homesmillbrae.com » Slowdown

As investors shift, housing is the new stock market

Wed, 28 Aug 2013 00:07:29 +0000

Another large-scale investor, Aaron Edelheit, CEO of Atlanta-based The American Home, has a different take on the slowdown in investor demand.

“Last year, the amount of institutional investors activity exploded. What you’re seeing now is the natural digestion of that exponential growth. That means maybe a slowdown in how many home they acquire, it may mean letting go employees in areas where it doesn’t make sense.”

These investors are moving their focus from acquisition to profitability, hoping to show Wall Street that the business model is not only feasible but highly profitable. The American Home now boasts 2,500 homes in Atlanta; Nashville, Tenn.; Orlando and Tampa, Fla.; and Charlotte, N.C.

Edelheit said rental demand is tremendous, and management is working well, but the model is still too green for the larger investment community. “You look at the stock prices of the companies that are public, and it’s pretty clear that Wall Street remains unconvinced in the single family rental model, and I think it’s natural for these firms to start right sizing and make sure that they are profitable.”

That could mean consolidation, with some of the larger firms that have stronger management structures buying up smaller players. Large-scale investors are still a relatively small segment of the 14 million single family rental market, but it appears they are here to stay, despite the recent volatility. Smaller investors, however, may be moving on, having exhausted their cash and their credit opportunities.

(Read more: Home prices across the US defy gravity)

Last spring, Redfin was running seminars for small “armchair” investors on how to buy and manage single family rentals. The classrooms were packed.

“There was a surge because people read the papers—in March, April, there was a bull market in housing. Suddenly at every cocktail party somebody wanted to make a killing in real estate,” Kelman said. “Some wanted to ride the wave, but some just caught it late.”

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

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/100988740

Housing Recovery Leaves Some Behind

Fri, 08 Mar 2013 08:11:42 +0000

To add to the delays, now some non-judicial states are seeing a big jump in backlogs due to new state laws that while attempting to safeguard borrowers, are delaying the foreclosure process in general.

Nevada instituted a new law criminalizing faulty foreclosures. Banks are taking a big breather there, resulting in the foreclosure backlog doubling in the last 8 months. Massachusetts, a non-judicial state, saw a similar jump after new state foreclosure legislation, and California’s Homeowner Bill of Rights, modeled on Nevada’s law, went into effect in January 2013, so it too will likely see a slowdown in the clearing of distressed loans.

It all brings into question the recent jump in home values, which is being caused by a huge drop in supply of distressed homes.

(Read More: Taking The Real Estate Recovery Local)

Sale prices of homes jumped nearly 10 percent in January, according to CoreLogic. Even with the price surge, inventories continue to drop dramatically across the nation, perhaps because would-be sellers want to see just how high prices will go before testing the waters.

Housing bulls seem unconcerned about the so-called “shadow inventory” of distressed properties, but perhaps they should be. Of the loans that were in foreclosure in January 2012, 42 percent still are, according to LPS. Just 33 percent moved to bank repossession or other forms of liquidation.

In addition, while new mortgage delinquencies are falling in non-judicial states, they are increasing almost 20 percent in judicial states, according to Lender Processing Services.

“The line that we would draw goes through home prices,” Blecher speculated. “If those back logs are having any impact on home prices that could drive new problem loans as well.”

(Read More: Pending Home Sales Soar Despite Rough Winter)

Article source: http://www.cnbc.com/id/100533234

Seasonal slowdown? Not in the Bay Area

Fri, 26 Oct 2012 01:34:18 +0000

Real estate in some parts of the nation experiences the malaise of fall, buyers cooled off by chilly weather and shorter days, distracted by the impending holiday season. But not the Bay Area. This September, Bay Area property sales made improvements in three key areas: days on the market (DOM); listing prices; and, most importantly of all, sales prices.

ZipRealty recently released September 2012 data in comparison with 2011 for each county in the Bay Area. And that data shows a very hot market, with no sign of seasonal slowdown whatsoever.

Want some local proof? Here are three San Francisco listings in which the sellers ask a million dollars or more above what they paid for them. In only one case, this first example, has the current seller been in the home more than 2 years.

Number one, Lower Pac Heights

On Buchannan Street in Lower Pac Heights, a splendid Victorian 5 bedroom offers evidence. Public records show it sold for $1,550,000 in 2005. Now it’s listed at $2,595,000—a substantial increase indeed, intimating the home rose over $100K a year in value every year since 2005.

Number two, SoMa

Or how about the first ever re-sell of an Infinity Tower duplex? This unit at 338 Spear offers 3 bed, 3 baths, jaw-dropping views, and a price to match. After having sold for $1,760,000 2 years ago, this property is now listed at $3,200,000- an increase of over 80% in just 2 years.

Number three, Cow Hollow

Or, this Cow Hollow listing, 3 bedrooms, easy walk to Presidio. Yes, the official write up hints at extensive remodeling (most of it in white, per photos). But that remodeling alone wouldn’t justify new price—we also need that crazy Bay Area real estate magic: according to sales history, the property sold $2,200,000 in 2010. Now, it’s $4,750,000.

So we ask you, readers, what’s next? Low inventory forcing prices up in every corner of the Bay, no matter what the season… how much higher can they go?

Article source: http://blog.sfgate.com/ontheblock/2012/10/25/seasonal-slowdown-not-in-the-bay-area/

Home Improvement Shows Gains—But May Not Last

Tue, 14 Aug 2012 19:30:32 +0000

The nation’s largest home improvement retailer, Home Depot, surprised the Street on Tuesday, beating profit estimates for the last quarter. It is also raising earnings outlooks for fiscal 2012.

It’s banking on continued improvement in market share and in the housing market, especially in California and Florida, which were two of the worst hit states in the recent crash.

Those two states were among the top sales performers for Home Depot
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] in the quarter. (Related: Home Depot Earnings)

“These are encouraging signs of stabilization in the housing market,” said Home Depot Chairman and CEO Frank Blake on an investor conference call.

As some analysts claim the housing market is rising from the bottom, citing the highest level of housing starts in three years, others caution that the ills still plaguing the market stand as severe headwinds to the home improvement retailers in general.

The foreclosure slowdown to a five-year low, said California-based analyst Mark Hanson, could hurt the likes of Home Depot. He cites the 22 percent (month-over-month) July drop in home sales in Phoenix as an example.

“The Phoenix region is a leading indicator to other more ‘distressed’ regions that made up most of the dead-cat bounce in Q1 and Q2 housing. The foreclosure rehab trade is now a headwind to Home Depot,” Hanson said. (Related: Why Drop in Foreclosures Is Bad for Housing Market)

Hanson expects July existing home sales to come in at the lowest annualized rate of the year. While few others are predicting such a “triple-dip,” Hanson has been warning for months that a drop in distressed supplies would stem the rebound in home sales, and it did just that in May and June.

This is not to say that the foreclosure crisis is gone, just perhaps delayed for the next few quarters. There are still 5.7 million loans that are either delinquent or in the foreclosure process, according to the latest reading from Lender Processing Services. While not all of those loans will go to final foreclosure, many of them will, and there is a huge cadre of hungry investors waiting to buy them up and do quick rehabs in order to rent them out.

Along with foreclosure issues, rising mortgage rates could also thwart some home improvement gains. Record low rates have prompted a surge in refinancing, giving many Americans extra cash to spend on remodeling. Home Depot cites sales gains in kitchen and bath, some of the first projects homeowners undertake when they have the means to do so.

“Today’s rates on the street are the highest since the last week in May, back at 4 percent,” said Hanson (quoting no-point to no-cost loan rates).

He also also noted most of those who could benefit from rates below 4 percent already refinanced in June and July. “Thus the cliff dive in weekly mortgage applications over the next three weeks will be one for the record books.”

—By CNBC’s Diana Olick

Questions? Comments? And follow me on Twitter @Diana_Olick

Article source: http://www.cnbc.com/id/48662461?__source=RSS*blog*&par=RSS

Mortgage Interest Deduction Big in Budget Play

Mon, 25 Jul 2011 21:36:34 +0000

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It’s not like the housing market needs any more headwinds, so here’s the government potentially giving us another: The mortgage interest deduction is back in big play in the budget deal.

It never exactly came off the table, but the bigger the budget deal, the more likely the mortgage deduction will take a bigger hit.

Right now, home loan borrowers can deduct the amount of interest they pay on their mortgages from their taxable income. This goes for principal residences and second homes. The interest deduction is capped at the first million dollars of debt on the home. For home equity loans it’s capped at $100,000 in debt.

The deduction costs the U.S. Treasury about $100 billion a year. There are proposals now to either reduce the cap to $500,000 and/or to eliminate the deduction on second homes. Eliminating the deduction on second homes would save about $15 billion, and reducing the cap to $500,000 would save another $15 billion, according to economist William Wheaton at MIT. 10.5 percent of existing home sales in June were of homes over $500,000 according to the Mortgage Bankers Association.

Then there’s the idea from the President’ bipartisan commission of turning the interest deduction into a 12 percent credit, limited to $500,000 in mortgage debt, only on primary residences. That could save the Treasury $65 billion.

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Article source: http://www.cnbc.com/id/43882179?__source=RSS*blog*&par=RSS

Foreclosures slow sharply in Bay Area in April

Thu, 12 May 2011 11:55:41 +0000

Foreclosure activity for houses in the Bay Area dropped during April, according to a new report set for release Thursday — but that shouldn’t be taken as a sign of an improving market, housing experts said.

Compared with the same month a year ago, foreclosure activity plunged in Alameda County by 27.7 percent, in Contra Costa County by 19.9 percent, in Solano County by 32.9 percent and in San Joaquin County by 32.9 percent, RealtyTrac reported.

“This slowdown continues to be largely the result of massive delays in processing foreclosures rather than the result of a housing recovery that is lifting people out of foreclosure,” said James Saccacio, chief executive officer of RealtyTrac.

In the Bay Area, total foreclosure activity plunged in April by 20.5 percent compared with the same month a year ago. Compared with March of this year, Bay Area foreclosures declined 19.3 percent, RealtyTrac said. The report defines foreclosure activity as the combined totals of notices of default, notices of trustees sale and repossessions by lenders, different stages in the foreclosure process.

Other experts agree that the lull isn’t a case of a thaw in the chilly housing market.

“It’s more a bureaucratic and paperwork slowdown,” said John Holmgren, manager of the Oakland office of Holmgren Associates/Opes Advisors. “A lot of lenders have slowed things down after the controversy over how foreclosures were being handled,” referring to the

so-called robo-signing scandals in which banks failed to follow the rules for processing foreclosure paperwork.
During the January-March quarter of this year, a foreclosure was taking a nationwide average of 400 days to complete. That was up from 340 days in the first quarter of 2010. In the first quarter of 2007, the average processing time was 151 days.

Still, the present lull could be temporary, RealtyTrac warned.

“The foreclosures won’t all flood the market at one time,” Blomquist said. “We do expect a gradual increase in foreclosures in the next few months.”

Santa Clara County foreclosures fell 13.8 percent, San Mateo County was down 28.1 percent compared to April 2010. Foreclosure activity fell 1.1 percent in San Francisco and rose 1.9 percent in Marin County, RealtyTrac reported.

“Unfortunately, most of the forecasts from the real estate associations suggest that the foreclosure problem is expected to continue for a pretty lengthy period,” Holmgren said.

That could keep a lid on any improvement in home prices.

“We won’t see any advance in values until it’s clear that the foreclosure situation has bottomed out,” Holmgren said.

Even worse, if the current slowdown in foreclosures is the result of paperwork issues, that may dash hopes of a housing market rebound.

Ultimately, new owners will be needed to buy homes with delinquent or failed loans.

“The market has to really absorb all of these distressed properties one way or another,” RealtyTrac’s Blomquist said. “Until they are gone, they will continue to weigh down the market and keep housing from truly recovering.”

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos.

Foreclosures decline
Foreclosure activity dwindled in the Bay Area during April compared to April 2010 and March 2011.
Area All foreclosures * % change, one year % change, one month
Bay Area 10,629 -20.5 -19.3
Alameda County 2,422 -27.7 -28.9
Contra Costa County 2,624 -19.9 -15.0
Marin County 209 +1.9 -20.5
Napa County 214 -11.7 -6.0
San Francisco 469 -1.1 +6.2
San Mateo County 814 -28.1 -9.3
Santa Clara County 1,798 -13.8 -22.0
Solano County 1,288 -32.9 -31.6
Sonoma County 791 -7.1 +0.3
San Joaquin 2,111 -21.2 +2.0
California 55,869 -19.9 -7.3
* Combination of notices of default, notices of trustee’s sale, and final foreclosure
Source: RealtyTrac

Article source: http://www.mercurynews.com/breaking-news/ci_18043751

Foreclosure Delays Plague Housing Recovery

Thu, 12 May 2011 11:55:39 +0000

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Foreclosure activity decreased in April for the seventh straight month, bringing total foreclosure activity to a 40-month low, according to a new report from RealtyTrac. This is not to say that default notices, scheduled auctions and bank repossessions aren’t running well above the norms, with one in every 593 US households receiving a foreclosure filing in April. The numbers are actually quite deceptive.

“This slowdown continues to be largely the result of massive delays in processing foreclosures, rather than the result of a housing recovery that is lifting people out of foreclosure,” notes RealtyTrac CEO James Saccacio in a statement.

There are currently 3.7 million loans that are 90 days or more delinquent, according to RealtyTrac’s Rick Sharga. Nationwide, completed foreclosures (REOs) took an average of 400 days from initial default notice to REO in the first quarter of this year. That’s up from 340 days a year ago and more than double the 151 days in 2007. At the current rate, it would take three to four years to move those loans through the foreclosure process. In some states, the picture is far worse.

In New York and New Jersey, it takes more than 900 days to get through the foreclosure process from start to finish, in Florida 619 days, and in California 330 days, according to RealtyTrac.

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Article source: http://www.cnbc.com/id/42994346?__source=RSS*blog*&par=RSS

Bay Area foreclosure slowdown continues

Thu, 10 Mar 2011 10:44:30 +0000

Foreclosure activity in both the East Bay and the Bay Area fell in February as lenders made changes to foreclosure procedures in response to the robo-signing scandal.

February’s numbers were a reversal of what happened in January, when the number of Bay Area homeowners who received a notice of foreclosure spiked almost 40 percent from a year ago, according to a report released Thursday by RealtyTrac.com.

“We expected (the January increase) because we thought there was an artificial low in October, November and December that was caused by the lenders slowing down because of the robo-signing controversy,” said Daren Blomquist, director of marketing and communications for RealtyTrac.com.

“We honestly expected (January’s) increases to continue into February. They did not, which indicates to us that what started out maybe as a paperwork issue (in states requiring lenders to use the courts to foreclose on homeowners) seems to be rippling out and becoming a much bigger issue that’s just miring down the lenders and keeping them from foreclosing.”

California is a nonjudicial foreclosure state, which means that lenders do not have to use the courts to foreclose. The robo-signing scandal surfaced in September in judicial foreclosure states.

The upshot is that lenders are “limited in the number of properties they can process each month,” Blomquist said. “It’s affecting

all stages of the process, and not just the final stage.”
In Alameda County, 559 notices of default — the first stage in the foreclosure process — were filed in February. That’s down 38.4 percent from January, and a drop of 42.2 percent from a year ago. Another 378 homes became bank-owned properties, the last stage in the process. That’s a 22.7 decrease from January, but a 4.4 percent increase from a year ago.

In Contra Costa County, 684 notices of defaults were filed, a 39.9 percent drop from January, and a 42 percent decline from year ago. Another 526 homes became bank-owned, a 17.4 percent drop from January and a 15.7 percent decline from a year ago.

In the Bay Area, which RealtyTrac.com. defines as Alameda, Contra Costa, Marin, San Mateo and San Francisco counties, 1,769 notices of defaults went out in February, a 32.4 percent drop from January and a 39.9 percent drop from a year ago. Another 1,150 homes became bank-owned, a 15.7 percent drop from January and a 4.2 percent decline from a year ago.

The slowdown is part of the “ongoing saga” of the foreclosure story that has nothing to do with fewer homeowners falling behind on their mortgage, said David Schubb, a real estate broker and president of The Schubb Group, a Pleasant Hill-based real estate brokerage.

“It’s not because the loan delinquency issues have disappeared or are getting better,” he said.

In addition to lenders reworking procedures to take back homes in response to the robo-signing scandal, foreclosures also have slowed in response to loan modification programs and short sales. Banks also are holding off on foreclosures to limit the number of homes that are put on the market at one time. Observers expect the slowdown will have to end sometime this year.

Nationwide, a total of 63,165 homes received a notice of default, a 16 percent drop from January and a 41 percent decrease from a year ago. Another 64,643 homes were taken back by banks, down 17 percent from January, and an 18 percent decrease from a year ago.

Contact Eve Mitchell at 925-952-2690.

FORECLOSURE ACTIVITY, MARCH 2011
HEADERS
Notice of defaults yr/yr Mar. % change
Notice of trustee sale yr/yr Mar.% change
Bank-owned properties yr/yr Mar. % change
All foreclosure activity yr/yr Mar.% change

CONTENT
Alameda
559 -42.2%
765 -8.7
378 +4.4
1,702 -21.5

Contra Costa
684 -42.0%
739 -18.1
526 -15.7
1,949 -28.0

San Joaquin
562 -31.3%
563 -18.9
493 +13.6
1,618 -16.9

Solano
356 -33.8%
402 -8.4
266 +17.2
1,024 -15.0

Source: www.realtytrac.com

Article source: http://www.mercurynews.com/breaking-news/ci_17575692