Could it really be good news for the housing market?

The National Association of Realtors (NAR) issued its report on existing-home sales this week and reported that sales rose 3.4 percent — making the total so far 4.62 million homes, 10 percentage points higher than this time last year.

It’s not just for investors any more

NAR’s chief economist noted that “regular” consumers are once again entering the home-buying fray, bringing more balance to the beleaguered market:

“it is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices.

The general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a sellers’ market.”

New home sales on the rise too

The Commerce Department reported that new home sales rose 3.3 percent. While compared year-over-year, sales this April were up 9.9 percent from the same month last year. Approximately 7.6 percent of home sales are new homes — especially as so many of previously owned homes are in distress and selling for far below market value.

Nonetheless, the median price for both new and previously owned homes rose in April, up 4.9 percent from April of 2011.

Via Reuters and Realty Times.

All of a sudden, the election doesn’t seem so far away, and the key states that are teetering may be swing back towards Obama as their housing markets show signs of life.

Key states see some improvement

An improving economy could significantly impact Obama’s chances of re-election — a Reuters review of 10 “key” states showed some positive movement in “even the most battered real estate markets, notably Florida, with some other key battlegrounds doing much better.”

The other states looked at by Reuters were: Arizona, Colorado, Iowa, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania and Virginia. According to the report, the state of Virginia has seen an increase of 2.4 percent in home prices year over year. For Obama, that may mean good news, as a recent poll put him 8 points ahead of Romney in that state.

US News reported Jason Gold, director of the Progressive Policy Institute's (PPI) "Rethinking U.S. Housing Policy Project noted

“this flattening implies that the ever important states that will determine the fall election are in the process of putting a floor under falling home prices.”

A lot can happen in a few months

Although there has been improvement of up to 3 percent in some of these swing states, the election is still nearly six months away. Whether the money from the National Settlement is going to the intended recipients, how much of a role Freddie Mac and Fannie Mae have and will have, and the fluctuating job market will all continue to bring pressure, positive and negative, on the housing market.

National boom, national crash, regional recovery

The Progressive Policy Institute maintains a “Battleground Home Values Index” — in the latest summary, they noted that Dr. Mark Zandi, Chief Economist, Moody’s Analytics, has “proclaimed the crash to be over,” while Ron Insana, Senior Analyst and Commentator, CNBC, and panel moderator, “added some geographic context to Zandi’s assertion, artfully describing the housing market as a “ ‘national boom, a national bust and a regional recovery.’ ”

Zandi goes on to say that in looking at the housing market recovery, the focus should be on “hitting singles,” and that when interest rates do finally begin to rise — and, yes, one day they will begin to go up — there will be a giant flurry of activity as buyers realize the days of sub-4 percent rates are disappearing.

Via Reuters, Progressive Policy Institute and US News.

Both 30- and 15-year mortgages reached record lows

Long-term mortgages were introduced to the U.S. market in the 1950s — and the 3.83 percent average for a 30-year loan reported by Freddie Mac last week is the lowest rate recorded since then.

The average for a 15-year mortgage dropped to a record low of 3.05 percent.

First quarter home sales highest in five years

According to NAR, home sales in the first three months of 2012 were the highest of any first quarter since 2007.  Home sales increased 4.7 percent from the fourth quarter of 2011 and were up 5.3 percent year over year from the same period in 2011.

Loan fees and delinquencies dropping too

Last week, the average fee for 30-year loans dropped from 0.8 to 0.7, although the fee for 15-year loans remained steady at 0.7.

At the same time, homeowners behind on their mortgage payments reached the lowest level in three years — only 5.78 percent of borrowers were late on payments for the first quarter of 2012. This is down from 6.19 percent year over year from 2011, and from 6.01 percent the quarter prior (the last quarter of 2011).

Via The Washington Post Blogs and Mortgage News Daily.

New foreclosures down more than 30% year over year

For months, economists and industry experts have been predicting a flood of foreclosures to upset the housing market once bank settlements and other distressed mortgage initiatives were ironed out. As it turns out, however, the March Mortgage Monitor report issued by LPS shows that although new foreclosures for March are up 8.1 percent over February, they are down 31.1 percent from the same time a year ago. (via Lender Processing Services)

Completed foreclosures down nearly 20% from last year

CoreLogic’s monthly foreclosure report shows that there were 69,000 completed foreclosures in March, compared with 85,000 last March — a decrease of 18.8 percent. According to CoreLogic’s CEO, the reduction in completed foreclosures, given that the foreclosure inventory is also shrinking, “suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities. This is what was envisioned with the recent National Foreclosure Settlement, and can often be a better outcome for both borrowers and investors.” (via CoreLogic National Foreclosure Report – March 2012)

Short sales outpace foreclosure sales

For the first time, it appears that lenders are finally catching on to the idea that “short sales should be the dominant way of disposing of assets [in distress],” as Jonathon Weiner of Lender Processing Services puts it. In January 2012, short sales were 23.9 percent of home purchases, while foreclosed homes accounted only for 19.7 percent. A year ago, foreclosures were 24.9 percent while only 16.3 percent of home sales were short sales. Weiner also observed that the growing preponderance of short sales is a positive sign that the country is finally making real progress working through its overwhelming inventory of distressed properties — and could be a sign that home prices will bottom out this year. (via Bloomberg Businessweek)

S&P/Case-Shiller Report Reports 0.2% Rise

According to the S&P/Case-Shiller report released last week, the composite index for 20 metropolitan areas gained 0.2 percent this February when seasonally adjusted — meeting forecasts made by economists. The rise is the first increase since April of last year. S&P’s index committee chairman noted that the news was a mix of good and bad news — prices in some areas continue to decline, and without the seasonal adjustment, the 20-city index was down 0.8 percent to reach 134.20, the lowest it’s been since 2002. (via Reuters)

Barclays Capital sees first signs of price increases

Analysts from Barclays Capital consider the 22 pecent order growth seen by homebuilders in the first quarter of 2012 as an early sign of the market beginning to see price increases return. The managing director of Barclays’ homebuilding division said that Phoenix, Denver, Orange County, CA, among others are seeing pricing comebacks. Three builders concurred with that perspective — Lennar, Meritage Homes and Ryland Group have reported the strongest order growth across both location and buyer type. Other homebuilders, D.R. Horton, PulteGroup, and M/I Homes also showed order growth, but without the same strong feeling for the trend to continue.

It’s possible that the last 12 to 24 months of increased investor activity buying existing homes has raised consumer demand for new homes. If so, that could mean good news for the homebuilding sector and the housing market. (via Housing Wire)

Affordability at 40-year high

Judging housing affordability by the relationship between median home price, median family income and average mortgage interest rates, the National Association of Realtors (NAR) says that homes are the most affordable they’ve been since record-keeping was started more than 40 years ago.

According to the president of NAR, for the first time ever the affordability index has broken two hundred — meaning the average family has roughly twice the income required to purchase a median-priced home.

Owning less than renting

Marshall Vest, author of the the Eller College of Management’s 2012-2013 Economic Outlook Report (updated quarterly) notes that affordability in Tuscon, AZ in 2012 has been so high that on a monthly basis, owning a home can cost the same or even less than renting one.

It is still a tough market— tight credit for builders and buyers alike along with ongoing issues obtaining accurate appraisals continue to slow recovery and constrain the market to the most qualified and determined buyers.

(via The Arizona Daily Wildcat and Realty Times)

There are now 35 states represented on the Improving Markets Index — tracked and reported by the National Association of Home Builders (NAHB) and First American Title Insurance.

To make the “improving market” list, a metropolitan area must show continuous improvement for six months in three areas:

• Housing permits (data from U.S. Census Bureau)
• Employment (data from the Bureau of Labor Statistics reports)
• Home prices (data from Freddie Mac reports)

This month’s index shows 101 metro area markets on the list in 35 states — a significant increase from the 12 markets that appeared on the list last September when the index was launched. Of the markets on the list from the previous month (March), 88 stayed steady, while 11 areas were dropped and 13 areas added.

“While housing markets across the country continue to struggle under the weight of overly tight lending conditions and other challenges, the April IMI indicates that at least 101 individual metros are showing measurable and consistent signs that they are headed in the right direction,” said NAHB Chairman Barry Rutenberg. “A total of 35 states are now represented on the list, with 10 states having four or more entries. This positive news is in line with what our builder members have observed regarding firming conditions and improved buyer interest in certain locations.”

It’s important to remember that the index focuses on improving markets, notes NAHB’s chief economist — as markets stabilize, their performance in the three areas tracked by the index will be less likely to improve from the previous month, which will drop them from the list.

For more on the Improving Markets Index, visit NAHB’s IMI page here.

Mortgage rates dropped last week

Although mortgage rates rose recently in response to a generally positive outlook on the economy, last week saw rates fall with news of Europe’s economy continuing to crumble and reports of uninspiring March employment numbers.

HSH.com’s mortgage tracker showed the overall rate for 30-year fixed-rate mortgages dropping to an average of 4.30 percent, while 15-year rates dropped to average 3.54 percent.

Fluctuating recovery means fluctuating rates

The economy continues to recover — but with less momentum than has been seen recently.

The Federal Reserve’s most recent meeting indicated a positive assessment of the economy, making it seem unlikely that the Fed will take new measures to expand or institute economic relief programs. The labor market, a key element to economic recovery, slowed considerably from its strong showing in the past three months — new job activity in March was half of the new job activity reported in February.

Spring is likely to see mortgage rates continue to be buffeted about, with no drastic increases or drops, as economic indicators — the state of the economy in Europe, the Fed’s stance on relief programs and the labor market — impact the market and consumer confidence.

(via HSH.com)

Good news/bad news

Last week’s Case-Shiller index seemed to be a case of “good news/bad news,” according to economic experts.

Although the index showed housing prices at their lowest level since 2003, many economists feel that in combination with the increase in home sales velocity and an encouraging labor outlook, the falling prices are more a reflection of market clearing out the distressed properties at attractive prices for cash buyers.

Home prices are on the mend

In an article in the LA Times, an economist from Capital Economics was quoted as saying that “home prices were ‘on the mend,’” and that they see home prices stabilizing, the first step in recovery.

 2012 will go down in history as the year that the most severe house price crash on record ended… The improvement in general price trends is being driven by the 13% rise in home sales since last July. In turn, this reflects the strengthening in the economy and signs that banks have become a bit more willing to lend.

Expert opinions see this year as the bottom

Marketbeat, a blog from The Wall Street Journal, gathered a few more opinions from “economists and market observers,” agreeing that the index drop is not a red alert on the crisis and recovery timeline. An economist from MFR points out that in the six years leading up to the market’s peak in 2006, the price index rose by 155% — in the six years since, the index has dropped only 34%. Other economists point to a six-year cycle, in which housing bubbles tend to bottom out six years after peaking.

On the whole, if 2012 sees home sales continue to rise, the distressed property inventory continue to shrink and the job market continue to improve — it could well be the low point on the housing market graph.

Test program in Nevada, Arizona and New York State

Bank of America Corp. announced that it is launching a test program for one thousand homeowners in Nevada, Arizona and New York — whose loans are distressed and for whom loan modifications have not worked — that will allow them to turn in the deed to their home (deed-in-lieu) in return for the opportunity to rent their home at or below market rates for up to three years.

Bank of America hopes to be able to off-load these homes to investors — as rental properties with income — within three months of the transaction with the borrower. The bank expects the test to yield hard numbers that will show whether this solution is financially preferable to the foreclosure process for loans that have exhausted all modifcation efforts. (via Los Angeles Times Business)

After loan modification options are exhausted

Bank of America’s “Mortgage to Lease” program is being tested with borrowers

…who have been previously offered a variety of possible alternatives to foreclosure — loan modifications, forbearance on payments, short sales and "deeds-in-lieu," where the borrower hands the property title back to the bank and moves out… But they either have not been able to qualify or have not responded to the bank's proposals. They're now essentially at the end of the line — there are no other standard lender remedies available to keep them out of foreclosure.

(via Seattle Times Real Estate)

Investors are jumping on the band-wagon

There has been a significant movement by investors to buy foreclosed properties and turn around and rent them — big name investment institutions like Berkshire Hathaway, Starwood Capital, and Oaktree Capital have all announced their intention to purchase foreclosed homes. And Fannie Mae recently announced that it is going to test a project to sell pools of single-family homes to investors. (via Huffington Post Business)