The market continued to show significant, sustained improvement in the nation’s inventory of delinquent mortgages for the fourth consecutive year in a row in 2013, along with recording the second consecutive year of significant improvement for those in foreclosure, the latest Black Knight Financial Services report found.
“In many ways, 2013 marked an abatement to crisis conditions in the U.S. mortgage market,” said Herb Blecher, senior vice president of Black Knight Financial Services’ data & analytics division.
“Delinquencies neared pre-crisis levels, foreclosure inventory declined 30% over the year, new problem loan rates improved in both judicial and non-judicial foreclosure states, and foreclosure starts ended the year at the lowest level since April 2007,” Blecher added.
2013 was also the best year for property sales since 2007, with totals through November outnumbering the full year totals for each of the prior three years.
However, Blecher explained higher interest rates and seasonality pushed monthly originations to the lowest level since 2008, and the current interest rate environment seems to have also brought an end to the refinancing wave we’ve observed for the last several years.
Meanwhile, national home price levels increased 8.5% year-over-year through November 2013.
“We did see home prices in judicial states generally recovering at a slower pace than their non-judicial counterparts. A similar situation existed with regard to negative equity improvement, which also occurred more slowly in those areas with extended foreclosure processes,” Blecher said.
In addition, 75% of loans that are either seriously delinquent or in foreclosure are underwater, which has had a pronounced effect on reducing overall negative equity numbers.
Monday, February 3, 2014
Friday, January 31, 2014
Flip now if you plan to flip that house at all-Profits are high but the market may be peaking
RealtyTrac, released its year-end and fourth quarter 2013 Home Flipping Report, which shows 156,862 single family home flips — where a home is purchased and subsequently sold again within six months — in 2013, up 16% from 2012 and up 114% from 2011.
Profits are strong in flipping right now. The average gross profit for a home flip — the difference between the flipped price and the price the flipper purchased the property for — was $58,081 for all U.S. homes flipped in 2013, up from an average gross profit of $45,759 in 2012. The average gross profit for homes flipped in the fourth quarter was $62,761, up from $52,746 in the fourth quarter of 2012.
It looks like the market for flips is slowing, which could portend ill for housing in general. Flips accounted for 3.8% of all sales in the fourth quarter, down slightly from 3.9% of all sales in the third quarter and down from 7.1% of all sales in the fourth quarter of 2012.
"Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase," said Daren Blomquist, vice president of RealtyTrac. "For the year 21% of all properties flipped were purchased out of foreclosure, but that is down from 27% in 2012 and 32% in 2011. Meanwhile flipped homes were still purchased at an average discount of 13% below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process — particularly in those markets with the biggest increases in flipping for the year."
RealtyTrac, one of the nation’s leading sources for comprehensive housing data, reported that homes flipped in 2013 accounted for 4.6% of all U.S. single-family home sales during the year, up from 4.2% in 2012 and up from 2.6% in 2011.
Who is flipping? People with lots of extra cash. The report shows the biggest increases in flipping nationwide occurred on homes with a flipped price of $400,000 or more. Although flipping increased across all price ranges, flips on homes with a flipped sale price above $400,000 increased 36% from 2012, while flips on homes with a flipped sale price at or below $400,000 increased 17% from 2012.
Major metro areas with big increases in home flipping in 2013 compared to 2012 included Virginia Beach (up 141%), Jacksonville, Fla., (up 92%), Baltimore, Md. (up 88%), Atlanta (up 79%), Richmond, Va., (up 57%), Washington, D.C. (up 52%) and Detroit (up 51%).
Major markets with big decreases in home flipping in 2013 compared to 2012 included Philadelphia (down 43%), Phoenix (down 32%), Tampa (down 17%), Houston (down 17%), Denver (down 15%), Minneapolis (down 9%), and Sacramento (down 5%).
Profits are strong in flipping right now. The average gross profit for a home flip — the difference between the flipped price and the price the flipper purchased the property for — was $58,081 for all U.S. homes flipped in 2013, up from an average gross profit of $45,759 in 2012. The average gross profit for homes flipped in the fourth quarter was $62,761, up from $52,746 in the fourth quarter of 2012.
It looks like the market for flips is slowing, which could portend ill for housing in general. Flips accounted for 3.8% of all sales in the fourth quarter, down slightly from 3.9% of all sales in the third quarter and down from 7.1% of all sales in the fourth quarter of 2012.
"Strong home price appreciation in many markets boosted profits for flippers in 2013 despite a shrinking inventory of lower-priced foreclosure homes to purchase," said Daren Blomquist, vice president of RealtyTrac. "For the year 21% of all properties flipped were purchased out of foreclosure, but that is down from 27% in 2012 and 32% in 2011. Meanwhile flipped homes were still purchased at an average discount of 13% below market value in 2013, the same average discount as 2012, indicating that investors are finding discounted buying opportunities outside of the public foreclosure process — particularly in those markets with the biggest increases in flipping for the year."
RealtyTrac, one of the nation’s leading sources for comprehensive housing data, reported that homes flipped in 2013 accounted for 4.6% of all U.S. single-family home sales during the year, up from 4.2% in 2012 and up from 2.6% in 2011.
Who is flipping? People with lots of extra cash. The report shows the biggest increases in flipping nationwide occurred on homes with a flipped price of $400,000 or more. Although flipping increased across all price ranges, flips on homes with a flipped sale price above $400,000 increased 36% from 2012, while flips on homes with a flipped sale price at or below $400,000 increased 17% from 2012.
Major metro areas with big increases in home flipping in 2013 compared to 2012 included Virginia Beach (up 141%), Jacksonville, Fla., (up 92%), Baltimore, Md. (up 88%), Atlanta (up 79%), Richmond, Va., (up 57%), Washington, D.C. (up 52%) and Detroit (up 51%).
Major markets with big decreases in home flipping in 2013 compared to 2012 included Philadelphia (down 43%), Phoenix (down 32%), Tampa (down 17%), Houston (down 17%), Denver (down 15%), Minneapolis (down 9%), and Sacramento (down 5%).
Monday, January 27, 2014
New Home Sales Expected to End 2013 on a Flat Note- When all else fails, just be optimistic
New home sales are expected to be flat in December due to seasonal factors and severe weather, according to economists at Wells Fargo Securities.
They expect the Census Bureau report slated to be released Monday morning will show December new home sales to come in at a 463,000 seasonally adjusted annual rate, compared to a 464,000 rate in November.
The WFS economists remain optimistic about the outlook for housing and they are forecasting that new home sales will hit 520,000 in 2014, up 20% from last year.
WFS senior economist Anika Khan noted that builders remain optimistic. She noted, however, that builders are catering more to move-up buyers and building fewer homes priced below $150,000.
“I am most concerned about first-time homebuyers,” she said. Even when it comes to existing home sales, the percentage of first-time buyers is low.
She blames this on tight credit conditions. “It continues to be very difficult for these folks to get into the housing market,” Khan said.
They expect the Census Bureau report slated to be released Monday morning will show December new home sales to come in at a 463,000 seasonally adjusted annual rate, compared to a 464,000 rate in November.
The WFS economists remain optimistic about the outlook for housing and they are forecasting that new home sales will hit 520,000 in 2014, up 20% from last year.
WFS senior economist Anika Khan noted that builders remain optimistic. She noted, however, that builders are catering more to move-up buyers and building fewer homes priced below $150,000.
“I am most concerned about first-time homebuyers,” she said. Even when it comes to existing home sales, the percentage of first-time buyers is low.
She blames this on tight credit conditions. “It continues to be very difficult for these folks to get into the housing market,” Khan said.
Friday, January 24, 2014
Fifth Third sets aside $69 million to pay lawyers- just goes to show that more issues are coming
Depending on who you believe, the fourth-quarter results at Fifth Third (FITB) came in either as expected or as beating expectations.
Nonetheless, the bank did manage to pull off a profit despite a huge settlement with Freddie Mac and even added capital to its litigation reserve fund.
In the fourth quarter, the bank reported net income of $383 million, or $0.43 per diluted common share.
Results included the mortgage repurchase provision of $28 million primarily related to Fifth Third’s settlement with Freddie Mac and expectations for future repurchase requests. The bank also recored $69 million in charges to increase its litigation reserves.
Fifth Third entered into a settlement for $25 million with Freddie Mac to resolve certain repurchase claims associated with mortgage loans originated and sold prior to 2009.
This was charged against the representation and warranty reserve.
A big driver of profit is the bank's stake in Vantiv, one of the nation's top payment processors and a strategic business partner of Fifth Third.
Additionally, overall credit improved at the bank.
Allowance for loan and lease losses decreased $95 million. Nonperforming assets declined $39 million and the bank changed its policy on home equity nonaccruals, which added another $46 million.
Nonetheless, the bank did manage to pull off a profit despite a huge settlement with Freddie Mac and even added capital to its litigation reserve fund.
In the fourth quarter, the bank reported net income of $383 million, or $0.43 per diluted common share.
Results included the mortgage repurchase provision of $28 million primarily related to Fifth Third’s settlement with Freddie Mac and expectations for future repurchase requests. The bank also recored $69 million in charges to increase its litigation reserves.
Fifth Third entered into a settlement for $25 million with Freddie Mac to resolve certain repurchase claims associated with mortgage loans originated and sold prior to 2009.
This was charged against the representation and warranty reserve.
A big driver of profit is the bank's stake in Vantiv, one of the nation's top payment processors and a strategic business partner of Fifth Third.
Additionally, overall credit improved at the bank.
Allowance for loan and lease losses decreased $95 million. Nonperforming assets declined $39 million and the bank changed its policy on home equity nonaccruals, which added another $46 million.
Thursday, January 23, 2014
Foreclosures, short sales increased 1% in Dec.
Foreclosures and short sales remained relatively frozen in December, with U.S. residential properties, including single-family homes, condominiums and townhomes, selling at an estimated annual pace of 5.16 million in December, a less than 1% increase from November and a 10% increase from a year ago, the latest RealtyTrac report found.
Annualized sales volume dropped from a year ago in 18 of the nation’s 50 largest metropolitan statistical areas and was down in five states: California, Arizona, Nevada, Rhode Island and Oregon.
In addition, the national sales price of U.S. residential properties, including both distressed and non-distressed, hit $168,391 in December, virtually unchanged from November and up 2% from December 2012.
The median price of a distressed residential property—in foreclosure or bank owned—was $108,494 in December, 38% below the median price of $174, 401 for a non-distressed residential property.
Furthermore, short sales and foreclosure-related sales — including both sales to third-party buyers at the public foreclosure auction and sales of bank-owned properties — made up 16.2% of all residential sales in 2013, up from 14.5% of all sales in 2012 and 15.2% of all sales in 2011.
"It may surprise some to see distressed sales rising in 2013 given that new foreclosure activity dropped to a seven-year low for the year," said Daren Blomquist, vice president of RealtyTrac.
"And while short sales did trend lower in the second half of the year, there are still more than 1.2 million properties in the foreclosure process or bank-owned, providing a sizable pool of inventory that the housing market is in the process of absorbing," Blomquist said. "Meanwhile, non-distressed sellers have not listed their homes for sale in droves, helping to keep the distressed share of sales at a stubbornly high level."
Annualized sales volume dropped from a year ago in 18 of the nation’s 50 largest metropolitan statistical areas and was down in five states: California, Arizona, Nevada, Rhode Island and Oregon.
In addition, the national sales price of U.S. residential properties, including both distressed and non-distressed, hit $168,391 in December, virtually unchanged from November and up 2% from December 2012.
The median price of a distressed residential property—in foreclosure or bank owned—was $108,494 in December, 38% below the median price of $174, 401 for a non-distressed residential property.
Furthermore, short sales and foreclosure-related sales — including both sales to third-party buyers at the public foreclosure auction and sales of bank-owned properties — made up 16.2% of all residential sales in 2013, up from 14.5% of all sales in 2012 and 15.2% of all sales in 2011.
"It may surprise some to see distressed sales rising in 2013 given that new foreclosure activity dropped to a seven-year low for the year," said Daren Blomquist, vice president of RealtyTrac.
"And while short sales did trend lower in the second half of the year, there are still more than 1.2 million properties in the foreclosure process or bank-owned, providing a sizable pool of inventory that the housing market is in the process of absorbing," Blomquist said. "Meanwhile, non-distressed sellers have not listed their homes for sale in droves, helping to keep the distressed share of sales at a stubbornly high level."
Wednesday, January 22, 2014
Mortgage applications rise 4.7%-Refinance share increases 10%
Mortgage applications continue to climb, rising 4.7% for the week ending Jan. 17, the latest report from the Mortgage Bankers Association said.
The refinance index also reported a 10% jump from last week, compared to the purchase index, which fell 4% from a week ago.
Overall, the refinance share of mortgage activity edged higher to 64% of total applications.
The 30-year, fixed-rate mortgage with a conforming loan limit decreased to 4.57%: the lowest level since November 2013.
In addition, the 30-year, FRM with a jumbo loan balance dipped to 4.57% from 4.58%, while the 30-year, FHA rate also dropped to 4.24% from 4.29%.
All three 30-year mortgage rates reached their lowest levels since November 2013, with the 15-year FRM decreasing to 3.68% from 3.72% a week earlier.
Meanwhile, the average contract interest rate for a 5/1 ARM fell to 3.23% from 3.28%.
The refinance index also reported a 10% jump from last week, compared to the purchase index, which fell 4% from a week ago.
Overall, the refinance share of mortgage activity edged higher to 64% of total applications.
The 30-year, fixed-rate mortgage with a conforming loan limit decreased to 4.57%: the lowest level since November 2013.
In addition, the 30-year, FRM with a jumbo loan balance dipped to 4.57% from 4.58%, while the 30-year, FHA rate also dropped to 4.24% from 4.29%.
All three 30-year mortgage rates reached their lowest levels since November 2013, with the 15-year FRM decreasing to 3.68% from 3.72% a week earlier.
Meanwhile, the average contract interest rate for a 5/1 ARM fell to 3.23% from 3.28%.
Tuesday, January 21, 2014
The most overvalued housing market in America
Housing markets resting on the laurels of juiced up home prices may be at risk in 2014 if those dramatic price swings are not supported by economic fundamentals.
And while Fitch Ratings expects most of the U.S. to experience modest and slow home price appreciation in 2014, a few markets have the research firm's bubble radar going off, according to Rui Pereira, managing director of structured finance for the ratings giant.
The Fitch Sustainable Home Price Model shows national prices overall overvalued by 15% in real terms. But when looking at individual local markets, prices in many cases are in line with economic fundamentals.
It’s when looking at California markets that much of the risk comes in.
One of the state’s riskiest zones – San Francisco – also captured the attention of HousingWire this past week.
In the West Coast city, price-to-rent and price-to-income ratios have risen nearly 25% since the start of 2012, Fitch points out. In fact, both metrics are now nearing all-time highs.
As DataQuick recently reported, the median price for a "Bay Area" home hit $548,500 in December, which is slightly down from November, but still up 23.9% from $442,750 a year earlier, the research firm said.
San Francisco prices are getting closer to levels reached in the 2006-2007 bubble when the median Bay Area price hit the $665,000-mark.
"Fitch believes most of the U.S. will see continued home price growth reflecting market momentum, the effects of inflation, the improving economy, and a return of buyers attracted by signs of stabilization," Pereira said.
"However, gains are expected to slow compared to prior years due to rising mortgage rates and more inventory becoming available. Mortgage volumes are expected to decline as rising rates further curtail refinancing."
And while Fitch Ratings expects most of the U.S. to experience modest and slow home price appreciation in 2014, a few markets have the research firm's bubble radar going off, according to Rui Pereira, managing director of structured finance for the ratings giant.
The Fitch Sustainable Home Price Model shows national prices overall overvalued by 15% in real terms. But when looking at individual local markets, prices in many cases are in line with economic fundamentals.
It’s when looking at California markets that much of the risk comes in.
One of the state’s riskiest zones – San Francisco – also captured the attention of HousingWire this past week.
In the West Coast city, price-to-rent and price-to-income ratios have risen nearly 25% since the start of 2012, Fitch points out. In fact, both metrics are now nearing all-time highs.
As DataQuick recently reported, the median price for a "Bay Area" home hit $548,500 in December, which is slightly down from November, but still up 23.9% from $442,750 a year earlier, the research firm said.
San Francisco prices are getting closer to levels reached in the 2006-2007 bubble when the median Bay Area price hit the $665,000-mark.
"Fitch believes most of the U.S. will see continued home price growth reflecting market momentum, the effects of inflation, the improving economy, and a return of buyers attracted by signs of stabilization," Pereira said.
"However, gains are expected to slow compared to prior years due to rising mortgage rates and more inventory becoming available. Mortgage volumes are expected to decline as rising rates further curtail refinancing."
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