Real Estate Blog

A recent Economist.com article took a look at the housing market in 20 countries. It took a look at whether the current decline in the market that the U.S. is experiencing is also being seen in other countries housing markets. Here’s what they found:

As illustrated above, the U.S. and Japan were the only countries that had a decline. South Africa, Singapore, Denmark, New Zealand and Britain posted double digit increases. While home prices across the globe appear to be slightly weaker than the prior year, they remain fairly strong compared to the slumping U.S. market.

According to a report by DataQuick Information Systems, the number of new and previously owned homes sold in the Denver area decreased by 10.6% in the first quarter of 2007, compared with the first three months of 2006. Additionally, the median price of all homes dropped 1.3% to $235,000 from $238,000 in the first quarter of 2006.

Another report presented a slightly more optimistic view of the Denver-area market. The PMI Risk Index ranked the Denver area as No. 38 out of 50, with a 16.9% chance of experiencing a decline in the housing market in the next two years. The Denver-Aurora area was ranked in the second-lowest risk category, which “is characterized by low to moderate levels of price volatility and (price) acceleration, affordability and employment.”

Forbes, with the help of data supplied by Moody’s, has projected when and how certain areas of the country will recover from the current housing slump. The data takes into account housing affordability, vacancy rates, the strength of the local economy and job market, investor share in 2005 and the share of subprime mortgages.

Here are their top choices:

Tampa, Fla.
Market trough: First quarter, 2008
Annual price growth following trough: 10.6%

Phoenix
Market trough: Fourth quarter, 2008
Annual price growth following trough: 7.7%

Las Vegas
Market trough: Second quarter, 2009
Annual price growth following trough: 7.2%

San Diego
Market trough: Second quarter, 2008
Annual price growth following trough: 5.3%

New Orleans
Market trough: Third quarter, 2007
Annual price growth following trough: 4.3%

To view other cities on their list, click here.

Anyone who has secured a mortgage to buy a home can tell you that the process can be frustrating and down-right confusing. It seems that each loan comes with its own mound of paperwork that covers every contingency you could possibly think of, but doesn’t seem to state anything in plain simple language and that’s a major problem.

According to a recent study by the FTC, required disclosure documents provided by mortgage lenders were ineffective at explaining the costs and risks of home loans. In the study, 800+ recent mortgage customers were each given disclosure forms for a hypothetical loan. About half got forms of the type currently used. The rest got prototype forms designed by the study authors to be understandable.

The study found that when given the disclosures now used:

• Half the borrowers couldn’t correctly identify the loan amount.

• Nine in 10 couldn’t figure out the total upfront cost of the loan.

• Two-thirds did not recognize that they would have to pay a penalty if they paid off the mortgage within two years. And 95% didn’t know how much that penalty would be.

• Three-quarters did not know when substantial charges for credit insurance had been included in the loan.

• One in five couldn’t correctly identify the annual percentage rate, the amount of cash due at closing or the monthly payment — or whether that payment included charges for property taxes and insurance.

County officials in the Detroit Metro area have a problem. Unpaid property taxes are at an all time high leaving county coffers short and putting more residents at risk of losing their homes. In total, Wayne, Oakland and Macomb counties are trying to recoup some $415 million in unpaid property taxes.

A weak economy and lack of jobs are being blamed for the rise in unpaid property bills in those three counties. The Michigan Department of Labor and Economic Growth report approximately 7.1% of Michiganians were out of work as of last month. A lack of work has some residents moving out of Michigan in search of jobs, creating a glut of available real estate and streets dotted with “for sale” signs.

Bargain Network reported last week that the number of properties entering some stage of the foreclosure process in May 2007 climbed approximately 6%.

For the second consecutive month, five states – Florida, California, Texas, Illinois and Colorado – accounted for 59% of the total number of foreclosure home filings. Florida posted the highest number of foreclosure home listings for the month, with 29,820 homes entering some phase of the foreclosure process – a 22% increase in filing activity over April 2007. California ranked second with 29,530 filings and a 17% increase in foreclosure activity since April 2007. Third place went to the Lone Star State with 11,012 filings, or one foreclosure for every 732 households. Illinois and Colorado rounded off the top five states with 9,525 and 8,662 new listings respectively.

Colorado’s foreclosure saturation rate was the highest in the U.S. for May, with an estimated one filing for every 211 households. Florida ran a close second with approximately one foreclosure home filing for every 245 households. The two states each recorded listings more than triple the national average for May of one filing for every 772 households.

You know the real estate market is in the dumps when you hear reports such as this one: KB Home is reportedly seeing a spike in order cancellations for fake houses. Yep, fake houses.

The Wall Street Journal recently reported that Macy’s Department Stores reportedly canceled plans to build 3,000-square foot fake homes inside stores in such cities as New York, Chicago and San Francisco. Apparently, the fake houses were part of an ambitious plan to display a large new line of home goods produced by Martha Stewart. The department store is canceling the plans due to a sharp decline in the housing market.

As the Managing Editor of Minyanville.com, Kevin Depew pointed out rather tongue-in-cheek, “this cautionary tale just serves to illustrate that even the fake house construction market is weakening more than expected due to fallout from the real estate mania.”

A recent San Francisco Chronicle article says the current Bay Area real estate market has become a giant game of chicken. Buyers, who 18 months ago, swarmed the market are now taking a wait and see approach. Wait, to see if sellers will blink and begin cutting prices even further.

Patience and persistence appear to be the mantra of area home buyers as they continue looking and waiting for the best possible deal. They are in no hurry to close on a home and want to ensure that they are indeed getting a bargain. According to ZipRealty, they may be on to something. Bay Area counties are reporting price cuts anywhere from 20 to 50%.

Buyers though will soon have to weight price cuts with interest rates. Rates on 30-year mortgages have risen four weeks in a row and, at a nationwide average of 6.53%, have hit a 10-month high, according to mortgage giant Freddie Mac. Recent strong job growth also means the Federal Reserve is unlikely to cut rates.

Ohio has decided to sue 10 real estate companies for improperly pressuring appraisers to inflate home values. Ohio’s AG Marc Dann said that the companies, based in Ohio, California, Arizona and New York, are accused of setting specific estimated values on properties and communicating a desired price to appraisers.

The mortgage brokers being sued are Ace Mortgage Funding LLC; American Home Brokerage Corp.; Apex Mortgage Services LLC; First Ohio Banc & Lending Inc.; Island Financial LLC; Premiere Service Mortgage Corp; and Robert C. Roach, president of The Valley Mortgage Group. The lenders are Sage Credit Company LLC and Wall Street Mortgage Bankers Ltd. Also being sued is All-Line Appraisals of Phoenix, which arranges property valuations for lenders and other clients.

Attorney Generals in NY and Colorado are also in the process of deciding whether or not to bring similiar lawsuits in their states.

The Warren Group, publisher of the Commercial Record, reports the median price of single-family homes in Connecticut remained constant at $270,000 after the first four months of the year, while sales in the same time period fell 2.2%. The year-to-date price stayed the same; however, the median price in April rose 1.9% from $269,900 to $275,000.

The state’s condo market is also a mixed bag. The average condo price was up, but sales had dropped dramatically. Sales dropped 6% in April, and year-to-date sales fell 8%. The median price of condos rose 5.7% in April from $183,000 to $193,500. The year-to-date price increased 4.2% from $187,000 to $194,900.