Apr 30, 2013 | Housing Analysis
According to the the latest Foreclosure Inventory Analysis showed nearly 1.5 million properties were currently in the foreclosure process or being held by banks as Real Estate Owned.
This was up 9 percent from the first quarter of 2012, but down significantly from the apex of foreclosure activity — 2.2 million units — in December 2010.
What Is Distressed Property?
“Distressed property” is a blanket term for homes in foreclosure, short sale or that are REO (Real Estate Owned).
Below are definitions of different types of distressed real estate, so that you can be familiar with the terms.
- Foreclosure: When a homeowner has defaulted on their mortgage for a specified period of time, the bank takes possession of the real estate.
- Short Sale: A homeowner facing foreclosure may request a short sale from their lender to sell the property for less than what is owed.
- REO: Real Estate Owned properties have gone through foreclosure and are held by the bank. This increases the possibility of purchasing these homes at a discount because maintaining an REO is costly for a lender.
All three scenarios offer opportunities for substantial savings, yet all include stipulations with regard to the contract and terms of purchase.
Special Requirements With Distressed Property Purchases
When you buy this type of property, you are dealing with a financial institution instead of a private seller, so it may take more time to get to the closing table.
Be prepared for a longer than normal communication cycle as there are often delays when working with the bank or mortgage lender to come to a decision on an acceptable offer and closing date.
Unfortunately, many distressed properties have more deferred maintenance and repair issues
If you are willing to take the chance and be patient, a distressed property could pay off in terms of a lower purchase price.
Additionally, most buyers of distressed properties see an increase in the value of their Massachusetts real estate within a short time of purchase.
In the end, it is strongly advised that buyers work with an experienced property expert when interested in distressed properties because of the additional paperwork and requirements to complete the transaction.
Apr 17, 2013 | Housing Analysis
The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to a rating of 42 from the March reading of 44.
The Housing Market Index (HMI) measures home builder confidence in market conditions for newly built single family homes.
A reading of more than 50 indicates better than average confidence, while readings below 50 indicate that home builders have concerns about current market conditions.
NAHB Housing Market Index Results For April
Home builders expressed concern over a gap between a growing demand for homes and builders’ ability to meet the demand for new homes as housing market conditions improve.
Top concerns cited by home builders surveyed include:
- Availability of construction credit
- Construction costs rising faster than home values
- Restrictive mortgage lending rules impacting would-be home buyers
Supply chains for building materials and available developed lots are also impacting home builder confidence, as they have been lagging behind increasing demand for homes since the recession and will need more time to catch up.
Six Month Confidence Forecast Strongest Since February 2007
While builder confidence fell on a month-to-month basis, home builders have a more positive outlook for the next six months.
The builder confidence reading for the next six months came in at 53 for April, which is the highest reading since February 2007.
In terms of demand for newly built homes, the home builders surveyed said that a shortage of existing homes, low mortgage rates and increasing consumer confidence are expected to improve the market for existing homes.
Consumer confidence is important to all facets of the home building and mortgage lending industries.
Buying a home is typically the largest investment that consumers make, and their confidence in the economy plays a role in their decisions about when or if they buy a home.
Regional readings for housing markets are based on a three month rolling average.
Results for April were unchanged or lower in all four regions as compared to the rolling average reported in March:
- Northeast: The reading of 38 is unchanged from March.
- Midwest: The reading declined by two points to 45.
- South: April’s reading declined by four points to 42
- West: April’s reading declined by three points to 55, but remains in positive territory.
Regional readings reflect conditions impacting only a specific area of the U.S.
Recent examples include the impact of Hurricane Sandy in the Northeast, and an ongoing lack of land available for home construction in the West.
Apr 2, 2013 | Housing Analysis
Last week, the S&P/Case-Shiller Index showed home prices gaining 8.1 percent during the 12-month period ending January 2013, marking the largest year-over-year increases since the summer of 2006.
The Case-Shiller Index measures changes in home prices by tracking same-home sales throughout 20 housing markets nationwide; and the change in sales price from sale-to-sale.
Detached, single-family residences are used in the Case-Shiller Index methodology and data is for closed purchase transactions only.
All 20 Case Shiller Index Markets Show Growth
Between December 2012 and January 2013, home values rose in all 20 Case-Shiller Index markets, with previously-hard hit areas such as Phoenix, Arizona leading the national price recovery.
Another notable gainer was New York, which posted the first year-over-year increase following 28 straight months of negative annual returns.
The top three yearly “gainers” for as of January 2013 were:
- Phoenix, Arizona : +23.2 percent
- San Francisco, California : +17.5 percent
- Las Vegas, Nevada : +15.3 Percent
Other year-over-year double digit gainers in home value were Atlanta, Detroit, Los Angeles, Miami, and Minneapolis.
Broader Numbers Support Widespread Housing Recovery
These strong annual home value increases continue to support the overall housing recovery.
There have been year-over-year double digit increases in home building permits and new housing starts as of February 2013 as well.
And foreclosure filings have fallen to only three-fourths of their previous annual levels.
It should be noted, however, that the Case-Shiller Index is an imperfect gauge of home values.
First, as mentioned, the index tracks changes in the detached, single-family housing market only. It specifically ignores sales of condominiums, co-ops and multi-unit homes.
Second, the Case-Shiller Index data set is limited to just 20 U.S. cities. There are more than 3,000 cities nationwide, which illustrates that the Case-Shiller sample set is limited.
And, lastly, the home sale price data used for the Case-Shiller Index is nearly two months behind its release date, rendering its conclusions somewhat out-of-date.
That said, the Case-Shiller Index joins the bevy of home value trackers pointing to home price growth over the last year.
A good next step for getting up-to-date home values in the Massachusetts area is to contact a qualified, licensed real estate professional.
Jan 29, 2013 | Housing Analysis
The National Association of REALTORS® (NAR) reports that the Pending Home Sales Index fell 4.3 percent in December as compared to the month prior. The index now reads 101.7.
The Pending Home Sales Index measures the number of U.S. homes that have gone “into contract”, but have not yet closed. The report is based on data collected from local real estate associations, and from national brokers.
Despite December’s drop, however, the annual rate at which contracts for a home purchase were drawn increased 6.9 percent from one year ago, and marked the 20th consecutive month of annual purchase contract gains.
NAR reports that 80% of homes under contract are closed with 60 days, with the majority of the remained homes “sold” within months 3 and 4.
Analysts believe that December’s Pending Home Sales Index drop is not a result of a weakening housing market. Rather, it’s a function of a falling national home supply; in particular, a shortage of homes in the West Region offered a prices under $100,000.
The national housing inventory is currently at an 11-year low. However, regionally, results varied :
- Northwest : -5.4 percent from November; +8.4 percent from one year ago
- Midwest : +0.9 percent from November; +14.4 percent from one year ago
- South : -4.5 percent from November; +10.1 percent from one year ago
- West: -8.2 percent from November; -5.3 percent from one year ago
Although December’s Pending Home Sales Index dropped as compared to November, the year-to-year growth of pending home sales suggests a broader improvement in the U.S. housing market. Furthermore, the index is a strong indicator of existing home sales, which means that this season’s home sales should outpace those from 2012.
The Pending Home Sales Index is bench-marked to 100, the value from 2001, which was the index’s first year of existence. 2001 was considered a strong year for the housing market so last month’s 101.7 is considered a positive measure for the housing market.
Analysts project a strong Spring market in Massachusetts and nationwide.
Jan 24, 2013 | Housing Analysis
Home sales dropped last month, but not because demand was lacking. There are fewer homes for sale than at any time in the last 11 years.
According to the National Association of REALTORS®, Existing Home Sales for December 2012 fell to a seasonally-adjusted, annualized rate of 4.94 million homes from November’s tally of 4.99 million existing homes.
The Existing Home Sales report is based on the number of closings for previously-owned, single-family homes, townhomes, condominiums and co-ops. It’s estimated that existing homes account for 85 to 90 percent of all home sales nationwide.
2012 was a good year for housing. Sales of existing homes climbed 12.8 percent as compared to the December 2011 tally, which may be a strong indicator of future mortgage originations and short-term demand for home-related goods.
Based on preliminary sales figures, the number of home resales in 2012 grew 9.2 percent to 4.65 million homes as compared to 4.26 million homes sold during 2011. This marks the highest number of home resales sold in 5 years — a time which predates the recession of last decade.
In addition, the median price of a homes resale read $180,800 in December, which is a 11.5 percent increase as compared to December 2011, and the tenth consecutive month of year-over-year median price growth.
Not since November 2005 has the median home resale price climbed this quickly
Furthermore, the supply of existing homes fell to 4.4 months in December, down 0.4 months from November. At the current pace of sales, the national home resale inventory will be sold by June. This is an important statistic because home supply of less than 6.0-months is thought to represent a “seller’s market”.
There are also just 1.82 million existing homes for sale nationwide — the fewest since January 2001, and a 22 percent reduction from one year ago. With buyer demand high and home inventory down, home prices are likely to rise in Worcester County area and nationwide throughout 2013.
Jan 17, 2013 | Housing Analysis
The National Association of Homebuilders (NAHB) Housing Market Index ended its 8-month winning streak this month, posting a value of 47. The January 2013 reading is on level with last month, and remains at a near 7-year high.
The Housing Market Index (HMI) is a measure of home builder confidence.
HMI readings below 50 indicate a “poor” new construction conditions for single-family homes nationwide; ratings above 50 signal “good” ones.
Not since April 2006 has the Housing Market Index crossed into “good” territory, but the past two years have witnessed the HMI nearly triple; and the index is up from a reading of 25 just twelve months ago.
Values would have likely increased this month, too, if not for builder uncertainty. The NAHB cites concern over prolonged legislative decisions as contributing factors to this month’s builder confidence reading. Specifically, the trade group expressed concern over the future of the federal income tax deduction for home mortgage interest and spending cuts related to the recent, so-called “fiscal cliff”.
As compared to the month prior, this month’s HMI showed the following :
- Current housing conditions were mostly unchanged between December and January
- Sales expectations the next six months dropped slightly between December and January
- Prospective home buyer foot traffic increased slightly between December and January
January marks the tenth consecutive month through which buyer foot traffic has increased. Foot traffic is now at its highest level in nearly 7 years.
The NAHB Housing Market Index suggests a slow, steady rise in confidence among the nation’s home builders. This is occurring, in part, because of improving housing market conditions both nationally and regionally. Another factor is rising confidence among today’s home buyers.
Home sale prices Massachusetts remain relatively low and mortgage rates sit below 4 percent. With demand for homes growing, prices are expected to rise. Home buyers this season may be more likely to get a good “deal” than the buyers of spring or summer.
