Archive for February, 2011
The Federal Housing Administration held 60,739 properties repossessed through foreclosure on its books as of December 2010, up 47% from the year before.
The current value of those properties is $9.1 billion, according to the FHA book of business report released Tuesday. Combined with Fannie Mae and Freddie Mac's third quarter numbers, the U.S. government holds roughly 360,000 REO properties.
Reselling these properties is key to driving the housing market into recovery. Estimates are wide-ranging on the size of this shadow inventory of foreclosed homes and delinquent loans still in the process.
Currently, the data provider CoreLogic (CLGX: 14.56 +0.62%) estimates it to be at roughly 1.3 million properties for the entire industry. Capital Economics on Tuesday released a report estimating it to be closer to 5.3 million homes.
More could be coming in the way from the FHA alone. According to the report, nearly 600,000 mortgages are in serious delinquency. That represents 8.78% of the FHA insurance in force.
With such high levels of problem loans and devalued properties after foreclosure, house prices are expected to decline throughout 2011, Capital Economics said.
Write to Jon Prior.
Follow him on Twitter: @JonAPrior
After three consecutive months of increases, commercial real estate prices fell 0.9% in December, according to Moody's Investors Service. This up and down activity is leading analysts to say any recovery in the space is hard to pin down.
According to the latest commercial property price index from the rating agency, prices at the end of December slumped 42.1% below their peak hit in October 2007. Prices throughout last year also fell 2.1% compared a year earlier.
Moody's Managing Director Nick Levidy said although prices in the commercial space haven't properly recovered, economic indicators point toward positive growth.
"A robust, broad-based recovery in commercial real estate prices has remained elusive, although some major markets, particularly capital-attracting gateway cities, continue to show signs of strength," Levidy commented. "However, we expect that an improving macro economy will mean fewer distressed sales as a percent of overall sales and higher transaction volumes, resulting in the emergence of positive market trends without the degree of choppiness seen in the index over the last year."
Prices across all commercial property types increased in the fourth quarter. Retail properties posted the largest gain, up 8.4%, followed by office properties (up 5.1%), industrial properties (up 4.9%) and apartment properties (up 3.6%).
Atlanta was the commercial property hot spot in the last quarter of 2010, as the city's transaction volume by dollar amount topped the list of metropolitan areas across all sectors of the industry.
According to Moody's, Atlanta accumulated the most transaction volume in the apartment, industrial, office and retail sectors. Chicago, Los Angeles, New York, San Francisco and Washington, D.C. also made it on the list top ten cities in all four categories.
On an annual basis, only two property types posted price increases. Apartments performed the best, rising 11.8% in 2010. Office properties also appreciated, up 1.7% in the year. Both industrial and retail property prices depreciated last year, down 1.8% and 2.7%, respectively.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
House prices in the S&P/Case Shiller index fell 5.3% over the last two quarters of 2010, wiping out the 4.9% growth seen in the previous year and a half and sending the housing market into a double-dip, analysts at Capital Economics said Tuesday.
The drop during the back half of 2010, when prices fell 3.3% in the third quarter and another 2.1% in the fourth quarter, puts prices down at levels last seen in 2002. The declines stem from the expiration of the homebuyer tax credit in April, but with prices still falling eight months after that, the fundamentals of the market are more glaring: low demand is falling short of high supply, according to Capital Economics.
The Toronto-based firm estimates 850,000 homes are for sale with another 4.5 million properties in the foreclosure pipeline. This shadow inventory of more than 5.3 million homes will continue to push prices downward.
Not everyone is so pessimistic however. Anthony Sanders, a real estate finance professor at George Mason University said underwhelming home sales, at least in the later months of 2010, should have been expected.
"It’s important to remember that this is winter and it’s normal for sales to be lower," Sanders said. "The real test is when spring comes in April. That’s when we’ll know if we have a recovery occurring."
Still, Capital Economics said further price declines are ahead, just how steep remains in question.
"We expect they will slide by a further 5% this year," analysts said. "The danger, however, is that a vicious circle of falling prices and rising foreclosures pushes prices even lower."
Distressed home sales, with an estimated market share at between 36% to 47% are a key contributor to the sharp decline as home prices fell in 18 out of the 20 MSAs, according to Scott Buchta, head of investment strategy at Braver Stern Securities.
Buchta said that the downward trending is not likely to end soon.
"We expect to see home prices continue to fall throughout 2011 as the housing market continues to struggle under the weight of high unemployment, growing inventories of distressed properties and rising interest rates," he said. "Year-over-year comparisons will be difficult as the impact of the 2009/2010 home buyer tax credits will continue to skew the data for the next several reports."
Write to Jon Prior.
Follow him on Twitter: @JonAPrior
