Where Are Housing Prices Headed?
The KCM Crrew...
The National Association of Realtors (NAR) has been reporting great news recently. Last week’s Existing Home Sales Report and yesterday’s Pending Sales Report both showed consecutive months of increases in the number of homes sold. Finally, buyers are jumping off the fence and taking advantage of one of the most opportune times to purchase a home in America’s real estate history. With an increase in demand, price appreciation can’t be far behind, can it?
Actually, the answer is NO! Prices are not determined by demand alone but in the relationship of demand to available supply. The inventory of homes for sale is still too high and about to surge higher. Along with the news of increased demand yesterday, RealtyTrac released their 2010 Year-End Metropolitan Foreclosure Market Report. The report showed that distressed properties across the country are on the rise:
… foreclosure levels remained five to 10 times higher than historic norms in most hard-hit markets, where deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.
The report also explained that the foreclosure epidemic is spreading to more and more of our communities:
… foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.
(Attention KCM Subscribers: The January issue of Keeping Current Matters has the ‘shadow inventory’ of homes coming to the market broken down by state. Use the chart when talking to sellers about future prices in your region. Click here to login.)
What does this mean for prices?
Here are a few quotes from this week.
Washington Post:
The closely watched S&P/Case-Shiller report shows that housing prices, compared year-over-year, have declined nationally for six consecutive months. The downward path suggests that housing prices could, by spring, hit their lowest level since April 2009, said David Blitzer, the index committee’s chairman.
New York Times:
A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.
CNN Money:
Barclay’s Bank analyst Theresa Chen doesn’t expect a reversal in housing market trends any time soon, since there is no end in sight to the foreclosure crisis.
“We expect softness to persist,” she said, “as home prices continue to face headwinds from the large pipeline of foreclosures entering the market.”
Housing Wire:
“… we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011,” the Radar Logic said.
Bottom Line
Prices will continue to soften in the first half of 2011 in most regions of the country. This information should be taken into consideration if you plan on selling your house in the next twelve months.
From: http://ping.fm/eVWKS
Friday, January 28, 2011
Where Are Housing Prices Headed?
Where Are Housing Prices Headed?
The National Association of Realtors (NAR) has been reporting great news recently. Last week’s Existing Home Sales Report and yesterday’s Pending Sales Report both showed consecutive months of increases in the number of homes sold. Finally, buyers are jumping off the fence and taking advantage of one of the most opportune times to purchase a home in America’s real estate history. With an increase in demand, price appreciation can’t be far behind, can it?
Actually, the answer is NO! Prices are not determined by demand alone but in the relationship of demand to available supply. The inventory of homes for sale is still too high and about to surge higher. Along with the news of increased demand yesterday, RealtyTrac released their 2010 Year-End Metropolitan Foreclosure Market Report. The report showed that distressed properties across the country are on the rise:
… foreclosure levels remained five to 10 times higher than historic norms in most hard-hit markets, where deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.
The report also explained that the foreclosure epidemic is spreading to more and more of our communities:
… foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.
(Attention KCM Subscribers: The January issue of Keeping Current Matters has the ‘shadow inventory’ of homes coming to the market broken down by state. Use the chart when talking to sellers about future prices in your region. Click here to login.)
What does this mean for prices?
Here are a few quotes from this week.
Washington Post:
The closely watched S&P/Case-Shiller report shows that housing prices, compared year-over-year, have declined nationally for six consecutive months. The downward path suggests that housing prices could, by spring, hit their lowest level since April 2009, said David Blitzer, the index committee’s chairman.
New York Times:
A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.
CNN Money:
Barclay’s Bank analyst Theresa Chen doesn’t expect a reversal in housing market trends any time soon, since there is no end in sight to the foreclosure crisis.
“We expect softness to persist,” she said, “as home prices continue to face headwinds from the large pipeline of foreclosures entering the market.”
Housing Wire:
“… we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011,” the Radar Logic said.
Bottom Line
Prices will continue to soften in the first half of 2011 in most regions of the country. This information should be taken into consideration if you plan on selling your house in the next twelve months.
From: http://ping.fm/eqC6W
The National Association of Realtors (NAR) has been reporting great news recently. Last week’s Existing Home Sales Report and yesterday’s Pending Sales Report both showed consecutive months of increases in the number of homes sold. Finally, buyers are jumping off the fence and taking advantage of one of the most opportune times to purchase a home in America’s real estate history. With an increase in demand, price appreciation can’t be far behind, can it?
Actually, the answer is NO! Prices are not determined by demand alone but in the relationship of demand to available supply. The inventory of homes for sale is still too high and about to surge higher. Along with the news of increased demand yesterday, RealtyTrac released their 2010 Year-End Metropolitan Foreclosure Market Report. The report showed that distressed properties across the country are on the rise:
… foreclosure levels remained five to 10 times higher than historic norms in most hard-hit markets, where deep fault lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.
The report also explained that the foreclosure epidemic is spreading to more and more of our communities:
… foreclosures became more widespread in 2010 as high unemployment drove activity up in 72 percent of the nation’s metro areas — many of which were relatively insulated from the initial foreclosure tsunami.
(Attention KCM Subscribers: The January issue of Keeping Current Matters has the ‘shadow inventory’ of homes coming to the market broken down by state. Use the chart when talking to sellers about future prices in your region. Click here to login.)
What does this mean for prices?
Here are a few quotes from this week.
Washington Post:
The closely watched S&P/Case-Shiller report shows that housing prices, compared year-over-year, have declined nationally for six consecutive months. The downward path suggests that housing prices could, by spring, hit their lowest level since April 2009, said David Blitzer, the index committee’s chairman.
New York Times:
A new slide in housing prices has begun in earnest, with averages in major cities across the country falling to their lowest point in many years.
CNN Money:
Barclay’s Bank analyst Theresa Chen doesn’t expect a reversal in housing market trends any time soon, since there is no end in sight to the foreclosure crisis.
“We expect softness to persist,” she said, “as home prices continue to face headwinds from the large pipeline of foreclosures entering the market.”
Housing Wire:
“… we believe that home prices will continue to weaken on a month-over-month basis until spring, and a year-over-year basis through the end of 2011,” the Radar Logic said.
Bottom Line
Prices will continue to soften in the first half of 2011 in most regions of the country. This information should be taken into consideration if you plan on selling your house in the next twelve months.
From: http://ping.fm/eqC6W
Wednesday, January 26, 2011
MBS prices are down -17/32 (FNMA 30-yr 4.0 at 98.19), below 9:45 et pricing of -10/32. Unfavorable repricing took place. Investor concerns about inflation following the release of the Fed statement (see below) pushed MBS markets to the lowest levels of the session. December New Home Sales rose 17% from November to an annual rate of 329K units, above the consensus forecast of 300K. Demand was stronger than average for the 5-yr Treasury auction. The bid-to-cover was 2.97, and foreign buyers purchased 45% of the total. The Dow was up 10 points, crossing above the 12,000 level for the first time since June 2008. Tomorrow, Durable Orders, Jobless Claims, and Pending Home Sales will be released. The results from the 7-yr Treasury auction will come out at 1:00 et.
Overall, there were few changes in the Fed statement. The Fed repeated its intention to purchase the full $600 billion in Treasuries under the quantitative easing program. Investors focused the most attention on one portion of the statement concerning the debate between different measures of inflation levels. Core inflation excludes food and energy, and economists are divided about which measure is a better indicator of inflationary trends. In recent months, commodity prices have increased significantly, driving up overall inflation levels. The Fed statement suggested that core inflation is still trending lower, however, and Fed officials are believed to place more weight on core inflation. Concerned that overall inflation levels may rise further without triggering Fed action, investors sold MBS and longer-term bonds after the statement was released.
Tomorrow, we will be switching the current coupon from the 30-yr 4.0% to the 30-yr 4.5% to better reflect current market conditions.
NEW: Refer a Friend - Get a FREE Month. See details at www.mbsquoteline.com (800-627-1077)
Overall, there were few changes in the Fed statement. The Fed repeated its intention to purchase the full $600 billion in Treasuries under the quantitative easing program. Investors focused the most attention on one portion of the statement concerning the debate between different measures of inflation levels. Core inflation excludes food and energy, and economists are divided about which measure is a better indicator of inflationary trends. In recent months, commodity prices have increased significantly, driving up overall inflation levels. The Fed statement suggested that core inflation is still trending lower, however, and Fed officials are believed to place more weight on core inflation. Concerned that overall inflation levels may rise further without triggering Fed action, investors sold MBS and longer-term bonds after the statement was released.
Tomorrow, we will be switching the current coupon from the 30-yr 4.0% to the 30-yr 4.5% to better reflect current market conditions.
NEW: Refer a Friend - Get a FREE Month. See details at www.mbsquoteline.com (800-627-1077)
Tuesday, January 25, 2011
S&P Case-Shiller Index Points to Double-Dip in Home Prices
S&P Case-Shiller Index Points to Double-Dip in Home Prices
01/25/2011 By: Carrie Bay
The latest Case-Shiller figures released by Standard & Poor’s (S&P) this morning signal home prices across the United States continue to weaken.
Based on data through November 2010, the 10-city composite of the closely watched gauge was down 0.4 percent and the 20-city composite fell 1.6 percent from their November 2009 levels.
In November, only four of the 20 metropolitan areas included in the study – Los Angeles, San Diego, San Francisco, and Washington D.C. – showed year-over-year gains. Home prices fell in 19 of 20 major metros on a month-to-month basis.
S&P’s analysts say a double-dip in home prices could be confirmed before spring.
The two composite readings remain above their spring 2009 lows. However, eight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle, and Tampa – hit their lowest marks since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have already fallen below their current cycle troughs.
(developing story)
From: http://ping.fm/fJxBa
01/25/2011 By: Carrie Bay
The latest Case-Shiller figures released by Standard & Poor’s (S&P) this morning signal home prices across the United States continue to weaken.
Based on data through November 2010, the 10-city composite of the closely watched gauge was down 0.4 percent and the 20-city composite fell 1.6 percent from their November 2009 levels.
In November, only four of the 20 metropolitan areas included in the study – Los Angeles, San Diego, San Francisco, and Washington D.C. – showed year-over-year gains. Home prices fell in 19 of 20 major metros on a month-to-month basis.
S&P’s analysts say a double-dip in home prices could be confirmed before spring.
The two composite readings remain above their spring 2009 lows. However, eight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland, Seattle, and Tampa – hit their lowest marks since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have already fallen below their current cycle troughs.
(developing story)
From: http://ping.fm/fJxBa
Friday, January 21, 2011
LPS: 6.87 Million Mortgages Delinquent or in Foreclosure
LPS: 6.87 Million Mortgages Delinquent or in Foreclosure
01/20/2011 By: Carrie Bay
As of the end of December, 6.87 million mortgages in the United States were delinquent or in the process of foreclosure, according to Lender Processing Services (LPS).
The company provided the media with a preview of its soon-to-be-released mortgage performance report this week, covering data through the end of last month.
The numbers show that while the nation’s volume of non-current home loans remains elevated, it’s been steadily declining for several months now. LPS reported that 6.92 million mortgages were delinquent or in the process of foreclosure at the end of November, and in October, it was just above 7 million.
Of the 6.87 million mortgages in the country that were behind on payments at the end of last year, 2,196,000 have been referred to an attorney for foreclosure,
according to LPS’ analysis. Another 4,674,000 are 30 or more days delinquent but not yet in foreclosure, with 2,117,845 of these at least 90 days overdue.
LPS says the nation’s total mortgage delinquency rate – which includes loans at least a month past due but not yet pushed to a foreclosure attorney – stood at 8.83 percent as of December month-end. That’s down 2.1 percent from November, and 17.9 percent below the delinquency rate a year earlier.
LPS defines the foreclosure inventory rate as loans that have been referred to a foreclosure attorney but have not yet reached the final stage of foreclosure sale. That rate was 4.15 percent at the end of December. The foreclosure pre-sale inventory rate rose 1.7 percent from November and is up 9.3 percent year-over-year in LPS’ study.
The company’s data show the states with the highest percentage of non-current loans (defined as the total number of foreclosures and delinquencies as a percent of all active loans in that state) include: Florida, Nevada, Mississippi, Georgia, and New Jersey.
The lowest percentage of non-current loans can be found in: Montana, Wyoming, Arkansas, South Dakota, and North Dakota.
LPS’ mortgage performance results are derived from its loan-level database of nearly 40 million mortgages. The company plans to provide a more in-depth review of this data in its December Mortgage Monitor report, scheduled for release February 4.
From: http://ping.fm/9hAQU
01/20/2011 By: Carrie Bay
As of the end of December, 6.87 million mortgages in the United States were delinquent or in the process of foreclosure, according to Lender Processing Services (LPS).
The company provided the media with a preview of its soon-to-be-released mortgage performance report this week, covering data through the end of last month.
The numbers show that while the nation’s volume of non-current home loans remains elevated, it’s been steadily declining for several months now. LPS reported that 6.92 million mortgages were delinquent or in the process of foreclosure at the end of November, and in October, it was just above 7 million.
Of the 6.87 million mortgages in the country that were behind on payments at the end of last year, 2,196,000 have been referred to an attorney for foreclosure,
according to LPS’ analysis. Another 4,674,000 are 30 or more days delinquent but not yet in foreclosure, with 2,117,845 of these at least 90 days overdue.
LPS says the nation’s total mortgage delinquency rate – which includes loans at least a month past due but not yet pushed to a foreclosure attorney – stood at 8.83 percent as of December month-end. That’s down 2.1 percent from November, and 17.9 percent below the delinquency rate a year earlier.
LPS defines the foreclosure inventory rate as loans that have been referred to a foreclosure attorney but have not yet reached the final stage of foreclosure sale. That rate was 4.15 percent at the end of December. The foreclosure pre-sale inventory rate rose 1.7 percent from November and is up 9.3 percent year-over-year in LPS’ study.
The company’s data show the states with the highest percentage of non-current loans (defined as the total number of foreclosures and delinquencies as a percent of all active loans in that state) include: Florida, Nevada, Mississippi, Georgia, and New Jersey.
The lowest percentage of non-current loans can be found in: Montana, Wyoming, Arkansas, South Dakota, and North Dakota.
LPS’ mortgage performance results are derived from its loan-level database of nearly 40 million mortgages. The company plans to provide a more in-depth review of this data in its December Mortgage Monitor report, scheduled for release February 4.
From: http://ping.fm/9hAQU
Thursday, January 20, 2011
Existing-Home Sales Soar to Seven-Month High
Existing-Home Sales Soar to Seven-Month High
01/20/2011 By: Carrie Bay
Sales of previously owned homes surged 12.3 percent in December, according to data released by the National Association of Realtors Thursday.
Existing-home sales have increased five of the last six months and have now hit a seven-month high, at a
seasonally adjusted annual rate of 5.28 million units. That’s up from a rate of 4.70 million in November, but remains 2.9 percent below the 5.44 million pace in December 2009.
“December was a good finish to 2010, when sales fluctuate more than normal,” said Lawrence Yun, NAR’s chief economist. “The pattern over the past six months is clearly showing a recovery.”
Yun says the December sales pace is near the volume he and his organization are expecting for 2011, “so the market is getting much closer to an adequate, sustainable level,” he said. “The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
Distressed homes accounted for 36 percent of the sales volume in December, up from 33 percent in November.
(developing story)
From: http://ping.fm/8xTkC
01/20/2011 By: Carrie Bay
Sales of previously owned homes surged 12.3 percent in December, according to data released by the National Association of Realtors Thursday.
Existing-home sales have increased five of the last six months and have now hit a seven-month high, at a
seasonally adjusted annual rate of 5.28 million units. That’s up from a rate of 4.70 million in November, but remains 2.9 percent below the 5.44 million pace in December 2009.
“December was a good finish to 2010, when sales fluctuate more than normal,” said Lawrence Yun, NAR’s chief economist. “The pattern over the past six months is clearly showing a recovery.”
Yun says the December sales pace is near the volume he and his organization are expecting for 2011, “so the market is getting much closer to an adequate, sustainable level,” he said. “The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
Distressed homes accounted for 36 percent of the sales volume in December, up from 33 percent in November.
(developing story)
From: http://ping.fm/8xTkC
Wednesday, January 19, 2011
Tuesday, January 18, 2011
Housing Moving to Higher Ground in 2011 | RISMedia
RISMEDIA, January 18, 2011—Housing will see gradual improvements in activity this year as the nation’s economy and job market continue to move to higher ground, establishing momentum that will produce more considerable gains in 2012, according to economists who appeared at the NAHB International Builders’ Show in Orlando on January 12.
“This year’s spring selling season will be better than last year’s,” said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers.
Crowe forecasted 575,000 single-family home starts in 2011, a 21% climb over an estimated 475,000 units started in 2010, which in turn showed a 7% gain from the 442,000 homes started in 2009.
Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16% this year to 133,000 units, with a further 53% increase in 2012 to 203,000 units.
Builders’ access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.
More encouraging is a rebound in the confidence of consumers, who mid-2010 “froze in place, faced with a lot of uncertainty,” he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.
The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2% reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5% range to 3.5% to 3.8% by year’s end.
New-home sales, Crowe projected, “will struggle” but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.
The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.
In addition to stimulative fiscal and monetary policy, Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.
Citing research from the Harvard Joint Center for Housing Studies, Nothaft said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.
While there will continue to be supply overhangs in some important large markets, by and large the housing price slump should bottom out by the middle of this year, he said, and price increases are already occurring in some local areas. That should attract prospective buyers who have been procrastinating until they see prices hit bottom.
“Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime,” he said, which for fence sitters will be “the time to come into the market.”
Fixed-rate mortgages will move up from their current 4.75% to the 5.75% range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30% below the 2010 level as refinancings fall sharply in the face of rising mortgage rates.
While a 20% increase in housing production in 2011 is good news for housing, to put things in perspective, Nothaft said that this gain is from an extremely low level, with single-family production declining about 80% from peak to trough.
For more information, visit www.nahb.org.
From: http://rismedia.com/2011-01-17/housing-moving-to-higher-ground-in-2011/
“This year’s spring selling season will be better than last year’s,” said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s tax credits for home buyers.
Crowe forecasted 575,000 single-family home starts in 2011, a 21% climb over an estimated 475,000 units started in 2010, which in turn showed a 7% gain from the 442,000 homes started in 2009.
Multifamily, which is poised to profit from a disproportionate number of Gen Y members moving into the housing market, has seen the bottom of the cycle, he said, and will see its starts rise 16% this year to 133,000 units, with a further 53% increase in 2012 to 203,000 units.
Builders’ access to the credit they need to start new homes remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing, and rectifying the situation as soon as possible is the top priority of the association.
More encouraging is a rebound in the confidence of consumers, who mid-2010 “froze in place, faced with a lot of uncertainty,” he said. A recent pickup in durable purchases for such items as automobiles and furniture indicates that consumers are less afraid today of losing jobs and income.
The U.S. economy will receive a boost from the massive tax package enacted at the end of last year, he said, including more income going into the pockets of wage earners thanks to a one-year 2% reduction in Social Security taxes. This will contribute to the gross domestic product strengthening from the 2.5% range to 3.5% to 3.8% by year’s end.
New-home sales, Crowe projected, “will struggle” but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.
The housing recovery will start up slowly this year, he said, because it will be driven by the relatively low housing production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks of housing activity such as California and Florida, on the other hand, will not be among the states whose housing markets recover the fastest.
In addition to stimulative fiscal and monetary policy, Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.
Citing research from the Harvard Joint Center for Housing Studies, Nothaft said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.
While there will continue to be supply overhangs in some important large markets, by and large the housing price slump should bottom out by the middle of this year, he said, and price increases are already occurring in some local areas. That should attract prospective buyers who have been procrastinating until they see prices hit bottom.
“Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime,” he said, which for fence sitters will be “the time to come into the market.”
Fixed-rate mortgages will move up from their current 4.75% to the 5.75% range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30% below the 2010 level as refinancings fall sharply in the face of rising mortgage rates.
While a 20% increase in housing production in 2011 is good news for housing, to put things in perspective, Nothaft said that this gain is from an extremely low level, with single-family production declining about 80% from peak to trough.
For more information, visit www.nahb.org.
From: http://rismedia.com/2011-01-17/housing-moving-to-higher-ground-in-2011/
Thursday, January 13, 2011
Tuesday, January 11, 2011
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