The housing market is inching closer to what it once was: Home prices are now within 15.2 percent nationally from their peak, according to a new report by Lender Processing Services.
The LPS price index rose in June to $229,000, up 6.9 percent from last year's levels. In June 2006, the peak was $270,000.
However, two states — California and New Jersey — are still playing catch up to their peak levels. California home prices are still down 26.3 percent and New Jersey is down 21.2 percent from its peak, according to LPS’ index.
Meanwhile, Massachusetts is only 10 percent from its peak housing price levels, and Pennsylvania and Tennessee are about 5 percent from their pre-crash highs, LPS says.
Texas and Colorado are two states that surpassed their pre-crash peaks. Source: “National Home Prices Nearing Pre-Crash Levels,” Mortgage News Daily (Aug. 26, 2013)
Shadow Inventories Becoming Vanishing Problem
Shadow inventories posted the largest quarter-over-quarter decline since the housing crisis began, and dropped 23 percent year-over-year, according to Compass Point Research & Trading.
Shadow inventories — homes at risk of default that have yet to hit the market — once posed a big threat to the housing recovery. At its peak in March 2010, shadow inventory was at about 5.5 million loans, according to data compiled by the Mortgage Bankers Association and Bloomberg. For the second quarter of 2013, shadow inventory has fallen to 2.99 million.
In comparison, shadow inventory loans totaled about 800,000 in March 2000—considered a more normal average.
There has been a large decline in 90-day-plus past due loans, which has helped lead to the drop in shadow inventories. Also helping to lower shadow inventories is the rise in home prices, lower unemployment rates, the higher number of loan modifications, and tightening of underwriting standards that has led to an improvement in mortgage credit quality, economists note.
“The shadow inventory is quickly being worked off and is no longer a significant weight on the housing market in most parts of the country. The key exceptions would be pockets in Florida, parts of the Midwest, and the middle Atlantic,” says Mark Zandi, Moody’s Analytics chief economist.
The decline is expected to continue as more home owners stay current on their loans. Source: “Shadow Inventory Decline Begins to Accelerate,” HousingWire (Aug. 23, 2013)
Shadow inventories — homes at risk of default that have yet to hit the market — once posed a big threat to the housing recovery. At its peak in March 2010, shadow inventory was at about 5.5 million loans, according to data compiled by the Mortgage Bankers Association and Bloomberg. For the second quarter of 2013, shadow inventory has fallen to 2.99 million.
In comparison, shadow inventory loans totaled about 800,000 in March 2000—considered a more normal average.
There has been a large decline in 90-day-plus past due loans, which has helped lead to the drop in shadow inventories. Also helping to lower shadow inventories is the rise in home prices, lower unemployment rates, the higher number of loan modifications, and tightening of underwriting standards that has led to an improvement in mortgage credit quality, economists note.
“The shadow inventory is quickly being worked off and is no longer a significant weight on the housing market in most parts of the country. The key exceptions would be pockets in Florida, parts of the Midwest, and the middle Atlantic,” says Mark Zandi, Moody’s Analytics chief economist.
The decline is expected to continue as more home owners stay current on their loans. Source: “Shadow Inventory Decline Begins to Accelerate,” HousingWire (Aug. 23, 2013)
7 Cities Leading the Housing Recovery
The housing recovery rolls on, with some markets seeing more progress than others. RealtyTrac recently released its first Housing Market Recovery Index, which reveals the metros leading the housing recovery.
The index showed that upstate New York, southwest Florida, and Northern California's Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” says Daren Blomquist, vice president at RealtyTrac. “Still, symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market Recovery Index:
1. Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
2. Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
3. Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
4. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
5. San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
6. Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
7. Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%
Underwater home owners: 36%
Source: RealtyTrac
The index showed that upstate New York, southwest Florida, and Northern California's Bay Area are leaders in the housing recovery. On the other hand, markets in northern Maryland, southeast Pennsylvania, and downstate Illinois are still showing signs of lagging the furthest behind in the recovery, according to RealtyTrac.
“The U.S. housing market has clearly shifted to recovery mode over the past 18 months, with home prices consistently rising and foreclosures falling closer to pre-housing bubble levels,” says Daren Blomquist, vice president at RealtyTrac. “Still, symptoms of the distress that plagued the housing market over the past seven years continue to linger, particularly in the form of a high percentage of underwater borrowers and distressed sales. This lingering distress is creating an uneven pace of recovery across different local markets.”
For its Housing Market Recovery Index, RealtyTrac used seven different measures to evaluate the 100 largest metro’s recovery: the unemployment rate, underwater loan percentage, foreclosure activity percentage change from peak, distressed sales, investor share, cash purchases, and median home price change from the bottom. The following are the metros that ranked highest on its Housing Market Recovery Index:
1. Rochester, N.Y.
Median home price change from trough: 93%
Unemployment rate: 7%
Underwater home owners: 7%
2. Cape Coral-Fort Myers, Fla.
Median home price change from trough: 82%
Unemployment rate: 7.4%
Underwater home owners: 42%
3. Albany-Schenectady-Troy, N.Y.
Median home price change from trough: 44%
Unemployment rate: 6.4%
Underwater home owners: 9%
4. San Jose-Sunnyvale-Santa Clara, Calif.
Median home price change from trough: 70%
Unemployment rate: 6.9%
Underwater home owners: 9%
5. San Francisco-Oakland-Fremont, Calif.
Median home price change from trough: 96%
Unemployment rate: 6.5%
Underwater home owners: 17%
6. Birmingham-Hoover, Ala.
Median home price change from trough: 58%
Unemployment rate: 5.9%
Underwater home owners: 15%
7. Atlanta-Sandy Springs-Marietta, Ga.
Median home price change from trough: 57%
Unemployment rate: 8.9%
Underwater home owners: 36%
Source: RealtyTrac
Mortgage Rates Calm—For Now
Average fixed-rate mortgages remained mostly unchanged this week, after seesawing the past few weeks, Freddie Mac reports in its weekly mortgage market survey.
Mortgage rates have fluctuated quite a bit the past few weeks as speculation grows that the Federal Reserve will taper its bond-buying program in September, which has been keeping rates at or near record lows in recent months.
Sixty-five percent of economists surveyed by Bloomberg expect the Fed to reduce its bond purchases at its Sept. 17-18 monetary policy committee meetings.
Thirty-year fixed-rate mortgages held flat this week but are 1.1 percentage points above their all-time lows set on Nov. 21, says Frank Nothaft, Freddie Mac’s chief economist. That rise alone equates to about $125 more per month in mortgage payments on a $200,000 loan, Nothaft says.
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 15: •30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.7 point, holding the same average as last week. A year ago at this time, 30-year rates averaged 3.62 percent. •15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, rising slightly from last week’s 3.43 percent. Last year at this time, 15-year rates averaged 2.88 percent. •5-year adjustable-rate mortgages: averaged 3.23 percent, with an average 0.5 point, rising from last week’s 3.19 percent average. Last year at this time, 5-year ARMs averaged 2.76 percent. •1-year ARMs: averaged 2.67 percent, with an average 0.4 point, rising from last week’s 2.62 percent average. A year ago, 1-year ARMs averaged 2.69 percent. Source: Freddie Mac
Mortgage rates have fluctuated quite a bit the past few weeks as speculation grows that the Federal Reserve will taper its bond-buying program in September, which has been keeping rates at or near record lows in recent months.
Sixty-five percent of economists surveyed by Bloomberg expect the Fed to reduce its bond purchases at its Sept. 17-18 monetary policy committee meetings.
Thirty-year fixed-rate mortgages held flat this week but are 1.1 percentage points above their all-time lows set on Nov. 21, says Frank Nothaft, Freddie Mac’s chief economist. That rise alone equates to about $125 more per month in mortgage payments on a $200,000 loan, Nothaft says.
Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 15: •30-year fixed-rate mortgages: averaged 4.40 percent, with an average 0.7 point, holding the same average as last week. A year ago at this time, 30-year rates averaged 3.62 percent. •15-year fixed-rate mortgages: averaged 3.44 percent, with an average 0.6 point, rising slightly from last week’s 3.43 percent. Last year at this time, 15-year rates averaged 2.88 percent. •5-year adjustable-rate mortgages: averaged 3.23 percent, with an average 0.5 point, rising from last week’s 3.19 percent average. Last year at this time, 5-year ARMs averaged 2.76 percent. •1-year ARMs: averaged 2.67 percent, with an average 0.4 point, rising from last week’s 2.62 percent average. A year ago, 1-year ARMs averaged 2.69 percent. Source: Freddie Mac
Builders Gain Optimism in the Recovery
Builder confidence in newly built, single-family homes is on the rise again.
The National Association of Home Builders/Wells Fargo Housing Market Index posted its fourth consecutive monthly gain in August, bringing it to its highest level in nearly eight years. The index gauges builders’ perceptions of single-family home sales, sales expectations, and buyer traffic for the next six months.
The index now stands at 59 — and any number above 50 indicates that more builders view market conditions as “good” rather than “poor.”
"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," said NAHB Chairman Rick Judson. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."
Buyers are showing increasing demand for the limited supply of new and existing homes in markets across the country, says David Crowe, NAHB’s chief economist.
"However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor,” Crowe notes. Source: National Association of Home Builders
The National Association of Home Builders/Wells Fargo Housing Market Index posted its fourth consecutive monthly gain in August, bringing it to its highest level in nearly eight years. The index gauges builders’ perceptions of single-family home sales, sales expectations, and buyer traffic for the next six months.
The index now stands at 59 — and any number above 50 indicates that more builders view market conditions as “good” rather than “poor.”
"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," said NAHB Chairman Rick Judson. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."
Buyers are showing increasing demand for the limited supply of new and existing homes in markets across the country, says David Crowe, NAHB’s chief economist.
"However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor,” Crowe notes. Source: National Association of Home Builders
Solarpanels
From the experts: all about solar leases Solar energy has a high profile, especially since the federal government created the 30% federal tax credit that applies to solar power systems in 2006. But is solar energy practical for the average California homeowner? SolarCity says, “Yes!”
California-based SolarCity offers two ways for homeowners to get into solar: -homeowners can purchase the system and installation from SolarCity; or -homeowners can install the system for free and pay SolarCity for the power the systems produce, through solar service agreements like solar leases or power purchase agreements (PPAs).
For either program, SolarCity includes: -repairs of the solar power system, if necessary; -insurance coverage for theft or damage to the panels; and-performance monitoring of each solar panel system.
But what happens when the homeowner sells their home? There are typically three options: -the buyer can choose to assume the solar lease; -the seller can purchase the solar panels and include the cost in the asking price; or -if the seller is moving within the same utility territory, they can pay to have their solar panel system transferred to their new home.
SolarCity also offers solar options for commercial buildings, new construction and government buildings.
Does it sound too good to be true? And is solar really for everyone? first tuesday called up Jonathan Bass, SolarCity’s Senior Director of Communications, to find out.
What are the requirements for entering SolarCity’s programs?
Solar can work for a wide range of homeowners. SolarCity provides potential clients with a free assessment, either in person or over the phone, to determine whether one of our solar programs will work for them.
Roof position is a major determinant of whether or not you should get solar. Generally you need a largely unshaded section of roof that faces south, east or west.
If the customer wants a monthly payment option, there is a credit score requirement of 680. The FICO score is the only requirement – there is no income or debt-to-income (DTI) requirement. If the homeowner doesn’t have at least a 680 FICO score, they can either pre-pay for the solar power or purchase the system.
We also have a team of transfer agents who work with people who are buying a home with our solar system already installed. If the homebuyer can’t meet the 680 FICO score (which is pretty rare), then we can look at other credit criteria to transfer the lease.
Why do most homeowners consider going solar? While there are environmental benefits to going solar, most homeowners go solar to control the price of their electricity. Our customers know exactly what they will pay for solar electricity for the length of their agreement, and their solar production is guaranteed. The agreements typically last 20 years, so the savings add up over the long-run.
A lot of homebuilders are actually adopting solar as well, pre-installing the system for the homebuyer. Our solar service to homebuilders has grown by more than 300 percent in the first six months of 2013 alone! This makes perfect sense, because installing solar panels increases the value of the home.
When is leasing solar panels more financially practical than purchasing solar panels? It depends on what is important to the customer. Customers that want to see immediate savings generally choose a no upfront cost option. Customers that want more long-term savings choose a prepaid service agreement or purchase option.
The cost of purchasing a solar system outright is pretty high. For a five kilowatt system in Los Angeles, the upfront cost is typically greater than $20,000, and even with incentives, it can still be $15,000 or more out of pocket.
Are there any issues with homeowners’ associations (HOAs) or permits that SolarCity has become aware of with the installation of solar panels? Many states, including California, have rules that prohibit HOAs from preventing customers from installing solar panels.* Solar panels have been demonstrated to increase home values in two separate studies conducted by Lawrence Berkeley National Laboratory and the National Bureau of Economic Research, so HOA concerns about solar panels are often unfounded.
Does leasing solar panels create a lien on the home? SolarCity’s panels files what is called a fixture filing on the solar panel system, not on the home. So, if the customer stops paying for the service, SolarCity is able to reclaim the system. However, we remove the fixture filing for customers when they sell or refinance their homes, and we have a dedicated team of employees in house that exclusively work on home sales and transfers to ensure the process goes smoothly.
Does it affect homeowner’s insurance? No, taking on a solar lease will not affect your homeowner’s insurance. SolarCity fully insures the system. However, some other providers may have you cover their panels in your own policy.
What happens if a homeowner stops making payments? Similar to anything else, if a homeowner cannot make payments then the service will stop.
Do you receive any incentives or subsidies from the government? Yes, there is a 30 percent federal tax credit that can be applied by the owner of the solar system. If the customer buys the system, they can write that credit off on the following year’s tax return if they have enough taxable income. If they choose a lease or PPA, then the incentives go to SolarCity, and are applied to reduce the cost of the system. Other incentives are generally treated the same way, and they vary by location and utility territory.
Will SolarCity be able to continue offering solar leases once the government stops subsidizing solar? We plan to be able to do so, yes. Energy is heavily subsidized. Oil and gas, nuclear power have received far more subsidies than solar to date. Solar incentives are designed to start at higher amounts and gradually decline to give providers the opportunity to increase efficiencies and reduce costs over time. Many local incentive programs have already ended or significantly declined. At the federal level, the 30% tax credit is scheduled to drop to 10% at the end of 2016. We need to reduce our costs between 5-6% annually to offset the change in incentives, and we plan to do so.
If there was one thing you wish every California real estate agent knew about solar panels, what would it be? Solar is not only a great way to reduce energy costs, it can be a powerful selling tool for real estate agents. Solar panel systems have been demonstrated to increase home resale value in two separate studies. SolarCity has a team of experts dedicated to help real estate agents and their clients sell solar-powered homes, and the interest in clean energy has never been greater than it is today.
California-based SolarCity offers two ways for homeowners to get into solar: -homeowners can purchase the system and installation from SolarCity; or -homeowners can install the system for free and pay SolarCity for the power the systems produce, through solar service agreements like solar leases or power purchase agreements (PPAs).
For either program, SolarCity includes: -repairs of the solar power system, if necessary; -insurance coverage for theft or damage to the panels; and-performance monitoring of each solar panel system.
But what happens when the homeowner sells their home? There are typically three options: -the buyer can choose to assume the solar lease; -the seller can purchase the solar panels and include the cost in the asking price; or -if the seller is moving within the same utility territory, they can pay to have their solar panel system transferred to their new home.
SolarCity also offers solar options for commercial buildings, new construction and government buildings.
Does it sound too good to be true? And is solar really for everyone? first tuesday called up Jonathan Bass, SolarCity’s Senior Director of Communications, to find out.
What are the requirements for entering SolarCity’s programs?
Solar can work for a wide range of homeowners. SolarCity provides potential clients with a free assessment, either in person or over the phone, to determine whether one of our solar programs will work for them.
Roof position is a major determinant of whether or not you should get solar. Generally you need a largely unshaded section of roof that faces south, east or west.
If the customer wants a monthly payment option, there is a credit score requirement of 680. The FICO score is the only requirement – there is no income or debt-to-income (DTI) requirement. If the homeowner doesn’t have at least a 680 FICO score, they can either pre-pay for the solar power or purchase the system.
We also have a team of transfer agents who work with people who are buying a home with our solar system already installed. If the homebuyer can’t meet the 680 FICO score (which is pretty rare), then we can look at other credit criteria to transfer the lease.
Why do most homeowners consider going solar? While there are environmental benefits to going solar, most homeowners go solar to control the price of their electricity. Our customers know exactly what they will pay for solar electricity for the length of their agreement, and their solar production is guaranteed. The agreements typically last 20 years, so the savings add up over the long-run.
A lot of homebuilders are actually adopting solar as well, pre-installing the system for the homebuyer. Our solar service to homebuilders has grown by more than 300 percent in the first six months of 2013 alone! This makes perfect sense, because installing solar panels increases the value of the home.
When is leasing solar panels more financially practical than purchasing solar panels? It depends on what is important to the customer. Customers that want to see immediate savings generally choose a no upfront cost option. Customers that want more long-term savings choose a prepaid service agreement or purchase option.
The cost of purchasing a solar system outright is pretty high. For a five kilowatt system in Los Angeles, the upfront cost is typically greater than $20,000, and even with incentives, it can still be $15,000 or more out of pocket.
Are there any issues with homeowners’ associations (HOAs) or permits that SolarCity has become aware of with the installation of solar panels? Many states, including California, have rules that prohibit HOAs from preventing customers from installing solar panels.* Solar panels have been demonstrated to increase home values in two separate studies conducted by Lawrence Berkeley National Laboratory and the National Bureau of Economic Research, so HOA concerns about solar panels are often unfounded.
Does leasing solar panels create a lien on the home? SolarCity’s panels files what is called a fixture filing on the solar panel system, not on the home. So, if the customer stops paying for the service, SolarCity is able to reclaim the system. However, we remove the fixture filing for customers when they sell or refinance their homes, and we have a dedicated team of employees in house that exclusively work on home sales and transfers to ensure the process goes smoothly.
Does it affect homeowner’s insurance? No, taking on a solar lease will not affect your homeowner’s insurance. SolarCity fully insures the system. However, some other providers may have you cover their panels in your own policy.
What happens if a homeowner stops making payments? Similar to anything else, if a homeowner cannot make payments then the service will stop.
Do you receive any incentives or subsidies from the government? Yes, there is a 30 percent federal tax credit that can be applied by the owner of the solar system. If the customer buys the system, they can write that credit off on the following year’s tax return if they have enough taxable income. If they choose a lease or PPA, then the incentives go to SolarCity, and are applied to reduce the cost of the system. Other incentives are generally treated the same way, and they vary by location and utility territory.
Will SolarCity be able to continue offering solar leases once the government stops subsidizing solar? We plan to be able to do so, yes. Energy is heavily subsidized. Oil and gas, nuclear power have received far more subsidies than solar to date. Solar incentives are designed to start at higher amounts and gradually decline to give providers the opportunity to increase efficiencies and reduce costs over time. Many local incentive programs have already ended or significantly declined. At the federal level, the 30% tax credit is scheduled to drop to 10% at the end of 2016. We need to reduce our costs between 5-6% annually to offset the change in incentives, and we plan to do so.
If there was one thing you wish every California real estate agent knew about solar panels, what would it be? Solar is not only a great way to reduce energy costs, it can be a powerful selling tool for real estate agents. Solar panel systems have been demonstrated to increase home resale value in two separate studies. SolarCity has a team of experts dedicated to help real estate agents and their clients sell solar-powered homes, and the interest in clean energy has never been greater than it is today.
Rapid Rise in Home Prices 'Remarkable'
During the first six months of this year, home prices jumped 10 percent, the fastest pace in 36 years, CoreLogic reports. Mark Fleming, chief economist with CoreLogic, called the 10 percent jump "remarkable."
In June, the latest data available, home prices were up 11.6 percent year over year, according to CoreLogic’s home price index, which reflects distressed sales as well. June marked the 16th consecutive month of increases.
The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.
Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.
Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.
The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
The pace of home price appreciation is showing signs of slowing. In June, prices rose 1.9 percent compared to May -- a slower pace for increases than in recent months. From April to May, prices rose 2.6 percent, while they rose nearly 2.8 percent in April from March.
Some analysts point to a slowing due to rising mortgage rates, fewer investors making purchases, and a rise in inventory levels of homes for sale. The National Association of REALTORS® reported that inventories of existing homes for sale rose to 5.2 months in June from 5 months in May. A six- to seven-month supply is considered a balanced market.
Still, prices are not showing signs of stalling. CoreLogic analysts predict that home prices will be up 12.5 percent year over year in July.
The five states with the highest home price appreciation year-over-year, according to CoreLogic’s June stats:
- Nevada: +26.5%
- California: +21.4%
- Wyoming: +16.7%
- Arizona: +16.2%
- Georgia: +14.3%
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