Monthly Archives: May 2011
In 7 States, Foreclosures Make Up 32% or More of Sales
Foreclosure sales are making up a big chunk of home sales across the country. In the first quarter (January through March) of this year, bank-owned home sales and homes in some stage of foreclosure made up 28 percent of all home sales in the country — which is up slightly from the fourth quarter of 2010 (27 percent), RealtyTrac reports. In some states, that percentage was even higher.
According to the latest RealtyTrac data for the first quarter of 2011, here are the states where foreclosures make up the largest percentage of home sales, along with the average foreclosure price and the percentage discount over a non-distressed property.
Percent of sales: 53%
Average foreclosure sales price: $128,589
Percentage discount over non-foreclosure sales: 18%
Percent of sales: 45%
Average foreclosure sales price: $247,623
Percentage discount over non-foreclosure sales: 34%
Percent of sales: 45%
Average foreclosure sales price: $128,289
Percentage discount over non-foreclosure sales: 25%
Percent of sales: 33%
Average foreclosure sales price: $141,845
Percentage discount over non-foreclosure sales: 15%
Percent of sales: 32%
Average foreclosure sales price: $116,583
Percentage discount over non-foreclosure sales: 27%
Percentage of sales: 32%
Average foreclosure sales price: $70,358
Percentage discount over non-foreclosure sales: 34%
Percentage of sales: 32%
Average foreclosure sales price: $175,957
Percentage discount over non-foreclosure sales: 24%
Source: “A Look at the States Where Foreclosures Made Up at Least 25 Percent of Home Sales in First Quarter,” The Associated Press (May 26, 2011) and “Foreclosure Homes Account for 28 Percent of Q1 2011 Sales,” RealtyTrac (May 26, 2011)
The nation’s largest banks and mortgage lenders currently own more than 872,000 homes — properties in which they repossessed from foreclosure, according to RealtyTrac. That is nearly twice the amount they repossessed in 2007, when the financial crisis began.
But the problem may get even worse: Banks are ready to repossess another 1 million homes in foreclosure, RealtyTrac reports.
The swelling number of lender-owned homes has economists concerned because higher inventories of distressed homes can depress overall home values. Economists say that it could take lenders three years to sell their foreclosed home inventory.
“It remains a heavy weight on the banking system,” says Mark Zandi, the chief economist of Moody’s Analytics.
Indeed, the high number of lender-owned homes stands to cost banks $40 billion in additional losses as they’re forced to sell these homes at sharp discounts over the next two years, according to Trepp, a real estate research firm.
Real estate professionals told The New York Times that lenders seem overwhelmed by the huge inventory of homes. They also say these lender-owned listings are often out of date and overpriced by as much as 10 percent, and that lenders take too long to accept an offer.
These homes also can sit in limbo for nearly two years. It can take 400 days just for lenders to foreclose on the home and then 176 days, on average, to sell it.
Source: “As Lenders Hold Homes in Foreclosure, Sales Are Hurt,” The New York Times (May 23, 2011)
The Brokerages With Highest Sales Volume Are…
The 500 largest real estate brokerages in the nation completed fewer transaction sides last year than in 2009 but had a slight boost in total sales volume, according to the latest report from communications company Real Trends, which each year ranks the country’s largest brokerages by transaction sides and closed sales volume.
Overall, the 500 largest real estate brokerages in the country completed 6.7 percent fewer transaction sides in 2010 than in 2009. Total sales volume, however, increased 1.3 percent to $513 billion.
For example, NRT Inc.–which ranked No. 1 in overall closed transaction sides and closed sales–saw its sales volume increase 5.4 percent to $112.9 billion in 2010. Other companies experienced even larger percentage boosts in sales volume, such as Houlihan Lawrence, which had a 37.3 percent jump in sales volume, and Prudential Douglas Elliman, which saw a 33.5 percent jump in sales volume in 2010 to $11.5 billion.
Here are the brokerage rankings based on 2010 closed sales volume:
1. NRT LLC ( Coldwell Banker is owned by NRT)
2. HomeServices of America Inc.
3. The Long & Foster Companies Inc.
4. Prudential Douglas Elliman Real Estate
5. Prudential Fox & Roach REALTORS®
6. Alain Pinel REALTORS Inc.
7. Hanna Holdings Inc.
8. ZipRealty Inc.
9. First Team Real Estate
10. William Raveis Real Estate Inc.
RISMedia also published its 2011 Power Broker Report in April, ranking the top 300 brokerages in the country based on the previous year’s closings. Read the "Power Brokers Gaining Steam" article in the June issue of REALTOR® Magazine for coverage and analysis.
Source: “Top 25 Largest Brokerages Nationwide,” Inman News (May 11, 2011)
Say goodbye to the traditional laptop and desktop computer–tablet computers will soon be the only thing most people will need, industry analysts predict. And real estate professionals are not immune to the trend, continuing to unlock the business potential computer tablets offer in keeping them in touch with their business while on the go.
Indeed, while global PC sales recently posted its largest drop in nearly 10 years, tablet sales have been soaring.
In 2010, about 19 million tablets were sold worldwide when Apple debuted its first iPad, which then set off a wave of tablet competitors. By the end of this year, tablet sales are expected to more than double to 50 million units. By 2012, industry analysts predict sales could reach 100 million.
“There's definitely a huge swing to the tablet market,” Rafael Barragan, manager of Best Buy in West Los Angeles–which is quadrupling the size of its “Tablet Central” area–told the LA Times. “Pretty soon everything is going to be touch-screen.”
In a recent survey by the Nielsen Company, nearly 77 percent of tablet owners surveyed say they use tablets for tasks that they would have previously used their computers for. About 35 percent of tablet owners said they use their desktop computer less or not at all, and nearly a third of survey respondents said the same about their laptop. Most of the tablet’s appeal is that it offers increased portability, an easier interface, and faster start-up, according to the survey respondents.
Source: “Will Tablet Computers Take Over?” Consumer Reports (May 9, 2011)
Real Estate News | May 16, 2011 |
Foreclosures Fall Again, Reaching 3-Year Lows
Fewer home owners are losing their homes as the number of foreclosure filings sank to more than a three-year low in April, RealtyTrac reports.
The number of foreclosure filings in April dropped 34 percent from a year ago, also marking the seventh straight month of declines, and reaching its lowest level since December 2007. Foreclosure filings include notices of default, scheduled auctions, and bank repossessions. Also, 69,532 homes were repossessed in April — an 8.6 percent drop from March and a 32 percent drop from last September’s peak.
Banks being blamed for faulty paperwork continued to slow the pace of foreclosure activity last month, but many foreclosures still loom, experts warn. About 3.7 million borrowers are at least 90 days late on payments.
However, there are hopeful signs of a turnaround: The employment picture is improving, which will allow more home owners to make payments and banks are completing more loan modifications to keep borrowers in their home. Banks completed 77,000 mortgage modifications in March, which is a 26 percent increase from February.
States With the Highest Foreclosure Rates
Nevada, Arizona, and California continue to post the highest foreclosure rates in the nation.
Ten states account for more than 70 percent of all foreclosure activity in the country: California, Florida, Arizona, Michigan, Nevada, Illinois, Texas, Georgia, Ohio, and Colorado.
Source: “Foreclosures Down 7th Straight Month,” CNNMoney (May 12, 2011) and “Faulty Paperwork Slows Foreclosure Activity, Survey Shows,” Reuters (May 12, 2011)
Commercial Real Estate Slowly Turning Around
Sales and leasing volumes in commercial real estate have turned a corner and are heading up, but because the past few years have been so difficult, the upturn barely feels like one. However, the sector is expected to strengthen more over the next couple of years, NAR Chief Economist Lawrence Yun told commercial real estate practitioners on Thursday at the 2011 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington.
Financing remains a major stumbling block, with little commercial mortgage backed security activity happening, but banks — particularly regional banks — are stepping in with portfolio loans, said Yun.
That’s a bit surprising, because the big-four national banks — Wells Fargo, Citibank, Chase, and Bank of America — are in a far better position to make loans. Not only are they sitting on piles of money, but because they’ve grown to the point where they’re too big to fail, they have a de facto implicit federal guarantee, Yun said.
A big concern looming is inflation. It remains low, about 2.9 percent (excluding energy and other volatile components to the economy), but inflation could rise and hit 5 percent by the end of the year and 6 percent in the early part of 2012, Yun predicted. If that happens, interest rate costs would also rise. For the federal government, a 2 percent increase in rates could wipe out a lot of any deficit reduction steps the government might take between now and the end of the year, because in some analyses, that could translate into $2 trillion in increased debt service payments for the government.
In the individual commercial sectors, multifamily housing has been the standout over the last year. Vacancies hit historically normal levels last year at about 5-6 percent with solid rental rate growth. Look for 4 percent higher rents nationally by the end of this year. That figure could be considerably higher in some first-tier markets like Washington, D.C., where rental rates have been rising at almost a double-digit clip.
Those gains might ease in the next year or two, though, as residential home sales improve. The high rental rate increases could tip the scale for some renters to consider home ownership. Yun has said on other occasions that almost 40 percent of the renter population today has the financial ability to become home owners, but for now are choosing to rent.
In the office market, vacancy rates are expected to decline steadily, from 16.5 percent in the first quarter of this year to 16 percent at the end of the year. Rental rate increases could turn positive for the first time in a while, too, to maybe 5 percent from a negative 2 percent. Offices are benefitting from recent job gains in professional service-type jobs like accountants and lawyers.
Among markets tracked by NAR, New York City has the lowest vacancy rate at a little over 8 percent. Washington, D.C., with its federal government-fueled activity, also has a relatively low vacancy rate. Pittsburgh, which has been steadily transitioning from an industrial city to a high-tech and professional services city, is among the metros with relatively strong office trends.
Industrial markets are also expected to improve, with vacancy rates projected to decline from 14.2 percent to about 12.9 percent at the end of the year. Yun is predicting positive rental rate growth of about 2 percent this year. Los Angeles, with its big Asia import-export trade, has the lowest vacancies at 7.5 percent.
Retail markets continue to struggle, with consumers still retrenching in their spending. In the long run, increased savings by consumers is good, because it boosts household financial stability, Yun said, but in the short term retail properties are getting little relief. Vacancy rates are only expected to improve marginally, from about 13 percent to just slightly better by the end of the year. Even so, the sector might see some improvement in rental rate growth, moving from a negative 1 percent to 1 percent in positive territory by the end of the year. San Francisco is in the best shape among major metro areas with a vacancy rate of about 6.7 percent.
You might not “feel the impact of the recovery,” Yun said. “The hole was so deep, it might still feel like we’re in a hole.”
— Robert Freedman, REALTOR® Magazine
-home sales rise in most states in first quarter
Existing-home sales rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million units in the first quarter, an increase from 4.75 million in the fourth quarter, but are 0.8 percent below the 5.18 million recorded during the same period in 2010, NAR reported.
The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. Distressed homes, typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.
Investors accounted for 21 percent of first-quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.
Regionally, existing-home sales in the West, which includes California, rose 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West declined 4.7 percent to $197,400 in the first quarter compared with the first quarter of 2010.
By THE ASSOCIATED PRESS 4:17 PM ET
Stocks closed higher Tuesday on Wall Street amid strong corporate earnings and after Microsoft agreed to buy the Internet telephone service Skype for $8.5 billion. Companies have built up a record amount of cash since the recession, and they have begun to use it for acquisitions, dividends and stock buybacks. Technology companies have particularly big cash hoards; Microsoft had $50 billion in cash and short-term investments at the end of March.. The purchase of Skype is Microsoft’s largest deal in its history. Large companies also want to put their cash stockpiles to work because they're getting minimal returns on them, said Oliver Pursche, president of Gary Goldberg Financial Services. Interest rates for short-term savings pay less than 1 percent. “The crisis is behind us,” he said. Companies “don't need this much cash anymore.” …
The Dow Jones industrial average rose 75.68 points, or 0.6 percent, to close at 12,760.36. The Standard & Poor’s 500-stock index rose 10.87 points, or 0.8 percent, to 1,357.16. The Nasdaq composite index climbed 28.64 points, or 1 percent, to 2,871.89. Nearly five shares rose for every one that fell on the New York Stock Exchange. Trading volume was 3.5 billion shares.
Existing-home sales continued to recover in the first quarter with gains in 49 states and the District of Columbia, while 22 percent of metropolitan areas saw prices rise from a year ago, according to the latest survey by the NATIONAL ASSOCIATION OF REALTORS®.
Total state existing-home sales, including single-family homes and condos, rose 8.3 percent to a seasonally adjusted annual rate of 5.14 million in the first quarter from 4.75 million in the fourth quarter, and are only 0.8 percent below a 5.18 million pace during the same period in 2010.
Also in the first quarter, the median existing single-family home price rose in 34 out of 153 metropolitan statistical areas from the first quarter of 2010, including four with double-digit increases; one was unchanged and 118 areas showed price declines.
Lawrence Yun, NAR chief economist, said home prices are all over the map. “The reading of quarterly price data can be volatile because they are based on the types of homes that are sold during the quarter. When buyers principally purchase distressed properties in a given market, the recorded prices will be very low, which is what we’re seeing now in much of the country,” he said. “Annual price data provides a better guide about the direction of the market in those areas.”
Distressed Sales Put Pressure on Prices
The national median existing single-family home price was $158,700 in the first quarter, down 4.6 percent from $166,400 in the first quarter of 2010. The median is where half sold for more and half sold for less. Distressed homes typically sold at a discount of about 20 percent, accounted for 39 percent of first quarter sales, up from 36 percent a year earlier.
Yun said lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”
Although sales are slightly below a year ago, the volume of homes sold for $100,000 or less in the first quarter was 8.9 percent higher than the first quarter of 2010, creating a downward skew on the overall median price.
The share of all-cash home purchases rose to 33 percent in the first quarter from 27 percent in the first quarter of 2010.
More Investors in the Market
Investors accounted for 21 percent of first quarter transactions, up from 18 percent a year ago, while first-time buyers purchased 32 percent of homes, down from 42 percent in the first quarter of 2010 when a tax credit was in place. Repeat buyers accounted for a 47 percent market share in the first quarter, up from 40 percent a year earlier.
“The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,” Yun added.
NAR President Ron Phipps said strong sales of distressed homes are exactly what the market needs. “The good news is foreclosures, which account for two-thirds of all distressed homes sold, are selling very quickly,” he said. “Short sales still take far too long to get lender approval, but it appears the inventory of distressed property is peaking and will be gradually declining next year. This means the market should slowly return to balance. We are encouraged that recent home buyers are having exceptionally low default rates.”
According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 4.85 percent in the first quarter, up from a record low 4.41 percent in the fourth quarter, but below the 5.00 percent average in the first quarter of 2010.
A Closer Look at Price Trends
In the condo sector, metro area condominium and cooperative prices – covering changes in 53 metro areas – showed the national median existing-condo price was $152,900 in the first quarter, down 10.4 percent from the first quarter of 2010. Eleven metros showed increases in the median condo price from a year ago, one was unchanged and 41 areas had declines.
Regionally, existing-home sales in the Northeast increased 0.8 percent in the first quarter to a level of 800,000 but are 7.3 percent below the first quarter of 2010. The median existing single-family home price in the Northeast declined 5.0 percent to $234,100 in the first quarter from a year ago.
Existing-home sales in the Midwest rose 7.9 percent in the first quarter to a pace of 1.09 million but are 5.0 percent below a year ago. The median existing single-family home price in the Midwest fell 5.3 percent to $124,400 in the first quarter from the same period in 2010.
In the South, existing-home sales increased 8.5 percent in the first quarter to an annual rate of 1.96 million and are 2.8 percent higher than the first quarter of 2010. The median existing single-family home price in the South slipped 0.6 percent to $141,800 in the first quarter from a year earlier.
Existing-home sales in the West jumped 13.5 percent in the first quarter to a level of 1.29 million and are 2.1 percent above a year ago. The median existing single-family home price in the West fell 4.7 percent to $197,400 in the first quarter from the first quarter of 2010.
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