By Inman News, Tuesday, August 31, 2010.

A quarterly index of national home prices in the second quarter showed improvement from both its first quarter and year-ago figures, according to the latest Standard & Poor’s/Case-Shiller National Home Price Indices report released today.

The indices, which are based on repeat sales of single-family homes over time, have a base value of 100, with levels above 100 representing the percentage of home-value appreciation since January 2000.

The U.S National Home Price Index rose 3.6 percent year-over-year in the second quarter to 138.03, and rose 4.4 percent from the first quarter of this year.

Meanwhile, the monthly 20-City Composite Home Price Index rose 4.2 percent in June, to 147.97, compared to June 2009. That follows a 4.6 percent year-over-year increase in May.

“After 16 consecutive months of improvement in their annual rates of return, June’s figures were the first to moderate from their prior month’s pace, pointing to a possible deceleration in home-price returns,” the report said.

Fifteen of the 20 metropolitan statistical areas covered by the index saw their home prices rise year-over-year. The index’s month-to-month gain was more modest: 1 percent.

“While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, in a statement.

“The worry starts when you remember that the homebuyers’ tax credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak. The inventory of unsold homes and months’ supply data were particularly troubling. If this relative weakness in demand continues, it will likely filter through to home prices in coming months.”

The 20-city composite was down 28.4 percent in June from its peak in June and July 2006.

“Even with concerns about near-term developments, we recognize that the housing market is in better shape than this time last year,” Blitzer said.

“Further, California’s cities have moved from some of the hardest hit to three of the four leading cities based on year-over-year gains. Among the other hard-hit cities, the news is also a bit encouraging — Las Vegas, however, remains among the weaker cities.”

Of the five metro areas that experienced declines in the past year, Las Vegas fell the most in June: -5.2 percent, to 101.77. The other metro areas to see drops were Charlotte, N.C. (-2.7 percent, to 117.24); Seattle (-1.8 percent, to 146.83); Tampa, Fla. (-1.6 percent, to 138.58); and Chicago (-0.1 percent, to 124.9).

San Francisco, San Diego and Minneapolis experienced double-digit year-over-year gains: 14.3 percent, 11.2 percent and 10.7 percent, respectively. San Diego, in particular, posted its 14 straight month of gains, the report said. The index for Los Angeles also rose substantially in June, up 9.2 percent.

9/1/2010

(Reuters) – The outlook for the U.S. economy would have to deteriorate “appreciably” to spur fresh support from the Federal Reserve, according to minutes of the central bank’s last policy meeting released on Tuesday.

The August 10 meeting was held against a darkening economic backdrop, and the Fed, in a significant policy shift, decided to reinvest maturing mortgage-related securities in government debt so its support for the stumbling recovery did not fade.

The minutes showed this shift would be a precursor to a return to outright asset purchases only if downbeat signs on the economy continued to mount.

Several policy makers believed they “would need to consider steps … to provide additional policy stimulus if the outlook were to weaken appreciably further,” the minutes said.

The minutes reflected an unusually wide range of views at the Fed for the outlook for the recovery and for inflation, and how the central bank should manage monetary policy.

Fed staff told policy makers that mortgage prepayments would likely shave $340 billion off mortgage-backed securities, or MBS, held in the Fed’s $2 trillion portfolio by the end of 2011 absent action. An additional $55 billion in agency securities were expected to mature over the same time frame.

While the minutes showed the current preference was to buy Treasury debt with the proceeds, officials left the door open to other options.

“While reinvesting in Treasury securities was seen as preferable given current market conditions, reinvesting in MBS might become desirable if conditions were to change,” the minutes said.

Even so, some officials worried the move might be send an “inappropriate” signal that the Fed was on the cusp of launching another massive securities shopping expedition.

The Fed stopped buying MBS and mortgage-agency debt at the end of March after it had accumulated about $1.4 trillion worth. It also bought $300 billion in longer-term Treasury securities as part of a program to spur recovery.

“The minutes … characterize the decision as more of a tactical decision to keep the balance sheet at its current level as opposed to a decision to provide additional stimulus,” Barclays Capital economist Michael Gapen said in a note to clients. “The hurdle for additional stimulus measures is higher than the August … statement seemed to imply,” he said, referring to the central bank’s initial policy announcement.

The Fed began buying mortgage-linked debt and longer-term U.S. Treasury securities as a way to drive down a range of interest rates and lift the economy after it had chopped overnight borrowing costs to near zero in December 2008.

U.S. Treasury debt prices on Tuesday held gains as the minutes underscored investors’ concerns the recovery is faltering. The comments weighed on stocks, which closed up marginally, with some analysts saying the minutes suggested the bar for further Fed easing was high.

DIVERGENCE OF VIEWS

The minutes were laced with expressions of concern that the U.S. recovery might be losing momentum even as overseas economies were proving more resilient than expected.

“Most (officials) saw the incoming data as indicating that the economy was operating farther below its potential than they had thought, that the pace of recovery had slowed in recent months, and that growth would be more modest during the second half of 2010 than they had anticipated,” the minutes said.

However, some of the 17 officials on the policy-setting panel said recent data, while weak, was consistent with their forecasts. Others said it was too soon to conclude the outlook for growth had clearly softened.

Officials were similarly divided on the inflation outlook.

Many said underlying inflation would be below preferred levels for some time, and a number judged that the risk of further disinflation had increased, although the minutes said the risk of a potentially crippling deflation were small.

A few said keeping interests rates at an exceptionally low level might be creating conditions for a future price surge.

The vote at the end of meeting was 9-1, with Kansas City Federal Reserve Bank President Thomas Hoenig dissenting.

Fed Chairman Ben Bernanke said on Friday that additional securities purchases were among the tools the Fed could deploy to stimulate the economy if it stumbled badly, and that those purchases could be effective.

While Bernanke said officials opted to reinvest in Treasuries in part because they prefer a portfolio made up mostly of government securities, the Fed would consider other options if conditions warranted.

At 7.22% for the second quarter, commercial real estate capitalization rates are at record highs compared with Treasury bonds, according to the National Council of Real Estate Investment Fiduciaries. “The data indicate that real estate is poised for a rebound,” according to Nori Gerardo Lietz, a pension fund adviser.   Bloomberg

9/1/2010

U.S. commercial real estate yields are near the highest level relative to Treasury bonds on record, a signal to some investors it’s time to buy property.

Capitalization rates, a measure of real estate yields, averaged 7.22 percent in the second quarter, based on an index calculated by the National Council of Real Estate Investment Fiduciaries. That was 429 basis points, or 4.29 percentage points, higher than the yield on 10-year government bonds as of June 30, according to data compiled by Bloomberg. It’s about 475 basis points higher than Treasury yields as of yesterday.

That spread is near the record 539 basis points in the first quarter of 2009, when the U.S. was mired in the worst of the financial crisis and property prices sank. Risk-averse investors are seeking the highest-quality office towers, hotels and apartments as the gap widens, according to Nori Gerardo Lietz, partner and chief strategist for private real estate at Partners Group AG in San Francisco.

“The data indicate that real estate is poised for a rebound,” said Gerardo Lietz, who advises pension funds on property investments.

Some buyers already are acquiring buildings at lower cap rates, which move inversely to price. In June, a group of South Korean pension fund investors bought the 33-story Wells Fargo Building in San Francisco for $333 million from Principal Financial Group Inc. in one of the largest transactions in the second quarter, according to Real Capital Analytics Inc., a property research firm. The office tower sold at a cap rate of about 7 percent, said Goodwin Gaw, the developer who helped broker on the deal.

New York Rates

In Manhattan, RXR Realty LLC bought a stake in 340 Madison Ave., a 22-story office building, at a cap rate of 6 percent, according to New York-based Real Capital. Cap rates are calculated by dividing net operating income by purchase price, so the lower the rate, the higher the value of the property, and vice versa.

The NCREIF index measures 6,066 U.S. properties with a market value of $234.5 billion. The spread over Treasury yields was calculated using transaction cap rates, which are based on actual sales — 48 in the second quarter — and are usually more reliable than appraised values, according to Chicago-based NCREIF. The organization’s measure, which it began publishing in 1982, represents current yield before any price appreciation.

Comparing Yields

Investors compare property yields with Treasuries to determine how much potential profit real estate offers relative to an investment that’s considered low-risk. The spread shrank to less than 80 basis points, the narrowest in 16 years, when commercial real estate prices peaked in 2007. Property values have dropped more than 40 percent since the October 2007 top of the market, according to Moody’s Investors Service.

The gap’s widening follows a plunge in bond yields after the global financial crisis spurred a flight to safety and the Federal Reserve slashed interest rates to a record low. Treasury bonds yesterday completed the biggest monthly rally since the end of 2008 amid signs economic growth is faltering, with the benchmark 10-year note yielding 2.47 percent.

“Property is attractively priced versus the fixed-income market,” said Ritson Ferguson, chief investment officer of ING Clarion Real Estate Securities in Radnor, Pennsylvania, which manages about $12 billion.

The wide spread carries a warning signal to some investors because the economy remains weak, hurting commercial rents and occupancy.

Being ‘Picky’

“It’s questionable how much growth you’re going to get,” said James S. Corl, managing director for distressed real estate investments at Siguler Guff & Co., a New York-based private- equity firm. “Yes, there is value in real estate but you’ve got to be very picky. If you pay up for existing leases, it’s very hard to manage your way out of that situation.”

For much of the past two decades, institutional real estate was valued at about a 9 percent cap rate, according to Jeffrey D. Fisher, a consultant to NCREIF and a real estate professor at Indiana University in Bloomington, Indiana. Cap rates on some commercial deals fell to less than 4 percent during the peak.

The rate declined in the second quarter as transactions began to increase, he said.

“What I’m seeing is a two-tiered market right now,” Fisher said. “For properties that have high occupancy, that’s where you really have seen the price appreciation and cap rates falling.” For buildings with low occupancy rates, “there is very little interest,” he said.

Sales Rebound

U.S. sales of office, retail, industrial, apartment and hotel properties totaled $20.7 billion in the second quarter, according to Real Capital. That was up 86 percent from $11.1 billion a year earlier.

The deals were still 85 percent below the peak of $135.7 billion in the second quarter of 2007, Real Capital data show.

Corporate bond yields are a better comparison than Treasuries and also indicate that properties are undervalued, said Michael Knott, managing director at Green Street Advisors Inc., a Newport Beach, California-based company that specializes in analyzing real estate investment trusts. Bonds rated Baa by Moody’s are perceived as investments with moderate risk, similar to commercial real estate, said Knott.

The spread between NCREIF real estate cap rates and Baa- rated corporate bonds is more than 200 basis points, Knott said. The average during the past 25 years is about 140 basis points.

“Underlying real estate looks cheap to us relative to where moderate-risk corporate bond yields are priced,” Knott said in a telephone interview. The exception is publicly traded REITs, which trade at a premium to asset values, he said.

“Smart managers today are being very selective because they realize a lot more property has to clear the market,” said Corl of Siguler Guff. “The volume of deals is definitely going to go up.”

August 23, 2010

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury has released the August edition of the Obama Administration’s Housing Scorecard (www.hud.gov/scorecard), a comprehensive report on the nation’s housing market. In July, housing prices remained level after 30 straight months of decline, while some price predictions have improved. In addition, historic low interest rates continued to promote home affordability and refinancing options for the nation’s families. However, the market remains fragile with foreclosure starts showing a slight increase and serious delinquencies continuing to work through the pipeline.

“While there has been some stabilization in the housing market, it remains clear that we have more work ahead,” said HUD Assistant Secretary Raphael Bostic. “Through the Obama Administration’s efforts over the past 16 months, we have seen increased price stabilization and improved home affordability for prospective, qualified homebuyers. At the same time, we know that we must continue to provide support to underwater borrowers, unemployed homeowners, and to the nation’s hardest hit neighborhoods.”

The August Housing Scorecard features key data on the health of the housing market including:

• Stabilizing housing prices drive improving expectations in some regions. After 30 straight months of decline, home prices have leveled off in the past year; futures indices have shifted upward since January 2009 as signs of recovery continue, although overall housing outlook measures remain mixed.

• More than twice as many modification arrangements begun compared to foreclosure completions. More than 3.15 million modification arrangements were done from April 2009 through the end of June 2010. This includes more than 1.3 million trial Home Affordable Modification Program (HAMP) modifications started, over 472,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and 1.4 million proprietary modifications under HOPE Now. The number of agreements offered continues to more than double foreclosure completions for the same period (1.24 million).

• More than 4.2 million families have benefited from housing counseling since April 2009. Working with a HUD-approved housing counselor can help borrowers manage debts apart from a mortgage – car payments, credit cards and personal loans, for example – and help them avoid falling into default.

• More than 37,000 homeowners received a HAMP permanent modification in July. While the pace of program entry has slowed due to upfront documentation requirements in place since June 1, this policy change streamlines the process to help more eligible homeowners convert to a permanent modification. Homeowners in permanent modifications are experiencing a median payment reduction of 36 percent, or more than $500 per month.

“HAMP, which represents just one, targeted piece of the Administration’s larger efforts on housing, has so far offered more than a million and half responsible homeowners the chance to modify their mortgages. This program has helped to stabilize a housing market that remains fragile and has redefined the modification standard for the industry – both of which are delivering real benefits to struggling homeowners in communities across the country,” said Treasury Assistant Secretary for Financial Stability Herb Allison. “Currently servicers are working through their pending modifications, and while Making Home Affordable works for a number of homeowners, many others are offered other means of avoiding foreclosure. As careful stewards of the scarce resources of the American taxpayer, we see this as prudent progress – and we will keep working to help the Americans hardest hit by this crisis.”

Data in the scorecard show that the recovery in the housing market continues to remain fragile, with some measures suggesting recovery will take place over time. For example, foreclosure starts went up slightly in July from the previous month, but remain well below July 2009 levels.

Foreclosure completions also inched upward as the volume of serious delinquencies continues to work through the pipeline.

Each month, the Housing Scorecard incorporates key housing market indicators and highlights the impact of the Administration’s unprecedented housing recovery efforts, including assistance to homeowners through the FHA and HAMP.

The Obama Administration’s complete Housing Scorecard available at: www.hud.gov/scorecard

August 19, 2010

Mortgage rates fell to new lows this week, according to the LendingTree Weekly Mortgage Rate Pulse, a snapshot of the lowest and average mortgage rates available within the LendingTree network of lenders.

On August 17, lenders on the LendingTree network offered mortgage rates as low as 4.00 percent (4.13% APR) for a 30-year fixed mortgage, 3.5 percent (3.85% APR) for a 15-year fixed mortgage and 2.875 percent (3.41% APR) for a 5/1 adjustable rate mortgage (ARM). Rates fell one eighth of a point week-over-week for all product types.

Average home loan rates offered by lenders on the LendingTree network were 4.52 percent (4.70% APR) for 30-year fixed mortgages, 4.14 percent (4.43% APR) for 15-year fixed mortgages and 3.48 percent (3.72% APR) for 5/1 ARMs.

“The current rate spread has widened to 108 basis points or 1.08%, approaching the high of 111 basis points we reached at the end of July,” said Cameron Findlay, Chief Economist of LendingTree.com. “For perspective, the median spread this year has been 74 basis points. So consumers in the market for a home loan should really be doing their homework to ensure they’re getting the best possible deal before locking in a rate. Spreads this wide provide an opportunity for borrowers to take control by using sites like LendingTree.com to negotiate with multiple lenders.”

Below is a state-by-state comparison of mortgage data including a snapshot of the lowest 30-year fixed rates offered by lenders on the LendingTree network, average loan-to-value ratio and percentage of consumers with negative equity.

STATE-BY-STATE MORTGAGE DATA
LOWEST MORTGAGE LOAN-TO- % WITH NEGATIVE
STATE RATE VALUE RATIO EQUITY

Alabama 3.88% (3.99% APR) 65% 8.6%
Alaska 3.88% (4.01% APR) 67% 9.3%
Arizona 3.88% (3.99% APR) 95% 51.3%
Arkansas 4.00% (4.13% APR) 74% 12.6%
California 3.88% (3.99% APR) 72% 35.1%
Colorado 3.88% (4.01% APR) 72% 20.2%
Connecticut 3.88% (4.01% APR) 58% 11.6%
Delaware 4.00% (4.11% APR) 69% 14.3%
District of Columbia 3.88% (4.10% APR) N/A N/A
Florida 3.88% (4.01% APR) 91% 47.8%
Georgia 3.88% (4.01% APR) 80% 27.8%
Hawaii 4.00% (4.12% APR) 53% 9.3%
Idaho 3.88 % (4.01% APR) 72% 22.7%
Illinois 3.88% (3.99% APR) 72% 20.9%
Indiana 3.88% (4.01% APR) 69% 10.7%
Iowa 4.00% (4.13% APR) 66% 8.9%
Kansas 4.00% (4.14% APR) 70% 10.7%
Kentucky 3.88% (4.05% APR) 67% 9.0%
Louisiana 4.00% (4.13% APR) N/A 23.8%
Maine 3.88% (3.99% APR) N/A 23.8%
Maryland 3.88% (4.10% APR) 69% 22.9%
Massachusetts 4.00% (4.12% APR) 61% 15.8%
Michigan 3.88% (3.99% APR) 85% 38.5%
Minnesota 3.88% (3.99% APR) 65% 16.6%
Mississippi 4.00% (4.20% APR) N/A 23.8%
Missouri 4.00% (4.12% APR) 71% 15.5%
Montana 4.00% (4.13% APR) 57% 6.9%
Nebraska 4.00% (4.20% APR) 72% 8.8%
Nevada 4.00% (4.14% APR) 123% 69.9%
New Hampshire 3.88% (4.01% APR) 69% 19.1%
New Jersey 3.88% (4.03% APR) 62% 16.1%
New Mexico 3.88% (4.01% APR) 66% 12.3%
New York 3.88% (4.03% APR) 49% 6.3%
North Carolina 4.00% (4.13% APR) 70% 10.2%
North Dakota 4.00% (4.13% APR) 60% 7.6%
Ohio 3.88% (4.01% APR) 75% 19.8%
Oklahoma 3.88% (3.99% APR) 70% 6.0%
Oregon 3.88% (4.01% APR) 68% 15.9%
Pennsylvania 3.88 % (3.98% APR) 62% 7.5%
Rhode Island 4.13% (4.26% APR) 55% 16.8%
South Carolina 4.00% (4.12% APR) 70% 13.5%
South Dakota 3.88% (3.99% APR) N/A 23.8%
Tennessee 4.00% (4.12% APR) 71% 13.9%
Texas 3.88% (3.99% APR) 70% 11.9%
Utah 3.88% (4.01% APR) 73% 21.1%
Vermont 4.00% (4.14% APR) N/A 23.8%
Virginia 3.88% (4.01% APR) 72% 24.3%
Washington 3.88% (4.01% APR) 67% 15.9%
West Virginia 4.00% (4.13% APR) N/A 23.8%
Wisconsin 4.00% (4.13% APR) 68% 14.7%
Wyoming 3.88% (4.01% APR) N/A 23.8%

August 16, 2010

The number of price-reduced homes on the market increased 5.3% in July 2010 as compared to June, according to a monthly review of MLS-listed properties within 26 of the country’s largest housing markets conducted by the national online real estate brokerage ZipRealty.

Although the number of price-reduced homes increased in July, the median price reduction across the 4,500 cities and communities in 26 markets surveyed slightly declined from June, to $18,949.

“Home buyers this summer have been on the sidelines, waiting to find deals and bargains; so we’re seeing more sellers slashing their list prices to entice these home shoppers to make an offer,” said Leslie Tyler, vice president of marketing for ZipRealty.

Highlights of ZipRealty’s July survey include:

-More than 45% of “for sale” homes included at least one price reduction—an increase of 2.67% compared to June

-”For sale” prices dropped 2.04%—down to a median of $254,987 across the 26 markets surveyed

-In six major metros, more than one out of two home sellers reduced their list price—Jacksonville, Phoenix, Minneapolis, Orlando, Austin and Chicago

-The metro with the highest percentage of price-reduced “for sale” homes continues to be Jacksonville, Fla., where 54% of all July listings had at least one price reduction

-Denver had the lowest percentage of price-reduced homes on the market in July with 32.5%

-Sellers in California housing markets continue to hold steady with prices, compared to other parts of the country; Los Angeles County (39.4%) and the San Francisco Bay Area (40.9%) had the second and third lowest percentage of reduced listings out of all markets surveyed in July

-Buyers in the San Francisco Bay Area again enjoyed the biggest home price discount in absolute dollars, with a median price reduction of $38,000 in July

-Buyers in Houston, Dallas and Raleigh-Durham found the smallest price reductions, with a median price cut of only $10,000 in each of the three markets

-Markets with the largest median price reduction in absolute dollars were: San Francisco ($38,000), Orange County California ($31,000), San Diego ($31,000), Los Angeles ($29,000), Miami/Ft. Lauderdale/Palm Beach ($27,000).

August 13, 2010

The real estate trend in firming home prices solidified in the second quarter with more metropolitan areas showing increases from a year ago, aided by a surge in home sales driven by the home buyer tax credit, according to the latest survey by the National Association of Realtors. In the second quarter, 100 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year, 91 areas had higher prices, while only 26 MSAs experienced annual price gains in the second quarter of 2009.

The national median existing single-family price was $176,900 in the second quarter, up 1.5% from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32% of second quarter sales, down from 36% a year ago.

Lawrence Yun, NAR chief economist, said the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market, we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes will also help to support home values.”

Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he said. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

Total state existing-home sales, including single-family and condo, rose 9.1% to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3% above the 4.78 million-unit pace in the second quarter of 2009.

Sales increased from the first quarter in 44 states and the District of Columbia; 47 states and D.C. had increases over year-ago sales levels.

NAR President Vicki Cox Golder, owner of a Tucson, Ariz.-based firm, said record low mortgage interest rates will help cushion a summer slowdown. “As expected, sales are slowing down now that the home buyer tax credit has expired, but record-low mortgage interest rates, along with stable and affordable home prices in most areas, provide opportunities for buyers who weren’t able to take advantage of the credit,” she said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.91% in the second quarter, down from 5.00% in the first quarter; it was 5.03% in the second quarter of 2009.

“Job creation will give home buyers more confidence, but the market over the next few months is likely to be below what we would expect for the size of our growing population,” Golder said. “With improving bank balance sheets, credit restrictions should gradually improve—Realtors are a great resource for consumer information on loan availability as well as neighborhood market conditions, which vary widely.”

In the condo sector, metro area condominium and cooperative prices—covering changes in 55 metro areas—showed the national median existing-condo price was relatively flat at $175,700 in the second quarter, down 0.5% from the second quarter of 2009. Twenty-six metros showed increases in the median condo price from a year ago; the first quarter of 2010 showed 24 metros up, while only four metros saw annual price gains in the second quarter of 2009.

Regionally, the median existing single-family home price in the Northeast declined 3.2% to $238,000 in the second quarter from a year earlier. Existing-home sales in the Northeast jumped 14.9% in the second quarter to a level of 980,000 and are 23.6% above the second quarter of 2009.

In the Midwest, the median existing single-family home price increased 1.4% to $148,500 in the second quarter from the second quarter of last year. Existing-home sales in the Midwest rose 14.5% in the second quarter to a pace of 1.30 million and are 20.9% above the same period in 2009.

In the South, the median existing single-family home price slipped 2.0% to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9% in the second quarter to an annual rate of 2.10 million and are 18.8% above a year ago.

The median existing single-family home price in the West rose 2.6% to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6% in the second quarter to an annual rate of 1.23 million but are 7.6% higher than the second quarter of 2009.

By Inman News, Thursday, August 12, 2010

Mortgage rates set new lows this week, but bargain rates haven’t spurred borrowers into action, two surveys of lenders show.

Freddie Mac’s weekly rate survey showed 30-year fixed-rate mortgages hitting 4.44 percent for the week ending Aug. 12, a new low in records dating back to 1971.

At 3.92 percent, 15-year fixed-rate mortgages were also at a low in records dating to 1991, while 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.56 percent — the lowest surveyed in records dating to 2005.

But low rates haven’t translated into demand for loans, another survey by the Mortgage Bankers Association showed. Many borrowers who might benefit by refinancing have already done so, and housing sales slowed after the expiration of the federal homebuyer tax credits.

Demand for purchase loans was down 34.1 percent from a year ago during the week ending Aug. 6, and requests to refinance accounted for 78.1 percent of all loan applications, the MBA survey found.

The National Association of Realtors’ latest forecast anticipates that sales of existing homes will plummet from an annual pace of 5.6 million during the second quarter to 4.5 million during July, August and September.

August 12, 2010

Clear Capital, a premium provider of data and solutions for real estate asset valuation, investment and risk assessment released its Home Data Index (HDI) Market Report. Patent pending rolling quarter technology significantly reduces the multi-month lag time associated with other indices to help investors, loan servicers and individual buyers and sellers make more informed, timely and profitable decisions.

“Home prices continue to show positive growth from the first quarter of the year,” said Dr. Alex Villacorta, senior statistician, Clear Capital. “This trend indicates that the initial upward momentum created by the tax credit expiration is being sustained.”

“While quarterly gains are showing strong momentum across the country, these recent price advancements are the latest turn in a volatile housing market that has seen “W” shaped price trends over the last two years. An interesting exception to this pattern is the West region, which has seen a stable and sustained growth since the trough of the downturn in the first quarter of 2009,” added Villacorta. “Despite the up and down behavior of prices since the worst of the housing downturn, national prices are still up 13.6%, providing a cushion against potential future declines and the start of a double-dip.”

National/Four Region Market Overview (July 2009 – July 2010)
Stability in the housing market has been elusive across the nation over the past few years, but amid this volatility, the West has emerged with relatively stable home prices compared to the other three regions. The West’s quarterly appreciation has ranged from -1.6 to 2.7% since the start of 2010. In contrast, appreciation ranges in the Midwest (-9.4% to 14.7%) and South (-4.2% to 7.0%) regions represent more dramatic price swings during the same period, while the Northeast (-4.4% to 6.9%) still trails the West, but is becoming more stable.

While many external factors (including unemployment and investor activity) contribute to current price trends, the effects of the recent home buyer tax credits are seemingly magnified within the lower-priced markets of the Midwest, while reduced in the higher-priced coastal markets. To illustrate, the recent tax credit’s cap of $8,000 contributes a larger share of the purchase price for a home in the Midwest and South where the median home price is just below $150,000, than in the higher-priced East and West regions where median prices typically top $210,000. In some local markets where prices dip below $100,000, the effects of the tax credits are even more pronounced. Compared to last month’s report, national home prices experienced an improved quarter-over-quarter price gain of 7.9%. At varying magnitudes, this pattern of improving quarterly gains was present across all four regions. Nationally, REO saturation continued its steady decline, falling to 22.7%, a 1.9 percentage point drop from last month’s report, and 19.8 percentage point drop from its peak in the first quarter of 2009.

Metro Markets (July 2009 – July 2010)
The large quarter-over-quarter gains reported last month continue upward influenced by the tail end of the home buyer tax credits. However, slowing year-over-year gains among twelve of the fifteen highest performing major markets above indicate this growth hasn’t maintained last year’s momentum. Elevated volatility continues in these markets as quarterly prices jumped an average of 6.3 percentage points, and only New Orleans, La., Pittsburgh, Penn., and Detroit, Mich. improved their yearly price gains from last month’s report.

Cleveland, Ohio and Memphis, Tenn. remain atop the highest performing markets this month, with Cleveland leapfrogging Memphis for the top position. Note this list is largely comprised of markets from the Midwest and South, and none of the West’s more stable markets are present. The combined $142,000 median sale price for these markets, including substantially lower-priced markets in Michigan, Ohio, Missouri and Tennessee, suggests the home buyer tax credits had increased influence over these markets during this past rolling quarter.

REO saturation continued to exert less influence among the highest performing markets, dropping an average 2.7 percentage points from last month’s reported rates. The Ohio markets of Columbus and Dayton led the way, experiencing a five percentage point decline in REO saturation rates.

The exclusive presence of positive quarterly gains within this month’s lowest performing major markets list is especially notable given that the majority of these markets are among the more troubled real estate markets of California, Florida and Arizona. With a quarterly appreciation spread of only 2.1 percentage points, the price increases within this group of markets was remarkably stable when compared to the highest performing major markets which experienced a 19.7% spread. Additionally, REO saturation rates showed improvement, declining in all the lowest performing markets, while yearly gains did begin to slow in-line with the national pattern.

Baltimore, Md. saw the largest quarter-over-quarter improvement in home prices compared to last month’s report, rising from a -1.8% price change to a 2.9% price change this month. This was sufficient to cut yearly losses to 2.7%, allowing Baltimore to join Miami, Fla., Honolulu, Hawaii, Las Vegas, Nev., and Riverside, Calif. as the five markets with improving yearly price trends. The remaining ten markets saw their year-over-year price trends slow by an average rate of 1.4 percentage points from those observed last month.

Micro Markets (July 2009 – July 2010)
This section highlights a single market every month with a deeper dive into how the micro and macro-markets relate to each other. Home prices in the Charlotte, N.C. micro markets have demonstrated greater stability than the nation as a whole. In the face of the economic downturn that cut home prices nationally by an average of 31.6% since the national peak of the housing market in mid-2006, Charlotte managed to delay home price declines until mid 2007 (ultimately experiencing a -13.1% price change). Over the last year, Charlotte’s 2.5% price change also undershoots the national 8.1% gain. This general stability extended to many of Charlotte’s micro markets, although some of the nuances of market timing shift price changes among Charlotte’s individual markets.

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