Real estate housing and economic news round up for 4-5-2012
CoreLogic Reports Home Prices
CoreLogic just released their February 2012 Home Price Index (HPI) report and it is not pretty. Getting pretty tired of sharing bad news. Maybe I should join the Kool Aid drinkers and ignore the facts? Lets look at the facts from CoreLogic:
- Excluding distressed sales, US home prices increased 0.7% from January 2012 to February 2012
- Excluding distressed sales, US home prices fell 0.8% if we compare February 2012 to February 2011
- US home prices home prices, including distressed sales, fell 2% if we compare February 2012 to February 2011
- US home prices home prices, including distressed sales, fell 0.8% compared to January 2012
Sounds pretty freaking scary but remember that does not really tell us about home prices in Upstate South Carolina. Distressed homes are foreclosures and short sales. Lets look at data from the Market Reports:
|Median Home Price||$125,000||$123,900||$113,250||$106,225|
I did not filter my data like CoreLogic does by removing the distressed homes. Sellers need to realize that buyers are looking for the best deal. Which means a seller is going to have to compete with foreclosures and short sales. Maybe a seller cannot go down to the same $/SF level as a foreclosure so that means they must have everything else perfect (condition, easy to show, etc etc).
Flashing Green Indicators for Real Estate
Consider the source and think about the report from CoreLogic above when you read what Jamie Dimon, CEO of JPmorgan Chase has to say about real estate in his latest letter to shareholders:
There has been a tremendous focus on the fact that housing prices remain depressed and, in fact, are still going down some. The large “shadow inventory” of homes in delinquency or foreclosure that has not yet hit the sale market adds to the fears that this will continue for a long time. New home construction still is very depressed – so, to most, the future looks bleak. However, if one looks at the leading indicators, all signs are flashing green – the turn is coming if it is not here already.
While we have to take what Dimon says with a grain of salt, he goes on to point out that population growth normally creates a need for an additional 1.2 million homes a year. Think about the latest Census and how much South Carolina has grown and is predicted to grow.
He also pointed out that it is cheaper to buy than to rent in half the market in America. He says this is the first time this has been true in 15 years. Rents have been going up and are predicted to keep on climbing in 2012. Something to consider even if Dimon is a jerk…
FHFA to Make Decision About Principal Reductions Soon
From a speech by FHFA acting director DeMarco:
It has been well-publicized that there is one form of loan modification that FHFA has not embraced, that being principal forgiveness. To be clear, the disagreement is not about helping borrowers. FHFA, with the Enterprises, has been making great efforts to assist troubled homeowners with underwater mortgages who have the ability to make a mortgage payment and a willingness to do so. While we are currently evaluating the recent Treasury changes to HAMP regarding principal forgiveness, I would like to explain the position we have taken to date.
The fundamental point of a loan modification is to adjust the borrower’s monthly payment to an affordable level. We have seen repeatedly that what matters most in successfully helping borrowers is a meaningful reduction in the monthly payment to an amount that helps stabilize the family’s finances. Indeed, we have found that payment reduction, not loan-to-value, is the key indicator of success in loan modifications.
Well that sounds reasonable and somewhat logical. Reduced payments huh? Hard to believe that DeMarco is a Washington bureaucrat.
As I have stated previously, we are currently evaluating the recent Treasury Department proposal to HAMP regarding principal forgiveness and expect a decision this month.
Considering this year is an election year we can probably expect the current administration will try to buy votes or at least some positive PR by forcing DeMarco to cave on this issue. Definitely an issue to watch.
What do you think is best: Principal reductions or reduced payments?
More Real Estate News & Links
America wants & needs action NOT words: Unemployment is very high, the housing market remains weak, and growth is not as fast as we would like.
Well bless their hearts! It is obvious they needed one since no one in Washington will listen to them: Bankers Get Their Very Own Super PAC
Hang on people we are in for a bumpy ride: Americans brace for next foreclosure wave