He brings up some solid points. This is more adjective then all the bottom callers
What Housing Recovery? Distressed Sales Still High, Shadow Inventory Massive
Agustino Fontevecchia, Forbes Staff 8/28/2012 @ 6:57PM
Housing markets seemed to have turned a corner, with Tuesday’s Case-Shiller data adding to the optimism. Home prices have risen for a second consecutive month for the first time since the summer of 2010, but much of this is a consequence of the falling percentage of distressed sales, while prices are still more than 31% of their peaks and may take years to recover. With 11.4 million, or 23.7%, of all residential properties with a mortgage under water, and a shadow inventory worth $246 billion, according to CoreLogic, a true housing recovery is far away.
Tuesday’s Case-Shiller release, with data through June 2012, showed home prices continuing to recover. Both the 10- and 20-city composites finally recorded annual gains (0.1% and 0.5% respectively), prompting index Chairman David Blitzer to say:
We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change. The market may have finally turned around.
The report was met with optimism, as it came after improved existing and new home sales, which Wells Fargo’s analysts suggest indicate markets may be “bottoming in July.” Morgan Stanley/Smith Barney’s people also acknowledged the “improving U.S.-housing fundamentals,” while Barclays’ research team now expects home prices to rise 3% on an annual basis in 2012.
There are several reasons to remain skeptical, though, that this recovery will both be swift and will fuel economic growth that will help pull the U.S. farther from the edge of a new recession. Goldman’s economics research team understands that much of the improvement in housing markets can be attributed to a fall in the percentage of distressed transactions, which accounted for 50% of sales in 2009 and has now fallen to 25%. (Read Steve Schaefer‘s piece, Why The U.S. Housing Recovery May Be Due For A Stumble for more on this).
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Proprietary OC Housing News home purchase analysis
624 West MAXZIM Ave Fullerton, CA 92832
$389,900 …….. Asking Price
$150,000 ………. Purchase Price
7/2/1993 ………. Purchase Date
$239,900 ………. Gross Gain (Loss)
($12,000) ………… Commissions and Costs at 8%
============================================
$227,900 ………. Net Gain (Loss)
============================================
159.9% ………. Gross Percent Change
151.9% ………. Net Percent Change
4.9% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$389,900 …….. Asking Price
$13,647 ………… 3.5% Down FHA Financing
3.60% …………. Mortgage Interest Rate
30 ……………… Number of Years
$376,254 …….. Mortgage
$98,243 ………. Income Requirement
$1,711 ………… Monthly Mortgage Payment
$338 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$97 ………… Homeowners Insurance at 0.3%
$392 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,538 ………. Monthly Cash Outlays
($257) ………. Tax Savings
($582) ………. Equity Hidden in Payment
$16 ………….. Lost Income to Down Payment
$117 ………….. Maintenance and Replacement Reserves
============================================
$1,833 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,399 ………… Furnishing and Move In at 1% + $1,500
$5,399 ………… Closing Costs at 1% + $1,500
$3,763 ………… Interest Points
$13,647 ………… Down Payment
============================================
$28,207 ………. Total Cash Costs
$28,000 ………. Emergency Cash Reserves
============================================
$56,207 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Cost of Ownership Analysis
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Nearby Foreclosures
Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."Comparative Market Analysis
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$404,999 654 West GAGE Ave |
0.16 miles 4 bd / 2.5 ba 1,471 Sq. Ft. |
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$288,900 1103 West CHEVY CHASE Dr |
0.22 miles 3 bd / 2 ba 1,370 Sq. Ft. |
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$329,000 401 West ORANGETHORPE Ave |
0.44 miles 3 bd / 1.5 ba 1,189 Sq. Ft. |
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$369,900 1214 North CITRON Ln |
0.51 miles 3 bd / 2 ba 1,639 Sq. Ft. |
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$325,000 460 W KNEPP Ave |
0.52 miles 3 bd / 1 ba 1,189 Sq. Ft. |
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$357,000 401 SOUTHGATE |
0.55 miles 3 bd / 1.75 ba 1,200 Sq. Ft. |
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$320,000 704 South WASHINGTON Ave |
0.59 miles 3 bd / 1.75 ba 1,394 Sq. Ft. |
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$349,900 1058 North LAGUNA St |
0.59 miles 3 bd / 1.5 ba 1,055 Sq. Ft. |
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$374,900 1038 North HERMOSA |
0.65 miles 4 bd / 2 ba 1,246 Sq. Ft. |
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$378,200 601 South WOODS Ave |
0.66 miles 3 bd / 1.5 ba 1,415 Sq. Ft. |
The bond selloff is taking a breather, so interest rates have started to fall again.
Mortgage Rates Slip as Investors Wonder About Stimulus
After a month of weekly increases, mortgage rates followed Treasury bond yields down this week.
Freddie Mac reported that the 30-year fixed averaged 3.59 percent (0.6 point) for the week ending August 30, down from 3.66 percent in the previous week’s survey.
The 15-year fixed also fell, dropping to 2.86 percent (0.6 point) from 2.89 percent.
In addition, both the 5-year and 1-year adjustable rate mortgage averages fell, declining to 2.78 percent (0.6 point) and 2.63 percent (0.4 point), respectively.
Frank Nothaft, VP and chief economist for the GSE, said the declines economic news that may indicate another stimulus is on the way.
“Treasury bond yields fell, allowing mortgage rates to follow, after the release of the July 31 and August 1 minutes of the Federal Reserve’s monetary policy committee,” Nothaft said. “Committee members agreed that economic activity had decelerated more in recent months than they had anticipated at their last meeting in June. Some members even saw room for additional stimulus fairly soon if need.”
Despite the overall waning of the economy, Nothaft was quick to note that the housing market has gained more ground.
“Nonetheless, the housing market continued to show improvement over the past few months,” he said. “New home sales rose 3.6 percent in July, matching May’s pace as the strongest month since April 2010. Similarly, pending home sales also rose in July to its highest rate since April 2010.”
Bankrate’s survey showed that the 30-year fixed average took a substantial tumble, falling to 3.80 percent from 3.91 percent before. The 15-year fixed also saw a fairly large drop, averaging 3.03 percent (from 3.12 percent the previous survey).
Meanwhile, the 5/1-year adjustable rate mortgage averaged 2.80 percent, down from 2.90 percent a week ago.
Company analysts and financial experts surveyed by Bankrate mostly believe mortgage rates will either remain stable or trend down in the near future.
“The minutes of the Federal Reserve’s most recent meeting gave investors hope that additional Fed stimulus might be close at hand. All eyes now turn to Jackson Hole, Wyoming for Fed chairman Ben Bernanke’s speech on August 31. If he even hints at forthcoming stimulus, both Treasury yields and mortgage rates will tumble further. Mortgage rates are closely related to yields on long-term government bonds,” Bankrate said in a release.
However, not all analysts agree. Senior mortgage reporter Polyana de Costa said she sees evidence of an upward trend to come.
“The latest economic reports have been somewhat positive, which might put some upward pressure on rates next week. If [Fed chairman Ben Bernanke] disappoints investors Friday – and I think he will – rates will probably increase slightly,” de Costa said.