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Wednesday, January 22, 2014

Thursday: Existing Home Sales, Unemployment Claims

by Calculated Risk on 1/22/2014 08:49:00 PM

• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 330 thousand from 326 thousand.

• At 9:00 AM, the Markit US PMI Manufacturing Index Flash for January. The consensus is for an increase to 55.0 from 54.4 in December.

• Also at 9:00 AM: the FHFA House Price Index for November 2013. This was originally a GSE only repeat sales, however there is also an expanded index. The consensus is for a 0.4% increase.

• At 10:00 AM: Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for sales of 4.90 million on seasonally adjusted annual rate (SAAR) basis. Sales in November were at a 4.90 million SAAR. Economist Tom Lawler estimates the NAR will report sales of 4.96 million SAAR. As always, a key will be inventory of homes for sale.

• At 11:00 AM: the Kansas City Fed manufacturing survey for January.

Short sales, Foreclosures and Cash buyers

Note: The NAR will release existing home sales and inventory for December tomorrow. It is also interesting to look at the trend for distressed sales (foreclosures and short sales), and for all cash buyers (frequently investors). Economist Tom Lawler sent me another update to the table below of short sales, foreclosures and cash buyers for several selected cities in December.

From CR: Total "distressed" share is down in all of these markets, and down significantly in most.

Short sales are down sharply in all of these markets (this was a real change in 2013, and I expect further declines in short sales in 2014).

Important Note on short sales: Historically the IRS has considered debt forgiveness (like short sales) as taxable income. In 2007, Congress passed a measure to exempt most forgiven mortgage debt from being considered taxable income (this helped increase short sale activity). This measure expired on Dec 31, 2013. However, according to a letter from the IRS:

"[I]f a property owner cannot be held personally liable for the difference between the loan balance and the sales price, we would consider the obligation as a nonrecourse obligation. In this situation, the owner would not treat the cancelled debt as income."
So in states that passed anti-deficiency provisions (like California), this means many loans will be considered nonrecourse by the IRS (and forgiven debt will not be taxed). In other states, forgiven debt will be taxed.  

Foreclosures are down in all of these areas too (except Springfield, Ill and Miami).

The All Cash Share (last two columns) is mostly declining year-over-year.  It appears investors are pulling back in markets like Las Vegas and SoCal - probably because of fewer distressed sales and higher prices.

Short Sales ShareForeclosure Sales Share Total "Distressed" ShareAll Cash Share
Las Vegas20.7%45.8%8.5%9.5%29.2%55.3%44.4%55.2%
Mid-Atlantic 8.0%13.0%9.3%9.7%17.3%22.7%19.3%20.3%
California *15.5%26.7%6.7%15.8%22.2%42.5%  
Bay Area CA*10.5%23.6%4.5%12.1%15.0%35.7%22.5%29.9%
So. California*13.2%26.7%5.8%14.2%19.0%40.9%27.7%35.8%
Tampa MSA SF11.9%22.4%18.2%17.4%30.1%39.8%42.0%48.2%
Tampa MSA C/TH8.4%17.7%15.8%17.0%24.2%34.6%62.8%70.0%
Miami MSA SF15.3%22.9%15.1%14.0%30.3%37.0%43.6%47.7%
Miami MSA C/TH11.9%18.7%17.0%13.7%28.9%32.4%71.8%78.3%
Tucson      32.3%33.1%
Toledo      36.5%41.6%
Wichita      30.2%30.6%
Des Moines      23.1%21.6%
Omaha      23.9%20.6%
Pensacola      36.5%32.7%
Georgia***      32.0%N/A
Hampton Roads    29.1%31.7%  
Northeast Florida    36.2%42.7%  
Chicago    36.0%45.0%  
Houston  6.5%14.2%    
Memphis*  21.0%25.6%    
Birmingham AL  22.5%34.0%    
Springfield IL**  17.7%14.2%    
*share of existing home sales, based on property records
**Single Family Only
***GAMLS only