| Interesting Data found on the shift from foreclosures to short salesDuring fourth-quarter 2012 lenders recorded a total of 38,212 Notices of Default (NoDs) on California houses and condos. That was down 22.1% from 49,026 during the prior three months, and down 37.9% from 61,517 in fourth-quarter 2011, according to San Diego-based DataQuick. Last quarter’s number was the lowest since 37,994 NoDs were recorded in fourth-quarter 2006. New foreclosure filings (NoDs) peaked in first-quarter 2009 at 135,431. DataQuick’s NoD statistics go back to 1992. The median price paid for a home last quarter was $300,000 in California, up 22.4% from a year ago and 32.2% off the median’s $227,000 bottom in first-quarter 2009, DataQuick reported. Foreclosure resales accounted for 16.6% of all California resale activity last quarter, down from 20.0% the prior quarter and 33.6% a year ago. It peaked at 57.8% in the first quarter of 2009. Foreclosure resale’s – properties foreclosed on in the prior 12 months – varied significantly by county last quarter, from 5.0% in San Francisco County to 31.4% in Sutter County. Short sales made up an estimated 26.0% of statewide resale activity last quarter. That was down from an estimated 26.4% the prior quarter and up from 25.7% of all resale’s a year earlier. The estimated number (rather than percentage) of short sales last quarter rose 4.2% from a year earlier. NoD filings fell in all home price categories last quarter. But mortgage defaults remained far more concentrated in California’s most affordable neighborhoods. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 5.5 NoDs filed for every 1,000 homes in those zip codes. The ratio was 3.5 NoDs filed per 1,000 homes for zip codes with $200,000 to $800,000 medians, while there were 1.3 NoDs filed per 1,000 homes for the group of zips with medians above $800,000. Most of the loans going into default are still from the 2005-2007 period: The median origination quarter for defaulted loans is still thi rd-quarter 2006. That has been the case for three years, indicating that weak underwriting standards peaked then. The most active “beneficiaries” in the formal foreclosure process last quarter were Wells Fargo (6,611), JP Morgan Chase (4,275) and Bank of America (2,005). The trustees who pursued the highest number of defaults last quarter were NDex West (mostly for Wells Fargo), Cal-Western Reconveyance (also Wells Fargo) and Quality Loan Service Corp (Bank of America). On primary mortgages, California homeowners were a median eight months behind on their payments when the lender filed the Notice of Default. The borrowers owed a median $14,364 on a median $308,885 mortgage. On home equity loans and lines of credit in default, borrowers owed a median $4,693 on a median $77,187 credit line. The amount of the credit line that was actually in use cannot be determined from public records. Although 38,212 default notices were filed last quarter, they involved 37,343 homes because some borrowers were in default on multiple loans (e.g. a primary mortgage and a line of credit). Of the state’s larger counties, mortgages were least likely to go into default in San Mateo, Santa Clara and Marin counties. The probability was highest in Yuba, Madera and Tulare counties. Trustees Deeds recorded (TDs), or the finalized loss of a home to the formal foreclosure process, totaled 21,127 during the fourth quarter. That was down 7.9% from 22,949 foreclosures in the prior quarter, and down 32.4% from 31,260 in fourth-quarter 2011. Last quarter’s foreclosure tally was the lowest for any quarter since second-quarter 2007, when 17,458 homes were foreclosed on. The all-time peak was 79,511 foreclosures in third-quarter 2008. The state’s all-time low was 637 in second-quarter 2005, DataQuick reported. Just as with mortgage default filings, foreclosures remained far more concentrated in the state’s most affordable communities. Zip codes with fourth-quarter 2012 median sale prices below $200,000 collectively saw 4.3 homes foreclosed on for every 1,000 homes in existence. That compares with 2.0 foreclosures per 1,000 homes for zip codes with medians from $200,000 to $800,000, and 0.5 foreclosure per 1,000 homes in the group of zips with medians over $800,000. On average, homes foreclosed on last quarter took 8.9 months to wind their way through the formal foreclosure process, beginning with an NoD. That’s up from an average of 7.9 months the prior quarter and down from 9.7 months a year earlier. While 1.1 million of California’s 8.7 million houses and condos have been involved in a foreclosure proceeding the past five years, 780,000 – less than ten%, were actually lost to foreclosure. The other 320,000 were either sold, or the payments brought current. At formal foreclosure auctions held statewide last quarter, an estimated 42.0% of the foreclosed properties were bought by investors or others who don’t appear to be lender or government entities. That was up from an estimated 39.2% the previous quarter and up from 31.2% a year earlier, DataQuick reported. Stock markets ready for a correction? One of the most respected maxims on trading floors is that bull markets end on good news and bear markets on bad news. In simpler terms, that somewhat counter intuitive observation means a run higher stops when the market no longer reacts positively to good news, while a run lower halts when the market no longer falls on bad news. Lately, the news has been mostly good, if only marginally so. The worst of the fiscal battles in Washington have abated for the moment, and companies have managed to beat sharply lowered earnings expectations. The European debt crisis is on the back burner, and geopolitical tensions, particularly in the Middle East, have quieted. Still, any one of those substantial market headwinds could start blowing again on a moment’s notice, wo rrying some that the current rally is heading for trouble. “We are reaching capitulation levels,” said Walter Zimmerman, senior technical analyst at United-ICAP. “What troubles me is there’s never been a happy ending from that combination of extreme complacency.” Indeed, many of the metrics that gauge market sentiment are in startling territory. The CBOE, an options measure of market fear, is around the 12.5 range. The VIX, as it is called, has only traded below 14 about 21% of the time in its 21-year history and has closed below 10 just nine times in nearly 6,000 trading days, according to Nicholas Colas, chief market strategist at ConvergEx. “The bottom line here is that at current levels you must – repeat MUST – believe that macro concerns (Euro, debt ceiling, China, whatever used to keep you up at night) are no longer an existential threat to either the global economy or to corporate earnings,” Colas wrote in a re cent volatility analysis. “And if you cannot get your head around that benign scenario, you must – repeat MUST – treat current equity prices with real caution.” Harvard study – housing ready for renewal After languishing for several years, the US remodeling industry appears to be pulling out of its downturn, and a renewal of the nation’s housing stock is underway, according to a major report released today by the Joint Center for Housing Studies of Harvard University. The US Housing Stock: Ready for Renewal is the latest report in the Improving America’s Housing series, published by the Remodeling Futures Program at the Joint Center. Foreclosed properties are being rehabilitated, sustainable home improvements are gaining popularity, older homeowners are retrofitting their homes to accommodate their evolving needs, and the future market potential is immense, as the emerging echo boo m generation is projected to be the largest in our nation’s history. “As baby boomers move into retirement, they are increasing demand for aging-in-place retrofits,” says Kermit Baker, director of the Remodeling Futures Program. “A decade ago, homeowners over 55 accounted for less than one third of all home improvement spending. By 2011, this share had already grown to over 45%. And generations behind the baby boomers will help fuel future spending growth since echo boomers are projected to outnumber baby boomers by more than twelve million as they begin to enter their peak remodeling years over the next decade.” Additionally, the surge in distressed properties coming back onto the market is contributing to an increase in US remodeling spending. “After limited spending during the housing bust, renovating the more than one million distressed properties that were sold in 2011 contributed nearly $10 billion to home improvement spending,&rdquo ; says Eric S. Belsky, managing director of the Joint Center. “With about three million more foreclosures and short sales in the pipeline, there is even more such spending ahead of us.” Average homeowner spending on remodeling was 20% higher in the Northeast and 10% lower in the South, compared to the national average in 2011. Since the 1990s, however, the Sunbelt metro areas have generally seen stronger growth in home improvement spending. As of 2011, metro areas with the highest per owner improvement spending included the rapidly growing Sunbelt metros of Austin, Las Vegas, and Phoenix, as well as traditionally stronger markets such as Boston, New York, San Francisco, and Washington, D.C. Spending on energy-efficiency upgrades, in particular, continued to expand through the remodeling downturn. “The share of total market spending on energy-related projects rose sharply from 23% in 2007 to 33% in 2011,” says Abbe Will, a research analyst in the Joint Center’s Remodeling Futures Program. “About a quarter of households undertaking home improvement projects in 2011 did so for energy efficiency purposes.” extends debt ceiling The GOP-controlled House approved an extension of the debt ceiling Wednesday, heading off an economy-rattling fiscal crisis for at least four months. The House passed the measure by a 285-144 vote, a bipartisan showing on an initiative brought by majority Republicans. The vote helped boost the stock market. The GOP legislation marked a tactical retreat by House Speaker John Boehner, R-Ohio, who is eager to avoid a potential first-ever default on US payment and debt obligations as he wrestles with Obama and his Democratic allies over taxes, spending and the deficit. Before the vote, Senate Majority Leader Harry Reid, D-Nev., said the upper chamber would immediately move to advance the legislation to the White Ho use, which has announced Obama would sign it. Hampton sales strong before tax increase In the fourth quarter, 89 homes sold for $2.5 million or more on the South Fork of Long Island, nearly double the number in the same quarter the year before, according a new market report by Brown Harris Stevens. That reflects, analysts said, a movement by wealthy buyers and their advisers to avoid rising capital gains tax rates this year—with top rate up to nearly 25% from 15% for some taxpayers. “The accountants were busy,” said Jonathan Miller, an appraiser, who prepared a market report on the Hamptons for Douglas Elliman. Cia Comnas, who oversees sales for Brown Harris Stevens in the Hamptons, said: “There was a lot of stuff scheduled for December that had to close before the end of the year. There was some drama.” The shifting mix of sales pushed up the average price of a Hamptons home to $2.17 million during the quarter, according to the Brown Harris Stevens report, a 27% increase from the same quarter last year. The median price was $975,000, up 15.7%. Data compiled by Mr. Miller dating back to 2005 put the average price in the fourth quarter at the highest on record because of the extra high-end sales. The total number of sales was the highest for the fourth quarter, since the fourth quarter of 2005, Mr. Miller said. Unemployment seasonally down In the week ending Jan. 19, applications for unemployment insurance payments declined by 5,000 to a seasonally adjusted 330,000, the lowest level since January 2008. Economists polled by Reuters had forecast claims to rise to 355,000 last week. Initial claims from two weeks ago were unrevised at 335,000. A Labor Department analyst said claims data were estimated for three states last week, but there was nothing unusual in the state level data, according to Reuters. The four-week moving average, which normally pro vides a better indication of the underlying trend in labor markets than the weekly number of jobless claims, dropped by 8,250 to 351,750 for first-time benefit applicants, the lowest since March 2008. The number of people filing for benefits after an initial week of aid increased fell 71,000 to 3.16 million in the week ending Jan. 12. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. Job gains are of great importance, because they lead to income growth, and that supports consumer spending, which accounts for more than 70% of the US economy. December was yet another month of job growth that is just about enough to keep pace with the underlying growth in the labor force, but not enough to drive the unemployment rate markedly lower. Nonfarm payrolls grew 155,000 last month, according to the Labor Department, while the unemployment rate held at 7.8% after the November figure was revised up from a previously reported 7.7%. |
