Housing Market: California Home Sales And Prices Expected To Rise In 2013 At Slower Rate Due To Effects Of “Underwater Borrowers”

5 10 2012

When will the housing market be “corrected?”The housing recovery in California is expected to continue through to 2013, but the market won’t be “corrected” until as far off as 2017, according to the California Housing Market Forecast released by the CALIFORNIA ASSOCIATION OF REALTORS.

  • Homes sales and prices are expected to keep rising, but lower-than-normal inventory levels and underwater mortgages are key hindrances to a faster recovery, according to Leslie Appleton-Young, chief economist with the CALIFORNIA ASSOCIATION OF REALTORS®.
  • Home sales are forecasted to rise 1.3 percent to 530,000 units next year, based on the projected tally of 523,300 units this year. That’s a slower growth than that of 2011 to 2012, which is roughly 5 percent.
  • The momentum in prices also is expected to carry through to 2013, a result of pent-up demand for a limited housing supply. The median price could rise 5.7 percent to $335,000 in 2013. That’s lower than the projected price growth from 2011 to 2012, an estimated 11 percent. The state has a 3.2 months’ worth of housing inventory, significantly lower than the 16 months’-plus supply of saw roughly four years ago.
  • “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes,” said Appleton-Young in the report.
  • Appleton-Young says what underwater borrowers throughout the state will do — be it selling or holding — will have a big effect on next year’s housing recovery.
  • Other things to watch next year that will have a bearing on the housing market include: policies related to the state,local and federal governments; and housing and monetary policies, Appleton-Young said.

Housing “Shadow Inventory”: Lenders Withholding Up To 90% Of REO Properties From Market

16 07 2012

But the extent to which lenders keep their stock of REOs — industry parlance for “real estate owned” properties — off the market may be much larger than most people think.

As many as 90 percent of REOs are withheld from sale, according to estimates recently provided to AOL Real Estate by two analytics firms. It’s a testament to lenders’ fears that flooding the market with foreclosed homes could wreak havoc on their balance sheets and present a danger to the housing market as a whole.

Online foreclosure marketplace RealtyTrac recently found that just 15 percent of REOs in the Washington, D.C., area were for sale, a statistic that is representative of nationwide numbers, the company said.

Analytics firm CoreLogic provided an even lower estimate, suggesting that just 10 percent of all REOs in the country are listed by their owners, which include mortgage giants Fannie Mae and Freddie Mac as well as the Federal Housing Administration. As of April 2012, 390,000 repossessed homes sat in limbo, while about 39,000 were actually listed for sale, said Sam Khater, senior economist at CoreLogic.

For more:  http://news.firedoglake.com/2012/07/16/the-great-housing-swindle-shadow-reo-artificially-boosting-prices/

U.S. Housing Market: “Shadow Inventory” In April 2011 Declines To 1.7 Million Homes From Peak Of 2 Million In January 2010; Homes That Are “50% Underwater” With Negative Amortization Loans Climbs To 2 Million Representing Future Defaults

29 06 2011
  •  Shadow inventory for residential properties declined to 1.7 million units in April according to CoreLogic
  •  This five months’ worth of supply is down from 1.9 million units compared to April 2010.
  • Shadow inventory has gone down because there are fewer delinquencies and more distressed sales
  • It will probably take several years for the shadow inventory to be absorbed given the long timelines in processing and completing foreclosures
  • Out of all the shadow inventory supply, 790,000 units are seriously delinquent, 440,000 are in some stage of foreclosure and 440,000 are REO properties
  • Shadow inventory, also known as pending supply, is calculated by determining the number of distressed properties not listed on multiple listing services where the mortgage is 90 days or more late, in foreclosure already, or REO on the books of a financial institution
  • Shadow inventory peaked in January 2010 at two million units, which is eight and a half months’ supply
  • However, there are two million negative equity loans that are more than 50% or $150,000 “upside down.”
  • This would severely restrict the owners’ ability to refinace or sell the home
  • “This is another layer that is sitting behind the shadow,” said Sam Khater, senior economist at CoreLogic
  • How many of those will default is difficult to predict but negative equity of 50% or more increases the likelihood of default

For more:  http://www.mortgageservicingnews.com/msn_features_reo/shadow-inventory-slowdown-1025477-1.html?ET=mortgageservicing:e1454:87423a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=MSN_REO_062911&site=default_reo