keeping you current: the outlook for the south florida real estate market, september 2009

8/14/2019 Keeping You Current: The Outlook for the South Florida Real Estate Market, September 2009

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September 200

MadeleineRomanello


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If you cant explain it simply,you dont understand it well

enough.


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Despite all of the bad news in the

media about homeownership andmortgages, most Americans still

believe buying a home is a great

investment for the future.

Sources: Bankrate.com 8/09

Is a home still a good investment?Is a home still a good investment?

92% say yes!!


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The study also found that

the proportion of first-time

home buyers increased

considerably to 56% in

2009 from 44% in 2008.

Many of these first-timebuyers may be attracted by

improved home affordability

and the perception of a

strong buyers market.

Sources: Housing Wire 7/31/09

JD Power Survey


5/32

Reports are still looking good!!

New construction

Existing home sales

Pending home salesUP!UP!

UP!


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Sources: Associated Press 8/26/09

New Home Sales up 9.6% in July

Sales are now up 32 % from the bottom in January, but

off 69 % from the frenzied peak four years ago.


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Sources: Bubble Meter.com 8/22/09

U.S. Existing Home

Sales$0 -100,000

$100,000 -250,000

$250,000 500,000$500,000 750,000

$750,000 1,000,000

$1,000,000 2,000,000

$2,000,000 +

Year over

Year+38.8%

+8.7%

-6.2%

-8.9%

-10.6%

-23.3%

-32.4%


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Mortgage Rates 30 year fixed

ource: Federal Reserve

5/21/2009


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The end of the low interest rate environment forhome loans may be arriving sooner rather than

later. In comments contained in a speech,

Richmond Fed President Jeffrey Lacker indicated

that the Federal Reserve may consider apremature end to its program of purchasing

mortgage-backed securities.

Mortgage Rates

rce: Examiner.com 8/27/09


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The Standard & Poors (S&P)/Case-ShillerUS National Home Price Index showed

some positive quarterly improvement,

gaining 2.9% in the second quarter

of 2009 over the first quarter. It

marks the first quarter-over-quarter

improvement in three years.

Sources: Case Shiller 8/25/09

Prices


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In the next six months, do you think thevalues of homes in your market will:

HomeGain 3rd Quarter Realtor Survey

Sources: Homegain 8/2009


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Knowing that the pace of declines had slowed once before, in early

2008, Robert Shiller, the Yale economist who helped create the index,said It really is too soon to call this a turning point.

Sources: Wall Street Journal 8/25/2009

Prices


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Sources: Calculated Risk 8/09

Prices


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Sources: Seeking Alpha 8/24/2009

Supply & Demand


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Sources: papereconomy.com 8/14/09

Supply & Demand


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Sources: Newsweek 8/31/2009

One of the most vitalfundamentals (in housing),

the ratio between supply

and demand, is still out of

whack.

- Newsweek

Supply & Demand


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Sources: Zillow Q2 Homeowner Confidence Survey 8/09

Shadow Inventory

The Zillow survey indicated that many homeowners couldbe waiting on the sidelines to sell. When asked about

future plans to sell, 29 percent of homeowners said they

would be at least "somewhat likely" to put their

homes on the market in the next 12 months if

they saw signs of a real estate market

turnaround, creating "shadow inventory"

that could slow a recovery.


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Single-family mortgages set a new record

delinquency rate of 13.16% in the second quarter

of 2009, according to the quarterly survey by the

Mortgage Bankers Association.

Sources: Mortgage Bankers Association 8/09

Delinquency Rates


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Fitch found thatthe cure rate for

prime loans

dropped to 6.6%

as of July from anaverage of 45%

for the years 2000

through 2006.


Cure Rate


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While subprime mortgages sparked the first round of housing

problems two years ago, now "troubles are lurking further up the foodchain," says Joshua Shapiro, chief U.S. economist at MFR Inc.


Prime Mortgages

White-collar job losses have

accelerated while more adjustable-

rate loans to prime borrowers are

resetting to higher payments.You put all that together, it leads

me to believe that the next leg

down on home prices is going

to come from the top, he says.


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If you look at prime jumbo, the

highest quality mortgages,6.2% are seriously delinquent.

That sounds like a low

number. But two years ago

that number was 1%. It's avery straight trajectory from

September 2007, pretty

closely mimicking

unemployment.

Prime Mortgages

Sources: Fortune.com 8/12/09


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rce: Wall Street Journal, Stan Liebowitz 7/3/09

Causes of Mortgage Foreclosures (2nd half 2008)


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Almost one-quarter of U.S. mortgage holders owed more

than their homes were worth in the second quarter and thatfigure may rise to as much as 30 percent by mid-2010

as job losses and foreclosures climb, Zillow.com said.

The negative-equity rate will rise and spin off more

foreclosures, Stan Humphries, Zillows chief economist,said in an interview. I see a substantial downside risk to

prices and dont think well see a bottom until

the middle of next year.

Sources: Bloomberg.com 8/12/09

Mortgages Underwater


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Karen Weaver, global head of

Deutsche Bank's securitizationresearch said last week that

48% of U.S. mortgage owners

will end up owing more than

their home is worth by 2011.According to Deutsche Bank,

home prices may fall another

14% before hitting a bottom.




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At what point of being underwater do homeowners

start falling into foreclosure rapidly?

Once you get to the point where negative equity is

significant -- for example, 25% or more -- there have

been studies that suggest you get more strategic

defaults.




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First Americansresearchers believe more

than 15.2m mortgagors are

underwater, representing

nearly one-third of the

nations mortgage market.

Sources: First American CoreLogic 8/09



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Sources: Center for Responsible Lending 8/09

Modifications


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On August 20, 2009, Freddie Mac confirmed in writing

that its servicers are not allowed to renegotiate shortsales commissions. According to the policy, as a

condition of the servicer's acceptance of a short sale

offer, servicers cannot renegotiate the sales commission

below the amount agreed to by the real estate broker andthe seller/borrower. However, if the negotiated

commission exceeds 6 percent, servicers are required to

limit it to 6 percent. This Freddie policy is consistent with

Fannie Mae's policy.

- National Association of Realtors

Sources: NAR 8/26/2009

Short Sales

keeping you current: the outlook for the south florida real estate market, september 2009

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