Existing-home sales rose in January, marking three gains in the
past four months, while inventories continued to improve,
according to the National Association of Realtors (NAR). Total
existing-home sales, which are completed transactions that
include single-family homes, town homes, condominiums and co-ops,
increased 4.3% to a seasonally adjusted annual rate of 4.57
million in January from a downwardly revised 4.38 million-unit
pace in December and are 0.7% above a spike to 4.54 million in
January 2011. Total housing inventory at the end of January fell
0.4% to 2.31 million existing homes available for sale, which
represents a 6.1-month supply at the current sales pace, down
from a 6.4-month supply in December. Total unsold listed
inventory has trended down from a record 4.04 million in July
2007, and is 20.6% below a year ago.
The national median existing-home price for all housing types was
$154,700 in January, down 2.0% from January 2011. Distressed
homes – foreclosures and short sales which sell at deep
discounts – accounted for 35% of January sales (22% were
foreclosures and 13% were short sales), up from 32% in December;
they were 37% in January 2011. All-cash sales were unchanged at
31% in January; they were 32% in January 2011. Investors account
for the bulk of cash transactions. Investors purchased 23% of
homes in January, up from 21% in December; they were 23% in
January 2011. First-time buyers rose to 33% of transactions in
January from 31% in December; they were 29% in January 2011.
Forty-seven% of NAR members report that contracts settled on time
in January; 21% had delays and 33% experienced contract failures.
Contract cancellations are unchanged from December but were only
9% in January 2011; they are caused largely by declined mortgage
applications and failures in loan underwriting from appraisals
coming in below the negotiated price.
Single-family home sales rose 3.8% to a seasonally adjusted
annual rate of 4.05 million in January from 3.90 million in
December, and are 2.3% above the 3.96 million-unit pace a year
ago. The median existing single-family home price was $154,400 in
January, down 2.6% from January 2011. Existing condominium and
co-op sales increased 8.3% to a seasonally adjusted annual rate
of 520,000 in January from 480,000 in December but are 10.3%
lower than the 580,000-unit level in January 2011. The median
existing condo price was $156,600 in January, up 2.0% from a year
ago. Regionally, existing-home sales in the Northeast rose 3.4%
to an annual pace of 600,000 in January and are 7.1% above a year
ago. The median price in the Northeast was $225,700, which is
4.2% below January 2011. Existing-home sales in the Midwest
increased 1.0% in December to a level of 980,000 and are 3.2%
higher than January 2011. The median price in the Midwest was
$122,000, down 3.9% from a year ago. In the South, existing-home
sales rose 3.5% to an annual level of 1.76 million in January but
are unchanged from a year ago. The median price in the South was
$134,800, which is 0.3% below January 2011. Existing-home sales
in the West jumped 8.8% to an annual pace of 1.23 million in
January but are 3.1% below a spike in January 2011. The median
price in the West was $187,100, down 1.8% from a year ago.
Romney to slash tax rate to 28%
Former Massachusetts Gov. Mitt Romney, seeking to kick-start his
presidential campaign among recalcitrant conservatives, proposed
Wednesday cutting the top income tax for individuals to 28%.
Romney’s earlier economic plan called only for preserving the
current top tax rate of 35%, while holding out the promise of
lower rates later in an overhaul of the tax code. But facing a
major challenge from upstart Republican rival Rick Santorum, he
has chosen to outline such an overhaul in Arizona ahead of
critical Feb. 28 primaries there and in Michigan — and before a
televised debate Wednesday night in Mesa. Romney’s top
economic adviser, Glenn Hubbard, said the plan would cut all six
current tax brackets — 10, 15, 25, 28, 33, and 35%, depending
on a taxpayer’s income — by the same proportion of 20%. That
would produce this new set of tax brackets: 8, 12, 20, 22.4,
26.4, and 28%. "We want middle-income Americans to be the place
we focus our help, because it's middle-income Americans that have
been hurt by this Obama economy," Romney said in announcing the
plan.
Hubbard said Romney is committed to making his plan both
“revenue neutral” – meaning it won’t add to the budget
deficit — and “distributionally neutral” – meaning that
it won’t shift the tax burden from upper-income Americans to
middle and working class Americans. Since the largest benefits
from rate reduction would go to upper income taxpayers, so will
the burdens of “base broadening” reductions in existing
deductions needed to keep the government from hemorrhaging
revenue, he explained. Reducing large tax deductions, such as
the ones for home mortgage interest and state and local taxes, is
politically treacherous because of their popularity with voters
and elected officials alike. For now, at least, Romney will dodge
any potential backlash by avoiding any specifics. Romney will
pledge to work with Congress on “limiting them,” Hubbard
said, but “it is not his intention to take on any specific
deduction or exclusion and eliminate it.” Hubbard contrasted
Romney’s “pro-growth” plan with Obama’s proposal to raise
taxes on individuals earning more than $200,000 and households
earning more than $250,000. He argued that would hurt economic
growth by crimping small businesses, many of which file under the
individual tax code.
Million dollar foreclosures rise
Five years after the housing bubble burst, America's wealthiest
families are now losing their homes to foreclosure at a faster
rate than the rest of the country -- and many of them are doing
so voluntarily. Over 36,000 homes valued at $1 million or more
were foreclosed on -- or at least served with a notice of default
-- in 2011, according to data compiled by RealtyTrac, which
tracks foreclosures. While that's less than 2% of all
foreclosures nationwide, it represents a much bigger share of
foreclosure activity than in previous years. Out of all
foreclosure activity, the share of foreclosures on properties
valued at $1 million or more has risen by 115% since 2007 while
the share of multi-million dollar foreclosures -- or homes valued
at more than $2 million -- jumped by 273%. Meanwhile, the share
of foreclosures on mid-range properties valued between $500,000
and $1 million fell by 21%. But don't expect a few depressed
mansions to bring down the neighborhood. A single foreclosure in
an otherwise wealthy area is unlikely to impact surrounding
values, Daren Blomquist, vice president of RealtyTrac said.
"You're not going to see the weeds growing." But there will be
an opportunity for buyers to snatch up these impressive houses at
bargain basement prices, he said, which could provide a
much-needed boost to sales overall. "In a good way, this is going
to drive turnover," he said.
Energy price spike has offset
How much rising gasoline prices will pinch consumers has yet to
be seen, but energy savings from the warm winter may have already
helped consumers avoid some of the pain. Deutsche Bank chief US
economist Joseph LaVorgna crunched the numbers and says consumers
may have seen about a third of the recent rise in gasoline prices
offset by cheaper natural gas and lower utilities costs this
winter. “To me it’s really more of a usage story than a
price story,” said LaVorgna. “The savings is going to be
disproportionate to the people that live in the northeast...for
those people that it’s impacting, it does add up to lots of
dollars.”
Gasoline prices, however, are expected to continue to rise into
the spring and are expected by analysts to top out above $4 a
gallon, and the benefit from cheaper heating bills will also fade
as the spring approaches. Economists are concerned that
consumers will start pulling back on other spending as gasoline
nears $4 a gallon, a level it’s already reached in some areas.
Certainly, as prices rise consumers also cut back on spending on
gasoline, a bigger trend that has been in place over the past
year. Last week alone, demand for gasoline dropped 6.4% from last
year’s level. From the recent low in the week of Dec. 19,
gasoline prices have risen by 29 cents to an average of $3.58 per
gallon, during the week of Feb. 13. Oil prices have risen about
40% from their October low of around $75. West Texas intermediate
was trading above $105 Wednesday on Nymex as tension surrounding
Iran keeps prices high.
Olick - not enough to buy
"Last week I wrote about how fewer foreclosures up for sale in
the housing market could actually mean lower overall home prices.
That may sound counter-intuitive, given that we always talk
about how distressed sales deflate comparable home prices. My
reasoning is that foreclosures are in high demand right now, and
organic, non-distressed sellers are still not coming back to the
market. Without the foreclosures, there really is no competitive
market. I hate to say, 'I told you so,' but … today the
National Association of Realtors reported that inventories of
homes for sale in January fell to 2.31 million, the lowest supply
since March, 2005. Rather than pushing home prices higher, they
are still down, 2%, from a year ago. The Realtors noted that 35%
of all home sales were distressed (either foreclosures or short
sales). Investor demand is high, they say, even claiming that a
recent program initiated to sell the foreclosures of Fannie Mae
and Freddie Mac in bulk to investors is unnecessary. 'Based on
the swiftness of how REO (bank-owned) properties are moving in
the market, it may not be needed,' said NAR chief economist
Lawrence Yun. He did admit that such a program would also take
away thousands of potential listings from Realtors.
Banks are ramping up the repossessions, as the so-called
'Robo-signing' foreclosure paperwork scandal is fading and a
settlement with federal and state governments has been reached.
But they are not going to flood the market with these properties,
for fear of losing pricing power. That’s why we are now
starting to see bidding wars in some of the hottest distressed
markets. Sales of existing homes in the West, which comprise the
hardest hit states of Arizona, Nevada and California, jumped 8%
in January month to month. More than half of sales out West are
foreclosures and short sales. Demand is definitely rising, but
only on the lower end. If you look at sales distribution by
price, 69.9% of homes sold in November were under $250,000. That
moved up to 72.2% in January. Given that there is just a two
month difference, seasonality, i.e, higher priced homes selling
at different times of year, doesn’t apply. As I wrote last
week, organic, non-distressed sellers are making up less and less
of the overall housing market. That does not a healthy housing
market make. Without good, move-up homes available, the market
cannot see real price appreciation. 'The main limit on sales
volume now is willing sellers, not willing buyers,' says Glenn
Kelman, CEO of Redfin, a real-estate brokerage."
Wells Fargo incentivizes mortgage workouts
Wells Fargo installed an incentive program that pays its
single-point-of-contact employees more if they reach some sort of
workout in lieu of foreclosure. Mortgage servicers must install
single points of contact for borrowers on the verge of
foreclosure, based on federal regulator consent orders signed in
2011, new Home Affordable Modification Program guidelines and the
servicing standards set as part of the attorneys general
settlement in February. Wells officials said they installed such
a program before even the consent orders. The San Francisco-based
bank now has between 3,500 and 3,800 employees that serve as the
point of contact for troubled mortgage borrowers, said Randy
Bockenstedt, senior vice president of default operations at
Wells. "Wells Fargo does have an incentive program. But you
don't play the incentive game without doing it the right way,"
Bockenstedt said at the Mortgage Bankers Association servicing
conference Wednesday. "Quality is king." Bockenstedt wouldn't
disclose how exactly the Wells SPOC employees are paid or when
the program was put in place. One servicer who asked not to be
named shook his head at the size of the Wells SPOC headcount.
"3,500," he said. "That's huge." "It's not cheap," Bockenstedt
admitted.
The bank's servicing performance over competitors cannot be
linked directly to the incentive program, but the results are
there. According to its fourth-quarter financial report, roughly
7.63% of the loans on the Wells Fargo servicing portfolio were
either in foreclosure or delinquency, compared to 11.5% at
JPMorgan Chase and 13.5% at Bank of America. Mark Atencio is the
senior vice president of Green Tree Servicing, which is a
specialty and subservicer of close to 1 million loans at an
unpaid principal balance of $82 billion. Atencio said Green Tree
also has an incentive program in place, and said if done
correctly, money can still be made with SPOC in place especially
with severity rates so high on REO sales, sometimes as much as
50%. "It's a higher cost," Atencio said at the conference. "But
you pay for it upfront and save on the backend." Still, not
everyone is up to speed. At a recent summit hosted by Hope Now, a
coalition of top servicers, investors and insurers, "the general
consensus" was that 30% of borrowers calling into a servicing
shop were reaching their SPOC designee. "The jury is still out
on whether or not the mandates will work," said Raymond Barbone,
executive vice president of mortgage services at BankUnited.
Bockenstedt said the struggles voiced at the Hope Now summit
illustrate the challenges of such a program. Servicers must
better align availability of the borrower with his or her SPOC.
"We'll be taking a cable company mentality to it. We'll be asking
borrowers what time of the day they would be most available,"
Bockenstedt said. "Our employees are available 40 to 50 hours per
week. The customer can call at anytime."
past four months, while inventories continued to improve,
according to the National Association of Realtors (NAR). Total
existing-home sales, which are completed transactions that
include single-family homes, town homes, condominiums and co-ops,
increased 4.3% to a seasonally adjusted annual rate of 4.57
million in January from a downwardly revised 4.38 million-unit
pace in December and are 0.7% above a spike to 4.54 million in
January 2011. Total housing inventory at the end of January fell
0.4% to 2.31 million existing homes available for sale, which
represents a 6.1-month supply at the current sales pace, down
from a 6.4-month supply in December. Total unsold listed
inventory has trended down from a record 4.04 million in July
2007, and is 20.6% below a year ago.
The national median existing-home price for all housing types was
$154,700 in January, down 2.0% from January 2011. Distressed
homes – foreclosures and short sales which sell at deep
discounts – accounted for 35% of January sales (22% were
foreclosures and 13% were short sales), up from 32% in December;
they were 37% in January 2011. All-cash sales were unchanged at
31% in January; they were 32% in January 2011. Investors account
for the bulk of cash transactions. Investors purchased 23% of
homes in January, up from 21% in December; they were 23% in
January 2011. First-time buyers rose to 33% of transactions in
January from 31% in December; they were 29% in January 2011.
Forty-seven% of NAR members report that contracts settled on time
in January; 21% had delays and 33% experienced contract failures.
Contract cancellations are unchanged from December but were only
9% in January 2011; they are caused largely by declined mortgage
applications and failures in loan underwriting from appraisals
coming in below the negotiated price.
Single-family home sales rose 3.8% to a seasonally adjusted
annual rate of 4.05 million in January from 3.90 million in
December, and are 2.3% above the 3.96 million-unit pace a year
ago. The median existing single-family home price was $154,400 in
January, down 2.6% from January 2011. Existing condominium and
co-op sales increased 8.3% to a seasonally adjusted annual rate
of 520,000 in January from 480,000 in December but are 10.3%
lower than the 580,000-unit level in January 2011. The median
existing condo price was $156,600 in January, up 2.0% from a year
ago. Regionally, existing-home sales in the Northeast rose 3.4%
to an annual pace of 600,000 in January and are 7.1% above a year
ago. The median price in the Northeast was $225,700, which is
4.2% below January 2011. Existing-home sales in the Midwest
increased 1.0% in December to a level of 980,000 and are 3.2%
higher than January 2011. The median price in the Midwest was
$122,000, down 3.9% from a year ago. In the South, existing-home
sales rose 3.5% to an annual level of 1.76 million in January but
are unchanged from a year ago. The median price in the South was
$134,800, which is 0.3% below January 2011. Existing-home sales
in the West jumped 8.8% to an annual pace of 1.23 million in
January but are 3.1% below a spike in January 2011. The median
price in the West was $187,100, down 1.8% from a year ago.
Romney to slash tax rate to 28%
Former Massachusetts Gov. Mitt Romney, seeking to kick-start his
presidential campaign among recalcitrant conservatives, proposed
Wednesday cutting the top income tax for individuals to 28%.
Romney’s earlier economic plan called only for preserving the
current top tax rate of 35%, while holding out the promise of
lower rates later in an overhaul of the tax code. But facing a
major challenge from upstart Republican rival Rick Santorum, he
has chosen to outline such an overhaul in Arizona ahead of
critical Feb. 28 primaries there and in Michigan — and before a
televised debate Wednesday night in Mesa. Romney’s top
economic adviser, Glenn Hubbard, said the plan would cut all six
current tax brackets — 10, 15, 25, 28, 33, and 35%, depending
on a taxpayer’s income — by the same proportion of 20%. That
would produce this new set of tax brackets: 8, 12, 20, 22.4,
26.4, and 28%. "We want middle-income Americans to be the place
we focus our help, because it's middle-income Americans that have
been hurt by this Obama economy," Romney said in announcing the
plan.
Hubbard said Romney is committed to making his plan both
“revenue neutral” – meaning it won’t add to the budget
deficit — and “distributionally neutral” – meaning that
it won’t shift the tax burden from upper-income Americans to
middle and working class Americans. Since the largest benefits
from rate reduction would go to upper income taxpayers, so will
the burdens of “base broadening” reductions in existing
deductions needed to keep the government from hemorrhaging
revenue, he explained. Reducing large tax deductions, such as
the ones for home mortgage interest and state and local taxes, is
politically treacherous because of their popularity with voters
and elected officials alike. For now, at least, Romney will dodge
any potential backlash by avoiding any specifics. Romney will
pledge to work with Congress on “limiting them,” Hubbard
said, but “it is not his intention to take on any specific
deduction or exclusion and eliminate it.” Hubbard contrasted
Romney’s “pro-growth” plan with Obama’s proposal to raise
taxes on individuals earning more than $200,000 and households
earning more than $250,000. He argued that would hurt economic
growth by crimping small businesses, many of which file under the
individual tax code.
Million dollar foreclosures rise
Five years after the housing bubble burst, America's wealthiest
families are now losing their homes to foreclosure at a faster
rate than the rest of the country -- and many of them are doing
so voluntarily. Over 36,000 homes valued at $1 million or more
were foreclosed on -- or at least served with a notice of default
-- in 2011, according to data compiled by RealtyTrac, which
tracks foreclosures. While that's less than 2% of all
foreclosures nationwide, it represents a much bigger share of
foreclosure activity than in previous years. Out of all
foreclosure activity, the share of foreclosures on properties
valued at $1 million or more has risen by 115% since 2007 while
the share of multi-million dollar foreclosures -- or homes valued
at more than $2 million -- jumped by 273%. Meanwhile, the share
of foreclosures on mid-range properties valued between $500,000
and $1 million fell by 21%. But don't expect a few depressed
mansions to bring down the neighborhood. A single foreclosure in
an otherwise wealthy area is unlikely to impact surrounding
values, Daren Blomquist, vice president of RealtyTrac said.
"You're not going to see the weeds growing." But there will be
an opportunity for buyers to snatch up these impressive houses at
bargain basement prices, he said, which could provide a
much-needed boost to sales overall. "In a good way, this is going
to drive turnover," he said.
Energy price spike has offset
How much rising gasoline prices will pinch consumers has yet to
be seen, but energy savings from the warm winter may have already
helped consumers avoid some of the pain. Deutsche Bank chief US
economist Joseph LaVorgna crunched the numbers and says consumers
may have seen about a third of the recent rise in gasoline prices
offset by cheaper natural gas and lower utilities costs this
winter. “To me it’s really more of a usage story than a
price story,” said LaVorgna. “The savings is going to be
disproportionate to the people that live in the northeast...for
those people that it’s impacting, it does add up to lots of
dollars.”
Gasoline prices, however, are expected to continue to rise into
the spring and are expected by analysts to top out above $4 a
gallon, and the benefit from cheaper heating bills will also fade
as the spring approaches. Economists are concerned that
consumers will start pulling back on other spending as gasoline
nears $4 a gallon, a level it’s already reached in some areas.
Certainly, as prices rise consumers also cut back on spending on
gasoline, a bigger trend that has been in place over the past
year. Last week alone, demand for gasoline dropped 6.4% from last
year’s level. From the recent low in the week of Dec. 19,
gasoline prices have risen by 29 cents to an average of $3.58 per
gallon, during the week of Feb. 13. Oil prices have risen about
40% from their October low of around $75. West Texas intermediate
was trading above $105 Wednesday on Nymex as tension surrounding
Iran keeps prices high.
Olick - not enough to buy
"Last week I wrote about how fewer foreclosures up for sale in
the housing market could actually mean lower overall home prices.
That may sound counter-intuitive, given that we always talk
about how distressed sales deflate comparable home prices. My
reasoning is that foreclosures are in high demand right now, and
organic, non-distressed sellers are still not coming back to the
market. Without the foreclosures, there really is no competitive
market. I hate to say, 'I told you so,' but … today the
National Association of Realtors reported that inventories of
homes for sale in January fell to 2.31 million, the lowest supply
since March, 2005. Rather than pushing home prices higher, they
are still down, 2%, from a year ago. The Realtors noted that 35%
of all home sales were distressed (either foreclosures or short
sales). Investor demand is high, they say, even claiming that a
recent program initiated to sell the foreclosures of Fannie Mae
and Freddie Mac in bulk to investors is unnecessary. 'Based on
the swiftness of how REO (bank-owned) properties are moving in
the market, it may not be needed,' said NAR chief economist
Lawrence Yun. He did admit that such a program would also take
away thousands of potential listings from Realtors.
Banks are ramping up the repossessions, as the so-called
'Robo-signing' foreclosure paperwork scandal is fading and a
settlement with federal and state governments has been reached.
But they are not going to flood the market with these properties,
for fear of losing pricing power. That’s why we are now
starting to see bidding wars in some of the hottest distressed
markets. Sales of existing homes in the West, which comprise the
hardest hit states of Arizona, Nevada and California, jumped 8%
in January month to month. More than half of sales out West are
foreclosures and short sales. Demand is definitely rising, but
only on the lower end. If you look at sales distribution by
price, 69.9% of homes sold in November were under $250,000. That
moved up to 72.2% in January. Given that there is just a two
month difference, seasonality, i.e, higher priced homes selling
at different times of year, doesn’t apply. As I wrote last
week, organic, non-distressed sellers are making up less and less
of the overall housing market. That does not a healthy housing
market make. Without good, move-up homes available, the market
cannot see real price appreciation. 'The main limit on sales
volume now is willing sellers, not willing buyers,' says Glenn
Kelman, CEO of Redfin, a real-estate brokerage."
Wells Fargo incentivizes mortgage workouts
Wells Fargo installed an incentive program that pays its
single-point-of-contact employees more if they reach some sort of
workout in lieu of foreclosure. Mortgage servicers must install
single points of contact for borrowers on the verge of
foreclosure, based on federal regulator consent orders signed in
2011, new Home Affordable Modification Program guidelines and the
servicing standards set as part of the attorneys general
settlement in February. Wells officials said they installed such
a program before even the consent orders. The San Francisco-based
bank now has between 3,500 and 3,800 employees that serve as the
point of contact for troubled mortgage borrowers, said Randy
Bockenstedt, senior vice president of default operations at
Wells. "Wells Fargo does have an incentive program. But you
don't play the incentive game without doing it the right way,"
Bockenstedt said at the Mortgage Bankers Association servicing
conference Wednesday. "Quality is king." Bockenstedt wouldn't
disclose how exactly the Wells SPOC employees are paid or when
the program was put in place. One servicer who asked not to be
named shook his head at the size of the Wells SPOC headcount.
"3,500," he said. "That's huge." "It's not cheap," Bockenstedt
admitted.
The bank's servicing performance over competitors cannot be
linked directly to the incentive program, but the results are
there. According to its fourth-quarter financial report, roughly
7.63% of the loans on the Wells Fargo servicing portfolio were
either in foreclosure or delinquency, compared to 11.5% at
JPMorgan Chase and 13.5% at Bank of America. Mark Atencio is the
senior vice president of Green Tree Servicing, which is a
specialty and subservicer of close to 1 million loans at an
unpaid principal balance of $82 billion. Atencio said Green Tree
also has an incentive program in place, and said if done
correctly, money can still be made with SPOC in place especially
with severity rates so high on REO sales, sometimes as much as
50%. "It's a higher cost," Atencio said at the conference. "But
you pay for it upfront and save on the backend." Still, not
everyone is up to speed. At a recent summit hosted by Hope Now, a
coalition of top servicers, investors and insurers, "the general
consensus" was that 30% of borrowers calling into a servicing
shop were reaching their SPOC designee. "The jury is still out
on whether or not the mandates will work," said Raymond Barbone,
executive vice president of mortgage services at BankUnited.
Bockenstedt said the struggles voiced at the Hope Now summit
illustrate the challenges of such a program. Servicers must
better align availability of the borrower with his or her SPOC.
"We'll be taking a cable company mentality to it. We'll be asking
borrowers what time of the day they would be most available,"
Bockenstedt said. "Our employees are available 40 to 50 hours per
week. The customer can call at anytime."
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