Short sales surged in second quarter: RealtyTrac
Second-quarter pre-foreclosure sales jumped 19% from the previous
quarter, suggesting more banks and distressed borrowers are
searching for efficient ways to offload properties that are near
foreclosure, RealtyTrac said. Third parties acquired 102,407
pre-foreclosures in the second quarter, while 162,680 bank-owned
homes were sold in the same period. Pre-foreclosure sales are
generally short sales and properties sold within the foreclosure
process. As for who is nabbing up distressed and bank-owned
properties, RealtyTrac said third parties acquired 265,087 homes
classified as in foreclosure or bank-owned in the second quarter.
That is up 6% from the revised first quarter figure and down 11%
from the second quarter of last year. The average sales price for
foreclosures or bank-owned properties hit $164,217 in 2Q, down
less than one percent from 1Q and 5% from the second quarter of
2010. The sales price for distressed real estate was 32% below
the average sales price of homes not in foreclosure. States with
the largest quarterly increase in pre-foreclosure home sales
included Nevada, which experienced a 43% increase; Washington
(39%), California (38%); and Texas (34%). The states with the
highest number of foreclosure sales included Nevada, Arizona and
California.
Budget Deficit Estimate Cut to $1.28 Trillion: CBO
The federal budget deficit will hit $1.28 trillion this year,
down slightly from the previous two years, with even bigger
savings to come over the next decade, according to congressional
projections released Wednesday. The nonpartisan Congressional
Budget Office says budget deficits will be reduced by a total
$3.3 trillion over the next decade, largely because of the
deficit reduction package passed by Congress earlier this month.
Nevertheless, the federal budget will continue to be awash in red
ink for years to come. Even with the savings, budget deficits
will total nearly $3.5 trillion over the next decade—more if
Bush-era tax cuts scheduled to expire at the end of 2012 are
extended. There is more bad news in the report: CBO projects
only modest economic growth over the next few years, with the
unemployment rate falling only slightly by the end of 2012. The
agency projects an unemployment rate of 8.5 percent for the last
four months of 2012. The presidential election is in November of
that year.
"The United States is facing profound budgetary and economic
challenges," the new CBO report says. "With modest economic
growth anticipated for the next few years, CBO expects employment
to expand slowly." Failure to pass a package would trigger $1.2
trillion in automatic spending cuts, affecting the Pentagon as
well as domestic programs. The new CBO report projects that the
legislation will reduce deficits by a total of $2.1 trillion over
the next decade. The agency also projects savings of $600 billion
over the next decade from lower interest rates.
Diana Olick: Higher-End Housing Hits a Wall
Most of America won't shed a tear for those who own higher-priced
homes, especially given that the median home price in the nation
has now fallen to just $174,000, but investors and homeowners
alike should take note: Higher priced homes are taking a hit and
the outlook for them is worse than the overall market. That will
have ramifications for recovery. Despite the fact that just
eight percent of US loans are currently jumbo, according to
Inside Mortgage Finance, and that share will rise to just 10-12
percent when the conforming loan limit is lowered October 1st,
high-end housing is already being hit harder than the overall
market, which isn't exactly doing so well itself. For one, weekly
mortgage applications to purchase a home have been falling
steadily, down 5.7 percent last week. But jumbo loan purchase
applications fell 15 percent.
While sales of homes below $250,000 rose nearly 25 percent in
July year over year according to the National Association of
Realtors (June 2010 was the end of the home buyer tax credit, so
July 2010 was artificially low, still....) sales of homes over
$500,000 were basically flat. Demand on the low end of the
housing market is boosted by investors largely buying distressed
properties; they either fix up and flip the homes or rent them
out, waiting for the market to recover. Higher end homes have far
fewer investors and may be more sensitive to a volatile stock
market, as potential buyers are more likely to be invested there.
Suffice it to say, we need all segments of the housing market
pushing forward in order to get the full market back to health.
Markets not impacted by rise in jobless claims
Initial jobless claims rose last week, increasing by 5,000
filings for a total of 417,000 claims on a seasonally adjusted
basis. That is up from the previous week's revised figure of
403,500 claims. The Labor Department noted the numbers for the
week ending Aug. 20 were impacted by 8,500 claims stemming from a
labor dispute between the Communications Workers of America and
Verizon Communications. Meanwhile, the advance seasonally
adjusted insured unemployment rate hit 2.9% for the week ending
Aug. 13, a slight decrease from the previous week's revised rate
of 3% Despite recent volatility in the stock market, analysts
with Econoday said Thursday the markets "are showing little
reaction to the report, which outside of the Verizon strike,
points to mildly improving conditions in the labor market."
Pre-Foreclosure Short Sales Jump 19% in Second Quarter
Short sales shot up 19 percent between the first and second
quarters, with 102,407 transactions completed during the
April-to-June period, according to RealtyTrac. Over the same
timeframe, a total of 162,680 bank-owned REO homes sold to third
parties, virtually unchanged from the first quarter.
RealtyTrac’s study also found that the time to complete a short
sale is down, while the time it takes to sell an REO has
increased. Pre-foreclosure short sales took an average of 245
days to sell after receiving the initial foreclosure notice
during the second quarter, RealtyTrac says. That’s down from an
average of 256 days in the first quarter and follows three
straight quarters in which the sales cycle has increased.
Nationally, REOs had an average sales price of $145,211, a
discount of nearly 40 percent below the average sales price of
non-distressed homes. The REO discount was 36 percent in the
previous quarter and 34 percent in the second quarter of 2010.
Together, REOs and short sales accounted for 31 percent of all
U.S. residential sales in the second quarter, RealtyTrac reports.
That’s down from nearly 36 percent of all sales in the first
quarter but up from 24 percent of all sales in the second quarter
of 2010.
Second-quarter pre-foreclosure sales jumped 19% from the previous
quarter, suggesting more banks and distressed borrowers are
searching for efficient ways to offload properties that are near
foreclosure, RealtyTrac said. Third parties acquired 102,407
pre-foreclosures in the second quarter, while 162,680 bank-owned
homes were sold in the same period. Pre-foreclosure sales are
generally short sales and properties sold within the foreclosure
process. As for who is nabbing up distressed and bank-owned
properties, RealtyTrac said third parties acquired 265,087 homes
classified as in foreclosure or bank-owned in the second quarter.
That is up 6% from the revised first quarter figure and down 11%
from the second quarter of last year. The average sales price for
foreclosures or bank-owned properties hit $164,217 in 2Q, down
less than one percent from 1Q and 5% from the second quarter of
2010. The sales price for distressed real estate was 32% below
the average sales price of homes not in foreclosure. States with
the largest quarterly increase in pre-foreclosure home sales
included Nevada, which experienced a 43% increase; Washington
(39%), California (38%); and Texas (34%). The states with the
highest number of foreclosure sales included Nevada, Arizona and
California.
Budget Deficit Estimate Cut to $1.28 Trillion: CBO
The federal budget deficit will hit $1.28 trillion this year,
down slightly from the previous two years, with even bigger
savings to come over the next decade, according to congressional
projections released Wednesday. The nonpartisan Congressional
Budget Office says budget deficits will be reduced by a total
$3.3 trillion over the next decade, largely because of the
deficit reduction package passed by Congress earlier this month.
Nevertheless, the federal budget will continue to be awash in red
ink for years to come. Even with the savings, budget deficits
will total nearly $3.5 trillion over the next decade—more if
Bush-era tax cuts scheduled to expire at the end of 2012 are
extended. There is more bad news in the report: CBO projects
only modest economic growth over the next few years, with the
unemployment rate falling only slightly by the end of 2012. The
agency projects an unemployment rate of 8.5 percent for the last
four months of 2012. The presidential election is in November of
that year.
"The United States is facing profound budgetary and economic
challenges," the new CBO report says. "With modest economic
growth anticipated for the next few years, CBO expects employment
to expand slowly." Failure to pass a package would trigger $1.2
trillion in automatic spending cuts, affecting the Pentagon as
well as domestic programs. The new CBO report projects that the
legislation will reduce deficits by a total of $2.1 trillion over
the next decade. The agency also projects savings of $600 billion
over the next decade from lower interest rates.
Diana Olick: Higher-End Housing Hits a Wall
Most of America won't shed a tear for those who own higher-priced
homes, especially given that the median home price in the nation
has now fallen to just $174,000, but investors and homeowners
alike should take note: Higher priced homes are taking a hit and
the outlook for them is worse than the overall market. That will
have ramifications for recovery. Despite the fact that just
eight percent of US loans are currently jumbo, according to
Inside Mortgage Finance, and that share will rise to just 10-12
percent when the conforming loan limit is lowered October 1st,
high-end housing is already being hit harder than the overall
market, which isn't exactly doing so well itself. For one, weekly
mortgage applications to purchase a home have been falling
steadily, down 5.7 percent last week. But jumbo loan purchase
applications fell 15 percent.
While sales of homes below $250,000 rose nearly 25 percent in
July year over year according to the National Association of
Realtors (June 2010 was the end of the home buyer tax credit, so
July 2010 was artificially low, still....) sales of homes over
$500,000 were basically flat. Demand on the low end of the
housing market is boosted by investors largely buying distressed
properties; they either fix up and flip the homes or rent them
out, waiting for the market to recover. Higher end homes have far
fewer investors and may be more sensitive to a volatile stock
market, as potential buyers are more likely to be invested there.
Suffice it to say, we need all segments of the housing market
pushing forward in order to get the full market back to health.
Markets not impacted by rise in jobless claims
Initial jobless claims rose last week, increasing by 5,000
filings for a total of 417,000 claims on a seasonally adjusted
basis. That is up from the previous week's revised figure of
403,500 claims. The Labor Department noted the numbers for the
week ending Aug. 20 were impacted by 8,500 claims stemming from a
labor dispute between the Communications Workers of America and
Verizon Communications. Meanwhile, the advance seasonally
adjusted insured unemployment rate hit 2.9% for the week ending
Aug. 13, a slight decrease from the previous week's revised rate
of 3% Despite recent volatility in the stock market, analysts
with Econoday said Thursday the markets "are showing little
reaction to the report, which outside of the Verizon strike,
points to mildly improving conditions in the labor market."
Pre-Foreclosure Short Sales Jump 19% in Second Quarter
Short sales shot up 19 percent between the first and second
quarters, with 102,407 transactions completed during the
April-to-June period, according to RealtyTrac. Over the same
timeframe, a total of 162,680 bank-owned REO homes sold to third
parties, virtually unchanged from the first quarter.
RealtyTrac’s study also found that the time to complete a short
sale is down, while the time it takes to sell an REO has
increased. Pre-foreclosure short sales took an average of 245
days to sell after receiving the initial foreclosure notice
during the second quarter, RealtyTrac says. That’s down from an
average of 256 days in the first quarter and follows three
straight quarters in which the sales cycle has increased.
Nationally, REOs had an average sales price of $145,211, a
discount of nearly 40 percent below the average sales price of
non-distressed homes. The REO discount was 36 percent in the
previous quarter and 34 percent in the second quarter of 2010.
Together, REOs and short sales accounted for 31 percent of all
U.S. residential sales in the second quarter, RealtyTrac reports.
That’s down from nearly 36 percent of all sales in the first
quarter but up from 24 percent of all sales in the second quarter
of 2010.
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