Tailwind for housing? Or too optimistic?

Posted on January 25, 2013 by grim

From the NYT:

Housing Offers Hope of Strength in the Economy

A funny thing is happening to the United States housing market. It is getting better at an accelerating rate.

And therein could lie hope for a surprisingly strong economy this year.

It has been a long time, as the economy worked off the excesses of the boom and cleared out the inventory of homes that should never have been built or were “sold” to people who could not hope to afford the payments. But now the inventory of houses for sale — both new and used — is as low as it has been in decades. Home prices are rising in most markets. Sales have picked up, though they are still low by historical standards.

“We had 48 months of depression in the housing industry,” said Karl E. Case, an emeritus professor of economics at Wellesley College and the co-developer of the Standard & Poor’s/Case-Shiller house price index. “Housing has brought us out of every recession in the past, and it was not available.”

But now, he said in an interview, “there is no question that we have turned what seemed to be a headwind into a tail wind.”
…
The National Association of Realtors, which reports each month on sales of existing, or used, homes, tries to calculate how many sales are distressed and how much that distress lowers the prices received. Lately, the proportion of distressed sales has been declining slowly and so has the discount. In December, 12 percent of sales were said to be of foreclosed homes, and an equal number were short sales, in which the home is sold for less than the amount owed on the mortgage.

There is reason to hope that those figures will continue to decline. Moody’s reports that the “shadow inventory” of homes with foreclosures pending and homes already owned by banks but not on the market is declining. It voices hope that banks “are finally putting behind them the operational and regulatory issues that plagued them in the past and are taking the steps necessary to address their backlogged foreclosure inventory.”

At some point, the declining proportion of distress sales could well mean that house price indexes will begin to rise faster than the underlying market might really justify, as those sales stop holding down the averages.

If that came as the economy began to strengthen enough that the Federal Reserve decided to let interest rates start to creep up, could that create a rush to buy among those who fear rising prices and mortgage interest rates?

Perhaps, but nothing like during the old days. People do know now that prices can fall, demographics will limit the number of new families that need housing, and banks are far less willing to make loans than they were. (That is true even though nearly all mortgages are sold to Fannie Mae and Freddie Mac. Banks fear they will have to repurchase any bad loans they sell, and seem to be erring on the side of caution.)
…
None of this is meant to suggest that the housing market is in good shape. But it is improving.

During the years running up to the collapse of the housing bubble, Professor Case was among those warning that prices had risen to unsupportable highs. But now he has a different view.

When I called him this week, he apologized for having to end the interview because of a prior appointment. “I’m going to look at a property that I may buy as an investment,” he said.

Posted in Employment, Housing Recovery, National Real Estate | 91 Comments

Economic Recovery? Focus on housing, not stocks.

Posted on January 24, 2013 by grim

From Bloomberg:

Rising House Prices, Not Stocks, Make People Feel Wealthy

As a key influence on households’ spending decisions, the health of the housing sector trumps stock-market moves, a paper released this week by the National Bureau for Economic Research claims.

The study, written by prominent economists Karl Case, John Quigley and Robert Shiller, refines their existing study of what is called the wealth effect. Case and Shiller are well known names, especially on housing issues. Quigley, another luminary, died in May, before the research’s publication.

Most economists and policymakers agree asset price gains can be big drivers of consumer spending power. Rising home or stock prices are generally agreed to increase consumer spending, while falling asset prices cut the other way.

That said, economists and policymakers have had a hard time quantifying the wealth effect. That’s problematic for many reasons, but it’s even more so due to the fact that the housing market’s crash and apparent recovery are considered central to the overall fate of the economy. To that end, the Federal Reserve is pursing a policy course deliberately aimed at driving up all manner of asset prices in hopes its actions will boost household spending to power better overall growth.

In the paper, the economists update their decade-old work, drawing on a wider and more up-to-date set of data ranging from 1975 to the second quarter of 2012. The broader information changes and clarifies what was once thought about the wealth effect’s influence.

There is “at best weak evidence of a link between stock market wealth and consumption,” the economists wrote. “In contrast, we do find strong evidence that variations in housing market wealth have important effects upon consumption,” they said.

“An increase in real housing wealth comparable to the rise between 2001 and 2005 would, over the four years, push up household spending by a total of about 4.3%,” the paper stated. Meanwhile, “a decrease in real housing wealth comparable to the crash which took place between 2005 and 2009 would lead to a drop of about 3.5%.”

This finding upends the old understanding that housing gains tended to push spending higher by a wider margin that home price declines depressed spending, the economists wrote.

From HousingWire:

Wealth effect creeps back into American households

The nascent housing recovery is beginning a shift from economic headwind to tailwind, creating the indirect effect of giving average American households hope to, once again, begin to retain a level of wealth.

Of course, being in America, the feeling of wealth is best described as a family’s healthy relationship with their overall composition of debt — and this is one relationship that is still changing.

“The wealth effect is multi-faceted: It is partly due to the psychological lift resulting from higher home values, i.e. the perception of a stronger household balance sheet position actually supports spending,” said Deutsche Bank ($47.23 -1.1%) analyst Carl Riccadonna in a note to clients. “More directly, price appreciation enables households to refinance debt, thereby reducing interest expenses, as well as tap into home equity via lines of credit or cash-out refinancing.”

The second detail is particularly interesting as, according to recent Federal Flow of Funds data, HELOCs and refis represent a large portion of the shrinking mortgage debt.
…
Deutsche Bank’s Riccadonna added that even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets.

“Based on previous analysis, we are projecting home price appreciation of 5-10% in 2013, which translates into a further increase in household assets, i.e. wealth creation, ranging between $860 billion and $1.72 trillion,” he said. “To be sure, the wealth effect on consumer spending could be substantial.”

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

What’s the right timeframe to resolve a foreclosure? Fast or slow?

Posted on January 23, 2013 by grim

From Bloomberg:

New York Protecting Defaulters Stalls Rebound: Mortgages

New Yorkers Paul and Angelica Kashman, declared in default on their mortgage in July 2010 and foreclosed on by Wells Fargo & Co. (WFC) in February 2011, say they aren’t deadbeats.

“We always knew that when we get into a court of law and show that we have all the information and backup, the truth will come out,” said Paul Kashman, 37, a manager in the hospitality industry. The couple, stuck in limbo by legal bureaucracy, says they were mistakenly pushed into foreclosure, and are eager now to save their home, using court mediation.

Their case is among 72,000 pending in the New York system, accounting for a quarter of the civil caseload, and highlighting the strength and weakness of the state foreclosure process. While borrowers have protections unavailable in many other states, it takes more than 1,000 days for banks to repossess a home, stalling a housing recovery by keeping pressure on values for years to come as a constant drip of distressed properties enter the sales market.

The New York area was one of only two in the country to post year-over-year home price declines in the latest Case- Shiller 20-city index. Homebuyers also could lose, with the Federal Housing Finance Agency considering a fee increase to compensate Fannie Mae (FNMA) and Freddie Mac for doing business in New York and four other states with slow, costly foreclosures.

“New York suffers from what appears to be altruism, in that it postpones foreclosures as long as possible — the problem is that altruism can be expensive,” said Anthony B. Sanders, an economics professor at George Mason University in Fairfax, Virginia. “It slows down the housing market and it results in lenders being almost unwilling to lend. New buyers will pay the price for this.”
…
It’s one of five judicial foreclosure states, including New Jersey, Connecticut, Florida and Illinois, in which home repossessions require court review that the FHFA is targeting. The agency has said it’s seeking to compensate Fannie Mae and Freddie Mac (FMCC) by bringing their pricing of risk more in line with how private lenders operate. The FHFA last year had the two government-controlled companies almost double the annual fees they charge for guaranteeing mortgage bonds, with increases averaging 0.2 percentage point.
…
“The proposal would create the perverse incentive that states should either give up the fight against mortgage fraud and roll back consumer protections or face the consequences of higher mortgage rates for consumers,” Benjamin Lawsky, superintendent of the New York Department of Financial Services, wrote in the letter. “The proposal would also shift the cost of the failures of lenders and servicers onto New York State borrowers.”
…
“The byproduct of an aggressive and zealous defense is that the homeowner gets to stay in the home much longer than they otherwise could have and actually gets to keep his home,” Richardson said.

In New York it took 1,089 days on average to foreclose in the fourth quarter, the longest of any state and more than five times the pace in hard-hit Arizona, a non-judicial state that has worked through much of its backlog, according to data from RealtyTrac.

Posted in Economics, Foreclosures, Housing Recovery, National Real Estate | 88 Comments

December Existing Home Sales

Posted on January 22, 2013 by grim

From Bloomberg:

December home sales probably highest in 3 years

Sales of U.S. homes probably rose in December to the highest level in three years as the industry headed toward a more rooted recovery in 2013, economists said before reports this week.

Combined purchases of new and existing properties climbed to a 5.49 million annual rate last month, the highest level since November 2009, according to the median forecast of economists surveyed by Bloomberg News.
Another report may show the outlook for growth brightened last month.

Historically low mortgage rates, an improving job market and an increasing number of households will probably keep spurring demand for housing this year. The rebound comes as political wrangling in Washington over federal-spending cuts and the debt begins to shake consumer confidence, raising the risk that the world’s largest economy will suffer.

“The housing market is coming back, gaining momentum, and it’s one of the bright spots for the economy as we start 2013,” said Robert Dye, chief economist at Comerica Inc. in Dallas.

Purchases of previously owned homes climbed to a 5.1 million annual rate in December, the strongest since November 2009, economists project National Association of Realtors figures will show Tuesday. New-home sales picked up to a 385,000 annual rate for the month, the best showing since April 2010, according to the survey median ahead of a Friday Commerce Department report.

The combined reading would be the strongest since a government tax credit for first-time buyers first expired three years ago. It would the second-highest since August 2007, four months before the last recession began.

Posted in Economics, Housing Recovery, National Real Estate | 137 Comments

“No one told us about this basement thing.”

Posted on January 21, 2013 by grim

From the AP:

Superstorm Challenges Basement Definition

Irene Sobolov thinks the first floor of her house is just that. The federal government and her insurance company say it’s a basement.

The semantics, Sobolov has learned, are very expensive.

Sobolov and others whose lower-level apartments or businesses sustained water damage during Superstorm Sandy say the property they own is being classified as a basement, severely limiting what is covered under the National Flood Insurance Program.

“It’s the battle of the definitions,” said Sobolov, standing on concrete that a wood floor once covered. She says the damage to her home came when the sewer overflowed, sending a repellent brew of sewage, condoms and garbage water up through her toilet and drain. “No one told us about this basement thing.”

The basement classification has become a point of contention in Hoboken, a city of 50,000 across the Hudson River from Manhattan. Hoboken sustained major flooding when the Hudson jumped its banks and roared into the city during Superstorm Sandy, one of the strongest storms to ever hit the area. It is one of the densest cities in the country, and there are about 1,700 below-ground units that house people or businesses, according to Mayor Dawn Zimmer.

A spokesman for Senator Frank Lautenberg said people whose homes or businesses were classified as a basement are eligible for grants that are part of the $50.7 billion Sandy aid package approved by the House of Representatives Jan. 15. It is unclear how much will be allocated or what the rules will be.
…
While there may be some relief coming, the classification is leading some to call for changes to the National Flood Insurance Program, saying the basement definition unfairly punishes people who own property in cities.

The flood insurance rules “do not reflect the reality” of urban living, Zimmer told Congress last month.

“A store or apartment that requires you to walk down one or two steps is plain and simply not a basement,” Zimmer told the Senate Committee on Small Business and Entrepreneur-ship.

“For many people, that’s their primary residence. It’s where they have the kitchen, the bedroom,” Zimmer said in an interview. “It’s their home.”
…
Sobolov said she is challenging the assertion that her home was flooded because of her claim that what came up through the toilet and drain damaged her home. But because the insurance company declared her home flooded, she is also fighting the basement classification. There was about a foot of water and sludge in her home.

She and her husband have owned the home for 12 years and pay about $2,500 a year in flood insurance, Sobolov said.

“They collect our money for 12 years and only now it’s, ‘Oh, I forgot to tell you, we don’t cover you?'” she asked.

Posted in General, New Jersey Real Estate | 89 Comments

Movin’ Out

Posted on January 19, 2013 by grim

From the Huffington Post:

More Young Americans Moving Out Of Mom’s House

Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery.

The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents’ nests and drove others back into them, putting a sharp brake on the pace at which new households formed.

Household growth averaged about 500,000 per year from 2008 through 2010 – less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.

But the rate at which individuals or families are getting their own homes picked up over the past two years, underpinned by a steady if tepid economic recovery and gradual labor market gains. In 2011, households increased 1.1 million and they grew closer to 1.2 million last year.

“The rise in household formation bodes well for the housing recovery. Instead of having too many houses, we are turning to a situation where there aren’t enough,” said Guy Berger a U.S. economist at RBS in Stamford, Connecticut.

Indeed, housing has turned from the economy’s sorest spot to its brightest, with new building activity at 4-1/2-year highs. Housing activity in turn spurs related areas like furniture.
…
The worst recession since the Great Depression of the 1930s cost the economy 8.8 million jobs and drove the unemployment rate up to 10 percent.

Dim job prospects and growing financial stress undercut the pace of household formation – a central force behind housing demand – even though the population kept growing at a rate of about 2.7 million per year.
…
An analysis by economist Timothy Dunne at the Cleveland Federal Reserve Bank found there was a shortfall of 2.6 million households from 2008 through 2011 compared to what pre-recession trends would have suggested.
…
The gains are being felt primarily in the rental market, where rising demand has spurred a sharp pick up in construction of apartment buildings. In contrast, the U.S. homeownership rate hasn’t risen much from a 15-year low reached in early 2012.

“We are going to see more recovery in the rental market, in the very short run. As the market improves, people will start to face higher rents and over time, that will spill over into the owner-occupied market,” sai d Gary Painter, a public policy professor at the University of Southern California.

New home completions have lagged the increase in household formation, leading to a tightening supply.

According to RBS’ Berger, more than 1.3 million new residential structures should have been completed last year to keep pace with household growth. But only 651,400 homes were finished, the second lowest on record.

“Given that the stock of homes available for sale is already very low, inventories alone are unlikely to meet the demand presented by these new households,” said Berger.

Posted in Demographics, Economics, Housing Recovery | 69 Comments

NJ adds 30,900 jobs in December, can it be sustained?

Posted on January 18, 2013 by grim

From the AP:

NJ adds record 30,900 private jobs in December

Private employers in New Jersey added 30,900 jobs in December, the largest one-month gain since the current system of employment tracking began in 1990, the state Labor Department reported Thursday.

Economists say that cleaning up from Superstorm Sandy and the start of rebuilding were factors, but there was strong growth in areas that seem to have been unaffected by the storm.

“Do you believe in miracles?” asked James Hughes, dean of the Bloustein School of Planning and Public Policy at Rutgers University. “It’s kind of spectacular job growth for December.”

But it comes with caveats.

The strong month capped a sluggish year and accounted for about two-thirds of the state’s total job growth for 2012. Even with the new jobs, the unemployment rate was a stubbornly high 9.6 percent. That’s the same as the rate initially reported for November. But on Thursday, November’s rate was adjusted upward to 9.7 percent.

The unemployment rate remained nearly 2 points higher in New Jersey than the national December rate of 7.8 percent.
…
“New Jersey has 1.2 percent more jobs today than it did a year ago,” said Patrick O’Keefe, director of economic research at J.H. Cohn. “That’s better than going backward, but it’s still not very robust.”

O’Keefe said that at the current growth rate, it would take three more years for the state to get back to the number of jobs it had in December 2007, just before the Great Recession began taking its toll on jobs.
…
A preliminary analysis shows that from December 2011 to December 2012, employment grew by 48,000 jobs, with the private sector accounting for more than 46,000. The Labor Department said that figure represents the largest over-the-year private sector increase in jobs since December 1999 to December 2000, when more than 64,000 jobs were added.

It will not be clear until March whether the major one-month growth can be sustained. The Labor Department does not release a monthly report in February.

Posted in Economics, New Jersey Real Estate | 131 Comments

No end to the foreclosures? Does it matter?

Posted on January 17, 2013 by grim

From the Philly Inquirer:

Foreclosure filings fell nationally in 2012, but not locally, research shows

Foreclosure filings fell 3 percent nationally in 2012 from 2011’s levels and were 36 percent below their 2010 peak, RealtyTrac reported Thursday.

Filings did increase in New Jersey (up 55 percent) and Pennsylvania (up 28 percent) last year, the Irvine, Calif.-based real-estate information firm said, but were still below the levels of 2010, considered a record year for foreclosures nationwide.

States experiencing hefty increases in 2012, including New Jersey and Pennsylvania, were those in which the courts handle foreclosures, said RealtyTrac vice president Daren Blomquist.

“We expect to see continued increases in judicial-foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states,” Blomquist said. There will be another set of increases in some non-judicial states near the end of the year, he added, as “lenders adjust to the new laws and process some deferred foreclosures in those states.”

Yet the additional foreclosures are unlikely to be the torrent many housing observers had predicted.

“There are more distressed [sales] to come, but I doubt it will result in more price declines,” said Mark Zandi, chief economist of Moody’s Analytics in West Chester.

Investor demand for such properties is verging on voracious, he said. Demand for nondistressed properties also continues to strengthen.

“There may be a lull in house-price gains early this year, but it will be temporary and modest,” Zandi said Wednesday.

Posted in Foreclosures, National Real Estate, New Jersey Real Estate | 161 Comments

Setting the stage for a strong spring market?

Posted on January 16, 2013 by grim

From DowJones:

Freddie Mac See Unemployment Lower in 2013

The unemployment rate is projected to edge lower this year and home sales are expected to rise at a rate similar to last year’s, while interest rates are projected to remain relatively low throughout 2013, mortgage-finance company Freddie Mac said.

Despite fiscal uncertainties facing the U.S., the company said consumer confidence has remained fairly resilient in recovering from its recession lows, buoyed by improving labor and housing market news. Business owners and managers, however, are more sanguine about the nation’s business outlook than consumers seem to be, according to its U.S. Economic and Housing Market Outlook.

Freddie Mac said 1.86 million jobs were created last year, representing the largest annual gain since 2006. Of that, 155,000 jobs were created in December, while November’s payrolls were revised up 24,000, keeping the unemployment rate steady at 7.8%–the lowest since December 2008.

The unemployment rate is expected to provide support for a continuation of an accommodative policy stance by the Federal Reserve through the coming year, making a case for relatively low interest rates for mortgage lending and the broader capital markets, the company said.
…
Freddie Mac said home sales for the first 11 months of last year grew 9% from the year earlier, leading to expectations of similar results this year.

“As we begin 2013, the economy is undoubtedly at a better place now than at this time in 2012. And despite the clouds of fiscal uncertainty facing the country, positive jobs reports and the strengthening housing market continue to be the bright spot as we begin the New Year,” said Frank Nothaft, Freddie Mac vice president and chief economist.

Last week, sister company Fannie Mae reported that consumer confidence in the U.S. housing sector rose in December to the highest level since 2010. Fannie Mae said its poll of 1,002 Americans showed that most expect home prices to increase an average of 2.6% over the next year.

Posted in Economics, Housing Recovery, National Real Estate | 152 Comments

Sandy strikes again

Posted on January 15, 2013 by grim

From Bloomberg:

Mortgage Delinquencies Jump in Areas Hit Hard by Sandy

Mortgage delinquencies have jumped about four times the U.S. average in areas of New York, New Jersey and Connecticut that were damaged by Hurricane Sandy, according to Lender Processing Services Inc. (LPS)

The share of loans with late payments rose 3.7 percent nationwide from August to November, the Jacksonville, Florida- based company said in a report today. In ZIP codes hit hardest by the storm, delinquencies surged 15.4 percent in Connecticut, 15.2 percent in New Jersey and 14.8 percent in New York.
…
Sandy made landfall on Oct. 29, killing more than 100 people, inundating New York City’s subway system and destroying waterfront properties from New Jersey’s Atlantic City to Greenwich, Connecticut. While many homeowners fell behind because of brief disruptions, such as difficulty retrieving mail after the storm, some people lost homes and jobs that won’t be replaced easily, said Keith Gumbinger, vice president of HSH.com, a Pompton Plains, New Jersey-based mortgage-information website.

“A good portion of these are probably temporary,” he said in a telephone interview. “However, there are people who did suffer from catastrophic loss, whose houses are not habitable.”
…

Fannie Mae and Freddie Mac said on Nov. 9 that they would suspend evictions and foreclosure sales for 90 days in storm- disaster areas. The government-backed housing-finance agencies will allow firms that service their loans to extend forbearance plans for as long as 12 months.

Posted in Foreclosures, Shore Real Estate | 135 Comments

December Housing Scorecard

Posted on January 14, 2013 by grim

From HousingWire:

Obama Administration: Housing prices up, inventory down

Home prices showed strong annual gains for the 12 months ending October 2012, the Obama Administration said in its December Housing Scorecard report.

“As the December housing scorecard indicates, our housing market is continuing to show important signs of recovery — with the FHFA and Case-Shiller housing price indices up 5.6% and 4.3%, respectively, from one year ago,” said the U.S. Department of Housing and Urban Development Senior Advisor on Housing Finance Michael Berman.

Housing inventory continued to drop overall, falling to 4.8 months’ supply from 5.3 months’ supply on the last scorecard.

This drop in inventory, coupled with strong demand, is a driving force behind price appreciation. Home sales are up, hitting 31,400 existing homes for sale compared to 30,100 homes last month.

The December scorecard also revealed a significant drop in foreclosures, with starts only reaching 77,500 in November, down from 89,200 starts the previous month.
…
A key indicator that, while still fragile, the housing recovery is very much happening is the number of underwater borrowers. The first quarter in 2012 accounted for 11.4 million underwater borrowers, while the second quarter only revealed 10.8 million.

Posted in Housing Recovery, National Real Estate | 106 Comments

Buyer must feed squirrels

Posted on January 12, 2013 by grim

From the WSJ:

Can I Buy Your House, Pretty Please?

Rob and Julia Israch won a fierce bidding war for a three-bedroom townhouse in Mountain View, Calif., late last year even though their $750,000 offer—while $92,000 above the asking price—was topped by 11 rivals and was several thousand dollars below the highest bid.

A key reason: The seller, software engineer Lev Stesin, was moved by a letter in which the Israchs said they worked in the technology industry and explained how the home’s spacious layout would be perfect given the imminent arrival of their first child. Among other things, the townhouse has three bathrooms, a wood-burning fireplace and a roomy backyard.

“I felt very comfortable with these people,” said Mr. Stesin, himself the father of a toddler. “I really wanted this place to go to somebody in a similar situation.”

In an echo of the last housing boom, ardent pitch letters from eager home buyers are popping up again in hot U.S. real-estate markets like Silicon Valley, Seattle, San Diego, suburban Chicago and Washington, D.C., housing economists and real-estate brokers say.

The heartfelt missives, often accompanied by personal photos, aim to create an emotional bond that can give their writers an edge—especially in situations where multiple bidders are vying for the same house. And the reappearance of buyer pitches, also known as love letters, offers further evidence that the housing market is rebounding after a five-year slump.
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“The market has gotten so crazy that money alone doesn’t talk,” explained Glenn Kelman, chief executive of Redfin, a real-estate brokerage that operates in 19 markets. In 2012, 70% of the offers handled by Redfin agents faced competing bids. In Silicon Valley, the figure was 95%.
…
A few years ago, the owners of an older Los Altos home got more than 21 offers and picked the one from a woman who also submitted a love letter from her dog, said Kathy Bridgman, an Alain Pinel Realtors agent who represented the sellers.

“She won’t touch a thing,” promised the letter, signed with a paw print. “I will be able to play in the yard.”

After closing, the buyer immediately tore down the home and built a bigger one.

Posted in Humor | 67 Comments

Are Free-and-Clear Owners and Cash Buyers driving the Market?

Posted on January 11, 2013 by grim

From CNBC:

Homeowners With No Mortgage Offer Clues to Recovery

As federal regulators and banks argue over whether new lending standards will make mortgage credit too tight or too expensive, one important fact about the housing market goes largely overlooked: More than 20 million American homeowners own their homes outright. No mortgage.

This represents just about one third of all homeowners nationwide, according to a new report from Zillow, a real estate information, sales and mortgage website.

Demographics, home prices and geographical location all seem to play into “free-and-clear” home ownership, according to Zillow’s survey.

Out of the nation’s top 30 housing markets, Pittsburgh, Tampa, New York, Cleveland and Miami had the highest percentage of free-and-clear homeowners. A high number of all-cash, foreign buyers probably plays into New York and Miami. The other cities have relatively low home values, compared to the rest of the nation, making it easier for homeowners to either buy their homes outright or pay off their mortgages more quickly.
…
So what can these factors tell us about the current housing recovery?

One of the biggest drags on the housing market is that nearly one third of all borrowers owe more on their mortgages than their homes are currently worth. These so-called “underwater” borrowers are stuck in place, unless they want to pay in to their mortgages to get out of their homes.

Obviously if a homeowner does not have a mortgage, they are more able to list their home for sale and buy a new property.
…
“By determining where these homeowners are located, we can also gain insight into potential inventory and demand in those areas, as well,” notes Zillow’s chief economist Stan Humphries.

Posted in Economics, Housing Recovery, Mortgages, National Real Estate | 141 Comments

North Jersey Contracts – December 2012

Posted on January 9, 2013 by grim

(Source GSMLS, except Bergen which is based off NJMLS)

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

Bergen County
December 2011 – 489
December 2012 – 516 (Up 5.5% YOY)

Essex County
December 2011 – 230
December 2012 – 267 (Up 16.1% YOY)

Hunterdon County
December 2011 – 67
December 2012 – 77 (Up 14.9% YOY)

Morris County
December 2011 – 208
December 2012 – 268 (Up 12.1% YOY)

Passaic County
December 2011 – 150
December 2012 – 205 (Up 36.7% YOY)

Somerset County
December 2011 – 168
December 2012 – 207 (Up 23.2% YOY)

Sussex County
December 2011 – 83
December 2012 – 98 (Up 18.1% YOY)

Union County
December 2011 – 205
December 2012 – 229 (Up 11.7% YOY)

Warren County
December 2011 – 63
December 2012 – 57 (Down 9.5% YOY)

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

Conservative appraisals holding back housing recovery?

Posted on January 9, 2013 by grim

From The Street:

Your Move When Appraisals Lag Home Price Recovery

Like many young things, the housing recovery is suffering some growing pains, as appraisals lag rising prices and make it difficult for borrowers to get loans.

The problem, mortgage-data firm HSH Associates says, starts with the conservative appraisal standards implemented during the financial crisis. That is compounded by a natural lag in comparable-sales data. The result — appraisals coming in lower than the price seller and buyer have set — is a possibility both parties need to take into account as they enter this changing market.

“While low home values continue to be an obstacle in the way of a full housing recovery, more and more markets in recent months have experienced home-price improvements,” HSH reports. “Although home prices are up in some areas, many real estate agents, homeowners and homebuyers alike are frustrated that appraisals aren’t keeping pace with current home-price appreciation.”

In places where the number of home sales remains low, appraisers do not have many recent sales to examine in establishing current values, HSH says. Relying on sales from many months earlier means using data that do not reflect recent price increases. Also, many appraisals are being done by out-of-town appraisers who do not have a feel for recent changes in the local market, HSH reports. It cites a recent survey by the National Association of Realtors that found 34% of realtors reporting problems with appraisals in the past dozen months.

When the appraiser sets a value lower than the mortgage the buyer needs, the lender will deny the loan.

What can buyer and seller do?

Posted in Housing Recovery | 141 Comments