Real Estate Wrap

Housing Starts Increase But Trend Still Down

2011-04-19T07:17:00.000-07:00

Housing starts increased by 7.2% from the prior month but are still well below pre-crash levels. Levels are close to record lows. Right now we have a surplus of housing inventory but consider the fact that not a lot of houses are being built and the population is increasing. Eventually we will need more inventory.

What does that mean? It's getting to be a good time to invest in real estate. Buy low and sell high. When everyone is ready to give up on an asset class is the time to begin eying it. My only caution with housing now is the fact that the mortgage interest deduction may become a casualty of budget cutting. If this happens, then housing prices could drop another 10-20% easily. That would make the bottom of the market.

Home Prices Still Falling

2011-04-01T11:38:00.000-07:00

I took a bit of break from Blogging, hoping that a year was enough time for the market to come back and adjust. So, the other day I took a look at the Case Schiller numbers and saw that not much has changed at all.

Here's the headline:

Home Prices Off to a Dismal Start in 2011 According to the S&P/Case-Shiller Home Price Indice

Not very encouraging. Here's some info from the press release:

The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate

What were the worst performing cities? The usual suspects: Detroit, Atlanta, Miami, and Seattle. Now, Atlanta, Cleveland, Detroit and Las Vegas home prices are below their December 2000 levels.

Mortgage Rates Hit Record Low This Week

2009-11-25T14:01:00.000-08:00

Rate are still coming down. Messr. Bernanke and company have done a good job killing the savings goose but they are doing great by the real estate industry. I don't know how much longer rates will drop so get it while you can. Press release below:

15-Year FRM Drops to Set Another New Low in Freddie Mac Survey History
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.78 percent with an average 0.7 point for the week ending November 25, 2009, down from last week when it averaged 4.83 percent. Last year at this time, the 30-year FRM averaged 5.97 percent. The 30-year has not been this low since the week ending April 30, 2009, when it averaged 4.78 percent.

The 15-year FRM this week averaged 4.29 percent with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago at this time, the 15-year FRM averaged 5.74 percent. The 15-year FRM has never been this low since Freddie Mac started tracking it in 1991.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.18 percent this week, with an average 0.6 point, down from last week when it averaged 4.25 percent. A year ago, the 5-year ARM averaged 5.86 percent. The 5-year ARM has never been this low since Freddie Mac started tracking it in 2005.

The 1-year Treasury-indexed ARM averaged 4.35 percent this week with an average 0.7 point, unchanged from last week when it averaged 4.35 percent. At this time last year, the 1-year ARM averaged 5.18 percent. The 1-year ARM has not been this low since the week ending July 7, 2005, when it averaged 4.33 percent.

(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)

"Long-term mortgage rates eased for the fourth consecutive week to record levels," said Frank Nothaft, Freddie Mac vice president and chief economist." Interest rates for 30-year fixed mortgage loans tied an all-time record low while both 15-year fixed mortgages and 5-year ARMs broke their corresponding records. Interest rates for 30-year fixed-rate loans are currently 0.8 percentage points below this year's peak set in mid-June, which shaves roughly $100 off the monthly payments on a $200,000 mortgage.

"House prices are slowly beginning to firm now. For instance, annual house price declines slowed for the sixth consecutive month in September, down only 3 percent, and represented the smallest decline since February 2008, according the Federal Housing Finance Agency's purchase-only house price index. [PDF] Moreover, 11 of the 20 major metropolitan areas experienced monthly house price increases between August and September, based on the S&P/Case-Shiller® 20-city house price indexes."

Mortgage Rates Continue Falling

2009-11-20T15:25:00.001-08:00

Mortage rates continued to fall this past week. According to BestCashCow:

"Mortgage rates have decended over the past three weeks, touching lows not seen since last April when the Fed began buying up mortgage backed debt. According to the BestCashCow rate tables, the average 30-year fixed rate mortgage is now below 5% at 4.901%. The fifteen-year fixed rate mortgage average is 4.373%, close to the all-time low.
What one hand giveth, the other taketh. And so it is that savers are subsidizing borrowers. I could provide a scathing commentary on this but will simply say that if you can't beat them, join them. If you are looking to buy or refinance, now is another great opportunity to do so.

Housing prices if anything are heading down. The near bankruptcy of the FHA and the glut of foreclosures is continuing to put massive pressure on housing prices. Now is a good time to buy.

Foreclosure Filings Surpass 300,000 for Eigth Month

2009-11-12T14:20:00.000-08:00

Think the real-estate market is on the rebound. The foreclosure numbers sure don't paint a recovery picture. Today, RealtyTrac released numbers which show that foreclosures were above 300,000 for the eigth month in a row.

A Bloomberg article says:

A total of 332,292 properties received a default or auction notice or were seized by banks in October, up 19 percent from a year earlier, Irvine, California-based RealtyTrac said today. One in every 385 households received a filing. The tally fell 3 percent from September, the third consecutive monthly decline.

In addition, foreclosures and government stimulated home purchases account for as much as 50% of home sales. The good news is that this may be the market clearing we need before prices can start to firm and even move up a bit. Still, home owners shouldn't expect the 20-30% price appreciations we saw earlier in the decade.

Housing Market on the Upswing

2009-10-27T13:45:00.000-07:00

After falling back to 2003 levels, it looks like the housing market is on the upswing, led by low mortgage rates and the first time homebuyer credit. Data from the S&P Case Shiller index show that the level of decline has leveled off and prices have even increased in some cities.

The chart above depicts the annual returns of the 10-City and 20-City Composite Home Price Indices, declining 10.6% and 11.3%, respectively, in August compared to the same month last year. Nineteen of the 20 metro areas and both Composites showed an improvement in the annual rates of decline with August’s readings compared to July. Cleveland was the only exception.

So, if you're thinking of buying a home, now may be a good time.

2009-09-22T09:41:00.001-07:00

I just noticed today that one of my favorite sites for financial info and bank rates just launched a section with mortgage rates, home equity rates, and auto loan rates. The site is BestCashCow and IMHO it provides the easiest best way to track cds, savings accounts, etc.

If you're looking to buy or refinance a home, you might want to check it out.
- Cindy

Posting on Booksie.com

2007-12-19T19:46:00.000-08:00

I wanted to digress from real estate for a minute to let you know I am posting on Booksie.com. I've always written poetry and I love the site. It's full of other poets, novelists, short story writers, etc. Stop by my page when you get a chance and send me a hello.

Visit my poetry on Booksie.com.

Housing Data Contradicts Media Reports of Subprime Crisis

2007-08-29T11:12:00.000-07:00

I just read a very interesting article by Sam Cass on BestCashCow. He compares a chart of where subprime mortgages are concentrated (Northeast and California) with data from the National Association of Realtors. The data, which I published several days ago, shows that both of those markets have relatively healthy housing markets, with prices having gone up over the last year.

The conclusion to draw isn't a hard one. How can there be a sub-prime crisis when the markets with the largest number of sub-prime loans are healthy?

I live in Massachusetts and I can tell you that as I reported earlier, prices here have not come down significantly. The local economy is strong and sellers are taking their homes off the market rather than sell them at lower prices.

My interpretation of the data is that housing prices are declining in places with oversupply and that are overbuilt - South, Midwest, Southwest. But these areas are less expensive and didn't require as much use of subprime and exotic mortgages. So the places where prices are falling are the places where there aren't a whole lot of sub-primes. At least that's what the data says.

NAR Reports Existing Home Sales Stable in July

2007-08-27T18:24:00.000-07:00

The National Association of Realtors reported that existing home sales were stable in July with "increases in the West and Northeast offset by a decline in the Midwest, according to the National Association of Realtors®."

Total existing home sales dropped by .2% to a seasonally adjusted rate of 5.75 million. This is 9% below the 6.32 million-unit level in July 2006.

The median prices dropped by .6% to $228,900 from $230,200, the highest monthly price on record. Thus, despite all of the talk of the sky falling, prices have fallen less than 1%.

Invenstories are rising though:

"Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June."

Overall, this paints a picture of a mixed real-estate market with the high-prices Northeast and West Coast doing better than the South and Midwest. It appears that the areas where prices dropped first are also the first to start to experience a bounce. I project that prices will continue to firm over the next couple of months despite the mortgage problems of the last few weeks. If anything, many markets may soon present a buying opportunity.

Sales Down and Prices Flat

2007-08-15T13:01:00.000-07:00

The National Association of Realtors just released their second quarter numbers and it looks like Salt Lake City is the winner. Salt Lake City finished first for the quarter ,its median price of $233,100 rose 21.9 percent from a year ago! Overall, house prices dropped 1.5% from a year earlier.

Despite the relatively good news on prices, home sales declined by 10.8% To me, this is a sign that many sellers have pulled their houses from the market rather than settle with a lower price. I've seen it happening in my area where real-estate listings are way down.

The average inventory is listed at around 8 months which isn't overly high.

Overall, prices are 1.7% off their peak, recorded in the third quarter of 2005. While any drop is obviously undesirable, to me this doesn't register as a catastrophe.

Jim Cramer Should Should Stick to Stocks

2007-08-11T17:57:00.001-07:00

I just read an article on The Street.com about how Jim Cramer advised owners who were underwater with their equity to consider walking away and giving the house up to foreclosure. I don't think it very good advice at all. It will blast your credit score forever (or at least the next 7 years), potentially open you up to litigation from your lender, and force you to give up your home. If you purchased properties to flip then I guess it's okay, but if it's your home, it seems like awfully impractical advice.

I don't know what someone does if they are underwater in their equity and can't make the mortgage. It's tough, really tough but advising them to walk-away isn't the right call either.

Mortgage Markets in Turmoil

2007-08-10T20:48:00.000-07:00

BestCashCow just ran an article entitled Mortgage Crisis Spreads, Wall Street Gyrates, and the Fed May Drop Rates that summarizes what is happening in the mortgage markets. As I blogged below, the impact is also being felt by us "little people."

Mortgage Market is Tough

2007-08-10T20:45:00.000-07:00

I have a friend that is looking to buy a house with an 80-20 mortgage. That means that she will take out a first loan for 80% of the purchase price, and a second loan for 20% of the purchase price. There will be no money down.

The rate on her loans was originally quotes at around 7% for the first and 8.5% for the second. The rate on the second has now gone to over 18%.

I've been reading about what's happening in the mortgage market. Here's some first-hand evidence of how it's directly impacting real-estate.

Housing Bubble or Not

2007-08-07T18:07:00.000-07:00

I've been following real estate for the last four or five years, since we purchased our new house. I got so into scanning the papers, comparing prices, and checking out places that it became a habit. I still go to open houses, and I spend a lot of time following the real estate market across the country. Together with my husband we're thinking about buying some investment properties. But first, I want to wait let the market come down.

Which bring me to my second point for this post. Will the market come down further. Based on what I have seen I'd say it will. Maybe not much more but I think prices will be soft or decline a bit more. They say that Real Estate tends to run in 7 year cycles. We have one great upward cycle and now we're on the down. It started last year - 2006 - which means it could be 2013 before things start to pick up again. Of course, the deals will be there.

Keep reading and I'll keep telling you what I find out. I scan the papers almost daily and have found a great source for information on a site called BestCashCow. Let me know what you think.