Fannie Mae: Recovery begins in Q3

Posted on July 25, 2011 by grim

From HousingWire:

Fannie Mae sees light at the end of housing tunnel

Home sales in the second quarter of 2011 were bad, according to Fannie Mae. Home prices also remain volatile, moving with gains and losses, over the past two years.

However, according to a housing forecast report card released on Friday from the government-sponsored enterprise, 2012 is likely to be a different story.

Next year will likely see meaningful gains in both categories, especially in the multifamily space. Both home sales and house prices should begin to improve from the third quarter 2011, with faster growth in the final two quarters of 2012.
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“Clearly, the renewed slowdown in hiring underscores the uncertainty surrounding the economic outlook,” said Fannie Mae Chief Economist Doug Duncan. “The lack of sustained, robust job growth continues to push out into the future the time for the housing market to heal, which is crucial to a meaningful economic expansion.”

Fannie Mae also predicts mortgage rates on 30-year fixed to hit 5% in the second quarter of 2012 and keep rising from there. Liquidations, on the other hand will remain at low levels for the long term.

Demands for rentals should remain robust, according to Kim Betancourt, Fannie Mae director of multifamily economics and market research, in a separate research report.

“There is some concern that multifamily fundamentals may stagnate if job growth remains anemic, however, new rental supply will be limited, likely resulting in keeping current rent levels stable,” Betancourt wrote.

Posted in Economics, Housing Bubble, National Real Estate | 145 Comments

Progress!

Posted on July 23, 2011 by grim

Some updates on my reno.

Foundation and drainage work is done, grading is complete. We no longer have any grass at all. Retaining walls are up and looking great.


Fancy blockwork steps


Wall out to the street (trees are now gone)


Other side of the driveway


Steve the tree guy from Montville taking care of the rest of the trees we weren’t brave enough to take down (26 or so in total at this point)


We have backyard now!


New windows (Full divided lights, sexy)


Modified window position and size in the kitchen to fit cabinetry and hood


Electrical work being done, we added 55 lighting fixtures


Main bath rough in electrical


Radiant heat in the main and master baths


Radiant heat in the kitchen


Sneak peak of the cabinetry waiting to be installed, silly amount of boxes, more than 45 feet of cabinetry, 12 foot island island


Sexy white inset cabinetry, exposed nickel hinges, seeded glass

Posted in Grim's House | 82 Comments

State unemployment ticks up in June, despite added jobs

Posted on July 22, 2011 by grim

From the Star Ledger:

N.J. unemployment rate grows in June

New Jersey added 1,700 jobs in June, but the unemployment rate inched up one-tenth to 9.5 percent as more people reported looking for work.

The Labor Department reports that the state added 6,400 private-sector jobs last month but public sector jobs declined by 4,700.

The state says leisure and hospitality industries added 5,200 jobs; education and health services added 1,800 jobs; and 1,000 construction jobs were added.

The manufacturing sector was hardest hit with a loss of 1,900 jobs; financial activities lost 900 jobs; and trade transportation and utilities lost 400 jobs.

From the APP:

NJ gained 1,700 jobs in June; unemployment climbs to 9.5%

New Jersey’s economy added 1,700 jobs in June, the state said Thursday in a report that shows the labor market recovering slowly but steadily from the devastating recession.

The job growth wasn’t strong enough to keep up with the number of residents looking for work; the state’s unemployment rate rose to 9.5 percent from 9.4 percent in May.

“Right now, my daughter, son-in-law and grandson moved into my one-bedroom apartment,” said Veronica Gaddis, 50, of Lake Como, who herself has been out of work for two years. “I’m grateful for that because I know there are people who have nowhere to go. It’s a mess.”
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New Jersey is trying to dig itself out of the hole left by a recession that caused it to lose 265,000 jobs, or 6.5 percent of its employment. And without a strong manufacturing presence, it hasn’t taken been able to take advantage of a resurgence in the nation’s manufacturing sector.

The report in June, however, carried a hopeful sign. The state added 6,400 private-sector jobs last month. It added 28,100 private-sector jobs the first half of the year, preliminary estimates show. And that puts it on pace for its best performance since 2000, Rutgers economist James W. Hughes said.

“It’s destined to be the best job growth year in 11 years,” Hughes said.

Still, New Jersey at that pace wouldn’t recover its lost jobs until 2016. And there are obstacles to get there. For one, there remains a gap between the pre-recession skills that workers developed and the post-recession skills employers need, said Mark Vitner, an economist with Wells Fargo Securities.

Posted in Economics, New Jersey Real Estate | 122 Comments

June Existing Home Sales Dissapoint

Posted on July 21, 2011 by grim

From the WSJ:

Home Resales Decline Again as Buyers Hesitate

Existing-home sales in June fell to a seven-month low, and the number of contract cancellations soared, signaling that buyers are rethinking home purchases amid national economic uncertainty.

Sales decreased 0.8% from a month earlier to a seasonally adjusted annual rate of 4.77 million, the National Association of Realtors said Wednesday. It was the third-straight monthly drop and puts this year’s pace behind last year’s 4.91 million homes sold, which had marked the weakest sales in 13 years.

The median sales price was $184,300, up 0.8% from $182,900 a year earlier.

“The housing market has been two steps forward, then two steps back,” said Chris Mayer, an economics professor at Columbia University. “This is a sign of the lack of progress in developing a mortgage market that can take us past the housing crisis.”

Sales were down 5.2% in the Northeast and 1.7% in the West, while other regions saw modest gains; sales were up 0.5% in the South and 1% in the Midwest. A separate report released Wednesday showed one bright spot for sales was Florida. Second-quarter home sales in Miami were up 13.5% from last year, and hit a five-year high, according to brokerage Douglas Elliman.

The overall decline in home sales “suggests that the recent deterioration in economic conditions has already hit the housing market,” according to Paul Dales, senior U.S. economist at the Toronto-based Capital Economics.

From Bloomberg:

Existing-Home Sales in U.S. Unexpectedly Fall 0.8% to a 4.77 Million Rate

Sales of previously owned U.S. homes unexpectedly declined in June to a seven-month low as the industry struggled to overcome rising unemployment and foreclosures.

Purchases dropped 0.8 percent to a 4.77 million pace, data from the National Association of Realtors showed today in Washington. The median projection in a Bloomberg News survey called for a gain to 4.9 million. Inventories increased, more contracts were canceled and 30 percent of transactions last month were of distressed dwellings, the figures showed.

Stricter lending rules, unemployment above 9 percent and delays in processing foreclosures mean it may take years to reduce the number of distressed properties on the market even as all-cash purchases have recently helped buoy demand. Federal Reserve Chairman Ben S. Bernanke last week said the decline in confidence and lack of job growth that are impeding consumer spending are also keeping real estate “depressed.”

“The market continues bumping along the bottom, with every move ahead matched by a disappointing setback,” said Richard DeKaser, an economist at Parthenon Group in Boston. “As long as the risk of further price declines is appreciable, buyers and lenders alike are going to remain skittish. For there to be a meaningful rebound in sales, we’ll probably have to wait until 2012.”

Posted in Economics, Housing Bubble, National Real Estate | 194 Comments

Why does the American Dream need to include a deed?

Posted on July 20, 2011 by grim

From Pimco:

Are There Any Rungs Left on the Housing Ladder?

From HousingWire:

Homeownership no longer an aspirational goal: PIMCO

The idea of homeownership as an aspirational goal may no longer carry much weight as college graduates enter the work force saddled with high student loan debt and older Americans focus on retirement.

Rod Dubitsky, an analyst with PIMCO, said the overall question that looms large over the mortgage industry is: Who is going to buy housing in the next 10 years?

In a report titled, “Are There Any Rungs Left on the Housing Ladder?”, Dubitsky dives into demographic data, painting a bleak picture for home sellers who are largely dependent on two groups of buyers: veteran homeowners who now have less desire to buy homes as they focus on retirement, and young buyers who are getting paid less while carrying significant student debt.

In downturns, markets generally look to first-time homebuyers to pull the levers of demand, but Dubitsky says the housing economy should not be overconfident when focusing on this group.

Why the change? According to Dubitsky this demographic is struggling financially, pushing them on a lower rung of the housing ladder. While in the past, the young demographic functioned as the market’s first-time homebuyers, today they are more likely to be long-term renters based on their financial situations.
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Dubitsky said the ability of these borrowers to make their way into the housing market is contingent on whether they have the opportunity to save money. But the statistics on this point remain grim with the average student debt now equal to a 15% down payment on a median-priced home.

“We believe that some amount of the reduction in graduate earnings power and rise in debt is a longer-term phenomenon that could serve to limit college graduate home purchasing power for the foreseeable future,” the report concluded.

The younger demographic is not the only group falling down the ladder. While young buyers are now more likely to rent than own, older homeowners are less likely to upgrade into larger homes or invest in second properties. Many older workers are aware they have to contribute 10% more of their pay to their retirement savings, which means less disposable income.

“This could be manifested in permanently postponed home purchases, reduced tendencies to upsize, lower likelihood of buying a retirement home, more affordable post-retirement rental choices,” according to Dubitsky. “All of this suggests downsized housing choices — one home instead of two, rent rather than own, smaller place rather than large. These choices could serve to reduce the dollars committed to housing investment.”

Posted in Economics, National Real Estate | 145 Comments

And they’re off!

Posted on July 18, 2011 by grim

From the Star Ledger:

Paramus bank the first to meet new court foreclosure filing standards

Hudson City Savings Bank is in compliance with the state court’s new mortgage foreclosure filing standards, according to a July 12 document that was made public yesterday.

The move means the bank is the first of more than two dozen of the country’s biggest mortgage lenders and servicers to satisfy the court’s exhaustive review of foreclosure processes, according to documents posted to the court’s website.

The decision comes nearly seven months after state Supreme Court Chief Justice Stuart Rabner issued a three-part initiative to investigate what he feared was rogue residential mortgage foreclosure filings, noting a staggering increase in caseloads and concerns the judges had inadvertently “rubber-stamped” files that had inadequate or inaccurate paperwork. Lenders and servicers were required to provide extensive documentation outlining how they handled foreclosure proceedings.

In his decision, retired Judge Walter Barisonek — serving as one of two special masters overseeing the cases — wrote that Hudson City Savings Bank has “sufficient policies and procedures in place to demonstrate affirmatively that there should not be irregularities in their handling of foreclosure proceedings in this state.”

The court’s actions have effectively halted foreclosure filings since December while lenders and servicers work with court-appointed special masters to review hundreds of pages of paperwork.

Posted in Foreclosures, New Jersey Real Estate | 156 Comments

Wrist slapping delayed a few weeks

Posted on July 18, 2011 by grim

From the NY Post:

Mortgage megadeal is still weeks away

America’s biggest mortgage servicers are still weeks from reaching a potential multibillion-dollar deal with federal and state officials to settle the foreclosure fiasco, The Post has learned.

Key sticking points include the amount each bank will have shell out and whether the firms will be released from future lawsuits once a broad accord is struck, sources said. Banks could be hit with as much as $25 billion in fines.

Negotiators had hoped to reach an agreement in principle by last week or possibly this week.

But a source close to the talks between the five biggest US banks and 50 state attorneys general and federal regulators said discussions aren’t as far along as hoped and that an agreement might be reached in the next three to four weeks.

The settlement as it is now structured would form two types of funds — one national and funds for each of the states — that would settle most state and federal civil foreclosure claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, formerly known as GMAC.

Last week, JPMorgan CEO Jamie Dimon voiced some frustration with the process and described the mortgage mess as an “unmitigated disaster” during a conference call with analysts to discuss second-quarter results. “We just really need to clean it up for the sake of everybody,” Dimon said. “And everybody is going to sue everybody else, and it’s going to go on for a long time.”

Posted in Foreclosures, Housing Bubble | 126 Comments

Bubble sitters just as unrealistic

Posted on July 17, 2011 by grim

From MarketWatch:

Post-bubble buyers more likely to overprice home

People who bought their homes after the housing bubble burst are more likely to have an unrealistic view of their home’s worth than those who bought before the housing downturn, according to a report released by Zillow this week.

The analysis found that people currently selling their homes who bought in 2007 or later are overpricing them by 14%. In contrast, those who bought before 2002 are overpricing by 12% and those who bought between 2002 and 2006 are overpricing by 9%.

“Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today,” said Stan Humphries, chief economist for Zillow. “But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.”

Of homeowners who said they intend to sell their home in the next four years, people who purchased their home after the bubble were also more likely than those who bought earlier to base their asking price on the price they originally paid for the home, according to Zillow.
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No one likes to admit their home has gone down in value — especially when it hasn’t been that long since you moved in. But if you need to sell that home after living in it for just a few years, take a deep breath and price it right, otherwise it could end up costing you even more.

“Overpricing homes causes them to stagnate on the market and keeps inventory from decreasing — not a desirable outcome for either the sellers or the market as a whole,” Humphries said.

Posted in Economics, Housing Bubble | 104 Comments

“Homeowners need to price their homes right or they won’t sell”

Posted on July 15, 2011 by grim

From the Chicago Tribune:

Pricing a home to sell in today’s market

During the housing boom, many real estate agents found it extraordinarily tough, if not impossible, to come up with even ballpark asking prices for their listings.

“Values were increasing at a pace we had never seen in this area,” said John Duffy of Duffy Real Estate in the Philadelphia area.

For four-plus decades, real estate agents had been used to gradual price appreciation of 3 to 6 percent a year, “and then the boom came along, and we were seeing a much faster and higher appreciation, which made it very difficult to price properties,” Duffy said.

The results: Multiple bids, and prices exceeding what homeowners were asking.

Today’s market is very different. And, Realtors say, the way houses are priced has changed dramatically.

“Homeowners need to price their homes right or they won’t sell,” said Art Herling, Philadelphia-area vice president of Long & Foster real estate company. “Buyers are extremely savvy and cautious, and, as one builder said, ‘It’s hip to be conservative.'”

You must be able to “defend” the asking price, Duffy said. One way is to research similar homes that have sold in the past few months in a neighborhood or town. Also, compare the house with others on the market in the same area.

“It is important for the Realtor and homeowner to be totally honest with the comparison, and make sure you are comparing apples with apples,” Duffy said.

Active listings “will give the seller a bird’s-eye view of what the competition is doing, and what he or she is up against, as a comparative tool,” said John Badalamenti of Prudential Fox & Roach in Wayne, N.J.

Added Laurie R. Phillips of Prudential Fox & Roach in Philadelphia: “When a new buyer is out looking at homes, they will compare the prices of what they are seeing.”

Days on the market is another important factor to consider, Duffy said. If a similar property has been listed for a while, it’s a good indication the house is overpriced.
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Looking back at sales from a more robust market is irrelevant, said Joanne Davidow, vice president and office manager at Prudential Fox & Roach in Philadelphia.

“Sellers may be tempted to price a house with what they need, but it is important to price at a realistic range,” Davidow said.

Posted in Employment, Housing Bubble, National Real Estate | 235 Comments

Kicking the can, prolonging the pain, delaying the inevitable, the new American Way

Posted on July 14, 2011 by grim

From CNN Money:

Foreclosures plunge in first half of 2011

Foreclosure filings fell dramatically during the first half of the year as processing delays at the banks, which are strapped with excess inventory of repossessed homes, continued to skew the numbers — and falsely raise hopes that the housing market is staging a recovery.

Foreclosure filings plunged 29% compared with the same period a year ago and were down 25% from the last six months of 2010, according to the latest report from RealyTrac, an online marketer of foreclosed properties.

Through June 30, 1.2 million U.S. homeowners — or one in every 111 households — received a foreclosure filing, according to RealtyTrac.

The deceleration in defaults continued as the year wore on with second quarter filings — at 608,235 households — marking the lowest quarterly total since the end of 2007, when the mortgage meltdown was still in its youth.
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RealtyTrac’s CEO, James Saccacio, sounded a sour note, however, contending that the drop-off in filings can be traced not to economic improvement or a pick-up in the housing market, but to processing delays brought on by the robo-signing scandal in which it was discovered that bank employees were signing foreclosure documents without following proper protocols.

“[That’s what is] pushing foreclosures further and further out — we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later,” Saccacio said.

As a result, it will only prolong the housing slump, he said.

“This casts an ominous shadow over the housing market where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number,” said Saccacio.
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The average time to process a foreclosure — from the initial notice to the final sheriff’s or trustee’s sale — rose to 318 days in the second quarter, up nearly 7% from 298 in the first quarter and 15% year-over-year, according to RealtyTrac.

In New York, the process now takes an average of 966 days — or more than two and half years. In New Jersey, it’s 944; and in Florida, 676. Texas is quickest out the door with a scant 92 days, followed by Virginia at 106.
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Ultimately, the artificial foreclosure delays are prolonging the housing market’s ills, said Arnold Kling, an economist with the Mercatus Center at George Mason University and formerly with Freddie Mac.

“The government should be trying to speed foreclosures, not stop them,” he said. “Postponing foreclosures may simply be putting off the inevitable market bottom. We need to remove barriers to foreclosures.”
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“Instead of housing returning to somewhat normal condition by 2014, we’re looking at 2015 or even 2016,” he said. To top of page.

Posted in Economics, Foreclosures, Housing Bubble, National Real Estate | 190 Comments

Altos: Home prices trending positive

Posted on July 13, 2011 by grim

From HousingWire:

Home prices, inventory levels trend up: Altos Research

Home prices and inventory levels are trending upward in many U.S. cities tracked by Altos Research, according to the firm’s latest Housing Market Update.

The median national home price for all 26 markets covered by Altos hit $450,358 in June, up from $444,273 in May.

Meanwhile, in the past three months, listing prices rose 2.31% and inventory levels grew 3.52%.

The only city to report a drop in home prices in June was Las Vegas and even that was a mere 0.86% decline when compared to the month before.

When analyzing home price data for the past three months, both New York and Las Vegas experienced falling prices, reporting drops of 2.2% and 1.61%, respectively, Altos said.

Inventory rose in 12 of the major markets tracked by Altos last month, while falling in the remaining 14 composite cities. The biggest inventory jump occurred in Boston, with the city’s inventory level rising to 5.8%. Phoenix, on the other hand, experienced the largest inventory level drop, falling 7.93%.
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Comparatively, the latest S&P/Case Shiller report said the average price of a single-family home rose for the first time in eight months during the month of April. Altos suspects the S&P/Case-Shiller will be reporting a few positive trends through September.

At the same time when looking forward, Altos foresees a slowing or plateau of home prices in the fourth quarter.

Posted in Economics, National Real Estate | 201 Comments

Shocked to hear a Realtor association is overstating sales prices

Posted on July 12, 2011 by grim

From the Chicago Tribune:

Realty trade group overreported Chicago home prices

The Illinois Association of Realtors said Monday that the median price it reported for home sales within the city of Chicago was inflated in May and mistakes in its reports may go back more than three years.

Errors in the reports can wrongly inflate consumer confidence in a housing market that has been struggling to recover for the past 4 1/2 years. It also can undermine the credibility of the real estate organizations that compile and disseminate the statistics. The Tribune and other media outlets report that data as part of regular coverage of the housing industry because it provides a pulse of the market.

The state Realtors’ group acknowledged the errors after the Tribune, acting on a tip, questioned the accuracy of the May report. The group believes median prices for both condos and detached single-family homes sold within the city contain errors.

“It’s not just May,” said Mary Schaefer, a spokeswoman for the Illinois Association of Realtorsadding that the mistakes appear to go back at least through January. “We’re trying to figure out where the bug occurred. We should have caught it. We pride ourselves on having accurate data. We want to make sure there is 100 percent clean data.”

The size of the Realtors’ errors is statistically significant, at least based on the May median price for condo sales wtihin the city. In its official report that has now been discredited, the trade group previously said that the median price of an existing condo sold in Chicago in May was $299,000, compared with $271,150 recorded in May 2010. In fact, the median price was $243,000, compared to a year-ago price of $265,000, according to data from Midwest Real Estate Data LLC, the multiple listing service for the Chicago area.
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The Chicago Association of Realtors “will continue to work diligently with the Illinois Association of Realtors and Midwest Real Estate Data to discover where the reporting error has occurred and improve the process by which we collectively report the data on the Chicago marketplace moving forward,” a spokeswoman said in an emailed statement. “Ensuring the housing data reported on the Chicago market is accurate remains our top priority as we are committed to helping consumers understand the Chicago real estate marketplace with the most exact information possible.”

Schaefer said the group does not think any fraud is being committed. “There’s no playing with the numbers, this is technical,” she said. “It’s how the system is reading the data.”

Posted in National Real Estate | 155 Comments

Time to buy?

Posted on July 11, 2011 by grim

From Time:

Why Real Estate May Be The Buying Opportunity of the Decade

No one knows what the economy or the stock market will do over the next six months. But when your time horizon is 20 years, the outlook is actually a lot clearer. And right now, all the trends are lining up to make real estate a fantastic long-term buy.

Of course, if you look at recent real estate statistics, the picture is a total catastrophe. Home prices are down by a third, and the decline recently exceeded that of the Great Depression. Across the country, 2 million homes are in foreclosure and another 2 million are more than 90 days behind in their payments. The backlog of foreclosures could last two or three years.

Falling home prices plus the foreclosure backlog probably mean a flat-to-down market over the next couple of years. But beyond the current desolation, the outlook is exactly the opposite. In fact, three different trends are aligning that figure to produce a major home-price boom over the next 20 years.
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The real estate market may not quite have bottomed out yet. And the boom I’m talking about will probably take more than a decade to unfold. It also may not apply as directly to real estate stocks. Home builders have more complex problems and real estate investment trusts often depend on commercial properties that are sensitive to business conditions. But the next two or three years should offer exceptional opportunities for buying actual real estate – primary residences and vacation homes – preferably somewhere that’s green.

Posted in Economics, National Real Estate | 155 Comments

Vacationeers take advantage of price slump in Vernon

Posted on July 9, 2011 by grim

From the NY Times:

On Vacation at Home, All Year Long

WITH ample opportunities to ski, golf, swim, hike and bike, life in this rural township in the New Jersey Highlands can feel like a year-round resort, residents say.

“I call it ‘being on vacation’ living here,” said Allison Callow, a real estate agent who has lived in Vernon Township for 16 years. She and her family traded in a three-bedroom colonial on one-tenth of an acre in Bergen County for a four-bedroom bilevel on more than an acre abutting a state park, which they bought for $158,000.

Activities in Vernon center on nine lake communities and the Mountain Creek ski resort, the state’s largest. Ownership of Mountain Creek has recently changed hands, and the new proprietors are spending an estimated $20 million on projects that include a 50,000-square-foot day lodge at the base of the 167-acre ski facility off Route 94.

“I see the investment being made by the resort industry as palatable proof that we’re moving ahead,” said Vic Marotta, the town’s first elected mayor, who took office on July 1. “We have a golden opportunity here. How we nurture it and see it through will determine what Vernon looks like in the future.” Mr. Marotta had also served as mayor when it was an appointed position.

Another change that may shape Vernon’s future are new sewer lines, which will largely serve Vernon’s commercial and recreational centers and could attract new businesses and retailers.

The real estate slump has had the effect of bringing in a new wave of second-home buyers and investors to the 1,500 condominiums at Mountain Creek. “We discounted very heavily, and we sold them,” said Andrew Mulvihill, the president of real estate investment at Mountain Creek, noting that his group sold 80 units this past winter.

Among the beneficiaries were Milo Chan and Winnie Donahue, who closed last month on a furnished three-bedroom town house in the Black Creek Sanctuary area, paying $170,000 for a unit that sold for $524,950 in 2004, according to Carol Williams, an agent at Prudential Gross & Jansen Highlands Realty. The couple and their two children, who live in Manhattan, plan to use the town house for weekend getaways in the summer and during ski season. While they weren’t actively looking to buy a second home, Ms. Donahue said the price, and the fact that it was furnished, made the deal irresistible.

“We wanted something turnkey, but this was ridiculous,” said Ms. Donahue, an advertising consultant. “It was a great buy at a great time that just fell into our laps.”
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Mark and Julie Bush were able to take advantage of those dropping prices by waiting it out to buy their new-construction four-bedroom, two-and-a-half-bath house on 3.2 acres. Mark Bush, 30, grew up in Vernon, but was most recently living in a condo here with his wife and two children. For a year and a half, he said he had been keeping his eye on a new house with great views of the mountains.

“Contracts had fallen through and I saw the price keep dropping every couple of months,” said Mr. Bush, a certified public accountant. In January, the Bushes moved into their new house, paying $355,000 for a house originally listed at $499,900.

Posted in Economics, Housing Bubble, North Jersey Real Estate | 90 Comments

Reaching a bottom in pricing?

Posted on July 8, 2011 by grim

From Bloomberg:

Real Estate Forecast: Home Prices Limp into 2012

In the second half of 2011, U.S. home prices will continue decreasing in general, with certain markets experiencing growth. Do you live in a likely gainer?

Home sale prices in the U.S. are expected to fall a further 2.4 percent in the second half of 2011, compared to the first half, as bank-owned properties drive down prices, unemployment remains high, and consumer confidence stays weak, according to a report released Friday, July 8, by Truckee (Calif.)-based data and valuation firm Clear Capital. Of 50 U.S. markets tracked for the report, only five metro areas are forecast to produce home-price gains in the second half: Washington, New York, Orlando, Dallas, and San Francisco.

U.S. home prices fell by 3.2 percent in the first six months of 2011 compared to the previous half, with median home prices dropping to $170,000, despite a 0.9 percent increase in the second quarter, estimates Clear Capital. The peak of the market was in summer of 2006, at $240,000, indicating a median price decline of nearly 31 percent since then.

The modest increase in the second quarter may be seasonal, as homebuying typically picks up in the warmer months. It is nonetheless encouraging, says Alex Villacorta, director of research and analytics at Clear Capital. “That’s not bad, as we’re under heavy inventory levels, high unemployment, and consumer confidence levels are not where they need to be,” he says. “It’s not the type of increase that signifies a V-shaped recovery. It will be more muted.”
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Before the housing collapse, the number of distressed sales historically made up a small percentage of the market. In the first half of 2011, however, bank-owned homes represented more than 30 percent of total sales, which is far above pre-2006 levels of less than 5 percent, according to Clear Capital. “A lot of the decline is a result of distressed sales,” says Celia Chen, senior director of the Moody’s Analytics research staff, specializing in housing economics. In 2010 there were 1.7 million distressed sales, up from an average of 450,000 per year during the pre-collapse period from 2000 to 2005, according to data from Moody’s.

The rate of decline has tapered off in recent months, following a slow winter homebuying season and a double dip earlier this year. Prices are expected to be less volatile, though “it is unlikely national home prices have reached a true and sustainable bottom,” states Clear Capital’s report. The firm expects national home prices to drift slightly downward until next year because of such factors as the financial crisis in Europe and jammed discussions regarding the debt ceiling in Washington. By May, the unemployment rate stood at a high 9.1 percent, according to U.S. Bureau of Labor Statistics data.
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Under current conditions, and presuming continued job growth, Villacorta and Chen both say home prices may reach bottom in the first quarter of 2012. In its most recent economic projection, the Fed expects the jobless rate in 2012 to fall to between 7.8 percent and 8.2 percent, with gross domestic product growth anticipated at from 3.3 percent to 3.7 percent. “Those [price] upticks from April are being sustained,” says Villacorta. “Albeit slim, it’s a step in the right direction.”

Posted in Employment, Housing Bubble, National Real Estate | 286 Comments