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Today’s Real Estate News 10.18.2013

Summary:
According to CNN Money, more budget cuts are on the horizon for the nation while the current $80 Billion budget cuts has already hurt the economy. Realtor shares an interesting fact in time for Halloween, most people are willing to purchase so-called haunted homes. LA Times reports that home prices & sales are cooling down in the Bay Area. Market Watch (Wall Street Journal) shows SunTrust Bank Inc.’s 3Q earnings have fallen 82% as a result of a settlement agreement. The Housing Wire reports that stocks are rising as a result of investor reaction to the “government deal,” JPMorgan Chase has donated $250 million in free & discounted homes across the nation & Vice President of Coastal States Mortgage Corp., Patrick Mansell, was sentenced to a 5 year prison term as a result of pleading guilty to “conspiracy to commit wire fraud” against Fannie Mae & Freddie Mac. According to Bloomberg, states are closing in on companies who are improperly labeling employees as contractors in order to evade employee taxes, overtime pay, insurance & pay fair wages to workers. CNBC reports that high-end flipping is increasing in popularity among investors & the Labor Department will be releasing the September jobs report this coming Tuesday. Time’s Business & Money section put out an article regarding the drag that student loans are on the economy.

Spending cuts are hurting economy
“If you thought this year’s cuts to preschoolers, senior meals and medical research were bad, get ready for more.”

Survey: Most People Open to Buying a Haunted House
“More than half of home buyers are open to buying a haunted house, according to realtor.com’s 2013 Haunted Housing Report. Also, 35 percent of the nearly 1,400 people who took the survey say they have lived in a haunted home.”

Bay Area home market cools, prices and sales fall
“Home prices and sales fell last month in the Bay Area as the tech-rich region mirrored a cooling trend elsewhere within the state.”

SunTrust Banks net down 82% on higher expenses
“SunTrust Banks Inc.’s STI +0.53% third-quarter earnings fell 82% as the regional bank posted higher expenses resulting from a recent settlement agreement.”

Housing stocks rise as investors react to government deal
“The HW 30 – a composite of housing and mortgage finance stocks – rose nearly 1% Thursday as the government reopened, allowing agencies like the Federal Housing Administration to return to the business of handling FHA loans.”

A Common Trait that Silicon Valley, Las Vegas, and New York all Share. Hint: It’s not the Weather
“On average, for every $1 billion increase in stock value of companies in a given area, the median sale price of nearby homes increases by $4,400. That doesn’t sound like much, until you consider an area like Silicon Valley, home to 45 publicly traded companies in this study, and about $1.1 trillion in valuation. When the aggregate stock value of these companies goes up, about three months later, home prices begin to rise at a corresponding rate. This means that an increase in stock value of just 1 percent for these Silicon Valley companies could lead to an increase of median sale price of more than $48,000.”

JPMorgan Chase donates $250 million free, discounted homes
“JPMorgan Chase (JPM) has donated or sold at a discount more than $250 million in corporate-owned homes to community associations, municipalities, veteran groups and nonprofit housing providers across the country.”

Mortgage executive gets five years for defrauding Fannie, Freddie
“A federal judge sentenced Patrick Mansell, 68, of Boca Raton, Fla., to five years in prison and three years subsequent supervised release after he pled guilty to conspiracy to commit wire fraud. His alleged violation occurred when Mansell took part in a scheme to defraud the government-sponsored enterprises, Fannie Mae and Freddie Mac.”

States Clamping Down on Workers Mislabeled as Contractors
“When construction slowed during the recession, some companies hired workers and wrongly designated them as independent contractors to avoid paying insurance, taxes, fair wages and overtime.”

Investors high on high-end house flips
“Rising home prices and short supply have investors setting their sights on a new real estate play.”

September jobs report coming on Tuesday
“The Labor Department said on Thursday that it would release its report on September employment on Tuesday, as it provided a fresh schedule for some economic data that had been postponed due to a partial government shutdown.”

Student Loans Are Becoming a Drag on the US Economy
“The housing recovery remains on track. But high levels of student debt threaten to hang over the residential real estate market for many years, acting as a drag on both household formation and higher prices.”

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Today’s Real Estate News 10.17.13

Summary:
According to CNN Money, the government shutdown cost the U.S. economy $24 billion. Reuters states that Washington is the “biggest risk” to the nation’s economy. The LA Times reports that SoCal’s housing market is slowing, reports this week’s mortgage rates, a former BofA employee has allegedly taken $1 million in bribes to alter short sale transactions & BofA “outpaces other banks in mortgage settlement compliance.” The Housing Wire shares that the U.S. housing market took only a minor hit as a result of the government shutdown & that flippers are backing away due to a decline in real estate turnover.
CNBC reports that Ben Bernanke, Federal Reserve Chair, won’t be required to testify in AIG case yet.

Shutdown took $24 billion bite out of economy
“The United States may have dodged an economic catastrophe by raising the debt ceiling and opening the government, but it didn’t emerge from the political debacle unscathed.”

Analysis: Washington becomes the biggest risk to the U.S. economy
“(Reuters) – Consensus may be hard to find in Washington these days, but many corporate executives and economists seem to agree on one point: the biggest risk to the world’s largest economy may be its own elected representatives.”

Southern California housing market slows after torrid rebound
“Southern California home buyers have apparently had their fill of bidding wars, home shortages and double-digit price hikes.”

Freddie Mac: Mortgage rates higher amid crisis; 30-year at 4.28%
“Fixed mortgage rates rose early this week amid the debt crisis, Freddie Mac’s latest survey showed, with lenders offering the 30-year home loan at an average of 4.28%, up from 4.23% a week earlier.”

Former BofA employee accused of taking bribes to rig short sales
“A former Bank of America Corp. employee who had dealt with delinquent mortgages has been arrested on federal charges of accepting more than $1 million in bribes to allow homes to be sold far below their market value.”

BofA outpaces other banks in mortgage settlement compliance
“Bank of America Corp. moved faster than Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. in satisfying its obligations to assist troubled borrowers under last year’s $25-billion national mortgage settlement, according to the agreement’s monitor.”

Housing recovery took a minor hit during government shutdown
“While the housing forecast remains mostly unchanged, the contentious negotiations that led to Congress temporarily raising the debt ceiling may have a lingering impact on consumer confidence in the housing market.”

Home flippers back away as real estate turnover activity declines
“Home flipping activity dipped 13% from the same period a year ago, with 32,993 single-family home flips recorded in the third quarter of 2013, RealtyTrac reported Thursday.”

Bernanke won’t have to testify in AIG case—for now
“Federal Reserve Chairman Ben Bernanke does not have to testify in the multibillion-dollar lawsuit by the former chief of American International Group against the United States over the insurer’s 2008 bailout, a federal appeals court said on Wednesday.”

Jobless Claims in U.S. Fall Less Than Forecast on California
“More Americans than forecast filed applications for unemployment benefits last week as California continued to work through a backlog, indicating it will take time to gauge the impact of the federal shutdown.”

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Today’s Real Estate News 10.16.2013

Summary:
CNN Money reports Bank of America posts a profit in the 3rd quarter, relieving investors after breaking even last year. Housing Wire shares that Fannie Mae is working on a risk-sharing transaction for next year, FHFA refinance activity slows, mortgage applications barely changed this week, National Mortgage Settlement is closer to meeting consumer-relief mandates and 67,000 home loan modifications have been finalized in August. Bloomberg states that U.S. Bancorp’s profit was little changed on lower bad loan provisions and homebuilder confidence has dropped more than it has in the past four months. Market Watch reports a 12% profit growth for PNC Financial. NY Times posts a profit for Blackrock. Reuters shares mortgage insurer MGIC profit.  CNBC reports that Fitch Ratings put the government’s “AAA credit rating on ‘rating watch negative.’” Dr. Housing Bubble shares a wealth of data in his blog post titled “The inefficient and fragile housing market: How trying to increase homeownership can backfire and add costs to regular home buyers.”

Bank of America swings to a profit
“Bank of America swung to a profit in the third quarter after breaking even last year. And investors breathed a sigh of relief.”

Fannie Mae plans next risk-sharing deal
“Mortgage giant Fannie Mae is working on another risk-sharing transaction for 2014, keeping in line with the firm’s plan to bring private capital back to the mortgage market.”

FHFA refinance activity declines
“Refinance volumes continued to decline in August as mortgage rates inched up from July levels.”

National Mortgage Settlement progress report: Big banks closer to finalizing consumer relief
“The mega lenders subjected to the National Mortgage Settlement are closer to meeting the consumer-relief mandates rolled out as part of a nationwide initiative to compensate borrowers for past servicing issues.”

67,000 home loan mods finalized in August
“Mortgage servicers modified 67,000 home loans in August, up 8% month-over-month, bringing the total amount of loans modified since 2007 to 5.4 million, Hope Now said Wednesday.”

U.S. Bancorp Profit Little Changed on Lower Bad Loan Provisions
“U.S. Bancorp, the nation’s biggest regional lender, said third-quarter net income was little changed as revenue fell and the bank set aside less for bad loans.”

PNC Financial’s profit up 12% on loan growth
“PNC Financial Services Group Inc.’s PNC +1.74% third-quarter earnings rose 12% as the regional lender’s results were helped by loan growth and improved credit quality, though net interest margin, a key measure of lending profitability slipped.”

BlackRock’s Profit Rose 14% in Third Quarter
“The giant money management firm BlackRock is now managing a record $4 trillion after customers put more money into its stock mutual funds and exchange traded funds.”

UPDATE 1-Mortgage insurer MGIC posts profit as housing market recovers
“Oct 16 (Reuters) – Mortgage insurer MGIC Investment Corp posted its second straight quarterly profit, after six years of losses, as a recovery in the U.S. housing market lowered the number of defaulters.”

Mortgage applications barely shift
“Mortgage applications barely changed during the week ending Oct. 11, rising only 0.3% from a week earlier, the Mortgage Bankers Association said Wednesday.”

Fitch puts US AAA rating on rating watch negative
“Fitch Ratings put the US government’s “AAA” credit rating on ‘rating watch negative’ Tuesday, saying that the standstill on the U.S. debt ceiling negotiations risks undermining the effectiveness of the country’s government and political institutions.”

The inefficient and fragile housing market: How trying to increase homeownership can backfire and add costs to regular home buyers.
“It was interesting to see that this week, the Nobel Prize, the biggest prize in economics went to three US economists, one being “irrational exuberance” Robert Shiller.  Markets for the most part are presumed to be efficient and what Shiller points out is the weaknesses inherent with this model.  The housing market is a perfect example.  The market is extremely inefficient when it comes to housing.  We massively subsidize this sector of the economy with the outward notion of helping regular buyers but do the opposite.  For example, the Fed’s QE initiatives have caused asymmetrical bets from financial institutions into residential real estate.  Largely because of this financial structure we went from a real estate market in free fall to one highly subsidized by low rates causing investors to crowd out regular buyers.  Prices now surge while the homeownership rate falls.  Of course how can the market be called efficient when the Fed provides this below market interest rate to a select group of people?  Is the public privy to this?  What use is a low rate when a bigger player comes in with all cash?”

Homebuilder Confidence in U.S. Declines to Lowest in Four Months
“Confidence among U.S. homebuilders fell more than forecast in October to a four-month low as rising interest rates and the budget battle in Washington stifled progress in the housing market.”

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Today’s Real Estate News 10.15.2013

Summary:

Today in real estate, the LA Times shows that Citigroup posts a $3.2-billion profit even with the mortgage decline in the market. The NY Times reports that while many want Jamie Dimon, JPMorgan Chase Chairman & Chief Executive, fired, investors, analysts, board members and regulators don’t want him fired.  Central banks are preparing for a U.S. Default, should it occur. The Wall Street Journal reports that home prices & home sales are now slowing down in the “Bust-and-Boom Markets.” Lawmakers are asking financial institutions to be cooperative with federal employees who have been furloughed due to the government shutdown. The Housingwire informs us that multifamily loans are hitting the market and that Citigroup is preparing for a “refi burnout.”

Citigroup posts $3.2-billion profit amid slump in mortgages, trading
“NEW YORK — Citigroup Inc.’s third-quarter earnings disappointed Wall Street analysts as the bank reported a sharp slowdown in mortgage and bond-trading revenue.”

The Bloodlust of Pundits Swirls Around Jamie Dimon
“Jamie Dimon should be fired.

That seems to be the conclusion of some in the pundit class about JPMorgan Chase’s chairman and chief executive. Writers, editors and bloggers have made it clear that they want his scalp: “NOW Are We Allowed Talk About Firing Jamie Dimon?” the Huffington Post blared after news that the bank set aside $23 billion to pay legal fees and fines last week. “I have trouble wrapping my head around the positive aspects of paying a multibillion-dollar fine,” an article on TheStreet.com said of the prospect of an $11 billion settlement with the Justice Department.”

Central Banks Gaming Out U.S. Default as Deadline Nears
“Central banks have begun making contingency plans on how they would keep financial markets working if the U.S. defaults on the world’s benchmark debt.”

Home Sales, Prices Slowing in Bust-and-Boom Markets
“The sharp home-price rally in some of the hardest-hit housing markets is likely to fade in the coming months amid a pullback in investor purchases and steady increases in the number of homes listed for sale.”

Lawmakers call for banks to rescue federal employees
“Lawmakers urged financial institutions to work proactively with borrowers facing financial distress because of the government shutdown. For three weeks, federal employees have been out of the job without pay.”

Performing multifamily loans hit the market
“A great deal of activity is surfacing in the multifamily sector in the form of nonperforming loan sales this week.”

Citigroup prepares for refi burnout
“As investors anticipate the release of Citigroup’s (C) third-quarter earnings, analysts are predicting declining mortgage lending activity for the bank.”

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Today’s Real Estate News 10.14.2013

Week 3: Small businesses reel from shutdown
“As the government shutdown moves into its third week, small businesses across the country are trying to figure out how — or if — they’ll be able make up the lost business.”

For sale by owner: Homeowners ditching brokers
“Bolstered by the housing recovery, a growing number of homeowners are going it alone when selling their homes hoping to save thousands of dollars in commissions.”

Homebuyers: To get the house, get there first
“Housing inventory is stiflingly tight in many locations, making it a challenge to find, much less land, your dream home.”

Shiller, two others win economics Nobel for ‘bubble’ warnings
“Robert Shiller, who became famous for calling the housing and Internet stock bubbles, was one of three Americans to win the Nobel in economics Monday.”

Saying goodbye to the California middle class. California least affordable state in the entire country as renting class expands.
“California for a generation has been a high cost of living state.  This is no surprising revelation.  Yet the tech boom in the 1990s set the state into a unique stratosphere of real estate.  Hundreds of thousands of jobs now depend on big tech companies including Facebook, Google, Apple, and other common names.  Changes like this have added to drive up in real estate values.  New data highlights that California’s metro areas are the least affordable for those looking to buy based on the families living in those areas.  Of course, investors are bringing outside money so that is one way to move around this new reality.  Unlike an Ohio or Nebraska, California real estate is global in nature.  The only problem today is the massive gap is pushing many middle class families out of reach from buying a piece of real estate.  It is becoming more challenging for families to purchase real estate in California and the data backs this up.”

14 American Housing Markets Drowning In Foreclosures
“One in every 998 U.S. homes received a foreclosure filing in the third quarter, according to the latest foreclosure data from RealtyTrac.”

US Default Seen Pushing Housing to the Brink
“Housing largely dodged a bullet on the government shut down that went into effect October 1, the pending default, however, is an entirely different matter. As the October 17 default deadline nears, knuckle in the housing industry are turning white.”

The 2 Families of Mortgage REITs
“Mortgage REITs are a very interesting sector, and although they only represent a small percentage of REITs, they’ve developed a very loyal following. Their increased use of leverage leads to very high yields that appeal to income seekers with a sizable appetite for risk. However, before jumping in to the sector, investors should realize that not all mortgage REITs are created equal. There are a wide variety of mortgage REITs, and the two major categories are separated by the types of mortgages the REITs invest in.”

J.P. Morgan Hiring for Compliance “SWAT Team”
“Facing a slew of costly regulatory issues, J.P. Morgan Chase & Co. is bringing in a SWAT team.”

Mortgage applications gain; buyers look past US shutdown
“Applications for U.S. home loans rose in the latest week as demand for refinancing outpaced purchases, data from an industry group showed on Wednesday.”

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The next move for the SoCal housing market: Investors slowly pulling back from peak. Foreclosure resales now only 7 percent of sales with the typical mortgage payment at $1,500.

“Last month only 7 percent of homes sold in SoCal fell in the foreclosure resale category, a 7 year low. This is a big trend change in the market as investors continue to be a big player in the real estate market while distress sales drop dramatically. What is interesting from the data is that the typical mortgage payment for those buying with a mortgage is still very low signifying income pressures. There is little doubt that SoCal is in a real estate fever. That fever may be drawing back a bit with inventory rising and prices getting out of reach for many but the investor play is still sucking up a lot of new inventory that hits the market. It might be useful to compare current housing data to figures reached during the peak of the market. How far have we come and where do we go from here?”

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Home Maintenance Checklist for the First Year

“After buyers move in to their new home, they should be prepared for some home fixes to present themselves each season, says Rich Escallier, a handyman in Chicago. “If you can go six months without finding something that raises your blood pressure, you’re lucky,” Escallier says.”

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