The Federal Housing Finance Agency (FHFA) today invited investors interested in purchasing pools of Fannie Mae, Freddie Mac and FHA foreclosures in the nations hardest-hit metropolitan areas with the requirement they rent them for a period of year to pre-qualify.

The new bulk sales program, under discussion since August, will begin with a pilot program where Fannie Mae will offer for sale pools of various types of assets including rental properties, vacant properties and non-performing loans with a focus on the hardest-hit areas. The first transaction will be announced in the near-term.

The purpose of the pilot phase will be to examine investor interest in various types of assets, including the location, size, and composition of pools of assets; the ways in which investors maximize the participation of experienced local firms and organizations that can provide the types of services and support needed to ensure community stabilization; the types of structures and/or financing that improve returns to the sellers as well as home values in impacted markets; and the process by which investors are qualified to and ultimately participate in the sales transactions.

FHFA said today it is also looking at ways to improve REO sales to homeowners and small investors, enhancing the existing retail sales strategy at Fannie Mae and Freddie Mac. Both companies sell the majority of their REO properties to owner-occupants at close to market value.

“This is an important step toward increasing private investment in foreclosed properties to maximize value and stabilize communities,” said FHFA Acting Director Edward J. DeMarco. “I am grateful for the collaborative effort by the many stakeholders including investors, nonprofit organizations, and state and local government officials, who have worked together on this Initiative.”

FHFA reportedly may include as many as 500 to 1000 in the first pool of the pilot phase. The GSEs have more than one million properties in their foreclosure pipelines.

Although the FHFA has not set a timetable for beginning bulk REO sales, government officials speaking on background with Inman News columnist Ken Harney said they may launch the program with a sale of 500 to 1,000 homes as early as this month.

The announcement by FHFA came just hours before President Obama was scheduled to make a major speech on housing policy.

National vacancy rates were 9.4 percent for rental housing and 2.3 percent for homeowner housing, the Department of Commerce’s Census Bureau announced today. The rental vacancy rate of 9.4 percent was approximately the same as the fourth quarter 2010 rate and 0.4 percentage points lower than last quarter. The homeowner vacancy rate of 2.3 percent was 0.4 percentage points lower than the fourth quarter 2010 rate and 0.1 percentage point lower than the rate last quarter.

The homeowner vacancy rate in principal cities (2.5 percent) was higher than in the suburbs (2.1 percent), but not statistically different from the rate outside MSA’s (2.5 percent). The homeowner vacancy rates in the suburbs and outside MSA’s were not statistically different from each other. The homeowner vacancy rate in principal cities was lower than a year ago, while the rates in the suburbs and outside MSA’s were not statistically different from their corresponding fourth quarter 2010 rates.

Among regions, the rental vacancy rate was highest in the South (12.0 percent) and lowest in the West (6.6 percent). The rental vacancy rate in the West was lower than in the fourth quarter 2010, while the rates in the Northeast, Midwest, and South were statistically unchanged.

For the fourth quarter 2011, the homeowner vacancy rates were higher in the Midwest (2.5 percent) and South (2.4 percent), but these rates were not statistically different from each other. The rates were lower in the Northeast (2.0 percent) and West (2.1 percent), but these rates were not statistically different from each other. The homeowner vacancy rates in the South and West were lower than a year ago, while the rates in the Northeast and Midwest were not statistically different from the fourth quarter 2010 rates.

The current list of Top 10 Turnaround Towns, developed using year-over-year comparative data from the fourth quarters of 2011 and 2010, begins with three of the nation’s top foreclosure markets that also achieved significant year-over-year median list price appreciation: Miami, FL, Phoenix, AZ, and Orlando, FL. They were followed by Fort Myers-Cape Coral, FL, which fell from third to fourth on the Realtor.com Top 10 Turnaround Town list in one quarter, and Sarasota-Bradenton, FL which rose from sixth to fifth. Ranking sixth was Boise City, ID, the only Rocky Mountain market to make the list. Four Florida markets rounded out the list including: Naples, Fort Lauderdale, Lakeland-Winter Haven and Punta Gorda.

The market rankings are based on year-over-year median price appreciation, reduction in year-over-year median age of inventory, and inventory reduction levels as observed on Realtor.com, as well as unemployment rates on a year-over-year basis. The Realtor.com Top 10 Turnaround Report is based on an algorithm that combines those four key measures with searches for properties on Realtor.com and the ratio of searches to listings in order to equalize markets by size. The resulting report reflects price changes that have taken place and gives weight to supply and demand dynamics that create continued progress towards growth and stability in future months.

The Realtor.com Top 10 Turnaround Towns, according to Fourth Quarter 2011 data are:

Miami, FL is leading the nation on the turnaround path. According to the Miami Association of Realtors, sales of existing single-family homes in the Miami Metropolitan Statistical Area (MSA) jumped 51 percent in the third quarter compared to a year ago.Miami has half as many properties in Realtor.com’s inventory of listings as it had a year ago, and the median age of inventory is down 30 percent from a year ago. Miami also continues to be a hot market for international buyers. In May, international clients purchased about 60 percent of the existing houses and condos and 90 percent of the newly built homes in Miami.[With inventory stabilized and median list prices regaining some of the 50 percent of value that was lost since 2006,] experts say one of the hardest hit foreclosure markets in the nation is on its way back.

Phoenix-Mesa AZ advanced two places on this Top 10 list between the third and fourth quarters of 2011. One of the areas hit hardest by foreclosures, Phoenix today still generates one foreclosure filing for every 317 housing units. Median list prices in Phoenix are up 15.38 percent on a year-over-year basis, but the market has to regain ground on what was lost in recent years. An uptick in demand driven by foreclosure bargains has contributed to a 27.47 year-over-year decline in the local median age of inventory. Unemployment in November was only 7.7 percent, below both state and national rates. With inventory in check, an improving local economy and growing demand, it’s only a matter of time before Phoenix returns to stability and lasting home value appreciation.

Orlando, FL secured its number three spot on the Realtor.com list of Top 10 Turnaround Towns as a result of progress made toward getting inventory back in balance with demand, suggesting the market may be stabilizing and turning a corner. The median age of inventory in Orlando on Realtor.com in the fourth quarter was down to 73 days, a 36 percent drop from a year ago and inventory was down 44 percent compared to a year ago. The Orlando MSA posted big declines in November foreclosure filings compared to the prior year and month. Lake, Orange, Osceola and Seminole counties posted 2,806 filings, or one in every 323 households. This is down 24 percent from November 2010, and nearly 36 percent down from the October 2011 filings. Fourth quarter 2011 year-over-year list prices on Realtor.com in Orlando rose 8.22 percent. Orlando leads the nation in the ratio of searches to listings on Realtor.com, a leading indicator that buyer demand may strengthen in the near future.

Fort Myers-Cape Coral, FL fell one rung to fourth place in the fourth quarter 2011 ranking on the list, but its recovery remains strong. Its median sale price has increased 20 percent over the past year, more than any other Florida market, though sales are down 13 percent.. The market led the nation in year-over-year median list price increases on Realtor.com (31.27%.) in the fourth quarter 2011, and ranked 14th in inventory declines that same quarter compared to a year ago. Only one in every 390 homes in the Fort Myers metro market received a foreclosure filing in December

Sarasota-Bradenton, FL ranks fifth in the nation on Realtor.com’s Top Turnaround Towns list for the fourth quarter 2011. Sales have been hopping in Sarasota and Bradenton this past fall, which is up 17 percent over last year. Median list prices were up 2 percent.] for the same period. This sales resurgence paralleled the drop in the available for sale inventory observed on Realtor.com, which just may place the remaining homes in range of a seller’s market. List prices on Realtor.com were up 10.78 percent in the fourth quarter 2011 compared to the fourth quarter 2010, and inventory is down 31 percent from a year ago.

Boise City, ID year-over-year for sale inventory observed by Realtor.com is down 40 percent, eighth best in the nation based on the year-over-year rate of decline. A key reason for the declining inventory is a reduction in foreclosures. A smaller inventory has helped drop the median age of inventory by 23.42 percent compared to a year ago. Smaller inventory is driving a median listing price increase of 13.77 percent, fifth best among Realtor.com’s 146 markets in the fourth quarter of 2011. Boise’s unemployment rate at 8.5 percent in November is better than the national rate.

Naples, FL is a newcomer to the Top 10 Turnaround Town list this quarter, powered by a 13.38 percent year-over-year increase in median list prices, seventh best in the nation overall, and a 35.94 percent reduction in for sale inventory. The median age of inventory in Naples is down 13.64 percent compared to a year ago. Demand in Naples, FL has been fueled by foreign buyers as the MSA attracts 6 percent of Florida’s international sales.While not everyone is bullish on Naples, sales are up and prices are moderating. The latest sales data from the Naples Board of Realtors confirms that the market is in the midst of change, but moving in the right direction. Sales of November single family homes are up 8 percent from November 2010 but sale prices are down 13 percent. Inventory is down 21 percent from a year ago.

Fort Lauderdale, FL has benefited from a shrinking inventory, which is down 41.63 percent year-over-year - sixth best (lowest) in the nation as observed by Realtor.com. Sales were up 22 percent in November and sale prices were up 18 percent year-over-year. List prices are up 7.84 percent over last year. However, like many other Florida markets, Fort Lauderdale, whose prices fell at least 46 percent from 2006 to 2010, still has a ways to go in part due to an unemployment problem affecting its housing market. But in November its unemployment rate fell to 9.4 percent.

Lakeland-Winter Haven, FL has observed a 9.09 percent increase in median list prices compared to a year ago. Its inventory has declined 35.28 percent since 2010 and its search-to-inventory ratio on Realtor.com, a measure of the number of buyers who are shopping for properties in the market, ranks fourth highest (best) in the nation in the fourth quarter 2011. As recently as a year ago, Lakeland-Winter Haven, FL was at the top of the national lists for foreclosure filings. But in recent months foreclosures in this MSA have been declining. In September, there were a total of only 86 distressed homes sold, compared to the 107 homes the previous month and 132 homes the previous year. Lakeland’s biggest hurdle on the road to recovery is its unemployment rate that dropped from 12 to 11 percent from the third to the fourth quarter, just a point over the state average.

Punta Gorda, FL returns to the Top 10 Turnaround Town list for the fourth quarter 2011 after it fell off the list the previous quarter. Like other Florida markets, it’s a market on the rebound, with both sale prices and sales up 11 percent year-over-year in November. Punta Gorda made it back to its 10^th place position on this list thanks to its29.25 percent year-over-year reduction in for sale inventory. But prices are just starting to turn around and must still make up for the 56.2 percent decline in home values observed since 2006. Currently Punta Gorda properties are selling at bargain prices, attracting both domestic and international buyers.

New originations ended the year down 29.3 percent from 2010, lower than since 2007, and December activity was down 2.7 percent from December 2010. Through November, originations totaled about 5.6 million, down 1 million from 2010, according to the December Mortgage Monitor report released by Lender Processing Services today.

Mortgages originated in 2010-11 have 90-day default rates that were lower than any vintage since 2005, before the housing crash and the implementation of tighter underwriting standards. Ninety day default rates are highest for loans originated in 2006, immediately before lending standards were tightened, and are lowest for loans originate in 2010 and 2011.

December origination data also shows that recent prepayment activity - a key indicator of mortgage refinances - has remained strong, with 2008-09 originations, high credit score borrowers and government-backed loans having benefited the most from recent, historically low interest rates.

Foreclosure starts plummeted in 2011, nearly 40 percent below 2010 for the year as a whole and down 3.7 percent from November to December.

LPS found that half of all loans in foreclosure in judicial states have not made a payment in more than two years. Foreclosure inventories in judicial states are two anmd a half times those in non-judicial states, and the gap continues to widen. Foreclosure sale rates in non-judicial states stood at approximately four times that of judicial foreclosure states in December.

However, pipeline ratios (the time it would take to clear through the inventory of loans either seriously delinquent or in foreclosure at the current rate of foreclosure sales) have declined significantly in judicial states from earlier this year.

Other findings from the LPS report:

Total U.S. loan delinquency rate: 8.15 percent

Month-over-month change in delinquency rate: 0.0 percent

Total U.S foreclosure pre-sale inventory rate: 4.11 percent

Month-over-month change in foreclosure pre-sale inventory rate: -1.3 percent

States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL

States with the lowest percentage of non-current* loans: MT, WY, SD, AK, ND

*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.

Nationwide 72 percent of homeowners in a recent survey by HomeGain indicated that they were satisfied with owning a home and 28 percent said they were dissatisfied. An analysis of results from a representative selection of states found that more homeowners in wealthier markets evidenced greater support for homeownership while those in more affordable markets were generally less supportive.

In New York State, the second most expensive state in the nation to buy a home, support was strongest, 77 percent. In California, fifth most expensive, support was 75 percent. Florida, twelfth most expensive state, support was 67 percent, and in Illinois, twenty-ninth most expensive, support was only 55 percent. Only Texas countered the trend. Though it ranks thirtieth in median home price, Texas homeowners supported homeownership by a 75 to 25 percent margin.

Among homeowners dissatisfied with homeownership, 64 percent said that price depreciation was the primary reason. However, depreciation seemed to have no effect on support for homeownership on a state by state basis. Some states like California in the Pacific region, where prices have fallen 10.7 percent since 2009, and homeownership support in has remained high. In Texas’ region, where support for homeownership is high at 75 percent, prices actually appreciated 2.1 percent last year. Illinois, where support for homeownership at 55 percent was lowest among all the states analyzed, its home prices have actually fared better than most regions, with only a 5 percent decline in prices over the three year period compared to the 6.1 percent national average.

“The HomeGain 2012 National Home Ownership Satisfaction survey shows in spite of declines in the values of homes nationwide, satisfaction among homeowners remains high at 72 percent, with nearly 3 of 4 home owners satisfied with home ownership.” said Louis Cammarosano, General Manager of HomeGain. “Of the 28 percent of surveyed homeowners who indicated they were unsatisfied, 63 percent cited price depreciation as the primary reason,” said Louis Cammarosano, General Manager of HomeGain.

]]> http://www.realestateeconomywatch.com/2012/01/homeownership-stronger-in-higher-priced-states/feed/ http://www.realestateeconomywatch.com/2012/01/first-time-buyers-ended-2011-on-new-low/ http://www.realestateeconomywatch.com/2012/01/first-time-buyers-ended-2011-on-new-low/#comments Thu, 26 Jan 2012 17:06:36 +0000 editor http://www.realestateeconomywatch.com/?p=4584 First-time home buyers are an ever-shrinking segment of the real estate market. In December, The percentage of first-time buyers tied the lowest level ever recorded in the National Assocition of Realtors’ Realtors Confidence Index this year at 31 percent of the market.

In June, first-timers also accounted for 31 percent. The lowest level ever recorded in the three and a half year old survey of Realtoers was below 30 percent in March 2010.

Realtors participating in the survey blamed stringent credit requirements by lenders who have still not recovered from the Great Recession.

Nearlhy half of December sales went to repeat buyers, 21 percent went to investors, 13 percent to second home buyers, 24 percent were relocation sales and 2 percent went to foreign buyers.

NAR also released projections of 2012 existing home sales at 4.62 million, a 6.3 percent increase over 2011 and median prices at $167,300, a .7 percent rise over 2011.

Obama’s expansion would allow all borrowers, not just those whose loans are held by Fannie Mae and Freddie Mac to refinance. Fannie and Freddie hold about 60 percent of the nation’s mortgages. The New York Times quotes a “senior government official” who estimated that the program could benefit two million to three million homeowners who have loans that are not guaranteed by the government, and that the program’s cost would not exceed $10 billion. When announced last September, the revised Home Affordable Refinance Program (HARP 2.0) was projected to help one million homeowners.

The President’s announcement comes after the HARP 2.0 program has been in effect only seven weeks. Initial reports suggested that key lenders-including certain megabanks-have been slow to implement changes to service borrowers applying for the program and they are also facing capacity constraints due to the ongoing mini-refinancing boom. Final rules were not announced until Novembers and reportedly many consumers and servicers were confused about whether they qualified and how to apply.

Concerns have been growing that the program would fall short of its million loan goal. The program is due to expire at the end of this year. Federal Reserve chairman Bernanke has suggested that the program be changed to mandate lenders to write down principal as well as interest . Others are recommending additional changes to reduce refinancing fees and “put-back” risk on the loans. Meanwhile, California Democrats in Congress are calling on President Obama to replace Federal Housing Finance Agency acting director Edward DeMarco, who has opposed writing down the principal of mortgages held by Fannie and Freddie.

However, recent reports suggest that interest is picking up. One source reports that 70 percent of the new loan applications at a major bank are HARP 2.0 loans. The HARP 1.0 program allowed borrowers to refinance up to 125% of the current value of the home but the HARP 2.0 will do away with that 125 percent limit.

“I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No more red tape,” said President Obama last night. The program would be paid for by a new fee on banks, but details have yet to be announced and until they are, the outlook in Congress is difficult to forecast.

Average days on market for properties over half a million averaged 222 days last week and has risen every week since August when DOM was at a year-low of 100 days, according to the latest monthly data from the Institute for Luxury Home Marketing. After falling since early July, inventories rose last week, reaching 23,416 homes in the ILHM market profile.

Thirty percent of listed properties have had a price decrease and even though the balance between supply and demand improved slightly in the first two weeks of the year, new listings slightly exceeded absorptions. Median price at $1,097,660 and median asking price per square foot at 333 were unchanged.

Top ten markets with the longest average days on market are Miami (308 days), Chicago (301), Detroit (271), Phoenix (264), New York (261), Orlando (253), Raleigh-Durham (252), Philadelphia (242), Charlotte (228) and Denver (226). Properties are moving fastest in Sacramento/Tahoe (173), San Diego (176) and Washington (176).

Overall existing-home sales rose 5.0 percent in December to a seasonally adjusted annual rate of 4.61 million from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010. The estimates from the National Association of Realtors are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.

In fact, so many investors are winning sales with cash and shorter closing timelines that they can offer lower bids, which may be may be depressing prices, especially on distressed sales, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.

In December the overall proportion of cash buyers in the housing market surged to a record 33.2 percent, up from 29.6 percent a year earlier. Some 74 percent of investors used all cash to buy homes last month. Investors accounted for 22.8 percent of home purchases in December 2011, up from 22.2 percent a month earlier.

The combination of all cash and shorter closing timelines convinced many sellers to accept lower bids. The survey found that cash buyers are able to bid significantly lower - and successfully - on many properties because they offer a shorter and more reliable closing timeline. This is particularly true for bids on distressed properties, because mortgage servicers selling foreclosed properties or real estate owned generally prefer transactions that can settle within 30 days.

The total share of distressed properties in the housing market in December, as represented by the HousingPulse Distressed Property Index (DPI), continued at a high level of 47.2 percent, using a three month moving average. This is the 24th month in a row that the DPI has been above 40 percent.

While investor bids may not be the first offers accepted, they often end up winning properties after other homebuyers are eliminated because of mortgage approval or timeline problems. Appraisals below the contracted price are a common reason for mortgage denials. Most mortgage financing timelines are now in excess of 30 days.

Real estate agents responding to the survey commented on low bids from investors. “Investors usually offer 10 percent-20 percent below list up to a price of $250K. First time homebuyers are (offering) close to list (price) as are current homeowners. Investors want 2-4 weeks to close …Financing buyers end up with 6- 8 weeks plus to close,” reported an agent in Arizona.

“Investors are very aggressive and expect to see 15 percent-20 percent off list, they will close in 30 days or less and most are cash buyers. First time homebuyers are in a market that sometimes sell for over list price which is difficult ‘at first’ for them to understand,” reinforced another agent in California.

“In competitive offer situations, cash offers prevail for the most part because of the common knowledge of lender closing issues. Cash sales close in 21-30 days. FHA sales close in 45 to 60 days,” reported an agent in New Jersey.

The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

The game is a promotional gimmick for a new company that passes agents and mortgage brokers, and markets directly to consumers.

In-Deed, the new company, a “conveyance service,” claimed in a news release that from September to November last year some 531,000 sales fell through i, compared with 394,000 for the three months from December 2010 to February 2011. The firm claimed that in the last six months of 2011 it was more likely that a transaction would fail than succeed.

In-Deed said the failed transactions cost buyers an average of £5,500. As a result, the number of buyers who give up on purchasing after the first try more than doubled last year. Difficulties securing mortgage finance is a key factor, seriously aggravated by declining service standards among property professionals, according to the firm’s research. Legal issues were the culprit in one in eight cases (12 percent) with reports of incompetence, delays and mistakes by solicitors, and anger with the legal profession.

“Angry Buyers is a new online game where players can let off steam by firing estate agents and property lawyers out of a cannon for the chance to win their rent or mortgage paid for six months.,” Phil Spencer, a British television personality and property expert who has signed on with In-Deed. “With mortgage finance harder than ever to secure and poor service standards rife in estate agency and conveyancing, it’s no surprise that home buying is such a frustrating process.

To play the Angry Buyers game, visit http://www.in-deed.net/angry_buyers.

.