Foreclosure Rates Near a ‘Significant Milestone’

Foreclosure Rates Near a ‘Significant Milestone’. Image courtesy of digitalart / FreeDigitalPhotos.net

Foreclosures continue to fall across the country and the return to normal levels may be on the horizon for many places, according to a new report.

Foreclosure filings fell 4 percent in February, reaching the lowest level since July 2006, according to RealtyTrac’s U.S. Foreclosure Market Report. Foreclosure filings reflect the number of default notices, scheduled auctions, and bank repossessions. The U.S. foreclosure rate now stands at one in every 1,295 homes that received a foreclosure filing in February.

“Given that August 2006 was the peak of the housing bubble, this eight-and-a-half year low in foreclosure activity is a significant milestone and a sign that nationwide foreclosure activity is on track to return to historic norms this year — and is possibly even headed below historic norms given the skinny-jeans-tight lending standards over the past five years,” says Daren Blomquist, vice president at RealtyTrac. “In markets where foreclosures were processed more efficiently we are seeing foreclosure numbers now below pre-crisis levels in some cases. Conversely, the cleanup of deferred distress is continuing in markets where a logjam of in-limbo foreclosures is still lingering from the housing crisis — as evidenced by rebounding foreclosure activity in those markets.”

24 states posted year-over-year increases in foreclosure activity. Activity was most elevated in Massachusetts (up 53% year-over-year) and New York, up 19 percent.

States With the Highest Foreclosure Rates

The following states posted the nation’s highest foreclosure rates:

1. Maryland: 1 in every 564 housing units received a foreclosure filing in February (foreclosure activity has fallen 1 percent compared to a year ago there, however)

2. Nevada: 1 in every 569 homes received a foreclosure filing (a 12 percent rise from a year ago mostly from a rise in foreclosure starts)

3. Florida: 1 in every 570 housing units (despite a 35 percent decrease in foreclosure activity compared to a year ago)

4. Indiana: 1 in every 871 housing units

5. Idaho: 1 in every 877 housing units

6. New Jersey: 1 in every 895 housing units

7. Illinois: 1 in every 906 housing units

8. Delaware: 1 in every 957 housing units

9. Ohio: 1 in every 1,000 housing units

10. North Carolina: 1 in every 1,088 housing units

Source: RealtyTrac

Mortgage Lenders Say Credit Is Easing

Mortgage Lenders Say Credit Is Easing. Image courtesy of stockimages / FreeDigitalPhotos.net

More lenders expect mortgage demand and profit margins to increase over the next three months, according to Fannie Mae’s first quarter 2015 Mortgage Lender Sentiment Survey.

More lenders say the credit tightening is softening, according to the survey. Seventy-one percent of lenders surveyed about government-sponsored enterprise purchase loans say they expect purchase mortgage demand to rise over the next three months. That’s a notable increase from last year, when 59 percent of lenders were optimistic about an increase.

What’s more, 41 percent of lenders report they expect their profit margins to rise, compared to only 21 percent who were upbeat about their profits last year.

“These results are consistent with our view that an improving economy, strengthening employment, and increasing consumer confidence should support a modest housing expansion in 2015, after an uneven and disappointing year for housing activity in 2014,” says Doug Duncan, Fannie Mae’s chief economist.

The message seems to be getting out to consumers too. Fannie Mae’s recent National Housing Survey, a poll of around 1,000 Americans, showed that 54 percent of consumers say that they believe getting a mortgage is now easy – a survey high.

Source: Fannie Mae

U.S. Homes Ended 2014 With Equity

U.S. Homes Ended 2014 With Equity. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Eighty-nine percent of all U.S. properties with a mortgage — or about 44.5 million — had equity by the end of the fourth quarter of 2014, according to CoreLogic.

If home prices rise by 5 percent, an additional 1 million home owners currently in negative equity could come back into the black.

The majority of properties with equity are concentrated at the high end of the housing market, according to the report. Ninety-four percent of homes valued at more than $200,000 have equity compared with 84 percent of homes valued less than $200,000.

While more home owners are regaining equity overall, the number with negative equity is still high.

“Negative equity continued to be a serious issue for the housing market and the U.S. economy at the end of 2014, with 5.4 million home owners still underwater,” says Anand Nallathambi, president and CEO of CoreLogic. “We expect the situation to improve over the course of 2015.”

The states with the highest number of properties in negative equity in the fourth quarter were:

• Nevada: 24.2%
• Florida: 23.2%
• Arizona: 18.7%
• Illinois: 16.2%
• Rhode Island: 15.8%

On the other hand, the following states had the most homes with (positive) equity:

• Texas: 97.4%
• Alaska: 97.2%
• Montana: 97%
• Hawaii: 96.3%
• North Dakota: 96.2%

Source: “CoreLogic Q4 2014 Equity Report,” CoreLogic (March 17, 2015)

Why Renters May Be in Trouble

Why Renters May Be in Trouble. Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

The gap between rental costs and household income is widening to unsustainable levels across the country. As more renters face steeper costs, it may put them even further away from home ownership, according to a new study released by the National Association of REALTORS®. NAR evaluated income growth, housing costs, and changes in share of renter and owner-occupied households over the past five years in metropolitan statistical areas across the U.S.

Over the last five years, a typical rent rose 15 percent, while the income of renters grew by only 11 percent, according to their research.

“The gap has worsened in many areas as rents continue to climb and the accelerated pace of hiring has yet to give workers a meaningful bump in pay,” says Lawrence Yun, NAR’s chief economist.

New York, Seattle, and San Jose, Calif., are among the cities where combined rent growth far exceeds wages, according to the survey.

“Current renters seeking relief and looking to buy are facing the same dilemma: Home prices are rising much faster than their incomes,” says Yun. “With rents taking up a larger chunk of household incomes, it’s difficult for first-time buyers – especially in high-cost areas – to save for an adequate down payment.”

Meanwhile, those who were able to buy a home in recent years have been insulated from the rising housing costs since they were able to lock-in a low 30-year fixed-rate mortgage with a set monthly payment, according to NAR’s study. As such, home owners were able to grow their net worth as home values increased and their mortgage balances went down.

“The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing housing costs every year,” according to NAR’s study.

The markets that have seen rents rise by the highest amounts since 2009 are:

• New York: 50.7%
• Seattle: 32.38%
• San Jose, Calif.: 25.6%
• Denver: 24.14%
• St. Louis: 22.26%

“Many of the metro areas that have experienced the highest rent increases are popular to millennials because of their employment opportunities,” says Yun.

The key to relieve housing costs: Builders need to ramp up the supply of new-home construction, according to Yun. He estimates that housing starts need to rise to 1.5 million. Over the past seven years, housing starts have fallen far short from that historical average – averaging about 766,000 per year.

“With a stronger economy and labor market, it’s critical to increase housing starts for entry-level buyers or else many will face affordability issues if their incomes aren’t compensating for the gains in home prices,” Yun says.

Source: National Association of REALTORS®

Home Improvement Spending Is Booming

Home Improvement Spending Is Booming. Image courtesy of Sira Anamwong / FreeDigitalPhotos.net

The home improvement industry could see record-breaking spending in 2015, according to a newly released report from the Joint Center for Housing Studies of Harvard University. Since the recession, the home improvement industry has outpaced the broader housing market’s recovery.

There are several factors behind the increase, such as the strengthening of the economy, recovering home prices, federal and state stimulus programs that are prompting a rise in energy-efficient upgrades, and rental property owners who are reinvesting in their properties to attract new tenants.

“After years of declining revenue and high failure rates, the home improvement industry is, to some extent, reinventing itself,” says Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “The industry is finding new ways to address emerging growth markets and rebuild its workforce to better serve an evolving customer base.”

Remodelers point to several growth areas, including retiring baby boomers looking to make accessibility improvements to allow them to age in place, sustainable home improvements and energy-efficient upgrades due to growing environmental awareness, and future projected growth from millennials.

“The millennials’ increasing presence in the rental market has already helped to lift improvement spending in that segment,” says Chris Herbert, managing director of the Joint Center. “It’s only a matter of time before this generation becomes more active in the housing market, supporting stronger growth in home improvement spending for decades to come.”

Most of the increase in home improvement spending has occured in metro areas with higher home values and incomes, the report notes. Owners in metro areas spent 50 percent more on improvement projects, on average, than their non-metro counterparts in 2013.

Source: “Emerging Trends in the Remodeling Market,” Joint Center for Housing Studies at Harvard University (March 2015)

The Social Media Networks Businesses Hate

The Social Media Networks Businesses Hate. Image courtesy of khunaspix / FreeDigitalPhotos.net

Small business owners have a love-hate relationship with Facebook. The social network can be great for staying connected to clients and prospects, but it’s difficult for small business owners to maintain their business pages, according to a recent survey from Manta.com, a network to find local businesses.

Manta.com recently polled more than 1,200 small business owners to find out which social media network is the hardest for them to maintain. Facebook landed No. 1 on the list, with 18 percent of small business owners answering that maintaining their Facebook page is the most taxing on their business.

LinkedIn was only a struggle for 10 percent of small business owners, but landed No. 2 on the list, while Twitter followed at No. 3 with 9 percent saying the social network is tough for them to maintain.

Small business owners are increasingly turning to social media to connect with consumers, though some owners may be finding their networks difficult to maintain and with little pay off. This may be because, as Forbes.com contributor Ian Altman notes, they spend too much time making sales pitches rather than highlighting how they can help their prospects. Altman, author of “Same Side Selling” and “Upside Down Selling,” says businesses using social networks need to emphasize in their contacts how they can help their network rather than constantly selling something.

Bottom line: “The goal of a community is not in raw numbers,” Altman notes. “If you measure impressions and shares, you might be missing the point of connecting. If the person who connected to you knew you’d be sending them a daily message promoting yourself, they might not have accepted the connection in the first place. Rather, you want to attract like-minded people where you an add value.”

Source: “The Social Media Platforms Small Business Owners Hate Most,” Forbes.com (March 2015) and “Annoying Social Media Tactics That Cost You Business,” Forbes.com (March 10, 2015)