fannie mae

Florida foreclosure limbo

Banks that made reckless home loans in south Florida have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth.  There are no owners willing to claim and care for them.  A months-long Sun Sentinel investigation of property code violations involving abandoned homes uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods.  The real estate industry calls such properties “bank walkaways.” They are no longer maintained by their legal owners, whether they were investors bailing out of unwise deals or families in financial ruin who decamped.  Nor are they being tended to by lenders, which have halted foreclosure proceedings because the remaining equity in the properties is deemed inadequate to cover the banks’ costs to reclaim title and maintain, refurbish and sell them.  The practice has contributed to South Florida’s foreclosure “limbo” problem in which thousands of vacant homes are stuck in unsettled court proceedings for years.

Spending down, income up

A Commerce Department report showed that personal spending increased 0.3% in the month, well down from the 0.9% jump in spending the month before. That was much weaker than the 0.5% gain in spending forecast by economists surveyed by Briefing.com.  Income increased a little faster, rising 0.4%, which was an improvement from the 0.2% rising the previous month. It was the first time since December that income growth outpaced spending increases, as consumers dipped into savings the previous two months in order to deal with rising prices, such as increases in gasoline prices.  But inflation moderated in March, and it allowed consumers to increase their savings again. The report showed that the savings rate, which compares after-tax income to the level of spending, edged up to 3.8% from 3.7% in February. That means the average family was saving $38 out of every $1,000 in take-home pay in the month.

ResCap bankruptcy could cost $1.2 billion

A bankruptcy filing on the ResCap mortgage unit could cost parent company Ally Financial between $400 million and $1.25 billion, according to a financial disclosure by the bank Friday.  “If a ResCap bankruptcy were to occur, we could incur significant charges, substantial litigation could result, and repayment of our credit exposure to ResCap could be at risk,” according to the filing.  On April 17, Ally disclosed the troubled mortgage unit missed an interest payment on its debt and would be considered in default if it wasn’t made within 30 days. More than $473 million on the debt is outstanding.  The unit actually forged a $191 million profit in the first quarter. But according to the filing Friday, Ally estimates the losses from litigation matters and repurchase obligations could reach as high as $4 billion over time.  Barclays Capital analysts predicted the unit could be placed into bankruptcy within one to two months, and outlined why selling the servicing rights would be critical for investors in ResCap issued mortgage-backed securities.  The unit has stopped lending to real estate developers and homebuilders in the US, according to the Ally filing Friday.

Student loans are a hot potato

In the political campaigns still taking shape, President Barack Obama, Republican challenger Mitt Romney and lawmakers of both parties say they want to protect college students from a sharp increase in interest rates on federally subsidized loans.  Agree, they might, and act they surely will. But first, they settled effortlessly into a rollicking good political brawl.  In less than 72 hours, what might have looked like a relatively simple matter mushroomed into a politically charged veto showdown that touched on the economy and health care, tax cuts and policies affecting women. Accusatory campaign commercials to follow, no doubt.  “This is beneath us. This is beneath the dignity of this House and the dignity of the public trust that we enjoy,” protested House Speaker John Boehner, R-Ohio as Democrats maneuvered for position on the student loan bill.

“It shouldn’t be a Republican or a Democratic issue. This is an American issue,” Obama said in North Carolina last week as he broached the topic of legislation in a move to gain support students in the fall election. He urged his listeners to tweet their lawmakers and urge them to block an increase in interest rates on federally subsidized loans issued beginning July 1.  There was partisan pop behind Obama’s message, though.  Over two days of campaign-style appearances on college campuses, he quoted one unnamed Republican lawmaker as saying she had “very little tolerance for people who tell me they graduate with debt because there’s no reason for that.” Another GOP lawmaker likened student loans to “stage three cancer of socialism,” he said. Both Republicans quickly said they had been quoted out of context. 

Within a day, Romney told reporters he agreed on the need to prevent the rate increase, while conceding nothing to Obama in the search for political advantage. “I support extending the temporary relief on interest rates for students,” he said, and cited “extraordinarily poor conditions in the job market” in a jab at the president’s handling of the economy.  Congressional Democrats announced they would write legislation to prevent a doubling of the current 3.4% interest rate, and cover the $6 billion cost by requiring more wealthy individuals to pay Social Security and Medicare payroll tax.  It was a not-so-subtle reprise of a campaign perennial, the allegation that Republicans want to cut programs benefiting those who aren’t rich to protect tax cuts for those who are.  “Let’s be honest,” said Senate Republican leader Mitch McConnell of Kentucky. “The only reason Democrats have proposed this particular solution to the problem is to get Republicans to oppose it, to make us cast a vote they think will make us look bad to the voters they need to win the next election.”  He then accused Democrats of wanting to pay for the legislation “by raiding Social Security and Medicare, and by making it even harder for small businesses to hire.”

TARP exec pleads guilty to fraud

Reginald Harper, former CEO of First Community Bank of Hammond, La., pleaded guilty to defrauding the firm out of millions of dollars in phony mortgages.  Harper faces up to five years in prison and a $250,000 fine. His sentencing is scheduled for Sept. 13. First Community applied for and was approved for $3.3 million in Troubled Asset Relief Program bailouts in 2008 but withdrew its application afterward.  Four years prior, Harper loaned $2 million to real estate developer Troy Foquet in 2004 to build out parcels of real estate, according to the charges.  Once it became difficult to find qualified homebuyers, Harper would loan potential buyers money to make it appear to the mortgage lender the borrower had more cash than they actually did. He also used “straw” buyers to obtain mortgages, which were used to pay off the original loans to Foquet.  Foquet also paid Harper with insufficient checks, which were credited as a loan payment in order to avoid reporting the delinquency.  Foquet pleaded guilty to the charges in March.  Executives had the choice of writing off losses on bad loans or covering up those losses through fraud,” said Special Inspector General for TARP Director Christy Romero. “Harper chose the latter and concealed the status of the loans from others at First Community Bank, from the bank’s regulators and in the bank’s TARP application.”

Foreclosure backlog looms

RealtyStore has completed a new study of the foreclosure status in three major housing markets, finding the amount of pending listings exceeds the amount of active foreclosures listed for sale by a margin of over 2 to 1. This shadow inventory of foreclosed homes illustrates the significant overhang of foreclosure listings that are anticipated to be unleashed on the housing in the wake of resolving the so-called foreclosure robo-signing situation in late 2010. The study was conducted for Cook County, IL (including metro Chicago), Miami-Dade County, FL (including metro Miami) and Maricopa County, AZ (including metro Phoenix).  Foreclosure counts in each location were tabulated by owner, including bank or lender owned homes, foreclosures owned by Fannie Mae or Freddie Mac, and HUD homes. Although Arizona had previously been one of the hardest hit areas for foreclosure activity, Cook County, IL shows a near equal total amount of foreclosed homes. Miami-Dade foreclosures number at roughly half the count of either other market.

The breakdown of active foreclosure listings vs pending, or shadow inventory, foreclosures listings was consistent across each market surveyed. On average, 29% of total foreclosures across the counties are currently listed for sale. Cook County, IL foreclosures were most heavily represented with active listings, with 32% of its foreclosures presently being marketed to buyers, and 68% of foreclosures pending listing. Maricopa County, AZ foreclosure listings for sale represent only 25% of recorded foreclosures in the county, with 75% of local foreclosures yet to be listed for re-sale. Miami-Dade, FL currently offers 29% of its total foreclosures on the market for re-sale, with 71% of its foreclosure inventory awaiting listing on the market.  According to RealtyStore, median list prices of foreclosures for sale in Cook, Maricopa and Miami-Dade counties continue to run below average home prices. Cook County foreclosures are listed at a median price of just $72,650 and an average price of $95,997. Miami-Dade foreclosures list at a median price of $106,900 and average $145,059, while Maricopa lists foreclosed homes slightly higher with a median of $109,900 and the average foreclosure listed at a price of $168,744.

The foreclosure median list prices come in at 56% and 42% below the median sales prices of single-family homes selling in metro-Chicago and Miami, respectively, as reported by the NAR in Q4, 2011. Metro-Phoenix posts a smaller price gap at 7%, suggesting foreclosure saturation may be peaking in Maricopa County.  Individual foreclosure listings continue to cover all portions of the pricing spectrum, ranging from as low as $5,900 for a single family foreclosed home in Chicago, IL to as high as a foreclosed estate in Paradise Valley, AZ listed at $5,700,000.

Jobless claims up

Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 386,000, the Labor Department said. But the prior week’s figure was revised up to 388,000 from the previously reported 380,000.  The four-week moving average for new claims, considered a better measure of labor market trends, rose 5,500 to 374,750.  Economists polled by Reuters had forecast claims falling to 370,000 last week.  The claims data covered the week for April’s nonfarm payrolls survey. The four-week average of new applications rose marginally between the March and April survey periods, suggesting not much change in labor market conditions.  Employers added 120,000 new jobs to their payrolls in March, the least since October, after averaging 246,000 jobs per month over the prior three months. Most economists have viewed the pull-back in job growth as payback after the weather-induced gains in the previous months.  The number of people still receiving benefits under regular state programs after an initial week of aid rose 26,000 to 3.30 million in the week ended April 7.  The number of Americans on emergency unemployment benefits fell 19,419 to 2.78 million in the week ended March 31, the latest week for which data is available.  A total of 6.77 million people were claiming unemployment benefits during that period under all programs, down 187,807 from the prior week.

CoreLogic – First Quarter 2012 Multifamily Applicant Risk Index Report

CoreLogic today announced that CoreLogic SafeRent, provider of the nation’s leading suite of screening and risk management services designed for the multifamily housing industry, released its first quarter 2012 multifamily applicant risk (MAR) index report. The first quarter MAR Index value increased one point from the fourth quarter 2011 and three points from a year ago, indicating an increase in national renter credit quality and slightly better applicant pool.  The MAR Index for first quarter 2012 is based exclusively on applicant traffic credit quality scores from the CoreLogic SafeRent statistical lease screening model (Registry ScorePLUS) and is updated quarterly to provide property owners and managers with a benchmark against which to evaluate their applicant credit quality trends against market based MAR Index trends. This comparison indicates the relative strength of their property portfolio to attract and secure applicants with higher credit quality and an increased likelihood of fulfilling lease obligations.

When comparing applicants for one- versus two-bedroom units, the first quarter 2012 MAR Index is slightly higher for one-bedroom units at 102, compared with 101 for two-bedroom units.  Regionally, the South and Midwest reflected the lowest MAR Index, each with values of 98, a one point increase from the fourth quarter 2011. The Northeast continues to maintain the highest MAR Index with a value of 111.  The three Metropolitan Statistical Areas (MSA) with the steepest decreases in the MAR Index were Cincinnati-Middletown, Ohio, Ky., Ind.; Columbus, Ohio; and Birmingham-Hoover, Ala.; each with decreases of three points. The three MSAs with the greatest increases in the MAR Index were Chicago-Naperville-Joliet, Ill., Ind., Wis.; Denver-Aurora, Colo.; and Salt Lake City, Utah; each with increases of four points. 

Understanding the Multifamily Applicant Risk Index (MAR Index)

The MAR Index is published quarterly by CoreLogic SafeRent. It provides trends of national and regional traffic credit quality scores whereby a lower index value indicates an applicant pool with a higher risk of not fulfilling lease obligations. A MAR Index value of 100 indicates that market conditions are equal to the national mean for the index’s base period of 2004. A MAR Index value greater than 100 indicates market conditions with reduced average risk of default relative to the index’s base period mean. A value less than 100 indicates market conditions with increased average risk of default relative to the index’s base period mean. The MAR Index is derived from the statistical screening model from CoreLogic SafeRent, which is the multifamily industry’s only screening model that is both empirically derived and statistically validated. The statistical screening model was developed from historical resident lease performance data to specifically evaluate the potential risk of a resident’s future lease performance. The model generates scores for each applicant indicating the relative risk of the applicant not fulfilling lease obligations. A lower score indicates a more risky applicant.

BOA tops estimates

Bank of America (BOA) reported lower first-quarter profit as the second-largest US bank took accounting charges related to its debt, but results topped analysts’ estimates as credit quality improved.  The bank reported charges of $4.8 billion related to changes in the value of its debt, partially offset by gains of $3.4 billion from equity investments and debt-related transactions.  Excluding debt valuation adjustments, it earned 31 cents a share.  First-quarter net income was $653 million, or 3 cents a share, down from $2.05 billion, or 17 cents per share, a year earlier.  Revenue declined to $22.3 billion from $26.9 billion.  The Charlotte, N.C.-based bank took a loan-loss provision of $2.4 billion, compared with $3.8 billion a year ago.  In its capital markets operations, Bank of America reported sales and trading revenue of $3.8 billion, up from $1.5 billion in the fourth quarter but down from $4.6 billion a year ago.

California foreclosure reform moves forward

Seven bills reforming some foreclosure rules passed committees in the California state legislature this week.  The bills were introduced in February. One set of bills extends protections to tenants, giving them 90 days before eviction after the foreclosure sale of the property. Another increases penalties to banks that fail to maintain blighted homes.  Servicers would be required to provide documentation to the borrower establishing its right to foreclose before the filing first step in the process, under other passed bills. Evidence of ownership and chain of title must also be shown to the borrower.  Two other bills charge servicers a $25 fee for every notice of default recording. The money will fund investigations for California AG Kamala Harris. Another piece of legislation passed by committee allows Harris to convene a grand jury to investigate financial crimes in different jurisdictions.  “All Californians have been impacted by the toll the mortgage and foreclosure process has taken on our neighborhoods,” Harris said. “Our California Homeowner Bill of Rights will provide relief for homeowners, tenants and communities. I thank the authors and supporters of these important bills.”

Short sales up in 2011

Short sale volumes may not have experienced the boom many predicted, but they’re certainly moving up.  Late last week, the Office of the Comptroller of the Currency issued a report on year-end loss mitigation activity for most of the mortgages serviced by the nation’s largest banks.  The 227,570 new short sales completed in 2011 was a 12% increase from one year ago and more than double the 112,000 measured in 2009, according to the report.  As the robo-signing freeze thaws, and new requirements under the attorneys general settlement are enforced, short sales may continue upward in 2012.

Eurozone unemployment hits new record

Unemployment in the 17 nation euro zone rose to 10.8% in February — as expected by economists’ polled by Reuters — and compared to 10.7% in January, the European Union’s statistics office Eurostat said on Monday.  Joblessness last reached February’s levels in May and June 1997 and was only slightly higher in April 1997 at 10.9%.  In February, unemployment was 10.2% of the working population in the wider, 27-nation EU, or some 24.5 million people, rising from 10.1% in January, Eurostat said.  Europe’s debt crisis has forced governments to drastically cut spending, while business confidence collapsed late last year, leaving many Europeans struggling to find work at a time when the euro zone heads into a recession.  The European Commission expects the euro zone’s output to shrink 0.3% in 2012, and data released separately on Monday showed that the bloc’s manufacturing activity contracted for an eighth successive month in March.

Detroit razing houses

More than a quarter of homes in Detroit whose loans failed at the height of the foreclosure crisis in 2006 and 2007 have already been razed or are on the demolition list, becoming a huge obstacle to the city’s rebirth, a Detroit News analysis shows.  In neighborhoods on the far west side and the northeast corner of the city, as many as two-thirds of the properties that went into foreclosure just five years ago are in the city’s crosshairs or already on the ground. The worst-hit areas almost mirror perfectly parts of the city where the most subprime mortgages were issued before they helped trigger the collapse of the banking industry.  And more vacancies could be on the way: Although the rate has slowed, lenders have foreclosed on 28,000 more homes since 2007, according to records from RealtyTrac.  Mayor Dave Bing has made reshaping the city one of his top priorities, and his Detroit Works Project is focusing on fixing targeted neighborhoods. But increasing vacancy squeezes the city’s already feeble tax base, diminishes the quality of life and undercuts the city’s recovery efforts.  In parts of the city least able to absorb abandonment, evictions are almost instantly followed by strippers who can gut properties in days.

Detroit has struggled with abandoned homes for years, and its population fell 25% to 713,777 from 2000 to 2010. But foreclosures from 2006 and 2007 alone have added 7,600 homes to the demolition list. Now, there are an estimated 38,000 homes in some stage of demolition, a number equal to 10% of all housing units in the city.   The city has knocked down 4,200 homes since 2010 and hopes to get to 6,000 more, which could take another three years at its current pace. That doesn’t take into account the 1,800 homes the Detroit City Council has targeted for demolition, or the 26,300 homes that are in the process of being considered for demolition.  If foreclosures continue to increase vacancies, the city will be hard-pressed to keep up with demolitions. City leaders are working with banks and other institutions to find ways to preserve occupancy, said Karla Henderson, Detroit’s group executive of planning and facilities.

Eurozone manufacturing in trouble

The euro zone’s manufacturing sector shrank for an eighth month and at a faster pace in March, adding to signs the bloc is in recession as the downturn spread to core members France and Germany, a survey showed today.  Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) dropped to 47.7 last month from 49.0 in February, in line with a preliminary reading.  It has now been below the 50 mark that divides growth from contraction since August.  Earlier data from Germany, Europe’s largest economy, showed its manufacturing sector contracted last month and it was a similar story in neighboring France.  In Spain, struggling to implement swinging austerity measures demanded by the European Union to meet tough deficit targets, the sector contracted for the 11th month.  Manufacturing in Italy shrank for an eighth month.  The economic slump will make it even harder for the 17-nation euro zone to overcome its debt crisis as it will depress tax revenues and hurt consumer spending.  Periphery countries have borne the brunt of the sharp downturn as their own austerity measures continue to hamper a return to growth, particularly Greece where the sharp decline in manufacturing continued last month.

Mortgage insurance slightly up

Members of trade group Mortgage Insurance Companies of America wrote $5.4 billion of primary new insurance in February, up from $5 billion in January and $4.2 billion from February 2011, the group reported on Friday.  The members, who include Genworth Mortgage Insurance Corporation, Mortgage Guaranty Insurance Corporation, and Radian Guaranty Inc., posted number for primary insurance in force was $397.7 billion, which is down from $399.2 in January and down greatly from $625,764.7 the February before.  February’s cure to default ration was 113.5%, that’s up from January’s 80.9% ratio and slightly up from February of last year, when the rate sat at 112.2%, continuing the trend of February, March and April seeing cure to default ratios of above 100%, which is not so for the rest of the year. 

In April, the Federal Housing Administration (FHA) will increase its insurance premiums.  But already, the FHA insurance premiums have risen significantly over the past 18 months, according to Genworth Financial, increasing a mortgage payment by $95 a month for borrowers at or above 95% loan-to-value ratios.  While many mortgage insurers are operating under state capital ratio waivers, some claim they are ready to take over market share from the FHA.  “Private mortgage insurance is more competitive than ever with FHA, and is well-positioned to take on new risk,” according to statement from Genworth Financial. “By contrast, the FHA is dealing with an unprecedented increase in delinquencies and defaults, and this precarious financial position suggests that FHA may continue to increase costs for FHA loans.”

Failed Colorado bill still gasping

Undaunted that legislators killed a bill requiring that lenders prove their right to foreclose on a home backers of the failed proposal have filed it as a ballot initiative with a harder approach: Foreclosures can’t happen unless all loan papers are properly recorded with the county first.  That means anytime a lender sells or transfers a note, as has been the practice for several years in the mortgage-backed securities business, the holder must file it with the county recorder of deeds.  Colorado has not required assignments — the legal word for when a mortgage or note exchanges hands — to be recorded for years, a critical part of the problem in determining who actually owns a note during a foreclosure, proponents of the initiative say.  “The intent is to ensure there are no gaps in the line of title,” attorney Stephen Brunette said. “Title records now are being totally messed with. Colorado’s foreclosure process today is fundamentally unsound.”  The ballot initiative — called the Foreclosure Due Process and Fraud Prevention Initiative — squarely takes on Colorado law that uniquely allows for “no-doc” foreclosures, where lenders can take a home without ever having to prove they have that right.

Opponents of House Bill 1156 who helped kill it in a Republican-controlled committee March 13 said the initiative could push lenders from the market.  “Our one concern is that nothing hurt lending in Colorado,” said Don Childears, president of the Colorado Bankers Association. “We’re not jumping to a conclusion that it’s automatically bad and have organizations against it tomorrow. But we’re aggressively thinking through its impact.”  HB 1156 sought to have lenders provide proof — theoretically a certified copy of a mortgage or loan note — that they had the right to foreclose on a property. It also would have required a judge to review the paperwork and certify a lender’s standing before ordering the public auction of a foreclosed home.  The proposed initiative is scheduled for a hearing at the Legislative Council on April 6, the first step to reaching November’s ballot. The proposal would need more than 87,100 validated signatures to get on the ballot, according to the Colorado secretary of state’s office.

3 major banks brace for downgrades

Moody’s Investors Service, one of the two big ratings agencies, has said it will decide in mid-May whether to lower its ratings for 17 global financial companies. Morgan Stanley, which was hit hard in the financial crisis, appears to be the most vulnerable. Moody’s is threatening to cut the bank’s ratings by three notches, to a level that would be well below the rating of a rival like JPMorgan Chase.  Bank of America and Citigroup may also fall to the same level as Morgan Stanley, but those two are helped by having higher-rated subsidiaries.  Credit ratings are particularly important for financial companies, which greatly depend on the confidence of their creditors and the companies they trade with. A high credit rating enables banks to put up less money, which they can borrow cheaply, while a lower credit rating can mean they have to put up more money and perhaps pay more for their loans.  The three banks that stand to be the most affected by a ratings downgrade have already said that they would have to put up billions of dollars more in collateral to back trading contracts.

Olick – investors swarm housing

“The number of homes sold to investors more than doubled last year, as rising rents and low-priced distressed properties fueled demand. Investors, half of them using no mortgage, bought 1.23 million homes in 2011, a 65% jump from 2010, according to the National Association of Realtors. Half of the homes purchased were distressed properties, that is, foreclosures or short sales (when the bank allows the home to be sold for less than the value of the mortgage).  ‘Rising rental income easily beat cash sitting in banks as an added inducement,’ says NAR’s chief economist Lawrence Yun. ‘In addition, 41% of investment buyers purchased more than one property.’  Half of investment buyers said they purchased primarily to generate rental income, according to the Realtors’ report. 34% wanted to diversify their investments, as 2011 saw a volatile stock market due to the debt crisis at home and overseas.

While nearly half of investment buyers said they were likely to purchase another property within two years, housing and mortgage analyst Mark Hanson calls them a ‘thin cohort’ and worries that they add ever more volatility to the current housing recovery.  ‘They are fickle and volatile. They will go away on the slightest of conditions changes. They also won’t chase prices higher or buy new homes from builders. Lastly, without the heavy flow of distressed supply, there is no US housing market recovery. Distressed sales ARE the market,’ says Hanson.  Foreclosure supply is still running high, with 65,000 completed foreclosures in February of this year, according to a just-released report from CoreLogic. 862,000 foreclosures were completed in the twelve months ending in February. While there are still 1.4 million homes in the foreclosures process, all of these numbers are coming down, albeit very slowly, and sales of bank-owned properties (REO) are speeding up.  Even the Realtors are concerned, like Hanson, that new programs by the government and banks to sell foreclosed properties in bulk discounts to large-scale investors, will cut off a robust individual sales market for smaller investors.  ‘Small-time investors are helping the market heal, since REO inventory is not lingering for an extended period,’ says Yun, clearly looking out for his Realtor constituents. ‘Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas.’”

Consumer spending up

The Commerce Department said on Friday consumer spending rose 0.8%, as households probably stepped up purchases of motor vehicles, despite a spike in gasoline prices.  January’s spending was revised up to 0.4% from a previously reported 0.2% gain. Economists polled by Reuters had expected spending, which accounts for two-thirds of US economic activity, to rise 0.6% last month.  When adjusted for inflation, spending rose 0.5%, the largest gain since September, after gaining 0.2% in January. That could cause analysts to raise their forecasts for 2% first-quarter growth.  The economy expanded at an annual rate of 3% in the final three months of 2011 as it got a boost from restocking by businesses, a stimulus that is expected to be lost this quarter.  Consumer spending rose at a 2.1% rate in the fourth quarter and last month’s increase suggested consumers were taking surging gasoline prices in stride, and saving less to supplement their low income.  Spending on goods meant to last more than three years rose 1.6% in February after advancing 1.4% the prior month. Spending on services rose 0.4%. Unseasonably warm weather had curbed demand for utilities in the prior months.

WSJ – investors buying vacation homes

In its annual survey of investment- and vacation-home sales, the National Association of Realtors found that the number of homes purchased by investors rose 65% during 2011 to 1.2 million, accounting for 27% of all home sales. In 2010, investment properties accounted for 17% of all sales.  The number of homes purchased as second or vacation homes jumped 7% last year to 502,000—accounting for 11% of all transactions, up from 10% of all sales in 2010.  While the majority of homes sold last year went to traditional buyers who plan to use the home as a primary residence, their presence in the market declined to 61% from 73% in 2010.  During the housing boom, speculators were blamed for helping to inflate the bubble by snapping up homes, especially new homes, and then quickly reselling them as prices rose higher. That led to overbuilding. Some economists now believe that investors are helping to stabilize the market by buying up excess inventory.

In some of the hardest-hit housing markets, investors are the largest category of buyers. But unlike during the boom years, when many investors were buying properties to “flip” quickly for a profit, many of today’s investors buy the homes with plans to rent them out and sell them when the market improves.  “Obviously, it’s a great rental market, and it’s going to be a great rental market for a while,” said Geoffrey Jacobs, principal at Empire Group, a developer that has amassed a portfolio of nearly 1,000 single-family homes in Phoenix since 2009. Because the typical home that he buys is only about 10 years old, “it’ll compete well with a new home down the road when we go to sell the houses,” Mr. Jacobs said.   Amid increased demand from investors, real-estate agents say there aren’t enough foreclosed homes in good condition available in some markets, including parts of California and Florida. Thirty% of vacation-home buyers said they plan to use the property as a primary residence in the future, indicating that buyers who can afford to take advantage of low prices and low interest rates to buy their future retirement homes are doing so.

Housing markets bottomed in 2009?

The housing industry fell apart quickly and then began a protracted recovery.  Many housing markets hit bottom three years ago in early 2009 when prognosticators claimed that home prices had much further to fall, according to data released by Pro Teck Valuation Services.  The Waltham, Mass.-based real estate valuation firm explored the turnover rate (number of non-distressed sales divided by the total housing stock in a region) as an indication of future home prices. The analysis, the firm says, demonstrates that home prices in many areas are already rebounding from the bottom of the market.   “The Miami and Los Angeles markets are highly representative of what we foresee for most of the important coastal US real estate markets,” Pro Teck Chief Executive Tom O’Grady said. “In particular, we see stabilizing and then gradually increasing prices over the next few years.”  According to Pro Teck, the significant decline in prices in 2009 made home values so compelling that both new owner-occupant homebuyers and astute US and foreign investors came into these markets. The new demand prevented further declines, they say, creating the longer-term “bouncing around the bottom” prices seen today. 

In addition to sales activity, the firm released a listing of the 10 best and 10 worst performing metros as ranked by its market condition-ranking model. The rankings are run for the single-family home markets in the top 200 statistical areas and based on the number of active listings, average listing price, number of sales, average active market time, average sold price, number of foreclosure sales and number of new listings.  “In March, the top ranked metros show a strong connection to states such as Texas and Oklahoma, which directly benefit from the resurgence in the US oil exploration industries,” Michael Sklarz, principal at Collateral Analytics, said. “In addition, most of these markets did not experience price bubbles during the mid-2000s boom period and, thus, never became overpriced in the first place.”