When looking at how the housing market could really recover, I thought
if we could get the job market going off of the stimulas bill, that
would lower the number of homes for sale, stablizing prices, and the
next leg up in the housing market to sustain it would come from
relocation. Relocation business is the piece of the puzzle that has
never happen, because we have had very little job creation. When
relocation picks up that will be one of the signs that show real job
creation is happening. Carson

Daily Forecast Update

NAR’s monthly official forecast as of May 4th
GDP 2010 Q1: +2.8%=E2=86=93
GDP 2010 Q2: +2.9%=E2=86=93
GDP 2010 Q3: +2.7%
Unemployment rate by the year-end 2010: 9.8%
Average 30-year fixed mortgage rate by the year-end 2010: 5.3%=E2=86=93
What does today’s data mean for REALTORS=C2=AE and consumers?

The recent decline in the 10-year Treasury yield reflects reduced =20
expectations for economic growth by the market. This pattern is a =20
double edged sword: lower Treasury yields will bring down long-term =20
mortgage rates, helping to stimulate sales via improved affordability =20=

at the cost of slower employment growth.
With more REO (Real Estate Owned) inventory hitting the market this =20
spring and a post-tax credit lull, robust sales are important to price =20=

stability and economic growth via a healthy banking system (with fewer =20=

foreclosures).
However, reduced confidence will weigh on retail sales, holding back =20
job creation. In addition, a weaker euro makes European manufacturing =20=

more competitive, weakening domestic manufacturers=E2=80=99 ability to =
export.
Details

The 10-year Treasury slid sharply in trading yesterday, capping off =20
nearly two months of steady declines.
Solid economic news in the early spring pushed the 10-year=E2=80=99s =
yield up =20
to 3.99 percent on April 5, but it stumbled in early May with the news =20=

of Greece=E2=80=99s budget problems and the potential for spillover into =
the =20
European and global markets. Over the last two weeks, the yield has =20
pulled back further, accelerating its decline this week and finishing =20=

yesterday=E2=80=99s session at 3.25 percent.
Over roughly the same period the 30-year fixed-rate mortgage, =20
according to Freddie Mac, fell from 5.21 percent on April 8 to 4.84 =20
percent as of yesterday.
Sent from my iPhone=

     As I said last month, pended transactions (signed contracts for sales not yet closed) for March were great.  Pended transactions for April were simply off the chart.  I believe that pended transactions for March and April combined were the best two month period in local MLS history.  As a result, inventory was just over 7 month’s supply.  I think the important questions, as a result of the past two months performance, are what does this mean and where are we going?

     I think we know several things and we can draw some conclusions.  First, closed transactions during May and June will be excellent.  This will continue to keep inventory levels relatively low especially compared to unusually high levels we saw at the beginning of the year.  I also believe that the homebuyer tax credits that expired at the end of April were clearly a factor in these remarkable sales numbers.  The key question is: how big a factor were the tax credits?  If average pended transactions for May-July are only down 25% from April’s spectacular numbers the housing market is in excellent condition.  If pended transactions are down closer to 50% then we still have to wait for a fuller recovery.  I believe that the number will be between 30-40%.  That indicates that things have definitely improved and we are moving in the right direction, but we still have room for improvement.

      Two other bright spots are an improvement in closed transactions over $200,000 and an improvement in sales price to list price percentage.  For homes over $200,000 sales are up 31.3% in the first four months of this year compared to the same four months last year.  Sales price to list price in April was 95.83%, the highest percentage in almost two years.  This is another sign of our improving market.

     School will be out soon and I’m looking forward to a great summer.  It’s easy to look for homes anytime, regardless of the weather, at   http://www.carsonlowry.com

Foreclosures Down, but Housing Pain Isn’t Over

Roughly a third of a million properties had some kind of foreclosure action taken against them in April — from a default notice to a bank repossession to a foreclosure auction.

That comes according to the latest data from RealtyTrac, an Internet marketplace specializing in foreclosures.

Commentators are writing positive headlines about the news because the exact number of foreclosure filings, 333,837, is less than the record-busting 367,056 recorded in March. It’s also less than the 342,038 recorded in April a year ago.

But the news does nothing to change the basic trend in foreclosures.

Let me put it this way: Give or take 20,000 or 30,000, we’ve had a third of a million foreclosure actions a month for the last year — at least four times the rate of foreclosures in a healthy housing market.

So the news on foreclosures seems to be consistently bad, even though I keep reading (and sometimes writing) that the economy is slowly getting better. What’s going on?

Many of the foreclosure actions that happened in April have been a long time coming. The biggest part of April’s approximately 334,000 foreclosure actions came from about 138,000 foreclosure auctions. An auction is the end of a process that usually takes at least two months, but now can take as long as a year.

Banks are taking their time to sell foreclosed properties because they don’t want to flood the market any more than they have to. Local foreclosure moratoriums and the federal Home Affordable foreclosure prevention program have also slowed down the foreclosure process.

That’s created a huge backlog of properties at risk. More than 6 million homeowners are more than 60 days late in paying their mortgages, according to the Treasury. Even if only a fraction of those properties are eventually seized, it will still mean high foreclosure rates for at least the next year.

“Foreclosure activity has begun to plateau — but at a very high level that will not drop off in the near future,” said James J. Saccacio, chief executive officer of RealtyTrac. He says foreclosures will continue “as lenders systematically work through the backlog of distressed properties.”

And as long as homes continue to be sold in foreclosure fire sales, prices for the rest of the housing market will continue to be depressed, especially in the biggest foreclosure states like Nevada, Arizona, California, and Florida.

That’s the bad news — but there’s some good news, too.

We are working through the backlog. There were 138,000 foreclosure auctions in April, but there were only 104,000 new default notices. The same trend continued throughout the first quarter, according to RealtyTrac, with a total of 369,000 foreclosure auctions but just 342,000 new default notices,

Since not every borrower who falls behind in his payments loses his house, here’s what that says about properties now entering the foreclosure process: The number of those that eventually will be seized is significantly smaller than the number emerging from foreclosure with new owners.

So there’s light at the end of the tunnel — but it’s a very long tunnel.

Foreclosure Filings by Month

April, 2010: 333,837
March, 2010: 367,056
February, 2010: 308,524
January, 2010: 315,716
December, 2009: 349,519
November, 2009: 306,627
October, 2009: 332,292
September, 2009: 343,638
August, 2009: 358,471
July, 2009: 360,149
June, 2009: 336,173
May, 2009: 321,480
April, 2009: 342,038