The Rocks Come with the Farm

Lots of Real Estate News

2011-07-25T14:16:00.000-07:00

Be sure to read today's (7-25-11) Herald Leader's front page article on the housing market. http://www.kentucky.com/2011/07/25/1823118/census-measures-the-shift-in-state.html
The Fayette County PVA office has a detailed report out on the real estate numbers. Click on this link to read....http://fayettepva.com/content/pdffiles/2011AnnualReport.pdf.

Wilma Langfels reports....INFO THAT HITS US WHERE WE LIVE.....lLast week included both problems and progress in the housing market. Getting the problems out of the way, June National Existing Home Sales came in down 0.8% versus May, to an annual rate still below 5 million units, lifting the months' supply to 9.5. But all the sales decline was from condos and coops, single-family sales staying the same. We appear to be bouncing along a bottom, as the median price of an existing home rose for the month and is now up 0.8% from last year. Average prices are up 2.7% versus a year ago, nationally.

Columnist Lou Barnes made some very interesting comments...he says the newest real estate data said a lot by saying nothing. The Philly Fed index, new unemployment, sales of existing homes, starts of new homes, home prices, mortgage applications - - all flat. Neither sinking back into recession nor going anywhere.

Everyone should note but no one did that yesterday was the 150th anniversary of the bloody collision of 60,000 Americans near Manassas Junction and Bull Run creek, the first real battle of the Civil War. As defeated Union soldiers streamed back into Washington, the reality of a long, hard war arrived with them.

Those demoralized by our termporary difficulty with self-governance, struggling with mere money, might mark yesterday's occasion by remembering our strength in serious trial, and our ability to join together and to heal.

Phoebe Chongchua shares an idea we can use in this market...The adage when it comes to real estate has been "location, location, location." A recent survey, though, shows that lifestyle options are also a high priority. These include health and safety, access to cultrual activities, and family-friendly neighborhoods.

Here are some of the results. The survey found the following lifestyle options are top priorities for buyers.

Ease of commuting by car: 38%

Access to health and safety services: 34%

Family-friendly neighborhood: 33%

Availability of retail stores: 32%

Access to cultural activities: 21%

Public transportion access: 19%

Nightlife and restaurant access: 18%

Golf-friendly area-access to golf course: 6%

If you're a seller what should all this mean to you? It's an opportunity to target buyers based on their interest. Just like businesses need to know who their target market is so that they can build a brand and solicit to those consumers, so too, for sellers.

If you're selling your home and you know that the above priorities can influence buyers, it only makes sense to play up the lifestyle options that apply to your home.

April 2011 Statistics

2011-05-20T09:55:00.000-07:00

Again, our Lexington Bluegrass Association of Realtors Report is not good news… sales down 23%, pending sales off 40% from April 2011.

I have pontificated for some time (2007) that we are in a ten year major climatic and cultural shift, in general, but specifically effecting housing and to add flame to the fire Lou Barnes says “It is no longer polite to speak of housing. The Fed does not, the White House does not, and the Treasury Secretary is too busy” to give housing adequate attention.

The two big disconnects are still out there,(1) Banks are loaning money…nonsense, and (2) The economy and unemployment are seriously improving …yes but at the same glacial pace the North Pole is vanishing…slowly but surely.

Anything positive? Yes. Most distressed properties owners understand the need to meet the markets demand for bargain pricing. It is not going to get any better quickly because the Feds have 355000 homes in inventory to come on the market. The non distressed homes that do sell have three things in common, they are: priced to this market, are in great shape and are aggressively marketed, adjusting immediately to needed price reductions and the quirks and desires of the legitimate buyer’s appraisal and inspection issues.

Our company has multiple solutions: great marketing on the internet, Auction option for 30 day cash in hand sale, and Property Management lease…..we can’t get enough homes to lease.

Robbing the Demand.....New Home Sales

2011-03-24T08:34:00.000-07:00

I am always asked, "how is the market?" Everyone wants me to say it is getting better because the historically robust spring market has always added anticipated enthusiasm to the market. However, spring or not we are only four years in this ten year correction cycle. The statistics below are additional measurements as we redefine the bottom.

"February's sales numbers add to the mounting evidence that the housing recovery is hesitating along with the inconsistent progress of the economic recovery," said David Crowe, chief economist for the National Association of Home Builders (NAHB).

"Falling housing prices of existing homes are robbing demand for new houses and until that changes, the housing market will be in trouble,' said Yelena Shulyatyeva, an analyst at BNP Paribas.

The NAHB also noted that "even qualified buyers who are ready to make a purchase are facing frustrating challenges in terms of tight consumer lending conditions and inappropriately low appraisal values on new construction."

Prices will continue to fall until the distressed inventory is significantly reduced and of course, the economy must turn around to bring equilibrium to the supply and demand that we learned about in Economics Class 101.

The Scale is Still Tipped in Favor of Bad News

2011-03-21T14:30:00.000-07:00

(1) Monthly existing home sales are near record lows. New home starts are at record lows.

(2) Shadow (distressed) inventory will take years to clean up.....51 months for New Jersey, 29 months for Florida, months and months where ever you live.

(3) A ship this big on the wrong course will take a long time (3 more years) to return to smooth waters.

Some telegraph messages are good.

Two marketing directors told me that on hand heavy machinery inventory has been significantly reduced in the last 6 months and a recreational vehicle marketing director reported that four wheel vehicles (think golf carts and hunting ATVs) can't keep up in production.

A regional bank is taking a gamble by financing several upper end homes to be built on their existing REO lots........what do they see coming?

Foreclosures Slowing for a Reason

2011-03-02T08:28:00.000-08:00

Foreclosures are slowing for a reason.....not necessarily a good one. It appears they are simply bogged down. Broker's Insider reports:

"Foreclosure filings were reported on 261,333 U.S. properties in January, a 1 percent increase from the previous month but a 17 percent decrease from January 2010, according to RealtyTrac. One in every 497 housing units received a foreclosure filing during the month.

January marks three consecutive months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months when the total exceeded 300,000. However, RealtyTrac CEO James J. Saccacio says that's because lenders are bogged down in reviewing procedures, resubmitting paperwork, and formulating legal arguments, not because housing has recovered."

Inman News reports, "While fewer homes are entering the foreclosure pipeline, it's taking them longer to get through it. Among homes in the foreclosure process in January, the average number of days delinquent was 507, up from 410 days in January 2010 and 319 days in January 2009."

Kentucky had 1,210 foreclosures filed in January 2011, a 22% increase from December, and a 5% increase from a year ago.

A "Real" Hard Look at the Market

2011-02-28T08:16:00.000-08:00

Here is the link to a great article by Lou Barnes (Prime Credit News) with a real look at the real estate market today.

He and I both are still searching for those building blocks that will staircase us off of the bottom. Although new home starts have again fallen by 12%, we have seen in our local market large, new, spec home starts ($750,000 and above) for the first time in over 3 years. The inference would be that these builders hope to be available as the market turns positive. Today's prime lending report states "Inventories are now at their lowest level since 1967."

2009-10-12T05:47:00.000-07:00

http://search.lbar.com/images/files/Stats%20to%20post%2009_09.pdf

September 2009 sales increased 7% over September 2008. 711 sales were reported closed on LBAR’s MLS. YTD sales are down 13% over same period in 2008. Months of inventory are down to 8.8 months from a high of 10.8 months. Pendings reported in September are equal to pendings sales reported in August and are up from 650 in September 2008 to 759 in September 2009.

Overall, we have seen two positive “incremental” increases in sales. (1) First-time homebuyer’s $8,000 tax incentive has helped the $125,000-175,000 market. (2) There has been some general movement in the existing home market when the homes are priced to today’s market and are in excellent condition.

The jumbo-loan ($417,000+) home sales remain weak. Over $750,000 homes are being punished with unacceptably high interest rates and large down payments.

We see no abatement in the foreclosure numbers… banks continue to buy back the majority of Master Commissioners of Sales.

LBAR Statistics for March 2009

2009-04-16T07:31:00.000-07:00

http://search.lbar.com/images/files/stats309.pdf

Top Ten Credit Do’s and Don’ts

2008-12-04T12:27:00.000-08:00

Did you know that most lenders pull your credit report a couple of times during the loan process? If your credit scores have dropped, you may no longer qualify for the rate or program that you are attempting to get. Credit scores are very important as all lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached. The loan to value, the debt to ratio and so on, etc.

Why it matters: Knowing what you should and shouldn’t do can affect the terms of your loan. It is always best to be as educated as possible in the loan process to ensure you are getting the best deal.

What you need to know: Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:

DON’T APPLY FOR A NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail. Every time that that you have your credit pulled by a potential creditor or lender; you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from 2-50 points for one hard inquiry.

DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Paying collections will decrease the credit score immediately due to the date of the last activity becoming recent. If you want to pay off old accounts, do it through escrow, and make sure that 1) you validate that the debt is yours, and 2) that the creditor agrees to give you a letter of deletion.

DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after the loan process, and make sure it is a more recent account.

DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, do it across the board. Meaning make an extra payment on all your cards at the same time.

DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after the closing.

DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.

DO STAY CURRENT ON EXISTING ACCOUNTS. Like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.

DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red Flags are raised easily with the scoring system. If it appears that you are changing your pattern, it will raise a red flag and your score could go down.

DO CALL YOUR LENDER if you receive something in the mail from a creditor or collection agency that you believe may affect your score during the loan process. We may be able to supply you with the resources you need to stop any derogatory reporting to the bureaus.

DO GET A FREE COPY OF YOUR CREDIT REPORT. https://www.annualcreditreport.com is a free resource to the public that allows you to get a complimentary copy from each of the three credit bureaus every 12 months.

Lbar Stats for October 2008

2008-11-17T12:41:00.001-08:00

Below is a link to download the October Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

Lbar Stats for September 2008

2008-10-09T07:37:00.000-07:00

Below is a link to download the September Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

Lbar Stats for August 2008

2008-09-12T07:06:00.001-07:00

Below is a link to download the July Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats for July 2008

2008-08-11T08:15:00.000-07:00

Below is a link to download the July Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats

2008-07-10T08:09:00.000-07:00

Below is a link to download the June Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

LBAR Stats

2008-06-19T12:46:00.000-07:00

Below is a link to download the May Stats from Lexington-Bluegrass Association of Realtors.

http://jonahmitchellrealestate.googlepages.com/home

Housing Flu Running Its Course

2008-06-13T06:35:00.000-07:00

The Housing Flu has spread from the three sickest hosts to the rest of the country, says a new report by Global Insight, a financial analysis firm.

Among the most comprehensive of the home price analysts covering 84 percent of all housing units, the House Prices in America report covers 330 housing markets, 262 of which experienced declines in the first quarter 2008. Most of the contagion is in California, Florida, and Michigan where 45 of the 50 worst performing markets are located.

Flu can be miserable, and there's no question that most of the country is feeling the symptoms. Home prices dropped 6.7 percent in the first quarter 2008, mostly due to overpriced areas being put to bed to rest.

Five symptoms need to get better before housing is healthy again -- price, credit, expenses, supply and foreclosures.

Price is already well on the road to recovery. In 2006, Global Insights found that 53 markets were overvalued. By the end of March, only eight housing markets were. Researchers say that the Northeast and coastal California and Florida are now fairly valued.

The next biggest hurdle is credit. Banks are currently looking at more than credit scores and housing comparables -- they're looking at how long homes have been on the market, and disregarding individual features as relevant to price. The pendulum has swung the other way in credit with lenders saying yes only if the loan is insured by Fannie Mae, Freddie Mac, PMI, or other third-parties. They've also all but shut down equity lines of credit, and if a homeowner is planning to rent a home and re-buy, the bank wants more than a signed lease - they want proof that utility bills have been transferred to the tenant's name.

These requirements aren't unreasonable, they are just unexpected by homeowners and buyers used to getting what they want.

It will take time for bad loans to be spun into good loans.

Tight household expenses are depressing consumers. Gas and food doubling in price since the housing boom says it all. When those come back down, consumers can breathe a sigh of relief.

Excess supply. Nationwide, housing is at about 11 months on hand, which means it would take that long to sell every house on the market if no more listings were added.

Last, foreclosures are up. According to RealtyTrac, banks will seize about 60,000 properties a month through December 2008. By then, about 1 million U.S. homes, or a quarter of all homes that are for sale, may be bank-owned.

Flu is a virus that simply has to run its course. It doesn't respond to antibiotics, and housing won't respond to quick fixes either, but it will respond to the greatest healer of all -- time.

Commercial Leading indicator

2008-05-12T11:05:00.000-07:00

The latest index suggest reduced business opportunities for commercial real estate practitioners over the next six to nine months.

Jonah's thoughts: Lets keep an eye on this one.

Home Sales Index was lower by 1%

2008-05-08T12:09:00.000-07:00

As Blanche Evans says, in Realty Viewpoint:

Add to the toxic brew of today's market, the steady drumbeat of pundits that housing sales haven't bottomed yet, and its amazing that pending sales held up as well as they did.

Sales will most likely remain flat, says the NAR.

Afteshocks are expected

2008-05-02T12:09:00.000-07:00

Today’s bad news aftershock......for the first time the world’s largest home improvement store chain has closed a flagship store for performance reasons. The Home Depot says of the 15 stores that it plans to close within the next two months, 4 of the 15 stores are in the surrounding states of Indiana and Ohio, Home Depot also plans to close a store in Frankfort KY.

Today’s good news aftershock.... The Dow Jones industrial average rose nearly 190 points to finish above 13,000 for the first time since Jan 3. Banks, home builders, chip makers, and retailers surged.

The aftershocks are still coming. No new news there.....the good news, however, is they are aftershocks. We need to adjust to the settling of this market over the next 24-36 months.

Before You Buy a Foreclosed Home

2008-03-17T11:57:00.001-07:00

Your Money
Parade Magazine
March 16, 2008

With foreclosures hitting record highs, some people are looking for real estate at bargain prices. “It’s not unusual for buyers to save up to 20% with a foreclosed home.” says David Webb of foreclosure auction firm Hudson & Marshall. What should you know before you buy?

1) Unlike regular home purchases, says Webb, “many foreclosures are sold in as-is condition, with no inspections.” So the burden is on buyers to make sure they know what they’re bidding on – or be willing to take a risk.
2) Before making an offer, he adds, you also should check that there are no liens against the property or back taxes owed, which will add to the total cost.
3) Finally, since most foreclosure sales require quick closings, buyers may need to pay in cash or get immediate financing.

Jonah's Thoughts: Note the above things about buying a foreclsure

Foreclosures, Foreclosures, Foreclosures

2008-03-14T08:33:00.000-07:00

from the Lexington Herald Leader
Friday 3-14-08

The overall U.S. foreclosure rate last month was one filing for every 557 homes. February marked the 26th consecutive month with a national year-over-year increase in foreclosure-related filings.

Kentucky bucks national trend

Kentucky continued bucking the national trend in foreclosures in February, when the state rate plummeted 24.2 percent over the number in February 2007.

Kentucky’s total of 476 foreclosures in ferry also dropped by 16.78 percent from January, according to Realty-Trac.

The total of 476 new foreclosures was equal to one for every 3,919 households in the sate, which gave Kentucky a ranking of 45th among the sates down from 38th in January when the state had 572 new foreclosures.

Only Mississippi, South Dakota, North Dakota, West Virginia, and Vermont had lower ranking than Kentucky.

Jonah's thoughts
If you want 10 tips to avoiding foreclosure e-mail me jonah@jonahmitchell.com. 15 year fised rate will fall below 5% soon.

U.S. Foreclosure Starts Hit New Records

2008-03-13T06:23:00.000-07:00

Falling Home Prices Create Less Incentive to Make Payments
Inman News

Loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said today.

Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes -- and less incentive to keep up on their mortgage payments, said MBA Chief Economist Doug Duncan.

That's particularly the case in states such as California, Florida, Nevada and Arizona, where overbuilding created surplus inventories that will take some time to work through, Duncan said.

The rate of foreclosure starts in Florida more than tripled between the fourth quarter of 2006 and the fourth quarter of 2007, and more than doubled in California.

Nationwide, the rate of loans entering the foreclosure process hit a never-before-seen 0.83 percent during the fourth quarter, up from 0.54 percent a year ago and 0.78 percent in the third quarter.

That pushed the total percentage of loans in the foreclosure process, which stood at 1.19 percent at the end of 2006, to 2.04 percent in the fourth quarter 2007 -- also a new record.

The delinquency rate rose to 5.82 percent during the fourth quarter -- the highest the MBA has seen in its quarterly survey of lenders since 1985. The delinquency rate stood at 4.95 percent during the same quarter a year ago, and at 5.59 percent in the previous quarter.

"Our general outlook is as long as house prices are declining, we expect to see some continued increase in delinquencies and foreclosures," Duncan said. With the continued seizure of credit markets and tightened underwriting standards, "we don't expect to see the peak (in foreclosures) until mid- to late-2008."

If there's any good news in the latest numbers, it's that there's been little growth in the rate of foreclosure starts in Midwestern rust-belt states such as Michigan, Ohio and Indiana, where different factors are in play. Job losses and outmigration, rather than overbuilding, have contributed to the decline in demand in those states, Duncan said.

Duncan said the nationwide increase in foreclosure starts was due to increases in both prime and subprime loans, with adjustable-rate mortgages (ARMs) of both types accounting for 62 percent of foreclosure starts.

Since the fourth quarter of 2006, the foreclosure start rate for prime ARMs increased from 0.41 percent to 1.06 percent, while the rate for subprime ARMs increased from 2.7 percent to 5.29 percent.

Subprime ARMs represented just 7 percent of loans outstanding, but accounted for 42 percent of foreclosures starts during the fourth quarter. Prime ARMs represented 15 percent of outstanding loans, and 20 percent of the foreclosures started.

While millions of ARM borrowers still face interest-rate resets, Duncan said the impact of those payment adjustments will be less than feared because cuts in short-term interest rates made by the Federal Reserve have also brought down the six-month LIBOR rate, the index used for many subprime ARM loans, by 2.5 percent since last September.

Duncan said the MBA forecasts at least one more cut in the federal funds rate this month.

"The reduction in LIBOR will mean that the resets of those loans will bring them very close to current contract rates," Duncan said. The problem of payment shock "will be much less than thought, although it won't be ameliorated."

If rising delinquencies and foreclosures were once believed to be largely confined to subprime loans, those days are past. The MBA survey showed prime loans accounted for 38 percent of foreclosure starts, compared with 50 percent for subprime loans. Prime loans made up a much larger percentage of outstanding loans, however -- about eight in 10.

Top 10 Commercial Real Estate IT Issues for 2008

2008-03-13T06:21:00.001-07:00

Realcomm recently surveyed our 2008 CIO Advisors on a number of topics from server utilization to staff development and asked what they see as their top IT issues in the coming year. Today's Realcomm Advisory provides some insight as to what's on the minds of the real estate CIO and where IT can play a strategic role in addressing these issues .

In reviewing the CIO Advisor survey responses, there seemed to be an expectation of a general economic slowdown and the requisite drive to increase operational efficiency while providing a higher level of service. The good news is that there are significant opportunities to streamline business processes, further align with the business units, and help drive services that will reduce costs and add revenues to the bottom line.

Here are the "Top 10 IT Issues for Commercial Real Estate CIOs in 2008," (in no particular order):

Virtualization
Virtual machines, both server and desktop, offer a significant means to cut IT costs while "greening" IT operations. Issues pertaining to hardware, provisioning, software licensing, performance, security, and management offer the greatest challenges to the CIO.

Staffing
If you're an IT leader today, you know that locating qualified IT staff (especially management-capable leaders) is becoming extremely difficult. Not only hiring, but retaining and developing staff and well executed performance reviews are essential to today's IT shops.

CRM
New applications are coming to market for the basic contact management (deal workflow and lease pipeline hold promise), but there are still many questions to answer on how we can better manage the huge amount of information in this traditional process.

Vendor Viability
With companies being acquired at an increasingly frenzied pace, the question becomes, "Will the solution I select today still be supported a year from now, and how do you assess vendor viability from both a strategic as well as a financial viewpoint?"

Alignment
Aligning business unit objectives with IT priorities is more important than ever. Are your IT leaders embedded in the leadership teams for various business units? Also, are you maximizing the ROI of IT services by leveraging them across multiple business units?

Global Expansion
As more companies are finding investment opportunities outside the U.S., IT departments are faced with a number of new challenges - from local reporting regulations to differences in time zones and currencies, to name but a few.

Building Automation Strategies
Smart, green, and sustainable have made their way to C-suite conversations, and the enabling technologies are now falling firmly into the lap of the CIO. With the shortage of experienced consultants and integrators here in the U.S. and Canada, where does an IT professional start?

Business Intelligence
Let's face it, more than half the business intelligence initiatives either are never completed or fail to deliver on the features and benefits promised at the outset. Does "one-size-fits-all" apply to an enterprise? Do you "build" or look for an "out-of-the-box" solution? Is SharePoint part of the solution?

Disaster Recovery
If your company suffers a major loss of data, there's a 50% chance you'll close your doors within two years. Recovery Point Objective (RPO), Recovery Time Objective (RTO), business continuity planning, data backups, offsite data replication, SAN/NAS - how seriously has your organization looked at disaster recovery and business continuity planning, in general?

Document Management
Commercial real estate remains the most paper-intensive industry on the planet and, at the same time, offers the greatest potential for paperless workflows. Document and file versioning, indexing, and retention strategies are among the greatest challenges for IT today.

www.realcomm.com

NAR: Home Sales, Prices Expected to Drop this Year

2008-03-13T06:14:00.000-07:00

The National Association of Realtors expects the median price of U.S. resale homes to drop 1.2 percent this year, following a 1.4 percent decline in 2007, with sales of resale homes slipping for the third consecutive year.

The forecast report released today also anticipates a 31.1 percent drop in single-family housing starts, a 6.1 percent decline in new-home prices, a rise in housing affordability and a dip in consumer confidence this year compared to 2007.

The federal funds rate is expected to average 3 percent in 2008, compared with 5 percent in 2007, according to the NAR forecast.

Sales of resale homes are expected to fall to 5.38 million this year, compared with 5.65 million in 2007 and 6.48 million in 2006. The association expects a 4.2 percent rise in resale home sales in 2009 compared to 2008.

The aggregate resale home price is projected to fall to $216,300 this year and then increase 3.5 percent to $223,800 in 2009, with the median new-home price falling to $232,200 this year and rising 5.1 percent to $244,100 in 2009.

Single-family housing starts, which fell 14.6 percent in 2006 and 28.6 percent in 2007, are expected to drop another 31.1 percent to 721,000 units this year, and to fall 5.6 percent to 680,000 units in 2009.

New single-family home sales, which dropped 18.1 percent in 2006 and 26.4 percent in 2007, are expected to fall another 23.7 percent this year compared to 2007. New single-family home sales are expected to turn around in 2009, rising 7.2 percent.

The average mortgage rate for a 30-year fixed-rate loan is expected to be 5.8 percent this year, down from 6.3 percent in 2007, with the average rate for a one-year adjustable-rate loan falling from 5.5 percent in 2007 to 4.8 percent in 2008, according to the NAR forecast.

An index measuring pending sales of previously owned homes, also released today by NAR, was down 19.6 percent in January compared to the same month last year and remained flat compared to December 2007, the National Association of Realtors trade group reported today.

The Pending Home Sales Index is based on contracts signed in January, and a sale is listed as pending when the contract has been signed but the transaction has not yet closed. A sale is typically finalized within one to two months of a contract signing.

In January the index stood at 85.9 -- an index of 100 equals the average level of contract activity in 2001, which was the first year examined for the index and the first of five consecutive record years in sales of resale homes, the association reported. In January 2007 the index was 106.8.

Regionally, the index plunged 28 percent in the Northeast, 23.8 percent in the South, 13.3 percent in the Midwest and 12.7 percent in the West in January 2008 compared to January 2007.

NAR will release resale home-sales data for February on March 24, and the next Pending Home Sales Index and forecast report is scheduled for release on April 8.

The prognosis remains the same; we’re not out of the woods yet.

2008-02-26T08:01:00.000-08:00

Today it was reported that the nationwide sales of single-family homes and condominiums dropped to a seasonally adjusted annual rate of 4.89 million units. In November 2007 I posted that this was coming. See Post Here

The realignment is on target to reduce the record inventory, prices still have to fall. Joel Naroff, chief economist at Naroff Economic Advisors said "Eventually, sellers will end their denial and realize that if they want to unload their homes, they will have to cut prices even more." Lowes and Home Depot blame the weak housing market for a drop in fourth-quarter earnings. (Lowes 33 percent) Inventory has to reduce.

2008 is the year of Realistic Realignment. In 2009 we will begin to reap the benefits from this induced weight reduction program. (1) inventory will begin to reduce (2) prices will have realigned enough from the sellers emotional price to the new market price to encourage the buyers out of their nice warm caves of induced hibernation.

LBAR Stats

2008-02-13T08:20:00.000-08:00

Below is a link to download the latest Stats from Lexington-Bluegrass Association of Realtors. While you are there you can also download December 2007 stats, as well as, the year ending stats for 2007.

http://alpaha.googlepages.com/home

LBAR Stats

2008-02-04T06:46:00.000-08:00

Follow this link to see the YTD and 1 Year Stats from LBAR you can also get the monthly stats as weel by folloing the links.

http://alpaha.googlepages.com/morejonahmitchelldownloads

New home sales take record hit

2008-01-29T08:12:00.000-08:00

Decline 26.4% in '07; prices fell sharply in December

By Martin Crutsinger
ASSOCIATED PRESS

WASHINGTON --New home sales plunged in 2007 by the largest amount on record while home prices tumbled sharply in December.

Analysts forecast more trouble in 2008 as housing tries to emerge from its worst slump in more than two decades.

The Commerce Department reported Monday that sales of new homes dropped by 26.4 percent last year to 774,000. That marked the biggest decline on record, surpassing the old mark of 23.1 percent in 1980.

Lexington-area sales also down

Sales of new homes in the Lexington area also slumped in 2007, but not as badly as they did nationwide.

The Lexington-Bluegrass Association of Realtors said Monday that 1,982 new houses were sold in 14 counties including Fayette and those surrounding it. That number is a 22.6 percent decline from 2006, when 2,561 new homes were sold.

Jonah's thoughts: Our predictions are right on. New homes starts turned out as reported and existing homes have fallen below the 5 million sales mark. No one should be any longer looking through rose colored glasses. The two big questions are 1. predicting 2008 numbers. New home starts should level off after a few more big adjustments by the big (track builders) new home builders. The small office (pickup truck) home builders have already stopped building. 2. When does our hibernating buyer shake off this induced sleep? Spring `08 will bring the scouts out and there will be a little bit of relief. But Spring `09 is probably our first hope of returning to a whittled down normal market. There is certian to be a big bounce with the 2010 Alltech World FEI Games.

Rates Update

2008-01-21T11:44:00.000-08:00

Rates remain very strong to start out 08 as investors still worry that the economy is slowing. We start this week (January 14, 2008) at 5.375% on a 30 year and 5.0% on a 15 year.

Guidelines for approval have tightened but not much as the media would have you believe.

Sure sub prime is gone but there is still 100% financing available under several Fannie and Freddie programs and especially under the gov’t loan programs.

Jonah’s Thought: Rates are great? And are probably going to get a little better with Fed discount rates sure to come down. The Question! When are the buyers coming out of their induced hibernation? The body temperature of this pent up demand has to be rising... Remember we are still going to sell 5 million houses this year.

Permit report for Jessamine County

2008-01-19T06:52:00.000-08:00

This report is for new home starts in Jessamine County.

12/01/07 – 12/31/07 - 4 permits

12/01/06 – 12/31/06 - 7 permits

01/01/07 – 12/31/07 - 114 permits

01/01/06 – 12/31/06 - 145 permits

In the month of December we were down 42% and for the year we were down 21%.

Housing Starts

2008-01-18T06:18:00.001-08:00

From the Lexington Herald-Leader 1-17-08

Home builder confidence near record low

A reading of U.S. home builders’ outlook remained near a record low in January as gloom engulfed the housing industry. The National Association of Home Builders said Wednesday that its housing market index, which gauges builders’ perceptions of current conditions, interest from potential buyers and expectations for home sales over the next six months, came in at 19 in January – the second-lowest point on record. The group also revised December’s reading downward by one point to 18, the lowest since the index began in 1985.

Housing starts

Tighter lending conditions, expensive gasoline and tougher job market are helping to limit demand for homes. The supply of homes, meanwhile, is bloated. To compensate, homebuilders have cut back on construction. Economist predict a 4 percent drop in December housing starts, compared with November. Global Insight economist Patrick Newport is looking for housing starts to drop by another 20 percent before turning around later this year.

Jonah’s Thoughts: Although these numbers are extreme they are needed for the correction to happen.

Is your adjustable-rate mortgage (ARM) about to reset?

2008-01-16T11:09:00.001-08:00

Do you know the interest rate relief program is starting up as of Jan. 1, 2008? There are three qualifications for the relief program.

1) You must be current on your mortgage

2) You must have less than 3 percent equity in your property

3) You must have a loan that will have an interest rate reset starting Jan. 1, 2008

What you need to do is call the federal government’s tool-free mortgage crisis help line at 1-888-995-HOPE to see if you qualify for assistance. Or you can talk to a housing counselor at the Department of Housing and Urban Development to refinance your mortgage at a lower rate through the new FHA Secure plan. You can go online to www.hud.gove/news/fhasecure.cfm to get contact information or call 1-800-CALL FHA.

Stats from LBAR

2008-01-14T05:20:00.001-08:00

December 2007 sales were down 18% compared to December 2006. 615 homes for a total of $103,356,445 were reported to MLS compared to 754 for $130,075,745 in December 2006. HOWEVER, sales for the year 2007 were only down 8% year to date compared to 2006. This is lower than all regions reported throughout the USA.

Excellent Summary Article: New-Home Sales Plummet

2007-12-31T09:24:00.000-08:00

Article from the Lexington Herald-Leader Business Section

By J.W. Elphinstone
ASSOCIATED PRESS

NEW YORK --
The upside to a housing slump is cheaper homes. But many prospective buyers don't see bargains yet, especially as stricter lending standards qualify only the cream of the credit crop.

The decrease in housing prices has only begun to eat into the nearly 13 years of quarterly price gains.

Bernard Baumohl, managing director of the Economic Outlook Group based in Princeton, N.J. said "Few are looking to upgrade until this whole thing shakes out."

Baumohi also said "There's certainly no incentive to buy if in a month or two from now that same house will be cheaper,"

Only 42 percent of all homes sold in the third quarter were priced low enough to be affordable for families earning the national median income of $59,000.

Moody's Economy.com and Banc of America Securities predict prices will tumble 15 percent from peak to trough, which they forecast won't occur until early 2009. Inventories of unsold homes are at the highest levels.

Banc of America Securities estimates that $361 billion in loans to risky borrowers are scheduled to reset next year. Potential home buyers are holding back over concerns about the economy and their financial security. Consumer confidence

Jonah’s Thoughts: Call it lack of incentive, hunkering down, or just being on strike. The only incentive I know that can entice these buyers out of their warm, safe, and familiar cave is a deal if not a steal. Somebody has to make up the gap between affordability and fear and in today’s market it is going to be the seller.

Housing Starts and Builder Confidence

2007-12-19T17:00:00.000-08:00

from Inman News

The rate of single-family housing starts and building permits in November sank to the lowest level since 1991, the U.S. Census Bureau and the Department of Housing and Urban Development announced today.

The seasonally adjusted annual rate of building-permit authorizations for new single-family housing units fell about 33.7 percent in November compared to the same month last year. The monthly rate of 764,000 in November was the lowest since June 1991, when it stood at 763,000.

This rate is a projection of a monthly total over a 12-month period, adjusted to account for seasonal fluctuations in construction activity.

Single-family housing starts dropped to a seasonally adjusted annual rate of 829,000 in November, down about 34.9 percent compared to November 2006. This was the lowest rate since April 1991, when it stood at 819,000.

The rate of total building-permit authorizations -- including single-family homes and multi-unit structures -- dropped 24.6 percent, from 1.53 million in November 2006 to 1.15 million in November 2007. This November 2007 rate was the lowest since the June 1993 rate of 1.13 million.

And the rate of total housing starts fell to 1.19 million in November, down 24.2 percent from the November 2006 rate. This rate was comparable to the September 2007 rate of 1.18 million -- the lowest rate since the July 1992 rate of 1.14 million total starts.

The rate of total housing completions dropped 28.7 percent, from 1.89 million in November 2006 to 1.34 million in November 2007 -- the lowest level since January 1998.

The agencies noted that month-to-month changes in seasonally adjusted statistics can show irregular movements, and it can take three months to establish an underlying trend for building permit authorizations, four months for total starts and six months for total completions.

Statistics are estimated from sample surveys and are subject to sampling variability and non sampling error including bias and variance from response, non reporting and under coverage.

On average, the preliminary seasonally adjusted estimates of total building permits, housing starts and housing completions are revised about 1 percent, according to the report.

Builder confidence remained at a record-low level for the third straight month in December, according to the results of a monthly survey by the National Association of Home Builders in conjunction with Wells Fargo.

The NAHB/Wells Fargo Housing Market Index stood at 19 in December -- a score below 50 indicates most builders view current and future market conditions as negative, while a score above 50 indicates most builders have a positive outlook. The index score during the past three months is the lowest in the 20-year history of the index.

Jonah's thoughts: Jessamine County has seen in the past 4 months a decline of 44% in new home starts. If possible the only positive note in the sad song is the inventory is decreasing. A decrease in new-start and existing inventory reduces the excessive overhang in our market.

NAR Looks at the bright side of slowdown

2007-12-14T10:55:00.000-08:00

from Real Estate Broker's Insider

In this difficult market, the National Association of Realtors is accentuating the positive. NAR Chief Economist Lawrence Yun points out that the 5.7 million home sales projected for 2007 will make it the fifth-best year ever.

A naysayer could counter that 5.7 million sales isn’t much help for an industry that had geared itself up to handle 2005’s 7.1 million sales.

“The extended real estates boom from 2001 to 2005 created unrealistic expectations that housing is a short-term, high yield investment,” Yun says.

While the National Association of Realtors is accenting the positive, Zillow.com, the S&P/Case-Shiller index and the Office of Federal Housing Enterprise Oversight take a more pessimistic view.

Zillow says national home prices fell 5.7 percent from the third quarter of 2006 to the third quarter of 2007.

What’s worse, Zillow says 15.6 percent of homeowners nationwide who bought in the past year and 17.5 percent of those who bought two years ago have current home values that are less than the original mortgage amount.

Of those who bought five years ago, only 1.8 percent are upside down.
Meanwhile, chief executives of two publicly traded retailers recently blamed the housing slowdown for their falling third-quarter profits.

Earnings at Lowe’s fell 10 percent from a year earlier. The story is similar at Office Depot. Its profits fell 9 percent.

Jonah’s Thoughts: The 5.7 million sales will be adjusted down. It is better to tell the customer they have a nasty cold rather than wait and suffer the flu epidemic. Sell it now and suffer a little is better than holding on to your emotional price and taking a real nasty hit a year from now.

Lexington Association of Realtors Statistics

2007-12-12T09:37:00.000-08:00

The monthly statistics of home sales for the Lexington Bluegrass Association of Realtors is on this web page http://alpaha.googlepages.com/home. Click the link that says November Stats.

New-Home Sales

2007-11-29T10:13:00.001-08:00

The Census Bureau reports how many new homes were sold in October and the average price. Economists believe new homes were sold at an annual rate of 753,000 units last month, a 21 percent decline from October 2006. On Wednesday, the National Association of Realtors reported sales of existing homes slipped more than 20 percent last month versus October last year.

Jonah’s Thoughts:
The bad news: we are not going to sell over 7 million homes this year.
The good news: we going to sell just under 5 million homes.

Existing-Home Sales Drop Further

2007-11-29T10:05:00.000-08:00

Sales of existing homes fell for the eight consecutive months in October, with median prices falling a record amount. The National Association of Realtors reported that sales of existing single-family homes and condominiums dropped 1.2 percent last month to a seasonally adjusted annual rate of 4.97 million units. The median sale price declined to $207,800 last month, a drop of 5.1 percent from a year earlier, the biggest year-over-year price decline on record. Analysts blamed the credit crunch that hit in August.

Jonah’s Thoughts:
The bad news: the decline is predictable and not over yet.

The good news: the overloaded inventory is being reduced, housing starts continue to be restricted and price reductions though hard on the home seller, are all good news as we look for the light at the end of the proverbial tunnel.

Jobless Rates Listed as up in 94 counties

2007-11-27T10:17:00.000-08:00

A state agency has reported that unemployment rates increased in 94 Kentucky counties between October 2006 and October 2007. The Kentucky Office of Employment and Training reported unemployment rates dropped in 18 counties and remained the same in eight counties. The highest jobless rate was 10.2 percent in Jackson County. Fayette and Warren counties recorded the lowest jobless rates at 3.7 percent each. In Kentucky, unemployment statistics are based in estimates and are complied to measure trends rather than actually to count people working. They do not include unemployed Kentuckians who have not looked for employment within the past four weeks.

Jonah’s Thoughts:
Fayette, Scott, Madison, and Jessamine Counties are all seeing new growth.

Lexington Herald-Leader, November 27, 2007

Housing crisis cuts into city coffers

2007-11-27T10:16:00.000-08:00

U.S. CONFERENCE OF MAYORS' REPORT SOUNDS ALARM

WASHINGTON --
The deepening housing crisis will cut economic growth by more than 25 percent in 143 U.S. metropolitan areas next year and by more than a third in 65 of those, according to a new forecast for the U.S. Conference of Mayors.
The report, to be released today and prepared by financial forecaster Global Insight, warns of cascading problems caused by falling home prices, an expected 1.4 million foreclosures and the pending reset of millions of adjustable-rate mortgages.
The cities with the biggest-percentage projected losses to their gross metropolitan products are Myrtle Beach, S.C., the California cities of Merced, Madera and Napa, and Sarasota-Bradenton, Fla.

Jonah’s Thoughts:
Don’t look for our property taxes to be lowered even though property value is sliding because of lower sales prices.

By Kevin G. Hall, MCCLATCHY NEWSPAPERS

Single-Family home building at 16-year low

2007-11-27T06:48:00.001-08:00

from Lexington Herald-Leader 11/21/07

The Commerce Department reported yesterday that total housing construction rose 3 percent in October to a seasonally adjusted rate of 1.229 million units. But all the strength occurred in a hefty rebound in apartment construction, which is extremely volatile. The bigger single-family sector actually fell 7.3 percent to an annual rate of 884,000 units, the slowest pace since October 1991. Applications for building permits fell for a fifth straight month. The rebound in overall construction in October reflected gains in all regions of the country except the South, where building activity fell 4.6 percent. Construction rose 21.1 percent in the Midwest, 8.5 percent in the Northeast and 5.8 percent in the West.

It's not as if we got dumb all of a sudden

2007-11-19T06:10:00.000-08:00

By Sue Kirchhoff, USA TODAY

WASHINGTON — More signs of a slowdown emerged Thursday, with a major retailer announcing lower-than-expected sales and the housing slump deepening. At the same time, spiking gasoline prices pushed consumer inflation higher in October.
The Federal Reserve has predicted that the economy's growth will slow, but not freeze up, through the end of the year and into 2008. Business and consumers face tighter credit markets, rising energy costs and dropping home sales and prices.

J.C. Penney CEO Myron Ullman III told investors during a conference call the slowdown reflected broader economic factors. One area of decline was home furnishings, tied to the slowdown in housing.
"It's hard to sell window coverings to homes that aren't being built," Ullman said. "It's not as if we got dumb all of a sudden."

House bill targets lenders

2007-11-19T06:05:00.000-08:00

from USA Today
Friday, November 16, 2007

The U.S. House on Thursday voted to crack down on mortgage lenders by enacting federal licensing, making them responsible for knowing whether borrowers can repay loans and fining them for steering people to higher-priced subprime loans when other financing is available. The bill now goes to the Senate, where a similar bill has been stalled.

How low can they go? Asks Fortune Magazine’s Shawn Tully

2007-11-12T06:47:00.000-08:00

Tully’s’ talking points

“Now that the gilded forecasts have proven spectacularly wrong, homeowners don’t know what to think about the real estate’s future. The dizzying rise sure didn’t make sense. And the sudden slump doesn’t seem any more logical.”

“According to our calculations, prices in most markets will fall by double digits over the next five years.”

“Prices have already started on the painful path back to rational levels.”

“Between 2000 and early 2005 average mortgage rates, adjusted for inflation, declined from 5.5% to less than 4% But the tailwind from low rates is now over. The cheap and easy money is gone, but the inflated prices it created are still here. No other factor was as important in driving the price-to-rent ratio to its current, unsustainable heights.”

Toll Brothers (Robert Toll), three reasons for the enormous overhang of unsold, unoccupied homes are…
1) Vacant homes in the hands of builders.
2) Older homes that speculators are trying to dump
3) Foreclosed properties that banks are desperate to shed.

Jonah’s Thoughts:
The big question is… have our buyers dissipated or just gone into hiding.
The Lexington area is only expected to fall by single digits.
Low interest rates are here to stay for the foreseeable future.

Global Credit Crunch

2007-11-08T10:41:00.000-08:00

How defaults on risky mortgages wreaked havoc around the world.

From 2001 through mid-2006, single-family home prices surged 84%, according to the S&P/Case Shiller U.S. National Home Price Index. Lenders granted mortgagees with risky structures to poor-credit or “subprime” borrowers, thinking rising home values would offset the risks. Homebuilders built new homes at a record rate. Home loans were resold and packaged into mortgage-backed securities, which were brought by hedge funds and other investors. This generated capital for lenders to make more loans. Then, the housing boom ended.

Michael J. Martinez, Kristen Girard

Jonah's Thoughts:
“This is a great summary if what happened to our credit markets.”

Residential Building Permit Trend Report

2007-11-05T06:03:00.000-08:00

(Click on the image to see the data more clearly.)

Mortgage Banker's Report

2007-11-05T05:53:00.000-08:00

Bankers expect 18% decline in mortgage originations in '08.

"Home sales, prices not expected to rebound until late next year," says MBA Chief Economist Doug Duncan

Duncan expects the pace of home sales to remain below 2007 levels until late next year, and said prices could continue to decline beyond that before flattening out in 2009. After adjusting for inflation, Duncan said nine months before investors in such securities regain their confidence , he said.

Is buying a home today a good investment?

2007-11-05T05:43:00.000-08:00

Jonah's Thought, "This is one good honest article about homeownership in today's market."

By Dian Hymer Inman News
Answer depends on whether goals are short- or long-term

Up until the recent slowdown, homeowners in many parts of the country saw the value of their homes rise rapidly. Home prices, in many areas, seemed to move in just one direction: up.

A combination of record-low interest rates and rapid price appreciation turned many homeowners into serial refinancers. When interest rates dropped, one mortgage was exchanged for another, sometimes several times within one year.

As home values rose, cash-out refinances allowed homeowners to pull equity out of their homes to remodel, send children to college, take vacations and buy new cars. It was good for the economy while wiping out billions of dollars of homeowner equity.

Tapping into home equity seemed like a great idea until the housing market softened. Now there are millions of homeowners around the country who can't sell their home for enough to pay off the loans secured against the property.

HOUSE HUNTING TIP: Buying a home is still a good investment if you can afford it, if you are ready to put down roots in a community, and if you want to invest in your personal happiness. Profit potential shouldn't be your only reason for buying a home, even though in most cases your home will appreciate in value if you maintain it and if you own it long enough.

The housing market, like any economic market, is cyclical. There are periods of robust activity followed by periods of sluggishness. Prices can go down as well as up. Now that the market has softened in most areas, it's time to look at owning your home as a way to gain control over your personal domain -- not as a source of quick cash.

In the areas that were previously hot, we are unlikely to see such significant home-price appreciation in the near future. So, if you're considering buying in one of these areas, think in terms of buying for the long term. If your future is uncertain, it might make more sense to rent.

Some niche markets in South Carolina, Idaho, Washington, Texas and Utah are experiencing double-digit home-price appreciation while the country on a whole is suffering a slowdown. If you are buying in such a market, take a lesson from the numerous homeowners who bought using risky mortgages and extinguished their equity through successive refinances.

Pay careful attention to how you finance your home purchase. The cheapest loan possible may be not be the best loan if it requires you to refinance or sell within the next few years. If the market slows and you are no longer earning appreciation on your home, refinancing could be a problem. If the market is soft then, you could have difficulty selling.

One of the best investment strategies is to buy when the market is soft, not when it's racing forward perhaps toward a peak. It's also a time when you'll find the least competition from other buyers, most of whom will wait to buy until the market has already turned.

Don't forget to consider the tax advantages of home ownership when considering whether home ownership makes sense for you. Generally, property taxes and interest paid on mortgages up to $1 million on your primary residence can be deducted for income-tax purposes. Restrictions apply, so consult your tax adviser before making a move.

The tax advantage of home ownership should not be your sole reason for buying. Owning your own home is a big commitment financially as well as in terms of the time and energy you will spend maintaining and improving your property.

THE CLOSING: In some countries, such as Australia, there is no tax break for owning a home. Nevertheless, people still buy houses there.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

NAR's rosey outlook

2007-11-02T13:11:00.000-07:00

Dr. Lawrence Yun, NAR Senior Economist spoke today to the Lexington Bluegrass Association of Realtors.

Jonah’s thoughts “NAR still holds to the philosophy that; because of the limited inflation, good job market numbers and mid-America growth numbers, we should expect the market to up-click starting this spring.

I, however, believe that the turn around is further off, not starting till November 2008.”

See Dr. Yun’s attached power point at this website http://alpaha.googlepages.com/home.

Mortgage Rates Drop across the Board

2007-11-02T10:04:00.000-07:00

Rates on 30-year mortgages fell to the lowest level in five months this week. Freddie Mac, the mortgage company, reported yesterday that 30-year, fixed-rate mortgages dipped to 6.26 percent this week.

Jonah’s Thoughts:
“Four things have to decrese and in some cases plunge: (1) Interest Rates, (2) Current Housing Inventory, (3) New Housing Starts, (4) Home Prices. Interest rates and new housing starts have begun to fall.”

Foreclosures up 30% in U.S., 3.5% in Kentucky

2007-11-02T09:56:00.000-07:00

By Jim Jordan
Lexington Herald Leader

Kentucky foreclosures remain well below the national average. The state was ranked 36th by RealtyTrac for the third quarter.

Jonah’s Thoughts:
“Kentucky consistently reflects the national real estate numbers and outlook, but on a less severe downturn.”

To read the whole article:
http://www.kentucky.com/101/story/219352.html

HOUSING ECONOMISTS EXPECT MARKET TURNAROUND TO BEGIN IN 2008

2007-11-02T09:41:00.000-07:00

Inman News

October 26, 2007 - Though there appears to be no let-up to the current housing downswing, economists participating in the National Association of Home Builders Fall Construction Forecast Conference on Oct. 24 said they expect the industry to bottom out and to start turning around in 2008.

Jonah's Thoughts:
"I think the trough/bottom will be November 4, 2008. Then the upturn will be gradual."

To read the whole article:
http://www.nahb.org/news_details.aspx?sectionID=148&newsID=5568

COUNTRYWIDE TO REFINANCE, MODIFY ARMS

2007-10-30T13:25:00.001-07:00

From the Lexington Herald Leader 10-24-07

Countrywide Financial Corp., the nation’s largest mortgage lender, said yesterday it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans whose interest rate is set to adjust by the end of 2008. Countrywide said it would reach out to discus options with borrowers who are current on their loans but are facing an imminent rate reset. Countrywide said it would refinance about $10 billion in loans and modify and additional $4 billion. It also plans to contact borrowers of some $2.2 billion who are late on their loans and having trouble paying because of a recent rate reset.

Existing Home Sales

2007-10-26T07:12:00.000-07:00

From the Lexington Herald Leader 10-24-07

In September, sales of existing homes are expected to have declined for a seventh straight month. If sales come in as expected, it would mark a 22 percent decline since March and, overall, a 29 percent drop from the June 2005 peak. In August, the National Association of Realtors estimated there was a 10-month backlog of unsold homes. That number is expected to rise again. The Realtors say home prices may have to decline another 10 percent before buyers reenter the market.

National Home Builders "Lookout" Outlook

2007-10-24T08:01:00.000-07:00

NAHB forecast: Florida will see steepest drop in starts
Nationwide starts expected to drop 24.8% this year
Wednesday, October 24, 2007Inman News

A forecast report released Tuesday by the National Association of Home Builders projects that the state of Florida and metro areas within the state will experience the steepest declines in housing starts this year compared to last year.

Nationwide, total housing starts are expected to drop 24.8 percent this year compared to last year and fall 11.9 percent year-over-year in 2008, while rising 12.5 percent year-over-year in 2009.
Housing starts in Florida are projected to fall from 198,900 in 2006 to 103,300 this year, a 48.1 percent drop, the builders group reported.

And Florida is home to nine of 10 U.S. metro areas with the sharpest projected drop in housing starts from 2006 to 2007.

The Sarasota-Bradenton-Venice, Fla., metro area topped that list, with a projected 67.5 percent decline this year compared to 2006. Next on the list was the Cape Coral-Fort Myers, Fla., metro area, with a 61.4 percent projected drop.

The other metro areas on the top 10 list are expected to see a 50 percent or greater slide in housing starts from 2006 to 2007.

The Detroit-Warren-Livonia, Mich., metro area is the only non-Florida area in the top 10 for housing market declines, with a projected 50.5 percent drop.

Housing starts are expected to fall 39.4 percent in Nevada, 38.5 percent in Alaska, 36.6 percent in Minnesota, 31.9 percent in Illinois, 28.7 percent in Wisconsin, 27.8 percent in California and Missouri, and 25.8 percent in Ohio this year compared to last year.

Only one other U.S. metro area tracked in the NAHB report, the Louisville, Ky., metro area, is expected to experience a gain in housing starts this year. That market area is projected to rise 3.7 percent, from 5,400 starts in 2006 to 5,600 starts this year.

Washington, D.C., is expected to see a 72.2 percent decline in starts in 2009 compared to 2006, after projected year-over-year declines of 22.2 percent this year, 50 percent in 2008 and 28.6 percent in 2009.

NAHB stated in a forecast overview that all housing markets "will suffer from tighter lending standards but areas of the country that have high concentrations of subprime (adjustable rate mortgages) will suffer a second hit because these loans have exhibited much higher default rates, particularly the most recent vintages. Defaults and foreclosures in these markets could bring significant numbers of housing units back onto the market exacerbating the problem of already high unsold inventories."

Also, high concentrations of subprime ARMs, coupled with economic weakness in some parts of the Midwest, "will slow recovery, particularly in certain markets in Michigan, Ohio and Indiana," the overview states.

"Although there was some weakening in the most recent permit numbers, many of the stronger markets in the country are at or above pre-boom levels of production. These markets include MSAs in the Southeast, Texas, Pacific Northwest, Mountain states, and the Dakotas, where subprime ARM exposure and speculative activity have been limited."

Home Buyers Get Cold Feet

2007-10-23T12:27:00.000-07:00

By: Michael J. Martinez, Ji Qi + AP

Just when it seems like it can’t get worse for homebuilders, the sector disappoints again. Last week, D.R. Horton, the second largest homebuilder behind Lennar, said orders for new homes fell 39 percent in its fourth quarter. What’s more, its order cancellation rate hit 48 percent, from 38 percent the prior quarter. Other homebuilders also saw high cancellations, adding to the backlog of unsold homes and depressing prices.
Prior to this summer, many analysts thought the housing sector would right itself by the first half of 2008. But that was before credit market troubles intensified. “Private builders and sales-people at many subdivisions we spoke with said sales volume dropped significantly in August and cancellations shot up,” says James Wilson, housing analyst with JMP Securities, who rates homebuilders, “market perform.”
Major homebuilders’ costs are low because they’ve cut back on building, but it could take two to three years to sell their inventory. “There’s probably another 20 percent downturn in home building left to go,” says Banc of America Securities analyst Daniel Oppenhein. “Things will worsen through the end of the year, but after that, it’s going to largely depend on availability of the mortgages,” says Oppenhein, who rates major home builders “neutral.”

Sources: Thompson Financial; the companies

Article in the Lexington Herald Leader, Tuesday, October 23, 2007 on B7

Are we there yet?

2007-10-22T13:10:00.000-07:00

Recession Chatter gets louder.

An Article from Fortune Magazine Oct. 15, 2007

Not, surprisingly, the R-word has dominated talk among bankers for weeks. “We’re very close to stall speed in the economy,” says Paul Kasriel, director of economic research at Northern Trust.

Of 50-plus economist surveyed by research firm Blue Chip Economic Indicators, not one is predicting a recession. They still expect GDP to grow 2.6% next year. But the broader definition, one put out by the Nation Bureau of Economic Research, is simply a “significant decline in economic activity, spread across the economy, lasting more than a few months.”

Of course, the biggest driver has been the downturn in the real estate market. After 15 years of rising home prices, a cooldown was expected. But the sharp price drops this summer showed that the downturn is deeper and broader than previously thought. In July home prices fell 4.5% from a year earlier, according to the S&P/Case-Shiller home price index. Since the index began in 1987 the only worse decline was in 1991. “We are only just beginning to see the spill over from housing,” says Kasriel.

What home owners need to be thinking

2007-10-19T08:23:00.000-07:00

I read this aritcle in the October 2007 issue of Fortune magazine. It is a Q&A with Alan Greenspan.

Q: What should the average American who owns a home be thinking right now? Should he/she be scared?

A: Well, there is no question that there is an overhang of inventories, especially newly constructed, unoccupied single-family homes. I judge there are about 200,000 units that are excess. And at this rate we’re going now, we’re running off a very small number of these inventories a month. These units are going to overhang the structure and move prices inexorable lower. So I think we’re going through a period that is not over yet, and it’s important that we bring this to an end sooner rather than later, because it has a corrosive effect on the economy.

Lexington Bluegrass Association of Realtors Statistics

2007-10-16T06:15:00.000-07:00

The monthly statistics of home sales for the Lexington Bluegrass Association of Realtors is no longer on this web page http://alpaha.googlepages.com/home. E-mail me and I will send you a link that says September Stats.