Friday, December 30, 2011

Analyst: Home price declines coming, but that could be a good thing

by KERRI PANCHUK

If banks ramp up next year and begin moving backlogged foreclosure inventory onto the market, homeowners and buyers could see further home price drops and those declines could go as deep as 10% to 15%, said Lance Roberts, CEO, economist and chief strategist at Streettalk Advisors.

Yet, Roberts in his forecast for 2012 adds a bit of humor to his predictions. He is confident, but not overly committal to a forecast, and chuckles when pointing out that the media and mainstream financial analysts previously called for home price bottoms in 2010 and 2011. Now many are forecasting a bottom in 2012, but Roberts is careful to recognize all the many knowns and unknowns that weigh on economies.

"I am in the camp that we are going to have slower economic growth (in 2012)," he said.

Currently, other analysts are projecting 2% to 2.5% growth. Roberts sees a sub-2% or 1% growth rate for next year.

"There is a current belief that the U.S. can grow even as China slows and the eurozone goes into recession," Roberts said in an interview with HousingWire. "But 20% of our exports go to the eurozone. If they go into recession, it is going to be difficult for us to avoid a recession without some type of stimulus program."

As far as gaining political capital for a third round of quantitative easing, Roberts says the Federal Reserve doesn't need it since it functions independent of Congress. "Ben Bernanke can launch a third round of quantitative easing if he chooses to do so. I think there is a likelihood we could see more stimulus," he said. Still, he says that move is contingent on what happens in Europe, China and stateside.

Roberts describes the housing market as one that is still undergoing a series of changes.

He points out that a majority of recent housing starts occurred in the multifamily apartment segment, suggesting more Americans are deleveraging and realizing not everyone will own a home.

Roberts doesn't view the past downturn or the possibility of a coming recession with doomsday glasses. Based on the supply and demand curve, the 2008 crisis was a long-time coming because government policy created a decade-long imbalance where homes were truly out of reach for borrowers and cheap credit made up the difference, he believes.

He sees recessions — when handled properly and without too much intervention — as the solution to getting demand and prices in line.

"Let's think about the average American salary," he said. "They make $55,000 a year. They now have to come up with a 20% down payment. Gone are the days of ninja loans. It's going to be harder for them to qualify to buy a house. If that is the situation, prices will have to fall further than the historic norm."

This is where Roberts throws out the possibility of another 10% to 15% home price decline.

But Roberts is more optimistic in one way: he sees recessions as a natural occurrence of a functioning marketplace. "They are a natural part of a market cycle," he said. "If the economy just goes up, things get excessively expensive and you set yourself up for a 2008-type crash."

He believes the recent pain is the result of government involvement in pushing homeownership and cheap credit. "The American Dream has never been homeownership," he said. "It was to have an opportunity to create a better life for yourself."

His verdict on the years leading up to the crisis and the past few years: "We basically tattooed American society with a horrible investment structure."

URL to original article: http://www.housingwire.com/2011/12/30/analyst-deeper-home-prices-coming-could-be-a-good-thing

For further information on Fresno Real Estate check: http://www.londonproperties.com

Thursday, December 29, 2011

Buyers, sellers continue to butt heads on home prices

by JUSTIN T. HILLEY

Most Americans feel now is a good time to buy a home, but those who want to sell are having difficulty finding buyers at desired prices, causing seller sentiment to fall to record lows.

The low opinion is causing a wide gap between homebuying and home selling that won't narrow for at least the next five quarters, according to a new report by the Mortgage Bankers Association's Research Institute for Housing America.

From 1992 to 2005, positive seller sentiment fluctuated between 40% and 60%, according to the report. Since 2005, sentiment has plummeted to 7.6%, even while homebuyer opinions remain high. Despite high unemployment, slow economic growth and problems plaguing the economy, nearly 80% of American households believe now is a good time to buy a home.

Today's pattern of homebuying sentiment looks similar to past recessions, but what is different is today's historically low positive seller sentiment, according to Gary Engelhardt, Syracuse economics professor. The large overhang of mortgages past due or in foreclosure is a major factor for the difference. As market values have fallen, potential sellers have not adjusted their target selling prices downward fast enough to bring buyer and seller sentiment more in line with one another.

Engelhardt said it is difficult to determine the main driver of the gap, but offers a few more possible explanations for the discrepancy.

He says seller prices may be anchored to past market values such as the purchase price of the property or what a comparable property sold for recently, especially around the market peak.

"If owners update these anchor prices infrequently, then a wide gap in buyer and seller sentiment would emerge in the face of sharp, prolonged declines in market values, such as those seen in the last few years," Engelhardt says.

He also cites the underwater homeowners who can't or won't adjust their selling prices to below that of their outstanding mortgage amount, as they would need to bring cash to the table to pay off the mortgage plus transactions costs.

Currently, about 20% of all homeowners with mortgages nationally are underwater. In some particularly hard-hit markets, as many as half of all homeowners with mortgages are underwater. Those are the same places with the highest incidence of delinquent mortgages and foreclosures.

Also, with large declines in market values, sellers now hold a highly leveraged option that pays off with any future increase in prices, meaning there may be increased value in waiting, either to initially list, or to keep, the property on the market. This could hold prices high enough to drive a substantial wedge between the existing buyer and seller. And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this.

Analyst expect home prices to stabilize in 2012.

The current lack of positive sentiment cuts across almost all demographic categories and regions. Positive seller sentiment is stronger among nonwhite households.

Engelhardt says that over the next five quarters, positive homebuying sentiment is forecast to align with current and long-run average levels. In contrast, positive seller sentiment is projected to remain at current and historically low levels. This indicates that home-selling sentiment and, hence, market activity, will also remain sluggish in the near term.

URL to original article: http://www.housingwire.com/2011/12/29/gap-between-homebuyer-and-seller-sentiment-at-record-level

For further information on Fresno Real Estate check: http://www.londonproperties.com

California pending home sales post higher for seventh straight month

Source: California Association of Realtors

California pending home sales decline in November, but year-to-year sales post higher for seventh straight month, C.A.R. reports

LOS ANGELES (Dec. 21) – Pending home sales in California fell in November but were up from the previous year for the seventh consecutive month. Additionally, distressed home sales dropped in November from both the previous month and year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

Pending home sales:

California pending home sales fell 9.1 percent in November but were up from a year ago, according to C.A.R.’s Pending Home Sales Index (PHSI)*. The index was 109.8 in November, based on contracts signed in that month, down from October’s index of a revised 120.9. However, the index was up 11 percent from November 2010, marking the seventh consecutive month that pending sales rose from the previous year. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“The strong year-over-year growth in pending sales observed in the last several months suggests we should see an increase in December’s closed sales over the same month last year,” said C.A.R. President LeFrancis Arnold.

Distressed housing market data:

At 55.1 percent, equity sales made up more than half of home sales in November, up from 53.9 percent in October and 54.4 percent in November 2010.
The total share of all distressed property types sold statewide fell to 44.9 percent in November, down from October’s 46.1 percent and 45.6 percent in November 2010.
Of the distressed properties sold statewide in November, 21 percent were short sales, up slightly from the previous month’s share of 20.7 percent and up from last November’s share of 19 percent.
At 23.5 percent, the share of REO sales was down from October’s 24.9 percent, and down from the 26.2 percent reported in November 2010.
Multimedia:

Closed housing sales by sales type.
Pending sales compared with closed sales.
Historical trend in the share of equity sales compared with distressed sales.
housing supply for REOs, short sales, and equity sales.
**Note: C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state. Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market. A sale is listed as pending after a seller has accepted a sales contract on a property. The majority of pending home sales usually becomes closed sales transactions one to two months later. The year 2008 was used as the benchmark for the Pending Homes Sales Index. An index of 100 is equal to the average level of contract activity during 2008.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles

URL to original article: http://www.car.org/newsstand/newsreleases/2011newsreleases/novpending/

For further information on Fresno Real Estate check: http://www.londonproperties.com

Depending on how you look, housing could be a bull or a lot of bull

Source: Fortune

Despite today's gloomy housing market, a few are betting 2012 will mark the beginnings of a fundamental turnaround for the industry. Barclays analysts recently raised their price targets for homebuilders D.R. Horton, Lennar Corporation, Meritage Homes Corporation, Pulte Group and Toll Brothers.

The outlook, the analysts say, comes chiefly because prices for non-distressed homes have stabilized. They point out that the sales of foreclosed homes are no longer dragging down prices for the rest of the housing industry. What's more, the job market has improved during the past 12 months with the creation of 1.8 million jobs, an average of 150,000 a month. And since job creation has been considerably better this fall than last year, the bullish argument goes, this sets the stage for a strong spring selling season.

URL to original article: http://www.builderonline.com/builder-pulse/depending-on-how-you-look--housing-could-be-a-bull-or-a-lot-of-bull.aspx?cid=BP:122911:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

National Association of Realtors' Pending Home Sales Index reaches 19-month high

Source: Reuters

(Reuters) - Pending sales of existing homes surged to a 1-1/2 year high in November, an industry group said on Thursday, offering more signs of a tentative recovery in the housing market.

The National Association of Realtors' Pending Home Sales Index, based on contracts signed in November, increased 7.3 percent to 100.1 -- the highest level since April 2010.

Economists polled by Reuters had expected pending sales to rise only 2 percent. Pending sales lead existing home sales by a month or two.

Recent data on home sales and construction have been fairly upbeat, suggesting an improvement in the sector, but prices continue to trend lower.

URL to original article: http://www.builderonline.com/builder-pulse/national-association-of-realtors-pending-home-sales-index-reaches-19-month-high.aspx?cid=BP:122911:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Wednesday, December 28, 2011

Most Americans say they're better off than their parents were

Source: Gallup

WASHINGTON, D.C. -- The large majority of Americans (69%) say they are better off financially than their parents were when they were the same age. However, this is down slightly from 74% in 1998, the last time Gallup asked the question.

The same Nov. 28-Dec. 1 Gallup poll also finds Americans only somewhat less likely now than in the more economically robust 1998 to be satisfied with their future prospects, income, net worth, and housing situation. Taken together, these results reveal that the majority of Americans do feel good about their personal financial situations, despite the struggling national economy.

Seniors More Positive Than Younger Generations

Four in five Americans aged 65 and older say they are better off financially than their parents were at their age. This is somewhat higher than the 64% to 70% of younger age groups saying the same.

High-income Americans are significantly more likely than those with lower incomes to say they are doing better financially than their parents were when they were the same age. Still, even a majority of lower-income Americans say they are better off financially than their parents were.

Bottom Line

Most Americans still think they are doing better financially than their parents did when they were the same age. This is positive news, given the difficult state of the U.S. economy over the past several years -- with millions of Americans seeing their home values deteriorate and jobs evaporate.

But Americans appear to be more upbeat when comparing their current situations with the past than with the unknown future. A Gallup survey from earlier this year found fewer Americans than ever saying today's youth will have a better life than their parents. And, while seniors and high-income Americans are the most positive regarding how they themselves are doing today compared with their parents, both groups were the least likely to predict that today's youth will be better off than their parents. So those who are most likely to think they are doing better than previous generations of Americans are apparently the least optimistic that future generations will enjoy the same prosperity.

URL to original article: http://www.builderonline.com/builder-pulse/most-americans-say-they-re-better-off-than-their-parents-were.aspx?cid=BP:122811:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Predictions 2012: home prices

Source: Kiplingers

The median home price in the U.S. has plunged nearly 40% in a little over five years, but the worst is definitely over: The market has finally wrung out the last excess valuations born of the housing bubble. Before you break out the party hats, note that this doesn�t mean prices across the nation are poised to rebound anytime soon. Alex Villacorta, director of research and analytics at Clear Capital, a provider of real estate data and analytics, says the housing market is in a �suspended state,� with positive and negative factors offsetting one another. But he doesn�t expect another free fall in prices, assuming �things are left to work themselves out and there are no further shocks to the economy.�


Although the percentage of sales of distressed homes will rise, the federal government�s latest loan-modification program might allow as many as 1.5 million to two million homeowners to refinance, estimates Mark Zandi, chief economist at Moody�s Analytics. Zandi says that further home-price declines nationwide will be limited to 3% to 5% and that 2012 will be the year that prices finally stabilize -- setting the stage for gains in 2013.

Short-lived spikes in prices will affect some cities sooner. When housing markets touch bottom and begin to stabilize, price appreciation tends to be spread unevenly, creating a lot of confusion about where the recovery is occurring and when, says David Stiff, chief economist at Fiserv Case-Shiller. Even within a single city, more desirable neighborhoods will stabilize first, while prices in other neighborhoods may fall at a rapid pace.

Touching bottom
In the year ending September 30, home prices across the U.S. fell by 2.6%, and the median home price stood at $171,250, according to Clear Capital. That comes on the heels of a 2.5% decrease from September 2009 to September 2010. In the five-plus years since the peak of the market, home prices nationally fell by 38.1%. Detroit (down 74.7%) is the biggest loser, crushed by subprime lending, foreclosures and the gutted auto industry. A few cities enjoyed small price appreciation, largely because they missed the bubble to begin with: the Clarksville, Tenn., metro area; cities in upstate New York, including Syracuse, Buffalo and Rochester; and Pittsburgh.

Houses haven�t been this affordable since appliances came in harvest gold or avocado green. The benchmark of affordability -- the ratio of median home price to median family income -- has fallen to 2.6, below the historical ratio of 2.9, says Stiff. Another measure, the percentage of monthly family income consumed by a mortgage payment (principal and interest, using a mortgage rate of 4.1%), is 12% nationally, the lowest since 1971.

Homes in many cities are now substantially undervalued as measured by affordability, says Stiff, and that can lead to double-digit bounces in prices -- say, a jump of 10% to 15% in the year following the trough, as the natural optimists, especially investors with cash, jump in to catch the bottom. It might look like a bubble all over again, but it won�t last long. A good example is Cape Coral-Fort Myers, Fla., where investors pushed up prices by 12% during the year ended September 30. Such a bounce will be followed by a sideways drift, during which the �glass half-empty� folks will slowly return to the market.

Theoretically, low rates should help push buyers to act. The average interest rate on 30-year fixed mortgages fell to 3.94% in the first week of October 2011, according to Freddie Mac. The past couple of years� predictions that rates would rise were based on the premise that the economy would improve, says Guy Cecala, publisher of Inside Mortgage Finance, an industry publication. �As long as the economy remains stagnant, unemployment remains high, and the housing market is in the toilet, rates will remain near historic lows,� he says. At least for the first part of 2012, he adds, rates should hover between 4% and 5%.

Other positive signs: Existing home sales increased during the summer and early fall of 2011, according to the National Association of Realtors, after a deep slump following the expiration of the first-time home buyer tax credit. Although the inventory of homes on the market and in foreclosure remains high, a lull in home building over the past three years is gradually easing the surplus. The months� supply figure, or how long it would take to sell the inventory of homes on the market at the current pace of sales, improved to 8.5 months in September -- although that ratio still favors buyers (six months� supply represents a normal balance between sellers and buyers).

The lure of affordability and low mortgage rates hasn�t increased buyer demand as much as one might expect. Some would-be buyers can�t get a mortgage, given lenders� stiffer requirements. Many more are hesitant to pull the trigger on a home purchase for fear that home prices will continue to fall or that their job prospects are uncertain. Although the recession has technically ended, the economy doesn�t feel better to many.

But Celia Chen, director of research at Moody�s Analytics, says that both corporate and household balance sheets are healthier and should lead to stronger economic growth and improved confidence. She anticipates more robust growth by the second half of 2012, assuming that Congress follows through on its debt-ceiling deal, the Fed keeps interest rates low, and there are no new shocks to the economy (see Investing Outlook 2012).

The foreclosure problem
The dark cloud of foreclosures still hangs over the housing market. The pace of foreclosures has slowed as lenders, loan servicers and regulators have sorted out paperwork and pro�cedures in the wake of the robo-signing controversy that emerged a year ago. But RealtyTrac, which monitors the foreclosure market, says that foreclosure filings have begun to ramp back up.

Nevada, California and Arizona -- among the epicenters of the boom and bust -- still suffer the highest rates of foreclosure. Georgia, Florida, Utah, Michigan, Idaho, Illinois and Colorado round out the top ten. Among metro areas, Las Vegas still tops the list.

Currently, about 1.84 million home loans are 90 days or more delinquent (a strong predictor of foreclosure) but not yet foreclosed on, and 2.17 million have finished the foreclosure process but haven�t yet been offered for sale, according to Lender Processing Serv�ices (LPS). What happens to home prices if and when they come to market? Villacorta, of Clear Capital, says that despite the downward pressure on prices by foreclosures, prices won�t tank as long as lenders continue to bring additional foreclosures to market at a steady pace.

Bank-owned foreclosures sell for an average discount of one-third off the per-square-foot price of conventional homes for sale, according to RealtyTrac. Buyers who want to snag a bargain on a distressed property will face competition from investors, and the biggest bargains may require a lot of work. Short sales, or homes sold with lenders� permission for less than their owners owe on their mortgages, have also grown in number. Lenders take an average of 16 weeks to sign off on a short sale, so patience is imperative.

Of course, the longer lenders take to work through the foreclosure glut, the longer it will take for home-price appreciation to return to its normal pace of 2% to 4% a year. To hasten the process, the federal government may introduce more policy initiatives -- although whether they�ll have any meaningful impact or come soon enough is debatable. In October, Fannie Mae and Freddie Mac, along with their regulator, the Federal Housing Finance Agency, expanded the Home Affordable Refinance Program to allow more underwater borrowers to refinance out of their mortgages into more manageable loans. The FHFA, the Department of Housing and Urban Development and the U.S. Treasury have called for ideas to handle the foreclosures they own, such as converting them to rental properties for purchase by investors.

URL to original article: http://www.builderonline.com/builder-pulse/predictions-2012--home-prices.aspx?cid=BP:122811:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Call it 2011's hangover before the hangover

Source: Business Week

They say a picture's worth a thousand words. Lucky for everybody, this one's worth less, like just about everything else. It may be said someday that if one can get a loan, it may be the moment of a lifetime to buy a home, and that's likely to be the case for months, as home prices continue to wander down during at least the first half of 2012. Curiously, at some point in a real estate cycle hence, it should hardly come as a surprise for homeowners, localities, states, nations, even the globe, to find ourselves collectively kneeling, hugging porcelain, promising "never again." Business Week's Drake Bennett offers this timely turn on Charles Dickens' Bleak House



A bleak, by-the-numbers portrait of home prices, home sales, homeowners, and the construction and mortgage industries—all in distress.




























URL to original article: http://www.builderonline.com/builder-pulse/call-it-2011-s-hangover-before-the-hangover.aspx?cid=BP:122811:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Tuesday, December 27, 2011

The echo boom, housing's next really big thing

Source: Forbes

Tim Smith blogs on the “Echo Boom”, also known as Generation Y (Americans born between 1980 – 1995). His most recent guest post indicated that Echo Boomers might not be that excited about becoming homeowners. There are a lot of them and they will have to live somewhere, so there may still be opportunity in housing them.

Seize the Next Biggest Financial Opportunity

Are you an investor in real estate? Are you a real estate agent? Are you a homeowner looking to sell? Are you trying to rent a nice apartment complex? If you have any interest in housing, you may have cringed when reading about the Millennial attitude toward housing. However, whether Echo Boomers rent or buy, they will need housing, and there are 80 million of them. In other words, recognizing their demographics and preferences will separate the winners from the losers and that has huge financial implications in a generation as large as the Echo Boomers.

Who Will Buy and Who Will Rent?

In the past, I’ve argued that single moms and females will produce the strongest demand for housing in the future. Then a few articles I covered mentioned a different take: the new renter is probably a single mom. However, single moms and females of the Millennial generation listed owning a home as a financial goal more than males, even though males are more likely to be homeowners (by a 7% margin). Married Echo Boomers also reported home ownership as a financial goal (approximately 21% of Echo Boomers are married). As this generation matures, I’d expect the strongest demand to come from these three segments of the Millennial generation.

Many single males stated that home ownership was not a financial goal. A few of these male renters wanted to buy land and build their own home outside of the city (approximately 10-15%), while the rest seemed satisfied with renting. Those in the real estate industry should be aware that renters are a profitable group, if you build housing that renters want.

Are there exceptions to these trends? Of course, and if the Millennial generation sees its marriage rate increase, there will be a growing demographic to sell homes to. In some cases Echo Boomers may opt to live with relatives or friends rent-free due to their economic circumstances. But even the ones who lived with their relatives or friends told me that they planned to be independent soon.

What Will They Want?

For now, most of Generation Y seem to want modest homes, the demand of which may be indicative of their young age. But it might also represent a demographic shift against large housing that is often overpriced and unnecessary. Because many Echo Boomers don’t have or make significant money, a small house offers the ability to save on energy. Other traits of housing that Echo Boomers want:
· Some Echo Boomers prefer to drive less or take public transportation. This indicates that they would prefer housing that is close to work, school and social areas. Keep in mind, that close housing will save them money so that they can afford other things in the area (an opportunity to attract businesses).
· For apartments, modern designs with social areas are replacing old apartments (and this will continue to grow). An example of this in terms of design, an example would be to replace carpet with hardwood floors. Builders and real estate developers can also attract businesses that offer social areas, like coffee shops, to open near the area.
· Since some Echo Boomers lack financial resources, always consider how your housing saves them money. Is it small and efficient? “This place will save you money on bills.” Is it close to their favorite places? “This place will save you money and time on transportation.” Does it offer their favorite activities? “This place offers a gym without an additional cost.” Always create win-win situations – it communicates that you value your customers.

Time Will Be the Ultimate Judge

While Echo Boomers may mature like older generations and buy houses in the suburbs, they may not. Time will answer questions about the housing demand from the Millennial generation, and what type of housing they’ll prefer. Either experts are right when they state that Echo Boomers are extending adolescence, or the zeitgeist of “making it” is changing for this generation. For now, anyone with a financial interest in real estate should pay attention to trends and find ways to meet their consumers’ needs. And best of all, you can win with the renters or the owners – you’re not stuck with one opportunity

URL to original article: http://www.builderonline.com/builder-pulse/the-echo-boom--housing-s-next-really-big-thing.aspx?cid=BP:122711:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Prices remain weighted by distress going into 2012

Source: Calculated Risk

S&P/Case-Shiller released the monthly Home Price Indices for October (a 3 month average of August, September and October). This release includes prices for 20 individual cities and and two composite indices (for 10 cities and 20 cities).

Data through October 2011, released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices ... showed decreases of 1.1% and 1.2% for the 10- and 20-City Composites in October vs. September. Nineteen of the 20 cities covered by the indices also saw home prices decrease over the month. The 10- and 20-City Composites posted annual returns of -3.0% and -3.4% versus October 2010, respectively.

“There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “Eleven of the cities and both composites fell by 1.0% or more during the month.

The Composite 10 index is off 32.9% from the peak, and down 0.5% in October (SA). The Composite 10 is at a new post bubble low (Seasonally adjusted), but still above the low NSA.

The Composite 20 index is off 33.0% from the peak, and down 0.6% in October (SA). The Composite 20 is also at a new post-bubble low.

The Composite 10 SA is down 3.0% compared to October 2010.

The Composite 20 SA is down 3.4% compared to October 2010. This was a slightly smaller year-over-year decline for both indexes than in September.

Prices increased (SA) in 4 of the 20 Case-Shiller cities in October seasonally adjusted (only one city increased NSA). Prices in Las Vegas are off 61.3% from the peak, and prices in Dallas only off 8.8% from the peak.

The NSA indexes are only about 2% above the March 2011 lows - and these indexes will hit new lows in the next few months since prices are falling again. Using the SA data, the Case-Shiller indexes are now at new post-bubble lows!

URL to original article: http://www.builderonline.com/builder-pulse/prices-remain-weighted-by-distress-going-into-2012.aspx?cid=BP:122711:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Monday, December 26, 2011

New home sales at 7-month high in November

(Reuters) - New U.S. single-family home sales rose to a seven-month high in November and the months' supply of houses on the market was the lowest in 5-1/2 years, adding to signs of a budding recovery in the sector.

The Commerce Department said on Friday sales rose 1.6 percent to a seasonally adjusted 315,000-unit annual rate. Octobers' sales pace was revised up to 310,000 units from the previously reported 307,000 units.

Economists polled by Reuters had forecast sales at a 313,000-unit rate. In the 12 months through November, new home sales were up 9.8 percent.

Coming on the heels of data this week showing a rise in sales of previously owned homes and surge in housing starts, the report implied a recovery was starting to take shape in the housing market.

The housing market, which triggered the 2007-09 recession, remains constrained by an oversupply of unsold homes, falling prices and high unemployment.

Sales were up in two of the four regions, with the number of homes sold in the Midwest the highest since November 2009.

The median sales price for a new home fell 3.8 percent to $214,100 last month. Compared to November last year, the median price was down 2.5 percent.

There were a record low 158,000 new homes on the market last month and at November's sales pace, it will take 6 months to clear them - the shortest amount of time since March 2006. That compared to 6.2 months in October.

A 6-month supply is generally considered ideal, with higher readings indicating steep price declines.

URL to original article: http://www.reuters.com/article/2011/12/23/us-new-home-sales-idUSTRE7BM0VY20111223

For further information on Fresno Real Estate check: http://www.londonproperties.com

Friday, December 23, 2011

New home sales increase 1.6%

by KERRI PANCHUK

New single-family home sales edged up 1.6% in November when compared to the previous month, a government report said Friday.

The Commerce Department said home sales hit an annual rate of 315,000 units, up from 310,000 in October and 287,000 in November 2010.

Meanwhile, the median sales price for a new home in November hovered at $214,000, while the average sales price hit $242,900.

The adjusted rate of new homes for sale at the end of November hit 158,000, creating a six-month supply of homes at the current rate.

URL to original article: http://www.housingwire.com/2011/12/23/new-home-sales-edge-up-1-6

For further information on Fresno Real Estate check: http://www.londonproperties.com

Thursday, December 22, 2011

Holiday season marked by record low interest rates

by KERRI PANCHUK

Mortgage rates remain near all-time lows with the 30-year, fixed-rate mortgage setting a new record with an interest rate of 3.91%, Freddie Mac said Thursday. That's down from 3.94% a week ago.

Meanwhile, the 15-year, FRM remained at 3.21%, and the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.85% this week, down from 2.86% last week.

Freddie Mac also reported that the 1-year Treasury-indexed ARM averaged 2.77%, down from 2.81% last week.

Freddie Mac concluded the 30-year, FRM and adjustable-rate products reached new all-time lows in this week's rate survey.

"Rates on 30-year fixed mortgages have been at or below 4 percent for the last eight weeks and now are almost 0.9 percentage points below where they were at the beginning of the year, which means that today’s homebuyers are paying over $1,200 less per year on a $200,000 loan," said Frank Nothaft, vice president and chief economist of Freddie Mac. "This greater affordability helped push existing home sales higher for the second consecutive month in November to an annualized pace of 4.42 million, the most since January."

On the same day, the Federal Housing Finance Agency said the national average contract mortgage rate hit 4.22% in November.

In addition, the average interest rate for a conventional, 30-year, FRM on loans of $417,000 or less increased 4-basis points last month to 4.40%. The contract rate on the composite of all mortgages, including fixed and adjustable rate mortgages, hit 4.20% in November, up 3 basis points from 4.17%.

URL to original article: http://www.housingwire.com/2011/12/22/holiday-season-marked-by-record-low-interest-rates-2

For further information on Fresno Real Estate check: http://www.londonproperties.com

Wednesday, December 21, 2011

Existing home sales up 4% in November

by JASON PHILYAW

Sales of existing homes rose 4% in November, according to the National Association of Realtors, which is revising its benchmarks for sales and inventory data since 2007.

The trade group said sales of single-family homes, townhomes, condos and co-ops increased to a seasonally adjusted rate of 4.42 million units from 4.25 million in October.

NAR said November existing home sales were 12.2% higher than 3.94 million a year ago.

Lawrence Yun, chief economist at NAR, said existing home sales reached a 10-month high in November, as people are taking advantage of a buyer's market. Yun said the current pace is 34% higher than the middle of 2010, and "a genuine sustained sales recovery appears to be developing."

Earlier Wednesday, CoreLogic (CLGX: 12.43 -2.66%) said home prices across the country are dropping as the glut of distressed properties continues to plague the real estate economy.

Potential homeowners also have access to the lowest mortgage interest rates in 40 years. Freddie Mac recently reported the average 30-year, fixed rate fell to 3.94% from 3.99% a week earlier and 4.83% a year ago.

"With record low mortgage interest rates and bargain home prices, NAR's housing affordability index shows that a median-income family can easily afford a median-priced home," according to Moe Veissi, president of the trade group and broker-owner of Veissi & Associates Inc. in Miami.

NAR said the median price of all homes sold in November was $164,200, down 3.5% from a year earlier. Sales of distressed properties accounted for 29% of all sales last month, which is up slightly from October and down from one-third of all sales a year earlier.

"With record low mortgage interest rates and bargain home prices, NAR's housing affordability index shows that a median-income family can easily afford a median-priced home," according to Moe Veissi, president of the trade group and broker-owner of Veissi & Associates Inc. in Miami.

NAR also revised benchmarks on existing home sales for the past four years. There were 4.19 million existing homes in 2010, which is down 14.6% from prior estimates of more than 4.9 million sales last year. The trade group lowered sales and inventory by 14.3% for 2007 through 2010, and expects the change to impact upcoming GDP revisions by the federal government.

The trade group said the housing inventory at Nov. 30 decreased to 2.58 million existing homes for sale, representing a seven-month supply, which is down from 7.7-months supply at Oct. 31.

"Since setting a record of 4.04 million in July 2007, inventories have trended down and supplies are moving close to price stabilization levels," Yun said.

Single-family homes sales increased 4.5% in November to an annual rate of 3.95 million from 3.78 million a month prior and rose 13% from 3.5 million a year earlier. The median price of an existing single-family home dipped 0.2% to $164,100 in November.

URL to original article: http://www.housingwire.com/2011/12/21/existing-home-sales-up-4-in-november

For further information on Fresno Real Estate check: http://www.londonproperties.com

Thursday, December 15, 2011

California home sales show year-over-year improvements

by KERRI PANCHUK

Home sales in the San Francisco area edged up in November over year-ago figures, although they dipped from October. Statewide, sales across California also declined month-over-month, but showed an increase from year-ago figures, DataQuick said.


A total of 6,317 new and resale houses and condos sold in the nine-county Bay Area last month. That was down 2% from 6,444 in October, and up 3.4% from 6,111 in November 2010, according to San Diego-based DataQuick.


Overall, California had an estimated 32,669 home sales statewide last month, down 4.2% from 34,087 in October, but up 4% from 31,403 in November 2010.

DataQuick President John Walsh said buyers remain hesitant to jump back into the market.

"These days, buyers and sellers have to contend with two sets of problems, which sometimes play into each other and sometimes conflict with each other," Walsh said. "The first is the lousy economy and the opportunities it presents, for better or worse. The second is the dysfunctional mortgage finance system. Interest rates may be at record lows, but the types of mortgages that are available have been drastically reduced and qualifying is a true grind."

The median sales price on all Bay Area homes in November fell to $363,000 from the prior month, buy increased 3.9% from $350,000 last year.

Statewide the median price for a California home was $244,000, up 1.7% from $240,000 in October and down 4.3% from $255,000 a year ago.

URL to original article: http://www.housingwire.com/2011/12/15/california-home-sales-shows-year-over-year-improvements

For further information on Fresno Real Estate check: http://www.londonproperties.com

Tuesday, December 13, 2011

Housing Market Sees Signs of Stability: Clear Capital

By: Krista Franks

The housing market may be stabilizing as house prices and REO saturation rates show little change on a quarterly and yearly basis, according to Clear Capital’s most recent Home Data Index.

Nationally, prices rose just 0.3 percent while REO saturation rate was relatively unchanged at 24.6 percent over the most recent quarter, according to Clear Capital data ending in November. Clear Capital measures housing data on a rolling quarter, which compares the most recent four months with the previous three.

“With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital.

Villacorta also reiterated a point he and other analysts made at a panel discussion a few days ago at the Five Star MPact Conference and Expo: Market data must be granular to be effective.

“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation,” Villacorta said in the Home Data Index.

He continued: “As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets.”
Over the recent quarter, prices changed by less than one percentage point in three of four U.S. regions, while the Midwest demonstrated a price increase of 1.2 percent.

The West was the only region to post a decline, falling 0.8 percent over the quarter. This decline is slightly lower than the quarterly price decline reported last month in the region – 1 percent.

“As this improvement comes at the beginning of the winter slow down, it suggests the stubborn quarter-over-quarter and year-over-year declines seen consistently in the hard hit region may be easing,” stated Clear Capital’s report.

The Northeast posted a 0.5 percent increase for the quarter, and the South posted a 0.2 percent increase.

While price changes did not vary drastically from region to region, they also did not vary widely from market to market.

The difference between the No. 1 highest performing market – Washington D.C. – and the 15th highest performing market – Cleveland, Ohio (1.7 percent) was just 3.1 percent.

However, the difference between the top and bottom ranked markets on the list of 15 lowest performing markets was much greater. In the No. 1 spot, Atlanta posted a 9.7 percent decline, while Dallas, at No. 15, posted a 0.4 percent decline.

Atlanta’s decline is likely the result of a decrease in transactions and an increase in distressed properties.

In keeping with Villacorta’s assertion that some markets are underperforming due to high REO saturation rates, Atlanta’s REO saturation rate is 42.8 percent, significantly higher than the national rate of 24.6 percent.

Also notable, Florida, which has seen a 59.1 percent decline in prices since their 2006 peak, has seen a 12 percent decline in REO saturation over the past year.

Additionally, four Florida metro markets – all of which experienced high foreclosure rates and sharp price declines over the past two years – held positions on the list of 15 highest performing markets for the second month in a row. Orlando, Tampa, Jacksonville, and Miami are now seeing rising prices.

URL to original article: http://www.dsnews.com/articles/housing-market-sees-signs-of-stability-clear-capital-2011-12-09

For further information on Fresno Real Estate check: http://www.londonproperties.com

Fresno, CA - Recent New Home Sales Numbers Give Hints Market Decrease is Slowing

Source: Builder News

Sales of new homes fell year-over-year in September in the Fresno, CA market, but the percentage fall was not as severe as August 2011, giving suggestion that the market may be evening out. Sales sank 19.0% from a year earlier to 94, relative to a 19.5% decline in August from the year earlier.

In the 12 months ending September 2011, there were 1,165 new home sales, down from an annualized 1,187 in August.

Compared to a year earlier, new home sales reflected 6.4% of overall housing sales, down from 8.3% last year. For new and existing homes, sales increased year-over-year in September after also increasing in August year-over-year.
Pricing and Mortgage Trends
Average price of newly sold homes saw a 5.9% decline year-over-year in September to $241,462 per unit. This decline is higher than the 13.1% decline in August from a year earlier.

For newly sold homes, the average mortgage size sank year-over-year along with average price of new homes. The average mortgage size dropped to $175,401 in September, marking an 18.1% fall compared with last year. In August 2011, average mortgage size declined 29.9% from a year earlier. For new home sales, the percentage of the sale price that was being financed slid 10.9 percentage points year-over-year to 72.6% in September 2011.

URL to original article: http://www.builderonline.com/local-housing-data/pacific/fresno-ca.aspx?cid=lmkt_fresno-ca20111212&rdrnum=183826

For further information on Fresno Real Estate check: http://www.londonproperties.com

Monday, December 12, 2011

Real estate supply's dead weight sits atop jobs rebound

Source: Federal Reserve Bank of St. Louis

Why Is Employment Growth So Low?
Juan M. Sanchez, Economist
Daniel L. Thornton, Vice President and Economic Adviser

Total nonfarm payroll employment declined by
nearly 8.75 million jobs from December 2007 to
February 2010 and has since increased by 2 million,
reducing the unemployment rate from 10.1 percent in
October 2009 to 9.1 percent in September 2011. A widely
asked question is why employment growth is so low. We
don’t know all the reasons, but the data suggest that the
pre-recession boom in residential and commercial real
estate and the subsequent bust are very important factors.
The chart shows total nonfarm employment and employment
in construction for January 2002 through September
2011. Both declined significantly during the 2007-09 recession
and for several months after. From the beginning of
the recession (December 2007) to the trough in total
employment (February 2010), total nonfarm employment
declined by 8.7 million jobs, while construction employment
declined by nearly 2 million jobs—
22 percent of the total. Hence, construction
alone accounts for much of the decline in
employment since the start of the recession.
These construction numbers, even though
high, likely underestimate the importance of
construction in explaining the slow growth
in employment for at least two reasons. First,
as the chart shows, the peak in construction
employment occurred in April 2006, well in
advance of the recession and near the time
house prices and residential investment
peaked.1 By the start of the recession, construction
employment had already declined
by nearly a quarter million jobs from its peak;
this number could be added to the decline in
construction employment attributed to the
recession.
Second, the numbers in the figure reflect
only the direct effect of the decline in construction
employment and not the indirect
effects that caused a slump in employment in
other industries. We estimate these indirect
effects using the Employment Requirements Matrix of the
Bureau of Labor Statistics.2 Assuming that about 1 million
construction jobs were lost when the real estate bubble
burst, we estimate that nearly 800,000 additional jobs were
lost in other industries as a consequence. Hence, the decline
in construction accounts for nearly 40 percent of the total
decline in employment between December 2007 and
February 2010.
To best evaluate employment growth, it is important
to note that while real GDP is now slightly above its prerecession
peak and real consumption is about 1.5 percent
above its pre-recession peak, real fixed investment is still
19 percent below its pre-recession peak, which occurred
in the first quarter of 2006, and 15 percent below its prerecession
level. Essentially all of the slow growth in investment
is directly attributable to low levels of real estate
investment. Real residential investment is nearly 60 percent
below its peak in the fourth quarter of 2005 and 38 percent
below its pre-recession level. Indeed, it has declined slightly
more since the end of the recession in June 2009. Real
nonresidential investment in structures (investment in commercial
real estate) is 28 percent below its pre-recession
level. All other components of real fixed investment are
very near or significantly above their pre-recession levels.
Hence, the anemic investment in residential and commercial
real estate has significantly contributed to the slow
growth in employment. The problem appears to be an
excess supply of real residential and commercial real estate,
which will continue to impede investment in residential
and commercial real estate. Unfortunately, the real supply
of real estate can only adjust by depreciation, population
growth (two very slow processes), or by a decline in its real
value, which occurs when real estate prices decline relative
to the prices of other commodities. While these adjustments
take place, we expect only moderate growth rates of
employment.

URL to original article: http://www.builderonline.com/builder-pulse/real-estate-supply-s-dead-weight-sits-atop-jobs-rebound.aspx?cid=BP:121211:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Bankrate: Jumbo Mortgage Rates Hit New Record Low

NEW YORK, Dec. 8, 2011 /PRNewswire/ -- The jumbo 30-year fixed mortgage rate fell to a new record low of 4.68 percent, according to Bankrate.com's weekly national survey. The average jumbo 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average conforming 30-year fixed mortgage inched lower to 4.24 percent while the 15-year fixed mortgage held steady at 3.48 percent. Adjustable rate mortgages were mostly lower, with the average 5-year ARM sliding to 3.18 percent and the 10-year ARM inching down to 3.8 percent.

Mortgage rates are low, but based on the ultra-low levels of benchmark interest rates such as 10-year Treasury notes, mortgage rates could be even lower. Since August, the European debt crisis has pushed the spread between risk-free U.S. government bonds and those of other bonds, such as mortgage-backed bonds, to the highest levels since the spring of 2009. At that time, financial tensions were at a fever pitch, particularly surrounding the health of the U.S. banking system. This time, its Europe's banking system in the crosshairs, but the result is much the same -- a higher-than-typical cost of borrowing when compared to the rock-bottom government rates.

The last time mortgage rates were above 6 percent was Nov. 2008. At the time, the average 30-year fixed rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.24 percent, the monthly payment for the same size loan would be $982.71, a difference of $259 per month for anyone refinancing now.

SURVEY RESULTS



30-year fixed: 4.24% --down from 4.25% last week (avg. points: 0.36)

15-year fixed: 3.48% -- unchanged from last week (avg. points: 0.31)

5/1 ARM: 3.18% -- down from 3.21% last week (avg. points: 0.34)

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/.

The survey is complemented by Bankrate's weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. There is no clear consensus, with 46 percent predicting that mortgage rates will remain more or less unchanged while 39 percent forecast an increase in mortgage rates. Just 15 percent of the respondents expect mortgage rates to decline in the coming week.

For the full mortgage Rate Trend Index, go to http://www.bankrate.com/RTI.

About Bankrate, Inc. (NYSE: RATE)

The Bankrate network of companies includes Bankrate.com, Interest.com, Mortgage-calc.com, Nationwide Card Services, InsureMe, CreditCardGuide.com, Bankaholic, CreditCards.com and NetQuote. Each of these businesses helps consumers to make informed decisions about their personal finance matters. The company's flagship brand, Bankrate.com is a destination site of personal finance channels, including banking, investing, taxes, debt management and college finance. Bankrate.com is the leading aggregator of rates and other information on more than 300 financial products, including mortgages, credit cards, new and used auto loans, money market accounts and CDs, checking and ATM fees, home equity loans and online banking fees. Bankrate.com reviews more than 4,800 financial institutions in 575 markets in 50 states. Bankrate.com provides financial applications and information to a network of more than 75 partners, including Yahoo! (Nasdaq: YHOO), America Online (NYSE: AOL), The Wall Street Journal and The New York Times (NYSE: NYT). Bankrate.com's information is also distributed through more than 500 newspapers.

URL to original article: http://www.prnewswire.com/news-releases/bankrate-jumbo-mortgage-rates-hit-new-record-low-135237728.html

For further information on Fresno Real Estate check: http://www.londonproperties.com

Friday, December 9, 2011

Mortgage Delinquencies to Decline in 2012: Study

By: Krista Franks

The current year will close with a 7 percent yearly decline in mortgage delinquencies, matching last year’s decline, according to predictions released Wednesday by TransUnion.

The percent of borrowers 60 days or more delinquent will fall to 5.95 percent by the end of the year, and will fall to 5 percent by the end of 2012, according to TransUnion.

However, despite yearly declines, the forecasters expect a slight rise in delinquencies through the first quarter of 2012.

After reaching 6.02 percent in the first quarter, delinquencies will decline for the following three quarters, the forecasters predict.
Tim Martin, group VP of U.S. housing in TransUnion’s financial services business unit, believes house prices and unemployment will continue to pose problems for the market in the coming year, but the market will see some positive movement due to “improving credit quality of new originations, consumer confidence, and GDP.”

“If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower’s situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011,” Martin said.

While the nation is expected to experience overall declines in mortgage delinquencies in the coming year, 12 states and the District of Columbia will likely see increases. Thirty-eight states will experience declines.

TransUnion expects Florida, Nevada, and the District of Columbia to close the fourth quarter of 2012 with the highest delinquency rates.

Florida and Nevada will be seeing double-digit delinquency rates at 13.20 percent and 11.09 percent respectively. The District of Columbia will follow with a rate of 7.91 percent.

At the other end of the spectrum, North Dakota will see the lowest delinquency rate in the nation at the end of 2012 at 1.3 percent.

South Dakota and Wisconsin will follow with rates of 1.96 percent and 2.11 percent respectively.

URL to original article: http://www.dsnews.com/articles/mortgage-delinquencies-to-decline-in-2012-study-2011-12-07

For further information on Fresno Real Estate check: http://www.londonproperties.com

Mortgage rates dip below 4% — again

by KERRY CURRY

Fixed-rate mortgages rates were largely unchanged and near record lows, according to Freddie Mac and Bankrate mortgage surveys.

The 30-year fixed dipped to 3.99% for the week ending Dec. 8 with an average 0.7 point, and at 3.27%, the 15-year, fixed-rate mortgage with an average 0.8 point, was just slightly above its all-time low of 3.26%, which it hit on Oct. 6, according to Freddie Mac.

The 30-year FRM dipped from last week when it averaged 4%. Last year at this time, the 30-year FRM averaged 4.61%, the GSE said.

The 15-year FRM is down from last week's 3.3%. A year ago it averaged 3.96%.

Freddie said the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.93%, up from last week's 2.9% but down from 3% a year ago.

The 1-year Treasury-indexed ARM averaged 2.8%, up from last week's 2.78% but down from 3.27% a year ago.

"These low rates and home prices have pushed housing affordability to record highs this year," said Frank Nothaft, vice president and chief economist at Freddie Mac.

Bankrate reported that the benchmark 30-year, fixed-rate mortgage fell 1 basis point this week to 4.24%, according to its survey of large lenders.

Mortgages in the survey had an average total of 0.36 discount and origination points. One year ago, the mortgage index was 4.89%.

The benchmark 15-year, fixed-rate mortgage was 3.48%, unchanged from last week. The 5/1 adjustable-rate mortgage fell 3 basis points, to 3.18%.

URL to original article: http://www.housingwire.com/2011/12/08/mortgage-rates-dip-below-4-%E2%80%94-again

For further information on Fresno Real Estate check: http://www.londonproperties.com

Bubble vision

Source: New York Times

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog. His new book, “The Behavior Gap,” will be out in January.


During a recent conversation, someone asked me if I thought the last few years made me better equipped to spot the next bubble. Since we had recently been through a real estate and credit bubble could anyone credibly claim that they would be prepared to spot the next one?

My response was simple: no.
While the last few years hasn’t made me any better at bubble spotting, it has made me realize that when it comes to investing it’s truly better to be safe than sorry. For anyone who thinks that living through a market that clearly got ahead of itself somehow makes you better able to forecast the next bubble completely misses the point.

The supposed ability to spot bubbles is just another way of talking about market timing. Market timing, while not impossible, has certainly proven to be highly improbable.

It’s certainly tempting to believe that somehow we could identify a variable or series of variables that would tell us when the market was officially in a bubble. It reminds me of a conversation I had a few years ago where somebody who was clearly exasperated said, “All I want is for someone to tell me to sell before the market goes down and to buy before it goes up. Seems quite simple to me!”

Looking for a bubble spotter is just the latest way we’ve come up with to trick ourselves into thinking that there is a way to time the markets. We can get very sophisticated in the stories we tell ourselves. We look for things like quantitative models, advanced forecasting software, years of academic research and studies. But in the end, it’s all just market timing. And for the most part, it simply doesn’t work.

One of the big problems with some of the recent bubble spotting methods is that they work perfectly, just so long as you’re looking backwards. Many of these techniques are based on extensive research that relies heavily on back-tested models.

We are very good at analyzing the past and coming up with surefire ways of avoiding the exact same mistake again in the future. But what we are particularly bad at is thinking about things that we have never thought of before. Most bubbles are blazingly obvious with the benefit of hindsight, but when we’re honest with ourselves, we have to admit that often they were caused by things that we hadn’t even considered possible. And the exact cause of the next bubble will surely be different than the cause of the last bubble.

This current obsession we have with bubble spotting isn’t new. It’s just the latest reincarnation of the age-old desire we have to make sense of the world around us and have some sense of control about the future. But if we do want to use history as a guide, we need to realize that even those that were best positioned to spot bubbles have been wrong.

In July 2009, The Wall Street Journal surveyed 50 economists about where interest rates on the 10-year Treasury bills would be one year later. Rates were sitting at 3.3 percent when the article came out. Forty-eight respondents said they would be higher one year later, while only two suggested rates would fall below 3 percent. The rate was 2.95 percent on June 30, 2010.

And it’s not just in recent times that the bubble predictors didn’t get it right. As Jason Zweig recently noted in The Wall Street Journal, even the guy who wrote the most famous book about bubbles missed a big one:

On Oct. 2, 1845, [Charles] Mackay wrote that “those who sound the alarm of an approaching railway crisis have somewhat exaggerated the danger.” He went on to ridicule anyone who argued that “the Railway mania of the present day” was similar to the devastating bubbles he had described in his own book. “There is no reason whatever to fear” a crash, he concluded. He couldn’t have been more wrong. From 1845 to 1850, railway stocks fell by two-thirds — the equivalent of roughly $1 trillion of losses in today’s money. Mackay never fessed up to his own extraordinary delusion.

So back to the original question. If we’re not any more prepared to spot the next bubble than we were just a few years ago, then what?

The point is we should stop trying to trick ourselves into believing that if we just buy a bigger computer, hire the right analyst, find the secret newsletter and read enough magazines or books then we’ll somehow be able to buy before the market goes up and sell before the market goes down.

We need to give up on the idea of timing the market and finally pay attention to the academic research that shows it’s a fool’s errand. Instead we should devote at least some of that time to developing a financial plan that starts with where we are today and plots a course to where we want to go. Once we have built a plan, no matter how basic, then we can figure out how we need to invest our money to meet those goals.

URL to original article: http://www.builderonline.com/builder-pulse/bubble-vision.aspx?cid=BP:120911:

For further information on Fresno Real Estate check: http://www.londonproperties.com

Thursday, December 8, 2011

TransUnion Forecasts Mortgage Delinquencies to Rise, and Then Fall in 2012; Credit Card Delinquencies to Remain Steady

Source: TransUnion

CHICAGO, IL--(Marketwire - Dec 7, 2011) - TransUnion released its annual forecasts today on consumer credit, which indicate that national mortgage loan delinquencies (the ratio of borrowers 60 or more days past due) will decline to about 5% by the end of 2012 from just under 6% at the conclusion of 2011. After six consecutive quarterly declines between Q4 2009 and Q2 2011, 60-day mortgage delinquencies are expected to rise through Q1 2012, peaking at 6.02%. TransUnion forecasts mortgage delinquencies, a statistic generally considered a precursor to foreclosure, to decline for the last three quarters of 2012.

"Although house prices and unemployment will likely face continued pressure next year, this forecast calls for gradual improvements in the second half of 2012 to other key variables, like improving credit quality of new originations, consumer confidence and GDP, that will positively influence homeowners' ability and willingness to pay their mortgages," said Tim Martin, group vice president of U.S. housing in TransUnion's financial services business unit. "If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower's situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011."

The expected mortgage delinquency decline in 2012 would follow recent yearly trends, including an expected 7% decrease by the end of this year and a 7% reduction in 2010. This is in contrast to more than 50% year-over-year increases between 2006 and 2009.

TransUnion is projecting 2012 declines in mortgage delinquencies for 38 states with the largest percentage declines expected in Arizona (-46.25%), Wisconsin (-45.52%) and Colorado (-40.34%). Twelve states and the District of Columbia are expected to see increases.

Credit Cards

Credit card delinquency rates (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) reached their lowest levels in 17 years during the second quarter of 2011 (0.60%) and TransUnion expects them to remain relatively low in 2012, decreasing approximately 7% from 0.74% in Q4 2011 to 0.69% in Q4 2012.

"Credit card delinquencies are expected to remain fairly steady in 2012 ranging between 0.69% and 0.76% -- levels far below those typically observed in the last 15 years," said Steve Chaouki, group vice president in TransUnion's financial services business unit. "In today's uncertain economy, consumers have found that credit cards are among their most valued assets due to the flexibility they provide. As a result, consumers have made a concerted effort to make on-time payments and maintain relatively low balances. In fact, credit card debt per borrower in the third quarter of 2011 stood at $4,762, approximately $1,000 less than the second quarter of 2009, the quarter in which the recession ended."

Thirty-nine states and the District of Columbia are projected to see credit card delinquency declines in 2012 with only 11 experiencing increases. States expected to see the largest credit card delinquency declines in 2012 include Delaware (-30.74%), Oklahoma (-23.74%) and California (-22.97%). The largest increases are expected in Connecticut (14.87%), Missouri (12.46%) and Louisiana (10.11%).

TransUnion's forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The forecasts would change if there are unanticipated shocks to the global economy affecting recovery in the housing market, or if home prices fall more than expected.

60-Day Mortgage Loan Delinquency Projections for 2012



2010-2012 Q4 2010 Q4 2011 Q4 2012
USA 6.41% 5.95% 5.00%



Highest Mortgage Delinquency States Q4 2012
Florida 13.20 %
Nevada 11.09 %
District of Columbia 7.91 %



Lowest Mortgage Delinquency States Q4 2012
North Dakota 1.30 %
South Dakota 1.96 %
Wisconsin 2.11 %


90-Day Credit Card Delinquency Projections for 2012



2010-2012 Q4 2010 Q4 2011 Q4 2012
USA 0.82% 0.74% 0.69%



Highest Credit Card Delinquency States Q4 2012
Mississippi 1.03 %
Louisiana 0.99 %
Missouri 0.92 %



Lowest Credit Card Delinquency States Q4 2012
North Dakota 0.36 %
Wyoming 0.44 %
Alaska 0.44 %


The most current mortgage and credit card delinquency data for the nation and every state can be found at www.transunion.com/trenddata.

TransUnion's Trend Data database
TransUnion's Trend Data is a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. For the purpose of this analysis, the term "credit card" refers to those issued by banks.

URL to original article: http://newsroom.transunion.com/press-releases/transunion-forecasts-mortgage-delinquencies-to-ris-0829772

For further information on Fresno Real Estate check: http://www.londonproperties.com

Wednesday, December 7, 2011

Fresno home prices decrease again

Written by Business Journal staff

Fresno home prices continue to fall according to a home price index just released by CoreLogic, a provider of consumer, financial and property information for business and government.

In Fresno, home prices, including distressed sales, declined by 10.8 percent in October of 2011, compared to October of 2010 and declined by 10.9 percent in September 2011, compared to September of 2010.

Excluding distressed sales, year-over-year prices declined by 8.5 percent in October of this year, compared to October of 2010 and by 9.5 percent in September of 2011, compared to September of last year.

The index shows that home prices in the U.S. decreased 1.3 percent on a month-over-month basis, the third consecutive monthly decline. They declined by 6.2 percent in California.

“Home prices continue to decline in response to the weak demand for housing,” said Mark Fleming, chief economist for CoreLogic. “While many housing statistics are basically moving sideways, prices continue to correct for a supply and demand imbalance. Looking forward, our forecasts indicate flat growth through 2013.”

Including distressed sales, the five states with the highest appreciation were: West Virginia at 4.8 percent, South Dakota at 3.1 percent, New York at 3 percent, District of Columbia at 2.4 percent and Alaska at 2.1 percent.

Including distressed sales, the five states with the greatest depreciation were: Nevada at -12.1 percent, Illinois at -9.4 percent, Arizona at -8.1 percent, Minnesota at -7.9 percent and Georgia at -7.3 percent.

URL to original article: http://www.thebusinessjournal.com/real-estate/12395-fresno-home-prices-decrease-again

For further information on Fresno Real Estate check: http://www.londonproperties.com

2012's 'sleeper' risks for housing

Source: Fortune

There have been recent signs of strength in the battered housing market but investors may need reminding that there's growing political risk to a rebound.

We've noticed a lot of investors getting positive on housing recently. In fact, housing is cited as the driver for the UBS economic team's rosy 2012 forecast. While we don't dispute that recent economic data has been better than feared, we take significant exception to the idea that housing is poised for smooth sailing. Here we present two risk factors looming large in our outlook but virtually unnoticed among investors: the 2012 election and the prospect for significant disruption to the current housing finance system.

The amount of political risk in the housing market is currently large and underappreciated. The FHA's share of mortgage purchase volume is just under 40%, while Fannie and Freddie combined have an almost 60% market share, leaving a sliver (less than 5%) for the private lenders.

Government support for the housing market is currently at or extremely near its high-water mark, and there's very limited potential for upside from here. If government support gets curbed, private lenders won't step up unless rates rise significantly and credit risk decreases (i.e. higher down payments and tighter standards). These factors will decrease demand and make home prices fall. Falling prices will in turn increase lenders' caution towards the asset class, creating a downward spiral.

2012 Presidential Election

The two current front-runners in the Republican primary, Newt Gingrich and Mitt Romney, hold very similar views about the housing market. Both believe that the market should be allowed to clear -- a euphemism for accelerating the realization of the downside. That means, at minimum, that no new initiatives will be forthcoming, and pressure will be applied to existing initiatives. Don't come crying to Mitt Romney when your home price falls.

Here's what the candidates have had to say:

"As to what to do for the housing industry specifically, and are there things you can do to encourage housing? One is, don't try and stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up, and let it turn around and come back up. The Obama administration has slow walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang. Number two, the credit (that) was given to first time homebuyers was insufficient and inadequate to turn around the housing market. I think it was an ineffective idea. It was a little bit like the cash-for-clunkers program, throwing government money at something which was not market oriented, did not staunch the decline in home values anymore than it encouraged the auto industry to take off. I think the idea of helping people refinance homes to stay in them is one that's worth further consideration. But I'm not signing on until I find out who's going to pay and who's going to get bailed out, and that's not something which we know all the answers to."- Mitt Romney speaking to the Las Vegas Review-Journal's editorial board.

"Remove obstacles to job creation imposed by destructive and ineffective regulations, programs and bureaucracies. Steps include: Repealing the Sarbanes-Oxley Act, which did nothing to prevent the financial crisis and is holding companies back from making new investments in the U.S; Repealing the Community Reinvestment Act, the abuse of which helped cause the financial crisis; Repealing the Dodd-Frank Law which is killing small independent banks, crippling loans to small businesses and crippling home sales; Breaking up Fannie Mae and Freddie Mac, moving their smaller successors off government guarantees and into the free market; Replacing the Environmental Protection Agency with an Environmental Solutions Agency that works collaboratively with local government and industry to achieve better results; and Modernizing the Food and Drug Administration to get lifesaving medicines and technologies to patients faster." - Newt Gringrich campaign website.

Right now, Intrade has Obama winning re-election at 50.3% - clearly too close to call. As far as the Republican nomination goes, Intrade currently has Romney at 46% and Gingrich at 33%. The following charts demonstrate.

The Fannie Mae quagmire

President Obama and the current legislators haven't expressed much interest in further housing initiatives, either. HARP 2.0, the slightly-expanded refinance program, fell well short of what its advocates had been hoping for, and the long-rumored GSE bulk REO program hasn't gone anywhere in months.

Finally, the recent failure of the combined lobbying might of the NAR, NAHB, and MBA to get higher GSE loan limits extended underscores the total lack of government appetite for housing programs.

So the possible outcomes for the 2012 election are either no change (Obama re-election) or a decrease in support (Republicans win the presidency).

Two catalysts for government support to fall

There are at least two important catalysts in 2012 that will force the government to reconsider current support levels – the GSEs' Treasury Support Agreement and an FHA bailout.

The first, as we've noted in the past, is the expiration of the GSEs' Treasury Support Agreement at year-end 2012. While the agreement to continue funding the GSEs will probably get renewed, there's a small risk that it won't – and either way, the approaching deadline could drive plenty of noise and spook the markets. (The debt-ceiling debate might be a good analogy here.)

The second catalyst is the FHA, which looks increasingly like it will need a bailout. In its annual report to Congress, released a few weeks ago, the FHA reported estimated economic net worth of $2.6 billion backing $1.078 trillion insurance in force, for a capital ratio of just 0.24% (or 417x leverage). One year ago, the capital ratio was 0.50%, and in 2007 it was 6.4%. The FHA's annual report claims it's adequately capitalized, but this conclusion relies on home prices not falling at all from here. Specifically, its says:

"With economic net worth being very close to zero under the base-case forecast, the chance that future net losses on the current, outstanding portfolio could exceed current capital resources is close to 50 percent. Negative house price growth in FY 2012, rather than stable or growing prices, would cause such a situation to develop."

Needless to say, our view on home prices is different from the FHA's median assumption of growth in 2012.

Three reasons why the job market still stinks

The government will have to pony up to recapitalize the FHA. FHA mortgages are fed into Ginnie Mae MBS, and Ginnie Mae MBS are explicitly backed by the full faith and credit of the United States government. So if the FHA runs out of funds, the government will have little choice but to step up. To do otherwise would be a default – not out of the question these days, but not very likely either.

How to play it

The clear way to play FHA turmoil is with the private mortgage insurers. These companies compete with (and are constantly undercut by) the FHA. An FHA pullback could be read as a big positive for Radian Group (RDN), Genworth Financial (GNW), Old Republic International (ORI), and MGIC (MTG) (and PMI Group, should it emerge from bankruptcy). However, we think enthusiasm would be short-lived. A dramatic decline in the 40% of the market that the FHA is now supporting would be a big negative for demand, and home price declines would follow. Since the MIs are so exposed to home prices, this would be a net negative for the industry. Accordingly, we would use any strength on FHA rumors as an opportunity to put these battered stocks back out on the short side.

URL to original article: http://www.builderonline.com/builder-pulse/2012-s--sleeper--risks-for-housing.aspx?cid=BP:120611:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

As NAR revision nears, existing inventory drops

Source: Calculated Risk

Another update: I've been using inventory numbers from HousingTracker / DeptofNumbers to track changes in inventory. Tom Lawler mentioned this back in June (Tom also discussed how the NAR estimates existing home inventory - they don't aggregate data from local boards!)

In the near future, the NAR is expected to release revisions for their existing home sales and inventory numbers for the last few years. The sales and inventory revisions will be down (the NAR has pre-announced this).

Using the deptofnumbers.com for monthly inventory (54 metro areas), it appears inventory will be below the December 2005 levels this month. Unfortunately the deptofnumbers only started tracking inventory in April 2006.

HousingTracker is reporting that inventory in the 54 metro area is down 17.5% from the same week in 2010. If this adjustment is close, existing home inventory is now below the levels of late 2005 - and that is when inventory started rising sharply.

This is just "visible inventory" (inventory listed for sales). There is a large percentage of distressed inventory, and various categories of "shadow inventory" too, but visible inventory has clearly declined in many areas.

In a previous post, I used this data to estimate the coming NAR downward revision for sales, see: A few comments on the expected NAR existing home sales revisions.

URL to original article: http://www.builderonline.com/builder-pulse/as-nar-revision-nears--existing-inventory-drops.aspx?cid=BP:120611:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Friday, December 2, 2011

Economy gains 120,000 jobs; unemployment drops to 8.6%

Source: New York Times

Somehow the American economy appears to be getting better, even as the rest of the world is looking worse.

In the midst of the European debt crisis, lingering instability in the oil-rich Middle East and concerns about a Chinese economic slowdown, the American unemployment rate unexpectedly dropped last month to 8.6 percent, its lowest level in two and a half years. The nation’s employers modestly increased their hiring, too, the Labor Department said Friday.

The figures come just a few months after economists were warning that the economy’s prospects were waning.

“If you go back to August, all sorts of people were telling us that the economy was headed straight into recession,” said Paul Ashworth, senior United States economist at Capital Economics. “Since that point, we’ve become more and more worried about the euro zone and other areas of the global economy, but somehow, at least for the moment, the U.S. economy seems to be shrugging all that off.”

Resilient as the economy has apparently been since then, the fate of the recovery appears to be more dependent on external — and especially European — events.

So far Europe’s problems have been relatively contained to the Continent. Many economists worry, however, that a disorderly default of Greece or Italy, which still looks alarmingly possible, could lead to a financial crisis that would plunge not only Europe but the entire world into a depression.

If recent history is any guide, even a modest credit tightening could throw the American economy off course; earlier this year, a series of shocks from higher oil prices, the Japanese earthquake and the stalemate over the United States debt ceiling managed to drain the energy from a newly rejuvenated recovery.

In addition to hawking its domestic jobs package, the Obama administration has stepped up its involvement in the euro zone crisis in recent days. The Treasury Department announced Friday that Secretary Timothy F. Geithner will visit European political and financial leaders in several cities next week.

“As president, my most pressing challenge is doing everything I can every single day to get this economy growing faster and create more jobs,” President Obama said Friday in Washington.

November’s drop in unemployment to 8.6 percent was a welcome relief, given that the jobless rate had been stuck at 9 percent for most of 2011.

The decline in the unemployment rate had a downside, though: It fell partly because more workers got jobs, but also because about 315,000 workers dropped out of the labor force. That left the share of Americans actively participating in the work force at a historically depressed 64 percent, down from 64.2 percent in October.

A separate survey of employers, which economists pay more attention to than the unemployment rate, found that companies added 120,000 jobs last month, after adding 100,000 jobs in October.

These payroll numbers were not particularly impressive by historical standards — payroll growth was just about enough to keep up with population growth — but there were other signs of resilience. Employment in the previous two months was revised upward substantially, and the report showed that companies have been taking on more and more temporary workers, indicating that more permanent hires may be in the cards, too.

Other recent economic reports have also been positive, including increases in help-wanted advertising, retail sales and auto sales in particular; decreases in jobless claims; and a loosening of credit conditions for small businesses. Perhaps most encouraging was a recent survey of small businesses that found hiring intentions to be at their highest level since September 2008, when Lehman Brothers collapsed.

“Small businesses were cheering up at the end of last year, but then got clobbered by the jump in oil prices, the Japanese earthquake and then the debt ceiling fiasco,” said Ian Shepherdson, chief United States economist at High Frequency Economics. “Small businesses employ half the work force, and we need them on board.”

Still, serious concerns remain about the economy’s ability to weather the financial and economic turmoil from abroad.

American governments at all levels continued to bleed workers, for one. Even excluding the hundreds of thousands who left the labor force, the country still had a backlog of more than 13 million unemployed workers, whose unemployment averaged an all-time high of 40.9 weeks.

“They say businesses are refusing to look at résumés from the unemployed,” said Esther Perry, 59, of Bedford, Mass., who participated in a recent report on unemployed workers put together by USAction, a liberal coalition. “What do you think my chances are? Once unemployment runs out, I don’t know what I will do.”

Even those who are employed are in fragile positions. Average hourly earnings fell 0.1 percent in November, and a Labor Department report released Wednesday found that the share of national income going to labor was at an all-time low last quarter.

These softer spots in Friday’s numbers underscored just how much President Obama needs additional stimulus, a tidy and fast resolution to the European debt crisis or some other economic breakthrough to reinvigorate the job market before the 2012 presidential election.

On the issue of government action to stimulate the economy, there has been some movement in Washington toward extending the payroll tax cut, which is currently scheduled to expire at the end of this month. Economists have said that allowing the expiration of the tax cut — which lets more than 160 million mostly middle-class Americans keep two percentage points more of their pay checks — could be a severe drag on both job creation and output growth.

“If isn’t extended, it will have an impact on consumer spending in the first half of next year because it’ll put a big dent in consumer income,” said Conrad DeQuadros, senior economist at RDQ Economics. “To the extent that reduces spending, there will be second-round effects on hiring.”

Extending the tax cut would likely lead to 600,000 to 1 million more jobs, according to Adriana Kugler, the chief economist at the Department of Labor.

The other major stimulus program scheduled to expire by 2012 is the extended unemployment insurance benefits, which allow some jobless workers to continue receiving benefits for as long as 99 weeks. Already, millions of workers have exhausted their benefits, and ending extended benefits is likely to affect another sizable chunk of the unemployed.

Failing to renew the federal benefit extensions will cause 5 million additional people to lose benefits next year, Labor Secretary Hilda Solis said in an interview.

Unemployment benefits are believed to have one of the most stimulative effects on the economy, since recipients of these benefits are likely to spend all of the money they receive quickly and so pump more spending through the economy.

URL to original article: http://www.builderonline.com/builder-pulse/economy-gains-120-000-jobs--unemployment-drops-to-8-6-.aspx?cid=BP:120211:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com

Expert: Apartment sales to rise 35% this year

Source: The Business Journal

Apartment sales in Central California are staging a slow but somewhat steady rise, continuing last year’s trend in which apartment sales more than doubled their 2009 numbers.

Apartment sales got off to a fast start this year before hitting some rough patches and then picking up steam again. Central California’s 2010 apartment sales were valued at more than $40 million, but the 2011 numbers surpassed that in the first nine months, said Robin Kane, founder of RCK Organization in Fresno and an expert on the multi-family housing market.

“Last year, apartment sales were just above the $40 million mark,” Kane said. “Through September of this year, we were at $43 million, and right now we’re at $47.6 million.”
Kane said that in the wake of the housing bust and the persistent recession, more families are renting apartments rather than buying houses like they would have in years past. He said those interesting in buying apartment complexes do so because they are much easier to manage.

“With apartments, you have a resident manager to oversee things,” he said. “But the same number of houses over three states — or even one city — is much harder to manage.”

While representing United Development in October, Kane was involved in the $3.1 million purchase of the 104-unit Evergreen Terrace Apartments south of Fresno Yosemite International Airport on Olive Avenue.

New apartments are being built in the area as well. Penstar Group, a Fresno-based development group, is overseeing construction of The Shires luxury apartment community near the intersection of Ninth and Cedar avenues in North Fresno. Leta Ciavaglia, corporate president for Penstar and the project executive for The Shires, said the first phase of the 122-unit site should be finished by spring 2012.

“The units are 900, 1,200 and 1,445 square feet; all have garages,” Ciavaglia said, adding that the community should attract a number of families. “People who are not quite ready to buy a home — husband, wife and children.”

Ciavaglia said that the foundations have been poured and the plumbing is being installed. The entire complex should be completed in fall 2012 if the weather cooperates.

“In development, everything is a roll of the dice,” she said.

Apartment sales are not only on the rise in Central California, but all across the country. Kane said that the latest census showed that 4.5 million Americans were added to the renter’s group, and that nationally, multifamily dwellings — most of which are apartments — are selling the best out of all the commercial real estate sections.

“Multifamily is the flavor of the month nationally,” Kane said. “The popularity in apartment sales is due to the [lower] percentage of home ownership.”

Commercial real estate brokers Marcus and Millichap said in their 2011 National Apartment Report that over the next five years, the 20- to 34-year-old age group will grow by 3.2 million individuals. Members of this age group have a higher percentage of renters than any other, and rising interest rates, large down payment requirements and tight lending standards will influence these younger households toward renting.

Kane said that while apartment sales don’t compare to where they were a few years ago, they are headed back in the direction of a much more normal market.

“At the end of this year, we should be at about 35 percent over where we were last year,” he said.

URL to original article: http://www.thebusinessjournal.com/real-estate/12341-expert-apartment-sales-to-rise-35-this-year

For further information on Fresno Real Estate check: http://www.londonproperties.com

Thursday, December 1, 2011

Stuck in neutral: first-time buyers

Source: Associated Press

This should be a great time to buy a first home. Prices have sunk to 2002 levels. Sellers are waiting anxiously as homes languish on the market. Mortgage rates are their lowest ever.

Yet the most likely first-time homeowners, especially young professionals and couples starting families, won't buy these days. Or they can't. Or they already did, during the housing boom. And their absence helps explain why the housing industry is still depressed.

The obstacles range from higher down payments to heavy debt from credit cards and student loans. But even many of those who could afford to buy no longer see it as a wise investment. Prices have sunk 15 percent in three years.

"I've looked for a home, but the places we can afford with the money we have are not that great," says Seth Herter, 23, a store manager in suburban St. Louis. "It also doesn't seem smart anymore to buy with prices falling. Buying a home just doesn't make sense to us."

The proportion of U.S. households that own homes is at 65.1 percent, its lowest point since 1996, the Census Bureau says. That marks a shift after nearly two decades in which homeownership grew before peaking at 70 percent during the housing boom.

The housing bubble lured so many young buyers that it reduced the pool of potential first-timers to below-normal levels. That's contributed to the decline in new buyers in recent years.

In 2005, at the height of the boom, about 2.8 million first-timers bought homes, according to the National Association of Realtors. By contrast, for each of the four years preceding the boom, the number of first-timers averaged fewer than 2 million.

Still, the bigger factors are the struggling economy, shaky job security, tougher credit rules and lack of cash to put down, said Dan McCue, research manager at Harvard University's Joint Center for Housing Studies. The unemployment rate among typical first-timers, those ages 25 to 34, is 9.8 percent, compared with 9 percent for all adults.

"The obstacles facing first-time buyers are big, and it's changing the way they look at home ownership," McCue says. "It's no longer the American Dream for the younger generation."

First-timers usually account for up to half of all sales. Over the past year, they've accounted for only about a third.

A big reason is tougher lending standards.

Lenders are demanding more money up front. In 2002, the median down payment for a single-family home in nine major U.S. cities was 4 percent, according to real estate website Zillow.com. Today, it's 22 percent.

And one-third of households have credit scores too low to qualify for a mortgage. The median required credit score from FICO Inc., the industry leader in credit ratings, has risen from 720 in 2007, when the market went bust, to 760 today.

Homes in many places are the most affordable in a generation. In the past year, the national median sale price has sunk 3.5 percent. Half the homes listed in the Tampa Bay area are priced below $100,000.

The average mortgage rate for a 30-year fixed loan is 4 percent, barely above an all-time low. Five years ago, it was near 6.5 percent. In 2000, it exceeded 8 percent.

When the economy eventually strengthens, the housing market will, too. More people will be hired. Confidence will rise. Down payments won't be so hard to produce.

The question is whether first-time buyers will then start flowing into the housing market. That will depend mainly on whether they think prices will rise, said Mark Vitner, senior U.S. economist at Wells Fargo.

"It's a guessing game as to when things will turn around," Vitner said. "But until they do, you won't see young people buying homes."

URL to original article: http://www.builderonline.com/builder-pulse/stuck-in-neutral--first-time-buyers.aspx?cid=BP:120111:JUMP

For further information on Fresno Real Estate check: http://www.londonproperties.com