Existing Home Owners Move in on Market

Daily Real Estate News | Monday, July 29, 2013

Existing home owners are taking a bigger share of the housing market while investors—who have been the powerhouse until late—are slowly retreating.
“A sustainable housing market typically includes a more balanced share of first-timers, move-up buyers and investors, and that's how the housing recovery is beginning to shake out,” Realty Times reports.
Taking the lead: Current home owners—whether move-up, move-down, or move-over buyers—accounted for nearly 45 percent of the market share in home sales in June, up from 43.8 percent in May, reports the Campbell/Inside Mortgage Finance HousingPulse.  Recent home price gains and the return of equity is prompting more to make the move, particularly as concerns rise that mortgage rates may soon cut into housing affordability.
Meanwhile, first-time home buyers are still being held back, with a slight drop in their market share from 36 percent in May to 35.7 percent in June, according to HousingPulse. Rising housing costs and mortgage rates as well as toughening up of lending standards have continued to shut out some first-timers.
The investor share in home purchases dropped to 19.7 percent in June from 23.1 percent share in February. It’s the lowest level recorded since September 2012, HousingPulse reports. Rising home prices and fewer distressed homes are prompting more investors to pull out of the market, which they had been dominating up until recently.
Source: “Shifting Share of Homebuyers Supports Sustainable Recovery,” Realty Times (July 26, 2013)

10 Markets Where More Buyers Bring Cash

10 Markets Where More Buyers Bring Cash

Daily Real Estate News | Friday, July 26, 2013

Home buyers who require financing for their home purchase can struggle to compete against buyers who have offers of all-cash.
Where are all-cash deals are the most prevalent? Cash deals represented 80 percent of home sales in June in Vermont; 58 percent in Nevada; 57 percent in Florida, and 51 percent in New York, according to RealtyTrac. Cash deals represent a very small percentage in Texas, Utah, and New Mexico.
The markets with the most all-cash transactions tend to have a high number of foreclosures and depressed home prices, which attracts investors and private equity firms, according to RealtyTrac.
The following 10 metros had 40 percent or more all-cash deals out of the total home sales in June, according to RealtyTrac:

1. Miami/Ft. Lauderdale: 64%
2. Las Vegas: 62%
3. Tampa, Fla.: 58%
4. Detroit: 56%
5. Orlando: 53%
6. New York: 49%
7. New Orleans: 43%
8. Memphis: 43%
9. Jacksonville, Fla.: 42%
10. Atlanta: 42%

Short Sale Stigma Surfacing?

Short Sale Stigma Surfacing?

Daily Real Estate News | Wednesday, July 24, 2013

In markets with high foreclosure rates, a short sale stigma may exist, and short sales may not be as sought among home buyers. Brokers may be at an advantage if they state in the listing that the nondistressed home they’re selling is “not a short sale,” suggests a new study, which evaluated 5,000 home sales in Boca Raton, Fla.
Homes listed as “not short sales” sold for 2 to 5 percent more than nondistressed homes that did not state that. Homes listed as “not a short sale” also sold faster, selling about 10 to 15 percent faster than other similar properties, according to the study’s author Ken H. Johnson, an associate professor at the Tibor and Sheila Hollo School of Real Estate at Florida International University in Miami.
"In some areas, buyers are probably starting to believe that short sales mean a big hassle because they've heard horror stories about waiting months for one or more banks to sign off on the deal," Johnson says.
Johnson notes that the study’s findings speak to that particular local market in Boca Raton, “but I think you can extrapolate to other areas where we've seen a lot of distressed properties and foreclosures in the last few years," says Johnson. "What we found is that, in those affected areas, there is a short sale stigma."
Source: “When ‘Not a Short Sale’ Is a Selling Point,” Bankrate.com (July 2013)
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Did Cash Buyers Save the Housing Market?

Did Cash Buyers Save the Housing Market?

Daily Real Estate News | Wednesday, July 17, 2013

Cash real estate sales have risen the last few years to some of the highest levels on record, and a new report by CoreLogic suggests that these sales heavily helped to contribute to stabilizing the residential housing market and leading it into recovery.
In the early 2000s, cash sales averaged 25 percent of home sales. But in 2007 and 2008, cash sales began to rise as foreclosures started to increase. By 2012, cash sales were making up 40 percent of sales and have since inched down to 39 percent as of May 2013.
“Without cash sales overall, sales today would be much lower and the price declines would have been worse,” Mortgage News Daily reports about CoreLogic’s findings. “More recently, cash sales have helped fuel price increases dramatically in several boom and bust markets. Median prices for cash sales are up 24 percent from a year ago while prices of sales generally have increased 15 percent.”
The rise in home prices will lead to a lower presence of cash sales as investor activity returns to more traditional levels, CoreLogic notes. With cash sales receding in recent months, first-time and trade-up home buyers will need to step in to keep the recovery expanding, CoreLogic notes.
Source: “Cash Sales Saved Housing Market -CoreLogic,” Mortgage News Daily (July 16, 2013)

Foreclosures Down 29% From Year Ago

Foreclosures Down 29% From Year Ago

Daily Real Estate News | Wednesday, July 10, 2013

Foreclosures are continuing a steady fall, as home prices rise and the housing market picks up nationwide.
About 1 million homes were in some stage of foreclosure in May, down from 1.4 million in May 2012, a 29 percent decline, according to CoreLogic’s latest foreclosure report. As of May, the foreclosure inventory represented 2.6 percent of all homes with a mortgage -- down from 3.5 percent a year prior.
There were 52,000 foreclosures completed nationwide in May, down 27 percent year over year. However, the numbers are still elevated compared to what’s considered normal for the market. Prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006, according to CoreLogic.
Since September 2008 -- the start of the financial crisis -- about 4.4 million foreclosures have been completed, CoreLogic’s data shows.
Meanwhile, shadow inventory is down 34 percent from reaching its 2010 peak. It was under 2 million units in April, representing a 5.3 month supply.
“We continue to see a sharp drop in foreclosures around the country and, with it, a decrease in the size of the shadow inventory,” says Anand Nallathambi, president and CEO of CoreLogic. “Affordability, despite the rise in home prices over the past year, and consumer confidence are big contributors to these positive trends. We are particularly encouraged by the broad-based nature of the housing market recovery so far in 2013.”
The stock of seriously delinquent homes, which is the main driver of shadow inventory, is at the lowest level since December 2008, adds Mark Fleming, chief economist for CoreLogic.  “Over the last year, it has decreased in 42 states by double-digit figures, resulting in rapid declines in shadow inventory for the first quarter of 2013,” Fleming says.
The following five states account for nearly half of all completed foreclosures nationally and had the highest number of completed foreclosures in the last 12 months ending in May:

• Florida
• California
• Michigan 
• Texas
• Georgia

Source: CoreLogic

Will Rising Mortgage Rates Cool the Market?

Will Rising Mortgage Rates Cool the Market?

Daily Real Estate News | Tuesday, July 09, 2013

A big jump in mortgage rates over the past two months may start to cool the rapid rise of home prices in the second half of the year, The Wall Street Journal reports.
Mortgage rates have shot up from lows of 3.59 percent in the beginning of May, to 4.58 percent during the last week of June, according to the Mortgage Bankers Association. Rates are at their highest levels in two years.
“A rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10 percent, so the recent move in rates just made homes about 10 percent more expensive to buyers who need to finance their purchase,” The Wall Street Journal reports.
Still, economists say mortgage rates at 4.5 percent or 5 percent is still very affordable by historical standards. Merrill Lynch analysts say that home prices would have to rise by 20 percent or mortgage rates would have to soar to around 6 percent to chip away at housing’s affordability.
Some economists see rising mortgage rates as a positive. John Burns, chief executive of John Burns Real Estate Consulting, says that rising rates produce more sustainable price increases. “I don’t think it’s the end of price increases, but I think they’re going to moderate significantly,” Burns told The Wall Street Journal.
Source: “Why Home-Price Gains Will Slow Amid Higher Mortgage Rates,” The Wall Street Journal (July 8, 2013)

All-Cash Offers Make Home Buying Competitive

All-Cash Offers Make Home Buying Competitive

Daily Real Estate News | Tuesday, July 02, 2013

All-cash offers accounted for 33 percent of home sales, according to the National Association of REALTORS®' May 2013 REALTORS® Confidence Index. The majority of those all-cash offers are coming from investors and international home buyers.
All-cash offers can represent stiff competition for traditional buyers. For example, first-time home buyers, who are already facing low inventories and rising home prices, view all-cash offers as one of their biggest competitions in the market today.
But for a seller, an all-cash deal is attractive, cutting out potential obstacles in making it to closing. "If you own a home and are selling yourself, it's probably easier if someone pays you cash -- it cuts out the messiness and having the home buyer get approved for a loan,” says Patrick Newport, U.S. economist at IHS Global Insights.
A high number of all-cash offers in the housing market can “signal a housing market that people are more willing to invest in,” says William Delwiche, investment strategist at Baird Research & Insights.
"A lot of those cash investors are looking for a return," says Karen Dynan, vice president and co-director of economic studies at the Brookings Institute. "If a lot of people think home prices will rise, they will put money into the market, and that increases demand and pushes up prices."
Cash-buying can be good for the economy, providing it with a short-term boost. It “helps to bid up asset values for houses, and is good for home owners who already own houses," Delwiche says. "There is also a benefit to state and local government finances because of the taxes associated with these purchases."
Source: “All-Cash Offers: Healthy for Real Estate Market, or a Hindrance?” FOX Business (June 28, 2013)