The 858 REALTY News

Mortgage Rates Fall Yet Again
September 4th, 2010 10:00 AM
Mortgage rates have hit a new record low for the 10th time in 11 weeks as investors continue to turn to Treasury bonds as a safe haven; the shift in money is cutting yields, which mortgage rates tend to follow.

Freddie Mac reports that 30-year fixed loans averaged 4.32 percent, down from 4.36 percent a week ago; and the 15-year fixed rate fell to a new low of 3.83 percent, down from 3.86 percent.
Posted by Robert Torre on September 4th, 2010 10:00 AMPost a Comment (0)

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Commercial Real Estate Yields Spur Investors
September 2nd, 2010 9:22 AM
Yields on U.S. commercial real estate are nearing a record high compared to Treasury bonds. Many investors take that as a signal to buy property.

Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, as calculated by the National Council of Real Estate Investment Fiduciaries. That was 4.29 percentage points higher than the yield on 10-year government bonds as of June 30 and 4.75 percentage points higher than Treasury yields as of Aug. 31.

These returns are near the record 5.39 percentage points in the first quarter of 2009, when the U.S. was dealing with the worst economic downturn since the Great Depression. The spread shrank to less than 80 basis points when commercial real estate prices peaked in 2007.

“The data indicate that real estate is poised for a rebound,” says Gerardo Lietz, who advises pension funds on property investments.
Posted by Robert Torre on September 2nd, 2010 9:22 AMPost a Comment (0)

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Housing Experts Say Tax Credit Had to End
September 1st, 2010 8:25 AM
Will the government revive tax credits to encourage home sales? Housing experts are dubious.

Even suggesting that the tax credit might be revived could have a negative effect on the market, says housing economist Tom Lawler, because it could “lead many a prospective home buyer to hold off on buying a home.”

Earlier this month Richard Dugas, CEO of PulteGroup Inc., said earlier in August on an earnings call: “Almost regardless of how future demand plays out, we still believe that the tax credit had to end. We need to know the true level of demand without government stimulus distorting the market so that we can continue to properly position our business for ongoing improvement.”
Posted by Robert Torre on September 1st, 2010 8:25 AMPost a Comment (0)

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5 Reasons Homeownership Trumps Renting
August 30th, 2010 10:15 PM
The seemingly endless run of bad housing news is discouraging some potential home buyers from considering a purchase. But the truth is that the advantages of homeownership have very little to do with investment gains. The best things about owning a home have a lot more to do with personal comfort and satisfaction.

Here are five of them:

· Be your own landlord. The bank can only kick you out if you don’t pay; a landlord can be much less dependable – deciding to sell the property or choosing to live there themselves.
· Paying the principal is forced savings. Yes, it’s possible that home prices will fall further. It is also possible that your 401(k) will lose value. But over the long haul, both are likely to enjoy modest gains in value.
· Fixed-rate mortgages never rise – and eventually you pay them off. With mortgage rates at record lows, people who buy now are locking in real bargains.
· Good schools. Family-sized rentals are harder to come by in areas with excellent public schools.
· Spacious properties in pleasant neighborhoods. Sizable homes in attractive communities are almost always owned – not rented.
Posted by Robert Torre on August 30th, 2010 10:15 PMPost a Comment (0)

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Foreclosures Down, But Late Payments Up
August 27th, 2010 12:17 PM
The wave of foreclosures appears to be subsiding slightly. According to data from Mortgage Bankers Association’s National Delinquency Survey:

• The percentage of loans on which foreclosure action were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago.

• The percentage of loans in the foreclosure process at the end of the second quarter was 4.57 percent, a decrease of six basis points from the first quarter of 2010, but an increase of 27 basis points from one year ago.

• Loans that were 90 days or more past due or in the process of foreclosure was 9.11 percent, a decrease of 43 basis points from first quarter, but an increase of 114 basis points compared to the second quarter of last year.

“The good news is that foreclosure starts are down, and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005,” says Jay Brinkmann, MBA’s chief economist.

The bad news is that the percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009. Now that rate has risen to 3.51 percent.

“Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers,” Brinkmann adds.
Posted by Robert Torre on August 27th, 2010 12:17 PMPost a Comment (0)

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July Existing-Home Sales Fall, But Prices Rise
August 24th, 2010 7:27 PM
Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009. Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun added.

Mortgage Rates Dip
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.56 percent in July from 4.74 percent in June; the rate was 5.22 percent in July 2009. Last week, Freddie Mac reported the 30-year fixed was down to 4.42 percent.

The national median existing-home price for all housing types was $182,600 in July, up 0.7 percent from a year ago. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009.

“Thanks to the home buyer tax credit, home values have been stable for the past 18 months despite heavy job losses,” Yun said. “Over the short term, high supply in relation to demand clearly favors buyers. However, given that home values are back in line relative to income, and from very low new-home construction, there is not likely to be any measurable change in home prices going forward.”

Inventory Rises
Total housing inventory at the end of July increased 2.5 percent to 3.98 million existing homes available for sale, which represents a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June. Raw unsold inventory is still 12.9 percent below the record of 4.58 million in July 2008.

NAR President Vicki Cox Golder said there are great opportunities now for buyers who weren’t able to take advantage of the tax credit. “Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position,” she said.

A parallel NAR practitioner survey shows first-time buyers purchased 38 percent of homes in July, down from 43 percent in June. Investors accounted for 19 percent of sales in July, up from 13 percent in June; the balance were to repeat buyers. All-cash sales rose to 30 percent in July from 24 percent in June.

Breakdown of the Numbers
• Single-family home sales dropped 27.1 percent to a seasonally adjusted annual rate of 3.37 million in July from a pace of 4.62 million in June, and are 25.6 percent below the 4.53 million level in July 2009; they were the lowest since May 1995 when the sales rate was 3.34 million.
• The median existing single-family home price was $183,400 in July, which is 0.9 percent above a year ago.
• Single-family median existing-home prices were higher in 11 out of 19 metropolitan statistical areas reported in July in comparison with July 2009 (the price in one of 20 tracked markets was not available). However, existing single-family home sales fell in all 20 areas from a year ago.
• Existing condominium and co-op sales fell 28.1 percent to a seasonally adjusted annual rate of 460,000 in July from 640,000 in June, and are 24.0 percent below the 605,000-unit level in July 2009. The median existing condo price was $176,800 in July, down 1.7 percent from a year ago.

By Region
• Existing-home sales in the Northeast dropped 29.5 percent to an annual pace of 620,000 in July and are 30.3 percent lower than a year ago. The median price in the Northeast was $263,800, up 4.8 percent from July 2009.
• Existing-home sales in the Midwest fell 35.0 percent in July to a level of 800,000 and are 33.3 percent below July 2009. The median price in the Midwest was $151,600, down 2.8 percent from a year ago.
• In the South, existing-home sales dropped 22.6 percent to an annual pace of 1.54 million in July and are 19.8 percent below a year ago. The median price in the South was $156,300, down 3.3 percent from July 2009.
• Existing-home sales in the West fell 25.0 percent to an annual level of 870,000 in July and are 23.0 percent below a year ago. The median price in the West was $224,800, up 3.3 percent from July 2009.
Posted by Robert Torre on August 24th, 2010 7:27 PMPost a Comment (0)

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Investors Turn to Flipping for Quick Profits
August 23rd, 2010 1:06 PM
Private equity firms and other groups of wealthy people are purchasing foreclosures at distressed prices, rehabbing them, and selling them for a quick profit.

This used to be a game for amateurs, but because of the lack of other investment opportunities, the money-management pros have stepped in.

The influx of new players is pushing up auction prices and making it harder to make a profit. The average discount at auctions — the difference between a home's sale price and its actual value — is 21.6 percent, down from 28 percent in January 2009, according to ForeclosureRadar.

"In crisis there's opportunity," says Rick Hudson, president of investment firm Prosperity Group Real Estate in Irvine, Calif. "Right now there's huge opportunity with flipping houses."
Posted by Robert Torre on August 23rd, 2010 1:06 PMPost a Comment (0)

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Three Reasons to Buy a Home Now
August 19th, 2010 11:07 PM
Stocks are up 50 percent from the March 2009 bottom. Some commodities have risen dramatically. The only asset class left in the cellar is real estate, says Michael Murphy, editor of the New World Investor stock newsletter.

As a result, Murphy is advising investors to buy now for these three reasons:

• Desperate sellers: Both home owners and lenders are eager to unload a flood of foreclosed and underwater properties. Buyers with the patience to push through these complex deals can save a bundle.

• Little competition. Because most people don’t have what it takes to negotiate their way through short sales and REOs, patient investors are winners.

• Low rates. Mortgage rates are at their lowest level in 40 years. If you believe inflation is inevitable, lock in now.
Posted by Robert Torre on August 19th, 2010 11:07 PMPost a Comment (0)

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22 Cities at Risk for Another Recession
August 19th, 2010 8:42 AM
At least 22 U.S. cities are at risk of slipping back into recession, Moody’s Economy.com said in a report Tuesday.

"With chances of a national double-dip recession now estimated at about one in four, several metro areas will probably experience their own downturns in the first half of 2011," said economist Andrew Gledhill, who wrote the report.

Gledhill identified these 22 markets as having the biggest chance of a double-dip recession, mostly because they have industrial economies that are affected by the national decline in manufacturing:

1. Missoula, Mont.
2. Salem, Ore.
3. Idaho Falls, Idaho
4. Lake County-Kenosha County, Ill.-Wisc.
5. Lafayette, Ind.
6. Wichita, Kan.
7. Hot Springs, Ark.
8. Pine Bluff, Ark.
9. Little Rock, Ark.
10. Wichita Falls, Texas
11. Akron, Ohio
12. Charleston, W.Va.
13. Macon, Ga.
14. Gadsden, Ala.
15. Gulfport-Biloxi, Miss.
16. Mobile, Ala.
17. Utica-Rome, N.Y.
18. Lebanon, Pa.
19. Springfield, Ohio
20. Wilmington, N.C.
21. Anderson, S.C.
22. Athens-Clark County Ga.
Posted by Robert Torre on August 19th, 2010 8:42 AMPost a Comment (0)

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Housing Starts Rise in July
August 17th, 2010 11:45 PM
U.S. housing starts in July rose 1.7 percent to a seasonally adjusted annual rate of 546,000 units, the Commerce Department reported Tuesday.

This is lower than analysts had predicted and down 7 percent compared to July of last year. Starts of new single-family homes declined by 4.2 percent to 432,000, while starts of large apartment units rose 32.6 percent to 114,000.

New building permits fell 3.1 percent to an annual rate of 565,000 units, the lowest level since May 2009.
Posted by Robert Torre on August 17th, 2010 11:45 PMPost a Comment (0)

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