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  1. Housing Market Yet to Bottom Out, Home Prices Continue Fall in October

    By on December 27, 2011

    Home prices fell again in October, according to the newest S&P/Case Shiller Home Price Index. The 10-city composite fell 1.1% from September while the 20-city index fell 1.2% over the same time frame.  The 10-city index is now down 3.0% from October 2010, while the 20-city index is down 3.4% from last year. Both indices are hovering around the same place they were in 2003. The S&P/Case Shiller Home Price Index is a three month average that is two months delayed.

    David Blitzer, Chairman of the Index Committee commented:

    “There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September. Eleven of the cities and both composites fell by 1.0% or more during the month. And even though some of the annual rates are improving, 18 cities and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.0% and the 20-City is down 3.4% compared to October 2010.

    “In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve. The crisis low for the 10-City Composite was back in April 2009; whereas it was a more recent March 2011 for the 20-City Composite. The 10-City Composite is about 2.4% above its relative low, and the 20-City Composite is about 1.9%.

    The only cities that saw year-over-year price improvements were Washington, D.C. (+1.3%) and Detroit (+2.5%). The cities seeing the biggest year-over-year losses were Atlanta (-11.7%), Las Vegas (-8.5%), and Minneapolis (-8.4%).

    At the end of the day, the housing market is still dealing with the same fundamental issue it has been dealing with for more than three years: a fundamental imbalance in the supply of houses and the demand for them.  The lack of demand is caused by trepidation about continuing price declines, lack of consumer confidence, unemployment. and a low rate of household formation due to unemployment.  The supply of homes is bloated primarily due to over-building during the bubble years and foreclosure.

    The problem is that all these factors create a vicious cycle that continues to drag down home values.  The lack of any sort of cohesive housing policy from the White House and our Congress is not helping matters.

    While the rate of home price declines is slowing, I don’t think most markets have hit bottom yet.  I fear that we still have a ways to go before we start seeing real improvements.

    Category: Mortgage Rates

  2. RadarLogic: Home Prices Fell 2.0% From September to October

    By on December 23, 2011

    Yesterday RadarLogic published its RPX Monthly Housing Report for the month of October. The found that homes prices were down 5.4% from October 2010, and 2.0% from September 2011.  This is the largest month-over-month decline in three years.  According to the report, there may be some seasonal factors at play here:

    “During the past two years, the RPX Composite price has dropped rapidly from August through October, temporarily stabilized in November, then dropped rapidly again in December and January.  If this pattern repeats this season, the RPX Composite will decline another five percent or so through early February, 2012.  From there, we expect it to stabilize temporarily before beginning its seasonal assent during the spring buying season.”

    Next Tuesday, the S&P/Case-Shiller Home Price Index for October will be released.  RadarLogic anticipates that this report will show a month-over-month decline, which I think is a pretty safe assumption.

    The same factors that have been causing home prices to fall for the past couple of years are still plaguing the housing market.  There is an acute lack of demand for housing in many markets as a result of unemployment, lack of consumer confidence and job security, and a low rate of household formation.  There is an overhang of homes both on the market and in shadow inventory as a result of foreclosure and overbuilding during the bubble years.  This is a simplification of the situation, but as long as this imbalance in supply and demand exists, home prices will continue to fall on average. With real estate being local, some markets are in better shape than others, and some places will begin to see improvements in the housing market before others.

     

     

     

    Category: Mortgage Rates

  3. Fannie Mae: Housing Will Experience a “Subdued Recovery” in 2012.

    1 By on December 20, 2011

    Today Fannie Mae released it Economics and Mortgage Market Analysis for December.  Fannie Mae economist Doug Duncan noted that “fourth-quarter economic activity seem[s] to indicate we will end 2011 on a positive note…however, the U.S. economy continues to face many obstacles, and we expect momentum to slow going into 2012″.

    As with everybody else, Fannie’s predictions for 2012 are muddled due to the ongoing European debt crisis.  Despite efforts by European authorities to formulate some sort of plan to deal with the problems, a solution has remained elusive, and the specter of sovereign defaults in Europe looms over the markets.  Duncan noted that “the global economic recovery appears to be losing steam.  We now expect that the Euro Zone has slipped into a recession in the current quarter that will likely last through the first half of 2012″.

    Another complicating factor is the uncertainty surrounding U.S. fiscal policy.  The ongoing payroll tax extension battle in Congress is emblematic of this.  Our elected officials are not very good at compromise, and the direction of U.S. fiscal policy is cloudy to say the least. Duncan notes that “fiscal contraction at all levels of government, including the scheduled increase in payroll taxes and reduction in unemployment benefits, will restrain growth”.

    As to housing, Fannie says that there are signs that low mortgage rates are spurring demand, and recent housing numbers (residential home construction and homebuilder confidence) have improved significantly (although by many measures home prices are still falling).  Regardless of recent improvements, Fannie predicts a “subdued recovery” for housing in 2012, muted by low household formation and an uncertain job market.

    Interestingly, Fannie “do[es] not anticipate that the Fed will engage in another round of quantitative easing” unless the European debt crisis gets worse, in which case the Fed could buy mortgage backed securities in an effort to drive down mortgage rates.  Personally, I think it is likely that the situation in Europe will get worse, and that the Fed will engage in QE3.

     

     

     

     

     

    Category: Mortgage Rates

  4. Home Prices Down 0.6% in September, Down 3.6% From Last Year

    By on November 29, 2011

    This morning S&P published the S&P/Case-Shiller Home Price Index for September.  The index is a three month average of home prices in 20 major U.S. cities, delayed by two months.  It was found that home prices were virtually unchanged in the third quarter of 2011, rising 0.1% from the second quarter.  The pace of year-over-year declines slowed, with home prices down 3.9% from Q310 to Q311, compared to losses of 5.8% from Q210 to Q211.

    Home prices in September for the 10- and 20-city indices were down 3.3% year-over-year and 3.6% year-over-year, respectively. David Blitzer, Chairman of the Index Committee at S&P commented:

    “Home prices drifted lower in September and the third quarter.  The National Index was down 3.9% versus the third quarter of 2010 and up only 0.1% from the previous quarter.  Three cities posted new index lows in September 2011 – Atlanta, Las Vegas, and Phoenix.  Seventeen of the 20 cities and both Composites were down for the month. Over the last year home prices in most cities drifted lower.  The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy”.   

    Continue Reading…

    Category: Mortgage Rates

  5. Clear Capital: Home Prices Fell 2.8% From Last Year – “Expect Another Long Winter”

    By on November 3, 2011

    According to Clear Capital’s November 2011 Market Report, home prices declined 2.8 percent from October 2010 to October 2011.  Rolling quarterly gains were minimal, with prices only rising 0.6 percent.

    Regionally, home prices retreated in three of four regions year-over-year.  Prices were up by 1.2 percent in the Northeast, but fell by 2.4 percent in the South, 3.6 percent in the Midwest, and 5.5 percent in the West.

    On an annual basis, the worst performing housing markets were Seattle (-14.4%), Detroit (-12.7%), Tuscon (-11.8%), Las Vegas (-10.7%), and Atlanta (-10.6%).

    Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital struck a negative note:

    “October home prices gains have leveled out, confirming what out data has pointed to over the last several months.  Short term gains have been nearly eliminated while longer term performance measures point to mostly negative territory through the turn of the year.  With current tepid demand expected to weaken even more consumer confidence at record lows, and as the distressed inventory continues to flow into the market, we can expect another long winter as the housing market will truly be put to the test against these downward forces”.

    The same headwinds that have faced the housing market for the past few years are still in effect: lack of demand for housing due to unemployment and uncertainty, a glut of supply due to foreclosure and price declines, negative equity preventing home sales, and tight credit.  Our elected officials have done precious little to help the situation in any meaningful way.

    There is nearly $700 billion worth of negative equity in the housing market, and until something is done about negative equity (and unemployment) we are unlikely to see any real improvement in home prices.

    Category: Mortgage Rates

  6. Home Prices Down 3.8% Year-Over-Year, But Above Crisis Lows

    By on October 25, 2011

    This morning S&P/Case-Shiller released the Home Price Index for August.  Home prices declined slightly more than expected.  The 20-city index fell 3.8% from August 2010 to August 2011.  Expectations were for a decline of 3.5%.  Prices were more or less stable from July to August, with both the 10- and 20-city indices rising 0.2%.  The S&P/Case-Shiller Home Price Index is a three month average of home prices with a two month lag.

    David Blitzer, the Chairman of the Index Committee at S&P remarked:

    “There was some weakness in the monthly statistics, as 10 of the cities post price declines in August over July.  And even though the annual rates are largely improving, 18 MSAs and  both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.5% and the 20-City is down 3.8% compared to August 2010. 

    “In the August data, the good news is continued improvement in the annual rates of change in home prices. In spring and summer’s seasonally strong period for housing demand, we cautioned that monthly increases in prices had to be paired with improvement in annual rates before anyone could declare that the market might be stabilizing.  With 16 of 20 cities and both Composites seeing their annual rates of change improve in August, we see a modest glimmer of hope with these data.  As of August 2011, the crisis low for the 10-City Composite was back in April 2009; whereas  it was a more recent March 2011 for the 20-City Composite.  Both are about 3.9% above their relative lows.”

    The 10-city and 20-city indices are down 30.9% and 30.8%, respectively, from their peaks in summer 2006.  Only two markets, Detroit and Washington, D.C. are showing year-over-year gains.

    The housing market still faces the same obstacles to recovery that it has for more than three years.  There is $700 billion worth of negative equity in the housing market.  There is still a massive overhang of unsold homes, both on the market and on bank inventory sheets.  There is little demand for these homes because of continuing high unemployment, lack of consumer confidence, and tight credit.  The imbalance in supply and demand will cause prices to continue to fall as we enter the winter, which is traditionally slow for home sales.

    The failure of of elected officials to do much of anything to address negative equity and the unemployment problem will guarantee continued pain for housing.

     

     

    Category: Mortgage Rates

  7. Fannie Mae: Americans Remain Pessimistic About the Housing Market

    By on October 10, 2011

    Fannie Mae released its Monthly National Housing Survey for September this morning.  The results of the survey showed that Americans are still extremely pessimistic about the future of the housing market.  If the economy is founded on confidence more than anything else, we should be worried about the near future regardless of what the economic indicators tell us.

    A full 77% of the people interviewed for the survey said that they believed that the economy was on the wrong track, about the same as the month before.  26% of respondents say that home prices will decline in the next year, with 18 percent saying they will increase, and 55 percent saying they will remain the same.  The average expectation is that home prices will decline by about 1.1%.  Doug Duncan, chief economist for Fannie Mae commented:

    “The September survey showed a marked deterioration in consumer expectations of home prices over the next year—their weakest outlook since monthly tracking began in June 2010.  Despite a decline in negative economic headlines during September – in contrast to their ubiquity during the debt ceiling debate in August – consumers continue to demonstrate very negative attitudes. At the same time, the share of consumers expecting mortgage rates to go up dropped sharply to the lowest level we have recorded, likely influenced by the news that the Federal Reserve will attempt to keep interest rates low for years to come.”

    Continue Reading…

    Category: Mortgage Rates

  8. Home Prices Rose in July on Seasonal Factors

    By on September 27, 2011

    The S&P/Case-Shiller Home Price Index for July was released this morning.  It showed that both the 10- and 20-city index experienced their fourth consecutive monthly increase (0.9% for both).  Despite the increase, the 10-city index was down 3.7% year-over-year, and the 20-city index was down 4.1% year-over-year.

    Much of the increase in prices can be attributed to seasonal factors rather than a fundamental improvement in the housing market or the broader economy.  David Blitzer, the Chairman of the Index Committee noted that despite rising prices commented:

    “While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery. Eighteen of the 20 cities and both Composites are showing that home prices are still below where they were a year ago.  The 10-City Composite is down 3.7% and the 20-City is down 4.1% compared to July 2010. Continued increases in home prices through the end of the year and better annual results must materialize before we can confirm a housing market recovery”.  

    “However, if you look at the state of the overall economy and, in particular, the recent large decline in consumer confidence, these combined statistics continue to indicate that the housing market is still bottoming and has not turned around.”

    Continue Reading…

    Category: Mortgage Rates

  9. HUD Housing Scorecard for June Shows Mixed Results

    By on July 5, 2011

    Last week the Obama Administration and HUD released their Housing Scorecard for June.  They said that the housing market “remains fragile” and recent data points to a “mixed picture of recovery.”

    HUD Assistant Secretary Raphael Bostic commented:

    “The housing data in this month’s Scorecard paint a mixed picture of the housing market, despite growing evidence of progress in the broader economy.  Last month we saw a slight uptick in home prices and a continued decline in mortgage defaults as our foreclosure prevention programs reach more borrowers upstream in the process.  But we have much more work to do to reach the many households who still face trouble and to help the market recover.  That is why this Administration continues to push for effective implementation of our recovery programs as we continue to help homeowners through this crisis.”

    Here are just some of the other factoids from the report that I found interesting:

    Continue Reading…

    Category: Mortgage Rates

  10. Foreclosures Continue to Pile Up in South Florida

    By on May 27, 2011

    There were a couple of good articles in the South Florida Sun Sentinel earlier this week that really highlighted the problems in the Florida housing market.  The first article is by Kimberly Miller.  It describes the backlog of foreclosures that are clogging the courts.

    Florida was one of the states that was most impacted by the housing bubble.  Home prices collapsed, to the point where more than 40 percent of South Florida homes are underwater.  Foreclosure rates exploded and foreclosure abuses were commonplace (see this unambiguously titled report composed by the Florida Attorney General: “Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases“).

    Now, there are now more than 466,000 foreclosed homes in Florida, accounting for 23.7 percent (!) of all of the foreclosures in the United States.  This has created a huge logjam of foreclosure cases in the Florida court system.  In response to this, the state created special foreclosure courts a couple of years ago to handle the workload.  Retired judges were hired in order to deal with the cases.  The courts operated so quickly that they were known as the “rocket docket“.  The problem was that oftentimes judges were essentially rubber-stamping foreclosures without much heed to pesky legalities.  The rocket dockets are closed now, ostensibly due to a budget crunch.  While I applaud this move, it is exacerbating the backlog of foreclosures.  It is unclear how this problem will be solved.

    Just as problematic is that demand for foreclosures appears to be dropping, as detailed in this article by Paul Owens.  Foreclosure sales in South Florida in the first quarter were down 11 percent from the prior quarter, and 20 percent year-over-year.  The robo-signing scandal has cast some doubts over the ownership of foreclosed properties, and it can take seemingly forever for the sale of a distressed property to be completed. Despite these issues, nearly 40 percent of home sales in South Florida involved distressed property.

    While many housing markets are at least beginning the healing process, the situation in Florida seems to be getting worse, without much light at the end of the tunnel.

    Category: Mortgage Rates

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