Your Property Path

Case Shiller: Thoughts From Around The Web

Optimists

A wave of foreclosures is forcing down home prices in most major U.S. cities. But economists and real estate agents are noticing what they call a key first step for any housing recovery: a drop in the glut of homes for sale in markets hit hardest by foreclosures.

If we were to see several consecutive months of supply getting smaller, it would point to an improving housing market," said Celia Chen, senior director at Moody's Analytics. "Even if it is investors buying them, they are renting them out in hopes that prices in the next several years will rise.

NAR

According to the latest Realtors Confidence Index, the gap between the indices of Prospective Home Buyer Traffic and Prospective Home Seller Traffic has narrowed, with an increase in Prospective Buyer Traffic. A continuation of the narrowing of the gap between buyer and seller interest would be favorable to the strengthening of real estate markets nationwide.

In many cases, and in recent years, market prices have already declined substantially. The size of the shadow inventory, mortgages, 30 days overdue or in forecolsure, suggests that problems may not be resolved for two or three years. However, the shadow inventory is declining in size and we may be near the end of continued price declines in many markets.

Pessimists

Standard and Poors

“There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing. says David M. Blitzer, Chairman of the Index Committee at S&P Indices. Ten of the 11 MSAs that recorded index lows in January fell further in February.

Wall Street Journal

The enormous supply overhang of existing homes (particularly factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” said Joshua Shapiro, chief U.S. economist at MFR Inc. “From a longer-term perspective, it is important to keep in mind that in the seven years leading up to the peak in July 2006, the nonseasonally adjusted national 20 city home price index jumped by 155% (126 index points)… So far, this index has dropped by 32% (66 index points) in the 55 months since the peak.

I could fill the page with pessimists, hardly a positive thought out there today. I think the most positive take away is that at least this is an orderly retreat, rather than the kind of screeching declines we have seen.

Thanks For Reading
Howard
www.yourpropertypath.com

Freddie Mac: 30-Year Mortgage Up Slightly for Second Week

30-year fixed-rate mortgage:
  averaged 4.86 percent with an average 0.7 point for the week ending March 31, 2011, up from last week when it averaged 4.81 percent. Last year at this time, the 30-year FRM averaged 5.08 percent.

The 15-year fixed-rate mortgage:  this week averaged 4.09 percent with an average 0.7 point, up  from last week when it averaged 4.04 percent.  A year ago at this time, the 15-year FRM averaged 4.39 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: averaged 3.70 percent this week, with an average 0.7 point, up from last week when it averaged 3.62 percent. A year ago, the 5-year ARM averaged 4.10 percent .

One-year Treasury-indexed ARMs: averaged 3.26 percent this week with an average 0.6 point, upfrom last week when it averaged 3.21 percent. At this time last year, the 1-year ARM averaged 4.05 percent.

Freddie Sayz

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac

Fixed mortgage rates rose slightly for a second week in a row, but continue to remain quite low. Low rates have benefited from relatively benign inflation reports. Inflation as measured by the 12 month growth in the core price index for consumer spending, a metric preferred by the Federal Reserve, is hovering near the lowest pace since 1960 when this data series began.

Sales of distressed properties continue to place downward pressure on house prices. In January, these homes accounted for 37 percent of existing home sales and rose to 39 percent in February, based on figures from the National Association of Realtors. House prices were down 3.1 percent in January from the same month last year according to the S&P/Case-Shiller Home Price Indices

Multi Famiily Rentals Improve

Tenant Selection Checklist

Mortgage Bankers Weekly Update: Mortgage Applications Decrease

Mortgage Bankers Association for the week of 3/30/2010

Market Composite Index: (loan application volume) a measure of mortgage loan application volume,decreased 7.5 percent on a seasonally adjusted basis from one week earlier

Refinance Index: decreased 10.1 percent from the previous week. The seasonally adjusted Purchase Index decreased 1.7 percent from one week earlier.

Purchase Index:  decreased 1.5 percent compared with the previous week and was 21.9 percent lower than the same week one year ago.

Refinance Share of Mortgage Activity:  decreased 10.1 percent from the previous week

Arm Share:  decreased to 5.7 percent from 5.9 percent of total applications from the previous week.

MBA outlook: (Excerpted from mbaa.org)

MBAA makes some interesting observations amid a general optimism.  The world economy, has been growing fast boosting boost to US growth through gains in exports. Last quarters growth was just revised upward. True, housing is a laggard, but even here MBAA expressed optimism and sees growth patterns, in stark contrast to Dr. Shiller of Case Shiller.

Treasury and mortgage rates increased towards the end of last week, as global markets calmed following the recent crises in Japan and the Middle East. Refinance volume predictably fell in response to these rate increases. As rates climb back to 5 percent, fewer homeowners have both the incentive and the ability to refinance, said Michael Fratantoni, MBAs Vice President of Research and Economics

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Multi Family: Recovering

Multi Family
A Recovering Market

We all know whats happening to the single family home markets. Over supply and shadow inventory and the subsequent price declines will continue until fear is overcome and inventory is soaked up.

The kinds of issues that led to a boom bust in housing did not take place with multi family. There was no build out leading to over supply and the lender market was much more rationlized. Little of the kind of lending that led to so many foreclosures, ultimately driving home prices down.

Lack Of Supply In The Rental Market
From 1997 to 2006, multifamily construction was about 342,000 new units per year, but by 2010 they new construction declined 66%. Government estimates indicate we will need 1.5 million additional units annually just to keep up with population growth. Quite a shortfall, indeed

Lack Of Lender Interest In Funding Any Real Estate
Adding to a undersupply is a real lack of lender interest in more housing of any kind. Although this appears to be a negative, it protected the sector from the boom mania and has kept the multi family market on a sound footing.

Foreclosure
Realty Trac reports annual foreclosure filings spiked from 1 million in 2006 to 3.9 million in 2009, and were about the same number in 2010. Finally, the huge foreclosure debacle is making renters out of all of us.

Demographics
The combination of immigration, retirees moving back in and a new generation up will equal the size of the boomers,creating a large pool of new renters. Now thats huge!

A Solid Market
The national vacancy rate for rentals fell 17% last year to 6.6%, according to Reis. And rents jumped. In New York, up 9% on average in the last five years; in San Jose, they're up 8% San Francisco, one of the best rental markets in the country has seen its vacancy rates drop as rentals in all neighborhoods post new highs.

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Green Landlording: Getting Tenants To Go Green

Getting Tenants to Go Green.

As property managers, we can't insist on behavioral changes. Going green can be a tough sell to a renter. After all, a building is only as green as the people who manage and live in it. Managers are key players and can encourage activities that reduce consumption and waste. The catalyst is education.

We Are All Stakeholders
You need to demonstrate the benefits. Tenants can be inspired to go green by emphasizing a better living environment and eco citizenship. Getting to that point, begins at the leasing process. Educate tenants on easy, cost effective ways to help the environment. Tips such as using compact fluorescent lights, unplugging electrical devices or recycling. That way both tenants and owner/managers can capture the benefits of saving money and natural resourcesGo for the easy things.

Its Good Business
An apartment.com study reports found tenants want to live a more sustainable lifestyle. More than 25% said they would pay more in rent to save money on energy costs. So set the tone for sustainability by making environmentally-friendly choices. Here are some easy, inexpensive ways that go a long ways towards a more sustainable healthier environment. For more energy saving ideas http://bit.ly/i6VDj8

Low Flow Toilets - Cost - $150-1500.00
If you decide that it is time for a toilet replacement, you reduce water use and bank teh savings. Replacing a 18 litre per flush toilet with an ultra-low-volume 6 litre flush model represents a 70% savings in water flushed. You can save as much as 7500 gallons of clean, fresh water annually

Shower Heads - Cost - $15-100.00
Conventional showerheads have flow rates up to 4 to 5 gallons per minute. A good low-flow showerhead can reduce water use by 50% and still provide a good shower

Faucets -
Leaky Faucet: One drop per second can waste as much as 10 gallons of water each week. Deferring basic maintenance can be costly.

Faucets Aerators - Cost - Less than $5.00
Conventional faucets have an average flow rate of almost 4 gallons per minute. Faucet aerators can reduce your home water consumption as much as 50%, and reduce your heating costs as a bonus.

Programmable Thermostats - Cost - $50-150.00
Tenants save up to 20% of total energy costs using a programmable thermostat by reducing temperature 5 degrees at night and 10 degrees during the day, whenever possible.
Start small and do the easy things first. Talk up green living at the lease signing and be a partner in creating a safer and healthier living environment. There is no better way to change behavior then by setting a good example. And by the way, reducing operating costs is good business. Save money and do well by doing good.

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Freddie Mac Weekly Update: 30-Year Fixed-Rate Mortgage Drops to 5 Percent

30-year fixed-rate mortgage:
  A veraged 4.95 percent with an average 0.6 point for the week ending February 24, 2011, down from last week when it averaged 5.0 percent. Last year at this time, the 30-year FRM averaged 5.05 percent. .

The 15-year fixed-rate mortgage: A verage 0.7 point, down from last week when it averaged 4.27 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.

Five-year indexed hybrid adjustable-rate mortgages ARMs: A veraged 3.8 percent this week, with an average 0.6 point, down from last week when it averaged 3.87 percent. A year ago, the 5-year ARM averaged 4.16 percent.

One-year Treasury-indexed ARMs: A veraged 3.40 percent this week with an average 0.6 point, up from last week when it averaged 3.39 percent. At this time last year, the 1-year ARM averaged 4.15 percent.

Freddie Sayz
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac
Fixed mortgage rates eased again this holiday week amid mixed inflation data reports. Although the  core consumer price index for January rose slightly above the market consensus, house prices fell 4.1 percent in the fourth quarter of 2010 compared to the same period in 2009, according to the  S&P/Case-Shiller National Index In addition, the level of the index was the lowest since the fourth quarter of 2002
Low mortgage rates and home prices are sustaining affordability in the housing market. Existing home sales rose for the third consecutive month in January and were at the strongest pace in eight months, the  National Association of Realtors reported; only the Northeast region experienced a slowdown in sales
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