New Home Sales Positive

New Home Sales Positive

• The figures for new home sales, contracts and not actual closings, were very positive today.
• New home sales in January jumped 15.6% from an upwardly revised December figure of 378,000 (vs. 369,000 initial estimate).
• Relative to last year, new home sales in January were 28.9% stronger, but the median price was only 2.1% higher.  The median home price for new construction in January remained 30% higher than the median price of existing home sales.
• While construction has ramped up in recent quarters, inventories continued to edge lower reaching 4.1 months in January.  That is the 12^th consecutive month below a supply of 5 months and the lowest since March of 2005.
• Continued growth of new sales will help to stimulate new construction which is good for the economy and employment.  However, only so many new homes can be sold as long as inventories remain tight and construction lags to keep up with demand.

Housing Inventory, Already Low, Dropped Further in January - WSJ.com

 http://blogs.wsj.com/developments/2013/02/14/housing-inventory-already-low-dropped-further-in-january/

 

By Nick Timiraos

See inventory and prices in major markets.

The number of homes listed for sale, which stood at an 11-year low at the end of last year, fell even further in January, according to a report released Thursday.

There were just 1.48 million homes listed for sale at the end of January, down by 5.6% from December and by 16.5% from one year ago, according to data compiled by Realtor.com. That’s the lowest level since the firm began its count in 2007. The National Association of Realtors separately reported last month that inventory ended 2012 at an 11-year low.

It’s normal for inventories to decline in December and January, as home sellers wait for the start of the spring buying season to list their homes for sale. But the shortage of homes for sale in a growing number of U.S. markets is maddening for would-be buyers who frequently complain that there aren’t enough good choices. Bidding wars are becoming more common.

Of the 30 largest U.S. markets, only Miami saw inventories increase in January from December, though they were still 10% below last year’s level. Other cities that have witnessed huge drops over the past year saw more modest monthly declines: inventories fell by less than 2% in Orlando, Phoenix, Atlanta, and Fort Lauderdale, Fla.

Several others reported huge monthly declines. There were just 1,800 homes listed in San Francisco, down by 21% from December and by 47% from one year ago. There were fewer than 4,000 homes listed in Seattle, down by 9% from December. Last year at this time, there were 7,175 listed for sale, and two years ago, there were more than 11,000.
Seattle and San Francisco have witnessed some of the sharpest price increases over the past year; median asking prices were up by 16.4% and 23.7% in both cities, respectively. Nationally, median asking prices were down by 0.5% from December and up by 0.8% from one year ago.
Housing inventory is low right now for several reasons. Notably, housing demand has picked up over the past 18 months, first as investors moved in to snatch up bargains on distressed properties, and later as demand from traditional buyers has picked up. Many investors have been buying homes that can be held as rental properties, which has kept them off the market.

Meanwhile, banks have slowed down their pace of foreclosure. The share of delinquent mortgages has been declining over the past three years, though it is still high. Lenders and other mortgage companies are also facing new processing requirements for foreclosures in some states, such as California, that have led to further declines in foreclosed-property listings.

A separate report Thursday from RealtyTrac, a real-estate firm, said that newly initiated foreclosures dropped by 11% in January and stood 28% below last year’s levels to a 6½ year low. A large part of that decline was due to the new “homeowner bill of rights” that took effect in California.
Many homeowners may be unwilling or unable to list their homes for sale because they don’t have any equity, or because they don’t have enough equity to sell their home and make a down payment their next home. Others that have equity may simply be unwilling to sell at a steep discount to prices that they would have paid in 2005, 2006 or 2007.
The Realtor.com figures include sale listings from more than 800 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.

FHA mortgage premium to rise on April 1 - SFGate.com

http://www.sfgate.com/business/article/FHA-mortgage-premium-to-rise-on-April-1-4250685.php?goback=.gde_90005_member_211566523

Borrowers who want to get a mortgage insured by the Federal Housing Administration should act quickly to avoid changes the agency is making to shore up its faltering insurance fund.

The U.S. Department of Housing and Administration announced the changes on Wednesday but didn't announce the effective dates until Thursday.

Here's the timing: FHA will raise the annual mortgage insurance premium on most loans that have a case number starting April 1 or later. To get a case number before the April 1 deadline and avoid the increase, borrowers should apply with a lender no later than March 25, says Julian Hebron, vice president with RPM Mortgage in San Francisco.
On most FHA loans, the annual premium will increase by 0.10 percentage point, or $100 per year for each $100,000 in loan amount.
For loans greater than $625,000 with a term longer than 15 years, the increase will be 0.05 percentage point, or $50 per year for each $100,000 in loan amount.

The premium itself varies depending on the loan size, term and loan-to-value ratio, but here's an example:

For a $500,000, 30-year loan with a loan-to-value ratio greater than 95 percent, the new premium will be 1.35 percent, or $6,750 per year, up from 1.25 percent, or $6,250 per year. On a monthly basis, the premium increase amounts to about $42.

For a chart showing premiums increases for various loan types, check out Hebron's blog at tinyurl.com/as4xsqb. These premium increases do not apply if a borrower refinances an existing FHA loan that was endorsed on or before May 31, 2009, into a new FHA loan under the streamline refinancing program.

FHA is not changing the one-time premium borrowers pay up front; it remains at 1.75 percent of the loan amount.

Bigger hit

In a potentially bigger hit, FHA borrowers will have to continue paying annual mortgage insurance premiums for a longer period of time - in most cases for the life of the loan.

This change will apply to new loans with case numbers starting June 3. To avoid this change, borrowers should try to apply by May 24, Hebron says.

In the past, FHA automatically canceled mortgage insurance on most loans when a borrower, anytime after five years, had made enough payments to reduce the balance to 78 percent of the original loan amount.

A borrower taking out a 30-year loan with 10 percent down could usually eliminate mortgage insurance after about six years making normal payments, or after five years if they made extra principal payments, Hebron says.

(If the original loan term was 15 years or less, the five-year rule didn't apply; FHA would cancel the insurance when the balance dropped to 78 percent.)

In the future, if the borrower starts off with a loan-to-value ratio above 90 percent, FHA will collect the premium for the life of the loan. If the original ratio is between 78 and 90 percent, FHA will cancel the premium if the balance drops below 78 percent of the original loan amount anytime after 11 years.

Read more: http://www.sfgate.com/business/networth/article/FHA-mortgage-premium-to-rise-on-April-1-4250685.php#ixzz2KFIevK8r

Big Money Betting On Housing - CNNMoney.com

http://money.cnn.com/2013/02/04/investing/housing-market/index.html?section=money_realestate&utm_source=twitterfeed&utm_medium=linkedin&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29

Investors are betting big on the housing recovery.

Hedge funds and private equity firms have been rushing in to buy up companies and assets in every part of the housing supply chain, including undeveloped land, homebuilders, foreclosed homes, and building parts manufacturers.

One of the most notable moves is coming from hedge fund manager John Paulson, best known for his big (and lucrative) bets against subprime mortgages in 2006 and 2007.

Now, he's turned his attention to snapping up undeveloped land in areas hardest hit by the housing crisis. "Land is the accordion in the home building equation," said Michael Barr, who runs Paulson's real estate investments. "It falls the most in a downturn, but also rises the most in an upturn."

Over the past two years, Paulson & Co has bought up enough land in California, Arizona and Nevada to build up to 25,000 homes and is aggressively scouting for more, according to Barr.

Related: Home prices post biggest jump in 6 years
 
Private equity firms are also getting in on the game. Blackstone Group (BX) spent $2.7 billion last year to buy 17,000 single family homes, post-foreclosure, around the United States and plans to continue ramping up those efforts in 2013.

Pine River Capital Management took real estate investment trust Silver Bay Realty Trust (SBY) public in December. Silver Bay, which acquires, renovates, leases and manages single family homes, has already purchased more than 2,500 homes in areas hard hit by the housing crisis. In a recent SEC filing, Silver Bay said that it plans to purchase 3,100 more homes.

And in a sign of investors' growing appetite for a piece of the housing market, shares of publicly traded homebuilders have been soaring. PulteGroup (PHM), KB Home (KBH), and Lennar (LEN) are all trading near 52-week highs. Pulte's shares have more than doubled over the past year, while the KB Home and Lennar's shares have nearly doubled.
And for the first time since 2004, homebuilders are testing the IPO waters.

Tri Pointe Homes (TPH), which builds single family homes in California and Colorado raised $232 million through an IPO last week. Shares of the company, owned by Starwood Capital, rallied 20% on their first day of trading.

Related: Home building surges 12%
 
Others are lining up. Scottsdale, Ariz., homebuilder Taylor Morison has filed to go public and is expected to kick off its investor roadshow in the next few weeks. And building supply company Boise Cascade, jointly owned by PE firm Madison Dearborn and OfficeMax (OMX, Fortune 500), plans to make its public debut next week.

Investment bankers and IPO investors say they expect more homebuilders to go public this year. "As the sector rotates back into favor again, it makes sense for housing companies to monetize," said Brad Miller, co-head of global equity syndicates at Deutsche Bank.

Brad Geisen, CEO of Foreclosure.com, which keeps a database of foreclosures around the nation, said he's been seeing a lot of interest from investors looking to buy up large numbers of foreclosed properties over the past three months.

"A lot of investors see a short window of opportunity where there's good inventory on the market at bottom market prices," said Geisen. "No one knows how long it will last, so these investors are trying to buy as much as they can right now."