RE News Canada - Real Estate News Source

Exclusive Report: Emerging Foreclosure Trends for 2012

RE NEWS Canada — Wed, 11 Jan 2012 18:25:04 +0000

There was an abundance of good news on the foreclosure front in 2011 that might portend a rosy outlook for 2012 — at least at first blush.

U.S. foreclosure activity was down on an annual basis in every month during the year through November, according to RealtyTrac’s monthly foreclosure market reports. These annual decreases put the nation on pace to have fewer than 2 million properties with foreclosure filings for the year, down more than 30 percent from the nearly 2.9 million properties with foreclosure filings in 2010.

Foreclosure activity in 2011 is on track to be down more than 50 percent in several states, including New Jersey, Maryland and Florida.

In addition, the much-feared shadow inventory of foreclosures has declined dramatically over the course of the year. Inventory of properties in some stage of foreclosure or bank-owned (REO) has shrunk from a record high of more than 2.2 million in December 2010 to just under 1.5 million in September, according to RealtyTrac data. That’s a 32 percent drop in just nine months, and puts the estimated months’ supply of foreclosure inventory at just over one year.

Despite this seeming good news, the housing market has not completely escaped the clutches of this foreclosure crisis. Instead foreclosure processing delays in 2011 have artificially exaggerated what would have been a slow, natural decrease in foreclosure activity off the foreclosure peak of 2010. This artificial trough in foreclosure activity in 2011 will result in a corresponding double-peak in 2012.

Although this double-peak will most likely not be as severe as the previous peak of 2010 (or 2009 in some local markets), buyers, investors and real estate agents should brace themselves for a resurgent short sale and REO market this year — and look for the opportunities that more foreclosure activity may represent for them.

1. Flat home prices: Resurging foreclosure activity in 2012 will look less like a tsunami and more like a series of smaller waves rolling into shore over the course of the year — which should allow the market to absorb this inventory without another 20 or 30 percent hit to home prices. Still, the steady influx of foreclosure activity will also keep home prices from appreciating substantially during the year.

2. More foreclosure inventory and REO sales: Increasing foreclosure activity will slowly push the available foreclosure inventory higher, and that could be good news for buyers, investors and real estate agents in markets with a scarcity of inventory. In select markets hard-hit by the foreclosure crisis, local real estate professionals have been telling RealtyTrac for several months now about a shortage of inventory and bidding wars on foreclosure properties. This is happening in places like Stockton, Calif., and Detroit, where a member of the RealtyTrac Agent Network recently said he believes there is a “backlog of buyers” in his market just waiting on more properties to become available.

3. More short sales: Legal issues, property maintenance costs and other issues complicating the foreclosure process will lead lenders to more likely approve short sales in 2012. Many of the properties that started the foreclosure process in the third and fourth quarters of 2011 will end up as bank-owned properties in 2012, but many will also end up as short sales.

This all spells opportunity for buyers, investors and real estate agents in 2012. Prices and affordability will stay low, allowing buyers and investors to still find good bargains. Available inventory of pre-foreclosure and bank-owned property will increase, providing more options for those buyers to find the bargain they’re looking for. And lenders will continue to slowly streamline the process of selling both short sales and REO properties — making life easier for everyone involved.

Source: RealtyTrac

Alberta and Saskatchewan to lead 2012 economic growth

RE NEWS Canada — Fri, 06 Jan 2012 19:22:57 +0000

Saskatchewan and Alberta will have the best economic growth over the next two years of all the provinces, according to a forecast out today.

Jacques Marcil, a senior economist with TD Economics, said the economic futures of Canadian provinces this year may largely depend on their connections to Europe and exposure to the strong possibility of a European recession.

Specifically, the report adjusts a September forecast to show slower growth this year in Ontario, Quebec and B.C., while also adjusting for faster growth in Alberta, Saskatchewan and Nova Scotia.

“The corresponding revision to our provincial outlook was unevenly distributed among provinces, but all regions are vulnerable to the uncertainty and volatility expected over the next six months,” said Marcil. “These headwinds will likely intensify at a time when constrained public finances leave very few tools available for Canadian governments to stimulate demand, or at least restore confidence.”

Alberta is expected to see Canada’s strongest employment growth, up 1.5% this year, compared to 0.8% nationally. It was already up 3.7% in Alberta last year. While unemployment will rise from 7.4% nationally last year to 7.6% this year, Alberta will replace Saskatchewan as the province with the lowest rate, at 5%.

“Saskatchewan, which usually acts as a responsive pool of spare workers for Alberta, is failing to do so currently because its economy is performing nearly as well as Alberta’s,” said Marcil.

Overall economic growth, based on real GDP, will increase most in Alberta, up 2.6%, followed by 2.4% in Saskatchewan. Nationally, it will rise just 1.7% this year, following a 2.4% gain last year.

The real estate markets in Vancouver and Toronto, however, are expected to hinder economic growth in their respective provinces, said the report. Toronto will be especially affected by its recent growth in condo developments, said Marcil.

“In addition to the growing pipeline of supply, the knock-on effects of financial market volatility to buyer confidence will likely result in a cooling down in condominium sales in the region in 2012 and 2013,” he said.

Marcil added that Vancouver’s real estate market peaked in 2011.

Source: Canadian Real Estate Magazine

CIBC – Canadian Home Over-Valued by 15%

RE NEWS Canada — Fri, 06 Jan 2012 19:18:39 +0000

CIBC’s top economist is suggesting Canadian home prices may be as much as 15% overvalued and not just the 10% suggested by his counterpart at that other bank.

Still, even that larger discrepancy between fair market values and selling prices won’t necessarily translate into a correction on the same scale, CIBC economist Avery Shenfeld told a gathering of Toronto business men and women Thursday. ”We’ve largely lent to those who have the income and ability to pay,” he said.”The catalyst for a correction just isn’t there.” Still, he’s among the first to suggest that the price gains Canadian real estate made last year have now pushed them up by as much as 10% per cent over their true value.

In December, a TD report on the Canadian real estate market argued that house prices in Canada, which increased 7.5% in 2011, were 10% overvalued, reflecting the rapid gains in Vancouver and, to a lesser extent, Toronto.

Also late last year, the IMF cast its own wary eye over the Canadian housing market, warning of the same 10% gap. Unlike Shenfeld, it expressed concern about the real probability of a correction given international economic uncertainty.

An external shock such as a decline in foreign demand for Canadian exports or weakening of commodity prices could see housing prices across the country fall by that 10% as unemployment grows, choking home sales, says the International Monetary Fund in a background paper for its annual assessment.

Still, on Thursday Shenfeld maintained that further escalation of home prices this year could ultimately lead to the same kind of challenges identified by the IMF. ”If we can get prices to level off,” he said, “we can avoid some of the pain later on.”

Source: Canadian Real Estate Magazine

US CMB – Fitch downgrades Chase CMBS

RE NEWS Canada — Fri, 06 Jan 2012 19:14:25 +0000

Fitch Ratings further downgraded 14 classes of JPMorgan Chase commercial mortgage-backed securities as more losses developed on specially serviced loans and payment performance declined on other loans.

Analysts expect several funds will be depleted by losses on specially serviced loans, while others will definitely feel an impact. The loan pool’s aggregate principal balance is down 7.2% to $4.53 billion from $4.88 billion at issuance. There are cumulative interest shortfalls of $11.9 million impacting several classes of CMBS. Most of the CMBS were already rated below investment grade.

One of the loans contributing a great deal to the losses is the Belnord loan secured by a 215-unit residential rental property in the Upper West side of Manhattan. The property has both rent controlled and market rent units.

“The New York State Supreme Court recently ruled that if a property received a J-51 tax abatement from the city, such as the subject, they could not increase the rents on rent controlled/stabilized units to market rents,” Fitch analysts said.” This decision will have a major impact on the borrower’s ability to execute its business plan.”

The loan is now with a special servicer facing imminent default. Fitch said workout discussions are underway.

Another loan contributing to the losses is the Americold Portfolio that is secured by four cold-storage warehouse and distribution facilities in four states.

Another loan in special servicing at Bank of America Plaza in Atlanta also is contributing to the losses. The property is 82% occupied, but in the past four years, it lost a major tenant in Ernst & Young, and Bank of America plans to decrease its space by 13%.

“Additionally, the lease rate on the space will be approximately half of what Bank of America was previously paying,” according to Fitch.

Source: Housing Wire

Real Estate Stock Picks 2012 – by MorningStar

RE NEWS Canada — Fri, 06 Jan 2012 19:09:09 +0000

The intrasector flight to more defensive names tempered in the fourth quarter. Other than lodging, recent macro-volatility doesn’t suggest high potential for materially sharp reversals in firming near-term operating metrics. Relative to private investors, and the public non-traded REIT space, publicly traded REITs remain well-positioned.

Along with the rest of the market, real estate stocks gyrated in the fourth quarter. However, relative to fair value, real estate stocks will likely finish the quarter at approximately fair value, similar to levels three months prior. This is in stark contrast to heights achieved earlier this year, which saw highs of nearly 1.3 times fair value, prior to macroeconomic concerns coming to a head. We highlighted five stocks at the close of the third quarter, Alexandria Real Estate Equities(ARE), Diamondrock Hospitality(DRH), Health Care REIT(HCN), Jones Lang LaSalle(JLL), and St. Joe(JOE). Although we continue to highlight these firms, we caution that the five are less compelling than they were at the close of the third quarter, as Alexandria, Diamondrock, Health Care REIT, Jones Lang LaSalle, and St Joe have risen by approximately, 8%, 33%, 7%, 10%, and 6% respectively, since the publication of the last quarter-end insight.

Since peak pricing premiums earlier this year, macroeconomic uncertainty and regulatory scrutiny on tenant revenue have taken their toll, dropping the sector to roughly fair value. Within the sector, a flight to safety toward cyclically defensive property sectors continues to exist, owing to fears of a slowdown in the macroeconomy. Additionally, stocks less dependent on near-term access to capital markets continue to be priced at a premium, as well.

REITs
Heading into 2012, we remain wary of the lofty valuations afforded to the property classes in REITs that have benefited from recent macroeconomic volatility. Still, while some sectors–especially those that renew leases on a near-term basis, such as lodging–could see a reversal in operating performance, we generally think that the fundamental improvements seen through most of 2011 should hold in the near term. This bodes reasonably well for investors.

Industrywide, REITs are currently yielding around 4%, and dividend payout as a percentage of funds from operation, in aggregate, is approximately 70%, according to the National Association of Real Estate Investment Trusts. We continue to think that the commercial real estate cycle is in the early innings of improvement, and though there could be payout concerns on a granular company-by-company basis, the industry as a whole likely won’t suffer rolling dividend cuts across the board.

Property classes that rely upon shorter-term leases–apartments, lodging, and storage–continued to see rental rate improvement in the third quarter, which generally led to operating income margin expansion. However, because those classes renew leases on a near-term basis, their revenue streams are more cyclically sensitive. Although lodging REITs appear undervalued to us, we caution that they are the most cyclically concerning. While occupancy gains since the trough of the recession have the lodging REITs under coverage within striking distance of occupancy levels last seen in peaks last decade, booking windows have remained short in the space, so gains could deteriorate quickly. We also note that the third quarter ended in early September for both Diamondrock and Host, prior to heightened levels of dislocation during the close of that month. Still, with balance sheets right-sized since the close of the recession and low levels of recourse debt due in the near term, we think lodging REITs, like most other REITs under coverage, remain in good financial health.

Near-term fundamentals are brighter for apartment and self-storage REITs, owing to favorable supply and demand dynamics for multifamily units. While single-family construction boomed during the housing bubble, multifamily construction sputtered. Credit conditions remain tight, and with memories of housing equity destruction still fresh in people’s minds, demand for multifamily remains quite healthy. Indeed, we think it’s likely that year-over -ear occupancy and rate metrics will continue to show improvement in the fourth quarter. Although we don’t like the supply dynamics of the storage space, the demand for storage units rides the coattails of multifamily demand, which remains healthy for the time being. Even though valuations in the latter sectors, multifamily and storage, have tempered lately, we caution investors that they still generally suggest that positives will persist well beyond the near term. We think this is unlikely.

For property classes that rely more upon longer-term leases, such as retail, health care, office, and industrial, operating improvement has varied. The landlords that are a closer degree of separation from consumer spending, such as retail REITs, have seen a greater pickup in operating metrics relative to office and industrial landlords. Thanks to stable triple-net leases and improved senior housing occupancy trends, health-care REITs have also fared well operationally, but a Medicare cut to skilled-nursing reimbursement levels, which began in the fourth quarter, will probably thin coverage levels. We think the operating improvement could prove lean yet again for office and industrial landlords, especially if there is a high degree of lease rollovers in the near term. And although consumer spending has proved fair through most of 2011, we’re looking for signs from retail management teams of a possible slowdown in consumer spending. With regard to health care, we don’t think near-term macro volatility will have meaningfully affected tenant coverage levels of rent, but we’re cognizant that future regulatory changes could pressure some thinly capitalized tenants further.

Heading into late 2008, the property REIT sector as a whole was overleveraged and low on liquidity. Refinancing concerns came to the fore in the balance of the year and early 2009 amid a greater credit market seize up, and the REITs that were ill-prepared for the credit crunch had to tap the markets on expensive terms. As uncertainty continues to pressure the macroeconomic outlook, it’s important to keep in mind that REITs, three years later, are in considerably better financial health, having deleveraged and kicked out maturity schedules to a significant degree. This access to capital markets continues to put them in considerably better standing than many private landlords and the public nontraded space, and we think that if banks curb extending and pretending tactics on underwater commercial real estate properties en masse, well-capitalized property REITs could expand their balance sheets opportunistically. Playing offense will largely depend on a management’s given appetite for access to the capital markets, however, as the dividend-payout requirement still necessitates very large purchases to be financed externally.

Top Real Estate Picks

Alexandria Real Estate Equities(ARE)
Star Rating: 4 Stars Fair Value Estimate: $87.00 Economic Moat: Narrow Fair Value Uncertainty: Medium Consider Buying: $60.90

Alexandria’s lease terms favorably lock in those top-shelf tenants over the long term and provide for steadily increasing payouts while keeping recurring cash expenditures at a minimum. Depending on space, lease terms can range from five to 20 years. Nearly all leases contain fixed or CPI-based rent escalators providing revenue growth and a hedge against inflationary pressures. More than 90% of Alexandria’s leases on a rentable square foot basis are triple-net, leaving the tenant responsible for reimbursing Alexandria for property-level expenses and capital expenditures for maintenance and improvements. Additionally, tenants are responsible for specialized capital improvements above what Alexandria initially provides, and having sunk capital into their spaces, tenants are reluctant to leave at the end of the lease term. Alexandria’s underwriting results in a stable stream of cash flow that can increase over time, with a high probability of re-leasing upon expiry.

Diamondrock Hospitality Company(DRH)
Star Rating: 4 Stars Fair Value Estimate: $12.00 Economic Moat: None Fair Value Uncertainty: High Consider Buying: $7.20

Diamondrock Hospitality boasts one of the strongest balance sheets among lodging real estate investment trusts, a key advantage since the travel market is highly cyclical. Aside from its revolver, substantially all of its debt is fixed-rate and property-specific. Near-term maturities were addressed with equity raises in 2009, and nearly all of its debt matures past 2014. Furthermore, about half the firm’s hotels are unencumbered, and in a worst-case scenario, they could support additional mortgage debt. With no joint ventures or operating partnerships, there also shouldn’t be any off-balance-sheet surprises. Indeed, Diamondrock’s sound balance sheet should enable it to seize upon attractive acquisition opportunities as distressed hotels and senior mortgages become available.

Health Care REIT(HCN)
Health Care REIT Star Rating: 4 Stars Fair Value Estimate: $59.00 Economic Moat: Narrow Fair Value Uncertainty: Medium Consider Buying: $41.30

We think health-care real estate has its fair share of tailwinds. Demand demographics are favorable, as baby boomers are fast approaching retirement age and living longer. Moreover, the government limits competitive supply in skilled nursing. The combination of increased demand with constrained supply should drive results at health-care landlords. With debt as a percentage of gross real property owned hovering in the mid- to upper 40s and limited near-term debt maturities, Health Care REIT’s debt profile affords it a good margin of safety to continue its expansionary efforts.

Jones Lang LaSalle(JLL)
Star Rating: 4 Stars Fair Value Estimate: $86.00 Economic Moat: Narrow Fair Value Uncertainty: High Consider Buying: $51.60

Jones Lang’s business has rebounded strongly with the recovery in commercial real estate. The firm benefited as commercial leasing and sale transaction markets bounced strongly in 2010 off depressed 2009 levels. We think the recovery will continue in 2011 and beyond, albeit at a slower pace, and Jones Lang, with its global brand and scale, is well positioned to continue capturing market share.

St. Joe(JOE)
Star Rating: 5 Stars Fair Value Estimate: $30.00 Economic Moat: Wide Fair Value Uncertainty: High Consider Buying: $18.00

St. Joe owns much of the yet-to-be-developed land in Bay and Gulf Counties in northwest Florida, for which it paid prices as low as $1 per acre several decades ago. The insertion of a new commercial airport into the middle of 75,000 St. Joe-owned acres in 2010 will be a significant economic driver for years to come in Bay County, and the company stands to benefit from stepped up efforts by the region’s, as well as the state’s, economic developers to lure large manufacturers into the area. South of the airport in Gulf County, St. Joe enjoys the vast majority of the land on which a deep-water port will someday be operating in Port St. Joe. We think the combination of these two commercial drivers, in addition to Joe’s residential projects makes for potentially lucrative profits for this unique company as the region develops during the coming decades. Things will likely proceed slowly in the near term, however, as current dicey economic conditions have set back development timelines significantly.

Data as of 12-16-2011.

Source: Yahoo Finance

US – Single Family Price 19 out of 20 Cities Saw Decline

RE NEWS Canada — Fri, 06 Jan 2012 18:32:29 +0000

Data through October 2011, released today by S&P Indices for its S&P/Case-Shiller[1] Home Price Indices, the leading measure of U.S. home prices, showed decreases of 1.1% and 1.2% for the 10- and 20-City Composites in October vs. September. Nineteen of the 20 cities covered by the indices also saw home prices decrease over the month.

The 10- and 20-City Composites posted annual returns of -3.0% and -3.4% versus October 2010, respectively. Fourteen of the 20 MSAs and both Composites saw improved annual returns compared to September’s data. Miami saw no change in annual returns in October; while Atlanta, Detroit, Las Vegas, Los Angeles and Minneapolis saw their annual rates worsen. At -11.7% Atlanta posted the lowest annual return. Detroit and Washington DC were the only two cities to post positive annual returns of +2.5% and +1.3%, respectively.

In October 2011, the 10- and 20-City Composites recorded annual returns of -3.0% and -3.4%, respectively. Both Composites and 14 MSAs – Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, New York, Phoenix, Portland, San Diego, San Francisco,Seattle, Tampa, and Washington DC – saw their annual rates improve in October compared to September.

“There was weakness in the monthly statistics, as 19 of the cities posted price declines in October over September,” saysDavid M. Blitzer, Chairman of the Index Committee at S&P Indices. “Eleven of the cities and both composites fell by 1.0% or more during the month. And even though some of the annual rates are improving, 18 cities and both Composites are still negative. Nationally, home prices are still below where they were a year ago. The 10-City Composite is down 3.0% and the 20-City is down 3.4% compared to October 2010.

“In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve. The crisis low for the 10-City Composite was back inApril 2009; whereas it was a more recent March 2011 for the 20-City Composite. The 10-City Composite is about 2.4% above its relative low, and the 20-City Composite is about 1.9%.

“Atlanta and the Midwest are regions that really stand out in terms of recent relative weakness. Atlanta was down 5.0% over the month, after having fallen by 5.9% in September. It also has the weakest annual return, down 11.7%. Chicago, Cleveland,Detroit and Minneapolis all posted monthly declines of 1.0% or more in October. These markets were some of the strongest during the spring/summer buying season. However, Detroit is the healthiest when viewed on an annual basis. It is up 2.5% versus October 2010. Atlanta, Cleveland, Detroit and Las Vegas are four markets where average prices are below their January 2000 levels; and Atlanta and Las Vegas posted new lows in October.

“Some of the other housing statistics posted relatively healthy figures for November, but it seems that most of the good news was confined to the multi-family sector. Existing home sales rose in November, but are still at a low annual rate of about 4.0 million. Single family housing starts also rose, but remain close to record lows and are still down about 1.5% versus October 2010.”

As of October 2011, average home prices across the United States are back to the levels where they were in mid-2003. Measured from their June/July 2006 peaks through October 2011, the peak-to-current declines for the 10-City Composite and 20-City Composite are -31.9% and -32.1%, respectively. The recovery from recent lows are +2.4% and +1.9%, respectively. The 10-City Composite hit its crisis low in April 2009, whereas the 20-City reached a more recent low in March 2011.

At +0.3%, Phoenix was the only one of the 20 MSAs that posted a positive monthly change. The 10-City and 20-City Composites were down -1.1% and -1.2%, respectively, from their September 2011 levels.

The table below summarizes the results for October 2011. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 24 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com



	October 2011	October/September	September/August
Metropolitan Area	Level	Change (%)	Change (%)	1-Year Change (%)
Atlanta	91.21	-5.0%	-5.9%	-11.7%
Boston	152.70	-1.1%	-0.8%	-1.1%
Charlotte	112.77	-0.5%	-0.3%	-1.2%
Chicago	116.40	-1.8%	-0.8%	-4.8%
Cleveland	99.64	-1.0%	-1.2%	-2.4%
Dallas	115.44	-0.9%	-0.6%	-0.6%
Denver	125.38	-0.2%	-0.7%	-0.9%
Detroit	71.00	-3.3%	-0.4%	2.5%
Las Vegas	92.36	-1.5%	-1.4%	-8.5%
Los Angeles	165.51	-1.5%	-0.8%	-4.9%
Miami	138.20	-1.2%	-0.7%	-4.0%
Minneapolis	111.27	-2.8%	-1.0%	-8.4%
New York	168.12	-1.2%	-0.1%	-2.0%
Phoenix	100.54	0.3%	-0.2%	-5.1%
Portland	135.44	-0.5%	0.1%	-4.7%
San Diego	152.86	-0.6%	-0.8%	-4.5%
San Francisco	132.34	-0.7%	-1.5%	-4.7%
Seattle	134.22	-1.0%	-1.1%	-6.2%
Tampa	126.71	-0.5%	-1.5%	-6.1%
Washington	187.42	-0.3%	1.2%	1.3%
Composite-10	154.10	-1.1%	-0.5%	-3.0%
Composite-20	140.30	-1.2%	-0.7%	-3.4%
Source: S&P Indices and Fiserv
Data through October 2011

Source: PR News Wire

US – NAR expects some commercial real estate growth next year

RE NEWS Canada — Wed, 14 Dec 2011 09:49:41 +0000

The commercial real estate segment could experience some growth in 2012, the National Association of Realtors said Monday.

“Vacancy rates are flat, leasing is soft and concessions continue to make it a tenant’s market. However, with modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year.”

Yun’s slightly upbeat report comes at a time when other analysts are expecting little to no growth in 2012. In fact, an economic report from Simon Hunt Strategic Services recently concluded that the U.S. and other industrialized economies face a “balance-sheet depression” that could naturally lead to another economic crisis.

Simon Hunt is forecasting another recession that will hit either in 2012 and 2013.

But within the CRE segment, NAR expects vacancy rates will drop a bit in 2012, causing rents to increase modestly.

Apartment rents will be rising at a faster rate due to increased demand in the segment, NAR said.

The association expects multifamily housing vacancy rates will drop from 5% in the fourth quarter to 4.3% in the fourth quarter of 2012. Areas with the lowest multifamily vacancy rates include Minneapolis, New York City and Portland, Ore.

Office vacancy rates are expected to fall from 16.7%, their rate today, to 16.1 in the fourth quarter of 2012. In addition, industrial vacancies could fall from 12.3% in the fourth quarter of 2011 to 11.7% in 4Q of next year. Retail vacancies also are expected to edge down to 11.8% in the fourth quarter of 2012, down from 12.6% in 4Q of 2011.

Source: Housing Wire

US – Single Family 3Q home prices remain weak: Case Shiller

RE NEWS Canada — Wed, 14 Dec 2011 09:43:05 +0000

The third quarter brought another dose of persistently disappointing home prices, with the U.S. national home price index up only 0.1% from the second quarter and down 3.9% from year-ago figures, the S&P Case-Shiller report.

The national index decline is not as steep as the 5.8% decline posted in the second quarter, but home prices overall are back to first quarter of 2003 levels.

The report found that the annual rate of change in 14 of the 20 metropolitan statistical areas covered by the report improved in September when compared to August.

The 10-city and 20-city composites saw annual rate declines of 3.3% and 3.6%, respectively. Between the second and third quarter the 10-city index home price index declined 0.4% and 20-city declined 0.6% during that time.

“Home prices drifted lower in September and the third quarter,” says David M. Blitzer, chairman of the index committee at S&P Indices. “The national index was down 3.9% versus the third quarter of 2010 and up only 0.1% from the previous quarter.

“Three cities posted new index lows in September 2011 — Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both composites were down for the month,” Blitzer said. “Over the last year, home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.”

Year-over-year, Detroit and Washington posted positive annual rates of change and noted an improvement in these rates compared to August. New York, Portland and Washington saw monthly gains between August and September.

“It is a bit disturbing that we saw three cities post new crisis lows,” the S&P Case Shiller report said. “For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9% in September over August.”

The relative lack of closed transactions might be exacerbating the downside, the report said.

“The relative good news is that 14 cities saw improvements in their annual rates of change, versus the six that weakened.”

Source: Housing Wire

US – Home refinancing and multifamily demand on the rise

RE NEWS Canada — Wed, 14 Dec 2011 09:34:50 +0000

Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace while residential real estate remained sluggish.

New York, Philadelphia, Cleveland and Kansas City reported increased loan demand. Several districts reported an increase in home refinancing activity. Boston noted plentiful financing and favorable terms for premier properties, while financing remained harder to obtain for riskier properties and for those in secondary and tertiary markets.

Atlanta saw soft loan demand as companies continued to reduce their debt loads and limit expansion and capital improvement plans. Residential real estate activity remained sluggish, according to the report. Single-family home construction was weak and commercial construction was slow.

Dallas was a bright spot on the housing front with continued improvement in the district.

“Inventories of existing homes fell further since the last report, and new home inventories remained lean,” the Dallas district reported. “Single-family home sales are better, according to contacts, but economic uncertainty is keeping many would-be buyers on the sidelines. Apartment demand rose even more since the last report, and contacts are very positive in their outlooks. Some respondents noted increased sales of apartment complexes to investors.”

Multifamily construction picked up in New York, Philadelphia, Cleveland, Chicago and Minneapolis. San Francisco remained “anemic,” while St. Louis and Kansas City reported decreased activity. In the Atlanta district, which includes Florida, condo activity was expected to rise.

“Contacts in South Florida signaled that condominium development was expected to get under way soon because of strong demand from foreign investors, many of whom pay with cash,” the report said. “Developers plan to cover costs by requiring a significant upfront payment from the purchasers before construction begins.”

The survey was based on information collected on or before Nov. 18.

Source: Housing Wire

US – Average Time to Foreclose Sets New Record 631 Days

RE NEWS Canada — Wed, 14 Dec 2011 09:29:41 +0000

Mortgage delinquencies continued their decline in October and are nearly 30% off their January 2010 peak, but foreclosure inventories and the foreclosure process reached all-time highs during the month, according to Lender Processing Services.

Foreclosure inventories reached 4.29% of all active mortgages, an all-time high, while the average days delinquent for loans in foreclosure extended as well, setting a new record of 631 days since last payment.

The average days delinquent for loans 90 or more days past due but not yet in foreclosure decreased for the second consecutive month.

Judicial vs. nonjudicial foreclosure processes remain a significant factor in the reduction of foreclosure pipelines from state to state, with nonjudicial foreclosure inventory percentages less than half that of judicial states, LPS said in its monthly Mortgage Monitor report. “This is largely a result of the fact that foreclosure sale rates in nonjudicial states have been proceeding at four to five times that of judicial,” LPS said. (Click on chart to expand.)

Nonjudicial foreclosure states made up the entirety of the top 10 states with the largest year-over-year decline in noncurrent loans percentages.

The October data also showed that mortgage originations are on the rise, reaching levels not seen since mid-2010. Mortgage prepayment rates also spiked, as much of the new origination is related to refinancing.

While Federal Housing Administration origination activity is down, government-sponsored enterprise and FHA originations still account for the vast majority of all new loans — nearly nine out of every 10 new mortgages.

The total loan delinquency rate in October stood at 7.93%, down 2% over September. Florida, Mississippi, Nevada, New Jersey and Illinois have the most noncurrent loans.

Source: Housing Wire