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

Banks Open to Short Sales.

Banks Open to Short Sales

To meet the terms of the $26 billion mortgage settlement, the nation’s five largest banks are becoming more agreeable to short sales, Inman News reports.

The five banks — Bank of America, Citi, JPMorgan Chase, Ally Financial, and Wells Fargo — have issued most of their relief from the settlement so far in the form of short sales or deeds in lieu of foreclosure.

Under the settlement, the five banks are required to provide $17 billion in aid to home owners, either through loan modifications, principal reductions, or short sales.

To date, 74,614 home owners have received an average of $116,200 each as either a short sale or deed in lieu of foreclosure.

Since January, sales of homes in the pre-foreclosure process — usually taking the form as short sales — have been rising. In fact, they reached a three-year high in the first quarter, RealtyTrac reports. Meanwhile, the number of foreclosure sales has been declining.

Besides short sales and deed in lieu of foreclosure, mortgage servicers are also increasingly offering first-lien loan modifications to struggling home owners. According to a progress report on the settlement, 7,093 borrowers received first-lien loan modifications, averaging about $105,650 per borrower.

Source: “Banks Using Short Sales to Meet Robo-signing Obligations,” Inman News (Sept. 4, 2012)

Buyer Pet Peeves When Touring Homes.

Buyer Pet Peeves When Touring Homes

What makes home buyers grimace when they tour a home for-sale? Don’t let one of your listings fall prey to one of these common buyer pet peeves. A recent article at Zillow highlights some of the following turn-offs:

• Pets: Dirty kitty litter boxes or dog toys scattered in a room can turn off buyers who associate pets with unsanitary homes. Remove all traces of pets in a home and pay attention to the home’s smell; get rid of any lingering pet odors when homes are for sale.
• Kid items: Don’t let the kids overtake a home with toys cluttering every square inch. Also, pay attention to any sanitary or personal items involving infants. For example, “leaving breast milk, a breast pump, or dirty baby bottles on the kitchen counter could make a buyer feel that the home isn’t clean or sanitary,” according to the Zillow article.
• Personal items: Watch the cleanliness of the bathroom and what’s left out: For example, make sure toothpaste residue isn’t left in the sink or prescription medications are left out in the open. “Buyers want to feel clean in the bathroom … they don’t need to be reminded that they will be taking over a ‘used’ bathroom,” according to the Zillow article.

Source: “5 Turn-Offs When Buyers Tour Your Home,” Zillow (Aug. 31, 2012)

Foreclosure Prices Rise, Highest Increase Since 2006.

Foreclosure Prices Rise, Highest Increase Since 2006

Foreclosure sales prices rose 6 percent in the second quarter and were up 7 percent year-over-year, RealtyTrac reported this week. This marks the largest annual increase in foreclosure -related sales prices since 2006.

During the second quarter, the average foreclosure -related sales price was $170,040.

Still, foreclosure and bank-owned homes sold at an average price that was 32 percent lower than the average price of a non-foreclosure home, RealtyTrac reports.

Meanwhile, the gap between REO sales and short sales continued to narrow during the second quarter. REO sales outnumbered pre-foreclosure sales by 9,833 — the smallest difference since the third quarter of 2007.

The number of short-sale transactions rose 18 percent year-over-year, accounting for 14 percent of all sales during January through May time period, RealtyTrac reports.

“The second-quarter sales numbers provide solid statistical evidence of what we’ve been hearing anecdotally from real estate agents, buyers, and investors over the past few months: There is a limited supply of available foreclosure inventory to choose from in many markets,” says Daren Blomquist, RealtyTrac vice president. “Given this shortage of supply and the seasonally strong buyer demand in the second quarter, it’s no surprise that the average foreclosure-related sales price increased both on a quarterly and annual basis.”

Source: RealtyTrac