by Calculated Risk on 8/08/2014 11:13:00 AM

From Fannie Mae:

• Fannie Mae reported net income of $3.7 billion and comprehensive income of $3.7 billion for the second quarter of 2014.
• Fannie Mae expects to pay Treasury $3.7 billion in dividends in September 2014. With the expected September dividend payment, Fannie Mae will have paid a total of $130.5 billion in dividends to Treasury in comparison to $116.1 billion in draw requests since 2008. Dividend payments do not offset prior Treasury draws.
...
Foreclosed property income decreased in the second quarter and first half of 2014 compared with the second quarter and first half of 2013 due to a decrease in gains recognized on dispositions of our REO properties. During the second quarter and first half of 2014, we experienced a modest increase in REO prices compared with a significant increase in REO prices in the second quarter and first half of 2013.
emphasis added

From Freddie Mac:

• Net income was $1.4 billion – the company’s eleventh consecutive quarter of positive earnings, compared to $4.0 billion in first quarter of 2014
• Based on June 30, 2014 net worth of $4.3 billion, the company’s September 2014 dividend obligation will be $1.9 billion, bringing total cash dividends paid to Treasury to $88.2 billion.

Click on graph for larger image.

Here is a graph of Fannie and Freddie Real Estate Owned (REO).

REO inventory decreased in Q2 for both Fannie and Freddie.

Delinquencies are falling, but there are still a large number of properties in the foreclosure process with long time lines in judicial foreclosure states.

Fannie noted there was only a "modest increase in REO prices" in Q2.

by Calculated Risk on 8/08/2014 08:21:00 AM

This is a key distressed market to follow since Las Vegas has seen the largest price decline of any of the Case-Shiller composite 20 cities.

The Greater Las Vegas Association of Realtors reported GLVAR reports median local home price hits $200,000

According to GLVAR, the total number of existing local homes, condominiums and townhomes sold in July was 3,314, up from 3,274 in June, but down from one year ago. Total sales increased thanks largely to a 12.2 percent monthly increase in condo and townhome sales.

GLVAR said 35.6 percent of all existing local homes sold in July were purchased with cash. That’s up slightly from 34.7 percent in June, but still near a five-year low and well short of the February 2013 peak of 59.5 percent, suggesting that fewer investors are buying homes in Southern Nevada.
...
In July, 11.5 percent of all existing local home sales were short sales. That’s up from 10.8 percent in June. Another 9.1 percent of all July sales were bank-owned properties, down from 10.1 percent in June.
...
The total number of single-family homes listed for sale on GLVAR’s Multiple Listing Service in July was 13,717. That’s down 0.9 percent from 13,838 in June and down 2.9 percent from one year ago.

By the end of July, GLVAR reported 7,266 single-family homes listed without any sort of offer. That’s up 2.0 percent from 7,126 such homes listed in June, and a 55.2 percent jump from one year ago.
emphasis added

There are several key trends that we've been following:

1) Overall sales were down about 9% year-over-year.

2) Conventional (equity, not distressed) sales were up 13% year-over-year.  In July 2013, only 64.0% of all sales were conventional equity.  This year, in July 2014, 79.4% were equity sales. 

3) The percent of cash sales has declined year-over-year from 54.5% in July 2013 to 35.6% in July 2014. (investor buying appears to be declining).

4) Non-contingent inventory is up 55% year-over-year.

More inventory (a major theme for 2014) suggests price increases will slow.

by Calculated Risk on 8/07/2014 07:07:00 PM

Earlier today the MBA released their Q2 National Delinquency Survey: Delinquency and Foreclosure Rates Decrease in Second Quarter

One of the key questions for housing is when will delinquencies and foreclosures be back to normal?

As Joel Kan, MBA’s Director of Economic Forecasting, said this morning:

“Some states hardest hit by the crisis, for example California and Arizona, now have foreclosure inventory rates that are both back to pre-crisis levels and less than half the current national rate. On the other hand, despite declines last quarter, states with slower-moving judicial foreclosure regimes, like New Jersey, Florida and New York, have foreclosure inventory rates two to three times the national average."

So the answer about when delinquencies and foreclosures will be back to normal depends on the state and foreclosure process.  Some states have already recovered and others are lagging behind.

A key point to remember is that most of the problem loans were originated in 2007 or earlier (a long time ago), and the lenders are just working through the backlog.  From the MBA:

... 75 percent of seriously delinquent loans were originated in 2007 and earlier. Loans with vintages started in 2011 and later only accounted for six percent of all seriously delinquent loans.

Click on graph for larger image.

This graph shows the percent of loans delinquent by days past due.

The percent of loans 30 days and 60 days delinquent are back to normal levels.


The 90 day bucket peaked in Q1 2010, and is about two-thirds of the way back to normal.

The percent of loans in the foreclosure process also peaked in 2010 and is close to two-thirds of the way back to normal.

So it has taken about 4 years to reduce the backlog by two-thirds, so a rough guess is that delinquencies and foreclosures will be back to normal in about 2 years.

by Calculated Risk on 8/07/2014 05:27:00 PM

From HotelNewsNow.com: STR: US hotel results for week ending 2 August

The U.S. hotel industry recorded positive results in the three key performance measurements during the week of 27 July through 2 August 2014, according to data from STR.

In year-over-year measurements, the industry’s occupancy rate rose 4.5 percent to 76.3 percent. Average daily rate increased 6.2 percent to finish the week at US$118.70. Revenue per available room for the week was up 11.0 percent to finish at US$90.54.
emphasis added

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The occupancy rate probably peaked for 2014 during the last week in July at 77.9%.  Before this year, the previous weekly high for the occupancy rate was late in July 2000 at 77.0%.

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2014, blue is the median, and black is for 2009 - the worst year since the Great Depression for hotels.  Purple is for 2000.

The 4-week average of the occupancy rate is solidly above the median for 2000-2007, and is at the same level as in 2000. 

Right now it looks like 2014 will be the best year since 2000 for hotels.   A very strong year ...

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 8/07/2014 03:08:00 PM

This is a quarterly index from the the National Association of Home Builders (NAHB) and is similar to the overall housing market index (HMI). The NAHB started this index in Q4 2008, so the readings have been very low.  Note that this index is Not Seasonally Adjusted (NSA)

From the NAHB: Builder Confidence in the 55+ Housing Market Shows Positive Signs in the Second Quarter

Builder confidence in the single-family 55+ housing market for the second quarter is up year over year, according to the National Association of Home Builders’ (NAHB) 55+ Housing Market Index (HMI) released today. Compared to the second quarter of 2013, the single-family index increased three points to a level of 56, which is the highest second-quarter reading since the inception of the index in 2008 and the 11th consecutive quarter of year over year improvements.
...
Two of the components of the 55+ single-family HMI posted increases from a year ago: present sales climbed seven points to 61 and expected sales for the next six months rose one point to 61. Meanwhile, traffic of prospective buyers dropped six points to 42.
...
“One of the factors contributing to the positive signs in the 55+ housing market is the slow but steady increase in existing home sales in the last three months,” said NAHB Chief Economist David Crowe. “The 55+ market is strongly driven by consumers being able to sell their existing homes at a favorable price in order to buy or rent in a 55+ community.”
emphasis added

Click on graph for larger image.

This graph shows the NAHB 55+ HMI through Q2 2014.  The index increased in Q2 to 56 from 50 in Q1, and up from 53 in Q2 2013.  This indicates that more builders view conditions as good than as  poor.

There are two key drivers: 1) there is a large cohort moving into the 55+ group, and 2) the homeownership rate typically increases for people in the 55 to 70 year old age group. So demographics should be favorable for the 55+ market.