Orange County’s home pricing got hit with autmun’s chill, as builders had a record-worst sales month.
DataQuick reported this morning that 2,297 residence sold in November. That is up 1.8% from a year ago. That gain came at a price. Literally.
Read it allMedian selling price was $400,000 — the lowest since April 2009 and off 8.0% in a year. Orange County’s median first hit $400,000 in May 2003
Last month the median price paid for all new and resale Southland houses and condos sold was $275,000, up 1.9 percent from $270,000 in October but down 4.2 percent from $287,000 in November 2010.
The regional median has declined year-over-year for the past nine months – since March. San Bernardino County’s 2.3 percent year-over-year gain in its median sale price in November marked the first time since January this year that any Southland County posted an annual gain in its overall median.
A total of 16,884 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in November. That was up 0.3 percent from 16,829 in October and up 4.2 percent from 16,208 in November 2010, according to San Diego-based DataQuick.
Last month 17.8 percent of all home sales were for $500,000 or more – the lowest portion since May 2009, when it was 17.4 percent. November’s share of $500,000-plus sales was down a hair from 17.9 percent in October and down from 21.1 percent a year earlier. The low point for $500,000-plus sales in this cycle was in January 2009, when only 13.8 percent of sales crossed that price threshold. Over the past 10 years, a monthly average of 27.9 percent of homes sold for $500,000 or more.
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Regionally, 95 of the 156 of the metropolitan statistical areas covered by Zillow experienced monthly home value depreciation and 39 metros showed monthly home value increases. Twenty-two metros remained flat.
Some of the nation's hardest hit areas showed some stabilization. In Miami, home values were flat on a monthly basis while Phoenix and Detroit saw monthly gains of 0.2% and 1%, respectively.
Read it allBut the housing market is far from healthy with only 10 metros seeing home value appreciation on a yearly basis with seven of those metros also having monthly appreciation, including Fort Collins, Colo., Madison, Wis., and Oklahoma City.
JPMorgan Securities concluded that if existing home sales fail to reach the 5.5 million level next year, the nation could be looking at another 5% decline in home prices in 2012. Overall, by the end of 2011, home prices will have dropped 3% this year and are expected to fall another 1.6% in 2012.
While the report is not overly optimistic, it does take note of several positive developments, including higher demand in November, increased consumer confidence and an uptick in job gains during the month.
"Even though as a whole, this group hasn’t experienced returns this low since June 2011, each of the 15 markets continued to post quarterly gains," the Clear Capital report states. "The overall performance of the group has stabilized and tightened, with only 3.1% separating the highest performing market, Washington, D.C., from the 15th place market, Cleveland."
Four Florida markets — Orlando, Tampa, Jacksonville and Miami — continue to keep their positions among the highest performing markets quarter-over-quarter, rebounding from the steep drops and high levels of foreclosures they experienced over the past two years, the report states.
According to Clear Capital, Orlando and Miami also show strong year-over-year performance, topping the list with 5.9% and 5.4% growth respectively.
"The strong upward price movement for these Florida markets has correlated with a 12% drop in REO saturation over the last year at the state level," the report says. "The growth in Florida’s MSAs must be described in proper perspective against the state’s precipitous -59.1% drop in prices from peak values in 2006 to today."
LinkAtlanta is now the market feeling the most acute drop in housing. The city is down nearly 20% year-over-year and the REO saturation rate is reaching 43%, second only to Las Vegas and Detroit.
The third quarter brought another dose of persistently disappointing home prices, with the U.S. national home price index up only 0.1% from the second quarter and down 3.9% from year-ago figures, the S&P Case-Shiller report said Tuesday.
The national index decline is not as steep as the 5.8% decline posted in the second quarter, but home prices overall are back to first quarter of 2003 levels.
And some analysis.The report found that the annual rate of change in 14 of the 20 metropolitan statistical areas covered by the report improved in September when compared to August.
The relative lack of closed transactions might be exacerbating the downside, the report said.Read it all
Surveys released by the Kansas City and Chicago Federal Reserves Tuesday find that despite a struggling U.S. housing market, agricultural land in their districts is booming. And the run-up in prices may have yet to peak, they said.
"District farmland values surged to a record high in the third quarter," the Kansas City survey said. "Cropland values rose more than 25 percent over the past year, and ranchland values increased 14 percent."
In particular, Nebraska experienced exceptionally strong gains in the Kansas City District due to bumper crops -- especially productive seasons for certain crops -- reporting a roughly 40% rise in farmland prices from one year ago.
An annual independent actuarial report puts the FHA's loan loss reserves at .24% of its $1.1 trillion dollars in insured mortgages.
The FHA, which does not originate loans, but insures them, has gone from less than 5 percent market share at the height of the housing boom to now more than 30 percent. The auditor measures the FHA's reserve by estimating future losses, and those estimates continue to grow as home prices fall and mortgage delinquencies still run very high.
The FHA's estimated reserves stand at $2.6 billion as of September 30th, according to the report, down 45 percent from $4.7 billion last year. Congress mandates that the FHA's reserves must be at least 2 percent of its total insurance in force, but it hasn't been at that level for a few years now. Auditors estimate it will not be back above that level until 2014, and that would be based on the current book of business.
Still, if home prices continue to fall, the FHA could need government support in the form of a bailout.
But for figures that carry such weight, critics say, the estimates can be far rougher than most consumers realize. Indeed, if the websites were dart throwers, they'd seldom hit the bull's-eye, and they'd sometimes miss the board entirely: Valuations that are 20, 30 or even 50 percent higher or lower than a property's eventual sale price are not uncommon. The estimates frequently change, too, for reasons that aren't always easy for homeowners to discern. According to the companies themselves, some quotes have swung by hundreds of thousands of dollars in as little as a month as new data gets plugged into the algorithms the sites rely on. (Those algorithms also change, as happened this summer when Zillow made adjustments that affected all of the 100 million homes in its database.)
Indeed, appraisers and real estate consultants say that those models veer off target with alarming frequency. Typically, data for valuation models come from two sources: records from tax assessors and listing data for recent sales. Middleman companies -- the dominant ones are CoreLogic and Lender Processing Services -- gather this data from more than 3,000 U.S. counties and license them out to the Web sites and other model-builders. Collection is itself a challenge, because not every county tracks properties the same way.
Public records are hardly the only problem. Automated models aren't designed to account for the unique details that often make or break a deal -- something their designers readily acknowledge. AVMs usually can't capture data that determines the condition of a property, such as whether there's been a ton of wear and tear. Is a home right next to the railroad tracks or a golf course or a landfill? AVMs can't always answer those questions, say industry pros, though GPS technology is improving things on that score. Models also can't decipher the motivations of a buyer or seller, says Leslie Sellers, a past president of The Appraisal Institute. A couple who's going through a nasty divorce, for example, may have taken the first offer that came along just to unload the property. For all these reasons, says Lee Kennedy, managing director of AVMetrics, a firm that audits and tests industrial-grade AVMs, the models that banks use often add a "confidence score" to their value estimates, with a low score signaling that it's best to send in a human appraiser.
Consumers, however, don't get to see a confidence score; instead, they get disclaimers, some of which are eye-opening. Zillow surfers who read the "About Zestimates" page find out that the site's overall median error rate -- the amount the estimates vary from the actual fair value -- is 8.5 percent, and that about one-fourth of the estimates wind up being at least 20 percent off the properties' eventual sale price. In some places, the numbers are far more dramatic: Gibson County, home of the West Tennessee Strawberry Festival, has a 57 percent error rate; in Hamilton County, Ohio, where the Cincinnati Bengals play, it's 82 percent. Site users are always one click away from this data, but agents say few homebuyers read it (on Zillow's homepage, the font for the "About Zestimates" link is slightly smaller than the main home-data type -- and quite a bit fainter).
The sites argue that, over time, edits and corrections will help them perfect their numbers -- and many of the corrections will come from their customers. On Homes.com, for example, anyone who knows certain specifics, like a homeowner's surname and the year the home was last purchased, can edit the details to reflect, say, a sprawling two-bedroom addition. Zillow also allows site visitors to modify its property details, and in four years, it has accepted revisions on 25 million homes -- perhaps the strongest testament to how seriously consumers take the estimates. Today, Zestimates are helpful enough, says the site, to give consumers an accurate sense of any home's value. In the meantime, says Humphries, the company's economist, "We're always tweaking the algorithm or building a new one."
Read it allIn the end, some critics say, the sites' business models may pose a bigger problem for consumers than their algorithms. Even their flaws help to sustain the buzz around the estimates, drawing curious visitors. The online firms earn significant revenues from advertising, and the more traffic they get, the greater that ad revenue is. Zillow says 57 percent of its revenue comes from display ads from the likes of home-supply store Lowe's, realty franchisor Century 21 and builder KB Home. Realtor.com's parent company, Move Inc., generates 42 percent of its sales from listings by local agents, while Homes.com says advertising is its fastest growing revenue area. Trulia expects its traffic to grow now that it has launched a beta version of an online estimator, says head of communications Ken Shuman; after all, he adds, "consumers asked for it." As long as they keep asking, say industry insiders, stumbles in reliability aren't especially important. "It's not about being accurate or precise; it's about being sticky," says Kennedy, of AVMetrics. For their part, the sites say stickiness matters to their business plans, but that they take the estimates very seriously; otherwise, as a Zillow spokesperson put it, "we wouldn't have a team of Ph.D.s trying to make them better all the time." They depict the estimates as an ongoing experiment that is likely to achieve a very high degree of accuracy -- someday. (At least for now, one site is deferring to agents in the home-value game: Realtor.com says it removes its estimates from homes once they actually go on the market.)
The median price on existing home sales fell in most of the 150 metropolitan areas surveyed by the National Association of Realtors in the third quarter.
Home prices on single-family homes rose in 39 of the 150 metro statistical areas surveyed, while 111 metro areas reported price declines. That compares to the second quarter when 41 metro areas posted annual price gains, NAR said.
Lawrence Yun, NAR's chief economist, said, "Home sales need to recover first – only then can prices stabilize. Existing-home sales are little changed from the second quarter but are notably higher than a year ago. The good news is inventory levels have been trending gradually down."
Total existing home sales fell 0.1% to a seasonally-adjusted annual rate of 4.880 million in the third quarter, compared to 4.883 million in the second quarter. Still, existing home sales are 17% above the pace of 4.170 million set a year ago.
Compared to a year earlier, every state and the District of Columbia saw sales rise from 2010 levels with 45 states posting double-digit gains.
Link HereThe national median existing single-family home price hit $169,500 in the third quarter. That is down 4.7% from $177,800 in the third quarter of 2010.
The rising percentage of homes with "negative equity" or "underwater" status is due largely to how long the foreclosure sale process takes rather than home value fluctuations, said Zillow chief economist Stan Humphries. Prior to the "robo-signing" scandal around foreclosures that came to light in 2010, the negative equity rate hovered in the 21 to 23 percent range, but has been in the 26 to 28 range since due to added delays in foreclosure sales. While the rate of foreclosures is dropping, the time required for foreclosures to sell has lengthened.
"We're in uncharted waters," Humphries said in an interview. "More than one in four homes underwater and about 9 percent unemployment is a recipe for more foreclosures."
The survey, by Columbus, Ohio-based Home Value Insurance Co., found that one-third of respondents thought buying a home was a risky investment and 18 percent said they were "not sure" they'd advise a younger person to buy one. About 85 percent said they consider now a bad time to sell but a good time to buy, while 23 percent of owners said they were likely to sell within five years.
October home prices fell 2.8% from a year earlier, the 13th straight month of such declines, according to Clear Capital.
Home prices increased 0.6% from the previous three months, which flattened out from the 3.5% in gain the month before.
Alex Villacorta, director of research and analytics at Clear Capital, said homebuyer demand is expected to decay even more in the coming months as the flow of distressed inventory continues.
"October home price gains have leveled out, confirming what our data has pointed to over the last several months," Villacorta said. "Short term gains have been nearly eliminated while longer term performance measures point to mostly negative territory through the turn of the year."
Three of the four U.S. regions posted home price gains, but they were well off their summer growth. Prices increased the most over the past three months in the Midwest at 2.6% and fell 1% out West.
Prices increased the most in Cleveland at 6.2% while prices in Las Vegas fell 3.4%.
"We can expect another long winter as the housing market will truly be put to the test against these downward forces," Villacorta said.
The besieged housing market has even further to fall before home prices really hit rock bottom.
Read it allSeveral factors will be working against the housing market in the upcoming months, including an increase in foreclosure activity and sustained high unemployment, explained David Stiff, Fiserv's chief economist.
Home prices in 20 U.S. cities dropped more than forecast in August, highlighting one of the obstacles facing the economic recovery in its third year.
The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from August 2010, the group said today in New York. The median forecast of 30 economists surveyed by Bloomberg News was for a 3.5 percent decline.
Recovering the 31 percent plunge in home prices from their 2006 peak will probably be years in the making as foreclosures throw more properties on the market and sales flag. Federal Reserve policy makers like William Dudley are among those that believe bolstering housing is among the “most pressing issues” facing the central bank.
The housing market is yet to gain speed more than two years after the recession ended in June 2009. Sales of previously owned homes fell 3 percent in September from the prior month, according to the National Association of Realtors.
While Commerce Department data showed builders began work on more new houses last month, the gain was led by a surge in building of apartments and other multifamily dwellings as more Americans became renters.
Read it allThe drop in home values has pushed almost a quarter of U.S. mortgage borrowers underwater, meaning their debt is more than their homes are worth, according to CoreLogic Inc., a real estate data company in Santa Ana, California.
The number of Americans who bought previously occupied homes fell in September. Home sales are on pace to match last year's dismal figures -- the worst in 13 years.
The National Association of Realtors said Thursday that home sales dropped 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. That's below the 6 million that economists say is consistent with a healthy housing market.
The housing market has been hobbled by foreclosures, weak demand and falling home prices. Last year 4.91 million previously occupied homes were sold, the lowest level since 1997.
Link HereActivity among first-time buyers accounted for 32 percent of all sales, the same as August. First-time buyers are critical to a housing recovery because their purchases of low and moderately priced homes allow sellers to move up to more expensive homes.
Clustered mostly in hard-hit cities and states, there are more than 4.5 million homes either owned by lenders or headed for foreclosure. In Miami, for example, there are about 200,000 shadow homes, dwarfing the 30,000 properties that are listed on the active market. Even as prices in Miami have shown signs of stability this year, an impending wave of foreclosures threatens to keep real estate values deflated.
"A lot of people don't understand how much inventory is set to come on line in the next 18 to 24 months," said Jack McCabe, the CEO of McCabe Research & Consulting in Deerfield Beach, Fla. "When you compare what the Realtors show as inventory to what's out there, you realize we have a long way to go."
A McClatchy Newspapers analysis of four years of foreclosure data and thousands of property records found record-high levels of shadow inventory in several housing markets across the nation.
Home prices could fall up to 7% by the end of the 2012 first quarter, Barclays Capital said Friday in a report to clients
Barclays also noted the worst-case scenario for a further home price collapse, where property value falls another 15 to 20% from current levels, is low.
Fannie Mae's recent survey of a sample pool of Americans found that most of those surveyed believe home prices will fall another 1.1% over the next year.
Home prices recently experienced a minor decline.
In August, home prices decreased 0.4% on a month-over-month basis, the first monthly decline in four months, according to CoreLogic.
Meanwhile, Clear Capital expects another home price dip is on the way.
Home prices rose nationally 3.5% in the third quarter over the previous quarter, according to the latest home data index from Clear Capital.
Link HereHowever, the company also predicts another minor decline in home prices for the fourth quarter of 2011, and a continued slide through the end of the first quarter of 2012.
CoreLogic released their monthly report this morning that showed that home prices in the U.S. decreased 0.4 percent on a month-over-month basis, the first monthly decline in four months. National home prices, including distressed sales, also declined on a year-over-year basis by 4.4 percent in August 2011 compared to August 2010. This follows a decline of 4.8 percent in July 2011 compared to July 2010. Excluding distressed sales, year-over-year prices declined by 0.7 percent in August 2011 compared to August 2010 and by 1.7 percent in July 2011 compared to July 2010.
As I discussed previously, the Fall/Winter seasonal effect has been strong in recent years and negative house prices followed consecutive months of home price increases.
While 0.4% sounds like a small number, on an annual basis it is -4.8%.
Once again, Operation Twist and low mortgage rates can only be effective in facilitating a housing rally if 1) consumers can get credit and 2) consumers feel positive about the state of the economy and housing market.
Link and graphs hereAnd today’s jobless claims number at 401,000 isn’t going to help
Moody's Investors Service lowered its near-term outlook for housing and the broader economy this week. Home sales and starts are now hitting a bottom, while home prices will continue to sink until early 2012, said Celia Chen, senior director at Moody's Analytics in a research note.
"As 2011 began, the recovery appeared healthy and ready to turn into a self-sustaining expansion. Job growth was strong, unemployment was falling, and income and consumer spending were accelerating," Chen said. "Today, the economy is struggling to avoid another recession."
Of the bankers surveyed by analysts at the consumer credit firm FICO and the Professional Risk Managers International Association more than half do not expect home prices to climb back to 2007 levels before 2020.
Read it all"Have we finally hit rock bottom? That’s hard to say, but according to our survey, it’ll be quite some time before prices fully recover. The fact is that the market needs help to clear the backlog of distressed properties," researchers said. "We are in no man’s land right now."
The economy has deteriorated significantly since July, Professor Shiller observes, and he suspects that the housing market has followed suit. And, from a broader perspective, house prices are still down more than 4% year over year.
Read it allIn February, Professor Shiller startled those looking for an imminent "bottom" in house prices by suggesting that house prices could still fall 10% to 25%. He's standing by that assessment.
