by Calculated Risk on 1/14/2015 01:14:00 PM

During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For some time, not much changed. But over the last 2+ years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In December 2014, 12.8% of all resales were distressed sales. This was up from 11.5% last month, and down from 18.8% in December 2013.

The percentage of REOs was at 6.7%, and the percentage of short sales was 6.1%.

Here are the statistics for November.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes increased 32.2% year-over-year (YoY) in November.  In general the YoY increases have been trending down after peaking at close to 100%.

Cash buyers accounted for 15.4% of all sales, down from 19.5% in December 2013 (frequently investors).  This has been trending down, and it appears investors are becoming much less of a factor in Sacramento.

Total sales were up 1.5% from December 2013, and conventional equity sales were up 8.9% compared to the same month last year.

Summary: Distressed sales down, conventional sales up and less investor buying.  This is what we'd expect to see in a healing market.  As I've noted before, we are seeing a similar pattern in other distressed areas.

by Calculated Risk on 1/14/2015 12:17:00 PM

From CoreLogic: Press Release and National Foreclosure Report

According to CoreLogic, for the month of November 2014, there were 41,000 completed foreclosures nationally, down from 46,000 in November 2013, a year-over-year decrease of 9.6 percent and down 64 percent from the peak of completed foreclosures in September 2010. ...

As of November 2014, approximately 567,000 homes nationally were in some stage of foreclosure, known as the foreclosure inventory, compared to 880,000 in November 2013, a year-over-year decrease of 35.5 percent and representing 37 consecutive months of year-over-year declines. The foreclosure inventory as of November 2014 made up 1.5 percent of all homes with a mortgage, compared to 2.2 percent in November 2013.
...
“While there has been a large improvement in the reduction of foreclosure inventory, completed foreclosures remain high and serve as one of the obstacles to new single family construction. Until the flow of completed foreclosures declines to normal levels, new-home construction will not pickup because builders have little incentive to compete with foreclosure stock.” Sam Khater, deputy chief economist at CoreLogic

A couple of points: As Khater noted, foreclosures are still an obstacle to new single family construction. In the report, CoreLogic notes that the "completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006" (foreclosure won't decline to zero).

by Calculated Risk on 1/14/2015 08:30:00 AM

On a monthly basis, retail sales decreased 0.9% from November to December (seasonally adjusted), and sales were up 3.2% from December 2013. Sales in November were revised down from an increase of +0.7% to +0.4%.

From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for December, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $442.9 billion, a decrease of 0.9 percent from the previous month, but up 3.2 percent above December 2013. ... The October to November 2014 percent change was revised from +0.7 percent to +0.4 percent.

Click on graph for larger image.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales ex-gasoline decreased 0.3%.

Retail sales ex-autos decreased 1.0%. 

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail and Food service sales ex-gasoline increased by 5.5% on a YoY basis (3.2% for all retail sales).

The decrease in December was well below consensus expectations of a 0.1% decrease.  Both October and November were revised down.

This was a weak report even after removing the impact of lower gasoline prices.

by Calculated Risk on 1/14/2015 07:01:00 AM

From the MBA: Mortgage Applications Increase by 49 Percent, Largest Weekly Gain Since November 2008

Mortgage applications increased 49.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 9, 2015....

The Refinance Index increased 66 percent from the previous week to the highest level since July 2013. The seasonally adjusted Purchase Index increased 24 percent from one week earlier to the highest level since September 2013.
...
“The US economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term interest rates,” said Mike Fratantoni, MBA’s Chief Economist.

“Mortgage rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year’s holiday. ... In addition to the drop in rates, and news of improvement in the job market, there was additional positive news for prospective homebuyers with evidence that credit availability has increased somewhat, and with FHA’s announcement of a decrease in their mortgage insurance premiums. Purchase application volume increased by almost 24 percent, with stronger growth for conventional applications than for government loans. Purchase application volume was at its highest level since September 2013, increased on a year over year basis in the aggregate, and notably increased across most loan size categories, particularly for the conforming, middle of the market loan segments that had been weak for much of the past year. FHA purchase application volume was up by 17 percent for the week on a seasonally adjusted basis.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.89 percent, the lowest level since May 2013, from 4.01 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index.

2014 was the lowest year for refinance activity since year 2000.

Even with the recent sharp decline in rates, mortgage rates would have to decline further for there to be a really large refinance boom.  But it looks like 2015 will see more activity than in 2014, especially from FHA loans after January 26th.

The second graph shows the MBA mortgage purchase index.  

According to the MBA, the unadjusted purchase index is up 2% from a year ago.

Note: Seasonal adjustments are difficult early in the year for all data, so this might be overstating the increase in activity.

by Calculated Risk on 1/13/2015 07:53:00 PM

The West Coast port labor discussions are ongoing ... and this could negatively impact the economy.

From the LA Times: Night shifts at L.A.-area ports to be cut, in latest move during talks

Employers at the ports of Los Angeles and Long Beach will no longer order dockworkers to unload ships at night, a move they contend will help relieve crushing congestion on the waterfront.

The labor cut, scheduled to begin Tuesday, is intended to put fewer new containers on docks that are near capacity, allowing night-shift workers to focus on clearing the cargo boxes already there, said Steve Getzug, a spokesman for the Pacific Maritime Assn., which represents shipping lines and terminal operators.
...
But the union representing West Coast dockworkers said the work reduction would increase port congestion and is intended to pressure union negotiators who have been attempting to reach a new labor agreement for eight months.
...
Last week, tensions between the sides appeared to ease when employers and the union asked for federal mediation to help reach a new contract for about 20,000 West Coast dockworkers.

Still a mess!

Wednesday:
• At 7:00 AM ET, Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:30 AM, Retail sales for December will be released. The consensus is for retail sales to decrease 0.1% in December, and to decrease 0.1% ex-autos.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for November. The consensus is for a 0.2% increase in inventories.

• At 2:00 PM, the Federal Reserve Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts.