“It does look like the spigot is being opened a little bit, at least for low-cost home purchases.”

 

Confidence among U.S. homebuilders fell to a record low in January, a sign the housing slump will extend well into the new year and contribute to deepening the recession.

“Foreclosures are rising and housing activity will continue to decline at least until mid- 2009.”

 

http://www.bloomberg.com/apps/news?pid=20601087&sid=atbRtohsT710&refer=home

 

The National Association of Home Builders/Wells Fargo index of builder confidence dropped to 8, lower than forecast, from 9 in December, the Washington-based association said today. A reading below 50 means most respondents view conditions as poor.

 

 Karen Cordes , an economist at Scotia Capital Inc. in Toronto, who accurately forecast the drop. “Foreclosures are rising and housing activity will continue to decline at least until mid- 2009.”

 

 Supercomposite Homebuilding Index recovered earlier losses, rising 2.6 percent to close at 191.92, as financials led a rebound in stocks on speculation President Barack Obama’s plans will shore up banks. The builder index lost almost a third of its value last year.

 It was forecast to hold at 9 this month, according to the median forecast of 39 economists surveyed by Bloomberg News. Projections ranged from 7 to 11. The gauge, which was first published in January 1985, averaged 16 last year.

Sandy Dunn, a builder from Point Pleasant, West Virginia, said in a statement today. “The Obama Administration and the new Congress have a tremendous opportunity and responsibility to enact legislation that can spur home buyer demand and jump-start the national economy.”

Lawrence Summers, his top economic adviser, said in a letter to lawmakers last week.

 

 

 

“The single most important trigger event for delinquencies is unemployment,” Nothaft said. “Clearly there will be more significant job losses over 2009 and that will contribute to delinquencies on loans of all types.” Particularly troubling, he said, is that even prime borrowers with conventional, conforming fixed-rate loans are defaulting in higher numbers.

http://www.marketwatch.com/news/story/Housing-still-heading-a-bottom/story.aspx?guid=%7BBB74DAB2-025F-451E-9D2A-87169B484EFF%7D

Weighing heavily on housing market forecasts is the continued decline in employment. Frank Nothaft, chief economist for mortgage agency Freddie Mac, said he expects unemployment will jump to 8.7% by the end of 2009, up from 7.2% today. And that in turn will push mortgage delinquencies and foreclosures higher, adding to an already bloated supply of homes on the market.

The job picture also dims consumer confidence, which is at or near historic lows, “making them afraid to go out and buy anything durable, and that certainly includes a home,” Crowe said. That is making it difficult to work off the excess inventory of homes for sale.

Crowe estimates that 6.2 million homes are vacant and on the market, with about one-third of those homes being new construction. He said that represents about 1.5 million units above what would be an equilibrium rate for housing.

“And adding to that static supply is the continued number of homes going into foreclosure,” he said.

Builders are making an effort to clear that supply, Crowe said, both by trimming housing starts and by cranking up incentives to move empty houses. A recent builder survey that asks about concessions being made found just 12% across the country saying they were offering nothing in the way of perks versus 50% who in 2003 said that.

Those concessions include price reductions and the addition of amenities at no cost. “Virtually all builders are doing something extra to move houses,” he said.

Home prices will continue their slide in 2009 and may well keep falling into 2010, said David Berson, chief economist for mortgage insurer PMI Corp. The company’s winter forecast shows that of the top 50 U.S. metropolitan areas more than half have a 50% or greater risk of seeing lower home prices two years from now as they do today. In some hard hit markets such as Las Vegas, that risk is about 90%, he said.

“These speculators are preventing the market from crashing now, and when they get out it could fall again.”

U.S. real estate prices and sales may begin to stabilize in 2010, said Stiglitz. A worsening economy and growing speculation will delay the recovery further, he said.

 

http://www.bloomberg.com/apps/news?pid=20601206&sid=apFMheiIZtPo&refer=realestate

“You don’t have it in strong hands, you have flippers,” said Shiller, who helped create the S&P/Case Shiller real estate price indexes. “These speculators are preventing the market from crashing now, and when they get out it could fall again.”

U.S. real estate prices and sales may begin to stabilize in 2010, said Stiglitz. A worsening economy and growing speculation will delay the recovery further, he said.

“Assuming we don’t overshoot, we could be back at equilibrium in 12 to 18 months, but there are reasons to believe we might overshoot,” Stiglitz said.

In November there were 4.2 million homes on the market, falling from an all-time high of 4.6 million in July, the National Association of Realtors said in a Dec. 23 report. The U.S. median home price plunged 13 percent from a year ago, the fastest pace since the 1930s, the trade group said.

“These speculators are preventing the market from crashing now, and when they get out it could fall again.”

U.S. real estate prices and sales may begin to stabilize in 2010, said Stiglitz. A worsening economy and growing speculation will delay the recovery further, he said.

 

http://www.bloomberg.com/apps/news?pid=20601206&sid=apFMheiIZtPo&refer=realestate

“You don’t have it in strong hands, you have flippers,” said Shiller, who helped create the S&P/Case Shiller real estate price indexes. “These speculators are preventing the market from crashing now, and when they get out it could fall again.”

U.S. real estate prices and sales may begin to stabilize in 2010, said Stiglitz. A worsening economy and growing speculation will delay the recovery further, he said.

“Assuming we don’t overshoot, we could be back at equilibrium in 12 to 18 months, but there are reasons to believe we might overshoot,” Stiglitz said.

In November there were 4.2 million homes on the market, falling from an all-time high of 4.6 million in July, the National Association of Realtors said in a Dec. 23 report. The U.S. median home price plunged 13 percent from a year ago, the fastest pace since the 1930s, the trade group said.

“…half of those surveyed said they would do without a formal living room if it meant a larger family gathering space..”

“…consumers are responding to features such as wider doors that can accommodate a wheelchair or walker, master bedrooms on the first floor, and tasteful looking handrails in the shower—amenities that will help baby boomers stay in their homes as they grow old…”

“…New homes in warmer climates are being built with courtyards that provide a connection to the outdoors but also give shelter from wind and privacy from neighbors…”

http://www.businessweek.com/lifestyle/content/jan2009/bw2009016_780596.htm?chan=innovation_architecture_top+storiesIndoor/

Outdoor Living Just since 1992 the number of U.S. homes built with patios or porches has doubled. The New American Home in Las Vegas has a giant backyard that features a covered area with a flatscreen TV and pool table as well as a detached “rejuvenation room” for relaxing. New homes in warmer climates are being built with courtyards that provide a connection to the outdoors but also give shelter from wind and privacy from neighbors. This is critical as builders try to cram larger houses onto smaller lots to keep land costs down. And there’s a history to them, notes Newport Beach (Calif.) architect David Kosco: “The courtyard goes back to Roman times.”

The Return of the BasementWith lot sizes limited, builders are looking for space underground. Once a typical feature of homes in the Northeast, basements are rising in popularity nationally as a way to create extra space. New technologies in insulation and waterproofing are allowing builders to add basements in any climate. They can serve as game rooms for kids, home theaters, or just the “man-cave” for Dad. Builders are even creating underground garages for homes and townhouses to free up space for living areas above, notes Irvine (Calif.) architect Rick Emsick.

The Death of the Living RoomThe kitchen, living, and dining areas are continuing to merge into a great room or family room. In a 2007 study conducted by the National Association of Home Builders, half of those surveyed said they would do without a formal living room if it meant a larger family gathering space. In some cases this is a refection of the connection to the outdoors as well, as home buyers want fewer walls and unobstructed views out into the backyard, says Craig Delahooke, director of custom development for John Laing Luxury Homes.

The Home OfficeNo longer just a spare bedroom, the home office is evolving into an entirely separate structure such as a casita in the backyard or even a separate wing near the garage. Having a separate entrance for the home office allows today’s increasingly mobile workforce to receive work-related visitors or hire an assistant at home without having these people traipse through the main house.

Wireless, but not CordlessWith wireless laptops allowing people to carry their computer to any room, that little computer nook that was popping up at the top of the stairs in many new homes is starting to disappear. Instead you’re likely to see a charging station or “Mom’s Desk,” a little space, typically in the kitchen, where cell phones, laptops, and other devices can be charged.

The Soft LoftThe industrial look with concrete floors and exposed brick is over. Thousands of these pseudo SoHos popped up even in cities such as Dallas and Houston that lacked an industrial past. Downtown lofts have seen some of the steepest price declines in this bust. “Architects love to show these wide-open floor plans, but the reality is people want some privacy,” says Los Angeles architect Jonathan Watts. He says new condos are returning to more traditional floor plans. Lofts are adding hardwood floors, sliding doors, even wall-to-wall carpeting to warm them up.

Say Bye to BlingAs befits this economy, homes are getting less ostentatious. That means less ornate wood, stone, and iron work. No more grand entrances with curved-marbled staircases. The stairs are shifting to the side of the home and back to their utilitarian purpose. Even fireplaces are flickering. Only 46% of all new homes came with one in 2007, according to the U.S. Census. That’s down from 59% in 1996.

The Green Badge of HonorIt almost goes without saying, but green continues to be in, despite the latest slide in gas prices. Even the giant New American Home promises to use “net-zero energy” thanks to devices such as solar panels and designs that let in natural light. Home buyers used to love wowing their friends with the size of their McMansions. Now, says Sean Degen, vice-president for architectural services at home building giant Pulte Homes, “you’re going to see more people having a green badge of an honor.”

Aging in PlaceBuilders say it’s rarely something they overtly try to sell, but consumers are responding to features such as wider doors that can accommodate a wheelchair or walker, master bedrooms on the first floor, and tasteful looking handrails in the shower—amenities that will help baby boomers stay in their homes as they grow old.

“It’s kind of a snowballing effect,” he said. “Until prices hit bottom, we’re going to continue to see this.”

“The home market is not going to recover, on the building or appreciation side, until two things happen: a) all these people with dodgy mortgages who bought things they couldn’t afford get shoved out and b) all those homes get absorbed. The fastest way to do both of those things is to let prices fall.”

Santa Clara County saw the biggest jump in preforeclosure activity among the counties last year, up 234 percent to 18,610, according to Default Research. Los Angeles County experienced the highest number, 122,408.

 

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/07/BUH0154HSL.DTL&type=printable

The number of scheduled foreclosure sales and defaults in core areas of Northern and Southern California exceeded a half million during 2008, up 132 percent from the previous year, according to a report by Default Research Inc.

Notices of defaults (the first step in the foreclosure process) and notices of trustee sales (which often but don’t always lead to actual foreclosures) reached 525,356 in 15 California counties last year, reported the Mt. Pleasant, Pa., company that sells information about distressed real estate to agents, lenders, investors and others. In the Bay Area counties of Alameda, Contra Costa, San Francisco and Solano, the annual total climbed 180 percent to 85,381.

Serdar Bankaci, founder of Default Research, traces the increase to a flattening in home prices that began in 2006, sparking foreclosures, which further depressed values and led to more bank seizures.

“Those who have seen some blue sky as a result of the late-year declines are somewhat off the mark,” said Paul Leonard, director of the California office of the Center for Responsible Lending, a consumer advocacy group. “Things are going to look pretty grim for a while.”

Christopher Thornberg, principal at Los Angeles research firm Beacon Economics, said many homeowners will wind up in foreclosure again despite lowered loan payments, because the total amount they owe will still far exceed the market value of their homes. Banks, meanwhile, will jump at the chance to get the government to subsidize losses on mortgages at high risk of defaulting again, he said.

There is also growing concern that loan modifications might not be enough to solve the foreclosure crisis.

Among homeowners who were 30 or more days delinquent on their loans and received loan modifications during the first quarter, 37 percent defaulted again within three months, according to a report released last month by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. Fifty-five percent did so after six months.

Leonard said the problem isn’t that loan modifications don’t work, but that banks aren’t lowering borrowers’ payments enough when they do the workouts.

Thornberg advocates a different solution entirely.

“My policy prescription: Let them get foreclosed on,” he said. “The home market is not going to recover, on the building or appreciation side, until two things happen: a) all these people with dodgy mortgages who bought things they couldn’t afford get shoved out and b) all those homes get absorbed. The fastest way to do both of those things is to let prices fall.”

Santa Clara County saw the biggest jump in preforeclosure activity among the counties last year, up 234 percent to 18,610, according to Default Research. Los Angeles County experienced the highest number, 122,408.

Most other groups that track California foreclosures and defaults, including MDA DataQuick of San Diego and RealtyTrac Inc. of Irvine, haven’t yet released final numbers for 2008. Through the third quarter, DataQuick reported 519,000 notices of trustee sales and defaults across the state, up 130 percent from a year earlier. Foreclosures totaled nearly 190,000, up 260 percent.

The other counties in the Default Research report include Fresno, Orange, Riverside, Sacramento, San Bernardino, San Diego, Santa Barbara, Tulare and Ventura.

“We’re in the midst of a downward spiral and the momentum is building,” Chief Executive Officer Stuart Miller said on a conference call with analysts.

“Purchases of previously owned homes, which account for about 90 percent of the market, fell 8.6 percent in November from the prior month and median prices fell 13 percent from a year earlier, the biggest decline on record. November sales of new homes, which account for the remainder, dropped to the lowest level in 17 years…”

 

 

http://www.bloomberg.com/apps/news?pid=20601103&sid=abXGoz2NzfSQ&refer=news

The index of pending home resales fell 4 percent to 82.3, the lowest level since the series began in 2001, from a revised 85.7 in October, the National Association of Realtors said in a report today in Washington. Pending sales fell in all four regions.

Economists expected November pending sales to fall 1 percent after an originally reported drop of 0.7 percent in the prior month, according to ….34 economists in a Bloomberg News survey. Estimates ranged from a drop of 5 percent to a gain of 1.5 percent.

Today’s home-sales report showed declines of 7.2 percent in the Northeast, 6.7 percent in the Midwest and 2.4 percent in the West. Pending sales fell 2.2 percent in the South.

Year-Over-Year Drop

The Realtors group, whose pending sales data go back to January 2001, started publishing the index in March 2005. The gauge was down 5.3 percent from November 2007.

Pending resales are considered a leading indicator because they track contract signings. Closings, which typically occur a month or two later, are tallied in the Realtors’ monthly existing-home sales report. That report for December is scheduled to be released Jan. 26.

The financial and credit market collapse that intensified in September stifled a housing market that had been showing some signs of stabilization.

In a separate survey released today, the Realtors group said housing starts in 2009 are likely to fall 28.6 percent to 646,000 from 904,000 last year. Median existing-home prices are likely to be $198,100 this year, little changed from 2008, and the median price of new homes will be $231,700, compared with $228,800 last year, the group said.

Existing Homes

 

One in 10 Americans fell behind on mortgage payments or were in foreclosure in the third quarter, the Mortgage Bankers Association reported last month. The share of mortgages 30 days or more overdue and the share of loans already in foreclosure both jumped to all-time highs in a survey that goes back 29 years, the association said.

With the economy gripped by a recession, average house prices have fallen by about a quarter from their peaks in mid- 2006, according to the S&P/Case-Shiller home price index.

 

San Francisco saw a 31 percent drop, and Miami, Los Angeles and San Diego were close behind, with declines in the range of 29 percent to 26.7 percent.

 

“Home prices are back to their March 2004 levels,” Blitzer said. “The bear market continues.”

 

NAR chief economist Lawrence Yun said the overall poor economic conditions are to blame… “The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level,” Yun said.

 

33http://www.npr.org/templates/story/story.php?storyId=98816752

 

Home prices plummeted a record 18 percent over the yearlong period ending in October as slowing sales and foreclosures pushed the U.S. housing market further into recession, a report released Tuesday shows.

The Standard & Poor’s/Case-Shiller Home Price Indices showed that home prices dropped at a record rate during the 12-month period, with all 20 metropolitan areas measured showing price declines — and 14 showing record drops.

Phoenix and Las Vegas continued to be the weakest markets, with each reporting annual declines of about 32 percent. San Francisco saw a 31 percent drop, and Miami, Los Angeles and San Diego were close behind, with declines in the range of 29 percent to 26.7 percent.

David Blitzer, chairman of the index committee at Standard & Poor’s, said the 20-city composite is down 23 percent from its peak in mid-2006.

“Home prices are back to their March 2004 levels,” Blitzer said. “The bear market continues.”

Blitzer said Atlanta, Seattle and Portland all entered the “double-digit club,” with annual declines of more than 10 percent.

In addition, the report’s monthly data showed no improvement in the national housing market over September’s report. All 20 metropolitan areas posed monthly declines.

The S&P/Case-Shiller indices, released on the last Tuesday of each month, track the prices of single-family homes for 20 metropolitan areas from Boston and New York to Dallas and Seattle.

Meanwhile, the Conference Board reported that consumer confidence hit an all-time low in December as employers cut jobs and housing prices fell. The Conference Board’s Consumer Confidence Index fell to 38 in December from a revised 44.7 in November.

Last week, the government reported that sales of new homes fell in November to the slowest pace in almost 18 years, while new home prices dropped 11.5 percent to $220,400, the largest decline in eight months.

Earlier this month, the National Association of Realtors reported that existing single-family home sales fell 8.0 percent to a seasonally adjusted annual rate of 4.02 million in November, down from 4.37 million in October — and 8.8 percent below the 4.41 million-unit pace a year ago.

The median existing single-family home price was $180,800 in November, down 12.8 percent from November 2007, NAR reported.

 

 

“…There are a fixed number of buyers in the market to which lenders will approve and make loans. Lenders are offering few indications that they will be loosening lending requirements in the near future, and so we can’t expect new buyers to enter the market simply with cheaper money available…”

With more stringent (and responsible) lending requirements, the question is whether the true number of buyers in the market is numerous enough to purchase the existing supply.

http://seekingalpha.com/article/112298-the-housing-market-will-improve-with-lower-prices-not-lower-interest-rates?source=email

However, there are buyers at lower home price levels that would qualify for a loan if the overall price of homes were lower. For example, assume that there is a fixed supply of homes on the market (say 1,000,000 homes) and assume that all of these homes were all priced at $250,000. There are a certain number of buyers that are willing and able to buy a home at this price (meaning that they are actually receiving loan approvals), but given the surplus of inventory on the market, it appears that the number of buyers is below our assumed supply of 1,000,000 homes.

Now, if the price of these 1,000,000 homes for sale dropped to $200,000, then basic economics tell us that more buyers become willing and able to buy homes. That is, some buyers that would not be approved to purchase a $250,000 home would be approved to buy a $200,000 home, simply because income requirements are lower for the buyer at the lower home price. The profile of the buyer doesn’t change for the lender under their stricter lending requirements – strong credit scores and meeting income level requirements – there’s just more buyers when home prices drop overall.

The cheaper money will decrease the final price of homes to the eventual buyers, even if the actual sold price of homes does not change. This is because the lower interest rates will result in a lower long term mortgage payment. As many Realtors have told their buyer clients – the final price of the home matters far less to you monthly than does the monthly payments that you will be making for the next 30 years. That said, lowering interest rates to make money less expensive won’t spur housing demand in a drastic way.

This would indicate that the fundamental issue in the housing market is total quantity of homes demanded from qualified buyers as determined by the money suppliers – banks and lenders. Only buyers that will be approved are part of the buyer pool, the rest are just lookers. With more stringent (and responsible) lending requirements, the question is whether the true number of buyers in the market is numerous enough to purchase the existing supply. Given that suppliers (home sellers) are continuing to drop their prices, it would appear that the real number of qualified buyers are less that required for the housing market to find equilibrium.