Foreclosure Bargains Getting Harder to Find

Home buyers hoping to snag a really good deal on a foreclosed home are finding it increasingly difficult because supply is shrinking.

The number of foreclosures that are available for sale nationwide fell to 617,000 in December, down from 845,000 in November 2008, reports Barclays Capital.

Not only have attractive homes in popular neighborhoods already been snapped up, but also government help for distressed buyers is delaying more foreclosures.

Demand is driving up prices. Investors say typical prices have climbed from 75 percent of appraised value to 85 percent or higher when there are bidding wars.

Source: The Wall Street Journal, James R. Hagerty (02/23/2010)

IRS Clarifies What's Needed to Claim Tax Credit

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: "In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)

U.S. Home Values Decline in Fourth Quarter

U.S. home values fell 5 percent in the fourth quarter of 2009 over the previous year, marking the 12th consecutive quarter of year-over-year declines, according to the Q4 2009 Zillow Real Estate Market Report. Home values nationwide also fell 0.5 percent from the previous quarter to a median price of $186,200.

After showing at least five consecutive month-to-month increases in home values during 2009, 29 of the 143 markets tracked by Zillow showed flat or decreasing values in the second half of the year. Negative equity remained high at 21 percent of all single-family homes with mortgages.

The number of homeowners who lost their home to foreclosure peaked in December, with more than one in every 1,000 homes being foreclosed, Zillow reports. Foreclosure re-sales made up more than one-fifth of all U.S. home sales in December. Additionally, 28.5 percent of home sales nationwide sold for less than what the seller originally paid.

U.S. Foreclosure Activity Declines in January

Foreclosure filings, including default notices, scheduled auctions and bank repossessions, were reported on 315,716 U.S. properties during January, a 10 percent decrease from December but still 15 percent higher than January 2009, according to the latest RealtyTrac figures released today. One in every 409 U.S. homes received a foreclosure filing during the month.

REO activity fell 5 percent from the previous month, but was up 31 percent from a year ago. Default notices were down 12 percent in January, but were up 4 percent from January 2009, while scheduled auctions were down 11 percent for the month but were 15 percent higher than a year ago.

RealtyTrac’s CEO James J. Saccacio says the January foreclosure data is similar to a year ago, when a double-digit jump in foreclosure activity in December 2008 was followed by a 10 percent drop in January 2009. “If history repeats itself, we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” Saccacio says.

Nevada continues to lead the country in foreclosure activity with one in every 95 households receiving a foreclosure filing during January, more than four times the national average. Arizona was second with one in every 129 households receiving a foreclosure filing.

Las Vegas had the highest metro foreclosure rate in the country, with one in every 82 households receiving a foreclosure filing during the month, despite a decrease of 2 percent in foreclosure activity from the previous month and 21 percent drop in activity from a year ago. Phoenix was the only metro area among the top 10 to post a month-over-month increase (4 percent) in foreclosure activity.

Fourth Quarter Home Sales Surge 13.9%

Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the NATIONAL ASSOCIATION of REALTORS®.

Sales increased from the third quarter in 48 states and the District of Columbia; 32 states even saw double-digit gains.

Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.

Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008.

Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.

The Tax Credit Affect

Lawrence Yun, NAR chief economist, said the first-time home buyer tax credit was the dominant factor.

"The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he said. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter. It was 5.86 percent in the fourth quarter of 2008.

NAR President Vicki Cox Golder said near-term market conditions will remain favorable.

“Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she said.

Golder said one of the biggest issues now is for repeat buyer who will have to accelerate their buying plans if they want the expanded tax credit. They have to have a contract by the end of April.

Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

Single-Family Home Prices

In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter, only 30 MSAs showed annual price increases and 123 areas were down.

The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less.

“This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun said. “Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable."

Markets by Region

Northwest: Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.

“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun said. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”

Midwest: In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.

Yun said markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he said.

South: In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.

“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun said.

West: Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.

“Markets in the West such as San Francisco, San Jose, and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun said.

A Closer Look at the Condo Market

Metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008.

Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines. In the third quarter, only four metros experienced annual price gains.

Source: NAR

Foreclosure Rate Dips in January

U.S. foreclosures declined 10 percent in January compared to December, but were still up 15 percent year over year, foreclosure marketer RealtyTrac reported Thursday.

RealtyTrac CEO James Saccacio predicted an increase on the horizon: “January foreclosure numbers are exhibiting a pattern very similar to a year ago: a double-digit percentage jump in December foreclosure activity followed by a 10 percent drop in January, then a surge in foreclosures over the next few months.”

States with the top 10 foreclosure rates are:
1. Nevada
2. Arizona
3. California
4. Florida
5. Utah
6. Idaho
7. Michigan
8. Illinois
9. Oregon
10. Georgia

Six states account for nearly 60 percent of the national total: California, Florida, Arizona, Illinois and Michigan.

Source: RealtyTrac (02/11/2010)

Are Interest Rates About to Rise?

Federal Reserve Bank of New York President William Dudley says the central bank will scale back its purchases of mortgage-backed securities late next month. While interest rates likely will climb when the program ceases, the extent of the rise remains to be seen.

Dudley says the Fed will act if rates spike too much. Still, analysts worry that the end of the MBA purchase program and expiration of the home-buyer tax credit, along with higher premiums and tighter underwriting of FHA mortgages, will work together to stifle home sales and price stabilization in the coming months.

Source: Inman News (02/08/10)