Archive for May 6th, 2008
Continue Reading May 6th, 2008
You bought at the peak of the market. You put next to nothing down. (Maybe you even took out one of those 105% LTV loans to cover closing costs.) Now prices are falling, falling, falling, and you are underwater on your mortgage. Deep underwater, where the strange sea creatures dwell.
If it’s any comfort, you are not alone. Here’s what Zillow.com, the real estate website, says today:
“Of homeowners nationwide who purchased when U.S. home values peaked in 2006, one out of every two (51.6%) now owes more on their mortgage than their home is currently worth.”
You’re in better shape if you bought before or after the 2006 peak in prices. Here’s the percentage of homes that are underwater on their mortgages based on when they were bought, according to Zillow:
2003 7%
2004 16%
2005 42%
2006 52%
2007 45%
Las Vegas may look dry, but from the point of view of homeowners, it’s deep underwater. Zillow says that buyers in 2006 posted a median downpayment of just 2%, and since then, home values have fallen 25 percent year-over-year, so 89.9% of homeowners now owe more than their home is worth.
Stockton, Calif., is worse: 95.8%. No wonder it’s known (unofficially of course) as the Foreclosure Capital of the U.S.A.
Check out what these other blogs are saying about the Zillow report:
Housing Prices-Housing Bubble, Zillow’s in-house blog, and the blog at Active Rain by Zillow exec Spencer Rascoff.
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Continue Reading May 6th, 2008
I came upon this little summary of recent housing data from Realty Times columnist Kenneth R. Harney yesterday. He argues that although recent the data still shows declining sales nationwide, sales and prices are rising again in many markets. Too early to call a rebound, he concludes, but worth noting.
If you only focused on the big headlines in the past week, you probably noticed that home resales were down by two percent nationwide during March. That didn’t sound good — certainly not for the start of the spring selling season.
But when you take a closer look at last week’s numbers, you find that resales were actually UP in large parts of the country — sales in the Northeast states, for example, jumped by 2.3 percent, and in the Western states they were up by 2.2 percent. The national numbers that dominated the press were dragged down by a 6.5 percent drop in resales mainly in one part of the country — the Midwestern states, where economic and employment problems continue to be tough.
Another market niche that did surprisingly well but got little attention: Condominiums, which saw a 3.6 percent jump in sales. That was on top of a 3.7 percent increase the month before.
Then there was the surprise of all surprises — again, with little public attention: Home prices. The Office of Federal Housing Enterprise Oversight — the government agency that tracks price movements in a giant portfolio of millions of homes financed and refinanced by Fannie Mae and Freddie Mac — reported a six tenths of a percent GAIN in average home values.
On top of that, the National Association of Realtors reported the median price of home sales in March rose to $200,700 — that was up from a revised $195,600 in February. There were significant increases in median prices in a number of metropolitan areas, including Austin, Texas, Des Moines, Iowa, and Durham, North Carolina.
Mortgage money at affordable rates clearly helped power some of those sales and modest gains in prices. Thirty-year fixed-rate mortgages averaged 6.04 percent last week, according to the Mortgage Bankers Association of America, and 15-year money averaged 5.6 percent.
What’s the takeaway here? Have we turned the corner and seen the end of the correction phase of the cycle? No, we’re not making that call quite yet.
The 10-month unsold inventory is still a leaden weight — and there are still some downward price adjustments ahead in the local markets that were driven by speculators during the boom years.
But the fact is: In many areas, and in some product niches like condominiums, the national headlines do not describe the local or regional realities. Thanks to lower prices and affordable mortgage rates, sales in those areas are up, not down.
Buyers see real opportunities and are writing contracts. And smart sellers are closing sales.
Source: Realty Times
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Continue Reading May 6th, 2008
The Tropicana Atlantic City casino today said that it is not part of the Chapter 11 filing by corporate parent, Tropicana Entertainment L.L.C., and is continuing normal operations. Read more »
Continue Reading May 6th, 2008
IMT Capital L.L.C. has announced that it has purchased Townhomes of Westlake Village, a 253-unit townhouse and apartment property in Ventura County, from Wilshire Equities for $68.5 million in cash. Read more »
Continue Reading May 6th, 2008
Equibase Capital Group L.L.C., a provider of mezzanine capital to the real estate industry based in Chicago, has announced it has made a bridge loan to Abbott Real Estate Development, a residential development firm located in Boston. Read more »
Continue Reading May 6th, 2008
Douglas Duncan, who was chief economist of the Mortgage Bankers Association, sent a blast email today to all his business contacts saying that it’s his first day as chief economist of Fannie Mae.
Talk about jumping from the frying pan into the fire. Or bad timing. Or something. Today, Fannie Mae announced that it lost over $2 billion in the first quarter and is going to cut its dividend and raise $6 billion in fresh capital. The stock fell.
As a taxpayer, I’m happy that Fannie Mae (and Freddie Mac) are raising capital. That will enable them to buy more mortgages and keep the housing market from dying on the vine. At the same time, a thicker capital cushion will reduce the risk that Fan and Fred will require a taxpayer-financed bailout.
In fact, I think Fannie and Freddie should raise even more money from the private markets. The reason they don’t, of course, is that selling new shares dilutes the current shareholders, meaning lower earnings per share and thus a lower stock price. Here’s Felix Salmon’s take at Portfolio.com.
Let’s hope that Doug Duncan didn’t take most of his pay in the form of Fannie Mae stock options.
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Continue Reading May 6th, 2008
Patrick Murphy, a 27-year commercial real estate veteran, has been promoted to vice chairman at CB Richard Ellis Inc. Read more »
Continue Reading May 6th, 2008
Forest City Ratner Cos., developer of the $4 billion mixed-use Atlantic Yards project in Brooklyn, just unveiled the most recent renderings of the development. Read more »