Monday, July 21, 2014
Home Prices to Level Off and Reverse Course Within 2 Years - Analysts
By: Jann Swanson for Mortgage News Daily
Jul 21 2014, 12:51PM
Two Bank of America Merrill Lynch (BAML) analysts are defending what they call their big high conviction views for what should happen in the housing world over the next two years. Chris Flanagan and Gregory Fitter, ABS and MBS strategists say that their views are not mainstream but that recent data has corroborated their theories.
The two contend that home price increases will continue to moderate from the skyrocket trajectory they were on in late 2012 and early 2013 will peak in mid-2016. Second, as unemployment continues to ease, the yield curve will continue to flatten (longer term rates getting lower while shorter term rates get higher, relative to each other) and the spread between two year and 10 year treasury yields should be at zero by the time home prices peak. The long end of the curve will remain at surprising low yields, fostered by a soft housing market and low inflation.
The first "big view", that home prices will peak in two years is validated they say by the most recent income based home price model from Case Shiller. Charts 1 and 2 includes the Case Shiller historical and forecasted home price index (HPI) along with the BoA strategists' estimate of fair value. This model shows that the HPI will increase from the first quarter 2014 level of 155.5 to a peak of 167.3 in the third quarter of 2016. This is an annualized growth of 3 percent over 30 months compared to 11 percent in 2013 and the 9.5 percent annualized rate since prices bottomed in the fourth quarter of 2011. Then prices are expected to decline and not recover to the 2016 level until Q2 2022, an annualized rate of price growth over six years of 0. With this factored in, the annualized home price growth rate between Q1 2014 and Q2 2022 is expected to be 1.0 percent.
To read the full article click the link below:
Home Prices to level off
Saturday, June 28, 2014
Surprise! Bank-Owned Properties Actually Sell For More!
Just when you thought you had the market all figured out....
In an article posted by Jann Swanson for Mortgage News Daily, it seemingly dispels the myth of bank owned REO properties being the default standard for the biggest bargains in the market place.
RealtyTrac recently analyzed residential sales over the year that ended in
March to determine what drives discounts in the market value or premiums
in the sales price for distressed properties. They looked at four
factors, foreclosure status, occupancy, equity, and property age, using them to
construct 24 different distressed property profiles. Each profile was compared
to a control group of properties not in foreclosure that sold in the same time
frame.
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990. What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group. The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed. Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).
Two profiles tied for the second largest discount, 26 percent. One profile was properties that were in default with positive equity; the other was properties in default with negative equity, vacant, and built before 1950. Discounts of 25 percent were the average for two other profiles; vacant properties with negative equity that were scheduled for foreclosure auction and vacant properties scheduled for foreclosure auction.
Read More:
Bank Owned Bargains?
Just when you thought you had the market all figured out....
In an article posted by Jann Swanson for Mortgage News Daily, it seemingly dispels the myth of bank owned REO properties being the default standard for the biggest bargains in the market place.
Surprise! Bank-Owned Properties Actually Sell For More!
Posted
to: MND
NewsWire
Thursday, June 26, 2014 10:03 AM
Thursday, June 26, 2014 10:03 AM
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990. What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group. The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed. Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).
Two profiles tied for the second largest discount, 26 percent. One profile was properties that were in default with positive equity; the other was properties in default with negative equity, vacant, and built before 1950. Discounts of 25 percent were the average for two other profiles; vacant properties with negative equity that were scheduled for foreclosure auction and vacant properties scheduled for foreclosure auction.
Read More:
Bank Owned Bargains?
Wednesday, May 7, 2014
Mortgage Rates Push Further Into 6-Month Lows
May 7 2014, 3:15PM
by: Matthew GrahamMortgage rates continued pushing into the lowest levels in more than 6 months after a docile congressional testimony from Fed Chair Yellen this morning. Financial markets and mortgage lenders were cautious ahead of the 10am speech, but improved afterward. A majority of lenders issued mid-day reprices, bringing rate sheets to levels not seen since November 1st. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already straddling 4.25% and 4.125%. Today's improvement equates to an effective drop of 0.04%.
Read More:
Mortgage Rates Push Further Into 6-Month Lows
For more market and real estate data click below:
www.MJDavisProperties.com
Monday, May 5, 2014
Giving New Meaning to "Shadow Inventory"
May 5 2014, 2:33PM
by Jann Swanson
Since the beginning of the housing crisis in 2008 housing experts have cited concern over the "Shadow Inventory" and the pitfalls it could present to any recovery of the housing market. Back then, as every month brought news of mounting delinquencies, rising unemployment, and pending adjustments to adjustable and teaser rate mortgages the shadow inventory had a particular definition; the number of homes with mortgages that are 90 or more days delinquent and that have a reasonable likelihood of ultimately being foreclosed and becoming bank-owned real estate even though they are not yet publicly listed for sale.
While lenders and servicers are still trying to rid themselves of backlogs of REO and there are still concerns over homes which may be held off the market for various reasons, the cry for months has been that there are not enough homes for sale. Sales, appeared to have been hampered by a lack of inventory as new home builders cut back on construction and current homeowners have deferred moving, each awaiting a better market.
The number of homes thought to be in the shadow inventory has dropped from 3 million at the peak in January 2010 to about 1.7 million in January of this year. Mark Fleming, CoreLogic's chief economist, said recently that the traditional view of the shadow inventory doesn't tell the whole story anymore and he puts forth two new ways of looking at how a different version of shadow inventory may still be holding back recovery.
Read more:
Giving New Meaning to Shadow Inventory
While lenders and servicers are still trying to rid themselves of backlogs of REO and there are still concerns over homes which may be held off the market for various reasons, the cry for months has been that there are not enough homes for sale. Sales, appeared to have been hampered by a lack of inventory as new home builders cut back on construction and current homeowners have deferred moving, each awaiting a better market.
The number of homes thought to be in the shadow inventory has dropped from 3 million at the peak in January 2010 to about 1.7 million in January of this year. Mark Fleming, CoreLogic's chief economist, said recently that the traditional view of the shadow inventory doesn't tell the whole story anymore and he puts forth two new ways of looking at how a different version of shadow inventory may still be holding back recovery.
Read more:
Giving New Meaning to Shadow Inventory
Tuesday, March 18, 2014
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Matt Davis
Broker- MJDavisProperties.com
|
Mortgage Rates Sideways Ahead of Fed Announcement
Mortgage rates were effectively unchanged today, putting an end to 2 days spent moving higher as the threat of violence diminished in Ukraine. Indeed it was violence in Ukraine (or rather, a Ukrainian Military Installation in Crimea) that enabled bond markets to improve today, thus preventing rates from rising further. Some lenders increased costs just slightly while an equal amount went the other direction. In both cases, today's latest rate sheets aren't that far off from yesterday's, though that wouldn't have been the case with this morning's rate sheets as many lenders improved mid-day to reach the 'unchanged' levels. The most prevalently quoted conforming 30yr Fixed for the best-qualified borrowers remains at 4.5% for some lenders, though at least as many are still offering 4.375%.
The balancing act between Ukraine and more normal sources of market movement continues to cause volatility for markets in general. The effects on mortgage rates have been better-enabled by the relative absence of significant domestic economic data. Complicating matters further, the only time that geopolitical risk wasn't having an obvious effect on rates, just happened to coincide with the only recent significant data earlier this month with the Employment report on March 7th.
That employment data made for a convincing head-fake toward higher rates and renewed geopolitical risk brought rates back down in the following week. The point is that significant domestic data hasn't really had to compete with geopolitical risk for the same stage. They've been taking turns, as it were.
The first good chance for this to change arrives tomorrow. There's no way to be sure it WILL change, but tomorrow's Fed policy announcement always has the potential to move markets, and it comes one day after news of gunfire and wounded Ukrainian military at an army base in Crimea. It's hard to imagine Ukraine-related headlines will simply take the day off tomorrow. The Fed certainly won't.
Mortgage Rates Sideways Ahead of Fed Announcement
Monday, March 17, 2014
| |
Matt Davis
Broker- MJDavisProperties.com
|
Seventh Straight Month of Lower Home Sales in California
Posted to: MND NewsWire
Monday, March 17, 2014 3:24 PM
Monday, March 17, 2014 3:24 PM
Closed sales of existing single-family homes slipped again in February, marking the seventh straight month of declining activity. The California Association of Realtors® (C.A.R.) said that sales of existing homes during the month were at a seasonally adjusted annual rate of 361,210 units. This was a 0.7 percent dip from the January rate of 363,930 units. It was the fourth month that existing home sales were under 400,000 and the rate was 13.7 percent below the rate of 418,520 homes in February 2013.
"The slower sales in February reflects diminished housing affordability after three years of solid price increases and interest rates that are nearly a full percentage point higher than a year ago," said C.A.R. President Kevin Brown. "With the interest rate difference alone, home buyers this year would have to pay $150 more per month on their mortgage payment than last year, a substantial amount for many would-be home buyers trying to get into the market."
Virtually every country reporting to C.A.R. posted year-over-year declines in sales. Increases were noted in Contra Costa Country (+22 percent) and San Francisco Country (+14.9 percent) and sales in the small counties of Madera and Amador were also up.
Inventories improved in February with a 4.7 month supply of existing single-family homes available for sale compared to 4.3 months in January and 3.6 months in February 2013. C.A.R.'s Unsold Inventory Index reflects both the number of homes on the market and the current sales rate. A six- to seven-month supply is considered typical in a normal market.
With declining sales and increasing inventories the statewide median price of an existing, single-family detached home retreated 1.6 percent from January's median price of $410,990 to $404,250. February's price was 21.3 percent higher than a year earlier marking two full years of consecutive year-over-year price increases and the 20th straight month of double-digit annual gains, as higher priced homes made up a larger share of the market compared to a year ago.
"Supply conditions in the housing market have shown some improvement since the end of last year, except for the lowest price range where the inventory for distressed properties is depleted. In the mid-priced range of $300,000-$750,000, which covers nearly half of all home sales, inventory is up 27 percent, while the supply of high-end homes - properties priced at or above $1 million, also is up 13 percent from a year ago," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "The improvement in these prime price ranges will benefit trade-up buyers who are expected to dominate the market in 2014, as many of them will be searching for homes in these price categories."
The median number of marketing days for a single-family home fell to 40 days from 44.3 days in January but remained higher than the 34.3 days it took to sell a home in February 2013.
Sales and price data are generated by C.A.R. from a survey of more than 90 Realtor associations throughout the state.
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