CHART OF THE DAY: US Crude Production Seen Rising To 20-Year High | Pound Ridge Real Estate
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Daily Archives: November 10, 2012
Competition Drives Down Foreclosure Discounts | Bedford Corners NY Real Estate
The national average discount on foreclosures has shrunk by 1.4 percentage points over the past year as competition for foreclosures as inventories tighten is driving prices closer to full-price properties.
Homebuyers nationwide in September could expect a discount of 7.7 percent when buying a bank-owned property (REO) versus the same home in a non-distressed sale, according to a new Zillow analysis.
The discount narrowed from 9.1 percent during the same month last year and has fallen dramatically from a peak national discount of 23.7 percent in August 2009. Zillow compared the actual sale price of foreclosed homes nationwide to the estimated price of the same home were it to sell in a non-distressed transaction.
While foreclosure sales continue to offer buyers discounts over traditional sales in the majority of metro areas, some of the areas hardest hit by foreclosures are also those where the price gap between foreclosed and non-foreclosed homes is the smallest. Areas with the smallest foreclosure discounts in September were Phoenix (0 percent), Las Vegas (0 percent), Sacramento, Calif. (0.7 percent) and Riverside, Calif. (1.8 percent), Zillow found.
“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow Chief Economist Dr. Stan Humphries. “Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors.”
Metro areas with the biggest foreclosure discounts include Pittsburgh (27.4 percent), Cleveland (25.8 percent), Cincinnati (20.2 percent) and Baltimore (20 percent).
Year-over-year foreclosure discounts fell in roughly three-quarters (76.9 percent) of metro areas analyzed, and all metros are down from their peak. Nationwide, foreclosure discounts reached their height in 2008 and 2009, and in some areas peaked at more than 30 percent.
As recently as the second quarter of this year, RealtyTrac reported that the national average price of bank-owned properties was 32 percent lower than the average price of a non-foreclosure home, a slight improvement from a 30 percent discount in the first quarter and also a 30 percent discount in the second quarter of 2011.
One reason for the great difference is the way the two organizations calculate the discount rate is calculated. Zillow’s discount rate is the result of comparing the sale price of a foreclosure to the estimated, non-distressed sale price of the same home. Other reports like RealtyTrac compare the median sale price of all foreclosures sold in a given period with the median sale price of all non-foreclosures sold in the same period.
Spanish Woman Commits Suicide As Foreclosure Agents Walk Into Her Apartment | Chappaqua Real Estate
The intensification of the financial crisis in Spain, and across Europe, is having very real effects on the lives of people. Beyond the rise in the unemployment rate, widespread foreclosures across Spain have caused at least two suicides over the past few weeks, along with an unsuccessful attempt in the city of Valencia. The latest case, reported on Friday, involved a 53-year-old woman who jumped from her sixth-story balcony in the Basque city of Barakaldo as foreclosure agents forced open her door.
Spain has been one of the hardest hit victims of the European sovereign debt crisis. Mired in a deep recession, the Iberian nation has seen the unemployment rate skyrocket above 25%, with youth joblessness reaching 50%. The consequence of a real estate bubble, Spain’s crisis has led to a slew of foreclosures across the nation.
The latest victim has been Amaya Egaña, a former municipal councilwoman for the Socialist Party of Prime Minister Mariano Rajoy. According to Spanish daily El Pais, Egaña jumped to her death from a sixth-floor balcony on Friday as a legal team from the local court walked into her apartment to foreclose on her. Receiving no response after ringing the bell and knocking on the door, a locksmith opened the door, only to find Egaña standing on a chair to jump from her balcony. Egaña was found alive, but paramedics had no chances of saving her life.
Egaña’s suicide isn’t the first related to foreclosures in Spain. Just a few weeks ago, on October 25, 53-year-old Jose Miguel Domingo was found dead hours before foreclosure agents arrived at his apartment. Domingo hung himself after not having been able to pay interest payments on a €240,000 mortgage that went sour in 2009.
A day after, a man whose name hasn’t been disclosed jumped from his window in the city of Valencia. The man attempted to commit suicide minutes before foreclosure agents arrived at his apartment; this time, though, paramedics managed to save his life.
The suicide of Egaña has been like the straw that broke the camel’s back. A social repudiation of banks’ foreclosure practices has made its way to Madrid, where the Administration of Mariano Rajoy is working on a plan to give subprime debtors some relief. According to El Pais, Rajoy is looking to put into place a two year foreclosure moratorium for subprime debtors.
Spanish banks are in dire need of cash. Despite a €100 billion bailout-pledge by the EU, institutions like Bankia and BBVA are struggling to plug holes in their finances. Much like in the U.S., they are doing whatever they can to extract payment from debtors.
In the U.S., banks’ attempts to speed up the foreclosure processes resulted in the robo-signing scandal, by which major mortgage originators were using fraudulent protocols to processes thousands of mortgages in record time. Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial were forced to fork over $25 billion to settle a suit brought Attorneys General from across the nation.
With Spain falling even deeper into the rabbit hole, as Rajoy refuses to take a bailout and borrowing costs rise, the situation could deteriorate further. Beyond economic losses, Friday’s events are direct evidence that financial crises have the potential to destroy the lives of ordinary individuals.
via forbes.com
October Prices Lag in the Midwest | Armonk NY Real Estate
Price growth was strong in every region in October, including the Northeast where prices rose more than any other region. However, Midwest prices continued to trail the nation as the recovery is still fragile in the nation’s heartland.
While current quarterly gains are all under 5 percent, October marks the fifth consecutive month of quarter-over-quarter home price growth. Nationally, prices edged up 2.1 percent over the rolling quarter, higher than over September’s rate of growth. The West came in strong again, with quarterly gains of 3.7 percent. The South posted gains of 2 percent over the rolling quarter, according to Clear Capital’s October HDI Market Report.
Previously trailing in quarterly gains, the Northeast saw the largest jump in regional performance. Up 1.7 percentage points from September, the Northeast posted 1.9 percent growth quarter-over-quarter. Price gains across the low, mid, and top tier sectors all contributed to the region’s quarterly improvement.
Meanwhile, in Midwest quarterly growth of 1.0 percent was 0.9 percentage points lower than September’s. The Midwest tends to see quicker shifts in percentage change due to relatively low price points when compared to other regions. But there are certainly states within the Midwest, like Ohio, that have made notable progress. Ohio’s recorded quarterly gains of 1.6 percent are secondary to its more substantial long term price growth of 15.0 percent since 2008.
Today the National Association of Realtors released median prices for metropolitan areas for the third quarter. Prices in Chicago are down 1.8 percent from a year ago; Madison, WI is down 4.3 percent; Bloomington, IL is down 0.5 percent; and Champaign-Urbana is down 3.6 percent.
Yearly home prices in October came in strong. National gains of 4.6 percent are the highest since August 2010, when the first-time-homebuyer tax credit was enticing buyers.
The West posted its first double digit yearly gains since 2006, at 11.4 percent. While the hard hit region showed little signs of slowing down, it has a long way to go. Current prices are still 42.9 percent below the peak. On par with quarterly trends, the Midwest saw yearly gains soften to 1.1 percent. This, in part, reflects higher prices a year ago when the region saw a short uptick.
October year-over-year home prices in the South and the Northeast made headway; each up at least 1.0 percentage point over September, to 4.2 percent and 2.0 percent, respectively. With yearly growth of 6.8 percent, Virginia outpaced its region by 2.6 points.
The highest performing metros are a diverse group. In October, strong markets like Phoenix and Seattle were bested by Atlanta. However, Atlanta is in the early stages of a recovery, highlighted by a relatively high REO saturation rate of 37.8 percent.
Atlanta’s growth of 8.0 percent over the last rolling quarter represents a significant reversal for the market. Even though REO saturation remains the highest on the list, the new found growth was supported by a 9.7 percentage point drop over the last six months.
While trends are improving, Atlanta’s price points are extremely low, with a median price-per-square-foot of just $58. That’s nearly half the national median price-per-square-foot of $107. Even slight shifts in price can have a relatively large impact on percentage change for Atlanta.
Cleveland’s quarterly and yearly gains of 7.1 percent and 4.9 percent, respectively, outpaced national, regional, and state returns
The group of lowest performing metros are a great example of how housing trends continue to differ market by market. While Ohio and Virginia are doing relatively well overall, markets like Columbus, Cincinnati, and Richmond lag behind top performers, though each has posted yearly growth.
And after coming in as one of the strongest 15 markets four times in 2012, Tampa landed on the list of lowest performing metros in October. Over the last year, the low tier segment has been a key growth driver for Tampa. But, losses of 5.3 percent over the last quarter in Tampa’s low price segment (homes selling for $62,000 and less) created a drag on the overall market’s quarterly gains of 1.5 percent. Additionally, Tampa’s REO saturation rose nearly one percentage point over the last quarter. While this market continues to see measured growth, it’s not on the same trajectory as other markets, like Atlanta.
Tampa is a great example of how seemingly small shifts in the status quo can disrupt the momentum of price gains. The housing recovery has been built upon the delicate balance between declining distressed sales and increased buyer activity. Until more of the middle class has access to credit, the recovery will be constrained.