US Foreclosure Figures Fall but It's Too Early to Celebrate

Data just released by Lender Processing Services shows the number of new foreclosures fell by nearly 40% last year, but this is largely due to the robo signing scandal, and the numbers defaulting on their mortgages last year remain more or less unchanged.

The figures found a significant difference between those states that required foreclosures to go through the courts compared to those that don't and found that foreclosure sales in states where no judicial action is required are four times higher than those states where cases are required to go through the courts.

RealtyTrac’s figures for the third quarter of last year show that foreclosure properties accounted for one fifth of all sales, down from 22% in the second quarter and 30% year-on-year.

The average price of foreclosure homes was $165,322 during the third quarter of last year which is around 34% below the price achieved by homes not in foreclosure. This average sales price had increased 1% quarter on quarter, but was down 3% year-on-year.

Until a settlement is agreed between multiple states attorneys general and major lenders the market won't be able to dispose of foreclosure properties properly. California's attorney general has just rejected the latest proposal, saying it is inadequate.

Without California's agreement the value of the settlement could drop by billions of dollars as around one fifth of the country’s foreclosures are in California. During 2005 and 2006 foreclosures typically accounted for less than 5% of all property sales throughout the country, so even though figures have fallen they still remain historically high.

Road to Recovery Remains Bumpy in the US

Although consumer confidence is growing the property market still faces a long road to recovery with prices down 3.4% in October 2011 compared to October 2010 according to the latest Standard & Poor's Case Shiller home price index.

During the spring and summer prices were showing signs of stabilising or even increasing, so these recent figures are a bit of a blow. Experts think they probably result from increased foreclosures, as during the summer months foreclosures slowed due to concerns over paperwork. Mortgage companies have now resumed their foreclosure activity which is forcing prices downwards.

Those buyers who can afford to wait are still choosing to sit on the fence, especially with expectations that prices may still fall a little further. A recent survey by Zillow showed that most housing experts believe prices will continue drifting downwards until the end of the year at least, due to several different factors.

One of these is the problem of negative equity as it is estimated around 22% of homeowners now have mortgages which are greater than the worth of their homes and they are unlikely to be able to afford to move and buy another property.

Foreclosures are still a problem and 6 million homeowners were late with their mortgage payments or were already facing foreclosure by the end of the third quarter. Continued distressed sales can only force prices downwards.

One of the worst performing metropolitan areas remains Atlanta where prices declined by almost 12% year-on-year with foreclosures accounting for much of this loss. Out of 20 cities just two were able to report positive gains with Washington and Detroit showing gains of 1.3% and 2.5% respectively.

US Foreclosures Fall 14% in November as Lenders Freeze Evictions for Holidays

Just as the Germans and Brits played football on the battlefields across Europe on Christmas day, the US' banks are calling ceasefire on litigious battles as they suspend evictions and foreclosure proceedings for the holiday period.

According to real estate data collection agency RealtyTrac the widespread move brought a 14% decline in the number of foreclosures last month, with 224,394 properties receiving default notices last month. The number of foreclosures also declined on a monthly basis, with 1 in 579 households receiving foreclosure notices in November, compared to 1 in 563 in October.

The firm's chief executive James Saccacio said that the eviction moratorium is partially behind the numbers:

Despite the fall in filings the number of scheduled foreclosure auctions hit a nine-month high. Saccacio explained: "[The] first quarter typically is a better buying season, so you’ll see more of this inventory try to come to market.

"I expect 2012 to look similar to 2011 in volume if nothing changes with government intervention regulations."

With 1 in 175 homes receiving foreclosure notices in November, Nevada remains the worst affected state for the 59th consecutive month. California (one in 211) came second, while Arizona was third (one in 256).

Saccacio's prediction that 2012 volumes will be largely the same as 2011 has to be looked upon as disappointing and pessimistic. For America 2012 will be almost the 7th year of housing market collapse and still we are not to see any improvement? Optimists would say that the rapid rush of auctions in Q1 combined with the foreclosure moratorium will make a big space to clear a large chunk of foreclosure inventory in Q1, setting the way for the rest of the year. Time will tell who is right.

US Births Hit an 11 Year Low, Affecting the Housing Market

  The birth rate in the US is at an 11 year low, and experts think decisions to delay having a family or forego having babies altogether may prolong recovery of the property market. The low birthrate will mean a lower rate of consumer spending on child related services and goods, and it's estimated the cost of having raising a child until the age of 17 is $226,920 with housing being one of the largest expenses.

Last year the number of registered births fell to 4 million which is the lowest level since 1999 as Americans worried about unemployment, falling house prices and low pay rises are lacking the confidence to plan for a new baby.

The US birthrate may not recover until 2013, and is likely to lead to slower economic growth. It’s being predicted that the employment rate will increase by 2.6% during the fourth quarter and that economic growth will be too weak in 2012 but to make much of an impact on the jobless rate.

Economists think the impact of a slowing birthrate could be huge as they point out households will choose to rent for longer periods of time, and there will be fewer people looking to move up the chain. Recently there have been signs of a pickup in the economy, and if this continues it could lessen the impact.

Consumer confidence improved in November and is at a four-month high, and retail sales increased by 0.5% last month. Claims for unemployment insurance have also dropped to their lowest level since April, which is a pretty good sign that the labour market may finally be recovering.

2011 Likely to Be another Bad Year for New Homes in the US

At the start of the year there were hopes that 2011 would see the property market in the US turning around, but instead this year looks likely to be less than memorable for the construction industry.

The number of new single-family homes constructed this year is expected to be around 424,000, which is a reduction of 10% on last year and 5% on 2009 which was the worst year on record since 1959.

It was anticipated that this year would see the beginning of a slow turnaround for single family home building as this particular sector has seen heavy job losses during the last five years, but optimism has gradually faded as the economic situation failed to improve.

Nationally house prices have continued to fall, and were down by an average of 4% in August compared to August last year, according to the Standard & Poor Case Shiller index, and fear of falling prices has kept buyers away.

This year has also seen the formation of fewer new households, with levels at just a third of those seen in 2007 to 2009. Consumer confidence has plunged with people becoming more uncertain about investments.

Many experts think the number of single family home sales will increase next year, with 2013 seeing an even bigger jump, but some are questioning the need to build extra homes as the US already has an oversupply. The latest data from the Federal Reserve Board shows banks continuing to ease lending standards on all types of loans apart from those secured on real estate.

US Shadow Homes Inventory Looks Set to Keep Prices Low

Hundreds of thousands of homes are either in foreclosure or have been repossessed by the banks, but have not yet come on the open market. There are already more homes for sale than people want to, or are able to buy, and with an estimated 1.6 million homes in the country's shadow inventory property prices are likely to remain depressed for years.

The states of Ohio, Georgia, Illinois, Florida and California have the largest shadow inventory is according to Realty Trac, which is a firm that tracks foreclosures and delinquent properties throughout the country.

Property prices in Ohio are down right across the state, and none of the areas seems able to maintain more than one month growth in prices, and it's not just affecting states with large shadow inventories, as Iowa had been largely unaffected by the boom and bust of the housing market, but is now beginning to see the negative effects of shadow inventory.

It can often take as long as a year before the banks get a foreclosure property on the market, and the likelihood is once it does sell it will be for a greatly reduced price.

According to Realty Trac, California has nearly 270,000 homes in its shadow inventory, while Ohio has nearly 70,000 homes. Apparently there are a couple of factors which are slowing down the resale of such properties, as legislators imposed a moratorium on foreclosures in 2009 as well as other delays, and lenders are increasingly seeking to keep homeowners in their property.

The value of the nation's shadow inventory has been estimated at $405 billion, and it's thought it will take at least four years to clear.

Sales of New Homes in the US Reach a Six-Month Low

Sales of new homes in the US have reached a six-month low, as even the largest price drops in two years failed to entice buyers away from distressed properties.

Sales fell by 2.3% to an annual rate of 295,000, and the median price dropped by 7.7% compared to August 2010. Developers are fighting limited access to credit and rising unemployment figures in addition to low foreclosure prices, and it seems likely that the building industry will not see a recovery in the short term.

The median sales price declined from $226,600 in August 2010 to $209,100 in August 2011, and purchases fell in three out of four US regions, with the North East registering a 14% drop. Sales in the Midwest rose by 8.2%. The supply of homes also increased to 6.6 months, up from 6.5 months in July.

In contrast sales of previously owned homes increased by 7.7% in August to reach a five-month high of 5.03 million annually, although the median price dropped by 5.1% compared to August 2010. Nearly a third of the properties were bought for cash while another third were made up of foreclosures and short sales.

Last week the Federal Reserve announced additional measures to increase growth and stimulate the property market, as it has been instrumental in every economic recovery since 1982 barring the current one. New housing starts fell to their lowest annual rate in three months in August, and the property market is still likely to be constrained by the current economic outlook and continuing weakness in the labour markets.

Overseas Investors Increasingly Interested in Memphis Property

According to one estate agent in Memphis, Tennessee, the city has seen a raft of overseas property buyers looking for cheaper investment opportunities, and the company feels this is down to the government's willingness to help foreign businesses. The government of Memphis and its civic leaders has been working over the last couple of years to improve the image of Memphis, emphasising that it is a world class city. It looks as if their efforts have been paying off, and a number of foreign-based companies have recently announced their intention to relocate facilities to Memphis.

Memphis is increasing its appeal to investors from Canada, Europe, Asia and Australasia, and the local estate agency admits it was caught unawares by the increased interest, as the majority of foreign investors tend to stick to known tourist destinations such as Florida or Las Vegas. It looks as if it is attracting investors who are looking for a lower cost investment which will produce positive cash flow and long-term stability, and the fact that Memphis is becoming well known as a business city, also helps considerably.

Now estate agents in the city are hoping to adapt to the new needs of international investors, and are learning to cope with different time zones and different cultural, legal and language barriers. At the moment foreign investors make up around 7% of all US home sales, so it is an important part of the market. However this particular Memphis estate agent believes that foreign investors will account for 20% of all sales during the fourth quarter of 2011 into the first quarter of 2012, and has plans to increase this percentage next year.

US Foreclosure Numbers Show Increase

The number of homes in the US that received foreclosure filings rose last month which is the first increase for three months. According to RealtyTrac, notices of repossession, default or auction sale were sent to 222,740 homes in June which is a 4% increase on the previous month.

This rise may be due to the increase in the number of properties sold, as banks could be prompted to issue foreclosure notices. The numbers of foreclosures had slowed in previous months as the banks became worried about the high numbers of homes hitting the market and subsequently dragging down prices.

Some experts feel that delaying the number of foreclosures is just delaying the recovery in the housing market, and there are estimates that it could take as long as 2015 or 2016 for prices to begin recovering.

During the first six months of the year the number of homes receiving foreclosure notices had fallen by 25% when compared to the last six months of 2010, and by 29% compared to the first six months of last year.

Sales of previously owned property in the US declined to a six-month low in May, while the supply increased which is a clear indication that the housing market is still in the doldrums.

Prices of foreclosure and short sale properties are typically around 20% below market value, and these represented about a third of all transactions in May, which is slightly less than the 37% recorded in April. Nevada still has the dubious distinction of having the highest foreclosure rate in the US with an incredible one in 21 homes receiving foreclosure notices.

Experts predict a long, slow struggle for US housing market

Experts are predicting that the American housing market will take a long time to return to any sort of normality, due to the huge number of foreclosures and empty homes, while the proposed 20% minimum deposit threatens to limit the number of buyers able to get on the property ladder.

The vice-chairman of the US Federal reserve, Janet Yellen, has said that the recovery will be long and drawn out, and that the Fed must work hard with other agencies to help clear the current stock of vacant properties and to prevent further foreclosures.

There were around 2 million vacant homes during the first quarter of this year, and the inventory of unsold property is likely to stay high for quite some time, increasing the downward pressure on house prices.

Americans are still having considerable difficulty getting finance, and the Federal Reserve is now trying to persuade lenders that all mortgages should meet higher underwriting standards as an alternative to foreclosure. Robert Shiller, the US economist responsible for the Case Shiller index predicts that house prices could fall by a further 10% to 25% during the next five years.

A minimum 20% deposit has been proposed by six federal regulators, but angry critics say this will prevent a large percentage of the population from ever buying their own home, condemning them to rent for ever.

There are worries that the only people who will be able to get mortgages in the future will be the very wealthy, with other potential buyers being either excluded or charged higher rates.

US new home purchases at record low

Homebuyers in the US are shunning new homes as purchases are now at record low levels with the figures for April showing that the property market remains a weak link in the US recovery.

The number of new homes sold in April was 300,000 which is the same as March, but it seems as if buyers are choosing to purchase previously owned homes which is having a serious effect on homebuilders.

The figures for this months new-home sales are not expected to show any significant improvement. The high levels of foreclosures will continue to have a negative effect on property prices. Unemployment levels are now at 9% and wages are remaining static.

When this is combined with tighter credit regulations it seems likely that a recovery in the housing market will take years. Steve Blitz, a senior economist for ITG Investment Research Inc in New York feels that new-home sales will remain depressed due to the considerable housing inventory.

The chief financial officer of D.R. Horton, Bill Wheat feels that demand will remain weak into 2012. D.R. Horton is the second largest homebuilder in the US.

Housing starts fell by 11% in April to 523,000, as builders have already begun to cut backoreLogic Inc estimated in March that there were 1.8 million homes that were more than three months delinquent, already in foreclosure or bank owned, and there are already 3.87 million pre-owned homes on the market which will continue to affect sales of new houses.

At the peak of the market, new-home sales accounted for 16% in July 2005, while in March they accounted for just 5.6% of the market.

PWC Declares American Property Market is in Recovery Mode

PricewaterhouseCoopers has declared from a recent report that the property market in America is in the mode of recovery and investors are the ones who are really leading the way. From all the reports over the last couple of years, this latest report seems to be the most encouraging, as the data indicates that confidence is returning to property investors.

According to data from the PwC Real Estate Barometer, the commercial real estate market is doing considerably well and will continue as long as confidence among businesses and consumers continues. The office and multifamily housing sector are expected to show positive signs of recovery by the end of this year.

The retail sector is not expected to do quite so well this year, but experts believe that next year will begin to see more recovery. There are some inflation fears and consumers are not spending as much right now, but investors are beginning to have more interest in distressed retail properties, as they believe it is a good time to purchase now before the market stabilizes.

Surprisingly, the luxury retail sector is showing signs of recovery, as people with a great deal of money are not afraid to spend it at this time. Some are surprised, but the retail sector is doing better than many expected, as many thought the boost wouldn’t come till at least the year 2013.

With the commercial real estate sector doing so well, and the retail market beginning to show small signs of recovery, experts believe that the increase in transactions will give the economy the added boost it needs.

US Housing Recovery on the Cards

Some experts say that the United States is on the way to a housing recovery as home affordability is returning to pre-bubble levels in more and more cities in America.

Home values have fallen 2.6 percent in the last quarter and such a significant drop has not been seen since the first quarter of 2009. Moody’s Analytics tracks the ratio of median home prices to yearly household incomes in 74 markets. According to their data, housing affordability is about the same now as it was between 1989 and 2003 in 47 of those markets. It is believed by most finance experts that the housing boom began in 2003.

It was during the boom that house prices increased greatly due to lax lending and inflation. This increase was greater than the average increase in household income, thus the ratio of home prices to yearly household income peaked in 2005 at 2.3 percent. Since September of 2010, it has dropped to 1.6 percent, which mirrored the lowest level in 35 years.

Chief economist at Moody’s Analytics, Mark Zandi, states that these are very affordable prices for people based on incomes. Home price declines are drawing buyers back into the market and especially property investors.

According to other economists and housing analysts, further declines in home values between 5 to 10 percent may occur by late this year or early next year. With such a decrease, most believe that this will be the bottom and that prices will begin their increase from there.

Stability Expected in Las Vegas Property Market in 2011

Economists and executives in the Las Vegas area have predicted that the property market in 2011 will be about the same as it was in 2010 but anticipate a rebound in 2012. Las Vegas is a sought after destination for retirees and home prices are affordable right now, bringing in overseas investors as well.

The rather high unemployment rate of 14 percent as well as a rather weak economy has kept the property market from significant growth the past couple of years, but analysts have confidence that within the next couple of years the economy will improve and more jobs will be available.

The market is doing better than it has in the past couple of years. In 2008 there was a 33 percent drop and in 2009 there was a 22 percent drop. Last year, in 2010, there was a 3 percent drop, which means that the property market is growing stronger.

Chief economist Lawrence Yun of the National Association of Realtors states that the economy is slowly improving across the nation and more jobs are out there. He believes that Las Vegas will benefit from such factors.

Yun also stated that he believes that the amount of foreclosures will remain about the same. The abundance of foreclosures have brought in a good number of real estate investors, especially foreign ones, who are buying approximately 40 to 50 percent of the homes in the area. Las Vegas has international appeal with an abundance of leisure activities that draw in tourists from all around the world.

2011 to be Year of Recovery for Washington Property Market

AS you’d expect the Washington property market, like London in Britain and Paris in France, is very different to the rest of the US housing market.

While many US cities and states are still struggling, Washington home values have practically recouped the losses made during the downturn and is currently on an upward path.

A recent report by Clear Capital a 5.3% house price growth saw Washington rank second behind Honululu (7.2%) in terms of property price growth in 2010. The group is predicting that a 6.5% growth in Washington home values this year will be the largest in the US.

According to Clear Capital it is not just the prestige pushing Washington’s housing recovery, but the strong employment sector and low foreclosure numbers. With US unemployment currently at 9.8%, Washington’s 5% is clear indication of the massive potential of the city. Also, only 15% of Washington properties are bank owned compared to 40% in other areas of the country.

Locations such as Capitol Hill, Northwest D.C., Bethesda, and Chevy Chase are in higher demand due to the desirable locations and centrality. The towns that are further away are seeing slower increase.

2011 may also see a rise in property investors as they see the home values beginning to increase.

The crisis has led to the gaps between major cities and affluent towns and their less affluent counter parts severely widened. While Washington maybe an extreme case it certainly is not an isolated one.

Realtor.com Goes International

Realtor.com, the US' largest property portal run by the National Association of Realtors is expanding into the world of international property, with translation services and international listings.

The portal currently features US property only, but it is already visited by 575,000 international users ever month, according to its data. It hopes to expand on this coverage of its clients US properties, and will also carry international listings as well.

"Realtor.com will expand the exposure of U.S. real estate listings to global markets and add international listings," said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.

"While all real estate in the U.S. is local, the same is not true for property owners. The U.S. continues to be a top destination for international buyers from all over the world. Foreign buyers understand the value of owning a home in this country and can rely on Realtors(R) to help guide them through the process of buying property in the U.S. With expertise, knowledge and experience, Realtors(R) have a global perspective, reflecting the increasing importance of foreign buyers to U.S. home sellers," Phipps said.

Realtor.com is a collaboration with Move Inc, which brings the internet technology know how to the NAR's industry clout to make a US only portal the most powerful property website in the world. Now that it will cover the world, one would assume it to become the most powerful overseas property portal, but this is far from being a given.

Rightmove is the largest UK property portal, and the presence of its overseas division is huge in the world of overseas property, but not the biggest. Although the fact that it is inextricably linked to the main rightmove site (same domain means no Alexa etc) we can see from the search results that there are more prominent sites in the overseas arena.

There is a lot to be said for sticking to your niche and ensuring your continued domination therein. Sometimes branching out works out tremendously, other times not so much. Time will tell which of these is true in the case of Realtor.com.