Monday, January 23, 2012

Assembly Bill 284 effects

Notice Of Default filings dropped dramatically in October due to the Assembly Bill 284, and continue to be affected. We (Las Vegas) went from over 3,000 NOD filings per month prior to October to just over 100 currently! We are seeing a huge reduction in inventory! There are nearly 100 less REO properties on the market today as there was just 9 days ago!

Thursday, January 19, 2012

As Home Buying Returns, Do Apartments Face a Bubble?

A huge surge in rental demand and comparatively little apartment supply created a boom in multi-family construction in the last year, but with the single family housing market slowly beginning to show signs of life, the concern among banks and investors is that all that supply will hit the market just as rental demand drops off.

Based on preliminary estimates of Q4 '11 activity, multi-family loan origination volume increased to $82 billion in 2011, up from $50 billion in 2010, according to Chandan Economics. Understandably, some lenders and investors are starting to ask questions.

"While 2012 should be another good year for apartment REITs, there is concern amongst some investors and managements that market expectations may be hard to beat," say analysts at Sandler O'Neill. "Based on discussions with managements, revenue growth should match sentiment but expense growth may be the wildcard."

Rents have been rising steadily as apartment vacancies drop and "rental nation" pervades consumer sentiment, but 2012 will likely not see as robust rent growth as 2011; housing affordability continues to improve and renting is becoming ever more expensive than owning.

"A stretched consumer is beginning to push back harder against rental increases, and new supply and a slowly healing single-family market will begin to equalize what has been a lopsided, renter-dominated housing market for over 5 years," say analysts at Green Street Advisors.

Mortgage applications surged 23 percent last week, according to the Mortgage Bankers association, although most of that was refinances. Another positive came from the NAHB's home builder sentiment index, which saw big gains in builder confidence, citing improved sales and buyer traffic. So is there real cause for concern about apartment demand?

"Only in some markets," says Sam Chandan of Chandan Economics. "Austin is a case in point. The supply response has been unusually strong there. Apart from specific cases like that, we do not anticipate a strong reversal in the rental bias until jobs accelerate markedly."

Since 2004, when homeownership rates peaked, the population of 20-34-year-olds grew by 2.8 million, according to researchers at CoStar Group, a commercial real estate information company. But the number of households shrunk by 300,000. In other words, younger Americans were doubling up with roommates or moving back in with their parents.

30 yr fixed 3.91% 3.96%
30 yr fixed jumbo 4.50% 4.58%
15 yr fixed 3.24% 3.39%
15 yr fixed jumbo 3.79% 3.93%
5/1 ARM 2.87% 3.17%
5/1 jumbo ARM 3.14% 3.27%

"This suggests big pent up demand - as much as 1.4 million new households within this prime renting cohort," says CoStar's Suzanne Mulvee.

We also have to remember that many Americans now have either damaged credit or not enough of a downpayment to qualify for today's low interest rate mortgages. That could keep them as renters for many more years, as credit standards aren't likely to loosen any time soon.

Pent-up demand will, like everything else in real estate, vary from market to market. In Washington, DC, for example, investors in multi-family are still very bullish, as home prices are strengthening and apartment supply is still limited. In other areas, like Las Vegas, where distressed homes are selling at big discounts, rental demand may wane more quickly for apartments, as those unwilling to buy choose to rent single family homes.

Another headwind to the multi-family sector could be more investors buying foreclosed single-family homes in bulk to rent. With federal regulators and the Obama administration seriously considering a program to sell bulk foreclosures owned by Fannie Mae and Freddie Mac, there could suddenly be a large supply of single family rentals competing against multi-family buildings. Again, that would largely be in the sand states, as there are far fewer foreclosed homes in major cities where apartments are and will likely continue to see big gains.

Wednesday, January 11, 2012

Home Affordability Offering Up 40-Year Deals

Home affordability is at 1971 levels, due to falling home prices and record low mortgage rates, pushing home ownership in reach to more families, according to the U.S. Department of Housing and Urban Development (HUD).
Home owners are bringing in nearly double the median income they need to cover the cost of an average home, HousingPredictor reports.
"With interest rates at historically low levels and markets across the country beginning to improve, home ownership is within reach of more households,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement.
Home sales have been ticking up, according to recent reports by the National Association of REALTORS®, the National Association of Home Builders, as well as the Obama administration’s December Housing Scorecard.
However, some consumers are finding more stringent lending standards for getting a mortgage a roadblock to home ownership, and some housing experts have blamed tighter underwriting standards in recent years for continuing to hold back the housing market.

Home Affordability Offering Up 40-Year Deals

Monday, January 9, 2012

Are falling prices the real threat? –

A growing number of economists and money managers are starting to worry about the opposite of inflation: deflation, a period of falling prices and declining incomes.
Sure, the government's consumer price index has gained 3.5% the past 12 months. Even stripping out food and energy, the CPI is up 2.1%, the Bureau of Labor Statistics says. And anyone who lives in the real world knows you can't live without food and energy.
But other prices have been moving relentlessly downward, from refrigerators to stocks to houses and salaries. Economist A. Gary Shilling argues that many of the factors for deflation are already in place, and that people overlook falling prices because they are so focused on the items they use the most.

Thursday, January 5, 2012

Pending Home Sales Highest in Over a Year-and-a-Half

Pending home sales continued to rise in November, reaching their highest level in 19 months, the National Association of Realtors (NAR) reported late last week.
The trade group’s index of signed sales contracts jumped 7.3 percent between October and November and is 5.9 percent above its level a year earlier. The last time the index was higher was in April 2010 as buyers rushed to beat the deadline for the homebuyer tax credit.
James Frischling, president and co-founder of NewOak Capital, says the latest results are likely to feed the view that there is a recovery going on in the housing market.
“This was an unexpected jump-up, with every region showing gains including a 15 percent increase out west, which has been the hardest hit area since the housing bubble burst,” Frischling noted.
Despite the strong gains atypical of the season, Frischling remains cautious. He says with contract cancellations above 30 percent, Realtors are keenly aware that it’s premature to conclude a housing recovery is underway based on November’s strong pending sales report.
Lawrence Yun, NAR’s chief economist, agrees that contract failures have been running unusually high.

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