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  • Mon, May 23 2011
  • 8:38 AM » Existing Home Sales: Investors, Distressed Sales and First Time Buyers
    Published Mon, May 23 2011 8:38 AM by Calculated Risk Blog
    The following graph shows existing home sales Not Seasonally Adjusted (NSA). Click on graph for larger image in graph gallery. The red columns are for 2011. Sales NSA are below the tax credit boosted level of sales in April 2010, but slightly above the level of March sales in 2008 and 2009. The level of sales is elevated due to all the investor buying. The NAR noted: All-cash transactions stood at 31 percent in April, down from a record level of 35 percent in March; they were 26 percent in March 2010; investors account for the bulk of cash purchases. ... First-time buyers purchased 36 percent of homes in April, up from 33 percent in March; they were 49 percent in April 2010 when the tax credit was in place. Investors slipped to 20 percent in April from 22 percent of purchase activity in March; they were 15 percent in April 2010. The balance of sales was to repeat buyers, which were 44 percent in April. Another survey, the "showed the proportion of first-time homebuyers in the housing market fell to 35.7% in April compared to 43.4% a year earlier. ... [The] Distressed Property Index, a key measure of the health of the U.S. housing market, fell slightly to 47.7% in April, although sales of distressed properties continued to account for nearly half of the market." This graph shows from Campbell/Inside Mortgage Finance HousingPulse Tracking Survey shows both distressed sales and first time buyers. From the survey: First-time homebuyers absorb housing supply, while move-up and move-down buyers produce no net take-up in inventory. When the supply of distressed properties exceeds the demand from first-time homebuyers, investors must step into the market to buy these properties, often at bargain-basement prices. Investors accounted for 23.0% of the housing market in the month of April, up from 18.0% a year earlier, according to the HousingPulse Survey. A common business model for investors has been to buy damaged properties, renovate, and sell the properties to first...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:38 AM » Ocwen in lead to buy Goldman's Litton: sources
    Published Mon, May 23 2011 8:38 AM by Reuters
    NEW YORK (Reuters) - Goldman Sachs Group Inc has moved closer to offloading Litton Loan Servicing, with Ocwen Financial Corp leading in an auction to acquire the troubled mortgage business, sources familiar with the situation said this week.
  • Thu, May 19 2011
  • 11:53 AM » ‘Move-Up’ Home Buyers Moving In
    Published Thu, May 19 2011 11:53 AM by Google News
    Building giant DR Horton Inc. has long been known as a starter-home builder. But the buyer pool is shifting, prompting the company to build slightly bigger homes with more amenities for ‘move-up’ buyers. “We see a great opportunity,” Donald Tomnitz, Horton’s chief executive, said on a recent earnings call. That’s certainly an optimistic view given the market for home sales these days. But other industry watchers agree with Horton’s assessment that move-up buyers—absent from the market for the last few years—are slowly crawling back into the game. (Move-up is a buyer category tracked separately from investors and others.) These move-up, or repeat, buyers made up 47% of sales in the first quarter, up from 40% a year earlier, according to the National Association of Realtors trade group. First-time buyers made up 32%, down from 42% a year earlier. While that covers existing homes—the bulk of the market’s transactions—some builders report similar shifts. First-time buyers had dominated the market in the last few years since they weren’t saddled with an existing home to sell in a down market. Sales surged last year as the government offered buyers a tax credit of up to $8,000, an offer that expired last summer. KB Home even made some of its floorplans smaller and more affordable, largely to cater to those buyers. But the credit pulled so much demand forward that sales have been anemic since the expiration. Another problem is that lenders continue to tighten loan requirements, excluding many would-be buyers. “The first-time level, it’s pretty hard, because there [are] a lot of dings on credit,” said Larry Nicholson, chief executive of Ryland Group, said at an industry conference earlier this month. “The move-up person has got some credit that’s been established. They’ve been in their job probably a little bit longer term, a little easier to get qualified.” That is one reason why, after several years on the sidelines, move-up buyers are starting to act. Many have outgrown their...
  • 11:53 AM » Real Estate News: Foreign Buyers Getting Firesale Prices on U.S. Housing
    Published Thu, May 19 2011 11:53 AM by Google News
    Michael Colavita : This contemporary home in the Queen Village area of Philadelphia features a 2,000-square-foot garden, a roof deck and a floating staircase topped with a large skylight. Here is a look at real-estate news in today’s WSJ : : Sales of previously occupied homes in the U.S. fell slightly in April. Separately, new claims for jobless benefits fell by 29,000 last week, but still remain above 400,000. : Seeking to simplify the home-buying process, the new consumer protection agency on Wednesday unveiled mortgage disclosure forms aimed at helping home buyers understand the terms of loans and shop around for the best offers. : Housing markets could sure use some good news. Existing-home sales out Thursday may provide a modicum of it. But the real test comes later this month with pending-sales figures for April, showing activity in the clutch spring selling season. : U.S. real estate, especially on the high end, is getting support from international buyers. Global buyers are finding a fire sale once exchange rates are figured in. : This minimalist four-bedroom home in the El Bosque urbanization near Valencia was designed by BoConcept founder Morten Georgsen. : This contemporary home in the Queen Village area of Philadelphia features a 2,000-square-foot garden, a roof deck and a floating staircase topped with a large skylight : Manhattan’s famed Palace hotel is under contract to be purchased by Northwood Investors, a real-estate investment advisory firm founded by John Z. Kukral, the former chief executive of Blackstone Real Estate Advisors. : The two penthouses atop of Morgan Lofts on East 36th Street are among a number of phantom condominiums caught up in the maze of city and state rules for condominium development. : Four members of New York’s congressional delegation have mounted a new bid to preserve two deteriorating buildings along Admiral’s Row, part of the Brooklyn Navy Yard. : This Manhattan duplex has a roughly 420-square-foot patio that the current...
  • 8:47 AM » Warren: New Mortgage Forms to Empower Consumers
    Published Thu, May 19 2011 8:47 AM by Google News
    Eli Meir Kaplan for The Wall Street Journal White House adviser Elizabeth Warren By Maya Jackson Randall and Alan Zibel Figuring out the true cost of a home loan over the long haul is a confusing process for consumers, forcing them to sift through a complicated stack of purchasing paperwork. The lack of clear disclosures was a key problem during the housing market’s boom, consumer advocates say. Many consumers didn’t understand the terms of “exotic” home loans such as interest-only mortgages, or “pick a payment” loans that allowed for the principal balance to increase over time. Some didn’t even realize they had more garden-variety adjustable-rate loans whose interest rate reset at market rates after an initial teaser period. The government’s new consumer protection agency is trying to correct this problem and simplify the entire process. The Consumer Financial Protection Bureau, which officially launches in July, on Wednesday published two prototype mortgage disclosure forms. (View the and .) The forms are designed to give consumers a clear idea of how much their monthly loan payments – as well as their tax and insurance bills – could rise over time. “This is about empowering consumers,” said Elizabeth Warren, the White House adviser charged with setting up the bureau. “It is always good for consumers to know the real cost of a mortgage.” In the coming months, the agency will hold interviews with consumers, lenders and brokers around the country. The consumer bureau is also inviting from the public: The project is a major undertaking for the fledgling agency. Previous attempts to streamline mortgage disclosures have stumbled partly due to intense opposition from interest groups and lawmakers. The Dodd-Frank financial overhaul, which created the consumer bureau, directed the agency to combine the mortgage documents and propose new mortgage disclosure requirements by July 2012. Currently, home buyers receive two sets of mortgage disclosure forms when they apply for a...
  • 8:47 AM » What’s the Future of the Mortgage-Interest Deduction?
    Published Thu, May 19 2011 8:47 AM by Google News
    Despite its popularity among real estate agents, builders and homeowners, talk is building on Capitol Hill and in policy circles of scaling back or eliminating the mortgage-interest tax deduction. Commentators give plenty of reasons to dislike it (see below). They say it benefits wealthy homeowners (even mortgage interest on second homes can be deducted) and is far too expensive at a time of great concern about the national debt. But supporters say that it’s crucial to the housing market, and cutting it would amount to a tax increase on homeowners as the housing market struggles to emerge from its historic bust. Complaints about the mortgage-interest deduction are not new, but they have renewed vigor these days in the heated federal budget debate. The deduction ranks high among so-called tax expenditures, reducing federal revenues to the tune of . “So it’s big and it’s prominent,” said Donald Marron, director of the Urban-Brookings Tax Policy Center. Current law allows interest deduction on mortgage debt totaling $1 million, and up to $100,000 in home-equity loans or lines of credit, for a principal and second home. There are several options to change the deduction, including: limiting the rate for upper-income households; replacing it with 15% ; and over time. So Developments posed this question to a group of experts: Should Congress cut back or eliminate the mortgage-interest tax deduction to help reduce the deficit? , president, National Association of Realtors: “The mortgage interest deduction is vital to the stability of the American housing market and economy. It’s ridiculous to say that the MID is suddenly part of the deficit problem – the MID has been part of the federal tax code for about 100 years. Reducing or eliminating the MID is a de facto tax increase on homeowners, who already pay 80% to 90% of U.S. federal income tax, and this share could rise to 95% if the MID is eliminated.” , professor of real estate and finance, the Wharton School, University of...
  • 8:47 AM » Recovery for New Home Sales: Uneven, Long-Term
    Published Thu, May 19 2011 8:47 AM by Google News
    Associated Press A recently built home in Illinois, pictured in April. While most industry watchers expect the housing market to start recovering later this year or sometime in 2012, the outlook for new-home sales is far more grim. Those sales, which have plunged 76% from the 2005 peak – will not recover until the second quarter of 2013, according to a from the Concord Group, a real-estate advisory firm. But the outlook for some individual markets is far worse: Each of the 16 markets covered by the Concord Group saw its recovery date delayed by at least one quarter. Las Vegas, one of the most overbuilt markets, won’t recover until the end of 2013. Phoenix and Orlando stretch into 2014, while pain in California’s Coachella Valley will linger until early 2016. This comes after the all-important spring selling season has seen anemic buyer traffic and disappointing sales. Home builders, five years into the worst downturn in generations, continue losing money as buyers flock to bargain-priced foreclosed homes. Another problem is that lenders continue tightening borrowing standards, leaving many would-be buyers unable to buy homes. “The slowdown in new home sales over the last six months is due in large part to continued mortgage constraints and weak consumer confidence,” says Richard Gollis, the Concord Group’s co-founder. The report tapped data from sources including the National Association of Realtors, HUD and the Census Bureau.
  • 8:47 AM » April Brings Modest Rise in Listings
    Published Thu, May 19 2011 8:47 AM by Google News
    The number of homes listed for sale ticked up slightly in many metropolitan areas last month as the spring sales season begins in earnest. The supply of homes available for sale in more than 140 metropolitan areas at the end of April was up 1.1% from a month earlier, according to figures compiled by Nationally, inventories typically rise in April from March as the busy shopping season gets underway. Over the last 28 years, the average increase in April has been around 5%, according to research firm Zelman & Associates. Overall, for-sale inventories were down 8.25% from one year ago, when tax credits were bringing more properties to the market and there were fewer roadblocks in the foreclosure process. Inventory counts were down from one year ago in 128 of the 146 markets reported by, but they were up from March in 100 markets. Inventory levels have been suppressed in recent months by banks that have had to retool their foreclosure processes in light of widespread document-handling abuses that surfaced last fall. More than two million homes are in some stage of foreclosure, and millions more are behind on their payments and at risk of foreclosure. Compared with March, the largest inventory increases came in Boston (12%), New Haven, Conn., (9.3%) and Washington, D.C., (8.2%). Listings were down most sharply in three Florida markets: Miami (-12.7%), Orlando (-10.8%) and Fort Lauderdale (-10.6%). Compared with one year ago, Las Vegas posted an 8.3% increase, while New York City was up 5.8%. Orlando and Miami saw the biggest decline in listings, down 34% and 30% from last April, respectively.
  • 8:47 AM » Foreign Buyers Getting Firesale Prices on U.S. Housing
    Published Thu, May 19 2011 8:47 AM by WSJ
    For U.S. homeowners, the family moving in next door could be Canadian. Or Chinese. Bloomberg News U.S. real estate, especially on the high end, is getting support from international buyers. If U.S. buyers find homes attractively priced, global buyers are finding a fire sale once exchange rates are figured in. According to a report released Wednesday by the National Association of Realtors , foreign clients spent about $41 billion in U.S. housing in the 12 months ended in March 2011. Individuals with visas to stay for more than 6 months purchased an additional $41 billion. Taken together, that’s about 8% of the total U.S. housing market. Foreign buyers are more likely to buy on the high end of the market. The report notes that the average purchase price paid by an international buyer was $315,000 compared to the overall U.S. average of $218,000. () International buyers are also more likely to pay cash, in part because they face difficulties getting U.S.-based financing. The report said 62% of foreign buyers used all cash. In recent months, about one-third of existing-home sales were all cash. What is interesting is that more international buyers are going downmarket. The NAR says in the latest year 45% of the international sales were under $200,000. That share is up from 28% in 2007. “Almost 80% of realtors reported that the value of the dollar had an impact on international sales” the NAR says. “When the dollar depreciates against the euro it also tends to depreciate against other currencies, so overall the U.S. home buying market has become increasingly attractive to international purchasers, ” the report says. Prices of new and existing U.S. homes have fallen by about 5% in the year ended in March (the latest data available) according to data from the NAR and Census Bureau . That means a U.S. buyer could enjoy a 5% price cut. Most foreign buyers got a better bargain when the price is viewed from local currency. A European buyer saw a price drop of 8%. A Chinese house...
  • 8:47 AM » Secondary Sources: Housing Boom, Fed Watch, Trade Milestone
    Published Thu, May 19 2011 8:47 AM by WSJ
    A roundup of economic news from around the Web. – Macroeconomic Advisers writes that there’s another housing boom in the offing. “We review what underlying demographic trends imply for the 10-year outlook for housing starts and conclude that starts will need to rise sharply to average roughly 1.6 million units per year over the next decade. Driving our conclusion are assumptions about the rate of population growth, the rates at which various segments of the population form households, the vacancy rate, the depreciation rate, and the share of additions to the housing stock that are accounted for by new construction. Reasonable assumptions for these parameters lead to an unavoidable conclusion: there’s a boom out there somewhere! It’s just a matter of when.” – Tim Duy says the Fed will pat themselves on the back rather than worry tightening was premature. “Recent market activity has followed a standard playbook – the advent of QE2 pushed market participants into the obvious trades. Long equities and commodities and short Dollar. Trades that worked because they were balanced on a kernel of truth. Global economic activity did firm, and interest rate differentials should be Dollar negative. At the same time, there was always a risk the trades would overextend and collapse, either under their own weight because the Fed took away part of the story. Perhaps it’s been a little of both, with at least energy prices clearly sapping US growth and the Fed calling it quits on quantitative easing. What is left? An economy that is growing yet remains mired at a suboptimal level relative to potential output. Very similar to what we had before QE2 – an economic roundtrip to somewhere that is at least within sight of another lost decade for U.S. job growth.” – Mike Mandel notes a U.S. trade milestone. “In 1987 the G6 countries (Canada, France, Germany, Italy, Japan, and the UK) accounted for 55% of U.S. goods imports. That same year, China, Mexico and Brazil only accounted for 8% of imports...
  • 8:47 AM » No Housing Recovery Without Private Label Mortgage Investors
    Published Thu, May 19 2011 8:47 AM by CNBC
    Despite the lowest interest rate on the 30 year fixed in six months, mortgage applications to purchase a new home fell last week, over 3 percent. In fact, purchase application volume has been falling, on average, for the past four weeks, which is particularly troubling in this, the supposedly busiest season of the year for home buying.
  • 8:47 AM » Can Lack of Inventory Save Housing?
    Published Thu, May 19 2011 8:47 AM by CNBC
    The current supply of homes on the market is the best indicator of the future health of the housing market. Let me say that again: Inventories matter.
  • Wed, May 18 2011
  • 8:24 AM » Housing Weakness Is Mixed Blessing
    Published Wed, May 18 2011 8:24 AM by WSJ
    Housing has long been the whipping boy of the Federal Reserve . But not in this business cycle. In the past, when the central bank wished to slow the economy, it raised interest rates which slowed the flow of credit to big-ticket sectors, especially housing. Once the Fed’s goal was reached, the Fed took its foot off the brakes. Lower rates stimulated housing again, creating jobs and renewing confidence. The scenario can’t play out this time around in large part because the collapse of the housing and mortgage bubbles caused the last recession. That is why the unexpectedly large 10.6% drop in April housing starts should be viewed as a mixed blessing. In the short run, the drop in construction will be a drag on growth of U.S. gross domestic product. In the long run, however, the sector can recover only if supply is drastically pared down to better balance with modest gains in demand. New construction is competing with millions of foreclosed homes and properties out on the market by desperate owners. Since bulldozing foreclosed homes isn’t a popular option, the main way to reduce supply is to cut new construction. The delay in a housing recovery, however, will make the Fed’s job harder. The U.S. economy seems to have stumbled in April. Not only did housing starts plunge, but industrial production was unchanged, dragged down by a 0.4% fall in manufacturing output. Auto production plummeted nearly 9% because of a shortage of parts from Japan. Also in April, retail sales rose a bit less than expected, and much of the gain reflected higher prices at gasoline stations and grocery stores, not increased volume. To be sure, output and demand could pick up in May and June, especially if commodity prices stay down. But if not, real GDP growth may fall under 3% in the second quarter. A second quarter of lackluster growth–GDP grew only 1.8% in the first quarter–will fall back on the Fed because the rate is too modest to help the labor markets much. (Indeed, the unemployment rate ticked...
  • 8:24 AM » In Consumer Behavior, Signs of Gas Price Pinch
    Published Wed, May 18 2011 8:24 AM by NY Times
    As gasoline prices stay high, Americans are turning to public transit and choosing homes closer to work.
  • 8:24 AM » New Incentives to Storm-Proof Homes
    Published Wed, May 18 2011 8:24 AM by Google News
    Getty Images By Kelli B. Grant Installing storm shutters or trading up for impact- and wind-resistant roofing isn’t just a way to make a home a safer place to weather a major storm. Increasingly, such projects are a way to cut the insurance bill. Prompted by rising financial losses from natural disasters, insurers and state governments are pushing for consumers who add safety features to their homes that could better protect them against damage from hurricanes, earthquakes and other disasters. Depending on where you live and what steps you take, savings could top 35%. Of course, the insurers and governments have incentive to do so: financial losses from natural disasters have increased dramatically as building costs rise and populations become denser, especially in high-risk areas such as coastlines. In all, U.S. catastrophe losses totaled $20.6 billion for 2010, including $13.6 billion covered by insurance. That’s the highest on record for a year without a hurricane landfall, and up 30% from 2009, which previously held that title. 2011 could be a contender, too, with tornado and flooding damages already topping $9 billion and predictions for an active hurricane season. Consumers don’t seem to be losing out, either. In addition to discounts on their premiums and preferential rates, homeowners who take steps to disaster-proof their property may be eligible for government grants, tax-credits and sales-tax holidays to cut the upfront costs for materials and construction. On the back end, they may see increased home value when it’s time to sell. But experts say such remodels are no guarantee of savings or safety: a solid insurance policy and family emergency plan are still vital. Kelli B. Grant is a senior consumer reporter for
  • 8:09 AM » AIA: Architecture Billings Index indicates declining demand in April
    Published Wed, May 18 2011 8:09 AM by Calculated Risk Blog
    Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment. From Reuters: The architecture billings index fell almost 3 points last month to 47.6, a level that indicates declining demand for architecture services, according to the American Institute of Architects (AIA). ... "The majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing," said AIA Chief Economist Kermit Baker. "That issue continues to be the main roadblock to recovery, and is unlikely to be resolved in the immediate future." Click on graph for larger image in graph gallery. This graph shows the Architecture Billings Index since 1996. The index showed billings decreased in April (index at 47.6, anything below 50 indicates a decrease in billings). Note: Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions. According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. Link to
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:09 AM » LPS: Delinquencies edge up in April, FNC: Non-Distressed House Prices stable in March
    Published Wed, May 18 2011 8:09 AM by Calculated Risk Blog
    A couple of stories: • From LPS "first look" report: . After the sharp drop in delinquencies in March, the delinquency rate edged up in April. The delinquency rate increased to 7.97% from 7.78% in March. There were an additional 4.14% of mortgage in the foreclosure process, down from 4.21% in March. A total of 6.39 million loans were delinquent, up slightly from 6.33 million. The full report will be released on May 26th. Note: The Q1 delinquency report from the MBA will be released this Thursday and will probably show a sharp decline in delinquencies. • From FNC: . This is one of several house price indexes I'm following in addition to Case-Shiller and CoreLogic. This is non-distressed sales. FNC announced Wednesday that U.S. home prices in March continue to show signs of stabilization following rather mild declines in February, making March the second consecutive month with better-than-expected price momentum. Based on the latest data on non-distressed home sales (existing and new homes), FNC’s Residential Price Index™ 1 (RPI) indicated that single-family home prices in March trended slightly upward since February at a seasonally unadjusted rate of 0.1%, consistent with rising home sales during the month. Despite continued downward price pressure from a relatively high volume of foreclosure sales, March marks the first month that home prices have shown a modest one-month gain since the April 2010 expiration of the homebuyer tax credits. Note: This is a hedonic price index using both sales and real-time appraisals. In general it has tracked pretty well with Case-Shiller and CoreLogic. FNC has data online for . Earlier: • • • Link to
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:09 AM » Lawler: The “Excess Supply of Housing” War
    Published Wed, May 18 2011 8:09 AM by Calculated Risk Blog
    CR Note: A key piece of data for the housing market - and the U.S. economy - is the current number of excess vacant housing units. Unfortunately it is very difficult to get a good handle on this excess supply (it is large, but how large?). Both Tom Lawler and I are hopeful that we can arrive at a more accurate estimate using the Census 2010 data to be released this month (the estimate will be as of April 1, 2010). Please excuse Tom's punctuation - but he has been arguing for better housing data for years - and he is clearly frustrated! By Tom Lawler: The “Excess Supply of Housing” War: Is the 3.5 Million Estimate “Gold” (Man, No!); or Can You Take the 1.2 Million Estimate to the (Deutsche) Bank? A few weeks ago Goldman Sachs’ analysts made headlines by arguing that the “excess” supply of housing, or actually the number of US housing units sitting vacant “above and beyond normal seasonal and frictional vacancies,” was “about” 3.5 million. This week Deutsche Bank analysts estimated that at the end of 2010 there were about 1.2 million “excess” vacant housing units in the US. Both sets of analysts relied heavily on data “provided” by the US Bureau of the Census in deriving their “estimates.” And, to the best of my knowledge, neither set of analysts was comprised of imbeciles. Yet jiminy cricket, those are pretty huge differences with massively different implications about the prospects for the housing markets and home prices over the next few years!!!!! And the major reasons for these differences? You guessed it, massively disparate sets of data from different areas of the Census Bureau on US housing!!!! As readers probably guessed, Goldman analysts’ estimates are based on what are almost certainly flawed and biased estimates of the occupied and vacant housing units from Census’ quarterly “Residential Vacancies and Homeownership” Reports, commonly referred to as the Housing Vacancy Survey (HVS). While there had already been strong evidence that the HVS dramatically overstated...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Tue, May 17 2011
  • 2:29 PM » Mutli-family Starts and Completions, and Quarterly Starts by Intent
    Published Tue, May 17 2011 2:29 PM by Calculated Risk Blog
    Also from the this morning ... Although the number of multi-family starts can vary significantly month to month, apartment owners are seeing falling vacancy rates, and some have started to plan for 2012 and will be breaking ground this year. So we should see a pickup in multi-family starts in 2011. However, since it takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year - there will be a record low number of multi-family completions this year. The following graph shows the lag between multi-family starts and completions using a 12 month rolling average. Click on graph for larger image in graph gallery. The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010. For 2011, we should expect multi-family completions to be at or near a record low, and an increase in multi-family starts. It appears that the rolling 12 month starts (blue line) will be above completions (red line) next month. Also today, the Census Bureau released the "" report for Q1 2011. Although this data is Not Seasonally Adjusted (NSA), it shows the trends for several key housing categories. This graph shows the NSA quarterly intent for four start categories since 1975: single family built for sale, owner built (includes contractor built for owner), starts built for rent, and condos built for sale. Single family starts built for sale were up slightly from Q4, but still near a record low. Owner built starts were at a record low, and condos built for sale are scrapping along the bottom. Only the 'units built for rent' is showing any significant pickup. The largest category - starts of single family units, built for sale - is moving sideways, and will remain weak until more of the excess vacant housing units are absorbed. Link to
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 2:28 PM » Still Home Sick
    Published Tue, May 17 2011 2:28 PM by The Big Picture
    Still Home Sick By John Mauldin May 16, 2011 ~~~ Everyone is curious about the state of housing in the US. My friend Gary Shilling recently did a lengthy issue on housing as it is today. I asked him to give us a shorter version for Outside the Box, and he graciously did. And you want to know what Gary thinks, because he is one of the guys who really got it right early, from subprime to the bubble and the price collapse, and has been right all along. No one is better. This very readable edition is full of charts and fast reasoning.The quid pro quo for getting him to give us something that is normally behind a velvet rope is that I put a link in to let you subscribe to his wonderful monthly letter. He really is one of the better analysts out there. He has spoken at my conference the last two years and is one of our highest-rated speakers. You can subscribe and mention the OTB and get 13 issues for the price of 12, plus Gary’s January 2011 report laying out his investment strategies for the year. $275 is the price via e-mail. Call them at 1-888-346-7444 or e-mail . And for those in the Dallas area, it is now my intention to meet some friends at the Zaza after the Tuesday night Mavericks-Thunder game, so drop on by. Your living the internet-driven life analyst, John Mauldin, Editor Outside the Box Still Home Sick (Excerpted from the May 2011 edition of A. Gary Shilling’s INSIGHT ) All may be well. That’s what many housing optimists proclaimed a year ago when prices appeared to have stabilized, indeed, started to recover from their collapse ( Chart 1 ). As Insight readers are well aware, we emphatically disagreed. We pointed out that the earlier extremes in the housing market made rapid revival—or any revival for that matter—extremely difficult. In the earlier salad days, housing was propelled by low mortgage rates, lax or nonexistent underwriting standards, securitization of mortgages that passed seemingly creditworthy and highly-rated but really toxic assets on the unsuspecting...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 2:28 PM » Behind the Numbers: Any Hope in Housing Starts?
    Published Tue, May 17 2011 2:28 PM by Google News
    Commerce Department out today that home construction fell again in April, yet another disappointing indication that the home-building sector remains in the doldrums, and that housing may continue to drag on the economy for some time. Housing starts, which gauge new home construction, fell 23.9% in April, compared with a year earlier, and suggest that only 523,000 new homes will be built this year. At the height of the housing boom, nearly 1.5 million new homes were being built each year. In March of this year, builders were building at a seasonally adjusted rate of 585,000 homes annually. Most economists had predicted that housing starts would rise. Permits for new homes also fell, by 4%, indicating that we’ll see fewer starts in months to come. Wall Street reacted by panning builder stocks – share prices of all of the publicly traded home builders were in the red, except for PulteGroup, which was up 0.53% and Toll Brothers, which was flat, in New York Stock Exchange trading just before noon Tuesday. Meanwhile, the numbers prompted moaning among builder analysts. One analyst blamed part of the slowdown on tornados and other extreme weather, but that was about as rosy as it got. Most market-watchers seem to believe that housing has little to no chance of leading the economy out of the downturn: Steve Blitz, ITC Investment Research: “Continued weakness in housing – a dog-bites-man story if there ever was one… The ongoing low level of construction activity is something we have been pointing out in real time with the falling pace of railcar loadings for wood and forest products. The surprise in today’s report was the sharp drop in multifamily, coming in at only 114,000 compared with 159,000 (in March) and averages of 153,000 for the previous three months, 122,000 for previous six months, and 120,000 for the previous 12 months. Although permitting dropped to 143,000 from 166,000 (in March), April permits are still above trend. In other words, multifamily starts is a volatile...
  • 2:28 PM » Real Estate News: Home Insurance Premiums on the Rise
    Published Tue, May 17 2011 2:28 PM by Google News
    Sotheby’s International Realty : The owner of this New Mexico home originally used the property as an office and gallery before converting it back into a home about 18 years ago. The main house is nearly 5,000 square feet and features recycled doors from Mexico, Spain, Portugal and Peru. Here is a look at real-estate news in today’s WSJ : : U.S. homebuilders’ confidence remained stuck at a low level in May as the battered housing market lingered in the doldrums. : Already plagued by stubbornly low home prices, homeowners soon may be facing another blow: rising insurance premiums. : Home Depot’s first-quarter profit rose 12% as the retailer saw a surprise drop in sales, though costs declined. The company also raised its full-year forecast. : As the weather gets worse, the deals and discounts for weather-proof renovations get better. : Private home sales in Singapore rose 29% in April from a month earlier, in a sign that recent government measures to cool the city-state’s property market have yet to temper strong demand. : This six-bedroom property, an hour and a half from London in Oxfordshire, retains some of the oak features of the original 200-year-old building. : An art conservator’s Victorian in Greenport Village, Long Island, features a French garden and meticulously restored interiors. : The owner of this New Mexico home originally used the property as an office and gallery before converting it back into a home about 18 years ago. The main house is nearly 5,000 square feet and features recycled doors from Mexico, Spain, Portugal and Peru.
  • 8:28 AM » Housing Data: Making foreclosure and default data publicly available
    Published Tue, May 17 2011 8:28 AM by Calculated Risk Blog
    The housing bubble and bust exposed the poor quality of publicly available U.S. housing data. One area of improvement is the various house price indexes now available that didn't exist in January 2005 when I started this blog. But that data isn't always timely, and the details aren't always public. There is a long long ways to go. The NAR data for existing home sales and inventory is still suspect, the Census Bureau could change their methodology so new home sales matched up better with builder reports (change the timing of sales and handling of cancellations), there is no good data available for housing demolitions, the total housing stock numbers are almost useless for analyzing the excess supply, and there is no timely data for household formation. But maybe we will have better publicly available data for foreclosures and delinquencies soon: From Alex Ulam at National Mortgage News: [T]hanks to a little-discussed provision of the Dodd-Frank Act, legislators, regulators and even nonprofit housing activists may eventually get a more comprehensive picture of the mortgage servicing industry. Section 1447 of the law calls for the Department of Housing and Urban Development to establish and maintain a comprehensive national database on foreclosures and defaults on mortgages and to make the information publicly available. The data is supposed to drill down to the census tract level and include the number and percentage of loans that are delinquent by more than 30 days; those that are in the foreclosure process; and those that are underwater. Hopefully the database will include the number of REOs, the number of mortgages in the foreclosure process, and all the deliquency data by census tract. That would help. Link to
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:27 AM » New York AG probes banks over mortgage securities: report
    Published Tue, May 17 2011 8:27 AM by Reuters
    (Reuters) - New York Attorney General Eric Schneiderman is investigating big banks like Bank of America Corp , Morgan Stanley and Goldman Sachs related to packaging of toxic mortgage loans into securities, the Wall Street Journal reported, citing sources.
  • 8:26 AM » Like Lowe's, Home Depot starts spring on slow note
    Published Tue, May 17 2011 8:26 AM by Reuters
    NEW YORK (Reuters) - Home Depot Inc reported weaker-than-expected quarterly sales as inclement weather hurt demand for seasonal goods at the start of the spring selling season.
  • 8:25 AM » Bucks: The Dangerous Allure of Distressed Real Estate
    Published Tue, May 17 2011 8:25 AM by NY Times
    Too many people will jump in at today's prices without figuring out whether the numbers on real estate ownership actually add up.
  • 8:24 AM » Senators Plan to ‘Get to the Bottom’ of HUD Allegations
    Published Tue, May 17 2011 8:24 AM by Google News
    Two key U.S. senators said Monday they plan to look into allegations that the Department of Housing and Urban Development has mismanaged a program that funds new low-income housing around the country. The Washington Post, in , found that nearly 700 HUD projects that received $400 million in federal funding have been stalled—some for 10 years or more. The top lawmakers on the Senate Banking Committee, Sen. Tim Johnson (D., S.D.) and Sen. Richard Shelby (R., Ala.), said in a joint statement that they were “deeply concerned by these reports, particularly at a time when so many Americans are in need of affordable housing.” They added that HUD, “like any government agency, has a duty to safeguard taxpayer funds…and we plan to get to the bottom of this issue.” A HUD spokesman said that the projects described in the Post’s story represent about 2.5% of 28,000 developments nationally, noting that many are new single-family homes that are still for sale because of the housing market’s distressed state. .
  • 8:23 AM » California Home Sales Dip in April
    Published Tue, May 17 2011 8:23 AM by Google News
    Hopes for a big spring sales season looked like a bit of California Dreamin’ for sellers in the Golden State last month. Sales of single-family homes and condominiums were down last month by 3.3% from March and by 6.1% from one year ago, when sales were artificially boosted by federal tax credits, according to a report Monday from DataQuick, a real-estate research firm. Southern California had its worst April in three years. A weak start to the spring season is particularly discouraging because interest rates are still near record lows. The average monthly mortgage payment on California home purchases last month was $1,050, down 61.7% from the market peak nearly five years ago. Median home prices in April were unchanged from March at $249,000. That’s down from $255,000 one year ago but up from the low of $221,000 reached in April 2009. Distressed property sales accounted for more than half of all existing home sales last month.
  • 8:22 AM » Behind the Numbers: Home Builders Feeling Down
    Published Tue, May 17 2011 8:22 AM by Google News
    Associated Press A new home being built in Lawrence, Kan., last month. As colleague Alan Zibel , U.S. home builders’ confidence remained stuck at an extremely low level in May as the battered housing market continues limping toward recovery. The National Association of Home Builders trade group said Monday its closely watched housing-market index was unchanged at 16 this month as expectations for single-family sales over the next six months fell, while traffic from potential buyers and current sales inched up. The index has been at that level for six of the last seven months. Readings at 50 and above indicate a positive view of the market. (The most recent time the home builders’ confidence gauge hit positive territory—that is, 50 or better—was April 2006. The latest 16 reading must mean that builders are pretty down.) Builders continue fretting about bargain-priced competition from foreclosures and other distressed properties, as well as proposals to scale back government support for housing. Many consumers remain on the sidelines, afraid that home prices have further to fall. Meanwhile, many would-be buyers can’t qualify for a loan. Another problem? Rising gas prices. Here’s what some industry analysts have to say: Adam Rudiger, Wells Fargo: “As we entered 2011, we believe builders were optimistic that an improved spring selling season might lead to growth for the industry in 2011. However, as the spring disappointed, these expectations likely moderated, which we believe is what the HMI showed this month.” David Goldberg, UBS: “We expect builder sentiment to remain depressed over the near term, following the weaker than expected spring selling season. … Readings on traffic remain well below the historical average; we don’t expect a significant improvement until home prices and the broad economy show signs of stabilization, leading to improved buyer confidence.” Andres Carbacho-Burgos, Moody’s Analytics: “The nearly comatose state of home builder confidence is also...
  • 8:21 AM » Real Estate News: Fannie Mae and Freddie Mac’s Nine Lives
    Published Tue, May 17 2011 8:21 AM by Google News
    Concierge Auctions : Built by a local real estate developer as a vacation home, this 9,700-square-foot home in Pasadena, Md., is headed to the auction block next month. The waterfront home features floor-to-ceiling windows and sits on 3½ acres. Here is a look at real-estate news in the weekend’s and Monday’s WSJ: : A subsidized market is a subsidized market, no matter how you dress it up. That’s worth remembering as the latest proposal to revamp housing finance emerges in Congress. : The Greatest Idea Never Sold: With home prices in what seems like an endless fall, why is it so fiendishly difficult to protect yourself against the risk of a further drop? : A reader in a flood- and weather-ravaged city asks how to buy a house that’s safe. : Switch up the linens, wash the windows and liberate yourself from cold-weather captivity. : Private outdoor space in Hong Kong is a rarity. This flat in Mid-Levels boasts a larger area outdoors than in. : Built by a local real estate developer as a vacation home, this 9,700-square-foot home in Pasadena, Md., is headed to the auction block next month. The waterfront home features floor-to-ceiling windows and sits on 3½ acres. : The buyer of the legendary Hotel Chelsea—a subject of rampant speculation in real-estate circles in recent weeks—turns out to be New York real-estate investor Joseph Chetrit, who previously upgraded the Empire Hotel. : The estate of Lehman Brothers Holdings Inc. is looking to sell its stake in the former International Toy Center building as the office market has improved significantly. : The office tower is one of the New York City’s defining features. But developers aren’t churning them out the way they used to. The recent production figures are anemic considering the volume of office space that has been eliminated. : South Orange, N.J., a farming community for 200 years, became a suburb of Newark and, after the railroad arrived in the 19th century, a summer retreat where wealthy New Yorkers built grand mansions...
  • 8:20 AM » Financing Foreclosed Homes - Mortgages
    Published Tue, May 17 2011 8:20 AM by
    For would-be owner-occupants without cash, the federally insured 203(k) loan is key.
    Click Here to Read the Full Article

  • 8:20 AM » HUD to Fund Loan Mod Counseling Centers
    Published Tue, May 17 2011 8:20 AM by
    The U.S. Department of Housing & Urban Development (HUD) has announced that the agency anticipates making approximately $10 million available under its Fiscal Year (FY) 2010 Mortgage Modification and Mortgage Scams Assistance (MMMSA) under the Housing Counseling Program Notice of Funding Availability (NOFA).
    Click Here to Read the Full Article

  • 8:20 AM » Fannie Mae "Using the Uniform Appraisal Dataset" Online Tutorial
    Published Tue, May 17 2011 8:20 AM by Google News
    Fannie Mae has posted their own tutorial on the Uniform Appraisal Dataset. You can find it at this website. On good authority Fannie Mae is having a Q & A session on May 19, 2011 about the tutorial. It appears...
  • 8:20 AM » HUD Responds to Washington Post Article Criticizing HOME Program
    Published Tue, May 17 2011 8:20 AM by National Council of State Housing Agencies
    Yesterday and today the Washington Post ran front-page articles reporting on delayed and abandoned developments funded by the HOME Investment Partnerships program. The first article, <
    Click Here to Read the Full Article

    Source: National Council of State Housing Agencies
  • Mon, May 16 2011
  • 10:08 AM » FDIC Challenges LPS, Corelogic “Appraisal Fraud”
    Published Mon, May 16 2011 10:08 AM by The Big Picture
    Posted in the you will find a fascinating lawsuit filed by the FDIC. The Federal Deposit Insurance Corp. has accused Lender Processing Services Inc. of Jacksonville, Fla., and CoreLogic Inc. of Santa Ana, Calif., of causing $283.5 million of damages to the former Washington Mutual Inc. for failing to provide oversight of appraisal. Below you will find the 118-page filing of the lawsuit that was commenced against LPS for $154.5 million. It states 220 appraisals performed between 2006 and 2008 contained “multiple egregious violations” of industry standards. Less than 4%of LPS’s appraisals conformed with professional appraisal standards . The FDIC filed a separate suit seeking $129 million from CoreLogic, claiming it found negligence in Corelogic’s eAppraiseIT unit after a review of 194 appraisals performed in 2006 and 2007. CoreLogic’s defense? 85% of the loans involved “desk reviews” — no interior or exterior inspection. Perhaps someone in Corelogic’s crack legal team can explain how on earth that qualifies as an appraisal?
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:07 AM » Inflation Definitions: Through the Ages
    Published Mon, May 16 2011 10:07 AM by WSJ
    An looks at the evolution of the dictionary definition of inflation from “flatulence” to “rising prices,” here’s a collection of the entries throughout the years. Samuel Johnson’s famous A Dictionary of the English Language, published in 1755, had just one definition for inflation: The state of being swelled with wind; flatulence. Webster’ American Dictionary of the English Language, published by G&C Merriam Co. in 1864, was the first to formally define inflation as an economic term: undue expansion or increase, from over-issue; — said of currency. Century Dictionary, a well-regarded American dictionary published from 1889 to 1891, defined inflation this way: Undue expansion of elevation; increase beyond the proper or just amount of value: as, inflation of trade, currency, or prices; inflation of stocks (that is, the price of stocks). In 1901, the sixth volume of the Oxford English Dictionary (letters H through K) defined inflation this way: Great or undue enlargement; increase beyond proper limits; esp. of prices, the issue of paper money, etc. Webster’s New International Dictionary, published in 1909, defined inflation as: Undue expansion or increase, as in paper currency, prices, etc. In the second edition of Webster’s New International Dictionary, published in 1934, the definition of inflation was greatly inflated : Disproportionate and relatively sharp and sudden increase in the quantity of money or credit, or both, relative to the amount of exchange business. Such increase may come as a result of unexpected additions to the supply of precious metals, as in the period following the Spanish conquests in Central and South America or the period following the opening up of large new gold deposits; or it may come in times of business activity by expansion of credit through the banks; or it may come in times of financial difficulty by governmental issues of paper money without adequate metallic reserve and without provisions for conversion into standard metallic money...
  • 10:06 AM » First: Inflation and Economic Hooliganism
    Published Mon, May 16 2011 10:06 AM by NY Times
    Not happy with the U.S. exporting inflation to the rest of the world? Tough.
  • 10:06 AM » Mortgages: Financing Foreclosed Homes
    Published Mon, May 16 2011 10:06 AM by NY Times
    For would-be owner-occupants without cash, the federally insured 203(k) loan is key.
  • 10:06 AM » Republicans: Bring Back Cap on Fannie, Freddie Aid
    Published Mon, May 16 2011 10:06 AM by Google News
    House Republicans are seeking to reestablish a cap on the amount of aid taxpayers can provide to mortgage giants Fannie Mae and Freddie Mac, a move that could cause tumult in the market for mortgage-backed securities. One of seven Republican bills unveiled Friday to speed up the eventual closure of Fannie and Freddie would cap taxpayer aid to the two mortgage giants at an unspecified level. While that’s likely to be a politically popular move, it could rattle the market for mortgage securities. That’s because investors in securities issued by Fannie and Freddie have been operating under the assumption that the Treasury Department will live up to pledge to provide unlimited aid to Fannie and Freddie through 2012. The government in December 2009 lifted that cap from an earlier level of $200 billion for each company. Since investors assume that the U.S. government stands behind Fannie and Freddie, they are willing to purchase securities issued by the two companies and consider them nearly as safe as Treasury debt. “We will make sure these institutions have the resources they need to meet their commitments over time,” Treasury Secretary Timothy Geithner told lawmakers earlier this year. Restoring caps on aid to Fannie and Freddie would throw the government’s support into question. “The market would have a difficult time trading if that legislation passed the House,” said Jim Vogel, a debt analyst at FTN Financial. Rep. Scott Garrett (R., N..J) said lawmakers haven’t delved into all the details, but want to “have a thoughtful discussion and hear some experts on it.” The new cap would have to be done in a way that doesn’t subject the government to lawsuits from bondholders, Garrett said. The bills are part of a GOP strategy to keep public attention on Fannie and Freddie, the two mortgage giants whose government takeover in fall 2008 has cost taxpayers about $138 billion so far. Republicans, especially in the House, want to unwind the government’s longstanding backing of the...
  • 10:06 AM » Rowhouse Rehab: Where, Oh Where, Has My Contractor Gone?
    Published Mon, May 16 2011 10:06 AM by Google News
    Ken Maldonado for The Wall Street Journal We paid our kitchen contractor two-thirds of the total—before two-thirds of the work was done. For years, my parents’ backyard in New Jersey had no deck—but it had a deck frame. One spring, my father hired a builder to make a deck and gazebo, promised to be completed before summer barbecue season. We paid him an advance, the frame was constructed and my father handed over some more money. And that was the last we ever saw of the contractor. It took years before my dad accepted the loss and just hired someone else to finish the job. So learned the lesson at an early age. Don’t trust your contractor. Use personal references to find one. Get everything in writing. Stay ahead in terms of payments versus work to be completed. And having bought and renovated three properties before this grand project without any major issues made me think we were savvy. In hindsight, we were just lucky. Here’s where we find ourselves: We paid our kitchen contractor two-thirds of the total—before two-thirds of the work was done. He said he was traveling, then said he had a death in the family, then said his mobile wasn’t working and then just stopped returning our calls and text messages. The subcontractor, who also alleges nonpayment from the contractor, has agreed to finish the work—but at a premium. Because we’ve lost about three weeks on the job due to all the starts, stops, absconding, excuses, we’re going ahead and eating the loss. It’s about $3,000, which means we likely won’t redo the bathroom this year or tile the basement so it can be used as a playroom. I’m filled with rage every time I think about that—and every night when we’re still ordering takeout. How could we have avoided this situation? After talking to friends, it’s clearly not uncommon. After talking to lawyers, however, it’s clearly preventable—and fightable. Here are some tips from real-estate lawyer Jeffrey S. Ween of Jeffrey S. Ween & Associates. 1. Get it in writing. That...
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