Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

Geographical Breakdown

• Northeast: The Pending Home Sales Index shot up 32.6 percent to 78.9 in April and is 0.8 percent above a year ago.
• Midwest: The index rose 9.8 percent to 90.4 and is 11.1 percent above April 2008.
• South: The index slipped 0.2 percent to 93.0 in April but is 3.5 percent higher than a year ago.
• West: The index rose 1.8 percent to 94.8 but is 2.9 percent below April 2008.

NAR President Charles McMillan said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.

“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger down payment. Buyers who are wondering about their options should contact a REALTOR, who can advise consumers on the housing assistance programs and resources available in a given area.”

Affordable Housing
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, which makes it the second-highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income.

A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small down payments are roughly 80 percent of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.

Pending Vs. Existing Sales
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”

The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.

Existing-home sales for May will be released June 23. The next Pending Home Sales Index will be on July 1.

Source: NAR (06/02/09)

A new foreclosure starts every 13 seconds – nearly 6,500 a day.

“It’s easy to think, ‘Well, that’s tough luck for the families that lose their homes.’ The truth is that foreclosures are costing neighboring families hundreds of billions of dollars and dragging down the entire economy,” says Michael Calhoun, president of CRL.

Calhoun called on lenders and loan servicers to utilize the tools offered by the U.S. government to keep people in their homes.

Source: Center for Responsible Lending (06/01/2009)

Kiplinger’s Personal Finance magazine evaluated U.S. cities for their growth potential, analyzing their ability to hold onto jobs even if the economy softens further.

With assistance from Kevin Stolarick of Martin Prosperity Institute, the magazine concluded that cities where there are a lot of jobs in which people are paid to think are surviving this downturn better than areas where much of the workforce is employed in manufacturing or service jobs.

Stolarick says these creative-class jobs tend to help generate new businesses and that increases the vibrancy of the areas where they hold sway.

This employment analysis combined with data about income growth and cost of living led Kiplinger’s to choose these 10 cities as the best places to live and work in today’s challenging economy:

1. Huntsville, Ala.
2. Albuquerque, N.M.
3. Washington D.C.
4. Charlottesville, Va.
5. Athens, Ga.
6. Olympia, Wash.
7. Madison, Wis.
8. Austin, Tex.
9. Flagstaff, Ariz.
10. Raleigh, N.C.

Source: Kiplinger’s Personal Finance (07/2009)

The housing price index report ranked South Carolina 20th in home appreciation for the past year, based on sales of certain existing single-family homes.

Related stories:
Home sales data show values dropped 3.4% in S.C. during 2008
S.C. ranks sixth in nation for home value appreciation over the past year

Nationally, home prices declined 7.14% in the past 12 months and 0.55% in the first quarter of 2009. The quarterly decline was much smaller than the 3.3% price decline reported for the nation’s homes in the fourth quarter of 2008.

In South Carolina, home prices fell 3.5% in the fourth quarter of 2008, according to the previous housing price index report.

Homes in the Midlands and Upstate metro areas mostly gained value over the past four quarters. Meanwhile, homes in the coastal metro areas included in the report lost value.

National and state-level data in the Federal Housing Finance Agency report come from sales of existing single-family homes with conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac. Metro area data also include appraisals used for refinancing.

Source: Federal Housing Finance Agency

The magazine mined data from the U.S. Census Bureau to determine where people older than 65 live now. It examined housing costs, employment opportunities, and the availability of hospitals and eldercare facilities, among other things.

Of counties with populations greater than 500,000, here are Forbes’ top picks of places in which to grow old gracefully:

1. Montgomery County, Pa.
2. Nassau County, N.Y.
3. Pima County, Ariz.
4. Palm Beach County, Fla.
5. Honolulu County, Hawaii
6. Brevard County, Fla.
7. Montgomery County, Md.
8. Ocean County, N.J.
9. Westchester County, N.Y.
10. Lancaster County, Pa.

Source: Forbes, Lauren Sherman (05/18/2009)

“We can’t right this ship if we don’t run off that inventory,” says Tommy Williams, president of Williams Financial Advisors in Shreveport, La.

Stocks rose more than 3 percent on May 4 following increases in pending home sales and construction spending. But a high inventory of unsold homes and increasing foreclosures are reducing demand, and that makes it hard for prices to stabilize.

“We are getting to the point of the year where we are getting into the peak home sales season,” said Kevin Shacknofsky, co-portfolio manager of the Alpine Dynamic Dividend Fund. “The numbers now will be far more important … it’s summer time.”

Source: The Associated Press (05/24/2009)

By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published May 18, 2009

Tri-county affordable housing officials plan to use $7.4 million in federal foreclosure relief money to buy 71 homes, and most will be offered as rentals.

The federal initiative sending the money to the region, called the Neighborhood Stabilization Program, is designed to stabilize property values in areas where clusters of homes are in foreclosure. Housing agencies purchase bank-owned homes, rehabilitate them as necessary and offer them as affordable sale or rental properties.

The Lowcountry Housing Trust learned in late March it would receive the $7.4 million, and officials are now firming up plans for spending the money.

Related stories:
Housing program to buy 100 homes in foreclosure
Tri-county to get $7.4M to help mitigate foreclosures

Plans are to buy 17 homes in Berkeley County, 40 in Charleston County and 14 in Dorchester County, in the following areas:

Of those, 10 in Charleston County will be offered for sale. The rest will be rented.

Tammie Hoy, executive director of the Lowcountry Housing Trust, said state housing officials preferred that most of the homes be offered for rent because the federal money must be spent quickly. Underwriting loans for home purchases can take awhile in the current market, Hoy said.

Renting the homes at affordable rates does more than help low-income families. Hoy said the program will prevent vacancies, which can breed vandalism. Moving families into foreclosed homes injects new economic activity into the neighborhood, creating demand for groceries, for example, Hoy said.

The federal program also will create jobs through the rehabilitation work some homes will require, she said.

The Lowcountry Housing Trust is working on an addition to its Web site that will track how the $7.4 million is spent and how many jobs are created, Hoy said. She said it will be similar to the federal government’s Recovery.gov site.

The money slated for Berkeley, Charleston and Dorchester counties came through an economic relief package that Congress passed in 2008. South Carolina received a total of $44 million for the new housing program through that package.

Congress’s more recent stimulus act, the 2009 American Recovery and Reinvestment Act, also includes money for the Neighborhood Stabilization Program. Local housing officials are working on an application for a portion of that money as well.

Hoy said the second round of money is targeted for areas with high rates of foreclosure and vacancy, perhaps higher than some areas of the Lowcountry have seen.

The national median existing single-family price was $169,000, which is 13.8 percent below the first quarter of 2008 when conditions were closer to normal. Foreclosures and short sales accounted for nearly half of transactions in the first quarter.

NAR data shows that 134 out of 152 metropolitan statistical areas reported lower median existing single-family home prices in comparison with the first quarter of 2008, while 18 metros had price gains.

NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are two levels of pricing in the current market.

“Traditional homes in good condition have held their value much better, so owners shouldn’t be overly concerned about median prices,” he said. “Most sellers can expect a good return if they’ve been in their home for a normal period of home ownership and haven’t excessively tapped their equity.”

Existing-Home Sales Sluggish

Meanwhile, the sales pace remained slow overall. Total state existing-home sales, including single-family homes and condos, were at a seasonally adjusted annual rate of 4.59 million units in the first quarter, down 3.2 percent from 4.74 million units in the fourth quarter, and 6.8 percent below the 4.93 million-unit pace in the first quarter of 2008.

Seventeen states saw a sales increase from the fourth quarter, and six states were higher than a year ago; complete data for one state was not available. Sales in the first quarter do not reflect an impact from the first-time home buyer tax credit.

Lawrence Yun, NAR chief economist, sees the market in a lull before an upturn. “Over the past couple months, contract activity for home sales, buyer traffic and inquiries about the $8,000 tax credit have all increased,” he said. “Housing affordability conditions are at record high levels and we expect a measurable increase in home sales during the second half of the year, which would help stabilize prices in most areas.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 5.06 percent in the first quarter from 5.86 percent in the fourth quarter; the rate was 5.88 percent in the first quarter of 2008.

Yun said some areas showed dramatic drops in home prices. “In areas with the biggest price declines, we also see much higher levels of distressed sales which are distorting the data,” he said. “We are very much in a bifurcated market with sharp differences between foreclosures and short sales on one hand, and traditional homes on the other. In many cases homes are selling below replacement construction costs, which speaks to great value in the current market.”

State, Local Bright Spots

The largest first-quarter sales gain from a year ago was in Nevada, up 116.8 percent, followed by California which rose 80.6 percent; Arizona, up 50.2 percent; and Florida with a 25.0 percent increase. Virginia and Minnesota also experienced double-digit sales increases.

The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21.1 percent from a year ago.

Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 13.8 percent from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6.0 percent to $152,600.

Median first-quarter metro area single-family home prices ranged from a very affordable $30,300 in the Saginaw-Saginaw Township North area of Michigan to $570,000 in Honolulu. The second most expensive area was the San Jose-Sunnyvale-Santa Clara area of California, at $450,000, followed by the Anaheim-Santa Ana-Irvine area of California at $435,800.
Other affordable markets include Akron, Ohio, at $50,100, and the Youngstown-Warren-Boardman area of Ohio and Pennsylvania at $51,200.

Condo Trends

In the condo sector, metro area condominium and cooperative prices – covering changes in 56 metro areas – showed the national median existing-condo price was $172,800 in the first quarter, down 20.2 percent from the first quarter of 2008. Five metros showed annual increases in the median condo price and 51 areas had declines.

The strongest condo price increases were in Portland-South Portland-Biddeford, Maine, at $196,900, up 11.2 percent, followed by the Wichita, Kan., area, where the median condo price of $113,900 rose 6.8 percent from the first quarter of 2008, and Bismarck, N.D., at $132,400, up 6.0 percent.

Metro area median existing-condo prices in the first quarter ranged from $75,200 in Las Vegas-Paradise, Nev., to $345,900 in San Francisco-Oakland-Fremont. The second most expensive reported condo market was Honolulu at $300,000, followed by the New York-Wayne-White Plains area of New York and New Jersey at $282,300.

Other affordable condo markets include the Palm Bay-Melbourne-Titusville area of Florida at $90,600 in the first quarter, and the Sacramento-Arden-Arcade-Roseville area of California at $93,800.

Regional Sales Volume, Prices

Regionally, existing-home sales in the Northeast fell 10.3 percent in the first quarter to a pace of 693,000 units and are 20.1 percent below a year ago.

The median existing single-family home price in the Northeast declined 15.9 percent to $235,500 in the first quarter from the same period in 2008. The best gain in the region was in Syracuse, N.Y., where the median price of $113,700 rose 3.1 percent from the first quarter of 2008, followed by Buffalo-Niagara Falls, N.Y., at $99,200, up 2.7 percent, and Binghamton, N.Y., where the median rose 0.5 percent to $110,300.

In the Midwest, existing-home sales slipped 2.2 percent in the first quarter to a pace of 1.04 million and are 13.1 percent below a year ago.

The median existing single-family home price in the Midwest was down 6.8 percent to $132,400 in the first quarter from the same period in 2008. After Davenport-Moline-Rock Island and Columbia, the next strongest metro price increase in the region was in Springfield, Ill., where the median price of $111,400 was 3.9 percent higher than a year ago, followed by Topeka, Kan., at $106,500, up 3.1 percent, and Bloomington-Normal, Ill., at $153,800, up 1.9 percent.

In the South, existing-home sales declined 2.5 percent in the first quarter to an annual rate of 1.70 million and are 12.7 percent lower than the same period in 2008.

The median existing single-family home price in the South was $146,600 in the first quarter, down 10.8 percent from a year earlier. After Cumberland, the strongest price increase in the region was in Beaumont-Port Arthur, Texas, with a 5.0 percent gain to $129,100, followed by Oklahoma City, at $129,900, up 4.0 percent, and Shreveport-Bossier City, La., at $136,000, up 3.4 percent.

Existing-home sales in the West slipped 0.9 percent in the first quarter to an annual rate of 1.16 million but are 24.3 percent above a year ago.

The median existing single-family home price in the West was $237,600 in the first quarter, which is 19.8 percent below the first quarter of 2008. The strongest price gain in the West was in the Salt Lake City area, where the median price of $230,100 rose 1.9 percent from a year earlier, followed by Farmington, N.M., at $191,200, up 0.7 percent.

By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published May 11, 2009

National homebuilder Beazer Homes, which has communities in the Charleston area, has agreed to settle a securities class action lawsuit that alleged the Atlanta-based homebuilder misled investors about its home financing and business practices.

The $30.5 million settlement, if approved by the court, would end the case originally filed in March 2007 in the U.S. District Court for the Northern District of Georgia.

In the settlement agreement, Beazer Homes admitted no wrongdoing.

In the consolidated lawsuit, lead plaintiffs Glickenhaus & Co. and Carpenters Pension Trust Fund for Northern California claimed that Beazer artificially inflated its stock price by presenting false statements about its business success.

The lawsuit claimed that Beazer had been making improper loans to low-income buyers, some of whom would not be able to pay for them. Meanwhile, the homebuilder issued overly optimistic financial outlooks, the lawsuit said.

Beazer’s lending practices prompted an investigation by federal officials and critical news stories in The Charlotte Observer, both of which caused stock prices to fall, the lawsuit said.

Beazer stock reached a high of $48 per share in December 2006, the lawsuit said. Today, the homebuilder’s stock is trading at $3.09 per share.

The class in the lawsuit includes purchasers of the company’s common stock between Jan. 27, 2005, and May 12, 2008.

On Friday, Beazer Homes reported a loss of $114 million, or $2.97 per share, for the quarter ended March 31. In the same quarter last year, Beazer lost $228.7 million, or $5.93 per share.

In its earnings statement, the homebuilder said an investigation by the U.S. Attorney for the Western District of North Carolina is ongoing, and the company recognized a total of $13 million for the quarter in expenses related to the investigation.

The company said homebuilding revenue declined 53.2% for the quarter because of a 48.1% decline in home closings and a 9.9% decline in the average selling price of homes closed compared with the same period of the prior year.

The bill also will force lenders to retain a 5 percent interest in mortgages other than standard 30-year fixed and adjustable-rate loans. However, adjustable-rate mortgages that carry prepayment penalties or fees greater than 2 percent do not qualify for the exemption.

Source: Washington Post, Dina ElBoghdady (05/08/09)