Realtor Coaching & Training: North Carolina
Sales of previously owned U.S. homes rose at their fastest pace in nearly six years in February, data showed on Monday, offering some hope to an economy battling a 15-month recession.
The National Association of Realtors (NAR) said sales rebounded 5.1 percent in February to a 4.72 million-unit annual rate, notching their largest gain since July 2003, but about 45 percent of these were foreclosure or short-sale transactions.
Clearly, the agents who are making the money in this market are the agents who know how to list and sell Shortsales…and REO Listing Agents. 45% of all transactions last month were Shortsales and REO sales. Agents learn how to easily list and sell shortsales. Watch the FREE Agent Shortsale Secrets video now. Next, watch the Agent REO Secrets video to learn how to become a REO Listing Agent.
This was above market expectations for a drop to a 4.45 million-unit pace after January’s 4.49 million rate. Compared to the same period last year, February sales were down 4.6 percent, the NAR said.
U.S. stocks, already rallying after the U.S. government released details of a plan to clean out toxic assets from banks’ balance sheets, extended gains on the housing data.
The housing market is at the core of the economic and financial meltdown and stabilizing it is seen as a key ingredient for the recovery from a recession that started in December 2007.
“Because entry level buyers are shopping for bargains, distressed sales accounted for 40-45 percent of transactions in February,” said NAR chief economist Lawrence Yun. “Distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the median price.”
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Increase In Home Sales.
Sales were up in all four regions, with the West outperforming. In California, the median listing price rose for the first time in three years.
Government data last week showed a rebound in U.S. housing starts and new building permits in February.
“It suggests that the drop in prices and mortgages rates and an increase in affordability are having an impact in the market,” said Alan Gayle, senior investment strategist at Ridgeworth Investments in Richmond, Virginia.
“Stabilization in the housing market is critical for the economy to start, and this is a good report.”
There is hope that the government’s $272 billion package to stem the tide of foreclosures, together with aggressive efforts by the Federal Reserve to keep interest rates down could lay the foundation for the housing market’s recovery.
NAR’s Yun said the government’s stimulus package could add 1 million sales this year, but depressed levels of consumer confidence and rising unemployment could derail this projection.
The median national home price declined 15.5 percent in February from a year ago to $165,400, the second biggest decline on record.
The inventory of existing homes for sale rose 5.2 percent to 3.80 million from the 3.61 million overstock reported in January. That represented 9.7 months’ supply at the current sales pace, unchanged from January.
Analysts said reducing this stock of unsold homes was critical for the housing market’s recovery.
“An overhang of inventory will continue to plague the market, putting downward pressure on prices and construction activity for some time to come,” said Adam York, an economist at Wachovia in Charlotte, North Carolina.
“The housing market will remain stressed until more reasonable inventory levels are restored.”
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Great article from ManagingREO.com. Thanks to Harris Real Estate University Student Ted Shoop for sending this to me.
Here is a great article about foreclosures and Loan Modifications. Read this article…then watch the FREE Agent Loan Mod Secrets Video.
Servicers are seeing increased cases where borrowers are trying to stall or stop foreclosures by filing “right to rescind” notices as violations of the Truth in Lending Act.
Translation: Borrowers are fighting foreclosures or at least making the process very difficult for their lenders. There is a surge of court cases where the Judge asked for the lender to produce mortgage documents as part of a foreclosure. Because the loans were packaged, sold…resold often the lenders can’t produce the required documentation….
Panelists on a mortgage litigation panel at the MBA’s National Servicing Conference in Tampa, Fla., said that debtors attorneys are claiming that the borrowers they represent were given inadequate documents at the time of closing and did not understand the loan, which judges are starting to honor.
Imagine the leverage this can create in the process of negotiating a Loan Modification…..
Terry Hutchens, president of the law firm of Hutchens, Senter & Britton, based in Fayetteville, N.C., said it’s worth it for servicers to work with the borrower and negotiate a settlement or loan modification with the borrower rather than take the case through expensive litigation, he said. “The atmosphere has changed. We’re not so vulnerable that we are rolling over in every case, but we have to consider doing things differently than we have in the past,” said Mr. Hutchens. “It can cost as much as $200,000 if you have to take some of these cases to trial.”
Shaun Ramey, a partner with Sirote & Permutt PC in Birmingham, Ala., said servicers must decide how to handle these new cases. Cities, states and counties are putting giant roadblocks up to fight foreclosures, he said. “There are new claims and new defenses. Public nuisance lawsuits are coming up more and more because foreclosures are driving up the cost of mounting REO properties sitting around and the cost it takes to maintain them,” Mr. Ramey told conference attendees.
In some states (Like Ohio) its common for someone to stay in their home for YEARS making no house payment…
“In Ohio and Florida, we’re seeing more foreclosure stops. New ways of stalling foreclosures. The press, society, judges, lawyers, everyone is talking about foreclosures. There are foreclosure boot camps, websites, blogs. Debtors attorneys want to prolong the process and keep the person in the house,” said Mr. Ramey.
Federal action is being taken under the Fair Housing Act by municipalities like the city of Baltimore regarding wrongful foreclosures. It was said that claims of reverse redlining are being brought against lenders, and borrowers are bringing suitability actions. Servicers are re-underwriting these loans in order to show suitability defense and action on an individual loan basis. “If the judges feel that something isn’t right, they will stop the foreclosure,” he added.
“You must prepare for litigation — defense action and how to represent yourself. Were you acting through MERS? Or will you name yourself? Providence, Buffalo, Cleveland, the cities are getting into the business of regulating foreclosures. There will be lawsuits,” he said.
Various attorneys general are claiming that the loan wasn’t suitable for the borrower and the loan didn’t meet their needs, which is why the borrower is in foreclosure now. Often, these risky loans had 100% financing and were subprime ARMs. While there is not a statute or violation that deals with this, these claims are being brought under the Deceptive Trade Practices Act.
Talk about LEVERAGE….Lenders have yet another reason to accept Short Sales and Loan Modifications…..
In Massachusetts, the highest court recently held that a lender had violated this act and ruled to stop the foreclosures. The lender had to give the attorney general 90 days notice to determine if the foreclosure is unsuitable. “Even though it didn’t violate a statute, they are saying the lender should have known. This is a serious matter. I think we’ll see this spread through the states,” Mr. Ramey said.
According to Mr. Hutchens, lender attorneys are on the side of good but getting a bad rap from the courts. “We have a client, a reputable lender. The judge told me he didn’t believe anything my client said. He believes everything he sees and reads on TV. We are dealing with brainwashed judiciary.”
While working on a case in North Carolina, Mr. Hutchens said the debtor took the stand in court and said she had tried to contact her servicer 200 times by phone. “She said she got lost in the shuffle of calls and never had any contact with her servicer. The judge said to the servicer lawyer, ‘What do you have to say about this?’ The lawyer said, ‘The left hand doesn’t know what the right hand is doing in this business.’ So the judge ruled no foreclosure.”
Mr. Hutchens said he hopes the mortgage industry can communicate better with lawmakers to have candid conversations and address these missteps. “We are not being treated fairly. We are not given a chance.”
Everyone shed a tear…..
As the courts are consumed with the topic of foreclosure stops and anti-foreclosure legislation, lenders and asset managers are still left dealing with the tremendous amount of vacant properties across the country.
Speakers at this panel also mentioned what other panelists said earlier in the day. Lenders are more open to the idea of leasing out real estate owned assets as another tool to support the industry. The new way of thinking is that these properties can be rented out and sold as REO, especially as valuations continue to decline on a national basis. It’s good for an objective third party to look at high end batches of homes, regular and aging inventory to determine which marketing strategy is best. They said staging and rental agreements are being considered more today through neighborhood outlooks.
Foreclosure moratoriums add costs to timeline management of maintaining the property. It can mean writing down loans further and pressure on property values. When the property is re-sold it helps the community and the neighborhood. Relative to where buyers are located, many do not have access to financing these days. The financing has to get kicked back on, the panelists said, and the industry needs to get back to good old-fashioned underwriting.
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Suit Up...FHA Limits Have Been Raised!
Here is something to celebrate….FHA loan limits have been RAISED!
From Inman News.
Conforming loan limits have been restored to as much as $729,750 in 250 counties around the U.S. as the regulator of Fannie Mae and Freddie Mac implements a policy change in last week’s $787 billion economic stimulus bill.
H.R. 1, the American Recovery and Reinvestment Act, restores the higher limits in place for Fannie and Freddie during much of 2008, allowing the companies to buy or guarantee loans of up to 125 percent of the median home price in high-cost areas.Congress instituted temporary increases in the $417,000 conforming loan limit in high-cost areas last year. A sunset provision brought the limit back down to 115 percent of median
While lawmakers had hoped that the secondary market for mortgage loans would be restored to health by now, problems continue, making jumbo loans costlier than those eligible for purchase or guarantee by Fannie and Freddie.
The new stimulus bill stipulates that loan limits are to be the higher of the 2008 limits or those put in place Jan. 1. In most high-cost markets, the 2008 limits are higher and loan limits are reverting back to last year’s levels. In releasing a list of loan limits by county, the Federal Housing Financing Agency said 43 counties in Virginia, North Carolina and California will keep increases originally instituted for 2009.The stimulus bill also restored the floor for FHA loan guarantee programs in “normal” markets to $271,050, and gave the Department of Housing and Urban Development leeway to allow FHA to guarantee loans of up to $729,750 in high-cost markets, as it did in much of 2008.
A HUD spokesman told Inman News that the Department will allow FHA to guarantee loans up to the $729,750 limit in high-cost areas, and that a list of loan limits in various markets will be posted on the Web Tuesday.
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California led the U.S. into the worst housing recession since the 1930s. Now the most populous state may be the first to find the bottom.
In Stockton, the U.S. metro area with the highest foreclosure rate, home sales more than doubled in the second quarter after prices fell by an average 37 percent. Across the state, sales rose for three consecutive months starting in April after 30 straight months of declines, the California Association of Realtors said. About 40 percent of those transactions were foreclosure sales, DataQuick Information Systems reported.
Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market.
“Half off in a decent neighborhood is close to the bottom,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. Property markdowns of 30 percent to 40 percent give the market “price illumination if not sunshine,” he said. (Bloomberg.com)
`Beginning to Happen’
California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to “discounted distressed sales,” with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.
The amount of time it would take to deplete the supply of homes decreased to 7.7 months from 10.2 months a year earlier, and the median price fell 38 percent to $368,250 last month.
Foreclosure sales accounted for 75 percent of June’s total in Merced County, home to the Merced metro area with the country’s second-highest foreclosure rate; 72 percent in Stanislaus County, home to the Modesto metro area with the third-highest foreclosure rate; and 66 percent in San Joaquin County, home to Stockton, data from DataQuick in La Jolla, California, and RealtyTrac show.
Sales of foreclosed properties equaled 63 percent of the total in Sacramento County, 62 percent in Riverside County, 58 percent in Solano County, 57 percent in San Bernardino County and 49 percent in Contra Costa County. Prices dropped as much 37 percent in those counties, DataQuick reported.
`Seen the Light’
About 1 million U.S. homes will be in some stage of foreclosure by the end of the year, and properties seized by banks will eventually sell at an average discount of 30 percent to 33 percent, said Rick Sharga, executive vice president for marketing at RealtyTrac.
Discounts will be higher in areas such as Stockton, about 80 miles east of San Francisco in California’s agricultural Central Valley, and Riverside, 50 miles east of Los Angeles, that experienced above-average levels of new construction at the peak of the housing boom and where lenders made a disproportionate number of subprime loans, Sharga said.
PMZ, the Stockton-based brokerage, closed 1,707 home transactions in the second quarter, about 80 percent of them foreclosure sales, said Michael Zagaris, the company’s president. Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he said.
“We’ve found the bottom,” Zagaris said. “The financial institutions have seen the light and are allowing the market to find its own level.”
Housing Bill
Banks will foreclose on about 700,000 properties with subprime mortgages this year, more than double the number a year ago.
Executives from Charlotte, North Carolina-based Bank of America Corp. and Wells Fargo & Co. in San Francisco told Congress last week that they’ve accelerated the pace of loan modifications and added personnel to help homeowners avoid foreclosure. Wells Fargo, which services one in eight U.S. mortgages, expanded its staff to more than 1,000 from 200 in 2005.
The housing bill signed by President George W. Bush yesterday is intended to stem foreclosures and includes a program backed by the Federal Housing Administration to insure as much as $300 billion in refinanced mortgages, including many subprime loans.
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President Bush’s decision to drop his opposition to a housing bill that has been pending in Congress for nearly a year cleared the way Wednesday for House approval of a greatly expanded package intended to shore up the shaky real estate market.
But even the most optimistic forecasts suggest it would help only about 400,000 of the estimated 3 million homeowners who will likely lose their homes in the next year. And with home prices still falling in most parts of the country, some analysts and economists say it will take at least another year before the housing market hits bottom and begins to recover.
The centerpiece of the proposed foreclosure relief effort is a package of federal loan guarantees to help strapped homeowners refinance into market-rate mortgages with better terms than the high-cost loans that are busting their household budgets. Lenders would have to agree to take a substantial loss on the existing loan.
But attorneys, housing counselors and others working with strapped homeowners say the proposal falls short because it leaves the decision to modify a loan up to individual lenders or loan servicing companies.
As a result, that means the housing bill will have “little or no impact on the number of foreclosures,” according to O. Max Gardner III, a Shelby, N.C. bankruptcy attorney who works with homeowners who are trying to modify their mortgages.
The option of refinancing loans at risk of default has been available to lenders since the housing and mortgage meltdown began. Despite government efforts to prod lenders to speed up the process, progress has been slow.
A survey by Moody’s Investors Service released last week found that as of March, loan servicers had modified less than 10 percent of the subprime loans with interest rate resets — up from 3.5 percent in December. Some homeowners report that their modified loan came with higher monthly payments, offering little long-term relief.
The survey found that about 40 percent of the loans modified in the first half of 2007 were 90 or more days delinquent as of the end of March.
The bill also raises the size of mortgages the two companies can buy or guarantee to $625,000 from the current $417,000 limit —extending the pool of customers for Freddie- and Fannie- backed loans in high-cost housing markets.
To spur home buying, the bill also extends tax credits of up to $7,500 for first-time homebuyers effective from April 9, 2008, to July 1, 2009.
Nothing is going to help those with existing loans who face default and foreclosure — or their neighbors who are seeing their home’s value decline.
“It’s not going to speed up or lessen the impact of the correction of the housing market,” said Wachovia economist Mark Vitner. “It’s too late for that. There’s nothing that can be done.”
Unless foreclosures can be slowed, home prices will likley fall further, according to Federal Reserve Chairman Ben Bernanke.
“The declines in home prices have contributed to the rising tide of foreclosures,” he told a congressional panel last week. “By adding to the stock of vacant homes for sale, these foreclosures have in turn intensified the downward pressure on home prices in some areas.”
“The real losers in this awful crisis are the residents who live next to the foreclosed property who have continued to pay their mortgages on time yet see their property values rapidly decreasing,” said Ali Solis, vice president of public policy for Enterprise Community Partners, a nonprofit group that helps finance affordable housing.
“The crisis is not getting better, the crisis is getting more severe,” said Susan Keating, the president of the National Foundation for Credit Counseling, which works with local agencies helping cash-strapped families. “And the tentacles of the problems are much more far-reaching than any of us would have considered 18 months ago.”
While the initial rounds of mortgage defaults and foreclosures were concentrated on the lower end of the economic ladder, the problem is now hitting families with higher incomes. Gardner says he’s seeing a big increase in bankruptcy filings from wealthier clients.
“From predominantly hourly employees all the way up to doctors, lawyers, insurance agents, people that were involved in the banking mortgage and real estate business,” he said. “It’s just been a massive upward movement on the income scale.”
For some homeowners, no amount of government help will head off a foreclosure. That includes many in states with the highest concentrations of mortgage defaults, such as California, Florida, Arizona and Nevada. In those states up to 40 percent of buyers in recent years were buying the homes as investments, according to Vitner.
“These investors never thought they’d have to make any mortgage payments. They thought they’d flip it,” he said. “These investors have no money. They have nothing. They used credit cards to make the down payment.”
Some info provided by wwwmsnbc.com
Realtor coaching, Tim and Julie Harris, Harris Real Estate Univeristy, How To List REOs, Real Estate training, coaching + training + reo + short sale, real estate investor, real estate scripts, super star interviews.
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Attention: HREU Students
This is a great article that was just released from Bloomberg.
Here are the important points:
1) Housing prices wont return to their peak values until 2015. That mean years of devaluing homes, flat to no appreciation…then slow reappreciation.
2) Other than the FHA (Fannie and Freddie) there are virtually no other lenders able or willing to originate loans. So, as we told you last year..become best friends with your local FHA lender.
3) The ‘move up’ market is very slow. Why? No equity in existing homes to use as downpayments.
4) Return to 20% down payments on homes. When Julie and I started selling homes most buyers had to put 10-20% down. During the peak of the bubble most buyers put no (or low) money down. Now, lenders require 20% down. How many buyers are out there with 20% down?
5) Retailers are failing right and left. Major stores closing.
Sounds all bad…almost scary doesn’t it?
Not if you are one of the agents who knows how to do short sales….or how to list REOs.
Clearly, that’s where this market is and will remain for years. Learn these skills and thrive in this market.
Learn these MUST KNOW skills now..that’s the best insurance policy for you in this market.
Get started now..
Download our Free Agent REO Secrets Guide Book. www.AgentREOSecrets.com
July 16 (Bloomberg) — The U.S. housing crisis may accomplish what years of parental hectoring couldn’t: Turn Americans from spenders into savers.
Spending will fall because homeowners can no longer use rising real estate values to borrow cash — $837.5 billion in 2006, according to a report by former Federal Reserve Chairman Alan Greenspan and senior Fed economist James Kennedy. With mortgage lenders requiring down payments of 20 percent, the average household, which puts away less than 1 percent of after- tax pay, will have to save 10 percent for 10 years to buy a home.
The housing market shaved almost 1.6 percent off gross domestic product growth in the first quarter and cut in half the growth rate of consumer spending, which accounts for more than two-thirds of the economy, said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.
“The loss of housing wealth is the difference between a recessionary economy and a growing economy,” said Zandi, an adviser to presumptive Republican presidential nominee Senator John McCain. “Consumers have powered the global economy for the past 25 years. For the foreseeable future, maybe the next 25 years, the savings rate will move higher.”
The worst housing crisis in at least a quarter century still has a long way to go, Zandi said. It will take until 2015 for the median home price to return to its July 2006 peak of $230,200, while home sales and residential construction will never again reach the record highs of 2005 and 2006, he said.
Fewer Loans
Lenders will issue 53 percent fewer purchase mortgages this year than in 2006, making home sales difficult and delaying a housing recovery, said Guy Cecala, publisher of industry newsletter Inside Mortgage Finance in Bethesda, Maryland.
Getting a home loan may also be made more difficult by plummeting investor confidence in Fannie Mae and Freddie Mac, which own or guarantee 81 percent of the mortgages issued this year, according to the Washington-based Office of Federal Housing Enterprise Oversight.
Fannie Mae, the largest U.S. mortgage finance company, and Freddie Mac, the second-biggest, have both lost more than 50 percent of their market values since July 7.
“You’ve never seen the mortgage industry this passive in lending in the past 50 years,” Cecala said. “They don’t want any more missteps creating any more losses. The flip side is it’s not helping anybody stay in homes or buy homes. You can’t have a housing recovery without financing.”
`Painful Process’
The residential housing decline will “change the structure” of the U.S. economy by forcing Americans to save, said Neal Soss, chief economist at Credit Suisse Group in New York.
“The days of wine and roses are over,” said Soss, who worked at the Federal Reserve for former Chairman Paul Volcker in the 1980s. “We were drunk on money. Getting sober is a painful process.”
Consumer spending, which rose 7.5 percent since the beginning of last year, will fall into negative territory after Americans run through their tax rebate checks this summer, said Bill Hampel, chief economist for the Madison, Wisconsin-based Credit Union National Association.
U.S. consumers spent at a record annual rate of $10.2 trillion in May, in part helped by the federal rebates, according to the Commerce Department. That won’t last, said Christopher Thornberg, president of Beacon Economics LLC in Los Angeles.
Delaying the Inevitable
“Throwing out a stimulus check does nothing but put off for a brief period of time the inevitable,” Thornberg said.
Two years ago, lenders made $2.7 trillion in mortgages, $600 billion to subprime borrowers with bad or spotty credit histories. Now, financial firms, responding to $415 billion of real estate-related writedowns and credit market losses, are forcing even the most creditworthy buyers to make higher down payments.
Sixty percent of lenders said they made it more difficult for the most qualified buyers to secure financing in the first quarter, according to a Federal Reserve survey.
“The mortgage industry always works like a pendulum,” said Rick Sharga, vice president for marketing at RealtyTrac Inc., an Irvine, California-based foreclosure database. “Two years ago they were giving loans to anyone who could fog a mirror. Now you need perfect credit and a significant down payment.”
Tougher Lending
Tougher lending guidelines are more prevalent in areas such as California and Florida where home prices have fallen the most, said Chris Hutchens, a mortgage planner with Alpha Mortgage Corp. in Wilmington, North Carolina. Loans with a 3 percent down payment from the Federal Housing Administration are available in his area, where home prices are more stable, he said.
“Banks are tighter than they were, so you have to work harder to get the loan you want,” Hutchens said. “It’s in the declining markets where it’s more difficult.”
As many as 500,000 borrowers will get FHA purchase mortgages or refinancings, U.S. Housing and Urban Development Secretary Steven Preston said in a July 10 Bloomberg Television interview.
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The bundling by banks of residential mortgages into securities that are sold to investors and are used to fund home loans was a $1.15 trillion market in 2006, according to Inside Mortgage Finance. In the first half of this year, banks issued $46 billion of the so-called private label securities.
`Big Sideshows’
“Housing and finance are big sideshows,” said Thornberg of Beacon Economics. “The main attraction is consumer spending.”
Saving enough money is the only thing stopping Nick Ruiz from buying a house. The 22-year-old paramedic said he has steady work, good credit and can verify his income. He’s even found foreclosed houses for sale in his price range in his hometown of Hialeah, Florida, a suburb 12 miles northwest of downtown Miami.
The only missing ingredient is the $30,000 down payment.
“I’m getting married in August and we wanted to have a house when we came back from the honeymoon,” Ruiz said. “We’ll have to live with my parents.”
Ruiz said he and his fianc e have credit card debt. Ruiz said he made a decision to postpone saving for a down payment until he can pay off the $12,000 he said he owes.
Rising Consumer Debt
“I figured it makes no sense to put money in the bank because no bank will give me the interest rate that these credit cards are charging,” Ruiz said.
Consumer debt was at an all-time high of $2.59 trillion in the first quarter, according to the Fed.
When real estate prices were rising, the debt was easier to pay down. Homeowners were able to refinance their mortgages and borrow cash equal to the difference between their old mortgages and the new, higher values of their houses. Mortgage debt, unlike credit card debt, is tax-deductible.
So-called equity extraction peaked at $256.9 billion in the second quarter of 2006, just as the median home price reached its all-time high of $230,200, according to the National Association of Realtors in Chicago. In the first quarter of 2008, with the median home price down to $200,100, equity extraction dropped 72 percent to $72.8 billion, according to an estimate based on the study by Greenspan and Kennedy.
Cautious Spending
More cautious spending by consumers has already begun to hurt the U.S. economy, said Patricia Edwards, who helps manage almost $15 billion at Wentworth Hauser & Violich in Seattle.
Retailers selling non-essential items to middle-income consumers, such as Sharper Image Corp., Lillian Vernon Corp., Linens ‘N Things Inc. and Whitehall Jewelers Holdings, were the first to suffer from the housing slump, Edwards said.
Macy’s Inc., J.C. Penney Co., Kohl’s Corp. and Dillard’s Inc. also are affected, Edwards said.
For companies such as Chico’s FAS Inc. and Coldwater Creek Inc., the main customers are women 45 years old and up, Edwards said. “If those women have a spending issue, their kids get clothes before they do,” she said.
The New York-based International Council of Shopping Centers expects 144,000 U.S. retail stores to close this year, a 7 percent rise over 2007 and the largest increase in 14 years, according to a July 11 report.
Wal-Mart Stores Inc. will do well because it has low prices and offers consumers a way to reduce their gas bills because they can buy most of their household items at one stop, Edwards said. The Bentonville, Arkansas-based company also generates about 20 percent of its revenue from overseas, and that’s “a fast growth area,” she said.
With less money available for homeowners to borrow and bigger down payments needed to buy a home, more companies will have to look outside the U.S. for customers, said Andrew Laperriere, managing director at International Strategy & Investment Group, a research firm in Washington.
“That process is already under way,” Laperriere said.
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Home prices in 20 U.S. metropolitan areas fell in April by the most on record, signaling the housing recession is far from over.
The S&P/Case-Shiller home-price index dropped 15.3 percent from a year earlier after a 14.3 percent decline in March. The group began keeping year-over-year records in 2001. A separate report showed consumer confidence slumped this month to the lowest level in 16 years.
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Mortgage defaults and foreclosures are adding to the glut of properties on the market, while stricter loan rules are making it more difficult for prospective buyers to get financing. The prolonged real-estate slump, along with higher fuel prices and a shrinking job market, is taking a toll on consumers and the economy.
Month-Over-Month
Nationally, home prices fell 4.6 percent in April from a year earlier, led by a 15 percent drop in states on the West Coast, the Office of Federal Housing Enterprise also reported today. The monthly house price index is down 4.6 percent from its peak in April 2007, Washington-based Ofheo said.
The Ofheo price index covers the entire nation, while the S&P/Case-Shiller 20-city gauge covers some areas that have shown the greatest fluctuation in values. The Ofheo measure also doesn’t include so-called jumbo mortgages, which are loans that exceed federal limits. The maximum was raised on a temporary basis in February to as much as $729,750 in some areas.
Declines Widespread
All of the 20 cities in the S&P/Case-Shiller index showed a year-over-year decrease in prices for April, led by a 27 percent drop in both Las Vegas and Miami. Charlotte, North Carolina, showed a decline for the first time.
Reports this week may reinforce the dim outlook for housing. Combined sales of new and existing homes in May probably were the third-lowest on record, according to the Bloomberg survey median.
Sales May Fall
New-home sales probably fell, approaching March’s 17-year low, a report from the Commerce Department tomorrow may show. The National Association of Realtors may report the following day that purchases of existing houses, which account for 85 percent of the market, rose last month from a record low.
Rising borrowing costs aren’t helping. Fannie Mae, the largest mortgage buyer, last week cut its forecast for new and existing home sales this year as 30-year fixed mortgage rates jumped to an eight-month high.
Banks repossessed twice as many homes in May as they did a year ago and foreclosure filings rose 48 percent, according to RealtyTrac Inc., a real estate database in Irvine, California.
Homebuilders are reeling. Standard Pacific Corp., an Irvine, California-based homebuilder, last week said new home orders for April and May fell 12 percent from a year earlier, citing “difficult housing conditions” in most of its markets.
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