Source: USA Today
In the aftermath of the nation's housing-market collapse and recession, more than 500 midsize and large cities have seen a rise in the share of homes that are rented rather than owned, according to a USA TODAY analysis of Census data.
Almost 4 million homes have been lost to foreclosures in the past five years, turning many former owner-occupied homes into rentals.
The shift to rental housing is potentially long-lasting and portends changes for neighborhood stability and how people build wealth, economists say.
"The changes are big but glacial," says Mark Zandi, economist at Moody's Analytics.
INTERACTIVE:Should you rent or buy?
The swing from owner- to tenant-occupied homes in the past decade has been dramatic in some places:
•Of the 100 largest cities, some of those with the largest shifts were Irvine, Calif., which went from about 40% of occupied homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7% to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.
•Twenty-five cities — including Baltimore, Minneapolis, Salt Lake City and Sacramento — swung from having more than half homeowners in 2000 to majorities of renters in 2010. In one — Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up from 49% in 2000.
•Florida, California and Arizona had the most cities where the share of renter-occupied housing grew by at least 5 percentage points. All three states have been hit hard by foreclosures.
Nationwide, 34.9% of occupied homes were rented in 2010, up from 33.8% in 2000. The Census data that USA TODAY analyzed for cities covered only housing within the cities' boundaries, not their much larger metropolitan areas.
Vacant properties, excluding seasonal or vacation homes, accounted for 7.9% of U.S. housing units in 2010. It's not clear how many of those have since become rentals or owner-occupied homes.
The renter household market remained fairly stable from 1990 to 2006, says Daniel McCue, senior research analyst at Harvard University's Joint Center for Housing Studies.
Since 2006, when housing prices peaked, the number of renter households in the U.S. has grown an average of 692,000 a year, while owner households have fallen an average of 201,000 a year, Census surveys show.
Several factors will boost rental growth for years to come, Zandi says, including continued foreclosures, continued drops in home prices that frighten buyers and potential cuts to government subsidies supporting homeownership. On the other hand, 74% of renters think owning is superior to renting, said a recent survey by mortgage giant Fannie Mae.
"There's still a pull toward homeownership, although it's been diminished," McCue says.
URL to original article: http://www.housingwire.com/2011/05/31/more-than-500-cities-see-more-homes-become-rentals
For further information on Fresno Real Estate check: http://www.londonproperties.com
Tuesday, May 31, 2011
Foreclosure starts and delinquences drop in April, LPS reports
by KERRY CURRY
Foreclosure starts and delinquencies dropped significantly from a year ago, according to Lender Processing Services' (LPS: 26.23 +1.16%) Mortgage Monitor report.
Servicers started 187,423 foreclosures in April, down 14.7% from a year ago and down 31% from March.
Total delinquencies, at 7.97%, are down 16.3% from a year ago but up 2.4% from March, according to the report. HousingWire gave readers a "sneak peak" of the report earlier this month.
Seriously delinquent mortgages, those that are 90 days overdue or in foreclosure stood at 7.86%, down nearly 11% from a year ago.
Still, more mortgages are seriously delinquent when compared to prior years. In January 2009, just 10% of delinquent mortgages were in the 12 months or more delinquent bucket. But as of April 2011, some 40% of delinquent mortgages had been delinquent for 12 months or more, illustrating the stretched-out timelines for foreclosures.
The foreclosure pipeline remains bloated, according to the report. Loans in the 90-plus days of delinquency or in foreclosure outnumber monthly foreclosure sales by a factor of almost 50:1. The foreclosure and seriously delinquent inventory stands at more than 4.2 million homes, yet just 84,219 foreclosure sales occurred during the month of April.
The numbers suggest that lenders are still having trouble restarting the foreclosure process that came to a halt last fall amid robo-signing allegations.
LPS also said new 30-day delinquencies in April were the largest seen in years.
The National Association of Realtors reported Friday that pending home sales declined by 11.6% in April from March and were down a whopping 26.5% from a year ago.
URL to original article: http://www.housingwire.com/2011/05/27/foreclosure-starts-and-delinquences-drop-in-april-lps-reports
For further information on Fresno Real Estate check: http://www.londonproperties.com
Foreclosure starts and delinquencies dropped significantly from a year ago, according to Lender Processing Services' (LPS: 26.23 +1.16%) Mortgage Monitor report.
Servicers started 187,423 foreclosures in April, down 14.7% from a year ago and down 31% from March.
Total delinquencies, at 7.97%, are down 16.3% from a year ago but up 2.4% from March, according to the report. HousingWire gave readers a "sneak peak" of the report earlier this month.
Seriously delinquent mortgages, those that are 90 days overdue or in foreclosure stood at 7.86%, down nearly 11% from a year ago.
Still, more mortgages are seriously delinquent when compared to prior years. In January 2009, just 10% of delinquent mortgages were in the 12 months or more delinquent bucket. But as of April 2011, some 40% of delinquent mortgages had been delinquent for 12 months or more, illustrating the stretched-out timelines for foreclosures.
The foreclosure pipeline remains bloated, according to the report. Loans in the 90-plus days of delinquency or in foreclosure outnumber monthly foreclosure sales by a factor of almost 50:1. The foreclosure and seriously delinquent inventory stands at more than 4.2 million homes, yet just 84,219 foreclosure sales occurred during the month of April.
The numbers suggest that lenders are still having trouble restarting the foreclosure process that came to a halt last fall amid robo-signing allegations.
LPS also said new 30-day delinquencies in April were the largest seen in years.
The National Association of Realtors reported Friday that pending home sales declined by 11.6% in April from March and were down a whopping 26.5% from a year ago.
URL to original article: http://www.housingwire.com/2011/05/27/foreclosure-starts-and-delinquences-drop-in-april-lps-reports
For further information on Fresno Real Estate check: http://www.londonproperties.com
Friday, May 27, 2011
Another collapse in home prices would hinder bank earnings: S&P
by KERRI PANCHUK
Another downturn in home prices could stifle the solid recovery banks have made in the past two years, cutting into profit margins, derailing credit and threatening ratings, according to Standard & Poor's credit analyst Devi Aurora.
The S&P report, which is based on a hypothetical situation with home price declines as deep as 15% between now and December 2012, examines the impact further price declines would have on banks, which are exposed to fluctuating home prices through loan portfolios and holdings of mortgage-backed securities.
In the past 12 months, banks have performed quite well. Recent reports show earnings at banks insured by the Federal Deposit Insurance Corp. growing exponentially year-over-year.
The banking regulator said financial institutions earned $29 billion in the first three months of 2011, up 66.5% from $17.4 billion a year ago and at the highest level in four years.
When analyzing the potential for further price volatility, S&P analysts found "rising interest rates, combined with receding business and consumer confidence, could be the trigger for a renewed housing downdraft."
URL to original article: http://www.housingwire.com/2011/05/27/another-collapse-in-home-prices-would-hinder-bank-earnings-sp
For further information on Fresno Real Estate, check: http://www.londonproperties.com/
Another downturn in home prices could stifle the solid recovery banks have made in the past two years, cutting into profit margins, derailing credit and threatening ratings, according to Standard & Poor's credit analyst Devi Aurora.
The S&P report, which is based on a hypothetical situation with home price declines as deep as 15% between now and December 2012, examines the impact further price declines would have on banks, which are exposed to fluctuating home prices through loan portfolios and holdings of mortgage-backed securities.
In the past 12 months, banks have performed quite well. Recent reports show earnings at banks insured by the Federal Deposit Insurance Corp. growing exponentially year-over-year.
The banking regulator said financial institutions earned $29 billion in the first three months of 2011, up 66.5% from $17.4 billion a year ago and at the highest level in four years.
When analyzing the potential for further price volatility, S&P analysts found "rising interest rates, combined with receding business and consumer confidence, could be the trigger for a renewed housing downdraft."
URL to original article: http://www.housingwire.com/2011/05/27/another-collapse-in-home-prices-would-hinder-bank-earnings-sp
For further information on Fresno Real Estate, check: http://www.londonproperties.com/
Fannie Mae servicers to evaluate more borrowers for imminent default
by JON PRIOR
Fannie Mae notified its mortgage servicers this week to begin evaluating borrowers for imminent default not just for the Home Affordable Modification Program but for any initiative.
Borrowers who do not qualify for HAMP and are less than 60-days delinquent on their mortgage must be evaluated for imminent default if they request a modification. If the servicer determines the borrower has less than $25,000 in cash reserves, the servicer must submit the loan to Freddie Mac's imminent default indicator, which evaluates the borrower's financial characteristics, such as credit score and property valuation, to determine if a default is likely.
If the test comes back negative, the borrower must provide documentation showing a specific hardship such as the death of a borrower or co-borrower, a prolonged illness or a divorce.
Both Fannie and Freddie completed 119,000 modifications in the fourth quarter, according to the latest report from their regulator, the Federal Housing Finance Agency. Roughly 20% of those were HAMP permanent modifications. Expanding the evaluation for imminent default to this larger percentage of non-HAMP workouts could boost numbers, as total modifications on Fannie and Freddie loans dropped 18% from the previous quarter.
When modification options failed, Fannie and Freddie conducted roughly 27,000 short sales and deeds-in-lieu of foreclosure in the fourth quarter.
A recent study from CoreLogic (CLGX: 18.03 0.00%) showed the risk of losses from these transactions due to fraud. Fannie released new guidance for servicers to mitigate some of the same risks highlighted in the report.
Fannie will require servicers to obtain either a broker price opinion or an appraisal from an approved network of providers before completing a short sale or deed-in-lieu of foreclosure.
According to the new guidance, servicers have until July 15 to comply. The list of providers, much like Fannie's attorney network, will be updated from time to time.
Servicers cannot request more than 75% of its BPOs or appraisals from one provider, and it must wait at least 120 days after the original order for gathering an updated value.
URL to original article: http://www.housingwire.com/2011/05/27/fannie-mae-servicers-to-evaluate-more-borrowers-for-imminent-default
For further information on Fresno Real Estate check: http://www.londonproperties.com
Fannie Mae notified its mortgage servicers this week to begin evaluating borrowers for imminent default not just for the Home Affordable Modification Program but for any initiative.
Borrowers who do not qualify for HAMP and are less than 60-days delinquent on their mortgage must be evaluated for imminent default if they request a modification. If the servicer determines the borrower has less than $25,000 in cash reserves, the servicer must submit the loan to Freddie Mac's imminent default indicator, which evaluates the borrower's financial characteristics, such as credit score and property valuation, to determine if a default is likely.
If the test comes back negative, the borrower must provide documentation showing a specific hardship such as the death of a borrower or co-borrower, a prolonged illness or a divorce.
Both Fannie and Freddie completed 119,000 modifications in the fourth quarter, according to the latest report from their regulator, the Federal Housing Finance Agency. Roughly 20% of those were HAMP permanent modifications. Expanding the evaluation for imminent default to this larger percentage of non-HAMP workouts could boost numbers, as total modifications on Fannie and Freddie loans dropped 18% from the previous quarter.
When modification options failed, Fannie and Freddie conducted roughly 27,000 short sales and deeds-in-lieu of foreclosure in the fourth quarter.
A recent study from CoreLogic (CLGX: 18.03 0.00%) showed the risk of losses from these transactions due to fraud. Fannie released new guidance for servicers to mitigate some of the same risks highlighted in the report.
Fannie will require servicers to obtain either a broker price opinion or an appraisal from an approved network of providers before completing a short sale or deed-in-lieu of foreclosure.
According to the new guidance, servicers have until July 15 to comply. The list of providers, much like Fannie's attorney network, will be updated from time to time.
Servicers cannot request more than 75% of its BPOs or appraisals from one provider, and it must wait at least 120 days after the original order for gathering an updated value.
URL to original article: http://www.housingwire.com/2011/05/27/fannie-mae-servicers-to-evaluate-more-borrowers-for-imminent-default
For further information on Fresno Real Estate check: http://www.londonproperties.com
Thursday, May 26, 2011
Prices are dropping--less quickly--even with distress in the mix
Source: NAHB Eye on Housing
Many analysts and economists view the continued downward trend in home prices as if it shows the for-sale housing sector has not seen its worst days. Others look at the data and recognize things have very likely already started to improve and will reflect that in the numbers before too long. The National Association of Home Builders' Eye on Housing economists write, "With the monthly data showing a marked slowing in the rate of decline in the National HPI, and house prices already showing improvement in some states, we expect no further significant declines in house prices. Further, we anticipate house prices will begin to shift upwards before the end of the year, ushering in a housing market recovery that is likely to run for several years.
The Federal Housing Finance Agency (FHFA) purchase-only house price index (HPI) fell 2.5% in the first quarter of 2011 to a seasonally adjusted index value of 181.0 (down 3.5% to 179.4 NSA). According to the FAFA, this is “… the largest quarterly decline since the fourth quarter of 2008 …”—the peak of the recession. This follows a seasonally adjusted 1.4% decline (-2.4% NSA) in the fourth quarter 2010. On a year-over-year basis, house prices are down 5.6% (NSA) from first quarter 2010 to first quarter 2011.
The rate of change in house prices varies widely across the states. Declines in house prices were observed in 43 states and the District of Columbia on a quarter-over-quarter basis. The largest quarter-over-quarter declines were observed in Idaho (-5.9% SA), Hawaii (-5.5%), Florida (-4.9%), South Carolina (-4.4%), Nevada (-4.3%) and the District of Columbia (-4.1%). States with an increase in house prices, included Arkansas (+1.7%), West Virginia (+1.4%), Wyoming (+0.8%) and Vermont (+0.6%).
While there was a marked decline in the quarterly numbers, the monthly numbers indicate that the downward pressure on house prices is easing. Month-over-month the National HPI was down 0.3% in March to a seasonally adjusted index value of 181.8, and on a not seasonally adjusted basis there was no change (+0.0%), with the HPI remaining at 181.6. This compares to a 1.5% (-0.9% NSA) decline in February and 1.2% (-1.5% NSA) decline in January.
House prices were no longer falling in several states, with a moderate increase observed in the HPI of four of the nine Census divisions between February and March. The largest increase was in the West South Central division (dominated by Texas), up 2.0%. West North Central (+1.4%), New England (+0.3%) and the Pacific (+0.1%) divisions also experienced an increase in house prices. The divisions experiencing a decline included South Atlantic (-2%) (dominated by Florida), East North Central (-0.9% SA), East South Central (-0.9%), Mountain (-0.4%) and Middle Atlantic (-0.2%).
With the monthly data showing a marked slowing in the rate of decline in the National HPI, and house prices already showing improvement in some states, we expect no further significant declines in house prices. Further, we anticipate house prices will begin to shift upwards before the end of the year, ushering in a housing market recovery that is likely to run for several years.
Footnote:
The FHFA report included notice of the introduction a new weighting system for the FHFA HPI. Under the new system the Census Division indexes are constructed as weighted averages of the state-level indexes (previously the Census Division indexes were estimated directly from pooled transaction-level data). The new weighting system also uses the year specific estimates of the housing stock from the American Community Survey (previously based on 2000 decennial Census data). The changes reduce the transaction-weighting bias in both the Census Division and National indexes. The FHFA advise that the changes “…. generally has a modest impact on index estimates, but offers significant theoretical advantages.”
URL to original article: http://www.builderonline.com/builder-pulse/prices-are-dropping--less-quickly--even-with-distress-in-the-mix.aspx?cid=NWBD100928002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Many analysts and economists view the continued downward trend in home prices as if it shows the for-sale housing sector has not seen its worst days. Others look at the data and recognize things have very likely already started to improve and will reflect that in the numbers before too long. The National Association of Home Builders' Eye on Housing economists write, "With the monthly data showing a marked slowing in the rate of decline in the National HPI, and house prices already showing improvement in some states, we expect no further significant declines in house prices. Further, we anticipate house prices will begin to shift upwards before the end of the year, ushering in a housing market recovery that is likely to run for several years.
The Federal Housing Finance Agency (FHFA) purchase-only house price index (HPI) fell 2.5% in the first quarter of 2011 to a seasonally adjusted index value of 181.0 (down 3.5% to 179.4 NSA). According to the FAFA, this is “… the largest quarterly decline since the fourth quarter of 2008 …”—the peak of the recession. This follows a seasonally adjusted 1.4% decline (-2.4% NSA) in the fourth quarter 2010. On a year-over-year basis, house prices are down 5.6% (NSA) from first quarter 2010 to first quarter 2011.
The rate of change in house prices varies widely across the states. Declines in house prices were observed in 43 states and the District of Columbia on a quarter-over-quarter basis. The largest quarter-over-quarter declines were observed in Idaho (-5.9% SA), Hawaii (-5.5%), Florida (-4.9%), South Carolina (-4.4%), Nevada (-4.3%) and the District of Columbia (-4.1%). States with an increase in house prices, included Arkansas (+1.7%), West Virginia (+1.4%), Wyoming (+0.8%) and Vermont (+0.6%).
While there was a marked decline in the quarterly numbers, the monthly numbers indicate that the downward pressure on house prices is easing. Month-over-month the National HPI was down 0.3% in March to a seasonally adjusted index value of 181.8, and on a not seasonally adjusted basis there was no change (+0.0%), with the HPI remaining at 181.6. This compares to a 1.5% (-0.9% NSA) decline in February and 1.2% (-1.5% NSA) decline in January.
House prices were no longer falling in several states, with a moderate increase observed in the HPI of four of the nine Census divisions between February and March. The largest increase was in the West South Central division (dominated by Texas), up 2.0%. West North Central (+1.4%), New England (+0.3%) and the Pacific (+0.1%) divisions also experienced an increase in house prices. The divisions experiencing a decline included South Atlantic (-2%) (dominated by Florida), East North Central (-0.9% SA), East South Central (-0.9%), Mountain (-0.4%) and Middle Atlantic (-0.2%).
With the monthly data showing a marked slowing in the rate of decline in the National HPI, and house prices already showing improvement in some states, we expect no further significant declines in house prices. Further, we anticipate house prices will begin to shift upwards before the end of the year, ushering in a housing market recovery that is likely to run for several years.
Footnote:
The FHFA report included notice of the introduction a new weighting system for the FHFA HPI. Under the new system the Census Division indexes are constructed as weighted averages of the state-level indexes (previously the Census Division indexes were estimated directly from pooled transaction-level data). The new weighting system also uses the year specific estimates of the housing stock from the American Community Survey (previously based on 2000 decennial Census data). The changes reduce the transaction-weighting bias in both the Census Division and National indexes. The FHFA advise that the changes “…. generally has a modest impact on index estimates, but offers significant theoretical advantages.”
URL to original article: http://www.builderonline.com/builder-pulse/prices-are-dropping--less-quickly--even-with-distress-in-the-mix.aspx?cid=NWBD100928002
For further information on Fresno Real Estate check: http://www.londonproperties.com
RealtyTrac reports nearly one-third of home sales are distressed
by KERRI PANCHUK
Sales of bank-owned homes and properties in some stage of foreclosure accounted for 28% of all U.S. residential sales in quarter one, up from 27% in the fourth quarter, RealtyTrac said Thursday in its 1Q 2011 survey.
The foreclosure data firm added that the average sales price of properties in foreclosure fell 1.89%, hitting $168,321 during the same period.
The average sales price for properties in foreclosure also fell approximately 27% below prime properties, the report said.
During the quarter, third-parties acquired 158,434 U.S. bank-owned homes and properties in some stage of the foreclosure process, down 16% from the revised fourth-quarter figures and 36% from year-ago levels.
"While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties," said James Saccacio, chief executive officer of RealtyTrac.
"While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure."
According to the report, a total of 107,143 real estate owned residential properties sold to third parties in the first quarter, down 11% from the previous quarter and down nearly 30% from the first quarter of 2010.
REO sales accounted for nearly 19% of all sales in the first quarter, up from 17% of all sales in the previous quarter and up from 18% of all sales in the first quarter of 2010. REOs sold for a relatively-unchanged average discount of 35%.
A total of 51,291 pre-foreclosure properties sold to third parties in the first quarter, down nearly 26% from the previous quarter and down 45% from the first quarter of 2010.
Pre-foreclosure sales accounted for nearly 9% of all sales, down from 10% of all sales in the fourth quarter of 2010 and down from 11% of all sales in the first quarter of 2010.
Short sales sold for an average discount of 9%, down from an average discount of 13% in the fourth quarter and an average discount of 14% in the first quarter of 2010.
URL to original article: http://www.housingwire.com/2011/05/26/realtytrac-reports-nearly-one-third-of-home-sales-are-distressed
For further information on Fresno Real Estate check: http://www.londonproperties.com
Sales of bank-owned homes and properties in some stage of foreclosure accounted for 28% of all U.S. residential sales in quarter one, up from 27% in the fourth quarter, RealtyTrac said Thursday in its 1Q 2011 survey.
The foreclosure data firm added that the average sales price of properties in foreclosure fell 1.89%, hitting $168,321 during the same period.
The average sales price for properties in foreclosure also fell approximately 27% below prime properties, the report said.
During the quarter, third-parties acquired 158,434 U.S. bank-owned homes and properties in some stage of the foreclosure process, down 16% from the revised fourth-quarter figures and 36% from year-ago levels.
"While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties sold to third parties," said James Saccacio, chief executive officer of RealtyTrac.
"While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery. At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure."
According to the report, a total of 107,143 real estate owned residential properties sold to third parties in the first quarter, down 11% from the previous quarter and down nearly 30% from the first quarter of 2010.
REO sales accounted for nearly 19% of all sales in the first quarter, up from 17% of all sales in the previous quarter and up from 18% of all sales in the first quarter of 2010. REOs sold for a relatively-unchanged average discount of 35%.
A total of 51,291 pre-foreclosure properties sold to third parties in the first quarter, down nearly 26% from the previous quarter and down 45% from the first quarter of 2010.
Pre-foreclosure sales accounted for nearly 9% of all sales, down from 10% of all sales in the fourth quarter of 2010 and down from 11% of all sales in the first quarter of 2010.
Short sales sold for an average discount of 9%, down from an average discount of 13% in the fourth quarter and an average discount of 14% in the first quarter of 2010.
URL to original article: http://www.housingwire.com/2011/05/26/realtytrac-reports-nearly-one-third-of-home-sales-are-distressed
For further information on Fresno Real Estate check: http://www.londonproperties.com
Wednesday, May 25, 2011
California's largest group of migrants heads to Lone Star State
Source: Orange County (Calif.) Register
The Orange County Register's Jon Lansner reports on U.S. Census domestic migration trends, including analysis of who's exited California for other state destinations: "Texas gained an estimated 61,270 residents in 2009 who said that they had lived in California a year earlier. Conversely, Census found 35,104 new Californians who lived in the Lone Star state in 2008. Thanks to my trusty spreadsheet, that means Texas netted population growth of 26,166 folks from California in 2009 — highest net migration among the 50 states (plus D.C. and Puerto Rico) away from the Golden State."
Texas gained an estimated 61,270 residents in 2009 who said that they had lived in California a year earlier.
Conversely, Census found 35,104 new Californians who lived in the Lone Star state in 2008.
Thanks to my trusty spreadsheet, that means Texas netted population growth of 26,166 folks from California in 2009 — highest net migration among the 50 states (plus D.C. and Puerto Rico) away from the Golden State.
Next, as a destination for California moving vans and the like, came Arizona with a net population gain of 12,881 from here. Third was Oregon that saw a 10,818 bump from California.
The Orange County Register's Jon Lansner reports on U.S. Census domestic migration trends, including analysis of who's exited California for other state destinations: "Texas gained an estimated 61,270 residents in 2009 who said that they had lived in California a year earlier. Conversely, Census found 35,104 new Californians who lived in the Lone Star state in 2008. Thanks to my trusty spreadsheet, that means Texas netted population growth of 26,166 folks from California in 2009 — highest net migration among the 50 states (plus D.C. and Puerto Rico) away from the Golden State."
One critical piece of the local real estate puzzle who is moving where. And in 2009, new Census data tells us, a Californian on the go was likely headed to Texas.
This study on state relocation trends within the United States says:
But not everybody’s leaving! California’s population benefited the most from Maryland.
- That state gained an estimated 6,639 residents in 2009 to California. But Census found 11,905 new Californians who previously lived in Maryland So, California netted population growth of 5,266 folks from Maryland in 2009 — best draw to the Golden State.
- Next came Michigan with a net population drop of 3,988 folks to California; then was Illinois with 3,587-person rush to California.
Overall, California in 2009 — by Census math — lost 546,589 residents in 2009 to other states. On the flip side, Census found 460,161 new Californians from other states. Thus, by our calculations, California suffered a net loss of 86,428 folks to other states in 2009. (Note: In total, California had 36.59 million residents in 2009 — up 171,000 due to net growth of foreign immigrants and births.)
Losing folks to other states is not good trend for real estate or the overall economy — but that 2009 loss is a relatively small slice of the population. For example, Census math also showed that 5.24 million Californians moved in 2009 — and chose to stay within the state. So, on a net migration basis, you could say that 98 percent of the Californians who moved — stayed home.
Census also reported, for 2010, some interesting broader trends about movers nationwide:
- 44 percent of those who moved did so for housing-related reasons, such as a need to live in a bigger/better residence.
- Other reasons for moving: family concerns (30.3 percent), such as a change in marital status, employment needs (16.4 percent) and other factors (9.5 percent).
- In 2010, 37.5 million people changed residences in the U.S. within the past year. That’s 12.5 percent of us — basically flat vs. 2009.
URL to original article: http://www.builderonline.com/builder-pulse/california-s-largest-group-of-migrants-heads-to-lone-star-state.aspx?cid=NWBD110525002
For further information on Fresno Real Estate, check: http://www.londonproperties.com
Since 95% of homes sold are resale, builders target "new vs. used"
Source: Calculated Risk
Calculated Risk's Bill McBride updates his "distressing gap"--the comparison of existing home sales to new-home sales--on a monthly basis. The tidal wave of distressed sales has thrown off the normal ratios, even during a downturn, and now, there are 15-plus resale homes sold for each new home. Increasingly, builders are setting their competitive sights not on one another so much as the pool of resales that are transacting that are not distressed. Meritage Homes, for instance, is pricing its high-energy efficiency new home product in the Phoenix market at the same square foot price as existing home comps in their respective submarkets. It takes a while to move the needle, but that's where they believe their incremental volume will come from.
• From the Richmond Fed: Manufacturing Activity Stalled in May; But Expectations Remain Upbeat
In May, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell sixteen points to −6 from April's reading of 10. Among the index's components, shipments decreased nineteen points to −13, new orders dropped twenty-five points to finish at −15
...
The pace of hiring held steady at District plants in May. The manufacturing employment index was unchanged at 14 and the average workweek measure flattened, losing seven points to 0. However, wage growth slowed sharply, falling sixteen points to 6.
This was the first regional manufacturing survey to show contraction - the others showed sharply slower growth in May.
Also the Richmond Fed service survey indicated slowing: Service Sector Activity Slowed in May; Hiring and Wages Remained Strong at Non-Retail Firms, and Leveled off at Retail Businesses (This is new and not closely followed).
URL to original article: http://www.builderonline.com/builder-pulse/since-95--of-homes-sold-are-resale--builders-target--new-vs--used-.aspx?cid=NWBD110525002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Calculated Risk's Bill McBride updates his "distressing gap"--the comparison of existing home sales to new-home sales--on a monthly basis. The tidal wave of distressed sales has thrown off the normal ratios, even during a downturn, and now, there are 15-plus resale homes sold for each new home. Increasingly, builders are setting their competitive sights not on one another so much as the pool of resales that are transacting that are not distressed. Meritage Homes, for instance, is pricing its high-energy efficiency new home product in the Phoenix market at the same square foot price as existing home comps in their respective submarkets. It takes a while to move the needle, but that's where they believe their incremental volume will come from.
• From the Richmond Fed: Manufacturing Activity Stalled in May; But Expectations Remain Upbeat
In May, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — fell sixteen points to −6 from April's reading of 10. Among the index's components, shipments decreased nineteen points to −13, new orders dropped twenty-five points to finish at −15
...
The pace of hiring held steady at District plants in May. The manufacturing employment index was unchanged at 14 and the average workweek measure flattened, losing seven points to 0. However, wage growth slowed sharply, falling sixteen points to 6.
This was the first regional manufacturing survey to show contraction - the others showed sharply slower growth in May.
Also the Richmond Fed service survey indicated slowing: Service Sector Activity Slowed in May; Hiring and Wages Remained Strong at Non-Retail Firms, and Leveled off at Retail Businesses (This is new and not closely followed).
URL to original article: http://www.builderonline.com/builder-pulse/since-95--of-homes-sold-are-resale--builders-target--new-vs--used-.aspx?cid=NWBD110525002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Tuesday, May 24, 2011
Mortgage defaults do not predict poor credit behavior: TransUnion
by KERRI PANCHUK
Troubled borrowers who default on their mortgages are less likely to develop long-term poor credit behavior, when compared to those who default on other kinds of loans, according to a new study from TransUnion.
Consumers who default on other bills and lines of credit, such as credit cards and auto loans, are more likely to miss payments in the future. The results are meant to be used by lenders to help determine which kind of lender is better apt to handle more credit.
The report found borrowers who had mortgage-only defaults on their records performed far better when they took out new loans when compared to borrowers who defaulted on multiple lines of credit.
For example, when assessing data on new auto loans, mortgage-only defaulters had a 5.8% 60-plus day delinquency rate, while those that had multiple delinquencies on credit cards and other loans had a 13.1% delinquency rate.
TransUnion said these statistics are fighting against the ongoing stereotype that mortgage-only defaulters benefited from the 'excess liquidity theory' in that a failure to pay their mortgage led to the borrowers having more money to cover other credit. The credit reporting agency said the reverse appears to be true, and the mortgage defaults have more to do with economic conditions, suggesting that these are borrowers with strong credit and potential to stay current on loans.
When it came to new credit cards, mortgage-only delinquent borrowers had an 11.4% default rate, while those with multiple delinquencies had a 27.1% 60-plus day default rate.
"This recession was unique in that certain consumers who defaulted on mortgages would otherwise be good credit risks," according to Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "It appears their actions were driven more by difficult economic circumstances than by any inherent inability to manage debt. Also, these results are well-aligned with our past research into the reversal of the payment hierarchy dynamic. Bottom line — consumers prioritize their payments based on product preference when they find themselves constrained financially. In that sense, loan defaults have always been strategic."
TransUnion reviewed data from a random sample of 5 million consumers and ended up weeding its sample down to 129,000 new accounts that had the data points needed to make comparisons between the two borrowing subsets.
Earlier this week, a new report sponsored by the National Bureau of Economic Research showed homeowners at least two-months delinquent on their mortgage may be more apt to strategically default if offered a mortgage modification despite the damage to their credit.
URL to original article: http://www.housingwire.com/2011/05/24/mortgage-defaults-do-not-predict-poor-credit-behavior-transunion
For further information on Fresno Real Estate check: http://www.londonproperties.com
Troubled borrowers who default on their mortgages are less likely to develop long-term poor credit behavior, when compared to those who default on other kinds of loans, according to a new study from TransUnion.
Consumers who default on other bills and lines of credit, such as credit cards and auto loans, are more likely to miss payments in the future. The results are meant to be used by lenders to help determine which kind of lender is better apt to handle more credit.
The report found borrowers who had mortgage-only defaults on their records performed far better when they took out new loans when compared to borrowers who defaulted on multiple lines of credit.
For example, when assessing data on new auto loans, mortgage-only defaulters had a 5.8% 60-plus day delinquency rate, while those that had multiple delinquencies on credit cards and other loans had a 13.1% delinquency rate.
TransUnion said these statistics are fighting against the ongoing stereotype that mortgage-only defaulters benefited from the 'excess liquidity theory' in that a failure to pay their mortgage led to the borrowers having more money to cover other credit. The credit reporting agency said the reverse appears to be true, and the mortgage defaults have more to do with economic conditions, suggesting that these are borrowers with strong credit and potential to stay current on loans.
When it came to new credit cards, mortgage-only delinquent borrowers had an 11.4% default rate, while those with multiple delinquencies had a 27.1% 60-plus day default rate.
"This recession was unique in that certain consumers who defaulted on mortgages would otherwise be good credit risks," according to Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "It appears their actions were driven more by difficult economic circumstances than by any inherent inability to manage debt. Also, these results are well-aligned with our past research into the reversal of the payment hierarchy dynamic. Bottom line — consumers prioritize their payments based on product preference when they find themselves constrained financially. In that sense, loan defaults have always been strategic."
TransUnion reviewed data from a random sample of 5 million consumers and ended up weeding its sample down to 129,000 new accounts that had the data points needed to make comparisons between the two borrowing subsets.
Earlier this week, a new report sponsored by the National Bureau of Economic Research showed homeowners at least two-months delinquent on their mortgage may be more apt to strategically default if offered a mortgage modification despite the damage to their credit.
URL to original article: http://www.housingwire.com/2011/05/24/mortgage-defaults-do-not-predict-poor-credit-behavior-transunion
For further information on Fresno Real Estate check: http://www.londonproperties.com
Monday, May 23, 2011
All real estate is local ... so is the foreclosure mess
Source: Wall Street Journal
The Wall Street Journal's Nick Timiraos writes that in states where the court system must play a role in the resolution of failed residential loans, the process of resolution is full of snags and slows-downs. Timiraos writes, "Some reports have shown that borrowers in judicial states are more likely to get help from lenders and may face slightly lower foreclosure rates, in part because of the higher costs to foreclose. At the same time, housing markets in non-judicial states may recover sooner as they more quickly digest the supply of bank-owned properties."
URL to original article: http://www.builderonline.com/builder-pulse/all-real-estate-is-local-----so-is-the-foreclosure-mess.aspx?cid=NWBD110523002
For further information on Fresno Real Estate check: http://www.londonproperties.com
The Wall Street Journal's Nick Timiraos writes that in states where the court system must play a role in the resolution of failed residential loans, the process of resolution is full of snags and slows-downs. Timiraos writes, "Some reports have shown that borrowers in judicial states are more likely to get help from lenders and may face slightly lower foreclosure rates, in part because of the higher costs to foreclose. At the same time, housing markets in non-judicial states may recover sooner as they more quickly digest the supply of bank-owned properties."
Thursday’s report on mortgage delinquencies from the Mortgage Bankers Association offered a mixed bag. The good news is that the share of problem loans in the system is down from one year ago.
The bad? Mortgage delinquencies, after adjusting for seasonal factors, didn’t decline much in the first quarter from the previous quarter, and foreclosures remain at very high levels.
But increasingly, the national numbers don’t paint as useful a picture about what’s happening on the foreclosure front, a point that Jay Brinkmann, the trade group’s chief economist, made on Thursday. National figures are “dominated by some problem areas that are both large and are going to have a much longer timeline to work out,” he said.
Brinkmann is referring to states like Florida, New Jersey and New York, which require banks to process foreclosures through courts. Banks, their lawyers, and courts have been overwhelmed by the caseload. The robo-signing scandal has added a new layer of scrutiny to banks’ paperwork, further extending timelines.
In so-called non-judicial states, foreclosures typically don’t take as long, and as more delinquent loans exit the pipeline through foreclosure, the top-line foreclosure statistics for these states are looking better.
Here’s an example: Take the top six states with the highest volumes of seriously delinquent loans (those that are 90 days or more past due or in foreclosure). The share of loans 90 days or more past due is falling in all of them.
- Source: Mortgage Bankers Association
But in three of them—judicial states of Florida, New Jersey and Illinois—the share of loans in foreclosure is rising.
In the non-judicial states of California and Arizona, foreclosures are falling. Nevada, also a non-judicial state, has seen less of a decrease in foreclosures, though it also has the worst delinquency problem in the country.
Some reports have shown that borrowers in judicial states are more likely to get help from lenders and may face slightly lower foreclosure rates, in part because of the higher costs to foreclose. At the same time, housing markets in non-judicial states may recover sooner as they more quickly digest the supply of bank-owned properties.
URL to original article: http://www.builderonline.com/builder-pulse/all-real-estate-is-local-----so-is-the-foreclosure-mess.aspx?cid=NWBD110523002
For further information on Fresno Real Estate check: http://www.londonproperties.com
As lenders hold homes in foreclosure, sales are hurt
Source: The New York Times
The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.
EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.
Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.
“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”
Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.
Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.
Before the housing implosion, the inflow and outflow figures were typically one-to-one.
The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.
“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”
A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.
But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.
Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.
“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”
The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.
“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”
The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.
Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.
“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”
Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.
Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.
The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.
“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”
URL to original article: http://www.housingwire.com/2011/05/23/as-lenders-hold-homes-in-foreclosure-sales-are-hurt
For further information on Fresno Real Estate check: http://www.londonproperties.com
The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.
EL MIRAGE, Ariz. — The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.
All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.
Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.
“It remains a heavy weight on the banking system,” said Mark Zandi, the chief economist of Moody’s Analytics. “Housing prices are falling, and they are going to fall some more.”
Over all, economists project that it would take about three years for lenders to sell their backlog of foreclosed homes. As a result, home values nationally could fall 5 percent by the end of 2011, according to Moody’s, and rise only modestly over the following year. Regions that were hardest hit by the housing collapse and recession could take even longer to recover — dealing yet another blow to a still-struggling economy.
Although sales have picked up a bit in the last few weeks, banks and other lenders remain overwhelmed by the wave of foreclosures. In Atlanta, lenders are repossessing eight homes for each distressed home they sell, according to March data from RealtyTrac. In Minneapolis, they are bringing in at least six foreclosed homes for each they sell, and in once-hot markets like Chicago and Miami, the ratio still hovers close to two to one.
Before the housing implosion, the inflow and outflow figures were typically one-to-one.
The reasons for the backlog include inadequate staffs and delays imposed by the lenders because of investigations into foreclosure practices. The pileup could lead to $40 billion in additional losses for banks and other lenders as they sell houses at steep discounts over the next two years, according to Trepp, a real estate research firm.
“These shops are under siege; it’s just a tsunami of stuff coming in,” said Taj Bindra, who oversaw Washington Mutual’s servicing unit from 2004 to 2006 and now advises financial institutions on risk management. “Lenders have a strong incentive to clear out inventory in a controlled and timely manner, but if you had problems on the front end of the foreclosure process, it should be no surprise you are having problems on the back end.”
A drive through the sprawling subdivisions outside Phoenix shows the ravages of the real estate collapse. Here in this working-class neighborhood of El Mirage, northwest of Phoenix, rows of small stucco homes sprouted up during the boom. Now block after block is pockmarked by properties with overgrown shrubs, weeds and foreclosure notices tacked to the doors. About 116 lender-owned homes are on the market or under contract in El Mirage, according to local real estate listings.
But that’s just a small fraction of what is to come. An additional 491 houses are either sitting in the lenders’ inventory or are in the foreclosure process. On average, homes in El Mirage sell for $65,300, down 75 percent from the height of the boom in July 2006, according to the Cromford Report, a Phoenix-area real estate data provider. Real estate agents and market analysts say those ultra-cheap prices have recently started attracting first-time buyers as well as investors looking for several properties at once.
Lenders have also been more willing to let distressed borrowers sidestep foreclosure by selling homes for a loss. That has accelerated the pace of sales in the area and even caused prices to slowly rise in the last two months, but realty agents worry about all the distressed homes that are coming down the pike.
“My biggest fear right now is that the supply has been artificially restricted,” said Jayson Meyerovitz, a local broker. “They can’t just sit there forever. If so many houses hit the market, what is going to happen then?”
The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale.
“If we are out there undercutting prices, we are contributing to the downward spiral in market values,” said Eric Will, who oversees distressed home sales for Freddie Mac. “We want to make sure we are helping stabilize communities.”
The biggest reason for the backlog is that it takes longer to sell foreclosed homes, currently an average of 176 days — and that’s after the 400 days it takes for lenders to foreclose. After drawing government scrutiny over improper foreclosures practices last fall, many big lenders have slowed their operations in order to check the paperwork, and in two dozen or so states they halted them for months.
Conscious of their image, many lenders have recently started telling real estate agents to be more lenient to renters who happen to live in a foreclosed home and give them extra time to move out before changing the locks.
“Wells Fargo has sent me back knocking on doors two or three times, offering to give renters money if they cooperate with us,” said Claude A. Worrell, a longtime real estate agent from Minneapolis who specializes in selling bank-owned property. “It’s a lot different than it used to be.”
Realty agents and buyers say the lenders are simply overwhelmed. Just as lenders were ill-prepared to handle the flood of foreclosures, they do not have the staff and infrastructure to manage and sell this much property.
Most of the major lenders outsourced almost every part of the process, be it sales or repairs. Some agents complain that lender-owned home listings are routinely out of date, that properties are overpriced by as much as 10 percent, and that lenders take days or longer to accept an offer.
The silver lining for home lenders, however, is that the number of new foreclosures and recent borrowers falling behind on their payments by three months or longer is shrinking.
“If they are able to manage through the next 12 to 18 months,” said Mr. Zandi, the Moody’s Analytics economist, “they will be in really good shape.”
URL to original article: http://www.housingwire.com/2011/05/23/as-lenders-hold-homes-in-foreclosure-sales-are-hurt
For further information on Fresno Real Estate check: http://www.londonproperties.com
Friday, May 20, 2011
Sustained recovery in housing remains elusive: Fannie Mae
by KERRI PANCHUK
The economy is expected to pick up speed after suffering through a volatile winter period, but a sustained recovery in the housing sector remains elusive as distressed home sales continue to dominant a large part of the sector's activity, Fannie Mae said in its May 2011 Economic Outlook report.
Single-family homebuilding activity was weak in the first quarter, while housing starts and new home sales remained flat at already depressed levels, suggesting a state of optimism in the housing sector of the economy is difficult to maintain.
The economy slowed dramatically in the first quarter, dipping to a growth rate of 1.8% from 3.1% in the final quarter of 2010. Despite that drop, Fannie Mae's long-term economic forecasts predict more than 3% growth in the next few years.
Fannie's Chief Economist Doug Duncan said despite low prices, low interest rates and improving job numbers, consumer attitudes have yet to rebound in a way that turns the tide.
"In spite of the positives surrounding the housing market, we see that consumers are still hesitant to take on a large financial obligation. Nevertheless, we do forecast some improvement in home sales over the course of 2011 compared to 2010," Duncan said.
URL to original article: http://www.housingwire.com/2011/05/20/sustained-recovery-in-housing-remains-elusive-fannie-mae
For further information on Fresno Real Estate check: http://www.londonproperties.com
The economy is expected to pick up speed after suffering through a volatile winter period, but a sustained recovery in the housing sector remains elusive as distressed home sales continue to dominant a large part of the sector's activity, Fannie Mae said in its May 2011 Economic Outlook report.
Single-family homebuilding activity was weak in the first quarter, while housing starts and new home sales remained flat at already depressed levels, suggesting a state of optimism in the housing sector of the economy is difficult to maintain.
The economy slowed dramatically in the first quarter, dipping to a growth rate of 1.8% from 3.1% in the final quarter of 2010. Despite that drop, Fannie Mae's long-term economic forecasts predict more than 3% growth in the next few years.
Fannie's Chief Economist Doug Duncan said despite low prices, low interest rates and improving job numbers, consumer attitudes have yet to rebound in a way that turns the tide.
"In spite of the positives surrounding the housing market, we see that consumers are still hesitant to take on a large financial obligation. Nevertheless, we do forecast some improvement in home sales over the course of 2011 compared to 2010," Duncan said.
URL to original article: http://www.housingwire.com/2011/05/20/sustained-recovery-in-housing-remains-elusive-fannie-mae
For further information on Fresno Real Estate check: http://www.londonproperties.com
Is the Flight From Homeownership Cyclical or Structural?
By:Jerry Ascierto
Multifamily Executive's Jerry Ascierto offers one of the better analyses of the receding tide of American homeownership in the past several years. Ascierto writes that the ownership to renting equation may come down to a question of aspiration versus capacity: "The desirability of owning a home, the behavioral aspect, is likely cyclical. But the good news for apartment owners is that the ability to finance a home purchase will shift in a more permanent way. The housing finance landscape is on the cusp of a structural change. First, the implicit government guarantee that Fannie Mae and Freddie Mac enjoyed allowed them to offer lower mortgage interest rates than the competition. As that guarantee is reshaped, interest rates will likely rise."
The national homeownership rate fell to 66.4 percent at the end of the first quarter—the lowest figure in 13 years—down from 67.2 percent a year earlier.
And that flight from ownership has had a big effect on the multifamily industry’s improving fundamentals. Unlike in previous upturns, the apartment sector’s recovery isn’t being driven by robust job creation or a rapidly improving economy. Where there has been new household formation, it’s been lopsided in terms of how much is directed toward rental housing.
Many in the apartment industry are now wondering if that shift away from ownership is structural (permanent) or cyclical (temporary)?
A Behavioral Shift?
One popular belief—echoed throughout countless multifamily conferences—is that the shift is largely behavioral, that the bloom is off of the rose of homeownership for many members of Generation Y. But this is likely a mistaken assumption.
“There’s no evidence at this point to support the definitive thesis that young American households are permanently biased away from homeownership,” says Sam Chandan, global chief economist for New York-based market research firm Real Capital Analytics. “History suggests that that bias is largely cyclical.”
The desirability of homeownership changes as the housing market changes, according to Chandan. It’s a function of people’s expectations about the value proposition of owning a home. And since home values aren’t expected to rise in the near term, the bias toward renting is clear.
Indeed, ownership is no longer viewed as a can’t-lose investment strategy. “That’s different than what we’ve previously seen in most coastal markets,” says Greg Willet, vice president of research and analysis at Carrollton, Texas-based MPF research. “But it’s actually not anything new for large parts of the country, like the Midwest. There, the premium to buy versus rent traditionally has been fairly small, and home appreciation traditionally has been pretty modest.”
One reason that home sales have been slow to bounce back is purely demographic, Willet suggests. “We simply don’t have very many people at the typical age for first-time purchase right now,” Willet says. “Those in their early- to mid-30s are at the tail-end of the comparatively small Gen X group.”
But once the oldest of the much bigger Gen Y group starts hitting their early to mid-30s in a few years, it wouldn’t be surprising for home sales to rise again. It may take longer since more people are marrying and having children later in life. And many budding careers of Gen Yers have been stalled by the economy, so it may take them longer to save up for a downpayment. “But it still seems like a pretty reasonable assumption that Gen Y households at some point will turn into their parents, just like every previous generation has,” Willet says.
A recent poll on Gen Y’s attitudes toward housing, conducted for the Urban Land Institute, sheds light on this issue. The survey polled 1,241 people aged between 15 and 32 and found that 35 percent already owned a home, and of those that didn’t, 90 percent envision becoming a homeowner.
A Structural Shift (in Finance)
The desirability of owning a home, the behavioral aspect, is likely cyclical. But the good news for apartment owners is that the ability to finance a home purchase will shift in a more permanent way.
The housing finance landscape is on the cusp of a structural change. First, the implicit government guarantee that Fannie Mae and Freddie Mac enjoyed allowed them to offer lower mortgage interest rates than the competition. As that guarantee is reshaped, interest rates will likely rise.
Downpayment expectations will also change—the days of putting little or no money down to buy a house are likely over. Another consideration is the mortgage interest deduction—there’s a lot of political momentum now to phase it out in some way, most likely for those in higher tax brackets.
“It’s not that young American families don’t anticipate being homeowners at some point; they just think of it being farther into the future,” Chandan says. “The fundamental structural shift in housing finance necessitates that.”
In other words, the spirit is willing, but the financing prospects are weak.
In the long-term, absent those mortgage subsidies, a sustainable homeownership rate is probably between 62 percent and 64 percent, according to Chandan. Yet, over the next couple of years, the homeownership rate may actually rise. The government will continue to support the housing market in the next year or two to help the broader economic recovery.
“It’s perfectly conceivable that we could see homeownership rates tick up a little bit as employment growth improves,” Chandan says. “But once you account for the ultimate winding down of policy interventions to support stability in the housing market, that long-term homeownership rate is lower than what we see today.”
In some ways, the pace of job creation this year is ideal for multifamily owners—there’s just enough, about 200,000 jobs a month, to start leveling out the economy. But there’s not enough job growth to send people flocking back into the for-sale pool.
“I think it’s actually better for the apartment sector if we have modest growth, rather than it taking off,” Willet says. “If employment growth got meaningfully stronger than it is, that’s going to help fuel a comeback in the single family market. And a lot of progress we’ve made thus far has been tied to people not leaving rentals to make purchases."
URL to original article: http://multifamilyexecutive.com/housing-trends/is-the-flight-from-homeownership-cyclical-or-structural.aspx?cid=NWBD110520002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Multifamily Executive's Jerry Ascierto offers one of the better analyses of the receding tide of American homeownership in the past several years. Ascierto writes that the ownership to renting equation may come down to a question of aspiration versus capacity: "The desirability of owning a home, the behavioral aspect, is likely cyclical. But the good news for apartment owners is that the ability to finance a home purchase will shift in a more permanent way. The housing finance landscape is on the cusp of a structural change. First, the implicit government guarantee that Fannie Mae and Freddie Mac enjoyed allowed them to offer lower mortgage interest rates than the competition. As that guarantee is reshaped, interest rates will likely rise."
The national homeownership rate fell to 66.4 percent at the end of the first quarter—the lowest figure in 13 years—down from 67.2 percent a year earlier.
And that flight from ownership has had a big effect on the multifamily industry’s improving fundamentals. Unlike in previous upturns, the apartment sector’s recovery isn’t being driven by robust job creation or a rapidly improving economy. Where there has been new household formation, it’s been lopsided in terms of how much is directed toward rental housing.
Many in the apartment industry are now wondering if that shift away from ownership is structural (permanent) or cyclical (temporary)?
A Behavioral Shift?
One popular belief—echoed throughout countless multifamily conferences—is that the shift is largely behavioral, that the bloom is off of the rose of homeownership for many members of Generation Y. But this is likely a mistaken assumption.
“There’s no evidence at this point to support the definitive thesis that young American households are permanently biased away from homeownership,” says Sam Chandan, global chief economist for New York-based market research firm Real Capital Analytics. “History suggests that that bias is largely cyclical.”
The desirability of homeownership changes as the housing market changes, according to Chandan. It’s a function of people’s expectations about the value proposition of owning a home. And since home values aren’t expected to rise in the near term, the bias toward renting is clear.
Indeed, ownership is no longer viewed as a can’t-lose investment strategy. “That’s different than what we’ve previously seen in most coastal markets,” says Greg Willet, vice president of research and analysis at Carrollton, Texas-based MPF research. “But it’s actually not anything new for large parts of the country, like the Midwest. There, the premium to buy versus rent traditionally has been fairly small, and home appreciation traditionally has been pretty modest.”
One reason that home sales have been slow to bounce back is purely demographic, Willet suggests. “We simply don’t have very many people at the typical age for first-time purchase right now,” Willet says. “Those in their early- to mid-30s are at the tail-end of the comparatively small Gen X group.”
But once the oldest of the much bigger Gen Y group starts hitting their early to mid-30s in a few years, it wouldn’t be surprising for home sales to rise again. It may take longer since more people are marrying and having children later in life. And many budding careers of Gen Yers have been stalled by the economy, so it may take them longer to save up for a downpayment. “But it still seems like a pretty reasonable assumption that Gen Y households at some point will turn into their parents, just like every previous generation has,” Willet says.
A recent poll on Gen Y’s attitudes toward housing, conducted for the Urban Land Institute, sheds light on this issue. The survey polled 1,241 people aged between 15 and 32 and found that 35 percent already owned a home, and of those that didn’t, 90 percent envision becoming a homeowner.
A Structural Shift (in Finance)
The desirability of owning a home, the behavioral aspect, is likely cyclical. But the good news for apartment owners is that the ability to finance a home purchase will shift in a more permanent way.
The housing finance landscape is on the cusp of a structural change. First, the implicit government guarantee that Fannie Mae and Freddie Mac enjoyed allowed them to offer lower mortgage interest rates than the competition. As that guarantee is reshaped, interest rates will likely rise.
Downpayment expectations will also change—the days of putting little or no money down to buy a house are likely over. Another consideration is the mortgage interest deduction—there’s a lot of political momentum now to phase it out in some way, most likely for those in higher tax brackets.
“It’s not that young American families don’t anticipate being homeowners at some point; they just think of it being farther into the future,” Chandan says. “The fundamental structural shift in housing finance necessitates that.”
In other words, the spirit is willing, but the financing prospects are weak.
In the long-term, absent those mortgage subsidies, a sustainable homeownership rate is probably between 62 percent and 64 percent, according to Chandan. Yet, over the next couple of years, the homeownership rate may actually rise. The government will continue to support the housing market in the next year or two to help the broader economic recovery.
“It’s perfectly conceivable that we could see homeownership rates tick up a little bit as employment growth improves,” Chandan says. “But once you account for the ultimate winding down of policy interventions to support stability in the housing market, that long-term homeownership rate is lower than what we see today.”
In some ways, the pace of job creation this year is ideal for multifamily owners—there’s just enough, about 200,000 jobs a month, to start leveling out the economy. But there’s not enough job growth to send people flocking back into the for-sale pool.
“I think it’s actually better for the apartment sector if we have modest growth, rather than it taking off,” Willet says. “If employment growth got meaningfully stronger than it is, that’s going to help fuel a comeback in the single family market. And a lot of progress we’ve made thus far has been tied to people not leaving rentals to make purchases."
URL to original article: http://multifamilyexecutive.com/housing-trends/is-the-flight-from-homeownership-cyclical-or-structural.aspx?cid=NWBD110520002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Thursday, May 19, 2011
First-time homebuyers are too few in number to absorb inventory overhang
by CHRISTINE RICCIARDI
URL to original article: http://www.housingwire.com/2011/05/19/first-time-homebuyers-are-too-few-in-number-to-absorb-inventory-overhang
For further information on Fresno Real Estate check: http://www.londonproperties.com
The number of first-time homebuyers coming to market this spring is not enough to absorb the amount of housing inventory on the market.
The percentage of first-time homebuyers searching for a property fell to 35.7% in April, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. First-time homebuyers comprised 43.4% of the demand market in April 2010, when the homebuyer tax credit was in place.
Research Director for Campbell Surveys Thomas Popik said while there are still a "normal" number of first-time homebuyers searching for a place to live, the number of available homes is causing a demand gap.
"The normal proportion of first-time homebuyers is about one-third of the market and that’s where we are now," said Thomas Popik, research director for Campbell Surveys. "Unfortunately, that’s not enough demand to absorb the excess supply from homeowners defaulting on their mortgages."
First-time homebuyers absorb housing inventory, as opposed to current homeowners who trade in their property for a another one, thereby sustaining the supply level. According to the survey, the gap between first-time homebuyers and distressed property supply climbed to 12% in April, compared to just 3.5% in the year prior.
And, the housing inventory is at a five-month high, according to a report from the Federal Reserve Bank of Cleveland. The report also laid out data that found sales are down 12.6% compared to 2010 (see chart below).
"As a result, we expect existing home sales for the spring/summer buying season to be significantly below last year and that will put continued downward pressure on home prices," Poptik said.
This circumstantial "deficit" of first-time homebuyers is putting a dependence on investors to buy up distressed properties. Investors accounted for 23% of sale transaction activity in April, the Campbell/IMF survey found. This figure is up from 18% one year earlier.
Investors are also buying the properties first-time homebuyers are not, as 45% of foreclosed properties were dubbed damaged or inhabitable in April's survey. The Campbell/IMF Distressed Property Index, which measures the health of the U.S. housing market, fell slightly to 47.7% during the month from 48.6% in March.
URL to original article: http://www.housingwire.com/2011/05/19/first-time-homebuyers-are-too-few-in-number-to-absorb-inventory-overhang
For further information on Fresno Real Estate check: http://www.londonproperties.com
More borrowers default on second liens in April
by KERRI PANCHUK
While default rates are down mostly so far this year, borrowers with second mortgages went against trend with their default rate rising in April for the first time in five months, according to data from Standard & Poor's and Experian.
The firms produce the S&P/Experian Consumer Credit Default Indices, which showed the default rate for second mortgages grew to 1.51% in April from 1.42% a month earlier.
At the same time, first mortgages experienced a decline in defaults, with that segment's default rate dropping to 2.16% from 2.33% between March and April.
"We had seen default rates fall across all major categories and most major cities during the prior six months, but given April's data that might be coming to end. The real question is whether April was temporary or are household balance sheets worsening?" said David Blitzer, managing director and chairman of the index committee for S&P Indices.
"In addition, there are some significant differences across credit types and MSAs. Bank card default rates went up in April, after having fallen each of the past 11 months; and the data indicate that the rate of default on credit cards is still 5.9%, more than twice any of the other loan classes," he said.
URL to original article: http://www.housingwire.com/2011/05/19/more-borrowers-default-on-second-liens-in-april
For further information on Fresno Real Estate check: http://www.londonproperties.com
While default rates are down mostly so far this year, borrowers with second mortgages went against trend with their default rate rising in April for the first time in five months, according to data from Standard & Poor's and Experian.
The firms produce the S&P/Experian Consumer Credit Default Indices, which showed the default rate for second mortgages grew to 1.51% in April from 1.42% a month earlier.
At the same time, first mortgages experienced a decline in defaults, with that segment's default rate dropping to 2.16% from 2.33% between March and April.
"We had seen default rates fall across all major categories and most major cities during the prior six months, but given April's data that might be coming to end. The real question is whether April was temporary or are household balance sheets worsening?" said David Blitzer, managing director and chairman of the index committee for S&P Indices.
"In addition, there are some significant differences across credit types and MSAs. Bank card default rates went up in April, after having fallen each of the past 11 months; and the data indicate that the rate of default on credit cards is still 5.9%, more than twice any of the other loan classes," he said.
URL to original article: http://www.housingwire.com/2011/05/19/more-borrowers-default-on-second-liens-in-april
For further information on Fresno Real Estate check: http://www.londonproperties.com
Wednesday, May 18, 2011
Man pleads guilty to scheme that cheated mortgage lenders out of more than $10M
Source: The Star-Ledger
A Piscataway man who owned and ran foreclosure-rescue companies pleaded guilty today to his role in a mortgage-fraud scheme that cheated mortgage lenders out of more than $10 million, federal authorities said.
Ronald Harris Jr., 41, pleaded guilty before U.S. Magistrate Judge Patty Schwartz in Newark to a one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering, said U.S. Attorney Paul J. Fishman.
According to documents filed in the case and statements made during the hearing, Harris admitted he duped mortgage lenders into believing they were lending money to credit-worthy people when, in fact, those people were straw-man" buyers.
Harris owned and operated Harris Capital and Skyline Capital Group, both businesses that operated out of Newark — and later Maplewood — and that purported to be foreclosure-rescue companies, authorities said.
Harris admitted that he and others — including Harris Capital employee Sterling Bruce, 37, of Newark — fraudulently promised to help homeowners avoid foreclosure and repair their bad credit by allowing their homes to be put in the names of "straw" buyers, who would help them obtain more favorable mortgages and improve their credit ratings, authorities said. The homeowners were told that titles to their homes would be returned to them, authorities said. Meanwhile, authorities said, the straw buyers were told they’d be helping someone save a home and would make money by selling the property back to the original owner after a year.
Authorities said Harris, Bruce, and Pia Perkinson, 39, of Parlin – who was a mortgage loan officer at different mortgage loan companies – then had loan applications sent in the straw buyers’ names to mortgage lenders.
Those involved in the scheme then submitted loan applications that misstated information about the straw buyers, including information about their employment, income and assets. In fact, many of the straw buyers’ loan applications falsely said they worked for one of Harris’ companies, making a substantial salary.
Before closing the fraudulent transactions, Harris and Bruce regularly filed fraudulent liens for tens of thousands of dollars on the properties, authorities said. At the closings, the liens would be paid off with money gotten from the fraudulently obtained loans and Harris and Bruce would make money off the deal, authorities said.
Harris and his co-conspirators caused lenders to fund dozens of fraudulent loans that totaled more than $10 million, authorities said, with Harris getting about $1,145,993.
Bruce and Perkinson already pleaded guilty to their roles in the scheme.
Harris faces up to of 30 years in prison and a fine of up to $1 million on the wire fraud conspiracy count, and up to 20 years in prison and a fine of up to $250,000 on the money laundering conspiracy count. Sentencing is scheduled for Sept.13.
URL to original article: http://www.housingwire.com/2011/05/18/man-pleads-guilty-to-scheme-that-cheated-mortgage-lenders-out-of-more-than-10m
For further information on Fresno Real Estate check: http://www.londonproperties.com
A Piscataway man who owned and ran foreclosure-rescue companies pleaded guilty today to his role in a mortgage-fraud scheme that cheated mortgage lenders out of more than $10 million, federal authorities said.
Ronald Harris Jr., 41, pleaded guilty before U.S. Magistrate Judge Patty Schwartz in Newark to a one count each of conspiracy to commit wire fraud and conspiracy to commit money laundering, said U.S. Attorney Paul J. Fishman.
According to documents filed in the case and statements made during the hearing, Harris admitted he duped mortgage lenders into believing they were lending money to credit-worthy people when, in fact, those people were straw-man" buyers.
Harris owned and operated Harris Capital and Skyline Capital Group, both businesses that operated out of Newark — and later Maplewood — and that purported to be foreclosure-rescue companies, authorities said.
Harris admitted that he and others — including Harris Capital employee Sterling Bruce, 37, of Newark — fraudulently promised to help homeowners avoid foreclosure and repair their bad credit by allowing their homes to be put in the names of "straw" buyers, who would help them obtain more favorable mortgages and improve their credit ratings, authorities said. The homeowners were told that titles to their homes would be returned to them, authorities said. Meanwhile, authorities said, the straw buyers were told they’d be helping someone save a home and would make money by selling the property back to the original owner after a year.
Authorities said Harris, Bruce, and Pia Perkinson, 39, of Parlin – who was a mortgage loan officer at different mortgage loan companies – then had loan applications sent in the straw buyers’ names to mortgage lenders.
Those involved in the scheme then submitted loan applications that misstated information about the straw buyers, including information about their employment, income and assets. In fact, many of the straw buyers’ loan applications falsely said they worked for one of Harris’ companies, making a substantial salary.
Before closing the fraudulent transactions, Harris and Bruce regularly filed fraudulent liens for tens of thousands of dollars on the properties, authorities said. At the closings, the liens would be paid off with money gotten from the fraudulently obtained loans and Harris and Bruce would make money off the deal, authorities said.
Harris and his co-conspirators caused lenders to fund dozens of fraudulent loans that totaled more than $10 million, authorities said, with Harris getting about $1,145,993.
Bruce and Perkinson already pleaded guilty to their roles in the scheme.
Harris faces up to of 30 years in prison and a fine of up to $1 million on the wire fraud conspiracy count, and up to 20 years in prison and a fine of up to $250,000 on the money laundering conspiracy count. Sentencing is scheduled for Sept.13.
URL to original article: http://www.housingwire.com/2011/05/18/man-pleads-guilty-to-scheme-that-cheated-mortgage-lenders-out-of-more-than-10m
For further information on Fresno Real Estate check: http://www.londonproperties.com
Missed payments on mortgages jump to 6.4 million in April
by JON PRIOR
Mortgages 30 or more days delinquent or in foreclosure totaled 6.38 million in April, a 2.3% increase from the previous month, according to Lender Processing Services (LPS: 28.61 +0.49%).
The LPS "first look" monthly mortgage performance report showed a sudden increase in troubled loans in April after an 11% monthly drop in March. However, delinquencies are still 16.3% below levels seen one year ago. Overall, 7.97% of all loans in the LPS database are 30 or more days delinquent.
Of the 6.38 million properties in 30-day delinquency or worse, 4.2 million are not in foreclosure. There are also 1.9 million loans 90 days or more delinquent but not in foreclosure.
These mortgages are the exact ones making up the shadow inventory of foreclosures that are keeping downward pressure on home prices and stalling out a recovery. According to another data provider, CoreLogic (CLGX: 18.33 +0.16%), the shadow inventory has declined slightly over the past year.
CoreLogic defines the shadow inventory as mortgages in at least 90-day delinquency and currently transitioning from foreclosure to REO. This supply of properties currently not on MLS systems but winding through the foreclosure process fell to 1.8 million in January 2011, down from 2 million the year before.
But this inventory will continue to see incoming loans for some time.
"In addition to the current shadow supply, there are nearly 2 million nondelinquent or current negative equity loans that are more than 50% upside down that will likely become shadow supply in the near future," CoreLogic said.
URL to original article: http://www.housingwire.com/2011/05/17/missed-payments-on-mortgages-jump-to-6-4-million-in-april
For further information on Fresno Real Estate check: http://www.londonproperties.com
Mortgages 30 or more days delinquent or in foreclosure totaled 6.38 million in April, a 2.3% increase from the previous month, according to Lender Processing Services (LPS: 28.61 +0.49%).
The LPS "first look" monthly mortgage performance report showed a sudden increase in troubled loans in April after an 11% monthly drop in March. However, delinquencies are still 16.3% below levels seen one year ago. Overall, 7.97% of all loans in the LPS database are 30 or more days delinquent.
Of the 6.38 million properties in 30-day delinquency or worse, 4.2 million are not in foreclosure. There are also 1.9 million loans 90 days or more delinquent but not in foreclosure.
These mortgages are the exact ones making up the shadow inventory of foreclosures that are keeping downward pressure on home prices and stalling out a recovery. According to another data provider, CoreLogic (CLGX: 18.33 +0.16%), the shadow inventory has declined slightly over the past year.
CoreLogic defines the shadow inventory as mortgages in at least 90-day delinquency and currently transitioning from foreclosure to REO. This supply of properties currently not on MLS systems but winding through the foreclosure process fell to 1.8 million in January 2011, down from 2 million the year before.
But this inventory will continue to see incoming loans for some time.
"In addition to the current shadow supply, there are nearly 2 million nondelinquent or current negative equity loans that are more than 50% upside down that will likely become shadow supply in the near future," CoreLogic said.
URL to original article: http://www.housingwire.com/2011/05/17/missed-payments-on-mortgages-jump-to-6-4-million-in-april
For further information on Fresno Real Estate check: http://www.londonproperties.com
Low-income households struggle to access credit
by JON PRIOR
Low-income households continue to rely on credit to meet their obligations, but access to that credit waned in the first quarter, according to a study from the Federal Reserve Bank of Philadelphia.
The Philly Fed surveyed 82 financial service providers in its district on the financial well-being of their clients. For households with low income, 59% of the respondents said access to credit slipped from the previous quarter. Almost half of respondents said funding for these services dropped in the quarter with more drops to come.
"Respondents reported that the financial well-being of [low-income] households continued to decline," said Brian Tyson, research analyst at the Philly Fed. "Organizations providing services to these households have seen significant increases in demand, while simultaneously facing decreases in their funding and capacity to meet this demand."
Of the respondents, 76% said demand for services increased in the first quarter, and 68% said this need will continue to grow over the next three months.
Roughly one-third of those surveyed said the availability of affordable housing decreased.
Over the coming months, access to credit is not expected to change. More than half of the service providers surveyed said there would probably be no change into their client's access to credit over the next three months, according to the report.
Other regional Federal Reserve banks are attempting to address the problem. The Federal Reserve Bank of Cleveland will hold a summit on the blight of low-income families June 9-10.
"Income inequality in this country is at an all–time high, and is among the highest in the developed world," the Cleveland Fed said. "In this environment, it is critical to revisit education and asset building policies, through the lenses of research and practice, that will support stability and upward mobility in poor communities."
URL to original article: http://www.housingwire.com/2011/05/17/low-income-households-struggle-to-access-credit
For further information on Fresno Real Estate check: http://www.londonproperties.com
Low-income households continue to rely on credit to meet their obligations, but access to that credit waned in the first quarter, according to a study from the Federal Reserve Bank of Philadelphia.
The Philly Fed surveyed 82 financial service providers in its district on the financial well-being of their clients. For households with low income, 59% of the respondents said access to credit slipped from the previous quarter. Almost half of respondents said funding for these services dropped in the quarter with more drops to come.
"Respondents reported that the financial well-being of [low-income] households continued to decline," said Brian Tyson, research analyst at the Philly Fed. "Organizations providing services to these households have seen significant increases in demand, while simultaneously facing decreases in their funding and capacity to meet this demand."
Of the respondents, 76% said demand for services increased in the first quarter, and 68% said this need will continue to grow over the next three months.
Roughly one-third of those surveyed said the availability of affordable housing decreased.
Over the coming months, access to credit is not expected to change. More than half of the service providers surveyed said there would probably be no change into their client's access to credit over the next three months, according to the report.
Other regional Federal Reserve banks are attempting to address the problem. The Federal Reserve Bank of Cleveland will hold a summit on the blight of low-income families June 9-10.
"Income inequality in this country is at an all–time high, and is among the highest in the developed world," the Cleveland Fed said. "In this environment, it is critical to revisit education and asset building policies, through the lenses of research and practice, that will support stability and upward mobility in poor communities."
URL to original article: http://www.housingwire.com/2011/05/17/low-income-households-struggle-to-access-credit
For further information on Fresno Real Estate check: http://www.londonproperties.com
Tuesday, May 17, 2011
In these troubled times, more Americans come current on mortgages
by CHRISTINE RICCIARDI
Even in an environment of declining home values, the number of Americans making good on their mortgage continues to grow.
The first-quarter national mortgage delinquency rate decreased to 6.19%, according to credit-reporting agency TransUnion. The numbers are down 3.4% from 6.41% in the fourth quarter and down 8.6% compared to 6.77% a year earlier.
The rate encompasses borrowers delinquent 60 days or more.
According to Standard & Poor's, U.S. consumers also reduced their revolving credit card debt by 18% since mid-2008 through default, borrowing less or paying down debt outstanding. This is the longest and fastest credit card deleveraging since record keeping began in January 1968.
Americans remain unlikely to take on more debt, despite the news that there are growing less risky.
"Currently, 28% of homeowners are 'underwater,' meaning that they owe more than the value of their houses," said S&P analyst Erkan Erturk. "Economic factors such as these, as well as high oil prices and weak consumer confidence, will likely continue to pressure U.S. consumers and constrain consumer debt growth."
Tim Martin, vice president of TransUnion's U.S. Housing Market group, said the recent trend seems counterintuitive. For example, as prices fall he said, the mortgage delinquency rate should rise as more and more homeowners find themselves in negative equity.
"While many homeowners still face pressure to make ends meet, they have lived in their homes for a long time and have diligently been paying their mortgage each month," Martin commented. "The fact that mortgage delinquency continues to decline despite this situation demonstrates that today’s borrowers are less risky."
The average borrower held about $190,115 in mortgage debt during the first quarter, according to TransUnion. While that is up 0.6% from the fourth quarter, average mortgage debt per borrower is down 1.4% compared to the first quarter of 2010.
The area with the highest average mortgage debt per borrower was Washington D.C. at $375,579, followed by California at $338,792 and Hawaii at $313,770. Borrowers in West Virginia have the lowest amount of mortgage debt at $99,640.
TransUnion predicts delinquency rates will fall further throughout 2011, as improving economic conditions and tighter lending standards offset the impact of home prices declines.
Earlier in May, TransUnion said its credit risk index fell for the fifth straight month in the first quarter, "indicating consumers are increasingly likely to repay their debt obligations and are managing new credit more responsibly."
The company said its index decreased about 5% from the fourth quarter and was down 1.6% from a year earlier. The quarterly decline was the largest since the third quarter of 2008, TransUnion said.
Consumer demand for credit also fell during the first quarter and "remains historically low."
"The broad and steady decline in the Credit Risk Index, coupled with a moderate decrease in the demand for credit over the previous year suggests that consumers continue to live within their means, tending to acquire new credit only for larger, specific purchases," said Chet Wiermanski, global chief scientist at TransUnion.
Still, S&P reports that it expects the rate of household deleveraging to slow.
"The long downward trend in credit card debt may soon bottom as the household debt service and financial obligation ratios are near their historical averages," said the S&P report. "Also, declining consumer default and charge-off rates and increased willingness to lend at large banks signal that revolving debt deleveraging is slowing down."
URL to original article: http://www.housingwire.com/2011/05/16/in-these-troubled-times-more-americans-come-current-on-mortgages
For further information on Fresno Real Estate check: http://www.londonproperties.com
Even in an environment of declining home values, the number of Americans making good on their mortgage continues to grow.
The first-quarter national mortgage delinquency rate decreased to 6.19%, according to credit-reporting agency TransUnion. The numbers are down 3.4% from 6.41% in the fourth quarter and down 8.6% compared to 6.77% a year earlier.
The rate encompasses borrowers delinquent 60 days or more.
According to Standard & Poor's, U.S. consumers also reduced their revolving credit card debt by 18% since mid-2008 through default, borrowing less or paying down debt outstanding. This is the longest and fastest credit card deleveraging since record keeping began in January 1968.
Americans remain unlikely to take on more debt, despite the news that there are growing less risky.
"Currently, 28% of homeowners are 'underwater,' meaning that they owe more than the value of their houses," said S&P analyst Erkan Erturk. "Economic factors such as these, as well as high oil prices and weak consumer confidence, will likely continue to pressure U.S. consumers and constrain consumer debt growth."
Tim Martin, vice president of TransUnion's U.S. Housing Market group, said the recent trend seems counterintuitive. For example, as prices fall he said, the mortgage delinquency rate should rise as more and more homeowners find themselves in negative equity.
"While many homeowners still face pressure to make ends meet, they have lived in their homes for a long time and have diligently been paying their mortgage each month," Martin commented. "The fact that mortgage delinquency continues to decline despite this situation demonstrates that today’s borrowers are less risky."
The average borrower held about $190,115 in mortgage debt during the first quarter, according to TransUnion. While that is up 0.6% from the fourth quarter, average mortgage debt per borrower is down 1.4% compared to the first quarter of 2010.
The area with the highest average mortgage debt per borrower was Washington D.C. at $375,579, followed by California at $338,792 and Hawaii at $313,770. Borrowers in West Virginia have the lowest amount of mortgage debt at $99,640.
TransUnion predicts delinquency rates will fall further throughout 2011, as improving economic conditions and tighter lending standards offset the impact of home prices declines.
Earlier in May, TransUnion said its credit risk index fell for the fifth straight month in the first quarter, "indicating consumers are increasingly likely to repay their debt obligations and are managing new credit more responsibly."
The company said its index decreased about 5% from the fourth quarter and was down 1.6% from a year earlier. The quarterly decline was the largest since the third quarter of 2008, TransUnion said.
Consumer demand for credit also fell during the first quarter and "remains historically low."
"The broad and steady decline in the Credit Risk Index, coupled with a moderate decrease in the demand for credit over the previous year suggests that consumers continue to live within their means, tending to acquire new credit only for larger, specific purchases," said Chet Wiermanski, global chief scientist at TransUnion.
Still, S&P reports that it expects the rate of household deleveraging to slow.
"The long downward trend in credit card debt may soon bottom as the household debt service and financial obligation ratios are near their historical averages," said the S&P report. "Also, declining consumer default and charge-off rates and increased willingness to lend at large banks signal that revolving debt deleveraging is slowing down."
URL to original article: http://www.housingwire.com/2011/05/16/in-these-troubled-times-more-americans-come-current-on-mortgages
For further information on Fresno Real Estate check: http://www.londonproperties.com
Thursday, May 12, 2011
Jobless claims fell 9.2% last week
by JASON PHILYAW
Initial jobless claims fell 9.2% last week, after climbing nearly 10% to the highest level since August the week before.
The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended May 7 decreased by 44,000 to 434,000. Initial claims for the prior week were 478,000, which was revised upward 4,000.
Analysts surveyed by Econoday expected 430,000 new jobless claims last week with a range of estimates between 415,000 and 465,000. A Briefing.com survey projected new claims of 400,000 for last week.
The four-week moving average, which is considered a less volatile indicator than weekly claims, rose by 4,500 to 436,750 from a slightly revised average of 432,250 the prior week. The seasonally adjusted insured unemployment rate for the week ended April 30 remained unchanged at 3%, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 23 fell to 7.9 million from 8 million the prior week.
URL to original article: http://www.housingwire.com/2011/05/12/jobless-claims-fell-9-2-last-week
For further information on Fresno Real Estate check: http://www.londonproperties.com
Initial jobless claims fell 9.2% last week, after climbing nearly 10% to the highest level since August the week before.
The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended May 7 decreased by 44,000 to 434,000. Initial claims for the prior week were 478,000, which was revised upward 4,000.
Analysts surveyed by Econoday expected 430,000 new jobless claims last week with a range of estimates between 415,000 and 465,000. A Briefing.com survey projected new claims of 400,000 for last week.
The four-week moving average, which is considered a less volatile indicator than weekly claims, rose by 4,500 to 436,750 from a slightly revised average of 432,250 the prior week. The seasonally adjusted insured unemployment rate for the week ended April 30 remained unchanged at 3%, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 23 fell to 7.9 million from 8 million the prior week.
URL to original article: http://www.housingwire.com/2011/05/12/jobless-claims-fell-9-2-last-week
For further information on Fresno Real Estate check: http://www.londonproperties.com
Wednesday, May 11, 2011
Mortgage purchase apps up; rates down
Source: Calculated Risk
Weekly economic scorecards are either good news, bad news, or no news, and this one falls into the third category. Inertial market forces--especially the hold-up in troubled-home loan resolution thanks to bad documentation process among the biggest mortgage servicers--grip the supply and demand like a knot in a garden hose. Calculated Risk's Bill McBride notes about this indicator as he has for months "The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers)."
The Refinance Index increased 9.0 percent from the previous week, and is at its highest level since the week ending March 18, 2011. The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier.
...
"The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points,” said Michael Fratantoni, MBA’s Vice President of Research. “Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall.”
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.76 percent, with points increasing to 1.10 from 0.75 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is at its lowest since December 2010.
Refinance activity increased as mortgage rates fell to the lowest level since December 2010.
The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers).
URL to original article: http://www.builderonline.com/builder-pulse/mortgage-purchase-apps-up--rates-down.aspx?cid=NWBD110511002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Weekly economic scorecards are either good news, bad news, or no news, and this one falls into the third category. Inertial market forces--especially the hold-up in troubled-home loan resolution thanks to bad documentation process among the biggest mortgage servicers--grip the supply and demand like a knot in a garden hose. Calculated Risk's Bill McBride notes about this indicator as he has for months "The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers)."
The Refinance Index increased 9.0 percent from the previous week, and is at its highest level since the week ending March 18, 2011. The seasonally adjusted Purchase Index increased 6.7 percent from one week earlier.
...
"The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points,” said Michael Fratantoni, MBA’s Vice President of Research. “Over this four week span, the refinance index has increased by about 18 percent. Despite the recent increases however, refinance application volumes remain more than 50 percent below levels seen last fall.”
...
The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.76 percent, with points increasing to 1.10 from 0.75 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 30-year rate is at its lowest since December 2010.
Refinance activity increased as mortgage rates fell to the lowest level since December 2010.
The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers).
URL to original article: http://www.builderonline.com/builder-pulse/mortgage-purchase-apps-up--rates-down.aspx?cid=NWBD110511002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Tuesday, May 10, 2011
Distressed properties drive home sales up, prices down in 1Q
by CHRISTINE RICCIARDI
Existing home sales increased in the first quarter in 49 states and the District of Columbia, driven by a substantial amount of distressed property sales. Only Vermont experienced lower sales volume during the first three months of the year when compared with the fourth quarter.
The National Association of Realtors said Tuesday seasonally adjusted sales rose to an annual rate of 5.14 million in the first quarter, up 8.3% from the fourth quarter and down 0.8% from a year earlier when the homebuyer tax credit was in effect.
Distressed property sales accounted for 39% of all transactions, up from 36% a year earlier. While this is good news for sales volume, distressed property sales are dragging down prices. In the first quarter, the median existing single-family home price was $158,700, down almost 5% from $166,400 one year ago.
The volume of homes that sold for less than $100,000 increased 8.9% compared to the same time period.
"The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales," said Lawrence Yun, chief economist at NAR. "The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up."
Home prices fell during the first quarter in 118 of 153 metropolitan areas tracked by NAR, or 77% of metros nationwide. Prices dropped the most in Gulfport-Biloxi, Miss., down 22.8% to a median $99,400. Charlotte-Gastonia-Concord, N.C.-S.C. witnessed the largest price gain during the quarter, up 12.2% to a median $195,100.
Several home prices indices around the country trended downward in the last month of the quarter, causing some experts to call a double-dip. CoreLogic (CLGX: 18.46 -2.48%) found March home prices down 7.5% from one year ago, marking eighth-straight months of declines. Integrated Asset Services' index fell 3.3% in the first quarter.
Zillow reported Monday that more than 28% of single-family homeowners are currently underwater on their mortgage.
URL to original article: http://www.housingwire.com/2011/05/10/distressed-properties-drive-home-sales-up-prices-down-in-1q
For further information on Fresno Real Estate check: http://www.londonproperties.com
Existing home sales increased in the first quarter in 49 states and the District of Columbia, driven by a substantial amount of distressed property sales. Only Vermont experienced lower sales volume during the first three months of the year when compared with the fourth quarter.
The National Association of Realtors said Tuesday seasonally adjusted sales rose to an annual rate of 5.14 million in the first quarter, up 8.3% from the fourth quarter and down 0.8% from a year earlier when the homebuyer tax credit was in effect.
Distressed property sales accounted for 39% of all transactions, up from 36% a year earlier. While this is good news for sales volume, distressed property sales are dragging down prices. In the first quarter, the median existing single-family home price was $158,700, down almost 5% from $166,400 one year ago.
The volume of homes that sold for less than $100,000 increased 8.9% compared to the same time period.
"The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales," said Lawrence Yun, chief economist at NAR. "The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up."
Home prices fell during the first quarter in 118 of 153 metropolitan areas tracked by NAR, or 77% of metros nationwide. Prices dropped the most in Gulfport-Biloxi, Miss., down 22.8% to a median $99,400. Charlotte-Gastonia-Concord, N.C.-S.C. witnessed the largest price gain during the quarter, up 12.2% to a median $195,100.
Several home prices indices around the country trended downward in the last month of the quarter, causing some experts to call a double-dip. CoreLogic (CLGX: 18.46 -2.48%) found March home prices down 7.5% from one year ago, marking eighth-straight months of declines. Integrated Asset Services' index fell 3.3% in the first quarter.
Zillow reported Monday that more than 28% of single-family homeowners are currently underwater on their mortgage.
URL to original article: http://www.housingwire.com/2011/05/10/distressed-properties-drive-home-sales-up-prices-down-in-1q
For further information on Fresno Real Estate check: http://www.londonproperties.com
Monday, May 9, 2011
Consumer debt level ends two-year decline
by JON PRIOR
URL to original article: http://www.housingwire.com/2011/05/09/consumer-debt-level-ends-two-year-decline
For further information on Fresno Real Estate check: http://www.londonproperties.com
Higher mortgage balances pushed total consumer debt up in the first three months of 2011, the first quarterly increase in more than two years, according to the Federal Reserve Bank of New York.
U.S. household debt totaled $11.5 trillion in the first quarter, down 8.2% from its peak in the third quarter of 2008. But for the first time in nine quarters, debt increased $33 billion, or 0.3%, from the end of last year.
"Behind the leveling off of total consumer debt was a small increase in mortgage balances shown on consumer credit reports," the NY Fed said in its report.
Lenders originated $499 billion in new mortgages during the first quarter, a 31% increase from one year ago. It's the third consecutive increase, according to the study.
While originations are up 65% from the low in 2008, they remain 34% below averages seen during the housing bubble between 2003 and 2007. Household mortgage debt remained 8.1% off its peak. Home equity lines of credit are 9.9% below that peak.
Analysts at Bank of America Merrill Lynch believe the $10.5 trillion of outstanding mortgage debt they measure is still about $1 trillion too high due to the collapse in home prices.
"A good portion of this excess debt should ultimately be defaulted on and written off," the analysts said. "The natural lender response to this reality has been to reduce the supply of credit for all but the best borrowers."
Delinquency rates on mortgages improved as well. According to the study, 28% of loans in early delinquency – 30 to 60 days past due – transitioned into serious delinquency. That's down from 30% in the previous quarter and lowest rate since the third quarter of 2007.
"This improvement was accompanied by a higher cure rate with the transition rate from early delinquency to 'current' increasing in the quarter," according to the NY Fed.
Roughly 368,000 consumers had a foreclosure added to their credit reports during the first quarter, a 17% drop from the previous period. New bankruptcies fell 13% to 434,000.
Those states hardest hit by the financial crisis in 2008 and the following credit crunch are healing faster than areas of the country that escaped the brunt of the damage.
"Data for Arizona, California, Florida and Nevada continue to indicate higher than average delinquency and foreclosure rates, but these rates are falling faster on average than in the rest of the country," the NY Fed said.
URL to original article: http://www.housingwire.com/2011/05/09/consumer-debt-level-ends-two-year-decline
For further information on Fresno Real Estate check: http://www.londonproperties.com
As REO and short sales abound, home prices in most markets continue to fall
Source: Wall Street Journal
The Wall Street Journal's Nick Timiraos and Dawn Wotapka got a sneak peak at Zillow.com data that indicates first quarter home prices fell 3% sequentially, and 1% in March from the month earlier. Their focus for this article is on gloom surrounding the reality that the house-price correction that got underway in 2008 is not done yet. The mainstream media is all over this as a double-dip--as if the tax credit stimulus programs were not temporary measures that helped some sellers hold the value of their homes amid an artificially prodded demand surge. We're of a mind that the trend is part of a single correction that is most likely bound to overshoot and then spring back a little once excess supply becomes more of a known quantity--which it not. Timiraos and Wotapka write, "While some analysts have argued that home prices need to fall to "clearing prices" that will attract more buyers, price declines could also complicate any recovery by pushing more borrowers under water. Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth."
Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.
Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow.
URL to original article: http://www.builderonline.com/builder-pulse/as-reo-and-short-sales-abound--home-prices-in-most-markets-continue-to-fall.aspx?cid=NWBD110509002
For further information on Fresno Real Estate check: http://www.londonproperties.com
The Wall Street Journal's Nick Timiraos and Dawn Wotapka got a sneak peak at Zillow.com data that indicates first quarter home prices fell 3% sequentially, and 1% in March from the month earlier. Their focus for this article is on gloom surrounding the reality that the house-price correction that got underway in 2008 is not done yet. The mainstream media is all over this as a double-dip--as if the tax credit stimulus programs were not temporary measures that helped some sellers hold the value of their homes amid an artificially prodded demand surge. We're of a mind that the trend is part of a single correction that is most likely bound to overshoot and then spring back a little once excess supply becomes more of a known quantity--which it not. Timiraos and Wotapka write, "While some analysts have argued that home prices need to fall to "clearing prices" that will attract more buyers, price declines could also complicate any recovery by pushing more borrowers under water. Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth."
Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.
Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow.
URL to original article: http://www.builderonline.com/builder-pulse/as-reo-and-short-sales-abound--home-prices-in-most-markets-continue-to-fall.aspx?cid=NWBD110509002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Thursday, May 5, 2011
Mortgage rates hit 5-month low
by KERRI PANCHUK
Mortgage rates fell to a five-month low this past week as reports of an uptick in unemployment filings and higher gasoline prices cut into consumer spending, scaring investors into safe government bonds, Bankrate said Thursday.
Freddie Mac also released its mortgage rate findings, which show the 30-year, fixed-rate mortgage dropping to 4.71% and the 15-year FRM hitting a new yearly low of 3.89%. The 30-year FRM remains below the 5% level recorded this time last year.
Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47% this past week, down from 3.51% last week and lower than the 3.97% rate recorded a year earlier. The one-year Treasury-indexed ARM also averaged 3.14%, a slight decline from 3.15% last week and 4.07% from last year.
Bankrate said Thursday "when investors get nervous they rotate into safe haven government bonds, to which mortgage rates are closely related. The downswing in government bond yields had a corresponding benefit on mortgage rates."
Bankrate's survey of the nation's biggest lenders showed a 30-year FRM falling to 4.88% and the 15-year FRM hitting 4.05%, while the jumbo 30-year FRM hit 5.36%.
URL to original article: http://www.housingwire.com/2011/05/05/mortgage-rates-hit-5-month-low
For further information on Fresno Real Estate check: http://www.londonproperties.com
Mortgage rates fell to a five-month low this past week as reports of an uptick in unemployment filings and higher gasoline prices cut into consumer spending, scaring investors into safe government bonds, Bankrate said Thursday.
Freddie Mac also released its mortgage rate findings, which show the 30-year, fixed-rate mortgage dropping to 4.71% and the 15-year FRM hitting a new yearly low of 3.89%. The 30-year FRM remains below the 5% level recorded this time last year.
Meanwhile, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47% this past week, down from 3.51% last week and lower than the 3.97% rate recorded a year earlier. The one-year Treasury-indexed ARM also averaged 3.14%, a slight decline from 3.15% last week and 4.07% from last year.
Bankrate said Thursday "when investors get nervous they rotate into safe haven government bonds, to which mortgage rates are closely related. The downswing in government bond yields had a corresponding benefit on mortgage rates."
Bankrate's survey of the nation's biggest lenders showed a 30-year FRM falling to 4.88% and the 15-year FRM hitting 4.05%, while the jumbo 30-year FRM hit 5.36%.
URL to original article: http://www.housingwire.com/2011/05/05/mortgage-rates-hit-5-month-low
For further information on Fresno Real Estate check: http://www.londonproperties.com
Jobless claims rose 10% last week
by JASON PHILYAW
Initial jobless claims rose nearly 10% last week, well above most analyst estimates and to the highest level since August.
The Labor Department said the seasonally adjusted figure of claims for the week ended April 30 increased by 43,000 to 474,000 from 431,000 a week prior, which was revised upward 2,000. The rise is somewhat attributable to layoffs in the auto industry and anomalies in the New York labor market caused by spring break, according to MarketWatch.
Analysts surveyed by Econoday expected 410,000 new jobless claims last week with a range of estimates between 400,000 and 450,000. A Briefing.com survey projected new claims of 400,000 for last week.
The four-week moving average, which is considered a less volatile indicator than weekly claims, shot up by 22,250 to 431,250 from a slightly revised average of 409,000 the prior week. The seasonally adjusted insured unemployment rate remained inched up to 3% from 2.9% for the week ended April 23, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 16 fell to about 8.04 million from nearly 8.2 million the prior week.
URL to original article: http://www.housingwire.com/2011/05/05/jobless-claims-rose-10-last-week
For further information on Fresno Real Estate check: http://www.londonproperties.com
Initial jobless claims rose nearly 10% last week, well above most analyst estimates and to the highest level since August.
The Labor Department said the seasonally adjusted figure of claims for the week ended April 30 increased by 43,000 to 474,000 from 431,000 a week prior, which was revised upward 2,000. The rise is somewhat attributable to layoffs in the auto industry and anomalies in the New York labor market caused by spring break, according to MarketWatch.
Analysts surveyed by Econoday expected 410,000 new jobless claims last week with a range of estimates between 400,000 and 450,000. A Briefing.com survey projected new claims of 400,000 for last week.
The four-week moving average, which is considered a less volatile indicator than weekly claims, shot up by 22,250 to 431,250 from a slightly revised average of 409,000 the prior week. The seasonally adjusted insured unemployment rate remained inched up to 3% from 2.9% for the week ended April 23, according to the Labor Department.
The total number of people receiving some sort of federal unemployment benefits for the week ended April 16 fell to about 8.04 million from nearly 8.2 million the prior week.
URL to original article: http://www.housingwire.com/2011/05/05/jobless-claims-rose-10-last-week
For further information on Fresno Real Estate check: http://www.londonproperties.com
Wednesday, May 4, 2011
Those who borrow, aren't doing it ... those who don't have to borrow don't apply
Source: Calculated Risk
Access to credit is locked up in a deleveraging economy's aversion to risk, period. People who could get loans are hesitant to do so because the gains they make on interest rates could be lost in a continuing decline in the value of their property purchase. It's only the purchase-for-cash-and-holders who have cash burning holes in their pockets, anxious to be put to use. In noting the status on mortgage applications for purchases in the latest period reported by the Mortgage Bankers Association, Calculated Risk's Bill McBride writes, "Refinance activity increased as mortgage rates fell to the lowest level since December 2010. The four-week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers)."
The MBA reports: Latest MBA Weekly Survey Shows Increase in Mortgage Applications, Driven by Refinances
The Refinance Index increased 6.0 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76 percent from 4.80 percent, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010.
Refinance activity increased as mortgage rates fell to the lowest level since December 2010.
The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers).
URL to original article: http://www.builderonline.com/builder-pulse/those-who-borrow--aren-t-doing-it-----those-who-don-t-have-to-borrow-don-t-apply.aspx?cid=NWBD110504002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Access to credit is locked up in a deleveraging economy's aversion to risk, period. People who could get loans are hesitant to do so because the gains they make on interest rates could be lost in a continuing decline in the value of their property purchase. It's only the purchase-for-cash-and-holders who have cash burning holes in their pockets, anxious to be put to use. In noting the status on mortgage applications for purchases in the latest period reported by the Mortgage Bankers Association, Calculated Risk's Bill McBride writes, "Refinance activity increased as mortgage rates fell to the lowest level since December 2010. The four-week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers)."
The MBA reports: Latest MBA Weekly Survey Shows Increase in Mortgage Applications, Driven by Refinances
The Refinance Index increased 6.0 percent from the previous week. The seasonally adjusted Purchase Index increased 0.3 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages decreased for the third consecutive week to 4.76 percent from 4.80 percent, with points decreasing to 0.76 from 1.00 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year fixed contract rate since December 3, 2010.
Refinance activity increased as mortgage rates fell to the lowest level since December 2010.
The four week average of purchase activity is at about 1997 levels, although this doesn't include the very high percentage of cash buyers. This suggests weak existing home sales through June (not counting cash buyers).
URL to original article: http://www.builderonline.com/builder-pulse/those-who-borrow--aren-t-doing-it-----those-who-don-t-have-to-borrow-don-t-apply.aspx?cid=NWBD110504002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Homebuyers don't know mortgage basics: Zillow
by CHRISTINE RICCIARDI
Most Americans are confident with in their knowledge of the mortgage industry, but a new study found that nearly half don't know what they're talking about.
Zillow Mortgage Marketplace released the results from a survey the firm recently conducted in conjunction with lpsos, an independent research firm. The survey tested prospective homebuyers' knowledge of the industry with true or false questions.
About 77% of prospective homebuyers did not clearly understand what factors are involved in determining a mortgage interest rate, claiming that annual income is an important determinant. The main factors include loan-to-value-ratio, credit score and debt-to-income ratio.
Interest rates gave survey respondents trouble across the board, as 57% believed interest rates on 5-year adjustable-rate mortgages would always increase after the five years, and 55% said that mortgage rates were set once everyday.
Nearly one-third of prospective homebuyers did not know that lender fees were negotiable and vary by lender, Zillow said, suggesting "many buyers aren't shopping around and getting the best possible terms."
Approximately 42% of survey respondents thought loans from the Federal Housing Administration were for first-time homebuyers only, while 37% considered a pre-qualification a binding commitment from a bank.
The survey is still available online as a quiz. Test your knowledge here.
URL to original article: http://www.housingwire.com/2011/05/03/homebuyers-dont-know-mortgage-basics-zillow
For further information on Fresno Real Estate check: http://www.londonproperties.com
Most Americans are confident with in their knowledge of the mortgage industry, but a new study found that nearly half don't know what they're talking about.
Zillow Mortgage Marketplace released the results from a survey the firm recently conducted in conjunction with lpsos, an independent research firm. The survey tested prospective homebuyers' knowledge of the industry with true or false questions.
About 77% of prospective homebuyers did not clearly understand what factors are involved in determining a mortgage interest rate, claiming that annual income is an important determinant. The main factors include loan-to-value-ratio, credit score and debt-to-income ratio.
Interest rates gave survey respondents trouble across the board, as 57% believed interest rates on 5-year adjustable-rate mortgages would always increase after the five years, and 55% said that mortgage rates were set once everyday.
Nearly one-third of prospective homebuyers did not know that lender fees were negotiable and vary by lender, Zillow said, suggesting "many buyers aren't shopping around and getting the best possible terms."
Approximately 42% of survey respondents thought loans from the Federal Housing Administration were for first-time homebuyers only, while 37% considered a pre-qualification a binding commitment from a bank.
The survey is still available online as a quiz. Test your knowledge here.
URL to original article: http://www.housingwire.com/2011/05/03/homebuyers-dont-know-mortgage-basics-zillow
For further information on Fresno Real Estate check: http://www.londonproperties.com
Welcome Aboard Our New Agents
London Properties is pleased announce the arrival of Helen Harper. She is a Residential Sales person joining our Clovis Office.
London Properties is pleased to announce the arrival of Janet McRee, formerly of New Homes Sales, Patti Locktov, Shaundra Ellsworth formerly of Coldwell Banker, these wonderful ladies will be working out of Fresno office.
London Properties, is pleased to announce Darlene Hansen, formerly of Realty Concepts. Darlene will be working our Hanford office.
London Properties, is pleased to announce Esperanza Venegas formerly of Cal Prime Realty. Esperanza will be working out of our Madera office.
Welcome aboard you great agents...go get'em!!!
If you or anyone your know is looking for a new career, go to www.tiore.com to learn how easy it is to get your real estate licnese.
London Properties is pleased to announce the arrival of Janet McRee, formerly of New Homes Sales, Patti Locktov, Shaundra Ellsworth formerly of Coldwell Banker, these wonderful ladies will be working out of Fresno office.
London Properties, is pleased to announce Darlene Hansen, formerly of Realty Concepts. Darlene will be working our Hanford office.
London Properties, is pleased to announce Esperanza Venegas formerly of Cal Prime Realty. Esperanza will be working out of our Madera office.
Welcome aboard you great agents...go get'em!!!
If you or anyone your know is looking for a new career, go to www.tiore.com to learn how easy it is to get your real estate licnese.
Tuesday, May 3, 2011
Pending Home Sales Rise Again in March
Walter Molony
March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.
The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”
The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2 but are 10.5 percent below March 2010. In the West the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun said.
“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun added.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
# # #
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
NOTE: First quarter metro area home prices and state existing-home sales will be published May 10. Existing-home sales for April will be reported May 19 and the next Pending Home Sales Index will be released May 27; all release times are 10:00 a.m. EDT.
URL to original article: http://www.realtor.org/press_room/news_releases/2011/04/phs_march
For further information on Fresno Real Estate check: http://www.londonproperties.com
March saw another increase in pending home sales, with contract activity rising unevenly in six of the past nine months, according to the National Association of Realtors®.
The Pending Home Sales Index,* a forward-looking indicator based on contract signings, rose 5.1 percent to 94.1 in March from a downwardly revised 89.5 in February. The index is 11.4 percent below 106.2 in March 2010; however, activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.
The data reflects contracts but not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said home sales activity has shown an uneven but notable improvement. “Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” he said. “The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.”
The PHSI in the Northeast fell 3.2 percent to 63.4 in March and is 18.4 percent below March 2010. In the Midwest the index rose 3.0 percent in March to 83.5 but is 16.6 percent below a year ago. Pending home sales in the South jumped 10.3 percent to an index of 110.2 but are 10.5 percent below March 2010. In the West the index increased 3.1 percent to 103.7 but is 4.1 percent below a year ago.
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes. That means the price trend will reflect more homes sold in the lower price ranges,” Yun said.
“The good news is that recent home buyers are staying well within budget, leading to exceptionally low loan default rates among home buyers over the past two years,” Yun added.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.
# # #
*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
NOTE: First quarter metro area home prices and state existing-home sales will be published May 10. Existing-home sales for April will be reported May 19 and the next Pending Home Sales Index will be released May 27; all release times are 10:00 a.m. EDT.
URL to original article: http://www.realtor.org/press_room/news_releases/2011/04/phs_march
For further information on Fresno Real Estate check: http://www.londonproperties.com
Monday, May 2, 2011
New MBA CEO optimistic on housing recovery
by KERRI PANCHUK
The former commissioner of the Federal Housing Administration, David Stevens is beginning his latest role as the President and CEO of the Mortgage Bankers Association on a high note.
While speaking at the trade group's national secondary market conference in New York, Stevens said housing is a basic human need, and took the opportunity to inject some optimism about the potential for an economic recovery with states like Florida and California — some of the hardest hit regions during the crisis— now witnessing more housing starts.
The future of the secondary mortgage market is contingent on industry players remaining bullish about housing, while also engaging directly with lawmakers and acknowledging past failures to stamp out bad actors, President and CEO David Stevens said Monday.
"We should all share collectively in the idea that there are plenty of people to blame for the housing crisis," he said. "Our industry clearly played a role."
Stevens said the industry has to "articulate its reason for being," and assist in the creation of a secondary mortgage market that will be driven more by private capital and designed to serve future customers — namely Echo Boomers who are beginning to emerge as the largest potential home buying segment of the American population.
Panelists at the conference suggested a new mortgage financing structure cannot take fully root until housing is stabilized.
"There is no question that we are in transition," Paul Mullings, senior vice president of single family sourcing at Freddie Mac said. "We are looking at what type of structure and pricing is needed to pull private capital back into the market."
"The housing market has to be stabilized," Mullings added. "The role of the government needs to be defined, and there has to be confidence in the ratings agencies."
In terms of rebuilding confidence in the secondary market, Ted Tozer, president of Ginnie Mae, said easing the fears of investors is a crucial step.
"Investors needs to feel they are being dealt with properly," Tozer said. "They need to know what the cost of capital is going to be."
Much of this will not be known until the shape of the secondary market is clearly communicated by regulators and the industry, he said.
Michael Berman, chairman of the MBA and CEO of CW Capital, stressed that the group's engagement with regulators has already proven successful when considering Treasury Secretary Timothy Geithner recently proposed a GSE reform plan that includes an option very similar to the MBA's own proposal. Much like the Treasury's plan, Berman said the MBA has long advocated for the creation of a housing sector driven largely by private capital with a limited government role.
Kevin Neyland, senior vice president of strategy and business development for the Federal Home Loan Bank of New York, said maintaining liquidity in the marketplace remains one of the industry's greatest challenges.
URL to the original article: http://www.housingwire.com/2011/05/02/new-mba-ceo-optimistic-on-housing-recovery
For further information on Fresno Real Estate check: http://www.londonproperties.com
The former commissioner of the Federal Housing Administration, David Stevens is beginning his latest role as the President and CEO of the Mortgage Bankers Association on a high note.
While speaking at the trade group's national secondary market conference in New York, Stevens said housing is a basic human need, and took the opportunity to inject some optimism about the potential for an economic recovery with states like Florida and California — some of the hardest hit regions during the crisis— now witnessing more housing starts.
The future of the secondary mortgage market is contingent on industry players remaining bullish about housing, while also engaging directly with lawmakers and acknowledging past failures to stamp out bad actors, President and CEO David Stevens said Monday.
"We should all share collectively in the idea that there are plenty of people to blame for the housing crisis," he said. "Our industry clearly played a role."
Stevens said the industry has to "articulate its reason for being," and assist in the creation of a secondary mortgage market that will be driven more by private capital and designed to serve future customers — namely Echo Boomers who are beginning to emerge as the largest potential home buying segment of the American population.
Panelists at the conference suggested a new mortgage financing structure cannot take fully root until housing is stabilized.
"There is no question that we are in transition," Paul Mullings, senior vice president of single family sourcing at Freddie Mac said. "We are looking at what type of structure and pricing is needed to pull private capital back into the market."
"The housing market has to be stabilized," Mullings added. "The role of the government needs to be defined, and there has to be confidence in the ratings agencies."
In terms of rebuilding confidence in the secondary market, Ted Tozer, president of Ginnie Mae, said easing the fears of investors is a crucial step.
"Investors needs to feel they are being dealt with properly," Tozer said. "They need to know what the cost of capital is going to be."
Much of this will not be known until the shape of the secondary market is clearly communicated by regulators and the industry, he said.
Michael Berman, chairman of the MBA and CEO of CW Capital, stressed that the group's engagement with regulators has already proven successful when considering Treasury Secretary Timothy Geithner recently proposed a GSE reform plan that includes an option very similar to the MBA's own proposal. Much like the Treasury's plan, Berman said the MBA has long advocated for the creation of a housing sector driven largely by private capital with a limited government role.
Kevin Neyland, senior vice president of strategy and business development for the Federal Home Loan Bank of New York, said maintaining liquidity in the marketplace remains one of the industry's greatest challenges.
URL to the original article: http://www.housingwire.com/2011/05/02/new-mba-ceo-optimistic-on-housing-recovery
For further information on Fresno Real Estate check: http://www.londonproperties.com
Stress, in a proper dose, can work as a leader's ally
Source: Harvard Business Review
Good piece on managing one's adrenaline level in a time of crisis or heightened anxiety. It's in the Harvard Business Review, from "Better Under Pressure," author and consultant Justin Menkes. Menkes concludes, "Once an executive learns how to manage adrenaline without panic, he or she can grow confident that the sensations that stress induces will not lead to collapse. While it is a noisemaker in the untrained mind, when channeled properly adrenaline can help people accomplish things that they never would have imagined possible. The ability to make adrenaline a friend is a necessity for executives in today's environment of ongoing duress." You folks know all about that, too.
Recently, I read an article in which a developmental psychologist cited a mountain of evidence showing that IQ was one of the most significant predictors of emotional resiliency in children. The same pattern has also long been seen in the military, where it has been conclusively shown that higher-IQ soldiers show fewer signs of long-term post-traumatic stress.
Why would cognitive ability predict emotional hardiness? In truth, it doesn't. But the tests that measure cognitive ability do. When you tell people they have 12 minutes to show whether they are smart or dumb, the ability to stay calm and focused under duress has a huge impact on the scores.
Heightened anxiety has long been shown to dramatically impair people's ability to think. It affects basic functions such as short-term memory and processing of simple information, as well as more complex thinking, where anxiety can aggressively interfere with the ability to differentiate between important and irrelevant tasks. In today's business environment of unrelenting pressure, aspiring leaders must learn how to confront heightened levels of urgency without allowing the accompanying mental agitation to be disruptive.
About six years ago, I interviewed "Ollie," the CEO of a consumer products company. I had been hired to evaluate Ollie by his parent company because his company had been doing poorly. In fact, it was the worst-performing brand in the parent conglomerate's portfolio. I had just presented Ollie with a hypothetical crisis that threatened the survival of his business, and was asking him to evaluate data, along with suggestions from colleagues and his board of directors, and arrive at a sound conclusion about what to do.
Just a few minutes before, when I had asked Ollie about his history with the company, he had confidently articulated the direction in which he was taking the business. Now he was struggling to offer even the most basic sense of how to proceed in a hypothetical, but very plausible, real-world crisis. When I would ask Ollie a question, he would offer an answer that was virtually incoherent. I recognized the shift in eye movements, the slight rise in room temperature, and the slight increase in human body odor. These are all the physical responses of someone experiencing an adrenaline flood that is overloading their higher-order functions. When this happens, a person is prepared to run, not think.
Anyone witnessing Ollie's answers to my questions would shudder at the thought that this person was responsible for a company with revenues over $1 billion, but Ollie was not nearly as incompetent as he appeared during the case study portion of our evaluation. Day-to-day, on the job, he appeared fine; it was when he was confronted with a high-stress crisis that his physical response overcame his mental processes. Ollie had been promoted to the CEO role at a time when the competitive environment was changing, and he had not been prepared to handle unfamiliar complexity. He had not yet learned to tame the cognitive overload that occurs for people in response to high levels of duress.
And Ollie is not alone. A full 20% of the executives I interview — senior leaders of some of the world's leading businesses — become almost incoherent during similar processes, unable to provide answers to more than one-third of the questions posed. Human beings are not naturally wired to engage in complex problem solving when they are under pressure, but it can be learned.
Aspiring leaders must be taught how to manage their stress in such a way that it actually increases their focus and clarity. They need to gain experience in stressful situations where they get an elevated — but not overwhelming — sense of adrenaline and are set up for success. Confidence under pressure can be built like a railroad track in the brain through exposure to repeated experiences over time.
This capacity can be developed in many ways. One simple exercise involves memorizing something, be it a poem or the 50 states, and then reciting it before friends at a dinner party, while encouraging them to taunt you if you make mistakes. At first, you are more likely to have missteps in this context. Eventually, you will find that you can do the exercise faster, with more accuracy, in front of an audience than when you do it by yourself. Toastmasters uses the same concept, teaching people to do something they often fear — public speaking — by first exposing them repeatedly to speaking in a small, supportive environment before putting them in front of larger and larger groups.
Mentors can also nurture this quality in future leaders by creating similar experiences. For instance, if your next-in-line is slated to present before the board, don't let him do so without preparation. Have him present first in front of a few colleagues, then at the Monday morning meeting, then before the management team, all before they present in the higher-pressure environment of the boardroom.
Once an executive learns how to manage adrenaline without panic, he or she can grow confident that the sensations that stress induces will not lead to collapse. While it is a noisemaker in the untrained mind, when channeled properly adrenaline can help people accomplish things that they never would have imagined possible. The ability to make adrenaline a friend is a necessity for executives in today's environment of ongoing duress. Not surprisingly, it's also a hallmark of the world's best CEOs.
URL to original article: http://www.builderonline.com/builder-pulse/stress--in-a-proper-dose--can-work-as-a-leader-s-ally.aspx?cid=NWBD110502002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Good piece on managing one's adrenaline level in a time of crisis or heightened anxiety. It's in the Harvard Business Review, from "Better Under Pressure," author and consultant Justin Menkes. Menkes concludes, "Once an executive learns how to manage adrenaline without panic, he or she can grow confident that the sensations that stress induces will not lead to collapse. While it is a noisemaker in the untrained mind, when channeled properly adrenaline can help people accomplish things that they never would have imagined possible. The ability to make adrenaline a friend is a necessity for executives in today's environment of ongoing duress." You folks know all about that, too.
Recently, I read an article in which a developmental psychologist cited a mountain of evidence showing that IQ was one of the most significant predictors of emotional resiliency in children. The same pattern has also long been seen in the military, where it has been conclusively shown that higher-IQ soldiers show fewer signs of long-term post-traumatic stress.
Why would cognitive ability predict emotional hardiness? In truth, it doesn't. But the tests that measure cognitive ability do. When you tell people they have 12 minutes to show whether they are smart or dumb, the ability to stay calm and focused under duress has a huge impact on the scores.
Heightened anxiety has long been shown to dramatically impair people's ability to think. It affects basic functions such as short-term memory and processing of simple information, as well as more complex thinking, where anxiety can aggressively interfere with the ability to differentiate between important and irrelevant tasks. In today's business environment of unrelenting pressure, aspiring leaders must learn how to confront heightened levels of urgency without allowing the accompanying mental agitation to be disruptive.
About six years ago, I interviewed "Ollie," the CEO of a consumer products company. I had been hired to evaluate Ollie by his parent company because his company had been doing poorly. In fact, it was the worst-performing brand in the parent conglomerate's portfolio. I had just presented Ollie with a hypothetical crisis that threatened the survival of his business, and was asking him to evaluate data, along with suggestions from colleagues and his board of directors, and arrive at a sound conclusion about what to do.
Just a few minutes before, when I had asked Ollie about his history with the company, he had confidently articulated the direction in which he was taking the business. Now he was struggling to offer even the most basic sense of how to proceed in a hypothetical, but very plausible, real-world crisis. When I would ask Ollie a question, he would offer an answer that was virtually incoherent. I recognized the shift in eye movements, the slight rise in room temperature, and the slight increase in human body odor. These are all the physical responses of someone experiencing an adrenaline flood that is overloading their higher-order functions. When this happens, a person is prepared to run, not think.
Anyone witnessing Ollie's answers to my questions would shudder at the thought that this person was responsible for a company with revenues over $1 billion, but Ollie was not nearly as incompetent as he appeared during the case study portion of our evaluation. Day-to-day, on the job, he appeared fine; it was when he was confronted with a high-stress crisis that his physical response overcame his mental processes. Ollie had been promoted to the CEO role at a time when the competitive environment was changing, and he had not been prepared to handle unfamiliar complexity. He had not yet learned to tame the cognitive overload that occurs for people in response to high levels of duress.
And Ollie is not alone. A full 20% of the executives I interview — senior leaders of some of the world's leading businesses — become almost incoherent during similar processes, unable to provide answers to more than one-third of the questions posed. Human beings are not naturally wired to engage in complex problem solving when they are under pressure, but it can be learned.
Aspiring leaders must be taught how to manage their stress in such a way that it actually increases their focus and clarity. They need to gain experience in stressful situations where they get an elevated — but not overwhelming — sense of adrenaline and are set up for success. Confidence under pressure can be built like a railroad track in the brain through exposure to repeated experiences over time.
This capacity can be developed in many ways. One simple exercise involves memorizing something, be it a poem or the 50 states, and then reciting it before friends at a dinner party, while encouraging them to taunt you if you make mistakes. At first, you are more likely to have missteps in this context. Eventually, you will find that you can do the exercise faster, with more accuracy, in front of an audience than when you do it by yourself. Toastmasters uses the same concept, teaching people to do something they often fear — public speaking — by first exposing them repeatedly to speaking in a small, supportive environment before putting them in front of larger and larger groups.
Mentors can also nurture this quality in future leaders by creating similar experiences. For instance, if your next-in-line is slated to present before the board, don't let him do so without preparation. Have him present first in front of a few colleagues, then at the Monday morning meeting, then before the management team, all before they present in the higher-pressure environment of the boardroom.
Once an executive learns how to manage adrenaline without panic, he or she can grow confident that the sensations that stress induces will not lead to collapse. While it is a noisemaker in the untrained mind, when channeled properly adrenaline can help people accomplish things that they never would have imagined possible. The ability to make adrenaline a friend is a necessity for executives in today's environment of ongoing duress. Not surprisingly, it's also a hallmark of the world's best CEOs.
URL to original article: http://www.builderonline.com/builder-pulse/stress--in-a-proper-dose--can-work-as-a-leader-s-ally.aspx?cid=NWBD110502002
For further information on Fresno Real Estate check: http://www.londonproperties.com
Subscribe to:
Posts (Atom)
