Tuesday, August 27, 2013

Real Estate Economic report Aug 15-30. The Real Estate Scientist Justin Thayer / Team Thayer

 New Home Sales were reported down 13.4% in July to a 394,000 unit annual rate, well below consensus expectations. We are still on an upward trend, with new home sales up 6.8% and the median new home price up 8.3% versus a year ago. 

Existing Home Sales grew 6.5% in July, at a 5.39 million annual rate. That's the strongest pace since November 2009, and sales are now up 17.2% from a year ago. The median price dipped slightly, but is still up 13.7% versus a year ago. It was great to see sales up in all regions of the country, with single family homes leading the way, although condo/coop sales also gained. The FHFA index of prices for homes financed by conforming mortgages gained 0.6% in June and is up 7.8% in the past year. 

 Freddie Mac's Primary Mortgage Market Survey showed average fixed mortgage rates edging higher for the week ending August 22. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information. The Mortgage Bankers Association purchase loan index was up 1% for the week ending August 16.

I expect the market to hold value until Feb 2014! Then we should see another property value growth period until Oct of 2014.

Justin Thayer 
Broker & Armature Economist! 

Economic Calendar for the Week of Aug 26 – Aug 30

 DateTime (ET)ReleaseForConsensusPriorImpact
M
Aug 26
08:30Durable Goods OrdersJul–5.0%3.9%Moderate
Tu
Aug 27
10:00Consumer ConfidenceAug77.080.3Moderate
W
Aug 28
10:00Pending Home SalesJul0.2%–0.4%Moderate
W
Aug 28
10:30Crude Inventories8/24NA–1.428MModerate
Th
Aug 29
08:30Initial Unemployment Claims8/24330K336KModerate
Th
Aug 29
08:30Continuing Unemployment Claims8/172.969M2.999MModerate
Th
Aug 29
08:30GDP – 2nd estimateQ22.1%1.7%Moderate
Th
Aug 29
08:30GDP Deflator – 2nd estimateQ20.7%0.7%Moderate
F
Aug 30
08:30Personal IncomeJul0.1%0.3%Moderate
F
Aug 30
08:30Personal SpendingJul0.3%0.5%HIGH
F
Aug 30
08:30PCE Prices – CoreJul0.2%0.2%HIGH
F
Aug 30
09:45Chicago PMIAug53.052.3HIGH
F
Aug 30
09:55U. of Michigan Consumer Sentiment – FinalAug80.080.0Moderate

Obamacare, tepid US growth fuel part-time hiring

U.S. businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid.
Faltering economic growth at home and abroad and concern that President Barack Obama's signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say. Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services.
Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services.
healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.
"Us and other people are hiring part-time because we don't know what the costs are going to be to hire full-time," said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, N.J. "We are being cautious."
Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10 percent and 15 percent compared with last year.
Other staffing firms have also noted a shift.
"They have put some of the full-time positions on hold and are hiring part-time employees so they won't have to pay out the benefits," said Client Staffing Solutions' Darin Hovendick. "There is so much uncertainty. It's really tough to design a budget when you don't know the final cost involved."
Cautious strategy
The delay in the Obamacare employer mandate "confused people even further," said Bill Peppler, managing partner at Kavaliro, a technology staffing firm in Orlando, Fla. "When we talk to customers, I still don't think anyone has a handle on this."
Obamacare appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment.
Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees, according to the staffing and payroll executives.
Under Obamacare, any employee working 30 hours or more is considered full-time. An effort to trim hours might have helped push the average work week down to a six-month low in July.
"As organizations and companies reduce the hours of part-time workers, they still have to replace the capacity, so they go out and hire additional part-time workers," said Philip Noftsinger, president of CBIZ Payroll in Roanoke, Virginia, which manages payroll for more than 5,000 small businesses.
Some large companies are also leaning more heavily on part-timers.
Wal-Mart Stores has been hiring more part-time workers, although it says the move is to ensure proper staffing when stores are busiest and is not an effort to cut costs.
Spokesman Kory Lundberg said the world's largest retailer promotes about 75,000 people from part-time to full-time work each year and is on track to do so again in 2013. 
Similarly, a memo that leaked out from teen and young adult retailer Forever 21 last week showed it was reducing a number of full-time staff to positions where they will work no more than 29.5 hours a week, just under the Obamacare threshold.
In a statement, the company said the move will affect fewer than 1 percent of its U.S. store employees, and was taken to better align staffing with sales expectations—not to lower costs under the Affordable Care Act.
Some public school boards and local governments, including the city of Long Beach in California, are also cutting hours.
"The difference between 30 and 40 hours can be the difference between being able to make ends meet month-to-month," said Heidi Shierholz, a senior economist at the Economic Policy Institute in Washington.
"That contributes to reduced living standards for American families and translates into having less income to spend on goods and services, which holds back the economy."
Weak economy not helping
Obamacare is only one factor. The surge in part-time employment also reflects an economy that has struggled to maintain decent growth.
That has left business owners such as Jason Holstine, who owns a building supply store in Baltimore, Md., reluctant to take on full-time staff. Holstine said he was more concerned about budget policy in Washington than about Obamacare, given that federal government furloughs tied to across-the-board spending cuts led some of his clients to put home renovations on hold. 
"We are still working in an environment that is very hard to forecast the near future and remains very cash-constrained," said Holstine. "We were always nimble, but we had to become more reactive. Using part-timers gives us more flexibility."
In a paper published last month, the San Francisco Federal Reserve Bank said uncertainty over fiscal and regulatory policy had left the U.S. unemployment rate 1.3 percentage points higher at the end of last year than it otherwise would have been. The jobless rate stood at 7.8 percent in December; it has since fallen to 7.4 percent.
"That's about 2 million jobs below where we should have been in 2012 because of policy uncertainty," said Keith Hall, a senior research fellow at George Mason University's Mercatus Center in Arlington, Va.
Economists and staffing companies are cautiously optimistic that part-time hiring and the low wages environment will fade away as the economy regains momentum, starting in the second half of this year and through 2014.
But businesses, accustomed to functioning with fewer workers, might not be in a hurry to change course. A study by financial analysis firm Sageworks found that profit per employee at privately held companies jumped to more than $18,000 in 2012 from about $14,000 in 2009.
"Private employers are either able to make more money with fewer employees or have been able to make more money without hiring additional employees," said Sageworks analyst Libby Bierman. "The lesson learned for businesses during the recession was to have lean operations."

Thursday, August 22, 2013

Home Affordability High Despite Rising Prices, Interest Rates

Even with home prices marching ever upward and mortgage rates bouncing back more than a full percentage point over last year, Capital Economics’ Paul Diggle insists housing affordability is still as good as most other experts say it is—if not better. Explaining that affordability measures “the burden of mortgage payments relative to income,” Diggle notes that the latest data from the National Association of Realtors shows that a family earning the median income has 178 percent of the income necessary to qualify for a mortgage on a median-priced home. At the same time, typical mortgage payments currently average 17 percent of median income, up from recent months but below the long-run average of 22 percent. In the firm’s latest US Housing Market Focus, Diggle notes that long-term trends show prices are up 15 percent below their trend level, with the ratio of Case-Shiller prices to disposal incomes per capital pointing to housing being about 16 percent below fair value. However, when comparing median household income to median home prices, Diggle says housing looks “no better than fairly valued.”








COURT RULES THAT HOMEOWNERS DENIED MODIFICATION CAN SUE THEIR LENDER

An an astounding decision today out of California, the 9th Circuit Court of Appeals ruled in favor of the Defendant/Borrowers and against Wells Fargo, finding and ruling that the homeowner who was approved for  a trial period modification could sue the lender when a final modification was denied.  For years now, borrowers, and the attorneys who represent them, have been dumbfounded when their clients were  offered a trial period, that went on and on and on, without end. Only to then receive a denial after payments were made timely under the trial period.
When lenders were questioned, the answer was almost always, the borrower did not remit the final package back on time. Therefore, it was denied.  Not until the executive offices of the lender or other complaint procedures were explored, did the banks react and give the final modification.  “I can vouch for this in my own experience.  With modifications we have obtained on behalf of my clients, only to then have the lender change their mind”Jacqueline A. Salcines, Esq.
Now, after this case, styled Corvello v. Wells Fargo and Lucia v. Wells Fargo, the 9th Circuit Court of Appeals rules that borrowers who find themselves in this position, comply with all bank requirements, are offered a trial period and then denied, have standing to fight back and sue the bank.  The court is just not going to put up with this nonsense.
In Corvello and Lucia cases, the homeowners were approved for the HAMP modification.  After the trial period, the lender, Wells Fargo, denied the modification citing that the final mod was not sent back to them on time.
With these pivotal cases, precedent is now set for the banks to be more honest and fair in dealing with homeowners and their attorneys when it comes to loan modifications under HAMP.
In my office, we always qualify the borrower before hand. We know whether they will qualify for HAMP and what they will most likely be given under the program.  We submit all documents on time and follow up timely with the lender to make sure the modification request is moving along to be approved.  Often times, the lender will remit documents directly to the borrower and omit the attorney from the equation. Why this is done, is unclear.  But now, more than ever, under these two cases, as long as the borrower signs all docs and sends them back on time, they can not be denied under HAMP

Wednesday, August 21, 2013

Housing market gets more buyer friendly

Kerry Fisher lost at least eight homes in the past four months to faster and more cash-rich buyers.
But recently an agent called her, asking if she was still interested in a home she thought she'd lost. She expects to close on the $195,000 condominium later this month.
"That was different," says the 41-year-old escrow assistant, who lives in Orange County, Calif., one of the nation's hottest real estate markets the past year.
Her experience points to a slightly kinder housing market for buyers in parts of the U.S., especially the West, as more homes come on the market, asking prices show signs of slowing and higher interest rates keep more shoppers at home.
"The market has become significantly more balanced," says Glenn Kelman, CEO of real estate brokerage Redfin. "There just isn't the madness we saw before."
Through June this year, U.S. home values gained 10%, CoreLogic says. That's the fastest pace since 1977, but there are signs that may not last much longer.
Nationwide, asking prices — a leading indicator of sale prices — were up 3.3%, on a seasonally adjusted basis, in May, June and July from the previous three months, according to real estate website Trulia.
That increase is robust, but it's less than the 4.2% jump that occurred from the three months ended in January vs. the three months ended in April, Trulia says.
In some of the hottest real estate markets, including Las Vegas, San Francisco and Portland, Ore., increases in asking prices have narrowed even more in recent months, Trulia says.
Pending home sales — which typically result in final sales a month or two later — also dipped in June, the National Association of Realtors says. Rising interest rates started to weigh on buyers.
The market's pace is "a little less frenzied," says NAR economist Danielle Hale.
FEWER BIDDING WARS
Strong competition for homes has helped drive prices higher. But bidding wars appear to be ebbing as well.
In July, 63% of buyers' offers on Redfin faced competition in 22 markets coast to coast, its data show. That's down from 68% in June and the peak of 76% in March.
Some markets saw even bigger monthly drops. Boston fell to 65% of offers in July from 74% in June. San Francisco eased to almost 80% of offers from 90%, Redfin says.
Some of the slowdown is likely seasonal. People go on vacation in July. More inventory also plays a role. Nationwide, the seasonally adjusted inventory of homes for sale was up 6% in June from January, NAR data show.
"There's been a surge of inventory," says Robin Kingsbury, agent with Red Oak Realty in the San Francisco Bay Area. "But that means instead of getting 15 offers, you'll get five to eight."
Nationwide, the for-sale home inventory was down 5.2% in July from a year ago. That was an improvement from January when it was down 16% year over year, Realtor.com says.
From June, inventory was up 1.4% in July. Some markets, especially in the West, posted bigger monthly gains. San Diego had a 13% jump. Los Angeles and Orange County, where Fisher was shopping, saw inventories rise 8%. Orlando was up 12%.
"Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers' choices and helping to moderate price increases," says Steve Berkowitz, CEO of Move, which operates Realtor.com.
SLOWING GROWTH IN HOME VALUES
Growth in median home values in some markets has been slowing, says Zillow economist Svenja Gudell.
In Miami, for instance, median home values increased 0.7% in May from April and 0.6% in June from May.
But in the previous five months, values rose at least 1% month to month, Zillow data show.
Values in San Jose, Calif., rose about 1% month to month in May and June. They increased at a 2% plus clip in the three prior months, Zillow says.
Slowing price gains wouldn't be a bad thing, says John Burns, CEO of John Burns Real Estate Consulting.
Rapid appreciation encourages flipping — when homes are bought and resold in short intervals for fast profits — and pushes home prices into unaffordable territory as wage gains lag.
If prices keep rising as fast as they have been, "It will create a bubble," Burns says.
Zillow's panel of 106 economists and real estate experts predicts home values will end this year up 6.7%. Appreciation will slow to 4.4% next year, the panel says.
Kelman even expects prices to flatten or decline in some markets this fall as inventories increase.
"It isn't just going to be up, up and up," he says.

Monday, August 12, 2013

Why you should buy Real Estate now!

FOR ALL THOSE WHO BOUGHT AT THE TOP OF THE MARKET IN 2006 HERE IS YOUR CHANCE TO REDEEM YOUR SELVES! Buy Soon! Do not wait for the rest of the world to totally catch on before you decide to make a move in Real Estate! 

 THE NATIONAL ASSOCIATION OF REALTORS (NAR) REPORTED THE NATIONAL MEDIAN EXISTING HOME PRICE INCREASING AT AN ANNUAL RATE OF 12.2% IN THE 2ND QUARTER, FROM $181,300 TO $203,500. THAT'S THE BIGGEST YEARLY PRICE BOOST SINCE 4th quarter OF 2005.

 Sales up 12.3% annually in the 2nd quarter as compared a year ago. The 5.06 million annual rates for the quarter were the highest reached since 2007.

Housing prices went up 1.9% in June, gaining for the 16th month in a row. For the year, they had home prices increasing 11.9%, trending at the fastest upward pace since 1977. Finally, it was reported that Fannie Mae posted a $10.1 billion profit in the second 1/4, almost double the same profit of a year ago. They will now pay a $10.2 billion dividend to the Treasury, which owns $117.1 billion of the company's senior preferred stock. 

Economic Calendar for the Week of Aug 12 – Aug 16
 DateTime (ET)ReleaseForConsensusPriorImpact
M
Aug 12
14:00Federal BudgetJul–$96.0B–$69.6BModerate
Tu
Aug 13
08:30Retail SalesJul0.2%0.4%HIGH
Tu
Aug 13
10:00Business InventoriesJun0.1%0.1%Moderate
W
Aug 14
08:30Producer Price Index (PPI)Jul0.3%0.8%Moderate
W
Aug 14
08:30Core PPIJul0.2%0.2%Moderate
W
Aug 14
10:30Crude Inventories8/10NA–1.320MModerate
Th
Aug 15
08:30Initial Unemployment Claims8/10339K333KModerate
Th
Aug 15
08:30Continuing Unemployment Claims8/33.000M3.018MModerate
Th
Aug 15
08:30Consumer Price Index (CPI)Jul0.2%0.5%HIGH
Th
Aug 15
08:30Core CPIJul0.2%0.2%HIGH
Th
Aug 15
08:30NY Empire Manufacturing IndexAug6.09.46Moderate
Th
Aug 15
09:15Industrial ProductionJul0.4%0.3%Moderate
Th
Aug 15
09:15Capacity UtilizationJul78.0%77.8%Moderate
Th
Aug 15
10:00Philadelphia Fed IndexAug10.019.8HIGH
F
Aug 16
08:30Housing StartsJul895K836KModerate
F
Aug 16
08:30Building PermitsJul934K911KModerate
F
Aug 16
08:30Productivity – Prelim.Q20.0%0.5%Moderate
F
Aug 16
09:55Univ. of Michigan Consumer SentimentAug85.185.1Moderate


Thursday, August 1, 2013

US Foreclosure Activity and Inventory Fall

The number of completed foreclosures in the U.S. decreased 20 percent in June from the same time last year, according to the latest data from CoreLogic.

The data also showed positive signs for the foreclosure inventory in the U.S. In June, there were about one million homes in some stage of foreclosure, a 28 percent decrease from a year ago. A record decrease in June's foreclosure inventory was also reported by RealtyTrac. 

"So far this year, distressed inventories have fallen dramatically, down 14.4 percent, and serious delinquencies are down 15.9 percent," Dr. Mark Fleming, chief economist for CoreLogic, said in the release. 

There were 68,000 foreclosures in June, a 2.5 percent increase from the previous month. In comparison, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.  

"The improvement is broad-based, with 49 states posting a year-over-year decline in foreclosure rates in June," Anand Nallathambi, president of CoreLogic, said in the release. "The housing market is clearly on the mend, but we expect the ultimate conclusion of the present housing down cycle to be another several years away." 

The June foreclosure inventory represented 2.5 percent of all mortgaged homes, compared to 3.4 percent last year, the firm said.