Tag Archives: Housing Supply

We are five years through a 10-year adjustment process, Fannie Mae's chief economist Doug Duncan told attendees at the Five Star MPact Mortgage Banking Conference and Expo Tuesday morning. Dodd-Frank has 300 rules that must be implemented in the market. Regulators are only halfway through that list so far; the second half will be enacted over the next couple of years. While the market will recover, Duncan stressed that it will take time to adjust to new regulations.

That ominous shadow inventory of repossessed and soon-to-be repossessed homes is getting smaller. Standard and Poor's (S&P) has released its third-quarter shadow inventory update. The agency says the volume of distressed assets included in its assessment dropped from $405 billion in the second quarter to $384 billion in the third. This figure has been on a steady decline since mid-2010. At current liquidation rates, S&P says it will take 45 months to work through the industry's shadow inventory.

Sales of previously owned homes got an unexpected boost last month while the number of homes on the market continued to decline, according to data released Monday by the National Association of Realtors. The trade group recorded a 1.4 percent month-over-month increase and a 13.5 percent year-over-year increase for existing-home sales in October. At the same time, housing inventory fell 2.2 percent to 3.33 million existing homes available for sale, which represents an 8.0-month supply. Distressed homes made up 28 percent of October's transactions.

Estimates of the industry's shadow inventory vary widely, but one thing analysts do agree on is that the overhang is massive and will likely weigh on market dynamics for years to come. Measurements of soon-to-be repossessed and foreclosed homes that have yet to hit the market range from 1.6 million to 8.2 million. Capital Economics' assessment falls in the middle of that range, and the company's analysts say if anything, theirs is probably an underestimate. They put the industry's shadow inventory at 4.3 million homes.

Temperatures are falling, and so are home prices in most local markets. Clear Capital says it's expecting another long winter as the housing industry tries to cope with the downward forces of weak demand, record-low consumer confidence, and distressed inventory. The company says the seasonal gains seen during the stronger spring and summer months have not been enough to push year-over-year home prices into the black. Clear Capital's October index puts national home prices 2.8 percent below a year ago.

After falling to a 13-year low during the second quarter, the U.S. homeownership rate posted a highly unexpected rise in the third quarter. Data released by the Census Bureau Wednesday puts the nation's homeownership rate at 66.3 percent. That's up from 65.9 percent at mid-year. With foreclosures forcing homeowners out of their homes and buyers waiting on the sidelines as home values declined, the rate has been heading south for quite some time. In fact, the third-quarter rise is the first in two years.

Sales of previously owned homes slipped 3 percent between August and September, according to data released by the National Association of Realtors (NAR) Thursday. That follows a jump of nearly 19 percent between July and August. The decline was widely expected as sales activity follows the typical seasonal cycle and heads lower with the mercury in the thermometer. Distressed homes accounted for 30 percent of sales in September. Eighteen percent were foreclosed homes and 12 percent were pre-foreclosure short sales.

The foreclosure tide has yet to ebb, and the massive supply of bank-owned homes building over the last half-decade has taken its toll on market fundamentals. What's become of all those properties seized by banks? CoreLogic delved into the stats to find out. Looking at the outcomes of 355,000 properties foreclosed on in 2006, the company found that 105,000 were liquidated as REO sales to third-party buyers in six months or less, while more than 20,000 remain part of the industry's REO inventory.

While the homeownership rate falls, rental demand rises bringing rental rates up and apartment vacancies down -- all of which has led Freddie Mac's chief economist to label the multifamily sector a positive signal for the U.S. housing industry. Frank Nothaft says improvement in the economics of apartment management has prompted an increase in structure values, property sales, and new construction. He notes that many newly-formed households are choosing to rent rather than own in the current, unstable economy.

The analysts at Barclays Capital say a ""triple-dip"" in home prices will likely materialize by early next year. The term ""triple-dip"" emerged in a Clear Capital report a couple of weeks ago, and Barclays says its analysis corroborates the idea. The research firm warns that home prices will likely slip another 6 to 7 percent over the coming winter months. That would put median prices at a new low for this cycle, in fact 3 percent below the double-dip measurement of last spring.