Foreclosure filings up sharply over last year
http://www.sacbee.com/business/story/1933547.html
Lenders made a daily average of 203 foreclosure filings against struggling borrowers in El Dorado, Placer, Sacramento and Yolo counties in the past year, according to Santa Ana-based real estate tracker First American CoreLogic.
Borrowers in the region received 74,348 notices, ranging from first warnings to repossessions, from May 2008 to April 2009, the firm said.
That was sharply higher than the 51,307 filings during the same period a year earlier when lenders filed an average of 140 notices daily.
The increase reflects the growing struggles of homeowners to make their mortgage payments amid rising unemployment and falling home values. First American said 6.78 percent of the region's home loans were 90 days or more delinquent in April, compared with 6.48 percent a year ago. The Sacramento region's delinquency rate is worse than the U.S. average of 5.1 percent but better than California's statewide average of 7.08 percent.
Monday, June 15, 2009
Friday, June 12, 2009
Home Front: Lender's phones silent as rates rise
Home Front: Lenders' phones silent as rates rise
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1940229.html
Mortgage rates, rising quickly from near-historic lows earlier this year, are already having negative consequences in the capital region.
"All of a sudden the phones just stopped ringing," said Michael McGee, president of Rancho Cordova's Winchester McGee Real Estate & Loans.
"At least right now, the refinance window has somewhat shut," added Brent Wilson, senior loan consultant at Sacramento's Comstock Mortgage.
It's also spooking buyers who haven't locked in a rate.
"I called my agent and said, 'We have to cancel,' " said Toby McBride of Citrus Heights on Thursday. He and his wife put in an offer on a house June 1 when rates were 5.12 percent. When the deal wasn't agreed to by Tuesday, with rates at 5.87 percent, they pulled the plug. (The new rate would add $175 a month to payments, said McBride, a federal worker).
"Definitely, the sudden change in interest rates has caused us to rethink our condition and lower our search price," he said.
As investors stew about inflation in the long run, rates are pushing back toward 6 percent and have reached a seven-month high, according to mortgage giant Freddie Mac.
The firm's Thursday survey revealed a national average of 5.59 percent (plus points) earlier this week for a 30-year fixed-rate loan. That's up from 5.29 percent last week.
Thursday, financial Web site Bankrate.com showed an overnight average of 5.74 percent.
"It just pretty much happened so quickly," said Charlene Singley, an agent with Lyon Real Estate and president of the Sacramento Association of Realtors. "I think it will take a while for people to realize that this is where the rates are now."
"I think we'll get some improvement from where we are today," said McGee. "But back to the high fours? It's possible, yes. Likely? I question that."
New home sales suffer
Thousands of distressed existing homes are making life harder and harder for Sacramento-area home builders. Their April sales numbers revealed the capital-area market as one of the state's weakest, according to the California Building Industry Association.
Builders in El Dorado, Placer, Sacramento and Yolo counties sold 290 houses in April. That was seven fewer than in March, and 48 percent below the same month last year, CBIA said this week. Builders in Yuba and Sutter counties sold 33 – better than March – but down 25 percent from the same time last year.
The numbers put area builders on track for a worse year than 2008, when they sold just 4,847 homes, according to Hanley Wood Market Intelligence.
In 2004 they sold 17,491.
The declines come amid fierce competition with discounted bank repos and short sales. In April, builders closed just 9.6 percent of the escrows in the capital area, compared with 24.5 percent in April 2005.
Statewide trends were a little better. Builders said sales were almost 7 percent better in April than March. But they were still down 31 percent from April 2008.
The CBIA said the median April sales price for a new house in El Dorado, Placer, Sacramento and Yolo counties was $292,900. It was $237,000 in Yuba and Sutter counties.
More time for renters
Oh, no. Home Front muffed a figure last week in an item about the Obama administration adding new protections for renters. In mistakenly noting that California renters get 30 days' notice to move after banks repossess houses, we overlooked last year's state Senate Bill 1137.
The bill gave tenants affected by foreclosure an extra 30 days' notice – to 60 days – through Jan. 1, 2013.
President Barack Obama, however, just signed a bill that gives renters with month-to-month arrangements 90 days' notice in foreclosure situations. Renters with leases in foreclosed homes stay until leases expire.
Profiting from feng shui
These days everyone is worried about money. But how do you get more? Here are a few feng shui ideas to increase your flow of wealth at home. For these, thank New York real estate broker Debra Duneier:
• The burners on your stove represent wealth. Keep them clean and alternate your use of the burners when cooking … The refrigerator should be filled with healthy food. A full refrigerator brings in abundance.
• The indoor plants that are wealth enhancers are bamboo and jade plants.
• Take three lucky Chinese coins and tape them to the back of a rug. Every time someone walks in (your home's entry point) they symbolically are bringing money into your property and into your life.
• Keep toilet seats down when not in use. Keep them up and money will disappear.
More tax credits sought
Finally, an update on tax credits: The California Franchise Tax Board reports that buyers of new, unoccupied homes have requested $82.5 million of the $100 million allocated for $10,000 tax credits.
The building industry is working the state Legislature to add more millions. In Washington, D.C., real estate and business executives are lobbying Congress for a new $15,000 tax credit for all buyers. A current $8,000 tax credit is just for first-time buyers.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1940229.html
Mortgage rates, rising quickly from near-historic lows earlier this year, are already having negative consequences in the capital region.
"All of a sudden the phones just stopped ringing," said Michael McGee, president of Rancho Cordova's Winchester McGee Real Estate & Loans.
"At least right now, the refinance window has somewhat shut," added Brent Wilson, senior loan consultant at Sacramento's Comstock Mortgage.
It's also spooking buyers who haven't locked in a rate.
"I called my agent and said, 'We have to cancel,' " said Toby McBride of Citrus Heights on Thursday. He and his wife put in an offer on a house June 1 when rates were 5.12 percent. When the deal wasn't agreed to by Tuesday, with rates at 5.87 percent, they pulled the plug. (The new rate would add $175 a month to payments, said McBride, a federal worker).
"Definitely, the sudden change in interest rates has caused us to rethink our condition and lower our search price," he said.
As investors stew about inflation in the long run, rates are pushing back toward 6 percent and have reached a seven-month high, according to mortgage giant Freddie Mac.
The firm's Thursday survey revealed a national average of 5.59 percent (plus points) earlier this week for a 30-year fixed-rate loan. That's up from 5.29 percent last week.
Thursday, financial Web site Bankrate.com showed an overnight average of 5.74 percent.
"It just pretty much happened so quickly," said Charlene Singley, an agent with Lyon Real Estate and president of the Sacramento Association of Realtors. "I think it will take a while for people to realize that this is where the rates are now."
"I think we'll get some improvement from where we are today," said McGee. "But back to the high fours? It's possible, yes. Likely? I question that."
New home sales suffer
Thousands of distressed existing homes are making life harder and harder for Sacramento-area home builders. Their April sales numbers revealed the capital-area market as one of the state's weakest, according to the California Building Industry Association.
Builders in El Dorado, Placer, Sacramento and Yolo counties sold 290 houses in April. That was seven fewer than in March, and 48 percent below the same month last year, CBIA said this week. Builders in Yuba and Sutter counties sold 33 – better than March – but down 25 percent from the same time last year.
The numbers put area builders on track for a worse year than 2008, when they sold just 4,847 homes, according to Hanley Wood Market Intelligence.
In 2004 they sold 17,491.
The declines come amid fierce competition with discounted bank repos and short sales. In April, builders closed just 9.6 percent of the escrows in the capital area, compared with 24.5 percent in April 2005.
Statewide trends were a little better. Builders said sales were almost 7 percent better in April than March. But they were still down 31 percent from April 2008.
The CBIA said the median April sales price for a new house in El Dorado, Placer, Sacramento and Yolo counties was $292,900. It was $237,000 in Yuba and Sutter counties.
More time for renters
Oh, no. Home Front muffed a figure last week in an item about the Obama administration adding new protections for renters. In mistakenly noting that California renters get 30 days' notice to move after banks repossess houses, we overlooked last year's state Senate Bill 1137.
The bill gave tenants affected by foreclosure an extra 30 days' notice – to 60 days – through Jan. 1, 2013.
President Barack Obama, however, just signed a bill that gives renters with month-to-month arrangements 90 days' notice in foreclosure situations. Renters with leases in foreclosed homes stay until leases expire.
Profiting from feng shui
These days everyone is worried about money. But how do you get more? Here are a few feng shui ideas to increase your flow of wealth at home. For these, thank New York real estate broker Debra Duneier:
• The burners on your stove represent wealth. Keep them clean and alternate your use of the burners when cooking … The refrigerator should be filled with healthy food. A full refrigerator brings in abundance.
• The indoor plants that are wealth enhancers are bamboo and jade plants.
• Take three lucky Chinese coins and tape them to the back of a rug. Every time someone walks in (your home's entry point) they symbolically are bringing money into your property and into your life.
• Keep toilet seats down when not in use. Keep them up and money will disappear.
More tax credits sought
Finally, an update on tax credits: The California Franchise Tax Board reports that buyers of new, unoccupied homes have requested $82.5 million of the $100 million allocated for $10,000 tax credits.
The building industry is working the state Legislature to add more millions. In Washington, D.C., real estate and business executives are lobbying Congress for a new $15,000 tax credit for all buyers. A current $8,000 tax credit is just for first-time buyers.
Wednesday, June 10, 2009
Use of short sales on rise in Sacramento housing market
Use of short sales on rise in Sacramento housing market
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1933643.html
For years real estate agents have steered buyers away from "short sales," labeling them a mind-numbing, difficult experience that could exhaust the patience of the biblical Job.
Now buyers can hardly avoid them.
"When it's 50 percent of the inventory you don't have a choice," said Scott Williams, a Roseville-based ReMax broker. Williams specializes in a complex transaction that may be the next evolution of the real estate market in Sacramento.
Banks, with their balance sheets battered after 40,000 capital-area foreclosures since early 2007, are finally warming up to short sales, a traditional marker of soured real estate markets. Increasingly, so are buyers. Some analysts believe short sales – those transactions in which banks accept offers below what they're owed to avoid the higher costs of foreclosing – may help avert a few thousand new foreclosures in the capital region.
"I still see a ton of defaults coming down the line … but a large percentage, 50 percent or more of these, will get done as short sales and keep the flow of repos to a manageable level," said Williams. "I don't see us getting flooded."
Industry analysts say half the for-sale signs in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties that aren't bank repos are short sales. They're especially prevalent in newer suburbs built during the housing boom. According to Sacramento-based Metrolist Services Inc.:
• 56 percent of Lincoln homes priced between $200,000 and $250,000 are short sales.
• 55 percent of Rancho Cordova homes priced between $200,000 and $300,000 are short sales. In Folsom, 46 percent of homes in that price range are short sales.
• 44 percent of Elk Grove houses priced from $300,000 to $325,000 are short sales.
All their owners owe more than their homes are worth. (Online evaluator Zillow.com says 68 percent of Sacramento-area households that bought in the past five years are in that boat). And most are believed to be in some stage of the foreclosure process.
Currently, nearly one in four sales pending – those expected to close escrow within weeks – are bank-approved short sales, according to Williams' analysis of Metrolist data. That's a rise from a January-through-June average of one in seven.
Bank repos, by comparison, are about 60 percent of area sales this year. But their share is falling now as the region's short-sale market share rises.
"It's a more cooperative solution," said David Sunlin, senior vice president with Charlotte-based Bank of America Home Loans. He said the firm is adding staff and streamlining procedures to do more short sales more quickly as an alternative to foreclosing.
"It allows the borrower to leave on their own terms. It's a more dignified exit strategy and the credit reporting is less negative afterward," he said. "It's a win for the lender as well. It's going to shorten the recovery cycle, which is important to all of us."
The firm, which bought Countrywide Financial last year, services one in five U.S. mortgages and is a top lender in the capital region.
Agents such as Williams hope the new BofA approach brings results. They complain that Countrywide has been among the industry's most difficult servicers for short sales.
Buyers say short sales make great deals – if you're patient.
"It probably saved us $50,000" said Helen Martinez, who, with her husband, Robert, closed escrow two months ago on a short-sale property in Davis. It took almost four months, she said.
"If you need something right away it's not going to work out," she said. "You'll sit around and wait forever and find something else."
Jamie Trussell also expects to go into escrow soon on a short-sale property in Elk Grove. He and his wife, Tricia, made an offer on the house in February, then sweetened it by $10,000 when others bid on it.
"We fell in love with the house so we remain dedicated to it," he said. The two checked out other houses while waiting, including bank repos, but Trussell said, "It's been tough to beat the house we have with everything we want."
Their long wait has had consequences, however. Higher interest rates are adding to their expected borrowing costs.
"The last few weeks I've been watching the interest rate climb," said Trussell. "It was 4.8 percent in May, and now, it's at 5.2 percent.
"Our greatest concern when we started was 'how long is this going to take?' It's really pushing to the wire for us."
Williams said many short sales fall apart between the offer and acceptance because people find other properties.
Short sales take so long because lenders must negotiate permission from other parties, such as investors and private mortgage insurers. Most recent home loans also have so-called "seconds," an extra loan that financed the down payment. Other short sales involve home equity loans or homeowner associations seeking restitution for unpaid dues.
"That can make the process more complex," said BofA's Sunlin. He said BofA also asks some borrowers to contribute funds to ease the lenders' losses "or sign a promissory note for a later date."
"We see this every week," said Scott Thompson, principal at Carmichael-based Mortgage Resolution Services, a short-sale specialty firm. He said such lender requests scuttle many short sales, prompting homeowners to instead "walk away" from the house.
Thompson said homeowners often prefer to walk away than request a short sale.
"Now, banks are ready to do them," he said. "But many homeowners are so far under water on their mortgages that they're disinclined to participate at all."
Sunlin concedes the difficulties on both ends in a still-unraveling housing market.
"These are tough times," he said. "But we are committed to make the process work better … By doing this we should see more private sales instead of bank-owned sales."
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/1933643.html
For years real estate agents have steered buyers away from "short sales," labeling them a mind-numbing, difficult experience that could exhaust the patience of the biblical Job.
Now buyers can hardly avoid them.
"When it's 50 percent of the inventory you don't have a choice," said Scott Williams, a Roseville-based ReMax broker. Williams specializes in a complex transaction that may be the next evolution of the real estate market in Sacramento.
Banks, with their balance sheets battered after 40,000 capital-area foreclosures since early 2007, are finally warming up to short sales, a traditional marker of soured real estate markets. Increasingly, so are buyers. Some analysts believe short sales – those transactions in which banks accept offers below what they're owed to avoid the higher costs of foreclosing – may help avert a few thousand new foreclosures in the capital region.
"I still see a ton of defaults coming down the line … but a large percentage, 50 percent or more of these, will get done as short sales and keep the flow of repos to a manageable level," said Williams. "I don't see us getting flooded."
Industry analysts say half the for-sale signs in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties that aren't bank repos are short sales. They're especially prevalent in newer suburbs built during the housing boom. According to Sacramento-based Metrolist Services Inc.:
• 56 percent of Lincoln homes priced between $200,000 and $250,000 are short sales.
• 55 percent of Rancho Cordova homes priced between $200,000 and $300,000 are short sales. In Folsom, 46 percent of homes in that price range are short sales.
• 44 percent of Elk Grove houses priced from $300,000 to $325,000 are short sales.
All their owners owe more than their homes are worth. (Online evaluator Zillow.com says 68 percent of Sacramento-area households that bought in the past five years are in that boat). And most are believed to be in some stage of the foreclosure process.
Currently, nearly one in four sales pending – those expected to close escrow within weeks – are bank-approved short sales, according to Williams' analysis of Metrolist data. That's a rise from a January-through-June average of one in seven.
Bank repos, by comparison, are about 60 percent of area sales this year. But their share is falling now as the region's short-sale market share rises.
"It's a more cooperative solution," said David Sunlin, senior vice president with Charlotte-based Bank of America Home Loans. He said the firm is adding staff and streamlining procedures to do more short sales more quickly as an alternative to foreclosing.
"It allows the borrower to leave on their own terms. It's a more dignified exit strategy and the credit reporting is less negative afterward," he said. "It's a win for the lender as well. It's going to shorten the recovery cycle, which is important to all of us."
The firm, which bought Countrywide Financial last year, services one in five U.S. mortgages and is a top lender in the capital region.
Agents such as Williams hope the new BofA approach brings results. They complain that Countrywide has been among the industry's most difficult servicers for short sales.
Buyers say short sales make great deals – if you're patient.
"It probably saved us $50,000" said Helen Martinez, who, with her husband, Robert, closed escrow two months ago on a short-sale property in Davis. It took almost four months, she said.
"If you need something right away it's not going to work out," she said. "You'll sit around and wait forever and find something else."
Jamie Trussell also expects to go into escrow soon on a short-sale property in Elk Grove. He and his wife, Tricia, made an offer on the house in February, then sweetened it by $10,000 when others bid on it.
"We fell in love with the house so we remain dedicated to it," he said. The two checked out other houses while waiting, including bank repos, but Trussell said, "It's been tough to beat the house we have with everything we want."
Their long wait has had consequences, however. Higher interest rates are adding to their expected borrowing costs.
"The last few weeks I've been watching the interest rate climb," said Trussell. "It was 4.8 percent in May, and now, it's at 5.2 percent.
"Our greatest concern when we started was 'how long is this going to take?' It's really pushing to the wire for us."
Williams said many short sales fall apart between the offer and acceptance because people find other properties.
Short sales take so long because lenders must negotiate permission from other parties, such as investors and private mortgage insurers. Most recent home loans also have so-called "seconds," an extra loan that financed the down payment. Other short sales involve home equity loans or homeowner associations seeking restitution for unpaid dues.
"That can make the process more complex," said BofA's Sunlin. He said BofA also asks some borrowers to contribute funds to ease the lenders' losses "or sign a promissory note for a later date."
"We see this every week," said Scott Thompson, principal at Carmichael-based Mortgage Resolution Services, a short-sale specialty firm. He said such lender requests scuttle many short sales, prompting homeowners to instead "walk away" from the house.
Thompson said homeowners often prefer to walk away than request a short sale.
"Now, banks are ready to do them," he said. "But many homeowners are so far under water on their mortgages that they're disinclined to participate at all."
Sunlin concedes the difficulties on both ends in a still-unraveling housing market.
"These are tough times," he said. "But we are committed to make the process work better … By doing this we should see more private sales instead of bank-owned sales."
Monday, June 8, 2009
Evidence that the housing market is recovering.
Here’s more evidence that the housing market is recovering.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.Other encouraging news came from IHS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas."While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan. "We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Sellers have dropped their asking prices on 25 percent of homes listed for sale on Trulia.com, according to a report the online real estate company released last week.The average price-reduced home has seen a listing price cut of 10.6 percent.Not only are cities with lots of foreclosures hard hit, but traditionally strong markets also are among those with large-percentage price reductions.Among the 50 largest U.S. cities, the 12 locales with the largest percentage of price reductions are:
1. Jacksonville, Fla. – 36 percent2. Tucson – 32 percent3. Boston – 32 percent4. Los Angeles – 32 percent5. Columbus, Ohio – 31 percent6. Dallas – 31 percent7. Honolulu – 31 percent8. Minneapolis – 31 percent9. Austin – 30 percent10. Washington, D.C. – 30 percent11. Baltimore – 30 percent12. Las Vegas – 30 percentReinforces what we know, the market will continue to be value driven for buyers and price driven for sellers.
Two major home builders, Toll Brothers Inc. and Hovnanian Enterprises Inc., say their losses were shrinking compared to last year because buyers are coming back to the market.Other encouraging news came from IHS Global Insight, a research firm, which said home prices fell on average at an annual rate of 2.2 percent in the first quarter in 199 of 330 metropolitan areas. That compares with a 12.5 percent decline in the fourth quarter of 2008 in 312 metropolitan areas."While it's too early to see a bottom of this housing downturn," the report said, the latest data "may signal that the market is beginning to stabilize."
Some brave home builders are back building spec homes, something they had all but stopped doing as the market slowed.D.R. Horton Inc. had about 5,500 speculative homes at the end of the second quarter. Pulte Homes Inc., had about 2,400 spec homes at the end of the first quarter. Both are well above the industry average of 1,388 spec homes, according to a May report from J. P. Morgan. "We went from having way too much inventory, to liquidating all that, to now being back in a situation where you've got to build some inventory or risk losing sales," says Brent Anderson, vice president of investor relations for Meritage Homes Corp.
Sellers have dropped their asking prices on 25 percent of homes listed for sale on Trulia.com, according to a report the online real estate company released last week.The average price-reduced home has seen a listing price cut of 10.6 percent.Not only are cities with lots of foreclosures hard hit, but traditionally strong markets also are among those with large-percentage price reductions.Among the 50 largest U.S. cities, the 12 locales with the largest percentage of price reductions are:
1. Jacksonville, Fla. – 36 percent2. Tucson – 32 percent3. Boston – 32 percent4. Los Angeles – 32 percent5. Columbus, Ohio – 31 percent6. Dallas – 31 percent7. Honolulu – 31 percent8. Minneapolis – 31 percent9. Austin – 30 percent10. Washington, D.C. – 30 percent11. Baltimore – 30 percent12. Las Vegas – 30 percentReinforces what we know, the market will continue to be value driven for buyers and price driven for sellers.
Friday, June 5, 2009
Rate-rise threatens economic relapse
Rate-rise threatens economic relapse
http://www.inman.com/buyers-sellers/columnists/loubarnes/rate-rise-threatens-economic-relapse
The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.
Markets first, then new economic data.
The 10-year T-note has jumped to 3.85 percent this morning, the highest since last fall, and even two-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. Mortgages have gone right along to 5.625 percent with lowest fees -- the highest since the Fed announced its intentions to buy at Thanksgiving. A 1 percent rate-rise in two weeks has stopped refinance activity altogether, and purchase markets also suffer.
Stocks have now recovered all 2009 losses, and the Dow's press up on 9,000 has retraced one-third of its overall collapse. A mechanical pattern typical of all major moves either up or down, these retracements also typically have little predictive value. Worriers are convinced that this move is an all-time "dead-cat bounce."
Optimists think oil touching $70 a barrel confirms their position, but that market carries a sulfuric whiff of speculative fiddling. There is no increase in global demand, and the world is awash in supply overshoot -- it won't last for more than a few years, but is deep and broad. Not even speculation can move natural gas, trading under $4 today. Industrial commodities have retraced like the stock market, but the whole agricultural sector is flat-on-bottom -- one old friend says that Memorial Day retail sales of beef were the worst ever measured. National health kick, or budget beans?
The first week of each month brings the most important data. Today's rise in rates and stocks immediately followed news that payrolls contracted by "only" 345,000 jobs in May, down a quarter-million from the first-quarter monthly average. However, unemployment jumped another 0.5 percent to 9.4 percent, new claims for unemployment insurance are steady at 625,000 weekly, and only continuing claims flattened. Possibly some people are going back to work, but only at lesser pay. The overall job picture is awful.
The twin Institute for Supply Management reports by inventory managers excited the optimists. Manufacturing rose from 40.1 to 42.8, technically close to recession-end level (actual growth lies at 50), but the juice was in the components: new orders to 51.1, and "prices paid" from 32 to 43.5 produced a delighted "Eek!" from inflationists. Wednesday's service-sector survey (70 percent-plus of the economy) was tepid, to 44 from 43.7, and optimists ignored employment components in both surveys, which are still mired in the 30s.
The optimists, centered in the stock market and joined by the inflation-fearful, see a normal, cyclical recovery building, in which jobs are the last to recover and inflation follows. It may be on the weak side, but there will be no more Bears, Lehmans, AIGs, Chryslers or GMs. With all the big dominoes down, there is no reason to buy Treasurys for safety at no-earn yields.
http://www.inman.com/buyers-sellers/columnists/loubarnes/rate-rise-threatens-economic-relapse
The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.
Markets first, then new economic data.
The 10-year T-note has jumped to 3.85 percent this morning, the highest since last fall, and even two-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. Mortgages have gone right along to 5.625 percent with lowest fees -- the highest since the Fed announced its intentions to buy at Thanksgiving. A 1 percent rate-rise in two weeks has stopped refinance activity altogether, and purchase markets also suffer.
Stocks have now recovered all 2009 losses, and the Dow's press up on 9,000 has retraced one-third of its overall collapse. A mechanical pattern typical of all major moves either up or down, these retracements also typically have little predictive value. Worriers are convinced that this move is an all-time "dead-cat bounce."
Optimists think oil touching $70 a barrel confirms their position, but that market carries a sulfuric whiff of speculative fiddling. There is no increase in global demand, and the world is awash in supply overshoot -- it won't last for more than a few years, but is deep and broad. Not even speculation can move natural gas, trading under $4 today. Industrial commodities have retraced like the stock market, but the whole agricultural sector is flat-on-bottom -- one old friend says that Memorial Day retail sales of beef were the worst ever measured. National health kick, or budget beans?
The first week of each month brings the most important data. Today's rise in rates and stocks immediately followed news that payrolls contracted by "only" 345,000 jobs in May, down a quarter-million from the first-quarter monthly average. However, unemployment jumped another 0.5 percent to 9.4 percent, new claims for unemployment insurance are steady at 625,000 weekly, and only continuing claims flattened. Possibly some people are going back to work, but only at lesser pay. The overall job picture is awful.
The twin Institute for Supply Management reports by inventory managers excited the optimists. Manufacturing rose from 40.1 to 42.8, technically close to recession-end level (actual growth lies at 50), but the juice was in the components: new orders to 51.1, and "prices paid" from 32 to 43.5 produced a delighted "Eek!" from inflationists. Wednesday's service-sector survey (70 percent-plus of the economy) was tepid, to 44 from 43.7, and optimists ignored employment components in both surveys, which are still mired in the 30s.
The optimists, centered in the stock market and joined by the inflation-fearful, see a normal, cyclical recovery building, in which jobs are the last to recover and inflation follows. It may be on the weak side, but there will be no more Bears, Lehmans, AIGs, Chryslers or GMs. With all the big dominoes down, there is no reason to buy Treasurys for safety at no-earn yields.
Wednesday, June 3, 2009
Waiting game on low mortgage rates backfires
Waiting game on low mortgage rates backfires
By Mark Glover mglover@sacbee.com
http://www.sacbee.com/business/story/1903523.html
Sacramento-area homeowners and prospective first-time homebuyers might be wondering: Did we miss the boat on mortgage rates?
The short answer from experts is: Probably, but rates are still very attractive.
For 10 weeks, mortgage rates were riding well below 5 percent on 30-year loans, but housing and industry analysts speculated that many first-time homebuyers and homeowners looking to refinance existing mortgages were waiting for rates to drop even lower.
Then on Wednesday, rates went the other way.
Mortgage rates at some lenders spiked anywhere from 0.5 percent to 1 percent, and industry analysts pointed to economic indicators favorable to even higher rates in the coming weeks.
Rates on 30-year, fixed-rate mortgages averaged 4.91 percent this week, according to the Sacramento Association of Realtors. Some lenders' rates spilled into the 5-percent-plus ballpark.
For those who were waiting for rates to go lower and others who had yet to lock in rates, the window of opportunity may have closed, experts said. They added the market is still relatively good.
"Did they miss it? Well, I think they did in the short term," said Mike Lyon, head of Sacramento-based Lyon Real Estate. "The good news is it's still cheap. For most people, I would say, 'Let's not get greedy.'
"Rates are still good. For decades, we were in the 10-percent-plus range. Prices are still soft. This is not the time to lose hope, but to be a little more vigilant. Maybe this was a wake-up call for people who were waiting."
Still, Lyon said the rate spike will have its effect – probably on 5 percent to 10 percent of escrows in the local market.
"I think the initial problem is for those who did not lock in, and thinking (rates) would go lower was really extremely optimistic," he said. "A lot of people who are first-time homebuyers are now going to think about the price. It reduces their buying power."
Andrew LePage, an analyst with researcher MDA DataQuick, speculated that this week's rise in mortgage rates might have a more limited effect on the local market.
"Anything under 5 percent is really good, period," he said. "I'd guess that (borrowers) who might affected by this are at the margins.
"There are other factors. Lenders are being very picky, home prices are still in flux. Prices are temporarily firm in some areas. (Rates aren't) the only factor, and nobody can predict mortgage rates, because there are so many factors."
Lyon agreed that predicting the long-range course of mortgage rates requires a crystal ball, but he said demand for refinancing remains high. He said mortgage rates will continue to be affected by numerous economic factors, including overseas bond buying and the finite number of bonds that can be purchased in the market.
Keith Springer, president of Capital Financial Advisory Services in Sacramento, agreed, noting that the recent rally in the U.S. stock market also has applied pressure for increased rates.
"(Borrowers) probably have missed the boat on the lower rates," Springer said. "If they skipped 4.5 (percent) or 4.75 (percent), we're probably not going to see that again for maybe a couple years.
"The good news is that they're probably not going to raise the prime rate soon, and that's tied to the adjustable (rates). … People shouldn't be scared, because even 5.5 percent is a good rate."
Springer added that heavy borrowing by the U.S. government will be critical in determining rates over the months ahead. That was echoed this week by Federal Reserve Chairman Ben Bernanke, who said mortgage-rate increases are linked to concerns that enormous federal borrowing will decrease the value of government-backed assets.
The 30-year fixed mortgage rate was at a record low of 4.78 percent in April, which analysts linked to the Fed buying more than $1 trillion in mortgage securities and $300 billion in Treasury notes. Some analysts hope the Fed will continue to take aggressive steps, saying that U.S. economic recovery depends heavily on free-flowing credit and a stabilized housing market.
The same analysts point out that homeowners who refinance their mortgages tend to spend their extra cash more freely on goods and services, providing an overall lift to the economy.
The downside of more Fed action is that increased yields on Treasury notes tend to drive mortgage rates higher. Another potential downside of buying more Treasury notes is that it creates inflation.
By Mark Glover mglover@sacbee.com
http://www.sacbee.com/business/story/1903523.html
Sacramento-area homeowners and prospective first-time homebuyers might be wondering: Did we miss the boat on mortgage rates?
The short answer from experts is: Probably, but rates are still very attractive.
For 10 weeks, mortgage rates were riding well below 5 percent on 30-year loans, but housing and industry analysts speculated that many first-time homebuyers and homeowners looking to refinance existing mortgages were waiting for rates to drop even lower.
Then on Wednesday, rates went the other way.
Mortgage rates at some lenders spiked anywhere from 0.5 percent to 1 percent, and industry analysts pointed to economic indicators favorable to even higher rates in the coming weeks.
Rates on 30-year, fixed-rate mortgages averaged 4.91 percent this week, according to the Sacramento Association of Realtors. Some lenders' rates spilled into the 5-percent-plus ballpark.
For those who were waiting for rates to go lower and others who had yet to lock in rates, the window of opportunity may have closed, experts said. They added the market is still relatively good.
"Did they miss it? Well, I think they did in the short term," said Mike Lyon, head of Sacramento-based Lyon Real Estate. "The good news is it's still cheap. For most people, I would say, 'Let's not get greedy.'
"Rates are still good. For decades, we were in the 10-percent-plus range. Prices are still soft. This is not the time to lose hope, but to be a little more vigilant. Maybe this was a wake-up call for people who were waiting."
Still, Lyon said the rate spike will have its effect – probably on 5 percent to 10 percent of escrows in the local market.
"I think the initial problem is for those who did not lock in, and thinking (rates) would go lower was really extremely optimistic," he said. "A lot of people who are first-time homebuyers are now going to think about the price. It reduces their buying power."
Andrew LePage, an analyst with researcher MDA DataQuick, speculated that this week's rise in mortgage rates might have a more limited effect on the local market.
"Anything under 5 percent is really good, period," he said. "I'd guess that (borrowers) who might affected by this are at the margins.
"There are other factors. Lenders are being very picky, home prices are still in flux. Prices are temporarily firm in some areas. (Rates aren't) the only factor, and nobody can predict mortgage rates, because there are so many factors."
Lyon agreed that predicting the long-range course of mortgage rates requires a crystal ball, but he said demand for refinancing remains high. He said mortgage rates will continue to be affected by numerous economic factors, including overseas bond buying and the finite number of bonds that can be purchased in the market.
Keith Springer, president of Capital Financial Advisory Services in Sacramento, agreed, noting that the recent rally in the U.S. stock market also has applied pressure for increased rates.
"(Borrowers) probably have missed the boat on the lower rates," Springer said. "If they skipped 4.5 (percent) or 4.75 (percent), we're probably not going to see that again for maybe a couple years.
"The good news is that they're probably not going to raise the prime rate soon, and that's tied to the adjustable (rates). … People shouldn't be scared, because even 5.5 percent is a good rate."
Springer added that heavy borrowing by the U.S. government will be critical in determining rates over the months ahead. That was echoed this week by Federal Reserve Chairman Ben Bernanke, who said mortgage-rate increases are linked to concerns that enormous federal borrowing will decrease the value of government-backed assets.
The 30-year fixed mortgage rate was at a record low of 4.78 percent in April, which analysts linked to the Fed buying more than $1 trillion in mortgage securities and $300 billion in Treasury notes. Some analysts hope the Fed will continue to take aggressive steps, saying that U.S. economic recovery depends heavily on free-flowing credit and a stabilized housing market.
The same analysts point out that homeowners who refinance their mortgages tend to spend their extra cash more freely on goods and services, providing an overall lift to the economy.
The downside of more Fed action is that increased yields on Treasury notes tend to drive mortgage rates higher. Another potential downside of buying more Treasury notes is that it creates inflation.
Monday, June 1, 2009
European media want close-ups of capital-area housing crash
Home Front: European media want close-ups of capital-area housing crash
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/736/story/1883525.html
Europeans are making Sacramento a regular stop on media expeditions to the housing crisis that has been pounding their banks.
This year, Home Front has received inquiries from a Swiss newspaper, a German magazine, a Dutch television show and most recently a German public TV program about finding places that reveal California's housing crash and the people who have endured it.
Know this: The big real estate meltdown that defines the Central Valley and the outer Bay Area suburbs is interesting to people who live nine and 10 time zones east of here. It's more than curiosity. Big European banks are taking hits after investing in the risky mortgage-backed securities tied to California real estate.
Public broadcaster ZDF Television of Mainz, Germany, said it plans to show up this Memorial Day weekend in the capital region as part of a Northern California tour. Producers called last week from Washington, D.C., scouting for newer struggling neighborhoods marked by foreclosures and for-sale signs. The aim is to show the audience back home the thousands of homes financed with subprime and adjustable-rate loans sold by Wall Street to German financial institutions.
The Dutch public television current affairs program NOVA also initially planned to have a crew in California this week, but didn't make it. It was looking for partially inhabited and bankrupt apartment buildings, and was scouting Sacramento for possibilities.
"We didn't actually make it to California (yet)," said Lynn Berger, a journalist with the Hilversum-based current affairs show. "But although we didn't make this specific report, we have reported about the California real estate situation in the past (about foreclosures, mostly). It is definitely a topic that has been, and will be, covered widely on Dutch TV and in the newspapers," he said in an e-mail this week.
Several weeks ago, Munich-based Focus Magazine sent reporter Stefan Wagner to Northern California for a magazine story on "effects of the financial crisis on Californians." Wagner planned a trip to Sacramento and the Central Valley's foreclosure belt (Merced especially) to talk with people losing their homes.
A Google search hasn't yet turned up his report yet. But if you see Germans with video cameras this weekend be friendly; wave your adjustable-rate mortgage for the viewers back home.
Expanding affordability
There's more good news on the affordability front. On the heels of last week's California Association of Realtors report that 80 percent of first-time buyers can afford the median-price starter home in Sacramento, a prominent national housing index says three-fourths of homes sold in the capital area are "affordable."
The National Association of Home Builders/Wells Fargo Housing Opportunity Index reported this week that 76 percent of homes sold in the first quarter of 2009 in El Dorado, Placer, Sacramento and Yolo counties were affordable to households earning the region's median income of $72,800.
What's most astonishing is how fast that ratio has changed. Just two years ago in the first quarter of 2007, only 13.4 percent of homes in the four-county region were affordable to households with a median income of $67,200.
Don't miss credit deadline
There is one new thing Home Front should say about the state's $10,000 homebuyer tax credit after a phone call from a buyer who missed the boat: Be sure to hound everyone involved in your sale to fax the application to the state Franchise Tax Board within seven days of closing escrow.
This caller said many real estate and escrow agents aren't up to speed on the tax credit for buyers of new unoccupied homes. And he missed the deadline to apply, being busy with moving and paperwork. Goodbye $10,000 tax break.
The Franchise Tax Board says the builder's people must complete a state form and give a copy to the buyer or escrow rep. The buyer fills out more details and then the escrow agent faxes it to the FTB. Advice from one who learned the hard way: Keep an eye on them.
Incidentally, a bill, AB 765, that would add $200 million to the tax credit allocation easily passed its first committee test – winning a 9-0 vote Tuesday in the Assembly Revenue and Taxation Committee. It goes now to the Assembly Appropriations Committee for similar consideration.
Pulte dominates region
The giants are getting bigger and more powerful. If 2009 continues the trends of its first quarter, Pulte Homes will sell one in five new houses this year in the capital region.
Pulte, with its Del Webb subsidiary and pending merger with Centex Homes, had a 20.4 percent market share in El Dorado, Placer, Sacramento, Yolo and Yuba counties, reports market tracker Hanley Wood Market Intelligence.
The firm counted 148 sales by Michigan-based Pulte and its two affiliates among 725 January, February and March sales in the six-county region.
That level of market share is unprecedented in the region in the last 20 to 30 years, said Hanley Wood's Sacramento analyst Kathryn Boyce.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/736/story/1883525.html
Europeans are making Sacramento a regular stop on media expeditions to the housing crisis that has been pounding their banks.
This year, Home Front has received inquiries from a Swiss newspaper, a German magazine, a Dutch television show and most recently a German public TV program about finding places that reveal California's housing crash and the people who have endured it.
Know this: The big real estate meltdown that defines the Central Valley and the outer Bay Area suburbs is interesting to people who live nine and 10 time zones east of here. It's more than curiosity. Big European banks are taking hits after investing in the risky mortgage-backed securities tied to California real estate.
Public broadcaster ZDF Television of Mainz, Germany, said it plans to show up this Memorial Day weekend in the capital region as part of a Northern California tour. Producers called last week from Washington, D.C., scouting for newer struggling neighborhoods marked by foreclosures and for-sale signs. The aim is to show the audience back home the thousands of homes financed with subprime and adjustable-rate loans sold by Wall Street to German financial institutions.
The Dutch public television current affairs program NOVA also initially planned to have a crew in California this week, but didn't make it. It was looking for partially inhabited and bankrupt apartment buildings, and was scouting Sacramento for possibilities.
"We didn't actually make it to California (yet)," said Lynn Berger, a journalist with the Hilversum-based current affairs show. "But although we didn't make this specific report, we have reported about the California real estate situation in the past (about foreclosures, mostly). It is definitely a topic that has been, and will be, covered widely on Dutch TV and in the newspapers," he said in an e-mail this week.
Several weeks ago, Munich-based Focus Magazine sent reporter Stefan Wagner to Northern California for a magazine story on "effects of the financial crisis on Californians." Wagner planned a trip to Sacramento and the Central Valley's foreclosure belt (Merced especially) to talk with people losing their homes.
A Google search hasn't yet turned up his report yet. But if you see Germans with video cameras this weekend be friendly; wave your adjustable-rate mortgage for the viewers back home.
Expanding affordability
There's more good news on the affordability front. On the heels of last week's California Association of Realtors report that 80 percent of first-time buyers can afford the median-price starter home in Sacramento, a prominent national housing index says three-fourths of homes sold in the capital area are "affordable."
The National Association of Home Builders/Wells Fargo Housing Opportunity Index reported this week that 76 percent of homes sold in the first quarter of 2009 in El Dorado, Placer, Sacramento and Yolo counties were affordable to households earning the region's median income of $72,800.
What's most astonishing is how fast that ratio has changed. Just two years ago in the first quarter of 2007, only 13.4 percent of homes in the four-county region were affordable to households with a median income of $67,200.
Don't miss credit deadline
There is one new thing Home Front should say about the state's $10,000 homebuyer tax credit after a phone call from a buyer who missed the boat: Be sure to hound everyone involved in your sale to fax the application to the state Franchise Tax Board within seven days of closing escrow.
This caller said many real estate and escrow agents aren't up to speed on the tax credit for buyers of new unoccupied homes. And he missed the deadline to apply, being busy with moving and paperwork. Goodbye $10,000 tax break.
The Franchise Tax Board says the builder's people must complete a state form and give a copy to the buyer or escrow rep. The buyer fills out more details and then the escrow agent faxes it to the FTB. Advice from one who learned the hard way: Keep an eye on them.
Incidentally, a bill, AB 765, that would add $200 million to the tax credit allocation easily passed its first committee test – winning a 9-0 vote Tuesday in the Assembly Revenue and Taxation Committee. It goes now to the Assembly Appropriations Committee for similar consideration.
Pulte dominates region
The giants are getting bigger and more powerful. If 2009 continues the trends of its first quarter, Pulte Homes will sell one in five new houses this year in the capital region.
Pulte, with its Del Webb subsidiary and pending merger with Centex Homes, had a 20.4 percent market share in El Dorado, Placer, Sacramento, Yolo and Yuba counties, reports market tracker Hanley Wood Market Intelligence.
The firm counted 148 sales by Michigan-based Pulte and its two affiliates among 725 January, February and March sales in the six-county region.
That level of market share is unprecedented in the region in the last 20 to 30 years, said Hanley Wood's Sacramento analyst Kathryn Boyce.
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