ATLANTA ? Dec. 3, 2009 ? The national economy is perking up, even as Florida and the Southeast continue to struggle with a weak job market, depressed lending and a gloomy commercial real estate sector, the government said Wednesday.
The economic snapshot was provided in the Beige Book ? a compilation of economic anecdotes from the nation?s 12 Federal Reserve districts.
While the report found that in eight out of the 12 districts ?economic conditions have generally improved,? four others ? including the Atlanta District, which serves Florida ? reported mixed economic news.
The bright spots in the Southeast: ?The majority of retailers described activity as exceeding their modest expectations,? and new and used home sales were seen as improving, particularly in the lower-priced category.
Otherwise, the report painted a picture of continued weakness.
Manufacturers said orders were down, car sales have slipped since the days of the ?cash for clunkers? program and ?commercial real estate conditions were widely characterized as weak and, in many cases, deteriorating further,? the report found.
Of particular concern for Florida?s business community, banks said they were maintaining tight lending standards as they focus on repairing their balance sheets.
?Some financial contacts commented that increased lending was not anticipated given the current economic environment,? the report found.
The Beige Book is produced eight times a year, usually a few weeks before the Federal Reserve Open Market Committee meets to set monetary policy. Federal Reserve Chairman Ben Bernanke has suggested the government will keep interest rates low to spur the economic recovery.
Copyright ? 2009 The Miami Herald, Jim Wyss. Distributed by McClatchy-Tribune Information Services
Friday, December 4, 2009
Wednesday, December 2, 2009
Nine consecutive gains for pending home sales
Another Month of good news!
WASHINGTON ? Dec. 1, 2009 ? Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors? (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. ?Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the homebuyer tax credit stimulus,? he said. ?This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.?
The PHSI in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago. In the Midwest the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008. Pending home sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago. In the West the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.
Yun cautioned that home sales could dip in the months ahead.
?The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.
?Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,? Yun said.
? 2009 Florida Realtors?
WASHINGTON ? Dec. 1, 2009 ? Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors? (NAR).
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.
Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. ?Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the homebuyer tax credit stimulus,? he said. ?This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.?
The PHSI in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago. In the Midwest the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008. Pending home sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago. In the West the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.
Yun cautioned that home sales could dip in the months ahead.
?The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.
?Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,? Yun said.
? 2009 Florida Realtors?
Friday, November 27, 2009
Faulty Chinese drywall causes corrosion, federal study says
MIAMI ? Nov. 24, 2009 ? What thousands of homeowners in South Florida and nationwide have believed about Chinese drywall was validated Monday when the Consumer Product Safety Commission said there is a link between the imported material and problems with corrosion in homes that have it. But the agency also said they don?t believe the problems are as widespread as early estimates predicted.
The conclusion followed testing at 51 homes in Florida, Alabama, Louisiana, Mississippi and Virginia that found ?a strong association between the problem drywall, the hydrogen sulfide levels in homes with that drywall and corrosion in those homes.?
Homeowners have been complaining for about a year to federal and state government agencies that their homes smell of sulfur or rotten eggs, the copper in their air-conditioning units and electrical wires in their homes are corroding and that other metals are turning black. They have also reported problems breathing, headaches and nosebleeds.
But until this week, no agency had officially linked corrosion problems with drywall. The safety commission is still investigating the link between wallboard and health concerns. Monday?s report said chemicals found in the homes tested were at levels lower than what might be expected to cause irritation, but the combination of those compounds with other substances could lead to the symptoms families are experiencing.
The agency cautioned that not all Chinese drywall is a source of problems.
?Not all drywall is alike,? said Jack McCarthy, president of Environmental Health & Engineering, which conducted the testing for CPSC. ?Not all Chinese drywall is alike. It depends on what it?s made of -- not the country it came from.?
CPSC spokesman Scott Wolfson said the agency is ?not limited in the scope of our investigation to just Chinese drywall.?
To date, the CPSC has received 2,091 complaints reports from residents in 32 states, the District of Columbia and Puerto Rico who believe their health symptoms or the corrosion of certain metal components are related to Chinese drywall. The majority of those -- more than 1,400 -- are from Florida residents.
While the problem is widespread, Wolfson said previous estimates that as many as 100,000 homes nationwide may be affected are likely incorrect. Complaints reported to state and federal agencies don?t foreshadow that large of a number.
The agency has spent about $3.5 million on its investigation, which it said is the largest in its history. The next phase of the agency?s work is on finding ways to identify problem drywall and come up with ways to treat homes.
Sen. Bill Nelson, D-Fla., was unimpressed with the consumer protection agency?s efforts.
?I?m still disappointed the government is taking too long to establish whether there?s a link between drywall, corrosion and health problems,? he said.
Many homeowners who are either living in their smelly homes or have moved out -- left to juggle mortgage payments and rent -- are still waiting for financial help. Some builders, including Miami-based Lennar and Sunrise-based GL Homes, have offered to repair affected homes. Many homeowners are pursuing lawsuits against foreign manufacturers that could take years to resolve.
Only one company, Knauf Plasterboard Tianjian, has agreed to be served with a federal class-action lawsuit and not force plaintiffs to go through international legal channels.
Warren Friedman of the U.S. Department of Housing and Urban Development said it is too early to discuss specifics of any financial assistance homeowners could get from the federal government. The CPSC sent the IRS a letter Monday informing them of their findings. The IRS could decide to allow homeowners to declare a casualty loss on returns.
Some states, including Louisiana, are using federal Community Development Block Grant money to help homeowners.
Copyright ? 2009, The Miami Herald, Nirvi Shah. Miami Herald staff writer Lesley Clark contributed to this report. All rights reserved.
The conclusion followed testing at 51 homes in Florida, Alabama, Louisiana, Mississippi and Virginia that found ?a strong association between the problem drywall, the hydrogen sulfide levels in homes with that drywall and corrosion in those homes.?
Homeowners have been complaining for about a year to federal and state government agencies that their homes smell of sulfur or rotten eggs, the copper in their air-conditioning units and electrical wires in their homes are corroding and that other metals are turning black. They have also reported problems breathing, headaches and nosebleeds.
But until this week, no agency had officially linked corrosion problems with drywall. The safety commission is still investigating the link between wallboard and health concerns. Monday?s report said chemicals found in the homes tested were at levels lower than what might be expected to cause irritation, but the combination of those compounds with other substances could lead to the symptoms families are experiencing.
The agency cautioned that not all Chinese drywall is a source of problems.
?Not all drywall is alike,? said Jack McCarthy, president of Environmental Health & Engineering, which conducted the testing for CPSC. ?Not all Chinese drywall is alike. It depends on what it?s made of -- not the country it came from.?
CPSC spokesman Scott Wolfson said the agency is ?not limited in the scope of our investigation to just Chinese drywall.?
To date, the CPSC has received 2,091 complaints reports from residents in 32 states, the District of Columbia and Puerto Rico who believe their health symptoms or the corrosion of certain metal components are related to Chinese drywall. The majority of those -- more than 1,400 -- are from Florida residents.
While the problem is widespread, Wolfson said previous estimates that as many as 100,000 homes nationwide may be affected are likely incorrect. Complaints reported to state and federal agencies don?t foreshadow that large of a number.
The agency has spent about $3.5 million on its investigation, which it said is the largest in its history. The next phase of the agency?s work is on finding ways to identify problem drywall and come up with ways to treat homes.
Sen. Bill Nelson, D-Fla., was unimpressed with the consumer protection agency?s efforts.
?I?m still disappointed the government is taking too long to establish whether there?s a link between drywall, corrosion and health problems,? he said.
Many homeowners who are either living in their smelly homes or have moved out -- left to juggle mortgage payments and rent -- are still waiting for financial help. Some builders, including Miami-based Lennar and Sunrise-based GL Homes, have offered to repair affected homes. Many homeowners are pursuing lawsuits against foreign manufacturers that could take years to resolve.
Only one company, Knauf Plasterboard Tianjian, has agreed to be served with a federal class-action lawsuit and not force plaintiffs to go through international legal channels.
Warren Friedman of the U.S. Department of Housing and Urban Development said it is too early to discuss specifics of any financial assistance homeowners could get from the federal government. The CPSC sent the IRS a letter Monday informing them of their findings. The IRS could decide to allow homeowners to declare a casualty loss on returns.
Some states, including Louisiana, are using federal Community Development Block Grant money to help homeowners.
Copyright ? 2009, The Miami Herald, Nirvi Shah. Miami Herald staff writer Lesley Clark contributed to this report. All rights reserved.
Wednesday, November 25, 2009
Real Estate of the Future: Lean, Clean and Green
RISMEDIA, November 25, 2009?There are several changes going on in the real estate industry today, not all of which are due to the economy, but certainly the reverberation from the recession will be felt for some time. As I see it, there are three words that come to mind as we move into the future of real estate:
Lean
In order to be successful in any business, you must find a need you can fill better than anyone else and you also need to fit the demographics of where you are. There are many reasons that being in the business of real estate is paramount for success. If we look at demographics, there are many Baby Boomers and Civics in the industry that want the opportunity to retire. But with the recent financial crisis, several of them have to start from scratch and they find themselves competing with the newest people coming into the industry who are often better educated in business and technology.
Looking from a consumer?s perspective, service is far more important than sizzle?we have a group consciousness about wasting money; we want to see a return on our investment in both time and money. The good businesspeople are going to track results for all their marketing efforts and systems to ensure a good return. The professionals who wish to retire want to save for that opportunity and they also want a good quality of life so they will be selective with their time. The Generation Xs and Ys understand the quadrant of what makes you an employee and what makes you own your future and how important it is to get to the right side of the quadrant to get a long-term return. They want quality of life all the way through.
I believe the real estate industry is going to continue to raise the standards and it will keep the number of people in the industry at a more realistic number. Moving forward, you will have to be a consummate professional. Even better than that is the fact that there will be more of the pie for the true professional that runs their business effectively.
Clean
Technology, Google and social networking has made what we do a matter of public record. Couple that with the most recent mortgage/financial crisis, and the consumer has two things they are concerned with: a way to look up all you do and who you work with along with mistrust due to the ones that made mistakes and the perception in the media. There has never been a more important time to be aware of what is being said about you and who you associate with.
Utilizing technology in order to be aware of what is being said about you on the Internet is crucial. The first thing you should do is get a Gmail account and then sign up for Google alerts to make yourself aware of what is being said about you, the people you work with and everyone real estate related that you do business with. Be proactive in showing what you do for this industry and your community. Get involved and help change the way the real estate industry and its professionals are perceived. Stay on top of local impressions as well?ask on a regular basis what the consumer and industry wants?and provide it.
Green
While conscientious living and the green movement continue to gain momentum across the real estate industry, every consumer we work with demands that everyone they do business with be more conscientious. Each of us has been responsible for using too much paper and not turning the lights off when we leave a room, but there are several ways to utilize e-business and to make your office environmentally friendly. The other reason for going green is that you will put more of it in your pocket by being more efficient. If you want to show consumers you are doing your part to care for the environment, go out and get a green designation and encourage everyone in your office to do the same. In addition, take stock of everything in your office and determine what systems you can put in place and how you can be more efficient in every department.
Commentary by Tami Bonnell read more: http://rismedia.com/2009-11-24/real-estate-of-the-future-lean-clean-and-green/#ixzz0XsDU6dHl
Lean
In order to be successful in any business, you must find a need you can fill better than anyone else and you also need to fit the demographics of where you are. There are many reasons that being in the business of real estate is paramount for success. If we look at demographics, there are many Baby Boomers and Civics in the industry that want the opportunity to retire. But with the recent financial crisis, several of them have to start from scratch and they find themselves competing with the newest people coming into the industry who are often better educated in business and technology.
Looking from a consumer?s perspective, service is far more important than sizzle?we have a group consciousness about wasting money; we want to see a return on our investment in both time and money. The good businesspeople are going to track results for all their marketing efforts and systems to ensure a good return. The professionals who wish to retire want to save for that opportunity and they also want a good quality of life so they will be selective with their time. The Generation Xs and Ys understand the quadrant of what makes you an employee and what makes you own your future and how important it is to get to the right side of the quadrant to get a long-term return. They want quality of life all the way through.
I believe the real estate industry is going to continue to raise the standards and it will keep the number of people in the industry at a more realistic number. Moving forward, you will have to be a consummate professional. Even better than that is the fact that there will be more of the pie for the true professional that runs their business effectively.
Clean
Technology, Google and social networking has made what we do a matter of public record. Couple that with the most recent mortgage/financial crisis, and the consumer has two things they are concerned with: a way to look up all you do and who you work with along with mistrust due to the ones that made mistakes and the perception in the media. There has never been a more important time to be aware of what is being said about you and who you associate with.
Utilizing technology in order to be aware of what is being said about you on the Internet is crucial. The first thing you should do is get a Gmail account and then sign up for Google alerts to make yourself aware of what is being said about you, the people you work with and everyone real estate related that you do business with. Be proactive in showing what you do for this industry and your community. Get involved and help change the way the real estate industry and its professionals are perceived. Stay on top of local impressions as well?ask on a regular basis what the consumer and industry wants?and provide it.
Green
While conscientious living and the green movement continue to gain momentum across the real estate industry, every consumer we work with demands that everyone they do business with be more conscientious. Each of us has been responsible for using too much paper and not turning the lights off when we leave a room, but there are several ways to utilize e-business and to make your office environmentally friendly. The other reason for going green is that you will put more of it in your pocket by being more efficient. If you want to show consumers you are doing your part to care for the environment, go out and get a green designation and encourage everyone in your office to do the same. In addition, take stock of everything in your office and determine what systems you can put in place and how you can be more efficient in every department.
Commentary by Tami Bonnell read more: http://rismedia.com/2009-11-24/real-estate-of-the-future-lean-clean-and-green/#ixzz0XsDU6dHl
Saturday, November 21, 2009
Foreclosure news
WASHINGTON ? Nov. 20, 2009 ? The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.
The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That?s a shift from last year, when riskier subprime loans drove the housing crisis.
The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.
After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.
Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.
One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.
?There?s no indication in this data that foreclosures are going to abate anytime soon,? said Mark Zandi, chief economist at Moody?s Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.
Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.
Many laid-off homeowners might be able to survive on their savings for a while, but ?the longer the economic situation stays in place, the less likely they are to hold on,? said Jay Brinkmann, chief economist at the Mortgage Bankers Association.
In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy?s recovery.
?Builders only start homes when they can make money,? said John Burns, an Irvine, Calif.-based real estate consultant. ?In a lot of areas, until prices go back up, construction doesn?t make any sense.?
The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.
Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won?t make her payment for December.
Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.
After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, ?while we continue to review her financials for a permanent solution.?
After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn?t expected to peak until next spring or summer.
Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.
About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.
Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.
The Mortgage Bankers Association?s quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.
Copyright ? 2009 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That?s a shift from last year, when riskier subprime loans drove the housing crisis.
The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.
After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market and expect further price declines.
Among states, the worst damage is still concentrated in the states hardest hit from the start: Florida, Nevada, California and Arizona. Together, they accounted for 43 percent of new foreclosures.
One in four mortgages in Florida were either past due or in foreclosure, the most in the U.S. Nevada was close behind at 23 percent.
?There?s no indication in this data that foreclosures are going to abate anytime soon,? said Mark Zandi, chief economist at Moody?s Economy.com, who projects that nationwide home prices will fall up to 10 percent before bottoming next fall.
Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.
Many laid-off homeowners might be able to survive on their savings for a while, but ?the longer the economic situation stays in place, the less likely they are to hold on,? said Jay Brinkmann, chief economist at the Mortgage Bankers Association.
In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle and prevent the industry from making a big contribution to the economy?s recovery.
?Builders only start homes when they can make money,? said John Burns, an Irvine, Calif.-based real estate consultant. ?In a lot of areas, until prices go back up, construction doesn?t make any sense.?
The crisis has struck people like Betty Wilson of San Diego. She was laid off a year ago from her job at an insurance company.
Since then, Wilson has managed to pay her $1,090 mortgage bill from collecting unemployment benefits, renting out a room and dipping into savings. But money is running low. She fears she won?t make her payment for December.
Wilson, 56, said she has tried to get her mortgage company, GMAC Mortgage, to lower her 6.25 percent interest rate or give her a temporary break from payments. Many mortgage companies will let a borrower skip up to six months of payments, though they require that the money be paid back eventually.
After The Associated Press inquired about her case, a GMAC spokeswoman said Thursday that the company would offer Wilson reduced payments for four months, ?while we continue to review her financials for a permanent solution.?
After a typical recession, foreclosures peak about six months after the unemployment rate does. But the process could take longer this time, in part because loan-modification programs and new state laws have prolonged the process. Unemployment, now at 10.2 percent, isn?t expected to peak until next spring or summer.
Another unknown is the effectiveness of the Obama administration plan to attack the foreclosure crisis. As of last month, about 20 percent of eligible borrowers, or more than 650,000 people, had signed up. But most of those enrolled have been chosen for trials lasting up to five months.
About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Even if some of them manage to stay in their homes, the market is likely to absorb a wave of new foreclosures. Those properties are concentrated in states like Florida and other already beleaguered areas.
Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures, from 35 percent a year earlier. Loans backed by the Federal Housing Administration also show rising signs of trouble. More than 18 percent of FHA borrowers are at least one payment behind or in foreclosure.
The Mortgage Bankers Association?s quarterly survey of 44.6 million loans is considered the most authoritative report on mortgage delinquencies. A separate report, issued monthly by foreclosure listing service RealtyTrac Inc., is based on courthouse filings.
Copyright ? 2009 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Thursday, November 19, 2009
Next wave of foreclosures looms
WASHINGTON ? Nov. 19, 2009 ? A second wave of foreclosures is poised to hit the market, potentially undermining housing recovery efforts as more homes add to the glut of inventory and drive down prices.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
?There?s a huge supply out there,? says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. ?The foreclosure process can take a long time. When it comes to (the housing recovery), we?re not home free.?
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here?s why:
? Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
? Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
? Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
? Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don?t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
?There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,? says Mark Zandi at Moody?s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.
Copyright ? 2009 USA Today.
These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.
About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.
?There?s a huge supply out there,? says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. ?The foreclosure process can take a long time. When it comes to (the housing recovery), we?re not home free.?
There is often a long lag time between a borrower going delinquent and the bank taking the home. Here?s why:
? Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
? Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
? Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
? Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don?t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.
?There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,? says Mark Zandi at Moody?s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.
The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.
Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.
Copyright ? 2009 USA Today.
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