September home sales disappoint, but post year-over-year gains

Posted on October 20, 2011 by grim

(New York-Northern New Jersey-Long Island MSA showing some stabilization with prices down only 0.5% year over year in September, and sales up 0.4%)

From the WSJ:

US Sep Existing-Home Sales Dip Slightly

Sales of previously occupied homes in the U.S. dipped slightly last month, a sign of continuing weakness in a depressed part of the economy.

Existing-home sales decreased by 3.0% in September from a month earlier to a seasonally adjusted annual rate of 4.91 million, the National Association of Realtors said Thursday. August’s sales pace was revised upward to 5.06 million per year.

Economists surveyed by Dow Jones Newswires had expected home sales to fall by 2.6% to an annual rate of 4.90 million.

The market is “in a holding pattern. It’s not breaking out,” said Lawrence Yun, the trade group’s chief economist.

Sales were up 11.3% from the same month a year earlier. The median sales price was $165,400, down 3.5% from $171,400 a year earlier.

The inventory of previously owned homes listed for sale, meanwhile, fell at the end of September to 3.48 million. That represented an 8.5-month supply at the current sales pace, compared with a healthy level of about six months. Foreclosures and other distressed properties represented about 30% of sales, the Realtors group said.

More than five years after the housing bubble started to burst,the housing market remains a heavy burden on the economy.

A massive supply of foreclosed properties and a shortage of buyers who are able to purchase a home amid tight lending standards are holding down prices in much of the country.

Meanwhile, consumers remain uncertain about whether the market will take another turn for the worse and are hesitant about making a big purchase. Mortgage lending for home purchases was at the lowest point in nearly 15 years last week, despite mortgage rates that have been hovering above record lows, the Mortgage Bankers Association said Wednesday.

From Bloomberg:

Sales of Existing U.S. Homes Fell as Forecast in September

Sales of existing homes fell in September, extending a pattern of declines and gains that show the industry continues to be buffeted by consumer pessimism and unemployment above 9 percent.

Purchases dropped 3 percent to a 4.91 million annual rate, matching the median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price dropped 3.5 percent from a year ago and about one in five real-estate agents polled said contracts had been canceled, the group said.
…
Sales of existing single-family homes decreased 3.6 percent to an annual rate of 4.33 million. Purchases of multifamily properties, including condominiums and townhouses, climbed 1.8 percent to a 580,000 pace.

Purchases dropped in three of four regions, led by an 8.8 percent decrease in the West. The West is probably the area most affected by the recent reduction in conforming loan limits, Yun said. Sales in the Northeast gained 2.6 percent, perhaps reflecting a rebound from Hurricane Irene, he said.

Posted in Economics, National Real Estate, New Jersey Real Estate | 56 Comments

Word of the day: Moribund

Posted on October 20, 2011 by grim

From the Federal Reserve:

Beige Book – October 19, 2011

Second District–New York

Economic growth in the Second District has remained modest since the last report, though there have been some signs of improvement in the labor market. Manufacturers report some further deterioration in their assessment of overall business conditions but note that orders, shipments and employment levels have been stable. Consumer spending, on the other hand, has been comparatively robust, despite low levels of consumer confidence: auto dealers report brisk business in August and September, non-auto retail contacts report that sales have been on or ahead of plan, and tourism activity has remained strong. Commercial real estate markets have been mixed but, on balance, slightly stronger since the last report. Home sales have been mixed, with scattered signs of a pickup, while the rental market has continued to strengthen. New home construction remains stalled, aside from rental apartments. There has been substantial new hotel development in Manhattan. Conditions in New York City’s key securities industry have weakened noticeably. Finally, bankers report a pickup in demand for residential mortgage loans (largely refinancing), a slight increase in demand for non-residential mortgages, some easing in credit standards for business loans, and little change in delinquency rates.
…
Construction and Real Estate

Residential construction remains moribund, particularly for single-family homes. Home sales have picked up a bit in parts of the District but remain weak overall, while the rental market has continued to strengthen. The housing market in northern New Jersey remains sluggish: with a dearth of new home construction, aside from some development of rental projects, the inventory of distressed properties has declined slightly but remains large; sales volume remains sluggish, and home prices have held steady and appear to have bottomed out. After a strong July and August, sales of Manhattan apartments tapered off in September; while co-op sales have been relatively sluggish, condominium sales have been buoyed by foreign buyers. The inventory of available newly-constructed condos has declined considerably in recent months but remains elevated. The lowering of the jumbo mortgage threshold from $730,000 to $625,500 on October 1st appears to have had little effect on the market. Overall, co-op and condo prices remain essentially flat. New York City’s rental market continues to strengthen. Net effective rents (which take into account landlord concessions that were prevalent a year ago but are now rare) are up roughly 5 percent from a year ago, with steeper increases at the high end of the market. Realtors in western New York State note that market conditions have improved slightly, with sales picking up and prices up slightly from a year ago.

Commercial real estate markets have been mixed since the last report. In New York City and metropolitan Buffalo, office vacancy rates declined in the third quarter, while rents moved up. However, vacancy rates rose in Westchester and Fairfield counties and were little changed across other parts of the District, while asking rents were generally down modestly. The market for industrial and warehouse space has not changed noticeably, except in metropolitan Albany and northern New Jersey, where asking rents are down moderately from a year ago. New office construction and development remains sluggish, but a number of major hotel development projects have been announced recently or are already underway in New York City.

Posted in Economics, New Jersey Real Estate | 80 Comments

Buck up campers, home prices will stabilize and begin to rise again

Posted on October 19, 2011 by grim

(Now a return to bubbly peak prices? That’ll take a while)

From the NY Times:

Gloom Grips Consumers, and It May Be Home Prices

Ernest Markey lost his stone-cutting business in 2009. He then sold his home for half a million dollars less than its value at the peak of the housing bubble and moved with his wife, Marie, to a smaller home in a less affluent suburb. They gave up two new cars and bought one. Used.

The Markeys have since patched together a semblance of their old life, opening a new stone-cutting shop. But they do not expect that they will ever recover financially from the loss of equity in their old home.

“For two years I kept thinking that things would get better,” Mr. Markey, 51, said as he stood in his empty store on a recent weekday. “Now I think the future doesn’t look so good.”

The United States has a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow. Consumers are holding back, businesses are suffering and the economy is barely growing.

There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.

That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.

Many say they believe that the bust has permanently changed their financial trajectory.

“People don’t expect their home to regain value, and that’s really led to a change in consumer attitudes about the economy that we’ve just never seen before,” said Richard Curtin, a professor of economics at the University of Michigan who directs its Survey of Consumers. The latest data from the survey, released Friday by Thomson Reuters, shows that expectations for economic growth have fallen to the lowest level since May 1980.
…
Economists have only recently devoted serious study to how a decline in housing prices affects consumer spending, not least because this is the first decline in the average price of an American home since the Great Depression. A 2007 review of existing research by the Congressional Budget Office reported that people reduce spending by $20 to $70 a year for every $1,000 decline in the value of their home.

This “wealth effect” is significantly larger for changes in home equity than in the value of other investments, such as stocks, apparently because people regard changes in housing prices as more likely to endure.

A recent paper by Karl E. Case, an economics professor at Wellesley College, and two co-authors estimated the decline in home prices from 2005 to 2009 caused consumer spending to be $240 billion lower in 2010 than it otherwise would have been. That figure is equal to about 1.7 percent of annual economic activity, enough to be the difference between the mediocre recent growth and healthy growth. And it does not include all the other effects of the housing crash, including the low level of new home construction, that are also weighing on the economy.

Posted in Economics, Employment, Housing Recovery | 135 Comments

Where have all the houses gone?

Posted on October 18, 2011 by grim

From the WSJ:

Slim Pickings Are Latest Headache for Home Sales

The housing market, which has struggled with an oversupply of homes for years, is facing a new problem: a lack of attractive inventory.

There were more than 2.19 million homes listed for sale at the end of September, down 20% from a year earlier, according to a new report from the real-estate website Realtor.com. That is the lowest level since the company began its count in 2007.

The report is the latest sign of how the U.S. housing market can’t seem to catch a break. While falling inventories are typically a sign of health, because reduced competition can boost prices, that isn’t the case right now.

Instead, real-estate agents say, people are pulling their homes off the market rather than try to sell them at today’s discounted prices. At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties. The shrinking supply isn’t driving up prices because demand is soft.
…
The decline in inventory also suggests that there are fewer opportunities for buyers and sellers to strike deals. That can further chill sales, as buyers become afraid to overpay while sellers are similarly cautious about underpricing their homes.

“The inventory is low, so it’s hard for buyers to find their dream home,” said Joan Downing, a real-estate agent in Bloomfield Hills, Mich., a suburb of Detroit. “That’s been our challenge more than anything: finding the inventory for the clients. Nobody’s complaining about the pricing or the interest rates.”
…
“As weak as demand is, inventory has been weaker,” said Glenn Kelman, chief executive of Redfin Corp., a Seattle real-estate brokerage firm that does business in 13 states. “Right now, the absence of inventory is the limiting factor on sales volume.”

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

No big price drops at the shore?

Posted on October 17, 2011 by grim

From the Philly Inquirer:

At the Shore, many homes retained value after a wild ride

If you have the money – and that means cash – you can buy your dream house at the Jersey Shore. If you don’t, as a prospective vacation-home owner you’re being squeezed even harder by the same financial institutions that tightened credit for purchases of primary residences.

The higher the price, “the greater the likelihood the buyer is paying cash for the property,” said Paul Leiser of Avalon Realty. “A $7 million sale is far more likely to be a cash deal than a $1 million sale.”

Like many places these days, Avalon, long a seaside favorite of the well-to-do, isn’t seeing a lot of home sales, period. But those that have occurred have been high enough in value to push the median price up 321 percent since 2005, an Econsult Corp. analysis of transactions in 13 Shore zip codes in Atlantic and Cape May Counties from April 1, 2005, through June 30, 2011, shows.

In comparison, the median price in high-end Stone Harbor is up a modest 87 percent, according to the analysis, conducted by Econsult vice president Kevin Gillen along with a broad examination of home prices in the eight-county Philadelphia region based on 376,257 sales in that period.
…
any Shore points that are traditional vacation destinations for Philadelphia-area residents did not fare all that badly in the housing downturn, the analysis showed, with one caveat:

Though almost all the communities retained the value they had in 2005, Stone Harbor alone consistently held onto median-price gains – from 2005 through 2007, when the U.S. housing bubble burst, then through to June 30 of this year.

Avalon’s median price rose 437 percent between 2005 and 2007, for example, then ebbed 22 percent by June 30.

Longport’s median price rose 16 percent from 2005 to 2007, then fell 21 percent from 2007 to second-quarter 2011, for a loss of 9 percent over the full analysis period.

A lot of developers and marginal buyers had banked on price appreciation in Wildwood zip code 08260, which also includes North Wildwood and Wildwood Crest. But the median price there rose just 2 percent from 2005 to 2007 – from $330,000 to $334,975 – then fell 34 percent from 2007 to second-quarter 2011, ending up at $222,375.

Many Wildwood developers were forced to abandon projects. Others brought in auction companies to try to reset the market and sell enough condos to stay ahead of foreclosure actions.

Sea Isle City’s median home price rose 27 percent from 2005 to 2007, on the other hand, then fall 9 percent from 2007 to second-quarter 2011. But at $571,250, it was still 15 percent higher than in 2005.

In Atlantic City, heavily dependent on the now-flagging casino industry, the median price began a precipitous decline in 2005, as prices just about everywhere else were performing spectacularly.

By second-quarter 2011, the median price had lost 53 percent of its 2005 value, plummeting from $269,000 to $125,250.
…
Although conditions vary substantially, the U.S. second-home market “is at bottom,” said Mark Zandi, chief economist at Moody’s Analytics Inc., of West Chester.

“I don’t expect second-home sales and prices to improve much in the next year – the market will remain at bottom – but I do expect the second-home market to be a strong market over the next five to 10 years,” Zandi said. “There is a strong demographic tailwind behind the market, given the aging of the large baby-boom generation into their 50s and 60s, when second-home buying is strongest.”
…
Yet two Atlantic City bedroom communities – Brigantine and Margate – did not take as big a hit as might have been expected, even though the casinos shed thousands of employees who lived in those towns as the tanking economy and competition from other states took a toll.

Brigantine’s second-quarter 2011 median price, $292,250, is just 1 percent below what it was in 2005, though those who bought at the height of the market – when prices were 36 percent higher than in 2005 – saw values tumble 28 percent.

Margate’s median as of June 30, $393,150, was 12 percent lower than 2005 and 20 percent – more than $100,000 – below the 2007 median price of $491,250.

Bottom line: Longtime Shore homeowners came through the housing bust better than those who bought during the boom.

Posted in Shore Real Estate, South Jersey Real Estate | 118 Comments

Come out, come out, wherever you are

Posted on October 15, 2011 by grim

From the NY Times:

Many Foreclosures, Few Listings

PRICES are down across the board so far this year in urban, suburban, rural and shore areas, in both northern and southern New Jersey — everywhere except areas close to Manhattan commuter train service, and in all price categories except, surprisingly, the uppermost.

What is perhaps scarier, market analysts say, is that mass foreclosure actions, which could further hurt home values, have yet to make their presence felt.

“The floodgates have been opened” on foreclosures, said Bill Flagg, a foreclosure specialist with ERA Queen City Realty in Scotch Plains. “Still, we are seeing just a trickle of listings.”

In August, after an investigation into lending practices at five big banks, a state Supreme Court judge removed what had been a de facto moratorium on judicial approvals of foreclosures.

In some other states, banks are still in the process of “recertifying” their lending practices, after evidence of “robo-signing” and careless processing of loans came to light. In New Jersey, however, that is officially done and over. “We don’t know for sure why the banks continue to hold back” on foreclosure listings, Mr. Flagg said.

New Jersey has almost 30,000 homes stuck at different points in the foreclosure “pipeline,” according to court records. Their owners are months to years delinquent on mortgage payments, and lenders have gone to court, at least to begin proceedings to seize their properties, as is required in this state.

On average, the process was taking 708 days, or nearly two years, while the moratorium was in effect in New Jersey. After it lifted in August, new foreclosure filings did increase: there were 1,190, up from 859 in July. But that was a small rise when seen in context, said Jeffrey G. Otteau, the president of the Otteau Valuation Group in New Brunswick.

As of the end of August, there had been 68 percent fewer foreclosure filings than in the same period of 2010, with just 0.05 percent of homeowner households receiving a first-time notice of default. That equates to five foreclosure filing notices for every 1,000 homeowners.

So when will the foreclosure wave finally show up? “This situation,” Mr. Otteau wrote in an e-mail, “reminds me of the recent BP Gulf oil spill, where we were all waiting for the oil to hit the beaches,” and the quantities that did arrive were smaller than expected. “I’m still wondering where it went — probably sitting on the ocean floor in enormous pools of coagulation, much like the shadow inventory in the foreclosure markets.”

Eventually those failed loans will have to “rise to the surface,” Mr. Otteau said. He predicts that when foreclosures do start coming fast and furious, the impact will be highly uneven around the state — just as the pain is unevenly dispersed now.

Posted in Foreclosures, New Jersey Real Estate | 134 Comments

Reserve too high to sell largest horse farm in Jersey

Posted on October 14, 2011 by grim

Same story, different property. Seller purchased at the height of the market and current bids don’t even come close to their (in all probability) unrealistic asking price.

From the Star Ledger:

Perretti Farms property for auction in Burlington County does not sell

A 310-acre farm of preserved land in the heart of New Jersey’s horse country did not sell at auction yesterday because the highest bid — $1.5 million — was not as much as the owners had anticipated.

Eight bidders showed up to the site in North Hanover, which is owned by the state’s largest and most prestigious standardbred breeder and racing stable, Perretti Farms. The company purchased the farm for $2.5 million five years ago, but is winding down operations in the next two years because of the shaky horseracing industry in New Jersey.

Similarly situated properties have sold for $10,000 an acre, said Max Spann, president of the Max Spann Auction and Real Estate, which organized the sale.

The highest bidders “have indicated they’re still interested,” Spann said. In the coming days, the prospective buyer and Perretti Farms will try and work out a deal.

Posted in Lowball, New Jersey Real Estate | 100 Comments

Q3 foreclosures fall, but indicators point to a jump on the horizon

Posted on October 13, 2011 by grim

From CNN:

Foreclosures continue to plague housing market

Foreclosures continued to plague the U.S. housing market last quarter, while a a growing backlog has caused the length of the foreclosure process to drag on and on.

Nationwide, foreclosure filings totaled 610,337 in the third quarter, an increase of less than 1% from the previous quarter, said RealtyTrac, an online marketplace for foreclosed properties.

Even though the increase was small, it is significant since it broke the trend of three consecutive quarterly decreases, said RealtyTrac Chief Executive James Saccacio.

“This marginal increase in overall foreclosure activity was fueled by a 14% jump in new default notices, indicating that lenders are cautiously throwing more wood into the foreclosure fireplace after spending months spent trying to clear the chimney of sloppily filed foreclosures,” he said.

Month-over-month, there were fewer foreclosures. Nationwide filings totaled 214,855 in September, a decrease of 6% from August and a 38% decrease from September, 2010.

“While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up,” said Saccacio.

From the Record:

Foreclosures in N.J. take an average 974 days

Foreclosures in New Jersey take an average of 974 days, or more than 2 1/2 years, RealtyTrac Inc. reported Wednesday. That’s the second-longest process in the nation, just behind New York at 986 days.

RealtyTrac also reported that foreclosure activity remained low in the state in the third quarter, down 78 percent from the third quarter of last year, as lenders dealt with accusations of sloppy documentation and legal improprieties in the foreclosure process.

Nationally, foreclosure activity was down 34 percent in the third quarter, compared with the same period in 2010.

“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork,” said James Saccacio, chief executive officer of Irvine, Calif.-based RealtyTrac, which tracks the foreclosure market nationwide.
…
One sign the process may be ramping up in New Jersey was a 29 percent increase in the number of default notices from the third quarter of 2010 to the third quarter of 2011. Default notices are the first step in the process.

Nationally, homes foreclosed in the third quarter took an average of 336 days to go through the system. New Jersey’s process is slower than some states’ because its foreclosures must go through the courts, which is not the case in about half the states.

The process was also slowed dramatically this year after state Chief Justice Stuart Rabner ordered six large lenders to show that they were following the rules and not filing unverified documents in foreclosures. The six lenders — GMAC Mortgage, Bank of America, Citibank, JPMorgan Chase Bank, OneWest and Wells Fargo — were cleared to begin foreclosure activity again in August and September.

In New Jersey, one in every 969 households received a foreclosure filing during the third quarter, compared with one in every 213 nationwide. Foreclosure activity in the third quarter remained highest in Nevada, California and Arizona, states that were hit hardest by the housing bust.

Posted in Foreclosures, National Real Estate, New Jersey Real Estate | 154 Comments

Any questions?

Posted on October 12, 2011 by grim

From the Record:

Wall Street job cuts may affect New Jersey’s economy

New York State Comptroller Thomas P. DiNapoli said on Tuesday that he expects Wall Street to cut nearly 10,000 more jobs by the end of the year and pay less in bonuses, a blow to the tax coffers of New York City and State. Securities-related activities accounted for 14 percent of New York State’s tax revenue last year.

The industry contributes less to New Jersey’s tax base, however, and the jobs and pay cuts are “not a major risk factor” for tax revenue, said Charles Steindel, the state Treasury Department’s chief economist.

“The wages and salaries paid by the financial industry in New Jersey are about 8 percent or 8.5 percent, and that’s pretty close to the national norm,” he said. “It’s not as critical an industry to the state of New Jersey as it is to New York. ”

Still, economists said on Tuesday that bad news for Wall Street is usually bad news for New Jersey, which is home to many stock and bond brokers, accountants and financial analysts who commute to New York from towns like Ridgewood and Franklin Lakes.

“Bergen and Morris counties have significant commutation of people to Wall Street,” said James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers. He did not have exact figures, but he suspects there are enough commuters to Wall Street to have an impact on the local economy.

If they lose their jobs or get smaller bonuses, “the retailers in northeastern New Jersey are going to feel that.” Hughes said. “There will be less activity in the housing market, as well.”
…
After adding 9,900 jobs from January 2010 to April 2011, the securities industry has lost 4,100 jobs through August 2011.

If, as DiNapoli predicts, the securities industry loses nearly 10,000 more jobs by the end of 2012, that would bring total industry job losses to 32,000 since January 2008.
…
Patrick J. O’Keefe, director of economic research at the accounting firm of J.H. Cohn in Roseland, said the downturn on Wall Street is “an across-the-board negative for the regional economy, and that’s a negative for New Jersey.”

On the other hand, in the past, cost-cutting by financial firms led to relocation of jobs from Manhattan to New Jersey, where real estate prices are lower, and the current downturn may prompt more of that, he said.

“There is no system that tracks the pingpong of jobs back and forth across the Hudson,” O’Keefe said, “but on net I think New Jersey was a beneficiary of job relocation in the past decade. To the extent it’s going to occur, we’d rather have those jobs come to New Jersey than go to Timbuktu.”

Posted in Economics, Employment, New Jersey Real Estate | 105 Comments

Anti Wallstreeters set sights on the mortgage biz

Posted on October 11, 2011 by grim

From HousingWire:

Protesters descend on MBA

Roughly 150 protesters gathered at the Hyatt Regency in Chicago Monday afternoon, protesting the Mortgage Bankers Association as some of the the trade group’s members looked on and snapped photos.

Thousands more from various groups organized around the city, including Daley Plaza and Federal Plaza. A pastor from a nearby suburb who identified himself as Russell, arrived at the Hyatt and picked up a sign from the Southsiders Organized for Unity and Liberation. It was a cardboard cutout of JPMorgan Chase CEO Jamie Dimon that read: “Wall Street Bank Robber.”

The likenesses of Bank of America’s Brian Moynihan, Countrywide’s Angelo Mozilo and others were also seen bouncing above the chants and a marching band.
…
One mortgage banker, who wouldn’t give her name, shook her head. “This is the wrong place to do this. We’re trying to figure out how to help them.”

Others were more critical. Another banker pointed out to his colleague different union members he thought he saw in the crowd. Another scolded some protesters for bringing their children to the rally.

One technology vendor, who wouldn’t be identified, said he was sympathetic and that some previous members of this very trade group “got away scot-free.”

“There’s just no jobs,” he said. “What would you do?”

Another banker, who also wouldn’t give his name, said the recent wave of protests was even routine. Coming out of crises and recessions, there is always a wave of descent before the eventual recovery.

The MBA itself put out a statement Monday morning in advance of the protest, highlighting the 3,000 members who assembled in Chicago to revamp the U.S. housing system.

“We all recognize that our industry faces a trust deficit with policymakers and the public and that people in our industry contributed to the events that led to the financial crisis,” the MBA said. “The mortgage professionals who have gathered in Chicago this week are about sustainable homeownership and ensuring access to affordable mortgage credit for qualified borrowers.”

Posted in Economics, Unrest | 100 Comments

Wrong title – We already made the big bet

Posted on October 10, 2011 by grim

From the WSJ:

U.S. Gambles With Mortgage Retreat

hree years after virtually nationalizing the U.S. mortgage market, the government has embarked on a pullback to see whether private industry picks up the slack.

Some people in the housing industry worry that Washington’s move will cause fresh pain in many regions where demand has yet to recover amid the sluggish economy.

At issue are the loan limits that Congress expanded in 2008, allowing Fannie Mae and Freddie Mac to buy mortgages that exceeded the national cap of $417,000.

When the mortgage market melted down four years ago and sent private mortgage investors fleeing, interest rates rose sharply on “jumbo” mortgages—those too large for backing by Fannie, Freddie or agencies such as the Federal Housing Administration. That accelerated home-price declines in high-end markets throughout California and the Northeast, where many pricey homes couldn’t be bought with a government-backed loan.

To stem the fallout in prices, Congress raised the loan caps to as high as $729,750 in markets such as Los Angeles and New York. It then passed a series of one-year extensions to keep the higher limits in place. But this year, Congress and the Obama administration opted against an extension.

As a result, the limits in hundreds of counties fell by 10% or more on Oct. 1. For loans backed by Fannie and Freddie, the limits declined to between $417,000 and $625,500 in about 200 counties.

More worrisome to real-estate agents are declines in the FHA limits, which fell to between $271,050 and $625,500 in 600 counties. Those changes are causing heartburn because the FHA allows buyers to make down payments of just 3.5%, and it has financed as many as half of all home purchases in recent quarters.

Policy makers allowed the limits to fall because they want private companies to hold more mortgage risk, and dialing down loan limits is one way to carve out space for those investors. Fannie, Freddie, and the FHA currently back nine in 10 new mortgages. Taxpayers already are on the hook for $141 billion in losses at Fannie and Freddie, and the FHA’s reserves have plunged to razor-thin levels.

Posted in Mortgages, National Real Estate, Risky Lending | 88 Comments

Dirt cheap money still not spurring the market

Posted on October 7, 2011 by grim

From the Courier News:

30-year mortgage rate falls to 3.94%

Depressed by investors seeking safe-havens, the average interest rate on a 30-year fixed mortgage fell this week to its lowest level ever, 3.94 percent, mortgage company Freddie Mac reported Thursday.

The decline could allow more buyers to afford homes and bolster the dormant housing market. And it could allow more owners to refinance, lowering their monthly mortgage payments and giving them more money to spend elsewhere in the economy.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage that he or she got in 2010. Refinancing the loan at 3.94 percent now could save him or her more than $2,000 a year.

For example, someone who got a $200,000, 30-year mortgage at fixed at 5.25 percent last year was paying about $1,100 per month. That same person today can get a 20-year mortgage at 3.75 percent for $1,185. And if that person wants to go to a 15-year mortgage with a fixed rate of 3.25 percent, they would pay about $1,400. The attraction of the 15-year loan is that unlike longer-term mortgages, even on the first payment of a 15-year loan, more of that money would go to paying off the principal than the interest. Amity makes loans to borrowers throughout the state.
…
“The comeback is not here yet,” said Christopher Randall, a vice president at Real Estate Mortgage Network, a mortgage lender in Edison. “We are seeing more activity, but it’s not rampant considering where rates are.”
…
Brian Jennings, president of Princeton Home Mortgage, the in-house mortgage company for Weidel Realtors, and Home Capital Network, the in-house mortgage company for Prudential New Jersey Properties, said that there is money available to all sorts of borrowers, but they need to understand that not everybody qualifies for the lowest rates. People with poor credit scores or people with low down payments cannot expect to get as good a rate as someone with a FICO credit score above 800 points and a large down payment because low scores and small down payments represent higher risks to lenders. For example, a person with a credit score between 720 and 739 will pay more for the same loan than someone with a credit score of 800 points. Or, a person with a credit score of 800 points and a 40 percent down payment will pay less for a loan than someone who only has a 10 percent down payment.

“We close loans every day for people with all sorts of credit,” Jennings said. “We have products for people with lower scores, but lenders are taking a bigger risk with them, so they will charge a higher rate.”

Posted in Mortgages, National Real Estate | 81 Comments

Bailout attempt #436 – Now we’re getting interesting

Posted on October 6, 2011 by grim

From HousingWire:

Bill allows tax-free use of retirement funds for mortgage payments

A bill introduced in Congress would allow struggling homeowners to withdraw funds from their retirement accounts tax free to pay their mortgage.

Sen. Johnny Isakson (R-Ga.) and Rep. Tom Graves (R-Ga.) submitted the Home Act Wednesday. Isakson also co-sponsored the Sen. Barbara Boxer (D-Calif.) bill that would eliminate fees and loan-to-value caps for Fannie Mae and Freddie Mac borrowers looking to refinance.

Borrowers could pull as much as $50,000 from their retirement account or one-half of the current value of their account, whichever is smaller, and avoid the typical 10% tax penalty. The cap is a lifetime cap, and does not expire on a particular date. Borrowers are eligible to make multiple withdrawals until they reach the cap.

The money must be put directly toward the mortgage within 120 days of withdrawal.

“This bill will help Americans who risk foreclosure use their own resources to make their mortgage payment on time without being penalized by the federal government,” Isakson said. “I firmly believe that economic recovery in this country will not occur until the housing market bounces back.”
…
“This legislation will simply place taxpayers who have saved responsibly on the same level as those who have not, all the while reducing foreclosures, eliminating red tape and accomplishing a goal that all members of Congress can support — keeping Americans in their homes,” Graves said.

Posted in Foreclosures, Housing Recovery, National Real Estate | 123 Comments

What if NYC really is special?

Posted on October 5, 2011 by grim

From Bloomberg:

New York Beats London as Top Spot for Real-Estate Investment

New York overtook London as the No. 1 destination for real-estate investment for the first time since 2007 after improved access to financing spurred more U.S. deals, Cushman & Wakefield Inc. said in a report today.

Investments grew 166 percent to $29.7 billion in the New York area in the 12 months through August, compared with a year earlier. Investment in greater London increased 2.4 percent to $27.2 billion, according to the report based on data compiled by the New York-based broker and Real Capital Analytics Inc.

Buyers are drawn to cities like New York and London because of a greater focus on the “biggest and best,” Cushman said in the report. The trend will continue in the next six months, it said.

Outside of the U.S. real estate lending tends to be tighter and is still “very focused on prime, leased assets only,” Cushman said in the report.

Chicago, New York, Boston and Atlanta made up four of the five fastest growing property investment markets by volume, the report said. Frankfurt and Germany’s Rhine-Main area ranked fourth, with growth of 126 percent.

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

Average NJ Foreclosure – 708 days late

Posted on October 4, 2011 by grim

From Bloomberg:

U.S. Homes in Foreclosure Average 611 Days Late on Payments

U.S. homeowners facing foreclosure were a record 611 days late paying their mortgages on average as legal disputes delayed bank repossessions, Lender Processing Services Inc. said today.

That was up from an average 599 days in July and 478 days in August 2010 for homes that had received a notice of foreclosure and weren’t sold or repossessed by banks, according to the Jacksonville, Florida-based real estate data company.

“You’ve got this bunching up in the later stages of the process,” Herb Blecher, senior vice president for analytics at Lender Processing Services, said in a telephone interview. “The bottlenecks are still there.”

The time to resolve mortgage delinquencies has grown from a year ago, when banks delayed filings after claims of “robo- signing,” or pushing through documents that weren’t verified, spurred investigations by attorneys general in all 50 states.

Foreclosures take longest in so-called judicial states, which require court approval to seize properties, led by New York, where the average home was in the process for 767 days. It was followed by Florida with 757 days, New Jersey with 708, Hawaii with 681 and Washington, D.C., with 676, Lender Procession said. The shortest averages were in Wyoming at 398 days, Nebraska at 407, Alaska at 411, Idaho at 416 and Arizona at 418.

Posted in Foreclosures, New Development, New Jersey Real Estate | 152 Comments