2011 Housing Market: A Year in Review

26 12 2011

Ring out the old and ring in the new! We have seen a lot of changes in Year 2011 in housing market. As we are gearing up to welcome 2012, here’s looking back at the top stories in housing market this year:

Record low morgage: Mortgage rates hit a record low of 3.94 percent this year. The lowest rates we have seen in years.
Once-in-a-generation time to buy: Homes sold for a fraction of their value five years ago, and excess inventory provided every buyer with a range of options. In some cities, homeownership became cheaper than renting. But job insecurities made buyers nervous to commit. Those who did found it difficult to get financing despite stellar credit scores. As a result, 2011 saw a real estate market with great deals, yet fewer buyers than needed. In 10 years, however, many Americans may look back on 2011 as the best time in a generation to invest in real estate-.
More homeownership: Most renters want to buy a home: 72 percent consider homeownership a good financial decision, and 64 percent believe the time is right, according to the National Association of Realtors® 2011 Housing Pulse survey.
The economy rebounded, sorta, kinda, a little: The Florida economy remained sluggish as unemployment rates stayed uncomfortably high and home sales stayed uncomfortably low; but, across the board, the state showed signs of recovery, with almost every economic indicator suggesting brighter days ahead.
Strong home sales: Home sales edged higher most months; selling prices held their own and, in a few cases, median selling prices rose. Floridians’ consumer confidence also rose toward the end of the year after bobbing around for most of the summer. Employment followed, and while the state has a long way to go to hit “normal,” it reached a 2011 level of “better than last year.”
Attractive commercial market: Florida investors increasingly want to buy office, retail and industrial properties. Vacancy rates, while high, have stabilized, along with rental rates. Core assets (essential to businesses) are selling and lenders – including the life insurance companies – are lending again. Banks are more realistic about prices for distressed properties, and 2012 should see the entry of more commercial tenants. “With modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year,” adds Lawrence Yun, NAR chief economist.
Florida Legislature: We got Amendment 4 and scrapped the cap: Florida Realtors had a number of victories in the 2011 Florida Legislature, but none as important as a constitutional amendment voters will consider in November 2012, and none so hard-fought as a law to “scrap the cap” on Florida’s affordable housing trust funds. Amendment 4, if approved by Florida voters, will create a property tax increase cap of 5 percent each year on non-homestead real estate, down from the current 10 percent cap. It will also give some first-time homebuyers a property tax break that decreases over time. In 2012, Florida Realtors will roll out its “Yes on 4” campaign. In the “scrap the cap” victory, the Florida Legislature agreed to allow all doc stamps earmarked for the affordable housing Sadowski Trust Fund to actually go into the fund.
Fasten your seatbelts. Property insurance is a bumpy ride: Lawmakers wrestled with a question that has been around for years: Should property insurance be affordable or available? If affordable, a major storm could bankrupt the state. If widely available, the cost could drive buyers away and hurt current homeowners. Citizens Property Insurance, the state-owned insurer, sits squarely in the middle of the debate since it covers most of the high-risk properties and, should a major storm hit, would force all Floridians to help pay for damages. To attract private insurers to the state and cut down on the number of owners under Citizens, Gov. Scott and lawmakers made changes. Sinkhole coverage became optional and much more expensive. Citizens dropped about 7,500 coastal homes in early December, and policy costs and rules are set to become even stricter in 2012. The uneasy balance between affordable or available insurance shifted a bit closer to the “available” side.
HAMP, HARP, TARP do little for at-risk homeowners: Falling home values and risky mortgages caused more Florida owners to face foreclosure. The government created, and modified, a number of programs slated to help owners keep their homes, but most applied only to about half of those in trouble – owners who had mortgages held by Fannie Mae or Freddie Mac. Even then, however the carrots held out by HAMP, HARP, TARP and others didn’t entice lenders that feared principal cuts and long-term changes. The issue led to some strategic defaults – foreclosures where investors could afford to pay but walked away as a financial decision – court backups, and a system that allowed some non-paying owners to live in a home for over two years before authorities finally foreclosed. Analysts expect the problem to improve but continue in 2012.
Should we slow the recovery to avoid another crisis? U.S. regulators have conflicting goals: Speed the recovery but, at the same time, take steps to make sure it never happens again. Unfortunately, it hasn’t figured out how to do both. While the federal government has tried to spark home sales through a number of programs (see No. 7 above), it has also created obstacles to homeownership by boosting mortgage rules, tightening appraisal standards and restricting the amount homeowners can deduct from federal taxes. A key concern of Realtors heading into 2012 is the qualified residential mortgage (QRM) rule – a minimum standard that mortgage loans must meet before Fannie Mae or Freddie Mac will consider buying them. Some lawmakers have suggested a 20 percent downpayment, a high standard that will force many buyers to wait years before they can afford homeownership. The discussion will continue in 2012.
2011 Realtors are different than 2005 Realtors: The skills needed to sell a house have changed. Realtors spend a lot more time talking to banks, trying to find out what’s happening with a client’s short sale; asking what paperwork they needed to file or re-file; and understanding new laws that oversee what they can do – and can’t do – when working with short-sale sellers. Realtors learned to accept disappointment – sales that fell apart at the last minute; appraisals that came in lower than hoped; and clients who wanted a bargain below any reasonable expectations.

Wishing you and yours a happy, healthy and prosperous new year!

More parents help kids buy homes

25 12 2011

Twenty percent of baby boomers have helped at least one of their children achieve homeownership by purchasing a home for them, co-signing a mortgage or contributing to the downpayment, according to a survey by Better Homes and Gardens Real Estate.

Another 68 percent of those polled plan to help their children or grandchildren become homeowners down the road.

Experts attribute the trend to low home prices, parents wanting to provide some stability in their children’s lives and the fact that their children lack the necessary cash to make home purchases. These parents recognize that cash transactions offer better deals and quicker closings, or they know their children cannot afford a 20 percent downpayment or have a type of job, such as freelance or part-time, frowned upon by lenders.

However, experts insist that parents should not jeopardize their budgets or their retirement by helping offspring become homeowners, and they should make sure their children can afford the monthly costs and other expenses that accompany homeownership.

Source: CNNMoney

Shadow inventory (pending supply) is down

25 12 2011

Current residential shadow inventory as of October 2011 remained at 1.6 million units – representing a supply of five months – down from a seven-month supply of 1.9 million units one year earlier, according to CoreLogic. It’s the same level reported in July 2011.

Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.

CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.

Data highlights:

* As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.

* Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).

* Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.

* Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.

* Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.

Source: Corelogic.com

Florida existing home and condo sales up in November

25 12 2011

Florida’s existing home and existing condo sales continued its positive upswing in November, according to the latest housing data released by Florida Realtors. Existing home sales increased 11 percent last month with a total of 12,993 homes sold statewide compared to 11,664 homes sold in November 2010.

“It’s really clear that two things are happening in Florida real estate,” said Florida Realtors Chief Economist Dr. John Tuccillo. “No. 1, sales are moving upward – not by a large increase, but definitely, positively on an upward trend. Second, prices are stabilizing. Now, it doesn’t mean that prices have turned around but they are stabilizing, and that’s vital for the market to gain equilibrium.

“The more important factor is that sales are increasing and in large part, that’s due to lenders becoming more educated on how to deal with distressed properties more effectively and in a more timely manner – and that’s helping the Florida real estate markets recover.”

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in November; 10 MSAs had higher existing condo sales.

The statewide median sales price for existing homes remained relatively flat last month at $130,100; a year ago, it was $130,600. According to analysts with the National Association of Realtors (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in October 2011 was $161,600, down 5.8 percent from the previous year, according to NAR. In California, the October statewide median resales price was $278,060; in Massachusetts, it was $275,000; in Maryland, it was $221,765; and in New York, it was $215,900.

In Florida’s year-to-year comparison for condos, 5,590 units sold statewide in November, a 2 percent gain over the 5,464 units sold in November 2010. The statewide existing condo median sales price last month was $86,700; a year earlier, it was $83,000 for a 4 percent increase. The national median existing condo sales price in October was $160,300, according to NAR.

“In recent weeks, we’ve seen encouraging reports of jobs growth and improvements in Florida’s economy,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates have remained at record lows and home prices appear to be stabilizing in many local markets across the state – all positive signs for the housing recovery.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.99 percent in November, down from the 4.30 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Related: NAR: Existing home sales continue to climb in November

Source: National Association of Realtors

Florida ranks high among states in lowering unemployment

25 12 2011

Florida had the second best year among all the states in terms of reducing unemployment over the last year, according to the Bureau of Labor Statistics.

Florida was behind only New Mexico in lowering its official jobless rate from 11.9 percent in November 2010 to 10 percent last month, the bureau said. New Mexico’s jobless rate dropped 2.1 percentage points from 8.6 to 6.5 percent.

Right behind Florida was Michigan, which lowered its rate 1.6 percentage points to 9.8 percent and West Virginia, which saw a 1.7 percentage point drop to 7.9 percent.

Also, the 98,100 jobs that Florida added over the year put the state third in the nation, behind only California and Texas. Still, Florida is just one of eight remaining states with double digit unemployment, though the situation is better than in Nevada, at 13 percent, and California at 11.3 percent. North Dakota has the lowest jobless rate, 3.4 percent.

Gov. Rick Scott talked about the state’s success in a radio appearance Wednesday morning. “We’ve got to get more jobs in the state, but this has been a great year” the governor said during an interview with WFLA Radio in Tallahassee.

Source: News Service of Florida

Jacksonville ranks 9th on the Top 15 U.S. Markets by Clear Capital

13 12 2011

Clear Capital released its Home Data Index (HDI) Market Report with data through November 2011.

Report highlights include:

– U.S. quarter-over-quarter home prices hold their ground and post an increase of 0.3%, while REO saturation rates remain near 25%.
– Quarterly price movements have become more aligned across the four regions within the U.S., with only 2.0 percentage points separating the highest performing region (Midwest at 1.2%) and the lowest performing region (West at -0.8%).
– Though the national year-over-year price change of -2.2% showed slight improvement over last month’s report (-2.8%), it marked 14 consecutive months of yearly declines.
– REO saturation rates remain stable nationally at 24.6% of all transactions.
– The Atlanta MSA bucked the nationwide trend of stability, posting a -9.7% drop in prices quarter-over-quarter.

“The overall market stability in this month’s report gives me hope that housing markets are settling after a very turbulent two years,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past.

“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation. As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets.”

Regional Market Overview (Nov. 2010 to Dec. 2011)

Regional Market Overview (Nov. 2010 to Dec. 2011)

Prices Flat as the Great Plains

– National home prices saw little movement across quarterly, six month, and yearly time periods.
– The West region experienced a slight improvement in quarterly price performance with a smaller decline than last month, and remains the weakest of the four regions.
– The Midwest, South and Northeast regions each turned in positive, but weaker quarterly numbers, compared to last month’s report.

The 0.3% increase for U.S. national home prices, after the 0.6% reported last month shows national home price gains continuing to stabilize and soften from those seen over the summer buying season.

Three of the four regions were generally flat, posting price changes of less than one percent quarter-over-quarter. The Midwest was the only region to see prices move above that threshold with a stronger 1.2% quarterly gain.

The West remained the only region to experience a quarterly price decline of -0.8%, showing a modest improvement over last month’s -1.0%. As this improvement comes at the beginning of the winter slow down, it suggests the stubborn quarter-over-quarter and year-over-year declines seen consistently in the hard hit region may be easing.

15 Highest and Lowest Performing Metro Markets (Nov. 2010 to Dec. 2011)

15 Highest and Lowest Performing Metro Markets (Nov. 2010 to Dec. 2011)

Highest Performing Markets: Holding Fast to Modest Gains

– Quarter-over-quarter gains for the highest performing markets continue to soften.
– Quarterly REO saturation rates hold steady on average, staying below the national rate.
– Four Florida markets maintain positions among the “top 15” list for a second consecutive month.

The highest performing markets continue to weaken quarter-over-quarter, with Washington, D.C. topping the list with 4.8% growth. Even though as a whole, this group hasn’t experienced returns this low since June 2011, each of the 15 markets continued to post quarterly gains. The overall performance of the group has stabilized and tightened, with only 3.1% separating the highest performing market (Washington, D.C.) from the 15th place market (Cleveland).

Four Florida markets (Orlando, Tampa, Jacksonville and Miami) continue to keep their positions among the highest performing markets quarter-over-quarter, rebounding from the steep drops and high levels of foreclosures they experienced over the past two years. Orlando and Miami also show strong year over year performance, topping the list with 5.9% and 5.4% growth respectively. The strong upward price movement for these Florida markets has correlated with a 12% drop in REO saturation over the last year at the state level. The growth in Florida’s MSAs must be described in proper perspective against the state’s precipitous -59.1% drop in prices from peak values in 2006 to today.

The average REO saturation among the top performing 15 markets is steady at 21.6%, trending well against last month’s 22.8% and solidly below the national average of 24.6%. This is a strong contributor to the group’s price stability and performance.

Lowest Performing Markets: Stabilizing, but Fighting REO Saturation

– Atlanta’s quarterly drop is more than double the decline of second place Seattle.
– REO saturation rates remain high but stable for the low performing MSAs, averaging 30.0%.
– Home prices in the Atlanta MSA experienced a very sharp quarter-over-quarter decline, with a notably high REO saturation rate of 42.8%. The increase in REO as a percentage of all sales is the result of a decrease in overall transactions and inflow of distressed properties, and is most likely creating the downward pressure on prices.

Aside from Atlanta, the lowest performing markets didn’t see much change in the rates of decline quarter-over-quarter from last month’s report, averaging -2.3% decline this month compared to -1.7% last month. The average REO saturation rate for the group was mostly unchanged from last month at 30.0%.

In contrast to the steep declines in Atlanta, the Dallas MSA posted a very mild quarter-over-quarter decline of -0.4%. This market has performed relatively well in recent past and is the only MSA on this list to boast a positive year-over-year price increase, at 1.6%. Though this gain is modest, it outpaced the rate of year-over-year growth in nine out of 15 markets on this month’s highest performing markets list.

Overall, the moderation and tightness of price decreases and stability of REO saturation for the lowest performing markets do provide for some degree of optimism for the market as a whole as we move into the softer winter buying season.

Source: Clear Capital

%d bloggers like this: