Summit Realty

Foreclosure starts surge in Western states

By Inman News

Foreclosure starts jumped by double digits from July to August in four out of five Western states tracked by ForeclosureRadar, reversing what had been a declining trend over the past several months, the company said.

The increase in foreclosure starts seen in Arizona, California, Nevada, Oregon and Washington appeared to be driven primarily by Bank of America and related companies, which boosted notice of default and notice of trustee sale filings by 116 percent from July to August.

Wells Fargo and US Bank also ramped up foreclosure start filings, ForeclosureRadar said, while filings by JP Morgan Chase and Citibank were essentially flat, ForeclosureRadar said.

In California, foreclosure starts jumped nearly 70 percent from July to August, totaling 31,965 — the highest level in a year. The average time to foreclose in California increased to 333 days in August, 49 days longer than a year ago.

Notice of trustee sale filings were up more moderately, rising 6 percent from July to August but still down nearly 24 percent from a year ago at 24,020.

California properties sold back to the bank (REO) increased 12 percent from July, to 11,104, down nearly 23 percent from a year ago. Sales to third parties on the courthouse steps were up 10 percent from July, to 3,853, an 11 percent increase from a year ago.

California foreclosure inventories remain down or flat from a year ago. Banks had 107,000 REO homes on their books — about the same as in July — and the number of homes scheduled for trustee sale was down nearly 24 percent from a year ago, to 94,000.

Homes in preforeclosure — those already hit with a notice of default but not yet scheduled for sale — jumped 20.5 percent from July to August, to 134,000. That was 10 percent below the preforeclosure number in California a year ago.

In Arizona, notice of trustee sale filings — the first step in the foreclosure process in that state — were up nearly 15 percent from July to August, to 7,060. That’s 34 percent below the same time a year ago. Time to foreclose in August was flat from July at 175 days, but up 15 percent from a year ago.

The number of Arizona homes going back to the bank as REOs fell 8 percent from July and 43 percent from a year ago, to 3,068. Sales to third parties on the courthouse steps were up 5 percent from July and 39 percent from a year ago, to 1,666.

Banks had 25,278 Arizona homes in their REO inventories, down 5 percent from July and 22 percent from a year ago. Another 35,860 had been hit with a notice of trustee sale filing, down 3 percent from July and 38 percent from a year ago.

In Nevada, notice of default filings jumped 44 percent from July but were down nearly 14 percent from a year ago, to 6,108. Time to foreclose jumped 14 percent from July to August, reaching a new record of 368 days.

Notice of trustee sale filings slipped for the fifth consecutive month, dropping 10 percent from July and 43 percent from a year ago, to 3,523.

Banks took back 1,805 Nevada homes, up 1 percent from July but down 14 percent from a year ago. Properties sold to third parties on the courthouse steps rose 20 percent from July and 28 percent from last year, to 786.

Foreclosure inventories were down or flat from a year ago. Banks had 16,425 REOs on their books, down nearly 5 percent from July and from a year ago.

The number of properties scheduled for sale was down 9 percent from July and 40 percent from a year ago, to 7,758. Homes in preforeclosure jumped nearly 26 percent from July to 47,509, down 14 percent from a year ago.

Washington saw a 3 percent increase in notice of trustee sale filings from July to August, reversing four months of consecutive declines. Activity on the courthouse steps slowed as foreclosures sold back to the bank (REOs) dropped 30 percent month over month, and foreclosures sold to third parties — typically investors — were down 33 percent. Time to foreclose was nearly flat in August at 104 days.

In Oregon, notices of default were up 36 percent from July to August, but filing activity was down 46 percent from a year ago. Properties sold back to the bank rose 243.3 percent from July as Recontrust, a subsidiary of Bank of America, began to clear the 2,800 foreclosures it started in April.

Properties sold to third-party investors were up 46 percent from July and 17.4 percent from a year ago. Time to foreclose dropped in August for the second month in a row, falling nine days from July, to 150 days.

Tags: california housing market, housing market, Las Vegas housing market, Las Vegas real estate, real estate market, san diego housing market, san diego real estate market, short sale foreclosure, short sale vs foreclosure

5 bright spots in real estate recession

The real estate market meltdown was much more severe and has lasted much longer than even the most bearish housing market observer would ever have predicted. Rather than values taking a dip, they’ve taken a double dip in many places; and the housing sector drama has infected the job market and the entire world’s economy.

Yet, there are some very shiny silver linings to this whole mess — a handful of ways in which our mindsets, habits, behaviors and approaches to money, mortgage and even life decision-making — have been changed by this real estate market debacle. As I see it, here are the five best things about this otherwise terrible housing recession:

1.People now buy for the long term. Even Jeff Lewis, that reality TV house flipper extraordinaire, has declared that he’s tapped out of the flipping business for the foreseeable future, trading in his real estate wheeling and dealing for the design business.

Recently, he mentioned having lost six homes in the real estate market crash. While Lewis flipped homes as his business, just five years ago, many Americans — homeowners and investors alike — took a short-term view on their homes, buying them with the idea that they could count on refinancing, pulling cash out or even reselling them anytime they wanted, at a profit.

Reality check — those days are gone. Now, buyers know they’d better be prepared to stay put for somewhere between seven and 10 years (shorter in strong local markets, longer in foreclosure hot spots) before they buy if they want to break even. And this is causing them to take mortgages they can afford over time, and make smarter, longer-term choices about the homes they buy.

2. Dysfunctional properties are being weeded out and creatively reused. Municipalities like Detroit and Cleveland are demolishing blighted and decrepit properties in dead neighborhoods en masse, intentionally shrinking their cities to match their shrinking populations. These efforts are also eliminating breeding grounds for crime, and focusing resources on the neighborhoods that have a better chance of surviving and thriving in the long term.

In the so-called “slumburbias” of central California, Nevada and Arizona, McMansions are being repurposed into affordable housing for groups of seniors, artist communities and group homes.

3. American housing stock is getting an energy-efficient upgrade. The news would have you believe that every American has lost his or her home, walked away from it, or is now renting by choice. In fact, the vast majority of homeowners have simply decided to stay put.

Instead of selling and moving on up, homeowners are improving the homes they now plan to stay in for a long(er) haul. And this generation of remodeling is focused less on granite and stainless steel, and more on lowering the costs of “operating” the home and taking advantage of tax credits for installing energy-efficient doors, windows, water heaters and more. And while the first-time homebuyer tax credit is a thing of the past, the homeowner tax credits for energy-optimizing upgrades are in effect until the end of this year.

4. People are making more responsible mortgage decisions, and building financial good habits in the process. Buyers are buying far below the maximum purchase prices for which they are approved. They are reading their loan disclosures and documents before they sign them. And, thanks to the stingy mortgage market, they are spending months, even years, in the planning and preparation phases before they buy: paying down their debt; saving up for a down payment (and a cash cushion, so that a job loss wouldn’t be disastrous); being responsible and sparing in their use of credit to optimize their FICO scores; and creating strong financial habits in one fell swoop.

5. Our feelings about debt and equity have been reformed. Americans no longer use their homes like ATM machines, to pull out cash, pay off their credit cards and then start the whole overspending cycle over again. Many can’t, because their homes are upside down and cannot be refinanced in any event — much less to pull cash out.

Others have been reality-checked by the recession, and are dealing with their non-mortgage debt the old fashioned way: by ceasing the pattern of spending more than they make, and applying the self-discipline it takes to pay their bills off.

Home equity, in general, is no longer viewed as an inexhaustible source of cash. Rather, we see it as a fluctuating asset to be protected and increased — not so much through the vagaries of the market, but through the hard work of paying the principal balance down. Many of those refinancing into today’s lower rates aren’t doing it to pull cash out, as was the norm at the top of the market; instead, they are refinancing into 15-year loans to pay their homes off sooner than planned, or reducing their required payment so their extra savings can be applied to principal.

Of course, it remains to be seen how lasting these changes will be if and when home prices go up and mortgage guidelines loosen up. But since neither of these things look likely to happen in the short term, hopefully there’s a chance that these behavior shifts will become part of a permanent mindset reset for American housing consumers.

Tags: 15 year fixed rate mortgage, 30 year fixed rate mortgage, affordable housing, colorado real estate market, housing market, Las Vegas housing market, Mortgage Rates, real estate market, san diego real estate market, short sale foreclosure, texas real estate market, Washington real estate market

Top Markets for Real Estate Agents

By Andrea V. Brambila

No matter the state of the housing market, there are real estate professionals doing business. Despite gloomy housing and economic news at the national level, real estate agents and brokers in some markets are seeing a high dollar volume in home sales due to rising prices and relatively vibrant local economies.

Inman News examined total sales, median sales price, real estate licensee data and Realtor membership counts in dozens of metro areas across the country to develop a list of 10 metros where real estate professionals are doing comparatively well in terms of sales and average total dollar volume in sales per Realtor.

The average total dollar volume in sales per Realtor was calculated by multiplying the average number of sales per Realtor by the median sales price in a given metro in the 12 months between June 2010 and May 2011.

Half of the markets on the resulting list are in the South (four are in Texas), three are in the West, one is in the Midwest, and one is in the Northeast. The 10 markets are, in order: Seattle-Bellevue-Everett, Wash.; Fort Worth-Arlington, Texas; Denver-Aurora-Broomfield, Colo.; Salt Lake City; San Antonio-New Braunfels, Texas; Pittsburgh; Dallas-Plano-Irving, Texas; Kansas City Mo.-Kan.; Austin-Round Rock-San Marcos, Texas; and Nashville-Davidson–Murfreesboro–Franklin, Tenn.

Total average sales volume per Realtor in the year ending in May 2011 ranged from $599,171 in the Nashville metro to $1.54 million in the Seattle metro. Sales per Realtor ranged from 3.2 in the Austin metro to 8.3 in the Fort Worth metro. For some metros, a high median sales price offset a relatively low sales rate to result in a higher than usual average total dollar volume in sales.

While all Realtors are real estate licensees, it’s important to note that in a given market there are some real estate licensees who are not Realtors. And the sales rate per Realtor statistic does not account for sales by non-Realtors — including sales by real estate licensees and for-sale-by-owner transactions — in a given market.

It’s also important to note that two real estate sales associates can profit in every sales transaction, as the typical sale features a real estate agent working on the “sell” side (or listing side) of the deal and another agent working on the “buy” side of the deal. And it is typical for sales associates on both sides of the deal to share a portion of their commission income with their broker.

Seven out of the 10 markets saw their median sales price rise year-over-year in May, and none of the remaining three saw double-digit price drops. On a month-to-month basis, all 10 either saw the sales price remain roughly flat or rise in May. That same month, the U.S. median sales price fell 3.2 percent on a year-over-year basis, to $152,000, according CoreLogic data.

Seven out of 10 markets had a median sales price higher than the national median ($150,500) in the 12 months between June 2010 and May 2011. Median prices ranged from $107,250 in the Pittsburgh metro to $302,000 in the Seattle metro.

Not surprisingly, the 10 metros, chosen for their total sales and total dollar volume in sales per real estate professional, turned out to have better-than-average local economies. None of the 10 markets had unemployment rates higher than the national rate in June, according to data from the Bureau of Labor Statistics.

Only the Seattle market had a rate equal to the nonseasonally adjusted national rate of 9.3 percent, while the rest had lower jobless rates. Nine out of 10 markets had lower foreclosure rates than the national rate in the second quarter, when 1 in 111 housing units nationwide received a foreclosure filing, according to data from foreclosure data site RealtyTrac. Only Salt Lake City had a somewhat higher rate, with 1 in 108 units in the area receiving a foreclosure filing.

According to the National Association of Realtors’ state existing-home sales data, there was an average of five sales per Realtor in the second quarter of this year. Among the top 10 states with a high rate of sales per Realtor, most were in the Midwest or the South.

Source: National Association of Realtors.

For data-quality purposes, only markets with at least 1,500 sales posted in May 2011 were considered for this report. While most of the 10 states above also posted high sales rates for real estate licensees (not just Realtors), most metros in these states did not meet the 1,500-sales-count threshold and were therefore not included in this report.

Another consequence of this threshold is that the populations of each of the 10 markets exceeded 1 million, and ranged from 1.1 million to 4.2 million.

Nine out of the 10 markets are projected to see double-digit population growth by 2020, according to data from data analysis firm ProximityOne. While the national population is expected to rise 8.9 percent between 2010 and 2020, each of the 10 markets except Pittsburgh is expected to see double-digit increases, from 10.6 percent in the Kansas City metro to 33.1 percent in the Austin metro.

The Pittsburgh area’s population is expected to stay virtually flat at 2.4 million.

Tags: Bureau of Labor Statistics, Career Opportunities with Summit Realty Group, housing market, National Association of Realtors, real estate agents, real estate licensees, real estate market, real estate sales, Realtors, Summit Realty, Summit Realty Group

Leadership sidelines economy elects to punt

Commentary: Fed chairman’s speech a ‘Thud!’

By Lou Barnes

Markets are stumbling to a standstill at week’s end, exhausted by the last month’s worries, and today big money in New York is distracted by Hurricane Irene. Better send the help to batten the house in the Hamptons, and see if those eager one-off friends up the Hudson would mind short-notice company.

The 10-year T-note, after its dramatic dive from 3 percent to 2 percent, has settled near 2.2 percent, no better indicator of deep concern still in place.

It is football season, and one sound from games fills the air: “Thump!”

Punting.

The entire financial world had waited two weeks for Federal Reserve Chairman Ben Bernanke’s speech at the annual gathering of central bankers in Jackson Hole, Wyo.

At 8 a.m. Mountain Standard Time today … “Thud!”

As punts go, a dribbler. This whiff — no new policy, no wisdom — reflects a divided Fed, with country rascals at regional Feds in open rebellion.

The ball landed at the Fed’s Sept. 20 meeting, the chairman adding Sept. 21 for extended argument. The game will go on, but the Fed will be entirely off the field for a month, maybe more.

Bernanke did give a whole paragraph to housing, noting the credit-default spiral still under way, with defaults producing tighter credit — which, in turn, produces a weaker housing market and more defaults.

What to do about the obvious? Federal Housing Finance Agency home prices falling 5.9 percent year over year? New mortgage delinquencies declining through 2010, but gently rising in 2011?

Mortgage rates failing to follow Treasurys down, the spread opening as in disastrous 2008? The Fed refusing to roll mortgage-backed securities purchased in QE1 (the first round of the Fed’s quantitative easing)?

He didn’t swing his foot at any of that. Just passive, professorial observation.

Our other professor, President Obama, depending on the track and vigor of Hurricane Irene, may forced to interrupt his vacation.

No matter: He already punted to an economic policy speech on Sept. 4. The nation trembles in anticipation. Uh-huh. He might have demanded that Congress stay in town, get to work; but that would require the same from him. “Thwack!” Shank.

Markets live in real time, and “tempus fugit” (Latin for “time flies”) no matter how much you’d like it to pause.

Markets attend the Church of What’s Happening Now, whether the punter is in town or not.

Second-quarter U.S. gross domestic product was revised down to 1 percent. The University of Michigan’s measure of consumer confidence has plunged from 75 to 55; every such move since the 1970s has marked a new recession. Maybe this time we’re just peeved.

On Thursday, Sept. 1, we’ll get employment data from August, and the first of the August surveys from the Institute for Supply Management. Maybe the captains of the sidelines are right to wait to see the data. The fans get so emotional about things.

This week, Warren Buffett executed a signature grandstand play, putting $5 billion into troubled Bank of America. A sign of the big turn, all OK? CNBC stock-pushers said so.

BofA stock sank steadily from $15 in January to $9.50 in July, then in a week crashed to $6. He didn’t just dump $5 billion into stock. He bought cumulative preferred paying a 6 percent dividend. Do you know any safe investments paying 6 percent guaranteed today?

He also received warrants to buy 700 million shares at $7.14 and resell whenever the stock price rises a convenient distance above that level. Buffett did a similar deal with Goldman, but in the depth of panic in early ’09. No healthy institution would accept such terms today.

America is a big and diverse place. Asserting an understanding of the American state of mind at any moment is a tad grandiose. However, never since the 1930s has there been such an opening for leadership to get out of its boxes.

We are learning the hard way — very hard — that the standard prescriptions of the left and right are dead ends.

More spending, income redistribution, and regulation won’t get us out of this. Neither will do-nothing, hard-money liquidation, or nut-case imaginings.

Salvation lies in basic things: Unity of purpose. Determination to compete. Pursuit of excellence. Abandon the past and self-congratulation, and adapt.

Perhaps disgust at the national punting team will do the trick.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at [email protected]

Tags: 10-year T-note, Bank of America, Ben Bernanke, BofA, Federal Housing Finance Agency, Federal Reserve, gross domestic product, housing market, Institute for Supply Management, mortgage backed securities, Mortgage Rates, real estate market

Debt Ceiling Deal Keeps MID Risk Open

The contentious debt ceiling deal enacted into law earlier this week as the Budget Control Act of 2011 doesn’t say anything about what programs should be cut and how tax benefits might change, but because it puts lawmakers under the gun to find up to $2.4 trillion in deficit reduction, it’s likely  the mortgage interest deduction and other federal commitments to housing will come under discussion.

The biggest risk to real estate comes in the second of the deal’s two-part deficit cutting mechanism. The first part requires about $920 billion in cuts in exchange for about the same amount in increased debt ceiling cap. That part happens quickly—as envisioned, before the end of the federal fiscal year,  which is at the end of September. Because of that short time frame, it’s unlikely highly controversial matters like MID or the tax treatment of carried interest will get taken up.

But the second part of the deal, which requires up to $1.4 trillion in cuts in exchange for about $1.2 trillion in debt ceiling increase, will be a little riskier for real estate.

To be sure, there’s no requirement that any amount of deficit reduction come from tax changes. It’s  thus entirely possible that all of the deficit reduction will come from cuts to discretionary spending programs and the military. Even Medicare might get cut. (Medicaid and Social Security are exempt.)

But it’s prudent to stay on top of the discussions as they happen, because MID will certainly make a tempting target. Estimates vary widely on how much MID costs the federal government in revenue each year. Upper estimates are around $80 billion, lower estimates are around $25 billion. The reason some estimates are so low is because of how people are expected to change their behavior if MID is modified. Some analysts say home owners will move lost MID tax savings into other types of tax savings, offsetting some or all of the gains the U.S. Treasury would have seen from changing the MID benefit.

On carried interest, which is of particular interest on the investment real estate side, certain income to the general partner in a real estate partnership is taxed at the capital gains rate. There are proposals floating around that would treat that income as ordinary income, increasing the tax burden. The carried-interest issue is mainly an issue for general partners in hedge funds, not real estate partnerships, so critics have made the case that proposed changes shouldn’t apply to real estate partnerships.

In any case, these are the kind of proposals that have a good chance of surfacing as lawmakers look for ways to reduce the deficit, so it’ll be important to stay on top of the news as Congress starts to act.

Article by Robert Freedman and presented by Realtor Magazine

Tags: mortgage interest deduction, mortgage loans, real estate market, treasury

Short Sale Transactions: A Primer for Realtors and Sellers

The real estate market runs in cycles. Presently, we are in an economic period in which mortgage delinquencies are on the rise. The primary cause of this is the combination of higher interest rates on mortgages and a slowdown in residential real estate sales. Some homeowners with adjustable interest rates are particularly stressed as their payment amounts increase, stretching their budgets to the limit. In this climate, we can anticipate seeing more foreclosures, “distress sales”, and short sales. The information in this primer will help you understand the short sale and how you can prepare for this transaction even before you begin the escrow process.

What is a Short Sale?

This term refers to a transaction in which the sales price will not generate enough money to cover the payoff of the Seller’s existing loan and closing costs. Working with a willing Lender, a Seller may be able to negotiate a payoff amount which is less than the actual amount that would ordinarily be required to payoff the loan. The lender agrees to accept the equity available in the property, and the Seller receives no proceeds from the sale of the property.

Why would a Lender or Seller find a Short Sale appealing?

Homeowners benefit by avoiding the long-term negative consequences to their credit which are associated with a foreclosure. Lenders benefit because they can avoid the substantial expense of a foreclosure proceeding. Most lenders do not want to own the properties used as collateral for their loans, because the maintenance costs and taxes add to their cost and decrease profitability.

What are the First Steps?

• The short sale real estate agent and Seller should start by having an extensive, truthful discussion about the Seller’s financial status. People who are in financial trouble may be hesitant to discuss the details of their unfavorable situation, but honesty and full disclosure are essential to the successful closing of a short sale listings transaction.
• The Seller should contact the Lender to find out whether the Lender is willing to consider a short payoff arrangement. The process of convincing a Lender to reduce its loan balance to close the transaction is often challenging, requiring the negotiating skills of a seasoned agent. Be mindful of the additional work that short sales require of both the short sale real estate agent and the Seller.
• Ask your Escrow Officer to prepare a “net sheet” as soon as possible and update it regularly as information becomes available. This is a detailed estimated statement of the payoffs and closing costs that will be charged to the Seller at close of escrow.

Working with the Lender

Determine the Lender’s guidelines. You can anticipate a very specific list of required documentation that begins with a copy of the Listing Agreement or some other form of written authorization from the Seller. Additional requirements include:

• Strong evidence of financial hardship to the Lender
• Pay stubs or other proof of current income flow
• 2 years of Tax Returns and W-2′s
• Latest personal checking account statement
• Copies of all past due secured and unsecured debt notices
• Copies of the latest mortgage statement
• Copy of the current tax bill
• Copy of a current appraisal, including comparable sales in the area
• Copy of the Purchase Agreement

Entering Escrow

The short payoff is a condition of closing that must be set out in both the Purchase Agreement and Escrow Instructions. When the Lender’s payoff demand is received in escrow, it is likely to include restrictions on closing costs and the payoff amounts to other lenders and creditors. Throughout the escrow process, the Seller and real estate agent should be proactive about the numbers that the lender will see. Take care to include every possible expense in the Seller’s “net sheet”, and be aware of the “bottom line” as the process unfolds. Your Escrow Officer can advise you immediately of any significant changes or discrepancies. Remember that the Lender will establish a minimum payoff figure which it is prepared to accept, and its willingness to adjust that final figure may vary.

Your Escrow Officer will fulfill the important role of reporting the numbers and complying with the short payoff Lender’s requirements. If you have been working with your Escrow Officer to generate preliminary “net sheets” for the Lender, then the Escrow Officer will be anticipating the requirements of these unique transactions and will be able to monitor the transaction to a successful conclusion.

Summit realty Group has a dedicated short sale real estate listings team in place to get your short sale listings sold fast and with the least amount of hassle as possible. Contact Summit Realty Group today to start your short sale process today.

Tags: housing market, real estate market, Short Sale, short sale vs foreclosure

Notice to Public about a malicious real estate company

It has been brought to our attention that the company, The Virtual Realtors Group, has been sending emails and posting Internet videos from accounts owned by Summit Realty Group attempting to show affiliation with Summit Realty Group and/or cause damage to the Summit Realty Group brand and reputation. Virtual Realtors Group has also posed as Summit Realty Group in at least one instance in order to attempt, which failed, to recruit brokers in another state to join their company. In more than one instance, The Virtual Realtors Group has attempted to hack into and monitor and/or cause damage to the Summit Realty Group office systems. Summit Realty Group has stopped each attempt thanks to the help and support of Real Estate Tomato and GoDaddy. Summit Realty Group has concrete evidence of these fraudulent actions and has turned over this evidence to the proper authorities. Summit Realty Group would like to make it public knowledge that it is in NO WAY affiliated with The Virtual Realtors Group.

The real estate company, The Virtual Realtors Group, has based their real estate commission programs off of Summit Realty Group’s commission structure in an attempt to benefit from and reach the same level of success as Summit Realty Group. The Virtual Realtors Group has also attempted to offer similar benefits, resources, and marketing tools as Summit Realty Group. These so called resources, marketing tools and The Virtual Realtors Group benefits they state they offer are no comparison to what Summit Realty Group offers their clients and agents and should not be construed as being “similar” or on the same level.

Summit Realty Group prides itself on being the leader in virtual real estate brokerages. The level personal support Summit Realty Group offers is unmatched by any other virtual real estate company in the business. The interactive state of the art Summit Realty Group back office system is constantly evolving with the changing real estate market, helping real estate agents to work more efficiently while increasing their sales production. No other back office system compares!

Summit Realty Group is the future of real estate today and the original brokerage with 4 industry leading 100% commission programs. Other brokerages may follow or imitate but Summit Realty Group will always lead. 

Tags: 100% Commission Brokerage, 100% commission plans, real estate market, Summit Realty Group, virtual brokerages

Pending Home Sales Turn Around in May

Lawrence Yun, NAR chief economist, said the improvement bodes well for home prices. “Absorption of inventory is the key to price improvement, and this solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace,” he said. “Some markets have made a rapid turnaround, going from soft activity to contract signings rising by more than 30 percent from a year ago, including areas such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and Seattle.”

Pending home sales have trended up unevenly since bottoming last June, rising in seven of the past 11 months. “Home sales still could be 15 to 20 percent higher,” Yun said. “If banks would simply return to normal sound underwriting standards and begin lending to more creditworthy borrowers, we’d get a much faster recovery in the housing sector.”

“In addition, a nonsensical situation has developed recently in some states with HUD unable to complete foreclosure deals because of insufficient funds to pay attorney fees at closing, even with buyers offering the full listing price,” Yun added.

The PHSI in the Northeast rose 7.3 percent to 69.2 in May and is 4.4 percent above a year ago. In the Midwest the index jumped 10.5 percent to 82.8 and is 17.2 percent higher than May 2010. Pending home sales in the South increased 4.1 percent to an index of 95.0 in May and are 14.6 percent higher than a year ago. In the West the index surged 12.9 percent to 100.6 and is 13.5 percent above May 2010.

Yun cautioned that healthy job creation is necessary to ensure a solid recovery in both housing and the overall economy. “The job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country,” he said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Tags: Lawrence Yun, NAR, real estate market, real estate trends

April Pending Home Sales Drop After Two Monthly Gains

Lawrence Yun, NAR chief economist, said the dip in contracts may be due to temporary factors. “The pullback in contract signings is disappointing and implies a slower than expected market recovery in upcoming months,” he said. “The economy hit a soft patch in April from sharply rising oil prices, widespread severe weather with the heaviest precipitation in 20 years, and a sudden rise in unemployment claims.”

Yun notes the growth in retail sales slowed measurably in April, while sales at furniture and home furnishing stores declined sharply. “Nonetheless, the magnitude of the fall in pending home sales is larger than can be implied by broad economic factors, so we need to see if it’s just a one-month aberration.”

Yun said tight credit is the primary long-term factor holding back the real estate market. “No doubt the continuing excessively tight mortgage underwriting process is making the housing market recovery unnecessarily slow,” he said. “Lenders and bank regulators need to be mindful of the historically low default rates among mortgage borrowers of the past two years. A robust economic and housing market recovery cannot occur as long as banks continue to hold onto huge cash reserves.”

“We simply have to get back to sound, common-sense lending standards to provide mortgages to creditworthy borrowers who are buying homes well within their means. Bank balance sheets show rising cash reserves and declining loan balances – it’s time to loosen the purse strings,” Yun added.

The PHSI in the Northeast rose 1.7 percent to 64.5 in April but is 33.4 percent below a year ago. In the Midwest the index fell 10.4 percent to 74.1 and is 30.2 percent below April 2010. Pending home sales in the South dropped 17.2 percent to an index of 91.3 in April and are 27.0 percent below a year ago. In the West the index declined 8.9 percent to 89.1 and is 16.9 percent below April 2010.

“Even with very favorable affordability conditions, job growth and a pent-up demand from abnormally low household formation during the past three years, the recovery will continue to be uneven and sluggish given the ongoing credit constraints,” Yun said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Tags: Lawrence Yun, Lawrence Yun NAR, Lawrence Yun NAR chief economist, pending home sales, real estate market, real estate trends