Posted by: Chris Palmeri on July 09
My colleague Prashant wrote recently about a second wave of foreclosures possibly headed our way in the second half of this year as banks tried to unload homes they can't refnance. But for now at least the big wave of bank-owned properties appears to have crested. Thank moratoriums, bailouts, reforms, and negotiations that help strapped homeowners hang on to their properties, says the property information specialists at Foreclosures.com.
They say that foreclosures nationally dropped 11% in the second quarter to 205,000. Compare that to 231,000 in the first quarter of this year. “Preforeclosures”—those folks who are late on their payments and heading in the bank-owned direction-- fell 10% in the second quarter to 494,078.
Even on a month over month basis things seems to be getting better. June’s foreclosure numbers reached record lows for the year. “These huge drops—double-digit in many parts of the nation—are a sigh of relief for the economy and housing markets as they bump along toward recovery,” says Alexis McGee, president of ForeclosureS.com. “Despite higher unemployment rates, industry and government stimuli are making a difference. It’s not just depressed properties that are selling anymore.”
McGee says the big surprise has been the 3% drop in new filings year to date versus 2008 in both foreclosures and preforeclosures. It’s not a huge drop, but it’s not the tidal wave of bad news some experts had been predicting.
Meanwhile people are buying more of the homes that are out there—foreclosures or otherwise. The Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending July 3. New loan applications increased 10.9 percent. Partly that’s due to still-low interest rates. The average rate for a 30 year fixed rate loan was 5.3%, with points of 1.13 percent.
Here is a regional breakdown of foreclosures.
Posted by: Prashant Gopal on July 08
You'd expect with job losses rising and so many Americans losing homes to foreclosure, rental buildings would be filling up with folks who can no longer afford to be homeowners. Instead apartment vacancies in the second quarter rose to 7.5% -- the highest percentage for that period in 22 years, according to today's apartment market report from Reis.
It seems that people are moving in with friends and family, or are finding roommates.
Effective rents, which include concessions, fell 1.9% from a year earlier and 0.9% from the previous quarter.
Spring is normally a good time for landlords to find new tenants, so the vacancy increase is particularly distressing for apartment owners.
San Jose, San Francisco, Las Vegas, Orange County, and Seattle had the worst effective rent drops for the quarter, according to Reis. Birmingham, Chattanooga, Louisville, Norfolk, and Syracuse had the highest rent increases.
Posted by: Prashant Gopal on July 07
A study released by the Federal Reserve Bank of Boston this week indicates that the $75 billion that the Obama administration is directing to the lending industry to encourage loan modifications probably won't work.
The four-month-old anti-foreclosure program has -- at least so far -- shown weak results. According to the Obama administration's own estimate, "over 50,000" loans were modified to make payments more affordable for borrowers at risk of default, The New York Times reported. That's a small number considering that millions of new foreclosures are expected in the next couple years.
Paul S. Willen, senior economist at the Boston Fed, told The Boston Globe that it would probably make more sense to give the money directly to struggling homeowners to cover their payments because lenders aren't eager to do loan workouts because they aren't profitable.
The Obama plan would give bonuses and other incentives to loan servicers to modify loans ($1,000 for each loan they modify and $1,000 each year that a borrower says current on their modified loan payments).
According to The Globe:
Willen said the success bonus could have the unintended effect of steering loan servicers away from those who need help the most, and toward only those borrowers most likely to recover on their own anyway. He said that if modifications increase, it won’t be by much. “My guess is they are going to help people who are OK, and they are not going to help people who are deep trouble,’’ he said.
Posted by: Chris Palmeri on July 07
I never thought I'd refer twice to the same string in an online real estate forum, but a reader of this message board at online brokerage firm Redfin.com raises an interesting issue for home buyers in some increasingly competitive markets.
Listing agents are the Realtors that represent the sellers of the home. They split the commission, paid by the seller, with the agent representing the buyer. In some markets where banks are dumping foreclosed properties the competition has gotten so fierce there are often multiple offers over the asking price. The listing agent is supposed to present the offers to his client but are they more apt to push an offer when there is no buyer's agent and they get to keep both sides of the commission?
That's the argument made by one reader named Janer on the Redfin message board.
"To Everyone out there just want to share with you the "Secret" since I can so relate to your frustration with being outbid on properties and properties going pending before you even have a chance to write an offer and I am speaking from experience - DROP YOUR AGENT and when you see/find a property you like find out who the listing agent is (you can go to www.realtor.com and type in the MLS# ; towards the bottom of the page it will tell you who the selling agent is and usually have a telephone number to contact. We had been looking for several months and being told by our buyer agent that we were being outbid like most of you or according to the listing agents they were already pending with only one or two days on market. The only offer we made and that was accepted which I wrote about in an earlier thread was when we bid way high over list price per our last agents advice to "get" the property and according to our agent the Bank would lower $$ to near the appraisal if it came in lower - WRONG! Bank wouldn't lower and we had to walk since there was such a huge gap between appraised value and our offer. We had to eat $275 for inspection and $450 for appraisal. Oh sorry, still haven't gotten over that yet... Anyways, we decided to drop our last buyer agent (mind you this was our third) and try this new strategy; we found a property we loved and contacted the listing agent all I got was his voice-mail so I left a message that we were interested in his listing and were also looking for a buyer's agent since we didn't have one. I got a call back I swear within an hour to show the property, we saw it, loved it and he wrote up our offer same day and per his advice asked for 3% closing costs paid by seller. Our offer was accepted today; day after we wrote offer at list price which comps show property is right at. Coincidence this could all happen so fast not to mention even getting an offer in considering we have been trying for months?? I think not. I will let everyone know how the process comes along but as of now my mantra is: If these listing agents want to play games to get their double commissions I say "let the games begin".
What do you think of this strategy?
Posted by: Prashant Gopal on July 06
The housing market has shown some signs of bottoming, but the next wave of foreclosures could delay any sort of recovery.
The Chicago Tribune had good piece today on another wave of foreclosures that could arrive as soon as this summer. Lenders are now moving ahead with foreclosures that had been delayed by self-imposed and state-government moratoriums that expired in the past few months.
First-time home buyers and investors are responsible for the spike in sales, especially in hard-hit California, Florida, Nevada, and Arizona. But the inventory of bank-owned homes is now likely to grow, putting increasing pressure on already low prices. And the rising unemployment rate will only compound the situation.
"The rapid pace of layoffs is of particular concern," the Tribune article reads. "Homeowners who have lost jobs have little chance of getting their mortgages modified. That puts many homeowners on a collision course with banks that are preparing to take a more aggressive stance on loan modifications."
