Real estate

Top 928. Feb 10, 2006 2:35 PM

» dna2 - Zillow

Pretty worthless. I looked at three places, there are no homes in zip code 16335 (where I went to college), the home I grew up in (3 stories plus a basement build in 1800s) is listed at 1560 square feet, my current house is way over valued on Zillow, by 25%. They have a ways to go to make this site useful, fun though. The satelitte of my hometown was better than Google Earth I thought.

-- posted by dna2

Top 929. Feb 11, 2006 8:37 AM

» SteveT - Coming Home to Roost

By JONATHAN R. LAING

THE RED-HOT U.S. HOUSING MARKET MAY be fast approaching its date with destiny. Indeed, inside the mortgage trade, much anxiety is being focused on a looming "reset problem." Over the next two years, monthly payments on an estimated $600 billion of mortgages to borrowers with checkered or no credit histories -- the "sub-prime" market -- may zoom as much as 50% higher, as the two-year teaser rates on hybrid adjustable-rate loans expire and interest payments hit their fully indexed levels.

In the past, such resets caused little disruption. For one thing, the sub-prime market was strikingly smaller. Only $97 billion of such mortgages were originated in 1996, compared with a mammoth $628 billion last year and $540 billion in 2004, according to the trade publication Inside B&C Lending. Sub-prime loans outstanding now account for more than 10% of the total U.S. mortgage debt of $8.4 trillion.

Moreover, the reset triggers on sub-prime mortgages have dramatically shortened, with the loosening in underwriting standards. During the past two years, "affordability" products, as the industry has dubbed them, have migrated from prime to sub-prime borrowers. Sub-prime borrowers used a variety of products, including:

Hybrid ARMs, with low teaser rates in the early years.

"IO Mortgages," which, in their early years, charge interest only and require no repayment or amortization of principal.

"Stated Income" or "No Doc" Loans, requiring no verification of a borrower's income.

Option ARMs, which give borrowers the option of making smaller than normally required monthly payments, with the unpaid portion being added to principal.

Piggy-Back Mortgages, in which the borrower received a first mortgage of, say, 80% of a home's value, plus a credit line to cover his down payment on a new home.

Surging property values in much of the country in the past four years helped bail out many sub-prime borrowers, letting them refinance their loans as painful resets loomed. Many borrowers not only refinanced old debt at attractive teaser rates, but also sucked additional equity out of their homes with cash-out refinancings, to pay off higher-rate credit-card debt. Meanwhile, delinquency rates and credit losses remained artificially low. A tapped-out borrower always could sell his home into a soaring real-estate market to pay off his mortgage debt and regroup.

But now the refi window may be closing for the sub-prime crowd. The Fed's hikes in short-term interest rates have pushed up fully indexed ARM rates. At the same time, evidence is mounting that home-price appreciation is slowing or, in a few areas, reversing. And the secondary market in mortgage-backed securities, which provides some 90% of the liquidity in the sub-prime market, is starting to balk at the easy lending practices in this sector.

Various doomsday scenarios are being posited. A New York hedge-fund manager heavily playing the short side of sub-prime mortgage securities foresees a coming spiral in delinquencies, foreclosures and credit losses from tapped-out sub-prime borrowers facing monthly payments they can't meet. A deadly feedback loop impends in which forced home sales will diminish collateral values, which, in turn, will foster yet more delinquencies and forced sales. Before the crisis runs its course, the deflationary contagion will infect all manner of homes, from high-end to starters, says this bear.

To be sure, this prediction is both apocalyptic and self-serving. Market shifts usually tend to unfold slowly enough to let players adjust. "I just don't see any coming collapse in the sub-prime market as long as the U.S. economy and job growth stays strong and interest-rate increases remain subdued," insists Doug Duncan, chief economist of the Mortgage Bankers Association in Washington. Echoes Guy Cecala, publisher of Inside B&C Lending: "People have been crying wolf about the looming sub-prime reset crisis for two years and nothing has happened. Lending standards are now being tightened up, so I expect we'll muddle through."

Perhaps so. But significant sticker shock impends for sub-prime borrowers. Say they are paying a fixed teaser rate of 7% (typical of what the 2004 and 2005 cohort of sub-prime borrowers had to pay while borrowers with good credit got fixed rates of 5%). Come reset, typical contracts call for a floating rate of 600 basis points, or six full percentage points over the six-month London interbank offered rate, a money-market benchmark. Six-month LIBOR has risen to around 4.7%, which means that the borrower would face more than a 50% jump in mortgage interest expense to 10.7%, subject to certain temporary caps on the permissible jump in interest rates.

The shock will be even greater for the sub-prime borrowers who are facing not only a jump from a fixed to a floating rate, but also the burden of amortizing principal after two years of interest-only payments. And for many, the interest- rate reset and IO expiration will occur on the same day -- a reflection of the "risk layering" prevalent in the sub-prime market over the past two years.

Of course, if sub-prime borrowers have enough untapped equity in their homes, they will be able to refinance their loans on somewhat similar terms -- the new teaser rates have risen to only 7.5% -- and roll the dice for another two years.

But Glenn Costello of Fitch Ratings estimates that at least a quarter of all sub-prime borrowers facing resets may have precious little equity left, even with the huge surge in home prices in the past two years. Many piggy-backed loans to borrow the down payment on their homes, in addition to taking on a conventional mortgage. "For some borrowers, there will just be no loan-to-value gap left," Costello contends.

In recent months, mortgage underwriting standards have indeed begun to tighten, mostly at the instigation of the secondary market, where the bulk of all sub-prime mortgages trade as securities. Investors seem to have lost much of their zest for IOs and hybrid ARMs. Risk layering is also being discouraged. Reset periods are also being extended out to five years to avoid future refinance jam-ups like what now looms in the next two years.

Even more ominous for the sub-prime borrowers with more than $600 billion or mortgages resetting in the next two years would be new standards for "nontraditional" mortgage products that have been jointly proposed by a number of federal regulators (the Office of the Comptroller of the Currency, the Federal Reserve, the FDIC, the Office of Thrift Supervision and the National Credit Union Administration).

The regulators want lenders to qualify borrowers, based on the full payments they will incur once teaser rates expire or full principal amortization on the loans begin. The prevailing practice in the sub-prime industry, however, considers only initial monthly payment levels.

Deutsche Bank Securities analyst Eugene Xu illustrates the impact such standards, if eventually implemented, would have on sub-prime borrowers hitting the refi window.

A household making $60,000 a year, with a total debt-to-income ratio of 40%, currently could qualify for a $288,000 hybrid ARM, paying a fixed interest-only rate of 7.5% for the first two years, followed by 28 years of floating rates. But if the underwriting standard were based on the current fully indexed 10.7% rate, the applicant would qualify for a loan of just $192,000.

These days, many sub-prime lenders are offering 40-year fixed-rate mortgages to reduce monthly payments. But even under this scenario, our hypothetical borrower would be able to obtain only a $234,000 loan at the prevailing sub-prime rate of 9% , says Xu. "The implication of all this is that many sub-prime borrowers who took out loans in recent years may not be able to refinance unless their income increases or interest rates drop significantly," he observes dryly. In other words, the American Dream of home ownership could turn into a Roach Motel nightmare.

Of course, the proposed standards are likely to be watered down. And if U.S. home prices keep rising smartly, the refinance crisis in the sub-prime market could be largely avoided. Industry economists from Freddie Mac to the National Association of Realtors all think that a 5% to 7% rise in housing prices is easily doable this year, if not the double-digit surge of 2005.

SOME SIGNS OF PRICE WEAKNESS are already apparent. Inventories of unsold homes are building in areas that led the recent price boom, such as Southern California and the East Coast. In many areas, affordability indexes (which measure the ability of a family with the median income for that area to buy a home selling at the median price there) are at two-decade lows. Sales of used or "existing" homes have sunk for three consecutive months, according to the National Association of Realtors, even though that trade group's national figures showed that home prices in December were an extraordinary 12.7% above the year-earlier level.

Richard DeKaser, senior vice president and chief economist of Cleveland-based National City (ticker: NCC), has more than an academic interest in what's happening in housing. National City is not only a top-10 originator and servicer of prime mortgages, but it also owns a major sub-prime lending concern, First Franklin. These days, his attention is riveted on National City's quarterly survey "Home Prices in America." As of 2005's third quarter, the latest period for which data are available, it showed 38% of the U.S. housing market at an "extreme" overvaluation level of 30% or higher. The champ, or chump: Naples, Fla., where National City believes homes are 84% overvalued.

Experience in the 299 metropolitan areas covered in the survey shows that such levels of overvaluation are typically followed by price declines of about 15% that take an average of three years to unfold. If systemic and not merely localized, he asserts, any correction this time around could have nasty side-effects: "Individuals will suffer a wealth decline and spend less freely. Lenders will suffer elevated loans losses and credit conditions will tighten. Mortgage-backed securities will lose value and consumer confidence and home building will decline."

The survey's models and methodology are more sophisticated than many such valuation studies. Home-price-to-local-income ratios are only one element examined. The survey also makes adjustments for such factors as population density (in- or out-migration from an area can have a big impact of home prices), mortgage rates, relative income levels (rich folks will allocate more of their income to luxury homes as real income rises). The study also uses a local adjustment factor for home-price-to-income ratios. For example, Santa Barbara, Calif., and Honolulu always boast higher ratios than other metro areas, presumably because of such pluses as their stunning climes.

One ray of hope: The level of overvaluation is so high and has been for so long that DeKaser is beginning to doubt his models' current relevance and predictive value. "I worry that the massive secular shift from fixed-rate loans to ARMs and the greater purchasing power that homebuyers consequently have may have skewed our findings some," he says.

Another positive: Delinquency and foreclosure rates in the sub-prime market certainly evidence few signs of stress. According to Loan Performance, a San Francisco statistical service, just 2.43% of homes bought with sub-prime loans were in foreclosure in November. That was materially lower than the 4.38% reported three years earlier. Serious sub-prime delinquencies had likewise fallen over the three years through November, to 5.3% from 8.16%.

But these figures ignore several important realities. First, nearly all the $1 trillion in outstanding sub-prime loans were made in the past two years, to buy homes or refinance older debt. Such loans typically must age a year or more before repayment problems crop up.

Likewise, the low interest rates and looser lending standards available in the past two years have afforded all but the most busted-out sub-prime borrowers the ability to refinance on easy terms.

Of course, the huge levitation in home prices in 2004 and 2005 also did wonders for default and delinquency levels. Borrowers who couldn't afford their monthly payments were able to resolve their debt problems by merely selling their homes, sometimes even booking a profit in the process. This was especially true in overheated markets like California, which accounts for about 30% of sub-prime mortgage debt.

Deutsche Bank's Eugene Xu looked at mortgage-loss severity rates provided by Loan Performance on a range of loans between prime and sub-prime loans that defaulted over the past three years. All had first liens on the underlying properties and had original loan-to-value ratios of 75% to 85%. They were of superior quality, in other words, to many of the sub-prime mortgages outstanding today.

What he found was revelatory. In areas with moderate home-price gains over the past five years, such as Jackson, Tenn., Memphis and Indianapolis, which had compound price appreciation of less than 4%, loan-loss severity clocked in at more than 35% of the outstanding balance.

In contrast, areas such as Santa Barbara and San Diego, which saw huge annual price growth of over 16.4%, showed minimal loan losses of under 3%. "Sure other factors enter into loss severities such as closing costs and loan size, but previous price appreciation is the primary determinant," he asserts. "Thus, loss severities in key, overheated markets like California and New York could skyrocket by eight-to-10 fold even if home prices growth just moderates markedly rather goes negative."

Modern-day sub-prime lending burst onto the scene only in the mid-'Nineties, pushed by upstart lenders enticed by wide margins and fat fee income. Industry growth surged until a liquidity crisis erupted in 1998 in the U.S. credit markets, following the Russian ruble crisis and the collapse of the Long Term Capital Management hedge fund. Dozens of sub-prime lenders were driven out of business and hideous loan performance made road kill of outfits like the Money Store.

But the industry has roared back, riding the tidal wave of home-price appreciation that sub-prime loans have, in turn, helped foster. In recent years, a number of blue-chip companies such as Citigroup (C), General Electric (GE), Wells Fargo (WFC), H&R Block (HRB), Countrywide Financial (CFC) and HSBC (HBC) have muscled into the industry, mostly by buying existing players and letting them operate independently.

The sub-prime lending crowd has been rocked by more than its share of scandals since the turn of the millennium. Just last month, privately held Ameriquest settled with 49 states for $325 million. Among other things, it had been charged with systematically abusing customers by steering them into higher-cost loans and leaning on appraisers to inflate home appraisals so it could make larger loans.

Shortly after they're originated, nearly all sub-prime loans are packaged into securitizations and sold to public investors. As result, sub-prime offers the best of all worlds in most credit environments. Borrowers assume the bulk of the interest- rate risk by taking out ARMs and can be a source of fat fee income. Meantime, all or most of the credit risk on the loans is shifted to the investors in securitizations.

Obviously, any smash-up in the sub-prime market would hurt lenders. Some such as New Century Financial (NEW) are set up as real-estate investment trusts and, as such, retain some of their securitizations and those of other players. Origination volume is also likely to drop, which would hurt lenders with costly infrastructures that can't be downsized easily in the face of lower volumes. Still, most of the major sub-prime lenders are small cogs in much larger corporate structures. And industry giant Ameriquest is privately held.

In a bad market, most of the blood would spilled in the lower-ranking tranches of sub-prime mortgage-backed securities, bonds rated triple-B minus and below. That's because the overcollateralization and excess interest margin (the difference between the interest thrown off by the pool and the interest promised the holders of the different tranches in the securitization) afford only about 7% to 8% loss protection to triple-B holders.

Any shortfall in interest payments and mortgage-principal loss above that level would eat away at their returns. In these securitizations, interest and principal payments cascade down from the higher to lower tranches. Priority of losses moves in the opposite direction from residual tranches and double-B bonds upward.

The aforementioned New York hedge-fund manager is busily shorting triple-B and triple-B-minus tranches in sub-prime securitizations by buying credit protection on them in the credit-default-swap market. The fund is also short various collateralized debt obligations, an estimated $50 billion or so invested mostly in the junior tranches of sub-prime securitizations. "These CDOs...could get completely wiped," the manager says. The cascade on interest and principal repayments from the securitizations above them might slow to a trickle.

The liquidity of the sub-prime market depends on continued purchases by CDOs of the randier tranches of sub-prime securitizations. Should this funding dry up, the sector's financing structure could seize up. And that would spell big trouble not only for sub-prime borrowers, but for the entire U.S. housing market...and economy.

The Bottom Line:
Cause or effect? Sub-prime mortgages have helped to push up home prices, which in turn have boosted sub-prime lending. This virtuous circle may be about to turn vicious.

E-mail comments to editors@barrons.com

URL for this article:
http://online.barrons.com/article/SB1139...

-- posted by SteveT

http://globaleconomicanalysis.blogspot.c...

Top 930. Feb 11, 2006 11:18 AM

» Jas_Jain - "Leading Home Price Index has fallen to an eleven year low"+More

Comments by Steve based on Bloomberg appearance of ECRI's managing director, Lakshman Achuthan: "...The major worry is [that ECRI's] Leading Home Price Index has fallen to an eleven year low ...The problem is you never know if it will turn into something worse. Most people think this will just be a pause in home prices, but most people aren’t right around turning points. "

Looks like I am having bad influence on others as evidenced by, “Many here have argued that the 6% Realt-Whore commission is doomed…”

Jas

-x-x-x-x-x-x-x-

-x-x-x-x-x-x-x-x-x-x-x-x-x-

http://patrick.net/wp/?p=155

Monopoly MLS Post-Mortem: What Comes Next?
February 7th, 2006

Many here have argued that the 6% Realt-Whore commission is doomed, like travel agency commissions of yore. The NAR is already under investigation by the Feds for anti-competitive practices, such as restricting access to the many regional MLSs, refusing to work with reduced-commission and/or flat-fee brokers (Help-U-Sell, ZipRealty, etc.). A bursting bubble will no doubt help grease the road to MLS reform and reform-minded legislation, as the myth of RE’s invincibility begins to fade. As dreams of early-retirement-through-flipping evaporates, public sentiment will no doubt begin to turn against the NAR.

…

-- posted by Jas_Jain

http://www.freep.com/apps/pbcs.dll/artic...

Top 931. Feb 14, 2006 5:19 PM

» Jas_Jain - FWC: Housing Forecast From the Foremost Expert

--
February 14, 2006

FWC: Housing Forecast From the Foremost Expert

The guy didn’t have to sign any lease, lives rent-free and has never bought or rented a house himself. We can be certain that he is very afraid because every other day he has been commenting on housing lately.

Jas

-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-

Bush sees safe landing for housing
BY JEANNINE AVERSA
ASSOCIATED PRESS

February 14, 2006

George W. Bush predicts safe landing for housing.

WASHINGTON -- The high-flying housing market should make a safe landing by gradually losing altitude, the White House suggested Monday.

Housing has been an important source of power for the economy as home sales hit record highs for five years running. Low mortgage rates were a factor behind brisk activity.

"A gradual slowing of homebuilding appears more likely than a sharp drop because the elevated level of house prices will sustain homebuilding as a profitable enterprise for some time," President George W. Bush's annual economic report to Congress says.

The direction of the housing market is closely watched. Most private analysts also expect gradual moderation. If the housing market were to collapse, it would pose grave dangers to the country's overall economic health.

House prices, which have risen rapidly in value, also will probably see slower growth this year, Matthew Slaughter, a member of the White House's Council of Economic Advisers, said in a briefing on the report.

Even with a housing slowdown, the economy is expected to log respectable economic growth this year, according to the White House's projections.

The president's report projects that the economy will grow by 3.4% as measured from the fourth quarter of last year to the fourth quarter of this year. In 2007, the economy should register another solid year, growing by 3.3%, he said.

The president's report examines economic conditions and challenges. These include rising health care costs, the massive strain on federal resources that will come from the looming retirement of millions of baby boomers, and bloated trade and budget deficits.

In other matters, the report said:

The decline in Americans' personal savings rate "may not be cause for much alarm for retirement preparedness." The personal savings rate last year dropped to its lowest point since the Great Depression.

The savings-rate measure doesn't provide a complete picture of households' finances because it does not capture gains from such things as higher real estate values or financial investments, the White House report and private analysts say.

Limiting the massive portfolio holdings of mortgage giants Fannie Mae and Freddie Mac would decrease "the likelihood of systemic problems with little adverse impact on the liquidity of the market." Proposals before Congress would curb the mortgage giants' holdings.

Looking back at last year, Bush marveled at the economy's sturdiness after being jolted by the devastating gulf coast hurricanes and high energy prices. "The United States economy continues to demonstrate remarkable resilience, flexibility and growth," he said.

Bush gave credit for that to "the hard work of America's workers" as well as his own policies that cut taxes and aim to keep them low. The economy grew by 3.1% last year, as measured by gross domestic product from the fourth quarter of 2004 to the fourth quarter of 2005.

The unemployment rate, which averaged 5.1% in 2005, should dip to 5% this year and hold steady at that rate next year, the White House forecasts.

Inflation, as measured by the Consumer Price Index, also should moderate this year. Consumers prices, which rose by 3.4% in 2005 -- the most in five years-- are expected to go up by no more than 2.4% this year and next year, the report said.

Addressing the government's balance sheets, Bush said the administration remains on track to cut the federal budget deficit in half by 2009. The president, who is calling on Congress to make his tax cuts permanent, would seek to slash the deficit by cutting spending.

The government ran up a $319-billion deficit last year. The administration is estimating the deficit for this year to hit a record in dollar terms of $423 billion, surpassing the record set in 2004. The worsening picture reflects increased spending for hurricane relief and the costs of the wars in Iraq and Afghanistan, the administration says.

The president also said he would continue to push for trade deals that would make it easier for U.S. companies to sell in global markets.

-- posted by Jas_Jain

Top 932. Feb 15, 2006 10:51 AM

» permabear - Toxic Loans Threaten Home Values

Toxic Loans Threaten Home Values
by Peter G. Miller

Stashed away amid the tons of paperwork generated each day in Washington -- reading what no one argues is a threat to Shakespeare -- is HUD's 2007 Budget Summary, a document which ought to make a lot of people take notice.

"Congress recognizes that today's high cost loans negatively impact consumers, communities, and the economy. To address the problem, Congress is considering legislation to regulate these types of loans and the lenders who originate them. HUD proposes to amend the National Housing Act to give FHA the tools to offer alternatives to high cost loans by supporting privately originated mortgages to nonprime borrowers. These hardworking, credit-worthy borrowers, like generations before them, are unable to get a reasonably priced mortgage on fair terms. Many are in jeopardy of losing their homes as their mortgage payments escalate or balloon notes become payable."

HUD -- in a few years -- will be able to cite the quote above as evidence showing it was aware of the toxic loans available today. But HUD does not regulate lenders. At the federal level, that's a job for other departments, offices and agencies.

Ask yourself: Why is it that only hardworking subprime borrowers are impacted when "mortgage payments escalate or balloon notes become payable"? Why have federal banking regulators allowed -- and continue to allow -- the origination of loans which clearly represent a looming national debacle? If it's true that "Congress recognizes that today's high cost loans negatively impact consumers, communities, and the economy," then why hasn't Congress or the executive branch done something meaningful to resolve the problem?

We now have a large percentage of loans that involve negative amortization and potentially huge payment increases. It's impossible to believe that some portion of these loans -- and perhaps a large portion -- will not result in financial disaster.

This is not a problem that can be ignored by those who own their homes free and clear. This is not something that does not impact those who have financed with dull, boring self-amortizing loans that required something down. In either case, guess what will happen to the value of your home if nearby properties are dumped on the market or foreclosed?

To understand what's going on, consider the joys of so-called "option" or "flexible" ARM loans.

With such mortgages borrowers typically have four payment choices during the first five years of the loan term: pay as if the loan is being amortized over 30 years, pay as if the loan will be paid off in 15 years, pay on an interest-only basis, or make payments based on a "start rate" that initially generates negative amortization.

The term "negative amortization" means that the monthly payment is insufficient to cover the interest cost. The interest not paid is added to the mortgage debt. Thus, if you pay down a mortgage it is "amortized" and if the debt increases you have "negative amortization."

Borrow $500,000 at 6 percent with an option ARM that has a 1.5 percent start rate and the initial payment will be about $1,725 -- a cost that will top $4,000 in the seventh year of the loan. However, given that this is an adjustable-rate product it's possible that interest rates could rise during the loan term, so maybe a $4,000 monthly payment is a low estimate. You have to wonder if payments which are affordable at $1,725 a month will continue to be tolerable at $4,000 -- or more.

If it's true that escalating payments are a national issue, then where were the federal regulators? Did they not understand the real and present dangers of the very loans they were supposed to oversee?

The argument can be made that option ARMs, stated-income loan applications and mortgages amounts above the value represented by the underlying real estate have all lubricated the economy by allowing additional buyers into the marketplace. Since real estate anchors about 20 percent of all economic activity, more buyers and more transactions are positives -- but not at any cost.

There's no doubt that more loan originations are surely good for the nation's lenders, their loan officers and their shareholders -- at least for the most recent quarter. But are not lenders in business for the long-term? Do the big "investors" who buy mortgage packages such as pension funds and insurance companies benefit from loans which are fundamentally more-risky than traditional mortgages?

Did banking regulators not see how the mortgage market has shifted to high-risk loans? And if they did see such a shift, why did they not move quickly and forcefully to protect the public interest?

The new generation of high-risk loans gained popularity at a time when home prices in most markets were rising with astonishing force. What will happen to such loans in less-robust markets is unknown, but federal banking regulators who oversee much of the loan market should be held responsible for the excess risk they have allowed and for the financial failures which are certain to follow.

Published: February 14, 2006

-- posted by permabear

Top 933. Feb 15, 2006 2:17 PM

» pbradford6 - Still no real slow down

Home prices jump again, up 13.6%
Record 72 U.S. areas saw double-digit increases in Q4
By Steve Kerch, MarketWatch
Last Update: 12:12 PM ET Feb 15, 2006

CHICAGO (MarketWatch) -- A record 72 U.S. metropolitan areas saw double-digit home-price increases in the fourth quarter, the National Association of Realtors said Wednesday, as the housing market showed few signs of cooling. Only six cities posted price declines.
Overall, prices of existing single-family homes rose 13.6% in the fourth quarter to a median $213,000 compared with fourth-quarter 2004. While still high by historical standards, that rate of appreciation fell from the third quarter's annual rise of 14.7%.
See what home prices did in 145 metropolitan areas.
"Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers," said David Lereah, the NAR's chief economist. "The good news is that the supply of homes on the market has been trending up, and we are entering a period of a more normal balance in supply and demand."
The biggest single-family price increase in the nation was in the Phoenix-Mesa-Scottsdale area of Arizona, where the fourth quarter price of $268,400 rose 48.9% from a year earlier.
Next was Cape Coral-Fort Meyers, Fla., at $293,100, up 48% from the fourth quarter of 2004. Orlando, Fla., with a fourth-quarter median price of $261,800, was up 42% in the last year.
Detroit and Cleveland saw prices fall by less than 1%. The largest price decline, 5.3%, was recorded in the South Bend, Ind., metro areas. Other cities that saw declines included Erie, Pa., Lansing, Mich., and Springfield, Ill.
Median fourth-quarter metro-area single-family prices ranged from $63,800 in Danville, Ill., to nearly 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California where the median price was $747,000.
The second most expensive area in the United States was the San Francisco-Oakland-Fremont area at $718,700, followed by the Anaheim-Santa Ana-Irvine area (Orange County, Calif.) at $699,800.
Other low-cost markets include Elmira, N.Y., the second least costly metro area at $78,800, and Decatur, Ill., with a fourth-quarter typical resale home price of $84,500.
For the first time in its quarterly housing report, The NAR broke out the numbers for condominium and cooperative prices. In the fourth quarter, the median existing condo/co-op price was $228,200, up 12.3% year over year. The condo survey includes 51 U.S. markets; 27 of those areas saw double-digit price gains while seven had declines.
In a separate report, the NAR said total existing-home sales, including single-family and condo, were at the third-highest pace on record in the fourth quarter of 2005. The Realtors said the seasonally adjusted annual rate of home sales was 6.9 million units in the fourth quarter, up 0.3% from the level in the fourth quarter of 2004.
Twenty-four states showed increases in sales activity over the same period in 2004.

-- posted by pbradford6

Top 934. Feb 15, 2006 3:03 PM

» Jas_Jain - Still no real slow down

In response to Still no real slow down posted by pbradford6:

--

Prices peaked in August in most areas and nation-wide. They are down 4-10% depending upon tbhe area. YoY comparison does nor capture the decline.

Do people look at the Scam Market prices YoY change? In that case, there was no bubble burst in NASTYQ! in May of 2000.

Jas

-- posted by Jas_Jain

http://www.usatoday.com/money/2006-02-14...

Top 935. Feb 15, 2006 8:06 PM

» Jas_Jain - Damsels In Distress As the Housing Bubble Pops? FW: More women b

February 15,2006

Damsels In Distress As the Housing Bubble Pops?

I have already recounted the sad story of an accountess in my son’s office who bought a condo for $670K, at the market peak last year, with an annual salary of $50K. Her total payments exceeded her gross salary. Despite being an accountant she was thoroughly misled about her “after tax” total cost of owning the place. Mortgage tax deduction for someone with $50K in annual salary is not the same as for someone with $200K in salary.

Last weekend, my son, who was renting a home Simi Valley, CA, was moving because the owner, a single woman, lost her job and had to move in and she plans to take in roommates to manage the expenses (she was renting a place herself near her work before she lost her job). She bought the home for $480K two years ago and it was vacant for six months before she rented it to my son. She has had to fork about $35K from her pocket over the last two years to cover the payments after rent. Had she sold the home at the peak price last fall, based on a sale price of $560K for an identical home just two homes away across the street, she would have come out even after all the buying and selling expenses and the money she had put in over the past two years. The market has softened in the past 4-5 months and she would lose money if she were to sell. If she finds a job too far for a commute she would face a dilemma.

While I was waiting outside the home my son was moving out of I happen to meet the woman who bought that $560K home across the street. I had seen the woman, who looked to be in her 30s, park her BMW from one spot to another to another until her favorite parking spot was vacated (there must not be enough space in the garage). She walked towards me and wanted to chat. She didn’t seem happy and she started by telling me how cheap these home were when they were first sold in 1999. Since I am always conducting research into housing and the economy I was happy to talk about the subject and ask her some questions. That is how I found out that she had moved in the house with her father last September when they both jointly bought the house for $560K. Before that she was living with her boyfriend. I am guessing that she must have had this urge to buy a home before prices went much higher and she couldn’t have bought without her father’s help, or partnership. I think that she was already aware of the prices in the neighborhood falling based on the current listings of nearly identical homes at lower prices. And that might have been the reason for her unhappiness at that time. As it turns out she had paid three times the price that the buyers paid for these homes in 1999 when they were brand new. Now, she was facing the prospect of falling prices and paying lot of money per month for sharing the home.

I know of several cases in Southern California, some from newspaper stories, where married women were heavily speculating in homes by buying 4-5 homes over a short period and mostly near the peak prices in 2005. One woman was putting her husband down because he was lot more cautious while she had already “made money” in the homes that she had bought earlier and she was going to keep on buying until she can borrow and buy. She believed that one can’t lose in homes if one can get loans to buy more (the area she was buying in, Victorville, is overbuilt and has lot of land that can be built on).

Last year, I listened to a news story which said that 1/3rd of the condos in L.A. area were being bought by single women. I would say that the condos that have been bought over the past 2 years would prove to be bad “investments” because they have been going up in prices faster than Single Family Homes and they may not have good resale market when prices fall and the residential market goes into a slump.

As it turns out more than twice as many single women are buying homes and condos than single man. Is there any message in this? Is it harder for a woman to resist buying a home than for a man after prices have skyrocketed to outrageous levels? Just curious.

One thing is for sure: Soft hands of women are all over the Housing Bubble. Plus, we have sugar daddies in Freddie Mac and Bankrupters who are thrilled to "help" a woman have things she wants.

Jas

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Posted 2/14/2006 11:46 PM Updated 2/15/2006 8:53 AM

Dream house, sans spouse: More women buy homes
By Noelle Knox, USA TODAY

Karen Phelan remembers how scared she was when she bought her first home 10 years ago. Newly divorced and broke, she'd saved for a year for a down payment on a modest house.

"I just got tired of waiting for Mr. Right to come along and start the American dream," says Phelan, who owns her own company, which resells time-shares. Last year, she sold that house and bought a larger one in a gated golf-course community in Reno.

"They're kind of like emotional trophies," says Phelan, 43. "It's symbolic of success — of getting out there and doing it on my own and saying, 'I'm just as capable of doing it as the next person and doing it on my own and making it.' "

A lot of other women seem to feel the same way. Last year, single women snapped up one of every five homes sold. That's nearly 1.5 million, if you're counting — more than twice as many as single men bought, according to the National Association of Realtors.

The trend is striking, because in 1981, the number of single women and single men home buyers was virtually the same. Since then, the percentage of buyers who are single women has almost doubled, while the percentage of single men buyers slipped 1 percentage point to 9% last year.

This rise of single-women homeowners is part of a greater social and economic shift that is reshaping American life.

"For the first time in history, women have access to the same resources men have always had — money, social status, power," says Donald Hantula, professor of organizational psychology at Temple University in Philadelphia.

"Women can go and acquire them on their own rather than searching for a mate to provide them. These demographic and social changes are not in line with how we adapted in the hunter-gatherer era."

This trend is forcing changes in real estate. The building industry is beginning to add features to homes with women in mind. Mortgage lenders are doing more to help women qualify for loans.

"There have been so many advances and innovations in the market to respond to them," says Regina Lowrie, chairman of the Mortgage Bankers Association and the first woman to hold that post.

Some of the most critical demographic changes that have opened up the real estate market to women include:

•Women (and men) are marrying later. On average, women now wait until they're nearly 26 to walk down the aisle, about six years later than in 1960, according to Census data. On average, men today marry at age 27, an increase of five years in that same period.

•Divorce. A Census study showed that 73% of women who married between 1980 and 1984 reached their 10th anniversary, compared with 90% of women who married between 1945 and 1949. Still, as many as half of new marriages end in divorce.

•Women tend to live longer than men. The average man will die at 74, giving the average widow (who'll die at 79) five more years to buy a home on her own.

"The large pool of unmarried individuals reduces the social weight of marriage, in economics and politics," says Stephanie Coontz, professor of history and family studies at Evergreen State College in Olympia, Wash. "It creates tastes, habits and expectations, as well as voting blocs not tied to the role of wife or husband."

Unmarried women have more money than ever.

In part,that's because more women than men are going to college. Men have been the minority on college campuses since the 1970s, and they now make up just 44% of the student body. There are more women than ever on the job — 46% of the workforce — and the pay gap with men is closing.

The rush of single women to buy homes is impressive, coming after decades of sex discrimination by banks and real estate agents.

Before 1974, when Congress amended the Fair Housing Act to stop sex discrimination, it was hard for single women to get a mortgage, or even a credit card, in their own names.

If a woman was married, her income was usually discounted on a loan application, Coontz recalls, because the bank assumed she would stop working once she had children.

Those days are gone. Today, mortgage companies offer products to help low-income applicants qualify for loans.

Women, in particular, benefit because 25% of single mothers spend more than half their income on housing, compared with 10% of single fathers who do, according to the Joint Center for Housing Studies at Harvard University.

When Patty Tarling became a single parent, she was 20. She then struggled for 15 years before she could buy her first home in Hillsboro, Ore. Borrowing against her 401(k) retirement plan, she put down 3% of the home price and received a loan insured by the Federal Housing Administration.

Last year, Tarling sold that home and moved to a suburb of Sacramento, where she's an office manager for a mortgage lender. She bought a three-bedroom, two-bath house.

"I did 100% financing, because the security of having a big cushion in savings and other investments is huge for me after living paycheck to paycheck for most of my life," says Tarling, now 40.

Owning a home "is the biggest accomplishment I've had — I'm just elated by it. Aside from your child, just the sense of confidence and self-worth you have to say you own your home is just huge."

Tarling concedes it's a little intimidating for her boyfriend, who was displaced by Hurricane Katrina and now lives with her.

"It's just a step," she says. "If we get married or something, we'll buy a place together."

Because of new government loan criteria, many lenders will now help single women in several ways. They will:

• Let women count child support from an ex-husband as income to help qualify for loans.

• Consider divorced women as first-time buyers,even if they bought homes with their former husbands, so the women can qualify for further help. First-time home buyers can often receive down payment assistance or low-down payment loans.

• Let women use some alternative forms of credit history, such as their phone bill record, in case they never had credit in their own names, says Lowrie of the Mortgage Bankers Association.

Single women home buyers often need help because their median income is $47,315 a year — 20% less than for single men buyers.

Buying the first condo

Sarah Van Elderen, 23, who graduated last year from Grand Valley State University in Allendale, Mich., doesn't make that much money. Still, she bought her first condo in Grand Rapids, Mich., with a fixed-rate, no-down payment loan for first-time home buyers.

(No-money-down loans can be risky if home prices in the area decline, and the owner needs to sell.)

She's proud of her first condo, even though she says, "The reaction of my 94-year-old grandma was, 'You're going to end up single if you buy a house yourself.' "

Actually, the rising number of single women homeowners could change the dating scene completely, says Hantula of Temple University.

"Houses are a great source of wealth, and as women are buying and holding onto them, they will gain greater equity and become less dependent on male partners for material assets and protection," Hantula says.

"Over the long term, women will become pickier, more choosy. They will look beyond an asset-based mating decision. ... Characteristics like emotional stability and other kinds of compatibility will become more important."

Apparently, home builders also want to be more attractive to single women buyers now. They're designing homes with features preferred by women.

"Women want more security than men, and less maintenance," says Anthony Perry, co-owner of Oakwood Homes, a developer in Woodstock, Ga.

"It's just doesn't matter to men as much. We're putting in flat-screen TVs for the guys."

Among the amenities Perry adds with women in mind: a courtyard design that provides a stronger sense of security, gated communities and twice as many street lights.

He also adds larger closets and energy-efficient appliances, which he thinks matter more to women. He also provides maintenance services for his home buyers. "We water outside the courtyard, mow the grass out front — we even change the heating and cooling filters," he says.

Asked why he thinks so few single men buy homes, Perry replies: "Men do it when we get married. Until then, we're just out running around."

Tommie Livatino, a high school basketball coach in Chicago, is one of the rare single-male home buyers.

"Every time I bought a piece of property, I always saw it as an investment first, and a way to keep living with my friends," says Livatino, 36.

He rented out rooms to his friends in his first house and bought his second and third homes with friends. Why does he think more single women buy homes than single men?

"Maybe women are much more intelligent than men," he says.

A professor's theory

Historically, men have always had access to the resources to provide shelter and don't have the same imperative, says Hantula, the organizational psychology professor.

"Throughout our evolutionary history, access to shelter was more the province of men than women. You take the hunter and gatherer into the 21st century, and men say, 'I don't need to go buy shelter, because if I need it, I can get it.' Whereas the woman is saying, 'If I have the chance, I better get it while I can.' "

Pat Spalding, 54, who is single and lives in Lakeland, Fla., sold her home and bought a nicer one last year. She recalls how a single male colleague had a very different reaction to buying a home.

"He needed to buy a home for the tax shelter, but he said, 'If I want to get up and leave, I don't want to have something to sell,' " recalls Spalding, who works in the real estate division of Central Florida Gas.

"But I need the security. I own this. ... And I don't want to depend on anyone for anything, and men don't seem to care about that."

The trend toward single women home buyers might be socially unsettling in the short term, Hantula notes.

And for women home buyers — who are doing something that their mothers had to fight to do — purchasing their first home can be personally unsettling, too.

"The first experience was really scary for me," Phelan says.

"I'm not going to candy-coat it. I don't think any woman out there is going to tell you the first purchase going solo is easy, because it's a huge investment."

Contributing: Barbara Hansen

-- posted by Jas_Jain

Top 936. Feb 17, 2006 9:44 AM

» Normxxx - BCA: U.S. Housing Slowdown

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U.S. Housing Slowdown Continues

10:20:00, February 17, 2006

U.S. home builders sales expectations failed to recover in February after steep losses in late 2005. The housing boom is over for this cycle.

A very mild winter has sustained construction (seasonally adjusted housing starts jumped in January), but U.S. home builders have lost confidence. The home builder survey and recent announcements from builders like KB Homes confirm that sales expectations have rolled over decisively, and the slowdown is no longer confined to the most speculative markets. Home inventories have risen substantially and home affordability has deteriorated, due to sky-high house prices and rising mortgage rates.

Bottom line: housing demand and home price inflation will continue to decelerate, and construction will weaken as inventories build,

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The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx