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July 15

Federal housing program complicates short sales

The Arizona Republic
7/15/2010
J. Craig Anderson

A recently implemented federal housing-market stimulus program designed to encourage short sales appears to be doing just the opposite, according to Phoenix-area real-estate agents, title companies and mortgage lenders.

Home Affordable Foreclosure Alternatives, the fourth initiative to be launched under the banner of the Obama administration's Making Home Affordable program, offers a cash incentive of up to $3,000 to homeowners on the brink of foreclosure who stick around to complete a short sale or deed in lieu of foreclosure, rather than just walking away.

It also provides a bonus of up to $6,000 to loan servicers for every short sale or deed in lieu they approve.

A short sale is one in which the home's seller owes more on the mortgage than the home's sale price would cover. The lender must agree to remove its lien from the property despite the unpaid loan balance.

A deed in lieu of foreclosure involves the delinquent homeowners signing the deed to their home over to their primary lender and walking away from the mortgage. The exchange occurs by mutual agreement, rather than by default.

While deeds in lieu are relatively rare, short sales have become foreclosure's twin engine in driving the housing market through its current readjustment period following an unprecedented real-estate bubble that burst in 2007.

Short sales are better for the housing market than foreclosures, because short sales generally do not lead to long periods of home vacancy, as foreclosures often do.

With that in mind, real-estate agents and others said they had been eagerly anticipating the April's implementation of the federal short-sale program, nicknamed HAFA.

That excitement quickly turned into disappointment as the effects of HAFA started to become clear, they said.

First of all, HAFA short sales require double the paperwork of other short sales, said Tempe real-estate agent Steve Trang of Occasio Realty.

"The most irritating thing is going from a document that was 50 pages to one that's 100 pages," Trang said.

HAFA short sales also can take twice as long to complete, said Steve DeLaveaga, vice president of sales and marketing at Fidelity National Title in Tempe.

A typical short sale takes longer than regular home sales because there are extra steps and more people involved. However, DeLaveaga said most lenders had done a good job of streamlining the process in the six months leading up to April.

Before HAFA, the typical escrow period was 35 to 50 days, DeLaveaga said. Now it's taking 75 to 100 days.

Most big consumer-mortgage lenders now require HAFA applications for all short sales, he added, even when the sellers have little chance of qualifying for the $3,000 relocation allowance.

Only about 10 percent to 20 percent of Phoenix-area short sellers actually qualify for the money, according to DeLaveaga and others.

Over the past three months, HAFA short sales have developed a reputation for being more time-consuming, labor-intensive and unreliable than comparable short sales occurring outside the federal program, Trang said.

For instance, a HAFA applicant's lender must send a letter of approval to the program's administrators in Washington, who then must review the application themselves.

Delays on the part of lenders and the government have dragged out the sale process, he said. In some instances, the buyers have gotten impatient and walked away from the deal.

"We have a government that is well-intentioned, but they're adding more obstacles," he said.

HAFA is the fourth program to be implemented under the Obama administration's $75 billion mortgage-relief effort, known as Making Home Affordable.

Its two key components, the Home Affordable Mortgage Program and Home Affordable Refinance Program, have undergone a number of revisions, primarily to reduce eligibility standards in response to lower-than-expected participation.

HAFA is likely to be subjected to a similar tweaking process, said Jay Butler, associate professor of real estate at Arizona State University's W.P. Carey School of Business.

"Basically, they're trying different things to see if they work," he said.

Dan Noma Jr., branch manager at Arizona Best Real Estate in Chandler, said he is optimistic about HAFA's potential for helping the local housing market.

The biggest problems are that too few consumers know about the program, he said, and too few real-estate agents know how to effectively push through a HAFA deal.

Chad Melin, branch manager at Academy Mortgage in Mesa, said real-estate agents should warn their clients to start putting together the documents required under HAFA, which include proof of income and evidence of financial hardship.

Noma said he still believes the program ultimately will help people once it has been broken in. HAFA eligibility lasts until Dec. 31, 2012.

Gilbert HomeStart real-estate agent Maria Hass said she was not optimistic.

"The HAFA program, just like the other programs, has not really helped," she said. "It's been a disaster."

2:23 PM GMT | Read comments(0)

Home Prices Expected to Weaken

United Press International
7/14/2010
Steve Cook

Eyebrows rose when CoreLogic reported yesterday that home prices increased in May, the fourth-consecutive month to show a year-over-year increase. Virtually every other indicator from Pending Sales to Mortgage Purchase Applications is showing home sales headed south with the expiration of the homebuyer tax credit ended April 30.

According to the CoreLogic, national home prices, including distressed sales, increased by 2.9 percent in May 2010 compared to May 2009 and increased by 3.5 percent* in April 2010 compared to April 2009. The bulk of the increase, however, came from increased prices for distressed sales ─ foreclosures and short sales.
Like a train slowing down to a stop, the engine driving modest increases in home prices is grinding to a halt. On a month-over-month basis, May's prices were only 0.9 percent higher than April's, making the rate of increase lower than the 1.3 percent gain from March 2010 to April 2010.

"Home price appreciation stabilized as homebuyer tax credit driven sales peaked in late spring," said Mark Fleming, chief economist for CoreLogic. "But given that the labor market and income growth remain tepid we expect prices to moderate and possibly decline the rest of the year."

April 2010 data was revised up from 2.6 percent to 3.5 percent. Revisions with public record data are standard, and to ensure accuracy CoreLogic incorporates the newly released public data to provide updated results.

Following the end of the credit, NAR's Pending Home Sales Index dropped more in May and fell to a lower level than ever before in its10 year history. It fell 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff came on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.

2:19 PM GMT | Read comments(0)

Home sales spike in Queens, Brooklyn

Crain’s New York Business
7/15/2010
Amanda Fung

Is it a second-quarter blip or something bigger? With buyers' tax credits ending and economic recovery still a matter of debate, it may be too soon to tell.

Similar to the Manhattan residential market, second-quarter real estate sales activity picked up in Brooklyn and Queens, according to a report released Thursday.

Queens saw a huge spike in sales activity in the second quarter, while Brooklyn recorded a more modest increase, according to a report by Prudential Douglas Elliman and Miller Samuel Inc. The number of sales in Queens jumped 86.6% to 3,972 in the second quarter from the same period a year ago, while in Brooklyn, sales rose 16.2% to 1,660.

“Overall the volume of transactions everywhere has rebounded year-over-year at or close to appropriate levels,” said Michael Guerra, executive vice president and director of sales for the Brooklyn division of Prudential Douglas Elliman.

Prices in Brooklyn continued to stabilize. For the quarter, the median sales price in Brooklyn was $463,000, up 5% from the same time a year ago. Since the third quarter of 2009, prices have been flattening, according to Jonathan Miller, chief executive of appraisal firm Miller Samuel.

Meanwhile, in Queens, prices continued to slide. The median sales price dipped 7.5% to $335,000 during the second quarter, from the same period last year. The decline is due to a greater number of smaller apartments in the borough that sold during the quarter, said Mr. Miller.

“A big part of the sales activity increase is attributable to the federal tax credits for first-time and existing homebuyers,” said Mr. Miller, adding that it had more of an impact in the two boroughs than in Manhattan, because of cheaper sales prices in general in the outer boroughs. “It was important in terms of stimulating activity.”

Low interest rates on mortgages also helped to lift sales in both boroughs. But experts remain cautiously optimistic, now that the tax credits have expired. Buyers were rushing to close on apartment sales by June 30 to meet deadlines for the credit. Now that the incentive has expired, the next 60 to 90 days could be crucial in determining whether the market has truly stabilized.

2:15 PM GMT | Read comments(0)

Home builders drop after Goldman downgrades sector

The Wall Street Journal Market Watch
7/14/2010
Alistair Barr

AN FRANCISCO (MarketWatch) -- Shares of residential builders including Pulte Group, KB Home and Lennar Corp. fell Wednesday after Goldman Sachs downgraded the sector on concern about the effect of a slowing U.S. economic recovery.

Joshua Pollard and Anto Savarirajan, analysts at Goldman, lowered their view on the builders to neutral from attractive.

"A looming slowdown in U.S. growth and correspondingly sluggish home sales is not a backdrop for outperformance," the analysts wrote in a Wednesday note to investors. "Although our universe has underperformed the market by 1,500 basis points since April, muted new-home sales since the tax credit expired bode poorly for outperformance even at below-normal valuations."

These stocks have lost at least 20% in the past three months on concerns that a slowing U.S. economic recovery and lingering high unemployment will dent sales of newly constructed homes. The Standard & Poor's 500 index is down about 10% in the same period.

Pending sales of new homes plunged 33% in May, after a federal subsidy for buyers expired at the end of April. Check out home-sales data here.

"Downgrading the group directly after the lowest new-home sales in history and the recent stock weakness seems counterintuitive," Pollard and Savarirajan allowed. However, the Goldman analysts are concerned that a post-stimulus lull that they thought would last one to two months is looking longer-lived, based on recent channel checks.

Re-acceleration of job growth, viewed as necessary for a housing rebound, may not be materializing, they added.

"While valuation is enticing for long-term investors, valuations are likely to remain below normal until double-dip-recession fears abate," the analysts wrote. "We now await signs of better underlying demand to get more positive."

Lower sales forecasts

The analysts expect new-home sales of 375,000 this year and 475,000 in 2011. That's down from a previous forecast of 500,000 in 2010 and 600,000 next year. They no longer see a surge in new-homes sales in the second half of this year.

"The drop in new-home sales from April to May was steeper than we had anticipated at the beginning of the year, and the recovery beyond May has been weaker than expected so far," they said.

"We estimate that new-home sales will be flat in 2010, followed by a 25% rebound in 2011 as the U.S. economy continues to recover and home prices remain stable," the analysts wrote. "The expected growth is off of very depressed levels and well below our normalized estimate of 800,000 [to] 850,000 new-home sales."

2:12 PM GMT | Read comments(0)

June home sales up, so are foreclosures

Daily Press
7/15/2010
Veronica Chufo

June home sales were up 2.5 percent on the Peninsula, compared to June 2009, while foreclosure filings were up 14 percent.

For the first six months of the year, sales were up 8 percent, compared to the first half of 2009, according to the Real Estate Information Network. At the same time, the number of properties with foreclosure filings jumped 34 percent, according to RealtyTrac, which follows foreclosures nationally.

Sales gains were driven by federal $6,500 and $8,000 tax credits, which expired earlier this year, said Tom Sullivan, president of the Virginia Peninsula Association of Realtors.

Now that those tax credits have ended, it's questionable whether 2010's sales gains will last, he said. Pending sales last month were down 17 percent from June 2009 levels.

The sales pace was expected to slow once the tax credit ran its course, Sullivan said.

"I'm just surprised with the magnitude of the change," he said.

Prices the last few months have been flat, indicating the market is stabilizing, Sullivan said. The median sales price last month for existing homes was $199,900, down less than 2 percent from this time last year. The median sales price for new construction was $234,500, down 4 percent.

"This month is sort of mixed signals," Sullivan said. "Listings are up. Median list prices are down 8 percent, which would indicate that sellers are being more realistic. Interest rates are great. What mystifies me a bit is pendings are down. Although we did a great sales month in June, the pipeline isn't so great."

Listings were up 17 percent in June, compared to June 2009. Perhaps that means sellers believe the worst is over and are willing to begin putting their homes on the market, Sullivan said.

"Unfortunately, we just haven't seen the buyers yet," Sullivan said. "Hopefully, that will open up in the months to come. There are plenty of people out there to qualify for these great low rates. I just don't see it happening today."

It'll take roughly nine months, at the current sales pace, to sell all the homes currently listed for sale in Hampton, Newport News and York County. It'll take roughly 15 months to exhaust the standing inventory in Poquoson, and 14 months in Isle of Wight.

About 21 percent of the sales last month were distressed, such as short sales or foreclosed homes, according to the Real Estate Information Network.

2:08 PM GMT | Read comments(0)

Hamptons Home Sales More Than Double in First Half

Bloomberg Business Week
7/15/2010

Home sales in the Hamptons, the beachside resort towns favored by celebrities and Wall Street financiers, more than doubled in the first half of 2010 from a year earlier, according to property broker Corcoran Group.

Sales in 15 New York villages and hamlets that make up the Hamptons rose to 923 homes from 433, Corcoran said in a report today. The dollar volume of all transactions more than doubled to $1.5 billion, while the median price of homes sold climbed 34 percent to $935,000.

“We’ve returned to a fairly healthy normal market,” Rick Hoffman, a Corcoran senior vice president who oversees sales on Long Island’s East End, said in a telephone interview. “We’re seeing the seasonality that we usually experience.”

Wall Street hiring and bonuses sparked confidence in would- be buyers, Hoffman said. New York’s financial companies added 6,800 jobs from the end of February through May, the largest three-month increase since 2008. The industry’s year-end bonuses gained an estimated 17 percent to $20.3 billion in 2009, according to the state comptroller.

“People who had been sitting on the sidelines said, ‘You know what? It’s not going to be the end of the world, lets go ahead and make this decision,’ ” Hoffman said.

The number of homes listed for sale in both the Hamptons and North Fork of Long Island rose 9.3 percent in the second quarter to 7,963, Corcoran said. The company didn’t provide separate home sales numbers for the April through June period.

The brokerage’s tally includes single-family home sales as well as sales of condominiums, Hoffman said.

2:06 PM GMT | Read comments(0)

July 01

Housing And Building Products: Is It Just For The Contrarians?

The Wall Street Journal
7/1/2010
Josh Beckerman

The housing rebound continues (or at least scattered signs of optimism). Several private equity-related deals have been announced in sectors like homebuilding and building materials.

Today, Gores Group-backed Stock Building Supply Holdings LLC said it completed the purchase of Bison Building Holdings Inc. out of bankruptcy. Stock, which had its own Chapter 11 stint last year, bought National Home Centers Inc. in April. Raleigh-based Stock said it “will continue exploring intelligent growth options.” In an effort to focus on the residential market, Stock recently sold its commercial door and hardware unit to Cook & Boardman Group, which is backed by Blue Point Capital Partners.

In another Thursday announcement, Resilience Capital Partners said it bought Taylor Lumber Inc., a 120-year-old maker of plain, rift and quarter sawn lumber, including cherry, maple, ash, hickory and Quentin Tarantino’s apparent favorite, oak. The McDermott, Ohio-based company has over 180 employees. Charlesbank Capital Partners LLC also likes lumber; the firm struck a deal in May to buy a majority of Cedar Creek Lumber in May; the sale price wasn’t disclosed but the deal involved a roughly $80 million debt facility.

This week also saw the news that Ares Management LLC invested $100 million of equity in City Ventures LLC, a California homebuilder specializing in “urban infill” construction. Imperial Capital, which backed the company at the time of its 2009 formation, retained a minority stake. City Ventures plans to pursue a “measured, yet aggressive, growth strategy.” The company buys “desirable, often distressed residential and mixed-use properties,” according to a February press release, including empty lots that are developers were unable to complete. City Ventures has more than 1,000 lots, “currently estimated to yield approximately $1 billion in potential revenue.”

Meanwhile, ABC Supply Co. just wrapped up the purchase of Bradco Supply Corp., which was backed by Advent International and Apollo Management. Bradco, with 129 locations and about $1.5 billion in 2009 sales, was ABC’s largest-ever acquisition.

And at least one player in the sector is braving the IPO market. CI Partners LLC-backed building products Ply Gem Industries Inc. company filed in late May for a $300 million offering.

When Charlesbank announced the Cedar Creek deal, the private equity firm’s Managing Director Jon Biotti said “a lot of times it’s daunting to invest in an industry before the market has rebounded.” He said “we’re comfortable jumping in before the rebound is obvious because it’s part of our contrarian investing style.” The firm expects the housing market to have a meaningful rebound in a three-to-five year period.

9:15 PM GMT | Read comments(0)

Case Says U.S. Housing Starts ‘Dead Flat in the Mud’: Tom Keene

Bloomberg Business Week
6/29/2010
Alex Kowalski and Tom Keene

The U.S. housing market “is still bouncing along the bottom” as vacancy rates outpace historically low construction, said economist Karl Case, co- creator of the S&P/Case-Shiller home-price index.

The S&P/Case-Shiller index showed today that home prices in 20 U.S. cities rose 3.8 percent in April from a year earlier, the biggest year-over-year gain since September 2006. Sales got a boost from a tax credit aimed at reviving the industry that triggered the worst recession since the 1930s.

While the report was “fairly positive,” Case said, home building, which has driven the economy during past economic expansions, “is dead flat in the mud.” Housing starts have been at 15-year lows for the past 18 months, and vacancy rates are increasing, he said.

“The unwritten story here is what’s going on with household formations and the pattern of them,” the Wellesley College economics professor said today in an interview with Tom Keene on Bloomberg Surveillance. “The census is telling us that households are being formed, but they don’t seem to be showing up.”

Case attributed this disconnect to fewer immigrants and more emigrants, as well as the “doubling-up phenomenon” where more people choose to live together or reside with their parents.

California Effect

Compared with the prior month, 18 of the 20 areas covered in the S&P/Case-Shiller home-price index showed an increase on an unadjusted basis for April, led by a 2.4 percent gain in Washington and a 2.2 percent increase in San Francisco. Miami and New York were the only two cities showing a monthly decrease.

San Francisco could be reviving the U.S. housing market, Case said, if it is able to propel California, which comprises 25 percent of the national market. California accounted for the most national foreclosures during March, April and May.

“Some of the institutions out there were lending money at rates that were beyond belief,” Case said. “If we can stabilize that market alone, it will help a lot.”

Case is retiring tomorrow after more than 30 years at the Wellesley, Massachusetts-based college.

9:13 PM GMT | Read comments(0)

Budget Plan to Stall Low-Income Housing, Critics Say

The Wall Street Journal
7/2/2010
Nick Timiraos

Developers say that a provision to defer low-income housing tax credits in a bid to close New York state's budget gap threatens to permanently chill future investment in a program that has attracted private capital for affordable-housing development.

Under the proposed provision, the state would defer for three years the use of the tax credits in excess of $2 million. Developers typically raise equity for new projects by selling the credits to investors, who then can claim them annually for 10 years.

Already, tax-credit syndications can be tough to put together because they're limited to a narrow pool of buyers—mostly large financial institutions—that expect to have long-term state tax liabilities. The value of federal tax credits has been depressed in recent years because some traditional buyers haven't had profits to shield from taxes.

Affordable-housing officials say that the state tax program has successfully boosted private-sector development of low-income housing and worry that the credits will become worth less if investors lose confidence in their ability to claim them as expected.

"What will people in the future pay for these tax credits if they're not getting them when they were supposed to? Will they buy them at all?" says Martin Dunn, president of Dunn Development Corp., a Brooklyn-based affordable-housing developer.

The deferral could imperil the success of financing for developments like the Navy Green, a 460-unit mixed-use project in Brooklyn. On Tuesday, Dunn Development closed on a deal with J.P. Morgan Chase & Co. to sell tax credits valued at $750,000 annually to start the first phase of construction, a 112-unit rental apartment building.

Developers say that the provision could put at risk some of the tax credits that have been authorized but not yet sold. "Investors are going to walk away from these," says Duncan Barrett, an Albany-based developer who serves as president of the New York State Association for Affordable Housing.

9:12 PM GMT | Read comments(0)

Distressed Sales to Sandbag Housing Revival

US News & World Report
7/1/2010
Luke Mullins

Distressed properties made up 3 in 10 homes sales in the first three months of the year, as the foreclosure onslaught continues to sandbag a real estate recovery.

Third-party buyers purchased 233,000 foreclosed properties in the first quarter, with distressed homes representing 31 percent of all home sales, according to a report released Wednesday by RealtyTrac. "In a normal year, 1 to 2 percent of total home sales are distressed," says Rick Sharga of RealtyTrac. "We're in the 30 percent range—it's really mind boggling."

The data is disconcerting because of the link between distressed transactions and home prices. "Foreclosure sales drive down prices," says Celia Chen of Moody's Analytics. "The greater the share of foreclosure sales to total sales, the greater the downward pressure on prices." On average, buyers paid 27 percent less for distressed properties than they did for homes not in foreclosure during the first quarter, RealtyTrac found.

After peaking in the first quarter of last year, the tally of foreclosed homes sales dropped 33 percent through the first three months of this year. The share of distressed sales, meanwhile, also declined from 37 percent to 31 percent of all home sales during that period. But analysts worry that the distressed share could soon move higher again.

In earlier months, many lenders delayed putting distressed homes onto the market as they waited to see if the properties would qualify for assistance through the Obama administration's housing rescue initiative, Chen says. But the program's results have been disappointing, says Zach Pandl, an economist at Nomura Securities. Of the 1.2 million trial loan modifications that were initiated through April, nearly 278,000 have already been canceled. "Many homeowners have been unable to pay their mortgages even after a modification," Pandl says. And after learning that properties won't qualify for federal assistance, banks are free to move them through the foreclosure process, which will likely drive foreclosure sales higher, Chen says.

9:07 PM GMT | Read comments(0)

U.S. housing market remains fragile despite low mortgage rates

The Washington Post
7/2/2010
Dina ElBoghdady

After showing signs of a fledgling recovery from the worst downturn in decades, the U.S. housing market appears to be heading back toward the doldrums, as the expiration of a lucrative tax credit for buyers and increased uncertainty about the economy cause home sales to plummet.

The sudden weakness in residential real estate has struck nearly every region of the country, according to recent government and industry data, driving down sales of new and previously owned homes alike in May. On Thursday, the National Association of Realtors said an index that measures sales contracts signed on existing homes plunged 30 percent in May, more than twice what analysts had forecast, to the lowest level since the group started tracking the numbers in 2001.

Those sharp declines come despite record-low mortgage rates and historically cheap home prices. The market's renewed fragility highlights concerns about whether the U.S. economy will hurtle back into recession and illustrates the impact of the nation's high unemployment rate, now at 9.7 percent. On Friday, the government will issue jobless figures for June that could signal what is in store for housing and economic growth.

As long as people are without jobs or fear losing their livelihoods, they are unlikely to commit to buying a home and saddling themselves with 30 years of mortgage payments.

"It sounds simplistic but it bears repeating: 'No job = No house,' " Mike Larson, an analyst with Weiss Research, wrote in a note to clients Thursday. "With so many Americans unemployed or underemployed, the housing market is going to keep hurting."

In a report last month, Harvard University's Joint Center for Housing Studies singled out high joblessness as "one of the biggest drags" on the market. Based on past downturns, the report concluded that job growth is highly correlated to a sustained housing recovery, even more so than falling mortgage interest rates.

Many housing analysts are rethinking their predictions for the market's performance for the year. More than half of the 106 economists and analysts surveyed by Macromarkets in June said they expect a dip in home prices; that's up from 40 percent in May.

Despite the flash of pessimism, many economists expect the market to stabilize, but they won't have a clean read on its direction until the fall or winter, when the lingering effects of the tax credit clear the system.

9:02 PM GMT | Read comments(0)

New York Housing Aid Plan Set

The Wall Street Journal
7/1/2010
Brittany Hutson

New York and federal housing authorities have come up with a plan to allow the city to make good on its promise to provide subsidized housing to thousands of low-income New Yorkers.

"We've created a plan to ensure that everybody that has a voucher today will continue to have a voucher," said Rafael Cestero, the city's Housing Preservation and Development commissioner.

In December, 2,500 families that had been approved to receive assistance from the city's Housing Choice Voucher Program, also known as Section 8, were told that their vouchers wouldn't be honored because the New York City Housing Authority exceeded its annual allotment of 99, 951 vouchers.

Since then, hundreds of families that lost vouchers have been evicted or face eviction and dozens have entered city homeless shelters, according to Judith Goldiner, an attorney at the Legal Aid Society, which provides legal representation to Section 8 and public housing tenants.

With a budget shortfall of $40 million, the housing authority received emergency funding from the U.S. Department of Housing and Urban Development earlier this year for $24 million. But that left a $16 million gap that would have put 4,000 families at risk for losing their vouchers by the end of this year.

On Wednesday, a $32 million plan was approved to save or restore the 6,500 vouchers. HUD will allow the transfer of nearly 2,000 housing authority Section 8 participants to the Section 8 program of the city's Housing Preservation and Development Department. These are the highest-costing vouchers of the 4,000 who were at risk and will cover the $16 million deficit of the housing authority.

The HPD will use $23 million of its budget reserves to relieve housing authority of its $16 million budget shortfall.

Of the 2,500 families, 1,500 will require a voucher this year. The New York State Department of Housing and Community Renewal will send 750 vouchers to HPD's Section 8 program.

The remaining 750 will be offered a new rental subsidy within the next six months. This will be created by HPD, who will take roughly $9 million of their federal HOME program funding.

HPD has an excess of $50 million in their budget reserves. They administer approximately 30,000 Section 8 vouchers. These vouchers will not be affected.

The housing authority will restore vouchers to the remaining 1,000 families in 2011.

Prior to the plan, time was running out for people like 43-year-old Nadeah Rasheed.

On Wednesday, a New York housing-court judge gave Ms. Rasheed one week to vacate the apartment where she lives with her two teenage daughters and to pay her landlord $4,440.

Ms. Rasheed, who arrived in New York five years ago from Iraq, works as a stock clerk at JCPenny's. But her salary isn't enough to pay for housing. Last July, she was approved for a $1,424 Section 8 voucher for a two-bedroom apartment. By December she had selected an apartment in the Bronx. But the voucher was cancelled.

"I begged them to take my papers and they said, 'No, Section 8 is frozen, you have to find your own place.'" Ms. Rasheed said she has no where to go. "I may have to go back to the shelter," she said. "I have no where else to go."

8:25 PM GMT | Read comments(0)

Mortgage rates hit new lows but housing demand lags without tax credits

Los Angeles Times
7/01/2010

A good news-bad news scenario continues on the housing front, with mortgage interest rates dropping again to record lows, according to the latest survey by home-loan buyer Freddie Mac.

The bad news: With the winding down of government stimulus programs, even fewer people are taking advantage of the eye-popping rates to buy homes.

The lenders that Freddie surveyed early this week were offering well-qualified borrowers 30-year fixed loans for up to $417,000 at an average rate of 4.58%, the lowest since the survey began in 1971.

For 15-year fixed-rate mortgages the average was 4.04%. Adjustable-rate loans with the first five years at fixed rates were being offered at an initial rate of 3.79%.

The borrowers would have paid an average of 0.7% of the loan balance in upfront lender fees and points, Freddie Mac said in its survey Thursday, and would have had 20% down payments or equity in their homes.

For solid borrowers who shop around and pay 1% of the loan balance in fees, rates were lower yet, mortgage professionals said. The website freerateupdate.com, which tracks rates being offered through brokers, said 30-year funding was available at 4.25% for such borrowers and 15-year mortgages at 3.75%.

The bad news, of course, is that the rates are scraping bottom because of fears that the global economy is in terrible shape. And that has continued a pattern that economists are watching with mounting concern -- a mini-boom in refinancings coupled with lagging actual home purchases.

A Mortgage Bankers Assn. index released Wednesday showed applications for refinance loans jumped 12.6% last week from the previous week and were at the highest level since the week ending May 22, 2009.

An index of home purchase applications, by contrast, fell 3.3% from one week earlier. That left refis at 76.8% of total applications, the highest share since April 2009.

"The bad news is we're driving rates down and there's still nothing on the housing sales side," said
Anthony Sanders, a senior scholar in real estate finance at George Mason University's Mercatus Center. "It's mostly refinancings, and 50% of the sales out there are foreclosures and distress sales."

Sanders noted that spooked investors worldwide are pouring funds into U.S. Treasury securities, still regarded as a bastion of safety. With the increased demand, the yield on Treasuries has dropped, dragging down the yield on Freddie and Fannie Mae mortgage bonds in the process.

The yield on the 10-year Treasury bond, which serves as a benchmark for fixed mortgage rates, dropped below 3% this week for the first time in more than a year.

That ultimately means lenders can offer lower rates on the mortgages backing the bonds.

Loans insured by the Federal Housing Administration remain available with 3% down payments to those who can qualify and pay the premiums for the insurance.

But government-controlled Fannie Mae and Freddie Mac have tightened their lending standards after heavy losses left them wards of the U.S. government. Federal tax credits for home buyers ran out at the end of April, and unemployment remains distressingly high, Sanders said.

"The facts of the matter are that we've exhausted what the government can do for the housing market," Sanders said. "The tax credits were the last hurrah of the stimulus."

Not surprisingly, given his comments, he's expecting another dip in housing prices as "the subsidies go away, the Bush tax cuts wear off and healthcare costs go up."

8:22 PM GMT | Read comments(0)

June 22

The Housing Market's Unexpected Drop

US News and World Report
6/22/2010
Luke Mullins

Home sales declined unexpectedly in May, even as federal stimulus efforts kept transaction levels artificially elevated.

Existing home sales slipped 2 percent in May from April but remained 19 percent above year-earlier levels, the National Association of Realtors said Tuesday. Despite the decline in sales, home prices were firm. Nationwide, the median home price increased 3 percent, to $179,600, from May of 2009. The months' supply of unsold homes, meanwhile, fell slightly to 8.3 from 8.4 in April.

The dip in sales came as a surprise to economists, who had predicted a 6 percent increase in May. Optimism had been fueled by an earlier NAR report showing that pending home sales had increased in April for the third straight month. Pending home sales—which reflect contracts signed but not yet closed—began rising early this year as buyers scrambled to take advantage of a federal tax perk. The Obama administration in February 2009 began offering tax credits worth up to $8,000 for qualified first-time homebuyers. The program was eventually extended and expanded to include even certain current homeowners who signed a sales contract by April 30 and closed their transactions by the end of June.

"Most analysts thought there would be a spike upward in existing home sales in May due to the expiration of the new homebuyer tax credit at the end of June," Brian Wesbury, chief economist at First Trust Portfolios, said in a report.

Celia Chen of Moody's Analytics says that the slide in existing home sales—which are tallied at closing—may simply reflect a slowdown in the mortgage financing process. "Learning from their mistakes earlier in the decade, mortgage lenders are carefully processing applications, making sure that all the i's are dotted and t's crossed," Chen said in a report. "Still-tight lending is slowing the approval process, and this may also be slowing the flow of home sales that are closing."

NAR says an issue related to flood insurance is gumming up the system as well. "Many potential sales are being delayed by an interruption in the National Flood Insurance Program," NAR Chief Economist Lawrence Yun said in a statement. "Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance."

6:17 PM GMT | Read comments(0)

US Stocks Lower On Disappointing Housing Data

The Wall Street Journal
6/22/2010
Peter A. McCay, Donna Kardos, Kristina Peterson

Stocks turned lower Tuesday afternoon as disappointing housing data weighed on the sectors most sensitive to the U.S. economic recovery including the industrial, energy, and consumer categories.

A report showing strength in regional manufacturing has lent some support to the market throughout Tuesday's trading session, keeping the recent declines in check.

The Dow Jones Industrial Average was recently off 34 points, or 0.3%, at 10407, led by a 2.1% decline in Home Depot to $30.77 after the release of data showing sales of previously owned homes in the U.S. slipped 2.2% in May to a 5.66 million annual rate. The surprise decline followed two monthly increases driven by a tax incentive for first-time buyers.

Alcoa and Caterpillar were also among the Dow's big losers, with Alcoa off 1.8% to $11.51 and Caterpillar off 1.6% to $65. However, Merck was a bright spot, up 1.4% to $35.60. Johnson & Johnson was also strong, up 1.2% to $59.90, after the company agreed to pay $45 million upfront to develop and commercialize a type-1 diabetes treatment-and-prevention drug from Swedish drug maker Diamyd Medical AB.

The Nasdaq Composite fell over 1 point to 2288. The Standard & Poor's 500-share index slipped 6 points to 1107 and has fluctuated between small gains and losses through much of the session. The technology and health-care sectors led the gains were the index's strongest sectors, while utilities and energy weighed as crude-oil futures slipped.

The moves came as the disappointing data pointed to continued struggles among consumers, which contrasted with a report showing manufacturing activity in the central Atlantic region remained strong in June, although it slowed slightly from its pace in May.

"You've got two economies at work," said Christian Thwaites, president and chief executive of Sentinel Investments. "In the corporate world, you're seeing gradual improvements in confidence, you're seeing a little bit more on the capital expenditure side and other indicators. The other part of the economy is the consumer, and that is flat and still struggling and will for some time. So we're not placing any big bets on the consumer-discretionary side."

Anxiety remained high over the health of European banks, after French bank Credit Agricole said it now forecasts its Emporiki Bank of Greece SA unit will return to profit in 2012 instead of 2011 because of higher-than-expected loan losses. That came a day after Fitch downgraded French bank BNP Paribas's credit rating. Last week, European leaders agreed to publish the results of stress tests showing the financial health of individual lenders by the end of July, in a bid to improve market confidence.

6:15 PM GMT | Read comments(0)

Getting older now means more housing distress

Reuters
6/22/2010
Lynn Adler

Amma Holmes expected to pay off the mortgage on her Tampa, Florida, home in the next few years. Instead, she lost her job and her two adult sons have moved back in to help pay her bills.

She isn't alone.

For the first time in generations, getting older means carrying more mortgage debt and less savings into retirement, thanks to the housing crash and rising joblessness among those 45 and older.

The average age of borrowers seeking foreclosure prevention help from CredAbility, a national nonprofit credit counseling agency based in Atlanta, rose this year to 48 from 46 last year, and 43 in 2006.

Holmes, 53, modified her mortgage earlier this year, cutting monthly payments by $375 a month. But she lost her job at Tampa General Hospital, and her sons moved in to help pay the debt.

"In 2014, my house would have been paid for," she said, but the end date is now 2036 after the modification. "I feel good about the modification, but it's like starting all over again."

Holmes originally bought her home in 1993. But she refinanced with an adjustable-rate mortgage in 2006, and then struggled to make payments when her hours were reduced.

With the wage cut, "I was always behind, with my paycheck what it was. I didn't have that much to pay," said Holmes, who is looking for a new position at the hospital where she worked for over 20 years.

6:02 PM GMT | Read comments(0)

June 20

Reviving a Housing Market in a Swoon

The New York Times
6/19/2010
Antoinette Martin

According to the early evidence, the New Jersey residential market went a bit weak in the knees in May — or even swooned — after the federal home buyer tax credit expired on April 30.

K. Hovnanian’s Four Seasons at Ridgemont broke ground in Montvale. The developer is hoping a home buyer tax credit, awaiting the governor’s signature, will help spur sales.

Sales statistics are not yet final. But in a sample study of multiple-listing data from nine counties done by the Otteau Valuation Group of New Brunswick, which reports on the state’s real estate industry, the pace of contract signings was found to be down in all of them, and in some cases sharply.

In Middlesex County, for example, four straight months in which sales outpaced those of the year before were followed by a month of May with almost a third fewer sales than last: 467 contracts versus 672.

On average across all nine counties, according to the Otteau data, there were 23 percent fewer sales in May than there were in May 2009. The counties were: Bergen, Camden, Essex, Hudson, Middlesex, Morris, Ocean, Passaic and Union.

Even before these numbers were in, however, state lawmakers were readying plans for a new statewide tax credit, described by some as a “bridge” to help the housing market along until the overall economy fully recovers.

On June 10, legislators gave overwhelming final approval to a measure that would provide buyers with a tax credit of $15,000 (or 5 percent of the purchase price, whichever is less) over three years, as long as they lived in their homes for at least that length of time. A total of $100 million would be allocated for the program, which would place no income limits on participating buyers.

By contrast, the federal program offered homeowners a maximum of $8,000 and, even when its income ceiling was raised early in 2010, excluded couples earning more than $225,000 a year. With New Jersey perennially ranked as one of the richest states, the income limit made a significant difference, in the eyes of market watchers.

7:17 PM GMT | Read comments(0)

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