Home Prices Up 5% Year-Over-Year: Clear Capital

New data released by Clear Capital Thursday shows that home prices nationally are up 5.0 percent compared to February 2009.

The quarter-over-quarter price change for the numbers through last month was flat at 0.0 percent, indicating a softening during the winter months. But Clear Capital noted that the year-over-year price variations have been in positive territory for two months straight, and the company said it expects another big price boost to come when home sales pick up before the contract deadline for the homebuyer tax credit.

“If the increase in demand that preceded the end of the last tax credit is any indication, home prices may dip only slightly into negative territory before getting an added boost before the April tax credit deadline,” said Dr. Alex Villacorta, senior statistician for Clear Capital.

All four U.S. regions posted very consistent quarterly price changes in February, according to Clear Capital’s analysis, with only the Northeast showing a decline of 1.4 percent.

On a year-over-year basis, just the West had a drop, and it was a mere 0.5 percent. Prices in the Midwest skyrocketed 13.8 percent compared to February 2009.

Clear Capital says February’s year-over-year price gains speak volumes about the improved market picture today compared to the first months of 2009, when credit was limited, nearly all properties were rapidly losing value, and REOs flooded the market as banks faced the risk of failure.

While the current supply of foreclosed homes is significant and the swollen pipeline for loan resolution is feeding concerns over shadow inventories, Clear Capital says demand for discounted REOs by investors and new homebuyers has buoyed prices well into the winter and should continue into the spring. The company noted, though, that this demand has been muted by the typical slowdown in winter sales, pushing REO saturation to 26.1 percent – a 1.3 percent increase over January.

“We observed an expected increase in REO saturation this month, as the flow of foreclosures continued to come into the market, while traditional non-distressed sales wait to be listed in the spring and summer months,” Villacorta explained.

Clear Capital says while the risk of additional REO inventories arriving later in 2010 should not be taken lightly, the company suspects this inflow will arrive with a stronger springtime and summer buying season, helping to ease the shock to the marketplace.

“Although many markets have seen a slow down in price gains, I’m encouraged that prices have remained positive through the first two months of the year despite all the negative economic news and threat of more REOs hitting the markets,” Villacorta said.

Home Prices Rise, According to FHFA Index

December 23, 2009

Home prices rose 0.6% in October and rebounded from a 0.4% decline in September, according to a house price index compiled by the Federal Housing Finance Agency. The index, however, only reflects homes funded by Fannie Mae and Freddie Mac loans. Regionally, the FHFA HPI registered a 3.7% jump in the Pacific states, which includes California. The Mid-Atlantic states ranked second with a 1.8% increase in house prices. The South-Atlantic region, which runs from Maryland to Florida, experienced the worst monthly performance with a 1.6% price decline in prices. FHFA bases its house price index on Fannie Mae and Freddie purchase mortgage transactions. Overall, U.S. prices are down 1.9% since October 2008, according to the regulator’s HPI. The FHFA index is 10.8% below the April 2007 peak in prices.

“Cash for Caulkers” could mean $12K per home

• By Steve Hargreaves, CNNMoney.com staff writer
• On 6:24 pm EST, Tuesday December 8, 2009

Cash for Caulkers could mean $12K per home
President Obama proposed a new program Tuesday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.
The administration didn’t provide immediate details, but said it would work with Congress on crafting legislation. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s helping write the bill, said a homeowner could receive up to $12,000 in rebates.
The proposal is part of the President’s larger spending plan, which also includes money for small businesses, renewable energy manufacturing, and infrastructure.
We know energy efficiency “creates jobs, saves money for families, and reduces the pollution that threatens our environment,” Obama said. “With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.”
The program contains two parts: money for homeowners for efficiency projects, and money for companies in the renewable energy and efficiency space.
The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.
Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.
Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible. That would mean a household could spend as much as $24,000 on upgrades and get half back.
Homes that take full advantage of the program could see their energy bills drop as much as 20%, he said. The program is expected to cost in the $10 billion range.
It’s not clear how the home efficiency plan would be administered – the government may issue rebates to consumers directly, homeowners might get a tax credit, or the program could be run via state agencies.
If consumers have to spend a lot of money up front to get the credit, it could throw a wrench in the works, David Kreutzer, an energy analyst at the Heritage Foundation, told CNN.
“This will not be something that’s attractive to people who are having trouble already making their budget payments month to month or week to week,” he said.
To keep consumers from having to spend thousands of dollars before getting reimbursed, Nadel said, one idea is to have contractors or big box retailers pay part of the cost up front.
Fraud issues could also come up, Kreutzer said.
“Any program that is going to run through a third party and is going to distribute billions of dollars needs to have lots of checks and balances to make sure there’s not abuse,” he said.
Nadel noted that as a way to guard against fraud, contractors would have to be certified to participate.
Energy company boost
Obama’s new spending plan also calls for renewable energy companies to get additional support. That could come in the form of loan guarantees – basically, money the government uses to secure loans for startups.
In the original stimulus bill passed earlier this year, $6 billion was earmarked for such loan guarantees. But then lawmakers took away $2 billion to fund Cash for Clunkers – the popular program that paid people to turn in their old cars.
The $4 billion from the original bill has funded about $40 billion in loans, said the staffer on the Senate Energy Committee. Meanwhile, firms are hoping for another $4 billion in loan guarantees, since they have another $40 billion worth of projects that need funding.
A bill on energy efficiency reimbursements already has supporters in the Senate.
“Not only will [such legislation] increase our energy security and transform our energy infrastructure to a modern, clean and efficient one,” Senate Energy Committee Chairman Jeff Bingaman, D-N.M., wrote in a recent op-ed column in the Hill, a Capitol Hill newspaper. “But it also will position the United States to lead in the development of clean energy technologies.”

Refinancing Application Surge May Reflect Rate Rise Nudging Borrowers

An increase in the average 30-year fixed mortgage rate for the first time in over a month during the week ending Dec. 4 could be responsible for an increase in refinance applications during the period, according to the Mortgage Bankers Association’s Weekly Mortgage Applications Survey. A rate rise sometimes causes a rush to refinance as borrowers may see it as a sign rates are rising and they need to lock in immediately. A relative improvement in unemployment put upward pressure on rates Dec. 4. During that week, the MBA’s Market Composite Index, a measure of overall mortgage loan application volume, increased 8.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 54% compared with the previous week, which was a shortened week due to the Thanksgiving holiday. The Refinance Index increased 11.1% from the previous week and the seasonally adjusted Purchase Index increased 4% from one week earlier. The increase in purchase applications reflected a 10% increase in applications for government mortgages and a 0.2% decrease in conventional mortgage applications, both on a seasonally adjusted basis. The share of refinance activity increased to 74.4% of total applications, up from 72.1% the previous week. The adjustable-rate mortgage share of activity decreased to 4.7% from 4.8%. The average contract interest rate for 30-year fixed-rate mortgages, which for the previous week was at its lowest point since May of this year, increased from 4.79% to 4.88%, with points increasing to 1.17 from 1.00 (including the origination fee) for loans with an 80% percent loan-to-value ratio, the association reported. The increase ended a run of six consecutive weeks of decline in the average rate. The average contract interest rate for 15-year FRMs came off of its lowest point ever increasing by 6 basis points, to 4.33%. For one-year adjustable-rate loans, rates decreased by 1 bp to 6.55%. The MBA stopped disclosing index values with the July 31 data release. The MBA can be found online at http://www.mortgagebankers.org.

as reported in the National Mortgage News 12-09-09

Freddie: Rates Hit Another New Low
The weekly average for the 30-year fixed-rate mortgage that dominates the market had fallen again to yet another record low at 4.71%, according to the most recent Freddie Mac Primary Mortgage Market Survey. That average rate for a 30-year fixed-rate mortgage during the week ending Dec. 3 was the lowest seen since Freddie started tracking the rate in 1971. It was 4.78% the previous week and 5.53% a year ago. The average 15-year FRM rate, which Freddie has been tracking since 1991, also dropped to a new record low. It was 4.27% during the most recent week, 4.29% the previous week and 5.77% a year ago. In contrast, the average rate for a five-year hybrid Treasury-indexed adjustable-rate mortgage inched up during the most recent week to 4.19% from 4.18% the week previous. This rate was 5.77% a year ago. The average one-year Treasury ARM rate during the most recent week, at 4.25%, was higher than the average five-year rate during that time but down compared to the rate for the same type of loan the week previous. During the previous week, the average one-year Treasury ARM rate was 4.35%. A year ago this rate was 5.02%. Points in the most recent week were 0.7 for 30-year FRMs and 0.6 for the three other types of mortgages. “Interest rates for 30-year and 15-year fixed-rate mortgages fell for the fifth consecutive week to an all-time record low while the average rate on five-year Arms hovered near its record set in the previous week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “In addition, interest rates on 30-year and 15-year fixed mortgages thus far in 2009 averaged one percentage point below their respective average in 2008.”  These rates are average for Freddie Mac loans with a loan amount of  $300,000 or more for a single family owner occupied purchase or refinance with an excellent credit score.  Loan to value ratio is assumed to be no more than 80%.

Pending Home Sales Hit Highest Mark in More than 3 Years: NAR

The National Association of Realtors (NAR) said Tuesday that its index of home sales contracts is up yet again, representing the ninth straight month that pending sales have recorded a rise – the longest run of increases since NAR began tracking sales agreements back in 2001.

The trade group’s Pending Home Sales Index showed an increase in signed contracts of 3.7 percent in October compared to September.

Perhaps even more noteworthy is that the latest reading is the highest on record since March 2006 and is nearly 32 percent above October 2008. The rise from a year ago is the biggest annual increase ever posted for NAR’s pending sales index.

Although the pending home sales numbers don’t always turn into tangible closed transactions – according to NAR they’ve been thwarted as of late by new appraisal rules – we’re still exceeding what the association deems as customary stats.

Lawrence Yun, NAR’s chief economist, says based on the country’s demographics, existing-home sales should be in the range of 5.5 million to 6.0 million annually. Based on the trade group’s existing-home sales report last month, the industry is currently moving properties at an annual rate of 6.1 million.

According to Yun, the gain is primarily due to the federal government’s popular $8,000 tax credit for first-time buyers, seeing as how the annual sales rate was well below the 5-million mark before the homebuyer tax credit stimulus was passed.

“This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future,” Yun said.

Yun cautioned, though, that home sales could dip in the months ahead. “The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge,” Yun explained.

Yun projects that as inventories continue to decline and balance is gradually restored between buyers and sellers, housing conditions will become self-sustaining and prices in most areas will begin to stabilize around the middle of 2010.

Existing-Home Sales Record Another Big Gain, Inventories Continue to Shrink

Washington, November 23, 2009

Driven by the first-time buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, while inventories continue to decline, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1 percent to a seasonally adjusted annual rate1 of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

Lawrence Yun, NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through – there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.

Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington, D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said.

“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a Realtor® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.

Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply2 at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” Yun said. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.

The national median existing-home price3 for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.

“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Yun said.

He added that low home prices also are contributing to extremely favorable affordability conditions. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.”

Single-family home sales rose 9.7 percent to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4 percent above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago.

Existing condominium and co-op sales surged 13.2 percent to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8 percent above the 547,000-unit level a year ago. The median existing condo price4 was $172,900 in October, which is 10.4 percent below October 2008.

Regionally, existing-home sales in the Northeast rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.

Existing-home sales in the Midwest surged 14.4 percent in October to a pace of 1.43 million and are 28.8 percent above a year ago. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008.

In the South, existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.

Existing-home sales in the West increased 1.6 percent to an annual rate of 1.31 million in October and are 12.0 percent above a year ago. The median price in the West was $220,200, which is 14.7 percent below October 2008.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

NOTE: NAR also reports monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, and is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of Realtors®.

1The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982.

3The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

4Because there is a concentration of condos in high-cost metro areas, the national median condo price generally is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

Existing-home sales for November will be released December 22. The next Pending Home Sales Index is scheduled for December 1; release times are 10 a.m. EST.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.

With housing affordability hitting near-record highs, now is the time to buy.

A combination of low interest rates and reasonable housing prices ensured that nationwide housing affordability lingered near record high levels for the third consecutive quarter, according to the National Association of Home Builders (NAHB)/ Wells Fargo Housing Opportunity Index (HOI) released Thursday.

“At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its November 30 deadline and expanding it to a wider group of eligible homebuyers,” said Joe Robson, NAHB chairman and home builder from Tulsa, Oklahoma. “With interest rates now lower than last quarter, the tax credit will encourage even more homebuyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories, and stabilizing home prices.”

After reviewing all new and existing homes sold in the third quarter of 2009, the HOI showed that 70.1 percent were affordable to families earning the national median income of $64,000. While this showed a slight decrease from the 72.3 percent affordability rate during the second quarter of 2009, it was notably higher than the 56.1 percent during the same period last year.

Holding steady for 17 consecutive quarters, Indianapolis remained the most affordable major housing market. According to the HOI, almost 95 percent of homes in this area were considered affordable to households earning the area’s median income of $68,100.

While affordability in Indianapolis was impressive, five smaller housing markets earned even higher affordability scores. Kokomo, Indiana posted the highest score, with 96.7 percent of homes sold during the third quarter considered affordable. Springfield, Ohio; Bay City, Michigan; Mansfield, Ohio; and Elkhart-Goshen, Indiana rounded out the top five.

Some markets, though, saw extremely low affordability scores. According to the HOI, the nation’s least affordable major housing market during the third quarter of 2009 was New York-White Plains-Wayne, New York/New Jersey, resulting in the area’s sixth consecutive appearance at the bottom of the affordability list. Homes in this vicinity were only affordable to about 19 percent of median-income earning residents. The least affordable of the smaller metro housing markets during the third quarter was San Luis Obispo-Paso Robles, California.

By: Brittany Dunn

First-Time Buyers Generate 50% of 09 Home Sales

November 19, 2009

Given the success of the first-time homebuyer tax credit and its extension into next year, the National Association of Realtors is forecasting that existing home sales will jump 13.6% in 2010 after a 2% increase in 2009. First-time buyers will account for a record 47% of homes sales in 2009, according to NAR chief economist Lawrence Yun. “In fact the credit is working better than first projected — it now looks like we’ll have 2.3 million to 2.4 million first-time buyers this year,” he said. The National Association of Home Builders estimates the tax credit has generated 200,000 extra sales. Mr. Yun expects sales of previous owned homes will hit 5.7 million in 2010, up from 5.0 million in the previous year. Congress recently extended the $8,000 first-time homebuyer tax credit to April 30 and it gives buyers with a binding sales contract an extra 60 days to close. The lawmakers also created a new $6,500 tax credit for repeat or move-up buyers. Bernard Markstein, NAHB director of economic forecasting, expects the extended/expanded tax credit, which goes into effect Dec. 1, will generate 180,000 extra sales, including 40,000 new home sales.

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