quickly, to avoid being stuck with any duds.

“That means the market will crash,” one analyst told another in an instant message. “Deals will rush in before they take further loss.”

“Yes,” said the analyst’s colleague. “We should not push criteria,” continued the first, “but we give in anyway. Ahahhahaha.”

About a month later, another S.& P. employee wrote in another instant message, reproduced in the complaint: “We rate every deal. It could be structured by cows and we would rate it.”

In its statement Tuesday, S.& P. said that the cow e-mail “had nothing to do with R.M.B.S. or C.D.O. ratings or any S.& P. model, and the analyst had her concerns addressed with the issuer before S.& P. issued any rating.”

Posted in Mortgages, National Real Estate, Risky Lending | 77 Comments

Mixed picture for NJ home prices

Posted on February 6, 2013 by grim

From the Record:

Home prices rise in region and nationwide, CoreLogic says

Home prices jumped 8.5 percent in the region and 8.3 percent nationwide from December 2011 to December 2012, as energized buyers chased a shrinking pool of properties, the property information company CoreLogic reported Tuesday.

The CoreLogic report is the latest evidence suggesting that home prices are generally rising nationwide. Low interest rates and an improving national job market are drawing buyers back into the marketplace, analysts say.

The price picture was mixed, however, with New Jersey as a whole posting a drop of 0.9 percent – one of only four states in the nation where home values declined even as inventories shrink. The state’s housing market recovery has been held back by its unemployment rate, which was 9.6 percent in December, compared with a national rate of 7.8 percent. In addition, foreclosures are ramping up in the Garden State, after being slowed down by questions over shoddy practices in the mortgage industry. When these foreclosed properties the market, they are likely to sell at a deep discount, putting downward pressure on nearby prices.
…
However, CoreLogic said prices were up in the metropolitan statistical area that includes New York City, Westchester and Bergen and Passaic counties. Bill Beckett of McSpirit & Beckett Real Estate in Tenafly said much of that increase is probably driven by New York City prices, while values in Bergen have been fairly flat.

Both Beckett and Nelson Chen of the Chen Agency in Fort Lee said they’ve seen a rise in demand from buyers.

“My schedule on Saturday was like 2006; I had appointments booked literally every half hour,” Chen said. “There’s a million people looking. But they’re still very picky.”

As buyers have begun to snap up more properties, inventory is dropping because homeowners are in no rush to put their properties on the market. The New Jersey Multiple Listing Service reports that the number of properties for sale in Bergen County dropped more than 25 percent from last January to January 2013.
…
Many homeowners are apparently waiting for prices to rebound.

“Once you have $400,000 in your head, it’s hard to put the house on the market for $319,000,” Beckett said.
…
And those who bought during the most recent boom years – roughly 2004 to 2007 – would not be able to sell without taking a loss. Prices in the region have returned to the levels of December 2003, and have dropped 24.5 percent below the peak levels of 2006, according to the S&P/Case-Shiller index.

“I had a meeting with someone who bought in 2004, and the home is worth less now,” Chen said. So the homeowner decided not to sell, he said: “They’re not willing to take that loss.

Posted in Economics, Housing Recovery, North Jersey Real Estate | 105 Comments

North Jersey Contracts – January 2013

Posted on February 4, 2013 by grim

(Source GSMLS, except Bergen- NJMLS) – Updated with 2011 Data

January Pending Home Sales (Contracts)
——————————-

Bergen County
January 2011 – 377
January 2012 – 510
January 2013 – 568 (Up 11.4% YOY, Up 50.7% Two Year)

Essex County
January 2011 – 198
January 2012 – 204
January 2013 – 306 (Up 50.0% YOY, Up 54.5% Two Year)

Hunterdon County
January 2011 – 55
January 2012 – 62
January 2013 – 98 (Up 58.1% YOY, Up 78.2% Two Year)

Morris County
January 2011 – 240
January 2012 – 261
January 2013 – 341 (Up 30.7% YOY, Up 42.1% Two Year)

Passaic County
January 2011 – 122
January 2012 – 137
January 2013 – 217 (Up 58.4% YOY, Up 77.9% Two Year)

Somerset County
January 2011 – 147
January 2012 – 176
January 2013 – 230 (Up 30.7% YOY, Up 56.5% Two Year)

Sussex County
January 2011 – 59
January 2012 – 106
January 2013 – 125 (Up 18.1% YOY, Up 111.9% Two Year)

Union County
January 2011 – 171
January 2012 – 211
January 2013 – 259 (Up 22.7% YOY, Up 51.5% Two Year)

Warren County
January 2011 – 44
January 2012 – 58
January 2013 – 77 (Up 32.8% YOY, Up 75% Two Year)

Posted in Housing Recovery, North Jersey Real Estate | 123 Comments

Why move when you can remodel?

Posted on February 4, 2013 by grim

From MarketWatch:

Home improvement gets a makeover

No longer content with new cabinet pulls or a fresh coat of paint, homeowners are beginning, again, to dabble in home remodeling projects.

Contractors say they’re getting more requests for upgraded kitchens and bathrooms, as well as home additions and major improvements that cut energy bills and reinforce structures against storms. It’s a significant shift from recent years, when homeowners were focused on only vital home repairs, “preserving the investment you had,” says Steve Melman, the director of economic services for the National Association of Home Builders. The NAHB’s forecast expects a 2.4% increase in remodeling spending this year among single-family-home owners. Harvard University’s Joint Center for Housing Studies has a rosier outlook. Residential spending on additions, remodels and other major home improvements for October 2012 through September 2013 is expected to tally $145.5 billion, up 19.6% year over year, according to a January report.

Even as remodeling rebounds, however, consumers are looking for ways to save. Prerecession-style, “blowout” renovations like creating a master bedroom suite or multiroom home addition pushed the average remodel tab to between $250,000 and $350,000, says Justin Mihalik, the second vice president of the New Jersey chapter of the American Institute of Architects. Today, the average for bigger projects runs about $100,000 to $150,000, he says — and many people are spending far less. Four trends that are reshaping remodeling:
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Cash Beats Credit

Homeowners are largely capping the budget at whatever they’ve saved up.
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Livability, Not Resale Value

Unlike in boom times (or during the “house-flipping” craze), there’s less focus now on the added value a remodel might bring at sale.
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Practical Upgrades

Premium prices for energy- or water-saving appliances and fixtures have come down over the years, making those upgrades more attractive for long-term-minded homeowners.
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Casting a Wide Net

During the fourth quarter of 2012, remodelers reported a 3.9% increase in inquiries over the previous quarter, according to the NARI. But the number of bids that turned into actual jobs was slightly behind, up 3.5%. “It’s taking much longer to close a sale,” says Shaw. Where boomers might talk to two or three contractors at most, younger couples are meetings with at least twice as many.

Posted in Economics, National Real Estate | 88 Comments

December Otteau Report

Posted on February 2, 2013 by grim

From the Otteau Group:

NJ Housing Recovery Picks Up In December

After pausing in November due to the after effects of Hurricane Sandy, New Jersey home sales resumed their upward trajectory with a 7% increase in December compared to the same month one year earlier. YTD home purchase contracts rose by an impressive 21% in 2012. Shifting to the supply side of the equation, the number of homes being offered for sale in New Jersey fell to their lowest level in 7 years.

Posted in Housing Recovery, New Jersey Real Estate | 52 Comments

Sandy foreclosure moratorium extended 90 days

Posted on February 1, 2013 by grim

From HousingWire:

FHFA, HUD extend foreclosure relief for Sandy Victims

Federal Housing Finance Agency Director Ed DeMarco and HUD Secretary Shaun Donovan said the federal housing agencies will extend foreclosure protections for homeowners displaced or negatively impacted by Hurricane Sandy.

Donovan and DeMarco said an existing foreclosure moratorium, that is about to expire, will be extended for another 90 days to offer families in the impacted region more time to recover.

The announcement blocks the initiation of new foreclosures and stalls any foreclosures already in process within disaster areas. The Federal Housing Administration also is suspending evictions on properties secured by FHA mortgages in areas impacted by the storm through April 30, 2013.

“It’s all too clear that families need more time to get back on their feet without having a foreclosure or eviction hanging over their heads,” said Donovan with HUD. “As we work to rebuild after this historic storm, we’ll do everything we can to ease the crushing burden being faced by those homeowners, many of whom have been forced from their homes.”

Posted in Foreclosures, New Jersey Real Estate, Shore Real Estate | 98 Comments

Spring Fever!

Posted on January 31, 2013 by grim

From HousingWire:

Trulia reveals best home-searching season

Online real estate marketplace Trulia revealed its latest survey findings Wednesday, showing the seasonal patterns of home search activity based on its search traffic.

The research, which was based on all home searches on Trulia from 2007 to 2012, was used to determine whether a state’s search activity in each month is above or below the annual average for that state.

The study revealed that post-holiday motivation pushed many potential homebuyers and renters back into full-on search mode at the beginning of the year. Nationally, online real estate search activity surged in January and usually reaches its peak around March or April.

Typically May sees a slight dip, but is directly followed by a second yearly peak during the summer months. Home searches usually dip the lowest in December.

“Home-search activity swings with the seasons in every state. Buyers and sellers can use these ups and downs to their advantage,” said Jed Kolko, chief economist of Trulia. “Sellers looking for the most buyers should list when real estate search traffic peaks. Buyers, however, should think about searching off-season, when there is less competition from other searchers.”

While most online home searches at the state level correspond with typical seasonal patterns, local markets are completely different depending on the market.

Posted in National Real Estate | 59 Comments

HARP 4.0?

Posted on January 30, 2013 by grim

From Bloomberg:

Menendez, Boxer plan bill to help struggling homeowners

Underwater homeowners may get additional federal assistance for refinancing government-backed loans under a proposal being revived in the U.S. Senate.

Democratic Senators Robert Menendez of New Jersey and Barbara Boxer of California plan to introduce a bill as soon as this week that would expand the existing Home Affordable Refinancing Program by promising lenders they won’t be forced to absorb the loss on refinanced loans that default, according to a person with knowledge of the matter. The person asked not to be identified because the timing is not final.

The bill is the first of a series of measures planned by the White House and congressional Democrats to promote refinancing as a way to spur a recovery of the housing market.

The Menendez-Boxer bill, a new version of a measure that failed to advance in the last session of Congress, would include a one-year extension of HARP, which is aimed at helping borrowers who are current on their mortgages but unable to refinance because their home values have dropped. The program, which applies to loans backed by U.S.-owned mortgage finance companies Fannie Mae and Freddie Mac, is set to expire at the end of this year; the bill would extend it through 2014.

“We believe the legislation — if it could be adopted — would be positive for the mortgage originators by giving them more time to find borrowers eligible for HARP,” Jaret Seiberg, senior policy analyst at Washington Research Group, a unit of Guggenheim Securities LLC, wrote in a market commentary today.
…
Menendez and Boxer were unable to pass the bill during the last session of Congress because they were unable to garner Republican support without opening up the measure for amendments.

Passage also is not assured this session, Seiberg wrote.

“We detect little support among House Republican leaders,” he said. “So even if it can pass the Senate, it may well die in the House.”

Posted in Housing Recovery, Mortgages, Politics | 133 Comments

November Case Shiller

Posted on January 29, 2013 by grim

From CNBC:

Housing Prices Climb; Market ‘Clearly Recovering’

U.S. single-family home prices rose in November, building on a string of gains that points to a housing market that is on the mend, data from a closely watched survey showed on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.6 percent in November on a seasonally adjusted basis, in line with economists’ forecasts.

Prices on a non-adjusted basis slipped 0.1 percent. The non-adjusted numbers showed prices fell in about half of the cities covered by the survey, with the winter months typically a weak period for housing, the survey said.

“Housing is clearly recovering”, David Blitzer, chairman of the index committee at S&P Dow Jones Indexes, said in a statement.

Prices in the 20 cities rose 5.5 percent year over year.

It was the 10th month in a row that prices have increased, the longest string of gains since before the market started to turn down in 2006.

From Bloomberg:

Home Prices Climb by Most in Six Years as U.S. Market Firms

Home prices in 20 U.S. cities rose in November from a year earlier by the most in more than six years, indicating the U.S. housing rebound is gaining ground.

The S&P/Case-Shiller index of property values increased 5.5 percent from November 2011, the biggest year-over-year gain since August 2006, a report showed today in New York. The median projection of 30 economists surveyed by Bloomberg called for a 5.6 percent advance.

Mortgage rates near a record low are propelling demand for real estate that’s outpacing the available supply, a sign prices will keep strengthening. Home-equity gains and an improving job market may help to put a floor under Americans’ confidence and spending, the biggest part of the economy, cushioning the hit from a higher payroll tax that began in January.

“The rise in home prices is a demand-supply story that should continue this year,” Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, said before the report. “Inventories are low, so that’s good news for home prices. Higher prices will also boost confidence and spending overall.”

Posted in Housing Recovery, National Real Estate | 133 Comments

Walking away about to get easier

Posted on January 28, 2013 by grim

From Bloomberg:

Fannie Adds Bailout For Underwaters Walkaways

Fannie Mae and Freddie Mac will let some borrowers who kept up payments as their homes lost value erase their debts by giving up the properties, helping Americans escape underwater loans while adding to losses at the mortgage giants bailed out with $190 billion of taxpayer money.

Non-delinquent borrowers with illness, job changes or other reasons they need to move will become eligible in March to apply for a so-called deed-in-lieu transaction that erases the shortfall between a property’s value and the size of its mortgage. It follows a change in November that lets on-time borrowers sell properties for less than they owe, known as short sales, wiping out the remaining mortgage debt. Normally, the lenders could pursue people to recoup their losses.

“It’s an extraordinarily generous approach for companies still in debt to American taxpayers,” said Phillip Swagel, a professor at the University of Maryland’s School of Public Policy in College Park, Maryland. “We’re giving people an incentive to walk away, right when the housing market is starting to right itself.”

Previous foreclosure-prevention programs were designed to help only borrowers on the verge of losing their homes, in effect penalizing those who kept paying, according to homeowner advocates such as Julia Gordon, director of housing finance and policy at the Center for American Progress in Washington. In some cases, servicers have advised borrowers to stop making their mortgage payments to qualify for help, leading to evictions if their applications are denied, Gordon said.
…
“Fannie and Freddie are playing catch-up, making these changes when defaults are falling and the housing market is coming back to some extent,” said Kurt Eggert, a professor at Chapman University School of Law in Orange, California. “It should have happened a long time ago.”
…
The deed-in-lieu transactions, which require homeowners to leave properties in good condition, preserve the value of homes by preventing owners from abandoning them to take a new job or cope with an illness, Gordon said. Vacant and dilapidated real estate drags down values of nearby houses, increases expenses for Fannie Mae and Freddie Mac, and reduces the amount they’ll recover when the property is sold, she said.
…
To qualify for the programs, borrowers are required to have a 55 percent debt-to-income ratio — meaning 55 percent of their monthly gross income goes to paying debt. To be eligible, homeowners have to document a hardship, such as illness, for Fannie Mae and Freddie Mac to consider the deal.

Posted in Economics, Foreclosures, Mortgages, National Real Estate | 113 Comments