How many bailouts need to fail before they realize it won’t work?

Posted on March 9, 2011 by grim

From CNBC:

More Borrowers Underwater: Why We Should Care

Falling home prices at the turn of the year pushed more borrowers into a negative equity position, meaning they owe more on their mortgages than their homes are worth.

In Q4, 23 percent of borrowers nationwide, or 11.1 million, were holding “underwater” mortgages; that’s a collective $750 billion of negative equity, according to the latest survey from CoreLogic. That’s up from 22.5 percent, or 10.8 million, in Q3, again, thanks to falling home prices. To make matters worse, 2.4 million borrowers have less than 5 percent equity in their homes, deemed as “near-negative” equity.
…
So why should we care if the bulk of these underwater borrowers can still make their monthly mortgage payments? “Negative equity holds millions of borrowers captive in their homes, unable to move or sell their properties,” notes CoreLogic’s chief economist Mark Fleming. “Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish.”
…
Negative equity will slow the pace of home sales, no question, but it will also provide more problems for policymakers and state and federal regulators. Right now the mortgage market is at the mercy of a huge potential settlement with the state attorneys general and a whole bunch of feds, part of which will be a push for principal write down on troubled loans. With negative equity continuing to rise, the principal write down argument gains strength. I spoke with Missouri state AG Chris Koster yesterday at a conference in DC:

“I think principal write-down is the right way to go. Twenty to 25 billion dollars is a significant amount of money. The big question is are we talking about five banks, 15 banks who chip in on that fund? We don’t know the answer to that until we get through these negotiations, but we’re at the beginning of something serious that could be successful.”

Posted in Employment, Housing Bubble, National Real Estate, Politics | 87 Comments

It doesn’t matter what you call it, prices are still falling

Posted on March 8, 2011 by grim

From HousingWire:

Nameless, formless crisis enveloping nation’s home price indices

Fears of a double dip in housing are giving away to a realization that the nation’s mortgage markets are facing a much colder reality — something that will not so easily be named, but is nonetheless hanging around for a very long time.

Both Standard & Poor’s and Radar Logic Research released updates Monday on the prices sellers are asking for residential properties. Neither is positive.

“No matter what you call it, a ‘double dip’ or the continuation of a long process of deterioration, the current trend in home prices is evidence that housing markets are continuing to languish,” said Quinn Eddins, director of research at Radar Logic.

“We expect the negative trend to continue under a severe supply overhang that includes a large and growing ‘shadow inventory’ of homes in default or foreclosure,” Eddins said.

In the past, such market behavior would be called a “w-shaped” recovery. But the National Bureau of Economic Research called an end to the recession in June 2009, and nearly two years later, there is not enough improvement to resemble a recovery in the housing market.

Posted in Economics, Housing Bubble, National Real Estate | 142 Comments

The other real estate market

Posted on March 7, 2011 by grim

From CNN/Money:

Who’s buying homes? The rich

The rich are different from you and me: They’re buying real estate.

After four straight years of declines, sales of million-dollar homes and condos rose last year in all 20 major metro areas, according to DataQuick Information Systems. On average, these cities saw an 18.6% jump in high-end home sales.
…
San Jose, Calif., had the biggest market for million-dollar homes, with a 27.4% spike in sales last year; Phoenix saw the smallest increase at just 0.4%.

Meanwhile, sales outside of this price point actually fell 2.8%.

“It hasn’t been a good six months for all people, but it was a good six months for rich people,” said Glenn Kelman, CEO of Seattle-based real estate brokerage Redfin. “When Wall Street goes up, rich people buy homes.”
…
“Higher income households are feeling better about their financial security,” said Greg McBride, chief economist for Bankrate.com.

As their confidence soared, the wealthy took advantage of bargains in expensive homes. An average seaside manor on Jupiter Island, Fla., that might have sold for $4 million in 2006 cost less than $3 million last year. The Brentwood bungalow in L.A. was $1.5 million instead of $2 million, and that Scarsdale colonial fell to $1.1 million after gong for $1.5 million four years ago.

Getting a mortgage for these expensive homes was cheaper as well.
…
In New York, where volume grew nearly 25%, high-priced home sales were driven by bonuses on Wall Street. Even though bonuses were slightly smaller last year, they still topped $120,000. And that’s just the average; many employees brought home significantly more.
…
The real estate industry may take some solace from the mini boom in high-end sales, but it does not necessarily mean good times are ahead for the rest of the market. In fact, the rest of the market is facing a potential 25% drop in prices and stalling sales.

“There are not a lot of million-dollar home buyers even in the best of times,” said Bishop. “It’s always nice to see any segment come back, but it’s the middle of the market we would like to see set the pace.”

Posted in Economics, National Real Estate | 157 Comments

Permanent shore residents cash out and leave

Posted on March 6, 2011 by grim

From the Philly Inquirer:

Housing boom a bust for Shore populations

It was 2004 when Lorraine McCarthy, a full-time resident of this Cape May County resort, sold her duplex a block from the boardwalk and decamped to the mainland.

“The choice we made to move off the barrier island was the same choice that a lot of people who wanted to make some money made,” said McCarthy, who lives in nearby Upper Township. “It was the best time to sell.”

The Jersey Shore’s real estate boom, it now seems, had a more profound effect on the region’s population than many realized.

In beach towns up and down the coast, the number of year-round residents dropped significantly last decade – almost 40 percent in one case, according to recently released U.S. Census statistics that surprised and alarmed some local officials.

“I knew our population numbers were going to be down, but I didn’t know they were going to be down this much,” said Suzanne Walters, who has noticed the voter rolls shrinking during her 15 years as mayor of Stone Harbor. The little borough’s population declined 23 percent between 2000 and 2010.

The robust economy during most of the decade led to a fevered real estate climate, said James Hughes, dean of Rutgers University’s Bloustein School of Planning and Public Policy.

“A lot of year-around residents at the Shore saw their property values surge, so they took advantage of the market,” Hughes said. Many migrated inland or left the state after their modest year-around dwellings were purchased – and sometimes replaced with larger homes – by people who live elsewhere.

Others, mostly retirees, held on to their properties and still vanished from local census roles, Hughes said, by acquiring winter residences in other states that they declared as their primary residences.

Their motivation: refuge from the Garden State’s notoriously high cost of living.
…
Having fewer residents also affects schools. In Sea Isle City, where the full-time population shrank 25 percent last decade, the Board of Education has asked the state to order its school district and neighboring Ocean City’s to merge
…
Between 2000 and 2010, Ocean City’s year-around population dropped about 24 percent to 11,701 residents. Among 10 Cape May County coastal locations, populations in nine declined, between less than 1 percent (Lower Township) and 38 percent (Avalon), according to the census. (Tiny Cape May Point gained 50 residents – an increase of 21 percent.) The towns’ total population dropped about 12 percent.

In Atlantic County, the combined population of Atlantic City, Brigantine, Longport, Margate, and Ventnor dropped about 11 percent to 66,907 during the decade. The greatest losses were in Brigantine (25 percent) and Margate (22 percent).

Meanwhile, the county’s mainland municipality of Egg Harbor Township experienced the second-highest population growth in the state. Galloway and Hamilton, both inland, also were among the top 25 gainers.
…
“People just cashed out,” said Walters, of Stone Harbor, which had 866 residents last year, according to the census.

“I know a lot of people, longtime residents, that sold and moved over to Cape May Court House on the mainland and used the money to buy a bigger home or pay for their kid’s college education. And a lot of retirees permanently moved to Florida or the Carolinas, where they found the cost of living to be cheaper,” she said.

“A lot of people talk about what we can do to lower taxes and costs and to keep our residents from fleeing the state. Maybe this will be a wake-up call that we need to stop talking and do something about it.”

Posted in Economics, Shore Real Estate | 64 Comments

Goodbye 30 year?

Posted on March 4, 2011 by grim

From the NY Times (Hat tip Shore):

Without Loan Giants, 30-Year Mortgage May Fade Away

How might home buying change if the federal government shuts down the housing finance giants Fannie Mae and Freddie Mac?

The 30-year fixed-rate mortgage loan, the steady favorite of American borrowers since the 1950s, could become a luxury product, housing experts on both sides of the political aisle say.

Interest rates would rise for most borrowers, but urban and rural residents could see sharper increases than the coveted customers in the suburbs.

Lenders could charge fees for popular features now taken for granted, like the ability to “lock in” an interest rate weeks or months before taking out a loan.
…
Douglas J. Elliott, a financial policy fellow at the Brookings Institution, said Congress was being forced for the first time in decades to grapple with the cost of subsidizing middle-class mortgages. The collapse of Fannie and Freddie took with it the pretense that the government could do so at no risk to taxpayers, he said.

“The politicians would like something that provides a deep and wide subsidy for housing that doesn’t show up on the budget as costing anything. That’s what we had” with Fannie and Freddie, Mr. Elliott said. “But going forward there is going to be more honest accounting.”

Some Republicans and Democrats say the price is too high. They want the government to pull back, letting the market dictate price, terms and availability.

“A purely private mortgage finance market is a very serious and very achievable goal,” Representative Scott Garrett, the New Jersey Republican who oversees the subcommittee that oversees Fannie and Freddie, said at a hearing this week. “No one serious in this debate believes our housing market will return to the 1930s.”
…
Hanging in the balance are the basic features of a mortgage loan: the interest rate and repayment period.

Fannie and Freddie allow people to borrow at lower rates because investors are so eager to pump money into the two companies that they accept relatively modest returns. The key to that success is the guarantee that investors will be repaid even if borrowers default — a promise ultimately backed by taxpayers.

A long line of studies has found that the benefit to borrowers is relatively modest, less than one percentage point. But that was before the flood. Fannie, Freddie and other federal programs now support roughly 90 percent of new mortgage loans because lenders cannot raise money for mortgages that do not carry government guarantees.

One prominent investor, William H. Gross, the co-head of Pimco, the major bond investment firm, has estimated that he would demand a premium of three percentage points to buy such loans — a cost that would be passed on to the borrower.
…
Longer terms make ownership affordable only by increasing the total cost of the loan, because the borrower pays interest for a longer period. Moreover, Mr. Pollock noted that over the last several years, borrowers with adjustable-rate loans paid less as interest rates fell, while those with fixed rates kept paying the same amount for devalued homes.

“One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage,” he said, noting that such loans are not available in most countries. “For many people, it’s not at all clear that that’s the best product.”

Posted in Employment, Mortgages, National Real Estate, Politics | 188 Comments

March Beige Book

Posted on March 3, 2011 by grim

From the Federal Reserve:

Beige Book – Second District–New York

Summary

The Second District’s economy appears to have expanded at a modest pace since the previous report. Business contacts in most industries report stable to improving conditions and express widespread optimism about the near-term outlook. Labor market conditions have been mixed but generally steady, on balance: T here has been little or no net hiring in the financial and manufacturing sectors, but a slight pickup in some other sectors. Retail sales are characterized as relatively strong in early 2011, despite inclement weather, and consumer confidence has continued to improve. However, tourism activity has shown signs of slowing by more than the seasonal norm in early 2011. Commercial real estate markets remain fairly slack: The market for office space has been generally stable, while the market for industrial space has softened somewhat. Housing markets have been mostly stable, with scattered signs of improvement. Finally, bankers report strengthening demand for commercial loans and mortgages but weaker demand for home mortgage loans; they also indicate little change in credit standards and steady to lower delinquency rates.

Construction and Real Estate

Housing markets across the District have been generally stable since the previous report, with pockets of mild improvement. An authority on New Jersey’s housing industry reports that the market has been performing slightly better in early 2011, as the negative aftermath of last year’s homebuyer tax credit appears to have worn off. While there is still a sizable supply of existing homes on the market–including a large number of distressed properties–the inventory of available new homes in northern New Jersey is reported to be very low. The residential real estate market in metropolitan Buffalo also appears to have recovered to more normal levels of activity after several months of sluggish performance. There are signs of gradual improvement in Manhattan’s apartment rental market: Rents continued to rise at a moderate pace, the inventory of available units is described as tight, and fewer landlords are reported to be offering concessions than last year. Conditions in Manhattan’s co-op and condo market, on the other hand, appear to be holding steady: A major appraisal firm reports that prices are holding steady across the board and notes that, while contract activity fell noticeably in January, harsh weather is seen as the culprit, and transaction activity appears to be rebounding in February.

Posted in Economics, New Jersey Real Estate | 150 Comments

Kick the can…

Posted on March 2, 2011 by grim

From the WSJ:

Housing Market Masochism

The U.S. housing market is still wheezing: The Case Shiller home-price index has fallen for five consecutive months and 22.5% of all residential properties with a mortgage are in negative equity, according to CoreLogic’s latest data. Bank foreclosures are expected to accelerate, and prices in many markets still haven’t touched bottom. The Obama Administration’s solution? Prolong the pain.

The latest attempt at housing market masochism was reported in a page one story in this newspaper last week. Details are sketchy, but the idea seems to be to force the nation’s biggest mortgage servicers to cough up $20 billion for principal write downs on “underwater” mortgages, in which borrowers owe more than their homes are worth. The money would be extorted as part of a settlement for the mortgage foreclosure kerfuffle of last year. Bank of America, Wells Fargo and J.P. Morgan Chase would likely be among the hardest hit.

This smells like a re-run of the failed Home Affordable Modification Program, or Hamp. Launched in 2009, Hamp was supposed to keep homeowners in their homes. Instead, the program swamped mortgage servicers as debtors rushed for the goodies, gummed up the foreclosure process and left some borrowers worse off. Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, said in January that Hamp falls “dramatically short of any meaningful standard of success.”
…
The larger context here is that Americans are figuring out that the multiple government programs to prop up the housing market have only postponed the day of recovery. They have given homeowners the false hope that they can stay in homes they can’t afford, delayed foreclosures that are probably inevitable, and prevented prices from finding a bottom.

Better news for the housing market is coming from Congress, where House Republicans are moving to dump Hamp. Mr. Geithner played the recession scare card yesterday by telling a House committee that closing Hamp would “cause a huge amount of damage” to the economy. But Mr. Geithner has had two years to make a difference with Hamp, and he’s done more harm than good.

Posted in Employment, Housing Bubble, National Real Estate | 97 Comments

January contracts post new low

Posted on February 28, 2011 by grim

From the Otteau Group:

Multiple snow storms and the painfully slow pace of economic recovery combined to reduce New Jersey home sales in January by 22% below the prior year’s pace as the housing market turns the corner heading toward spring. This decline was heavily influenced however by January’s record breaking total snowfall as well as the absence of a homebuyer tax credit program which lifted last year’s sales. At the same time, unsold inventory was essentially unchanged in January recording a minimal 2% rise from one year ago.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 110 Comments

Homeownership goes the way of the Hula Hoop

Posted on February 28, 2011 by grim

From CNBC:

Fewer in US Deem Homeownership a Safe Investment

Homeownership as an investment is no longer the rock-solid foundation for the American Dream it once was, according to a survey released on Monday by the firm the government created in the 1930s to promote homeownership.

ewer than two in three Americans now think owning their own home is a safe investment, down sharply from more than four out of five who thought it was a good investment less than a decade ago.

That attitude shift is likely to cause rents to rise as more Americans opt for renting over buying, according to the latest quarterly survey of attitudes toward homeownership from Fannie Mae, the largest provider of U.S. home mortgage funds.

The National Housing Quarterly Survey found just 64 percent of Americans think owning their own home is a safe investment, down from 70 percent at the beginning of last year and sharply lower than the 83 percent who thought it was a safe investment in 2003.
…
Duncan noted that borrowers are swinging back toward making home purchase decisions based on where they want to raise children and what kind of lifestyle they want, rather than on the investment potential.

“Focusing on the whole economy, not just housing, there are some long-term benefits of that because it is likely to be a more stable environment than people acting on the temporary benefits and tax strategies.

So, it’s likely to lead to more stability for the economy,” Duncan said, adding that stability is also positive for housing in the long-term.

Nearly three out of four respondents to the survey said they think it will be harder to get a mortgage in the future, up from about two-thirds who thought so at the beginning of last year.

Still, 78 percent of respondents believe housing prices will hold steady or rise in the next year, up from 73 percent in January 2010.

Posted in Economics, National Real Estate | 103 Comments

Cocky sellers drop prices at the shore

Posted on February 25, 2011 by grim

From the NY Times:

A Low Tide for Home Sales in the Shoreline Market

FOR the shoreline real estate market, by unvarying tradition, spring arrives early. Sometime in mid-January, in all four coastal counties — Monmouth, Ocean, Atlantic and Cape May — the number of listings begins to swell and rises in small waves, usually reaching a peak by early April.

So far this year that pattern remains unbroken, according to brokers selling homes in the shore counties.

Price trends, on the other hand, appear to be breaking in unusual directions. A look at sales statistics from the last two years indicates that towns on beaches are doing less well than their counties-at-large, according to Jeffrey G. Otteau, the president of the Otteau Valuation Group in New Brunswick.

In one sense, this flouts Realtor wisdom, as proximity to water ordinarily translates unambiguously to premium prices. But economic uncertainty changes things, Mr. Otteau said. “People are more conservative about how much they will spend for a house, and especially a second house, if that is what they are looking to buy,” he said.

In Belmar, a beach community with 6,000 year-round residents, the median sales price in 2010 represented a 4.3 percent decline from 2009. It was $400,000, down from $418,000. Yet in Monmouth County, where Belmar is situated, the median price over that same period rose by 2 percent.
…
If you look at the average sales price disparity in this instance, it was even greater. Belmar’s was down by 15.1 percent, and Monmouth’s was up by 3 percent.

In 2007, when redevelopment of Belmar’s beachfront began, the median price reached a high of $456,000.

“For several years after that there was pricing arrogance in Belmar,” said Brian Church, a broker for Ward Wight Sotheby’s International Realty. “They had done a great job of improving their profile. But then sellers got a little cocky with pricing and it took a while for prices to come back down.”

Mr. Church said that many buyers “voted with their feet,” seeking lower-priced homes in nearby communities like Avon, Ocean Grove and Bradley Beach — until sellers in Belmar started to become more realistic about asking prices.
…
In Ocean County, where the median price did not change appreciably in 2010, it was down 7.56 percent in Seaside Heights, the honky-tonk beachfront town that is the film site for the TV reality show “Jersey Shore.” The most expensive house sold in Seaside last year went for $607,500; the median sales price was $220,000.

In Point Pleasant Beach, another popular Ocean County community, the median essentially stayed the same — $522,000 — but there were 17 percent fewer sales than in the previous year.

Down in Atlantic County the Atlantic City housing market, mostly condominiums, continued its rapid deterioration; the median price was down 20.1 percent, to $147,350. In more neighborhood-oriented Brigantine, by contrast, the price dipped 3.5 percent, to $308,500. Atlantic County’s median stayed flat, at $206,144.

In the southernmost county, Cape May, North Wildwood was one of the strongest markets. Indeed, it outdid the county, but not in very impressive style. Its median price declined by 0.3 percent; the county’s fell by 3 percent.

Posted in Employment, Housing Bubble, Shore Real Estate | 282 Comments

Anything to be optimistic about in the January home sales numbers?

Posted on February 24, 2011 by grim

From Barrons:

Depressed Home Prices Boost Sales

Sales of existing U.S. homes rose a seasonally adjusted 2.7% from December to January, to a better-than-expected 5.36 million, according to the National Association of Realtors.

That figure is an eight-month high and the fifth rise in six months, as buyers were enticed by falling home prices.

Year-over-year, sales rose 5.3%, so that activity is now above the level when the home buyer tax credit expired in 2010, putting pressure on home sales.

Without season adjustment, sales would have fallen 30% from December, but that is not unusual for the slow winter season.

While a somewhat improved employment outlook and recent rosier economic outlook contributed to the gain, buyers are also likely taking advantage of depressed home prices, which some see as susceptible to further pricing pressure.

From Reuters:

US home sales rise, price slump points to weakness

Surging sales of distressed properties pushed prices for previously owned U.S. homes to a
near nine-year low in January, even as they helped to lift overall sales to an eight-month high.

The National Association of Realtors said on Wednesday existing homes sales climbed 2.7 percent to an annual rate of
5.36 million units, marking the third straight month of gains. Economists had expected a fall to a 5.24 million-unit pace.

But foreclosures and short sales, which typically occur below market value, accounted for 37 percent of the
transactions and suggested further price declines ahead. The median home price fell 3.7 percent from a year ago to $158,800, the lowest since April 2002.

“What this shows is that there will be an ongoing adjustment to prices to the downside. Housing fundamentals are still weak,” said Neil Dutta, an economist at Bank of America Merrill Lynch in New York.

From CNN/Money:

Foreclosures make up 26% of home sales

Home prices are down but sales are up, somewhat contradictory trends.

Home prices fell nearly 6% during the six months ended Dec. 31, sending values to their lowest levels in the post-bubble period, S&P/Case-Shiller reported on Tuesday. On Wednesday, the National Association of Realtors reported that sales of existing homes rose for the third straight month.

“At least it’s not a double whammy where both sales and prices are dropping,” said Stuart Hoffman, chief economist for PNC Financial Services Group. “Deals are getting done.”

That’s because 26% of all homes sold last year were foreclosures and short sales, according to a RealtyTrac report released on Thursday. That’s down slightly from 2009, but a jump compared to 2008.

Homes already foreclosed on and repossessed by banks, called REOs (real estate owned), sold for an average of 36% less than normal sales, RealtyTrac reported. Meanwhile, the discount for homes sold while they were still in the foreclosure process (short sales) was 15%.
…
Foreclosed properties sold for the biggest discount — 50% off — in New Jersey.

These homes have attracted bargain hunters, including individuals or groups looking to buy and hold properties, according to Hoffman. They hope to buy at such a good price that they can rent out the properties and make a profit.

“These folks are cash investors who are going in and offering very low bids,” he said.

Posted in Economics, Housing Bubble, National Real Estate | 169 Comments

New Jersey Home Price Tracker – February 2011

Posted on February 22, 2011 by grim

The New Jersey Home Price Index Tracker has been updated to include:
* December S&P Case Shiller (Aggregate, Tiered, Condo)


(click to enlarge)


(click to enlarge)

S&P Case Shiller NY Metro Commutable Area Home Price Index

Low Tier (Under $287,359) – Peaked in October 2006 and is down 29.1% from peak

Mid Tier ($287,395 – $456,159) – Peaked in September 2006 and is down 23.4% from peak

High Tier (Over $456,159) – Peaked in June 2006 and is down 17.5% from peak

Aggregate (Overall Market) – Peaked in June 2006 and is down 22.3% from peak

Condo-Only Index – Peaked in February 2006 and is down 14.9% from peak

Posted in Economics, Housing Bubble, New Jersey Real Estate | 219 Comments

SHOCKER: Realtors lied about home sales

Posted on February 22, 2011 by grim

(Of course this isn’t the first time someone caught them, see: NAR: 4% Quarterly Gain is (Oops) Actually a 30% Loss. In retrospect, maybe that wasn’t a one-time mistake at all, but an example of a systematic manipulation of data.)

From the WSJ:

Home Sales Data Doubted

The housing crash may have been more severe than initial estimates have shown.

The National Association of Realtors, which produces a widely watched monthly estimate of sales of previously owned homes, is examining the possibility that it over-counted U.S. home sales dating back as far as 2007.

The group reported that there were 4.9 million sales of previously owned homes in 2010, down 5.7% from 5.2 million in 2009. But CoreLogic, a real-estate analytics firm based in Santa Ana, Calif., counted just 3.3 million homes sales last year, a drop of 10.8% from 3.7 million in 2009. CoreLogic says NAR could have overstated home sales by as much as 20%.

While revisions wouldn’t affect reported home-price numbers, they could show that the housing market faces a bigger overhang in inventory, given the weaker demand.

In December, NAR said that it would take 8.1 months to sell some 3.6 million homes listed for sale at the current pace, but the number of months it would take could be even higher if sales are revised down. Any revisions wouldn’t have an impact on homeowners, but it could have consequences for the real-estate industry. Downward revisions would show that “this horrific downturn in the housing market has been even more pronounced than what people thought, and people already thought it was pretty bad,” said Thomas Lawler, an independent housing economist.

From Reuters:

U.S. housing data may have understated extend of collapse-report

A U.S. housing trade association is examining the possibility that the data it releases underestimated the collapse of the housing industry, the Wall Street Journal reported on Monday.

The National Association of Realtors, which issues the monthly existing home sales report that is closely watched by economists and financial markets, may have over-counted home sales dating as far back as 2007, the newspaper said in an article posted to its web site.

NAR’s home sales count was at odds with calculations by CoreLogic, a California real estate analysis firm, according to the report. CoreLogic says NAR could have overstated home sales by as much as 20 percent.

An over-count of home sales may mean that there is a bigger backlog of unsold homes and that it will take longer for the U.S. housing sector to climb out of the deep hole it is already in, dragging on the broader economic recovery.

From UPI:

CoreLogic Blasts NAR for Overstating Home Sales

The “most popular measure” of existing home sales, the National Association of Realtors’ Existing Home Sales, has increasingly overstated home sales for ten years as measured by five other sources, and reached a level in 2010 that is 15 to 20 percent higher than actual sales, according to CoreLogic, which made the charges in its US Housing and Market Trends Report.

CoreLogic reported sales totaled only 3.6 million in 2010, down 12 percent from 2009. By comparison, NAR reported sales fell only 5 percent in 2010 after rising in 2009, and were flat relative to 2008. CoreLogic said sales did not actually rise in 2009.

Posted in Housing Bubble, National Real Estate | 169 Comments

Just when you thought we’d finally started dancing at the bottom

Posted on February 21, 2011 by grim

From Yahoo News:

New Jersey Foreclosures Expected to Rise 20 Percent in 2011

CBS’s New York affiliate reported that despite improvements in the economy, foreclosures in New Jersey are expected to increase 20 percent this year.

Kevin Wolf, who works for the administrative office of the courts, estimated that prior to the economic meltdown caused in part by subprime mortgages, there were approximately 24,000 to 25,000 foreclosures each year. That number nearly tripled to 65,000 foreclosure filings in 2009. That number is set to be even higher during 2011.

Although the economy has shown marked improvement since its darkest days, common economic wisdom is that jobs are the last area of the economy to recover. With high levels of unemployment come high levels of foreclosures.

Just a few days ago the Washington Post reported the Mortgage Bankers Association had announced mortgage delinquency rates, which measure how many home owners are behind on their mortgage payments, had dropped during the last quarter of 2010, to their lowest level since 2008 when the economy began its now legendary nosedive.
…
Despite the cautiously optimistic tone of the Mortgage Bankers Association’s report, the news for New Jersey continued to be bleak. Approximately half of all foreclosures occur in just five states, one of which is New Jersey. The others are Florida, California, Illinois and New York.

According to Wolf, though, there is some home for New Jersey home owners in trouble. Wolf said that, “In addition to the housing counselors, we are also funding attorneys to help home owners in the mediation process.” This could mean renegotiating mortgages, lowering interest rates, extending the timing of the loan, and, hopefully, keeping people in their homes.

Posted in Foreclosures, New Jersey Real Estate | 120 Comments

The rich are alright

Posted on February 18, 2011 by grim

From the NY Times:

In Market Reports, Some Affluent Towns Do Better Than Others

AFFLUENT towns are different from other towns. Their citizens have more money, of course, and their homes have more value.

But some affluent towns are different from other affluent towns, in that their median home values rose significantly last year.

In the last quarter of 2010, the median sales price for the entire state rose by 1 percent from the year before, according to a new market report from the Otteau Valuation Group in New Brunswick. To this somewhat surprising news, the group’s president, Jeffrey G. Otteau, hastened to add that even that faint increase was unlikely to continue.

The rise after a long-term decline was most likely the result of a court-ordered moratorium on foreclosures at the end of the year, and will be reversed when the moratorium is lifted, which is expected to be soon, Mr. Otteau said.

Yet, throughout 2010 and much of 2009, there was a small group of communities that seemed impervious to the overall trend of declining prices — or else extremely resilient if dips occurred.

In the Bergen County village of Ridgewood, for instance, the median sales price (at which half the homes sold for more and half for less) rose 8.7 percent in the last quarter, versus the same period in 2009. The median price was $700,000, according to the latest statistics from Otteau. In 2009 it was $644,000.
…
Ridgewood, an attractive community with a charming shopping area and a train station, seriously outperformed its home county last year. There was a 1 percent rise in median value in Bergen County, in line with the state at large.
…
Why? Mr. Otteau said it was primarily because of Manhattan.

Like the handful of other communities that consistently deserve gold-star status for their market reports — including Short Hills in Essex County and Summit in Union — Ridgewood is “Manhattan-centric,” the analyst said. It has a train station with direct service to Manhattan, whose economy and housing market are picking up again.

“Federal stimulus funds are what’s driving the national economy right now,” Mr. Otteau said, “and much of the trillion dollars that was dropped out of the helicopter, in effect, by the feds in the form of grants, loans, discounts, bailouts — all of those — landed in New York City.”

Manhattan regained vigor as an employment center, while New Jersey continued a decade-long decline in the number of new jobs, he said. “This means Manhattan is becoming an increasingly potent force in the New Jersey market,” he added.
…
In a long-established suburb like Summit, where single-family homes predominate, the total supply of houses changes little year to year, although the sales pace may fluctuate a lot. There were 274 houses sold in Summit last year, up from 221 in the lean real estate year of 2009.

And median home values increased by 6 percent, to $794,500 from $749,000.

In Union County the median price was down 2 percent, to $310,000.

In Millburn, which includes the exclusive Short Hills section, the median price rose 7.4 percent, to $999,000 from $930,098. The median price in Essex County was up as well, by 8 percent.

Posted in Economics, Housing Bubble, New Jersey Real Estate | 263 Comments