by Calculated Risk on 7/19/2011 02:58:00 PM

From DataQuick: Golden State Mortgage Defaults Drop to Four-Year Low

A total of 56,633 Notices of Default (NoDs) were recorded at county recorders offices during the April-to-June period. That was down 17.0 percent from 68,239 for the prior quarter, and down 19.2 percent from 70,051 in second-quarter 2010, according to San Diego-based DataQuick.

Last quarter's activity was the lowest for any quarter since 53,493 NoDs were recorded in the second quarter of 2007. It was well below half the record 135,431 default notices recorded in the first quarter of 2009.

"A lot of theories are being floated as to why the numbers are down. Bank policy changes. Legal challenges. Politics. Holding back temporarily so as not to flood the market. The fact of the matter is that no one really knows, outside of lending and servicing industry insiders. ..." said John Walsh, DataQuick president.
...
Most of the loans going into default today are from the 2005-2007 period: the median origination quarter for defaulted loans is still third-quarter 2006. That has been the case for more than two years, indicating that weak underwriting standards peaked then.

And on completed foreclosures:

Trustees Deeds recorded (TDs), or the actual loss of a home to foreclosure, totaled 42,465 during the second quarter. That was down 1.4 percent from 43,052 for the prior quarter, and down 10.9 percent from 47,669 for second-quarter 2010. The all-time peak was 79,511 in third-quarter 2008.

Last quarter's trustees deeds total was the lowest since 35,431 were filed in fourth quarter 2010, and the second-lowest since fourth quarter 2007, when 31,676 were filed.

Click on graph for larger image in graph gallery.

This graph shows the annual Notices of Default (NODs) filed in California. The current year was estimated at the total for Q1 plus 3 times the Q2 rate.

California had a significant housing bust in the early '90s, with defaults peaking - and prices bottoming - in 1996. That bust was mild compared to the recent housing bust - and defaults are still way above the 1996 peak.

On the reasons for the decline: I think legal and political issues are more focused on the foreclosure process, and that the filing of default notices is probably still pretty routine - so even though the foreclosure pipeline is still pretty full, I think the decline in NODs actually suggests fewer defaults.

Earlier:
• Housing Starts increase in June
• Multi-family Starts and Completions

by Calculated Risk on 7/19/2011 01:48:00 PM

There was a report last week from Nick Timiraos at the WSJ: U.S. Tackles Housing Slump that "The Obama administration is ramping up talks on how to revive the housing market".

From Renae Merle at the WaPo: Obama administration not planning another big housing program

The Obama administration has no plans to introduce another large-scale program for relieving the troubled housing market, despite the president’s recent admission that his past efforts have not solved the problem, according to a senior administration official.
...
“There is no money and, to some degree, we have run out of ideas. I have seen them all,” said Mark Zandi, chief economist of Moody’s Analytics. “I don’t think there is something grand that could make a big difference.”
...
The biggest opportunity for wide-ranging change may be a settlement being negotiated between a coalition of state attorneys general and large banks related to flawed foreclosure practices, industry officials and consumer advocates say.

Unfortunately most of the programs so far have fallen short of expectations (HAMP) or were misdirected (Housing Tax Credit).

Some of the new policy ideas being discussed - like converting some delinquent homeowners to renters using a deed-in-lieu of foreclosure, then placing the property under the current REO Tenant-in-Place Rental Policy¹ - and finally selling the property to investors with tenant-in-place - had some merit. But it appears there will won't be any new programs, except maybe a little something from the servicer agreement.

¹ The current REO Tenant-in-Place policy is to protect tenants of foreclosed investor owned property.

by Calculated Risk on 7/19/2011 10:28:00 AM

Earlier:
• Housing Starts increase in June

Although the number of multi-family starts can vary significantly from month to month, apartment owners have been seeing falling vacancy rates, and some have started to plan for 2012 and 2013 and have been breaking ground this year. So I've been forecasting a pickup in multi-family starts.

However, since it takes over a year on average to complete multi-family projects - and multi-family starts were at a record low last year - there will be a record low, or near record low, number of multi-family completions this year.

The following graph shows the lag between multi-family starts and completions using a 12 month rolling average.

Click on graph for larger image in graph gallery.

The blue line is for multifamily starts and the red line is for multifamily completions. Since multifamily starts collapsed in 2009, completions collapsed in 2010.

The rolling 12 month total for starts (blue line) is now above the rolling 12 month for completions (red line), and they are heading in opposite directions. Starts are picking up and completions are declining.

To summarize:
• Multi-family starts will be up strong this year, but
• Multi-family completions will be at a record low.

It is important to note that even with a strong increase in multi-family construction, it is 1) from a very low level, and 2) multi-family is a small part of residential investment (RI). Still this is bright spot for construction.

by Calculated Risk on 7/19/2011 08:45:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 629,000. This is 14.6 percent (±10 9%) above the revised May estimate of 549,000 and is 16.7 percent (±11.8%) above the June 2010 rate of 539,000.

Single-family housing starts in June were at a rate of 453,000; this is 9.4 percent (±11.1%)* above the revised May figure of 414,000. The June rate for units in buildings with five units or more was 170,000.

Building Permits:
Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 624,000. This is 2.5 percent (±1.3%) above the revised May rate of 609,000 and is 6.7 percent (±2.0%) above the June 2010 estimate of 585,000.

Single-family authorizations in June were at a rate of 407,000; this is 0.2 percent (±1.0%)* above the revised May figure of 406,000. Authorizations of units in buildings with five units or more were at a rate of 198,000 in June.

Click on graph for larger image in graph gallery.

Total housing starts were at 629 thousand (SAAR) in June, up 14.6% from the revised May rate of 549 thousand.

Single-family starts increased 9.4% to 453 thousand in June.

The second graph shows total and single unit starts since 1968.

This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for over two years - with slight ups and downs due to the home buyer tax credit.

This was above expectations of 575 thousand starts in June. Multi-family starts are increasing in 2011 - although from a very low level. This is one of the bright spots for construction and the economy this year.

I'll have more on housing starts later.

by Calculated Risk on 7/18/2011 07:59:00 PM

Note: There are various reports that the servicers are still filing documents with robo-signing. Geesh!

From Eric Wolff at the North County Times: Foreclosure auctions getting pricey

Competition at foreclosure auctions has become fierce in 2011 as more bidders battle over fewer properties, according to analysts and pricing data.

The number of bidders ballooned this spring, as small-time investors entered the market and institutional investors started buying more ...

In the first half of 2011, the median gap between opening bids and winning bids grew to the highest amount in the last five years, according to a North County Times analysis of data from ForeclosureRadar.
...
"Margins have started to dry up a lot," said Bruce May, a Vista house investor who has abandoned the auctions because of the competition.

That last comment reminds me of the famous Yogi Berra quote: "It's so crowded, nobody goes there.". The lenders would probably get higher prices if they put the auctions online and gave people better advance notice.

Earlier:
• NAHB Builder Confidence index increases in July, Still Depressed
• Residential Remodeling Index at new high in May
• Lawler: Existing Home Sales Down in June

Weekend:
• Summary for Week Ending July 15th
• Schedule for Week of July 17th