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Demand for home loans increasing | Waccabuc Real Estate

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Even before Brexit hit, mortgage rates were at historical lows, igniting a surge in demand for home equity loans this year.

According to new results from the American Bankers Association’s Consumer Credit Delinquency Bulletin, consumers are handling the loan responsibility well, with home-related delinquencies down in two out of three categories compared to the previous quarter.

“As the housing market continues its slow and steady recovery, consumers have more valuable equity at stake, which makes their loan payments even more of a top priority,” said James Chessen, ABA’s chief economist.

“Growing equity also makes new home equity loans a viable option for qualified home owners. The market for home equity loans and fix and flip loans will likely continue to grow as a larger pool of qualified borrowers looks to take advantage of low rates to make property improvements or pay off higher-interest debt,” he continued.

Home equity line delinquencies dropped 3 basis points to 1.15% of all accounts. Meanwhile, home equity loan delinquencies increased 6 basis points to 2.74% of all accounts after falling 23 basis points in the previous quarter.

It’s important to note that the first quarter marks the first time since 2008 that both home equity loan and line delinquencies are at or below their 15-year averages.

As far as the third category, property improvement loan delinquencies fell 3 basis points to 0.89% of all accounts.

For background, Bankrate explains that there are two types of home equity loans: term, or closed-end loans, and lines of credit.

A home equity loan comes in one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month.

On the other hand, a HELOC is more comparable to a credit card.

At the start of this year, Black Knight reported that HELOCs started to surge in 2015 and was only predicted to maintain its upward trajectory into 2016.

At the time, Black Knight Data and Analytics Senior Vice President Ben Graboske said, “In total, we’re looking at over 37 million borrowers with current CLTVs below 80% that have an average of $112,000 equity available to tap in their homes, an increase of 3.1 million from just a year ago.”

The growing potential of borrowers who could capitalize on low interest rates paired with lenders trying to find new sources of business created a new surge in home equity loans.

After the financial crisis, home equity lines of credit fell to the wayside as lenders scaled back on giving out second liens and many cut existing credit lines to avoid new defaults, an article in The Wall Street Journal by Annamaria Andriotis said.

But this all started to change due to increasing property values, the growing number of homeowners who have equity available for withdrawal and lenders needing to offset faltering mortgage originations.

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ABA: Here’s proof rising home equity levels are good for consumers

Used home sales | Waccabuc Real Estate

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Existing Home Sales in the United States is expected to be 5569.18 Thousand by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Existing Home Sales in the United States to stand at 5438.60 in 12 months time. In the long-term, the United States Existing Home Sales is projected to trend around 5182.05 Thousand in 2020, according to our econometric models.

United States Existing Home Sales

 

ForecastActualQ2/16Q3/16Q4/16Q1/172020Unit
Existing Home Sales553055695472545354395182Thousand
United States Existing Home Sales Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of United States Existing Home Sales using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – United States Existing Home Sales – was last predicted on Wednesday, June 22, 2016.
United States HousingLastQ2/16Q3/16Q4/16Q1/172020
Building Permits113811401152116111711250
Housing Starts116411641175118411931213
New Home Sales619531475517510590
Pending Home Sales4.63.382.92.31.991.42
Existing Home Sales553055695472545354395182
Construction Spending-1.80.20.40.30.3-0.9
Housing Index0.20.450.430.410.40.31
Nahb Housing Market Index605859.7959.158.653.76
Mortgage Rate3.764.95.13.853.96.5
Mortgage Applications2.90.020.490.50.50.5
Home Ownership Rate63.563.5263.5363.5363.5363.53
Case Shiller Home Price Index184192195196196174

Douglas Elliman lead broker in Manhattan | Waccabuc Real Estate

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New York brokers love to win, and only the most talented and dedicated hustlers thrive. The firms that employ them are no different, fighting borough-by-borough, neighborhood-by-neighborhood, building-by-building and unit-by-unit in hopes of locking down as many of the listings as possible, and crushing their competition.

The Real Deal compared top brokerages citywide in its May issue, but those results tell only part of story. To get the view from the trenches, TRD drove into active sales listing data — both resales and new development — from On-Line Residential to determine which brokerages were winning which Manhattan neighborhoods.

Douglas Elliman, by far the city’s largest brokerage with over 2,000 agents in Manhattan, fully topped the charts in six of the seven neighborhoods TRD analyzed (those with the largest number of total sales listings). It dominated some – for example Tribeca, where it had a striking 42 percent market share – but just squeaked by in others, such as the Upper East Side, where it beat rival Corcoran Group / Corcoran Sunshine by just five listings of a total 1,150, or about 0.3 percent of the submarket.

The two Corcoran firms, with a combined 1,100 agents in Manhattan — had a strong showing on the Upper West Side – the second largest neighborhood by listings, with 601 – where it had a solid 24 percent market share on 146 total listings, compared to a 17 percent share on 103 listings for Elliman.

brokerages by nabe

Elsewhere though, the Corcoran brokerages were mostly forced to settle for second place. Only in Hell’s Kitchen did a third firm break into the top two slots. River to River Realty, which is based in the neighborhood, had 47 listings, or 19 percent of the submarket.

Still, the firm put up a stiff challenge to Elliman overall, considering its far lower agent count. Corcoran – which does more new development business than its rival, and also has a stronger presence in Brooklyn – also performed better in neighborhoods with more total listings, while Elliman dominated less active areas.

The competition for third place highlighted a more diverse set of players, with seven different firms appearing in each of the seven third place slots. Brown Harris Stevens and Halstead Property showed in the largest two neighborhoods by listings, the Upper East and Upper West Sides, with market shares of 12 percent and 10 percent, respectively.

 

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http://therealdeal.com/2016/05/12/which-resi-brokerage-rules-which-manhattan-neighborhood/

Home Sales Finish Year Up | Waccabuc Real Estate

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New homes sales were up 10.8% in December to 544,000 on a seasonally-adjusted annual basis (SAAR) and finished 2015 just past half million (501,000) for the best year since 2007. The increase in signed contracts to purchase a new home comes as mortgage rates remain very low by historic standards and the US economy continues to gain strength.
Sales were up in every census region although nominally in the South by 0.4%, to 273,000. In other regions, the Northeast was up 21% to 29,000 (SAAR), the Midwest up 32% to 75,000 and the West up 21% to 167,000. For the year, the Northeast was down 12% to 24,000 new homes sales, which is the worse year since 2011. Other regions performed much better with the Midwest up 3.2% to 60,000, the best year since 2008; the South was up 17.6% to 285,000, the best year since 2007; and the West was up 20.5% to 130,000, the best year since 2007.

New Home Sales

Inventories continue to build even in the face of labor and lot shortages. December’s unsold inventory increased 2.6 to 237,000, the highest since October 2009. Even with the increase in sales, the months’ supply fell to 5.2 months.
The median sales price fell 4.3% to $288,900 due primarily to a decline in sales over $750,000 and an increase in sales between $200,000 and $300,000. The trend suggests more first time home buyers are entering the market.
The shares of signed contracts that are still under construction or not yet started have climbed back to near the same levels has the early 2000s as builders switch from selling off left over inventory to selling from the stock of homes under construction or planned but not yet started.

Stage of Construction for New Homes Sold

 

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Existing home sales down 10.5% in November | Waccabuc Real Estate

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Sales of existing homes fell short of expectations in November, hitting the slowest sales pace in 19 months after new mortgage rules hit the market, realtors said.

Existing home sales fell 10.5 percent to 4.76 million homes in November, the National Association of Realtors said Tuesday.

Analysts polled by Thomson Reuters expected to see existing home sales in November hit 5.35 million units, about the same as the 5.36 million the previous month.

The sales represent a 3.8 percent year-on-year decline for the indicator, a barometer of the American real estate market.

The Midwest led declining sales, seeing a 16.4 percent drop in sales of existing homes, followed by the West at 13.9 percent and the Northeast at 9.2 percent.

The median home prices was $220,300, up 6.3 percent from this time last year. Inventories are currently at 5.1 month supply of homes, tighter that the 6 months considered balanced.

 

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cnbc.com

#Hamptons real estate prices up, sales slow | #Waccabuc Real Estate

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Real estate prices continued to climb in the third quarter of 2015, but sales pace slowed and inventory is more difficult to come by, when compared with the third quarter of 2014, which was a banner season for real estate on the East End.

According to The Corcoran Group’s quarterly Corcoran Report, “the volatility of financial markets world-wide resulted in fewer closed transactions this quarter.”

On the South Fork, according to Corcoran, sales activity and sales volume declined by 16 percent and 13 percent, respectively, compared to the third quarter of 2014. Only East Hampton Village, Southampton and Shelter Island reported more sales than last year.

The Corcoran Group reported that the average sale price on the South Fork increased 3 percent, while the median price rose 6 percent, versus the same quarter a year ago.

Nine sales over $5 million in East Hampton Village skewed the median price there up 70 percent over the third quarter of 2014.

Though recent quarters have shown a good deal of activity in the under-$500,000 range, where such properties can even be found on the South Fork, that share of the market shrank in the third quarter both east and west of the Shinnecock Canal.

East of the canal, under-$500,000 sales shrunk to just 8 percent of the market, from 14 percent in the third quarter of 2014, while the market share of houses under $500,000 west of the canal shrank from 41 percent in the third quarter of 2014 to 38 percent in the third quarter of this year.

On the North Fork, the Corcoran Group reported the number of sales and sales volume decreased 11 percent and 17 percent, respectively, over the third quarter of 2014. They reported the median sales price increased 1 percent, but the average sales price decreased 8 percent.

On the North Fork, they reported the $500,000 to $750,000 market range grew from 23 percent to 31 percent of sales, while market shares above and below those ranges declined by 4 percent.

The Corcoran Group also reported that the total inventory of residential properties for sale on both forks declined by 383 housing units from the third quarter of 2014.

With a limited amount of vacant land available for sale on the East End, the number of vacant land sales decreased quarter-over-quarter by 32 percent on the South Fork and 29 percent on the North Fork.

In commercial markets however, The Corcoran Group saw quite a bit of activity on the North Fork, with the number of sales increasing 67 percent. The number of South Fork commercial sales declined 37 percent over the same period.

Douglas Elliman Real Estate’s Elliman Report also showed a market slow-down on the South Fork when compared with the same quarter in 2014, though they did report greater gains in prices.

Douglas Elliman reported 507 sales on the South Fork in the third quarter, 20 percent below the same quarter in 2014 but 11 percent above the decade quarterly average of 457 sales.

The market share of sales below $12 million fell to 49.5 percent, its lowest point in the past four years, with 44 percent of sales between $1 million and $5 million.

According to Douglas Elliman, listing inventory on the South Fork was unchanged over the third quarter of 2015, with 1,710 houses on the market this quarter. The listing discount, or the difference between the last listing price and the sales price, declined to 10.2 percent from 12 percent in the same quarter last year.

Median sales price rose to $950,000, up 9.8 percent over the same quarter last year, the fourth highest level reported in the past decade.  The average number of days on the market fell 6.4 percent to 161.

Douglas Elliman reported that North Fork housing prices also skewed higher, with the median sales price jumping 16.1 percent to $516,250, the second highest median price in the past seven years. Only the second quarter of 2015 saw higher prices on the North Fork, and the year-over-year increase was the sixth consecutive quarterly increase.

 

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http://www.eastendbeacon.com/2015/11/04/real-estate-third-quarter-figures-pale-after-banner-2014-season/

U.S. new homes sales near one-year low | Waccabuc Real Estate

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New U.S. single-family home sales fell to near a one-year low in September after two straight months of gains, but a jump in prices suggested that housing remained on solid ground.

The Commerce Department said on Monday sales dropped 11.5percent to a seasonally adjusted annual rate of 468,000 units, the lowest level since November 2014. August’s sales pace was revised down to 529,000 units from the previously reported 552,000 units.

The moderation in new home sales is at odds with other housing reports that have painted a bullish picture of the sector. New home sales, which account for 7.8 percent of the housing market, tend to be volatile on a month-to-month basis because they are drawn from a small sample.

“The September report does little to alter our view that the housing market is continuing to recover. We view the new home sales data as unreliable and many other more reliable housing indicators have been sending upbeat signals lately,” said Daniel Silver, an economist at JPMorgan.

September data on existing home sales, homebuilder confidence and housing starts have been fairly strong.

 

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http://www.reuters.com/article/2015/10/26/us-usa-economy-idUSKCN0SK1PW20151026

US home prices rise steadily in June | Waccabuc Real Estate

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U.S. home prices rose solidly in June, another sign of health in the housing market.

The Standard & Poor’s/Case-Shiller 20-city home price index rose 5 percent from a year earlier, a slight improvement on May’s 4.9 percent increase, according to S&P Dow Jones Indices.

Prices rose 10.2 percent in Denver, 9.5 percent in San Francisco and 8.2 percent in Dallas. Chicago posted the smallest gain, just 1.4 percent.

Strong sales have been lifting prices. The National Association of Realtors said last week that sales of existing homes rose 2 percent in July to a seasonally adjusted annual rate of 5.59 million, the fastest pace since February 2007. The Commerce Department reported last week that U.S. builders started work on single family homes in July at the fastest pace since late December 2007, the month the Great Recession began.

“The missing piece in the housing picture has been housing starts and sales,” said David Blitzer, chairman of the S&P Down Jones index committee. “These have changed for the better in the last few months.”

Still, some uncertainties weigh on the housing market. The Federal Reserve is considering whether to raise short-term interest rates, a move that might send mortgage rates higher. For now, the average rate on 30-year fixed-rate mortgages remains below 4 percent. Blitzer says a modest Fed rate increase “won’t derail housing.”

Housing is also drawing strength from a healthy labor market. U.S. unemployment is at 5.3 percent, a seven-year low.’

 

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http://www.usnews.com/news/business/articles/2015/08/25/us-home-prices-rise-steadily-in-june-as-sales-pick-up

How Dodd-Frank changed housing | Waccabuc Real Estate

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The effect of loose lending during the last housing boom was abundantly clear: Nearly 8 million U.S. homes fell into foreclosure. The response was a slew of new lending rules under the Dodd-Frank financial reform law, and the result was a credit lockdown that continues today, nearly five years after the legislation was enacted.

“For lenders this is all about paperwork, verification and doing a lot of the grunt work that was ignored or passed over before the crisis,” said Jaret Seiberg, a managing director at financing firm Guggenheim Securities.

The rules fill thousands of pages and have cost lenders millions of dollars in labor and software to revamp their systems in compliance, but at face value, they’re pretty simple. Highly risky loan products, like negative amortization mortgages, are now banned. Borrowers must document their employment and debt levels. Lenders must disclose all the costs involved in each loan, and, perhaps most important, lenders must verify a borrower’s ability to repay the mortgage.

That last one may sound ridiculous, but it was the fundamental reason for the financial crisis in housing. Borrowers were given loans they could never repay.

“If you’re a high-quality credit consumer, Dodd-Frank just made it a much bigger pain in the butt to get a loan. You’ve got to fill out more paperwork, you’ve got to dig up more tax returns,” said Seiberg. “You’ve got to find information related to retirement accounts, stuff that was never asked for before. But if you’re on the low end of the spectrum, it has made it tougher to get that mortgage.”

So tough that the average FICO credit score on loans made today are the highest in history. Tight credit, though, is blamed for a still-falling homeownership rate, now at the lowest in a quarter century.

“The biggest misconception is that you need a big down payment to buy a house. It’s just not correct. What has changed is not the down payment, it is the credit and the ability to repay rule. Beyond that it’s the documentation piece,” said Craig Strent, CEO of Maryland-based Apex Home Loans. “It’s not hard to qualify, it’s hard to get through the process because of the massive amounts of additional documentation that is now required.”

Foreclosure bank owned house

Getty Images

Borrowers, however, still complain that it is not just the process, but the level of creditworthiness that is keeping them out of the homebuying market; even the Federal Reserve chair, readying to raise interest rates, says credit is too tight.

“Demand for housing is still being restrained by limited availability of mortgage loans to many potential homebuyers,” said the central bank’s chair, Janet Yellen, in testimony to the Senate Banking Committee on Wednesday.

Tight credit is also blamed for a shift in the lending landscape. Large bank lenders are moving out, and independent, nonbank lenders are moving in. Nonbanks now make up 43 percent of mortgage lending today, up from just 10 percent in 2009, according to Inside Mortgage Finance, an industry publication.

“Banks consolidated massively. The big four are so well-diversified that revenue stream from mortgages is not part of their headline strategy,” said Anthony Hsieh, chairman and CEO of California-based loanDepot, a nonbank lender that has grown dramatically in just the past year.

Private sector investors have not returned to the mortgage market. Loans backed by government entities Fannie Mae, Freddie Mac and the FHA make up more than 90 percent of all new loans today, a historically high share. During the housing boom they were barely one-third of the market.

“I think Dodd-Frank, not only does it add complexity, but it adds a lot of confusion,” said Hsieh.

It also adds significant costs in time and labor. Lenders like Apex Home Loans have had to hire dozens of additional staff just to comply with new rules.

 

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http://www.cnbc.com/2015/07/16/how-dodd-frank-changed-housing-for-good-and-bad.html

Building Labor Shortage Intensifies | Waccabuc Real Estate

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A survey of single-family builders conducted by NAHB in June 2015 shows that shortages of labor and subcontractors—already quite widespread in mid-2014—have become even more widespread during the past year.

The shortages are most acute for basic skills like carpentry, which are needed during the construction of any home.  For example, in the 2015 survey 69 percent of builders reported a shortage (either serious or some) of construction workers willing and able to do rough carpentry.

2015 labor shortages

Builders, however, may be even more concerned about the availability of subcontractors than of workers to employ directly.  In building a single-family home, three-quarters of the construction work is typically done by subcontractors (documented in a 2012 NAHB survey available here).  The rankings of labor and subcontractor shortages in the 2015 survey were similar, but—with the exception of building maintenance managers—the shortages of subcontractors were more widespread.  In the rough carpentry category at the top of  both charts, 74 percent of builders reported a shortage of subcontractors, compared to 69 percent for labor directly employed.

2015 sub shortages

Historically, for every trade covered in the survey, shortages were more widespread in 2015 than in 2014.  One way to see this is to look at the labor shortage percentage averaged across all 9 trades that NAHB surveys have covered in a consistent way since 1996.  This average skyrocketed from a low of 21 percent in 2012 to 46 percent in 2014, before increasing even further to 52 percent in 2015.

Nine trade history

The 9 consistently covered trades are carpenters-rough, carpenters-finished, home electrician services, excavators, framing crews, roofers, plumbers, bricklayers/masons and painters.  The history for each is available in the full report.  The survey’s current list of 12 trades was recommended by Home Builders Institute, NAHB’s workforce development arm.

The incidence of shortages is surprisingly high given the rate of new home construction, which has only partially recovered from its 2008 downturn.  In fact, the 9-trade shortage is now substantially higher than it was at the peak of the 2004-2005 boom, when annual starts were averaging around 2 million, compared to current rates of about 1 million.  The last time builder-reported labor shortages were as widespread as now was just before 2001—during a prolonged period of strong GDP growth with overall unemployment as low as 4.0 percent.

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http://eyeonhousing.org/2015/07/