Americans brace for next foreclosure wave | Reuters

(Reuters) - Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio.

"Last year was an anomaly, and not in a good way," he said.

In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

via reuters.com

Things are crazy right now, let's hope this slows things down a bit, but not too much.

Realtors: We Overcounted Home Sales for Five Years - US Business News

Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.

CNBC.com

The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.

"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.

"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."

via cnbc.com

This is not good and makes no sense that they didn't think of this sooner. Calls into question their other numbers now. The NAR just got a big black eye.

Home sales fall to 2011 low; few 1st-time buyers

WASHINGTON (AP) -- Fewer people bought previously occupied homes in May, lowering sales to their weakest point of the year.

Home sales sank 3.8 percent last month to a seasonally adjusted annual rate of 4.81 million homes, the National Association of Realtors said Tuesday. That's far below the roughly 6 million annual sales rate typical in healthy housing markets.

Since the housing boom went bust in 2006, sales have fallen in four of the past five years. Analysts say they expect sales to level off at about 5 million a year. That's not much better than the 4.91 million homes sold last year, the worst showing in 13 years.

The depressed housing market has weighed on the broader economy. Declining home prices have kept people from selling their houses and moving to find jobs in growing areas. They have also made people feel less wealthy. That has reduced consumer spending, which drives about 70 percent of economic activity.

One sign of the housing industry's struggles is that fewer first-time buyers are entering the market. The number of first-timers ticked down to 35 percent of sales last month. In healthy times, they drive about half of sales.

First-time buyers are critical because they tend to improve their properties and invest in their communities, a combination that raises home values. And their purchases allow sellers to move up to pricier homes.

Instead, the market has been saturated with foreclosures, which force prices down. Sales of homes at risk of foreclosure fell in May. But they still made up 31 percent of all purchases. And many pending foreclosures are backlogged in the courts or held up by state and federal probes into questionable foreclosure practices by lenders.

Until the glut of foreclosures are cleared and people think it's a safe time to buy, "it is unlikely that home prices can recover on a sustained basis," said Steven Wood, chief economist at Insight Economics.

Bigger required down payments, tougher lending rules, heavy credit-card and student-loan debt and a shortage of desirable starter homes are keeping many would-be buyers away. Even some who do have enough money for a down payment and a solid credit history are holding off, worried that home prices will keep falling.

Investors are filling some of the void. They are spending cash to scoop up deeply discounted homes in hard-hit areas of Phoenix, Las Vegas and Tampa. Last month, investors accounted for 19 percent of all sales.

All the while, previously occupied homes are cheap and in great supply.

Re-sold homes are a bargain compared with new homes. The median sales price for a previously occupied home in May was $166,500. The median price of a new home is nearly 31 percent higher than the price for a re-sale -- around twice the normal markup.

The gap is largely due to the flood of foreclosures and short sales. (Short sales occur when lenders accept less than what's owed on the mortgage.) A record 1 million homes were lost to foreclosures last year. And foreclosure tracker RealtyTrac Inc. expects 1.2 million more will be lost this year.

Another problem for the housing market is the glut of unsold homes. In May, the supply fell slightly to 3.72 million homes. At last month's sales pace, it would take more than nine months to clear those homes.

Homes priced for less than $100,000 are selling briskly, but more expensive homes are having trouble finding buyers. Analysts say a healthy supply can be cleared in six months.

The situation is worse when taking into account the "shadow inventory" of homes, economists say. These are homes that are in the early stages of the foreclosure process but, because of backlogged courts or the government probes, haven't hit the market for re-sale.

Sales fell across most regions in May. Sales dropped 6.4 percent in the Midwest, 5.1 percent in the South and 2.5 percent in the Northeast. There was no change in the West.

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JPMorgan expects home prices to dip « HousingWire

Friday, June 10th, 2011, 7:54 am

JPMorgan (JPM: 41.05 +0.17%) predicted a further dip in home prices this past month, forecasting another 4% to 5% drop in home values between now and mid-2012.

In its June 2011 Home Price Monitor Report, the bank lowered its base home price forecast to a level that's 37% under peak price levels.

The financial services firm blames its lowered price expectations on a supply-and-demand imbalance, as well as anemic consumer demand and disappointing economic reports.

The good news is CoreLogic's home price index grew a slight 0.7% in April, which shows some signs of possible price stability, JPMorgan said.

But home prices still declined more than anticipated in the first quarter, reaching a new post-2006 low, the bank said.

Making matters worse, JPMorgan's Home Price Monitor report points to a 12% drop in pending home sales in the month of April.

The bank said "a looming question is when and if lending standards will ease enough to boost demand."

Write to Kerri Panchuk.

via housingwire.com

Daily Real Estate News

Report: Real estate market won't hit bottom this year

Nearly half of all sales are distressed

By Inman News
Inman News™

Home values fell 8 percent year-over-year in April, according to a report from property search and valuation site Zillow.

Zillow's Home Value Index is now down 29.5 percent, to a median $169,588, from its peak of $240,656 in June 2006. That's equivalent to the index's level in May 2003, the report said.

Of 132 metro areas tracked, only three saw year-over-year appreciation: Honolulu (1 percent); Pittsburgh (0.9 percent); and Fort Myers, Fla. (0.5 percent). Nearly half saw double-digit decreases.

Homes in Ocala, Fla., lost the most value (-19.9 percent), followed by Manchester, N.H.; and Gainesville, Ga. (-16.5 percent each).

Month-to-month depreciation slowed slightly in April compared to late 2010. From March to April, the index fell 0.8 percent, compared with a 0.9 percent dip between November and December.

"In general, current trends are consistent with our earlier expectations of depreciation rates improving in the spring but from absolute levels that are high enough and at a pace that is slow enough that a bottom won't be reached this year," said Stan Humphries, Zillow's chief economist, in a statement.

"Key drivers at this point are the pace of foreclosures and improvement in the employment picture."

Depreciation was sharpest in the least expensive one-third of homes, which fell 1 percent month-to-month and 15 percent year-over-year, to a median value of $93,100. Values among the middle tier of homes declined 0.8 percent month-to-month and 8.7 percent year-over-year, to a median $157,600.

The most expensive third dipped 0.7 percent month-to-month and 4.9 percent year-over-year, to a median $293,500.

The rate of homes lost to foreclosure -- those repossessed by the lender or sold to a third-party at auction -- remained flat year-over-year at 10 of every 10,000 homes.

"This rate is substantially higher than the recent low point reached in December 2010, when 8.8 per 10,000 homes were liquidated, but also less than the high point of 11.3 per 10,000 homes, reached in October before the foreclosure slowdowns began," Humphries said.

Foreclosure resales rose for the 10th straight month in April, to 24 percent of overall sales, up from 16 percent in April 2010. That figure doesn't include short sales, which Zillow said accounted for an equal share of transactions in April.

Copyright 2011

Wow, the bad news just keeps coming.

My Way News - Americans' equity in their homes near a record low

WASHINGTON (AP) - Falling real estate prices are eating away at home equity. The percentage of their homes that Americans own is near its lowest point since World War II, the Federal Reserve said Thursday. The average homeowner now has 38 percent equity, down from 61 percent a decade ago.

The latest bleak snapshot of the housing market came as mortgage rates hit a new a low for the year, falling below 4.5 percent for a 30-year fixed loan. But even alluring rates have failed to deliver any lift to the depressed housing industry.

The Fed report is based on data from the first quarter of this year. Another report last week found that home prices in big cities have fallen to 2002 levels.

Normally, home equity rises as you pay off the mortgage. But home values have fallen dramatically since the bubble in prices burst in 2006. So many homeowners are losing equity even though the outstanding balance on the loan is getting smaller.

(AP) In this Feb. 4, 2011 file photo, a part of the JP Morgan Chase building reflects in its... Full Image

Nicole Rosen's home in tiny Spanaway, Wash., just outside the military base where her husband works, has lost $150,000 in value since she paid $275,000 for it in 2006. She has battled mortgage lenders in court for two years to stay out of foreclosure. In the meantime, the couple are paying off credit cards, figuring it's the only "positive thing we could do."

"We're paying off all our debt. We only have $200 left on our credit cards. But we're stuck in our house," Rosen said.

Home equity is important for the economy because it has a lot to do with how wealthy people feel. If they feel swamped by a mortgage loan, they're less likely to spend freely on other things. Home equity also serves as collateral for some loans.

There are 74.5 million homeowners in the United States. An estimated 60 percent have a mortgage. The rest have either paid off the loan or bought with cash.

Of the people who have mortgages, 23 percent are "under water," meaning they owe more on the mortgage than their home is worth, according to the private real estate research firm CoreLogic. An additional 5 percent are nearing that point.

(AP) Chart shows quarterly statistics on household net worth Full Image

The outlook for the housing market remains dim.

Fixed mortgage rates average 4.49 percent, extremely low by historical standards, and have fallen for eight straight weeks. But most people can't meet tougher lending requirements. Falling rates make it easier to refinance, too, but many of the people who can afford to do that already have.

And foreclosures keep hammering the housing market. On Thursday, the Obama administration said the three largest U.S. lenders - Wells Fargo, Bank of America and JPMorgan Chase - haven't helped enough people lower their mortgage payments to stay in their homes.

The government said it has started withholding the cash incentives it established for lenders under its 2-year-old foreclosure prevention program. The administration had hoped the program would prevent as many as 4 million foreclosures, but it has helped fewer than 700,000 people.

Foreclosures have economic ripples: Homes in foreclosure sell at a 20 percent discount on average, and those discounts erode prices throughout a neighborhood.

Many foreclosure sales have been delayed while federal regulators, state attorneys general and banks review how those foreclosures were carried out over the past two years. When those foreclosures go through, prices may fall even further.

Home prices are expected to keep falling until the number of foreclosures for sale is reduced, companies start hiring in greater force, banks ease lending rules and more people think it makes financial sense again to buy a house. In some areas of the country, that could take years.

The Federal Reserve report found that Americans' overall net worth grew 1.65 percent in the January-to-March period, to $58.06 trillion, mostly because of stock market gains. Most of those gains have been erased since March, though.

Net worth is the value of assets such as homes and stocks, minus debts like mortgages and credit cards.

The report found household debt declined at an annual rate of 2 percent from the previous quarter, mostly because of a decline in mortgage debt, which has fallen for 12 straight quarters.

But the decline is deceiving. Mortgage debt is coming down because so many Americans are defaulting on payments and losing their homes to foreclosure, not just because people are paying off loans.

"A lot of this debt reduction is not voluntary," said Dana Saporta, director of U.S. economics at Credit Suisse.

The Fed report suggests the average household owes about $119,000 on mortgages, credit cards, auto loans and other debt.

Debt now equals 119 percent of the money Americans have left over after taxes. In late 2007, when the country was binging on debt, it was 135 percent. In the healthier 1990s, it was roughly 90 percent.

Auto loans, student loans and other consumer credit rose 2.4 percent during the quarter, a second straight gain. Analysts say more people, many of them unemployed, are borrowing money to attend school.

The Fed's quarterly report documents wealth, debt and savings for corporations, governments and households. It covers most of the financial transactions that take place in the United States.

It found that corporations are still hoarding cash. Excluding banks and other financial firms, companies held $1.9 trillion in cash at the end of the quarter. That was slightly more than in the previous quarter and set another record.

The reluctance of companies to spend more of their cash helps explain why job growth has been slow since the recession ended. The unemployment rate is 9.1 percent, slightly higher than when the year began.

Household net worth in America is up nearly 19 percent from early 2009 but still about 11 percent below its peak in 2007. Normally, greater wealth would spark consumer spending. But the lost home equity is counteracting it.

Per household, it comes to about $518,000. But the gap between the super-rich and everyone else in the United States has grown over the past three decades. So while average wealth is increasing, most Americans don't feel the difference.

---

AP Business Writer Matthew Craft in New York contributed to this report.

via apnews.myway.com

40% of underwater borrowers took cash out of homes

40% of underwater borrowers took cash out of homes

CoreLogic: Owners with home equity loans more than twice as likely to be upside down

By Inman News
Inman News™

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Homeowners with home equity loans are more than twice as likely to be "underwater" as those who didn't take cash out of their homes, according to statistics compiled by real estate and loan data aggregator CoreLogic.

CoreLogic estimates that at the end of March, 22.7 percent of homeowners with mortgages -- about 10.9 million borrowers -- owed more on their mortgage than their home was worth. That's down slightly from an estimated 11.1 million underwater borrowers at the end of December.

Falling home prices can put borrowers who have little equity in their homes underwater. By allowing homeowners to convert equity they have in their homes into cash, home equity loans reduce the cushion borrowers have against price declines.

CoreLogic said that 38 percent of borrowers with home equity loans were underwater at the end of March, compared with 18 percent of homeowners who had no home equity loan. More than 40 percent of all underwater homeowners (4.5 million) have home equity loans, CoreLogic said.

As might be expected, CoreLogic found that the presence of a home equity loan also increased the amount of negative equity. Underwater homeowners who had taken out home equity loans owed $83,000 more than their home was worth, on average, compared with $52,000 for those who hadn't taken cash out of their home.

Past studies have shown that the higher a borrower's combined loan-to-value ratio (CLTV), the more likely they are to stop making payments on their loan. In many cases, borrowers will opt for a "strategic default" -- not because they can't afford the monthly payments, but because they don't believe their home will regain its value anytime soon.

CoreLogic found that borrowers with home equity loans were slightly more likely to default at "moderate" levels of negative equity, up to 115 percent CLTV. Beyond that point, the relationship reverses, and default rates were slightly higher among homeowners without home equity loans.

Among all underwater borrowers nationwide, the average amount of negative equity was $65,000. In states with higher-cost housing, the average was considerably higher. In New York, underwater borrowers had an average of $129,000 in negative equity, followed by Massachusetts ($120,000), Connecticut ($111,000), Hawaii ($98,000), and California ($93,000).

At the other end of the scale, underwater borrowers in Ohio had the lowest negative equity -- $31,000, on average -- followed by Indiana ($34,000), and Minnesota ($38,000).

Nevada led all states in the proportion of underwater borrowers -- 63 percent of Silver State homeowners with mortgages owed more than their home was worth -- followed by Arizona (50 percent), Florida (46 percent), Michigan (36 percent), and California (31 percent).

At the metro level, Las Vegas led the nation, with 66 percent of mortgaged properties underwater, followed by Stockton (56 percent), Phoenix and Modesto (55 percent), and Reno (54 percent).

Metropolitan markets located outside of the five states with the highest negative equity shares include Greeley, Colo. (38 percent); Boise (36 percent); and Atlanta (35 percent).

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