Home Price Reductions Level Off

The share of homes on the market with price reductions declined to an average of 21 percent as of Feb. 1, according to Trulia.com, which has been tracking the information since April 2009.

This is a significant decrease compared to November 2009, when 26 percent of homes had at least one price reduction

The total dollar amount cut from home prices dropped to $22.6 billion as of Feb. 1, down from $28.1 billion in November, a 19 percent decrease.

The average discount for price-reduced homes is holding steady at 11 percent off the original listing price.

Here are the cities with the largest decrease in listings with price reductions between last November and this month, according to Trulia.

San Francisco, -46
Oakland, Calif., -43
Sacramento, -42
San Jose, -40
Indianapolis, -39
Seattle, -37
San Diego, -33
New York, -33

Source: Trulia.com (02/16/2010)

IRS Clarifies What’s Needed to Claim Tax Credit

The Internal Revenue Service has clarified which documentation taxpayers need to submit to claim the first-time and move-up homebuyer tax credit.

While the IRS is still requiring the filing of Form 5405, it is not demanding that all parties’ signatures be on the HUD-1 settlement document in areas where requiring both the buyer and the seller to sign the document isn’t common.

The IRS clarification says: “In areas where signatures are not required on the settlement document, the IRS has clarified that it will accept a settlement statement if it is completed and valid according to local law. … The IRS encourages those buyers to sign the settlement statement prior to attaching it to the tax return.”

For repeat buyers, the IRS is seeking documentation that home buyers have lived in the previous property for a consecutive five of the past eight years. Proof can include property tax records, home owner insurance records, or mortgage interest statements.

Source: Washington Post (02/20/2010)

Bankers: The End of Foreclosure Crisis is Near

The Mortgage Bankers Association is seeing signs that the foreclosure crisis is ending.

“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight,” says Jay Brinkmann, MBA’s chief economist, in a published statement.

Brinkmann said that normally there is a large spike in short-term mortgage delinquencies at the end of the year because of high heating bills and holiday expenditures. This year, there was not only no spike, but the 30-day delinquency rate actually fell from 3.79 percent to 3.63 percent.

Thirty-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures, Brinkmann said.

“[This] gives us growing confidence that the size of the problem now is about as bad as it will get,” he said.

Source: Mortgage Bankers Association (02/19/2010)

Seattle, U.S. home prices rise: Case-Shiller report

Home prices across the U.S. rose for the seventh straight month in December, and were also up in Seattle, a sign of price stability as the housing market continues its bumpy road to recovery.

The Standard & Poor’s/Case-Shiller 20-city home-price index released Tuesday rose 0.3 percent from November to December to a seasonally adjusted reading of 145.87.

In the Seattle market, which includes King, Snohomish and Pierce counties, the seasonally adjusted index was 148.37, up 0.2 percent from November and 0.8 percent from its bottom in September.

The 20-city index was off 3.1 percent for the year from December 2008, while in Seattle, prices were down 7.9 percent over that same period. But that was an improvement over the one-year drop of 10.6 percent from November 2008 to November 2009 in the Seattle area.

The national figure nearly matched analysts’ estimates that it would fall by 3.2 percent.

Only five of 20 cities in the index showed declines from November to December. The index is now up more than 3 percent from its bottom in May, but still 30 percent below its May 2006 peak.

Prices peaked a year later in Seattle. The index is down 22 percent since then.

Los Angeles and Phoenix posted the largest December price increases. The worst performer was Chicago with a 0.6 percent decline.

Rising prices are a key to the nation’s recovery because they make homeowners feel wealthier and more comfortable to spend money. Consumer spending accounts for more than two-thirds of all economic activity.

Price increases also help rebuild equity for homeowners who owe more on their mortgages than their properties are worth. Roughly one in three homeowners with a mortgage are in that position, according to Moody’s Economy.com.

The housing market is seeking stability as it bounces back from a four-year recession. Sales of previously occupied homes fell almost 17 percent in December, the largest monthly drop in 40-years of record-keeping, the National Association of Realtors said.

Data for January will be released Friday, with analysts forecasting a 1 percent rise.

Source: Seattle Times & Associated Press, Seattle Times desk editor Bill Kossen and business reporter Eric Pryne contributed to this report (02/23/2010)

Construction Up Along With Builder Confidence

Construction of new homes rose to an annual rate of 591,000 in January, up 2.8 percent from December when the revised rate was 575,000, the Commerce Department announced Wednesday.

Meanwhile, the monthly home builder confidence scale rose two points in February to 17.

The National Association of Home Builders Chair Bob Jones said, “Builders are slightly more optimistic that the housing recovery is finally beginning to take root.”

Builder confidence was highest in the Northeast and the South, weaker in the West and lowest in the Midwest.

Source: The Wall Street Journal, Meena Thiruvengadam (02/16/2010) and CNN, Blake Ellis (02/17/2010)

National Association of Realtors Resource to Reduce Short Sale Stress

According to the most recent REALTORS® Confidence Index, buyers continue to be discouraged with the extended short sale process, which frequently results in foreclosures that could have been prevented.

New resources from the National Association of REALTORS® aim to help REALTORS® and consumers successfully navigate the short sale process to help more home owners avoid foreclosure.

“Our members report that short sales are often riddled with delays and red tape,” said NAR President Vicki Cox Golder. “NAR has worked tirelessly to provide REALTORS® with the resources they need to navigate short sale transactions, as well as provide guidance on helpful government programs designed for home owners facing the process.”

On April 5, 2010, the U.S. government will implement the Home Affordable Foreclosure Alternatives Program (HAFA). Part of the Home Affordable Modification Program, HAFA helps home owners who are unable to retain their home under HAMP by simplifying and streamlining the use of short sales and deeds-in-lieu of foreclosures. Home owners must meet certain requirements to participate, and incentive payments are provided to home owners and servicers.

Source: NAR (02/19/2010)

Home Prices Rise in Metro Areas

Home prices rose in more than a third of U.S. metropolitan areas in the fourth quarter, the National Association of Realtors said Thursday as it pointed to a “broad stabilization” in values.

The median price for single-family home resales was up from a year earlier in 67 of the 151 U.S. metropolitan areas included in the trade group’s quarterly survey. But other housing analysts say the home-price trend depends heavily on any recovery in the job market and on the pace of foreclosures.

Median Home Prices by Metro Area
Sortable Chart: A look at prices in 151 metro areas around the country, released Thursday by the NAR.
.The national median price for single-family homes was $172,900 in the fourth quarter, down 4.1% from a year earlier. That was the smallest decline in more than two years.

Among metro areas showing the biggest gains from a year earlier were Cleveland (25%), Akron, Ohio, (23%) and San Francisco (13%). Those increases don’t denote a general surge in home values but rather show that sales of foreclosed homes at fire-sale prices made up a smaller percentage of overall sales than they did a year earlier.

Foreclosures dominated some markets a year ago. Nationwide, “distressed property,” including foreclosures and homes at risk of foreclosure, accounted for 32% of fourth-quarter transactions, down from 37% a year earlier, the Realtors estimated.

Metro areas showing big price declines included Las Vegas and Ocala, Fla., (both down 23%) and Orlando (down 20%).

For condominiums, the median resale price in the quarter for 54 metro areas surveyed was $177,300, down 4.8% from a year earlier. Eleven of the metro areas showed higher condo prices, and the rest showed declines.

.One major worry is that price drops have left many households without any equity in their homes. Homeowners who are “underwater”—owing more than the value of their homes—are more likely to abandon their houses if their incomes fall or they lose their jobs. That would create more foreclosures, weighing on home prices.

At the end of 2009, 21% of households with mortgages on single-family homes owed more than the current value of their homes, according to a new estimate from Zillow.com, a real-estate data provider.

State and federal efforts to avert or delay foreclosures by offering borrowers easier terms have created a huge backlog of unresolved cases, likely to lead to an eventual bulge in the supply of foreclosed homes. As of Dec. 31, about 3.9% of first-lien home mortgages were 120 days or more overdue but still not in the foreclosure process, according to LPS Applied Analytics. That represents about two million households.

Source: The Wall Street Journal, James R. Hagerty (02/15/2010)