homesmillbrae.com » Crash

Mortgage bailout not over, FHA to draw $1.7 billion

Fri, 27 Sep 2013 20:11:21 +0000

The negatives, however, are that the FHA is making far fewer loans today due to tighter underwriting and higher fees. That means it is making less money, even though its newer loans are performing extremely well. The estimates for the insurance fund will not be updated until the end of this year, when it will likely show vast improvement.

(Read more: Mortgage alert: Borrowers change how they cheat)

“It is estimated that the improvement in recovery rates alone is worth more than $5 billion to the MMIF—which would far exceed the amount of the mandatory appropriation,” wrote Galante.

The FHA, which insures low down-payment loans, or loans with a minimum 3.5 percent down, stepped in to save the housing market. It went from about a 3 percent share of the market to almost a third of the mortgage market during the crash. But now, it’s paying the price.

“Over the years, the FHA has strayed far from its original mission. It has become the nation’s largest subprime lender,” wrote Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee.

(Read more: Map: Tracking the recovery)

Most of the FHA losses, around $70 billion, were from loans originated between 2007 and 2009. The biggest trouble has been in reverse-mortgages for senior citizens and seller-funded down payments; the latter was banned in 2008.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/101068629

Home prices push past rising rates, says report

Tue, 03 Sep 2013 18:42:19 +0000

(Read more: Home values rise, but millions still drown in debt)

Mortgage rates are about a full percentage point higher today than they were at the beginning of March. The average rate on the 30-year fixed hit 4.80 percent by the middle of last week, according to the Mortgage Bankers Association. That is the highest since April 2011.

Rates have been trending higher on expectations that the Federal Reserve will begin to taper its investments in mortgage-backed securities.

Home prices are also trending higher in part due to the fact that there are fewer distressed properties for sale. Excluding distressed sales, prices were up 11.4 percent year over year. Distressed properties have seen big price jumps in the past year, as investors fight to get the remaining bargains.

Markets hit hardest by the housing crash have seen some of the biggest price gains: Nevada home prices were up 27 percent annually in July, California up 23 percent and Arizona up 17 percent. Completed foreclosures nationally were down 25 percent in July from a year ago, according to CoreLogic.

(Read more: Map: Tracking the recovery)

Prices are also getting a boost from the sheer lack of properties for sale. Inventories are way down in local markets across the nation, and home builders are not ramping up production fast enough to meet new demand.

While the inventory situation is not expected to ease very much over the next year, home prices are expected to weaken slightly, as higher rates and weak income growth put a cap on just how high prices can go.

Article source: http://www.cnbc.com/id/101004096

Higher mortgage rates may mean easier credit

Tue, 06 Aug 2013 04:35:42 +0000

(Read more: Mortgage delinquencies suddenly spike)

It is likely no coincidence that standards are easing as rates rise and mortgage applications fall. Total mortgage applications were down 47 percent last week from a year ago. Refinances, which had been the banks bread and butter during the housing crash, are down 59 percent from a year ago. Applications to purchase a home are up just 5 percent.

“People see interest rates rise, they slow down some of that eagerness to get into the market,” said David Stevens, CEO of the Mortgage Bankers Association in an interview on CNBC’s “Squawk Box.”

(Read more: Map: Tracking the US real estate recovery)

Credit standards tightened dramatically over the past several years, as loose credit was largely blamed for the crash in housing. Average borrower credit scores on new loans are dramatically higher today, and lenders require larger down payments.

Even the FHA, the government mortgage insurer, which was created to help lower creditworthy borrowers, has raised its standards as well as its insurance premiums. Many lenders have overlays to their guidelines that they add on top of standard conventional guidelines. They could do that because refinances were so high, they needed to slow the volume in order to process all the loans.

Article source: http://www.cnbc.com/id/100939328

The fastest way to triple your money is…housing?

Fri, 19 Jul 2013 03:24:13 +0000

Large-scale institutional investors have been swarming the distressed housing market since the height of the housing crash, buying homes in bulk, rehabilitating them and putting them up for rent. Companies like Blackstone, Colony Capital, Waypoint and hedge fund titan John Paulson have been reaping solid rewards on the trade.

Paulson, speaking at CNBC’s Delivering Alpha conference, said he is still high on housing.

“It’s not too late to get involved. I still think buying a home is the best investment any individual can make. Affordability is still at an all-time high,” said Paulson.

Large-scale investors, however, may not be behind the surge in home flipping. They may, in fact, be the cause of it.

“Now that the institutional investors are doing buy and hold, a lot of these guys [individual investors] can’t compete with their checkbooks,” said Rick Sharga, formerly an executive at Carrington who now works for Auction.com. “In some cases the individual investors are flipping them to the institutional investors.”

While many of the large funds have teams that renovate homes, in some cases they would rather pay a premium for a move-in-ready property, rather than waste time and money remodeling.

“So the flippers are kind of the in-between middleman who is getting the property into good rentable condition and then selling to the institutional investors,” explained Blomquist.

(Read more: Map: Tracking the US real estate recovery)

Article source: http://www.cnbc.com/id/100896253

Bay Area housing recovery spreads from Silicon Valley to East Bay

Thu, 09 May 2013 08:48:24 +0000

Click photo to enlarge

The Bay Area’s overheated housing market is restoring thousands of homes to their pre-crash peak values in a ZIP-code-by-ZIP-code recovery that is rapidly spreading from Silicon Valley to the East Bay.

Thirty-four of 185 ZIP codes in five counties have regained or surpassed their bubble-era peak home value or are less than 1 percent from it, according to this newspaper’s analysis of February median values for all homes from online real estate site Zillow.

Another 49 ZIPs are within 15 percent of their previous highs, including 18 in the East Bay. A year ago, only part of leafy Palo Alto had regained the value it lost after Bay Area home values crested in 2006-07.

“Seven or eight years ago, there was really a bubble,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California. “Now it’s just good real estate where values are returning to near past peaks.”

Every part of the Bay Area has seen gains in the past year, with Silicon Valley leading the way. But parts of Contra Costa and Alameda counties, where subprime lending was heavy, are still far below their peaks.

The recovery has pulled many homeowners out from underwater — when houses are worth less than the mortgage — and convinced others it may finally be time to sell and move to bigger homes. They’re diving into a fast-moving market in which homes can sell in a day for more than the asking price.

Mike and Lois Lee

sold their Danville home for $780,000 in two days this month, after their real estate agent, Mark Kennedy of Empire Realty, told them their house was again worth more than they paid for it. They made $10,000 on the sale, the result of the past year’s rise in home values.

“I had no idea the market had corrected that much,” Mike Lee said.

Kennedy said the couple tried to sell in 2011 but there were no takers, and it might have resulted in a short sale. “I would say that in a year they went from losing money to making money,” he said.

In one Sunnyvale ZIP code that surpassed its bubble-era peak in December, Greg and Daisy Biggers decided in January it was time to make a move. Their family — four children — was outgrowing the home and the market timing looked right. In fact, it couldn’t have been better.

The Biggers family sold their home in less than a week, with all offers above asking price. Then they bought a home in Orinda, paying above the asking price. The whole process, from the decision to move to the purchase of the Orinda home, took eight weeks. Both homes are in escrow, and agents declined to reveal the sales prices before closing.

“When we started looking at the market, we picked up on this

Daisy Biggers, left, her husband, Greg, and son, Jeffrey, 11, pack some of their belongings that were stored in the garage of the house they recently sold in Sunnyvale on Tuesday, April 23, 2013. They sold their house in less than a week, and bought one in Orinda. The whole process, from the decision to sell, took only eight weeks. Housing values have staged a big comeback and are rapidly accelerating around the Bay Area, with the biggest recovery so far in the Peninsula and Silicon Valley. (Patrick Tehan/Bay Area News Group)
(
Patrick Tehan
)up-trend in prices,” Biggers said. “We quickly decided that if we’re going do it, now is the time. We had much higher demand than we had hoped for, which is great. And things are moving really, really quickly.”

Some pricier parts of Berkeley, Pleasanton, Oakland and Orinda are 10 percent or less below their earlier peaks. Not far behind are San Ramon, Moraga, Alameda, Danville and Fremont.

“Property in Dublin is selling at prices you would more commonly associate with some parts of the Peninsula,” said Lanny Baker, president and chief executive of ZipRealty. Baker said prices should hold even as more homes come on the market.

The market is so hot that sales in a week are not unusual. According to the real estate company Redfin, 24 percent of Alameda County listings in March were pending in a week; the numbers were 32 percent in Contra Costa County, 19 percent in San Mateo County and 26 percent in Santa Clara County.

Ally Yang bought a home in Mountain View in a day after losing another home to a higher offer. Her agent, Mark Wong of Alain Pinel Realty, “sent me the listing. I said let’s go check it out. I walked in, it’s a single family, I know the value, I think it’s a good deal.”

She made an offer of $705,000 that afternoon, and it was accepted. “I think in this kind of market you just have to know what you want and go after it,” she said.

Up the Peninsula in a Burlingame ZIP code that surpassed its bubble-era peak in August, Dianna Herrmann decided it was time to downsize and put her historic, 6,000-square-foot home on the market for $3.98 million.

“I watch the real estate market a lot,” Herrmann said. In February, she called her real estate broker. “I said things are overheated, inventory is low, prices are moving up and rates are low. Is this a good time to sell?”

The answer was yes.

Fifteen days later, the house was sold in an all-cash deal for over the asking price.

“The market is faster than ever,” said Burlingame broker Jennifer Tasto. “When a place sells, there’s one person who gets it and two other people replacing that buyer.”

The recovery is in full bloom in San Francisco. The Mission Bay neighborhood, where new luxury condominiums are about all that’s for sale, edged past its prior peak in January, and other parts of the city are nearing their previous highs.

“San Francisco has recovered incredibly,” said Leslie Bauer, an agent who specializes in the South Beach, Yerba Buena and Mission Bay districts. “I would say we’re recovered beyond when the market fell.”

But the data also reflects the stark contrast between the tech-heavy South Bay and Peninsula, where many areas are surpassing their pre-crash peak values, and the far reaches of the East Bay, where home values in some places are 50 percent or more below peaks that were inflated by subprime lending.

Antioch, Pittsburg, Richmond and a ZIP code in East Oakland have a long climb ahead of them. There, values still hover near their bottoms.

Fifteen ZIP codes in Contra Costa County and three in Alameda County are more than 50 percent below their peak median home value, according to Zillow’s data. In one Antioch ZIP, the median value of a home was $177,700, only 18 percent up from an October 2009 bottom of $149,800 and 62 percent below its peak of $473,400 in January 2006.

“We have a ways to go before we recover,” said Luis Salas, a real estate agent in Antioch. “We’re far from the city and there was so much construction the prices went down a lot in Antioch — in some cases more than 50 percent from the peak. But it’s recovering.”

As prices rise in Antioch, some short sales are drawing offers over asking price and becoming regular equity sales, according to Joy Di Ricco, an Antioch real estate agent who has specialized in short sales since the market crash.

She said one client’s home was $100,000 below the amount of the mortgage six months ago.

“I told them hold off,” Di Ricco said. “Sure enough, I think in another 30 days we may have an equity sale.”

Contact Pete Carey at 408-920-5419 Follow him at Twitter.com/petecarey.

Article source: http://www.mercurynews.com/business/ci_23107869/bay-area-housing-recovery-spreads-from-silicon-valley

US Pending Home Sales Tick Upward in March

Tue, 30 Apr 2013 06:54:53 +0000

“Contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply,” said Realtors chief economist Lawrence Yun in a release. “Little movement is expected in the near-term sales closings, but they should edge up modestly as the year progresses.

(Read More: Despite Rising Demand, Some Builders Slow Production)

Listings were down 17 percent in March from a year earlier, according to the association, with several factors affecting inventories. Millions of Americans still owe more on their mortgages than their homes are worth, and that makes it impossible for them to move without incurring major expense.

Others are watching home prices rise and may be waiting to see just how high they go before listing their homes.

Meanwhile, home builders, while trying to ramp up production, are faced with a lack of land, labor and materials. Single-family starts were at a seasonally adjusted annual rate of just 619,000 units, an improvement from the worst of the crash but far below historical norms.

(Read More: Map: Tracking the US Real Estate Recovery)

Regionally, the pending home sales index was unchanged in the Northeast from February, up 0.3 percent in the Midwest, up 2.7 percent in the South and up 1.5 percent in the West.

Existing home sales in March, based on closings, fell just under one percent in March. While higher than a year ago, home sales appear to have leveled off, despite this being the normally busy spring season.

(Read More: Government Mortgage Fix Is Failing)

Article source: http://www.cnbc.com/id/100683911

Housing recovery spreading in Bay Area

Sun, 28 Apr 2013 18:48:18 +0000

Neighborhoods around the Bay Area, from Silicon Valley to the East Bay, are seeing home values near their pre-crash levels, according to the real estate site Zillow.com.

The Mercury News reports that 34 of 185 ZIP codes in the region have reached or come near their bubble-era peak home values and another 49 are within 15 percent.

The recovery is being felt in many parts of the East Bay, as well, though areas of Contra Costa and Alameda counties where subprime lending was heavy are still struggling.

But home values in some parts of Berkeley, Pleasanton, Oakland and Orinda have risen to 10 percent or less below their earlier peaks, the report notes.

Despite High Demand, Some Builders Slow Production

Thu, 25 Apr 2013 17:22:55 +0000

While smaller builders are taking the brunt of the price increases, the big public builders may actually be taking advantage of them. Knowing that supplies are low and demand is high, some are limiting sales in order to keep prices high.

(Read More: Housing “Stuck” Due to Short Supply)

“We are pricing our homes and limiting the number of lots we’re releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities,” wrote Meritage CEO Steven J. Hilton in the company’s quarterly earnings release.

Meritage is not the only one, as limited supply of new and existing homes pushes prices higher across the nation. It may seem counterintuitive to stop building in such a scenario, but apparently it is making business sense.

(Read More: Housing Recovery to Face Test as Builders Report)

“Many builders are starting to limit production,” noted Megan McGrath of MKM Partners. “I think raising prices is one part of the equation, but I also think there is the issue of limited labor and finished lots at play.”

With the housing crash so deep and prolonged, the big builders may have been caught off guard by the swiftness of new housing demand. Few predicting the inventory shortfall, and it is still unclear how long that shortfall will last. Builders are in the business of selling homes, but they also need to be in the business of staying in business and delivering to shareholders. If slower production amid rising demand equals higher prices, then that may just be the new normal.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100673946

Housing Already Shows Signs of a New Bubble

Wed, 06 Feb 2013 04:10:27 +0000

Barely a year in, home prices rose over eight percent annually in December, according to a new report from CoreLogic. While still down double digits from their 2006 peak, prices are suddenly soaring again and raising some serious red flags.

(Read More: Is the Refi ‘Apocalypse’ Really Upon Us?)

Analysts at Clear Capital, which runs a four-month moving average price index, note that January’s numbers show, “momentum stalls.” While they blame this on seasonal slowdowns, they point to Florida as a concern.

“Florida metros, namely Miami, Orlando, Tampa, and Jacksonville, were all missing from the top 15 performing market list. Since September 2011, at least one of these markets made the list,” cautions Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “While this isn’t confirmation that the recovery is finished in the sunshine state, it’s certainly something to keep an eye on. These markets led the recovery in late 2011, and share some of the hallmarks for recovering markets overall.”

Florida’s housing market has been driven by distressed homes, and investors buying them at a rapid pace.

Other markets that saw the most distress during the housing crash, like Phoenix, Las Vegas, and much of California, have also seen so much investor demand, that prices are up by double digits from a year ago.

(Read More: New Housing Fears: Home Prices Rising Too Fast?)

Article source: http://www.cnbc.com/id/100435276

New Housing Fears: Home Prices Are Rising Too Fast

Tue, 22 Jan 2013 20:21:08 +0000

As a result, home prices are now rising more and faster than most analysts predicted due to this short supply, up 7.4 percent year-over-year in November, according to CoreLogic. They are especially surging in some of the hardest hit markets from the housing crash, where large-scale investors are swarming with cash in hand. In Phoenix, home values jumped nearly 32 percent from a year ago in November and are now at the highest level since October of 2008 according to DataQuick. While still 39 percent off their boom-high in June of 2006, they are now up 41.5 percent from the bottom, and there is not much on the market.

(Read More: Could Rentals Be the New Red Flags in Real Estate?)

Healthy housing market gains are historically driven by increasing employment and income, not by lack of supply; the latter leads to price bubbles. First-time home buyers, who generally account for 40 percent of the home-buying market or higher are still under-represented at just 30 percent, according to the Realtors. This is due to tighter credit conditions in the mortgage market and now decreasing affordability.

December’s disappointing drop in home sales, month-to-month is a clear warning for the housing recovery going forward. Rising home prices are not the sole measure of a healthy market. Supply and demand need to fall closer in line, and a robust economic recovery should be driving both home sales and prices.

(Read More: One Overlooked Fact About the Housing Recovery)

Article source: http://www.cnbc.com/id/100397644