Inventory of New Homes Down to Lowest Level in Nearly 50 Years

“In recent years, new housing supply has been running at the lowest levels since the 1960’s due to the slow down in new home construction, the size of homes being built, and the complicated process for selling/buying distressed properties.”

See the whole article here.

Case-Shiller: August Home Prices at 2-Year High

U.S. home prices continued to increase in August as the Case Shiller 20-city Home Price Index increased 0.9 percent to its highest level since September 2010. The 20-city index is up 2.0 percent in the last year.

See the article here.

In bay area, it is absolutely a seller's market. 15 to 30 offers per house is not uncommon at this moment.

Home Prices rise due to Banks' Holding onto REOs ?

A sharp drop in distressed sales is one of the main drivers behind the steady rise in home prices seen in certain areas throughout the country.

In September, the HousingPulse Distressed Property Index (DPI), which measures the proportion of purchase transactions involving distressed properties, hit a record low of 38.6 percent based on a three-month moving average.

The drop marks the fifth consecutive monthly decline and is more than 10 percentage points lower than the February’s near-record-high of 48.7 percent.

Please see the whole article here.

Bay Area housing prices at four-year high on August 2012

The Bay Area's housing recovery showed increasing signs of strength in July, as eager buyers pushed prices to four-year highs.

The region logged its 13th consecutive month of yearly sales increases and the median price for all types of homes in the nine-county Bay Area was at its highest -- $421,000 -- since 2008, according to a report Wednesday from DataQuick. The median sale price has been rising for five months. 
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Prices are still 37 percent off their 2007 peak for all types of homes in the Bay Area. Contra Costa County is down 51 percent from its peak price for single-family homes before the housing crash; Santa Clara County is 19 percent below the peak; San Mateo County almost 23 percent below and Alameda County 35 percent under its peak price.

Read more here. 

The U.S. Housing Bust Is Over

This is the consensus on the street. Check the WSJ article here.

The housing market has turned—at last.

The U.S. finally has moved beyond attention-grabbing predictions from housing "experts" that housing is bottoming. The numbers are now convincing.

Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. "We finally saw some rising home prices," S&P's David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.

 Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't.

CMBS Delinquencies Hit All-Time High

The delinquency rate for commercial mortgage-backed securities (CMBS) moved up 12 basis points in June to 10.16 percent, reaching an all-time high, according to a report from Trepp.

There was one positive side to the report. Trepp stated that most five-year loans originated in 2007 were made in the first six months of that year, and so now that we are halfway into 2012, this means the number of five-year loans from 2007 are reaching their maturity dates and will fall off over the next six months.

Read the whole article here.

JC: This may mark the peak of the CMBS delinquency. Will the trend get better from here?

Why Aren’t There More Homes for Sale?

It’s no secret to anyone who has watched the real-estate market over the past year that the number of homes for sale has dropped sharply, especially in hard-hit markets such as Miami, Orlando and Phoenix.

Economists at CoreLogic have new evidence showing how big price declines are keeping many home sellers on the sidelines. They found that the supply of homes for sale declines as the rate of negative equity — or the share of borrowers who owe more than their homes are worth — rises.

Many hard-hit markets have seen an influx of well-funded investors scooping up foreclosures that can be rented out, meaning inventory is being taken off the market, at least for now.

Meanwhile, banks have sharply slowed down their foreclosure processes after being caught fraudulently processing the paperwork required to take back those properties two years ago.

Read more on WSJ 6/11/2012 here.

Foreign Purchases of U.S. Homes Rise Strongly

WSJ June 11, 2012,

A survey released Monday showed that the six-year slide in U.S. housing prices, coupled with the rising value of some foreign currencies and continued instability in Europe, is fueling a property-buying binge in the U.S. by wealthy foreigners.

The survey showed that around 55% of all buyers came from five countries: Canada, China, Mexico, India and the United Kingdom. Canadians accounted for nearly one quarter of all foreign sales.

See the whole article here.

Many Home Owners still way underwater

Here is the complete list of metropolitan areas and their underwater mortgage rates from Zillow’s report:

• Las Vegas: 71%
• Phoenix: 55.5%
• Atlanta: 55.2%
• Orlando: 53.9%
• Riverside, Calif.: 53.4%
• Sacramento, Calif.: 51.2%
• Detroit: 49.8%
• Tampa, Fla.: 48.3%
• Miami - Fort Lauderdale, Fla.: 46.4%
• Chicago: 41.1%
• Minneapolis - St. Paul, Minn.: 39.9%
• Seattle: 39.6%
• Charlotte, N.C.: 36.6%
• San Diego: 35.6%
• Portland: 34.3%
• Columbus, Ohio: 34.2%
• Cleveland: 33.9%
• Virginia Beach, Fla.: 33.2%
• Washington D.C.: 32.4%
• Baltimore: 31.4%
• Dallas - Fort Worth, Texas: 30.7%
• San Francisco: 30.7%
• St. Louis: 30.7%
• Los Angeles: 30%
• Denver: 29%
• Philadelphia: 25%
• San Jose, Calif.: 22.7%
• Boston: 22%
• New York: 21.3%
• Pittsburgh: 16.7%
• U.S. average: 31.4%

Read the whole article here. 

Shadow Inventory: 46 Months to Clear Distressed Housing Supply

It will take 46 months to clear the market’s supply of distressed homes, or the shadow inventory, according to estimates from Standard & Poor’s Rating Services based on first-quarter 2012 data.

Read the whole article here. 

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It is 4 years away to clear all of them. I think the end of bank foreclosure is near. The impact from bank distressed properties will lesson in 1 - 2 years.

LPS: Home Prices Increased, but We've Been Down This Road Before

For the first time since March 2010, data from Lender Processing Services (LPS) showed an increase in home prices. 

“Reasons for caution are clear, as we’ve been here before. Non-seasonally adjusted prices increased for a few months in early 2009, 2010 and 2011 – trends that all ended by summer, after which all the gains – and then some – were lost,” said Raj Dosaj, VP of LPS Applied Analytics.


Read the whole article here. 

California Sees Fewer Homes Going into Foreclosure

California may have some rough patches in it, but overall, with the worst part of the housing crises appearing to be over.

A total of 56,258 Notices of Default (NODs) were recorded at county recorders offices in California during the first quarter of 2012, the lowest level since the second quarter of 2007 when 53,943 NODs were recorded, according to DataQuick.

Read more here.

Lenders that Sell Short Sales Faster and for Less

Fannie Mae, Freddie Mac, and FHA had the shortest timelines at 193 days in January 2012, a decrease compared to a year ago in January 2011, when short sales averaged 248 days. Ally Financial came in second at 321 days, reducing its timeline as well from 393 days a year ago.

As for the number of short sales, Bank of America completed the most in January 2012, with 5,276, followed by Chase (2,967), Wells Fargo (2,788), MERS (1,429), and Bank of New York Mellon (1,401).

Read more here.

RealtyTrac: Short Sales Up 33% in January, Outpace REO Sales in 12 States

Short Sales has replaced REO and becomes the dominating theme in foreclosure market since 2nd half of 2011.
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Short sales even outpaced bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey.

Read more here.

California Home Prices Going Up, Inventory Down, C.A.R. Reports

The median price of a single-family home for March 2012 was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February’s median price of $266,660. The month-over-month increase was the largest since March 2004.

When breaking up prices by specific regions, the San Francisco Bay area was an exception, seeing a year-over-year decrease of 1.6 percent, but a 9.1 percent month-over-month increase.

Read more here.

BofA Makes Changes to Trim Short Sale Timeline

Bank of America says it will now be able to provide a decision on a short sale offer in 20 days. Typically, BofA’s short sale process has taken anywhere from 45 days upwards.

See the article here.

Best Markets for Single-Family Rental Investments

from DSNews on 4/12/2012

I don't know how those cap rates are calculated. In Northern California, the cap rate can range from 3% to 8% if you hire a property manager. Lowest cap rate of 5.4% sounds still high.
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Based on the 26 major markets CoreLogic assessed, the markets that yield the highest single-family rental cap rates were generally in Florida or the Midwest. West Palm Beach had the highest rate at 12.4 percent, followed by Cleveland (12.3 percent), Fort Lauderdale (12 percent), Chicago (11.6 percent), and Las Vegas (11.4 percent).

The common denominator for areas with lower cap rates was lower than average prices. Honolulu at 5.4 percent had the lowest cap rate, followed by Raleigh (7.3 percent), and Austin (7.7 percent). Among the larger markets, Miami had the lowest cap rate at 7.7 percent, which is partly due to improved home prices.

As of January 2012, cap rates for the single-family market averaged 8.6 percent, according to CoreLogic.

Home Prices Have Been Rising for Three Months

As you may already know, bay area housing price is going up in the past 3 months. Multiple offers are everywhere. I've heard 28 offers on a house.


Standard & Poor’s reported Tuesday that it’s closely watched Case-Shiller index declined in January for the fifth straight month, with both the 10-city and 20-city composite readings slipping 0.8 percent from December.
But according to John Burns Real Estate Consulting (JBREC), that’s stale news and doesn’t reflect what’s actually happening in the market right now. In fact, the independent research company says home prices are rising.

Read more here.

Taking a year or more to foreclose a property?

The average loan in foreclosure has been in the process for 571 days, but judicial states are weighing heavily on that average.

Foreclosures in judicial states have aged an average 654 days, while foreclosures in non-judicial states have aged an average 297 days, according to Moody’s. 

To be relevant to you or to California, which is a non-judicial state, it will take 10 months to foreclose a house. 

Read more here.

In Stockton, Calif., slow fall off financial cliff

By HANNAH DREIER, The Associated Press

The city of 290,000 that rode the wave of the housing boom in the late 1990s and early 2000s now finds itself littered with foreclosed homes, saddled with pension, health care and other obligations it can't afford, and unable to pay its bills.

The City Council voted last month to suspend $2 million in bond payments and begin negotiations with bond holders, creditors and unions. A new California law requires that cities begin a 60-day mediation process before filing for Chapter 9 bankruptcy, though city leaders can file at any time if negotiations stall.

Though many communities across the country are struggling with their finances and some already have filed for bankruptcy — Pennsylvania's capital of Harrisburg, Jefferson County, Ala., and little Central Falls, R.I. — Stockton's litany of problems stand out.

The unemployment rate has doubled over the past decade and now hovers around 16 percent. A fifth of residents live below the poverty line.

Read the whole article here 

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Zillow report: Median Rent Prices on the Rise as Home Values Drop

While homes prices continue to be on the decline, rent prices are actually on the rise and showed a 3 percent increase from January 2011 to January 2012, as opposed to home values, which dropped 4.6 percent during that same period, according to the January Zillow Real Estate Market Reports. Zillow data also showed year-over-year gains for 69.2 percent of metropolitan areas covered by the index while only 7.3 percent of metros saw increases in home values. Based on the Zillow Rent Index, the states with the greatest increases in median rent over a year were New Jersey (+16.5), New York (+13.7), Kansas (+10.2), Indiana (+10), and Michigan (+10.0). » Read More

Warren Buffett's View on Single Family Home Investment

On Monday, February 27, 2012 Warren Buffett appeared live on CNBC for his annual “Ask Warren” marathon. During this interview he mentioned that one of the best investment opportunities around right now in the United States are Single Family Homes!

BUFFETT: I would say that single-family homes are cheap now, too.

BECKY: You would?

BUFFETT: Yeah, single-family homes— but if I had a way of buying a couple hundred thousand single-family homes and had a way of managing— the management is enormous— is really the problem because they're one by one. They're not like apartment houses. So— but I would load up on them and I would take mortgages out at very, very low rates. But if anybody is thinking about buying a home— five years ago they couldn't buy them fast enough because they thought they were going to go up, and now they don't buy them because they think they're going to go down. And interest rates are far lower. It's a way, in effect, to short the dollar because you can— you can take a 30-year mortgage and if it turns out your interest rate is too high, next week you refinance lower. And if it turns out it's too low, the other guy's stuck with it for 30 years. So it's a very attractive asset class now.

BECKY: If you are a young individual investor at home and you have your choice between buying your first home or investing in stocks, where would you tell someone is the better bet?

BUFFETT: Well, if I thought I was going to live— if I knew where I was going to want to live the next five or 10 years I would— I would buy a home and I'd finance it with a 30-year mortgage, and it's a terrific deal. And if I— literally, if I was an investor that was a handy type, which I'm not, and I could buy a couple of them at distressed prices and find renters, I think that's— and again take a 30-year mortgage, it's a leveraged way of owning a very cheap asset now and I think that's probably as an attractive an investment as you can make now.

After Two-Year Lull, Delinquencies Rise for Second Straight Quarter

The national mortgage delinquency rate rose during the fourth quarter of 2011, TransUnion reported Tuesday, marking only the second time since the end of 2009 the Chicago-based credit bureau has recorded an increase in its quarterly assessment of past due mortgage payments.

The first was during the third quarter of 2011, with the succession signaling what could be a troubling trend in the making.

The rate increased from 5.88 percent at the end of the third quarter to 6.01 percent as of the end of the fourth.

The highest mortgage delinquency rates during the fourth quarter were found in Florida (14.27%), Nevada (12.08%), New Jersey (8.32%), and Arizona (7.50%).
States with the lowest mortgage delinquency rates included North Dakota (1.50%), South Dakota (2.45%), Nebraska (2.57%), and Alaska (2.77%).

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You can read the whole article here.

Would you like to find out why this can be right?

Foreclosures & REO RAISE House Prices, Economic Activity & Taxes.

a)  Foreclosures and distressed sales INCREASE neighborhood house values and create a positive economic benefit when investors buy low, rehab and resell higher. Moreover, rehabs create jobs and the resale makes for TWO existing home sales transactions, commissions etc in a short period of time. Lastly, they make for a substantial increase in property tax revenue on rehab and final resale.

b)  Foreclosures and distresses sales BENEFIT the neighborhood and local area economy when they are sold to an owner-occupant who purchased in the open market and then rehabs, maintains and occupies.

Is strip mall or retail shopping center a good investment?

If you are interested in retail commercial properties ( shopping centers, malls, ..... ) and think they are cheap now, you may want to think twice. In short, the macro trend does not support the future of the retail commercial properties.

This article below from The New York Times tells well.

How About Gardening or Golfing at the Mall?

Some highlights: 

* While malls have faced problems in the past, the Internet is now pulling even more sales away from them.

* Near-record vacancy rates at malls of all kinds, both the big enclosed ones and the sprawling strips.

* Most cities, looking at shrinking budgets, cannot afford to subsidize or knock down ailing malls.

* Schools, medical clinics, call centers, government offices and even churches are now standard tenants in malls.

* The vacancy rate at shopping centers and strip malls was 11 percent in the last quarter of 2011, the highest level since 1991, according to the research firm Reis.

Foreclosures at the high end increase

by Pete Carey on 02/05/2012 in Mercury News  ( Read the whole article here. )

Although starter homes ($400K to $600K) has bottomed out since 2010 and even start to recover now, be very careful on the high end properties since they may not have fully corrected yet.
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The housing crisis, which first devastated borrowers who purchased lower-cost homes with subprime loans, has caught up with people whose wealth helped them hang onto their houses longer.

Throughout affluent communities in the Bay Area, million-dollar-and-up homes are increasingly being lost to foreclosure, or sold as a last resort for far less than their mortgages.
More than 1,500 Bay Area homes with mortgages of $1 million or more were scheduled for auction last year, more than double the number in 2008, according to ForeclosureRadar, a foreclosure tracking service.

Santa Clara County had more than 400 homes valued at $1 million or more scheduled for auction in 2011, the most of six Bay Area counties.


Contra Costa County, which led the region in lower-end foreclosures, is now one of the harder hit on the high end, with about 300 homes valued at $1 million or more scheduled for auction in 2011. Even the exclusive country-club community of Blackhawk is not immune.

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.


Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.


Click here to read the whole article.

Bay Area home prices expected to stabilize in 2012

After years of decline, housing prices are expected to stabilize or even increase in some parts of the Bay Area this year, according to a new forecast.

Stabilizing prices are a sign of a healthier market, even though homebuyers still face challenges -- tight credit, not many homes for sale and competition from investors paying cash.

In a report to be released Monday, Clear Capital, a real estate valuations company in Truckee, predicts that prices will remain almost flat this year -- compared with a 4.7 percent drop in 2011 -- in the San Francisco-Oakland-Fremont metropolitan area, including Contra Costa County. Silicon Valley should see a 1.6 percent increase in home prices, compared with a 2.5 percent drop last year, the company said.
"This region overall is doing pretty well," said Clear Capital research director Alex Villacorta.

In three of the past four years, Bay Area home prices have declined from the previous year, including a dramatic 35 percent drop for the San Francisco metro area in 2008 and a 28 percent drop in Silicon Valley that year. Only in 2010 were there slight increases, followed by last year's drop.

See more By Pete Carey of Mercury News

Rise in Home Sales Signifies Strengthening Market: Economists

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

See the whole article here.

Also, in Commercial Real Estate market,  the outlook also looks positive. See this article for more details:

A Strong Close to 2011 Confirms Improving Outlook for 2012

Housing Inventory Ends Year Down 22%

There were fewer homes listed for sale at the end of 2011 than in any of the previous four years, a positive sign for the housing sector.

But appearances can be deceiving, and it remains to be seen whether the drop is the beginning of a real recovery or if inventory is being held down by sellers waiting for prices to pick up and banks moving slowly on foreclosures.
The 1.89 million homes on the market at the end of December represented a 6% decline from November and a 22.3% decline from one year ago, according to data compiled by Realtor.com.

See more on Wall Street Journal January 19, 2012

Mortgage Rates Break Record Lows

With property values across the country at depressed levels and interest rates dancing around historical lows for months now, housing affordability has hit an all-time high. That affordability inched even higher this week, as mortgage interest rates broke through their previous record lows to fall further still.

( Note: isn't this very ironic? When it is very cheap, very affordable, people can't buy or hesitate to buy ? )

Freddie Mac says all loan products covered in its regular weekly market survey eased to set new all-time lows for the week ending January 12, 2011.

Read more on DSNEWS ................
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Foreclosures in Most of Top 20 Metros Decline From Past Two Years

See which States have the highest foreclosure rate: Nevada, Arizona, California .......

Half of the metros in RealtyTrac’s list top 20 foreclosure rates for 2011 were located in California. The California metro with the highest foreclosure rate for the year was Stockton, which came in second on the top 20 list with a rate of 5.43 percent.


California metros also took the third, fourth, and fifth spots on the top 20 list: Modesto (5.20 percent), Vallejo-Fairfield (5.2 percent), and Riverside-San Bernardino (5.16 percent). Las Vegas had the highest foreclosure rate in 2011 among metro areas with populations of at least 200,000. About one in 14 homes – 7.38 percent – received at least one foreclosure filing in the Las Vegas area over the year.
However, Nevada’s foreclosures declined sharply from the third quarter to the fourth quarter after the implementation of a law mandating lenders file an additional affidavit in order to initiate the foreclosure process. With Arizona posting the second-highest foreclosure rates among the states, Phoenix also maintained an elevated foreclosure rate of 3.69 percent, earning it the No. 6 spot on the top 20 list.

Apartment-Vacancy Rate Tumbles to 2001 Level

In bay area, the rental has been strong in the past 2 -3 years. Some east bay rents of 4/2, 1800 sqft houses has increased from $1900 to $2300, a 21% increase in around 3 years.

See a Wall Street article below.

WSJ, 1/5/2012

The nation's apartment-vacancy rate in the fourth quarter fell to its lowest level since late 2001 as Americans continued to favor renting homes instead of buying them.

Rents climbed, but data firm Reis Inc. said the increase was less than expected. Landlords of properties intended for lower-income renters found it more difficult to raise prices, according to Reis.

In the fourth quarter, the vacancy rate fell to 5.2% from 6.6% a year earlier and 5.6% at the end of the third quarter, according to Reis. The vacancy rate rose as high as 8% in 2009.

During the depths of the downturn, landlords had to offer incentives such as flat-screen TVs and months with no rent to attract tenants. But in the fourth quarter of 2011, landlords in 71 of the 82 of the markets that Reis follows were able to raise rents.

Darlene Shaffron recently moved into a loft apartment that rents for $2,800 a month in Jersey City, N.J. She considered buying—and was preapproved for a mortgage—but was too scared to put money down on a home that could see its value decline in a volatile market. "If we went into a double-dip recession or something worse, then I would have spent all of the cash," the 40-year-old said. Ms. Shaffron decided to "save the money...and rent for a little bit longer."

Reis said the market has been weakened by job losses in the financial-services industry. Also, the city has the highest rent level in the nation—$2,876 a month—making it difficult for landlords to raise prices. By contrast, San Francisco's landlords managed a 5.1% gain over the past year, while San Jose climbed 5%, fueled by a booming tech sector. The higher-quality properties in the most desirable locations posted gains of over 10%, Reis said. 

The rental market also has been fueled by a dearth of new supply. Just 8,865 units were delivered in the quarter, the second-lowest quarterly figure since Reis began publishing quarterly data in 1999.

The strength of the market hasn't been lost on developers who are racing to move plans off their drawing boards.

More than 173,000 units were likely started in 2011 and some 225,000 and 280,000 starts are expected nationwide in 2012 and 2013, according to Zelman & Associates.
One concern for landlords is that the housing market will bottom or improve in 2012, which could curb rental demand. "Most any person or industry would be happy to see the single-family market stabilize, except for the apartment sector," said Richard Anderson, an analyst who covers apartment companies for BMO Capital Markets. "You're either an owner or a renter. There's no middle ground."

$1,000 a month NET Free Cash Flow

A nice single family house close to bay area can now generates $12,162 NET cashflow a year or around $1,000 a month. 

What happens if you have 5 of these kinds of houses below? Will $5,000 a month support your living expenses for the retirement?  Not to mention the gains from possible real estate appreciation in the future. 

Here is one example which you can build your retirement portfolio when California housing price is very low now. 

Investors See Bigger Profits From Rising Rents

The rents in Bay Area also rises up quite a bit in the past several years. Many 4/2, 1700 sqft single family houses were rent for $1,800 are now rent for $2,300 ..... 

Daily Real Estate News | Friday, October 21, 2011

Rental demand and prices continue to soar, and investors are cashing in. Rents are rising at a 5.17 percent annual rate — up from last year’s 4.72 percent rate. If rents continue to grow at their current pace, they won’t be too far behind the record-high reached in 2000 of 6.18 percent, according to Axiometrics Inc.
The rental market has added about 1.4 million new renters this year, some of whom were former home owners who faced foreclosure or a short sale. Renters are increasingly showing an appetite for single-family homes owned by investors.
As such, the number of investors in the market is growing. Investors make up anywhere between 20 and 40 percent of monthly existing home sales, according to home-sale data. With home prices and interest rates low, more aspiring investors are jumping in. Nearly 60 percent of investors in a recent survey by Realtor.com considered themselves newcomers to real estate investing.
“This is a long-term investment,” says Greg Rand, CEO of OwnAmerica. “Rents are a steady return on your investment through the years, leaving you with an attractive asset when prices improve. And they will. The best profits in real estate accrue to long-term investors who take a long-term view.”