Daily Archives: May 18, 2012

Waccabuc Real Estate | Bay Area home sales take step toward normalization

Leave a reply

Home sales in the San Francisco-Bay area grew to their highest year-over-year level in six years during the month of April, real estate analytics firm DataQuick said Thursday.

The region had 7,675 new and resale home sales in the nine-county Bay Area last month, compared to 7,694 the previous month and 6,789 a year earlier.

DataQuick said sales last month were at their highest April level since 2006 when 9,129 homes were sold in April.

“It appears that the market is taking a step in the direction of normalization, but only a step,” said John Walsh, DataQuick president. “We’re still watching technical indicators more than top-line sales counts and median prices. The mortgage market is critical, as is market mix and the receding importance of foreclosure resales.”

The median sales price also edged up to $390,000 April. Over last year, the median price increased 8.3% from $360,000 in April of last year. 

The market’s low point hit $290,000 in March 2009, which is well below the current median price. However, the median remains well below the $665,000 level reached in June and July of 2007.

Foreclosure resales accounted for 21.7% of resales in April, which is the lowest amount on record since January of 2008.

via housingwire.com

More than $500B needed to meet Basel III rules, analysts say | Katonah Real Estate

Leave a reply

Analysts at Fitch Ratings estimate the 29 global systemically important financial institutions, or G-SIFIs, need to raise $566 billion in common equity in order to satisfy new Basel III capital rules.

The amount is 23% more than the institutions’ aggregate common equity of $2.5 trillion and will impact their return on equity. Together, they represent $47 trillion in total assets.

Basel III sets higher levels for capital requirements while introducing a new global liquidity framework. It is designed to ensure systemically significant banks possess enough capital to cover future risks, enhancing the regulatory framework adopted by Basel II.

The United States is making little progress in meeting those requirements.

Banks face both market and supervisory pressures to meet the targets, even though Basel III won’t be fully implemented until the end of 2018. Banks will likely pursue a mix of strategies to address these shortfalls, analysts say, including retaining future earnings, equity issuance and reducing risk-weighted assets.

“Absent additional equity issuance, the median G-SIFI would be able to meet this shortfall with three years of retained earnings, which might constrain dividend payouts and share buybacks,” Fitch analysts say.

This capital increase implies a reduction of more than 20% in the G-SIFI’s return on equity from about 11% over the past several years to 8% to 9% under the new regime.

“Basel III thus creates a tradeoff for financial institutions between declining ROE, which might reduce their ability to attract capital, versus stronger capitalization and lower risk premiums, which benefits investors,” analysts say.

Banks that continue to pursue 12% to 15% ROE will face potential incentives to reduce expenses further and increase pricing on borrowers and customers.

“Since it is impossible for regulators to perfectly align capital requirements with risk exposure, banks may seek to increase ROE by favoring riskier activities that maximize yield on a given unit of Basel III capital, including new forms of regulatory arbitrage,” analysts say.

via housingwire.com

Lenders Show Signs of Easing on Refis | Chappaqua Real Estate by Robert Paul

Leave a reply

In April lenders loosened up slightly on the loan-to-value ratio used to make approval decisions on mortgage refinance applications. However, but the lid is still screwed down tightly on purchase mortgages used to buy homes, according to the Ellie Mae Origination Insight Report.

“In April, the average loan-to-value (LTV) for closed loans hit 80 percent, the highest we have seen since we started tracking in August 2011. The increase was driven by an easing of LTVs on conventional refinances (the average LTV was 69 percent in April compared with 65 percent in March) and what we believe to be the first surge in Home Affordable Refinance Program (HARP) 2.0 activity from correspondent lenders,” said Jonathan Corr, chief operating officer of Ellie Mae.

LTVs on purchase loans were steady, highest for FHA loans at 95 percent. LTV ratios for conventional purchase loans stayed at 81 percent, virtually unchanged for at least nine months.

“Last month closed refinances with LTVs of 95 percent-plus, nearly doubled to 7.1 percent compared to 3.6 percent in March. This has been slowly increasing since the HARP 2.0 announcement in October 2011, but correspondent lenders have only recently been able to run these loans through Desktop Underwriter and Loan Prospector.”

Ellie Mae, which processes approximately two million loan applications, or 20 percent of all U.S. mortgage originations, reported a slightly higher closing rate for all loans of 48.1 percent over 46.9 percent in March.

Lenders took a little longer to process applications in April. “Recently, the Wall Street Journal and other media outlets have been reporting that the nation’s largest retail lenders are now quoting long timelines for refinances-in some cases as long as 60 to 90 days,” said Corr. “While the average refinance going through our platform took five days longer in April than in March, it still only took 47 days. So, it appears that small and mid-sized lenders and community banks on our platform are providing faster decisions than the retail channels of some mega-lenders.”

via realestateeconomywatch.com

Listing Inventory Hits 5-Year Low | Armonk NY Homes

Leave a reply

The national for-sale inventory of single family homes, condos, townhomes and co-ops fell to the lowest level since 2007 in April, providing further evidence that the inventory draw down is continuing into the spring home buying season.

On a year-over-year basis, the total number of listings on Realtor.com was down by 18.85 percent, declining in all but five of the 146 markets covered by the megasite, a sign that the overall market is in a stronger position than it was one year ago. Since the beginning of the year, the total size of the inventory has ranged from about 1.76 to 1.84 million units, the lowest levels observed since Realtor.com began collecting these data in January 2007.

While Florida markets dominated the list of top ten MSAs with the largest year-over-year declines in their for-sale inventories one year ago, the list now includes major California markets, as well as Phoenix, Seattle and Atlanta-suggesting that these markets, which have been relatively slow to recover, may be beginning to turn around. The five markets registering an increase in their for-sale inventory in April reported very small increases.

The median age of the inventory also fell by 11.5 percent on a year-over-year basis, from 95 days in April 2011 to 84 days in April 2012, while the median list price ($191,211) remained essentially unchanged. Lower inventories, combined with lower shorter time on market and relatively stable listing prices, could be indicative of the kind of balanced housing market that has not seen in many years. The median age of the inventory exceeded 120 days in just 6 markets in April, down from 16 markets in March, 34 markets in February and 46 markets in January. Most of the markets with the oldest inventories are resort communities, particularly in Florida and the Carolinas.

The nationwide median list price for single family homes, condos, townhomes and co-ops was $191,211 in April, up from $188,900 in March and essentially the same as it was one year ago ($191,900). The relative stability in listing prices over the past 12 months stands in stark contrast to the significant declines that occurred in the fall of 2010, when the after effects of the after the tax credit came to a close. While higher list prices do not always translate into higher sales prices, the stability observed in since the beginning of the 2011 home buying season may nevertheless signal a growing optimism on the part of sellers that the market has is beginning to turn around.

via realestateeconomywatch.com