Realtor Coaching & Training: San Francisco
Real Estate Recovery?
We are in a constant ongoing..never ending…search for the latest real estate news. We are on the look-out for anything that will help you to be of service to your real estate clients. There has been much talk about the ‘Green-Shoots’ in the economy. The question is…are those Green Shoots signs of recovery…or really weeds that will need to be pulled.
So, is it time time pop the champaign corks….or get out the Weed-B-Gone?
Read this and share your comments…
In the Sacramento Delta suburbs east of San Francisco — where home prices soared and fell as viciously as anywhere in the country — a housing market rebound is feverishly underway.
A 1,600-square foot rancher listed for $179,000 — after last selling for $425,000 in 2004 — drew multiple offers last month with a high of $210,000 in cash. The topper: The property was a “short sale” whose owner needs lender approval to sell for less than the mortgage owed — and which buyers wouldn’t touch just three months ago.
Housing emerges from the woods“My phone was ringing off the hook, my voice mail was on overload and people were coming into the office receptionist saying they couldn’t reach me,” said Christy Howard, a Coldwell Banker Coon and McCreary agent who listed the Antioch house. “Everyone was waiting for the bottom, and the problem is they waited to long, because the bottom has already come and gone.”
Spurred by markdowns up to 80% from market highs, first-time buyers and investors both American and foreign descended en masse in the last three months on San Francisco’s hardest-hit hinterlands as Wall Street and the economic climate improved. They’re picking clean the Delta region’s banked-owned inventory as soon as properties hit the market and are engaged in unprecedented bidding wars even on short sales.
We have been reporting on this for months on our main blog. Agent REO Secrets students and Agent Short Sale Secrets students are experiencing multiple offers for their listings…..flash back to 2006!
The panicked buying — fueled by buyers’ fear they’ll miss out on fire-sale prices — belies the doom-and-gloom evoked by recent reports of rising mortgage delinquency rates and foreclosure activity. It is one of several overlooked signs the U.S. housing-market turnaround has started in the nation’s hardest-hit markets, which is critical to driving an overall recovery:
After spending most of the 1990s in the $250,000 range, the median-priced home that was sold in the seven-county San Francisco area rose to a staggering $850,000 by its May 2007 peak. It since fell to a low of $399,000 in February — a 53% drop in just 21 months — before posting its first monthly gain in March, albeit a 1% uptick. The median is expected to continue rising at a healthy clip in months ahead since it’s now at the level of nine years ago, before the bubble began inflating.California’s statewide inventory of unsold homes — based on the number on the market divided by the present monthly sales rate — stood at a 15.2 months supply in February, 2008. That figure was down to 5.8 months in March, near the historic average.
At roughly 22,000 units, Las Vegas’ inventory is not far off its recent record high. Yet total sales closed in March showed flourishing demand, the fourth best on record. That monthly record — set during the height of the boom — is expected to be broken this summer.
Looking on Realtor.com confirms a dramatic drop in available homes that are priced within the FHA loan limits. Homes in Vegas uner $200,000 are selling very fast….
“Things have been looking up but it’s going unnoticed,” says Forrest Barbee, a board member with the Greater Las Vegas Association of Realtors and a broker for Prudential American Group Realtors. “It’s just going to take the data a little longer to catch up with reality.” Listen to one analyst’s thoughts about housing having hit bottom.
Adds Rick Sharga, senior vice president of RealtyTrac, which compiles home sales and foreclosure data: “We’ve overshot the market in places like Las Vegas and Arizona in terms of fair value and buyers are bidding prices up again on many properties. The challenge is going to be whether there is enough financing to eat up the inventory that’s yet to come.”
Ok, read that last comment again. What Mr.Sharga is referring to is the massive wave for foreclosures coming and REOs hitting the market now. Read this blog article: The Truth Behind The Shadow Inventory.
Mixed signals
The specter of rising foreclosures — born now of the recession rather than just overleveraged subprime borrowers — is the wild card in future health of the U.S. housing market and the economy by extension. Read about the difficulty borrowers are having with mortgage modifications.
The number of U.S. homeowners behind on payments or in foreclosure shattered the record in the first quarter, the Mortgage Bankers Association reported last week. Nearly one in eight mortgage holders were either delinquent or in the foreclosure process — and prime mortgages in trouble for the first time outnumbered subprime loans on a percentage basis. Read more on the record jump in foreclosures in the first quarter.
Yesterday we had a conference call with a high-up in one of the big 3 banks. He told us that in California alone they have seen 110,000 homeowners fall behind 60 days in the mortgage. Thats counting just 2 lenders. (BOA and Wells). You can assume that the actual number for the entire state is 5-6 times that number. In case you didn’t know it, 95%+ of the time once a homeowner misses 2 payments the house becomes a foreclosure. Bottom line, be ready. You still have time to become a REO Listing Agent. Watch the Free Agent REO Secrete video then download the FREE Agent REO Secrets book…
Yet the number of pending sales of existing U.S. homes took a surprising upswing in April, rising 6.7 percent in the biggest monthly gain in more than seven years, the National Association of Realtors reported Tuesday. That increase lags the 9.2% jump in October 2001, but that spike owed to buyers temporarily putting off home shopping following 9/11. See the latest data on pending home sales.
And in an overlooked report that belies the first-quarter delinquency numbers, defaults on privately insured mortgages — where borrowers are more than 60 days behind — fell 3% in April and were down 24% from a record 106,482 in February, the trade group Mortgage Insurance Companies of America reported Friday.
Most importantly for gauging the strength of the nationwide market is how conditions are improving in the most-depressed regional markets.
With those markets now stabilizing, banks are no longer anxious to dump real-estate owned properties, as houses in their foreclosure portfolios are called, fearing they’ll get appreciably less three months from now for their foreclosed properties.
Lets HOPE that is true. Lets hope (and pray) that he lenders are smart enough NOT to flood the market. Here is a great article on our blog that you will want to read NOW.
As a result, they’ll be more judicious about the pace at which they release foreclosures onto the market. The new goal: To maximize the value of supplies in hand rather than unload it helter-skelter and torpedo the housing market like they did while they were shell-shocked by the devastation they’d wrought.
With the banks themselves now somewhat more stable, they’ll also be less likely to want to part with their “toxic assets” knowing the most-scorched, still-serviceable mortgages will be the most valuable on a credit-risk markup once the economy recovers. In fact, the price stabilization in the most-depressed U.S. markets will allow a clearer valuation of the toxic assets we now all hold by virtue of bank bailouts — a modicum of certainty that will hasten the overall recovery.
Key marketsHomeowners in most of America know by their own property’s value that the spike in U.S. median home values was driven in considerable measure by soaring prices and volume in major markets, especially in California, Florida, Nevada and Arizona. By virtue of their climates and economic-growth rates, those four states have been on the extremes of the U.S. boom-and-bust housing cycle since the 1950s.
You can’t discount how critical an upturn in those states will be, considering they account for 46% of foreclosures nationwide. If foreclosures there are more quickly consumed as they’re starting to be now — fueled in part by foreign buyers who recognize their value — we’ll all reap a return on our bailout money a lot faster.
“The banks are getting smarter and realizing that if they don’t sell it in a short sale, they lose more money going the foreclosure route,” Barbee said.
Adds Sharga: “The banks will be very particular and thoughtful about how they’ll release new foreclosures, because they know now how flooding the market will have a disastrous effect.”
That, and if the chastened lenders would just swallow crow and pony up for rights to an encouraging Beatles song to play on their delinquent-payers’ hold line: “We can work it out.”
Article Source: MarketWatch.
Popularity: 1% [?]
Home Sales INcrease!
Its been interesting reading all the conflicting reports regarding the economy and the ‘housing recovery’. It seems that the media is now (finally) figuring out what Harris Real Estate University students have known for well over a year..(we are in the eye of the ‘real estate storm’ and its realistic to believe that the real estate markets will get worse…in some cases MUCH worse…. before they get better)
Stocks of homebuilders have had an impressive run recently, thanks to a stream of improving macroeconomic data, including home sales and consumer confidence, climbing an average of 38% since March 9. But will the recovery last? Recent gains in long-dated U.S. Treasury yields augur rising mortgage rates, while the likelihood of increasing foreclosures could further bloat the housing supply in the months ahead.
New sales of single-family homes came in at a seasonally adjusted annual rate of 352,000 in April, down 0.3% from a downward-revised 351,000 in March, but 34% below the April 2008 estimate of 533,000, according to the U.S. Census Bureau and the Housing and Urban Development Dept.. But new home sales are down from 362,000 in February. The median sales price of new houses sold was $209,700, down almost 15% from a year ago.
One reason for the month-to-month improvement in the housing numbers for a couple of months earlier this year was the moratorium placed on foreclosures by many banks from November through February, says Robert Stevenson, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller in New York. But since then, foreclosures have continued to rise, causing home sales to plateau.
Some of the positive data points have proved not to be sustainable, he says. “You haven’t seen as many sales as you would like coming out of the spring homebuying season and the very low mortgage rates and some of the tax stimulus,” he says. Still, homebuilders are feeling more optimistic. The National Association of Home Builders’ housing-market index, which measures both current and future sales conditions, climbed two points, to 16, in May after a five-point increase in April.
The “Better Areas” Are Going to Get Hit
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
Economists would like to believe the recent data indicate that the housing market has touched bottom, but prices have further to drop to reach some analysts’ peak-to-trough estimates of 43%. John Burns, a real estate consultant who advises major homebuilders, believes the median home price will fall an additional 5% or 6% and that will be the end of it. “The worst areas have been hit very hard” since that’s where most of the distressed selling has been, he says. “It’s the better areas that are going to get hit over the next 12 months” as foreclosures mount in those areas.
In Phoenix, which has experienced one of the worst drops in home prices from their peak of any U.S. city, sales-office traffic jumped 55% in the three months through the end of April after 11 consecutive quarters of decline, according to Jim Belfiore, president of Belfiore Real Estate Consulting, a market research firm in Phoenix. Traffic is a leading indicator of where home sales are headed, he says.
Builders’ sales in that area have at least tripled in the past 30 days, due to a big drop in prices from January through early March that narrowed the premium over prices of foreclosure properties to just 15% in most local sub-markets, says Belfiore. Meanwhile, the latest S&P/Case-Schiller data show prices of foreclosures on Phoenix’s multiple listing service up an average of $5 per square foot over the past 30 to 40 days, with demand currently outstripping supply.
Phoenix is being looked at as an indicator of what the nationwide housing market could look like 12 to 18 months from now, he says. The land and lots that most of the publicly traded homebuilders own in and around Phoenix comprise a significant portion of their total holdings, he adds.
Bottom-Fishing in Phoenix
Stevenson at Fox-Pitt characterizes most of those buying homes in Phoenix as “bottom-fishers” who are taking advantage of the supply glut that’s pushed prices to bargain levels. Other reasons the market has attracted buyers: Phoenix is likely to produce one of the higher levels of job growth over the next 10 years, and its climate makes it a preferred retirement destination, he says.
Belfiore concedes that a large percentage of the recent sales has been by investors rather than people planning to move in immediately, and most are resales of foreclosure properties. The majority of new-home sales have been by first-time home buyers, motivated by the federal tax credit of up to $8,000, which is set to expire in November.
The expected increase in foreclosures over the next few months will force homebuilders to lower prices on new homes to be able to compete. Builders who own the land end up building a house and selling it at a price that results in a negative margin just to get the money out of the land, says Stevenson. Normally, however, rather than build at a negative margin, companies will take an impairment charge, marking down the value of the land to where they can afford to sell the houses for less without killing their margins.
Generally, the bigger homebuilders are still reporting impairment charges between $100 million and $400 million per quarter this year, including the cost of walking away from options on land they don’t own and goodwill remaining from past acquisitions, he says.
more foreclosures than new homesMetrostudy, a national housing market research firm in Houston, is still projecting 490,000 U.S. housing starts for 2009, below the 520,000 to 550,000 forecast by many general economists. Brad Hunter, chief economist and national director of consulting at Metrostudy, recently cited three reasons for the low level of starts: the inventory overhang builders are trying to work off, denial of credit by some builders’ banks even if they’re current on their loans, and the depressed price levels that make it hard for some builders to sell homes profitably.
Housing inventory fell to 10.1 months of supply from 10.7 in March and was well below the peak 13 months of supply, After a couple of strong months, there was a lull in purchases of homes priced between $150,000 and $200,000, which had had the strongest growth, Goldman Sachs said in a May 28 research note. The key to further paring excessive housing supply is a slowdown in foreclosure filings, which Goldman doesn’t see as likely. In March, foreclosure filings were 15% higher than the total inventory of new homes for sale, Goldman said, citing RealtyTrac data.
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
Do stock-market pros like any names in the battered industry? D.R. Horton (DHI) is one of the stocks favored by James Wilson, an analyst at JMP Securities in San Francisco, who rates it as outperform. He said he expects the company to be among the first to return to profitability starting in fiscal year 2010. “Over 50% of its customers are first-time home buyers, who will be the first, in our view, to enter the market as prices begin the bottoming process and sales start to pick up in certain markets,” he wrote in a May 6 research note.
D.R. Horton had $1.5 billion in cash at the beginning of May and said it was terminating a $275 million revolving credit line due to lack of anticipated need, and as a result saving $3 million in annual non-use fees. The company generated $161 million in operating cash flow in the second fiscal quarter and $978.6 million for the first six months of fiscal 2009. “This puts Horton in a very favorable position to capitalize on attractive land deals as banks and private builders begin to unload assets on the cheap,” Wilson said in his note.
While the company said it’s trying to work down current inventory and is not considering any joint-venture deals, at some point land will become too cheap to ignore, Wilson said. After two straight quarters of impairments below $60 million, the company is nearing the end of its impairments, he said. He expects an additional $65 million in impairments for the current fiscal year, which should bring Horton’s assets close to being in-line with current market values. However Credit Suisse analyst Daniel Oppenheim is less optimistic about the stock, which he rates as underperform, citing risk from mounting foreclosures.
Wilson reaffirmed his outperform rating on MDC Holdings (MDC) on May 11, citing the company’s strong balance sheet and much lower-than-expected impairments in the first quarter. With MDC perhaps $30 million away from the end of its impairments, he lowered his net loss forecast for fiscal 2009 to $2.25 from $2.75 a share, but reduced his estimate for fiscal 2010 from breakeven to a loss of 50¢ a share based on lower revenue from a lower-than-expected backlog plus higher corporate overhead costs.
Pressure on MarginsEven though MDC slashed it speculative sales by 173 units from the fourth quarter of 2008 to the first quarter of this year, its remaining 648 spec sales are too high compared with backlog of just 629 units, which will put pressure on margins, according to Credit Suisse (CS). In a May 8 note, Oppenheim rated MDC as underperform, saying that with sales, general, and administrative expenses at 29.3% of revenue, the builder needs significant further cuts or higher sales volumes to become profitable again.
Although he sees MDC as one of the best-managed home builders, Oppenheim said he expected weaker sales and lower prices due to greater competition from foreclosures in the short term to put pressure on the stock and also pointed to the risk associated with its premium valuation to its peers.
Oppenheim downgraded KB Home (KBH) to underperform from neutral in April, citing “risks from weak demand, falling home prices, and increased competition from other builders at the low end of the market where KB Home competes with its new lower-priced ‘Open Series’ product.” His $10 target price is based on a 10% premium to his adjusted book value estimate.
While a lot of the data suggest the housing market is close to bottoming out in some ways, there’s really no recovery on the horizon, says Burns. That’s because mortgage rates are being held artificially low for now and are going to trend up in the months ahead, which will prevent a strong recovery. Meanwhile, any pent-up demand from renters who want to become owners will be overwhelmed by the rising number of foreclosures. “It’s going to take a couple years to work our way through this [inventory],” he says.
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Harris Real Estate University students (and future students) here are the latest Case-Shiller home price indices. 
The March report(.pdf) for the S&P Case-Shiller Home Price
Indexes shows a record decline of 19.1 percent in the quarterly National Home Price Index and a slightly less severe rate of decline for the 10-city and 20-city indexes. Price indexes for all 20 cities are shown below.
The top to bottom position on the right (corresponding to the order of the legend in the upper left to aid in viewing the data) saw a few changes last month, San Francisco, Las Vegas, Minneapolis, and Phoenix continuing to move down.
The index for Detroit now stands at 71.67, well off the bottom of the chart.
As shown below, Phoenix maintained its leadership role in year-over-year price declines with an astonishing 36.0 percent plunge. Las Vegas and San Francisco are not far behind with declines of more than 30 percent, all underlined in red.
Home prices in Minneapolis continue to tumble at an astonishing rate, down more than 6 percent in March with a year-over-year drop of 23.3 percent, sixth worst of the 20 cities.
David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s
Declines in residential real estate continued at a steady pace into March. All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines. Seventeen metro areas recorded a monthly decline in March, with Minneapolis, Detroit and New York posting record monthly declines.
On a positive note, nine of MSAs are reporting a relative improvement in year-over-year returns and nine of the 20 metro areas saw an improvement in their monthly returns compared to February. Furthermore, this is the second month since October 2007 where the 10- and 20-City Composites did not post a record annual decline. Based on the March data, however, we see no evidence that that a recovery in home prices has begun.Realtors, the CEO and Founder of RE/MAX said that every agent must be doing short sales! What are YOU waiting for? Watch the FREE Agent Short Sale Secrets video now and then download the FREE Agent Short Sale Secrets video. Learn NOW how to easily list and sell short sales.
There’s your “green shoot” for the day – March was the second month in the last six where neither index showed a record annual decline in home prices.
Source: TheMessThatGreenspanMade.com
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Lower Price = Faster Sale!
HREU Students, great common sense article to share with your Sellers about the importance of pricing their homes to SELL vs to SIT.
One of the hardest things a home seller has to do is lower the asking price. Not only does it mean making less money on the sale, but it also shows weakness in an increasingly competitive market. A price reduction is often a red flag to home buyers that the seller is in no position to negotiate and that further reductions are possible.
Its been proven countless times that the longer a house sits on the market the less percent of the original asking price it will eventually sell for. Unlike fine wine, a home for sale does NOT get better with time.
Despite the economic and psychological pain, accepting a price reduction—even a sizable one—may be the only way to sell a house in this market. For sellers who can afford to ride out the downturn, the smart move is to take your property off the market. For everyone else, it’s time to get real.
Of course, that’s great news for potential home buyers who are benefiting from more affordable prices. “There’s so much inventory that sellers need to market their listings effectively. The best way to market is to lower the price to make it attractive,” says Pete Flint, chief executive officer and co-founder of San Francisco-based real estate Web site Trulia.com.
Where the Bargains Are
BusinessWeek.com teamed up with Trulia.com to rank the nation’s largest cities with the most discounted homes. Topping the list was affluent Scottsdale, Ariz., where 37% of listings have had at least one reduction and the average discount is 12.9% off the original asking price. Other cities in the top 30 include Tampa, Saint Paul, Los Angeles, Honolulu, Columbus, San Francisco, and New York City.
Realtors, learn how to do short sales. Stop avoiding learning this skill. Knowing how to easily list and sell short sales is the new mandatory skill every agent must have. Watch the FREE Agent Short Sale Secrets video now and download the FREE Agent Short Sale Secrets book.
Of course, a reduced price isn’t always a bargain. The owner might not have dropped the price enough or might be lowering it because of some other reason (maybe the house is just plain ugly). But markets with large numbers of listing-price drops are also places where properties are lingering on the market and where sales prices are falling fast.
That’s certainly the case in Scottsdale. Dave Messner, founder of RE/MAX Fine Properties in North Scottsdale, said homes on the lower end are selling but sellers of new luxury homes are having to discount heavily. The problem is that sellers are competing with banks that are putting foreclosed homes on the market for bargain-basement prices.
“Buyers are looking for absolute steals and that’s what’s selling,” Messner said.
Heidi Majidi, a Realtor with RE/MAX, said that one seller cut the price of a $2 million Scottsdale listing in half only two months after putting it on the market. “It’s pretty scary stuff,” she said.
Even New York Prices Are Dropping
Homeowners in New York City are facing a more sudden change in the market, which was in pretty good shape until the Wall Street meltdown about six months ago. In New York City, which ranked No. 25 on our list, 29% of listings are now below their original asking price, according to Trulia.com. The average asking-price discount: 13.7%.
Home prices in New York dropped 21% in the first quarter compared with a year ago and sales have dropped off almost 57%, according to Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel. Home sales picked up in March, but they are concentrated in the lower end of the market. High-end homes, as in much of the country, are taking a long time to sell because wealthy buyers have lost jobs, bonuses, and investment income, and jumbo loans are difficult to get.
“In Manhattan, specifically in the last two quarters, we’ve seen a big jump in listing-price discounts,” Miller said, adding that sellers had to adjust quickly to the sudden drop-off in demand.
Gauging the Market
Sellers are sometimes behind the market because the home price reports they consult lag behind the market. The reason is that these reports are based on property closings, which happen months (and for new construction, even a year) after buyers sign contracts, said Gary Malin, president of Citi Habitats, a Manhattan residential real estate broker. To properly gauge the market, it’s important to look at what’s currently on the market rather than what has closed and consider how long those listings have lingered there, he said.
Buyers tend to think that properties that have been on the market too long are undesirable, but a significant price reduction can help to spur activity, Malin said.
“It does get a second wind when it’s priced appropriately,” he said.
But Mollie Carmichael, senior vice-president of John Burns Real Estate Consulting in Irvine, Calif., said it’s better to start out with a competitive asking price than to make adjustments later. In a market where prices are falling, an asking price that is 5% above other listings at the beginning could be 20% too high a few months later. The longer it takes to sell a home, the more prices would have fallen, Carmichael said.
A lower price will generate more interest and could even trigger a bidding war, she said.
“If you close fast and sell fast, you have a better opportunity to retain value,” Carmichael said. “I know you might love this or that about your home, but price it to the market. Premiums are very, very difficult to achieve in a market like the one we have today.”
Source: BusinessWeek.
Popularity: 1% [?]
HREU Students here is the promised city-by-city break down of the Case-Shiller home-price index.
The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, continued to post declines in February but the pace stopped setting records after 16 consecutive months.
Click the image for an interactive map of home-price declines.In the 20-city index, no area experienced year-over-year price gains, the eleventh straight month that has happened. Further, none of the cities managed to avoid month-to-month declines for the fifth month in a row.
Phoenix, Las Vegas and San Francisco continued to lead year-over-year decliners, with drops over 30%. Cleveland posted a large month-to-month drop, as the rate of decline accelerated there. The rates of decline also accelerated in Charlotte, New York and Washington.
Realtors, clearly more sellers who will need the services of an agent who knows (really knows) how to list and sell short sales. Watch the Free Agent Short Sale Secrets video now…then download the FREE Agent Short Sale Secrets book.
Dallas, Denver, Cleveland, Boston and Charlotte managed to avoid double-digit year-over-year declines, while New York moved posted a year-to-year drop over 10% for the first time. Measuring from each market’s peak, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 50.8% from its peak in June of 2006. All of the 20 metro areas are in double digit declines from their peaks, with seven — Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego — in excess of 40%.
“We continue to believe that it is unlikely that we are anywhere near a bottom in nationwide home prices,” said economist Joshua Shapiro of MFR Inc. “After all, in the seven years leading up to the peak in July 2006, the national 20 city home price index jumped by 155% (126 index points). So far, this index has dropped by 31% (63 index points) in the 30 months since the peak. By our estimation, the composite 20 city index is perhaps two-thirds of the way through its ultimate total decline in this cycle.”
Home Prices, by Metro Area
Metro Area February 2009 Change from January Year-over-year change Atlanta 106.65 -2.50% -15.30% Boston 148.77 -1.30% -7.20% Charlotte 118.94 -1.60% -9.40% Chicago 126.3 -3.40% -17.60% Cleveland 97.76 -5.00% -8.50% Dallas 112.39 -0.30% -4.50% Denver 120.22 -1.70% -5.70% Detroit 74.6 -3.80% -23.60% Las Vegas 121.06 -3.60% -31.70% Los Angeles 163.16 -2.00% -24.10% Miami 154.28 -3.00% -29.50% Minneapolis 116.39 -3.10% -20.30% New York 178.16 -1.60% -10.20% Phoenix 111.89 -4.50% -35.20% Portland 150.88 -1.90% -14.40% San Diego 146.82 -1.00% -22.90% San Francisco 120.39 -3.30% -31.00% Seattle 152.12 -1.50% -15.40% Tampa 145.25 -2.70% -23.00% Washington 168.02 -2.30% -19.20%
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S&P Case Shiller Home Price Index
Harris Real Estate University students (and future students) here is the most recent Case-Shiller Home Price index information.
Read this and then share your comments with us…Do you think housing has reached bottom? (If not, when will it?)
After deteriorating relentlessly for nearly three years, the much-watched S&P/Case-Shiller Index showed a brief glimmer that plummeting home prices are at least slowing their fall.
Prices are still plunging: Home prices in 20 major cities across the country have fallen 18.6% between February of this year and last, according to the index released Tuesday. That painful drop, however, is an improvement from January, when prices fell an unprecedented 19%.
“This is the first month since October 2007 where the 10- and 20-city composites did not post a record annual decline,” says David Blitzer, the Chairman of the Index Committee at Standard & Poor’s, in a statement with the release. “We will certainly need a few more months of data before we can determine if home prices are finally turning around,” he cautioned.
Realtors, learn now how to become a REO listing agent. Watch the FREE Agent REO Secrets video now…then, download the FREE Agent REO Secrets book. Become a REO Listing Agent NOW!
The Case-Shiller Index paints a particularly brutal portrait of the housing bubble in American cities. All 20 cities in the index have seen home prices decline by more than 10% since their bubbles burst. In Phoenix, a market particularly flooded with foreclosures, home prices have fallen 51% since June 2006.
Six other American cities have seen declines of more than 40% since their peaks: Detroit, Las Vegas, Los Angeles, Miami, San Francisco and San Diego.
Home prices are still falling in every city tracked by the index. But in 16 of the index’s 20 cities, home prices are no longer falling as quickly. Historical data from the Case-Shiller Index show home prices beginning to charge up a mountain in the mid ’90s; by 2004, home prices were posting record improvements, with the 10-city index showing annual price increases of 20%.
Then, in 2004, the size of the increase began to slow (in mathematical terms, the second derivative became negative). By 2006, prices were falling, and by 2007, the fall accelerated to the highest rates the 20-year-old index had ever recorded.
It is at least a glimmer of good news for the battered housing market, even if it does not mean price recovery has begun. The plummeting housing market is a key barrier to economic recovery.
Falling home prices have decimated consumer confidence. Economist Robert Shiller of Yale University, one of the designers of the Case-Shiller Index, told Forbes earlier this month that, despite tentative evidence that confidence is stabilizing, “I do think it is too soon to draw any conclusions that confidence has bottomed out, especially since home price indices have been continuing to fall, and if this continues it will continue to damage balance sheets.” Not knowing when home prices would stop falling has hindered banks in pricing mortgage-related assets.
The housing report is also good news for the “stress tests” the Federal Reserve is administering to the country’s 19 biggest banks to determine how well they can weather a deep recession. The tests evaluated whether or not the banks could survive a 22% annual decrease in home prices.
Many economists feared this assumption was not pessimistic enough–that banks could survive the stress test, but still perish when the economy proved even worse. Today’s index provided a glimmer of hope that the economy could at least outperform the adverse stress test.
Source: Forbes.com
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1000's Of Bank 'Shadow Listings'
A vast “shadow inventory” of foreclosed homes that banks are holding off the market could wreak havoc with the already battered real estate sector, industry observers say.
Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.
“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”
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In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as “shadow inventory.”
“There is a real danger that there is much more (foreclosure) inventory than we are measuring,” said Celia Chen, director of housing economics at Moody’s Economy.com in Pennsylvania. “Eventually those homes will have to be dealt with. If they’re all put on the market, that will add more inventory to an already bloated market and drive down home prices even more.”
More than one-third locally
In the Bay Area, a Chronicle analysis of data from San Diego’s MDA DataQuick shows that more than one-third of foreclosures are in shadow territory – that is, they are not registering in county records as having been resold.
For the 26 months from January 2007 through February 2009, banks repossessed 51,602 homes and condos in the nine-county Bay Area, according to DataQuick. Yet in the same period, only 30,823 foreclosures were resold, leaving about 20,000 bank repos unaccounted for.
Turnaround usually quick
Realtors say foreclosures generally go on the market a month or two after the bank takes title and then sell fairly quickly, often getting an accepted offer within a week or two of being listed and then closing escrow within 30 days. That means that foreclosures should register as being resold within three months.
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But taking the foreclosures in any given month or selection of months and looking at what happened three months later also reveals a big gap between what banks took back and what they resold.
Tom Kelly, a spokesman for banking giant Chase in Chicago, said the bank sells foreclosed homes in a timely fashion.
“We try not to be in the business of owning homes,” he said. “Our goal is to get them back on the market as quickly as possible. We want to maximize what we sell them for and yet do it quickly.”
Kelly was at a loss to explain the shadow inventory phenomenon other than the quantities involved.
“The inventory might be growing because there is just a lot of volume coming in. That would not surprise me,” he said.
Locally, the monthly number of foreclosures has decreased since peaking at 4,321 in August 2007. That has allowed foreclosure resales to start closing the gap.
Most observers say the recent fall-off in foreclosures came because California and many banks implemented foreclosure moratoriums in the fall, not because the problem has diminished.
Only 65.5 percent resold
A second DataQuick study of all Bay Area homes repossessed by banks in the 18 months ending January 2009 tracked how many of those homes had resold by mid-March. It found that 65.5 percent had resold. Discovery Bay’s ForeclosureRadar.com compared its database of Bay Area foreclosures to MLS listings for the past 120 days and found that fewer than one-fifth of the foreclosures showed up as for-sale listings.
“Foreclosure numbers are artificially depressed,” said CEO Sean O’Toole. He puts California’s shadow inventory at about 100,000 homes.
So why aren’t banks selling off their foreclosures?
Observers say several factors are at work.
– The “pig in the python”: Digesting all those foreclosures takes awhile. It’s time-consuming to get a home vacant, clean and ready for sale. “The system is overwhelmed by the volume,” Sharga said. “In a normal market, there are 160,000 (foreclosures for sale nationwide) over the course of a year. Right now, there are about 80,000 every month.”
– Accounting sleight-of-hand: Lenders could be deferring sales to put off having to acknowledge the actual extent of their loss. “With banks in the stress they’re in, I don’t think they’re anxious to show losses in assets on their balance sheets,” O’Toole said.
– Slowing the free-fall: Banks might be strategically holding back some foreclosures so prices don’t fall as fast. “They want to be careful about not releasing them too quickly so they don’t drive prices down and hurt the values,” O’Toole said.
Besides the shadow foreclosures, yet another wave of distressed properties is in the pipeline. These are homes with delinquent payments for which the banks appear to be prolonging the foreclosure process. Some of that could be because they’re negotiating with homeowners about loan modifications or other ways to keep them in the home. But banks also could be deliberately foot-dragging for the same three reasons listed above.
“The problem is that no one knows how extensive (the shadow inventory) is,” said Patrick Newport, U.S. economist with the Massachusetts research firm Global Insight. “It’s a wild card. If it’s a really big number, you’ll see prices drop a lot more and deeper problems for the financial system.”
Missing foreclosures
Only 65.5 percent of all Bay Area homes repossessed by banks in the 18 months ended January 2009 had been resold by mid-March. This study looked at the same homes over time, not an aggregate of all foreclosures.
| County | % foreclosures resold | % foreclosures unsold |
| Alameda | 58.6% | 41.4% |
| Contra Costa | 69.8% | 30.2% |
| Marin | 66.9% | 33.1% |
| Napa | 66.0% | 34.0% |
| San Francisco | 49.8% | 50.2% |
| San Mateo | 61.5% | 38.5% |
| Santa Clara | 62.0% | 38.0% |
| Solano | 67.5% | 32.5% |
| Sonoma | 75.3% | 24.7% |
| Bay Area | 65.5% | 34.5% |
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