Choose your preferred headline of the week…is the market good/bad/better/worse?

Palm Beach County homes sales surge

From the Palm Beach Post: April's single-family home sales in Palm Beach County rose a whopping 67.9 percent from a year ago, a surge that underscores the growing belief that buying a home now is a good bet.

There were 2,186 pending home sales in April, up from 1,302 during the same month last year. Townhouses and condo pending sales are up 39.2 percent, to 2,051 in April from 1,473 a year ago.

Pricing is reflecting the renewed buyer interest in home purchasing. The median sale price of a single-family homes in Palm Beach County is $210,100, up from $199,900 the same time last year and up 6.6 percent from March. The median townhouse and condo price is $88,636, up from $85,000 a year ago.

"Prices are climbing as demand increases and inventory levels decrease," said Bonnie Lazar, 2012 President for the Realtors Association of the Palm Beaches. "Inventory is slightly below normal levels, dropping over 50 percent from the previous year."

April single-family home inventory declined 55.5 percent to 5.7 months from 12.8 months a year ago. It was the same story for townhomes and condos, which fell 53.8 percent to 5.5 months from 11.9 a year ago.

Lazar said that trend should mean continued growth in home sales and median prices.

Florida still leads nation in delinquent loans, Mortgage Brokers say

Also from the Palm Beach Post: Florida still has the dubious distinction of leading the nation in “seriously delinquent” home loans, the Mortgage Brokers Association says today.

Some 17.92 percent of Florida home loans were 90 days or more past due or in foreclosure during the first quarter. Nevada was a distant second with 12.63 percent of its loans seriously delinquent.

Florida carries burden of 30 percent of nation’s shadow inventory

Another recent Palm Beach Post article: The Sunshine State’s shadow inventory of 550,000 homes makes up a third of the nation’s unlisted distressed properties according to a report released this week by the Florida Realtors.

Florida Realtors chief economist John Tuccillo said despite the large volume, the slow leak of homes onto the market, as well as an increase in short sales, shouldn’t crash prices as many have feared.

The report, released Tuesday, defines shadow inventory as homes with mortgages 90 days or more delinquent, homes in the process of foreclosure and homes repossessed by the bank but not yet listed for sale.

Goldman Sachs predicts that homeownership rates will decline into 2014

Goldman Sachs recently released a study looking at the housing market and attempted to analyze a bottom in regards to the homeownership rate. One of their major key figures dragging the rate lower was of course, the shadow inventory and the dismal employment outlook.

 

So…there you have it…clear as pea soup.

But if you’re reading this blog and considering buying OR selling, lets talk about what your best option is given your goals and timeframe.

Thanks for reading…Steve Jackson - 561*602*1258

Does It Pay To Stay?

 

DoesItPayToStay.com

A tough question deserves an honest answer.

And one of the toughest questions homeowners are asking us every day is, “Do I short sell my home or stay and wait until I can get out even?” Either way, to make the best decision, you should have all of the information in front of you...

That's why we created a very specific online calculator to help you ‘crunch the numbers’.

Being able to see the current market value of your home and projecting when your investment will break-even is invaluable to your decision making process. With our calculator you’ll be able to do so (for free) in a matter of minutes!

Take a look at the short video below, or go right to the calculator and find out...does it pay to stay?

DoesItPayToStay.com

 

Should I Short Sale My Palm Beach County Home?|

How Do I Short Sale My Lake Worth Home?

Happy Mothers Day

 

Robert Schiller of the Case-Shiller home price index says, “the world is in a late great depression”!

Yale economist Robert Shiller recently participated in a CNBC interview and gave a chilling analysis of the world economy as well as our housing market…some excerpts below:

The global economy is mired in a "late Great Depression" despite central bank stimulus policies, says Yale economist and author Robert Shiller.
"Our whole economy has been affected by variations in confidence. Central banks are sort of trusted, but the actions they have often affect people’s confidence by appearance rather than substance. We’re not in the most trusting mood now,” Shiller tells CNBC.

The Federal Reserve, the European Central Bank, the Bank of Japan and the Bank of England have propped up their respective economies via liquidity injections known as quantitative easing, tools designed to spur recovery but dubbed by critics as printing money out of thin air. He says the world is in a “new age of austerity.”

Shiller, designer of the Standard & Poor’s/Case-Shiller house price index, adds it's "really hard to forecast" if the U.S. housing market is finally recovering but does find one bright spot.
"The general presumption is that home prices are going down and that's good – it'll make them more affordable."

"Reuters: NEW YORK – The United States housing market is likely to
remain weak and may take a generation or more to rebound, Yale
economics professor Robert Shiller told Reuters Insider on Tuesday.
 
Mr. Shiller, the co-creator of the Standard & Poor’s/Case-Shiller
home price index, said a weak labor market, high gas prices and
a general sense of unease among consumers was outweighing low
mortgage rates and would likely keep a lid on prices for the
foreseeable future.

“I worry that we might not see a really major turnaround in our
lifetimes,” Mr. Shiller said

He said suburban areas in particular might endure further price declines
as high gas prices increase demand for “walkable cities.”

Cheaper housing prices will encourage many to avoid relying on their homes as the bulk of their investment portfolio and diversify, which is a good thing, Shiller adds. "Fifty years ago, there wasn’t this talk of housing as an investment. It was a zeitgeist of the early 2000s, and it has gradually gone." The housing sector appears to be bouncing along a bottom.

It's going to be rocky for a while," says Gregory Miller, an economist at Suntrust Bank in Atlanta, according to Reuters.

Housing prices will drop by a further 20 percent as the downturn gripping the United States deepens, leading economist Gary Shilling says. Writing in the Christian Science Monitor, Shilling said more and more people are looking to rent as homeownership becomes increasingly rare. “Housing activity remains depressed, with the only life coming from the multifamily component, which is being driven by the zeal for rental apartments as homeownership falls,” he wrote.

“Homeowners are losing their abodes to foreclosures; many can’t meet stringent mortgage lending standards; some worry about homeownership responsibilities in the face of job uncertainty; and many people have no desire to buy an asset that continues to fall in price.

“I am looking for a further 20 percent slide in housing prices.”

As my dedicated blog readers know, you don’t come here for sugar-coated real estate stories. I always try to dig deeper into what is being reported…piece together related analysis…give you a clear and “no spin” picture of our real estate environment.

Feel free to call me directly at 561.602.1258

Thanks for reading…Steve Jackson

Who is buying all of these homes? And what does it mean?

I just finished going over NAR’s 2012 Investment and Vacation Home Buyers Survey,which covered existing- and new-home transactions in 2011. The report showed that investment-home sales surged an extraordinary 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.

A recent CNBC article (excerpted below) notes the risk of what the NAR report exposed:

While nearly half of investment buyers said they were likely to purchase another property within two years, housing and mortgage analyst Mark Hanson calls them a “thin cohort” and worries that they add ever more volatility to the current housing recovery.

“They are fickle and volatile. They will go away on the slightest of conditions changes. They also won’t chase prices higher or buy new homes from builders. Lastly, without the heavy flow of distressed supply, there is no U.S. housing market recovery. Distressed sales ARE the market,” says Hanson.

Remember…investment is all about the numbers. Change anything where the numbers aren’t as attractive — even something as minor as HOA fees — and investor demand dries up. To an investor, a house is not a home: it’s cashflow + equity. These investors analyze a house in exactly the same way they would analyze a bond or a stock.

Even if house prices remain stable, if rent rates drop, that changes the investment equation. Now the investor isn’t interested even if the price remains at $200K, because his cashflow projections are all out of whack.

Any hint of rent regulation, and an investor would have to be a fool, politically connected, or pay such a low price that he’ll still make money under rent control, to even consider buying rental properties.  

Stan Humphries, from Zillow recently said, “some markets have likely seen their bottom (think Washington DC or Phoenix, both of which we forecast to see appreciation in 2012),but nationally, the bottom in home values is some way off. Your cautions all fall in line with exactly what we at Zillow have been observing – high percentages of cash buyers, investors flocking to the market to take advantage of rising rental rates (with rents up 3% nationally during 2011). We’re forecasting the national bottom in home values for 2013, and we expect that most large markets will continue to see depreciation throughout 2012. We introduced a formal forecast in our Q1 reports. (You can see the Zillow report here: http://bit.ly/yRwRj7.

As I always tell my clients…”take every news report you read/see/hear with a grain of salt”. Most agencies who put out the stories have an agenda to promote…and most reporters no longer look into the details of any story they are given.

The recent great housing news…(i.e. sales/prices up), is being driven by a very narrowly motivated segment of buyer: “investors”. If there is any small shift in the tax laws benefiting income properties, rental rates; any reduction of cash-on-cash return or after tax return…you can bet the investors will be back on the sidelines.

Call me directly and lets talk about how all of this (and more) affect/influences your real estate selling or buying goals.

Thanks for reading…Steve Jackson

561.602.1258

Todays real estate headlines in the news…Pick your flavor

 

1) It's safe to sell your home again:

The Realtors' group's chief economist, Lawrence Yun, opted to look on the bright side of the report -- sales were up 5.2% year-over-year. "We have seen nine consecutive months of year-over-year sales increases," he said. "Existing-home sales are moving up and down in a fairly narrow range that is well above the level of activity during the first half of last year."

2) Housing recovery still sputters:

NEW YORK (CNNMoney) -- The housing market continued to struggle in March, despite low home prices and record low interest rates, an industry report revealed Thursday.

Sales of existing homes fell 2.6% compared with a month earlier, to an annualized rate of 4.48 million homes, the National Association of Realtors said. Gus Faucher, a senior economist at PNC Financial, called the report disappointing. "We were expecting an increase," he said. "We need a turnaround to help the economy recover.

3) No Housing Recovery Until 2020 In 5 Simple Charts

Every day (for the past 3 years) we hear countless fairy tales why housing has bottomed and will improve any minute now. Just consider the latest kneeslapper from that endlessly amusing Larry Yun of the NAR, uttered just today: "pent-up demand could burst forth from the improving economy." Uh, right. Here's the truth - it won't and here is why, in 5 charts (below) directly from Bank of America, so simple even an economist will get it.

• Epic supply backlog
• A secular shift from plunging demand via habitation patterns, as more and more simply opt to live with their parents
• More and more are forced to rent
• Home prices will slide ever more as the American Dream of home ownership is forgotten, leading to even less wealth extraction via home equity loans
• Which all  means there is no hope for a long, long time…not at least until 2020

 

The so called “recovery” is about to get impaled by a tsunami of foreclosures with prices dropping a further 5-10% - recovery will take years with the added bonus that those who have been living rent free are about to direct some of that windfall of "disposable income" to actually paying for shelter…watch how that effects the overall economy!

As always…thanks for reading!

Steve Jackson

561.602.1258

Home Affordable Foreclosure Alternatives (HAFA) for Palm Beach County Residents extended through 2013

The Making Home Affordable (MHA) Program was introduced by the Obama Administration in 2009 in an attempt to stabilize the housing market and help struggling homeowners obtain relief and avoid Foreclosure. The program consisted of several smaller programs including the Home Affordable Modification Program (HAMP), the Home Affordable Refinance Program (HARP and the new HARP 2.0) and the Home Affordable Foreclosure Alternatives Program (HAFA).

HAFA is a government-sponsored initiative assisting all Home Affordable Modification Program (HAMP) eligible homeowners in avoiding foreclosure through a short sale or deed-in-lieu of foreclosure.

The program recently announced updates and changes that will take effect June 1st.

These changes will allow a greater number of distressed homeowners to seek assistance.

The major changes from March's updates to the HAFA program include:

• Extending the deadline for submitting for HAFA eligibility will be extended a full year, from December 31, 2012, to December 31, 2013.
• The removal of occupancy requirements. Previously, HAFA required homeowners to have lived in the property within the last 12 months.
• $3,000 relocation incentives will be limited to properties occupied by an owner or tenant at the time of the short sale.
• Mortgage payments will be allowed to exceed 31% of the homeowner's gross monthly income. This update will allow a homeowner to stay current on their mortgage and still qualify, minimizing the overall impact to their credit.
• Secondary lienholders may receive up to a maximum of $8,500, up from $6,000 previously.
• And one of the most dramatic changes: The Credit Bureau Reporting will be Account Status Code 13 (paid or closed account/zero balance) or 65 (account paid in full/a foreclosure was started), as applicable.

With these updates, a homeowner can be current on their mortgage, qualify for HAFA, continue to make their payments, and execute a short sale with minimum impact on their credit!

If you are upside down on your home…call me today. My direct line is 561.602.1258

Thanks For Reading…Steve Jackson

Bloomberg Law with an insightful commentary on the recent $25B mortgage fraud settlement

Fourth Quarter and Year-End 2011 U.S. Foreclosure Sales Report: Shifting Toward Short Sales

RealtyTrac® (www.realtytrac.com), the leading online marketplace for foreclosure properties, today released its Q4 and Year-End 2011 U.S. Foreclosure Sales Report™, which shows that sales of homes that were in some stage of foreclosure or bank owned accounted for 24 percent of all U.S. residential sales during the fourth quarter — up from 20 percent of all sales in the previous quarter, but down from 26 percent of all sales in the fourth quarter of 2010.

“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore continued. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent. Pre-foreclosure sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami and Phoenix, where REO sales had outnumbered pre-foreclosure sales a year ago. That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.”

PLEASE READ THIS: 2012 is shaping up  to be the “perfect storm” in the realm of short sales. A) the banks FINALLY realize that it is in their best interests to approve a short sale rather than take a home back in foreclosure, B) the Mortgage Debt Forgiveness Act  is still in place, but only until the end of 2012 (and I wouldn’t bet the farm on the deadlocked politicians/bureaucrats in Washington easily coming to an extension agreement),  C) the inventory of decent single family homes here in Palm Beach County is extremely low, and D) many lenders are offering cash incentives to underwater and delinquent homeowners if they complete a short sale and meet other, minor benchmarks.

If you are upside-down..don’t wait..call me today, please. This year may be your best opportunity to sell your home in a manageable and dignified way.

My direct line is 561-602-1258.

Thanks for reading, Steve Jackson

Foreclosure Fraud Settlement Update…

Full and complete details are still not available as of today. We have been given only the main points of the agreement. Missing still are the most important aspects; the implementation and enforcement details. As the well known saying goes…’The devil is in the details’ (see below).

A previously ‘settled’ suit by Nevada/Arizona against Bank of America for failing to follow their responsibilities in the Countrywide settlement will be folded into the deal. In that settlement, BofA promised to deliver $8.5 billion in relief for Countrywide borrowers who fell victim to deceptive practices in the mortgage process. In reality, only $236 million was ever spent. Weak settlement terms allowed BofA to take credit merely for offering loan modifications to borrowers. And the Nevada suit alleged that BofA immediately started abusing borrowers who tried to get relief under the deal. But that suit is now gone.

State and federal regulators insist that they learned their lesson with that botched settlement and that this one has tight enforcement guidelines. (Sure!) However, the monitoring process begins with a self-assessment from the banks through quarterly reports, which will then be reviewed by a govt. determined committee. This enforcement process is likely to take months to ‘properly assess’ the settlement.

What has been made public is that 5 billion will go as a hard cash penalty to the states, which can use the monies, for what appears to be, any reason. As a matter of fact, one official close to the talks stated that he feared that much of that cash payout will go in some states toward filling their budget holes. The federal government will get a cash penalty as well (how much? for what purposes?)  Out of that $5 billion, up to 750,000 borrowers wrongfully foreclosed upon will get (up to) a $2,000 check if they sign up for it and it is determined that they qualify (who can qualify and what the process is has yet to be disclosed). For someone wrongfully foreclosed on, foreclosed on with fraudulent documents or denied due process, this is the equivalent of saying to them “sorry we broke the law and stole your home, here’s one months rent, now go away quietly.”

The bulk of the money, NOT actually a payment of any kind, around $17 billion, will go towards loan modifications, principal write-downs, short sales and other foreclosure avoidance efforts.

This figure pales in comparison to the negative equity in the country, which sits at, at least, $700 billion. Nationally, 1 in 5 mortgages is currently under water…here in Florida, almost 1 in 2 mortgages is under water. AND the banks have 3 years to implement these processes and procedures.

It will be many years into the future, after this ‘landmark settlement’ has faded from scrutiny, before it can be determined if the promises on loan modifications, etc., have been fulfilled. 

Do you think this multi-billion-dollar settlement is tough on the banks?Lets look at the stock prices of the banks involved in this settlement…did they fall through the floor as a result of the drastic penalties invoked?

• Well, just before Christmas, Bank of America stock dipped below the $5.00 mark; on Friday, it closed over $8.00…UP OVER 60% in 60 days! Nice…and one would have to have their head firmly in the sand to think that the terms of this settlement were not widely distributed to the ‘in’ crowd in the past 60 days.
• Citi..again, from a low point of about $25 the same day, just before Christmas, to a close of about $33 on Friday…a 30% return in 60 days…not as good as BofA, but still not bad for the insiders.

**and the mention of insiders brings up this point: Our elected officials do not have to comply with the rules/laws governing the trading of equities on inside information. I’d like to see how many of the ‘peoples representatives’ (privy to the details/impact of this settlement) bought bank stock in the past 60-90 days.

• JPMorgan Chase…Same date of the low…just before Christmas at just under $31, to a close on Friday of just under $38.00…only a 22% return (and that's NOT annualized) on that trade.
• Wells Fargo…SAME low date just before Christmas, of about $25.50 to a close on Friday of $30.30. Another tidy return of about 20% in 60 days.

If you laid these charts on top of one another…they are almost identical in movement! The terms were leaked, the impact evaluated, and then the party started!

I’ll post again on this when the FULL details are finally released, whenever that may be!

 

Thanks for reading and putting up with my heavy dose of cynicism…Steve Jackson

Call or email me any time with your take on the matter, 561-602-1258

The BIG bank settlement…

Here are the main details of todays multi-state bank fraudclosure settlement…my analysis and opinion will come in a few days, after I have had time to read and digest the full settlement (which I have to diligently search for because it is not readily available)

NEW YORK (CNNMoney) -- The nation's five largest banks have finally struck a deal with 49 states to settle charges of abusive and negligent foreclosure practices dating back to 2008.

Under a deal announced Thursday, the banks will commit $26 billion to help underwater homeowners and compensate those who lost their homes due to improper foreclosure practices…

What did the mortgage lenders and loan servicers agree to do? The banks and servicers have committed at least $17 billion to reduce principal for borrowers who 1) owe far more than their homes are worth 2) are behind on payments.

The amount of principal reduction will average about $20,000 per borrower.

Another $3 billion will go toward refinancing mortgages for borrowers who are current on their payments. This will enable them to take advantage of the historic low interest rates currently available.

The banks will pay $5 billion directly to the states, the only hard money involved in the deal. Out of that fund will come payments of $1,500 to $2,000 to homeowners who lost their homes to foreclosure. Other funds will be paid to legal aid and homeowner advocacy organizations to help individuals facing foreclosure or experiencing servicer abuses.

Another $1 billion will be paid directly by Bank of America to the Federal Housing Administration to settle charges that its subsidiary, Countrywide Financial, defrauded the housing agency.

In addition, the banks agreed to eliminate robo-signing altogether and to use proper and legal procedures when putting homeowners through the foreclosure process. They also agreed to end servicer abuses, like harassing delinquent borrowers for payments, and to include principal reductions more often in their mortgage modifications programs.

Is my mortgage lender taking part in this settlement? Bank of America, Wells Fargo , JPMorgan Chase, Citigroup and Ally Financial
are taking part in the settlement.

In addition, nine other unnamed loan servicers may join the settlement later, and that would bring its value to $30 billion.

Loans owned or backed by Fannie Mae and Freddie Mac, however, are not part of the deal. The Federal Housing Finance Agency, which oversees the two government-sponsored mortgage giants, will not allow any balance reductions for loans insured by the companies under the settlement.

I lost my home to foreclosure; how do I know if I qualify for payment? If you were foreclosed on in the calendar years 2008 through 2011, you may be be eligible for a payment of up to $2,000. People who think they may qualify should notify their bank.

What should I do if I think I may qualify for a principal reduction or refinanced mortgage? Contact your lender/servicer and ask them to review your case.

If I take the money, what rights do I give up? Individual borrowers do not give up any right to sue.

As part of this deal, state attorneys general gave up the right to sue the mortgage servicers for foreclosure abuses arising out of the robo-signing scandal. However, they reserve the right to sue if they uncover improper acts when the loans were originated or when they were securitized.

When will the new rules and bank policies be put into place? Most of them have already become part of bank policies.

When will homeowners get paid? HUD said the settlement will be put before a court for approval within two weeks. It is unknown how long it will then take for a court to rule.

The relief for homeowners has to be completed within three years, but the state attorneys general and HUD want it to be front-loaded and completed within 12 months.

Would I have to pay taxes on the principal reductions or the pay-outs? If the principal is reduced in 2012, it will not be subject to income tax.

That's because the Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence. The act is scheduled to expire at the end of this year, however.

So if the act is not extended and the principal reduction occurs in 2013, borrowers may be on the hook to pay taxes on the settlement amount.

It's not clear whether you would have to pay taxes on the $1,500 to $2,000 payout. The IRS declined to comment on the question.

Will the settlement make it harder to get a mortgage? The new rules and regulations the banks have agreed to under the settlement should have little impact on future mortgage borrowing since most of practices are already in place, said Keith Gumbinger of HSH Associates, a mortgage information provider.

Only $5 billion of the $26 billion settlement will be a direct cost to the banks. The remainder will be the cost of modifying mortgages. Many of those modifications may be in the best interests of the banks to make, however, since the alternative may be foreclosure, which can cost banks more than modifications.

Come back in a day for my insight and analysis of the States Attorneys General settlement with these 5 banks! I’m certain it will be a bit different than the popular spin being put on it now.

 

Thanks for reading…Steve Jackson

561 602 1258 (direct)

––For Every Two Homes Available for Sale, There Is One “In The Shadows”––

 

CoreLogic® (NYSE: CLGX), a leading provider of information, analytics and business services, reported today that the current residential shadow inventory as of October 2011 remained at 1.6 million units, representing a supply of 5 months. This was down from October 2010, when shadow inventory stood at 1.9 million units, or 7-months’ supply, but approximately the same level as reported in July 2011. Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.

CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders. Transition rates of “delinquency to foreclosure” and “foreclosure to REO” are used to identify the currently distressed non-listed properties most likely to become REO properties. Properties that are not yet delinquent but may become delinquent in the future are not included in the estimate of the current shadow inventory. Shadow inventory is typically not included in the official metrics of unsold inventory.

Data Highlights:

• As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.
• Of the 1.6 million properties currently in the shadow inventory (Figures 1 and 2), 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).
• Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.
• The shadow inventory is approximately four times higher than its low point (380,000 properties) at the peak of the housing bubble in mid-2006. A healthy housing market should have less than one-month’s supply of shadow inventory, which would be an easily absorbed stock of distressed assets with little or no discernable impact on house prices, unless the inventory was geographically concentrated.
• Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.
• Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.
• Based on current estimates of the visible inventory (both distressed and non-distressed), the shadow inventory is approximately half of all visible inventory listings. For every two homes available for sale, there is one home in the “shadows”

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.

The full report can be found at http://www.corelogic.com/ShadowInventoryOct2011.

 

I do follow CoreLogic reporting every month…however, there are other, credible, estimated of the shadow inventory of 3-4 times what CoreLogic reports. And this is what is going to keep our values from increasing any time soon.

Thanks for reading…Steve Jackson

Call me directly at 561-602-1258

What if the Federal deficit was your household debt?

Freddie Mac offers help for the unemployed

Just this afternoon I received an email bulletin from Freddie Mac that may give some relief to unemployed individuals having difficulty making payments on a Freddie Mac loan.

 

Here is a brief overview with a link to the actual Freddie Mac document I received:

Freddie Mac, (Bulletin 2010-17), is introducing new forbearance requirements to provide a “short-term unemployment forbearance” relief option to assist Borrowers who are unable to make their Mortgage payment due to unemployment.

In addition, Freddie Mac is introducing an “extended unemployment forbearance” relief option to provide an extension of the forbearance period if such Borrowers have not regained employment after the short-term forbearance period has ended. Including these additional relief options in our loss mitigation tool kit gives unemployed Borrowers an opportunity to retain homeownership by providing Mortgage payment relief while they seek re-employment.

Servicers will have delegated authority to approve eligible Borrowers for a short-term unemployment forbearance period of six months during which time the monthly Mortgage payment is either suspended or reduced.

If the Borrower remains unemployed at the end of the short-term unemployment forbearance period, the Servicer must consider the Borrower for extended unemployment forbearance in accordance with the Guide.

If the Borrower meets the eligibility criteria for extended unemployment forbearance, the Servicer must obtain Freddie Mac’s written approval before entering into an extended unemployment forbearance plan with the Borrower.

EFFECTIVE DATE: Changes announced in this Bulletin are effective February 1, 2012 for all new Borrower evaluations for an alternative to foreclosure. However, Servicers may begin implementing the unemployment forbearance relief options earlier for all new requests for assistance in which an eligible Borrower’s hardship is unemployment.

If you have any question about Freddie Macs new plan, above, or any other questions regarding foreclosure alternatives, please pick up the phone and call me directly at 561-602-1258...or send me an email

Thanks for reading my blog…Steve Jackson

2012

To help you celebrate and reflect here is a collection of quotes to start the new year.

In the New Year, may your right hand always be stretched out in friendship, but never in want. -Irish toast

Your Merry Christmas may depend on what others do for you … but your Happy New Year depends on what you do for others. -Author unknown

Your success and happiness lies in you. Resolve to keep happy, and your joy and you shall form an invincible host against difficulties. Helen Keller

We will open the book. Its pages are blank. We are going to put words on them ourselves. The book is called Opportunity and its first chapter is New Year’s Day. Edith Lovejoy Pierce

One resolution I have made, and try always to keep, is this: To rise above the little things. John Burroughs

We spend January 1 walking through our lives, room by room, drawing up a list of work to be done, cracks to be patched. Maybe this year, to balance the list, we ought to walk through the rooms of our lives…not looking for flaws, but for potential. Ellen Goodman

Be always at war with your vices, at peace with your neighbors, and let each new year find you a better man. Benjamin Franklin

May the best of this year be the worst of next. Unknown

Resolve to make at least one person happy every day, and then in ten years you may have made three thousand, six hundred and fifty persons happy, or brightened a small town by your contribution to the fund of general enjoyment. Sydney Smith

      

         Drawn by me…for you!

 

Merry Christmas…Happy Holidays!

NAR…”OOPS”!

I think it's time to tell everyone what I have known for a long time now...What the acronym NAR actually stands for. I know that they would like you to believe that it is 'National Association of Realtors', but the real truth, revealed to all recently is that NAR stands for: 'Numbers Aren't Real'!

The NAR US Housing Home Sales Figures were artificially inflated by at least 11% per year for the period of 2007-2010. Nice work NAR! They said there were a few "errors' in data collection and interpretation". And I think that it goes back to BEFORE 2007...why did they only go back and revise to that year? “Sales were weaker than people thought (or were lead to believe by NAR reports),” said chagrined NAR spokesman Walter Malony. Data firm CoreLogic accused the NAR of over-counting home sales back in May of this year. At the time, the organization insisted that any issues with their numbers would be “relatively minor.” Unfortunately, NAR economist Lawrence Yun has revised that prediction to say that the changes in reporting will be “meaningful,” adding that “this means the housing market’s downturn was deeper than what was initially thought”. 

Being in the business every day for a long time now, I began to see a slowdown in the 1st half of 2006 and an 'acceleration' in price and volume declines right at the beginning of 2007. My analysis shows that the air started to come out of the bubble, at least in Palm Beach County, right at the end of 2005. I could go in to their methodology and poke a thousand holes in it...but I'd bore everyone but myself.

The readers who regularly read my blog posts will know that I don't "toe the line" when it comes to the NAR/FAR, etc. Coincidentally, a blog post I wrote just about 5 weeks ago, http://winstontrails.blogspot.com/2011/11/if-they-keep-predicting-market.html skewers the NAR for their inept (intentionally misleading) comments.

Below are the charts that reflect the adjustments.

                        

 

 

 

 

 

 

So...what does this all mean?  Why now? And what is the effect of this revision?

Well, I think the "why now" question can be answered by NAR being called out on their numbers by CoreLogic a few months ago.

But the "what does this all mean" question has many possible answers depending upon the angle it is being viewed from. My obvious, but cynical, view is that the NAR and administration can now more easily report "improvments" in home sales. The new sales figures will be compared to the re-benchmarked historical sales and will paint a rosy housing and economic picture going forward. And if the reporters (TV and print) continue to just repeat data rather than dig in to the meaning of the data, the re-benchmarked (lower) figures will fade into distant memory...and the 'improving home sales numbers' will be evidence of our 'robust and recovering' economy.

Lastly, what does this effect? This question is better answered by a formally trained economist, but I have to believe that these numbers somehow impact GDP in a negative sense, retroactively.

If you've read this far, I commend you! Seriously though, if you are considering your options, whether it be selling or purchasing real estate, call me. You don't want to take the chance of ending up getting advice and consulting with an NAR drone who is taught to memorize "objection handling dialogs' and sales tactics.

My direct line is 561-602-1258 or

As always…thanks for reading,

Steve Jackson

Merry Christmas From Aunt Fannie and Uncle Freddie

 

Fannie Mae and Freddie Mac are suspending evictions of foreclosed properties from Dec. 19 through Jan. 2, 2012.

The government-sponsored enterprises are the first institutions this holiday season to announce their annual moratoriums, which is a common practice in the housing sector to provide families a greater measure of certainty during the holidays.

During this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be permitted to remain in the home.

 

The suspensions apply only to eviction lockouts related to REO properties owned by Fannie Mae and Freddie Mac and will not affect other pre- or post-foreclosure processes.

  “The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” said Terry Edwards, executive vice president of credit portfolio management at Fannie Mae, in a statement.

“No family should have to give up their home during this holiday season," he said.

 

A Thanksgiving message to our readers

                             Click above to see the latest housing trends newsletter

If they keep predicting a market bottom…eventually they’ll all be right!

 

Just to say it at the outset of this post…why don’t any of the reporters, be it newspaper, online outlets or television, ever do any research and ask any tough questions when they continue to interview and quote the “experts” regarding housing?

Case in point: Here is a headline of an article/interview of Zillow chief economist, Stan Humphries, 18 months ago:

As Housing Market Nears Bottom, Pent-Up Supply Waits…And here is the prediction directly from the article: We forecast that the nation will hit a bottom in home values in the third quarter of this year, (which would have been July-Sept 2010) but that there will be negligible appreciation in home values for three to five years after we’ve reached bottom…

Case-Shiller, an oft quoted research firm has this on-the-money prediction from an interview from November 30th 2009:

U.S. home prices are unlikely to fall much further in the next year even after a “discouraging” report on values in September, said Karl Case, the co-creator of the S&P/Case-Shiller Index.

“If I were betting even odds, I’d bet that we don’t have much further decline, but that we bounce along the bottom,” Case, a retired professor of economics at Wellesley College, said today in a Bloomberg Television interview…

And then here is a quote from an interview Shiller did less than 60 days ago: SHILLER: “House Prices Probably Won’t Hit Bottom For Years”

And the icing on the cake has been our own chief economist(s) of the National Association of Realtors:

04/2006: We can expect a historically strong housing market moving forward, earmarked by generally balanced conditions across the country and fairly stable levels of home sales with some month-to-month fluctuations.”, NAR

07/2006: “Right now we are on course for a soft-landing in housing.”, NAR

10/2006: “The worst is behind us, as far as a market correction. This is likely the trough for sales. When consumers recognize that home sales are stabilizing, we’ll see the buyers who’ve been on the sidelines get back into the market.”, NAR.

12/2006: “At least the bottom appears to have already occurred. It looks like figures will be improving.”, NAR.

01/2007: “It appears we have established a bottom” David Lereah, NAR Chief Economist.

07/2007: “Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year.”, NAR

11/2007: “I don’t anticipate any further major sales declines,” Yun said. However, the NAR didn’t anticipate the sales declines of the past two years, and it’s been predicting a bottom nearly every month since early 2006. (from Marketwatch)

02/2008: Reuters reports that “The NAR’s chief economist, Lawrence Yun, said the market is ‘scratching the bottom,’ with sales holding at a deflated rate of around 5 million units for the past several months.”

02/2008, There is no chance of a large price decline in Rockford, Lawrence Yun told a crowd of more than 400 at Cliffbreakers, 700 W. Riverside Blvd. There is not a price bubble in Rockford., BusinessRockford.com (see July, 2009 news report below)

07/2008: There are signs of pent up demand . I think we are very near to the end of the housing downturn, Yun said.

12/2008: I would not have done anything different. But I was a public spokesman writing about housing having a good future. Ex-NAR Chief Economist Lareah.

04/2009: “We are close to the bottom, says Lawrence Yun, chief economist for the National Association of Realtors. Once home sales begin to rise that could boost home buying confidence and get others off the sidelines.”

04/2009: The “worst may be over” in parts of the West, said Lawrence Yun, NAR Chief Economist.

07/2009: Follow up from 2/08 quote above: BusinessRockford.com – The local housing market showed few signs of rebounding in the first half of 2009, with sales of single-family homes and condominiums falling nearly 20 percent and median sale prices falling in all but two of the Rock River Valley’s largest municipalities... In Rockford, the median prices of the 61104 ZIP code are down 52.3 percent from the first six months of 2008, dropping from $64,950 to just $31,000.

Now, more than ever, it is so important to work with an agent that will consult, diagnose and recommend solutions based upon a multitude of factors…with the MOST important one being; what is in YOUR best interest.

In the past several years, I have ‘converted’ many buyers into renters, but also, some renters into buyers, because that's what we decided, together was the best option for them. I have also dissuaded many sellers from becoming ‘landlords by default’ and putting tenants in their homes while waiting for “prices to go up’ because they didn’t want to “give their house away”. On the flip side of that coin, I just had a conversation with a prospective client yesterday and we decided AGAINST selling, as the cash-flow the home would generate, along with the tax benefits of renting outweighed the prospect of home value declines…their time horizon was sufficiently long to mitigate the risk when compared to the monthly cash flow.

If you would like to discuss all of the factors that you should be considering, whether it be on the selling or buying side, please call me at 561-602-1258…or email me at Steve@TheJacksonTeam.com

Thanks for reading,

Steve Jackson

Home values…Negative equity…etc

Nationally, on a year-over-year basis, Zillow reports that home values were down 4.4 percent with the Zillow Home Value Index at $171,500. Overall, this quarter could have looked a lot worse considering all of the economic headwinds and turbulence that materialized over the summer. In terms of strict fundamentals, housing affordability looks compelling with big resets in home value levels and historically low mortgage rates. At this point, however, it’s clearly an issue of confidence, and high unemployment and economic uncertainty are not helping on this front. While we still have a ways to go in terms of home value depreciation, the pace at which home values are falling has declined considerably during the course of this year.  Nationally, foreclosure re-sales made up 18.9 percent of all sales in September, up slightly from the Q2 level of 18.8 percent. Foreclosure re-sales have, however, significantly increased from their Q3 2010 levels of 15.1 percent. This foreclosure pipeline will continue to depress home prices moving forward...the large shadow inventory will keep pressure on pushing home prices lower. That is why year over year home prices are still falling:

Negative Equity

National negative equity edged up slightly to 28.6 percent , (the local negative equity figure is close to 50% when you count all of the homes that are within 5% of being in a negative equity position) of all single-family homes with mortgages, compared to 26.8 percent in the second quarter. Negative equity fell in the second quarter on the basis of sharp improvements in depreciation rates and flat foreclosure rates. This quarter, however, home values remained relatively flat while foreclosure rates slowed further, and these two factors combined to increase negative equity. (Because Zillow and other firms that calculate negative equity use valuations, each which has some margin of error, and because the number of homeowners just barely in positive equity is somewhat greater than the number who are just barely in negative equity, the estimation error will tend to incorrectly place more people in negative equity (who are, in fact, in positive equity) than is offset by incorrectly placing people in positive equity (when, in fact, they are in negative equity). This subtle point has the possibility of producing an upward bias in the negative equity statistic.)

People selling their homes in Palm Beach County lost money nearly 46 percent of the time during the third quarter of this year, according to Zillow. The percentage of Palm Beach County properties that sold for a loss between July and the end of September, was a 3.4 percent increase from the previous quarter and at an elevated rate predicted to continue through at least next year.

Any homeowner who is in negative equity and who experiences a financial setback, like a job loss, income reduction or divorce, will find their options limited. To sell a home while underwater means the seller must pony up the difference between the mortgage and the current value, or negotiate a short sale with their bank. Therefore, negative equity does open homeowners up to risk they would not otherwise encounter, and it’s important to understand the total universe of homeowners who have this increased risk.

If you happen to fall in to the 50% at or near being upside down and you need to sell or just want to know what your options may be, visit our blog http://www.shortsales123.com/, read some of the posts, then give me a call at 561-602-1258.

Thanks for reading,

Steve Jackson

Home sales in Smith Farm, 2011



53 total sales in Smith Farm so far in 2011...
just about 1 out of every 3 sales was a 'distressed' sale