HARP Refis Outshine 2011 Numbers, Make Monthly Drop
Via Esther Cho, DSNews.com
From January 2012 to July, 519,339 loans were refinanced under the Home Affordable Refinance Program (HARP), FHFA announced Friday.
Two factors were named as the main drivers behind the high volume of refinancings: record-low mortgage rates and HARP changes such as the removal of the loan-to-value (LTV) ceiling.
“When we announced additional program changes to HARP last fall, we were cautiously optimistic that the changes would double or more the number of HARP refinances,” said Acting Director Edward J. DeMarco. “With more than half-a-million homeowners taking advantage of the program in the first seven months of this year Fannie Mae and Freddie Mac are on track to meet or surpass our original estimates.”
While the LTV ceiling has been removed, only borrowers with GSE loans are eligible, and borrowers must be current at the time of refinancing and can only be allowed one late payment in the past year, as long as it did not occur 6 months before refinancing.
The more than half a million loans refinanced under HARP in the first seven months of the year accounted for more HARP refinancings than the 400,024 loans from all of 2011.
In June and July, more than half of borrowers refinanced under HARP were underwater (they had LTV ratios greater than 105 percent). In hardest-hit states such as Nevada, Arizona and Florida, 70 percent of those refinanced in July were underwater borrowers.
In addition, about one-fifth of those who refinanced opted for 15- and 20-year mortgages, which can help underwater borrowers build equity faster.
In July alone, 96,370 loans were refinanced through HARP, a monthly drop from 125,866 in June. Since the program’s inception, more than 1.5 million loans have been refinanced through HARP.
REO Saturation Rate Falls for First Time in 2012: Clear Capital
Via Esther Cho, DSNew.com
While home prices remained little changed, the REO saturation rate fell for the first time this year, according to Clear Capital’s Home Data Index Market report, which included data to the end of August.
The REO saturation rate, which calculates the portion of REO sales relative to total sales, slipped 6.4 percentage points from the previous quarter to 20.5 percent. The drop is the lowest the REO saturation rate has been since April 2008. At its peak, the REO saturation rate was 40.2 percent in the first quarter of 2009.
Although the market is seeing a decrease in the volume of REO sales, fair market sale volumes are increasing, leading to more activity in the owner-occupied sector, the real estate data provider explained.
According to the report, the first phase of the recovery was strengthened by REO-only price trends, but August gains were due largely to strengthening in the fair market segment as investment purchases slow down.
“Sustained growth in the fair market segment could build a foundation for Phase Two of the recovery,” Clear Capital stated.
Home prices, which include sales prices for REOs, increased 1.9 percent on a quarterly basis in August, little changed from the 2 percent quarterly gain in July. Year-over-year, home prices rose 2.9 percent.
All four regions saw price gains, with the West leading growth with a 3.8 percent quarterly increase and 7.7 percent yearly rise. Prices in the Midwest rose for the first time since April 2010 on a yearly basis, edging up 0.5 percent; quarter-over-quarter, prices were up 2 percent.
Prices increased quarterly and yearly in the South by 1.5 percent and 2.5 percent, respectively. The Northeast saw respective quarterly and yearly increases of 0.5 percent and 1.3 percent.
Quarter-over-quarter, two metros posted double-digit gains: Milwaukee, Wisconsin (12.5 percent) and Seattle (10.4 percent).
Despite having an REO saturation of 48.8 percent, Detroit managed to see a 5.9 percent price gain, but still experienced a yearly decline of 1.7 percent.
Dayton and Houston were the worst performing metros on a quarterly basis, each seeing price declines of 4.9 percent.
July Home Prices See Biggest Yearly Increase Since 2006: CoreLogic
Via Tory Barringer, DSNews.com
Home prices in July saw the biggest nationwide year-over-year increase since August 2006, CoreLogic reported Tuesday.
According to the company’s July Home Price Index (HPI), home prices-including distressed sales-increased year-over-year by 3.8 percent in July. On a month-over-month basis, prices increased 1.3 percent from June.
July marked the fifth consecutive increase in home prices on both a monthly and yearly basis.
Of the top 100 Core Based Statistical Areas (CBSAs), only 23 showed year-over-year declines, four fewer than June.
Removing distressed sales, home prices increased year-over-year by 4.3 percent compared to July 2011 and 1.7 percent relative to June 2012-the fifth consecutive month-over-month decrease.
CoreLogic also reported that its Pending HPI forecasts more monthly and yearly increases ahead. According to the report, prices (including distressed sales) are expected to rise at least 0.6 percent from July to August, putting August on track for a 4.6 percent year-over-year increase. Excluding distressed sales, CoreLogic anticipates price gains of 1.3 percent month-over-month and 6.0 percent year-over-year.
Mark Fleming, chief economist for CoreLogic, said the positive growth will likely lead to price gains for the full year.
“The housing market continues its positive trajectory with significant price gains in July and our expectation of a further increase in August,” Fleming said. “While the pace of growth is moderating as we transition to the off-season for home buying, we expect a positive gain in price levels for the full year.”
Company president and CEO Anand Nallathambi agreed.
“It’s been six years since the housing market last experienced the gains that we saw in July, with indications the summer will finish up on a strong note,” Nallathambi said. “Although we expect some slowing in price gains over the balance of 2012, we are clearly seeing the light at the end of a very long tunnel.”
Will Short Sales Hit Home Prices?
AnnaMaria Andriotis
August 22, 2012 2:05 PM GMT
MarketWatch
Copyright 2012 MarketWatch, Inc. All Rights Reserved.
On Tuesday, the Federal Housing Finance Agency announced new guidelines that are supposed to make it easier for home owners to sell their properties in a short sale — when a home sells for less than the borrower owes on the mortgage.
In addition, the new guidelines, which kick in on Nov. 1, allow owners with a Fannie Mae or Freddie Mac mortgage to pursue a short sale even if they haven’t fallen behind on their mortgage payments but have a hardship, such as a job loss or divorce.
Consumer advocates say the changes will help some of the borrowers who’ve been unable to sell the estimated 11 million U.S. homes worth less than the value of their mortgage, according to CoreLogic. However, not all homes would qualify in this new program.
And while the changes provide new hope to distressed home owners, experts say they could negatively affect prices in neighborhoods that get an influx of new short sales. A rise in short sales will result in “downward pressure on home prices until we clear out the majority of these distressed properties,” said Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.
Home prices had been rising in recent months, a trend experts say is due to the limited inventory and the smaller number of distressed properties on the market.
In June, median home prices were up 8% from a year prior, according to the National Association of Realtors. That marked the fourth back-to-back monthly increase in home prices — the longest streak since 2006. Inventory was down 24% from the prior year. And distressed sales — including short sales and foreclosures — accounted for 25% of all sales, down from 30% in June 2011.
For its part, the Washington-based NAR says it’s called for an expedited short-sales process to help boost inventory. The Federal Housing Finance Agency says that it expects short sales to settle at market prices and that they’ll help avoid foreclosures and long vacancy periods that result in declines in home values.
Still, data suggest that the impact on home owners who aren’t in distress could be lower values for their properties in the near term. Even if short sales fly off the market, they’ll likely go at a discounted price. According to the NAR, short sales sell at prices that are 15% lower than regular home listings, on average.
Instead, the benefits for homeowners could be bigger in the long term. “It’s a better idea to clear out the backlog of distressed homes rather than delay the process in the name of supporting [home] values,” said Brad Hunter, chief economist at Metrostudy, a market research and consulting firm.
Western States See Mixed Foreclosure Numbers for July
ForeclosureRadar’s Foreclosure Report for July 2012 showed mixed month-over-month trends from state to state but revealed an overall year-over-year decline in foreclosure filings.
The report, released Monday, covers Arizona, California, Nevada, Oregon, and Washington. Of the five states, only Arizona and Oregon posted decreases in foreclosure filings from June, while California and Nevada reported relatively small increases.
Washington showed the largest increase in filings, posting a 22.4 percent rise from June.
Oregon reported a 64.2 percent decrease in foreclosure filings, likely due to trends in the state that may indicate a lean toward a judicial foreclosure process. The state saw a new law (SB 1552) that gives homeowners at risk of default the right to request foreclosure mediation. In addition, a ruling from the Oregon Court of Appeals forced some lenders to proceed judicially with foreclosures, contributing to a drop in filings.
At this time, it’s not clear if this is just a temporary decline or a shift toward a judicial foreclosure process in the state.
Foreclosure sales were also mixed across the states. Washington reported the largest decrease in sales, posting a 27.5 percent drop from June. Nevada’s sales also fell 4.6 percent.
Of the other states, Arizona saw the largest increase in foreclosure sales with 27.5 percent. Sales increased slightly in California (10.5 percent) and stayed fairly flat in Oregon (0.4 percent).
Time to foreclose either fell or stayed flat in all five states, with California reporting the largest decrease (10.4 percent) and Washington reporting the largest increase (only 2.0 percent).
While these numbers were too varied to be indicative of a larger trend within the region, ForeclosureRadar founder and CEO Sean O’Toole said long-term trends-which show decreases in foreclosure activity in every state except Washington-are more important.
“While we are as curious as anyone to see the direction foreclosures are headed each month, it is important to keep things in context,” O’Toole said. “It is not unusual to see the number of Foreclosure Filings or Foreclosure Sales go up or down 10 percent or more each month. Whether it’s due to the length of the month, holidays, or internal delays at a lender, trustee, or posting company, it is completely normal to see fluctuations. What’s important is the bigger picture.”
Study: Delinquency Affects Neighboring Prices More than Foreclosure
A working paper released by the Federal Reserve Bank of Atlanta suggests that foreclosures may not negatively impact nearby property prices as much as originally thought.
The paper examines and refutes the argument long used by experts that mortgage foreclosures greatly reduce the sale prices of properties in the area. The Atlanta researchers approached the issue using a new dataset that takes into account the stage of the foreclosure process on a property and the property’s condition.
The Atlanta Fed’s paper includes research on mortgage loans that are seriously delinquent, as well as REOs and the number of properties recently sold by the lender. The study also includes minor delinquencies, defined by the researchers as delinquencies less than 90 days.
This more open approach allows for the possibility that the foreclosure externality (the effect of the foreclosure on neighboring properties) might occur before the process is actually completed.
The study actually found while neighboring home prices do tend to sink when a property becomes distressed, the effect is only minor. Furthermore, the effect appears when the borrower first becomes seriously delinquent on the loan and disappears approximately one year after the foreclosure is sold.
Because foreclosure externalities peak before the process is completed, the Atlanta Fed concluded that issuing a foreclosure moratorium would do nothing but draw out the delinquency period, making the problem worse.
“Our results suggest that they key to minimizing the costs of foreclosure is to minimize the time that properties spend in serious delinquency and in REO. On one hand, this implies putting pressure on lenders to sell properties out of REO quickly. On the other hand, and perhaps much less palatably, it implies minimizing the time a borrower spends in serious delinquency, which means accelerating the foreclosure process,” the paper read.
The paper argues that the likely explanation for the drop in surrounding home prices is the “investment externality effect,” or the tendency of borrower and lenders underinvesting in property maintenance because they have nothing to gain from a distressed or foreclosed property. As a result, the home falls into disrepair, and nearby prices suffer.
The researchers also debate against the possible explanation that an increasing supply of houses on the market (boosted by foreclosures) could give buyers more bargaining power:
“If we thought foreclosed properties were driving down prices by competing with non-distressed sales, then we would expect, at the very least, that the properties in above average condition would have the same effect as properties in below average condition and, indeed, we might even expect the above- average properties to generate even more competition,” the paper read.
Builder Confidence Improves to Highest Reading Since 2007
Builder confidence improved two points in August to 37, its highest level since February 2007, the National Association of Home Builders (NAHB) reported Wednesday. Economists had expected the index to remain flat at 35.
The improvement in the index in August marked the fourth straight month-month gain. The overall index has gained 22 points in the last year, the largest one-year gain since February 1992. The August reading also marked the third straight month the index was more than double what it had been one year earlier.
The Housing Market Index (HMI), considered a measure of builder confidence, could be reflected in permits and starts data reported for August. That report from the Census Bureau will be issued in September. Meanwhile, Census will report on July permits Thursday.
All three components of the index – the assessment of current sales, of sales six months out, and traffic at showrooms and model homes – improved.
The current sales measure rose three points to 39, its highest level since February 2007. The August gain followed a jump of five points in July. The current sales gauge is up 24 points in the last year, the last year, the strongest year-year surge since February 1992.
Buyer traffic also rose three points to 31, its highest reading since May 2006. Year-year the buyer traffic index is up 20 points, the largest 12-month improvement since March 1996.
The index of the outlook for sales in sales months rose one point to 44, the highest level since April 2007. The six month sales outlook index has increased 25 points in the last year, the largest annual gain since January 1992.
“This fourth consecutive increase in builder confidence provides further evidence of the gradual strengthening that’s occurring in many housing markets and providing a needed boost to local economies,” said NAHB Chief Economist David Crowe. “However, we are still at a very fragile stage of this process and builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values, and the difficulty of accessing credit for both building and buying homes.”
Gains in the index – or its components – do not always translate into new home sales. New home sales, for example, fell 32,000 in June to 350,000 although the HMI rose that month. The current sales measure rose in June as well but the buyer traffic index was flat. Six months earlier in December, the outlook for sales six months ahead had improved.
The index, built based on surveys conducted jointly by the NAHB and Wells Fargo, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”
Regionally, the index improved in two of the four census regions: up nine points to 42 in the Midwest and two points to 35 in the South but down nine points to 25 in the Northeast and down three points to 40 in the West. The regional confidence measures are consistent with the most recent report (for June) on new home sales, which showed new home sales plunged in the Northeast.
The HMI survey followed a surprisingly strong payroll report for July which showed the nation added 163,000 jobs, far more that what the market had been expecting but the unemployment rate rose to 8.3 percent in the same month. However recent housing specific survey such as the Case Shiller Home Price Index show improvements in home prices.
Freddie Mac: Shadow Inventory Unlikely to Bring Down Prices
Freddie Mac isn’t afraid of shadows.
The GSE released its U.S. Economic and Housing Market Outlook for August on Wednesday, examining recent trends in home price indices and speculating on the impact of shadow inventory on home prices.
The Freddie Mac Home Price Index (HPI) for the country showed a 4.8 percent gain in the second quarter, the largest quarterly pickup in eight years. Year-over-year, the national index posted a 1 percent increase, the largest annual appreciation since November 2006.
Other HPI metrics also suggest a strengthening market, with CoreLogic’s index rising 2.5 percent year-over-year for June and FHFA’s HPI posting year-over-year gains through May.
In addition, the recovery was broad-based. From June 2011 to June 2012, 34 states (and the District of Columbia) posted gains in home prices. This was the largest number of states reporting annual appreciation since April 2007.
Freddie Mac speculated that even if national HPIs dip in the usually weaker autumn and winter months, the second-quarter HPI gains will likely overshadow any expected declines.
While prices have shown positive growth in many states through this year, concerns about shadow inventory-the stock of single-family loans that are seriously delinquent— have some experts worried about prices taking another tumble.
Freddie Mac asserted that although delinquency rates may be higher than they were before the recession, the “shadow” over the housing market is not as long as some may think.
“While the shadow inventory persists, there is an important difference in today’s market compared with those of recent years, and that’s the substantially reduced amount of excess vacant housing,” said Frank Nothaft, VP and chief economist for Freddie Mac.
Vacancy data from the Census Bureau showed that vacancies in U.S. homes for rent or for sale continued to decline in the second quarter. Rental vacancy rates have fallen to 8.6 percent, the lowest rate since the second quarter of 2002. For-sale vacancy rates have dropped to 2.1 percent, the lowest since the second quarter of 2006.
Additionally, the for-rent market now appears to be in relative balance, with rental stock close to overall rental demand. This results in normal vacancy levels.
The continuing drop in excess vacant stock is important because it means that in most markets, REO homes on the for-sale market don’t have to compete with an oversized vacant inventory.
“The housing recovery may finally be coming out from the shadows,” Nothaft said.
Low Inventory Adding to Home Prices and Decreasing Days Listed: Redfin
By Esther Cho, DSNews.com
As homeowners hold back from selling, home prices are benefiting, according to a report from Redfin, which tracked home prices in 19 U.S. markets.
While prices remained flat month-over-month (-0.1 percent) from June to July, Redfin found prices rose 3.2 percent from July 2011 to July 2012.
However, the number of homes for sale fell 28.1 percent during the same one-year period and also declined 5 percent from June.
According to Redfin, the biggest challenge the housing market is facing is selection, and the problem will persist until the end of the year.
Among 19 markets measured by Redfin, 16 saw yearly price gains, with Phoenix seeing the biggest gain at 28.7 percent.
San Jose and Denver also had noteworthy gains at 11.9 percent and 8.5 percent, respectively. On the other hand, markets that saw yearly decreases included Long Island (-6.6 percent) and Chicago (-3.1 percent).
On a monthly basis, Phoenix actually saw prices dip 2.1 percent. Out of the 19 metros, eight others also saw month-over-month losses, including San Francisco (-2.5 percent), Washington D.C. (-1.9 percent), and Chicago (-1.9 percent). San Jose and Portland had the biggest monthly price gains, 4 percent and 2.1 percent, respectively.
With inventory low, Redfin found the percentage of new listings that were taken off the market within a matter of weeks remained high. For single-family homes, 27.8 percent were under contract within 3.5 weeks from their debut day in July.
Redfin also stated low inventory led to a slowdown in home sales, with July seeing a decline of 12.4 percent from June, but still up 6.8 percent from a year ago.
Home Values Rise for First Time in 5 Years
Via CNN Money, By Les Christie
NEW YORK (CNNMoney) — Home prices hit a bottom and are finally bouncing back, according to an industry report released Tuesday.
Nationwide, home values rose 0.2% year-over-year to a median $149,300 during the second quarter, the first annual increase since 2007, real estate listing site Zillow reported. Prices were up 2.1% from the first quarter.
Even though June marked the fourth consecutive month of home value increases, overall home prices are still down almost 24% since April 2007, when Zillow began to track home values.
“[I]t seems clear that the country has hit a bottom in home values,” said Zillow’s chief economist Stan Humphries. “The housing recovery is holding together despite lower-than-expected job growth, indicating that it has some organic strength of its own.”
Last winter, Zillow projected that the housing market turnaround would not arrive until the end of the year.
Other home price indexes have also recorded gains lately, including the S&P/Case-Shiller home price index. In it latest release, it reported that home prices in 20 major markets rose 1.3% in April, the first monthly increase in seven months.
Zillow uses a different methodology in calculating home values than other home price indexes like Case-Shiller and the Federal Housing Finance Agency. Sales of foreclosed, bank-owned properties, for example, are not factored into Zillow’s data. Zillow does include short sales, however, which are more difficult to distinguish from conventional sales.
“Our index is geared to consumers, conventional sellers deciding whether they want to put their homes on the market,” said Humphries.
The indexes that include foreclosures in their market data show larger price declines. The peak-to-trough drop for the S&P/Case-Shiller home price index, for example, is about 34% compared with Zillow’s 24%.
Fewer than one third of the 167 metro areas Zillow surveyed recorded annual increases in home values, but the size of the price gains in these areas more than offset the losses posted by the remaining two-thirds of the markets.
In Phoenix, the biggest gainer, home values soared 12.1% year-over-year to a median of $136,200. Meanwhile, the biggest loss sustained by any of the 30 largest metro areas was in Chicago where median home values fell 5.8% to $158,600.
Foreclosures remain one of the biggest risks to the housing market recovery, Humphries said. In the wake of the national foreclosure settlement which clarified how banks can legally pursue foreclosures, Humphries expects the pace of foreclosures to pick up.
“That will translate to more homes on the market,” he said. “But we think demand will rise to absorb that.”
Zillow expects the housing market to continue to slowly recover, with median home values projected to climb 1.1% — relatively flat — over the next 12 months.
Beaten down markets like Phoenix, Las Vegas and many Florida cities, will likely record greater-than-average gains over the next 12 months, said Humphries.
The results in those places, however, will be bumpy. Home price increases will cause some homeowners who have been patiently waiting for values to rebound to put their homes on the market. And those additional listings could cool prices for a while, resulting in a staircase effect with “price spikes followed by plateaus,” said Humphries.
This Week’s Economic News
Via GuaranteedRate.com
As expected, mortgage rates moved further downward again last week as has been the trend for some time. There was limited positive news on the economic front as growth continues to cool. Retail Sales and the Conference Board’s Leading Economic Indicators posted small declines while Industrial Production moved up slightly more than expected. Federal Reserve Chair Ben Bernanke spent two days testifying before Congress last week. His assessment of the economy was more bleak than many had hoped and he gave little hint or insight into when or whether the Fed might introduce a third round of quantitative easing. As he and other Fed governors have done before, Bernanke pointed out the need for legislative action on matters of reducing the structural deficit.
This week is a lighter week in terms of economic data. The biggest report of the week will be the first estimate of the second quarter GDP released on Friday. Estimates are for GDP to have slipped to a 1.2% clip.
CAR sees state housing market improving, housing prices at 2010 high
LOS ANGELES - California’s housing market exhibited signs of continuing improvement in June, with home sales showing solid gains and home prices reaching their highest level since August 2010, the California Association of Realtors reported today.
“Although home sales throughout the state continued to improve compared with a year earlier, we did see a modest dip compared with May,” said CAR President LeFrancis Arnold. “Potential home buyers are frustrated by limited number of homes on the market for sale and growing discouraged by signs that the economy is slowing.”
Closed escrow sales of existing single-family detached homes in California declined 8.6 percent from May’s revised 567,330 to a seasonally adjusted annualized rate of 518,460 in June, according to Los Angeles-based CAR.
June sales rose 8.5 percent from June 2011’s revised 478,040 pace. The statewide sales figure, which is adjusted to account for seasonal factors that typically influence home sales, represents what would be the total number of homes sold during 2012 if sales maintained the June pace throughout the year.
Home prices also continued to improve, with the median home price — $320,540 in June for an existing single-family detached home in California — posting month-over-month and year-over-year gains for the fourth straight month, according to a CAR statement.
June’s price rose 1.3 percent from a revised $316,410 in May and 8.1 percent from a revised $296,410
recorded in June 2011, CAR reported. The June 2012 figure was 30.7 percent higher than the cyclical bottom of $245,230 reached in February 2009.
The median price posted above the $300,000 level in June for the third straight month after remaining below that mark for 15 months, according to CAR.
With Low Supply, Asking Prices Rise for Fifth Straight Month
Via The Wall Street Journal
By Nick Timiraos
Home sellers are staying on the sidelines this summer, which is helping to firm up prices in more U.S. housing markets.
The number of homes listed for sale rose by just 0.5% in June from May and was down 19.4% from one year ago, according to Realtor.com. Slightly less than 1.89 million homes were listed for sale in June, which is lower than at any time in 2011 or 2010.
Listings are down in part because banks have been slower to move foreclosed properties onto the market and investors are buying up more of them at courthouse auction sales and renting them out. Meanwhile, traditional sellers are frequently unwilling to list their homes amid signs that prices are turning around in more markets. And in some of the markets with the biggest inventory drops, many owe more than their homes are worth and may be unable to sell without taking a big loss.
Compared with one year ago, listings were down in all but two of the 146 markets tracked by Realtor.com. Inventory has fallen by nearly 58% in Oakland, Calif.; by 49% in Fresno, Calif.; by 47% in Bakersfield, Calif.; and by 43% in Seattle.
Big inventory drops are pushing up prices. Median asking prices rose for the fifth straight month and were 2.7% higher than one year ago, though they were up by just 0.05% for the month. By contrast, last year’s disappointing spring sales season prompted sellers to cut prices by 1% in June from May.
About two thirds of all markets saw median prices increase in June from one year ago, and about one third of all markets saw median prices rise by at least 5%. The biggest gainers were Phoenix, San Francisco, and Santa Barbara, Calif. Prices declined in just 19 markets, with the biggest declines reported in Allentown, Pa.; Peoria, Ill.; and Toledo, Ohio.
Another sign of the improvement this spring: The median age of inventory listed for sale fell by nearly 10% from one year ago. That means sellers are finding buyers more quickly for their homes.
