Friday, August 28, 2009

First-time buyer credit may be extended, increased

Bills to extend the maximum $8,000 tax credit for first-time home buyers, which expires Nov. 30, are pending in both the U.S. House and the Senate.

Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate Banking, Housing, and Urban Affairs Committee, is co-sponsor of a bill with Georgia Republican Sen. Johnny Isakson that would raise the credit amount to a maximum of $15,000.

Senate Majority Leader Harry M. Reid of Nevada favors an extension of the current credit. He was quoted by the Las Vegas Sun saying, "It's something we can get done."

Odds are that the credit will be extended and broadened to cover all buyers next year, but the chances of the amount increasing aren’t as good, observers say.
SOURCE: REALTOR MAGAZINE

Low mortgage rates fueling increase in sales

Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with an average 0.7 point for the week ending August 27, 2009, up from last week when it averaged 5.12 percent. Last year at this time, the 30-year FRM averaged 6.40 percent.

The 15-year FRM this week averaged 4.58 percent with an average 0.7 point, up from last week when it averaged 4.56 percent. A year ago at this time, the 15-year FRM averaged 5.93 percent.

"Long-term mortgage rates were barely changed this week, remaining historically low, which is helping to sustain a high level of affordability in the home-purchase market," said Frank Nothaft, Freddie Mac vice president and chief economist." Low rates contributed to existing home sales rising for the fourth consecutive month to an annual pace of 5.24 million in July, the most since August 2007, according to the National Association of Realtors®.

"Similarly, new home sales rose for the fourth month in a row to 0.4 million, the strongest pace since September 2008, the Commerce Department reported. The sales gain helped to reduce the number of new unsold houses on the market to the lowest amount since March 1993. In addition, house prices in June rose nationally for the second consecutive month, according to the Federal Housing Finance Agency's purchase-only house price index."
SOURCE: REAL ESTATE CHANNEL

Thursday, August 27, 2009

Mortgage applications jump 7.5%

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending August 21, 2009. The Market Composite Index, a measure of mortgage loan application volume, increased 7.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6.3 percent compared with the previous week and 34.1 percent compared with the same week one year earlier.

The Refinance Index increased 12.7 percent from the previous week, the third increase in the last four weeks. The seasonally adjusted Purchase Index increased 1.0 percent from one week earlier, solely boosted by increased demand for government loans. This marks the fourth consecutive weekly gain - the first time this has happened since March, when fixed mortgage rates first dropped and stayed below 5 percent.

The four week moving average for the seasonally adjusted Market Index is up 3.5 percent. The four week moving average is up 1.7 percent for the seasonally adjusted Purchase Index, while this average is up 4.8 percent for the Refinance Index.
SOURCE: REAL ESTATE CHANNEL

Wednesday, August 26, 2009

New homes sales increase 9.6% in July

Purchases of new homes in the U.S. jumped more than forecast in July, adding to signs that the economy is rebounding from the worst recession since the 1930s.

Sales increased 9.6 percent, the most since February 2005, to a 433,000 annual pace, figures from the Commerce Department showed today in Washington. The number of houses on the market dropped to the lowest level in 16 years.

The gain in sales, together with rising purchases of existing homes and steadying prices, indicate the housing slump may be ending as Federal Reserve efforts to thaw credit and the Obama administration’s first-time homebuyer incentives lift demand. Job losses and mounting foreclosures mean any rebound in construction may be limited.
SOURCE: BLOOMBERG

Mission Bay ready for its close up

It's taken four mayors and three planning directors to create what is now the last swath of San Francisco land where planners can create a neighborhood from scratch. So far, 3,000 people have moved into the 300-acre rail yard south of the Giants baseball park. The neighborhood is 35 percent built, and 15 years from now, it's expected to have 11,000 residents.

Mission Bay feels as if it escaped the economic downturn - stores are opening, buildings are going up, and young professionals are zipping out of $700,000 condos to get to work. Most live in a six-block area north of Mission Bay Creek. These pioneers say it's now starting to feel like a place worth staying in on the weekends.

"It's changed a lot. It's way more crowded now," said Claudia Arrenberg, 27, who shopped for pasta and fruit with her 2-year-old daughter at the new Mission Bay Farmers' Market.
All in all, it's starting to feel like a neighborhood. Hopefully SWL 337 won't take as long to complete.

SOURCE: SFGATE

Consumer confidence up

The Conference Board, a New York-based business research group, said Tuesday that its Consumer Confidence Index rose to 54.1 in August from an upwardly-revised 47.4 in July.

Economists were expecting the index to increase to 48, according to a Briefing.com consensus survey. The measure is closely watched because consumer spending makes up two-thirds of the nation's economic activity.
SOURCE: CNN MONEY

Tuesday, August 25, 2009

More appraisal woes - Part 2

I have a deal in contract now going through this very problem. Inexperienced, inadequate appraisers hold the power to disrupt and scuttle deals (my appraiser clearly didn't have a basic understanding of how to equalize comps to the subject property, something even I learned before obtaining my broker's license).
Since national lenders cannot maintain lists of appraisers in every community, they long ago began outsourcing the process to the management companies, who had claimed about 30 percent of the market before the code took effect. Now that the lenders are the ones ordering all the appraisals, the management companies are expanding their share.

Real estate groups say the management companies, with the competition from brokers and agents eliminated, are now trying to fatten their profit margins by hiring appraisers as cheaply as possible.

These inexperienced appraisers, often traveling many miles to a market they do not know well, are scuttling legitimate deals, the agents claim.
This has to change. There has to be an appeals process to keep inexperienced appraisers from ruining deals, and the market by extension.

SOURCE: NY TIMES

The Price is Right (in Miami)

Are you listening, San Francisco developers? Want more sales? It's all about pricing. Get in front of the market again and you'll make sales.
Are the good 'old days of real estate back? It appears so in Downtown Miami.

In recent weeks developers have sold hundreds of condos, in a flurry of activity they haven't seen since the peak of the housing market. Some builders are actually running out of inventory. The first building to sell out, Brickell on the River, happened quietly and quickly selling 120 units in just six weeks time.

"It's pretty impressive when you walk into a sales office and you have 20-30 people waiting to see units. Sounds crazy but it's actually happening now," Andres Asion, with Miami Real Estate Group, told CBS4's David Sutta.

Before Asion could deposit the checks, he had sold out the entire building out; something developers in this area have not been able to do for the past three years.

So how did Asion do it?

Price. They dropped it roughly a $100 thousand under their closest competition. The final prices were half of what units sold for at the peak of the market.

"You could see it in the pricing. When you could buy a two bedroom condo for $220,000 in which before it was $450,000 people are really pulling the trigger," Asion said.
SOURCE: CBS 4

June Case-Shiller Index up 3.8% MOM

June's Case-Shiller Index rose 3.8% from May to June in the San Francisco MSA.

After three years of declines, home prices increased 2.9% in the three months ended June 30, according to the latest S&P/Case-Shiller report. That is the first quarter-over-quarter improvement in three years.

Prices in the national index are down 14.9% compared with the second quarter of 2008, the report said. But that is better than the record 19.1% decline that was set in the first three months of 2009.

"We're seeing some positive signs," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.

Among cities, Cleveland reported the biggest rebound during the three months; prices improved by 4.2%. San Francisco prices rose 3.8% and Minneapolis 3.1%. Prices declined in only two of the 20 cities, Las Vegas, down 2%, and Detroit, down 0.8%.

Despite the upbeat report, Robert Shiller, one of the principle authors of the Case-Shiller index, expressed caution, pointing out that last year's turnaround quickly fizzled out.

In early 2008, prices were falling 3% a month. That improved to -0.5% a month in the spring, giving the impression that the market would turn around. But prices quickly started falling more steeply again. The same thing could happen again, especially with the economy still in a downspin.

"The really important things [affecting home prices] are unemployment and momentum," said Shiller, who is a Yale economist. "We have momentum, which is very important, but we also have high unemployment."

And, he added, "the government has not yet handled the foreclosure problem."

Shiller, too, is relatively optimistic despite being cautious. "I have found that momentum matters," he said, "and this is a sudden break in [downward] momentum. The [market] psychology seems to be changing."
SOURCES: S&P and CNN MONEY

Monday, August 24, 2009

Roubini: risk of double-dip recession

Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the world's recent financial troubles, sees a "big risk" of a double-dip recession, according to an opinion piece posted on the Financial Times' Web site on Sunday.

Roubini, a professor at New York University's Stern School of Business, said it appears the global economy will bottom out in the second half of this year, and that U.S. and western
European economies will likely experience "anemic" and "below trend" growth for at least a couple of years.

Yet he warned that policymakers face a "damned if they do and damned if they don't" conundrum in trying to unwind their massive fiscal and monetary stimuli to keep the global economy from toppling into a depression.
SOURCE: CNBC

VIDEO: Mortgage delinquencies increase for prime loans












Resales jump 7.2% in July - largest increase in 2 years

Sales of previously owned U.S. homes jumped 7.2 percent in July to mark the fastest sales pace in nearly two years, an industry survey showed Friday, in a strong sign that housing is pulling out of a three-year slump.

Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest rate since August 2007, the National Association of Realtors said, beating market expectations for a 5 million unit pace. Sales in June had been at a 4.89 million pace.

July's increase was the largest monthly gain since the series started in 1999. The last time sales rose for four consecutive months was in June 2004, the NAR said.
SOURCE: CNBC

Thursday, August 20, 2009

Commercial real estate down from Q1 to Q2

U.S. commercial real estate activity in the second quarter slowed to its lowest level in 15 years as demand for office and retail space collapsed amid the severe recession, a real estate trade group said on Wednesday.

The National Association of Realtors (NAR) said its Commercial Leading Indicator for brokerage activity index fell 1.3 percent to 101.5 in the second quarter, the lowest reading since the first three months of 1994.

"The reduction in commercial real estate activity is expected to last at least through the first quarter of 2010. Any meaningful recovery is not likely to occur before the second half of next year," said NAR chief economist Lawrence Yun.
SOURCE: REUTERS

Chinese investors buying mortgage-back securities

Not so "toxic" to the Chinese, so it seems.
China's $200 billion sovereign wealth fund, which suffered big paper losses on stakes in Morgan Stanley (MS, Fortune 500) and Blackstone (BX), is set to invest up to $2 billion in U.S. mortgages as it eyes a property market recovery, two people with direct knowledge of the matter said Monday.

China Investment Corp. (CIC) plans to invest soon in U.S. taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF).

Under the Public-Private Investment Plan (PPIP) launched earlier this year, the U.S. government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as $40 billion in toxic securities from banks.

Compared with TALF, the new and smaller PPIP program focuses on safer toxic securities, which must have triple-A ratings from at least two agencies, and are debts guaranteed by the Federal Deposit Insurance Corporation (FDIC), sources explained.

"In this case, CIC feels safer to invest and the safer it feels, the more confident it will naturally feel about its investments, as well as in the prospects for the U.S. economy," said one of the sources.
SOURCE: CNN

Tuesday, August 18, 2009

Single family starts and permits up in July

Production and permitting of new single-family homes continued on an upward trajectory in July, according to newly reported numbers from the U.S. Commerce Department today. Meanwhile, substantial declines on the multifamily side dragged down the overall numbers, with combined single- and multifamily starts down 1 percent to a seasonally adjusted annual rate of 581,000 units and combined single- and multifamily permits down 1.8 percent to a 560,000-unit rate.

“The latest report marks a fifth consecutive month of improvement in single-family housing starts and a fourth consecutive month of improvement in single-family permits,” noted NAHB Chief Economist David Crowe. “This is exactly in keeping with our latest member surveys, which indicate that builders are cautiously optimistic about single-family sales conditions over the next several months. That said, the significant drop-off in multifamily construction and permitting shown in recent months’ reports may be a harbinger of the financing challenges facing all home builders going forward. A severe lack of credit for acquisition, development and construction financing, along with other issues tied to low appraisals and the upcoming expiration of the first-time buyer tax credit, could derail the progress made so far. Government action is required to ensure that housing can help generate jobs and economic growth in the days ahead.”
The good news is tempered by the potential expiration of the first-time buyer credit, due to expire in November:
“With the impending expiration of the first-time home buyer tax credit at the end of November, July was probably the last month in which to get homes permitted and started in time for customers to take advantage of that valuable incentive,” noted Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla. “Builders were responding to improved demand related to that upcoming deadline and also to the first signs of an economic recovery.

However, it remains to be seen what happens after the tax credit expires, and the severe credit crunch that has curtailed many multifamily projects is looming over single-family builders as well. Congress and the Administration need to take action now in order to maintain the momentum toward a housing and economic recovery.”
SOURCE: NAHB

2001 Market renderings

Prado Group released new renderings of the proposed development at 2001 Market Street





Monday, August 17, 2009

New home industry expectations up

The NAHB and Wells Fargo index improved month-to-month, along with new sales expectations:
More signs the U.S. economy was exiting its worst recession in 70 years emerged on Monday with reports showing confidence rising among homebuilders, factory activity perking up in New York state and credit card defaults slowing.

The National Association of Home Builders and Wells Fargo said their Housing Market Index edged up one point to 18 in August -- the highest level since June 2008 and the second consecutive monthly gain.

The residential housing market's three-year slump shows signs of turning the corner. In the NAHB survey, the sales expectations measure for the next six months climbed four points in August to 30. The traffic of prospective buyers index rose three points to 16 in the same month.
SOURCE: REUTERS

Park Merced development latest victim of economic downturn



Via Socketsite comes news that SummerHill is backing out of their proposed development at Park Merced:
The owner of the Park Merced Shopping Center has decided to lease up the building after its to sale Peninsula residential builder SummerHill Homes fell through. SummerHill had planned to do a $47 million, 195-unit proposed mixed-use development across from Villas ParkMerced.
SOURCE: SOCKETSITE

Thursday, August 13, 2009

2nd quarter existing home sales up 3.8% nationwide

"Just the facts please, ma'am":
Existing-home sales in the second quarter showed healthy gains from the first quarter in the vast majority of states, and price declines have increased affordability in most metro areas, according to the latest survey by the National Association of Realtors®.

Total state existing-home sales, including single-family and condo, rose 3.8 percent to a seasonally adjusted annual rate1 of 4.76 million units in the second quarter from 4.58 million units in the first quarter, but remain 2.9 percent below the 4.90 million-unit pace in the second quarter of 2008.

Thirty-nine states experienced sales increases from the first quarter, and nine states were higher than a year ago; the District of Columbia showed both quarterly and annual rises.

Lawrence Yun, NAR chief economist, said the sales gain appears to be sustainable. “With low interest rates, lower home prices and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” he said. “There have been sustained sales gains in Arizona, Nevada and Florida, as well as diverse areas such as Maryland, the District of Columbia and Nebraska. More recently, we’ve seen strong double-digit gains in Idaho, Utah, New Mexico, Washington, Hawaii, New York, New Jersey, Maine, Vermont, Wisconsin, Indiana, South Dakota and Montana.”
Good news for Q2, on top of the previously discussed good news on price, DOM, and inventory.

SOURCE: NATIONAL ASSOCIATION OF REALTORS

Wednesday, August 12, 2009

Who's buying in this market?

While working in managment of new construction sales offices, my mantra for buying demographics was always "first-timers" and "empty-nesters". Well, buried in an article on shrinking house sizes (and the impending death of McMansions) was a quote from Toll Brothers:
It's also hard to know whether the trend is a the result of a change in attitudes or a change in buyers, according to Kira McCarron, the chief marketing officer for Toll Brothers, an upscale homebuilder...

"The active adult product is taking a bigger share of the market right now," said McCarron, leading to more small homes and dragging the average new home-size data down.
Which is part of the reason I left Toll Brothers in 2005, selling McMansions in San Ramon, to work for condo developers. I knew the coming economic downturn would be weathered better by young professionals who rent, and empty nesters who have 30 years worth of equity built up. They can more easily survive a 25% equity drop, selling their homes which in many cases are already paid off, and moving to urban centers. Looking at sales around the city, a majority of new home buyers are empty nesters and first timers. Add in move-up buyers leaving high-rises for single family homes, and we have a good mix of supply and demand in San Francisco. Our market should continue to be strong as long as this keeps up.

SOURCE: CNN MONEY

Hump Day blues

In true "Hump Day" style, today we bring you news from Zillow's COO regarding the outlook for the coming year. The bottom line: foreclosures may still drag housing prices lower.
Despite a new report from Zillow.com that the annual rate of home price declines improved for the first time in ten quarters, the company’s COO does not think prices are anywhere near out of the woods yet.

He thinks some of the real estate bulls are not factoring in foreclosures nearly enough.

“One in four Americans now who have a mortgage are underwater on their loan at least somewhat so a lot of Americans can't qualify for Making Home Affordable [govt. modification plan], can't qualify for a loan modification or are caught up in the paperwork and bureaucracy of what it takes to modify your loan,” says Zillow’s Spencer Rascoff.

“In the second half of 2009, home values are going to continue to decline. Foreclosures are going to keep making up a significant part of the sales, probably about a quarter of all sales in the back half of 2009 nationwide will be foreclosures,” says Rascoff, adding, “I think you'll have those homes clear off the market but new foreclosures come on the market right behind them.”

Rascoff believes we are a full year away from a true national bottom in housing, but even then, he says, don’t expect to make money fast. “You're not going to see a return to rapid appreciation from a couple of years ago," he opines. "This is probably going to be an L-shaped recovery where home values stay relatively constant once they hit the bottom."
The potential for new foreclosures, on top of the rumored "shadow inventory" on the banks balance sheets, could spell further price reductions. Will this impact us here in San Francisco? Possibly, and probably if foreclosures become a big issue here, but to what degree is anyone's guess. An additional 15-20% drop? Maybe not, if our job market continues to improve. Keep following to find out.

SOURCE: CNBC

Monday, August 10, 2009

Commercial real estate troubles keeping interest rates low

The collapse in commercial real estate is preventing Federal Reserve Chairman Ben S. Bernanke from declaring the economy and financial markets are healed.

Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service. That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year, pressuring companies such as Maguire Properties Inc., the largest office landlord in downtown Los Angeles, to put buildings up for sale...

If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.

Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.”
SOURCE: BLOOMBERG

Wednesday, August 5, 2009

Robert Shiller on Charlie Rose

Worth watching. Shiller touches on real estate, financial innovation, herd mentality, The Great Depression, and much more.

Tuesday, August 4, 2009

Q2 analysis

A quick breakdown of Q2 activity, nationwide. Visit the pdf via link below for raw numbers by MSA
The Altos Research 10-City Composite Index was up by 1.3% in June and 3.9% during the most recent three-month period.

 Prices increased in 22 of 26 markets with 21 markets currently showing three months of sequential price increases. Through the first half of 2009, listing prices for single family home rose materially in most of the country. There is some recent evidence, not yet reflected in the data in this report that the home price rebound peaked in early June, and prices may resume a decline for the near-term future.

 The Altos 10-City Composite Index continues to highlight a shift in properties available on the market. The market has experienced some turnover at the low-end (two years after the first sub-prime collapse) while new properties on the market are shifting to the higher-end.

 The California markets of Los Angeles and San Diego showed the largest monthly listing price increase with rises of 6.6% and 6.0% respectively. The largest monthly drop in asking prices occurred in Las Vegas with prices falling 2.1% but that was a markedly slower rate of decline than the 3.7% rate last month.

 Listed property inventory increased in 16 of 26 markets and was down in 10markets. Although inventory grew in most markets during June, growth remained restrained with all markets showing increases of less than 4%.

 All markets except Boston and San Francisco had a median days-on-market of 100 or more in May. By far, the market with the slowest rate of inventory turnover was Miami with a median of 262 days-on-market or more than eight months. The Altos 10-City
For San Francisco real estate, specifically:

Price Index:
$697,376 - April
$720,060 - May
$742,596 - June
3.1% - % change May to June
6.5% - 3 mo. % change

Listing Inventory:
10,283 - April
9,302 - May
9,014 - June
-3.1% - % change May to June
-12.3% - 3 mo. % change

Average Days on Market:
96 - April
96 - May
94 - June
-1.4% - % change May to June
-1.9% - 3 mo. % change

SOURCE: ALTOS RESEARCH

Pending home sales up 3.6% in June

The number of contracts to buy previously owned homes in the U.S. rose in June for a fifth straight month and exceeded economists’ forecasts, as lower prices and mortgage rates attracted buyers.

The 3.6 percent gain in the index of signed purchase agreements, or pending home resales, followed a 0.8 percent gain the prior month that was larger than previously estimated, the National Association of Realtors said today in Washington.

Foreclosure-driven declines in home values and tax incentives are putting houses within reach of first-time buyers, helping to stabilize the real-estate market, which has been the biggest drag on economic growth. At the same time, with mortgage rates no longer dropping and unemployment still rising, it may be months before a sustained recovery in housing takes hold.

“It’s a modest recovery, however these numbers are exceeding people’s expectations,” said David Sloan, senior economist at 4Cast Inc. in New York, one of three forecasters who shared the highest projection in a Bloomberg News survey. Nonetheless, he said, while there are “genuine signs” of recovery in housing and manufacturing, “the consumer is still the big sort of worry.”
Good news on top of April's big increase of 6.7%

SOURCE: BLOOMBERG