Posts Tagged ‘Intero Insider’

« Older Entries

The Intero Insider: Summer’s Gift to Housing: A Three-Legged Stool

By Gino Blefari | September 26th, 2012 0 Comments

Economic and other housing news this past week have given the housing recovery three strong legs to stand on. The dreaded shadow inventory that many have worried could derail the recovery and possibly even throw us back into a housing downturn showed some solid progress, home resale volume ticked up significantly in August, and Wall Street welcomed a successful IPO of a real estate search site.

Shadow inventory

JPMorgan Chase reports that banks trimmed 1.2 million troubled mortgages or foreclosed homes off their books in the first half of 2012. The bank’s research arm says the progress could double by the end of the year, leaving an estimated more than 4 million loans and properties to settle.

While 4 million properties left in the looming shadow inventory still sounds pretty deadly, it would be down from a peak of 6 million in 2010. Two million homes in two years is actually pretty great in the context of things.

Of those 1.2 million that were processed in the first half of the year, nearly 335,000 were short sales, 420,000 were loan modifications and another 470,000 were sold as REOs (bank-owned homes).

Let’s keep it up!

Summer resale volume heats up

Existing home sales were up 7.8% in August to a rate of 4.82 million homes from 4.47 million in July, according to the latest monthly numbers from the National Association of Realtors. Sales volume in August was 9.3% higher than the 4.41 million level in August 2011.

In addition to this good news, NAR reports that the national median price rose on a year-over-year basis for the sixth month in a row. The median price was $187,000 in August, up 9.5% from the same month a year ago and the strongest increase since January 2006 when the median price rose 10.2% from the previous year.

Summer traditionally is high season for home sales so this news is not surprising. But it shows a strength we need to see right now.

Real estate stocks get a warm welcome

Real estate search site Trulia.com debuted its IPO last week with a very warm welcome from eager investors. The stock traded up 41% to close at $24 per share in its opening day, according to Marketwatch.

Given that the company has yet to turn a profit, the move can be interpreted as good faith in a recovering real estate market. Investors clearly expect a strong recovery in housing and property markets. Of course, that doesn’t mean it’s a sure thing, but it’s a great vote of confidence and something the market needs right now.

Congratulations to Trulia! Here’s to many more successful IPOs in housing and to many more months of positive gains. Full steam ahead.

  • Get new posts via email
  • Subscribe

The Intero Insider: We’ve Seen the Bottom and It’s Past Us

By Gino Blefari | July 19th, 2012 0 Comments

As I cruised through real estate headlines this past week, two stood out as big wins for the industry and homeowners:

Rising home prices bring 700,000 homeowners above water (Inman News)

Housing passes a milestone (Wall Street Journal)

The underwater story

This is a big one. The problem runs deep, has political implications and also has created a major hurdle for the recovery.

Underwater homeowners can’t sell like other homeowners can. Therefore, unless they’re looking for a short sale or have to sell due to other circumstances, they’re not putting their houses on the market. This actually has created constrained inventory in some markets where demand is really healthy – leaving buyers with few options and competitive bidding situations.

The report last week from CoreLogic that rising home prices helped more than 700,000 homeowners regain equity in their homes during the first quarter was a glimmer of good news on the negative equity front.

The number of U.S. homeowners with negative equity declined 6% in the first quarter, leaving 23.7% of all homes with mortgages underwater (down from 25.2% in the fourth quarter).

This is solid, positive news based on data. But we also can’t forget that 11.4 million borrowers still owe more on their mortgage than their homes are worth. It will take some time for the market to absorb and fully recuperate from this. The good news is that things are heading up in a big way.

The milestone story

The Wall Street Journal has proclaimed, “The housing bust is over.”

While many of us might point to various statistics that have hinted at this story over the last few months already, this feels like a bigger deal because of where it’s coming from – the business press.

The Journal cites the following stats to make the case:

Nearly 10% more existing homes were sold in May than in the same month a year earlier.
The fraction of homes that are vacant is at its lowest level since 2006.
Builders began work on 26% more single-family homes in May than in May 2011.
A WSJ survey of forecasters found that 44 believe the housing market has reached its bottom; only three don’t.

The Journal states: “From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.”

The biggest threat however is the shadow inventory we hear a lot about. We’ll save that for another post and take the good news in stride today.

It’s going to be another interesting year for housing markets!

  • Get new posts via email
  • Subscribe

The Intero Insider: Homeownership Optimism Prevails

By Gino Blefari | July 11th, 2012 0 Comments

There’s something special about first-time homeowners. The sparkle in their eyes. The “I-can’t-believe-we-finally-did-it” way they carry themselves. The giddiness and hint of terror in their voices as they tell the story of how they found “the one” and realize each time they tell it what a commitment they’ve made.

It’s fantastically American.

It’s how I know sentiment towards homeownership is still alive no matter what any rent-vs-buy index says – ­no matter what any consumer confidence or homeownership attitudes survey reports.

Right now, however, more and more Americans do feel that it’s a great time to buy a home. In a survey of 1,001 Americans last month, Fannie Mae found that 73% believe it’s a good time to buy, up from 72% of the respondents in May.

Another interesting finding in the survey is that the number of Americans who said it is a good time to sell remained at 15% in May. That’s a pretty low number and reflects what buyers in some markets are seeing: tight inventory due to a lower number of homeowners putting their houses up for sale.

These sentiments, along with record low interest rates, have created a perfect storm for some buyers – though not all. In fact, many of the buyers in pockets around Intero’s headquarters in the Bay Area are feeling the pressure of low inventory. Their bids are met with heavy competition and some are bidding so far over asking price you’d think it was 2004 all over again.

All of this would suggest that that perfect time to buy could very quickly be slipping away. Fannie Mae’s survey found that 69% of respondents said they would buy a home in June, up from 63% in May. This is the highest level since the survey began. Consumer confidence on the buy side is alive and strong.

In addition, consumers in the survey predict that home prices will rise 2% over the next 12 months, up from 1.4% in May.

My prediction is that at some time during those 12 months, we’ll see the confidence start to tip over to sellers too and they will be less hesitant to list their homes for sale. This will free up inventory in those tight markets and fuel a steady flow of sales.

Not all markets will recover on the same time frame, of course. But I think it’s safe to say that if your market has low inventory right now, the worst is likely behind you.

  • Get new posts via email
  • Subscribe

Intero Insider: Positive Housing News with High Impact

By Gino Blefari | July 4th, 2012 0 Comments

In the wake of two pieces of positive news on housing last week, there was a loud chorus of commentators simultaneously asking:

“Is this the big sign we’ve been waiting for?”

“Could it be? The housing recovery is fully grown?”

News item #1: Home values increase in Case-Shiller’s index

Sure, we’ve already seen an increase in values in some of the other indexes that track this data. The National Association of Realtors reported a 7.9% increase year-over-year in the median home price in May. And the FHFA house price index, which is a Federal government-generated number, showed a 2.7% increase year-over-year in May.

This one from Case-Shiller is kind of a big deal, though, because while industry reports like the one from NAR are constantly criticized for being overly optimistic, the Case-Shiller index has always suffered criticism for being too lagging and too negative.

The fact that the latest Case-Shiller index showed a 0.7% increase in home prices for April from the previous month is big news. The index showed positive gains in 19 of the 20 cities it tracks. Pretty impressive!

News item #2: Sales of new single-family homes jumped in May

Sales of new single-family homes were up 8% in May from April and up 20% from the same month a year ago, according to new data released from the Commerce Department.

Again, this is an agency from outside the housing industry reporting positive gains, which tends to give the news added weight among skeptics.

What are we to make of these statistics?

As I’ve been saying a lot lately, all of these national numbers are pretty much meaningless when it comes to the individual decisions that buyers and sellers make. Those decisions are based much more on the local market and the individual household situation (i.e., Do we need to sell? Do we need to relocate? etc.).

But on the national stage, positive statistics do help to paint the economic picture for lawmakers, which affects the conversation that takes place in the media. That in turn affects market psychology a bit. When you’re constantly hearing on the news that the market is in trouble, you tend to be a bit nervous about playing. By contrast, if you’re hearing the market is much improved and all the signs point to more improvement to come, it can affect your confidence level – this time, in a good way.

  • Get new posts via email
  • Subscribe

Intero Insider: Buying a Home Is Not What You See on TV

By Gino Blefari | June 20th, 2012 0 Comments

Plenty of studies over the years have shown that watching too much TV is bad for your health – physically and mentally. Not only are you sitting and inactive for long periods of time, but the brain becomes passive and often disengaged.

However, TV can be menacing in other ways too, like in the form of misinformation.

Reports this past week have revealed that HGTV’s popular “House Hunters” show is likely mostly fabricated.  One couple that was featured on the show came forward and said that their story was mostly made up. Maybe that’s not such a surprise, but it’s worth talking about.

For those unfamiliar with the show, the premise is to follow home buyers in their pursuit of buying the perfect home. It aims to capture the dramas that come along with that journey – the aspirations, disappointments and, ultimately, the happy endings.

I felt compelled to write about this because the show is marketed as a reality show and is shot documentary style. While many of us already realize that most “reality” shows on TV are far from it, there’s still a danger in people watching this show and thinking it reflects, in some way, the realities of a typical home purchase.

I feel this is a good example of why consumers need trustworthy agents to set realistic expectations about the real estate process itself far in advance, and also to educate them on the current conditions in their local market. Real estate, like personal finance, has always been one of those things in which people turn to the strangest places for advice. Parents, barbershops, colleagues, friends. Many tend to listen to anecdotes about what went wrong and what went right and take it as pure gospel.

Even though I give people the benefit of the doubt and assume that most were not turning to “House Hunters” as a way of educating themselves on the real estate process or turning to the show for financial advice, I’m glad this story was released. It is a nice reminder that often what we see on TV – even as it’s being touted as “reality” – is, in many cases, fabricated or distorted.

The true reality is that sometimes it works out and sometimes it doesn’t when trying to buy a home. The key is to be prepared, understand the process and the local market, and not let setbacks deter you from your goal of buying the perfect home. Use an experienced agent who knows the local market and you’ll see that, mostly, there’s no drama at all.

  • Get new posts via email
  • Subscribe

Intero Insider: Underwater Loans Helping to Push Up Prices in Some Markets

By Gino Blefari | June 13th, 2012 0 Comments

An upside to underwater homeowners? Apparently underwater loans are credited as a cause of home price increases in markets nationwide.

This conclusion seems like a stretch – until you dig into the reasoning and data a bit.

A data report from CoreLogic this month shows that home prices are trending upward in markets with tightening inventories. The data provider goes on to find a correlation between markets with tightened inventories and underwater mortgages.

In other words: underwater homeowners who otherwise would be prime candidates to sell and move up instead are staying put because they don’t have enough equity to sell.

In some circumstances, these owners could try the short sale avenue. But even in that case, the ones who sell short are not going to be able to get another home loan for a few years because of the blemish to their credit history. For some families, that makes a short sale unattractive. They’d rather live in their home and wait it out than deal with a short sale, an attack on their credit and years of renting afterward.

According to CoreLogic, home prices, including distressed sales, increased 1.1% in April from the previous year and were up 2.2% from March. It was the first time two consecutive year-over-year increases occurred since June 2010, and it was the second monthly increase this year. The data provider expects home prices to increase another 2% from April to May.

CoreLogic points out that the national supply of homes for sale was down to 6.5 months in April, a level not seen in more than five years. CoreLogic’s Chief Economist Mark Fleming is quoted as saying the squeeze in inventory was “in part driven by the ‘locked in’ position of so many homeowners in negative equity.”

Maybe this is just what we needed to boost values a bit and rev up the housing engine in markets that have been hurting.  After all, I learned in my Econ 1A course in college that price is derived from the changing relationship between supply and demand.  Otherwise, this could be the spark that puts more emphasis on initiatives to help homeowners with negative equity modify their loans.

Are you seeing this happen in your market? Is inventory getting squeezed because the important move-up buyer segment is staying put due to negative equity in their current loans?

  • Get new posts via email
  • Subscribe

Intero Insider: Battling Classic Housing Data Conflict

By Gino Blefari | June 6th, 2012 0 Comments

National housing data headlines are very often misleading – at best. At their worst, they drill into one of the harder to measure, but equally important factors impacting the nation’s real estate markets: consumer psychology. In fact, if not for the reality that 99.9% of consumers buy a home for the sake of owning a home, improving their lifestyle and growing their families – three things you can’t measure with numbers – I’d be willing to say that national housing data often does more damage to market conditions than good.

Last week, we saw a classic example of this type of dubious headline shootout: The S&P/Case-Shiller Home Price Indices came out, indicating that home prices fell nearly 3% in the first quarter this year. This probably had some people scratching their heads if they were paying attention to the report from NAR released the week before noting that home prices continued to trend upward in April, climbing 10% compared to the same month a year before.

Upon closer look, it’s easy to point out that the S&P/Case-Shiller numbers are quarterly, while NAR’s numbers are monthly. It’s also important to point out how each report is measuring price changes. For instance, NAR measures existing homes that sell each month and tracks the changes in median values, while S&P/Case-Shiller looks at the same home and measures how much it recently sold for versus how much it sold for the last time it changed owners.

These are two very different takes on data that gets lumped into the same thing in a news headline: home values. As we all know, not many people pay much attention past that headline.

In my experience, many consumers aren’t that concerned with national statistics. However, paranoia and uncertainty about the market ensues after the last downfall and more people may be watching stuff like this than we think.

It’s our job as real estate professionals to pay attention to these data headline discrepancies and proactively help consumers sort out what these numbers mean.

It’s our job to reinforce the realities of our local markets. While these national data are painting two stories – one slow but steady recovery, and one that’s not yet started recovering lost values – your local market may very well be tipping back into a seller’s market. Indeed, some markets are back to multiple offer situations and are experiencing tight inventory, making it tougher to be a buyer than it has been generally in recent years.

Should we even pay attention to national housing data? Yes, to the extent that it’s news and news travels. But I think we should pay even more attention to what’s being left out of these news stories, and be prepared to help others understand.

  • Get new posts via email
  • Subscribe

Intero Insider: Digging Deeper Into Negative Equity Situation

By Gino Blefari | May 30th, 2012 0 Comments

This past week, Zillow released its latest Negative Equity report, giving some numbers on the percent of homeowners who owe more on their mortgage than their homes are currently worth. Nearly 16 million homeowners were underwater on their mortgages in the first quarter of 2012, owing a collective $1.2 trillion more than their homes were worth, according to Zillow. That’s nearly a third of all homeowners with mortgages, which sounds pretty bad if you ask me.

However, this is just the type of statistic that needs some digging to fully interpret and understand before allowing it to upset you or affect any buying or selling decisions.

As Zillow points out, despite being underwater, foreclosure is likely not imminent for most of these homeowners as 9 out of 10 continue to make their mortgage payments on time without any problems. Only 10.1% were more than 90 days delinquent with mortgage payments during the data period.

But let’s also not forget that time can and will change things for homeowners. Being underwater is only a serious problem if a homeowner suddenly is unable to pay their mortgage and needs to sell, needs to sell for some other reason such as job relocation, or is facing a market and situation in which his value has dropped severely below market value – to the point in which the home is likely to not recuperate value over the homeowner’s lifetime.

For most underwater situations, the owners will likely stay or want to stay in their homes for a long period of time, which gives the market a chance to recuperate value, in many cases. Not that long ago, people expected real estate values to move only in the long-term. In other words, no one was expecting to double their money in the next five years – or, by that same sentiment, to recuperate a dip in value in the next five years either.

In fact, if you apply the same principles as stock market investing, which requires more time to see increases in overall value of the original dollar put in, it feels more “normal” to take a long-term view on real estate values. Not many stock investors, which tend to be everyday workers who invest their retirement savings in portfolios that, by design, take at least 10 years to produce a meaningful investment outcome.

Another good point to the negative equity report is that many homeowners in negative equity are not deeply underwater, according to Zillow’s numbers. Nearly 40% of underwater homeowners owe between 1 and 20% more than their home is worth. Of course, some owe much more and markets vary in severity of the problem, with Las Vegas, for instance, being a metro in which more than one quarter of homeowners with mortgages owes more than double what their home is worth.

As with all real estate statistics, it’s important to construct the context around the negative equity report to get a clearer picture of what is happening and who is affected. Just because a homeowner is pronounced underwater doesn’t mean he’s in dire straits – or that his home will blight his neighborhood. A rise in negative equity wouldn’t even necessarily mean there’s an impending rise in foreclosures. Dig deeper to understand what is going on, folks!

  • Get new posts via email
  • Subscribe

Intero Insider: April Sales, Values Trending Up

By Gino Blefari | May 23rd, 2012 0 Comments

The latest housing numbers are out and the message is clear: Things are heating up in markets across the country once again, and the best news about this is the fact that it’s no longer just investors who are gobbling up properties. Now we’re seeing more demand and sales coming from primary residence buyers.

Sales of existing homes increased 3.4% to an annual rate of 4.62 million in April from March, and were up 10% from the same month a year ago, according to the latest numbers from the National Association of Realtors. The best part of this news is that home values also increased 10.1% to $177,400 in April. The increase in values may seem to hurt affordability, but in actuality it tends to spur more buyers who are on the fence to make a move while conditions are still great.

Buying conditions are still excellent for buyers. Average rates on the 30-year fixed-rate mortgage were 3.79%, according to Freddie Mac’s latest survey measuring the week ending May 17.

Not only are the numbers good – they’re showing strength in all the right places. A healthy market is one that sees sales and values increasing at a reasonable pace, and one that is not unevenly filled with distressed properties and investor buyers.

The share of sales that were foreclosed properties is slowly diminishing. Distressed homes, which include foreclosures and short sales that sell for deep discounts, accounted for 28% of April sales, with 17% being foreclosures and 11% being short sales. This was down from 29% in March and 37% in April a year ago. Foreclosures sold for an average discount of 21% below market value in April, according to NAR, while short sales sold at an average 14% below market value.

The share of buyers who were first-time purchasers increased to 35% in April, up from 33% in March, but down slightly from 36% in April last year. Meanwhile, investors purchased 20% of homes in April, down from 21% in March, and holding steady from 20% during the same month last year.

Depending on your market, you may be seeing a plethora of discount deals still out there, or multiple bid situations. NAR says this is because inventories are tight in some markets, notably the Washington, D.C., area, Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. Expect stronger price increases in most of these areas in the coming months.

All of this shows that to talk about the condition of the housing market right now, you really need to first define which segment you’re talking about: first-time buyers, foreclosures, city, state, neighborhood, etc. The market is moving in a few different directions, depending on where you’re looking. Overall, things are definitely trending up, but be sure to understand which segment you’re trying to assess before drawing any big conclusions.

  • Get new posts via email
  • Subscribe

Intero Insider: 4 Signs It’s Time to Buy a Home Now

By Gino Blefari | May 2nd, 2012 0 Comments

If ever there was a fantastic time to buy a home, it’s right now. Never mind the fact that I head a leading real estate brokerage company. Let the statistics show you why now is your best bet to get into the housing market:

1. Home values are recovering

U.S. home values rose 0.5% from February to March, the largest monthly increase since May 2006, before values at the national level peaked, according to a recent report from Zillow this month. In addition, the company said in its home value forecast that it expects 19 of the 30 markets it covers will reach a bottom in values this year. Phoenix and Miami-Ft. Lauderdale are expected to see significant home value increases.

2. Interest rates are still extraordinarily low

The cost of borrowing is still extremely attractive for buyers who qualify and are ready for the financial responsibility of a home mortgage. Saying mortgage rates have hit a new “record low” has become a bit of a broken record. At an average 4.04% in the latest Mortgage Bankers Association survey, rates on the standard 30-year fixed-rate mortgage are almost too good to be true. While there’s no sign from the Federal Reserve that rates will increase significantly anytime soon, it’s definitely a great condition for buyers right now.

3. Multiple offers are back

Demand for housing is starting to outweigh supply in some markets across the country. We covered the return of bidding wars this spring in markets like Silicon Valley, Miami, Seattle and Washington, D.C. Even despite the presence of “war” like situations, multiple offers are once again a fact of life in markets with strong economies and job prospects.

4. Rents are rising with no end in sight

The median U.S. rent was $721 per month in the first quarter, up 5.6% from the same period a year earlier, according to the Commerce Department. Altogether, rental income has increased 12% in the year ended in March. In addition to rising rent, the supply of units is the tightest in more than 10 years, with 8.8% of units vacant in the first quarter. This at a time when the demand for rental units is at the highest in 15 years. This means more buyers likely will continue to jump from that tight market into owning while the numbers make sense.

As you can see, the buyer market is about to get more crowded than it’s been the last few years. These are each solid market forces that could push more and more buyers off the fence, creating more transactions and helping to lift home values this year and next. If you think you want to buy – or know buyers who are testing the waters – now is your chance to take advantage of prime home-buying conditions.

  • Get new posts via email
  • Subscribe

« Older Entries