Undeveloped Land in High Demand.

Undeveloped Land in High Demand.

Investors have a new target in real estate: undeveloped land. They’re snatching up undeveloped land heavily discounted in bankruptcy proceedings from developers and banks that foreclosed on the builders once they ran out of money for their projects, Reuters reports.

The investors then resell the land for up to 20 percent or more returns on their investment. Or, in a buy-and-hold strategy, the investors partner with home builders to develop the land.

“We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery,” Michael Barr, a Paulson & Co. portfolio manager, told Reuters. “Undeveloped land is the highest-returning component of the home building equation.”

Investors find the most attractive land to buy is a parcel that already has all the planning permissions in place to start construction. Otherwise, the approval process for building on the undeveloped land from local and state agencies can be costly and timely.

Source: “Investors Cash-in on Land Deals as U.S. Housing Picks Up,” Reuters (Sept. 10, 2012)

Back-to-School Mentality Drives Housing for Fall.

Back-to-School Mentality Drives Housing for Fall

Forty percent of real estate agents and brokers say the end of vacation season will likely bring a refocus on real estate and a primary driver behind fall home sales, according to a recent survey. ERA Real Estate has dubbed it the “ back-to-school mentality” for the real estate market.

ERA Real Estate surveyed brokers and agents to determine fall trends. Twenty percent of brokers and agents say that buyers’ desires to be in a new home for the holidays as a main motivator in getting more people moving, and 10 percent say a main motivation will be buyers who want to complete their home purchase before the end of the year so they can take advantage of the tax benefits of home ownership.

ERA expects the market of buyers to be made up of the following mix in the fall:

• 27% first-time home buyers
• 20% move-up buyers
• 17% downsizing/retiring buyers
• 14% investors
• 11% military relocations
• 6% vacation home buyers
• 5% other

Source: “Fall Trends in Housing: Back-to-School Mentality Drives Activity,” RISMedia (Sept. 10, 2012)

Home prices have Progressed, But Have they Recovered?

Home prices have Progressed, But Have they Recovered?

Home prices have posted some of their strongest gains this year in nearly six years. But while prices have likely hit bottom, the public shouldn’t confuse that with a full recovery. A lot more still has to happen to get to that point, analysts say.

For one, inventories of homes for-sale need to reach more normal levels. The number of homes for sale are at an eight-year lows, The Wall Street Journal reports. Home prices are rising in many areas but it’s because “there are more buyers chasing fewer homes and fewer distressed homes, such as foreclosures,” The Wall Street Journal reports.

Also, millions of home owners are underwater, owing more on their mortgage than their home is currently worth, which is preventing them from trading up and moving to a new home.

Home prices have been increasing at the fastest rate in markets that have some of the highest number of underwater home owners because so few homes are for sale, according to The Wall Street Journal.

“While low inventories have helped firm up Home prices, they could also soon lead to year-over-year declines in sales volumes because there aren’t enough homes on the market to sustain the current sales pace,” The Wall Street Journal reports.

Other challenges the housing market still faces on its road to recovery include the stringent lending standards that are preventing many potential buyers from qualifying for a loan. Also, a large overhang of distressed mortgages has the potential to cause foreclosures to rise. Furthermore, if high unemployment across the country continues, it will putoff rising home prices.

Source: “Housing on Mend, but Full Recovery Is Far Off,” The Wall Street Journal (Sept. 9, 2012)

Smaller Banks Now Under Fire for Foreclosure Abuses.

Smaller Banks Now Under Fire for Foreclosure Abuses

After a landmark mortgage settlement against the nation’s largest banks earlier this year, the U.S. state attorneys general are now investigating smaller banks for alleged foreclosure mishandlings.

The U.S. state attorneys general are reportedly targeting U.S. Bancorp, PNC Financial Services Group Inc., SunTrust Banks Inc., and HSBC Holdings Plc.

The banks have yet to speak publicly about the investigation or any potential settlement talks. But several of the smaller banks have reportedly set aside millions of dollars in reserves in case a settlement is reached.

“If a settlement were reached it would likely include an agreement by the smaller banks to comply with specified servicing standards, and settlement payments to governmental authorities as well as a monetary commitment that could be satisfied under various loan modification programs,” according to a filing by U.S. Bancorp.

Earlier this year, state attorneys general and federal officials reached a landmark $25 billion settlement with the nation’s five largest banks over foreclosure mishandling. The banks involved in the settlement were JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, and Ally Financial Inc. As part of the settlement, the banks were required to provide aid—in the form of debt forgiveness, loan modifications, forbearances, or short sales—to struggling home owners as well as compensate home owners who had wrongfully lost their homes to foreclosure.

Source: “Four Regional Banks Discuss Settlement Over Foreclosures,” Bloomberg-Businessweek

Homes Are Selling Faster.

Homes Are Selling Faster

Sales are quickening their pace as the time to sell a home decreases and falls more in line with a “balanced” housing market, according to new research by the National Association of REALTORS®.

The median time a home listed for sale was on the market in July was 69 days, down from 98 days one year earlier. Broken down further, one-third of homes purchased in July were on the market for less than a month, and one in five of homes purchased in July were on the market for at least six months.

“As inventory has tightened homes have been selling more quickly,” says Lawrence Yun, NAR’s chief economist. “A notable shortening of time-on-market began this spring, and this has created a general balance between home buyers and sellers in much of the country. This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren’t often languish on the market.”

By the end July, a 6.4-month supply of homes were on the market at the current sales pace. That is 31.2 percent below year-ago levels, when there was a 9.3-month supply.

With supplies of homes tighter, economists expect home prices to continue their trend upward.

“Our current forecast is for the median existing home price to rise 4.5 to 5 percent this year and about 5 percent in 2013, which is somewhat stronger than historic norms because of the inventory shortfall that is most pronounced in the low price ranges,” Yun says.

Source: National Association of REALTORS®

Housing Indexes Point to Pricing Rebound.

Housing Indexes Point to Pricing Rebound

Several housing indicators in recent months are all revealing a similar trend: Home prices are rising in most markets across the country.

The latest housing index from CoreLogic, based on July multiple listing service data, shows national home prices are up 3.8 percent from a year ago in July.

According to CoreLogic, that is the largest annual increase since August 2006.

“It’s been six years since the housing market last experienced the gains that we saw in July, with indications the summer will finish up on a strong note,” says Anand Nallathambi, president and CEO of CoreLogic. “Although we expect some slowing in price gains over the balance of 2012, we are clearly seeing the light at the end of a very long tunnel.”

According to CoreLogic the states seeing the largest price increases were Arizona (16.6%), Idaho (10%), Utah (9.3%), South Dakota (8.3%), and Colorado (7.3%).

CoreLogic’s index follows on the heels of the National Association of REALTORS®’ existing-home sales index for July, which showed home prices up 9.4 percent from a year ago. Home prices have risen for the last five consecutive months, according to NAR research.

Also, last week, the S&P/Case-Shiller housing Price index showed national home prices up 1.2 percent from a year ago during the second quarter.

Each housing index may differ somewhat because it pulls data from different sources and uses different metrics.

Source: REALTOR® Magazine Daily News