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Home prices falling
According to Fiserv, a division of Moody’s Economy.com, the average home price in the United States will fall by about 6% by September 2011. Most of the projected home price decline will occur during the usually slow summer months of 2010. After that, prices should begin to stabilize, according to Fiserv, and stay almost flat through fall of 2011. The main reason for continued decline, according to Mark Zandi, economist and co-founder of Economy.com, is foreclosures — the same thing that’s plagued markets for the past three years. He figures there are at least 4.5 million mortgage loans either in foreclosure or clearly headed in that direction. When that additional inventory hits the market, it will provide numerous choices for buyers and encourage sellers to drop their listing prices. The end of two federal programs, which have been propping up markets, will also tamp down prices. The Fed’s program to buy mortgage securities lapses on March 31, when it cedes the playing field to private investors, who will almost surely demand higher rates, and a month after that, the homebuyer tax credit will start to expire. Of course, home prices are ultimately decided by employment. “If [the job market] improvement is stronger than expected, prices will get better. If it’s weaker than expected, prices will be worse,” Zandi said.
Jobless claims up
The Labor Department said in its weekly report that there were 496,000 initial job claims filed in the week ended Feb. 20, up 22,000 from a revised 474,000 the previous week,. The prior week, there were 442,000 claims filed. A consensus estimate of economists surveyed by Briefing.com expected new claims to fall to 460,000. The government said 4,617,000 people filed continuing claims in the week ended Feb. 13, the most recent data available. That’s up 6,000 from the preceding week’s revised 4,596,500 claims for a jump of more than 12% over the past two weeks. A Labor Department official said the unexpectedly large rise could partly reflect a backlog of claims that were unable to be processed in four Mid-Atlantic and New England states because of heavy snowfall. Still, the increase is likely to amplify concerns that the job market is weakening, potentially slowing the economic recovery. Dan Greenhaus, chief economic strategist at Miller Tabak, said the claims data has been unusually distorted in recent weeks. As a result, “we are concerned about the upward pressure on initial claims but not overly concerned.” The four-week average, which smoothes volatility, rose by 6,000 to 473,750. The four-week average has risen by about 30,000 in the past month, raising concerns that job cuts are continuing. Initial claims had fallen sharply over the summer and fall but the improvement has stalled since the year began.
New home sales down
The Census Bureau says the seasonally adjusted annual rate of new home sales fell 11.2% to 309,000 last month, compared with a revised rate of 348,000 in December. It was the lowest rate since the government began keeping records in 1963 and comes after declines in November and December. The drop surprised many industry analysts. A consensus of economists surveyed by Briefing.com had expected January sales to rise to an annual rate of 354,000. “Some people were expecting a surge in demand because of the tax credit,” said Patrick Newport, an economist at IHS Global Insight. “But that surge isn’t materializing.” New home sales fell in all U.S. regions except the Mid-west, where sales edged up 2.1%. The Northeast was the hardest-hit last month, with sales plunging more than 35%. “Distressed inventory continues to hit the market at cut-rate prices, drawing potential buyers away from new product,” said Mike Larson, real estate analyst at Weiss Research. “And let’s face it, the job market is nothing to write home about, either.” There were an estimated 234,000 new homes for sale at the end of December, according to the report. At the current sales rate, it would take 9.1 months to sell through that inventory. That’s up from December, when there were 8.1 months of inventory on the market. Prior to December, inventory levels had been steadily declining since May 2009. IHS Global Insight’s Newport said he also expects sales to pop this spring. However, he may reduce his full year forecast for new home sales in light of Wednesday’s report. “Builders are putting up homes,” he said. “But what these numbers are telling us is that those homes aren’t selling.”
Manufactured Goods Jump 3%
The Commerce Department reported Thursday that orders for durable manufactured goods jumped 3 percent in January, the biggest increase since a 5.8 percent increase last July. However, excluding transportation, durable goods orders fell by 0.6 percent, a weaker showing than economists had expected. The strength came mostly from a surge in demand for commercial aircraft, while demand for autos, machinery and a host of other products fell last month, indicating manufacturing is still facing hurdles that could slow the economic recovery. The drop in orders excluding transportation followed solid gains of 2 percent in both December and November. Analysts were not too concerned by the drop in demand outside of aircraft, noting that the government revised higher the increase in orders excluding transportation in December to show a gain of 2 percent, stronger than the initial estimate of a 1.4 percent rise. Paul Ashworth, an economist at Capital Economics, said the January durable goods report provided further evidence that “the manufacturing sector is enjoying a healthy rebound, driven by restocking and a sharp turnaround in world trade.” The 0.6 percent drop in orders outside of transportation reflected a big 9.7 percent plunge in demand for machinery, which offset a 1.9 percent increase in orders for primary metals such as steel. Orders for non-defense capital goods, excluding aircraft, fell by 2.9 percent in January following solid gains in the two previous months. This category is considered a proxy for business plans to invest in new equipment to expand and modernize.
MBA proposes forbearance program
The Mortgage Bankers Association (MBA) says it has developed a concept for a new forbearance program that would allow qualified borrowers who had lost their jobs to remain in their homes while they seek new employment. According to the proposed program, loan servicers would reduce the borrower’s mortgage payment to an affordable amount for up to nine months while the homeowner looked for employment. “The vast majority of new distressed borrowers we are seeing involve the loss of income,” said John A. Courson, MBA’s President and CEO. “This program is designed to buy those borrowers time to find a new job, after which they could hopefully qualify for a loan modification.” Loan servicers who participate in this program would reduce monthly payments to an affordable level based on household income, and borrowers would be initially evaluated for the forbearance program using a model that assumes the borrower will be reemployed within nine months of losing his or her job at 75 percent of the borrower’s previous salary. The borrower would be reevaluated as to employment and income status every three months for a total forbearance of nine months. Once reemployed, the borrower would be evaluated for a modification under the Obama Administration’s Home Affordable Modification Program (HAMP). “Recent statistics show that the average unemployed U.S. worker stays unemployed for between six and seven months,” added Courson. “That is a long time for a borrower with a dramatic drop in income to stay current on their mortgage. Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job.”
Now on to our real estate investing educational section…
LinkedIn LifeHacks for Realtors & Investors
By now nearly every real estate agent, broker or investor in the nation has a LinkedIn account…but are you making the most of it? According to LinkedIn, the majority of people create a profile, invite a few friends and family then let it go dormant. Learn how to supercharge your LinkedIn profile and let it begin really working for you with these quick tips:
1. Pick a professional name. Select the title or name you want to use for all of your business dealings to put on your LinkedIn profile. Be sure to make sure your name shows up on the Google search results whenever you perform a search for that name. Because LinkedIn is a large website that is constantly indexed by Google, your LinkedIn profile should show on the first page.
2. Pimp our your profile. LinkedIn comes with a standard “my blog” and “my website” links on the profile page…rather than use these rather lame and generic equivalents, put them both to maximum productivity by customizing each. Simple log into LinkedIn, click on the “edit” button then “other”. The system will now allow you to customize the phrase so people can more easily find your business. For example, replace with your name and city or type of real estate you specialize in for enhanced search engine visibility and marketing.
3. Add the options. Link to your Facebook account (remember, use a strategic name!) and import your Wordpress blog into your LinkedIn profile page. Not only does it keep the content fresh and focused in one easy to access location but it reduces the amount of time you spend updating information. Another important option to consider is LInkedIn’s Direct Ads campaign where you can target professionals for as little as $50 per month. It works a lot like Google’s adwords but for LinkedIn. Find out more at https://www.linkedin.com/directads/start.
4. Include your email contact list. Sounds like a no-brainer but a surprising number of people fail to follow through with this one simple step! If you are like most real estate agents, chances are you have hundreds or even thousands of email contacts in your address book. Put them to good use!
5. Join a group. There are many LinkedIn groups ranging from specialized interest areas, geographic location or simply to share and expand networking connections. While some shudder at the thought of joining a link-building group, keep in mind these are all willing participants who act like virtual networking promoters on steroids. Six degrees of separation demonstrates the best connections are often those most distant from our typical circle of influence so take time to develop both close and far connections.
If this sounds like a lot of work, don’t despair. Find out how to put Social Media to work for your professional goals without the hassle or headache. Join us tonight at 8:30 PM ET, 5:30 PM PST:
https://www2.gotomeeting.com/register/819732522
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
All Rights Reserved.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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{ 1 comment… read it below or add one }
As much as I regret the outcome, I think the folks at Case Shiller and S&P are the closest to being on the mark of all the “official” real estate statistical/data sources.
We are going to see a lethargic and unproductive real estate market in most areas of the country for the balance of this year.
If we don’t start seeing some leadership and courage in our elected officials, it is going to be even longer on the downside.
The issues and roadblocks to a housing recovery are complex and spread across the landscape of the transaction and the greater economy. Both regulatory and legislative reforms are needed if the market is going to be able to bring itself back to a healthy and stable level of activity. Great article, Chris.
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