Appears that the bottom is now behind us

Posted on September 20, 2012 by grim

From the WSJ:

The Housing Recovery Keeps Rolling Along.

August existing-home sales and construction of single-family homes jumped to the highest level in more than two years. Meanwhile, a separate report showed housing starts in August rose 2.3% on a month-over-month basis.

The data — which come one day after confidence among U.S. home builders jumped to the highest level in more than six years – point to continued signs of an improving housing market.
…
Existing-home sales are now back at levels last seen in May 2010, when first-time homebuyers were rushing to qualify for a government tax credit. As the chart from Credit Suisse shows, home sales still have a long way to go before reverting back toward pre-crisis levels. But for now, the momentum appears to be moving in the right direction.
…
“This may be the most promising existing home sales report in five years,” wrote economists at IHS Global Insight. “Fundamentals — an improving economy, low interest rates, and, possibly, a drop in the cancellation rate — appear to be the driving force behind August’s strong and broad-based gains.”

To be sure, there are still reasons to stay cautious about the recent recovery in housing data.

Steven Wood, chief economist at Insight Economics, points out there are still plenty of distressed properties on the market and “a substantial shadow inventory of unsold homes.” He notes the slow recovery hasn’t gained much traction considering how much damage was done throughout the crisis.

But all in all, strategists and economists seem to be getting more upbeat that the housing recovery is for real.

“The pieces for a more sustainable housing sector recovery are now falling into place,” says Millan Mulraine, an economist at TD Securities.

From Forbes:

Housing Recovery? Starts And Sales Of Existing Units Hit Two-Year Highs

The housing market has been one of the key factors that’s been absent in the broader, albeit tepid, U.S. economic recovery. Recent data suggests residential real estate is on its way to a gradual recovery, as Wednesday’s single family home starts and used home sales showed, which hit their highest levels in more than two years. This may be the beginning of a gradual, and difficult, recovery for what was the epicenter of the global financial crisis.

The last time the housing market seemed to be in recovery mode was back in mid-2010, after the first-time homebuyer tax credit boosted demand for homes. Ever since then, most of the chatter has been about a double-dip in prices, a massive buildup of inventories, and a lurking shadow inventory.
…
A solid rebound in housing markets is by no means around the corner. As mentioned above, the shadow inventory looms and inventories are still relatively large. Investors have difficulty accessing credit, despite Bernanke’s best efforts to lower mortgage rates via QE3, and consumers are in the midst of a cycle of deleveraging. If this is truly the beginning of the housing recovery, investors can expect a gradual and difficult climb that will last several years. Still, the market seems to have bottomed.

Posted in Economics, Housing Recovery, National Real Estate | 108 Comments

Hey Christie – How about focusing a little bit on NJ now?

Posted on September 19, 2012 by grim

From Bloomberg:

New Jersey Housing Suffers as Defaults Exceed Nevada: Mortgages

New Jersey’s judicial review of all foreclosures, which delays seizures to help borrowers, threatens to hold down prices for years as properties remain subject to repossession and then may be sold at a discount. That’s buffeting a housing market already hurt by unemployment that’s risen to a 35-year high.

The state passed Nevada in the second quarter in the rate of homeowners with seriously delinquent loans — those 90 days late or in foreclosure — according to the Mortgage Bankers Association. Only Florida had a higher rate of serious delinquencies, and that fell 1.2 percentage points from a year earlier to 17.5 percent of mortgages. In comparison, New Jersey’s rose 1.3 percentage points to 12.7 percent.

While home values increased in July from a year earlier in 42 states, New Jersey prices fell 0.8 percent, according to CoreLogic (CLGX), a real estate services company based in Santa Ana, California.

“Housing is an albatross around New Jersey’s economy, which is one of the weakest in the country,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in an e-mail.

From the Philly Inquirer:

S&P downgrades N.J.’s economic outlook to ‘negative’

Budget analysts and credit rating agencies continue to cast doubt on a “Jersey Comeback.”

On Tuesday, Standard & Poor’s became the third credit agency within days to warn that New Jersey’s $31.7 billion budget, which went into effect July 1, is based on overly optimistic revenue projections. It depends on expected revenue growth of nearly 8 percent, more than twice the rate of the previous year.

The Christie administration itself is presenting a muted economic forecast to investors, a far cry from the governor’s months of touting the state’s economic “comeback,” a slogan he recently abandoned.

While two other rating agencies, Moody’s and Fitch, last week deemed the state’s economic outlook “stable,” S&P downgraded it to “negative.” It cited the revenue assumptions; reliance on one-shot measures, such as the clean energy fund, to plug budget holes; and longer-term economic pressures.

Both Moody’s and Fitch expressed concern that despite the state’s relatively wealthy population and diverse economy, New Jersey has lagged behind the nation in recovery and its budget remains structurally unbalanced.

From the Record:

NY Fed chief cites slow N.J. recovery

The president of the Federal Reserve Bank of New York told an audience of students, corporate executives and college officials at Montclair State University Tuesday that New Jersey’s economy is improving – albeit at a moderate pace.

President Bill Dudley, said the Fed’s move to spend $40 billion a month on mortgage bonds, which he voted for, was necessary given the slow advances in economic growth nationally.

Without further action from the Fed, he said, growth would be too weak to “make big inroads into the spare capacity” of labor and industrial production, and wouldn’t boost employment or business spending.

“I believe that a nudge in the right direction will move us will move us closer to a self-reinforcing cycle of more hiring, more spending, more growth and more investment,” he said.
…
In New Jersey, he said, the economic recovery is struggling from the impact of the continuing housing slump and the excessive debt burden that people are carrying.

Although there are signs that housing prices are starting to “firm,” there has been little recovery in the construction industry, and the percentage of mortgage debt in New Jersey that is 90-days delinquent – 9.3 percent in June – is three percentage points higher than the national rate, Dudley said.

“Things are improving, not as fast as we’d like,” he said. “There is still a lot of stress on New Jersey families.” As of the second quarter of 2012, the average debt per person was about $63,000, “roughly unchanged over the past several years,” he said.”Delinquency rates on that debt are high,” he said, adding that “8.4 percent of all debt in the state is seriously delinquent, up from 7.4 percent in 2011.” That’s well above the national rate of 6.7 percent, he said, adding that “many New Jersey households are still struggling with their finances.”

Posted in Economics, Employment, Foreclosures, New Jersey Real Estate | 144 Comments

Many borrowers locked out of lower rate mortgages

Posted on September 18, 2012 by grim

From the LA Times:

Two-thirds of Americans with mortgages pay 5% interest or higher

US. interest rates are at rock-bottom levels, but that’s not helping most Americans with mortgages. And those high-cost loans remain a big drag on the economy, experts say.

Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic.

Meanwhile, the average 30-year fixed-rate mortgage has been below 4% every week but one this year, and the average 15-year fixed-rate mortgage, popular among buyers looking to refinance, has been below 3% since the last week in May, according to Freddie Mac.

Several factors may be keeping homeowners from securing lower mortgage rates, economists said, including battered credit, insufficient income, stricter lending standards and the costs of refinancing.

But a major aftershock from the housing crisis itself also remains a big stumbling block: the significant chunk of homeowners who are underwater and unable to get new loans.

For underwater borrowers — those who owe more than their homes would bring if sold — the CoreLogic data showed that 84% had loans with interest rates above 5%. Half of underwater borrowers had interest rates above 6% at the end of the second quarter.

Economists and policymakers see a big opportunity, arguing that getting borrowers into lower-cost loans would be an effective way of stimulating the economy — freeing up some income for those who are probably struggling the most to pay their mortgages. Refinancing could also help underwater borrowers by allowing them to plow more cash back into their homes and reduce principal.

To that end, the Federal Reserve last week unveiled big new steps to further push down mortgage interest rates and spur the housing market.

The vast majority of borrowers with negative equity, about 84.9%, continued to pay their mortgages in the second quarter, CoreLogic reported last week.

Nevertheless, underwater loans remain an obstinate barrier to economic growth because people who remain stuck in their homes are often unable to pursue new jobs and other opportunities elsewhere. These borrowers are also higher risks for foreclosure.

Helping spur mass refinancing with new government policies would not only help underwater households but also get the economy moving again, economists say.

“It has very strong macroeconomic effects,” said Joseph E. Stiglitz, a Nobel Prize-winning economist and professor at Columbia University. “The irony is the people who need the help the most have not been helped — the people who are underwater.”

Changes this year to the Home Affordable Refinance Program for underwater borrowers with Fannie Mae and Freddie Mac loans have led to a 95% increase in participation in the program through the first half of the year.

Stiglitz is supporting legislation by Sen. Jeff Merkley (D-Ore.) that would expand refinancing to borrowers who have privately owned mortgages.

Other Senate bills also aimed at expanding refinancing opportunities and reducing costs are being sponsored by Sens. Dianne Feinstein (D-Calif.), Barbara Boxer (D-Calif.) and Robert Menendez (D-N.J.).

Posted in Economics, Housing Recovery, Mortgages, National Real Estate | 193 Comments

Inept banks blamed for poor HAMP performance

Posted on September 17, 2012 by grim

From the Huffington Post:

Banks’ Disorganization Pushed 800,000 Homeowners Into Unnecessary Foreclosure: ProPublica

Over the past several years, we’ve reported extensively on the big banks’ foreclosure failings. As a result of banks’ disorganization and understaffing — particularly at the peak of the crisis in 2009 and 2010 — homeowners were often forced to run a gauntlet of confusion, delays, and errors when seeking a mortgage modification.

But while evidence of these problems was pervasive, it was always hard to quantify the damage. Just how many more people could have qualified under the administration’s mortgage modification program if the banks had done a better job? In other words, how many people have been pushed toward foreclosure unnecessarily?

A thorough study released last week provides one number, and it’s a big one: about 800,000 homeowners.

The study’s authors — from the Federal Reserve Bank of Chicago, the government’s Office of the Comptroller of the Currency (OCC), Ohio State University, Columbia Business School, and the University of Chicago — arrived at this conclusion by analyzing a vast data set available to the OCC. They wanted to measure the impact of HAMP, the government’s main foreclosure prevention program.

What they found was that certain banks were far better at modifying loans than others. The reasons for the difference, they established, were pretty predictable: The banks that were better at helping homeowners avoid foreclosure had staff who were both more numerous and better trained.

Unfortunately for homeowners, most mortgages are handled by banks that haven’t been properly staffed and thus have modified far fewer loans. If these worse-performing banks had simply modified loans at the same pace as their better performing peers, then HAMP would have produced about 800,000 more modifications. Instead of about 1.2 million modifications by the end of this year, HAMP would have resulted in about 2 million.

Posted in Foreclosures, Mortgages, National Real Estate, Risky Lending | 111 Comments

White House shows support for HARP 3

Posted on September 15, 2012 by grim

From the White House Blog:

Infographic: The Plan to Help Homeowners Refinance

Congress is currently considering a plan that would help millions of responsible homeowners save hundreds of dollars each month by refinancing their mortgages.

The plan to expand access to refinancing is simple: make it easier for millions of responsible homeowners with mortgages backed by Fannie Mae and Freddie Mac to take advantage of historically low interest rates, even if they are underwater, as long as they are current on their payments. The proposal would establish a quick and hassle-free process—no more tax forms, and no more appraisals—just a lower interest rate, and lower payments each month.

Posted in Housing Recovery, Mortgages, Politics | 120 Comments

Increased cancelations – Big deal or not?

Posted on September 14, 2012 by grim

From HousingWire:

15% of home sales fail: Capital Economics

Many parties are forming real estate deals only to watch their transactions fall through before the closing date, Paul Diggle, a property economist with Capital Economics, said Thursday.

Diggle released a note saying “it’s obviously not good that 15% or more of all contracted home sales aren’t making it through to closing.”

Using data from the National Association of Realtors, he found that pending home sales rose 6.9% from December to July while actual closings were up only 2.1%.

If both indexes had risen together, it would suggest a more seamless move through the entire real estate transaction.

Part of the difference may be attributed to NAR’s existing home sales index using a larger survey sample than the pending home sales index, Capital Economics said.

“But we suspect that the bulk of the divergence reflects the fact that cancellation rates have increased,” Diggle wrote. “And this divergence creates problems in a market that is struggling to recover.”

Diggle says the escrow period has become more challenging for buyers and sellers who find themselves wrangling with financing, home inspections and title report issues.

“Escrow allows buyers or sellers who run into problems with any of these steps to withdraw from a sale at a relatively low cost,” he explained.

Diggle says rising cancellation rates are likely to keep the housing recovery “relatively muted.” The good news is more buyers are considering sales, but the divergence between initial contracts and closings could suggest falling home prices lie ahead.

Posted in Economics, Housing Recovery, National Real Estate | 237 Comments

Foreclosures up, but still at a very low level

Posted on September 13, 2012 by grim

From the Philly Inquirer:


Foreclosure filings up in Pa., N.J., other states

States that process home foreclosures through the courts, including Pennsylvania and New Jersey, experienced an increase in filings in August over July’s levels, RealtyTrac, which tracks foreclosures nationwide, reported Thursday.
…

Nationally, the foreclosure-filing rate rose 1 percent from July to August but was down 15 percent from August 2011, RealtyTrac said.

Yet in judicial-foreclosure states, “deferred activity boiled over,” said Daren Blomquist, vice president of RealtyTrac. “This was a continuation of a trend we’ve been seeing for several months now.”

Twenty states registered year-over-year increases in foreclosure activity.

In Pennsylvania, new foreclosures increased 129 percent from August 2011, while in New Jersey they increased 101 percent. On the distressed-housing list of 50 states, they were ranked 27 and 32, respectively.

Filings in both states were below the national average of one in 681 houses, with Pennsylvania at one in 1,194 and New Jersey at one in 1,461.

Sales of houses repossessed by banks through foreclosure fell in most states. Pennsylvania had 43 percent fewer sales in August than in 2011.

Recently, many lenders have been trying to avoid the expensive and lengthy foreclosure process by making short sales, those in which banks accept prices less than what is owed on the mortgages.

RealtyTrac data show short sales in the first quarter at a three-year high, and 25 percent above levels for the same three months of 2011.

Posted in Foreclosures, New Jersey Real Estate | 191 Comments

Foreclosure on your street? Go mow their lawn.

Posted on September 12, 2012 by grim

From the IB Times:

US Foreclosures Have Modest Impact On Nearby Home Prices: NBER

Foreclosed properties in the U.S. only modestly depress the home prices of nearby properties, and the effects vanish a year after the distressed property is resold, according to a working paper by the National Bureau of Economic Research.

A seriously delinquent or repossessed home causes a 0.5 percent to 1 percent decrease to home values within 0.10 miles, described as “an amount that would most likely go unnoticed by the typical seller who does not have many distressed homeowners living nearby,” according to the report, “Foreclosure Externalities: Some New Evidence.” It was written by Kristopher Gerandi of the Federal Reserve Bank of Atlanta, Eric Rosenblatt of the Federal Reserve Bank of Boston, and Fannie Mae’s Paul Willen and Vincent Yao.

“Perhaps the most important conclusion that one should take from this analysis is that the effects of foreclosure and distressed property in general on the prices of neighboring homes are fairly small,” wrote the authors, who used public housing data in the study.

The authors cite three possible explanations for the faint relationship between foreclosures and falling home prices. They found the most likely reason to be a lack of investment by distressed property owners, which leads to deterioration of the property. Delinquent homeowners often lack the funds to maintain their property, and they have no incentive to improve it if they are at great risk of losing it to the lender, the authors said, which hurts the marketability of neighboring homes.

The two other explanations, which were thought to be less likely, were that the listing of a foreclosed property on the market increased local inventory and lowered demand, both of which could lead to lower prices.

Posted in Foreclosures, National Real Estate | 144 Comments

Dems seek HARP expansion

Posted on September 11, 2012 by grim

From HousingWire:

Senators bargain on HARP expansion

Senate Democrats reintroduced a bill to expand refinancing for an estimated 13.5 million Fannie Mae and Freddie Mac mortgage borrowers.

Sens. Robert Menendez, D-N.J., and Barbara Boxer, D-Calif., will keep the origination cut-off date for the Home Affordable Refinance Program at June 2009 after a previous version expanded the program through June 2010.

“We made this change in a compromise with industry groups, and in response to issues raised by mortgage bond investors,” Menendez said in a conference call with reporters Monday. “We’ve addressed every objection raised to the previous version.”

The new version of the bill also eliminates previously proposed penalties for second lien holders and mortgage insurers who did not approve or transfer coverage in order to allow a HARP refinance to go through.
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The new bill still allows a new servicer to avoid repurchase and warranty risk from the government-sponsored enterprises on the old loan. It also still prohibits the GSEs from charging any upfront fees to refinance a loan they guarantee, and it eliminates appraisal costs for all borrowers.

More than 1.5 million borrowers refinanced under HARP, since the program launched in 2009.

The Federal Housing Finance Agency eased guidelines last year to allow more deeply underwater borrowers to refinance, and the program spiked when lenders put in the new rules. Roughly 519,000 borrowers took advantage of HARP in 2012, already more than the 400,000 in all of last year, according to the FHFA.

The Obama administration renewed a push to get a new refinancing package through Congress. But despite some of the give by Menendez and Boxer Tuesday, enacting the bill remains a long shot in the Republican-controlled House.

Posted in Foreclosures, Mortgages, Politics, Risky Lending | 99 Comments

Don’t bet on a quick recovery

Posted on September 10, 2012 by grim

From the WSJ:

Housing on Mend, but Full Recovery Is Far Off

Home prices during the first half of 2012 posted their strongest gains in six years, the clearest sign that more U.S. housing markets have hit bottom.

But the housing market remains far from normal. Hitting a bottom shouldn’t be confused with a full-on recovery, which looks a ways off.

Today’s rising prices have less to do with surging demand—though hard-hit markets in Arizona, California, and Florida have seen significant investor appetite for distressed homes—than with declines in the number of properties for sale.

Inventories of “existing” homes—that is, ones that haven’t just been built—are at eight-year lows. New-home inventories are lower than at any time since the U.S. census began tracking them in 1963. In some cities, there are one-third fewer homes listed for sale than a year ago.

Here’s why prices are rising: There are more buyers chasing fewer homes, and—critically—fewer distressed homes, such as foreclosures. Low inventory is one sign that housing markets may have reached a turning point because many want to buy at the bottom but few want to sell.

There are several factors behind the low inventory. Banks have slowed their pace of foreclosures. Investors have snapped up discounted properties that they can convert into rentals. Home builders, struggling for several years to compete on price with foreclosed properties, have added little in the way of new supply.

For now, price gains are concentrated at the low end of the market, where inventory declines have been most dramatic. “The market is really drying up in these seemingly distressed markets really quickly,” said Michael Sklarz, president of research firm Collateral Analytics. “They really are scratching for properties to sell.”

Low inventory is benefiting home builders, as buyers grow frustrated by bidding wars sparked by a shortage of move-in-ready housing. “People can’t find inventory that they want, so they say, ‘I’m just going to buy the house down the block that’s brand new. I don’t have to go through the whole torture,’ ” Mr. Sklarz said.
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An important test comes later this year. In each of the past three years, prices rose in the summer but gave up all those gains and more in the winter, when sales traditionally slow. This year could be different because the supply of homes isn’t piling up.

Absent a shock to the economy, housing is on the mend. But it will be a long time before it returns to normal.

Posted in Economics, Housing Recovery, National Real Estate | 128 Comments

Weekend Housing Pep Talk

Posted on September 8, 2012 by grim

From Barrons:

Happy at Last

Nothing’s wreaked quite the havoc on the U.S. economy, and indeed the national psyche, as the six-year slide in home prices. It wiped out some $7 trillion in household wealth, savaged bank balance sheets, and induced the Great Recession and the tepid recovery.

Yet there are unimpeachable signs that this national nightmare is now over. Home prices are starting to rise, if somewhat haltingly, in most areas of the country. And a number of forecasters predict home-price increases around 10% or so nationally over the next three years, with some metropolitan statistical areas, such as Midland, Texas, and Bismarck, N.D., likely riding the energy-exploration boom to better than 20% jumps in residential-real-estate prices. The turnaround, in fact, appears to be arriving exactly on the schedule that Barron’s laid out this year in a March 19 cover story entitled “Ready to Rebound.”

Of greatest moment, perhaps, was the release two weeks ago of the S&P/Case Shiller Composite 20-City Index that showed a jump in home prices of 2.3% in June over May. Likewise the Case-Shiller National Index in the second quarter rose 6.9% over the first-quarter level, before any seasonal adjustment. And for the first time since the summer of 2010, the National Index actually nosed ahead of the year-earlier quarter’s reading, if only by 1.2%.

“This increase in home prices, unlike the one that occurred in 2009-2010 as a result of the temporary tax credit for first-time home buyers, looks to be for real,” says David Blitzer, chairman of the index committee at S&P Dow Jones Indices. “We probably won’t see a V-shaped recovery in housing, with prices overall going up 20% in the next year. But this rally has legs, and prices will definitely be higher next year.”
…
“It has been six years since the housing market last experienced the gains we saw in the July numbers, with indications that the summer will finish up on a strong note,” says CoreLogic CEO Anand Nallathambi. “Although we expect some slowing in price gains over the balance of 2012, we are clearly seeing the light at the end of a very long tunnel.”
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Yet some keen observers of the real-estate market, such as Moody’s Analytics’ Mark Zandi, are optimistic that home prices will rise as much as 10% from current levels by the end of 2014, once the shadow inventory is worked down over the next year or so. He points to such factors as the continued rise in effective rent rates (the main competition to home ownership), low mortgage rates, steady though slow improvement in job growth and improving availability of bank credit.

“We’ve clearly reached a key psychological shift in home buyers’ psychology, where folks are now starting to worry about missing the boat, rather than fearing whatever house they buy, no matter how attractive the price, can only go down in value,” Zandi explains.

Posted in Economics, Housing Recovery, National Real Estate | 186 Comments

Not on fire, but rents still rising

Posted on September 7, 2012 by grim

From CNBC:

Rent Spikes Begin to Ease

Recent reports have shown home prices rising, especially in the housing markets which were hardest hit in the crash.

Investors, buying in bulk, have been swarming these distressed markets, seeking to take advantage of a thriving new single family rental market.

The strong demand from investors has pushed supplies down, causing prices to rise. But as housing recovers, and more fence-sitters decide to jump in, will the rental market remain strong?

Rents are still rising.

Nationally, rents rose 4.7 percent in August from a year ago, which, while still a gain, is down from the 5.8 percent annual increase in May – making it the slowest rise since March, according to Trulia.com. Some markets, however, are still hot, with rents up around 10 percent year over year. These include Houston and Seattle, Denver and San Francisco.

“Rents had been on fire earlier this year, but some of the hottest rental markets are starting to cool,” said Jed Kolko, Trulia’s Chief Economist. “New construction that started last year is finally coming onto the market, giving renters more choices and some relief from rising rents. Still, rents are climbing in nearly all of the major rental markets.”
…
A new report from Rent.com quantified many of the reasons potential buyers are delaying home ownership: 47 percent are waiting to save a down payment , 11 percent are waiting for the real estate market to stabilize, 22 percent are waiting for their credit to improve to qualify for a home loan, and 20 percent are waiting to feel more secure about their employment situation.

Posted in Economics, Housing Recovery, National Real Estate | 144 Comments

Homes that sell are selling faster (or are they?)

Posted on September 6, 2012 by grim

Caution caution caution… Read this piece with extreme skepticism. “Relisting,” the practice of taking a property off market and almost immediately back on market as a new MLS listing in order to make the property appear “new to market” or to “refresh the listing” is still commonplace. The issue has never really been resolved, and there is no consistent definition for the “days on market” metric, especially if it includes any kind of gap between relisting (if it’s off the market for a day, is it considered the same listing? What about a week? A month?). In addition, if a property changes brokerages during the listing time, the agent surveyed will likely only quote the time at their brokerage. This can all wildly impact the reported “days on market”. Also, the methodology here appears to be less than ideal. Instead of basing the metric on a sample of sales data, it’s conducted as a survey. I believe the question form has a bit of survivorship bias, because it focuses only on homes that sold, and not homes that haven’t sold. Combined with the relisting activity, I have little faith in the accuracy or reliability of the data.

From the AP:

Realtors: US homes selling at faster pace

U.S. homes are taking less time to sell than a year ago, reflecting more homebuyer demand and fewer bank-owned homes and other properties available for sale in some markets.

The National Association of Realtors said Wednesday that the median time a previously occupied home was listed for sale shrank in July to 69 days. That’s down from 98 days in the same month last year.

One-third of the homes purchased in July were on the market for less than a month, while one in five was on the market for at least six months. A home’s median time on the market has been declining steadily since January, the trade group said.

Between 2004 and 2005, the high-flying years of the housing boom, the median selling time of previously occupied homes was four weeks, NAR said. The supply of homes on the market averaged 4.3 months over the same period.

The July figures, which were derived from a monthly survey of the trade group’s real estate agents, are good news for sellers and come as the inventory of homes available for sale has been tightening.

Overall, there were 2.4 million previously owned homes for sale in July, down 24 percent in the past year. It would take about 6.4 months to exhaust that supply at the current sales pace. That’s just above the six-month inventory typical in a healthy economy and 31 percent below the 9.3-month supply in July last year.

“A notable shortening of time on market began this spring, and this has created a general balance between homebuyers and sellers in much of the country,” said Lawrence Yun, the trade group’s chief economist.

Factoring out short sales — when a bank agrees to accept less than what the seller owes on their mortgage — the median time on the market for homes was around six to seven weeks, Yun said.

Posted in Economics, Housing Recovery | 124 Comments

“Don’t be surprised if the all-time low in home prices is in the rearview mirror.”

Posted on September 5, 2012 by grim

From the WSJ:

Here’s More Evidence That Home Prices Have Hit Bottom.

In each of the last three years, home prices have increased in the spring and summer, when more people are buying homes, before giving back all of those gains and then some in the fall and winter, when activity cools.

But it is beginning to look like that might not happen this year, absent a major stumble for the economy.

Home prices in July were up by 3.8% from one year ago, the largest year-over-year jump in six years. Moreover, prices have shot up by 9.6% from February, when they registered their lowest levels of the housing downturn, according to CoreLogic data released Tuesday.

This adds evidence to the case that U.S. home prices may have hit bottom earlier this year. Even though prices will soften in the autumn, “we have a much better supply and demand dynamic” than in previous years, said Mark Fleming, chief economist at CoreLogic.

So when people say they believe home prices haven’t reached a bottom—that this year’s seasonal gains will be wiped away by January or February of next year—here’s the relevant question: Will home prices fall by 9.6% in the next six months?

Anything, of course, is possible. Home prices fell in the winter—what Mr. Fleming calls the “offseason”—in each of the last three years to record a new low. But they have not fallen by 9.6% in any six-month span since March 2009, which was when the U.S. economy was still in recession.

That’s the good news. Here’s the bad news: While the year-over-year comparisons look good right now, the economy—and workers’ wages—aren’t growing fast enough to justify this kind of increase on a sustained basis.
…
As we’ve written many times before, the strong rise in home prices this year owes as much to sharp declines in inventory as it does to demand-side improvement. Banks have been much slower to take back and list foreclosed properties, easing pressure on home prices but leaving a bloated “shadow inventory” of potential foreclosures.

These homes will weigh on markets for years, though there’s less evidence that they will be dumped on the market at once. While the shadow inventory may not lead to a big drop in prices that some have feared, it will probably keep a lid on future home-price gains.
…
The bottom line: Don’t be surprised if the all-time low in home prices is in the rearview mirror. But this doesn’t mean a full-on recovery is here, and there’s little evidence that the current pace of improvement can continue. For now, home prices appear to be bumping along a bottom.

Posted in Economics, Housing Recovery, National Real Estate | 109 Comments

North Jersey Contracts – August 2012

Posted on September 4, 2012 by grim

(Source GSMLS, except Bergen which is NJMLS)

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

Bergen County
August 2011 – 589
August 2012 – 707 (Up 20% YOY)

Essex County
August 2011 – 258
August 2012 – 348 (Up 34.9% YOY)

Hunterdon County
August 2011 – 92
August 2012 – 124 (Up 34.8% YOY)

Morris County
August 2011 – 333
August 2012 – 475 (Up 42.6% YOY)

Passaic County
August 2011 – 145
August 2012 – 260 (Up 79.3% YOY)

Somerset County
August 2011 – 220
August 2012 – 322 (Up 46.4% YOY)

Sussex County
August 2011 – 106
August 2012 – 150 (Up 41.5% YOY)

Union County
August 2011 – 245
August 2012 – 305 (Up 24.5% YOY)

Warren County
August 2011 – 80
August 2012 – 107 (Up 33.8% YOY)

Posted in Housing Recovery, New Jersey Real Estate | 121 Comments