by Calculated Risk on 4/26/2012 01:07:00 PM

From the National Multi Housing Council (NMHC): Market Conditions Improve For Apartment Industry

Optimism continues for the apartment industry, according to the latest results of the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The findings reflect a gradual recovery for the multifamily sector that faced a 50-year low in apartment starts in 2009.

The Q1 2012 survey’s four indexes measuring Market Tightness (74), Sales Volume (57), Equity Financing (62) and Debt Financing (65) remained above 50 for the eighth time in the past nine quarters. Any number above 50 indicates quarter-to-quarter growth.

"Market conditions improved across the board, even from the rather strong level of three months ago,” said NMHC Chief Economist Mark Obrinsky. “Demand for apartment residences – and apartment properties – continues to grow. We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.”
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The Market Tightness Index increased to 74 from 60. Nearly half (49 percent) reported tighter markets – reflecting lower vacancy rates and/or higher rents – compared to only one percent reporting looser markets.

Click on graph for larger image.

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tightening from the previous quarter. The index has indicated tighter market conditions for the last nine quarters and suggests falling vacancy rates and or rising rents.

This fits with the recent Reis data showing apartment vacancy rates fell in Q1 2012 to 4.9%, down from 5.2% in Q4 2011, and 9.0% at the end of 2009. This is the lowest vacancy rate in the Reis survey in over 10 years.

This survey indicates demand for apartments is still strong. And even though multifamily starts increased in 2011, completions of apartments were near record lows - so supply was constrained. There will be more completions in 2012, but it looks like another strong year for the apartment industry.

A final note: This index helped me call the bottom for effective rents (and the top for vacancy rate) early in 2010.

by Calculated Risk on 4/26/2012 11:20:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Eased Further but Activity Remained Expansionary

“Factories in our region report continued growth, especially in employment, but at somewhat slower rates than in previous months, when unseasonably warm weather may have helped boost activity” said Wilkerson. “Expectations for the rest of the year notched down a bit as well, but remained positive.”

Growth in Tenth District manufacturing eased further in April, but activity remained expansionary and well above year-ago levels. The majority of producers reported some negative effects from elevated gasoline prices, and nearly half of all respondents noted difficulties finding workers. Price indexes were mixed, with slight easing in some materials price indexes and fewer producers planning to raise selling prices.

The month-over-month composite index was 3 in April, down from 9 in March and 13 in February ... However, the employment index jumped from 23 to 31 – its highest level since early 2007.

Most of the regional surveys were weaker in April, but they also showed an increase in employment.

From Freddie Mac: Fixed Mortgage Rates Hold Near Record Lows

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates down slightly and hovering just above their record lows as markets waited for the Federal Reserve's monetary policy announcement. The 30-year fixed-rate mortgage averaged 3.88 percent and has been below 4 percent all but one week in 2012. The 15-year fixed, a popular refinancing choice, averaged 3.12 percent.

30-year fixed-rate mortgage (FRM) averaged 3.88 percent with an average 0.7 point for the week ending April 26, 2012, down from last week when it averaged 3.90 percent. Last year at this time, the 30-year FRM averaged 4.78 percent.

From Radar Logic: Home Prices Strengthened Considerably in February, But the Strength May Not Last

According to the February 2012 RPX Monthly Housing Market Report released today by Radar Logic Incorporated, the RPX Composite price, which tracks home prices in 25 major US metropolitan areas, increased 1.9 percent over the month ending February 16, 2012.

Notwithstanding the strength exhibited by home prices in February, the RPX Composite price was 3.18 percent lower than it was in February 2011. Transaction activity in the 25 MSAs increased 16 percent on a year-over-year basis. ... Investment buying and mild weather likely contributed to the strength in the housing market during February. Unfortunately, the positive impact of both these factors will probably be temporary.

The Radar Logic report includes a graph of future prices that suggests investors think prices will bottom in early 2013.

by Calculated Risk on 4/26/2012 10:00:00 AM

From the NAR: March Pending Home Sales Rise, Market Recovering

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1 percent to 101.4 in March from an upwardly revised 97.4 in February and is 12.8 percent above March 2011 when it was 89.9. The data reflects contracts but not closings.

The index is now at the highest level since April 2010 when it reached 111.3.
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The PHSI in the Northeast slipped 0.8 percent to 78.2 in March but is 21.1 percent above March 2011. In the Midwest the index declined 0.9 percent to 93.3 but is 16.9 percent higher than a year ago. Pending home sales in the South rose 5.9 percent to an index of 114.1 in March and are 10.6 percent above March 2011. In the West the index increased 8.7 percent in March to 108.0 and is 9.0 percent above a year ago.

This was above the consensus of a 1.0% increase for this index.

Contract signings usually lead sales by about 45 to 60 days, so this is for sales in April and May.

by Calculated Risk on 4/26/2012 08:30:00 AM

The DOL reports:

In the week ending April 21, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 1,000 from the previous week's revised figure of 389,000. The 4-week moving average was 381,750, an increase of 6,250 from the previous week's revised average of 375,500.

The previous week was revised up to 389,000 from 386,000.

The following graph shows the 4-week moving average of weekly claims since January 2000.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 381,750.

This is the highest level for the 4-week moving average this year.

And here is a long term graph of weekly claims:



After falling to 363,000 at the end of March, the 4-week average has increased for three straight weeks and is at the highest level this year.

All current Employment Graphs

by Calculated Risk on 4/26/2012 12:01:00 AM

From RealtyTrac: 54 Percent of U.S. Metros Post Quarterly Increase in Foreclosure Activity in First Quarter of 2012

First quarter foreclosure activity increased from the previous quarter in 26 out of the nation’s 50 largest metro areas, led by Pittsburgh (up 49 percent), Indianapolis (up 37 percent), Philadelphia (up 30 percent), New York (up 24 percent), Raleigh, N.C. (up 23 percent), and Virginia Beach, Va. (up 22 percent).

The biggest quarterly decreases in foreclosure activity among the 50 largest metro areas were in Portland, Ore. (down 28 percent), Las Vegas (down 26 percent), Providence, R.I. (down 24 percent), Salt Lake City (down 22 percent), Boston (down 21 percent), and San Jose, Calif. (down 21 percent).

“First quarter metro foreclosure trends were a mixed bag,” said Brandon Moore, chief executive officer of RealtyTrac. “While the majority of metro areas continued to show foreclosure activity down from a year ago, more than half reported increasing foreclosure activity from the previous quarter — an early sign that long-dormant foreclosures are coming out of hibernation in many local markets.”

Click on graph for larger image.

This graph from RealtyTrac shows some market are seeing an increase in foreclosure activity and others a decrease.

RealtyTrac doesn't mention this, but Pennsylvania, Indiana, New York and North Carolina are all judicial states (the top 5 metro increases were in those states).

The states with the largest decreases in foreclosure activity - Oregon, Nevada, Rhode Island, Utah, Massachusetts, and California - are all non-judicial states.

This really is a tale of two different foreclosure methods. Many of the judicial states still have a long way to go.