Click here: Realtor survey  – scroll down to page 14 for comments from agents about the market.

Here are the garphs from page 10 - the realtors surveyed say that most homes sold have languished on the market for more than three months - which shows how bad realtors are with pricing correctly:

An excerpt from Yun – he is trying to bully the mortgage industry into making riskier loans:

Consider the following loan performance after one year from the time of origination on Fannie Mae and Freddie Mac backed mortgages.

Loan default rates were 0.3 to 0.4 percent in the more “normal” housing years of 2002 and 2003 – before the housing boom, before all those exotic mortgage products (subprime, no-doc loans) and well before the developments of any housing bubble. In the immediate years after the bubble burst – 2007 and 2008 – default rates rose to 2 and 3 percent.

Now examine the performance for those loans originated in 2009 and 2010.

The default rates came in at 0.1 and 0.2 percent after one year of seasoning. Those are exceptionally low figures – in fact, even lower than those for the normal housing years. The data for 2011 is not yet available, but several indications point towards possibly an even better loan performance than we saw in 2009 and 2010. While the headline mortgage default data are driven by the souring loans from the bubble years, the default rates among recent borrowers have been at historic lows.

Banks and the regulators need to understand this important distinction and permit more loans to flow into the market.

My estimation based on credit scores of those who are being approved for mortgages today vs. those who were approved 10 years ago suggests that home sales could easily rise by 15 to 20 percent if the underwriting standards were to go back to normal.

That would be a sizable gain in home sales and would result in a commensurate decline in inventory. A decline in inventory and increased sales would help bolster home price appreciation. If underwriting standards return to normal, the housing market will approach a more normal state as well.

A normal housing market would help fuel a continuing economic recovery, help bolster household wealth, spur consumer spending, spawn more job creation (thus providing more fuel to the economy). It would, in effect, be a win-win situation. This is what we aim for. This is what we hope for. This is what NAR continues to work towards for its members and America’s homeowners.

The N.A.R. released their exact mis-remembering of home sales data over the last few years:

They appear to be paranoid that their reputation might be slipping, because they added this gem:

Home buyers and sellers will not be affected by any revisions to NAR’s existing-home sales data. Median home prices remain the same, and the data has no impact on consumers who want to buy or sell a home in today’s market.

Their reasons for MLS sales count and Benchmark Divergence?

• Fewer FSBO home sales and more REALTOR®-assisted home sales (e.g., no net increase in home sales in a case where 80 MLS sales and 20 FSBOs shifts to 90 MLS sales and 10 FSBOs).
• More Homebuilders seek REALTOR®-assistance in listing properties on MLSs (More MLS count even though there is no increase in existing home sales).
• Flipping of a home (re-sell within 12 months). Re-benchmarked figure excludes the second sale, while they are counted as twice in MLS count.
• Enlarged MLS geographic coverage. Some of the home sales are not an increase in home sales but are just due to enlarged sampled areas.
• Double counting as one single property is listed in two or more MLSs.(Example: a home in Colorado Springs is listed in MLS in Colorado Springs and is also listed in MLS in Denver.)

They are right that home buyers and sellers won’t be affected, because they gave up long ago that anything relevant would come from N.A.R. But I don’t know how the median price isn’t affected – they took out 737,000 sales and the median price just happened to be the same? Maybe they don’t even know how a median price is calculated?

From the sddt.com:

 The nation’s economy is five years into a 10-year recovery cycle, according to Douglas Duncan, Fannie Mae chief economist and vice president.

National housing prices have another 3 percent left to fall, excluding distressed sales, and could fall another 7 percent altogether, he said, speaking at the annual real estate conference held by the University of San Diego’s Burnham-Moores Center for Real Estate.

The housing market’s problem is too much supply, much of which is comprised of distressed properties, and too little demand. The lack of demand is driven not only by the nation’s stubbornly high unemployment rate, but also the lack of movement in wages of those that are employed.

Together, those factors have influenced on-the-fence buyers to decide there’s no motivation to move right now, while others aren’t in a position to enter the market in the first place.

In addition to the 8.6 percent of the population that’s currently unemployed, there’s another 26 percent who fear for their job security, according to a survey conducted by Fannie Mae, cited by Duncan. That means more than a third of the country is unsure of their immediate earnings prospects.

“Employment is the most important factor in my belief system in how you understand real estate,” he said.

Read the rest of this entry »

People have been sending in the links to the story about the NAR sales recount.

http://www.cnbc.com/id/45659547

NAR has always been irrelevant, and will always be – they are a joke.

They don’t do a hard count of the actual sales; instead, they estimate the sales nationwide.  Yet, the story is that they are revising their estimating model, not that they are changing to an actual count of home sales.

They have realtor.com, which according to them is “the most comprehensive source for real estate listings”, but they don’t use it themselves to count sales?

What they should do is discontinue the national count altogether, as part of a shift to educating the public properly.  They should champion the ‘all real estate is local’ mantra, and if they are going to publish anything, it should be statistics on local sales only.

But they can’t stop from blubbering all over themselves, they even had to assure us with this:

“The benchmark revisions will be published next Wednesday and will not affect house prices.”

NAR should do all of us a favor and close their doors – for good.

From HW:

Four years after the housing bust, researchers at the Federal Reserve Bank of New York are putting some of the blame on real estate speculators, saying they played a key role in blowing up the housing bubble that eventually popped, causing home prices to tumble nationwide.

In a report titled  “Flip This House: Investor Speculation and the Housing Bubble,” four researchers claim borrowers who owned multiple homes for investment purposes played a key role in running up national home values right before the 2007 housing meltdown.

In fact, the report found a third of U.S. home purchase lending in 2006  was issued to borrowers who already owned property. In California, Florida, Arizona and Nevada, investors made up 45% of the 2006 transactions, suggesting the deep pain in these markets was rooted in excessive levels of real estate speculation.

“In 2006, Arizona, California, Florida, and Nevada investors owning three or more properties were responsible for nearly 20% of originations, almost triple their share in 2000,” the study said.

The report describes these investors as over-leveraged borrowers, consuming large doses of non-prime debt with high interest rates and low-down payments to fuel their appetites for quick acquisitions that could be flipped for profit.

What these investors created was an insidious cycle, where their excessive buys pushed prices higher for all buyers. When the bust came, these overleveraged house flippers escaped by abandoning their second liens, while innocent homeowners ended up underwater on their mortgages.

The report – which was filed by Andrew Haughwout, Donghoon Lee, Joseph Tracy and Wilbert van der Klaauw with the New York Fed Bank – puts the blame mostly on speculators operating in the 2004-to-2006 time span.

The authors of the report claim many of the investors may have falsely stated an intention to live in the homes while applying for cheap credit.

Either way, the report’s authors see a need for housing policy to address the issue of excessive leverage and speculation to curtail similar trends in the future.

“In the 2000s, securitized nonprime credit emerged to allow leverage to increase, with effects that extended far beyond this sector, including spillovers from defaulted mortgages to the value of other properties. Effective regulation of speculative borrowing, like what is being attempted in China today, may be needed to prevent this kind of crisis from recurring,” the report concluded.

This guy has intriguing evidence, but his reasons are just ivory-tower guesses.  Hat tip to DB for sending this along from businessinsider.com:

Barclays analyst Stephen Kim is becoming increasingly convinced that the housing market is near a bottom and that it will rebound in 2012.

He points to one key trend, which he is surprised is getting so little attention.

“In the absence of a government homebuyer incentive, prices for non-distressed home sales have stabilized for almost a year! In our opinion, this is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the Street. Meanwhile, we point out that this stability on the part of non-distressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices.“

Kim continues:

We are particularly intrigued by the inability of distressed sales to drag down non-distressed pricing. This separation between the two types of housing is critical for several reasons:

- The data shows that a distressed home is increasingly being seen as a poor substitute for a non-distressed home.
- This bifurcation between distressed and non-distressed homes will only widen with the passage of time.
- With buyers now discerning that distressed homes cannot be compared to non-distressed homes, concerns about the workout of foreclosures may be overblown.

Kim believes that stability in these prices in the absence of government subsidies is strong signal that home buyer sentiment is improving.  Furthermore, he notes that stabilization in relevant economic indicators such as unemployment and consumer sentiment only strengthens his argument.

Read more: http://www.businessinsider.com/barclays-the-most-important-trend-in-the-housing-industry-is-signalling-a-recovery-2011-12#ixzz1ftxltYch

David Blitzer and his crooked bow tie make the usual psycho-babble comments on CNBC:

http://www.cnbc.com/id/45475582

“Consumer attitudes have gotten a lot more negative about long-term commitments, and the No. 1 long-term commitment most people in this country made is buying a house,” David Blitzer, chairman of the S&P Index Committee, told CNBC.

Prices in August were also revised to show a decline of 0.3 percent after originally being reported as unchanged.  The index has leveled off in recent months and analysts are hoping the market is at least stabilizing.

“Over the last year home prices in most cities drifted lower,” Blitzer said in a statement.

“The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.”

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This was probably the more pertinent comment from the same article:

The number of U.S. homeowners who are underwater on their mortgages decreased modestly in the third quarter, though levels remained high, data analysis company CoreLogic said Tuesday.

The number of properties with so-called negative equity — in which the amount owed on the mortgage exceeds the property’s value — was 10.7 million, or 22.1 percent of all residential properties with a mortgage.

That is a slight decrease from 10.9 million, or 22.5 percent, in the second quarter, CoreLogic said.

“Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness,” Mark Fleming, chief economist at CoreLogic, said in a statement.

As the housing market struggles to recover, the large number of underwater homeowners has prompted concerns of more foreclosures to come if borrowers become unable to keep up with their payments or decide to walk away.

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Lately, San Diego’s ride has been smooth, not bumpy, with September’s SA off -0.5%:

The last few years close-up:

From sddt.com:

Add another data point to housing’s ongoing bounce along the market bottom.

Sales activity of existing homes in San Diego County slipped on a monthly basis in October, falling roughly in line with its year-ago level, according to recent data.

The San Diego Association of Realtors (SDAR) reported that buyers purchased 2,292 total homes last month, virtually unchanged from the 2,297 sold last October but down 9 percent from a month earlier.

Of the homes sold in October, 1,546 were single-family homes. The single-family total is 10 percent fewer on a monthly basis but 3 percent above October 2010.

The 746 condos sold last month represented declines of 6 percent from both the previous and year-ago months.

Among single-family homes, the median sales price — measuring only the cost of the median home of all properties sold during the defined period, rather than a broad change in housing values –fell 1.3 percent from September and 7.6 percent from last October, to $355,000.

The median condo sold for $207,500, down 1.1 percent from September and 2.8 percent from last October.

The most pronounced change in the SDAR numbers, on an annual basis, is the average time properties spent on the market last month.  Single-family homes sold in an average of 91 days, 18 percent more than the 77 average days spent on market last year, and 12 percent more than a month earlier.

The for-sale inventory, especially on the low end of the market, has grown picked over as the distressed properties in the best condition are quickly snatched up after going on the market. Making matters worse, sellers who would typically be looking to enter the move-up market have abstained due to low prices and an unstable labor market.

“People go out and they get very discouraged looking at what’s on the market,” said Alan Nevin, principal of The London Group Realty Advisors last week, reached last week to discuss housing affordability in San Diego. “The number of listings of homes under 500 in acceptable areas is negligible.” (I think he means under $500,000)

Russ Valone, president and CEO of MarketPointe Realty Advisors, said the increasing prevalence of short sales might also account for the rising days spent on market average.

The average is calculated from the time a property is listed to the time it closes, not when it enters escrow. The notoriously lengthy transaction timeline of short sales could push up the average, even if other properties aren’t necessarily spending additional time on the market.

(JtR: The paragraph above is inaccurate, the DOM is calculated from listing date to pending date)

Short sales account for roughly 8 percent of all home sales this year, up from 7 percent in 2010, 5.5 percent in 2009 and 3 percent in 2008, according to CoreLogic.

Valone said the increasing share of short sales is also in part responsible for the softness in prices.  “We’ve been bumping along the bottom for a good year,” he said. “Look at housing market, and softness, has little to do with housing, has to do with larger macroeconomics.”

The market needs echo boomers — children of baby boomers — to leave the rental market and become home buyers, according to Valone.

As long as the labor market remains weak, though, they’ve opted for flexibility over building equity.

“People who don’t own now should be coming into the market with zeal, with good interest rates and prices, and instead they’re saying ‘I don’t know if I’ll be full-time employed in San Diego,’ so they want the flexibility that staying in the rental market affords them,” he said.

While some analysts’ predictions have surpassed the general forecast that prices won’t fall more than another few percentage points, and have suggested they could come down as much as another 7 percent, those losses still don’t represent a great deal of money in the long run, according to Valone. More than a fear that values are still on the way down, it’s a fear of the current labor market that’s keeping young would-be buyers on the wrong side of the fence, he said.

“Housing won’t lead us out,” he said. “Instead of it being the lead engine pulling the train, it’ll be in the back pushing the train.”

Through ten months, total home sales have slipped 3 percent from last year, when the homebuyer’s tax credit propped up sales early in the year, led primarily by a decline in condo sales.

County buyers have purchased 8,902 condos this year, down 8.3 percent from the year-ago period’s 9,709.

Meanwhile, 17,565 single-family homes have been sold this year, down less than a percent from last year’s 17,603.

The average days on the market for the entire year among single-family homes has increased 13 percent, from 74 to 84, while condos are now spending an average of 96 days on the market, up 14 percent from 84 during the first 10 months of 2010.

The median sales price of a single-family home sold this year, $368,000, is 4 percent less than the median home’s price last year. In the condo market, the median price has fallen 5 percent to $207,500.

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JtR’s research:

Now that there are so many companies reporting sales and pricing, the numbers tend to vary. 

I don’t know where CoreLogic gets their “8% of sales this year were short sales”.  Of the detached and attached home sales in San Diego County this year, the MLS shows that 21% have been short sales, and 23% have been REO sales.  

San Diego County sales counts for first ten months (1/1 – 10/31)

From Originator News:

Bank of America is working “very hard” on a short sale-to-lease program for distressed borrowers who don’t qualify for government-backed refinance programs.

But the much-maligned bank won’t move forward until it gains assurance from regulators that borrowers are being treated fairly.

As outlined late this week by B of A executive Ron Sturzenegger at the Urban Land Institute’s fall conference in Los Angeles, the bank would regain title to mortgaged properties under a short sale arrangement, and then lease the houses back to their occupants for three years for rents that approximate the average for their particular areas.

At the end of the 36-month lease, Sturzenegger said during a panel session on capital markets, the institution would re-sell the houses to renters who wanted to buy them back. He did not say what price buyers would have to pay to reclaim ownership from the bank.

Sturzenegger, who is managing director of legacy asset servicing at B of A, said investors are interested in the program, as are borrowers. But two obstacles still need to be overcome before the program becomes operational, he said: governmental clearance and finding someone with the ability to run it.

Hat tip to DOB for sending this in, from AdvisorOne:

After years of housing market decline that has weakened the economy and depressed consumer sentiment, a number of analyses are strongly suggesting that a turnaround in the beaten sector may finally be at hand.

Indeed, the market seems to be adding its endorsement to these analyses, with the SPDR S&P Homebuilders ETF (XHB) up 23% in the past month. (Even with the recent surge, the index is down more than 50% over the past five years.)

In a sweeping report titled “Housing: A Time to Buy,” JPMorgan Asset Management analysts David Kelly and David Lebovitz argue that trends in supply, demand and inventories all point to rising home prices. The two analysts offer lots of data that show how extreme the changes in the housing market have been in recent years. Their conclusion is shared by their counterpart, Citi analyst Joshua Levin (see more on Levin’s research on the next page).

Take housing starts, for example: The best month in the past years of housing crisis resulted in just half the average level of building activity over five decades. Kelly and Lebovitz present the data as follows: “In almost 50 years, from January 1959 to September 2008, the lowest annualized rate of housing starts recorded for any month was 798,000, and the average rate was more than 1.5 million units. Since January 2009, the highest rate recorded for any month has been 687,000, and the average rate has been just 575,000.”

Other stark findings include the fact that the value of home equity today totals less than half the level reached in 2006 –$6.2 trillion compared to $13.5 trillion five years ago. And the effect of the housing bust has been profound in that the fall in construction employment alone accounts for 30% of U.S. job losses in a sector that accounted for no more than 5.7% of U.S. jobs at its peak. All these and many more statistics account for today’s depressed consumer sentiment, whose current index value of 57.5 is nearly 30 points below its average of the past 40 years.

From an investment point of view, the JPMorgan valuation data is similarly robust. Kelly and Lebovitz show that the ratio of median home prices to personal income over the past 45 years has hovered over 200% (and peaked at 251%), but has fallen now to a historic low of 153%. To get back to a normal ratio, home prices would have to rise by 27%, they say. And with the fall of mortgage rates, mortgage payments for the median home have fallen to just 6.9% of personal income – a ratio of less than have the 14.4% average since 1996.