We review the past month’s property news.
The Federal Housing Finance Agency reports that U.S. home prices fell 6.3 percent in January YoY. Foreclosures are said to have dragged down the values. Meanwhile, the Case-Shiller Home Price Indices released its January report indicating the continued freefall in home values. The 20-city composite index dropped by 19 percent YoY with significant decreases observed in Las Vegas: 32.5 percent, Phoenix: 35 percent, San Francisco: 32.4 percent and Miami: 29.4 percent.
Existing home sales went up by 5.1 percent in February MoM but still below 4.6 percent YoY. The National Association of Realtors cites the seasonal trends in the slowdown. Their median single-family home price was surveyed at $164,000, dropping 15 percent YoY.
Mortgage rates reached almost equalled its all-time low registering at 4.98 percent in Freddie Mac’s survey. The 3-year fixed rate mortgage rate was just 0.02 percent short of January 15’s 38-year record.
In a Reuters report, Penn, Schoen & Berland Associates conducted a poll among homebuyers and found out that “they were likely to buy a house for the first time in the next two years. More than three-quarters of those polled said this is a good time to buy a home, and almost 70 percent said now is a better time than six months ago.”
Campbell Communications ran a property sales survey among 1,000 real estate sales agents and discovered that 19 percent of home sales during January and February were short sales, slightly YoY, when 18% of sales were short sales. The author of the study, Tom Popik said to Marketwatch, “In many cases, a short sale is a more cost-effective resolution than a foreclosure, with the loss severity for a short sale typically being one-half the severity for a foreclosure.”
AIG Global Real Estate is being sued by a Mitchell L. Morgan Management Inc. for allegedly failing to pay its real estate ventures. Developers like Alex Barker, an Alabama shopping center investor, received no payment from the company after signing contracts for property development.
Moody’s Investor Service downgraded U.S. Bancorp’s senior debt from Aa3 to Aa2 for fears that more borrowers will default with their real estate loan payments. The credit rating firm announced, “The lender faces continued elevated credit costs and profitability pressures as the U.S. economy remains weak.”
The Federal Reserve’s Summary of Commentary on Current Economic Conditions or more commonly known as the Beige Book analyzed that no improvement in the real estate industry has been noted. It states, “Residential real estate markets remained in the doldrums in most areas, with only scattered, very tentative signs of stabilization reported. The pace of sales remained very low in most areas and declined further in some; most Districts reported small declines, but New York cited a sales drop of 60 to 65 percent in Manhattan compared with twelve months earlier. By contrast, Cleveland, Richmond, Dallas, and San Francisco each reported a rising or better-than-expected sales pace for existing or new homes in some areas, attributed largely to falling prices and improved financing terms for some types of home mortgages.”