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Smart Real Estate News & Commentary by Chris McLaughlin June 9, 2011

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DSNews.com – short sales up

Servicers completed 1,666 short sales and deeds-in-lieu (DIL) of foreclosure under the Home Affordable Foreclosure Alternatives (HAFA) program in April. That’s up 73.7% from the 959 HAFA transactions completed the month before.  HAFA has been in place since April of 2010. According to Treasury’s latest report, which covers program activity through April of this year, a total of 7,113 short sales and DILs have concluded through HAFA.  Treasury says another 7,780 HAFA transactions have been started, meaning an agreement has been put in place between the servicer and the homeowner for terms of a potential short sale of DIL.  Treasury notes that a short sale typically takes 120 days to complete under the program. The number breakdown in the report doesn’t specify how many of the HAFA“starts” are still in process or may have been withdrawn. Any short sale also requires the cooperation of a third-party purchaser, junior lien holders, and mortgage insurers to complete the transaction.

The latest data show that the 10 largest servicers participating in the federal government’s foreclosure prevention programs have completed a short sale or DIL for 82,995 borrowers who did not qualify for a Home Affordable Modification Program (HAMP) trial and 31,048 borrowers whose trial plans were canceled, indicating that servicers are employing their own short sale programs to avert foreclosure for borrowers that don’t fit the mod equation.  Critics of HAFA have urged Treasury to raise the monetary incentive for servicers, investors, and subordinate lien holders, citing low payouts as a common reason HAFA short sales are rejected.

WSJ – mortgage rates hit new 2011 low

Home mortgage rates fell again to a fresh 2011 low as a week of downbeat jobs data fueled concerns over a possible economic slowdown this year, according to the latest survey from Freddie Mac.  The decline in fixed rates represented the eighth-straight weekly fall and comes after the Bureau of Labor Statistics this week said employers added far fewer private-sector jobs than expected.  The housing market continues to be fragile across the nation as well,” Freddie chief economist Frank Nothaft said, with Federal Reserve data released Wednesday showing weak sales and prices in most districts.  The 30-year fixed-rate mortgage averaged 4.49% in the week ended Thursday, down from 4.55% the prior week and last year’s 4.72% average. Rates on 15-year fixed-rate mortgages fell to 3.68% from 3.74% the previous week and 4.17% a year earlier.  Five-year Treasury-indexed hybrid adjustable-rate mortgages fell to 3.28%, from 3.41% last week and 3.91% a year earlier. One-year Treasury-indexed ARM rates decreased to 2.95%, from 3.13% the prior week and 3.91% a year earlier.  To obtain the rates, fixed-rate borrowers required an average payment of 0.7 point, while the adjustable-rate mortgages required a 0.5 point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

Banks fight back

The Foreign Account Tax Compliance Act was passed by Congress last year and comes into force in 2013. Last week, senior bank executives implored Tim Geithner, US Treasury secretary, to modify the law, according to people familiar with the meetings.  Banks say they are already racking up significant costs. Eventually, they say, the task of scouring records for US citizens and then reporting them could run into billions of dollars and conflict with domestic privacy laws. Disclosure records show groups including Switzerland’s Credit Suisse, Barclays of the UK and TD Bank of Canada have together spent millions of dollars lobbying on the issue.  Terry Campbell, Canadian Bankers Association head, said the act was “conscripting financial institutions around the world to be arms of US tax authorities”. Algirdas Semeta, the European tax commissioner, told the Financial Times that he shared the concerns of the financial sector and expected more meetings with US counterparts. “We can find alternatives that would ensure all necessary information on their taxpayers without imposing additional burdens on financial institutions in the EU,” he said.  People involved in meetings on the subject say the Obama administration has indicated it will look to reduce the burden on banks, which have to identify US citizens with accounts of more than $50,000.

Olick – predicting home prices is impossible

“When Robert Shiller, co-creator of the S&P/Case-Shiller Home Price Indices , speaks, he tends to make headlines, and yesterday was no different.  Claiming that he wasn’t making any predictions, he predicted that home prices could fall another 25%.  ‘That wouldn’t surprise me at all,’ he hedged. And there was the headline, tragic as it is.  I happened to be at the conference yesterday where he said that. In fact, I was a speaker/panelist at the Standard and Poor’s ‘Housing Summit 2011: Boom, Bust and Beyond.’ And, no offense, but that wasn’t the headline. What really struck me was what he said right before that.  ‘Statisticians deal with things that repeat themselves. This housing boom and bust is so historic and unprecedented, you can’t forecast the future because you have no comparison.’  That was not only the headline, but the theme of the conference, as I sat on a panel with economists from S&P, Experian and Columbia Business School. Chip Case was there as well, disagreeing with Shiller on several points.

Audience members, largely from the finance industry, kept asking the same question in different ways, ‘When is this all going to get better??’  One by one, we panelists opined on headwinds and tailwinds, but never really answered. This is something of a shift from just the past few months, when the economists who cover housing seemed to be suddenly more bullish.  But now we have a new dip in home prices, which is putting more borrowers in a negative equity position. There is more concern of more borrowers hitting that ‘stress threshold,’ as one panelist put it, where they just quit paying on their loans.  We already have millions of borrowers who are not current on their mortgages. They haven’t hit the foreclosure pipe yet, but many will, and the panelists seemed most concerned about this huge glut of properties that will not just hit, but continue to plague the market for years to come.

This as the Treasury released a lackluster report on its own mortgage modification program and then punished several big banks for poor performance by cutting off the program’s financial incentives.  By far the biggest concern among questioners and panelists alike was lack of buyer demand. The demand that should be there is pressured by fear, tight credit and under-employment.  ‘Even with recent job growth, we still have 7 million fewer people employed today than at the peak in 2008, and the unemployment rate remains high at 9.1% officially, but a whopping total of 15.9% are underemployed or have given up their search,’ notes housing analyst John Burns.  This ‘wage-less recovery,’ he argues is largely behind the lack of buyer demand, despite much-improved affordability. 

But all real estate is local, right? And all these national numbers that folks like me spew don’t have any footing in local reality, right? Yes, that may be true when it comes to the numbers. All real estate is local, but consumer confidence is national, and that trumps the local numbers.  I have to say, leaving yesterday’s conference, I felt a strange unease, not because we talked about the same barriers to recovery that I talk about every day of the week, but because all these experts who are supposed to tell us when it’s all going to be alright…don’t have a clue.”

Oil prices fall on productivity boost

Oil prices fell to near $98 a barrel today, extending a big loss from Friday after a report said Saudi Arabia plans to boost its crude production.  Saudi newspaper al-Hayat reported Friday that the country will increase production by 13%, or about 1.14 million barrels per day, to boost global supplies and help lower prices. Earlier last week, the Organization of Petroleum Exporting Countries failed to reach consensus to raise output and left the cartel’s production quotas unchanged.  Fighting in Libya since February has shrunk global crude output by shutting down the OPEC nation’s 1.6 million barrels a day of production. Political violence and upheaval in the Middle East and North Africa this year has probably added about $15 to the price of oil, said Paul Sheard, global chief economist at Nomura.  Analysts are concerned an escalation of violence and instability in the Middle East would send oil prices higher and undermine global economic growth.  In other Nymex trading in July contracts, heating oil rose moved up 0.01 cent to $3.1061 a gallon while gasoline added 0.14 cent to $3.0191 a gallon. Natural gas futures gained 5 cents to $4.807 per 1,000 cubic feet.

Fitch downgrades 9 mortgage servicers

Fitch Ratings downgraded ratings on nine mortgage servicers because of tougher regulations and the lack of urgency these companies displayed in response to the foreclosure crisis.  The credit rating agency took action on two Bank of America servicing divisions of, two Wells Fargo servicing divisions, JPMorgan Chase , Citigroup , MetLife Bank , PNC Bank and SunTrust Mortgage .  In late 2010, procedural defects surfaced across the servicing industry. Servicers halted the foreclosure process to fix affidavits required in judicial states. Federal regulators followed with investigations and consent orders, requiring new standards for servicing loans. Negotiations between the 50 state attorneys general remain ongoing.

“The full extent of the concerns resulting from this and other related functions within servicer operations is far from resolved. Fitch expects that the additional scrutiny from a wide range of interested parties, as well as the potential new regulation and heightened risk from litigation, will result in continued reluctance to proceed with foreclosure,” Fitch said.  In November, Fitch placed these ratings on watch and complete a full review of the rated sevicers later in 2011.  Fitch already incorporated the heightened resolution times and loss severities into its analysis of outstanding residential mortgage-backed securities bonds. Therefore, it does not expect to change outstanding RMBS bond ratings.

See you at the top!

Chris McLaughlin

**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

*************************************************

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.  Own portfolio of nearly 150 high-value, high-profit  properties

    * Owner of one of Florida’s largest Real Estate firms, running 4 different offices, supporting over 420 agents, uniquely positioning him to help

  thousands of investors make money in the biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices  closed 2,786 sides for a closed sales volume of $392,912,927!

    * Highly sought-after speaker, consultant, and   seminar leader for current trends and hot topics in Real Estate Investing, Entrepreneurship,

and Wealth Building.

    * Follow me on Twitter: http://twitter.com/mclaughlinchris

    * Join my Facebook Fan Page: http://www.mclaughlinchris.com

Smart Real Estate News & Commentary by Chris McLaughlin June 3, 2011

Forward this e-mail to your friends!

Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–>

http://www.mclaughlinchris.com

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************************************************************

500 cities see more rentals

In the aftermath of the nation’s housing-market collapse and recession, more than 500 midsize and large cities have seen a rise in the share of homes that are rented rather than owned, according to a USA TODAY analysis of Census data.  Almost 4 million homes have been lost to foreclosures in the past five years, turning many former owner-occupied homes into rentals.

The shift to rental housing is potentially long-lasting and portends changes for neighborhood stability and how people build wealth, economists say.  “The changes are big but glacial,” says Mark Zandi, economist at Moody’s Analytics. 

The swing from owner- to tenant-occupied homes in the past decade has been dramatic in some places:

-  Of the 100 largest cities, some of those with the largest shifts were Irvine, Calif., which went from about 40% of occupied homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7% to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.

-  Twenty-five cities — including Baltimore, Minneapolis, Salt Lake City and Sacramento — swung from having more than half homeowners in 2000 to majorities of renters in 2010. In one — Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up from 49% in 2000.

-  Florida, California and Arizona had the most cities where the share of renter-occupied housing grew by at least 5 percentage points. All three states have been hit hard by foreclosures.

Nationwide, 34.9% of occupied homes — including houses, condos, and apartments — were rented in 2010, up from 33.8% in 2000. The Census data that USA TODAY analyzed for cities covered only housing within the cities’ boundaries, not their much larger metropolitan areas.  Vacant properties, excluding seasonal or vacation homes, accounted for 7.9% of U.S. housing units in 2010. It’s not clear how many of those have since become rentals or owner-occupied homes.  The renter household market remained fairly stable from 1990 to 2006, says Daniel McCue, senior research analyst at Harvard University’s Joint Center for Housing Studies.  Since 2006, when housing prices peaked, the number of renter households in the U.S. has grown an average of 692,000 a year, while owner households have fallen an average of 201,000 a year, Census surveys show.  Several factors will boost rental growth for years to come, Zandi says, including continued foreclosures, continued drops in home prices that frighten buyers and potential cuts to government subsidies supporting homeownership. On the other hand, 74% of renters think owning is superior to renting, said a recent survey by mortgage giant Fannie Mae.  “There’s still a pull toward homeownership, although it’s been diminished,” McCue says.

Jobs growth paltry

U.S. employment rose far less than expected in May to record its weakest reading since September, while the jobless rate rose to 9.1% as high energy prices and the effects of Japan’s earthquake bogged down the economy.  Nonfarm payrolls increased 54,000 last month, the Labor Department said on Friday, with private employment rising 83,000, the least amount since June. Government payrolls dropped 29,000.  Economists polled by Reuters had expected payrolls to rise 150,000 and private hiring to increase 175,000 in May. The government revised employment figures for March and April to show 39,000 fewer jobs created than previously estimated.  Stock index futures plunged following the announcement, while Treasury’s surged in price and sent the yield on the 10-year note to 2.96%.  The report provides one of the best early reads on the health of the U.S. economy and it regularly sets the tone for global financial markets. Worries about the pace of the U.S. economic recovery weighed on stocks on Thursday. 

The unemployment rate rose to 9.1% last month from 9.0% in April as some discouraged workers who had been inspired by the pick-up in hiring in April re-entered the labor market.  The employment report showed weakness across the board, with the private services sector adding 80,000 jobs last month after increasing payrolls by 213,000 in April.  Within the private services sector, leisure and hospitality fell, showing no boost from McDonald’s recruitment of about 50,000 new staff in April, which was after the survey period for that month’s payrolls. Spring is traditionally a strong hiring period for McDonald’s.  Retail employment, which recorded its largest increase in 10 years in April, fell 8,500 last month. Manufacturing payrolls growth contracted 5,000 last month, while construction employment rose 2,000.  The report showed the average work week steady at 34.4 hours and few signs of wage inflation, with average hourly earnings rising 6 cents.

DSNews.com – CMBS delinquencies fall

The delinquency rate on loans held in commercial mortgage-backed securities (CMBS) fell slightly in May from the new record high set the month before, according to Trepp LLC.   The New York-based research firm says the age of CMBS loans 30 or more days delinquent, in foreclosure, or REO has fallen back 5 basis points to 9.60%.  Trepp explained that although small, May’s decline is actually the biggest rate drop for U.S. commercial real estate loans in CMBS in about two years, setting aside October 2010 when the Extended Stay Hotels loan was resolved.  Still, at 9.60%, CMBS delinquencies remain highly elevated, rising more than a full age point over the previous 12 months. Trepp reports that in May 2010, the overall delinquency rate was 8.42%.

According to Trepp’s market analysis, the value of delinquent loans within commercial mortgage bonds now stands at $61.5 billion.  There were seven loans with balances of over $50 million that moved into the 30-plus day delinquent category in May, Trepp reported. That contrasted sharply with April when five loans of over $100 million ($1.07 billion in total) moved into the delinquent bucket.  “[In April] the delinquency rate posted its biggest rate of increase since late 2010 – a 23 basis point jump,” said Manus Clancy, managing director of Trepp. “The increase took many CMBS pros by surprise as it came after three consecutive months of improving results.”  Clancy noted, “While there may be additional bumps along the way, we think the May numbers accurately reflect a leveling off in the market.”  Based on Trepp’s report, the industrial and office delinquency rates worsened last month while all other major property types saw improvement.  The industrial delinquency rate spiked 120 basis points in May, boosting the rate to nearly 12%. Six months ago, the rate was under 7%.  The office delinquency rate was up three basis points in May, yet remains the best performing major property type at 7.23%.  Delinquencies in all other major property types – retail, multifamily, and hotel/lodging – declined for the month.

Moody’s warns of US credit rating

Moody’s Investors Service said yesterday Moody’s it would put the Aaa U.S. rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.  “Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely,” Moody’s said.  The ratings agency, whose announcement follows a similar warning from Standard & Poor’s earlier this year, said if the debt limit is raised and default avoided, the Aaa rating will be maintained. Still, the rating outlook will depend on the outcome of debt talks in Washington, Moody’s said.  “Moody’s downgrade adds pressure on Congressional leaders to work hard at reaching an agreement to increase the debt ceiling,” said Kathy Lien, director of currency research at GFT Forex in New York.  If a downgrade were to occur, Moody’s said it would put the U.S. credit in the Aa range.

Olick – 20% mortgages under fire

“To call it an uneasy alliance is too simple, but that’s exactly what the characters were going for when they called their morning press conference in downtown DC.  The new president of the Mortgage Bankers Association, Dave Stevens, arrived carrying a message from Wall Street and Main Street money makers in the breast pocket of his navy blue suit; he was seated in a row just down from Ethan Handelman of the National Housing Conference, who sported a pony tail and an agenda favoring low-income borrowers.  In between them was Ken Edwards, of the Center for Responsible Lending, who referred to the group as, ‘an eclectic mix.’ 

Adversity makes strange bedfellows, and today’s mortgage market is nothing short of adverse. The group came together to argue against what Edwards called ‘draconian requirements’ for a the proposed ‘Qualified Residential Mortgage’ (QRM) standard. The QRM is part of new risk retention rules, mandated by the Dodd-Frank Financial Reform legislation of last year. The proposal, which is under comment period until the end of next week, includes a 20% down payment for a home loan to qualify as a QRM. If the loan does not meet the QRM standards, the lender must hold on to 5% of the risk.  They call that ‘skin in the game,’ but banks big and small say it will make mortgages more expensive and difficult to obtain, while consumer advocates say it is nothing short of discrimination.  ‘We believe that the regulators, while being very thoughtful through this process, have overreached by adding loan to value and DTI (Debt to Income), which will create societal boundaries, which we believe were unintended by those who drafted the law in the first place,’ said Stevens, who as recently as a few months ago headed up the Federal Housing Administration (FHA), currently the only low down payment option available for low-income borrowers.  John Taylor of the National Community Reinvestment Coalition was a tad more blunt: ‘It’s coming from the very agencies who had the job and the responsibility to prevent the predatory lending, the kind of abusive lending products, that got us into this mess. We now get a solution that’s going to constrict access to housing in a way that we haven’t seen since the Jim Crow era.’

These gentleman join nearly 40 Senators who have signed onto a letter calling for the QRM proposal to be re-written more broadly. They characterize the 20% down payment as ‘unnecessarily tight.’  I personally don’t know what the right down payment number is, 10, 20, 5%? I don’t claim to have any better answers than anyone else. I just report what everybody else claims is right. But here’s a thought:  All these organizations, companies, entities, etc. want to see the free flow of credit again. That’s really the only way housing can regain its footing and the economic recovery can start cooking with gas. The nation’s banking system was infected with greed and that infection spread to everyday homeowners and individual investors all over the nation. In the end, it was deadly. Now the government, federal regulators, whoever, are trying to re-invent the market, to make sure it is infection-proof in the future. But now it seems as if many of the players who themselves were hurt by this crisis would rather see the ills of the mortgage market treated with Novocain than with medicine.”

Factory orders decline

According to a Commerce Department report, overall factory orders fell 1.2% to a seasonally adjusted $440.4 billion after an upwardly revised 3.8% rise in March. That was steeper than the 1% fall that Wall Street economists surveyed by Reuters had forecast for April and implied some weakness in the factory sector that had performed relatively well until recently and helped support economic recovery.  Transportation orders plunged 9.3% in April, nearly wiping out a 10.6% rise in March orders. It was the sharpest falloff in monthly transportation orders since an 11.9% fall in December.  But order declines were widespread in April, affecting categories including primary metals, machinery, computers and electrical equipment in addition to cars and other transportation goods.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com

(subscribe to this newsletter)

*************************************************
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 150 high-value, high-profit
      properties

    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building

    * Follow me on Twitter: http://twitter.com/mclaughlinchris

    * Join my Facebook Fan Page: http://www.mclaughlinchris.com

Smart Real Estate News & Commentary by Chris McLaughlin May 9, 2011

Forward this e-mail to your friends! 

Then they can subscribe directly at the following link:  http://www.smartrealestatenews.com/

*** Join Chris’ Facebook Fan Page–> http://www.mclaughlinchris.com

*** Follow Chris on Twitter–> http://www.twitter.com/mclaughlinchris

************************************************************

Home values fall

Real estate data firm Zillow said its home value index fell 3% in the first three months of the year from the previous quarter, and was down 8.2% year-over-year.  The number of homeowners under water amounted to 28.4% of single-family homeowners, representing a peak since Zillow began calculating the data in 2009.  That was up from 27% in the fourth quarter of last year.  Foreclosures also rose, following the moratoriums that had been in place in late 2010. In March, one out of every 1,000 homes was in foreclosure.  Given all those factors, it is unlikely home values will reach a bottom this year, Zillow said, and the firm pushed its forecast out to 2012.

Republicans want consumer bureau curbed

Last Thursday 44 of the 47 Republicans in the Senate sent a letter to President Obama, arguing that the new agency is far too powerful, and lacks structural checks and balances that would make it more accountable.  Republicans want changes at the very top of the agency. The director — a position that sits vacant — would be replaced with a board.  Without mentioning her by name, the letter is a thinly veiled reminder to the White House that an attempt to nominate Democrats’ favorite candidate, Elizabeth Warren, would lead to a contentious fight on the Hill.  Officially a White House adviser who also works with the Treasury Department, Warren is a lightening rod figure in the fight over the future of the agency.  The House Financial Services Committee is also considering bills to prevent the bureau from flexing new powers. 

Freddie Mac sells record number of REO

Freddie Mac sold roughly 31,000 previously foreclosed and repossessed homes in the first quarter, a new record for the company as both government-sponsored enterprises shed inventory from the end of last year.  Combined, both Fannie Mae and Freddie hold 218,000 REO properties as of the end of the first quarter, down from roughly 234,000 at the end of 2010, according to their filings.  In the first quarter of 2011, Freddie holds roughly 65,000, compared to its larger sibling Fannie, which holds 153,000 REO in its inventory.  While both GSEs made progress in cutting down this portion of the nation’s inventory of foreclosed homes, which continues to drag down home prices, inventory has elevated since one year ago.  Both Fannie and Freddie held 163,000 properties in the first quarter of 2010, almost what Fannie holds currently by itself.  Repossessions at Freddie increased by nearly 1,000 in the first quarter, and the holding period for these homes averaged 191 days before being resold. This varies significantly from state to state, especially as servicers restart foreclosure processes in different areas of the country. Servicers paused the process late last year to correct procedural problems.  “We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO,” Freddie said in its financial supplement.

Gas prices to drop

After rocketing up 91 cents since January, including 44 straight days of increases, the national average this past week stopped just shy of $4 a gallon and has retreated to under $3.98. A steady decline is expected to follow.  Typically, gas prices peak each spring, then fall into a summertime swoon that can last several weeks. This year’s decline should be gradual but steady, said Fred Rozell, the retail pricing director at the Oil Price Information Service.  Some drivers might not notice much of a price drop at first, Rozell cautioned. When average gas prices fluctuate nationally, some areas are affected more than others. In cities with many service stations, for instance, prices can be slower to fall. It’s even possible prices will rise at some stations in coming days even if they decline nationally.  And after the galloping surge in prices this year, many gas station owners are reluctant to lower prices until they see their competition doing the same, Rozell said.  A drop in prices would take some pressure off struggling consumers as well as businesses. As prices soared this year, surveys showed that motorists started to drive less. MasterCard SpendingPulse said this past week that it had recorded its sixth straight week of declining gasoline consumption.  That’s a cautionary sign for the economy, because most drivers conserve fuel only after curbing spending on other discretionary items like furniture, computers and vacations.

DSNews.com – Las Vegas investor sales up

Las Vegas region home sales held at a five-year high in March amid strong activity from investors and cash buyers focusing on foreclosures. Due to the large number of discounted, foreclosure properties on the resale market, the median sales price fell in the area.  According to figures from DataQuick, the median price paid for all new and resale houses and condos sold in the Las Vegas metro area in March was $117,000, down 1.7% from February and down 10% from a year ago.  It was the sixth consecutive month in which the median fell year-over-year. The March median was the lowest since January 1996.  DataQuick attributes the median’s 15-year low to price depreciation, robust sales of low-cost foreclosures, strong sales to investors who target low-cost properties, low new-home sales, and higher-than-usual condo resales.  Distressed sales, the combination of sales of foreclosed homes and short sales, represented about 69% of March resale transactions, the company reports.  Foreclosure resales rose to 57.3% of the Vegas resale market in March, up from 56.7% in February and 55.5% a year earlier.  Short sales made up an estimated 11.7% of Las Vegas-area March resales, down from 14.3% in February and 13.7% a year earlier.  Based on trustee deeds filed at the county recorder’s office, DataQuick says the number of homes foreclosed on in the Las Vegas region in March rose from both a month and a year earlier.  Lenders foreclosed on 3,331 single-family homes and condo units that month, up 41.6% from February and up 52.1% from March 2010.

Fannie Mae declares 1Q  loss

Fannie Mae reported net loss of $8.7 billion in the first quarter, including a $2.2 billion dividend payment to the Treasury Department. The loss narrowed from $13 billion one year ago.  Fannie said still falling home prices drove losses during the quarter. The government-sponsored enterprise estimated home prices fell 1.8% during the quarter, even though some regions experienced gains.  The mortgage giant’s regulator the Federal Housing Finance Agency (FHFA) requested $8.5 billion from the Treasury to eliminate Fannie’s net worth deficit. Fannie now owes the Treasury $99.7 billion and so far paid $12.4 billion in dividends.  Fannie said if the market shifts away from refinancing as is likely to occur as mortgage rates rise, market share will dip further.  While business could be declining, legacy issues are too. The serious delinquency rate on Fannie Mae loans dropped to 4.27% in the first quarter from 5.47% one year ago and 4.48% in the previous period. The company said modifications and other workouts, combined with foreclosures when other alternatives are exhausted, outnumbered new delinquent loans hitting its books.

See you at the top!

Chris McLaughlin
**************

Copyright Loss Mitigation Institute LLC 2010.

All Rights Reserved.

http://www.shortsalesriches.com
http://www.shortsalescoach.com
http://www.sixfigurebpo.com
http://www.reomillionaireclub.com
http://www.youtube.com/shortsalesriches 

http://www.smartrealestatenews.com (subscribe to this newsletter)

*************************************************

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 150 high-value, high-profit
      properties

    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     420 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!

   * In 2010, Chris’ 4 Central Florida real estate offices

      closed 2,786 sides for a closed sales volume of

      $392,912,927!  

    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building

    * Follow me on Twitter: http://twitter.com/mclaughlinchris

    * Join my Facebook Fan Page: http://www.mclaughlinchris.com

Smart Real Estate News & Commentary by Chris McLaughlin April 28, 2011

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NAR – pending home sales rise

March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors (NAR).  The Pending Home Sales Index (PHSI) rose 5.1% to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4% below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.  The data reflects contracts but not closings, which normally occur with a lag time of one or two months.

The PHSI in the Northeast fell 3.2% to 63.4 in March and is 18.4% below March 2010. In the Midwest the index rose 3.0% in March to 83.5 but is 16.6% below a year ago. Pending home sales in the South jumped 10.3% to an index of 110.2 but are 10.5% below March 2010. In the West the index increased 3.1% to 103.7 but is 4.1% below a year ago.  Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24% and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”

GNP slows

Gross domestic product, the broadest measure of the nation’s economic health, rose at an annual rate of 1.8%, the Commerce Department reported today. That’s a significant slowdown from the 3.1% growth rate in the final quarter of 2010.  Most predictions for growth have fallen precipitously over the past several weeks as rising prices spooked forecasters. Economists surveyed by CNNMoney were predicting growth of 2.0% in the first quarter. But some estimates were as high as 4.3% just two months earlier.  The sharp rise in oil prices in recent months was a major drag on growth. Besides cutting into the amount of money consumers had to spend on other items, the higher prices for imported oil caused a rise in the nation’s imports, which cut into GDP. The increase in imported goods shaved 0.8 percentage points off of growth by itself.  Rising inflation on overall prices also took a bite out of growth. Since GDP is adjusted for inflation, higher prices mean the economy must grow at a faster pace just to keep up. Consumer prices were up at a 3.8% from a year earlier, according to the report, compared to a rise of only 1.7% in the fourth quarter.  And the weak real estate market continued to weigh on the economy, as investment in homes and housing construction fell at a 4.1% pace in the quarter, while investment in non-residential real estate, such as offices, stores and factories, plunged by 29%.  But economists are expecting the slowdown to be temporary — they still project full-year growth of 3.1% for 2011.

DSNews.com – Home ownership dropping

The U.S. Census Bureau reported yesterday that the homeownership rate dropped to 66.4% at the end of the first quarter. It’s fallen back to a level not seen since 1998. Analysis of the numbers shows that the housing bust has more than reversed the increase in homeownership gained during the boom.  Economists at the research firm Capital Economics say the further decline in the homeownership rate in the first quarter “provides yet more evidence that Americans are now less able and less willing to buy a home.”  Paul Dales, the firm’s senior U.S. economist, said, “Part of this fall is due to foreclosures and the combination of high unemployment and tighter credit conditions preventing households from getting on the property ladder.”

But, Dales added, “[I]t also seems likely that there has been a reduction in the desire to own a home now it’s clear that housing is not a one way bet.”  At the same time, the homeowner vacancy rate fell to 2.6% from 2.7%, but Dales says this figures till remains above the long-run trend, suggesting that there is still too much supply.  Two million of the homes up for sale were sitting empty during the first quarter and another 4 million empty properties were not even listed, he explained.  “The inevitable consequence of low demand and high supply is lower prices,” Dales said.

Unemployment up

The number of initial claims rose to to 429,000 in the week ended Apr. 23, up 25,000 from the week before. It was the highest level in three months, and surprised economists, who were expecting initial claims to drop to 390,000 in the latest report.  The 4-week moving average of initial filings– a number that tries to smooth out week-to-week volatility — also rose above the threshold to 408,500, up 9,250 from the previous week. The 8-week moving average, which is an even better gauge for the longer-term trend, also ticked above 400,000.  In the government’s last monthly reading on the labor market, the unemployment rate fell for a fourth straight month in March to 8.8%, the lowest since March 2009, as the economy gained 216,000 jobs.

The Labor Department’s April job report is due at the end of next week.  Meanwhile, the number of Americans filing for ongoing claims decreased 68,000 to 3,709,000 in the week ended April 16, the latest data available. That’s the lowest figure since September 2008, and below economists’ estimates for 3,690,000 continuing claims.  Ongoing claims reflect people who file each week after their initial claim until the end of their standard benefits, usually after 26 weeks.  The 4-week moving average for ongoing claims fell by 22,750 to 3,697,750.

Ryland’s loss grows

Homebuilder and mortgage lender Ryland Group posted a first-quarter loss of $19.5 million, or 44 cents per share, as the company continued to grapple with falling home sales and a real estate market flooded with competing foreclosures and existing home sales.  The firm reported a loss of $14.3 million, or 33 cents a share, a year earlier.
 The builder, which also maintains its own mortgage finance group, failed to meet analyst expectations, with the average analyst expecting a loss of 31 cents a share.  Ryland’s loss deepened as sales fell about 30% to $168.6 million for the first quarter, down from $241.9 million a year earlier.

Home sales fell 17.2%, with only 966 new orders reported in the first three months of 2011, compared to 1,167 a year earlier when the homebuyer tax credit was still in play coaxing buyers into the market.  Ryland’s results for the quarter were hurt by pretax charges on inventory, valuation adjustments and other write-offs for the period.  The company’s deepening loss comes at a time when homebuilders are struggling to attract new buyers.  Moody’s Investors Service recently revised the ratings outlook for PulteGroup Inc. from positive to stable over concerns the homebuilder’s operating performance and the industry’s return to a more stable environment will take more than a year.

See you at the top!

Chris McLaughlin
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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 150 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
420 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!

* In 2010, Chris’ 4 Central Florida real estate offices

closed 2,786 sides for a closed sales volume of

$392,912,927!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
* Follow me on Twitter: http://twitter.com/mclaughlinchris
* Join my Facebook Fan Page: http://www.mclaughlinchris.com
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