Showing posts with label housing. Show all posts
Showing posts with label housing. Show all posts

Friday, May 18, 2012

Realtors Optimistic On Spring Home Sales Season, As Investors Eye Builders LEN DHI MHO RYL - Investors.com


Anyone who makes a living in residential real estate knows better than to crack open the champagne just because of some encouraging housing data.

Still, it's hard not to get cautiously upbeat over recent trends that point to an improving U.S. housing market and indicate some further strengthening in months to come.

National real estate analysts and local real estate agents sound encouraged by the state of housing as it enters the stretch drive of the spring home-selling season.

Foot traffic is up, prices are stabilizing by some measures and sales are trending higher. Recent housing statistics suggest the market is at its strongest point in years.

"Demand is up, and the psyche of the consumer is much better than it has been in years," said the National Association of Realtors' Ken Fears, manager of regional economics.

Agents See Change

How much spring homebuying are real estate agents noticing right now? Nate Johnson, with Keller Williams Realty in northern Virginia, says his team is "seeing a lot of buyers out there" and getting multiple offers on short-sale properties. His work is concentrated in Fairfax County, just across the Potomac River from Washington, D.C.

Although down 2.6% monthly in March, the pace of U.S. existing home sales reached its highest level since 2007 in the first quarter, up 4.7% from the previous quarter and more than 5% from the prior year.

Prospects for new home sales are looking better too. Investor optimism has pushed IBD's Building — Residential/Commercial industry group to the top-ranked spot among 197 groups tracked, with Lennar (LEN), Standard Pacific (SPF), MI Homes (MHO), Ryland Group (RYL) and D.R. Horton (DHI) among highly rated stock market performers. Still, after an exuberant rise, several builder stocks gave up some gains Thursday ahead of April home sales numbers due out next week.

Near Washington, D.C., the main challenge now is finding homes people want to sell, Johnson says.

"The inventory is very low in some places," he said. "Many people are upside-down on their mortgages and can't sell."

Short sales occur when more is owed on a home than it sells for, when a lender does agree to a sale.

"A lot of our short-sale inventory are condos," Johnson said. "A lot of investors are snapping those up at inexpensive prices with the idea of renting them out."

Looking For Listings

A lack of inventory is also a problem in certain Atlanta neighborhoods, says Thom Abbott, an associate broker at Thomas Ramon Realty at Palmer House Properties. His firm specializes in midtown condos at prices ranging from $80,000 to more than $600,000.

by Vince Cariaga Investor's Business Daily May 17, 2012


Realtors Optimistic On Spring Home Sales Season, As Investors Eye Builders LEN DHI MHO RYL - Investors.com

Subdivisions go urban as housing growth shifts

Townhouses and single-family homes are sprouting on old industrial sites in the heart of Southern California cities. In Florida, developers are coveting foreclosed golf courses in urban centers to put up new subdivisions. Builders in Texas are going after available land even near landfills for residential and retail development.

Why are the giants of the building industry, the creators for decades of massive communities of cookie-cutter homes, cul-de-sacs and McMansions in far-flung suburbs, doing an about-face? Why are they suddenly building smaller neighborhoods in and close to cities on land more likely to be near a train station than a pig farm?

A housing industry slowly shaking off the worst economic conditions in decades is rethinking what type of housing to build and where to build it. It's a response to a new wave of home buyers who have no desire to live in traditional subdivisions far from urban amenities.

The nation's development patterns may be at a historic juncture as builders begin to reverse 60-year-old trends. They're shifting from giant communities on wide-open "greenfields" to compact "infill" housing in already-developed urban settings.

The market slowdown has given builders time to assess sweeping demographic changes that are transforming the way Americans want to live.

Young Millennials and older Baby Boomers are rejecting traditional suburban lifestyles in favor of urban living and shorter commutes. Many want to live near city centers so they can walk to work, shops and restaurants or take public transportation. They also prefer smaller homes because they're single or have no kids and don't want to spend their free time maintaining their homes.

"It's the kids (ages 18 to 32), the empty nesters (Baby Boomers with no kids at home)," says Chris Leinberger, president of Smart Growth America's LOCUS (Latin for "place"), a national coalition of real estate developers and investors who support urban developments that encourage walking over driving. "These two generations combined are more than half of the American population."

The housing bust of the last five years hit hardest in subdivisions in remote suburbs, drying up financing for such development. At the same time, gas prices soared and so did environmental consciousness, giving consumers pause about living in distant suburbs away from services, jobs and entertainment.

California couple Maurice Turner and his wife, Preet Bassi, used to rent in the center of Anaheim. When they decided to buy, they found their choices limited at first.

"The majority of homes were single-family homes in the suburbs or older homes and multi-story condos in the city," says Turner, administrative manager in a nearby city.

The 30-something professionals did not want to leave city neighborhoods and settle in a suburban subdivision. And they didn't want to live in a multi-story condo building.

That was about the time Brookfield Homes, a leading developer of huge suburban subdivisions, began Colony Park -- more than 500 single-family homes, townhouses and condominiums in Anaheim's Historic District on a site that once housed industrial warehouses. Many of the townhomes are across the street from restaurants, entertainment and other urban attractions.

Turner and Bassi now live in a three-story, 1,700-square-foot townhouse where they and their neighbors make "a conscious effort to spend less time in your car commuting and spend more time in your neighborhood with friends, neighbors, family," Turner says. "The urban environment was a big key to staying."

Growth patterns shift

Developers are listening because the market has spoken loud and clear.

Latest Census data show that population growth in fringe counties nearly stopped in the 12 months that ended July 1, 2011, and urban counties at the center of metro areas grew faster than the nation as a whole, a USA TODAY analysis found.

Central metro counties accounted for 94% of U.S. growth, compared with 85% just before the recession and housing bust.

A recent Case Western Reserve University study found that Cleveland's inner city is growing faster than its suburbs for the first time.

In January 2000, the highest price per square foot in the Washington, D.C., metro area was in the leafy suburb of Great Falls, Va., according to Zillow, a real estate research firm. Ten years later, townhouses in the hip and urban Dupont Circle neighborhood of Washington were worth 70% more per square foot than property in Great Falls.

"These are the market signals we're getting throughout the country," Leinberger says. "The drivable suburban fringe is where the housing market collapsed -- 80% of the collapsed market was there. It's a classic case of the real estate industry overproducing."

Most major builders have created "urban" divisions in the past five years to scout for available land in already-developed parts of cities and closer suburbs -- even if it means former industrial and commercial sites or land that may require environmental cleanup.

This shift doesn't mean the end of sprawling suburban subdivisions in onetime cow pastures and corn fields, but it does signal a notable change that could alter the housing landscape for years to come.

"There has been a huge shift, particularly in the last 10 years," says Marie York, president of real estate consulting York Solutions in Palm Beach County, Fla., and a board member of the American Planning Association. "There's an emphasis on walkability, an emphasis on health, an emphasis on commuting by bicycle ... a shift away from blatant consumerism and the McMansion model."

The shift is not temporary, says Gregory Vilkin, managing principal and president of MacFarlane Partners, a San Francisco-based real estate investment company building 170 units on the site of former parking lots and auto repair shops in South Lake Union, a new urban project in Seattle.

Vilkin headed one of the nation's largest urban redevelopments while at the helm of Forest City Enterprises' residential real estate division: Stapleton, a cluster of neighborhoods built on 7.5 square miles on the site of the old Stapleton International Airport in Denver. Developers built 11 units per acre compared with four per acre in traditional suburban subdivisions.

"I reject the premise that (the shift) is just because of the recession," Vilkin says. "It's no longer the American dream to own a plot of land with a house on it and two cars in the driveway."

Adds Leinberger: "This is a structural change, not a cyclical downturn."

Moving toward the center

Whether it's temporary or a seminal moment in the nation's development history, the housing bust and recession have prompted developers to set their sights inward. When property values drop, so does investment. And because values dropped the most on the outer edges of metro areas, developers are paying attention to sites they never considered before.

"It makes you not look at these large properties on the edge of the Earth anymore," says Denise Gammon, president of the communities division of Florida-based Kitson & Partners. "There's a dramatic shift going on."

Gammon also worked on Stapleton, and Kitson hired her to develop their infill business. In Tampa, the company is building Bay Pines, which will have multi-family housing, hotel, grocery store and shops on 60 acres that once was the site of a mobile home park.

"It's an area of Tampa that hasn't seen new housing in 25 years," she says. "The conventional model is obsolete. People are looking for something different."

In California, KB Home built Primera Terra at Playa Vista, near Marina Del Rey, on the site of an old Hughes Aircraft site. The condos highlight energy efficiency, proximity to shops, parks and schools, and prices under $600,000 (no garages).

"It has drawn an incredible number of people," says Steve Ruffner, president of KB Home Southern California. "People are very interested in technology in a home that's not only good for the environment but saves them ownership costs --Energy Star, solar."

Executives of Dallas-based Huffines Communities sensed a revolution was afoot after attending a builders' show in Orlando in 2005 when they realized that investors were the dominant buyers of suburban housing -- not consumers.

The company had nine so-called "master-planned communities" in the works that would go up on undeveloped land in outer suburbia.

"We sold six and kept three," says Robert Kembel, Huffines president. The company redeployed its capital to redeveloping sites in cities. "If people prefer to live closer to the jobs center, the pricing you can command is higher and there's less competition," Kembel says.

Huffines is developing Viridian, 5,000 units on a 2,300-acre site in a flood plain near a landfill in Arlington, Texas. The project required lengthy and costly cleanup and wetlands restoration measures.

"Developers who have the patience to go to the city or county and negotiate public-private partnerships to help mitigate huge costs, those are the guys who win," Kembel says.

No time for big yards

Suburbia is changing, too.

Established suburbs such as Virginia's Fairfax County, outside Washington, D.C., are building town centers that combine residential and retail on greenfields. Rapid transit lines are expanding through Tysons Corner, site of two shopping malls and headquarters of major corporations. Plans are for dense, high-rise development.

Even traditional communities built on greenfields are transforming. In Southern California's Inland Empire, an area where housing prices are lower and appeal to first-time buyers, Brookfield is building Edenglen in Ontario. The homes are built on smaller lots -- 4,500 square feet instead of the more conventional 7,200 square feet -- and priced from $200,000 to $300,000.

"We've seen a lot of single females, single males, couples without kids," says Carina Hathaway, vice president of marketing. "They don't really have time to maintain huge yards."

But Kembel predicts infill development is the wave of the future. Military bases that have shuttered offer huge opportunities, and so do old subdivisions built when sprawling suburbia was born in the 1950s and 1960s, he says.

"For the first time in history, Americans have stopped pushing development to the edge," says Robert Lang, professor of urban affairs at the University of Nevada-Las Vegas and author of Megapolitan America. "The shift is from the old crabgrass frontier to the new Main Street."

by Haya El Nasser - May. 15, 2012 04:03 PM USA Today




Subdivisions go urban as housing growth shifts

Sunday, May 13, 2012

Arizona shows big jump in 2011 construction

Arizona ranked fifth among U.S. states for construction spending on commercial real-estate projects in 2011, a huge advance from its No. 14 position the previous year, according to a report issued this week.

The report, from the Virginia-based real-estate development association NAIOP, said companies spent $4.2 billion on Arizona commercial-development projects in 2011, supporting more than 74,000 jobs.

The huge jump in Arizona construction spending was due in large part to the ongoing construction of Intel Corp.'s $5 billion Fab 42 project in Chandler, which began in summer 2011 and is expected to be completed in 2013.

The facility, touted as the largest microchip-fabrication facility in the world, is expected to employ about 1,000 full-time workers upon completion.

The biggest spender in the U.S. on commercial construction in 2011 was Texas, with $7.9 billion spent on commercial projects supporting about 150,000 jobs, the NAIOP report said.

New York was second, with $6.5 billion in construction spending and about 83,750 jobs supported, it said.

In third place was West Virginia, with $5.9 billion in construction spending and about 101,000 jobs supported, followed by California, with $4.5 billion in spending and about 71,000 jobs supported.

Nationally, development and construction of commercial real estate -- including office, industrial and retail buildings -- rebounded in 2011, the NAIOP report said.

It was the first year to post gains in construction spending since the recession began in 2007, according to the report, titled "How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011."

Construction spending on commercial real estate totaled $92.3 billion in 2011, an increase of more than 12 percent compared with 2010, the report said.

That spending supported nearly 2 million jobs nationally, it said.

Although most developers have yet to resume construction of new multitenant office and retail projects, there has been a resurgence of multifamily housing and warehouse construction, both of which are considered commercial development.

The total economic impact of commercial real-estate development, including pre-construction, construction and post-construction, added $261.6 billion to the U.S. gross domestic product in 2011.

That's a 13 percent increase over the $231.7 billion commercial construction added to the U.S. GDP in 2010, according to the report, which was issued Monday.

The increase in construction spending and activity resulted in the building of 238.3 million square feet of new commercial space, an increase of 2.5 percent from 2010.

That new space has the capacity to house 610,000 jobs with an annual payroll of $26.8 billion, the report said.

"2011 was a transition year for the U.S. economy and the construction sector," said report author and economist Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University. "The U.S. economy shifted from a federal stimulus to private-sector-driven growth pattern, and construction spending grew accordingly."

Forecasts for 2012 call for construction spending to increase and accelerate further in 2013 and 2014, according to the report.

"For the first time, we are seeing across-the-board increases in this sector," said Thomas Bisacquino, NAIOP president and CEO. "We believe this is the most solid evidence yet of a strengthening recovery."

by J. Craig Anderson - May. 8, 2012 06:18 PM The Republic | azcentral.com




Arizona shows big jump in 2011 construction

Thursday, May 10, 2012

Is It Better To Buy A Home Or Rent?

As real estate market analysts debate whether U.S. home prices have finally found a bottom, which would signal a recovery is taking hold, some experts are arguing the difference between a home’s price and its value to a buyer. Economists note that homes have historically been poor investment vehicles when considering the alternatives, and that buyers should focus on a home’s value as measured by the quality of life and utility that it delivers to buyers. Deciding this often comes down to a comparison with the costs of renting, and websites like Trulia.com offer rent-to-buy indexes to help buyers weigh the costs and the benefits. For more on this continue reading the following article from TheStreet.

Economists are furiously debating whether home prices are "bouncing along the bottom," ready to rebound, or poised for another dip. Millions of prospective homeowners are eagerly awaiting the conclusion. After all, no one wants to invest in a money loser.

But maybe those buyers are focused on the wrong question. Price is not as important as value, two measures that sound the same but aren't.

That's among the conclusions in a SmartMoney piece by Jack Hough, who uses home price data back to the 19th Century to show that, once inflation is figured in, home prices don't go up at all over the long term. There are spikes, like the one in the last decade, often followed by price collapses. But on average, home prices rise at the inflation rate. In contrast, some other investments, including stocks, rise considerably faster than inflation to produce real profits.

Experts have known for a long time that homes are not especially profitable investments, though it's hard to convince homeowners.

This does not mean, however, that a home is a bad buy. Instead, the home should be viewed as a purchase for consumption, just like shoes, cars and food -- necessities that produce no investment return. The home's value, as opposed to its price, is determined by how well it serves the owner's need for shelter.

And that largely depends on the cost of the alternative: rent.

Right now, home prices in many parts of the country are low relative to rent, making buying the better option. This is seen in the "rent yield," figured by dividing annual rent by the sales prices of comparable properties. If you paid $12,000 a year to rent a home worth $120,000, the rent yield would be 10%. Hough points out that even if you adjust for things like taxes and maintenance on the home, the yield in many markets exceeds 5%, not bad then considering bank savings are paying next to nothing.

Trulia.com has a rent-vs-buy index that shows markets where buying makes the most sense. This price-to-rent ratio divides home prices by rents, the inverse of the rent yield index, so the lower the number the better. (Convert it to rent yield by dividing 1 by the price-to-rent ratio.)

Trulia's most recent survey found it is cheaper to buy than to rent in 98 of the 100 largest markets.

Why has the balance shifted toward renting in so many places? It's a combination of the drop in home prices and the rise in rents due to greater demand from people who cannot buy or don't want to buy.

Buying does not make sense unless you plan to stay in the home for at least five years -- the longer the better. That will provide time for appreciation to cover buying and selling costs like the real estate agent's commission.

Finally, if the home is a consumption item and not an investment, it makes sense to buy the cheapest home that serves your needs. Buying a McMansion packed with rooms you rarely use is like buying a dozen eggs and letting half of them spoil.

by Jeff Brown, MainStreet, Nuwire Investor May 8, 20112


Is It Better To Buy A Home Or Rent?

Monday, May 7, 2012

Home buying may never get any cheaper

Several housing experts are predicting that this year will be the last chance for home buyers to cash in on the weak housing market.

NEW YORK (CNNMoney) -- Buying a home may never get any cheaper than this. Several housing experts are predicting that this year will be the last chance for bargain hunters to cash in on the best deals of the weak housing market.

With home prices down 34% nationally since 2006 and mortgage rates at historic lows, homes have never been more affordable -- but it won't stay this way for much longer.

Stuart Hoffman, chief economist for PNC Financial Services (PNC, Fortune 500), said he expects home prices to flatten out by the third quarter and start climbing by next year.

A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.

Some economists, like Trulia's Jed Kolko, expect home prices to pick up even more quickly. Trulia's data shows that the national average for asking prices already increased 1.4% in the first quarter of 2012, compared with the last three months of 2011.

Mortgage payments at lowest level in decades

"This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer," he said.

Prospective homebuyers who've been sitting on the fence shouldn't worry if they aren't quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.

Hoffman, for example, is forecasting a 2% increase in 2013 compared with 2012. Meanwhile David Stiff, chief economist for Fiserv, predicts that prices will turn in the last quarter of 2012 and will rise 4.2% for the 12 months through September 2013.
Foreclosures start to fade. One major factor that will drive the trend is the cooling of the foreclosure crisis. Stan Humphries, chief economist for Zillow, said that the percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is "falling fast."

That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.

Before things slow down, however, buyers should brace themselves for a temporary spike in the number of foreclosures as banks start expediting the processing of hundreds of thousands foreclosures that were stuck in the system following the robo-signing scandal. That backlog should move more quickly now that new guidelines for processing foreclosures have been outlined in the $26 billion foreclosure settlement.

Many of the bank-owned properties currently coming out of the foreclosure pipeline are being snapped up by investors who are fixing them up and renting them out -- often to those who were displaced by the foreclosure of their own home. That has helped to lift prices on foreclosed properties, according to Alex Villacorte, the director of analytics for Clear Capital, which specializes in housing market valuations.

Home buying much cheaper than renting

"That could have a significant impact on the market overall in terms of providing a rising floor to home values," he said.

In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

"It's crazy," said Tanya Marchiol, founder of Team Investments, a Phoenix real estate investing firm. "Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000."

Miami saw a 4.6% increase quarter-over-quarter through April, and Tampa, Fla., was up 4.4%, according to Clear Capital.

Goodbye 3.8% mortgage. In addition to home prices, mortgages could also move higher.
Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low.

But rates aren't expected to remain at these record-low levels much longer. As the economy continues to recover, rates will move higher, said Doug Lebda, CEO of LendingTree, the online lending site. Although, he said, they will "stay very reasonable."

The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.

Greater demand for loans will help fuel the increase, according to Lebda.

6 Ways to get a great mortgage deal

Even though mortgage rates have been cheap, borrowing for home purchases has been sluggish. The Mortgage Bankers Association estimates that homebuyers will take out mortgage loans totaling about $415 billion this year, an increase of less than 3% compared with 2011. Next year, however, it forecasts that amount will almost double to $706 billion.

As housing markets stabilize and prices stop falling, homebuyers will be even more confident about buying, said Humphries.

"People can now see the light at the end of the tunnel," he said. "And that can be enough to get them off the fence."




by Les Christie cnnmoney.com May 3, 2012



Home buying may never get any cheaper

Thursday, May 3, 2012

Phoenix Finds Its Way Out of the Downturn: A Model for Recovery


The Arizona capital of Phoenix was one of the hardest hit markets by the housing crisis, with home values plunging nearly 60 percent from 2006 through mid-2011 and foreclosure filings soaring.

As recently as June 2011 Phoenix held the second highest metro foreclosure rate in the country, behind only Las Vegas, according to RealtyTrac. By the end of 2011, it had dropped to No. 6, and by March 2012, slipped to No. 9.

Adam Artunian, senior research analyst with John Burns Real Estate Consulting (JBREC), says it wasn’t too long ago that Phoenix was considered ground zero of the housing market’s collapse. “Phoenix has orchestrated a dramatic turnaround in recent months and has considerably outpaced other distressed markets such as Las Vegas, Riverside-San Bernardino, and Sacramento,” according to Artunian.

So what’s going on in the Valley of the Sun that’s so different from the rest of the country? What market forces are strong enough to lift the nation’s sixth most populous city from the depths of the downturn?
Analysts and local real estate professionals alike attribute the market’s turnaround to investors who are snapping up properties to fix and flip or fix and rent.

While Phoenix has always been an attractive investment market, Artunian says investors have literally flooded the area since the downturn and now make up close to 45 percent of all buyers.

Investor demand is so strong in fact that Artunian says first-time buyers are having difficulty competing with investors who are paying with all cash. Local agents are reporting bidding wars among prospective buyers, with homes going for more than the asking prices.

Artunian notes that single-family rental rates are now averaging $12,500 a year. With the selling price of a distressed home usually well below the median home price of $127,000, he says investors can expect to achieve between a 5 percent and 10 percent annual return, after operating expenses and before any home price or rental appreciation.

Investor demand has served to drive up home prices in the area. According to Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, the median price of single-family homes in the Phoenix area rose to $134,900 in March of this year, up more than 20 percent from a year earlier.

He says the increase signals a shift in the mix of properties being sold, with fewer low-price foreclosures moving through the market. Median and per square foot pricing is moving up as traditional sales account for a greater percentage of activity, Orr explained.

The average price per square foot for homes in Phoenix during the first quarter of this year was $956, according to the online real estate marketplace Trulia. That’s an increase of 999.9 percent compared to the same period last year.

Local investors say homes priced at the lower end of the market – under $100,000 – are becoming increasingly harder to find, and once you do find a bargain-priced gem, it’s snapped up and off the market before you know it.

Artur Ciesielski, a Realtor and partner with inPhoenix Realty Group, noted in a recent blog post that the nose-dive in Phoenix home prices since the bubble burst is now fueling investor appetite, especially in a market with such high rental demand.

“Expect investor demand to continue and to be part of the demand that is driving prices up,” Ciesielski writes, “and forget about shadow inventory, it’s not coming.”

The housing inventory in Phoenix has fallen to a mere 2.4 months, down from nearly 5 months just one year ago and over 12 months in early 2008. According to JBREC, months-of-supply has not been this low in Phoenix since late 2005 when sales activity was at feverish levels.

Listings of existing homes for sale have fallen 43 percent since March 2011, and local practitioners are now calling “shadow inventory” nothing more than a myth. They say if banks were holding properties off the Phoenix market, now would be the time to release them and it’s just not happening.

Where are all the real estate investors descending from? Artunian points to Canada. While there are a growing number of local investors taking advantage of current conditions, he says Canadians are increasingly flush with cash, many because of their own real estate boom in recent years.

That combined with a favorable currency exchange rate has given them “unusual buying power,” according to Artunian. He cites data from the Cromford Report, a local real-estate publication, which shows one in every 25 sales registered in February went to a buyer that listed a Canadian address.

by Carrie Bay dsnews.com May 2, 2012



Phoenix Finds Its Way Out of the Downturn: A Model for Recovery

Thursday, April 19, 2012

U.S. housing market boosted by jobs, higher rents

WASHINGTON - It's been a long time since the market for new homes has looked this good.

Rising rents and a healthier job market are inspiring more Americans to consider buying.

Builders are responding to the demand by laying plans for more homes this year than at any other point in past 3 1 / 2years.

And banks are helping both by approving more loans.

All that points to a better year for the housing market, though a full recovery could take several years.

"We're doing so much more business than we have in years," said Ed Kopal, who runs a construction company in East Texas and has seen his business more than double this year compared with 2011.

Others, too, foresee more enthusiasm among buyers after four sluggish years.

Builders requested a seasonally adjusted annual rate of 747,000 permits to build homes in March, the Commerce Department said Tuesday. The pace hasn't been that high since September 2008.

Of those requested, 462,000 permits were to build single-family homes. That's 12 percent more than just six months ago. Still, the figure remains far below the 800,000 permits a year that signify a stable new-home market.

Builders are seeing more demand for apartments, too. Over the past six months, permits to build apartments have surged 68 percent, to 285,000 permits. A healthy number is closer to 400,000 a year.

Rents are rising, which has spurred construction for both kinds of homes.

In Philadelphia, rents have increased nearly 15 percent over the past year through February, while home values have dropped 5.4 percent, according to real estate website Zillow.

Minneapolis rents are up nearly 10 percent; home prices are down nearly 7 percent. Baltimore has seen rents rise 8.6 percent and home values drop 4 percent.

In Chicago, median rents in the past 12 months have risen 8.6 percent, or more than $100 a month. In the same period, the median home price has fallen 11 percent, to just $154,600.

So while apartment developers are chasing higher rents, renters are seeing more incentive to buy homes. A survey of homebuilders has shown an increasing amount of foot traffic at open houses across the country since September.

Kennon Reinard and her husband were among those who felt the time was right. The couple has rented a two-bedroom apartment in Chicago for the past six years. Over the past month, they looked at 14 houses before making an offer of nearly $260,000 on a four-bedroom home on the Northwest side of the city.

"We've always wanted a house, but we never thought we could afford one," said Kennon Reinard, 33. "But we started noticing friends buying houses last summer and, when we checked it out, we realized we could own a whole home with a backyard without paying that much more than what we're paying in rent."

The Reinards and other potential homebuyers have another reason to feel good about trading rent payments for a mortgage: The job market has strengthened since last summer.

The unemployment rate has fallen from 9.1 percent in August to 8.2 percent last month. Employers have added an average of 212,000 a month from January through March.

More jobs and a better outlook among buyers could also make 2012 the first year since the housing bubble began to burst in 2006 that construction adds to growth -- rather than detracts.

Record-low mortgage rates have helped persuade buyers. The average rate on a 30-year fixed-rate loan is just above the 3.87 percent level reached in February -- the lowest since long-term mortgages were first offered in the 1950s.

Banks are also seeing more qualified buyers apply for loans. Two of the nation's biggest banks -- JPMorgan Chase and Wells Fargo -- approved more mortgage applications in the first-quarter, based on their recent earnings reports.

"The ones buying now are older, they've saved up for a while, they have good jobs, they are not risky," said Karen Mayfield, senior vice president of Bank of the West, a national bank lender based in San Francisco.

Among the most basic requirements needed for homebuyers: good FICO credit scores typically above 700, substantial down payments, stable job histories and thorough documentation.

The Reinards had been socking away a portion of their paychecks for all the years they rented and both have solid credit histories. They are coming to their closing in May with a down payment of more than $25,000.

"We feel very safe in our jobs," Reinard said. "We've been pretty financially responsible so we got thumbs up after all the checks."

by Derek Kravitz - Apr. 17, 2012 01:55 PM AP Economics Writer




U.S. housing market boosted by jobs, higher rents

Phoenix Housing Market Rising

http://video.cnbc.com/gallery/?video=3000085201&startTime=0&endTime=6


Saturday, April 14, 2012

Homebuilders busy again in corners of metro Phoenix

Homebuilding, metro Phoenix's biggest industry before the housing crash, is on the rise again.

Unlike in the past, this burst in the region's homebuilding isn't being driven by buyers going farther and farther out to find a house they can afford or investors looking for bargains.

In some areas of metro Phoenix, including Chandler and Gilbert in the southeast and Peoria and Surprise in the northwest, short-sale home prices are climbing so high due to multiple offers that resale home prices are rivaling new-home costs.

At the same time, builders are able to put up new houses for costs that let them compete with foreclosure-home prices. Many picked up empty lots in prime locations for bargain prices during the crash and can keep construction costs low.

The results: Among buyers, a growing number who have been outbid multiple times on short sales and foreclosures are opting to purchase new houses instead. And among builders, who have seen several dismal years of slow sales and deep losses, some are now reporting profits or at least their highest monthly sales in years.

Amy Baum had been outbid on seven short sales on homes in Chandler and Gilbert when her real-estate agent persuaded her to look at new homes in Gilbert.

Baum, an occupational nurse who treats employees at Intel, wanted to be near her job and her parents, who live in the southeast Valley.

"The prices on short sales were being bid up so high, I would have ended up paying $215,000 for a home that would take another $15,000 to fix up," said Baum. "I could get a new house for $215,000 and not have to worry about fighting some other buyer for it or renovating it."

New-home recovery

New-home sales and permits to build homes are up significantly in metro Phoenix from last year, due mostly to buyers like Baum.

"There's no question the new home market is finally on its way back," said RL Brown, publisher of the "Phoenix Housing Market Letter," a monthly newsletter tracking homebuilding. "But no one knows whether it will come back rip-roaring like the boom of 2006 or a more normal market like 2003."

For the first two months of this year, new home permits are up 84 percent compared with the same period in 2011, but the overall numbers are still low by metro Phoenix standards.

In January and February, there were 1,460 single-family permits issued in the region. In 2003, there were about 2,500 permits issued a month. In 2006, new homes went up at an average rate of 5,300 a month.

New-home sales are up 34 percent, but again, there were only 1,099 during the first two months of the year.

Several builders are reporting March was their best month for sales in years, and the uptick in the new-home market is likely to continue for at least a few more months.

Homebuilder Taylor Morrison sold more than 100 metro Phoenix houses in three weeks, making March its best year for sales in four years, said Pierrette Tierney, the company's vice president of sales and marketing.

She said buyers who have lost bidding wars on short-sale and foreclosure homes are Taylor Morrison's biggest group of buyers now.

"People call after looking at one of our houses and say, "If I write you a deposit check right now, can I get that lot?' " Tierney said.

"They are so happy when we tell them yes because they have been turned down so many times trying to buy existing houses. Of course, we are thrilled, too."

Location, location

Not all areas of metro Phoenix's new-home market are drawing buyers. The areas with the most homes being built are also the areas with the fewest existing homes for sale. The fringe parts of the Valley, the communities farthest out, continue to struggle.

"Real-estate agents are beginning to steer clients to new homes again because, in certain areas, it's the only option for their buyers," said Marcie Jarnagin-Beckham, a sales associate with Meritage's Villages at Val Vista in Gilbert, where Baum purchased her home.

The majority of new homes sold in metro Phoenix during the past year have been in Gilbert and Chandler. Buyers are drawn to those areas for the schools, jobs and shopping.

Other popular areas are Peoria and Surprise in the northwest. Several large employers have moved into the areas, and the expansion of Loop 303 has made commutes easier.

"It's all about location for homebuyers now," said Brown. "People will no longer drive until they qualify to buy a house."

Perry Dion has been trying to buy a house in Peoria for the past year. He has bid on dozens of short sales and even gone to the foreclosure auctions in front of the Maricopa County Courthouse.

"I have been going month-to-month on my apartment paying more because I kept thinking one of my offers would be accepted," he said. "But recently, I realized I have saved enough money that I can buy a new home in the area."

He's been checking out new subdivisions in Peoria and north Phoenix for the past few weekends and hopes to sign a contract this month.

Dion wants to sign a deal soon because he is already seeing some slight increases in the prices of the new homes he's checked out.

Market conditions

There's a shortage of home lots in the areas of the Valley where most new houses are being built. That, along with demand for more buyers, could push up overall new home prices this year, say real-estate analysts.

"I don't think any homebuilders are jumping up and down yet, but it feels good to be selling homes again," said Carl Mulac, president of AV Homes and chairman of the Home Builders Association of Central Arizona. "I am just concerned about how long this window of opportunity will last."

Some builders are expected to try to draw buyers in other parts of the Valley where they still have inexpensive lots. But there's no guarantee that strategy will work.

Building costs could rise if new-home demand continues to increase.

Subcontractors had to cut what they charged builders to survive the downturn, and most are ready to raise their fees as soon as they can, said Brown. Those higher fees will push up new-home prices.

And bargains on empty lots in foreclosure are mostly gone, so builders' land costs will continue to rise.

"My biggest concern for the market," Mulac said, "is whether the price appreciation of new homes can outpace the cost appreciation builders will soon be facing."


MORE ON THIS TOPIC

Single-family permits issued in metro Phoenix

1,460In January and February

2,500Per month in 2003

5,300Per month in 2006





by Catherine Reagor - Apr. 13, 2012 11:07 PM The Republic | azcentral.com



Homebuilders busy again in corners of metro Phoenix

Reagor: New DMB head rosy on housing

DMB Associates promoted Charley Freericks to president this week. Here are some of the Arizona real-estate veteran's opinions on the housing market and DMB's future.

Question: How would you describe metro Phoenix's current housing market? Economy?

Answer: There is significant anecdotal evidence for the beginning of a recovery. In housing, in retail, office and in employment. I look for it in discretionary-spending places -- if restaurants have wait lists, if at sporting events seats are filled and there are lines at concessions. DMB's communities and commercial centers tell the same story: Month to month and year over year, the negative trends have reversed, and the numbers are going the right direction. Consumer confidence is returning, and that is when recoveries get traction.

Q: What will Eastmark do for Mesa? Verrado for West Valley?

A: Eastmark is something very special. This new DMB community will help redefine the Gateway area. In the past, we have been market- and place-makers with communities such as DC Ranch, Superstition Springs and Verrado. But with Eastmark, we are reshaping and enhancing an already established area and serving as a catalyst for new activity in this center of regional importance.

Remember, this area was formerly Williams Air Force Base, and following its closure, it was repurposed as the regional reliever Phoenix-Mesa Gateway Airport. The combination of ASU Polytechnic, the aerospace-aviation employers and the airport itself has produced a significant, and emerging, center of commerce.

Verrado, another former desert proving ground, continues to evolve and grow as our long-term vision is realized. Banner has their new medical facility under construction, retail and offices are filled, and housing is in recovery. Verrado has performed better than many areas in the West Valley. It's a testament to DMB's community life and neighbor engagement. Homebuyers in this market want a place to call home and invest in their community. We are also under way on attracting employers to the region so the vision for a true live-work-educate-play community can be realized.

Q: What's next for development in Arizona for DMB?

A: Today, we have one of the finest portfolios of large-scale communities and mixed-use commercial properties in the West. DMB is fortunate to have great sponsorship and commitment for the long term. We have been selective in order to achieve our goal of creating the country's finest living environments. For now, we are working to capture every housing and employment opportunity that will help us achieve the vision for our communities.

Q: When do you think metro Phoenix's homebuilding market will recover?

A: The recovery is starting here now. It's tempting, but impossible, to forecast the bottom or top of a market. But here is what I know about recoveries: First you crawl, then you walk, then you run. While we may not be running right away, we are in recovery.

One of our primary differentiators is thinking about how people will live in our communities, and we make every effort to create places that will live well over time. As we move forward, buyers are again looking for how they want to live and where they can be proud of their home, neighborhood and community. People want to live where they can be engaged, involved and connected. Our communities are recovering faster because people value places with stability and engagement.

Q: And how often do people misspell or mispronounce your last name?

A: Wow! Both my first name and last name are hard to spell, so one or the other is always wrong. "Freericks" came over from Germany unchanged at Ellis Island. The only benefit is I can tell right away if I know the person addressing me.

by Catherine Reagor - Apr. 13, 2012 04:11 PM The Arizona Republic | azcentral.com


Reagor: New DMB head rosy on housing

Sunday, April 8, 2012

Housing takes a few baby steps forward

Naysayers of metro Phoenix's housing-market recovery might be swayed by this:

The median price of an existing home in the region climbed 7 percent during March.

Last month, the median price of a Phoenix-area used home reached $131,000, according the real-estate firm AZBidder.

That's the highest the median for the area has been since June 2010.

A little more positive data. In March, 9,587 houses were sold across the region. That's the highest level since June 2009.

The number of homes for sale continues to shrink.

There are 21,750 houses on the market Valley-wide, according to the Cromford Report.

But that figure includes 7,700 homes that are already under contract for a sale.

Minority bias alleged

The National Fair Housing Alliance investigated nine metro areas, including metro Phoenix, to determine if foreclosure properties in Black and Latino neighborhoods were being maintained and marketed by lenders as well as foreclosures in predominately White neighborhoods. Its report was released earlier this week.

In the Valley, the housing group compared fewer than 200 foreclosure homes in Glendale and Maryvale. The investigation found 40 percent of the bank-owned homes in Maryvale, which it considered predominately Latino, had broken doors.

Only 6 percent of the bank-owned houses that the group checked out in the neighborhood in Glendale, which it considered predominately a White community, had broken doors.

About 73 percent of the foreclosure homes in the west Phoenix community didn't have "for sale" signs.

And 11 percent of those Glendale foreclosure home were missing those signs.

The investigation was a random sampling, and the Housing Alliance would not disclose what ZIP codes the homes it tracked were in or which lenders were the worst offenders.

But the report does address a problem for most major cities with higher foreclosure rates.

The Housing Alliance plans to file complaints with the U.S. Department of Housing and Urban Development in the next week accusing the lenders of violating the nation's Fair Housing Act.

by Catherine Reagor - Apr. 6, 2012 03:31 PM The Republic | azcentral.com



Housing takes a few baby steps forward

Friday, April 6, 2012

Americans Brace for Next Foreclosure Wave - US Business News - CNBC

Foreclosure

Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end.

Housing experts say warning signs of a new wave of foreclosures are likely to be replicated across much of the country.

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.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

More conclusive national data is not yet available. But watchdog group 4closurefraud.org, which helped uncover the "robo-signing" scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash.

Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo's rose 68 percent and Bank of America's, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America [BAC 9.23 0.03 (+0.33%) ] said it does not comment on data provided by other sources. Wells Fargo [WFC 33.73 -0.15 (-0.44%) ] and Deutsche Bank did not comment.

Housing experts say localized warning signs of a new wave of foreclosures are likely to be replicated across much of the United States.

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed".

One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.

"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."

"Hard to Catch Up"

Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.

Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.

"If things don't pick up, I will be out on the street," he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.

Have Refis Run Out?Slideshow: Cities With the Most Underwater MortgagesAs Foreclosure Problems Persist, Fed Seeks More FinesJPMorgan's Dimon: Mortgage Woes Still Hit Earnings
Underscoring the uncertainty of his situation, Burns' cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April.

A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.

"Once you get behind it's so hard to catch up," she said.

Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.

Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.

Real estate company Zillow [Z 37.08 -0.59 (-1.57%) ] says more than one in four American homeowners were "under water" or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.

"We're seeing more people coming through who have good loans with reasonable interest rates," said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago, which provides foreclosure counseling. "But in many households only one person works now instead of two, or they had their hours cut."

"The answer to the housing crisis now is job creation."

Early Signs of Uptick?

Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.

According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.

There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.

A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.

"Now the banks have a settlement, foreclosure numbers for 2012 are going to be high," said NEDAP co-director Josh Zinner.

A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.

"Funding is a major concern given what our members expect for this year," said associate director Kevin Stein.

All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.

Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of "moral hazard" — that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.

ESOP in Ohio engages in "hits" on Chase branches — they say Chase [JPM 44.34 -0.07 (-0.16%) ] is the least accommodating major bank when it comes to working with struggling homeowners — where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions. A Chase spokeswoman said the bank has made "extensive efforts" to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure "more than twice as often as we have had to foreclose." Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.

"Until banks engage in meaningful principal reduction as a matter of course," ESOP's Seifert said after a recent protest at a Chase branch in Cleveland, "this crisis will not end."

by Reuters Apr 5, 2012

Americans Brace for Next Foreclosure Wave - US Business News - CNBC

Thursday, April 5, 2012

Homebuilder Sector Up 28%

Home investors bought 1.23 million homes in 2011, a 65 percent jump from 2010. 50 percent of those purchases were either foreclosures or short sales. Lawrence Yun, National Association of Realtors chief economist; Gary Beasley, Wayport Real Estate Group managing director; and CNBC's Courtney Reagan offer insight.















Homebuilder Sector Up 28%

Monday, April 2, 2012

Mansion in PV sells for $10.5 mil

M56 Place LLC, a New Mexico limited liability company, paid $10.5 million in cash for this 17,015 square-foot home at Mummy Mountain Estates in Paradise Valley.
John McLean/The Arizona Republic M56 Place LLC, a New Mexico limited liability company, paid $10.5 million in cash for this 17,015 square-foot home at Mummy Mountain Estates in Paradise Valley.




Metro Phoenix's high-end housing market received a boost earlier this week when a 35,000-square-foot mansion in Paradise Valley sold for $10.5 million in cash. It's the region's highest price home resale since the boom, though there have been some pricier homes built.

The house, situated on 5 acres, was once owned by Phillips Smith, former chairman of Taser International. He gave the home back to lender M&I Bank in 2011.

The buyer, M56 Place LLC, has carefully covered the names of its principals, the people who will own the home.

"The house is in great shape and was a great deal for the buyer," said Joan Levinson of Realty One Group. She negotiated the sale for the lender and buyer and declined to disclose names of the people behind M56 Place.

The house was originally listed for $20 million, and then lowered to $15.9 million. The mansion comes with a 21-car garage, two swimming pools, a guesthouse, seven bedrooms, 10 bathrooms, $1.2 million in security and sound equipment, a 13-seat movie theater and two large libraries

Smith lived in the home and maintained it until the sale.

Price per square foot

For anyone still in doubt about home prices increasing in the metro Phoenix area: on March 28, the price-per-square-foot of a home sale in the region had climbed 8.68 percent from the end of February, according to the Cromford Report.

Mike Orr, publisher of the online real-estate report, said that beats the highest monthly price jump during the region's housing boom: 7.47 percent during January 2005.

The biggest 30-day price change during the past decade happened during September 2007, but that was a drop of 9 percent.

Valley Home Values

The Republic's annual analysis of metro Phoenix home prices and sales will be in Sunday's paper and online at homevalues.azcentral.com.

Some homeowners may look at the data and think prices look low for their neighborhood.

The report is based on annual data from 2011, and many areas didn't start to see increases in home values until late last year.

by Catherine Reagor - Mar. 30, 2012 04:50 PM The Arizona Republic | azcentral.com



Mansion in PV sells for $10.5 mil

Wednesday, March 28, 2012

Fewer Phoenix-area homes for sale; prices up

A surge in buyers and a drop in foreclosures have left a shortage of houses for sale in metro Phoenix, according to a newly released report on the state of the housing market.

The shrinking inventory has prompted bidding wars and pushed up home prices in many communities.

At the end of February, the supply of homes for sale was just under 24,000, down 42 percent from a year earlier, mostly because of a 52 percent drop in foreclosures during the past year, according to the latest monthly real-estate report from Arizona State University's W.P. Carey School of Business.

As banks take back fewer homes through foreclosure, fewer homes go to auction or back on the market.

Tuesday's report, which said that home prices could keep climbing if the inventory of homes for sale remains low, was the most optimistic from ASU since the beginning of the region's housing crash in 2007.

"Supply is tight, in a pretty extreme way, and it looks like it will stay that way for months," said Mike Orr, director of the Center for Real Estate Theory and Practice at ASU.

Orr said that as long as supply is tight and there are more buyers than sellers, Phoenix-area home prices will continue to climb.

Metro Phoenix's median home price has steadily been increasing since last August, when it fell to a 12-year low of $113,000. The region's median for February was $124,500, up 8 percent from a year earlier.

Climbing home prices could entice more homeowners who bought before the boom to try to sell their homes.

More sellers would increase supply, balancing the market and aiding many frustrated buyers who are currently being outbid on foreclosures and short-sale homes.

"Now, I have a ton of buyers and no properties to sell them," said Diane Brennan of Scottsdale-based Keller Williams Integrity First Realty.

"I warned buyers for months they should act quickly. Many didn't pull the trigger before because they were waiting for the bottom," she said.

There is a potential problem lurking in the recent trend: Some appraisals aren't keeping pace with the increases in home prices.

Orr said appraisers are still looking at prices from three months ago.

In some parts of metro Phoenix, though, home prices have climbed 5 percent or more since the beginning of the year.

by Catherine Reagor - Mar. 27, 2012 10:48 PM The Republic | azcentral.com



Fewer Phoenix-area homes for sale; prices up

Demand For Homes Continues To Show Recovery - WSJ.com

The number of contracts signed to buy homes in February eased slightly from January but posted another strong gain from a year ago—the latest sign that demand for homes is up from the depressed levels of the previous 18 months.

A report Monday by the National Association of Realtors showed the index of pending home sales, reflecting deals that have gone into contract but haven't yet closed, rose 9.2% last month from a year earlier, continuing a rise largely fueled by investors' purchases of foreclosed properties. The index fell by 0.5% from January.

While buyers are starting to step forward, however, home builders and real-estate agents report an elevated level of contracts falling apart, as buyers run into trouble qualifying for mortgages amid tough lending standards.

Another common complaint: low appraisals that come in below a negotiated value, requiring sellers to cut their price or buyers to put more money down in order to keep a deal from collapsing. As a result, the pending sales figures could be overstating actual sales as buyers sign multiple contracts over the course of several months.

The number of contracts signed to purchase homes in February posted another strong gain in the latest sign that housing demand is up from the depressed levels of the previous 18 months. Nick Timiraos has details on The News Hub. Photo: Bloomberg News

Still, analysts say that housing demand appears to be stronger than at any point in the past year. Low prices are luring investors who can convert properties into rental units and make double-digit returns. More first-time buyers could face added urgency to move as landlords begin to raise rents and mortgage rates rise from record lows.

"We are seeing very strong activity out there," said Ivy Zelman, chief executive of research firm Zelman & Associates. Buyers are tired of deferring moves, and rising rents "have really pushed people off the fence," she said. "We're not ready yet to wave the victory flag and say home prices are going up, but we're confident they're stabilizing."

Monday's report showed that purchase activity was up 18.4% and 19% from a year ago in the Northeast and Midwest, respectively, after an unseasonably warm winter. Contract activity fell by 1.8% in the West.

Real-estate agents in many parts of the country say inventories of homes for sale are declining, leaving more buyers competing for less supply. Shrinking inventories could be a consequence of the decline in home prices, which has left more sellers unable or unwilling to sell their homes at a loss.

In Orange County, Calif., the number of homes listed for sale is down by 36% from a year ago. Meanwhile, the number of homes under contract is up 25% to its highest level in four years, according to Steven Thomas, a local housing-market analyst.

So far this year, nearly one in six homes listed for sale have gone under contract within their first three days across the 18 markets covered by Redfin Corp., a Seattle-based brokerage, said Glenn Kelman, the firm's chief executive.

by Nick Timiraos The Wall Street Journal Mar 28, 2012


Demand For Homes Continues To Show Recovery - WSJ.com

Housing availability plummets 42% as prices rebound - Local News - Phoenix, AZ - msnbc.com


A dramatic housing turnaround is taking hold, with the glut of homes for sale in the Valley plummeting 42 percent in the last year.

This has put housing in short supply and helped to boost homes prices by nearly 16 percent since values bottomed out in September 2011, according to an Arizona State University report.

The findings are probably a shock to Valley residents used to gloomy housing news, said Mike Orr, director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at ASU.

“They think we have a glut but we have a shortage, and it’s almost as stressful as having a glut as to have a shortage,” Orr said.

Many buyers have become dispirited after making multiple offers and not getting a home. That problem will likely get worse in the next few months because spring is the most active time for home buying, Orr said.

The shortage is made worse because new home construction had fallen so dramatically.

Builders completed about 4,000 homes a month at the peak of the housing boom, but that’s fallen to about 400 a month now. Orr expects builders can double production but he said they face limits because so many construction workers left the state when the housing market crashed.

“I can’t see them building enough to change a shortage into an adequate supply, at least not in the short term,” he said.

The February housing report includes Maricopa and Pinal counties. Its findings include:

• Median sale prices rose 8.3 percent from February, from $115,000 to $124,500. That includes new homes.

• The average price per square foot rose 4.1 percent, from $81.07 to $84.36.

• Monthly foreclosures are up from February but down 9 percent from February 2011.

• Foreclosure completions were down 52 percent in the last year.

• Bank-owned sales dropped 40 percent.

Low-end and moderately priced homes are in the highest demand, Orr said.
Housing wasn’t hurt by gas prices of nearly $4 a gallon, Orr said. But it has affected where people want to buy and made central locations more desirable.

Orr said the improving housing news doesn’t indicate the market is healthy or normal yet. Prices need to rise about 33 percent based on trends of long-term average pricing, Orr said. That would place values at $120 per square foot. Prices had fallen to $78 but are now at $90.

“I don’t know when we’ll get back to normal,” Orr said. “Arizona, housing prices in particular, seems to be a very volatile market.”

by East Valley Tribune msnbc.com Mar 28, 2012


Housing availability plummets 42% as prices rebound - Local News - Phoenix, AZ - msnbc.com

Friday, March 23, 2012

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

 

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

by Krista Franks Brock DSNews.com Jan 24, 2012



Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Tuesday, March 20, 2012

The one number to watch for a housing recovery

If you're waiting for home prices to go up, then you're missing signs the troubled housing market has finally turned around.

 

FORTUNE – Over the past few months, many economists have concluded that that the U.S. housing market has reached a turning point and is healing. This may sound hard to believe, since home prices have continued their downward trend. In 2011, prices fell by 4% following nearly a 30% decline since the property bubble paeked in June 2006. They ended the year at a 10-year low.

Indeed, prices aren't likely going to rise for a while. But this might not necessarily mean the housing market isn't on the mend. Perhaps we're looking at the recovery all wrong, says Paul Dales at Capital Economics. In a report to clients recently, the economist said higher prices won't be the sign that tells us there's a realrecovery under way. Rather, the recent pick-up in sales is what we should pay attention to.

After all, prices tend to be a lagging indicator. It could take six months for any improvements to show in the market, if not longer.

"Even if the asking price is at the right level when the home is first listed, it may still take a few months to find a buyer and another month or so before the contract is closed," Dales wrote to clients last week. "The selling price that is registered at the end of this process therefore relates to the market conditions somewhat earlier."

Sales have risen recently, reaching a few milestones.

In 2011, existing home sales climbed to 4.26 million – higher than the 4.19 million sales in 2010. Needless to say, this is far below the market's peak of 7.1 million sales amid the housing boom in 2005. But it's worth noting that for the past two years, sales have crept up from the market's low of 4.1 million sales when the market collapsed in 2008. In particular, in the past six months, total homes sales have risen by 13% as borrowing costs for home mortgages continue to fall to record lows and investors making up the bulk of sales find opportunities in heavily discounted properties after foreclosures and short sales.

And a series of home sales data released later this week is expected to show that home purchases probably climbed in February to their highest level in nearly two years, according to the forecasts in a Bloomberg survey. Sales of new and previously-owned properties combined are expected to rise to an annual rate of 4.93 million – the strongest since May 2010, and up from 4.89 million in January.

The evidence reminds us that perhaps we should change our expectations of what a housing recovery might look like, particularly following a crisis marked by record foreclosures and a financial crisis that sent the economy into one of the deepest recessions. The recovery we have been anticipating is defined more on the rate at which the glut of vacant properties comes off the market as opposed to any steady rise in prices, which some think won't happen for another few years.

The inventory of unsold homes has dwindled, falling in January to 6.1 month's worth of supply – its lowest level since March 2005. A supply of six months is generally considered ideal for a healthy housing market, but there continue to be several headwinds at play that could weigh down prices.

The most immediate threat is the $25 billion settlement that federal and state officials recently reached with five banks to end investigations into abusive foreclosures practices. The agreement, which had stalled pending foreclosures nationwide for more than a year, will probably add more properties into the market. Dales at Capital Economics estimates additional 3 million homeowners might succumb to foreclosure over the next few years.

And then there's the longer-term threat to prices, which some experts say could arise when the Federal Reserve raises interest rates later. The inevitable move could potentially make the cost of home purchases more expensive relative to stagnant incomes.

So if anyone is looking at prices for signs of a recovery, it's likely that they'll miss it.

By Nin-Hai Tseng CNNMoney Mar 20, 2012





The one number to watch for a housing recovery

Monday, March 12, 2012

Phoenix-area homebuyers squeezed out by investors

Many potential homebuyers who sat on the sidelines watching metro Phoenix's house prices fall during the past five years are back in the market, ready to take out a mortgage and move in.

But many are finding they cannot buy.

Armed with a preapproved mortgage and even enough cash for a hefty down payment, they bid on foreclosed homes and houses up for short sale -- but are outbid by investors buying houses for cash on the spot.

Traditional homebuyers, who typically make an offer contingent on other steps such as an appraisal and securing the loan, find they can't compete with someone who is willing to pay up front the entire asking price or more.

Tight supply makes the competition even stiffer.

Home resales, averaging 7,500 a month, are at their highest level since the peak of 2005-06. But the number of homes for sale is at the lowest level in more than a decade. There currently are about 23,000 homes for sale in metro Phoenix, one-third of the area's housing inventory in 2009.

With demand for houses high and supply so low, many are drawing multiple bids.
That is not to say the bidding wars are driving up prices in the overall housing market nearly as much as they did in boom times. Median resale prices remain near the bottom of the lows to which they fell after the housing crash and wave of foreclosures that began in 2007.

But those low resale values have kept many traditional sellers out of the market, too, experts say. Many homeowners don't have enough equity to sell, or just don't see enough profit to make selling and moving worth it.

The result is that much of today's bidding is on foreclosure homes or short sales, where banks approve a sale for less than the current borrower owes.
And in these cut-rate homes, cash is king.

Foreclosures have declined in recent months, as banks increasingly approve short sales to help residents avoid foreclosure. The drop in foreclosure inventory is working to push up home prices a little each month.

Most metro Phoenix homes for sale are still considered great deals. Market watchers agree that long-term investors paying cash will lead to fewer empty homes and a better market overall.

But for the housing market to truly recover, they say, it must see a return of the regular participants: homeowners confident enough to put their houses on the market, and perhaps more importantly, regular buyers with mortgages and jobs who can afford to buy homes of their own.

"Phoenix's housing market is in a state of fast changes," said Mike Orr, real-estate analyst for Arizona State University's W.P. Carey School of Business.
"Prices are ticking up, and buyers are getting more and more frustrated they can't find homes," said Orr, who also publishes daily real-estate analysis called the Cromford Report.

Traditional buyers

Nakisha and Lenny Williams heard about the great deals for Phoenix foreclosure and short-sale homes more than a year ago. The couple began searching online. The low prices for homes built just a few years ago helped them decide it was time for a move.

The young couple quit their jobs, sold their Chicago-area home for a modest profit and relocated to Phoenix, where they found new jobs fairly quickly and rented an apartment while they shopped for a home. But the Williamses have been outbid on at least five homes so far and have been waiting for more than a month to hear back on their latest bid on a Litchfield Park house.

Nakisha Williams works for a water company. Though Lenny Williams recently lost his construction job, the couple have been saving for a down payment and are preapproved for a mortgage they can afford, if their offer of $120,000 for the home is approved.

"It's crazy for buyers now," said the couple's real-estate agent, Yvette McDonald of Monopoly Realty. "The Williamses are still looking for other homes while they wait to hear back from the lender on the Litchfield Park home, but we can't find anything that is still available by the time we make an offer."

She has several other potential buyers in the same position, making multiple offers that aren't accepted or are topped by other bidders, especially investors.

Investors

Andy Rysdam has $10,000 for a down payment and is preapproved for a mortgage to buy a home for as much as $175,000. Recently, his real-estate agent found a potential house listed late in the afternoon. They went to see it first thing the next morning, and already there were seven other offers on it.

"It's the investors getting the best homes. They have cash," said Rysdam, who is renting and not giving up on buying a home despite already being beaten out by investors several times.
Cash buyers, who are typically investors looking to resell the properties or use them as rentals, account for nearly 60 percent of all Phoenix-area homebuyers now, according to data compiled by AZBidder.com, an online foreclosure-auction service.

"We are seeing multiple offers on any decent home," said Rysdam's agent, Brett Barry of Phoenix's HomeSmart. "These are different than the bidding wars from the boom, but buyers are getting more and more aggressive as the inventory of homes for sale continues to shrink."

Scottsdale real-estate agent Diane Watson is working with a Canadian investor who wants to spend $10 million on metro Phoenix homes that can be turned into rentals.

Wealthy investors can make more money buying foreclosure or short-sale homes in growing areas like Phoenix and renting them for seven to 10 years until prices rebound than they can on most other investments now.

Watson can't find enough homes for her Canadian investor and is considering approaching homeowners underwater on their mortgages and late on their payments to sell through a short sale even before their lender suggests it.

"I am about to go door to door," she said. "People don't realize they have the short-sale option because the deals have been so hard to do in the past, but not now."

Laura Gonzales thought she had found the home of her dreams in Phoenix. The elementary-school teacher has been renting a house in north Phoenix's Desert Ridge area since she moved from California in 2007.

As foreclosures have climbed in her neighborhood and home prices have fallen, she has slowly saved for a down payment. In January, she found "the perfect home" listed for short sale just a block from where she's renting. The house was bigger, and her monthly mortgage payment would be less than her rent.

She made an offer the day it was listed for sale. But already a dozen other offers had been made. She upped her offer by $10,000, but at least two investors upped their offer by twice as much.

The home ended up selling for almost $200,000 -- more than $50,000 over the asking price.

"It was heartbreaking," Gonzales said. "And last month, the same thing happened to me on a house I didn't want nearly as much, but I felt like I had to keep bidding because the homes I like are going so fast in this area."

Diane Brennan of Scottsdale's Keller Williams Integrity First Realty said the housing market is crazy now. "It's nearly impossible to buy a home in the $100,000 range," she said. "I've got tons of buyers and no properties to sell them. One home in south Scottsdale got 43 offers."

A rush to avoid higher prices

Metro Phoenix's median existing-home price has been steadily ticking up since last August when it fell to a 12-year low of $113,000. In February, the median price for the region was up to almost $123,000, according to a monthly analysis from AZBidder. All types of homebuyers see metro Phoenix's prices finally rising and want to close a deal before they go higher.

Some first-time buyers with Federal Housing Administration financing have a bit of an advantage now, said real-estate agent Barry.

Those buyers are required to put down only 3.5 percent, so they can often keep bidding with investors, knowing that if they win and the appraisal doesn't come in that high, the lender will have to lower the price to meet the housing agency's requirements.

Banks might boost supply of homes

Banks still hold many of the homes they took back through foreclosure in recent years; the rush to buy could push them to put more on the market.

"If lenders are holding back on foreclosures and waiting for a sign the homes will sell, well, the time is now," said Jim Sexton of Phoenix's Realty ONE Group.

"Real-estate agents and buyers are all frustrated. The demand for homes is real."
Lenders did slightly increase the number of new notices of foreclosure they sent last month, which could mean more short sales or foreclosures for buyers to choose from in the next few months.

Housing analysts say the current buying frenzy may run its course in six months and not create a lasting recovery. Experts say the region's housing market won't really recover until regular homeowners, who can afford their mortgages, feel like they can sell and make a decent profit -- not the profit of 2006, but enough to pay off their mortgage and net a slight profit if they bought before 2000.

Regular buyers, who have to put down 10 to 20 percent for a mortgage, might have to wait for those regular sellers to put their homes on the market, creating enough supply to ease the bidding frenzy. When demand is strong enough that multiple bids are made on houses owned by homeowners, not lenders, that will be a strong sign of a return to a normal market.

"Once sellers begin to realize the market is recovering, and they can actually make some money on their home, then the market will truly start to stabilize," said ASU housing analyst Orr.

by Catherine Reagor - Mar. 10, 2012 11:25 PM The Republic | azcentral.com



Phoenix-area homebuyers squeezed out by investors