Apr 28, 2014

Price Growth Slows in Once Hot Markets

As per Mortgage News Daily, Sales of residential properties were marginally higher in March than in February and the median price of both distressed and non-distressed properties also increased slightly RealtyTrac said today.  Sales of single-family homes, condominiums, and townhomes were at an annual rate of 5,253,464 units in March, up 0.4 percent from February.  The sales pace was 8 percent higher than in March 2013.

The median price of all residential properties was $164,500, a 1 percent increase from the previous month and 10 percent above the median price one year earlier.   RealtyTrac said this was the 24th consecutive month that median house prices posted annual growth and the 10 percent March to March change was the largest of those increases.

"The housing market showed signs of coming out of hibernation in March after a sluggish fall and winter," said Daren Blomquist, vice president at RealtyTrac. "Median home prices increased on a monthly basis following six consecutive months where they were flat or declining, and increased on an annual basis by the biggest percentage since hitting bottom in March 2012.

"Sales volume also increased slightly from March to February following four consecutive monthly decreases, but both annual sales volume and median prices are still below their recent peaks in October and August respectively," Blomquist continued. "Meanwhile, the distressed share of sales increased from the fourth quarter to the first quarter nationwide and in 38 states, which - along with many non-distressed homeowners regaining enough equity to list their homes for sale - is helping to ease low inventory conditions in some markets."

Investor interest in the residential market remained strong.  Based on buyer mailing addresses more than one-third (34 percent) of March sales appeared to involve non-owner occupants, most likely investors or second home buyers.  In addition, 7 percent of March sales were multi-parcel transactions where several properties were sold on the same date and recorded on the same sales document.

Despite the annual increase in residential sales volume nationwide, sales were down from a year earlier in six states, Massachusetts, Rhode Island, California, Connecticut, Nevada, and Arizona.  Sales were also down in 21 of the 50 largest metropolitan areas including some which were notable hot spots a few months ago.  San Jose saw sales fall 18 percent from a year earlier, San Francisco was down 15 percent, and Las Vegas and Phoenix decreased by 12 percent and 11 percent respectively. 

Likewise many metro areas that have seen massive price appreciation since reaching their respective troughs are now seeing more moderate price growth.  The median price of a home in San Francisco has risen 94 percent after bottoming out in March 2009 and posted an annual increase of 39 percent in June of last year but by last month the appreciation had slowed to 26 percent.  The median price in Detroit is 92 percent above the May 2009 trough and the area had a 38 percent annual increase in October but now the annual increase is 29 percent.  RealtyTrac reports a similar pattern in Fort Myers, Phoenix, and Atlanta.

Short sales and distressed sales - in foreclosure or bank-owned - accounted for 16.4 percent of all sales in the first quarter, up from 14.5 percent in the previous quarter but still down from 18.5 percent in the first quarter of 2013.  Short sales alone accounted for 5.6 percent and an additional 1.2 percent of sales nationwide took place at public foreclosure auctions. 

Some metro areas are still experiencing high levels of non-equity sales. In Las Vegas, Stockton, California, Detroit, Cleveland, and Dayton combined short sales and distressed sales exceeded one third of the March total.

Apr 23, 2014

Economists: U.S. will see better growth in '14

The U.S. economy is headed for stronger growth in 2014 that will steadily chip away at the unemployment rate, top economists predict in a largely optimistic USA TODAY quarterly survey. The jobless rate, which dipped to a five-year low of 6.6% in January, will fall to 6.3% by the end of the year, their median forecast indicates.

Job gains, which averaged 194,000 a month last year, will reach a monthly average of 200,000 this year, they predict. Employers added 113,000 jobs in January, well under many economists' forecasts, the government reported last week.

The economy got off to a slow start in January as a result of financial turmoil in emerging markets, a stomach-churning drop in stock prices and extreme winter weather that kept many shoppers at home. But the economists surveyed expect growth to accelerate after a weak first quarter, reaching a solid 2.8% rate for the year.

"I think we will regain momentum and not fall on our face," says Diane Swonk, chief economist of Mesirow Financial, drawing a contrast with previous ups and downs in the five-year-old recovery.
Many of the 40 economists surveyed Feb 5-6 recently cut their first-quarter forecasts. Most of the change is due to the adverse January weather and an expected pull-back in business stockpiling after firms aggressively replenished shelves in the second half of 2013.
While growth late last year was driven largely by the stockpiling, this year's expansion will be fueled by higher consumer and business spending, says Dean Maki, chief U.S. economist of Barclays Capital. "It's more durable," he says.

Many were anticipating a breakout year in 2014, signaling a new course for a generally sluggish recovery. Households have shed much of the debt they amassed during the mid-2000s real estate bubble. A stock run-up and rising home prices have made consumers feel wealthier. And the effects of federal spending cuts and tax increases are fading, while state and local governments are poised to increase outlays after years of austerity.

Several economists say those improving fundamentals remain intact. Some see financial troubles in emerging markets such as Turkey and Brazil as risks to the USA's outlook. Chris Varvares of Macroeconomic Advisers has trimmed his growth forecast, saying the turmoil could curtail U.S. exports and stock prices, crimping business investment and consumer spending.

But more than eight in 10 of those surveyed said January's stock sell-off and emerging markets' woes have not caused them to be less optimistic about growth this year. Sixty-four percent said their 2014 forecasts are more likely to prove too conservative than too rosy.

Maki says the recent stock swoon pales compared to last year's market gains and is unlikely to hurt consumer spending this year. Rising interest rates may cause Americans to buy smaller homes, but they shouldn't deter purchases, he says.

Measures of Housing Distress at 7+ Year Lows

Black Knight Financial Services said today that the mortgage delinquency rate in March was the lowest in the U.S. since October 2007 and the foreclosure rate was the lowest since October 2008.  September 2008 is the date most commonly used to mark the beginning of the foreclosure crisis.  Foreclosure starts in March also hit a 7.5 year low.

In its monthly "First Look" report the company said that the rate of loans that were 30 or more days past due in March but not in foreclosure was 5.52 percent or 2.77 million housing units.  This was a -7.57 percent change (-221,000 units) from February and 16.29 percent lower than in March 2013 when total delinquencies were approximately 3.31 million. 

Of those delinquent mortgages 1.2 million were more than 90 days past due but not yet in foreclosure.  That was a decline of 43,000 loans month-over-month and 267,000 on an annual basis.
Loans in foreclosure, often called the foreclosure inventory, numbered 1,070,000 in March, down 45,000 from February and 619,000 compared to March 2013.  The foreclosure inventory represented 2.13 percent of mortgaged homes in the U.S., a decline of 4.23 percent for the month and 36.69 percent from the year before.

Black Knight says the total of loans past due or in foreclosure has slipped below 4 million units for the first time since November 2007 with a total of 3.84 million homes in those combined categories.  This is a month-over-month change of -266,000 and a decline year-over-year of 1,156,000.

The states with the highest rates of non-current loans in March were Mississippi (13.39 percent), New Jersey (12.93 percent), Florida (12.10 percent), New York (11.09 percent), and Maine (10.58 percent).

Several states have shown substantial improvement in their non-current loan percentages over the last six months.  States with declines in those percentages ranging from 19.22 to 21.42 percent over that period were California, Arizona, Illinois, Florida, and Nevada.  At the same time there were five states in which the non-current rate deteriorated by approximately 10 percent, Oklahoma, New York, New Mexico, Alabama, and Louisiana.

There were 88,100 foreclosure starts nationally in March compared to 91,993 in February.  This was a 4.24 percent decrease and starts were down 27.19 percent from one year earlier.  Foreclosure sales as a percentage of seriously delinquent loans ticked up 9.15 percent to a rate of 1.83 percent, a rate 6.37 percent below that of March 2013.

Black Knight said that loan prepayment rates, while still down nearly 60 percent from levels in March 2013, rose in March by 20.84 percent to 0.80 percent.

The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, scheduled for release in early May.