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.

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.

US Property Market Finally Shows Signs of Stabilising

According to the second-quarter real estate market report from Zillow, the property market in the United States may finally be showing signs of heading towards stabilisation.

Although property prices have fallen by an average of 6.2% in the majority of markets, these falls have been slowing, with the last quarter showing just a 0.4% decline, the smallest for more than four years.

Some property markets are showing price increases, and negative equity has declined slightly. However economists are predicting that the bottom of the market won't be realised until next year due to the high numbers of foreclosures and continuing uncertainty over the economy.

Overall property prices have fallen by around 28% since their peak in June 2006, and the average property costs $171,600. The rate of foreclosures is gradually declining, as in March it reached a peak of 21.4% of all sales, while in June this figure fell to 19.7%.

Although property experts acknowledge this is good news they are still cautious about the future, and feel the road to recovery will not be particularly smooth. This is due to the fact that there are still a lot of foreclosures in the pipeline, and many people still have high levels of negative equity which could put their homes at risk in the future.

Some property markets have now shown two consecutive quarters of appreciation, and these include Washington DC where property prices increased 0.2% through to the first quarter of the year, and 1.7% through the second quarter. In the Pittsburgh prices increased 0.1% through the first quarter of the year and 2.8% through the second quarter.

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.

US banks easing terms on risky loans

Two of the largest US banks, the Bank of America and JP Morgan Chase, are helping borrowers by easing their mortgage terms or cutting their debt, and some of the grateful recipients are not even in default.

One lucky borrower received a letter last year from Chase telling her the amount she owed on her condominium would be cut in half. Her loan was for $300,000, but she wasn't in default, and although she didn't understand quite why they have chosen to do this she certainly wasn't going to turn down such a lucrative offer. However the offer was deliberately vague, and upon acceptance the interest rate was raised to around 5% so repayments remain roughly the same.

Before this offer was made this particular property owner was in negative equity, and as such was far more likely to be at risk of foreclosure as anyone in this position is more likely to move away to take a job than anyone who has a financial stake in the property.

Apparently banks are overhauling loans for borrowers who have pay option adjustable rate mortgages which were taken out in the late stages of the property boom, as these are viewed as potentially causing future problems. This type of loan allows borrowers to forgo making the principal payment and some of the interest payment for an introductory period which can last several years. The extra interest and monies owed are then added to the loan.

Although there are many homeowners who could desperately use this kind of assistance, the lucky few chosen to receive this help are often suspicious as to the motive. In March economists at the Federal Reserve wrote a paper saying they could find no real evidence that any lender is actually reducing principal on mortgages.

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.

Australians Finding Value in US Property Market

Australians are viewing the US as a good property investment opportunity, but real estate experts are cautioning investors to do their research before making an investment.

Australia has a strong dollar and the US property market has an abundance of foreclosures on the market. With median prices being much lower in the US, Australians are tempted to make overseas investments to enrich their portfolios.

The median house price in Perth, Australia is $465,000 and in the US is $210,000. With the falling rate of home ownership in the US, the market is peaking the interest of international investors.

According to Leigh Gavin, head of property research at Frontier Investment Consulting, for every 1 percent that home ownership rate falls, it equals about 1.1 million households.

In the last year, about $600 million dollars have come in from Australian investors into the US property market. Some are even paying for investments that they have never seen. This may not be wise though, if the area that the properties are being purchased are not in attractive areas. The potential for loss in the future is greater if the area is run down or in a high crime area.

Some experts are advising that investors look into multi-family housing and some companies are available to assist overseas investors find and purchase such housing for as little as $10,000. Multi-family housing is booming in the US due to Generation Y’s reluctance to purchase their own homes with the economy the way it is.

In Australia, yields on apartments are about 2-3 percent, but in the US yields are about 5-6 percent. The US property market is expected to continue to see slow recovery this year, as more and more people begin to show interest in purchasing homes once again.

Growth Predicted in US Commercial Property

According to a recent report by PricewaterhouseCoopers LLP, the United States commercial property sales are expected to increase within the next few years, as more and more property investors gain confidence in the market as a whole.

According to this quarterly survey, job growth, as well as higher business and consumer optimism, are encouraging purchasers to get into the market now with the interest rates where they are. By waiting, interest rates could increase, as well as push prices up in the office, industrial, multifamily, and retail sectors.

Everyone is awaiting recovery of the real estate industry, and as confidence grows among investors, the better will be the results for the industry. The long wait has caused some investors to become more eager to get back in there.

According to an index from the Massachusetts Institute of Technology Center for Real Estate in Massachusetts, commercial real estate prices surges 19 percent in 2010. Estimates from real estate experts believe that commercial property transactions could increase up to 40 percent this year, to $135 billion.

Additonally, the PricewaterhouseCoopers report stated that with low interest rates and stiff competition among buyers, the chances of getting good returns on investments are favorable. In 27 of 31 office markets, capitalization rates decreased.

It is estimated that within the next two years, most industrial markets will improve, with 86.2 percent expected to be in recovery by 2012 as demand surges. With supply and demand becoming more balanced, vacancy rates should decrease and the rental industry should increase.

The multifamily sector has been doing quite well due largely to more challenging lending restrictions and limited home buying opportunities. As a result, demand for apartments have increased and are expected to continue for the next couple of years.

http://www.bloomberg.com/news/2011-03-21/deal-volume-to-drive-u-s-commercial-real-estate-recovery-pwc-survey-says.html

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.

Seattle Real Estate Market Shows Signs of Improvement

After several years of a slow real estate market, commercial developers in Seattle are noticing a greater need for apartments in the area and are hopeful that 2011 will be a more productive year.

Apartments are in great demand these days due to the amount of foreclosures and people just not opting to purchase homes right now. Developers are putting up apartment complexes and seeing them filled up quickly.

Within the last year, vacancy rates have dropped and rent has increased slightly, which are clear signs of increasing demand. Analysts predict that 2011 will see a growing market as developers get on board and get building.

A 122-unit is set to begin being built in Belltown this month as well as a 105-unit development near Seattle University next month. R.D. Merrill Properties has their hopes on constructing a 234-unit complex on Capitol Hill in March that will target young adults. This same company is planning on construction in three other areas as well, including Wallingford, Ballard, and Lower Queen Anne.

One of the country’s biggest apartment developers, Avalon Bay Communities, anticipates building a 272-unit apartment complex as well. The number of apartments in the early permitting stages has increased 48 percent in the fourth quarter alone.

The market in Seattle has even prompted developers in other cities to come get in on the ripe market. Atlanta-based Wood Partners opened an office in November.

People just don’t seem as interested to purchase homes these days due to the poor real estate market the past few years. Many are waiting to see what the market will do in the next couple of years before making that decision.

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.