Short sales are rising sharply, offering many struggling
homeowners a better alternative to foreclosure in many of
the nation's hardest hit states. In January, short sales
rose 33% compared with 12 months earlier, RealtyTrac said.
During the month, 32 states saw year-over-year percentage
increases in short sales. Even more encouraging, short sale
deals outnumbered foreclosures in 12 states, including some
of the hardest hit like California, Arizona and Florida.
January's numbers look to be just the beginning. "[W]e
believe 2012 could be a record year for short sales," said
Daren Blomquist, vice president at RealtyTrac. Banks are
showing signs of being more open and willing to approve the
deals -- even if it means accepting less money. The average
sales price for a short sale was $174,120 in January, down
4% from December and 10% year-over-year.
One of the biggest roadblocks for short sales has been the
time it takes to get deals approved. That time shrunk
slightly during the first quarter -- to 306 days from 308
days the previous quarter -- but many deals still fall
through because the buyer eventually walks away. However,
that will all change come June 1 when a set of new rules are
put in place that will require lenders to make a decision
about short sale requests within 60 days. Earlier this
week, the Federal Housing Finance Agency (FHFA), which
oversees Fannie Mae and Freddie Mac, which will also require
lenders to review and respond to short sale requests within
30 days and provide weekly status updates to the borrower if
the offer is still under review after that time. Also
helping to speed things along is the government's Home
Affordable Foreclosure Alternative program, which launched
in late 2009, according to Charlie Engel, another spokesman
for RealtyTrac. The program pays incentives to those who
sell their home in a short sale rather than let it fall into
foreclosure.
Recovery faltering?
Some of the same spoilers that interrupted the recovery in
2010 and 2011 have emerged again, raising fears that the
winter’s economic strength might dissipate in the spring.
In recent weeks, European bond yields have started climbing.
In the United States and elsewhere, high oil prices have
sapped spending power. American employers remain skittish
about hiring new workers, and new claims for unemployment
insurance have risen. And stocks have declined. There is a
“light recovery blowing in a spring wind” with “dark
clouds on the horizon,” Christine Lagarde, managing
director of the International Monetary Fund, said Thursday,
at the start of meetings here that will focus on Europe’s
troubles and global growth. Ms. Lagarde implored world
leaders not to become complacent. Forecasters have said
that the trends point to a moderation of economic growth in
the United States, but they still expect the recovery to
continue this year. The slowdown in part reflects an
unusually warm winter, which pulled forward economic
activity, making January and February seem artificially good
and perhaps making recent weeks look worse than they truly
were. Still, the breadth of the recent weakening of
activity shows that the economy remains fragile, as is
typical in the years following a financial crisis.
Persistent economic worries — about both a potential
slowdown in the near term and almost certain sluggish growth
in the long term — have formed the backdrop for the annual
spring meetings of the monetary fund and the World Bank.
Finance ministers and central bankers are convening in
Washington to discuss how to lift growth and reduce
unemployment. The fund this week upgraded its estimate of
global growth in 2012 and 2013 from estimates made in
January, but did so with major caveats. “An uneasy calm
remains,” said Olivier Blanchard, the International
Monetary Fund’s chief economist. “One has the feeling
that any moment, things could well get very bad again.”
Europe remains the central concern. In a report released
this week, the fund’s economists said that financial
institutions in the European Union would shrink their
balance sheets by up to $2.6 trillion by the end of next
year, reducing the availability of credit for businesses and
households by as much as 1.6%. Private analysts have also
warned of weakness in Europe, despite the European Central
Bank’s effort to quiet markets by providing financial
firms with unlimited low-cost, short-term loans — a policy
credited with pulling down bond yields this winter. Policy
makers in Washington also have domestic worries. Speaking on
Wednesday at the Brookings Institution, Treasury Secretary
Timothy F. Geithner noted that the recovery had been slow
and cautioned that headwinds remained.
Olick - lack of distressed sales pushes sales lower
"Sales of existing homes continue to drop, and while tough
credit and weak consumer confidence are certainly factors,
lack of supply appears to be the latest culprit.
Inventories of existing homes historically rise in the
spring, as sellers look to take advantage of the busy
season; not so this spring. Inventories fell 1.3% to 2.37
million units for sale. That's down nearly 22% from a year
ago. Inventory is dropping because the number of distressed
properties for sale is dropping. The data speak volumes:
Distressed sales fell to 29% of all sales in March, down
from 34% the previous month. The investor share of sales
also fell from 23% to 231%. That pushed overall home sales
down, but most notably out West, where most of the
distressed supply exists. Sales fell 7.4% month to month
out West in March, as supplies of existing homes fell to 3.1
months from 4.7 months a year ago, according to internal
tracking by the National Association of Realtors. That is
the lowest supply of any region by far, and half the
national average. Compare it to an 11.6 month supply in the
Northeast, where there are far fewer foreclosures. Supply
is tight because banks, after the 25 billion dollar mortgage
settlement over so-called 'robo-signing' have slowed much of
the foreclosure process, trying to modify more loans or find
foreclosure alternatives. Less supply usually means rising
prices, if you go by the usual supply/demand theory. The
trouble is, supply isn't dropping because of so much demand,
it's dropping because of the distressed market.
Normal sellers still aren't putting their homes on the
market for fear of deep price cuts, or because they are so
underwater they can't afford it. More than 11 million
borrowers currently owe more on their mortgages than their
homes are currently worth. On the demand side, credit is
still very tight and fees for FHA loans, which had really
been fueling much of the market, rose April 1st. We saw a
huge drop in mortgage applications last week, driven by a
23% drop in FHA applications. 'This drop follows big
increases in the demand for FHA loans over several weeks in
anticipation of the FHA mortgage insurance premium increases
that went into effect last week,' wrote Mortgage Bankers
Association chief economist Jay Brinkmann in a release.
'This was the largest weekly drop in the government purchase
index since the expiration of the first-time homebuyer tax
credit in May 2010.' Without a strong recovery in the job
market, which does not appear to be the case, and a big
loosening in credit, which also does not appear to be the
case, regular demand for home purchases will remain soft.
The potential demand among investors is strong and growing,
but they need supply to buy, and they're just not finding
enough."
NBC/WSJ - close election race
Presumptive Republican presidential nominee Mitt Romney has
begun to consolidate support within his party as he begins
what promises to be a closely contested general election
against President Barack Obama, according to the latest NBC
News/Wall Street Journal Poll. Romney is now viewed
favorably by 70% of Republican primary voters — up from
58% last month before his foremost challenger, former Sen.
Rick Santorum of Pennsylvania, decided to suspend his
campaign. "You can see the first stage of political
recovery," said Republican pollster Bill McInturff, who
conducts the NBC/WSJ survey with Democratic counterpart
Peter Hart. Once primary competition ends, he explained,
"Your own party starts saying, 'OK, that's our guy."
Obama still leads Romney in a prospective November matchup
by 49% to 43%, matching the 6-point edge he received in the
March survey. That margin reflects the way improved news on
the economy has lifted the president's standing since
October, when he led Romney by just 2 percentage points.
However, the 6-point spread was statistically insignificant
because it was within the poll's margin of error of plus or
minus 3.1 percentage points. "The president's standing is
no doubt stronger than it was six months ago," Hart said.
But given the tenuous state of the recovery and Americans'
sense of the nation's direction, he cautioned fellow
Democrats: "He's worked his way up to a 50-50 chance to win,
but no better than that."
Just 33% of Americans believe the nation is headed in the
right direction, the survey showed, a significant
improvement from last fall. But 59% still describe the
nation as "off on the wrong track." The telephone poll of
1,000 adults was conducted April 13-17. Americans remain
split on Obama's job performance: 49% approve and 46%
disapprove. Approval for his handling of the economy is
slightly lower at 45%. On having good ideas for improving
the economy and changing business as usual in Washington,
Romney leads the Democratic incumbent by 40% to 34% and 36%
to 29%, respectively. "All signs point to a very, very
close campaign," Hart said.
WSJ - cities with unrealistic prices
SmartMoney crunched the numbers to find the metro areas
where the gap between listing prices and the actual purchase
prices are the largest and the areas where they’re the
smallest:
Three most unrealistic
Atlanta
- Median list price: $150,000
- Median sales price: $90,600
- Difference: -40%
Jacksonville
- Median listing price: $184,775
- Median sales price: $121,600
- Difference: -34%
Washington D.C.
- Median listing price: $359,900
- Median sales price: $313,300
- Difference: -13%
Three most realistic
Las Vegas
- Median listing price: $120,000
- Median sales price: $121,800
- Difference: +1.5%
Boston
- Median listing price: $319,000
- Median sales price: $325,000
- % difference: +2%
Tampa, Fl.
- Median listing price: $139,900
- Median sales price: $135,500
- Discount: -3%
Miami sales surge
The median sales price of condominiums in Miami-Dade County
surged 46% to $141,700 in March compared to a year earlier,
according to the Miami Association of Realtors and the local
multiple listing service system. For the fourth consecutive
month, Miami home prices also posted strong gains with the
median sales price of single-family homes rising 13% to
$180,000 over March 2011. “The fact that Miami home
prices have significantly increased for four consecutive
months indicates prices have bottomed and have caught up
with sales levels,” said Martha Pomares, 2012 MAR chairman
of the board. She said the association expects the trend to
continue due to Miami's attractiveness to an international
clientele. Statewide, condo median sales prices in March
increased 20.8% to $105,000 and rose 10.3% to $139,000 for
single-family homes, according to Florida Realtors and its
data partner 10K Research and Marketing. Sales of existing
homes in Miami-Dade decreased 12% in March, from 1,039 to
919, compared to record sales levels March 2011. Sales of
condominiums were down 10.1% during the same time period.
For the full state of Florida, sales of existing
single-family homes totaled 18,370, down 5.7% over year-ago
figures, while statewide condos sales declined 12%.
Distressed properties continue to make up a large portion of
sales, but demand is strong, MAR said. In March, 49% of all
closed residential sales in Miami-Dade County were
distressed.
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