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Election and Housing: Is Your Home’s Value Better Off?

Tue, 06 Nov 2012 08:10:25 +0000

Are we better off today than we were four years ago? That is the constant question on the eve of yet another tight presidential race. From the perspective of home prices, the answer is, as always, it depends on where you live. Some cities are faring far better than others, and some believe that home prices are not entirely finished correcting.

According to the widely watched SP/Case Shiller Home Price Indices, home values in the nation’s ten largest cities were down 2.4 percent from January 2009 through August 2012 seasonally adjusted. For the top twenty cities, they are down 3.7 percent seasonally adjusted.

These two composites, however, are still both off nearly 30 percent from the peaks in the summer of 2006.

Remember, also, that we saw a bump in home prices in 2010 from the Obama administration’s home buyer tax credit. Home prices on the 20-city composite were up 1.5 percent in August 2010, not seasonally adjusted, from January 2009, but then of course they dropped again, and we are still, today, below that level of the tax credit surge. (Read More: Home Prices Rise, but Analysts See Pressure Ahead.)

So can an incumbent president win a second term when home prices are lower than they were when he took office? I asked SP’s David Blitzer:

“Our data go back to 1987 for the 10-City Composite, so there are a couple of hints — Bush-1 took office with the index at 77.99 In January 1989; in November 1992 it was 77.09, and he lost. In August 1992 (comparable to August 2012, our latest data point) the index was 77.76, also down by the slightest amount. Clinton, who was re-elected saw home prices rise from an index of 76.56 to 78.23 during his first term — up 2.2 percent over four years. The Clinton increase points out how large the price moves in the 2000s were. In the Carter years inflation was running close to double digits so home prices were most likely rising in nominal terms.”

(Read More: Cities With the Most Affordable Homes.)

While SP/Case-Shiller’s top ten and top twenty city composites are basically flat since President Obama took office, the national quarterly index is up 2.6 percent not seasonally adjusted, and consumer confidence in home prices is higher than it has been.

“Consumers’ average home price change expectation is 1.5 percent, consistent with recent periods and marking nearly a full year in which home price expectations have been positive,” according to Fannie Mae’s National Housing Survey, released in early October. “Thirty-seven percent of those surveyed expect home prices to go up in the next year, the highest level since the survey’s inception in June 2010.”

Confidence is up and national home price statistics are up, but 10.8 million, or 22.3 percent of all homeowners with a mortgage, owe more on that mortgage than their home is currently worth, according to CoreLogic. An additional 2.3 million borrowers have less than 5 percent equity in their homes, making it very difficult to move up or even out.

Still, all real estate is local, so take a look to see where you might be:

-By CNBC’s Diana Olick; Follow Her on Twitter @Diana_Olick and Facebook.
Questions? Comments? RealtyCheck@cnbc.com

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Article source: http://www.cnbc.com/id/49694810?__source=RSS*blog*&par=RSS

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

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US Home Builders

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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

Why Rise in Home Prices May Not Mean Much—Yet

Wed, 01 Aug 2012 23:40:12 +0000

Average home prices through May increased for the second month in a row, according to the latest SP/Case-Shiller Home Price Indices, which measure both the top ten and top twenty housing markets in the US.

Prices are still down from a year ago, but those annual drops are improving.

“On a monthly basis, all 20 cities and both composites posted positive returns and 17 of those cities saw those rates of change increase compared to what was observed for April. Seventeen of the 20 cities and both Composites also saw improved annual rates of return,” notes SP’s David Blitzer.

“We have observed two consecutive months of increasing home prices and overall improvements in monthly and annual returns,” he added. “However, we need to remember that spring and early summer are seasonally strong buying months so this trend must continue throughout the summer and into the fall.”

This is not the first time since the initial home price collapse in 2006 that we have seen prices rise, only to fall again. We saw large price gains in 2009, thanks to the home buyer tax credit, and we saw slight gains last spring due to some seasonality and a big run on distressed properties by investors.

So how do we know if the latest gains we are seeing are here to stay?

Much of the answer lies in foreclosures. Many markets have seen their supply of foreclosed properties fall dramatically, due to huge investor demand.

Take Phoenix, for example, where investors claim there is just not enough to buy. Home prices there are up 11.5 percent from a year ago.

Miami and Tampa are also seeing solid gains. But Atlanta continues to be the weakest spot; as foreclosure supplies there surge, prices are down 14.5 percent.

Foreclosures are falling nationwide, but the crisis is far from over, and the concern is that all the delays in foreclosure processing will continue to wreak havoc on home prices for at least another year, if not longer.

There were 1.4 million homes in some stage of foreclosure in June, down slightly from 1.5 million in June of 2011, according to a new report from CoreLogic.

Completed foreclosures, however, fell more dramatically, down 24 percent from a year ago. This is likely due to renewed loan modification efforts by lenders, as well as new state legislation, that are keeping many homes from final foreclosure.

The big questions continue to be how long these foreclosure delays will last and how successful foreclosure alternatives and loan modifications will ultimately be. And these numbers don’t include loans that are delinquent but not yet in the foreclosure process. Those number around 3.6 million according to Lender Processing Services.

With so many different home price surveys showing gains this spring, and in the absence of a home buyer tax credit, it would appear that this price recovery is the real thing.

But there is in fact one government stimulus in play that some have been discounting, and that is record low interest rates. Those low rates should be giving home buyers even more purchasing power than we are seeing in the price numbers.

The concern is that these price gains are largely on the low end, distressed sector, where the bulk of home sales are right now. Lack of supply is pushing prices up there, but not, perhaps, in the rest of the market, where sales are still sluggish, and buyers need mortgages, unlike so many all-cash investors.

While some housing analysts have already called a bottom to home prices, others warn we may not have seen the last of the losses.

The spring market was slightly better than expected, especially for the home builders, but we have to remember that the builders and the overall housing market are not necessarily the same.

Home builders may be seeing gains due to the drop in supply of distressed properties, but that drop in supply could in turn slow the existing home sales market and push price numbers down yet again.

-By CNBC’s Diana Olick
Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48417387?__source=RSS*blog*&par=RSS

Home prices fall in US, SF region

Thu, 01 Dec 2011 07:05:13 +0000

Home prices nationally and in the Bay Area fell more than expected in September and in the third quarter, according to a closely watched index. The continued declines show a still-struggling housing market that is unable to give a boost to the economy.

Nationally, residential real estate prices fell 3.9 percent in the three months ended in September compared with the same period last year, according to the SP/Case-Shiller Home Price Indices. Compared with a year ago, prices fell in 18 of the 20 metropolitan areas tracked by the index, including the San Francisco area, which was down 5.9 percent in the quarter compared with 2010.

“There is no significant momentum, no signs of the housing market contributing to the economy anytime soon,” said Maureen Maitland, vice president of SP Indices, which produces Case-Shiller. “The fact that so many markets were negative does cause us to pay attention. We are on very shaky ground.”

While some seasonal weakness is to be expected after the prime spring selling season, “weakness and negativity do not have to be synonymous,” she said.

In other words, while flat prices might not stir concern, the continued price declines do.

The San Francisco metropolitan area – which Case-Shiller defines as the counties of Alameda, Contra Costa, Marin, San Francisco and San Mateo – is actually among the better-performing regions, despite falling more than the national average.

“San Francisco (metro) has recovered 13 percent from its low in 2009,” Maitland said. “Since then, its prices have been largely increasing, although they have recently fallen down a bit on a year-over-year basis. But two years ago, when there was some recovery, San Francisco was one of the markets that was doing better than others.”

While the nation has undergone a “double dip” in which prices fell, recovered and then fell further, San Francisco has not, she said.

Case-Shiller tracks sales of the same single-family houses over time. It compares changes with a base value of 100, which represents values as of January 2000.

The San Francisco index is now 133.22, meaning that prices here are 33.22 percent above their year 2000 level. The region’s index peaked at 218.37 in May 2006 and hit a low of 117.74 in March 2009.

“Housing is struggling to get up off the mat everywhere,” said Jim Diffley, chief regional economist for IHS Global Insight. “The Bay Area in some ways has been more fortunate than its Sun Belt neighbors. Its economy is doing relatively better.”

IHS predicts that the California market is near bottom and that prices nationally may drop another 7 percent before turning around in mid-2012. “We may have a little further to fall in other parts of the country before we finally get some growth in 2012,” Diffley said.

Patrick Newport, U.S. economist for IHS, said the continued weakness in sales of existing homes bodes poorly for recovery in construction of new homes, typically a major source of job creation. The country is on track to build 600,000 new homes this year, compared with a normal market of 1.4 million new homes.

“This year is probably going to be the worst we’ve ever had for new-home sales and new-home starts,” he said. “Normally, in a recovery, housing is a key sector that gets the economy back on track. Building more homes creates more jobs and has a positive feedback loop.”

The only two regions where prices increased year-over-year were Detroit, where they had tumbled so drastically that they may have hit bottom, and Washington, D.C., where federal jobs buoy the local economy, Maitland said.

Prices nationally rose 0.1 percent in the third quarter compared with the second quarter, which means they were essentially flat.

E-mail Carolyn Said at csaid@sfchronicle.com.

This article appeared on page D – 1 of the San Francisco Chronicle

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/30/BUOG1M5MCG.DTL&type=business

Biz Break: A ‘welcome shift’ in S.F., other big metro housing markets?

Wed, 29 Jun 2011 08:42:46 +0000

Today: The real estate market may be turning up in the San Francisco region and other big metro areas. Plus: Google (GOOG) introduces Google+ social features. And: MySpace is reportedly about to be sold.

An upturn in the real estate market?

As warmer weather has brought out buyers, home values have turned upward in 13 of the nation’s 20 largest metro areas, according to the latest Standard Poor’s/Case-Shiller Home Price Indices report released today.

The San Francisco-Oakland-Fremont metro area — which includes

relatively expensive San Francisco, San Mateo and Marin counties and more affordable communities in Alameda and Contra Costa counties — had the nation’s second-biggest gain in April, with prices climbing 1.7 percent from the month before. However, home values were still down 5.5 percent from April 2010.
Nationwide, home prices increased 0.7 percent on average in the 20 metro areas after reaching a “double dip” low in March.

“In a welcome shift from recent months, this month is better than last — April’s numbers beat March,” David M. Blitzer, chairman of SP’s index committee, noted in the report.

“However, the seasonally adjusted numbers show that much

of the improvement reflects the beginning of the spring-summer homebuying season,” Blitzer said. “It is much too early to tell if this is a turning point or simply due to some warmer weather.”
While San Jose is the Bay Area’s biggest city, its metro area isn’t included in the Case-Shiller report because it’s not one of the nation’s 20 largest.

Google vs. Facebook?

Mountain View Internet juggernaut Google revealed details today of its effort to compete with Palo Alto social networking powerhouse Facebook.

In a blog post, Vic Gundotra, Google’s senior vice president of engineering, described “the Google+ project” as a way “to make Google better by including you, your relationships and your interests.”

Google+ is invitation-only for now. According to the http://plus.google.com site, its features include:

Circles, which groups people by relationships, allowing Google+ members to “share precisely with the right folks,” Gundotra wrote.

Hangouts, or group chats “combining the casual meetup with live multiperson video.”

Sparks, which sends users videos and articles that Google+ determines they might like.

Huddle, which creates a simpler group chat to allow for quick decisions, such as which movie to see.
MySpace sale?

Speaking of social networking, media giant News Corp. reportedly is seeking offers to sell MySpace. According to our friends at The Associated Press, a deal may come this week.

MySpace, you might recall, was the music-oriented hub of cool kids online, but has struggled as it tried to compete with Facebook.

According to AP, which quoted “a person familiar with the matter,” three possible bidders for MySpace are Specific Media, Golden Gate Capital and Austin Ventures.

A potential buyer would keep MySpace’s emphasis on music, but probably would cut more than half of the Los Angeles site’s staff.

Silicon Valley tech stocks

Up: Apple (AAPL), Oracle (ORCL), Google, Intel (INTC), Cisco Systems (CSCO), Hewlett-Packard (HPQ), eBay (EBAY), Gilead Sciences (GILD), Yahoo (YHOO).

Down: VMware.

The tech-heavy Nasdaq composite index: Up 41.03, or 1.5 percent, to 2,729.31.

The blue chip Dow Jones industrial average: Up 145.13, or 1.2 percent, to 12,188.69.

And the widely watched Standard Poor’s 500 index: Up 16.57, or 1.3 percent, to 1,296.67.

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Frank Russell at 408-920-5876. Follow him at Twitter.com/mercspike.

Article source: http://www.mercurynews.com/news/ci_18369846?source=rss

Predicting Home Prices Is Now Impossible

Thu, 16 Jun 2011 09:58:25 +0000

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When Robert Shiller, co-creator of the SP/Case-Shiller Home Price Indices , speaks, he tends to make headlines, and yesterday was no different.

Claiming that he wasn’t making any predictions, he predicted that home prices could fall another 25 percent.

“That wouldn’t surprise me at all,” he hedged. And there was the headline, tragic as it is.

I happened to be at the conference yesterday where he said that. In fact, I was a speaker/panelist at the Standard and Poors “Housing Summit 2011: Boom, Bust and Beyond.” And, no offense, but that wasn’t the headline. What really struck me was what he said right before that.

“Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can’t forecast the future because you have no comparison.”

That was not only the headline, but the theme of the conference, as I sat on a panel with economists from SP, Experian and Columbia Business School. Chip Case was there as well, disagreeing with Shiller on several points.

Audience members, largely from the finance industry, kept asking the same question in different ways, ‘When is this all going to get better??’

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Show Entire Article

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Article source: http://www.cnbc.com/id/43354956?__source=RSS*blog*&par=RSS

Predicting Home Prices is Now Impossible

Fri, 10 Jun 2011 23:31:04 +0000

Page 1 of 3 | Next Page
Show Entire Article

When Robert Shiller, co-creator of the SP/Case-Shiller Home Price Indices , speaks, he tends to make headlines, and yesterday was no different.

Claiming that he wasn’t making any predictions, he predicted that home prices could fall another 25 percent.

“That wouldn’t surprise me at all,” he hedged. And there was the headline, tragic as it is.

I happened to be at the conference yesterday where he said that. In fact, I was a speaker/panelist at the Standard and Poors “Housing Summit 2011: Boom, Bust and Beyond.” And, no offense, but that wasn’t the headline. What really struck me was what he said right before that.

“Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can’t forecast the future because you have no comparison.”

That was not only the headline, but the theme of the conference, as I sat on a panel with economists from SP, Experian and Columbia Business School. Chip Case was there as well, disagreeing with Shiller on several points.

Audience members, largely from the finance industry, kept asking the same question in different ways, ‘When is this all going to get better??’

Page 1 of 3 | Next Page
Show Entire Article

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Article source: http://www.cnbc.com/id/43354956?__source=RSS*blog*&par=RSS