It’s (almost) official – foreclosure crisis is over

IRVINE, Calif. – Dec. 12, 2013 – RealtyTrac’s Foreclosure Market Report for November shows foreclosure filings – all default notices, scheduled auctions and bank repossessions – decreased 15 percent from the previous month and 37 percent year-to-year.
 
The 15 percent monthly decrease in November was the biggest month-over-month decrease since November 2010 when U.S. foreclosure activity plummeted 21 percent in one month following the revelation of the so-called robo-signing scandal in October 2010.

While the drop reflects all homes somewhere within the foreclosure process, a decline in the number of homes receiving their first foreclosure notice reflects a stronger improvement. A total of 52,826 U.S. properties started the foreclosure process for the first time in November, down 10 percent from the previous month and 32 percent from a year ago, hitting its lowest level since December 2005.

In Florida, the percentage drop in owners receiving a first-time foreclosure notice was also dramatic. The state had 6,744 foreclosure starts in November, an 18.02 percent decline month-to-month and a 45.9 percent drop year-to-year.

The number of Florida foreclosure completions – the final step where a lender takes back the home – also dropped in November, though not as dramatically. Completed state foreclosures were down 2.72 percent month-to-month and 15.59 percent year-to-year.

Florida foreclosure activity in November – starts, in progress and completions – decreased 15 percent from the previous month and 23 percent from a year ago for the fourth consecutive month with an annual decrease. However, the state still has the nation’s highest state foreclosure rate: one in every 392 housing units with a foreclosure filing.

Among metro areas with a population of 200,000 or more, those with the highest foreclosure rates were the Florida cities of Jacksonville, Miami, Port St. Lucie and Palm Bay, along with Rockford, Ill.

“While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed,” says Daren Blomquist, vice president at RealtyTrac.

“While foreclosures will likely continue to stage a weak rally in certain markets next year … it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold,” he adds.

Foreclosure Market Report highlights
 
• November foreclosure starts increased from a year ago in 15 states, including Pennsylvania (up 233 percent), Delaware (up 104 percent), Maryland (up 74 percent), Oregon (up 38 percent), and Connecticut (up 37 percent).
 
• There were a total of 30,461 U.S. bank repossessions (REOs) in November, down 19 percent from the previous month and 48 percent from a year ago. It’s the lowest level since July 2007 for a 76-month low.
 
• Only five states posted year-over-year increases in REOs: Delaware (179 percent increase), Maryland (41 percent increase), Connecticut (9 percent increase), Maine (6 percent increase), and Iowa (2 percent increase).
 
• Scheduled foreclosure auctions (which are foreclosure starts in some states) in November increased from a year ago in 19 states, including Oregon (726 percent increase), Massachusetts (217 percent increase), Utah (214 percent increase), Connecticut (199 percent increase), Delaware (104 percent increase), and New York (34 percent increase).
 
• Among the nation’s 20 largest metro areas, those with the highest foreclosure rates were MiamiTampa, Chicago, Riverside-San Bernardino in Southern California, and Baltimore. Only three of the 20 largest metros posted annual increases in foreclosure activity: Baltimore (up 46 percent), Philadelphia (up 34 percent), and Washington, D.C. (up 6 percent).
 
© 2013 Florida Realtors®

Apartment rents to rise 3% next year.

WASHINGTON – Dec. 16, 2013 – Higher rents are ahead next year for the nation’s apartment dwellers, but some cities will see smaller bumps than in recent years, market researchers say.

Rents will increase 3.1 percent nationally next year, about the same as this year, apartment market researcher Axiometrics says.

Researcher Reis sees rents rising an average of 3.3 percent in 2014.

Tight supply and rising demand are still the key drivers.

“The construction pipeline really closed during the recession. We’re still clawing our way back,” says Ryan Severino, Reis chief economist.

Cities that have seen some of the sharpest increases will see rents rise a little more slowly next year, says Jay Denton, Axiometrics vice president of research.

Since the end of 2009, rents have soared 43 percent in San Francisco, including an 8 percent jump this year, Denton’s data show. Next year, they’ll rise 5.1 percent given still strong demand and limited new supply.

Seattle, which posted a 6.5 percent increase this year, will rise 4.4 percent next year. Austin, which rose 5.2 percent this year, will see an increase of 3.7 percent.

Construction has been uneven across the country. Some major metros that have led the way in new construction are now at risk of having an oversupply of apartments.

Washington, D.C., “has probably already gone over that cliff,” Denton says. Rents there will fall 2.5 percent next year, Axiometrics predicts. Austin also has seen a lot of construction. “It’ll be difficult to raise rents there,” Severino says.

Nationwide, almost 230,000 new apartments will be added to the supply next year, Axiometrics says. That’s up from 170,000 this year and only 87,000 last year. Any slowdown in rent increases will be good news for renters.

Half of all U.S. renters paid more than 30 percent of their income for rent – a traditional measure of affordability – in 2010, up 12 percentage points from a decade earlier, according to a recent study from Harvard’s Joint Center for Housing Studies.

Apartment rents have risen every year since 2010, market data show. Meanwhile, the share of Americans who rent grew from 31 percent in 2004 to 35 percent in 2012, the study says.

Trevor Coccimiglio, 24, is looking to rent a room in a shared house in San Francisco for less than $1,200 a month. That’s about what his father pays to rent an entire house in suburban Salt Lake City. “That’s just the cost,” says Coccimiglio, who has taken a new investment banking job.

He recently looked at a $900-a-month room in a three-bedroom, 864-square-foot apartment.

Copyright © 2013 USA TODAY, Julie Schmit

Improving U.S. economy leads Fed to ease stimulus

WASHINGTON (AP) – Dec. 19, 2013 – The Federal Reserve has sent its strongest signal of confidence in the U.S. economy since the Great Recession, deciding that the nation’s economic prospects are finally bright enough to withstand a slight pullback in stimulus spending.

Yet the Fed also made clear Wednesday that it will keep supporting an economy that remains less than fully healthy. It will continue to keep interest rates low and try to boost unusually low inflation, which can be a drag on spending and borrowing.

At his final news conference as Fed chairman before he leaves in January, Ben Bernanke managed a delicate balance: He announced a long-awaited and long-feared reduction in the stimulus. Yet he did so while convincing investors that the Fed would continue to bolster the economy indefinitely. Wall Street roared its approval.

In a statement after a two-day policy meeting, the Fed said it would trim its $85 billion a month in bond purchases by $10 billion starting in January. Bernanke said the bank expects to make “similar moderate” cuts in its purchases if economic gains continue.

At the same time, the Fed strengthened its commitment to record-low short-term rates. It said for the first time that it plans to hold its key short-term rate near zero “well past” the time when unemployment falls below 6.5 percent. Unemployment is now 7 percent.

The Fed’s bond purchases have been intended to drive down long-term borrowing rates by increasing demand for bonds. The prospect of a lower pace of purchases could mean higher loan rates over time.

Nevertheless, investors seemed elated by the Fed’s finding that the economy has steadily strengthened, by its firm commitment to low short-term rates and by the only slight amount by which it’s paring the bond purchases.

The Dow Jones industrial average soared nearly 300 points. Bond prices fluctuated, but by late afternoon the yield on the 10-year Treasury note had barely moved, inching up to 2.89 percent from 2.88 percent.

“We’re really at a point where we’re getting to the self-sustaining recovery that the Fed has been talking about,” Scott Anderson, chief economist of Bank of the West. “It really seems like that’s going to come together in 2014.”

The Fed’s move “eliminates the uncertainty as to whether or when the Fed will taper and will give markets the opportunity to focus on what really matters, which is the economic outlook,” said Roberto Perli, a former Fed economist who is now head of monetary policy research at Cornerstone Macro.

The stock market has enjoyed a spectacular 2013, fueled in part by the Fed’s low-rate policies. Those rates have led many investors to shift money out of low-yielding bonds and into stocks, thereby driving up stock prices. Still, the gains have been unevenly distributed: About 80 percent of stock market wealth is held by the richest 10 percent of Americans.

Critics have argued that by keeping rates so low for so long, the Fed has heightened the risk of inflating bubbles in assets such as stocks or real estate that could burst with devastating effect. Bernanke has said the Fed remains watchful of such risks.

But he has argued that still-high unemployment and ultra-low inflation justify continued stimulus.

Bernanke will step down from the Fed on Jan. 31 and be succeeded by Vice Chair Janet Yellen, whose nomination the Senate is expected to confirm as soon as this week. Asked at his news conference about Yellen’s role in the decision the Fed announced, Bernanke said: “I have always consulted closely with Janet, even well before she was named by the president. And I consulted closely with her on these decisions, as well, and she fully supports what we did today.”

In updated economic forecasts issued Wednesday, the Fed predicted that unemployment would fall a bit further over the next two years than it thought in September. It expects the unemployment rate to dip as low as 6.3 percent next year and 5.8 percent in 2015.

Yet the Fed expects inflation to remain below its target level. Policymakers predict that their preferred inflation index won’t reach its target of 2 percent until the end of 2015 at the earliest. For the 12 months ending in October, the inflation index is up just 0.7 percent.

The Fed worries about very low inflation because it can lead people and businesses to delay purchases. Extremely low inflation also makes it costlier to repay loans.

In its statement, the Fed said it will reduce its monthly purchases of mortgage and Treasury bonds each by $5 billion. Beginning in January, it will buy $35 billion in mortgage bonds each month and $40 billion in Treasurys.

The Fed’s low-rate policies have been duplicated by other central banks, from the European Central Bank to the Bank of Japan, that have also sought to energize economic growth and boost inflation.

The Fed’s actions Wednesday were approved 9-1. The only member to object was Eric Rosengren, president of the Federal Reserve Bank of Boston. He called the move premature because unemployment remains high and inflation extremely low.

The Fed’s action comes after encouraging reports that show the economy is accelerating. Hiring has been robust for four straight months. Unemployment is at a five-year low of 7 percent. Factory output is up. Consumers are spending more at retailers. Auto sales haven’t been better since the recession ended 4½ years ago. The stock market is at all-time highs.

And Congress gave final approval Wednesday to legislation that reduces federal spending cuts and averts the risk of another government shutdown early next year.

“It eases a bit of the fiscal restraint in the next couple of years, a period where the economy needs help to finish the recovery,” Bernanke said of the congressional deal. “So those things, you know, are positive things.”

All of which could enhance the confidence of individuals, businesses and investors.

The economy is improving consistently, said John Silvia, chief economist at Wells Fargo. And the Fed is “now recognizing the trend and decided to go with the flow.”

Fla.’s housing market reflects changing conditions in Nov. 2013

ORLANDO, Fla. – Dec. 19, 2013 – Florida’s housing market reported higher median prices, more new listings and a stabilizing supply of homes for sale, according to the latest housing data released by Florida Realtors®.

“As Florida’s economy gains strength, it signals new trends for the housing market,” said 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “In November, we marked 24 months – 2 years – of consecutive gains in statewide median sales prices, year-over-year, for both single-family homes and for townhouse-condo properties. With prices rising and many homeowners seeing renewed equity in their homes, we’re seeing less distressed sales.

“On average, home sellers received about 94 percent of their asking price in November. These favorable conditions are encouraging more traditional home sellers to list their properties, which in turn is boosting inventory levels slightly from the previous month.”

The statewide median sales price for single-family existing homes last month was $169,900, up 13.3 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in November was $131,299, up 17.2 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in October 2013 was $199,500, up 12.7 percent from the previous year; the national median existing condo price was $199,200. In California, the statewide median sales price for single-family existing homes in October was $427,290; in Massachusetts, it was $320,000; in Maryland, it was $256,651; and in New York, it was $230,276.

Statewide closed sales of existing single-family homes eased slightly in November to 16,620, down 1.2 percent compared to the year-ago figure. Closed sales of condos and townhomes last month totaled 7,576, down 7.1 percent compared to November 2012.

However, the closed sales data reflects fewer short sales and cash-only sales in November: Traditional sales in Florida rose 10.9 percent for single-family homes and 2.8 percent for condo-townhome properties. Closed sales typically occur 30 to 90 days after sales contracts are written.

“November’s data reflects changes in the dynamics of Florida’s housing market,” said Florida Realtors Chief Economist Dr. John Tuccillo. “While traditional sales and those financed by mortgages are up, there was a decline in both short sales and cash-only sales. This suggests that the investor presence, which had been so strong in the market, may be diminishing. It signals a continued return to what we would consider a more traditional market.”

Meanwhile, new listings for existing single-family homes last month rose 14.8 percent and new listings for condos and townhomes rose 5.4 percent over November 2012 figures, according to Florida Realtors. Inventory was at a 5.6-months’ supply in November for single-family homes and at a 5.8-months’ supply for townhouse-condo properties.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.26 percent in November 2013, up from the 3.35 percent average recorded during the same month a year earlier.

To see the full statewide housing activity reports, visit the research page on Florida Realtors’ website.

© 2013 Florida Realtors®