Thursday, April 29, 2010

Foreclosure Sales Expected to Increase over next few years.

  • Some interesting stats about foreclosures, projections and future home prices from the Wall Street Journal. It's amazing how big a problem foreclosures really are for home values and the housing market.

    tags: foreclosures, short sales

    • No one can estimate with much confidence how many foreclosed homes banks need to sell or how fast they are getting rid of all that property.

      A huge chunk of today’s housing supply comes from homes that have been acquired by banks or mortgage investors through foreclosure, plus those that are being offered by people who hope to avoid foreclosure by doing “short sales,” selling their homes for less than the mortgage balance due.

    • National Association of Realtors estimates that such “distressed” situations accounted for 35% of home sales in February and March
    • Barclays Capital in New York. They estimate that banks and mortgage investors including Fannie Mae and Freddie Mac owned 480,000 homes at the end of February.
    • RealtyTrac Inc., another data provider and one of the few other firms that regularly makes such calculations, estimates that banks and mortgage investors own 758,000 foreclosed homes.
    • all of the economic data the government tracks, the sector it appears to track the worst is…the housing market
    • Inside Mortgage Finance reports that mortgages backed by government-related entities – Fannie Mae, Freddie Mac, the FHA and the VA – accounted for more than 96% of home loans originated in the first quarter
    • Whatever the number of homes that banks, the federal agencies and private mortgage investors own now, it’s likely to increase. Barclays expects the inventory generally to rise over the next 20 months, peaking at 536,000 in January 2012, and then decline gradually.
    • Barclays expects 1.6 million “distressed sales” of homes – mainly foreclosures or short sales – both this year and in 2011, then a slight decline to 1.5 million in 2012.
    • Around 30% of all home sales this year and next will be foreclosure-related, forecasts Robert Tayon, a mortgage analyst at Barclays, who says that would be only about 6% in a normal housing market.
    • Barclays expects U.S. home prices on average to fall another 3% to 5%
    • adding to a decline of about 30% already recorded since 2006

Posted from Diigo. The rest of my favorite links are here.

Wednesday, April 28, 2010

103 Months to Clear Foreclosure Housing Inventory

  • This is a staggering stat about foreclosures, which shows realities of a very scary side of the housing and foreclosure market. If most of the foreclosures of people in default really happen, there are going to be lots more foreclosure homes for sale and home prices will go down.

    tags: foreclosures, shadow inventory

    • As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

      Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.

    • little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.

Posted from Diigo. The rest of my favorite links are here.

Friday, April 23, 2010

First-Time Homebuyers Drive Housing Market in March: Report

  • March was a record month for US Real Estate. There were more first time buyer sales than ever before, and there were also more distressed sales than ever before. More than half of US homes sold during march were distressed in some way. 18.6% of the homes that sold were Short Sales. Here are some notes from an article on

    tags: first time buyers, short, sales

    • The surge in first-time buyer activity in March came at the same time the volume of distressed properties in the housing market climbed to over 50 percent, according to the survey.
    • The latest survey found that short sales accounted for 18.6 percent of the housing market in March.
    • Campbell survey found that 48.2 percent of March’s home purchase

      transactions were attributable to first-time homebuyers. This eclipsed the previous peak of 46.9 percent reached last October when the November expiration of the original homebuyer tax credit sent purchases by first-time buyers soaring.

      “The strong participation of first-time homebuyers this spring is a welcome surprise,” said Thomas Popik, research director for Campbell Surveys. “Many observers had felt that the pool of first-time homebuyers had been depleted last fall, but this is turning out not to be the case. Instead, the normal spring-summer buying season is combining with the tax credit to produce blow-out results for first-time homebuyers.”

The number of distressed homes is absolutely incredible. It will be really interesting to see what happens to the Utah real estate market this summer, post tax credit expiration. So far the rate of Utah Foreclosures isn't nearly this high. 

Friday, April 16, 2010

The Rich Are More Likely to Default

  • Homes with values more than a Million are far more likely to default than less expensive homes. Here is some interesting information from a Wall Street Journal blog.

    tags: luxury homes, default

    • People who bought some of the most expensive homes in America now are far more likely to be behind on their mortgages than are ordinary Joes.
    • We got this interesting data from First American CoreLogic, whose loan database covers more than 80% of the overall home-loan market. That database includes 1,700 mortgage loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American.

      First American CoreLogic
      Percentage of home loans 90 days or more delinquent. Blue: greater than $1 m Red: less than $1m

      What’s going on here? Sam Khater, a senior economist at First American, said his theory is that the borrowers with huge loans may be more inclined than people of lesser means to decide it isn’t worth paying the lender any more once the value of the home crashes far below the loan balance.

      Another possibility is that many of those borrowers were high rollers on Wall Street who have lost much or all of their incomes and no longer can keep up their Gatsby-esque lifestyles.

Political Tide Turns Against Aggressive Mortgage-Modifications - Developments - WSJ

  • Republicans and Democrats are both not completely supportive of the Home Affordable Modification Program. Just 6% of American's are in default, is it the best interest of Government to make the other 94% pay for it?

    tags: foreclosures, bail out, HAMP

    • Rep. Jeb Hensarling, a Texas Republican, is:

      Yet another chapter in ‘America: The Bailout Nation,’ as coauthored by the President and by Speaker (Nancy) Pelosi.  It takes $50 billion from taxpayers or borrows the money from the Chinese to bail out banks that made bad loans, and to bail out many who bought more home than they could afford, speculated in residential real estate or used their home equity as an ATM machine.  We must remember that 94% of Americans own their home outright, rent or are current on their mortgage, and they are being asked to bail out the other 6%.  It’s a policy that says to the citizens who work hard, who live within their means, who save for a rainy day, ‘You are a sucker.’ When you are struggling to pay your own mortgage, you shouldn’t be forced to pay your neighbors as well.

Monday, April 12, 2010

HUD Redefines

  • Okay this is really stupid. HUD changing the definition of things will just confuse the public more. It is now calling a property behind on payments as "Foreclosed". The word, with the "ed" suffix implies that the foreclosure has happened. In reality, these properties haven't foreclosed. There hasn't been a foreclosure process yet in place, in fact there are still many months before the foreclosure auction will ever take place, that is if the mortgage loan is never made current. 

    tags: foreclosed, hud

    • Effective immediately, HUD is classifying any property that is at least 60 days behind on the mortgage or the property owner is 90 days or more delinquent on tax payments as a “foreclosed” home.

      In addition, HUD is expanding the definition of an “abandoned” property to include homes where no mortgage or tax payments have been made by the property owner for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies.

Posted from Diigo. The rest of my favorite links are here.

Thursday, April 8, 2010

Twenty-Seven Million People with Mortgages Believe They Owe More than Their Homes Are Worth

  • Many Americans are underwater on their homes and/or worried about their abilities to pay all their bills. The number of people who claim to have a hard time paying their mortgages is also very high, especially among those who have underwater mortgages.

  • Over two-thirds (69%) of adults who are homeowners have a mortgage that they need to pay off. People whose homes are believed to be worth less than the money owed on their mortgages are common across all income groups. Fully 26% of adults with mortgages who have household incomes of $75,000 or more believe their homes are worth less than the balance of their mortgages.

  • Almost a third (29%) of adults with mortgages are having some difficulty (18%) or a great deal of difficulty (11%) paying off their mortgages.

      •               Among those who believe their homes are worth less than their outstanding mortgages, fully 26% are having a great deal of difficulty and another 23% are having some difficulty paying them off
    • The two-thirds (65%) of all adults who are concerned about having enough income to cover all their costs and expenses include 26% who are very concerned and 39% who are somewhat concerned.
      Among those who believe that their homes are worth less than their mortgages, fully 42% are very concerned and another 38% are somewhat concerned about not having enough income to cover their costs.
    • Unsurprisingly, income levels make a big difference. Concerns about not having enough income to cover costs and expenses is much higher among people with household incomes below $35,000 (40% are very concerned) than among those with incomes over $75,000 (16% are very concerned).

Posted from Diigo. The rest of my favorite links are here.

Friday, April 2, 2010

Foreclosures Will Solve Housing : NPR

  • This is an interesting article that talks about the ineffectiveness of the HAMP efforts to reduce foreclosures. It claims that foreclosures are the answer to solve the housing crisis, and Government needs to stop giving incentives for irresponsible behavior. 

    tags: foreclosures, housing, HAMP

    • Team Obama is rewarding reckless behavior, punishing the 90 percent of responsible homeowners who are making good on their mortgages, and setting up a greater moral hazard that will surely lead to an expansion of bailout nation.

      I’m talking about an add-on to HAMP, the $75 billion Home Affordable Modification Program, which has been a dismal failure. In fact, the entire foreclosure-prevention effor—-- including forgiveness of mortgage-loan principa—-- has been a failure.

    • The Office of the Comptroller of the Currency reports that nearly 60 percent of modified mortgages re-default within a year.
    • Team Obama would actually subsidize people making up to $186,000 a year who have a mortgage balance of over $700,000
    • It’s an upper-middle-class entitlement. Actually, at $186,000, it’s virtually a top-earner entitlement, according to Team Obama's definition of rich people eligible for tax hikes.
    • Why should the 90 percent of folks who make good financial decisions on their homes have to pay for the 10 percent who did not?
    • Just because a home loan is "underwater" — meaning its value is lower than today’s current market pric—-- why should a responsible person whine about it and walk away? Why not service this loan for the longer term and wait for prices to improve? That’s called personal responsibility.
    • Bloomberg financial columnist Caroline Baum argues that lower home prices are the key to solving the housing problem. Popular blogger Barry Ritholtz says we need more foreclosures, not fewer, to solve housing.
    • Bouncing from pillar to post, the White House has unsuccessfully tried mortgage modifications, foreclosure abatements, and tax credits. None of it has worked. But the price tag so far for these failed government interventions in the housing market is $75 billion and rising.