by Calculated Risk on 1/14/2015 07:41:00 PM

On mortgage rates from Matthew Graham at Mortgage News Daily: Mortgage Rates Back to 3.5% for Some

If you have a truly ideal credit profile and loan scenario, a few of the more aggressive lenders are quoting conforming, 30yr fixed mortgage rates at 3.5% today. Almost all other lenders are only an eighth of a point higher at 3.625% for top tier scenarios. This is a rate landscape that hasn't been seen since early May 2013. There's still quite a bit of ground to cover between here and the 3.125%-3.25% rates seen at the end of September 2012, but for all intents and purposes, 3.5%-3.625% was the upper end of the refi boom golden age from mid 2012 to mid 2013.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to increase to 295 thousand from 294 thousand.

• Also at 8:30 AM, the Producer Price Index for December from the BLS. The consensus is for a 0.4% decrease in prices, and a 0.1% increase in core PPI.

• Also at 8:30 AM, the NY Fed Empire State Manufacturing Survey for January. The consensus is for a reading of 5.0, up from -3.6 last month (above zero is expansion).

• At 10:00 AM, the Philly Fed manufacturing survey for January. The consensus is for a reading of 18.8, down from 24.3 last month (above zero indicates expansion).

by Calculated Risk on 1/14/2015 04:13:00 PM

From DataQuick: Southern California Home Sales and Median Sale Price Rise

The number of homes sold increased sharply from the month of November and rose modestly from the same time a year earlier, marking one of just two months in 2014 to post a year-over-year gain in sales. ... A total of 19,205 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December 2014. That was up month over month 22.8 percent from 15,643 sales in November 2014, and up year over year 4.3 percent from 18,415 sales in December 2013, according to CoreLogic DataQuick data.

"One month doesn’t make a trend, but December’s uptick in home sales might indicate renewed interest in housing thanks to lower mortgage rates and job growth in recent months,” said Andrew LePage, data analyst for CoreLogic DataQuick. “The gain came despite a continued decline in the share of homes sold to investors and cash buyers. If demand continues to build we'll need more supply to keep up with it. One of the big questions hanging over the housing market is whether higher demand and home values will lead to a lot more people listing their homes for sale, as well as more new-home construction, which remains well below average.”
...
Foreclosure resales represented 5.0 percent of the resale market in December. That was down from a revised 5.5 percent in November 2014 and down from 5.8 percent in December 2013. In recent months the foreclosure resale rate has been the lowest since early 2007. In the current cycle, foreclosure resales hit a high of 56.7 percent in February 2009. Foreclosure resales are purchased homes that have been previously foreclosed upon in the prior 12 months.

Short sales made up an estimated 6.2 percent of resales in December, down from a revised 6.4 in November 2014 and down from 10.2 percent in December 2013. Short sales are transactions in which the sale price fell short of what was owed on the property.
emphasis added

Based on early reports from different areas, it looks like home sales picked up in December.

by Calculated Risk on 1/14/2015 02:05:00 PM

Fed's Beige Book "Prepared at the Federal Reserve Bank of San Francisco and based on information collected on or before January 5, 2015. "

Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand during the reporting period of mid-November through late December, with most Districts reporting a "modest" or "moderate" pace of growth. In contrast, the Kansas City District reported only slight growth in December. However, most of their contacts, along with those of several other Districts, expect somewhat faster growth over the coming months. ...

And on real estate:

Single-family residential real estate sales and construction were largely flat on balance across the Districts. Sales declined somewhat on a year-over-year basis in the Boston, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts. In the Philadelphia District, year-over-year existing home sales finished lower in November, but pending December sales in some areas were up notably over December 2013. However, builders of new homes in the Philadelphia District reported weak traffic for prospective buyers and fewer contract signings. San Francisco reported that overall home sales picked up in December. Richmond reported a modest increase in housing market activity. Home prices increased modestly, on balance, in the Boston, Philadelphia, Cleveland, Atlanta, Chicago, and Dallas Districts. The Cleveland, Atlanta, Chicago, Minneapolis, and Kansas City Districts all reported slightly slower single-family residential construction activity. However, the pace of single-family home construction increased in some areas of the San Francisco District.

Commercial real estate activity expanded in most Districts. The Philadelphia District reported a modest pace of growth for commercial real estate leasing activity, and Boston reported improving conditions in commercial real estate markets overall. Commercial real estate activity in the Chicago and Kansas City Districts expanded at a moderate pace. The Dallas District noted that office leasing activity remained strong, but one contact noted a slight pullback in demand from oil and gas firms. Demand for apartments in the Dallas District also remained strong. New York City's co-op and condo market showed continued strength in the final quarter of 2014; apartment sales volume was down from the exceptionally high levels of the prior year but still fairly brisk, while selling prices were up moderately. Commercial construction activity increased in most Districts. Activity grew modestly in the Philadelphia District and a bit faster in the Atlanta and Chicago Districts. Atlanta cited the multifamily residential segment as a source of growth, while Chicago credited demand for industrial and office buildings. Commercial builders in the Cleveland District reported a moderate to robust increase for projects in the pipeline. Dallas reported that overall commercial construction was strong. San Francisco reported that multifamily residential construction was strong in many areas of that District and that retail, office, industrial, or infrastructure projects were widespread across that District.
emphasis added

Residential real estate was "flat", however commercial was picking up.

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).