Monthly Archives: May 2013

‘Underwater’ Homes Drag Sales Rate Down | Katonah NY Homes

Why are home prices rising? One reason: a shortage of homes for sale.

But how can that be? After years of poor sales, shouldn’t there be a flood of potential sellers rushing to market as conditions improve?

That seems logical, but a study by Zillow , the housing and mortgage data firm, sheds light on a big part of the problem: the “effective” rate of underwater homes. Underwater means the mortgage borrower owes more than the home can fetch in a sale. To sell, the homeowner must come up with other money to make up the difference and retire the old loan. Many people just don’t have that much sitting around, or if they do they can’t bring themselves to tap their college or retirement funds.

Zillow says that at the end of the first quarter 25.4% of all homeowners with mortgages were underwater. On top of that 18.2% had less than 20% equity, meaning the mortgage balance exceeded 80% of the home’s value. Together, these two categories create an effective underwater rate of 43.6% – 22.3 million homes.

“These homeowners likely cannot afford a down payment for a new home, tying them to their current homes and contributing to inventory shortages,” Zillow says.

 

‘Underwater’ Homes Drag Sales Rate Down – Yahoo! Finance.

Why House Flippers Might Get Hosed | Bedford Hills Homes

 

They’re baa-aaack.

Reuters

House flippers helped generate the real-estate frenzy from 2003 to 2006, buying and selling homes within six months or less to turn a quick profit as home values rapidly rose. Some flippers made a killing, but in general they added to the froth that eventually pushed the housing market over the edge. As prices began to plummet, some flippers became reluctant “underwater” homeowners suddenly stuck with a white elephant.

With home prices now rising by double-digits once again, flippers are making a comeback. Research firm Realty Trac recently published a report claiming that “flipping homes will likely become more favorable for investors in 2013 as home prices are expected to continue climbing.” The top five markets for flipping, according to RealtyTrac, are Orlando, Las Vegas, Phoenix, Tampa and Memphis.

[Click here to check home loan rates in your area.]

The Wall Street Journal recently reported that the number of homes flipped in California has hit the highest level since 2005, leading a national trend. Some flippers are professional investors, but others are individuals who just happen to have the funds for an all-cash purchase. House-flipping seminars have returned in some areas, along with warnings by consumer advocates to be wary of them.

House flipping, like many forms of speculation, has a legitimate place in a capitalist economy, as long as flippers risk their own money and pose no unusual risks to the broader system. Speculators often put up capital others don’t have, which can help keep markets fluid.

Risk of getting swamped

But some real-estate experts think flippers could quickly get swamped in a market that is still prone to shocks. “They’re a real concern to me,” says Stan Humphries, chief economist at real-estate research firm Zillow (Z). “They create volatility and make prices go up more than they should. And it’s usually the less sophisticated participants who get hurt the most.”

The majority of economists think the recent rise in home prices — which soared by a nationwide average of 10.2% per year in the latest Case-Shiller report — is good news for the economy because it repairs some of the damage from a housing bust that slashed home values by 30% or more. But some feel new bubbles are forming. And a full housing recovery is still years away, with price gains likely to be jagged and unpredictable.

 

Why House Flippers Might Get Hosed | The Exchange – Yahoo! Finance.

Mortgage rates jump to highest mark in a year | Pound Ridge Homes

Mortgage rates surged again this past week, completing a consistently steep ascent in May, according to data released Thursday by Freddie Mac.

The 30-year fixed-rate average jumped to 3.81 percent with an average 0.8 point, its highest mark in the past year. May began with the 30-year hovering at 3.35 percent, well below last year’s reading at the start of the month; however, four straight weeks of increases have pushed the average above last year’s reading of 3.75 percent.

The 15-year fixed rate average followed suit, rising to 2.98 percent from 2.77 percent last week, with an average 0.7 point. One year ago, the average was 2.97 percent.

Hybrid adjustable rate mortgages, on the other hand, remained below their averages from last May. The five-year ARM rose slightly to 2.66 percent, down year-over-year from 2.84 percent, and the one-year dropped slightly to 2.54 percent, down from 2.75 percent a year ago.

A Freddie Mac executive pegged the rising fixed-rate averages to some recent signs of economic improvement, including higher home prices and improving consumer confidence.

 

Mortgage rates jump to highest mark in a year.

Average Selling Price for All Bedford Area Homes | RobReportBlog

Average Sold Price
Armonk $      1,429,790.00
Chappaqua $         975,676.00
Pound Ridge $         952,189.00
Bedford Corners $      1,980,500.00
Bedford Village $      1,515,589.00
Bedford Hills $         810,555.00
South Salem $         548,000.00
Katonah $      1,027,795.00
North Salem $         636,000.00
Mt Kisco $         549,706.00

 

 

Average Selling Price for All Bedford Area Homes | RobReportBlog.

Obama administration extends Making Home Affordable Program until 2015 | Pound Ridge Real Estate

The Department of Housing and Urban Developmentteamed up with the Treasury Department on Thursday to announce an extension of the Obama administration’s Making Home Affordable Program through Dec. 31, 2015.

The new deadline was determined in coordination with theFederal Housing Finance Agency to align with extendeddeadlines for the Home Affordable Refinance Program and the Streamlined Modification Initiative for homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac.

The program deadline was previously set to end Dec. 31, 2013.

The Making Home Affordable Program is a critical part of the Obama administration’s efforts to provide relief to families at risk of foreclosure and help the housing market recover from the housing crisis, HUD explained.

“The housing market is gaining steam, but many homeowners are still struggling,” said Treasury Secretary Jacob Lew.

He added, “Helping responsible homeowners avoid foreclosure is part of our wide-ranging efforts to strengthen the middle class, and Making Home Affordable offers homeowners some of the deepest and most dependable assistance available to prevent foreclosure. Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry.”

Since its creation in March 2009, roughly 1.6 million actions were taken through the program to provide relief to homeowners and, consequently, nearly 1.3 million homeowners were helped directly by the program.

As of March, more than 1.1 million homeowners received a permanent modification of their mortgage through HAMP, with a median savings of $546 every month — or 38% of their previous payment.

Since the fourth quarter of 2008, Fannie Mae and Freddie Mac completed more than 2.7 million foreclosure prevention actions. Approximately half of these actions are permanent loan modifications, including more than 435,000 permanent HAMP modifications, according to the FHFA.

“One of FHFA’s priorities is to provide assistance to struggling borrowers who are at risk of losing their homes,” said Ed DeMarco, current acting director of the FHFA.

He added, “These extensions keep two valuable foreclosure prevention programs available to those who need them. The extensions also align the end date for three key assistance programs that were developed in response to the housing crisis.”

Since 2009, Freddie Mac has helped more than 830,000 borrowers avoid foreclosure and nearly 230,000 of these families were assisted through HAMP, said Tracy Mooney, senior vice president of single-family servicing and REO for the GSE.

The Making Home Affordable Program has also put into place important protections for homeowners that have helped inform efforts to create standards for the mortgage servicing industry.

This includes requirements for mortgage servicers regarding clear and timely communications with homeowners and protections to ensure that they are evaluated for assistance before being referred to foreclosure.

 

Obama administration extends Making Home Affordable Program until 2015 | HousingWire.

NAR: Pending home sales up 10.3% from last year | Bedford NY Real Estate

Pending home sales continued to inch higher in April with theNational Association of Realtors’ Pending Home Sales Index rising slightly to an index score of 106, a 0.3% increase fromMarch’s 105.7 score.

In April 2012, the index was hovering at 96.1, 10.3% lower than current figures.

Home contract activity reached its highest level since the index score hit 110.9 in April 2010. For the past 24 months, pending sales have been above year-ago levels.

Lawrence Yun, NAR chief economist, noted the development of a familiar pattern. “The housing market continues to squeak out gains from already very positive conditions. Pending contracts so far this year easily correspond to higher closed home sales in 2013,” Yun said.  

This year, total existing-home sales are predicted to rise just over 7% to about 5 million. 

Yun added, “Because of inventory shortages, higher home sales will push up home values to the highest level in five years.”

The national median existing-home price should rise to nearly 8% and exceed $190,000 in 2013. 

Strong gains in the Northeast and Midwest were largely offset by declines in the West and South. Pending sales in the Northeast increased 11.5% to an index score of 92.3 in April, 17.7% above year-ago levels. Midwest pending sales rose 3.2% to 107.1 in April, up 15.1% from a year earlier.

Conversely, in the South, pending home sales fell 1.1% to an index score of 119.2, but remain 12.3% higher year-over-year.

Finally, with strong inventory constraints, pending sales in the West dropped 7.6% in April to an index score of 94.6, which is 2.6% higher than year ago levels.

 

NAR: Pending home sales up 10.3% from last year | HousingWire.

Concerns Regarding Interest Rate Increases | Bedford Hills Real Estate

Don’t Panic About Rising Yields Just Yet (The Big Picture)

Treasury yields have been rising recently but Barry Ritholtz says there’s no reason to be alarmed about this. “Yields have moved up from the absurdly low level of 1.5% to 2% after a 30 year move down from 17%. Some people will scream that “yields have skyrocketed 25%” (but these are the same folks who have been yelling POMO! POMO! POMO! for 146%). It’s just as silly to claim that yields have retraced only 50 bips of the 1400 basis point move. A better context is to note that yields have backed up 1/2 percent from the lows, and that will affect economic activity, earnings, and psychology in ways we may not fully recognize yet.”

He also writes that Fed tightening, inflation, and increased demand for capital cause yields to go up. In this case we don’t know which it is and if it is demand for capital then that is a positive for the economy and stocks, not negative.

Death Of Managing Partner Raises Concerns For Investors That Lent Him Millions (The Wall Street Journal)

In April, Invesco announced that it was selling Atlantic Trust Private Wealth Management to Canadian Imperial Bank of Commerce (CIBC). About a month later S. Mark Powell, head of Atlantic Trust’s Texas office was found dead. The cause of death was undetermined. Now, the Wall Street Journal reports that some investors have said some of the money lent to Powell has gone missing. Invesco however said they didn’t believe client accounts had been accessed.

From the WSJ: “Since Mr. Powell’s body was found nearly two weeks ago, investors have come forward to say they lent him in total millions of dollars, according to people familiar with the matter. At least some of that money appears to have gone missing, the people said. An Invesco spokesman said in a statement that following Mr. Powell’s death, the fund-management company has become “aware of unusual transactions Mr. Powell seems to have conducted personally outside of his work for Atlantic Trust.”

What The Bond Market Sell-Off Looks Like On A 222-Year Chart (Global Financial Data)

The recent sell-off in the Treasury bond market has been one of the biggest market stories. Bond yields have reached their highest levels in over a year. Global Financial Data’s chart shows 10-year Treasury yields going back to 1791.

global financial data bond yields versus stocks

Vanguard Lowers Cost Of Dividend Themed ETF (Barron’s)

Vanguard has lowered the cost of the Vanguard Dividend Appreciation ETF (VIG) to 0.10% annually, from 0.13%. “When fund expenses get this low, they more or less approach zero. It’s a good reminder that you can cut out a lot of middlemen if you’re willing (and able) to manage your own money, and use an ETF instead of paying a pricey fund manager,” writes Brendan Conway at Barron’s. VIG is the 56th of Vanguard’s 65 ETFs to cut its expense ratio compared to last year.

7 Psychology Concepts That You’ll Find On Wall Street’s Hardest Exam (Business Insider)

There are seven common behavioral biases that drive investor decisions. 1. Overconfidence – These investors are often underdiversified and more vulnerable to market volatility. 2. Anchoring – Tied to overconfidence, this is when investors “revise” their analysis after finding information that significantly changes their initial assumptions. 3. Representativeness – “you incorrectly think one thing means something else.” 4. Loss aversion. 5. Regret minimization – “when you avoid investing altogether or invest conservatively because you don’t want to feel that regret.” 6. Frame dependence – “The tendency to change risk tolerance based on the direction of the market.” 7. Defense mechanisms – investors are great at making excuses for why they lost money.

 

10 Related Factors, Issues and Concerns Regarding Yield Increases | The Big Picture.

US Foreclosure Inventory Declines | Cross River Real Estate

florida foreclosure

U.S. foreclosure inventory, which refers to properties in some stage of foreclosure, equaled 1.1 million in April,according to CoreLogic’s latest report.

This was down 24% from 1.5 million a year ago. It was also down 2 percent from March.

Foreclosure inventory represented 2.8% of all homes with a mortgage, compared with 3.5% a year ago.

Meanwhile, there were 52,000 completed foreclosures in April, the same as March. But this was down from 62,000 a year ago. Before the housing bust, completed foreclosures averaged about 21,000 a month.

Home prices have been boosted by tight supply, especially a decline in the stock of distressed properties.

“Fewer distressed properties combined with improving home prices and a pickup in home purchases are significant signals that the ongoing recovery in the housing and mortgage markets continues to gather steam,” said Anand Nallathambi, president of CoreLogic in a press release.

Here are some details from the report:

  • “The five states with the highest number of completed foreclosures for the 12 months ending in April 2013 were: Florida (102,000), California (79,000), Michigan (68,000), Texas (53,000) and Georgia (47,000). These five states account for almost half of all completed foreclosures nationally.”
  • “The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (9.5 percent), New Jersey (7.4 percent), New York (5.1 percent), Maine (4.4 percent) and Nevada (4.3 percent).”
  • “The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5 percent), Alaska (0.6 percent), North Dakota (0.7 percent), Nebraska (0.8 percent) and Virginia (0.9 percent).”

Here’s a look at foreclosure inventory by state:

foreclosure inventory by state

 

US Foreclosure Inventory Declines – Business Insider.

April Pending Home Sales | South Salem NY Real Estate

suburbs housing california

Pending home sales climbed 0.3% month-over-month in April. This missed expectations for a 1.5% rise.

On a yearly basis they were up 13.9%, beating expectations for a 13.9% rise.

“The housing market continues to squeak out gains from already very positive conditions.  Pending contracts so far this year easily correspond to higher closed home sales in 2013,” said Lawrence Yun NAR chief economist in a press release.

A regional breakdown showed that the pending home sales index (PHSI) increased the most in the Northeast, up 11.5% on the month, and 17.7% on the year. The PHSI fell the most in the West, down 7.6% on the month and 2.6% on the year.

March’s reading was revised up modestly to show a 5.9% year-over-year rise.

Here’s a look at how pending home sales have done since 2001:

April pending home sales chart

 

April Pending Home Sales – Business Insider.