Archive for June, 2014

First-lien mortgages serviced by large national and federal savings banks are 93.1% improved in the first quarter of 2014 and foreclosures have been cut in half, according to a report released today by the Office of the Comptroller of the Currency.

Servicers initiated 90,852 new foreclosures during the quarter, a decrease of 49.1% from a year earlier.  The number of completed foreclosures also decreased 33.9% to 56,185, compared to a year ago.

Factors contributing to the decline in foreclosure activity include improved economic conditions, foreclosure prevention assistance, and transfer of loans to servicers not included in this report.

The mortgages in this portfolio comprise about 48% of all mortgages outstanding in the United States — 24.5 million loans totaling $4.1 trillion in principal balances.

The improvement in first-lien mortgages contrasts with 91.8% at the end of the previous quarter and 90.2% a year earlier.  The percentage of mortgages that were 30 to 59 days past due decreased 19.8% from a year earlier to 2.1% of the portfolio, the lowest level since the OCC began reporting mortgage performance in 2008.

Seriously delinquent mortgages — 60 or more days past due or held by bankrupt borrowers whose payments are 30 days or more past due — decreased to 3.1% compared with 4% a year earlier.

The percentage of mortgages that were seriously delinquent decreased 22.4% from a year earlier and is the lowest level since June 2008.

At the end of the first quarter of 2014, the number of mortgages in the process of foreclosure fell to 432,832, a decrease of 52.3% from a year earlier. The percentage of mortgages that were in the process of foreclosure at the end of the first quarter of 2014 was 1.8%, the lowest level since September 2008.

Servicers implemented 237,133 home retention actions (modifications, trial-period plans, and shorter-term payment plans) in the quarter compared with 71,678 home forfeiture actions (completed foreclosures, short sales, and deed-in-lieu-of-foreclosure actions).

The number of home retention actions implemented by servicers decreased 32.1% from a year earlier. Almost 91% of modifications in the first quarter of 2014 reduced monthly principal and interest payments, and 58.6% of modifications reduced payments by 20% or more. Modifications reduced payments by $292 per month on average, while modifications made under the Home Affordable Modification Program reduced monthly payments by an average of $312.

Servicers implemented 3,460,476 modifications from January 1, 2008, through December 31, 2013. Of these modifications, 60% were active at the end of the first quarter of 2014 and 40% had exited the portfolios of the reporting institutions, through payment in full, involuntary liquidation — completed foreclosure, short sale or deed-in-lieu of foreclosures — or transfer to a non-reporting servicer.

Of the 2,071,078 modifications that were active at the end of the first quarter of 2014, 69.9% were current and performing at quarter end, 23.9% were delinquent, and 6.1% were in the process of foreclosure.

Southern California remains home to the most overpriced housing markets in the country, but any fears of a new bubble look increasingly unfounded.

That’s according to a new report out Tuesday from real estate website Trulia, which monitors bubble conditions by tracking home prices relative to household incomes and long-term norms in markets nationwide.

After surging last year, prices here have cooled off this spring, giving the job market time to catch up. While Trulia says three of the four most “overvalued” housing markets in the nation are in Southern California — Orange County, Los Angeles County and the Inland Empire — those markets are far less overvalued than they were in the mid-2000s, when risky lending pushed prices far beyond what household incomes would bear. This time, price gains are slowing down as would-be buyers pull back and lending standards remain high.

“We’d be at greater risk of heading toward a bubble if price gains were still accelerating, but they’re not. Furthermore, the market is neither overbuilding nor overlending,” Kolko wrote. “On all these measures, the housing market today looks little like the bubble last decade.”

Still, if there’s a place where home prices are out of whack with incomes, the Southland is it. Prices in Orange County were 17% overvalued in the second quarter, by Kolko’s estimate. In Los Angeles they were 15% overvalued and in the Inland Empire, 13%. That’s compared with 71%, 79% and 92%, respectively, for those markets at the peak of the housing bubble in early 2006.

The latest readings on United States home prices are the latest confirmation of a slowdown in that area: Prices are still rising in most cities, but much more slowly than they were a few months ago. And that’s news we should cheer.

The S&P/Case-Shiller index of home prices in 20 major cities rose 0.2 percent in April, down from 1.2 percent in March and well below the 0.8 percent that analysts forecast. Over the last year, prices have risen 10.8 percent, compared with a 13.7 percent gain in the year ended in November, the recent peak. A second report on home prices out Tuesday, from the Federal Housing Finance Agency, showed the same pattern.

Just two years ago, buying a home looked to be a screaming bargain across most of the country. But the gains in home prices since then have made it a much closer call, as we reported last month. Jed Kolko, the chief economist of Trulia, writes Tuesday that national home prices are only 3 percent undervalued relative to long-term fundamentals, and that a handful of markets, particularly in Southern California, are now significantly overvalued.

Photo

Home buyers seem to be drawing the line and paying no more than they can afford.CreditDavid McNew/Getty Images

This doesn’t mean that a bubble on the order of 2006 has returned, only that buyers in some of those higher-priced markets should be wary andconsider renting a home instead if they are on the fence. “Orange County, today’s frothiest market,” writes Mr. Kolko, “is just 17 percent overvalued now versus being 71 percent overvalued” at the start of 2006.

Year-over-year change in S&P/Case-Shiller 20-city home price index

2012   10
2013   5
2014   0

But that moderate potential overvaluation could easily become a major one if double-digit price increases rise too much longer. In a world where inflation is low and wages are flat, continued steep home prices increases would rapidly move the housing market from broadly balanced to unaffordable and primed for a correction in just a few months.

That’s what makes this housing recovery seem healthier and more sustainable than the bubble of the early 2000s. Then, even as home prices soared beyond any traditional level relative to income, home buyers responded by taking on more risk and buying anyway, speculating on further home price gains. This time, they seem to be looking at high valuations and not getting caught up in the excitement, instead drawing the line and paying no more than they can afford.

Home price numbers tend to move in more steady, gradual waves than other economic data. They also come out with long delays; the April Case-Shiller numbers are actually based on transactions that closed from February through April — and those home sales generally went under contract a month or two before they closed.

So the latest home price readings are very much a look in the rearview mirror, and it’s a look that suggests a deceleration is underway. The question is where it will ultimately settle. If prices were rising 13 percent in the year ended in November and 11 percent in April, what will, or should, the level be later in 2014?

The healthiest thing for the housing market would be home price rises that thread the needle: high enough that homeowners are building equity and homebuilders have incentive to start new construction, but low enough that they don’t significantly outpace wage growth and result in unaffordable housing and a painful correction. The April home price numbers suggest we may be heading there.

 

Realtors expect home prices to continue to appreciate over the next year, with a median price increase expected of 4% over the next 12 months, according to the latest survey of the National Association of Realtors in their confidence index.

The index reflects the responses of more than 3,000 NAR members about their sales transactions.

The full report can be read here.

“Slower sales due to tight credit conditions, declining affordability due to the recent price growth amid modest income gains, and fewer distressed sales likely account for the modest expectations,” economists note in the report.

Some states are slightly more optimistic about home price increases, such as in Florida, where low housing inventories and high demand are expected to boost prices.

Price growth in Florida is expected in the range of 5% to 7% over the next 12 months.

Real estate professionals in states including California, Oregon, Nevada, Texas, and Georgia are forecasting home prices to be greater than 5% to 6% in the next 12 months.

“The median price for a new home under contract jumped 12.6% over the 12-month period ending in March to $290,000. The median existing home price was 31.7% lower at $198,200, more than three times the historical average spread of 10.8%, suggesting that existing homes are a bargain by historical standards,” said Ken Fears, director of regional economics and housing policy at NAR. “It appears that new home sales have begun to feel the weight of the sharp increase in mortgage rates, home price gains, and the erosion of affordability over the last 12 months. The impact of weather on new production will ease through the summer, resulting in additional inventory coming on line in six to nine months. However, inventory remains tight and prices continue to rise. A moderate increase in inventory will help to steady prices to a historically stable growth path.”

In most states, agents are predicting a 3% to 5% growth in home prices.

Nearly 12 percent of the U.S. population — 35.9 million people — moved between surveys taken in 2012 and 2013, and nearly half cited a housing-related reason as their most important motivation, according to a report from the U.S. Census Bureau.

Many wanted a new or better home or apartment; others wanted cheaper housing. Some wanted to own their home rather than rent, or to live in a better neighborhood or one with less crime. Some had the decision taken out of their hands — they were foreclosed on or evicted.

Moving image via Shutterstock.
Moving image via Shutterstock.

Nearly a third of movers (30.3 percent) cited a family reason for the change, including establishing their own household or change in marital status, among other reasons.

Just under a fifth of movers (19.4 percent) pointed to a job-related reason, such as a new job or job transfer; to be closer to work or have an easier commute; to look for work or due to a lost job; or due to retirement, among other reasons.

Compared to 1999, the share of people moving for better housing declined from 21 percent to 15 percent in 2013, while the share of those moving to form their own household rose to about 11 percent from about 8 percent. Moves due to a new job or transfer remained fairly flat at just under 10 percent.

Those who said the desire for cheaper housing was the most important reason for moving rose from 6 percent in 1999 to 8 percent in 2013. Meanwhile, those moving because they wanted to own rather than rent fell from about 8 percent in 1999 to about 6 percent in 2013.

 Last year, 5 percent moved to be closer to work or for an easier commute, up from 3 percent in 1999.

“We asked people to select the reason that contributed most to their decision to move. Picking one reason can be difficult, as moves are often motivated by many different, and oftentimes competing, factors,” said the report’s author, David Ihrke, a demographer in the Census Bureau’s Journey to Work and Migration Statistics Branch, in a statement.

“For instance, if one’s primary reason for moving is to be closer to work or having an easier commute, they may have to sacrifice other preferences. This could include forgoing cheaper housing options or settling for a different neighborhood. If they mainly want cheaper housing, they may have to deal with a longer commute.”

Moves within the same county were typically made for housing-related reasons, while moves to another county or from abroad were more often made for job-related reasons.

Summer 2014 Activity Guide

Posted: June 10, 2014 in Grover Beach

The Summer 2014 Activity Guide for the City of Grover Beach is now available and includes information on the Sizzlin’ Summer Concert Series & Farmers Market and the 26th Annual Dune Run-Run!

For a copy of the entire Activity Guide, which includes information regarding recreation programs and special events offered in Grover Beach as well as neighboring communities, contact the Parks and Recreation at (805) 473-4580.

Summer 2014 Activity Guide

Applications for U.S. home mortgages declined last week as both refinancing and purchase applications decreased, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 3.1 percent in the week ended May 30.

The MBA’s seasonally adjusted index of refinancing applications fell 2.9 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, dropped 3.6 percent.

Fixed 30-year mortgage rates averaged 4.26 percent in the week, down 5 basis points from 4.31 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.