Friday, April 27, 2012

Homebuilder Shares Climb After Orders for New Houses Rise

U.S. homebuilders rallied to the highest in almost two years after four companies reported an increase in orders and contracts to buy existing homes climbed more than forecast, signs that the housing market may be reaching bottom

Ryland Group Inc. (RYL), based in Westlake Village, California, had the biggest gain among builders after reporting a 46 percent increase in orders. Its shares rose 14 percent to $21.62 at the close in New York, the largest gain in three years.

The Standard & Poor’s 1500 Homebuilding Index of 11 companies climbed 4.8 percent to the highest level since May 2010 after PulteGroup Inc. (PHM), M/I Homes Inc. (MHO) and Meritage Homes Corp. (MTH) also reported increases in orders.

The rising demand for new homes is an indication that housing is finding a low amid improving U.S. employment. The index of pending home purchases rose 4.1 percent to the highest level since April 2010, the National Association of Realtors reported today. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent gain.

“The momentum is building for the homebuilding industry, and the numbers speak for themselves,” Brad Hunter, chief economist for Metrostudy, a Houston-based firm that tracks housing starts, said in a telephone interview today. “All around the country, traffic is improving and the quality of traffic is improving. When somebody comes into the sales office, they’re more likely to pull the trigger and sign a contract.”

New Home Sales

New homes sold at an annual pace of 328,000 in the U.S. in March, up 7.5 percent from a year earlier, the Commerce Department reported April 24. The median estimate in a Bloomberg News survey forecast a rate of 319,000. The U.S. unemployment rate was 8.2 percent last month, down from 8.9 percent a year earlier, according to Labor Department data.

Publicly traded homebuilders may be taking market share from private firms because they have better access to financing and are able to buy land and build in the best locations, said Robert Curran, a managing director at Fitch Ratings Ltd.

“We’re seeing for the public builders, pretty broadly, some pretty healthy improvement,” he said. “It’s clear nationally that we are having a more normal-type spring selling season.”

Ryland’s backlog, an indication of future sales, rose 44 percent, and revenue increased 29 percent, the company reported yesterday after the close of regular U.S. trading. Its net loss narrowed to $5.1 million from $19.5 million a year earlier. 


M/I Homes, based in Columbus, Ohio, reported a 15 percent increase in deliveries and a 17 percent increase in new contracts. Its shares gained 8.6 percent today.

PulteGroup Inc., the largest U.S. homebuilder by revenue, had a narrower first-quarter loss as it reduced costs and sold houses at higher prices. Orders rose 15 percent and the company’s backlog climbed 12 percent. Shares of the Bloomfield Hills, Michigan-based company rose 10 percent today.

D.R. Horton Inc., the largest U.S. homebuilder by volume, earlier this week reported earnings that beat analysts’ estimates, its fifth straight quarter of profitability.

“It was the first quarter in several years that fundamental demand came in stronger than expected, allowing us to beat our forecast for the period,” Chief Executive Officer Richard Dugas said in a conference call with analysts. “We are pleased with how the year has started off, including a continuation of better sales activity thus far in April.” 

To contact the reporter on this story: Prashant Gopal in New York at pgopal2@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit FirstCapital Online or call: 310-458-0010

Thursday, April 26, 2012

Home Sales Contracts Rise 4.1% in March

More buyers signed contracts to buy existing homes in March than the previous month, according to a monthly survey just released by the National Association of Realtors.

The Pending Home Sales Index rose 4.1 percent from February and is now 12.8 percent higher than March of 2011.

“The housing market has clearly turned the corner,” said NAR chief economist Lawrence Yun in a release. “Rising sales are bringing down inventory and creating much more balanced conditions around the country, which means home prices will be rising in more areas as the year progresses.

Contract activity was strongest out West, with the index jumping nearly nine percent.

Both the Northeast and Midwest saw declining activity.
The bulk of distressed properties are in the West, with California, Arizona and Nevada still leading the nation in foreclosure activity.

A recent spike in short sales, where the bank allows the home to be sold for less than the value of the mortgage, could be lifting the numbers in those states. Distressed sales accounted for 29 percent of all sales in March, according to the Realtors and a much higher share of sales out West.

Final sales of existing homes (closings) fell unexpectedly in March, leading many to blame the unusually warm winter for pulling demand forward. First quarter home sales saw their highest quarterly volume in five years.

This bump up in new contracts, though, may be a sign that spring isn’t a complete wash. Contract cancellations, however, have been running unusually high, upwards of 30 percent, due to low appraisals and a still-tight credit market, but Realtors claim those buyers have been staying in the market, offering other contracts. By: Diana Olick CNBC Real Estate Reporter

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713 NMLS#4256

Visit FirstCapital Online or call: 310-458-0010

Wednesday, April 25, 2012

Housing market may be on rebound at last

New data show price declines easing in big cities, sales of new homes improving nationally and foreclosures in California dropping to levels not seen since 2007.


The housing market's long, cold winter may finally be heading into a springtime thaw.

New data show price declines easing in big cities, sales of new homes improving nationally and foreclosures in California dropping to levels not seen since before the start of the credit crunch nearly five years ago.

The easing of foreclosures is seen as key by many economists, since the glut of these properties being sold at a discount has been a significant drag on home prices.

"The foreclosure market is turning into a drought, not a wave, and that has resulted in a lack of inventory," said Sean O'Toole, chief executive of the firm ForeclosureRadar.com. "If it continues, it will likely mean that we've either seen a bottom — or have passed a bottom — in prices because of limited supply and still strong demand."

Home prices remain depressed from their peak in 2007, when the median-priced home in Southern California sold for $505,000. The median price last month was $280,000.

The economy overall has been improving, however, with unemployment, retail sales, corporate profits and other measures showing steady if unspectacular gains. Housing has been one of the last holdouts, but analysts note that prices have stabilized and sales volume has been gaining.

"What are important are sales and inventory, and those are pointing in the right direction," said Christopher Thornberg, a principal at Beacon Economics who was one of the early callers of the housing crash. "I would say that by the end of the year, they should translate into better prices."

Thornberg added, "The recovery is here."

Notices of default, the first step in the foreclosure process, fell to 56,258 statewide in the first three months of the year, a 17.6% drop from the same period last year, DataQuick of San Diego reported Tuesday. That was the fewest number of default notices filed since the second quarter of 2007.

Banks still retain many foreclosed properties on their books, and some analysts have predicted that housing prices could weaken again if lenders dump these properties into the recovering market. But O'Toole and other analysts see that long-feared "second wave" as increasingly unlikely, pointing out that the banks would be acting against their own interests by undercutting prices through a fire sale.

"A few years back, there were some breathtakingly negative forecasts making the rounds regarding the foreclosure problem," DataQuick President John Walsh said. "It's not necessarily playing out the way some pundits thought."

Low interest rates and the availability of bargain-priced properties are drawing more buyers into the market.


Bobbie Dunlap, 61, an office manager, said she recently bought a bank-owned home for $225,000 that she intends to fix up and rent out. The South Gate resident said she had to raise her price to beat competing bids on the two-bedroom property in Bellflower. She hopes that the rental income from the investment will provide her with a financial cushion when she stops working.

"It is in pretty good shape, but it still needs some extra work, of course," Dunlap said.

Maryam Javadi of Palos Verdes Estates is hopeful that buyers will take the plunge this spring. She recently listed her 2,074-square-foot house at $950,000, and about 40 people showed up Sunday to check out the four-bedroom property, which has canyon views and sits near the end of a quiet cul-de-sac.

"Some people have been back to see it two or three times already," Javadi said.

Betting on the rebound, investors made up a record share of buyers in Southern California during the first two months of the year, according to DataQuick. As more foreclosed homes in hard-hit neighborhoods are filled with renters, an increasing number of everyday buyers will grow interested in owning, said Ivy Zelman, chief executive of Zelman & Associates, a New York housing research firm.

"This is not a robust recovery, but I feel confident that we are not sitting here lingering," said Zelman, who predicts that home prices will end the year up about 1%. "There really is more meat to the bone."

Other new housing data also point to a fledgling recovery.

The real estate website Zillow estimated that home values in Los Angeles hit a bottom in the first quarter as the median price flattened from February to March; several communities posted price increases, including Compton, Manhattan Beach and Santa Monica. Zillow's is among several recent predictions that certain markets have put the worst behind them.

New-home sales nationally fell 7.1% in March from the previous month, the Commerce Department said Tuesday, but that was partly because it revised February sales figures up significantly. Even though the figure for March was the lowest since November, overall sales of new homes are up about 16% for the first three months of the year from the same period a year earlier, the Commerce Department said. The report helped boost the Dow Jones industrial average 74 points to 13,001.

That improvement means that new-home sales will probably be stronger than last year's, which were the worst on record.

One of the most widely watched measures on home values, the Standard & Poor's/Case-Shiller index of 20 U.S. cities, showed price declines moderating from January to February. Prices fell 0.8% from January to February, and were down 3.5% from February 2011. Los Angeles fell 0.8% in February from the previous month, while San Francisco was down 0.7%. San Diego was slightly positive, up 0.2% from January.

Many economists brushed off the decline as the Case-Shiller numbers capture the traditionally slow months of January and December, as well as February, because they average three months' worth of data. The index's year-over-year decline in home values has also been steadily shrinking in recent months.
  April 25, 2012
alejandro.lazo@latimes.com


Monday, April 23, 2012

Annual Home Prices Rise for the First Time in California in 18 Months

April 23, 2012 (Shirley Allen)

Monthly sales of new and existing homes in California bounced back from a dismal February and even improved upon the previous year’s tally while home prices saw their first year-over-year increase in a year and a half according to real estate information provider DataQuick.

An estimated total of 37,481 new and existing homes and condos were sold in the Golden State in March. That was 26.5 percent higher than the 29,630 homes sold in February and 2.9 percent higher than the 36,417 homes sold in March 2011.

Home sales in the state typically increase between February and March and despite being 14.6 percent below the historical average of 43,883 sales for the month, it was still the best showing for the state since 2007.

The median sales price for a home in California increased 5.0 percent to $251,000 from $239,000 in February and was 0.8 percent higher than the median price of $249,000 posted in March of 2011. It was the first increase in year-over-year prices in the state in 18 months.
The statewide current cycle peak price was $484,000 in early 2007, while the low during the current cycle was $221,000 in April 2009.

Distressed property sales accounted for 51.4 percent of all re-sales in March, down from a revised 54.3 percent in February, with homes that had been foreclosed on in the previous twelve months accounting for 32.5 percent of the existing home sales. That was down from a revised 33.9 percent in February and down from 40.1 percent in March of 2011.

Short sales accounted for an estimated 18.9 percent of all re-sales last month, down from a revised 20.4 in February. In March of last year, short sales accounted for 18.5 percent of all existing home sales.

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713

Visit First Capital Online or call: 310-458-0010

Thursday, April 19, 2012

THE TRUTH ABOUT RATES AND COSTS


This article was written at the beginning of the refinance boom of late 2010
but the concepts still hold true in today’s market.

At times like the present when rates are near historic lows, a mania typically sets in about getting the very lowest rate available.  However, it is important to consider the relationship between rates, fees and points.

If one takes the emotion out of the decision and analyzes things from a mathematical standpoint, it is often the case – especially in this market - that the lowest rate is not always the best investment.

Ultimately the decision is yours, but my goal is to help you really look at things from all angles so that the program you choose is done for all the right reasons and has withstood the scrutiny of reason rather than just being a product of the emotional frenzy.

Rates, rate sheets and rebates (which allow no point and no cost loans) are in constant flux.  In the present market, yes, there are super low rates available, but the “sweet spot” is often at a slightly higher rate because the rebates fatten up considerably.

For example, I recently priced a $400,000 loan where there were no points at one rate, but for only .125% higher, the rebate was dramatically larger and allowed me to pay all the closing costs as well!

Of course, initially everyone wants the lower rate, especially if it’s below some emotional threshold, but on the transaction above, the lower rate is in no way the better deal.

Closing costs on the no point loan would still be about $3,000 and the monthly savings of the lower rate only about $30.  Waiting over 8 years to get a $30 monthly return on investment (ROI), no matter how long one thinks they’ll have the loan, is not sound investing.

The way to help conceptualize this pricing is that, yes, the whole rate structure has moved down.  However, it didn’t move down uniformly, but rather hit a certain rate threshold area and flattened out wider which created much more rebate at slightly higher levels.

Hypothetically speaking maybe a one point loan moved from, say, 5.0 to 4.5%, but a No Cost loan moved from, say, 6.0 to 5.0.  It wasn’t that low rates weren’t available before, it’s just that the change in the whole rate structure needs to be accounted for.

People will hear in this market about the person who got the really low rate – they’re especially loud at the water cooler and cocktail party - but will rarely hear the story about the points and fees to get there.

The media is also dreadful at neglecting this relationship.  For example when newspapers blurt out about the latest Freddie Mac loan being at X.xx%, it usually takes some further reading to find out that said rate included 0.7 points to get there.  And closing costs!

As with the above example, it’s often the case that the higher savings that accompanies the lower rate comes at too steep a cost when compared to the alternative.

Moreover, there is another very critical point that should be considered in all of this: there is a legitimate possibility that we are headed for a double dip in the economy and rates may go even lower.  (Update note: or European Recession, Portuguese, Spanish, Etc… debt crisis, real problems in the Middle East, etc…)

If one has just paid costs for a loan, there will be some ROI period, no matter what.  If rates go lower before the end of that period and a refinance makes sense, that money is out the window.  Also, if rates go lower, it’s harder to make the low rate really work if you’ve already paid to go low a few months or even a few years previous.

Of course if you haven’t spent a dime and we do truly get the lowest rates ever, at that point, it may make sense to pay fees and/or points.  And, having invested nothing, you should be able to capitalize regardless.

In short, in today’s market, a no-cost refinance at a higher rate may be the best bet.  If rates never get lower and actually go high, you’ve still improved your situation and are saving already from day one – a loan with fees might never catch up.  However, if they do get lower, having not spent any money, you’ll be able to get that benefit from that scenario as well.

Please do note that all this may change tomorrow, that every situation is different and that we analyze and re-analyze every deal to make sure.  Also, these are just the numbers: there are emotions and other factors that we can’t possibly account for that affect you and your family.  Ultimately you may decide that the low rate with fees and/or points is for you.  We just want to make sure that you’ve made that decision from the most informed standpoint possible.

April 2012 – For those clients who heeded the above advice, we have rolled them down another 3-4 times since that period, each time at no cost.  The savings they realized compared to those who paid points and fee is immense.

The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.
First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713

Visit FirstCapital Online or call: 310-458-0010

Wednesday, April 18, 2012

"Beginning of a broad-based housing recovery,” - Realtor.com

Could it be that housing has emerged from its funk?

While some hard-hit markets still lag, overall, a number of key indicators are pointing in that direction and could confirm “the beginning of a broad-based housing recovery,” according to the latest report from Realtor.com. “We’re seeing some hope,” says Steve Berkowitz, the company’s chief executive officer, adding that in general, close-in suburbs are recovering faster than the outlying ones. The report looked at data from March 2012 and compared it with a year earlier.

Signaling the more optimistic outlook, median list prices for resale homes jumped about 5.6% to $189,900 from a year before. (Sales prices of existing homes eased up 0.3% in February to an estimated $156,600 from a year earlier, according to the latest statistics from the National Association of Realtors.)

In the 146 markets Realtor.com surveyed, listing prices were up 1% year over year in 111 metropolitan statistical areas and 5% or more in 70 cities. The biggest listing price increases happened in two places that had been hard-hit by the foreclosure crisis, Phoenix and Miami.

The report suggests that because asking prices have risen, these two cities, as well as Boise City, Idaho, and Punta Gorda, Fla., “appear to be in the recovery process.”

Listing prices were flat in 18 markets and fell more than 1% in 17 markets. Only two cities, Chicago and Knoxville, Tenn., experienced a drop of 5% or more. The report says that the shift shows a change in the nation’s housing problems “away from the sand states and into older, more industrialized areas” that have been slammed by the recent recession.

When it comes to days on the market, there’s more good news for sellers. The median time on the market was 89 days in March, roughly a 19.8% decline from the same month a year earlier. 

It's a remarkable turnaround: In March 2010, the median age of for-sale inventory was up about 26.1% from the year before. Homes sold in fewer than 50 days in Denver; Washington, D.C.; and Iowa City, Iowa, as well as the California cities of Oakland, Fresno, Bakersfield and San Francisco. They took longer than 150 days in rural areas in southern South Carolina as well as Asheville, N.C.; Santa Fe, N.M.; and Myrtle Beach, S.C.

Shrinking supply also has a lot to do with consumers’ more upbeat attitudes, the report noted.

Nationwide, inventory levels of resale homes, which include single-family, condos, townhouses and coops, fell about 21.5% from the year before, which the report says is a sign that the market is in a stronger position than it was this time last year. Some of the country’s most distressed markets have seen inventory declines greater than 38%, including Oakland, Bakersfield and Fresno in California and Miami, Fort Lauderdale and Orlando in Florida. Atlanta, Seattle, Phoenix and Portland, Ore., also showed steep declines. 

Only Philadelphia and Hartford, Conn., showed bump ups in inventory levels, and the increases were slight.

However, the so-called “shadow inventory” of homes that are heading for foreclosure or already reclaimed by lenders remains a wild card that could dampen the recovery’s momentum.

Santa Ana, Calif.-based research firm CoreLogic estimates that the shadow inventory is about 1.6 million units, which would take about six months to clear at the current sales rate. But some economists think that estimate is too low. Ed Sullivan, chief economist for the Portland Cement Association, says that bank processing delays are masking the true extent of the shadow inventory and expects that it will take nearly nine months to burn it off. “It will slow things down, but not stop the recovery,” he says.  By June Fletcher, Yahoo! Real Estate

 
The views, opinions, positions or strategies expressed by the authors and those providing comments or external internet links are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of First Capital, we make no representations as to accuracy, completeness, current, suitability, or validity of this information and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Any information provided does not constitute an offer or a solicitation to lend. Providing information to purchase does not guarantee a loan approval. All registered trademarks, copyright, images, or other items used are property of their respective owner and are used for editorial purposes only.

First Capital Mortgage is a subsidiary of PHH Home Loans LLC, a direct lender, Dept. of Corporations file #413-0713

Visit FirstCapital Online or call: 310-458-0010