I predicted back in March that the housing market was in for another significant decline as the first time home buyer tax credit expired, option ARMS were about to reset and banks were accumulating large stocks of shadow inventory. Unfortunately, it appears I might be right. The National Association of Realtors’ July Report paints a bleak picture:
“Existing home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.
Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.”
Sales of previously occupied homes fell in June and are expected to keep sinking, indicating that the housing market’s troubles are likely to drag on the economic recovery.
AP
Existing home sales in June fell and are expected to keep sinking
Sales fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million, the National Association of Realtors said Thursday. Economists polled by Thomson Reuters had expected sales of 5.18 million.
The report counts home sales once a deal closes. Last month’s report captured some buyers receiving federal tax credits of up to $8,000 that boosted sales this year. Buyers initially had to close their purchases by June 30, but Congress extended the deadline to the end of September.
Since the tax credits expired, the number of people buying homes has fallen sharply, despite lower prices and the lowest mortgage rates in decades. The situation has been worsened by high unemployment, tight lending standards and rising foreclosures.
As we all know, the recession is over. Joe Biden told us so. Ben Bernanke said the same. Obama’s chief economic officer Lawrence Summers even said “everybody agrees that the recession is over.” (1) Honestly, how could anyone disagree? After all, the Dow Jones is up almost 50% over the last year and we onlylost 36,000 jobs last quarter, which is apparently great.
So we’ve had a jobless recovery because our economy grew 2.2% last quarter. Unfortunately, as Anthony Randazzo points out in Reason Magazine, most of that “growth” is based on temporary government programs:
“Consider that 37 percent of the third-quarter GDP growth was due to motor vehicle purchases, which were stimulated almost entirely by the Cash for Clunkers program… Another 20 percent of third-quarter GDP growth came from new residential investments, propped up largely by the First-Time Homebuyer Credit… Overall, government support accounts for roughly 77 percent of economic growth in the third quarter of 2009, according to my analysis of Commerce Department statistics. This means that non-Washington GDP growth was closer to 0.34 percent from July to September 2009, instead of 2.2 percent.” (2)
He concludes, “This is not real growth. It’s the national equivalent of a credit-card buying spree, with the bills—in the form of debt service and unfunded liabilities—to be paid off later. It is a faux recovery.”
Everybody take a nice long look at today’s Pending Home Sales Indexfrom the National Association of Realtors, because it’s just about the last positive picture we’re going to see for a while.
Yes, the index rose even more than expected, as buyers rushed in to take advantage of the home buyer tax credit.
And yes, those numbers will show up in Existing Home Sales in May and June, but then look out.
The mortgage crisis is dragging on the economic recovery as more homeowners fall behind on their payments.
Analysts expect improvement soon, but the number of homeowners in default or at risk of foreclosure will have a lingering effect on the broader economy.
More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday.
A growing percentage of U.S. homeowners were saddled with “underwater mortgages” in the first quarter, accounting for almost one in four homes in a trend that poses a serious threat to the housing market’s recovery, real estate website Zillow.com said on Monday.
U.S. home values also declined again in the first quarter, Zillow reported.
Homeowners with “underwater” mortgages—where the amount owed on the mortgage exceeds the value of the home—are more prone to defaults and foreclosures.
Late stage foreclosures pushed filing figures higher in the opening quarter, suggesting that banks may be chipping away at distressed properties clogging the system. US housing prices continued their downward trajectory, while the strong presence of first-time buyers in March provided some steam to a mostly tepid recovery. See the following article from Property Wire for more on this.
Recent talk of a recovery in the US real estate market has been dealt a blow by the latest figures that show foreclosures still rising and prices falling.
Foreclosure filings including default notices, scheduled auctions and bank repossessions rose 7% in the first quarter of 2010 compared with the last three months of 2009, the most recent figures from RealtyTrac show.
Some 932,234 properties, or one in every 138 US housing units, received filings. During March alone, 367,056 properties received filings, 19% more than in February and 8% more than the same time last year.
Yes, banks are ramping up loan modifications and ramping up short sales and ramping up deeds in lieu of foreclosure, but the plain fact is that as the systems are oiled, the loans are moving through faster, and the pig in the python is showing its face.
The graph shows that we are largely through sub prime loan defaults (in purple), only to face a tidal wave of option ARMs recasts and likely defaults (in blue). Bottom-line: Short sales are here to stay!
The Short Sale Doctors, Realtors, and Stewardship Properties partner together for successful short sales. See YOU & US.
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Together We Create 6 WINS…
A Win/Win/Win/Win/Win/Win Situation!
1. A WIN for the Seller: Relieve over-leveraged homeowners from the pain of foreclosure and having their credit report badly damaged. They can now start a new chapter in their life.
2. A WIN for the Lender: Our packets go to the lender in perfect order so that they can process and negotiate the short sale in the most streamlined way possible. A successful short sale brings them greater financial return than the alternatives of an auction or REO sale.
3. A WIN for the Realtor: Collect a FULL commission and do what you do best–buying and selling real estate. By using our services you will not get bogged down with the paperwork, calls and interactions with overwhelmed loss mitigation departments. When we buy the house (over half the time), agents can receive even more commission.
4. A WIN for Us: We seek to get paid a loss mitigation fee from the short sale lender. In many cases we end by purchasing the home ourselves and making a larger profit margin from a subsequent sale.
5. A WIN for the new Buyer: Now that the property’s price has been appropriately discounted for the market, it is much easier to attract a new homeowner.
6. A WIN for our City & Country: In a small way we hope to contribute to healing our nation of the debilitating financial crisis brought upon by the increasing foreclosure rate. This will revitalize our economy and lead the world out of a damaging recession.
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Kind Words We Appreciate…
The Short Sale Doctors & Stewardship Properties’ staff,
Scott and I want to thank you all for the incredible work you did on the short sale of our home.
The months surrounding our looming foreclosure date were filled with a lot of doubt, fear, and anxiety. The moment I spoke with Margo, we were convinced to give Stewardship’s services a shot. It saved our financial future and our sanity. The shortsale process was unbelievably simple for us as homeowners in comparison to the months of struggling to communicate with our mortgage holder.
Jered did a phenomenal job of keeping us updated on the status of the settlement process. Every member of the Stewardship Properties’ team treated us with utmost respect, kindness and empathy through one of the most difficult times in our life. Our time was running out, foreclosure was closing in, and Stewardship Properties rescued us with time to spare.
We are very grateful for all of you, what you stand for, and the work you do.
I predicted back in March that the housing market was in for another significant decline as the first time home buyer tax credit expired, option ARMS were about to reset and banks were accumulating large stocks of shadow inventory. Unfortunately, it appears I might be right. The National Association of Realtors’ July Report paints a bleak picture:
ke a nice long look at today’s 
