Federal Share of REOs is Rising

In trying to keep my promise to post only NSDCC-related data, here’s a national article from G-S, with NSDCC relevance at the bottom. Hat tip to Aztec for sending this along:

As of 1Q, the number of seriously delinquent federally backed loans surpassed the number held by banks and private label securitizations and now accounts for the majority of seriously delinquent mortgages (seriously delinquent mortgages comprise loans in the foreclosure process as well as loans that are 90-plus days delinquent but not yet in foreclosure).

This shift is due to the persistently elevated level of seriously delinquent loans among Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), in contrast with private-label and bank-held loans, where serious delinquencies peaked in 2009 and have declined significantly since.

The chart below shows the number of seriously delinquent mortgages backed by federal entities and the total mortgage market; the right axis shows seriously delinquent loans as a share of the total.

The federal share of REO property is also rising.


Down-Payment Check

The original thought behind examining the size of down payments was to get a feel for the buyers’ intentions – figuring that if they put down a healthy chunk of change, that they probably planned to live there long-term.

But it also helps illustrate who is buying – people with substantial funds available.

Here are the down-payment stats for the Carmel Valley, Del Mar, Solana Beach, and RSF detached sales for June – where the average price was $1,391,764, at an average of $415/sf:

Amt of Down Pmt Number of Sales
0-19% 6
20% 14
25% 7
30-50% 10
51%+ 5
Cash 6

Short sales: 5

Bank-owned sales: 2

Number sold for less than the sellers paid:  18 (37.5%)

Sold before MLS input: 2

So far this month, 44% of the buyers are using at least 30% down payments on very expensive properties.  Yes, the lenders are demanding bigger down payments, but the fact that people have the dough, and are willing to invest it in spite of the headlines, is a healthy sign.

It helps identify the competition for the top-quality properties too – where you will likely be bidding against people with ample horsepower.  Strategize accordingly.

May Sales & Pricing Summary

The N.A.R. Existing Home Sales for May will be released tomorrow, and no one expects any sunshine.  But the NSDCC numbers still look solid, compared to the last two years:

Year # of Sales $/sf Avg. SP Median SP Avg. DOM Med.SP/Med.$/sf
$1,220,706 $770,888
$1,020,496 $800,000
$1,153,254 $850,500

But sales are way below the peak – the best May was in 2002 when 392 NSDCC houses sold.

I think the sales are going to drop further in coming months. There have only been 147 detached NSDCC listings marked pending this month, and we’re two-thirds through. The June closings total only 115 so far, but they’re averaging $384/sf.

The market around here has become a rich man’s game. You’d have to be a strong qualifier, and be comfortable with risking big money, to buy with prices at this level. But at this rate, we’re only going to see 100-200 sales per month. With the banks not foreclosing, the only people who must sell are those who need to tap their equity to eat – and there doesn’t appear to be many sellers like that around here.

Church House on the Water

On the river in Rotterdam, is a wooden church from 1930.

The building has not functioned as a church since the 1960s, and had been used as a storage space and garage. The church was completely covered with aluminum sheeting and transformed into a storage company.

Until a family with two children, bought the church in order to live.

Instead of simply transforming the church into a house with 12 bedrooms, we have a ‘normal’ house created as a separate object placed in the church. You can truly walk around the house while you are ‘in’ the church.

Banks Manipulating System

For those who think that any local real estate market could get crushed (further) read this article – it appears that the banks have foreclosures right where they want them.  Hat tip to MB for sending this along, from the nytimes.com:

Millions of homeowners in distress are getting some unexpected breathing room — lots of it in some places.

In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.

In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’ ” said Herb Blecher, an LPS senior vice president. “Now you’re probably not losing any sleep.”

When major banks acknowledged last fall that they had been illegally processing foreclosures by filing false court documents, they said that any pause in repossessions and evictions would be brief. All of the major servicers agreed to institute reforms in their foreclosure procedures. In April, the Office of the Comptroller of the Currency and other regulators gave the banks 60 days to draw up a plan to do so.

But nothing is happening quickly. When the comptroller’s deadline was reached last week, it was extended another month.

New foreclosure cases and repossessions are down nationally by about a third since last fall, LPS said. In New York, foreclosure filings are down 85 percent since September, according to the New York State Unified Court System.


Bouncing Along…

As CR pointed out yesterday, there are now several home pricing indicies.

The one developed by FNC attempts to overcome the problems with the repeat-sale measurements – here is their explanation:

One possible approach to address this dilemma is to consistently use all of the housing stock for each period. To do this it is necessary to have a market price for each house in each period.

Since all the properties do not sell, a model must be created to price all of the major attributes of a house (i.e. location, gross living area, age, lot size, bedrooms, bathrooms, etc.) and then compute an estimated market price for each property. The value of each of the attributes is estimated based on the observed properties that do sell over an extended window.

This approach allows all of the properties to be included in the index which then provides a stable broad based index for each period. Models of this type are referred to as hedonic models and have been used for many decades to estimate the value of a property. The limitation to using this approach for an index has been the general lack of availability of characteristic information about residential properties.

FNC has developed a hedonic index based on the data collected from public records and blended with data from appraisals. The addition of the appraisal data provides the physical property characteristic data that is often missing from public records.

Here is their San Diego Residential Price Index, which has a familar shape to it:

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