Mortgages rates fall to record lows — again

NEWS SUMMARY – From Freddie Mac’s weekly survey, the average 30-year fixed-rate mortgage fell to 3.91% this week — the lowest in at least four decades and the sixth such record this year. Interest charged on adjustable-rate mortgages (ARMs) likewise fell to record territory:  The 5-year ARM fell to a record-low 2.85% and the 1-year ARM fell to a record-low 2.77%. The 15-year fixed was unchanged from last week’s record low of 3.21%.

Rates on 30-year fixed mortgages been at or below 4% for the past two months, Freddie Mac reported. Payments on a $200,000 loan are now at least $100 a month lower than at the start of the year. (See chart upper right.)

WHAT I SEE – From rate sheets hitting my desk that are not part of Freddie Mac’s survey: A 10-year fully amortized fixed rate is available at 2.99 percent and 1 point. The 30-year conforming plus fixed rate ($417,001 to $625,500) is 3.875 percent and 1 points. A 15-year conforming plus fixed rate loan is at 3.25 percent and 1 point. FHA 30-year fixed jumbo ($417,001 to $729,750) is 3.75 percent and zero points.

WHAT I THINK – The Federal Housing Finance Agency is considering a 5-year reprieve from interest payments for underwater borrowers who file a Chapter 13 reorganization bankruptcy. This is for borrowers with federally insured loans. Congressional approval is not in play.

It sounds like you may have an opportunity of free rent for 5 years should you meet the criteria. It looks to me that the underlying issue is finding new solutions to end a further collapse in property values caused by underwater borrowers walking away. It’s estimated that 25% of all homes with mortgages are upside down.

Fannie Mae’s chief economist, Doug Duncan thinks there is a 40% chance of a double-dip recession next year.

All of this means definitely continued low rates next year.

Posted in: Lending/rates • Freddie Mac • lending 

House Prices Are Finally Nearing A Bottom – But Don’t Look For A Rapid Recovery

Since the beginning of the house-price crash in 2007, analyst after analyst has predicted that "the bottom" in house prices is just around the corner - only to be wrong every time.
But now, finally, it looks as though house prices may actually be nearing a bottom.
Why?
Because, after falling nearly 35% from their 2007 peak, nationwide house prices are finally approaching "normal" levels on two key valuation measures: The "price-to-rent ratio," which measures house prices relative to what the houses might rent for, and the "price-to-income ratio," which measures house prices relative to average incomes.
Using the first ratio, economists at Goldman Sachs have concluded that national house prices will decline another 2.5% in 2012 and then bottom over the course of the following year.
(To see a recent chart of the national price-to-rent and other ratios, please click here.)
House prices differ markedly depending on where you live, of course, and Goldman's analysts have considerably different predictions for different markets. Prices in New York, Portland and Atlanta, Goldman predicts, will still see significant declines. While prices in Detroit, Miami and Cleveland should rise.
Importantly, after a price bubble similar to the one the U.S. just experienced, prices often don't stop at "average" levels on the way down. On the contrary, they often plunge straight through "fair value" and spend years below average levels. And that certainly could happen to house prices this time around.
But Goldman's economists believe house prices will level out in a year or two. And unlike other analysts who have made similar predictions in prior years, Goldman's economists actually have data on their side: The price-to-rent ratio really has fallen to normal levels.
Of course, even if house prices do bottom in 2013, that doesn't mean that they'll quickly shoot up again - or that housing will once again be the "great investment" that everyone thought it was back in the boom years.
One of the reasons house prices are expected to bottom soon is that houses are currently more affordable than they have been in the past. But housing "affordability" is judged, in large part, on mortgage rates, and mortgage rates are currently near an all-time low. If and when the economy begins to recover in earnest, mortgage rates will likely rise, and, as they do, houses will become less affordable.
So it is likely that, even after they bottom, U.S. house prices will face headwinds for a long time.

• REAL LIFE MONEY
• NOVEMBER 13, 2011

How to Figure the Fuzzy Math of Internet Home Values

By ALYSSA ABKOWITZ

Jason Gonsalves worked hard to turn his 6,500-square-foot stucco-and-stone home in the suburbs of Sacramento into the ultimate grown-up party pad, complete with game room, custom wine cellar and an infinity-edge pool overlooking Folsom Lake. When interest rates fell recently, Mr. Gonsalves, who runs a lobbying firm, looked into refinancing his $750,000 mortgage. That's when he got startling news—the home had dropped more than $200,000 in value while he was renovating.

Or at least, that's what one real-estate website told him. Another valued the house at only $640,500. And these online estimates left him all the more confused when a real-life appraiser, assessing the house for the refinancing loan, pinned its value at $1.5 million. "I have no idea how those numbers could be so different," Mr. Gonsalves says.

Right or wrong, they're the numbers millions of consumers are clamoring for. After years of real-estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, Homes.com and Realtor.com are reshuffling the deck, giving home shoppers and owners estimates of what almost any home is worth. People have flocked to the data in startling numbers: Together, four of the biggest sites that offer home-value estimates get 100 million visits a month, with web surfers using them to determine what to ask or bid for a home, or whether to refinance.

Zillow, Trulia and other websites post estimates of home values. But as Alyssa Abkowitz explains on Lunch Break, these popular sites can be -- by their own admission -- wildly inaccurate.

But for figures that can carry such weight, critics say, the estimates can be far rougher than most people realize. Valuations that are 20% or even 50% higher or lower than a property's eventual sale price are not uncommon, as the sites themselves acknowledge. The estimates frequently change, too—sometimes by hundreds of thousands of dollars—as sites plug new data into their algorithms.

• What the Sites Get Right and Wrong

All of the competitors make it clear their numbers are guesstimates, not gospel. "A Trulia estimate is just that—an estimate," says a disclaimer on that site's new home-value tool. Zillow goes a step further, publishing precise numbers about how imprecise its estimates can be. And every major site urges home-price hunters to consult appraisers or real-estate agents to refine their results.

But despite the disclaimers, homeowners and real-estate agents say, many Web surfers put enough faith in the estimates to sway the way they shop and sell.

After Frank and Sue Parks put their manor-style house in Louisville, Ky., on the market, they watched as Zillow put a $331,000 value on the dwelling in May; by July it had climbed to $1.5 million. (Zillow says the lower estimate reflected errors in its statistical model.) The couple got potential buyer referrals from the site, but they fended off a stream of lowball offers before they sold this fall. Mrs. Parks says the estimate roller coaster "really affected our ability to move the place."

Determining a home's value has traditionally been the job of an appraiser, who gathers data on recently sold homes and compares them with the "subject property" to arrive at an estimate.

In the late 1980s, economists started developing automated valuation models, or AVMs, computer models that could analyze data about comparable sales, square footage, number of bedrooms and the like, in a matter of seconds. For years, these tools were mostly reserved for in-house analysts at lending banks.
It wasn't until 2006 that Zillow took them to the masses, with its Zestimates, which now offer values for more than 100 million homes based on the company's own algorithms. "Humans don't make these decisions," says Stan Humphries, chief economist at Zillow.

Numbers like these have become weapons in the arsenal of consumers like Simms Jenkins, an Atlanta marketing executive, who has recently relied on online estimates to help him both buy and sell homes. "I can't imagine 25 years ago, when people would just go out and spend their entire Saturday looking at homes," he says. "You don't have to do that now."

But appraisers and real-estate consultants say the online models can veer off target with alarming frequency. Most data for the models come from two sources: records from tax assessors and listing data for recent sales. Collection is a challenge, however, because not every county tracks properties the same way—some calculate home size by number of bedrooms, others by overall square footage. And automated models aren't designed to account for the unique construction details that often make or break a deal, or for intangible factors like a neighborhood's gentrification. "You cannot use a computer model in certain areas and expect the value to come out right," says John May, the former assessor of Jefferson County, Ky., which includes the state's largest city, Louisville.

For all these reasons, models that banks use often add a "confidence score" to their estimates. Consumer-oriented sites, meanwhile, rely on disclaimers, some of which are eye-opening. Zillow surfers who read the "About Zestimates" page find out that the site's overall error rate—the amount its estimates vary from a homes' actual value—is 8.5%, and that about one-fourth of the estimates are at least 20% off the eventual sale price. In some places, the numbers are far more dramatic: In Hamilton County, Ohio, which includes Cincinnati, it's 82%.

The sites argue that, over time, edits and corrections will help them perfect their numbers—with many fixes coming from their customers.

On Homes.com, anyone who knows a homeowner's surname and the year the home was last purchased, can edit the details of a property listing in ways that can eventually change the estimated value.

Zillow has accepted revisions on 25 million homes—perhaps the strongest testament to how seriously consumers take its estimates. Today, the site says its figures are accurate enough to give consumers a good sense of any home's value. In the meantime, says Mr. Humphries, its economist, "We're always tweaking the algorithm or building a new one."

Mortgage aid open to more Calif. borrowers             

A state-run program that helps homeowners struggling to pay their mortgages now has broader eligibility guidelines, opening up help to borrowers who did "cash-out" refinances and own multiple properties, said California Housing Finance Agency officials on Monday.

The mortgage-aid effort, called Keep Your Home California, so far has helped close to 8,000 low- and moderate-income households that are behind on loan payments or close to default, according to agency leaders.

"This expanded eligibility will allow more families to qualify and receive greater assistance," said California Housing Finance Agency Executive Director Claudia Cappio, in a statement. "We are continuously evaluating our experience so far and making adjustments like these based on the initial results of the Keep Your Home California program."

Keep Your Home California has four parts that include: mortgage help for the unemployed, mortgage aid for homeowners with documented financial hardship, relocation help for those in the midst of a short sale or deed-in-lieu of foreclosure, and reduction of principal. The programs, paid for by the U.S. Treasury Department's Hardest Hit Fund, is costing taxpayers $2 billion.

Monday's announced changes include:

--Allowing homeowners who completed "cash-out" mortgage refinancing to take part in the four programs. Such borrowers were excluded before.

--Allowing borrowers who own more than one property to apply. Program officials said this will be particularly helpful to those who co-signed on properties for family members.

--Offering mortgage aid to unemployed borrowers for nine months, instead of six. Such homeowners can get up to $3,000 a month. To qualify, you must receive unemployment benefits.

--Reinstating up to $20,000 in past-due mortgage payments instead of the previous $15,000 cap.

To qualify, your mortgage servicer must take part in Keep Your Home California. Click here for the list of servicers.

Info: Call 888-954-KEEP(5337) between 7 a.m. and 7 p.m. Monday through Friday, and 9 a.m. to 3 p.m. on Saturdays. Visit: http://www.keepyourhomecalifornia.org/ or 
http://www.conservatucasacalifornia.org/.

Reported by reporter Lily Leung at lily.leung@uniontrib.com or 619-293-1719.

October 27, 2011

Handling High Closing Costs

By VICKIE ELMER

WHEN you add everything up, closing costs can increase the price of a home by as much as $10,000, sometimes more.
Those who are cash-poor can ask relatives for help. But some lenders advertise another option: If borrowers agree to accept a mortgage interest rate from a quarter to a full percentage point higher than they would ordinarily qualify for, they can receive credit toward their closing costs.
 Such mortgages are sometimes called no-closing-cost loans, though the term is misleading. The credit usually covers only fees charged by the mortgage broker or bank, like the loan origination fee, the underwriting expense, and the appraisal, according to Neil Diamond, a mortgage broker in Commack, N.Y.  That generally leaves title insurance, mortgage-recording taxes, insurance and escrowed taxes to cover, he said.
The amount of credit depends on total closing costs and other loan details. A rule of thumb is that for every one-eighth of a point increase in interest rate, borrowers receive a credit worth half a percentage point of the principal amount, said Jason Auerbach, a divisional manager for First Choice Loan Services in Manhattan. On a $400,000 30-year mortgage with a 4.125 percent base rate, the first one-eighth of a point increase would yield a $2,000 credit and so would the second, but the credit for the third would drop to about $400, he said, noting that some lenders set a 5.25 percent ceiling on rates.
With mortgage rates so low, Mr. Auerbach said, interest in “no-closing-cost” loans has increased.
While these mortgages can be helpful to some, borrowers should carefully review all the details. “It’s a sales technique,” Mr. Diamond said. “It can be positive and negative.”
The main downside, of course, is that the higher rate and monthly payment remain in place through the life of the loan. Therefore, Mr. Diamond said, borrowers must ask themselves what they can really afford.
Mr. Diamond suggests doing a side-by-side comparison of loans with and without the credit. If you were paying around $50 a month extra in interest charges to cover, say, $6,000 in closing costs, it would take you 120 months, or 10 years, before you began to pay more in monthly payments than you were saving on closing costs. So if you stayed in the home for seven to eight years — the national average in recent years, according to the National Association of Realtors — you would come out ahead with the higher rate.
But a higher mortgage payment with more going toward interest and less toward principal repayment could lead you to a higher debt-to-income ratio, Mr. Auerbach pointed out. This might affect some borrowers’ ability to qualify for the loan, or might leave them with less money for home improvements or purchases after they moved in.
Even so, a “no-closing-cost” loan can be useful for anyone who has found a home and does not want to wait to save thousands of dollars more to cover all the closing costs. It also can be worthwhile for “people who would rather hold onto their money,” Mr. Diamond said.
Nationwide, total closing costs on a $200,000 mortgage average $4,070, according to a recent survey from Bankrate.com. That represents an 8.8 percent increase over last year, and reflects higher lender fees. New York’s closing costs averaged $6,183, the highest in the nation. In New Jersey the average was $4,589; and in Connecticut, $3,843, according to Bankrate.com.
Closing costs can be much higher on more expensive homes. Dianne Scalza, an associate broker with Netter Real Estate on Long Island, says that buyers in the West Islip area, for instance, typically pay $12,000 to $17,000.
Co-op owners may also benefit from the raise-the-rate approach when it comes to refinancing. Because the loan balance does not change, they most likely will not need board approval for a new mortgage, Mr. Auerbach said. 

Ten things you need to know about buying or selling a home

By Deborah K. Dietsch, Published: October 26

After staying put during the economic recession, you might be tempted by stabilizing real estate prices and low mortgage interest rates to sell your house and buy your next place. What you may not realize is how long and complicated the process of buying and selling a home has become. New lending regulations, appraisal procedures and consumer expectations can throw up roadblocks for even the most seasoned flipper. Many homeowners who haven’t sold or bought a home in the past few years will find that many of the old “rules” have changed. Residential real estate experts suggest homeowners become aware of the new rules before listing their current property and searching for a new home.
1. A buyer’s market? Not entirely.
Home prices and mortgage rates are down, but buyers may not be in the catbird seat in some sought-after neighborhoods, where properties are worth almost what they were between 2005 and 2007. In August, median sales prices of houses in the District reached almost 88 percent of their peak value, prices in Northern Virginia rose to nearly 80 percent of their high and those in suburban Maryland climbed to nearly 67 percent, according to the George Mason Center for Regional Analysis. But within each county and, indeed, each neighborhood, there can be a lot of variation.
“Inside the Beltway, it is somewhat balanced between a buyer’s and a seller’s market because there are fewer buyers out there and less inventory,” said agent Jamie Koppersmith of Century 21 Redwood Realty. When priced right, he said, homes can still attract multiple offers. Confirming this reality is agent Anslie Stokes Milligan of McEnearney Associates, who said she fielded seven offers earlier this month on a rowhouse near Dupont Circle.
2. Pick a real estate agent willing to do the homework, because buying and selling take more effort these days.
Buyers and sellers should insist their agents do more than show listings and run open houses. Today, savvy buyers are well-versed in online tools such as Redfin and Zillow, and they look up a lot of listings data themselves. Buyers should make sure their broker is well versed in the latest lending and appraisal practices and able to navigate around potential land mines that could detonate the deal. “There are so many things that can go wrong with a transaction, even when the buyer and seller are organized and well-qualified,” said realtor Morgan Knull of ReMax Gateway. “These days, there seem to be more problems than in the past with buying and selling, and everything takes longer to do.”
Knull said agents should be expected to supply appraisers with detailed information about relevant comparables and market trends and to resolve title issues, especially with foreclosures involving complicated chains of ownership.
Realtors should also be expected to understand short sale transactions and be willing to keep tabs on the buyer even after the contract is signed.
“When an offer comes in, you can’t just assume the buyer will get the loan,” said Koppersmith. “We need to look at the financials they provide as well as talk to their lender to make sure they are qualified and will be able to close the transaction. The last thing you want for your seller is to have the property under contract for a month or more, only to have it come back on the market because the loan wasn’t approved.”
3. Sellers, don’t put off those remodeling projects.
Call it the “HGTV effect.” The proliferation of home improvement shows on cable television has increased buyers’ expectations of finding homes in move-in-ready conditions. Except for do-it-yourselfers intentionally looking for a fixer-upper — with a lower price to match — buyers want older homes to look like new.
They now expect sellers to have renovated older kitchens and bathrooms, replaced windows and refinished floors. “There is intolerance among today’s buyers for properties that haven’t been updated appropriately,” said Knull. “Granite on countertops is no longer an upgrade — it’s an entitlement.”
4. Home staging may be worth the extra cash.
“Besides new paint, staging is the best return on investment you can make,” said agent Rachel Valentino of Keller Williams. Particularly for vacant homes, she said, “It’s difficult for most buyers to walk into an empty house and see how their furniture would be placed. You have to do the legwork for them.”
With so many buyers searching online for properties, well-decorated rooms with visual impact are critical to standing out from the crowd. “If the photos look depressing, buyers may never walk inside the front door,” said Knull. Staging, he adds, is most valuable in properties with small or unusual spaces.
Professional stagers both rearrange owners’ furniture and redecorate from scratch, but their services don’t come cheap. A two-hour consultation with staging advice typically costs $200 to $300, and outfitting the main rooms with rented furnishings can cost $5,000 or more. “The national average to stage a vacant house is about 1 percent of the asking price,” said Monica Murphy, owner of Preferred Staging in Potomac Falls, Va.
5. Appraisals may not match price expectations.
The days of cherry-picking a friendly appraiser to assess a property within 24 hours are over. In 2009, a practice known as the Home Valuation Code of Conduct went into effect to ensure that homes are appraised fairly, without the influence of lenders and third parties. The policies are still in place for conforming mortgages sold to Fannie Mae and Freddie Mac, and they have created unintended consequences for appraisals.
Now lenders often outsource the process to third-party appraisal management companies to avoid any conflict of interest. Since the appraisal fee is now shared between the management firm and the appraiser, the appraisal can cost more, with the higher price passed on to buyers and sellers. “Not only is the consumer paying more but getting lower quality,” said Ken Chitester, spokesman of the Chicago-based Appraisal Institute. “Top appraisers won’t do the job for less than they used to be paid and often the selected appraisers are the least experienced professionals available.”
In some cases, appraisers may undervalue the property because they are unfamiliar with the community in which the house is located. Realtor Kimberly Cestari of W.C. & A.N. Miller found one of her listings in Chevy Chase was appraised at $100,000 less than the sales price because it was a rambler in a neighborhood full of colonials. “I found a rambler of similar value in [the nearby neighborhood of] Forest Hills and the appraisal went up. It was a nail-biter,” Cestari said. “The onus is now on the listing agent to provide the appraiser with relevant comparables to show them how we arrived at the price.”
The seller can also help prove the value of the home. “Provide the appraiser with a list of repairs and upgrades to the home over the past four to five years,” said Frank John of Washington Appraisal.
More layers of administration and quality control between lenders and appraisers mean the appraisal process takes longer. “Generally, it takes seven to 10 days,” said McEnearney Associates’ Milligan. “Some lenders require two appraisals for some FHA and jumbo loans.”
6. Start saving your financial records to show the bank.
Lenders now require more documentation than ever to be convinced of financial qualifications. “We have to validate everything,” said Catherine Smith of First Home Mortgage in McLean. Her advice to a potential buyer? “Become a paper hound. Come prepared with two years of tax returns and two years of bank statements for all assets. Be ready to defend your credit.”
Buyers need a credit score of at least 620, the minimum accepted by Fannie Mae, and many lenders require higher scores. “In general, the lower your credit score, the higher the interest rate will be on the loan,” said Debbie Polcyn of First Savings Mortgage in Bethesda.
7. Prepare to spend more time securing a loan.
What used to take two weeks can now take 30 to 60 days, according to several lenders. “The absolute number one reason that the loan process has lengthened is because of compliance with federal regulations,” said Polcyn. She also cites increased loan documentation requirements, more intensive underwriting and quality control processes such as fraud checks as contributors to the wait.
Meeting with a loan officer before you start looking for a house can help pave the way to more financing options and a smoother deal. “Get an accurate snapshot of interest rates and monthly payments before you start shopping,” said Valentino.
8. A bigger down payment might be necessary.
Buyers seeking homes in upscale neighborhoods may have to come up with a higher down payment, since jumbo loans aren’t available in the amounts that they used to be. “You used to be able to borrow up to $729,750 in high-cost areas inside the Beltway, but now the maximum is $625,500. If you exceed the limit for the area, your loan becomes nonconforming,” said Smith of First Home Mortgage. “There are fewer sources for that money, and interest rates are higher.”
Documentation of income and reserve funds is required of all loans, but the process is more stringent for securing a jumbo loan. “Lenders want to make sure the borrower can handle unexpected expenses, loss of income or other financial bumps in the road after closing,” said Polcyn.
9. The home inspection is back with a vengeance.
Waiving the inspection was one way to beat the competition during the go-go market of 2005-07. Now buyers view the top-to-bottom assessment of a home as essential to making sure their investments are sound. Some even see the inspection as an opportunity to get renovations done at the seller’s expense. “People are asking for more and more on the home inspections,” said Cestari. “Buyers are becoming pickier. I’ve had them request the sellers paint the trim, replace the gutters, line chimneys.”
To avoid a second price negotiation over fixes, some agents recommend that sellers pay for their own inspection before putting the house on the market and making the report part of the disclosure package. “I encourage the owner to service the heating and cooling system, and get chimney and termite inspections,” said Milligan. “Those are three big-ticket items that buyers bring up frequently.”
10. Sell or rent before buying or be willing to pay two mortgages.
Selling one house and buying another used to happen in quick succession, without the need to rent temporary quarters and move a household twice. Buyers who wanted to purchase a home before selling their existing residence often made the contract contingent on the future sale. Or they opted for a bridge loan as a stopgap measure to finance their next purchase before selling.
But as the real estate market has slowed and lending regulations have tightened, both these options have been kicked to the curb. As a result, sellers can be left scrambling to find a place to live after closing.
Renting a furnished apartment for the transitional period in between selling and buying is an option but an expensive one. Oakwood, a temporary housing company with more than 60 properties in the D.C. area, charges $193 to $209 per day for a two-bedroom apartment in the metro area. Another company specializing in transitional apartments, Turnkey Housing Solutions, charges about $145 per night for a similar unit. ExecuStay Marriott, a division of the hotel chain, works with more than 54 apartment communities in the metro area to offer two-bedroom units averaging $199 per night in the District and $135 per night in suburban Maryland and Virginia. Added to those prices are a 14.5 percent sales tax in the District for a stay of less than 90 days and a 10.5 percent tax in Maryland and Virginia for stays of less than 30 days.
To avoid these high costs, Koppersmith suggests that sellers rent their property back from the buyers for a month or two. “This allows the seller to close on the home they are selling, get the proceeds and then quickly put a contract on another home and settle that property as fast as possible,” he said. “Assuming the seller feels confident they can find a home they would like to purchase, this is a pretty good strategy for bridging the gap.”

US homebuilders less pessimistic in October

By DEREK KRAVITZ, AP Real Estate Writer

Tuesday, October 18, 2011

(10-18) 07:58 PDT WASHINGTON (AP) --
U.S. homebuilders are less pessimistic about the struggling housing market, but not enough to signal a recovery any time soon.
The National Association of Home Builders said Tuesday that its index of builder sentiment this month rose from 14 to 18.
Any reading below 50 indicates negative sentiment about the housing market. It hasn't reached 50 since April 2006, the peak of the housing boom. The index has been below 20 for all but one month during the past two years.
Last year, the number of people who bought new homes fell to its lowest level dating back nearly a half-century. Sales this year haven't fared much better.
Builders are struggling to compete with foreclosures, which have made the price of previously occupied homes more competitive. Many buyers are having difficulty obtaining loans or meeting higher down payment requirements. Low appraisals are scuttling some deals after contracts have been signed. Some buyers want to upgrade to a new house but are holding off because they can't sell their home.
David Crowe, the builders group's chief economist, said some builders are shifting their assessment from "poor" to "fair," but few are changing their views from "fair" to "good."
The trade group has identified several pockets of strength. Home construction, prices and employment have been improving in those areas.
The two biggest cities cited — New Orleans and Pittsburgh — were suffering through economic downturns during the housing boom. New Orleans is rebuilding after Hurricane Katrina in 2005; Pittsburgh has evolved from a city dependent on the steel industry to a diverse economy with jobs in health care, education and technology.
Smaller metro areas where energy and agriculture are the primary economic drivers have also shown improvement, the trade group said. Of 23 "improving" metro areas highlighted by builders, seven are located in Texas alone.
While new homes make up a small portion of sales, they have an outsize impact on the economy. The builders' trade group says each new home built creates an average of three jobs for a year and generates about $90,000 in taxes.
Separate gauges of current single-family home sales and foot traffic of prospective buyers increased four and three points each, to 18 and 14, respectively. A survey of sales expectations over the next six months rose seven points, to 24.
An index of builders' outlook in the West rose nine points, to 21. The Midwest and South rose 4 points, to 15 and 19, respectively. The Northeast was unchanged at 15.

http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/10/18/national/w070616D89.DTL

Foreclosure slowdown stabilizes real estate values

Zillow: Home values down year-over-year in August

Home values were down on a yearly basis in August, but showed relative stability in the near term, according to indices that track home values nationwide.
Home values fell 4.5 percent year over year in August, to $172,600, and remained essentially flat compared to July, according to the Zillow Home Value Index, released today. CoreLogic's Home Price Index showed a similar drop year over year, down 4.4 percent, with month-to-month prices also remaining virtually flat.
Overall, prices have dropped 30.5 percent since an April 2006 peak, according to CoreLogic. When distressed sales (bank-owned homes and short sales) are excluded, the drop from peak stood at 21 percent in August.
Zillow's index report showed a somewhat similar drop from a June 2006 peak: 28.3 percent. That index tracks 157 metropolitan areas nationwide. Of the 25 largest metros tracked, all saw their index values remain virtually the same on a monthly basis. On a yearly basis, Sacramento, Calif., saw the biggest drop (-11.3 percent), followed by Minneapolis-St. Paul, Minn. (-10.7 percent) and Atlanta (-10 percent).
Only Pittsburgh experienced year-over-year value appreciation: 2.8 percent. That metro continues to be the only one among the top 25 to have seen its index value remain essentially flat from peak, falling only 0.8 percent.
Miami-Fort Lauderdale, Fla., and Orlando, Fla., have seen the biggest drops from peak, each down 54.5 percent.
Zillow Home Value Index

Largest 25 metros	Zillow Home Value Index			Foreclosures
	Aug-11	Y-o-Y Chg.	Chg. from peak	Homes foreclosed (for every 10k homes)	Foreclosure resales
U.S.	$172,600	-4.5%	-28.3%	9.2	19.5%
New York	$350,700	-2.90%	-23.30%	0.4	2.5%
Los Angeles	$389,900	-6.10%	-35.60%	12.9	25.4%
Chicago	$172,800	-9.10%	-36.30%	--	--
Dallas	$128,000	-2.80%	-11.40%	8.8	18.6%
Philadelphia	$194,300	-4.20%	-17.70%	3.2	7.2%
Miami-Fort Lauderdale, Fla.	$139,900	-3.30%	-54.50%	--	--
Washington, D.C.	$315,400	-1.60%	-28.10%	5.7	14.1%
Atlanta	$121,700	-10%	-33.30%	--	--
Detroit	$75,000	-6.50%	-52.80%	--	--
Boston	$316,200	-3%	-20.60%	--	--
San Francisco	$474,700	-7.10%	-32.80%	13	25.5%
Phoenix	$123,100	-8%	-56.40%	32.3	44.2%
Riverside, Calif.	$184,300	-4.40%	-54.20%	25.9	46.1%
Seattle	$259,800	-6.30%	-31.90%	13.6	22.2%
Minneapolis-St. Paul, Minn.	$159,600	-10.70%	-35.40%	11.9	19.6%
San Diego	$347,300	-5.80%	-35.30%	12.6	27.2%
St. Louis	$130,700	-7.30%	-16.90%	--	--
Tampa, Fla.	$106,400	-9.00%	-51%	--	--
Baltimore	$224,000	-3.90%	-25.60%	3.2	12%
Denver	$198,000	-4.20%	-14.70%	11.4	23.9%
Pittsburgh	$110,500	2.80%	-0.80%	3.8	8.9%
Portland, Ore.	$211,400	-4.60%	-27.90%	7.9	16.5%
Cleveland	$112,300	-4.90%	-22.10%	7	19.7%
Sacramento, Calif.	$202,400	-11.30%	-51.30%	22.7	40.8%
Orlando, Fla.	$117,400	-5.10%	-54.50%	--	--

Source: Zillow.
The rate at which homes were foreclosed in August was 9.2 out of every 10,000 homes, a decline from 10.9 of every 10,000 homes in October 2010, before investigations into documentation irregularities lengthened foreclosure timelines. Foreclosure resales stood at 19.5 percent of overall sales.
"Due to the robo-signing controversy, the pace of foreclosure liquidations has been slower than it would be otherwise, which is impacting home-value trends positively. Eventually the pace will pick up again, putting more bank-owned homes into local markets and putting additional downward pressure on prices," said Stan Humphries, Zillow's chief economist, in a statement.
"We remain encouraged about the organic stabilization in home values that we have been seeing absent the federal homebuyer tax credits, but we remain concerned about the impact that recent economic turmoil and continued weak economic indicators will have on future home sales and home-value trends.
"At this point, we maintain the expectation that a definitive bottom will not occur until 2012 at the earliest."
According to CoreLogic's price index, home prices fell a slight 0.7 percent year-over-year in August when distressed sales are excluded.
"The continued bright spot is the nondistressed segment of the market, which is only marginally lower than a year ago and continues to exhibit relative strength," said Mark Fleming, CoreLogic's chief economist, in a statement.
Of the 100 most-populous metro areas nationwide, 80 saw yearly price declines in August, including seven of the top 10.

10 largest metro areas	Y-o-Y Chg.	Y-o-Y Chg.
	Single-family	Excluding distressed
Chicago-Joliet-Naperville, Ill.	-10.2%	-1.3%
Phoenix-Mesa-Glendale, Ariz.	-9.8%	-8.2%
Atlanta-Sandy Springs-Marietta, Ga.	-7.2%	-2.8%
Riverside-San Bernardino-Ontario, Calif.	-6.0%	-3.8%
Los Angeles-Long Beach-Glendale, Calif.	-5.2%	0.7%
Houston-Sugar Land-Baytown, Texas	-2.6%	3.3%
Philadelphia, Pa.	-1.7%	-1.7%
Dallas-Plano-Irving, Texas	0.2%	2.6%
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.	0.9%	2.4%
New York-White Plains-Wayne, N.Y.-N.J.	3.2%	4.0%

Source: CoreLogic.
In September, home prices remained little changed, either from August or over a three-month period starting in July, according to a report from Altos Research.
Altos' 10-city national composite dipped 0.6 percent in September from August and 1.3 percent from July, to $444,045. Salt Lake City posted the largest price change from August, an increase of 1.7 percent.
Unsold inventory in the 10-city composite fell in every market, declining 1.9 percent overall from August and 2.3 percent from July. Tampa, Fla., posted the biggest decrease from August: 9.9 percent.
"The mass liquidation of foreclosure portfolios is best described as a trickle. The inventory is coming on the market slowly as more loans are modified to keep homeowners in their homes. Although the millions of properties in the shadow inventory are still looming, there is nothing that indicates a flood of foreclosures hitting the market anytime soon," the report said.