Friday, May 29, 2015

Team Thayer Real Estate Economic Report May 29, 2015 #EugeneOregonRealtors #OregonRealEstateNews

 This week marks a turnaround in real esate with reports uniformly showing strength. Job growth and relatively low mortgage rates are making buyers feel optimistic at model homes from coast to coast.

New home sales activity picked up:


  • Sales increased 6.8% in April
  • Sales for the first 4 months of 2015 increased 23.7% over the same period in 2014
  • Supply is down relative to sales – now at 4.8%
  • Median sales price is up 8.3% year on year due to decreased supply
Pending home sales data from the NAR is positively effervescent:


  • Homes going under contract were up 3.4% in April; March results were revised up by 1.2%
  • This indicator has increased every month in 2015 to the highest level since May, 2006
  • The year-on-year gain is a very healthy 14%
Mortgage delinquencies moved in the opposite direction in Q1. The national delinquency rate hit 2.95% according to TransUnion. This is the 13th consecutive quarterly drop and well below the market peak of 6.94% reached in 2010 and the first it has been below 3% since 2007.

Interest rates continue to be favorable. 30-year fixed rates have moved up slightly, but have been holding beneath 4%, which has increased buyer purchasing power, blunting some of the impact from rising home prices.

Loosening mortgage guidelines, relatively low interest rates, and the seasoning out of many mortgage defaults from the financial crisis mean that credit issues are weighing less on sales activity in the housing sector. Affordability however, continues to be a factor, especially as the Fed eyes rate increases later in 2015.

Q1 economic activity was dismal. The Commerce Department revised GDP down -.7%. Note that the first quarters of 2011 and 2014 also witnessed contractions. Consumers and businesses were clearly cautious, but we hesitate to read too much into the quarterly data because we know that the economy is subject to enormous seasonal variation. But it looks like the winter blues are behind us as durable goods orders strongly increased in April. This is good news for factories and workers and indicates some economic momentum.


Pending Home Sales Rise to Highest Level in Nine Years. Team Thayer Real Estate Eugene Oregon #EugeneOregonRealtors

Pending Home Sales Rise to Highest Level in Nine Years

pending-home-sale

The National Association of Realtors (NAR) recently reported in their Pending Home Sales Index (PHSI) that, pending home sales increased in April for the fourth consecutive month and reached their highest peak in nine years. All four major regions saw growth in April, led by the Northeast and Midwest.
“The steady gains in contract activity each month this year highlight the fact that buyer demand is strong,” said Lawrence Yun, NAR chief economist. "Realtors are saying foot traffic remains elevated this spring despite limited—and in some cases severe—inventory shortages in many metro areas. “
The index is a forward-looking indicator based on contract signings, NAR reported. It increased 3.4 percent to 112.4 in April from a slight upward revision of 108.7 in March and is now 14 percent above 98.6 in April 2014. This is the largest annual increase since 15.1 percent in September 2012. Year-over-year, the index has increased for eight consecutive months and is at its highest level since 112.5 in May 2006.
"Homeowners looking to sell this spring appear to be in the driver's seat, as there are more buyers competing for a limited number of homes available for sale,” Yun said. "As a result, home prices are up and accelerating in many markets."
Yun expects a rebound heading into the summer, following April’s decline in existing-home sales, but the chance of significant gains will depend on an increase in inventory and evidence of moderating price growth now that interest rates have started to rise.
"The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers—especially first-time buyers—are able to obtain a mortgage,” Yun adds.
The PHSI in the Northeast saw 10.1 percent of growth to 88.3 in April, and is now 9.4 percent above a year ago after dropping for four straight months. The Midwest the index increased 5 percent to 113 in April, and is 13.3 percent above April 2014.
According to the report, pending home sales in the South saw an increase of 2.3 percent to an index of 129.4 in April and are 14.8 percent above last year. The index in the West saw a small increase of 0.1 percent in April to 103.8, and is 16.4 percent above a year ago.
The Realtors expect for total existing-home sales in 2015 to be around 5.24 million, an increase of 6.1 percent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.
“Our realtor.com activity this spring has been predicting strong sales,” said Johnathan Smoke, NAR chief economist. “Sales would be even higher if inventory was growing as quickly as demand, but instead we’ve had 32 straight months of the supply of existing homes on the market under 6 months. That’s why we’re seeing higher levels of price appreciation this year. All this bodes well for continued momentum into May and June.”

Thursday, May 28, 2015

Freddie Mac Sells Third Non-Performing Loan Bundle of 2015. Team Thayer Official. #Foreclosure #REO #Bankownedhomes


Freddie Mac has sold its third bundle of seriously delinquent single-family mortgage loans of 2015 via auction, according to an announcement from Freddie Mac on Tuesday afternoon.

The winning bidder was LSF9 Mortgage Holdings, LLC. The sale included 1,052 non-performing loans serviced by Ocwen Financial with an aggregate unpaid principal balance (UPB) of $201 million. The loans were offered for sale in a single pool. The loans were sold on May 21 and the transaction is expected to close in July.
The cover bid price, which was the second highest bid, fell in the mid-70s percent of the UPB for the pool of loans. The weighted average BPO was 93 percent, average loan size was $191,177, and the note rate was 5.28 percent, according to Freddie Mac.
The deeply delinquent status of the loans, which are three years delinquent on average, indicates that the borrowers have already been evaluated for or are in some stage of loss mitigation, or are in some stage of foreclosure. Twenty-nine percent of the loans in the pool were loans that were modified that later became delinquent.
Advisors on the transaction were Bank of America Merrill Lynch, Wells Fargo Securities, and Castle Oak Securities. Freddie Mac began marketing the pool of NPLs on April 28 to potential bidders that included non-profits, minority- and women-owned businesses, neighborhood advocacy funds, and private investors.
Winning bidders and their servicers must meet the Federal Housing Finance Agency (FHFA)'s NPL sale guidelines announced on March 2, which include approval by and good standing with government housing agencies (Freddie Mac, Fannie Mae, Ginnie Mae, and the Federal Housing Administration); evaluating borrowers for eligibility in the government's Home Affordable Modification Program (HAMP); and applying a "waterfall" of resolution tactics before resorting to foreclosure.
The Standard Pool Offering NPL sale announced Tuesday was Freddie Mac's third of the year and fourth overall since the first sale occurred in July 2014. The first three sales totaled approximately $1.97 billion in UPB. The previous NPL sale by Freddie Mac, completed on March 25, was its largest bulk NPL sale ever – it included nearly 5,400 loans totaling $985 million in UPB.

First-Time Buyer Index Shows Mortgage Loans Are Becoming Riskier. Team Thayer #RealEstateNews #EugeneOregon

The April 2015 First-Time Buyer Mortgage Risk Index (FBMRI) for Agency loans increased by nearly a full percentage point year-over-year up to 15.28 percent, indicating that those mortgage loans are moving deeper into the high-risk category, according to data released this week by the American Enterprise Institute (AEI)'s International Center on Housing Risk.
Risk layering is largely responsible for the increase in risk on mortgage loans taken out by first-time buyers, according to AEI. Seventy percent of first-time mortgage buyers in April 2015 had a combined LTV ratio of 95 percent or more and 97 percent of them had a 30-year term. Without substantial home price appreciation, the low down payment and slow amortization makes it likely that these first-time buyers will have very little equity in their homes for many years.
Also contributing to the higher risk among first-time buyers is that approximately one-fifth of them fit the traditional definition of subprime mortgages (a FICO score below 660) and about one-fourth of them had total debt-to-income ratios higher than 43 percent, which is the limit defined by the Qualified Mortgage rule, according to AEI.
"The first-time buyer MRI hit a series high of 15.28 percent in April, moving deeper into the high-risk loan category," said Edward Pinto, co-director of the American Enterprise Institute’s (AEI’s) International Center on Housing Risk. "This growing leverage puts the housing market at risk given interest rates are at historically low levels and American households are facing increasingly sharp swings in income and expenses."
The Agency index for first-time buyers in April (15.28 percent) was 6 and a half percentage points higher than the index for repeat buyers, according to AEI. Repeat mortgage buyers are often less risky because of a smaller share of repeat buyers have a FICO score below 660 and a much smaller share have a combined LTV ratio of above 95 percent.
The First-Time Buyer Mortgage Share Index (FBMSI) increased by 1.1 percentage points year-over-year in April, up to 57.9 percent, which indicated that first-time buyers accounted for 57.9 percent of primary owner-occupied home purchase mortgages with a government guarantee. The combined share of first-time buyers for both government-guaranteed and private sector mortgages also rose in April by full percentage point up to 52.2 percent, according to AEI. Both the combined index and the first-time buyer share index showed little change in the last two years outside of seasonal trends, which was contrary to the findings of the annual National Association of Realtors (NARsurvey issued in November that showed a sharp decline in first-time home buyer share during the same period.
"A recent Urban Institute study of first-time buyers confirms the results we have been reporting for some time," said Stephen Oliner, co-director of AEI’s International Center on Housing Risk. "These results are contrary to the drop in the first-time buyer share shown by the NAR measure."
The overall number of primary owner-occupied purchase mortgages that sent to first-time buyers (the Agency FTB loan count) increased year-over-year for the six-month period from November 2014 to April 2015 by 8 and a half percent up to 577,000. The number was reported at 532,000 for the same six-month period a year earlier.

How can 3 appraisers give 3 different values for the same property? Team Thayer #EugeneOregon #RealEstateNews

Imagine 3 appraisals on one property, and all of them have a different value. How can appraisers have any credibility when there is so much difference? I hear this question all the time, so I wanted to pitch in some thoughts to hopefully strike a balanced conversation for home owners, agents, and appraisers. Here are three points to consider for perspective. Any thoughts?
why are appraisals so different in value - by sacramento appraisal blog
  1. Range of Values: We like to think value is incredibly precise, but one of the best things we can do is realize there is a range of value in real estate. This means realistically buyers might be willing to pay anywhere between $330,000 to $340,000 for a particular property instead of such an exact figure of $334,568. The same is true when we buy a new car or even buy something on Craigslist. Rather than being tied down to one exact figure, we often recognize there is a price range we’d be comfortable paying. We might think of a Camry as having a value anywhere from $21,500 to $23,000 or a used bookcase being a deal between $55 to $65. Real estate works very similarly, though since appraisers have to put an exact number in an appraisal report for lending purposes, we are stuck with that exact figure.
  2. If I asked 3 Agents: Since appraisers give a written value for a property, it’s easy to criticize the value (rightly so). But if I asked three real estate agents to give a precise written and supported value for a property, chances are I would get three different values, right? This would be especially true for a custom home or something that is unique or lacking decent comps. I bring this up because it takes real skill and time to nail a value, and there is going to be a difference in opinion even among qualified and respected professionals throughout the real estate community – whether appraisers or agents. When speaking in real estate offices and this point arises, I often ask, “If I asked 10 different agents for a value on a property, what do you think the result be?” While it sounds like a cop out to gloss over bad appraisals, there is a valid point here.
  3. Quality Spectrum of Appraisers: Lastly, it’s worth noting there is sometimes a difference in values because some appraisers simply do a better job. Remember, an appraisal is about two things: 1) Comps; and 2) Adjustments. When comps or adjustments are out of sync with the market, it’s easy for value to be out of line. This is the part where the appraisal industry has a black eye, and it certainly deserves criticism when an appraisal is not what it should be (whether too high or too low).
The Pain of 2 Appraisals: While it’s perfectly reasonable to see a minor difference in value among appraisers (or any real estate professional), the reality is lenders sometimes require two appraisals when a property has been flipped or even when a property is very unique. We all know this can lead to turmoil for a transaction if one value is at or above the contract price and the other is below. This is why it’s best for a transaction to have just one appraisal, and better yet, to have a lender who understands the above issues and can be reasonable when there are two different values on one property (hopefully the values are somewhat close).
I hope these points are helpful for framing the conversation next time this issue comes up. I’d love to hear your take in the comments below.
Question: Any thoughts or stories to share? What other points would you put in here?

Monday, May 25, 2015

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Freddie Mac Predicts Interest Rate Volatility. Team Thayer Real Estate Advice. #Freddiemac #interestratevolatility



freddie-mac-two

Freddie Mac eased its U.S. Freddie Mac relconomic and Housing Market Outlook for May today, revealing that low mortgage rates kept affordability high in the first quarter of this year for buyers, but housing markets probably will see interest rates increase for the rest of the year. The outlook credits market participants attempting to anticipate the Federal Reserve's timing around rising short term interest rates as the likely be the cause of the increase.
“For the remainder of this year, we're likely to continue to see these mortgage rate swings as market participants try to anticipate Fed timing around rising short term interest rates,” said Len Kiefer, deputy chief economist at Freddie Mac. “Unfortunately, perspective homebuyers may experience bouts of affordability shock in many housing markets."
Outlook Forecast:
  • Due to weak first quarter data, revising down the forecast for economic growth for 2015 from 2.6 to 2.3 percent.
  • With tight for-sale inventories, house price growth continues to beat expectations. Expect 2015 house price growth to be 4.5 percent, revised up from 4.0 percent last month.
  • Due to strong refinance activity through the first four months of the year, the forecast for 2015 mortgage originations has been revised up to $1,350 billion.
  • Due to low mortgage rates and strong refinance volume, the forecast for the refinance share of originations in 2015 has been boosted to 43 percent.
“The labor market has added 5 million additional jobs, the unemployment rate is significantly lower, and housing markets are generally in much better condition than two years ago,” Kiefer said. “So far it's been low mortgage rates that have helped to keep homebuyer affordability strong in the face of rising house prices, while income growth remains stagnant."

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Tuesday, May 19, 2015

Delinquency Rate Falls Below 3 Percent for First Time Since 2007

The percentage of residential mortgage borrowers who are delinquent (more than 60 days behind on their mortgage payments) was reported at 2.95 percent in Q1, the first time it has been below 3 percent in more than seven years, according toTransUnion's Quarterly Industry Insights Reportreleased Monday.
Q1 marked the 13th consecutive quarterly decline in mortgage delinquency rate. Q1's percentage of 2.95 was a drop from 3.29 percent in Q4 2014 and from 3.59 percent in Q1 2014. Before Q1, the mortgage delinquency rate had not been below 3 percent since Q3 2007 (immediately prior to the beginning of the recession), when it was reported at 2.61 percent.
Subprime consumers had a delinquency rate of 27.23 percent in Q1, a decline of 9 percent year-over-year; it was reported at 29.7 percent for Q1 2014. The delinquency rate for both subprime consumers and all consumers peaked in Q1 2010 at 40.5 percent and 6.9 percent, respectively.
"It's taken more than seven years, but the mortgage delinquency rate has reached pre-recession levels. We continue to see a steady decline in the mortgage delinquency rate, primarily driven by strong performance by newer vintage loans," said Joe Mellman, vice president and head of TransUnion's mortgage group. "It's also encouraging to see continued delinquency rate declines for the subprime and near-prime risk groups."
According to TransUnion's report, every state reported a year-over-year decline in mortgage delinquency rate, and most metro areas reported a substantial decrease. In Miami, the delinquency rate declined by 36.1 percent down to 6.15 percent, and in San Francisco, it fell by 31.1 percent down to 1.32 percent.
"It's a positive sign to see double-digit percentage delinquency declines in major markets across the country, as it demonstrates the improvements are widespread -- not just a regional phenomenon," Mellman said.
While mortgage loan delinquencies were down, mortgage balances per consumer were up, according to TransUnion. In Q1 2015, the average mortgage loan balance was $187,175, up from $187, 139 the previous quarter and from $186,836 for Q1 2014. The number of mortgage accounts declined in Q1 to 53.0 million, representing a drop of about 400,000 from Q4 2014 (53.4 million). By comparison, in Q1 2009 there were 61.6 million mortgage accounts nationwide (about nine million more than in Q1 2015).
Subprime and near-prime mortgage consumers held about 32 percent of the balances they held in early 2010 at the peak of the financial crisis, according to TransUnion, whereas prime, prime plus, and super-prime consumers held about the same amount of mortgage balances as they did in early 2010.
Mortgage originations in Q4 2014 (viewed one quarter in arrears to ensure all mortgage accounts are included) were down by 6.7 percent on a quarter-over-quarter basis, totaling 1.45 million or the quarter. That number represented an increase of 3.8 percent year-over-year, however. Mortgage originations jumped year-over-year in all risk tiers, let by super prime (5.1 percent). Jumbo loan activity was the primary driver for the spike in super prime mortgage originations in Q4, according to TransUnion.

Monday, May 18, 2015

Will Home Sales to Hit Highest Level Since 2006? Team Thayer Real Estate Advice #EugeneOrRealtor

Existing homes sales this year are expected to hit levels not seen since just after the peak, in 2006, driven by strong job growth, low interest rates and a gradual loosening of lending standards, according to the National Association of Realtors.
Lawrence Yun, chief economist at the realtor association, said in his mid-year forecast on Thursday that he expects home sales to end up around 5.3 million in 2015, a significant pick-up from 4.9 million sales in 2014.
Last year, economists also anticipated robust growth in the home sales, but were disappointed when a spike in interest rates early in the year and poor wage growth dampened the market.
Mr. Yun said that early results this year point to a pick-up in home sales, including sales in the first few months, foot traffic at homes on the market and strong job growth. Buyers who have been kept out of the market by low wages and strict lending standards are likely to start coming back.
“There is sizeable pent-up demand,” he said in an interview.
To be sure, the volume of sales Mr. Yun is anticipating remains well below recent high in 2005 when more than 7 million homes were sold. Mr. Yun said the market is likely a decade off from hitting those levels again. In 2006, sales fell to 6.5 million and since then have hovered around 5 million sales or fewer.
If interest rates or prices rise, making houses less affordable, that could hold back the volume of sales, which Mr. Yun said shows the need for more new-home construction.
Robert Dietz, vice president of tax and market analysis at the National Association of Home Builders, said that he anticipates that 2015 will be the first time during the recovery that the growth of single-family home starts will exceed apartment starts. That would be a significant shift for a recovery that has been driven by a boom in rental construction while single-family home construction has grown less robustly.
Still, Mr. Dietz said, new home construction will remain about half  of normal production levels. Homebuilders are being held back by the shortage of construction laborers, the difficulty of obtaining construction loans and the elusiveness of first-time home buyers, he said.

Wednesday, May 13, 2015

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Foreclosure inventory tumbled by 25.7%. Team Thayer Official

Foreclosure inventory tumbled by 25.7%, while completed foreclosures also dropped by 15.5% from March 2014, according to the latest report from CoreLogic .
There were 41,000 completed foreclosures nationwide in March 2015, down from 48,000 in March 2014, representing a decrease of 65.2% from the peak of completed foreclosures in September 2010, according to CoreLogic data.
Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 5.6 million completed foreclosures across the country, and since homeownership rates peaked in the second quarter of 2004, there have been approximately 7.7 million homes lost to foreclosure.
“We are seeing additional improvement in housing market conditions due to a decline in the serious delinquency rate to 3.9%, far below the peak of 8.6% in early 2010,” said Frank Nothaft, chief economist for CoreLogic. “Despite the decline in the number of loans that are 90 days or more delinquent or in foreclosure, the percent of homeowners struggling to keep up is still well above the pre-recession average of 1.5%.”
In addition, CoreLogic reports that the number of mortgages in serious delinquency declined by 19.1% from March 2014 to March 2015 with 1.5 million mortgages, or 3.9%, in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO).
This is the lowest delinquency rate since May 2008. On amonthly basis, the number of seriously delinquent mortgages declined by 1.9%.
As of March 2015, the national foreclosure inventory included approximately 542,000 homes, or 1.4%, of all homes with a mortgage compared with 729,000 homes, or 1.9%, in March 2014, representing a year-over-year decline of 25.7%.
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Source: CoreLogic
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Source: CoreLogic