Broward County Pending Home Sales Rise Again in March

Miami, FL –The total number of listings – including single-family homes and condominiums - that pended during the month of March in Broward County increased 7.3 percent, up from 4,121 to 4,421 compared to a year earlier, according to the Broward Council of the 27,000-member MIAMI Association of REALTORS and the local Multiple Listing Service (MLS) systems. In further detail, single-family home and condominium sales that pended during the month increased 17.3 and 3.0 percent respectively.

“We continue to see historically strong home sales activity that is driving price appreciation in Broward Country,” said Rick Burch, president of the Broward Council of the MIAMI Association of REALTORS. “Rising pending sales point to further strength and stability in the Broward County residential real estate market.”

Cumulative Pending Sales
Total March cumulative pending home sales – including single-family homes and condominiums - in Broward County were 8.3 percent above March 2011, up from 8,628 to 9,443, and down 1.0 percent month-over-month from 10,619.

Cumulative pending single-family home sales rose 11 percent from 3,624 a year earlier but declined 21percent compared to the previous month. Cumulative pending condominium sales in Broward County increased 8.3 percent, up from 4,821 a year earlier and declined 1.0 percent compared to the previous month.

“Broward County has much to offer in terms of lifestyle, weather, location, and amenities for all types of buyers,” said Ernesto Vega, president-elect of the Broward Council of the MIAMI Association of REALTORS. “The local market’s appeal continues to attract both domestic and international buyers and investors who are generating demand and boosting market performance.”

Nationally, the Pending Home Sales Index, a forward-looking indicator based on contract signings, declined ?? percent to ?? in March from ?? in February, according to the National Association of Realtors. The index is ?? percent higher than the ?? index reported in March 2011.

Increased pending sales are an indication of increased future sales. A sale is listed as pending when a contract is signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

*“Pended sales” are defined as only the sales that pended during a particular month
**“Total cumulative pending sales” refer to all sales cumulatively pending at the end of a particular month.

Palm Beach, Fort Lauderdale offer greatest returns for Real estate investors

Real estate investors seeking to rent out single-family homes would be wise to head to South Florida, a new MarketPulse report released today by CoreLogic shows.

Capitalization Rates for single-family homes that are rented out averaged 12.4 percent in West Palm Beach, signifying the greatest returns among all the markets tracked by the analytics firm. Single-family homes rented out in Fort Lauderdale posted the third-best returns, offering investors a 12 percent cap rate, CoreLogic said.
The national average cap rate for single-family homes was 8.6 in January 2012, down from 8.8 percent a year before but up from 5 percent in 2006. Many of the other investor-friendly markets were in the Midwest, such as Cleveland (12.3 percent cap rate) and Chicago (11.6 percent).

Miami, on the other hand, actually posted a relatively meager cap rate of 7.7 percent, offering the worst returns among the nation’s largest markets.

The high cap rates are a result of strong demand among Americans for rental properties, even as housing affordability sits at its highest level in more than 20 years, according to the report.

Rental closings increased 11.5 percent year-over-year in 2011 and comprised 29 percent of all single-family closings. By comparison, rental closings represented just 11.3 percent of all closings in early 2006. Meanwhile, sales closings declined 9.8 percent between 2011 and 2010. In fact, rental demand is so strong that supply is now at its lowest level in the last five years even has the volme of rental increased 2.6 percent over the last year

Paint ads on the side of your house?

Paint ads on the side of your house? To be mortgage free, sure
TAMPA, Fla. – April 3, 2012 – A California marketing company wants to pay your mortgage for up to a year. But there’s a very big catch: You have to let it paint your house, and in not-so-subtle colors.

Think eye-popping neon and bold letters.

The company behind this outlandish campaign launched its first so-called billboard house last month in Buena Park, Calif. One section of the front wall is green, the other orange. The company, Brainiacs From Mars, slapped its own logo right above the garage. There also are logos for Facebook and Twitter and a photo of an alien.

Now, Brainiacs is looking for more homes. And where better to find people desperate for mortgage money than the Bay area?

“We knew Florida would be good for this,” said David Le, spokesman for the company. “People are hurting everywhere, but there are so many people in Florida who need help.”

Brainiacs started the project last spring, largely to promote itself and its pledge to customers to bring “out-of-this-world attention to your business.” The project has made headlines across the world, rated a mention in a Jay Leno monologue, and boosted traffic exponentially on the company website, according to a “Case Study” posted there.

Brainiacs plans to paint at least 100 homes by the end of this year and as many as 1,000 total.

Here’s how it works: Homeowners in California are getting their nearly $2,000 monthly mortgage paid for by Brainiacs until the paint comes down. That could be a month or a year, depending on how long the company wants to leave the ads up. The house will be painted back to normal colors when the project is over.

Brainiacs has received 40,000 applications through its website, dominated by the states hit hardest by the housing crisis: Florida, California and Nevada. About 215 of those are from Tampa, Le said.

Anne Cribb and her husband, Chad, have applied to make a billboard out of their home at 611 N. MacDill Ave. in Tampa. They’re keeping up with mortgage payments now, but it’s a struggle, Anne Cribb said, and she’s motivated by the chance to get ahead.

She doesn’t care what the painting scheme looks like, as long as it’s tasteful.

“It would need to be something G-rated, of course,” she said. “Beyond that, I don’t think my neighbors would care too much. It’s not permanent.”

Even if the Cribbs’ neighbors don’t mind, though, homeowners on other streets might, and the city of Tampa most certainly doesn’t welcome billboard homes, said Thom Snelling, in the zoning department.

“The property owner and the sign company would be knowingly violating city ordinances,” Snelling said.

Painting a sign on your house would not fall under Tampa’s definition of a billboard, he said, but it is what the city considers an “off-site” sign, and there’s an ordinance against that.

“For example, I can’t advertise doughnuts on the side of a building, if I can’t buy doughnuts there,” Snelling said.

Le said he’s aware there will likely be zoning issues in some areas, but he thinks the company can work something out.

“Once people hear that we’re helping people pay their mortgage, they like the idea better,” he said.

So what happens if homeowners choose to go ahead and break zoning laws?

There’s a potential civil penalty, such as a lien on the home, preventing a sale until it’s paid off. But it could take months to work through the process of issuing a zoning violation, and as long as the homeowners remove the paint, there’s no penalty at all.

“Well, this company will paint the house back when they’re done,” Cribb said. “It doesn’t have to stay up long. Any time would help.”

Le said the plan right now is to paint homes with his company’s logo only, but other companies already are calling wanting their logos on houses.

Could a Coca-Cola or Viagra house appear soon in a neighborhood near you?

“We just don’t know that yet,” Le said.

Tampa City Councilwoman Lisa Montelione said she doesn’t mind if homeowners paint their homes bright colors, but she would have concerns over the content of the signs.

Also, she said, homeowners in deed-restricted communities – such as New Tampa, which she represents – would not be eligible.

“If you have deed restrictions, there are certain pre-approved colors you have to choose from, and neon green is not one of them.”

Copyright © 2012 the Tampa Tribune (Tampa, Fla.), Shannon Behnken. Distributed by MCT Information Services

Bill could help short sale sellers in 2013

WASHINGTON – April 2, 2012 – Under U.S. law, a homeowner with an underwater mortgage who goes through a short sale has part of his or her debt forgiven by a bank. The amount forgiven is legally considered income, as if the lender gave the owner a monetary gift by saying, “You no longer have to pay this.”

As a gift, that money is income and taxable by the IRS when the homeowner fills out his yearly income taxes. However, a temporary law effective through Dec. 31, 2012, nixes that amount as homeowner income, making the debt forgiveness tax-free. A short sale in 2012, then, allows a homeowner to walk away free of debt.

As it stands now, that rule expires next year, and underwater homeowners who go through a short sale could be taxed on the amount forgiven.

However, a bipartisan bill introduced late last week by U.S. Senators Debbie Stabenow (D-MI) and Dean Heller (R-NV) – the Mortgage Relief Act – would extend that rule past Dec. 31 if approved by both the House and Senate and signed by President Obama. Senators Robert Menendez (D-NJ), Sherrod Brown (D-OH) and Jeff Merkley (D-OR) cosponsored the legislation.

“It is bad enough that so many families are faced with mortgages that now exceed the value of their home,” says Stabenow. “But to add insult to injury, without this bill, the IRS would once again require these families to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That’s just wrong.”

Stabenow championed the original Mortgage Relief Act of 2007 designed to fix the problem that now expires at the end of 2012. Stabenow and Heller’s new bill will extend this tax protection for underwater homeowners through 2015.

Approximately, 20 to 25 percent of American homeowners are currently underwater on their mortgages.

© 2012 Florida Realtors®

Broward County's unemployment fell

Broward County's unemployment fell to 7.9 percent, the lowest rate in South Florida, the state reported Friday.


Statewide, unemployment dropped to 9.4 percent, a three-year low, and the third consecutive month below 10 percent, the state said. January's rate was 9.6 percent.

Job creation also picked up steam, after jobs were lost in January, with 10,100 jobs gained in February, according to Florida's Department of Economic Opportunity.

Florida's still lagging the nation in adding jobs, said Mark Zandi, chief economist for Economy.com. But in two or three years, as housing and construction turns around, "Florida will take its traditional position as a growth leader," he said.

Job gains for the month in Broward were in education and health services, leisure and hospitality, and business and professional services.

Since February of last year, Florida has added 72,300 jobs, ranking 4th among states with significant employment changes, the Bureau of Labor Statistics said Friday.

Palm Beach County's rate dropped to 9.2 percent from 9.6 percent in January.

Florida had a broad-based gain in jobs, with the largest numbers in trade, transportation and utilities; education and health services; professional and business services; and leisure and hospitality.

From December to January, Florida lost 38,600 jobs, the Bureau of Labor Statistics said. Previously, Florida has been gaining jobs, adding 7,300 in December and 8,500 in November.

The 9.4 percent unemployment rate represents 859,000 residents out of work.

U.S. rate on 30-year mortgage back below 4%

The average U.S. rate on the 30-year fixed mortgage fell back below 4 percent this week, staying near historic lows.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.99 percent from 4.08 percent last week. Last month, the rate touched 3.87 percent, the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage also fell, to 3.23 percent. That’s down from 3.30 percent last week and above the record low of 3.13 percent hit earlier this month.

The low rates have made homebuying and refinancing more affordable at a time when the housing market is flashing small signs of improvement. Still, most economists say it will take years for the market to fully recover from the housing bust.

January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders are more confident about the market. In February, they requested the most permits to build single-family homes and apartments since October 2008.

An improved job market may also be helping home sales. Employers have added an average 245,000 net jobs per month from December through February. That has helped reduce the unemployment rate to 8.3 percent, the lowest level in nearly three years.

Rates rose a bit earlier this month after positive economic news pushed up yields on U.S. Treasury bonds. Mortgage rates then to track the yield on the 10-year Treasury note.

An improving economic outlook can lead investors to shift money from Treasury bonds to stocks. That pushes up Treasury yields.

Even with signs of improvement in housing, home prices continue to fall. Millions of foreclosures and short sales - when a lender accepts less than what is owed on a mortgage - remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.

To calculate the average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year fixed loan was 0.7. For the 15-year fixed loan, the average was 0.8.

For the five-year adjustable loan, the average rate fell to 2.90 percent from 2.96 percent, and the average fee was unchanged at 0.8.

The average on the one-year adjustable loan dropped to 2.78 percent from 2.84 percent, and the average fee was unchanged at 0.6.


Copyright © 2012 The Associated Press, Christopher S. Rugaber, AP economics writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Home Prices Ready to Rebound

After falling 34% over the past six years, U.S. home prices will soon bottom. They could turn back up by spring 2013.
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It hit with the ferocity of an Old Testament plague, wiping out large populations of homeowners in the U.S. Five million of the country's 76 million mortgage holders have lost their homes to foreclosure or lender-ordered short sales since 2006, and an estimated 14 million more owe more on their homes than their properties are currently worth. In all, some $7.4 trillion in homeowners' equity has been destroyed, according to Mark Zandi, chief economist at Moody's Analytics, and more than two million jobs in the home-building industry disappeared.

At year end 2011, the S&P/Case-Shiller National U.S. Home Price Index fell to a record low, 33.8% below the boom peak level, recorded in 2006's second quarter. The descent has been all the more hideous in such once-manic markets as Las Vegas, Phoenix and Miami, which, according to the Case-Shiller 20-City Composite Index, have fallen 61%, 55% and 51%, respectively, from their high-water marks.

Everyone has shared the pain. The negative wealth effect from the price decline both contributed to the virulence of the Great Recession and crimped the subsequent recovery.

Yet as grim as these year-end readings appear to be, there are signs that the long nightmare for American homeowners is in its terminal stage, and that, maybe, just maybe, home prices will bottom and begin to turn by the spring of 2013—if not before. Certainly, the economy is doing better these days—the sine qua non for improved demand for housing. Jobs numbers have been up sharply three months in a row, leading to a jump in consumer confidence of late.

The near-record low in mortgage rates and concomitant slide in home prices has made houses and condos stunningly affordable (although stiff underwriting standards have made getting home loans more difficult). This is captured in the National Association of Realtors Housing Affordability Index, which measures how much purchasing power a median-income family needs in order to buy a median-priced home, using conventional mortgage financing.

This measure stood at 206 in January, which meant that the typical family has more than double the income needed to purchase an average home. That reading is more than twice the 102.7 at the peak of the bubble in July 2006.

MUCH OF THE HOME-PRICE DECLINE in the past six years has been fueled by the distress sales of foreclosed properties, which typically sell at discounts of 30% or more to dwellings in the conventional sales market. Distressed sales, along with vacant houses and condos awaiting a sale, trash property values for all the other homes in the immediate area.

These forced sales have weighed heavily on overall market prices that are typically reported on a metropolitan-area basis that includes cities, surrounding communities and exurbs, which are a good distance from downtown. Within many metropolitan statistical areas, a bifurcated market has developed in which a pricing recovery already is under way in communities and neighborhoods far from the areas still reeling from past excesses of subprime mortgages and predatory lending.

This phenomenon is showing up in the statistical service CoreLogic's Home Price Index, which nicely separates distressed from nondistressed sales. Indeed, for all of 2011, prices fell 4.7% nationally from the previous year's level. Excluding distressed sales, however, home prices dropped just 0.9%.

Of greater moment, perhaps, CoreLogic data show that nondistressed-sales prices rose 0.2% month over month in December 2011 and 0.7% in January 2012. Could this be an augur of better times to come?

Absolutely, in the opinion of Karl Case, professor emeritus at Wellesley College and one of the progenitors of the Case-Shiller indexes, launched in 2002. "If you drill down in the numbers by zip code in the Boston area, as I have done, you find that more desirable, affluent neighborhoods like Back Bay and Beacon Hill are doing just fine now—while, say, Fall River is still in the dumps and dragging down the entire Boston Metro area," he asserts.

This bifurcated market is seen all across the country. While the Nob Hill neighborhood in San Francisco never saw values drop drastically and is now recovering nicely, Stockton, Calif., remains in the dumps. It's a tale of two cities elsewhere, too. The Santa Monica real-estate market is doing fine, while the desert towns to the east are still suffering. And, in the Miami environs, South Beach is strengthening; Hialeah, Fla., isn't.

Then there are areas that have been so depressed that the only direction now seems to be up.

In fact, woebegone Detroit was the only place in the latest Case-Shiller National Index to show an annual increase for December. True, the price increase was a skimpy 0.5%, but that was lots better than the 12.8% slide notched by the Atlanta area for 2011. And the only two metro areas that showed month-over-month gains in December were Miami, up 0.2%, and Phoenix, up 0.8%.

TO BE SURE, PLENTY OF headwinds remain for home sales. Unlike the stock market, home prices display much long-term momentum and inertia. Prices, all other factors being equal, tend to move in their past direction, and lenders, chastened by recent experience, remain tight with mortgage credit. Going through the home-loan application process these days is like undergoing a financial colonoscopy. In contrast, during the salad years of the housing boom, banks were shoving money at borrowers, with few questions asked.

The biggest impediment to a turn in the home market remains the so-called shadow inventory of some 3.671 million homes, according to estimates by Mark Zandi of Moody's Analytics: those that remain somewhere in the foreclosure pipeline. Payments on some are 90-plus days delinquent; others are already lender-owned properties, known as REOs (real estate owned), that haven't yet been listed for sale.


This inventory sits atop a market for existing-home sales that this January reached an annual pace of 4.5 million units. Moody's Zandi, for one, finds particularly worrisome the recent $26 billion settlement of charges, alleging malpractice in home foreclosures, reached by 49 state attorneys general and the five largest lenders and mortgage servicers in the U.S. If nothing else, as a result of this, the shadow inventory will hit the home market far faster than it would have otherwise.

"While I feel better about U.S. home prices than I have in six years, I do think that a pickup in foreclosure and short sales could push U.S. home prices down another 5% this year, before the market bottoms next spring," says Zandi. (In a short sale, the lender and homeowner agree to sell the home at a loss with the proceeds going to the lender in lieu of an actual foreclosure.)

Others are more sanguine.

Eleven forecasters surveyed this year by the Federal Reserve Bank of Philadelphia predicted, on average, that the Case-Shiller National Index would fall by just 0.2% this year—and that it would rise 1.2% in 2013. Even if the decline were to reach Zandi's 5% level in 2012, it would be off such a low price base as to be almost imperceptible.

If the market bottoms out early next year, as Barron's expects, any recovery is liable to be somewhat tepid for a while. Buyer psychology has been shredded by the housing bust: The notion of housing as investment, rather than shelter and a wasting capital good, has been destroyed. Meanwhile, lots of sellers, anxious to downsize or liquidate, remain in the wings, ready to pile into the market at the first sign of a rebound.

A pricing model recently developed by Goldman Sachs predicts a rise in nominal prices of a cumulative 30% over the next 10 years, for a real return of 1% annually, after adjusting for inflation. But if tax changes like the elimination of deductibility of mortgage interest materialize, long-term appreciation in home prices could hew more closely to inflation, with little in the way of real returns.

NONETHELESS, THE POSITIVES these days outweigh the negatives.

Take the daunting 3.7 million homes that Moody's estimates is in the shadow inventory. Zandi points out that this foreclosure pipeline has been steadily shrinking since its peak of 4.53 million homes in the first quarter of 2010. The decline is primarily a result of a precipitous drop in loans entering the foreclosure channel.

The 30- and 60-day early-stage delinquency rate has been dropping like a stone for several years because of tightened mortgage-underwriting standards.

Likewise, Zandi expects that the shadow inventory could be reduced by at least 700,000, thanks to recent changes in Uncle Sam's Home Affordable Modification Program to encourage lenders to reduce the principal on loans in early-stage default.

He also expects investment demand from all-cash buyers for homes in hard-hit areas like Nevada, Arizona, California and Florida to take lots of properties out of the shadow inventory. Rising rent rates make the strategy appealing to buyers seeking attractive cash returns while they await a turn in the market.

The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, is also encouraging them to make bulk sales to investors of their large portfolios of foreclosed properties.

CoreLogic's chief economist, Mark Fleming, thinks that the size of the true shadow inventory—the number of homes that will reach the market as distressed sales—totals only about 1.6 million. Such transactions, which accounted for 28% of all existing home sales in December, won't return to the record 33% they hit in February 2011, he adds.

The demand for housing could pick up markedly in the years ahead, just from population growth, or, in census lingo, household formation.

The Great Recession of 2008-09 sparked a collapse in household formation, as adult children postponed striking out on their own or moved back to their parents' homes after losing, or failing to find, jobs.

The household-formation rate plummeted to 300,000 during 2008, from more than 1.7 million in 2005. But the Canadian economic research outfit BCA sees the U.S. rate surging to its historic annual average of around 1.3 million in the years ahead, boosting the demand for rental apartments first and then spilling into the housing market. BCA reckons that five million new households will have to be formed simply to return the ratio of households to population to normal levels.

Perhaps no one knows more about residential real-estate price trends then Yale economist Robert Shiller, the co-creator of the Case-Shiller indexes. He has studied prices going back many years, including those in one neighborhood in Amsterdam that has been around for literally centuries.

While he's reluctant to predict definitively when the U.S. housing bust will end, he points to one leading confidence indicator that appears to be signaling a market turn—the National Association of Home Builders/Wells Fargo Housing Market Index.

This monthly survey seeks to capture shifts in builders' perceptions of current and future market conditions and buyer traffic. The index has been on a tear of late, rising five months in a row and to its highest level since 2007. Home-builder stocks likewise have blasted off since the October 2011 stock-market low, with Beazer Homes (ticker: BZH) up some 167%, Toll Brothers (TOL), 81%, and the SPDR S&P Homebuilders exchange-traded fund (XHB) up 74%.

This confidence index, Shiller notes, topped out almost seven years ago, in the very month that he boldly predicted in a Barron's article that the U.S. home market was on the verge of a monumental collapse that would see prices fall an inflation-adjusted 50% ("The Bubble's New Home," June 20, 2005).

"It's amazing how on target that prediction was, since nationally the market is already down 40% in real terms," Shiller said in a recent telephone interview.

The Yale economist isn't sure why the builder-confidence reading has been such a good leading indicator. After all, the market for new homes even in strong years never accounts for more than 20% or so of all sales; existing houses and condos account for much more. And lately, the figure has sunk to around 6%. Perhaps home builders have a deeper insight into potential buyers' psychology—although if their grasp of market conditions were that good, many of them wouldn't have gone belly-up during the bust.

The Obama administration certainly hopes that housing is on the verge of a turn. So do the host of homeowners anxious to unload their properties. One very positive sign: The inventory of new and used homes is around a six-month supply, a decline from the peak in 2008 of more than 10 months


Barron's Cover | SATURDAY, MARCH 17, 2012 Ready to Rebound
By JONATHAN R. LAING |