Mar
31
Record Drop in Home Price Index
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The S&P Case-Shiller 20-city index sets marks for monthly and annual declines, as fall extends to 30th straight month.
NEW YORK (CNNMoney.com) — Housing prices in 20 major cities fell at record monthly and annual levels in January, according to a private report issued Tuesday, with prices down 2.8% from December and 19% from a year earlier.
The S&P Case-Shiller Home Price Index, a comparison of price changes recorded when homes are resold, is considered to be one of the most accurate gauges of market trends available. Its 20-city index has been down for 30 straight months.
Month-over-month home prices fell in all 20 markets during January and are now at late 2003 levels.
“There are very few bright spots that one can see in the data,” said David Blitzer, chairman of the index committee at Standard and Poor’s. “Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs (metropolitan statistical areas) falling more than 20% in the last year.”
All told, prices have plunged 29.1% nationally since they peaked during the second quarter of 2006, according to Case-Shiller.
Where home prices will fall the most
Individual metro areas have fared far worse. In Phoenix, home prices have fallen 35% year-over-year, while Las Vegas has been down 32.5%, San Francisco has been down 32.4% and Miami has fallen 29.4%.
Phoenix has lost 48.5% from its peak, the most of any metro area. Other big losses were absorbed by: Las Vegas, Miami, Phoenix, San Francisco and San Diego; each has seen home prices decline more than 40% from their peaks.
All 20 index cities were in negative territory, with Dallas being the least affected at a loss of 4.9%. Others in single-digit losses were: Denver at 5.1%, and Cleveland at 5.2%.
The latest report confirms anecdotal information that has been streaming in from around the nation, according to Mike Larson, a real estate analyst with Weiss Research.
“The pace of decline has picked up recently,” he said. “Arguably, that’s just what we need to drive up sales activity and reduce inventory.”
The nation is grappling with historically high foreclosure rates, which add to inventories of homes for sale and drive down prices. In many markets, a large percentage of the homes changing hands are what’s known as “distressed properties,” meaning they are either bank repossessions or short sales, deals in which owners sell their homes for less than what they owe on their mortgages.
Much of the sales traffic is in foreclosure inventory, which may be skewing price statistics downward because distressed properties are often in poor condition.
But Larson does not expect home prices to improve anytime soon as job losses mount. “The biggest risk going forward is the health of the overall economy,” he said.
There has been a string of positive housing market reports over the past few weeks, pointed out Pat Newport, an analyst with IHS Global Insight. New home sales are rebounding, existing home sales are rising and low interest rates are sending mortgage applications up.
“Those reports are not reflected in the January Case-Shiller report,” he said. They won’t be until at least the February statistics and even the March statistics come out.
Mar
30
Lenders are fixing more loans, but the number needing assistance is soaring.
NEW YORK (CNNMoney.com) — Lenders have helped an increasing number of mortgage borrowers to get current on payments and stay in their homes, but the tide of foreclosures is still rising.
In February, nearly 250,000 homeowners received either mortgage modifications or repayment plans from their lenders, according to Hope Now, the coalition of lenders, investors and community advocacy groups put together to combat the foreclosure plague.
About 134,000 of the workouts completed were mortgage modifications, which typically lower the interest rate on loans, lengthen mortgage terms or reduce principal owed to make loans more affordable. Modifications are considered more comprehensive and effective than repayment plans, which simply tack the late payments on to the end of the loan but don’t reduce payments.
“The mortgage lending industry is responding to the needs of its customers and offering solutions that are appropriate to the current market and economic conditions,” said Hope Now’s director Faith Schwartz.
But in spite of these efforts, the number of foreclosures started in February rose to 243,000 from 217,000 in January. About 87,000 homes were repossessed by banks during February, a 28% jump from the 68,000 foreclosures completed in January. Since the mortgage meltdown hit in July 2007, 1,395,044 homes have been lost.
February was the second straight month of sharply higher foreclosures; prior to January, the problem appeared to be easing. Foreclosures declined to 69,000 in November from 77,000 in October and then dropped again to 56,000 in December.
But the report could have been much worse, considering the nation’s deteriorating economic picture, Schwartz said. “We’re shedding 650,000 jobs a month,” she said. “But there’s more flexibility [by the lenders]. They’re offering more forbearance in response to job losses.”
The Obama administration’s foreclosure prevention initiative could send mortgage modification numbers higher in the coming months, but it will take time. “We won’t see a spike right away,” said Schwartz. “[Under the program] It takes 90 days to complete a modification. Over the next three months we’ll start to see some pull-through.”
April will be “the month to get all the implementation details done on the new plan so that everything is crystal clear when they start using it,” she added.
Mar
25
New Home Sales in Surprise Rebound
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Census Bureau says sales of newly built homes rose nearly 5% in February.
NEW YORK (CNNMoney.com) — Sales of newly constructed homes unexpectedly rose in February, rebounding nearly 5% after sinking to the lowest level on record in January, according to a government report released Wednesday.
The U.S. Census Bureau reported that new home sales rose 4.7% to a seasonally adjusted annual rate of 337,000 in February from a revised 322,000 in January. It was the first increase since July, and comes after sales tumbled to all-time lows in recent months.
Economists were expecting a sales rate of 300,000, according to consensus estimates compiled by Briefing.com.
The report also showed that the median sales price of new houses sold in February was $200,900, down 18% from $245,300 a year ago.
The estimated number of new homes for sale at the end of February was a seasonally adjusted 330,000. At the current sales pace, it would take more than a year to sell through that number of new homes, according to the report.
Wednesday’s report was the latest in a series of better-than-expected readings on the housing market.
On Monday, the National Association of Realtors said that existing home sales rose 5.1% in February to a seasonally adjusted annual rate of 4.72 million units from a rate of 4.49 million in January.
Last week, the Commerce Department reported that initial construction of new homes surged 22% in February to a seasonally adjusted annual rate of 583,000, up from a revised 477,000 in January. It was the first time housing starts increased since June, when they rose 11%.
Mar
23
Existing Home Sales Spike 5%
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Realtors group says sales of existing homes rose in February. Prices tumble more than 15%.
NEW YORK (CNNMoney.com) — Sales of existing homes unexpectedly rose in February, recovering from a sharp drop in the previous month, according to an industry report released Monday.
The National Association of Realtors said that existing home sales rose last month to a seasonally adjusted annual rate of 4.72 million million units, up 5.1% from a rate of 4.49 million in January. February sales were down nearly 5% from year ago levels.
Economists surveyed by Briefing.com were expecting existing home sales to decline to 4.45 million.
The report said first-time buyers made up half of all purchases in February, and that sales of distressed properties accounted for about 45% of all transactions.
Sales were unexpectedly strong in the West, with activity increasing more than 30% over last year.
“February wasn’t too shabby for the existing-home market,” said Mike Larson, real estate analyst at Weiss Research. “The catch? The increase in sales activity is coming at the expense of pricing.”
The national median existing-home price was $165,400 in February, down 15.5% from last year, when the median price was $195,800.
Prices were depressed by the large number of foreclosed properties on the market, said NAR chief economist Lawrence Yun in a statement.
“Our analysis shows that distressed homes typically are selling for 20% less than the normal market price, and this naturally is drawing down the overall median price.”
Meanwhile, the total number of existing homes on the market at the end of February rose 5.2% to 3.80 million units. At the current sales pace, it would take an estimated 9.7 months to sell down that inventory of properties.
The report also said the total number of homes for sale has steadily declined over the past six months from a record level last July.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said there’s a “good chance” the collapse in home sales that has been going on since September is “now over.” “Though a sustained recovery is still a long way off,” he added.
Mar
17
Housing Starts Unexpectedly Surge
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Government report shows construction of new homes jumped 22% in February.
NEW YORK (CNNMoney.com) — Initial construction of U.S. homes unexpectedly surged in February, after falling for eight months, according to a government report released Tuesday.
Housing starts rose to a seasonally adjusted annual rate of 583,000 last month, up 22% from a revised 477,000 in January, according to the Commerce Department. It was the first time housing starts increased since June, when they rose 11%.
Economists were expecting housing starts to decline to 450,000, according to consensus estimates compiled by Briefing.com. Still, starts are down more than 47% from February 2008, when over 1.1 million new homes broke ground.
New construction of single-family homes, considered the core of the housing market, increased 1.1% to an annual rate of 357,000 versus 353,000 in January.
February’s increase was driven by a nearly 80% increase in construction of multi-family homes. New construction of buildings with 5 or more units increased surged 80% to 212,000 from 118,000 in January.
Applications for building permits, considered a reliable sign of future construction activity, rose 3% to a seasonally adjusted annual rate of 547,000 last month. Economists were expecting permits to fall to 500,000.
While the surge in new construction was a welcome sign for the nation’s battered housing market, analysts warned that the increase could be short lived.
“With new home sales still falling and the months’ supply at a record, there is no reason for homebuilding to rise,” wrote Ian Sheperdson, chief U.S. economist at High Frequency Economics in a research note. “This is a temporary rebound, not a recovery.”
New home construction surged in the Northeast, jumping nearly 89% last month. Starts also increased in the Midwest and the South.
In the West, where the housing market was overbuilt in the boom years and where there is a glut of foreclosed homes, starts declined nearly 25% versus the previous month.
Mar
15
27 Visualizations and Infographics to Understand the Financial Crisis
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→ Click to see all 27 visualizations and infographics to understand the financial crisis
Here’s one of them:
→ Click to see all 27 Visualizations
Mar
12
Rise in Foreclosures ‘A Shock’
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February saw an unexpected jump in foreclosure filings as the weak economy puts more pressure on borrowers.
NEW YORK (CNNMoney.com) — The foreclosure picture suddenly darkened again in February.
More than 74,000 homes were lost to bank repossessions during the month, up from 67,000 in January, according to a regular monthly report from RealtyTrac, the online marketer of foreclosed properties. Nearly 1.2 million have been lost since the foreclosure crisis hit in August 2007.
The number of foreclosure filings rose 6% during the month after falling 10% in January. Worse, filings leaped nearly 30% compared with February 2008. And the results confounded expectations: A downtrend had been expected due to the numerous foreclosure moratoriums in effect during the month.
“We were very surprised,” said RealtyTrac spokesman Rick Sharga. “The moratorium were led by big players like Fannie and Freddie and all the major banks. It was supposed to cover the whole waterfront. The fact that foreclosures still went up was a shock.”
A particularly troubling aspect of the report was that, for many borrowers, once they go into default, they never get out despite moratorium efforts. That’s borne out by comparing bank repossessions – homes actually lost by borrowers – with total foreclosure filings: Nationally, repossessions increased 11% for the month, almost double the 6% rise for filings.
The same holds true for year-over-year figures: February filings jumped 30% compared with last year but repossessions rang up a 60% gain.
The reason so many people lose their homes once they are in default is partially attributed to the severe home price drops recorded in many of the worst-hit areas. When borrowers are severely underwater, owing more than their homes are worth, it removes an incentive to keep up with mortgage payments. Some simply walk away.
The Worst Hit States
Many states that had previously escaped the worst ravages of the foreclosure plague have started to feel the effects. In South Carolina, foreclosure filings, which include notices of default, notices of foreclosure sale and bank repossessions, skyrocketed 254% compared with last February. The state recorded a filing for every 818 households, the 20th highest rate among the states.
As foreclosures soared, so did South Carolina’s unemployment. By January, that had reached 10.4%, the second highest rate, after Michigan, in the nation. It rose 1.6 percentage points higher than December, the biggest increase in any state, and it jumped 4.7 percentage points over the past 12 months, also more than anywhere else.
According to the Neighborhood Assistance Corporation of America CEO, Bruce Marks, poorly underwritten mortgages is still the main source of foreclosures in the state. “It continues to be problem mortgages,” he said, “loans that were unaffordable from the start. But unemployment is adding to that.”
NACA, which counsels at-risk borrowers and refinances many into low-cost mortgages, is throwing a counseling event in Columbia, S.C., this weekend. The agency expects to host more than 20,000 attendees and has already pre-registered more than 7,500 homeowners.
The dubious honor of worst foreclosure state still belongs to Nevada, where one of every 70 households had a filing. Foreclosures are up 156% from last February and 9% from January. More than 2,800 homes were repossessed by banks during the month.
Second was Arizona, with one filing for every 147 households, up 88% year-over-year and 23% from January. California, with nearly 81,000 filings, had more than any other state, with a rate of one for every 165 households. Florida had more than 46,000, one for every 188 households.
Other hard hit states were Idaho (one in 358), Michigan (one in 360) and Illinois (one in 369).
Worst Hit Cities
Among metro areas, Las Vegas, where one in every 60 housing units received a foreclosure filing in February, led all other cities with populations of 200,000 or more. Another Nevada city, Reno, had one for every 108 hosueholds, the eighth highest rate in the nation.
The Cape Coral, Fla., metro area had the second highest foreclosure rate in February, with one in 65 housing units.
The rest of the top 10 consisted of six California cities: Stockton (one in 67), Modesto (one in 68), Merced (one in 74), Riverside-San Bernardino (one in 80), Bakersfield (one in 85) and Vallejo-Fairfield (one in 111).
Phoenix rounded out the top 10, with one in every 110 housing units receiving a foreclosure filing. The Phoenix metro area posted the ninth highest foreclosure rate in February.