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Sales Soar as Manhattan Condos Kick Co-Op Prices

Wed, 03 Jul 2013 08:25:02 +0000

“They have may have re-financed, and they may have taken out a second mortgage,” said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and consultancy. “When they bought the home they may have figured out a way to put a small amount down, smaller than what the co-op actually knew about. It is the same problem here that it is everywhere else.”

Nationwide, more than 40 percent of homeowners with a mortgage are in a negative or near-negative equity position (less than 20 percent equity in the home), according to Zillow. Housing may be local, but this particular credit issue is national.

(Read more: NY’s Luxury Penthouse Shortage Pinches Prices)

Short supply pushed prices higher for Manhattan condominiums, but not for co-ops. Condominiums, which have a median price of $1.25 million, about twice that of co-ops, are being helped by foreign, all-cash buyers. International buyers tend to shy away from tough Manhattan co-op boards.

(Read More: Mortgage Rates Pressure Home Builders)

“Scarcity is an important issue, and when apartments are properly priced they are selling quickly. While there is great demand and small supply, buyers are reluctant to pay a price that is not justifiable,” said Hall. F. Willkie, president of Brown Harris Stevens Residential Sales in a release. “Job growth remains strong in the city as does interest from both domestic and international buyers; this bodes well for a healthy market.”

Sales began to pick up dramatically this year, as fears of the fiscal cliff abated and optimism returned to real estate. While limited inventory would appear to make this a seller’s market, agents say savvy buyers are the norm in Manhattan, and that has kept price increases in check. While home prices in the rest of the nation were up just over 12 percent in May from a year ago, according to a new report from CoreLogic, Manhattan prices in general are not rising that fast.

Prices for co-ops, which account for 75 percent of the Manhattan market, were flat in the second quarter of this year, while the median price for a condo was up 14 percent from a year ago, according to the Douglas Elliman report. Larger co-ops saw bigger price gains, but for condos the gains were in studio apartments. Sellers are getting 98 percent of asking price, according to another report from Halstead Property.

(Read More: Pending Home Sales Soar to 6-Year High)

Article source: http://www.cnbc.com/id/100860538

Rising Rates Scare Borrowers Into Action

Thu, 13 Jun 2013 01:13:11 +0000

Roughly 10 million refinances took place over the past two years, although that may include borrowers who have refinanced more than once, according to Inside Mortgage Finance. From mid-2011 to mid-2012, rates dropped by 100 basis points, making it worthwhile for some to refinance more than once.In addition to low rates, the government’s refinance program, called HARP, for underwater borrowers with Fannie Mae and Freddie Mac loans, helped juice refinances as well.

In the first three months of this year, there were nearly 1.4 million refinances on Fannie Mae and Freddie Mac mortgages alone, according to the Federal Housing Finance Agency. Of those, 22 percent were through HARP, which was recently extended through 2015. More than 2.4 million borrowers so far have taken advantage of that program.

For borrowers who don’t have government-backed loans and therefore don’t qualify for that program, rising home prices have helped allow more of them to qualify for refinances. Among borrowers, 850,000 rose above water on their mortgages, moving into a positive equity position in the first three months of this year, according to a new report from CoreLogic. While nearly 10 million are still underwater, the more that rise above, the more refinances can happen.

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“We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap,” said Anand Nallathambi, the CEO of CoreLogic.

Rising prices, however, are a double-edged sword, especially in a rising interest rate environment. Potential buyers are losing purchasing power every day, just as demand is surging.

—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/100810389

Is Housing Risen From Ashes? ‘Industry Has Come Back’

Tue, 25 Sep 2012 23:52:46 +0000

Economists are saying it, and now even some Americans are saying it.

After falling to depths not seen since the Great Depression, the U.S. housing market may finally be rising from the ashes.

It may not seem like a lot, but 27 percent of Americans believe the value of their homes will increase in the next year, according the CNBC All America Economic Survey.

That is the highest percentage since 2007 and the third straight quarter that such optimism has gained. (Read More: CNBC Poll: Economy’s Worse, but Obama Favored to Fix It.)

“Overall the housing industry has come back,” said Standard and Poors’ David Blitzer, commenting on Tuesday’s release of the latest SP/Case-Shiller home price indices. “We might finally get a little boost to the economy from the housing sector.”

Home prices in the nation’s top twenty markets rose 1.2 percent in July from a year ago, according to SP/Case-Shiller. (Read More: US Home Prices Rose for Sixth Month in a Row: Case-Shiller.)

All of those markets saw month-to-month price gains, while just four saw annual declines. Atlanta continues to see the largest drop, down just under 10 percent year-over-year, but even its declines are easing.

In Phoenix, where distressed properties have made up the bulk of home sales, prices are up 16.6 percent from a year ago, due to big supply shortages of low-end homes.

Home prices are still down 30 percent from their peak in 2006, but just the prospect of a real bottom has some buyers finally getting off the fence. In addition, rising prices helped 1.3 million home owners to rise out of a negative equity position on their mortgages in the first half of this year, according to CoreLogic.

Nearly 11 million, or 22 percent of all borrowers, are still stuck in place, owing more on their mortgages than their homes are worth, and an additional 2.3 million have less than 5 percent equity in their homes, making a move up unlikely. (Read More: More Homes Are Above Water, But Some Sellers Still Suffer.)

The latest numbers, from existing home sales to earnings from the big public home builders, are fueling much-needed confidence in housing, but it would be naïve to declare that this industry is completely out of the woods.

Positives, like record-low mortgage rates and much-improved affordability are offset by still high negative equity, tight credit conditions and continued uncertainty about the overall state of the economy.

Just 10 percent of those polled in the CNBC survey say the economy is good or excellent, with 91 percent saying it is only fair or poor. Fifty-three percent say it is poor, with 25 percent saying it will get worse. These sentiments are little changed from the survey results in June.

Housing still faces some huge unknowns, including tough regulation on mortgage lending, the looming “fiscal cliff,” and more than 5 million loans that are either delinquent or in the foreclosure process.

Supplies of distressed homes are low, but much of that is due to delays in the foreclosure process which are just now beginning to lift. New mortgage delinquencies are falling slightly, but they are still far higher than historical norms. (Read More: ‘Underwater Mortgage’ Refis Get Fresh Push in Congress.)

There is also a possible new headwind that few have mentioned. That is the potential loss of the Bush 2007 Mortgage Relief Act benefit.

This act negates any tax liabilities against borrowers who do so-called “short sales.” This is when the bank allows the home to be sold for less than the value of the mortgage. The debt that is forgiven (that is the amount of the mortgage not covered by the sale price) would usually be taxed, but this act put a temporary stop to that in order to give borrowers relief and stimulate the short sale market.

This act expires at the end of this year, and Congress has yet to extend it.

“Private investors, Realtors and banks have begun to drive short sales hard, as foreclosures take too long and are too politically sensitive,” said housing analyst Mark Hanson. “The loss of the Bush 2007 Mortgage Relief Act benefit, which has been driving incremental short sale volume all summer — and is responsible for a large part of the year-over-year increase in sales volume — will drive sales volume into a “triple dip” in the winter/spring…Prices will get hit as well.”

It is of course possible that Congress will extend the act at the last minute, but this is just one example of many “ifs” still present in the market.

Mortgage rates may be low now, but some say they could move up next year, influenced by factors outside the Federal Reserve’s recent attempt to lower them (QE3). (Read More: How Does the Fed Help My House My Mortgage?)

Home prices appear to be improving, but a new flow of distressed properties could lessen those gains this fall. And again, so much still depends on jobs. SP’s David Blitzer may believe housing is back, but his colleague Robert Shiller said last week that he wasn’t convinced. Suffice it to say, the housing market has come a long way, but it still has a long way to go.

—By CNBC’s Diana Olick

Click on ticker to follow real estate news:

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Construction General Building Materials

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Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49163485?__source=RSS*blog*&par=RSS

More Homes Are Above Water, But Some Sellers Still Suffer

Thu, 13 Sep 2012 04:56:08 +0000

As home sale prices rise, overall home equity rises, and consequently more and more mortgages are no longer “under water.”

1.3 million homes that were previously worth less than the mortgages on them came back into positive territory in the first half of this year, according to CoreLogic.

Billions of dollars in home equity are returning, but what exactly are homeowners doing with this new found cash? Not much.

They certainly aren’t taking it out of their homes the way they used to. In fact, they are actually putting more cash in during refinances, according Freddie Mac. Lenders say it is becoming nearly the norm.

“I continue to see large cash infusions at closing to pay down to conforming [loan] limits, as well as increases in monthly payments to obtain lower rates on shorter amortizations, both of which are very atypical traditionally, but more and more common in this latest refi market,” said Craig Strent, CEO of Rockville, Maryland-based Apex Home Loans.

As for home sales, the reason so many people cannot move isn’t entirely negative equity, but what’s called “near negative equity,” or having less than 5 percent equity in your home. 10.8 million or 22.3 percent of all residential properties with a mortgage were in a negative equity position at the end of the second quarter of 2012, according to CoreLogic, but an additional 2.3 million borrowers had less than 5 percent equity. (Read More: Pending Home Sales Beat Expectations in July.)

The bottom line is that most move-up buyers, the ones desperately needed for a real robust housing recovery, cannot move if they can’t make enough in the sale not only to cover the mortgage but to cover real estate agent fees, closing fees and of course a down payment on a new home.

Much of the recovery in the housing market of late has been thanks to investors, who are often all-cash buyers and who do not have to sell a home in order to buy another. All that activity on the very low/distressed end of the market is pushing overall prices higher. (Read More: How Investors Are Skewing Home Price Recovery.)

Many Realtors with whom I’ve spoken have said yes, the low end is still on fire, and even the very high end is doing well because high end buyers don’t rely so much on credit. It’s the middle that is still suffering.

But wait! According to CoreLogic’s report, negative equity is concentrated on the low end of the housing market: “For example, for low-to-mid value homes (less than $200,000) the negative equity share is 32 percent, almost twice the 17 percent of borrowers with home values greater than $200,000.”

So with less negative equity in the middle, why is the low end moving and the middle not? (Read More: Where Are the Move-Up Home Buyers?)

Because the low end activity is largely in short sales (when the home is sold for less than the value of the mortgage) and foreclosure sales. That’s also where we’re seeing investors do all the bulk deals. Witness Fannie Mae’s sale of 699 properties earlier this week to Pacifica Group, a real estate investment company. The homes in that deal averaged around $111,000.

The middle of the market is still struggling with near negative equity, not to mention tighter credit the higher the loan value is. The more expensive the home, the bigger down payment you’re going to need to meet today’s tough standards. Home prices are going to have to come back a whole lot more strongly before the middle of the market is able to move again.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49005248?__source=RSS*blog*&par=RSS

More Homes Are Above Water, But Some Sellers Still Suffer

Thu, 13 Sep 2012 04:56:08 +0000

As home sale prices rise, overall home equity rises, and consequently more and more mortgages are no longer “under water.”

1.3 million homes that were previously worth less than the mortgages on them came back into positive territory in the first half of this year, according to CoreLogic.

Billions of dollars in home equity are returning, but what exactly are homeowners doing with this new found cash? Not much.

They certainly aren’t taking it out of their homes the way they used to. In fact, they are actually putting more cash in during refinances, according Freddie Mac. Lenders say it is becoming nearly the norm.

“I continue to see large cash infusions at closing to pay down to conforming [loan] limits, as well as increases in monthly payments to obtain lower rates on shorter amortizations, both of which are very atypical traditionally, but more and more common in this latest refi market,” said Craig Strent, CEO of Rockville, Maryland-based Apex Home Loans.

As for home sales, the reason so many people cannot move isn’t entirely negative equity, but what’s called “near negative equity,” or having less than 5 percent equity in your home. 10.8 million or 22.3 percent of all residential properties with a mortgage were in a negative equity position at the end of the second quarter of 2012, according to CoreLogic, but an additional 2.3 million borrowers had less than 5 percent equity. (Read More: Pending Home Sales Beat Expectations in July.)

The bottom line is that most move-up buyers, the ones desperately needed for a real robust housing recovery, cannot move if they can’t make enough in the sale not only to cover the mortgage but to cover real estate agent fees, closing fees and of course a down payment on a new home.

Much of the recovery in the housing market of late has been thanks to investors, who are often all-cash buyers and who do not have to sell a home in order to buy another. All that activity on the very low/distressed end of the market is pushing overall prices higher. (Read More: How Investors Are Skewing Home Price Recovery.)

Many Realtors with whom I’ve spoken have said yes, the low end is still on fire, and even the very high end is doing well because high end buyers don’t rely so much on credit. It’s the middle that is still suffering.

But wait! According to CoreLogic’s report, negative equity is concentrated on the low end of the housing market: “For example, for low-to-mid value homes (less than $200,000) the negative equity share is 32 percent, almost twice the 17 percent of borrowers with home values greater than $200,000.”

So with less negative equity in the middle, why is the low end moving and the middle not? (Read More: Where Are the Move-Up Home Buyers?)

Because the low end activity is largely in short sales (when the home is sold for less than the value of the mortgage) and foreclosure sales. That’s also where we’re seeing investors do all the bulk deals. Witness Fannie Mae’s sale of 699 properties earlier this week to Pacifica Group, a real estate investment company. The homes in that deal averaged around $111,000.

The middle of the market is still struggling with near negative equity, not to mention tighter credit the higher the loan value is. The more expensive the home, the bigger down payment you’re going to need to meet today’s tough standards. Home prices are going to have to come back a whole lot more strongly before the middle of the market is able to move again.

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/49005248?__source=RSS*blog*&par=RSS

Where Are the Move-Up Home Buyers?

Thu, 02 Aug 2012 17:51:34 +0000

Housing has never been more affordable, and yet home ownership is still falling and more Americans are renting. The supply of homes for sale is down 24 percent from a year ago, according to the National Association of Realtors, but that still doesn’t explain why so few buyers are jumping in. The answer lies in the immobile move-up buyer.
“At current mortgage interest rates, the monthly cost of the typical new mortgage – at about 12 percent of median income – is not much more than half normal levels,” notes Paul Diggle of Capital Economics. “In other words, housing is very affordable.”

Still, while mortgage refinances soar to a two-year high, weekly numbers from the Mortgage Bankers Association show that applications to purchase a home are down by 6 percent over the past year.

Jason and Pascale Royal would love to move up to a bigger home. With a new baby and a dual income, they are even willing to pay more for a bigger mortgage. The trouble is, the mortgage on their south Florida home is about $100,000 more than the home is currently worth. To add insult to injury, they can’t get any help from the bank or the government.

“Because we’ve been current on our payments and have never been late or missed one, we don’t qualify for any of these short sales or any of these special programs to help underwater borrowers,” says Jason Royal.

Jason and Royal are among 11.4 million borrowers, or nearly 24 percent of all residential properties with a mortgage, that are currently in a negative equity position, according to CoreLogic. In addition, 2.3 million borrowers have less than 5 percent equity, referred to as near negative equity. But mortgage analyst Mark Hanson takes it one step further, adding that most move-up buyers need to just 6 percent extra to pay the Realtor, but 20 percent to put down on the next mortgage. He therefore puts real or “effective” negative equity at 80% loan to value; that is, you probably need about 20 percent equity in your current home to move up. He calculates about 25 million borrowers don’t meet that amount of equity. That’s twice as many underwater borrowers as most analysts and politicians purport.

“Investors and first-timers have come in and out of the market throughout history at various times for various reason, but underpinning housing has always been move-up/across/down buyers,” says Hanson. “Half of the repeat buyers have died. They are down for the count due to negative equity, “effective” negative equity, low quality credit, or legacy 2nd liens they can’t extinguish. This is a huge problem for anybody betting on ‘escape velocity’ or a ‘durable recovery’ in housing.”

The Royals could just walk away, as many like them already have. The Obama administration has been pushing its program that pays lenders to slash mortgage balances, but this week the regulator for Fannie Mae and Freddie Mac said the two mortgage giants will not participate. The administration claims reducing principal will keep borrowers from walking away. Fannie and Freddie’s regulator, Edward DeMarco, claims offering principal reduction will cause current borrowers to miss payments just to qualify. The Royals appear to prove both of them wrong. They won’t walk away and they won’t stop paying.

“I bought this house, I sat down, I signed the paperwork, I knew the numbers, and so I’ve made my payments as committed, and I don’t want to stop paying to create a situation where the bank wants to get me out of the house. I’d rather do it in a way that’s fair to both parties,” says Jason.

But the Royals also won’t move, and therefore won’t be able to contribute to the housing recovery.

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48441793?__source=RSS*blog*&par=RSS

Should Everyone Get Bonus For Paying Mortgage On Time?

Tue, 12 Jul 2011 05:41:24 +0000

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At what point is moral hazard trumped by corporate survival and the cold hard need to get people to pay their mortgages? The answer is: Now.

As home values continue to fall and more borrowers fall into a negative equity position on their home loans, those who stand to lose, banks and investors, are working to keep borrowers current.

To date, they have focused on delinquent borrowers, offering loan modifications and foreclosure alternatives, like short sales and deeds in lieu of foreclosure.

Last fall, New Jersey-based Loan Value Group launched a new business model, offering lenders and mortgage investors a way to keep their current, but underwater, borrowers current through cash incentives.

It’s called Responsible Homeowner Reward, and today, one of the nation’s largest mortgage insurers, PMI Mortgage Insurance, joined in.

Here’s how it works. Borrowers pay nothing. They sign up with the program, promising to keep current on their mortgages for a certain period, generally 36 to 60 months (LVG has worked out the contract with the participating lender/investor).

After that period, the borrower will be paid anywhere from 10 to 30 percent of the loan principal, depending on the contract, in cash. The lenders/investors pay LVG, which receives a servicing fee, and LVG pays the borrowers. Again, the borrowers pay nothing for this bonus.

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Article source: http://www.cnbc.com/id/43713068?__source=RSS*blog*&par=RSS

Your Home as Corporate Housing: It Just May Get You a Job

Sat, 04 Jun 2011 01:47:38 +0000

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Earlier this week I did a piece on television about how many job seekers are frozen in place because they can’t sell their homes to relocate for a new job.

More than a quarter of U.S. borrowers owe more on their mortgages than their homes are currently worth. We call that in a “negative equity position” or “underwater.”

“I had an example last week of someone who was on the East Coast and there was an opportunity on the West Coast. Great paying job, and the family just could not afford to take a $250,000 loss on their house. That employee, prospective employee had to forgo that opportunity,” recalled Gary Burnison, CEO of Korn Ferry International, an executive recruiting firm.

I decided to dig a little deeper into this phenomenon and found another fascinating story: Temporary corporate housing is seeing a boom, and it’s not just in big rental apartment buildings. Job seekers are actually renting out their own homes as corporate housing, so they can take a job somewhere else and not have to sell at a loss.

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Article source: http://www.cnbc.com/id/43269087?__source=RSS*blog*&par=RSS

Homeowners Drowning in Negative Equity

Mon, 09 May 2011 23:42:37 +0000

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If you have no desire or need to sell your home, then falling home prices are just on paper and likely temporary, right? Depends on how you look at it.

Falling home prices put more borrowers in a negative equity position, that is owing more on their mortgage(s) than their homes are worth. We call that “underwater,” and for good reason, because for some borrowers that sense of drowning in debt has profound implications.

Today Zillow.com reported a new high in negative equity: 28.4 percent of single family homes with a mortgage (remember, 32 percent of all homeowners do not have a mortgage).

That’s a national average, but the numbers are far worse in some of the nation’s big metros. Atlanta, for example, has a 55.7 percent negative equity rate. Denver, 41 percent, Chicago nearly 46 percent. This is on top of all the foreclosure hot spots like Phoenix, where close to three quarters of all borrowers are underwater.

Why should we care if it’s all on paper?

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Article source: http://www.cnbc.com/id/42957613?__source=RSS*blog*&par=RSS

More Borrowers Underwater: Why We Should Care

Tue, 08 Mar 2011 17:22:05 +0000

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Falling home prices at the turn of the year pushed more borrowers into a negative equity position, meaning they owe more on their mortgages than their homes are worth.

In Q4, 23 percent of borrowers nationwide, or 11.1 million, were holding “underwater” mortgages; that’s a collective $750 billion of negative equity, according to the latest survey from CoreLogic [ CLGX 18.14 +0.19 (+1.06%) ]. That’s up from 22.5 percent, or 10.8 million, in Q3, again, thanks to falling home prices. To make matters worse, 2.4 million borrowers have less than 5 percent equity in their homes, deemed as “near-negative” equity.

Of course negative equity is concentrated in the hardest hit states: Nevada (65 percent), Arizona (51 percent), Florida (47 percent), Michigan (36 percent) and California (32 percent). This as the consensus among housing watchers is that home prices will fall another 5 to 10 percent this year before slowly climbing back. That means negative equity will climb another ten percentage points.

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Article source: http://www.cnbc.com/id/41968547?__source=RSS*blog*&par=RSS