“Mortgage rates have increased more than 100 basis points since early May, and we anticipate that trend to continue, albeit gradually, during the next year,” Doug Duncan, Fannie Mae’s chief economist, said in a report Tuesday. He also expects economic growth to slow from the, “surprising” pace seen last quarter.

Regionally, home builder confidence increased the most in the Midwest and West and more moderately in the Northeast and South. Housing starts and building permit numbers for August will be released by the Commerce Department on Wednesday.

(Read more: Map: Tracking the recovery)

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

Questions?Comments? facebook.com/DianaOlickCNBC.

Article source: http://www.cnbc.com/id/101040159

Throughout the nine-county region, about 18 percent of all homes with a mortgage – or 205,819 homes – were underwater as of June 30, according to real estate service Zillow.com. That’s a big comeback from just 15 months earlier, when negative equity peaked both locally and nationally.

In late March 2012, almost a third of Bay Area homeowners with mortgages – 31.2 percent, or 355,879 homes – had loans larger than their house’s value.

About one-third of homes are owned outright with no mortgage; they are excluded from the percentage rates.

“The Bay Area is getting out of negative equity at a much faster pace than anywhere else in the country,” said Stan Humphries, chief economist for Zillow. “It was a huge percentage point decrease there. Nationally the decrease is much smaller.”

Nationwide, the negative equity rate is 23.8 percent of mortgaged homes, Zillow said.

Home prices surge

Most of the gains are because of a surge in home prices as local real estate markets have grown heated. A smaller share stems from underwater homes changing hands, either as foreclosures or short sales, thus wiping out their negative equity.

The report comes as Richmond – among the areas most underwater – considers taking the radical step of invoking eminent domain to forcibly seize underwater mortgages and slash their principal to restore some equity to the homeowners. Richmond says the goal is to prevent foreclosures and stabilize neighborhoods.

Being underwater has huge implications for a homeowner, particularly when combined with a financial shock – death, divorce, job loss or mortgage payments resetting higher, for instance.

People who have equity in their homes, the largest asset for most Americans, generally have more consumer confidence.

“Homeowners feeling like they are richer in home values does translates to them feeling a bit ‘spendier’ on the consumer side of their expenditures, which will strengthen broader economic recovery,” Humphries said.

Not surprisingly, negative equity is most prevalent in areas that were ravished by foreclosures. The Solano County communities of Vallejo, Fairfield and Suisan City have underwater rates above 47 percent of mortgaged homes.

The Contra Costa towns of Pittsburg, Richmond, Antioch, Hercules and Oakley have rates well above 40 percent. Some Oakland ZIP codes also have high rates.

Even more relevant, in those areas it’s not just that many homes are underwater, it’s that they are deeply underwater, with significant percentages owing more than twice their home’s value. That means homeowners in those areas are unlikely to reach positive equity for many years.

By contrast, in the affluent areas of San Francisco, San Mateo and Marin counties, not only are far fewer homeowners underwater, most are underwater by smaller percentages. That means they have hope that the rising market will lift them into positive equity within a short time frame.

Underwater homes are among the reasons the real estate market has faced a limited supply of inventory.

“You’re still not seeing folks who bought in 2006 selling now because they’re not above water yet,” said Kevin Kieffer of Keller Williams Realty in Danville.

Fewer short sales

As equity continues to rise, more homes should hit the market.

“Our expectation is that a lot of people recently freed from negative equity will start to sell their homes, which will ease inventory constraints,” Humphries said.

The decrease in underwater homes is also borne out in far fewer short sales – homes sold for less than is owed on the mortgage.

“Short sales have dwindled down to hardly anything now,” Kieffer said. “There are only four active (short sale listings) in central (Alameda) county.

“The banks are not pushing hard for short sales the way they once were. I think they’re waiting to ride out this market for the upside. They don’t want to have to go through the expense of a short sale.”

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/realestate/article/Bay-Area-leads-in-underwater-mortgage-rebounds-4772598.php

Throughout the nine-county region, about 18 percent of all homes with a mortgage – or 205,819 homes – were underwater as of June 30, according to real estate service Zillow.com. That’s a big comeback from just 15 months earlier, when negative equity peaked both locally and nationally.

In late March 2012, almost a third of Bay Area homeowners with mortgages – 31.2 percent, or 355,879 homes – had loans larger than their house’s value.

About one-third of homes are owned outright with no mortgage; they are excluded from the percentage rates.

“The Bay Area is getting out of negative equity at a much faster pace than anywhere else in the country,” said Stan Humphries, chief economist for Zillow. “It was a huge percentage point decrease there. Nationally the decrease is much smaller.”

Nationwide, the negative equity rate is 23.8 percent of mortgaged homes, Zillow said.

Home prices surge

Most of the gains are because of a surge in home prices as local real estate markets have grown heated. A smaller share stems from underwater homes changing hands, either as foreclosures or short sales, thus wiping out their negative equity.

The report comes as Richmond – among the areas most underwater – considers taking the radical step of invoking eminent domain to forcibly seize underwater mortgages and slash their principal to restore some equity to the homeowners. Richmond says the goal is to prevent foreclosures and stabilize neighborhoods.

Being underwater has huge implications for a homeowner, particularly when combined with a financial shock – death, divorce, job loss or mortgage payments resetting higher, for instance.

People who have equity in their homes, the largest asset for most Americans, generally have more consumer confidence.

“Homeowners feeling like they are richer in home values does translates to them feeling a bit ‘spendier’ on the consumer side of their expenditures, which will strengthen broader economic recovery,” Humphries said.

Not surprisingly, negative equity is most prevalent in areas that were ravished by foreclosures. The Solano County communities of Vallejo, Fairfield and Suisan City have underwater rates above 47 percent of mortgaged homes.

The Contra Costa towns of Pittsburg, Richmond, Antioch, Hercules and Oakley have rates well above 40 percent. Some Oakland ZIP codes also have high rates.

Even more relevant, in those areas it’s not just that many homes are underwater, it’s that they are deeply underwater, with significant percentages owing more than twice their home’s value. That means homeowners in those areas are unlikely to reach positive equity for many years.

By contrast, in the affluent areas of San Francisco, San Mateo and Marin counties, not only are far fewer homeowners underwater, most are underwater by smaller percentages. That means they have hope that the rising market will lift them into positive equity within a short time frame.

Underwater homes are among the reasons the real estate market has faced a limited supply of inventory.

“You’re still not seeing folks who bought in 2006 selling now because they’re not above water yet,” said Kevin Kieffer of Keller Williams Realty in Danville.

Fewer short sales

As equity continues to rise, more homes should hit the market.

“Our expectation is that a lot of people recently freed from negative equity will start to sell their homes, which will ease inventory constraints,” Humphries said.

The decrease in underwater homes is also borne out in far fewer short sales – homes sold for less than is owed on the mortgage.

“Short sales have dwindled down to hardly anything now,” Kieffer said. “There are only four active (short sale listings) in central (Alameda) county.

“The banks are not pushing hard for short sales the way they once were. I think they’re waiting to ride out this market for the upside. They don’t want to have to go through the expense of a short sale.”

Carolyn Said is a San Francisco Chronicle staff writer. E-mail: csaid@sfchronicle.com Twitter: @csaid

Article source: http://www.sfgate.com/realestate/article/Bay-Area-leads-in-underwater-mortgage-rebounds-4772598.php

“This coming week, market participants will be focused on Friday’s jobs report as an indicator of whether the economic recovery is strong enough to withstand an earlier-than-expected withdrawal of Fed stimulus.”

Mortgage rates are up about a full percentage point from where they were at the beginning of May. That translates into about a 15 percent jump in monthly payments for the average home buyer, or 15 percent less purchasing power, depending on how you look at it. That can certainly be make or break for some buyers, especially first-time home buyers who may have been stretching in the first place.

“Applications for new home purchases have continued to move sideways over the last month, but that may be people are rushing to buy or lock in mortgage rates before rates move even higher,” said Michelle Girard of RBS Securities. “It may be that there is going to a bit of a lag effect. I still think rates are historically low, and we are in an improving economy, although a gradual one, the recovery can continue, maybe the pace will moderate—but I do not think the back up in mortgage rates is going to derail the housing recovery.”

Article source: http://www.cnbc.com/id/100862969

Article source: http://southsanfrancisco.patch.com/groups/real-estate/p/local-home-prices-among-highest-in-bay-area

Bank repossessions, the final stage of the foreclosure process, fell 9 percent month-to-month and were down 35 percent from a year ago. Still the numbers are on pace for nearly a half a million properties to be repossessed in 2013. That’s an improvement, but still well above normal levels.

(Read More: Dire Predictions For Housing Recovery)

The picture is also mixed geographically – Arkansas (up 143 percent), Oklahoma (up 103 percent), Maryland (up 74 percent), Washington (up 71 percent), New Jersey (up 33 percent), and New York (up 21 percent) –as states that require a judge in the foreclosure process as well as those with new laws protecting borrowers, are seeing a spike in repossessions.

Article source: http://www.cnbc.com/id/100877414

“This coming week, market participants will be focused on Friday’s jobs report as an indicator of whether the economic recovery is strong enough to withstand an earlier-than-expected withdrawal of Fed stimulus.”

Mortgage rates are up about a full percentage point from where they were at the beginning of May. That translates into about a 15 percent jump in monthly payments for the average home buyer, or 15 percent less purchasing power, depending on how you look at it. That can certainly be make or break for some buyers, especially first-time home buyers who may have been stretching in the first place.

“Applications for new home purchases have continued to move sideways over the last month, but that may be people are rushing to buy or lock in mortgage rates before rates move even higher,” said Michelle Girard of RBS Securities. “It may be that there is going to a bit of a lag effect. I still think rates are historically low, and we are in an improving economy, although a gradual one, the recovery can continue, maybe the pace will moderate—but I do not think the back up in mortgage rates is going to derail the housing recovery.”

Article source: http://www.cnbc.com/id/100862969

(Read More: Short Supply Has Home Sales ‘Squeaking’ Out Gains)

While Humphries does not make the connection to rising bank repossessions in the report, his numbers do. They show inventory easing much more on the low end of the market, where distressed homes tend to be.

“The greatest year-over-year decreases in inventory were among more expensive homes, with the availability of top-tier and middle-tier properties each falling 15.7 percent year over year. The number of bottom-tier properties for sale on Zillow nationwide fell only 2.5 percent in early June compared to June 2012.”

As more bank-owned homes hit the market, inventories are likely to turn positive again in the near future.

—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/100812845

“It was a bit of a nightmare because I don’t live in Greenville…I have no desire to go back to Greenville because my life is in DC,” says Patel. “It was a lot of coordination and I am still trying to collect over $2,000 from my tenants.”

Patel finally ended up selling the home recently at a large loss. She didn’t want to do a short sale because the process is long and risky, and she didn’t want to damage her credit.

(Read More: Record High New Home Prices to Grow)

While there are no real estimates of how many “accidental landlords” now inhabit the housing market, Realtors say they are one more cause of today’s low inventory issue. Usually a buyer is also a seller, making the transaction a wash in terms of inventory, but if the buyer is not a seller, and instead becomes a landlord, inventory takes a negative hit.

Home prices have been rising steadily, up over ten percent from a year ago, according to the latest reading from CoreLogic. Prices are still well below where they were during the housing boom, when so many people bought into the market.

As millions come above water, others are far below. Forty-eight percent of borrowers in Atlanta are underwater, 37 percent in Miami, 54 percent in Las Vegas and 37 percent in Sacramento.

(Read More: Homes Selling at Fastest Pace Since Boom)

It will take many years of price gains for these homeowners to see the light of equity.

Article source: http://www.cnbc.com/id/100764601

(Read More: US Home Sales Rise to Highest Level in More Than 3 Years)

First time home buyers are already dropping out of the market, representing just twenty-nine percent of home buyers in April, according to the NAR—the lowest in two years. Rising mortgage rates, now at their highest in two months, are playing a part, but there are also fewer low-end homes to buy. The number of homes in the foreclosure process is now down nearly twenty-five percent from a year ago, according to a new report from Lender Processing Services.

Just eighteen percent of home sales in April were of distressed properties, the lowest since the Realtors began tracking this number in 2008. Compare that to thirty-five percent about a year and a half ago. Sales of homes priced below $100,000 were down ten percent in April compared to a year ago, while every other price range saw sales gains. Those who can get credit are now competing for what little there is to buy, and pushing prices well beyond expectations.

(Read More: Mortgage Applications Sink as Interest Rates Jump)

“I don’t see it lasting,” added Fairweather. “I think the minute they increase interest rates, you’ll see people pull back.”

—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/100758136