Posted tagged ‘Investors’

Cash Sales Decline; Still Dominate Lower-Priced Homes

June 23, 2014

home-prices

As home prices rise the interest of investors, the majority of cash buyers, wanes and therefore cash sales decline.    For a more detailed look at this subject – please read the article below.

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Home purchases made with cash are on the decline across the country, according to Zillow, but cash sales still make up a significant portion of the lower-priced home market in many areas.

Cash sales declined year-over-year in the first quarter in 102 of the 126 metro areas Zillow observes. Zillow chalked up the decline to waning investor demand and a resurgence of traditional buyers in the market.

“[I]t’s heartening to see more buyers armed with traditional financing begin to enter the market,” said Stan Humphries, chief economist at Zillow. “This is a critical step on the way back to a more normal, balanced housing market.”

However, despite the recent trend, “it’s pretty clear that cash is still king, especially at the lower end of the market,” according to Humphries.

In fact, in the overwhelming majority of the top 30 metro areas—27 markets—Zillow found more than one third of home purchases in the lowest priced third of the market were made with cash.

Furthermore, in three of these markets, more than 80 percent of home purchases in the bottom segment were made with all cash. In Miami, 84.7 percent of low-priced home sales were cash deals. Detroit was close behind with 83.2 percent of low-priced home sales coming in as cash deals, while in Tampa, Florida, 81.4 percent of low-priced home purchases were made with cash.

Across the full price spectrum, the three metros ranking highest for proportion of cash deals in the first quarter were Miami (64.9 percent), Tampa (57.1 percent), and Cleveland (54.2 percent).

To read the complete article – please use the link below.

Cash Sales Decline

Even in Buyer’s Market, Homeownership Expected to Decline

January 2, 2014

forecast-fourThis is good news in spite of what it sounds like. The rapid growth in home prices would only lead to another “Bubble” and more than likely a crash down the line. For a more detailed look at this subject – please read the article below.

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Zillow expects conditions next year to be a bit friendlier to homebuyers—but that doesn’t mean we’ll necessarily see more owner-occupied housing, experts at the real estate marketplace say.

Looking at ongoing trends, Zillow made four major predictions about the course of housing over 2014.

First, home values are forecast to rise by 3 percent at the national level over the year. The prediction projects a retreat from 2012 and 2013 levels, which Zillow says were “unsustainable and well above historic norms for healthy, balanced markets.”

“This year, home value gains will slow down significantly because of higher mortgage rates, more expensive home prices, and more supply created by fewer underwater homeowners and more new construction,” said Dr. Stan Humphries, Zillow’s chief economist. “For buyers, this is welcome news, especially for those in markets where bidding wars were becoming the norm and bubble-like conditions were starting to emerge.”

Second, the company predicts mortgage rates will reach 5 percent by the end of the year—a level not seen since early 2010—as the economy improves and the Federal Reserve adapts its policies. That news may not be as bright for buyers, but Erin Lantz, director of mortgages for Zillow, says it’s important to keep perspective.

“While this will make homes more expensive to finance—the monthly payment on a $200,000 loan will rise by roughly $160—it’s important to remember that mortgage rates in the 5 percent range are still very low,” Lantz said. “Because affordability is still high in most areas relative to historic norms, rising rates won’t derail the housing recovery.”

However, Lantz noted affordability has already turned into an issue for some markets, particularly those in California.

To read the complete article – please use the link below.

Homeownership Expected to Decline

Why so Few Houses for Sale? Lots of Reasons.

December 10, 2013

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This is a pretty complete overlook of the inventory shortage. The one major factor that was not touched on by this article is the lenders, for a lot of different reasons, are not putting many of their foreclosed homes on the market as fast as they used to and therefore there are less of these homes for sale. For a more detailed look at this subject – please read the article below.

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Inventories of homes for sale have been slow to bounce back since the 2007–09 recession, despite steady price appreciation since January 2012.

Normally, higher prices reflect robust sales. But lately, prices have been rising even though sales remain stuck at relatively low levels. The National Association of Realtors reports that an annualized 4.5 million homes were sold in June 2013, roughly the same as at the end of the 1990s.

Many prospective buyers attribute the low sales volume to a lack of inventory on the market. So why are there so few homes for sale? There are lots of reasons why.

William Hedberg, a research associate, and John Krainer, a senior economist, both with the Federal Reserve Bank of San Francisco, examine some of the factors affecting this “more complicated than normal” situation in a recent paper. Here are their key findings:

Many homeowners are still underwater. Many properties are still worth less than the value of their mortgages, which would leave sellers owing additional money at closing.

As a result, a large number of homeowners are waiting for house prices to rise, allowing them to recover lost equity. They delay putting their homes up for sale until the situation improves and they can make back enough to cover the down payment on their next purchase.

To read the complete article – please use the link below.

Few Houses for Sale

New Head of FHFA Expected

November 26, 2013

This is good and bad news for the country. With Mr. Watt running the FHFA you can expect more principle forgiveness with more buyers qualifying for mortgages. On the down side his programs will cost the U.S. Taxpayer more money in the form of government subsidies (HAPM, Etc.)  For a more detailed look at this subject – please read the article below.

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Analysts expect to see a new face at the helm of the agency overseeing Fannie Mae and Freddie Mac now that Democrats in the Senate have changed the rules, eliminating the use of the filibuster to block presidential appointments.

The Senate majority’s instatement of the so-called nuclear option “has cleared the path for Mel Watt’s confirmation” as director of the Federal Housing Finance Agency (FHFA), according to secondary market analysts at Barclays.

Under the chamber’s new rules, the president’s nominees for all positions except Supreme Court judge can be approved with a simple majority vote, rather than the previous requirement of 60 “yay” votes.

Rep. Mel Watt (D-North Carolina) received 56 votes in favor of his confirmation on October 31st, just 4 votes shy of the number needed under the old rules but enough to be confirmed under the new simple-majority requirement.

“[H]e has the required votes and should be confirmed as the new FHFA director. In our view, this raises the level of policy risk,” Barclays said, “as we would generally expect him to be more supportive of the administration’s policies. … [K]ey areas of concern would be principal forgiveness for the GSEs and potential expansion of the HARP [Home Affordable Refinance Program] eligibility date.”

To read the complete article – please use the link below.

Head of FHFA

Judicial Foreclosure Auctions Elevate Foreclosure Activity

November 18, 2013

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Is the “Elevated Foreclosure Activity” caused because the reposed property is finally making its way through the court system or is it because the banks have been rat holing these homes and now that prices are up they are going to sell them? For a more detailed look at this subject – please read the article below.

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Foreclosure auctions in judicial states rose annually for the 16th straight month in October. RealtyTrac recorded a total of 30,023 scheduled judicial foreclosure auctions nationwide last month, up 10 percent from the previous month and up 7 percent from October 2012.

States with the biggest annual increases in scheduled judicial foreclosure auctions included Maryland (+177 percent), Delaware (+142 percent), New York (+98 percent), New Jersey (+97 percent), Pennsylvania (+58 percent), Connecticut (+35 percent), and Florida (+32 percent).

“The backlog of delayed judicial foreclosures continues to make its way through the pipeline, with many of these properties now being scheduled for the public auction after starting the foreclosure process last year or earlier this year,” said Daren Blomquist, RealtyTrac VP.

Blomquist says lenders are moving these properties to public auction more rapidly because there is strong demand from institutional investors looking for buy-to-rent opportunities. In addition, he notes that rising home prices mean more loan losses can be recouped, either by selling off foreclosure assets to investors at auction or by repossessing and reselling properties as bank owned.

Overall, RealtyTrac reported 133,919 U.S. properties with a foreclosure filing—default notice, scheduled auction, or bank repossession—in October. That represents a 2 percent increase from the previous month but a 28 percent decrease from a year earlier. RealtyTrac’s data shows one in every 978 U.S. housing units received a foreclosure filing during the month of October.

To read the complete article – please use the link below.

Foreclosure Activity

Report: Housing Bubble Fears May Not Be Unfounded

November 8, 2013

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This is a case of any housing bubble that builds will probably be localized and not a threat to the nation. California seems to be the most likely suspect for this trend with San Francisco leading the way. For a more detailed look at this subject – please read the article below.

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Fitch Ratings Wednesday stated unabashedly a fear that has been whispered across the industry for the past several months—a looming bubble in some markets.

National home prices are 17 percent overvalued, and current levels of price appreciation in some areas of the country are unsustainable, according to Fitch.

“Fitch identifies a bubble risk in continuing price rises and sees several factors which could halt or even reverse recent gains in the market,” Fitch stated in its quarterly U.S. RMBS Sustainable Home Price and Economic Risk Factor Report released Wednesday.

Rising prices and interest rates threaten affordability, and investors may be creating an illusion of demand that does not exist.

“Having avoided the worst of the downturn, but participating fully in the drastic growth of the past year, much of coastal California is now approaching the peaks of home prices seen during the expansionary bubble of the early 2000s,” Fitch said.

Fitch identified the San Francisco Bay Area as experiencing “the largest unchecked growth” in the nation. If prices continue their current rate of appreciation, they will “eclipse 2006 levels within six months,” Fitch stated.

Prices are already 30 percent overvalued in the region, according to Fitch.

Furthermore, Fitch points out investors have contributed considerably to recent buying activity. In fact, cash purchases—often an indicator of investor activity—is almost 50 percent in the Bay Area.

To read the complete article – please use the link below.

Housing Bubble Fears

High-End Home Flipping on the Rise

October 19, 2013

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High-end home flipping, if you really know what you are doing, can be a great business. If you don’t really know what you’re doing it is a great way to go broke in a very short time period. For a more detailed look at this subject please read the article below.

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Real estate investors made an average gross profit of $54,927 on single-family home flips in the third quarter RealtyTrac reported.

The tracking company’s data indicates investors’ Q3 profit was up 12 percent from an average gross return of $48,893 in the third quarter of 2012. The higher gross profit was driven in part by an increase in high-end flips of homes that were sold for $750,000 or more.

High-end flipping during the July-to-September period was centered in four coastal California markets and New York. At the same time, the former flipping hot spots of Tampa and Orlando, Florida, as well as Phoenix saw marked slowdowns in home flips.

In total, RealtyTrac’s Home Flipping Report released Thursday shows 32,993 single-family home flips—where a home is purchased and subsequently sold again within six months—in the third quarter, down 35 percent from the second quarter and down 13 percent from the third quarter of 2012.

At the high-end of the price spectrum, some 968 homes nationwide were flipped in the third quarter, down 13 percent from the second quarter but up 34 percent from the third quarter of last year.

RealtyTrac says more than three-fourths of all high-end flips were in five markets: the New York metro area, Los Angeles, San Francisco, San Jose, and San Diego.

Nationally, flips on homes priced between $1 million and $2 million increased 42 percent year-over-year, while flips on homes priced between $2 million and $5 million increased 350 percent year-over-year.

To read the complete article please use the link below.

High-End Home Flipping