Daily Archives: March 11, 2013

Falling Inventories are Hitting the Brakes | Armonk NY Real Estate

At long last, there are signs that the unprecedented year-long decline in for-sale inventories are slowing, though continuing to fall, just in time for the spring home buying season. But inventories may continue to decline through 2013.
Nationally, inventory is no longer in a free fall, reported Trulia’s Chief Economist Jed Kolko yesterday. The seasonally adjusted quarter-over-quarter change in inventory is negative, but no longer falling as sharply as it did a few months ago. (Year-over-year changes are slower to show a turnaround because they combine a full year’s worth of changes in a single measure. But looking at quarterly or monthly changes requires a seasonal adjustment because inventory has a strong seasonal pattern that makes the underlying trend hard to see.)
The quarter-over-quarter decline in inventory has been at a 14-21 percent annualized rate since October 2012, compared with a 23-29% annualized rate from March 2012 to September 2012:
Nationally, inventory fell 23 percent year-over-year in February, according to the Department of Numbers HousingTracker. Inventory fell year-over-year in all 50-plus markets they track, and by more than 50 percent in several California metros. Price increases and disappearing inventory go hand-in-hand: nearly all metros with the biggest inventory declines also had year-over-year price increases of 10 percent or more, such as Sacramento, San Jose, and Seattle.
Kolko said less inventory leads to higher prices, which in turn lead to less inventory – at least in the short term. Everyone wants to buy at the bottom; no one wants to sell at the bottom. When prices start to rise, buyers get impatient while many would-be sellers want to hold out in the hopes of selling later at a higher price. However, the “inventory spiral” can’t go on forever because eventually rising prices will encourage homeowners to sell and builders to build, which add to inventory and breaks the spiral.
“The critical question for the housing market – especially for buyers fighting over tight inventories – is how long until that kicks in? How long do prices have to rise before sellers and builders start adding to inventory?” asked Kolko.
In the long term, higher prices lead to more inventory -. As prices keep rising, more homeowners decide it’s worthwhile to sell, especially those who get back above water, which adds to inventory. Also, builders take rising prices as a cue to rev up construction activity, which also adds to inventory.
For the U.S. overall, an inventory turnaround in 2013 is unlikely. Since national asking home prices bottomed in February 2012, it may be at least another year before national inventory starts expanding. Inventory will make a turnaround first where asking prices bottomed earliest, such as in Phoenix, Miami, Detroit, Houston, and Oklahoma City. The inventory turnaround is a longer way off in metros where prices have bottomed more recently, such as in Sacramento and the Inland Empire.

via realestateeconomywatch.com

State Laws will Extend Foreclosure Pain by 30 Months or More | Chappaqua NY Real Estate

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The 23 states that require court orders to foreclose and other states that have enacted legislation that delays foreclosure processing will take twice as long as the rest of the nation to clear backlogged foreclosure inventories at their current rate.
The foreclosure inventory in judicial states remains three times that of non-judicial states and pipeline ratios — the rate at which states are currently working through their existing backlog of loans either in foreclosure or serious delinquency — are almost twice as high in judicial states than non-judicial states, according to the Lender Processing Services’ January Mortgage Monitor.
“On average, at today’s rate of foreclosure sales, it will take 62 months to clear the inventory in judicial states as compared to 32 months in non-judicial states. A few judicial states — New York and New Jersey in particular — have such extreme backlogs that their problem-loan pipelines would take decades to clear if nothing were to change,” said LPS Applied Analytics Senior Vice President Herb Blecher.
Blecher said certain non-judicial states, such as Massachusetts and Nevada, have recently enacted ‘judicial-like’ legislative and/or legal actions which have greatly extended their pipeline ratios. Nevada’s ‘time to clear’ has extended from 27 months in January 2012 to 57 months as of January 2013. The change in Massachusetts has been even more pronounced. Since June of last year, its pipeline ratio has gone from 75 to 171 months.
“As California’s recently enacted Homeowner’s Bill of Rights is closely modeled on the Nevada legislation, we’ll be watching that state closely over the coming months to gauge its impact, as well,” Blecher said.
The January data also showed that, despite an overall national trend of improvement, new problem loan rates remain high in states with large numbers of “underwater” borrowers. So-called “sand states,” such as Nevada, Florida and Arizona, are still seeing high levels of negative equity (45, 36 and 24 percent of borrowers are underwater, respectively), and each of those states is experiencing higher-than-average levels of new problem loans. Additionally — and further underscoring the differences seen between judicial and non-judicial states — new problem loan rates in non-judicial states declined slightly over the last six months, while increasing almost 20 percent in judicial states.
States with highest percentage of non-current loans are Florida, Mississippi, New Jersey, Nevada and New York.
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via realestateeconomywatch.com

The Cost of Recovery: FSBOs are BAAAACK | Cross River Real Estate

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In the hottest markets around the nation, “for sale by owner” signs are popping up in yards as penurious owners try their hands at selling their own homes. It’s another sign of recovery that’s raising echoes of the real estate boom seven years ago.
“In Silicon Valley we have returned to the market conditions where nearly everything sells as soon as it hits the MLS. This seems to cause two things to happen; the return of “quick buck agents” and FSBOs. The “quick buck agents” are those who get their license in a hot market hoping to make a few dollars off friends and family. They’re the ones who come and go with every boom market. The bigger concern is the FSBO,” blogged Los Altos broker Bryan Robertson on the Active Rain site two days ago.
Within hours several dozen Realtors chimed in.
“We are seeing a new wave of FSBO signs in 2013. With the return of the strong seller’s market, it’s just a fact. It’s just something new to work with again, when they had virtually disappeared in the past few years,” agreed Realtor Michelle Francis of Buckhead Atlanta.
“FSBO’s have made a comeback here in the Phoenix metro area, especially in the lower priced home market. When homes were bought at the bottom of the market and now want to be sold, some people can only sell for a small margin. Our market has not recovered in some areas enough to pay all the real estate costs for the seller. Therefore, he does a FSBO,” reports Associate Broker Barb Merrill.
“Bryan, I haven’t started seeing lots of them yet, but I expect to!” said Connie Harvey, a Nashville Realtor.
“It is much easier to sell a home on your own now…at one time Realtors pre-qualified the buyer now banks give them a letter of prequalification….with homes selling fast you can anticipate more and more FSBOs Of course once the negotiating starts the sellers lose their stomach for it in many cases, ” said Edward Gilmartin of Boston Homes.
“Had a FSBO call me today saying he was using the comps I GAVE HIM and go it alone. But.. Understand he would pay me 3% if I brought him a buyer. Imagine that……” said John McCormack of
Realtors report their strongest defense against sellers who go it alone are legal requirements that sellers disclose problems with their homes in writing or risk liability. “The number one thing sellers forget to do is provide proper disclosures. Even with all the advice out there, it’s unlikely a seller will prepare the documents to cover all the disclosures necessary. They might even be hiding something. This is one of many reasons why you need an agent,” said one. ” If you get sued for not disclosing something, you’re likely to lose out on any savings you might have achieved. It’s not worth the risk,” agreed another.
For sale by owner transactions, or FSBSs, reached an all-time low of 9 percent last year and in more than half of those, the seller already knew the buyer so a great deal of marketing was not necessary. In the seven year buyer’s market since the real estate crash in 2007, FSBOs have dropped like a rock, from a high of 14 percent of all transactions in 2004. Now however, reports from the across the nation suggest that there may be more FSBO yards displayed this spring buying season than in nearly a decade.
One way sellers can save on commissions today is to use a flat fee broker, who charges by the service provided rather than a percentage of the transaction.
According to the National Association of Realtors (NAR), more sellers are choosing to discounted agent services. The percentage of homes sold on a flat-fee basis rather than a commission grew from one to three percent. For the past few years, 20 percent of homes were sold by agencies that provided limited services such as listing on the MLS. The growth in flat-fee listings is coming from sellers need to go through brokers who are members of multiple listing services to get listed, but want to save on commissions by doing their own marketing.
On RealtyTrac last week, OurBroker Columnist Peter Miller argues that brokers are more important now than ever, even for the buy side of a transaction.
“When I first started in real estate, do-it-yourself transactions actually made some sense. Contract agreements ran one or two pages and real estate brokers did not have much training beyond what a reasonably informed member of the public might have. In fact, when I first began looking into real estate, I found it was possible to get a six-month temporary brokerage license, meaning you could buy and sell property for others with no training and no testing at all.
“Long ago the idea of buying and selling without a broker was both attractive and doable. That’s just not the recommendation I would make today. I now tell owners to list houses with successful professionals and I tell purchasers to find an experienced buyer broker as well as a good home inspector. With something as important as a home purchase getting such help in today’s world simply makes sense,” he wrote.
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