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Regulators ready to cut Freddie Mac more slack
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Federal regulators say they'll give Freddie Mac more room to purchase and guarantee mortgages if the company follows through on a plan to raise billions to counter its losses.
Freddie Mac narrowed its first-quarter net loss to $151 million -- down from $2.5 billion in the fourth quarter of 2007 -- but company officials said they still need to raise $5.5 billion in new capital.
Freddie Mac was able to trim losses in part because of a change in accounting rules that allowed the company to stop reporting losses on certain credit guarantees that put a $1.3 billion dent in the bottom line during the fourth quarter.
The company saw credit-related expenses -- including provisions for credit losses and real estate-owned operations expenses -- rise sharply during the first quarter, to $1.4 billion. That compares with $912 million in the fourth quarter.
Charge-offs and real estate-owned operations expenses hit $528 million, up from $236 million in the fourth quarter.
Credit losses rose from 5.4 basis points of the total mortgage portfolio in the fourth quarter to 11.6 basis points. Freddie Mac officials now say they expect total credit losses for 2008 will rise to 16 basis points, up from a previous estimate of 12 basis points.
To maintain capital levels required by regulators, Freddie Mac plans to issue $2.75 billion in common stock and $2.75 billion in nonconvertible preferred securities.
"It's important to note that we began the year with a larger capital cushion compared to a year earlier, and during the quarter we put that capital to work, providing critically needed liquidity to the market and delivering attractive returns on equity for our business," said Buddy Piszel, chief financial officer, in a statement. "Our plan is to raise new capital that will not only enable us to continue to serve our mission and meet the housing market's needs in this time of stress, but also to deploy that capital in a way that enhances business flexibility and strengthens our capital position."
Federal regulators announced Wednesday that after the company raises the additional capital, they will reduce mandatory capital surpluses from 20 percent to 15 percent.
On March 19, the Office of Federal Housing Enterprise Oversight gave Freddie Mac and sister company Fannie Mae additional leeway to buy up to $200 billion in mortgages and mortgage-backed securities by relaxing tougher capital requirements put in place in 2004, in the wake of management and accounting scandals (see story).
OFHEO Director James Lockhart said Wednesday that Freddie Mac "continues to make progress in remediating its past problems including eliminating all material weaknesses" and that an additional reduction of capital surplus requirements to 10 percent is anticipated in September.
Fannie and Freddie together purchased or guaranteed three out of four U.S. mortgages during the fourth quarter of 2007, and also racked up $6 billion in losses.
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Nightly real estate rates continue climb
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Long-term mortgage interest rates were up again Wednesday, and the benchmark 10-year Treasury bond yield slipped to 3.91 percent.
The 30-year fixed-rate average rose to 5.86 percent, and the 15-year fixed rate gained to 5.46 percent. Meanwhile, the 1-year adjustable rate jumped to 5.92 percent.
The 30-year Treasury bond yield dipped to 4.61 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average rose 66.2 points, or 0.52 percent, finishing at 12,898.38. The Nasdaq gained 1.58 points, or 0.06 percent, closing at 2,496.7.
Stock figures are current as of 7:30 p.m. Eastern Standard Time.
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Nightly real estate rates up again
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Long-term mortgage interest rates continued higher Tuesday, and the benchmark 10-year Treasury bond yield inched up to 3.92 percent.
The 30-year fixed-rate average rose to 5.82 percent, and the 15-year fixed rate gained to 5.42 percent. Meanwhile, the 1-year adjustable rate held at 5.83 percent.
The 30-year Treasury bond yield increased to 4.64 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average lost 44.13 points, or 0.34 percent, finishing at 12,832.18. The Nasdaq gained 6.63 points, or 0.27 percent, closing at 2,495.12.
Stock figures are current as of 7:30 p.m. Eastern Standard Time.
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Foreclosure filings increase in April
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Foreclosure-related filings rose 4 percent from March to April and 65 percent from a year ago, with nearly a quarter of a million properties nationwide subject to a default notice, auction-sale notice or bank repossession, data aggregator RealtyTrac reported.
RealtyTrac estimates that about 2 percent of households nationwide are in some stage of the foreclosure process, with parts of California, Florida, Nevada and Arizona among the hardest hit.
Of the 10 cities with the highest rate of foreclosure-related filings, nine were in California and Florida.
In California, Merced led the nation in foreclosure-related filings with one per 66 households. Stockton, Modesto, Riverside, Vallejo-Fairfield and Bakersfield also made the top 10 list.
In Florida, three communities -- Cape Coral-Fort Myers, Port Lucie-Fort Pierce and Fort Lauderdale -- had foreclosure rates that placed them in the top 10 among 230 metropolitan areas where RealtyTrac collects data.
Las Vegas cracked the top 10 list at number seven, with one in 116 homes subject to a foreclosure-related filing in April, RealtyTrac said.
Although Nevada saw foreclosure activity fall 5 percent from March, the state continued to have the highest rate of foreclosure-related filings in the nation -- one per 146 homes.
California followed with one filing per 204 households, while a 26 percent month-over-month increase in filings bumped Arizona into third place with one filing per 224 households.
Florida, with one filing per 242 households, trailed in fourth place, while Colorado had the fifth-highest rate with one filing per 349 households.
Nationwide, foreclosure filings were up 4.4 percent from March and 64.7 percent from a year ago, to 243,353 -- one foreclosure-related filing per 519 homes.
Not all filings result in foreclosure, because in some cases borrowers are able to work out loan modifications or short sales with lenders.
Of the foreclosure filings documented by RealtyTrac in April, 46 percent were notices of default or lis pendens (warnings of a pending legal claim on a property).
Another 32 percent were notices of trustee or foreclosure sales, while the remaining 22 percent represented "real estate-owned" or REO properties foreclosed on and repossessed by a bank.
If more than one foreclosure document is filed against a property in a given month, only the most recent filing is counted in the report.
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Refinancings rise amid lower rates
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Home loan application volume gained 2.9 percent last week as interest rates continued to fall, the Mortgage Bankers Association reported today.
Refinancings were up a seasonally adjusted 6.5 percent from the end of April, but that gain was offset by a 0.7 percent decrease in the index for purchase loans. As a result, the refi share of loan applications edged up from 47.1 percent to 48.7 percent and the adjustable-rate mortgage (ARM) share grew from 6.8 percent to 8.3 percent.
Interest rates across all loan types dipped for the second straight week, MBA reported, with average rates on 30-year fixed-rate mortgages sinking from 5.91 percent to 5.82 percent, rates on 15-year fixed loans slipping from 5.49 percent to 5.38 percent, and rates on one-year ARMs falling from 6.77 percent to 6.6 percent.
The points (loan fees expressed as a percent of the loan amount) that borrowers paid to attain these rates were mostly higher last week. On 30-year loans, points rose from 1.12 to 1.23; on 15-year loans they gained from 1.07 to 1.09; and they fell from 1.35 to 1.31 on one-year ARMs.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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Trulia launches vertical ad network
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Real estate search and marketing site Trulia.com has launched a real estate ad network to allow real estate brokers, lenders and other advertisers to target home buyers and sellers on multiple real estate niche sites with a single point of contact for billing and reporting.
The Trulia Ad Network makes it simple for advertisers to achieve targeted reach across a large number of relevant Web sites, while helping publishers capitalize on the growing movement of real estate ad dollars online, said Trulia Chief Executive Officer Pete Flint.
Advertisers can use Trulia Ad Network to target audiences by city and ZIP code at partner sites that include Oodle, Homes & Land and The Savvy Source.
Trulia says that advertising partners will have access to 10 million monthly unique visitors across the company's network of targeted real estate sites. The company says Trulia.com attracts 4.5 million unique visitors a month, and that 72 percent plan to buy a home in the next 12 months.
Trulia's existing publisher network includes dozens sites including Kiplinger, Parade magazine, Village Voice Media and St. Petersburg Times.
Publishers who offer content focused on real estate and "related life events" can earn ad revenue from real estate advertisers, monetizing local content with advanced geo targeting.
Trulia.com's existing advertisers include Wachovia, Lennar Homes, The Carrier Corp., DirectBuy, Prudential Real Estate, Windermere Real Estate and ZipRealty.
Leslie Tyler, vice president of marketing for ZipRealty, said the Trulia Ad Network will make it easier to reach buyers online.
"Rather than making dozens of individual buys, or settling for more generic sites and networks, we expect to gain visibility on all the best niche sites on the Web quickly and cost-effectively through a single point of contact," Tyler said in a press release.
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REA Group increases stake in Italian portal
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The REA Group, a global online real estate advertising company based in Melbourne, Australia, has acquired an additional 10 percent of Italian real estate site casa.it for $2.44 million (1.5 million euros) from its founder, Antonio Fregnan.
This increases the REA Group's stake in Italy's number one real estate portal to 69.4 percent. The acquisition signals the REA Group's continued belief in the Italian market and its long-term importance.
The remaining 30.6 percent of casa.it is owned by SKY Italia.
"Since we bought the controlling stake in casa.it in February 2007, the business has performed very well and continues to lead all other real estate portals in the country in terms of revenue, paying agents and unique visitors," Simon Baker, CEO and managing director of the REA Group, said.
"While casa.it is still in its early stages of growth, especially when compared with realestate.com.au, we are excited about its long-term prospects in the Italian market."
According to REA Group, more than 8,200 agents were using casa.it in April 2008. The business generated $2.3 million in revenue in the half year ending December 2007, its first complete half year on the REA Group's books.
The site reached 827,000 unique browsers in April 2008, up 15 percent from February 2008, REA Group reported.
The REA Group has operations in 12 countries, publishes 18 Web sites and eight print publications.
In April, the company expanded its footprint in the United Kingdom with the acquisition of Hotproperty.co.uk. (See Inman News story.)
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Keller Williams sending listings to Zillow
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Keller Williams Realty Inc. will automatically feed the listings of the company's 73,000 associates to Zillow.com on a daily basis, the companies announced.
Keller Williams is the latest member of the Zillow Listings Feed Program, launched in November to allow real estate brokerages to post for-sale listings directly to the site in a bulk feed. The listings include property descriptions, photos and contact information for listing agents, with Zillow providing links back to the broker.
Cary Sylvester, director of technology with the Keller Williams Realty International Service Center, said all leads generated by agents' listings on Zillow will go directly to the listing agent at no charge. Zillow also allows individual agents to create a free profile page with photos, contact information and more details about the agent, linked directly from each listing.
Offering automated property valuations, or "Zestimates," and other information about properties and housing markets, Zillow claims more than 5 million unique visitors a month. The company says that two-thirds of visitors to the site are in the market to buy or sell a home now, or plan to within the next two years.
Zillow receives property listings information from a combination of agents, brokers and MLSs, with nearly 1.9 million for-sale listings available on the site Wednesday.
Those who choose to send listings to Zillow and other sites that aggregate listings hope to benefit from the sites' ability to attract large audiences and come up on top of search-engine rankings.
Not all are brokers are convinced of the benefits of sharing property listings with aggregators. The real estate search and marketing site Trulia, which relies primarily on data feeds supplied by real estate brokers, recently came under fire for allegedly using listings to boost the site's search-engine rankings at the expense of companies that provide listings.
Trulia denied that its use of "temporary redirects" and "no follows," hurts brokers that send its listings, saying its business model is to generate traffic for them.
Although Realtor.com and Yahoo Real Estate may employ similar search-engine optimization techniques, they receive listings from Realtor-affiliated MLSs and are bound by rules that Trulia is not, according to Galen Ward, co-founder for Seattle-based Estately.com, who first raised the issue (see Inman News story).
Realtor.com recently announced it is updating about one-third of the site's 4.4 million property listings every 15 minutes (see story).
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FBI boosts mortgage fraud caseload
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The FBI had more than 1,200 mortgage fraud investigations open at the end of fiscal year 2007, a 47 percent increase from the previous year but still a small fraction of suspected cases.
The number of suspicious activity reports (SARs) filed by banks detailing suspected mortgage fraud incidents grew 31 percent during the same period, to 46,717.
Although federally chartered banks are required to file SARs with the Treasury Department's Financial Crimes Enforcement Network (FinCEN), many other mortgage lenders are exempt, suggesting that the FBI is investigating only a small fraction of mortgage fraud cases.
In a report last year, the bureau said it investigated 818 mortgage fraud cases in 2006, winning 204 convictions and collecting $389 million in restitution and $231 million in fines (see story).The bureau did not release information on 2007 convictions, restitution and fines in its latest report.
The FBI said the top 10 hot spots for mortgage fraud were Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado and Minnesota. Other states "significantly affected" by mortgage fraud included Arizona, Maryland, Utah, Nevada, Missouri, Indiana, Tennessee, Virginia, New Jersey and Connecticut.
"The downward trend in the housing market provides an ideal climate for mortgage fraud perpetrators to employ a myriad of schemes," the FBI said in a press release announcing the release of the report. "Emerging and re-emerging schemes in 2007 included builder-bailouts, seller assistance, short sales, foreclosure rescue, and identity theft exploiting home equity lines of credit."
According to the report, builder-bailout schemes may involve incentives to buyers that are not disclosed on mortgage loan documents. A builder who is having trouble selling a property may agree to return a buyer's down payment, for example, inflating the value of the home to conceal the fact that the homeowner has no equity.
While 93 percent of SARs filed with FinCEN did not quantify specific losses, the 7 percent of reports that included loss estimates totaled more than $813 million.
Those losses are "just the tip of the iceberg, reflecting only a small percentage of financial damage suffered by victims of mortgage fraud," said Kenneth W. Kaiser, assistant director of the FBI's Criminal Investigative Division.
The report relied on numbers from a number of public and private sources, including FinCEN, the Mortgage Bankers Association, the Mortgage Asset Research Institute, HUD's Office of the Inspector General, BasePoint Analytics, Interthinx, Fannie Mae, Radian Guaranty Inc. and RealtyTrac Inc.
In its own analysis of FinCEN reports, the industry-backed Mortgage Asset Research Institute concluded that it could take three to five years before many instances of fraud and misrepresentation in loans made in 2007 are discovered. Many adjustable-rate mortgage (ARM) loans will be refinanced, "potentially blocking discovery of some of these issues," MARI concluded (see story).
In the past, the FBI's mortgage fraud investigations have typically involved fraudulent attempts to obtain money from lenders by inflating the value of multiple properties. Often such schemes involve straw buyers and collusion by real estate professionals including appraisers, title and real estate agents and mortgage brokers.
The FBI is also engaged in a broader investigation of how mortgages were originated and bundled into securities during the housing boom. In January, the bureau briefed reporters on an investigation involving 14 financial services companies, mortgage lenders and investment banks.
The FBI did not identify the companies under investigation, but Goldman Sachs, Bear Stearns and Morgan Stanley have all disclosed to investors that they are responding to subpoenas from regulators.
Countrywide Financial Corp. has also been identified in news reports as a subject of that investigation. The FBI is reportedly looking at Countrywide's underwriting practices on stated-income loans, and whether Countrywide misrepresented its financial condition and the quality of its loans in regulatory filings with the Securities and Exchange Commission (see story).
In a regulatory filing this week, company officials said they have been informed by the Department of Justice "that the FBI cannot confirm or deny whether it is conducting an investigation" of Countrywide.
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SecondSpace launches Canada, UK real estate sites
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SecondSpace, an online marketplace targeting the second-home market, today launched three new Web sites in Canada and the United Kingdom that aim to connect brokers, developers and agents to buyers and owners of vacation property around the globe.
ResortScape.CA, ResortScape.Co.UK and LandWatch.Co.UK feature more than 600,000 vacation properties, new developments, luxury condos, villas, ski chalets, cottages, home sites, ranches and acreages in destinations throughout the United States, Canada and more than 40 additional countries, according to a company announcement.
The sites are powered by SecondSpace's Web platform that sorts more than 1.5 million property listings to determine those that match the desired "second home" lifestyle.
SecondSpace was founded in 2006 by two Internet veterans -- former Classmates executive Anil Pereira, and former Microsoft technical leader Alok Sinha. The Bellevue, Wash.-based company launched its first two Web sites, LandWatch.com and ResortScape.com, in 2007. (See Inman News story.)
"The global market for second homes and land continues to see considerable cross-border buying activity, driven largely by baby boomers and buyers interested in overseas investment opportunities," Pereira said today in a prepared statement.
The slumping U.S. market and weakening dollar have made foreign buyers attractive to many U.S. companies. Overseas buyers continue to see the U.S. as an attractive market for purchasing a vacation home or investment property, according to a recent National Association of Realtors report.
Real estate brokerages and agents who upload their listings into the SecondSpace network via ResortScape.com or LandWatch.Com automatically gain syndication into the new ResortScape.CA, ResortScape.co.UK and LandWatch.co.UK Web sites, the company said. Listings can be uploaded via one of SecondSpace's supported partners or through a self-service tool found on the Web sites.
SecondSpace also offers featured placement for various listings with the purchase of a subscription.
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PMI Group trims losses to $274 million
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Mortgage insurer PMI Group Inc. said it lost $274 million in the first quarter, compared with a $102 million profit a year ago.
Most of the losses -- $172.5 million -- stemmed from U.S. mortgage insurance operations, while another $88 million was related to the company's investment in bond insurer FGIC Corp.
PMI Group's mortgage insurance operations include PMI Mortgage Insurance Co. and affiliated mortgage insurance and reinsurance companies, plus equity in earnings from a joint venture, CMG Mortgage Insurance Co.
"The significant weakening of the U.S. residential mortgage, housing, credit and capital markets continues to negatively affect our U.S. Mortgage Insurance Operations segment, and will continue to do so throughout 2008," PMI said in a regulatory filing.
Mortgage insurance operations generated $537 million in losses and loss adjustment expenses, with net loss reserves boosted by $368.2 million because of an increase in default inventory, higher claim rates and average claim sizes.
PMI's primary default inventory increased to 69,718 at the end up March, up 10 percent from the previous quarter and 78 percent from a year ago. The primary default rate hit 8.78 percent, up from 7.9 percent in the previous quarter and 5.34 percent a year ago.
Higher claim rates were driven by home-price declines and the reduced availability of certain loan products, which made it harder for troubled borrowers to refinance, the company said. Average claim size has grown in part because of higher loan sizes and coverage levels, and because declining home prices limit loss mitigation opportunities.
On April 8, Standard & Poor's analysts lowered their insurer financial strength ratings on PMI and rivals MGIC Investment Corp. and Radian Group Inc., prompting Fannie Mae and Freddie Mac to require the companies to submit remediation plans showing how they will restore the ratings required of "top tier" insurers (see story). PMI said it has submitted a plan to Freddie Mac, which has requested additional information, and expects to submit one to Fannie Mae this month.
PMI posted a $1 billion fourth-quarter loss and, like its competitors, has tightened underwriting standards -- making it more difficult for borrowers making less than 20 percent down payments on a home to obtain funding (see story).
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Real estate rates end night higher
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Long-term mortgage interest rates increased Monday, and the benchmark 10-year Treasury bond yield inched up to 3.8 percent.
The 30-year fixed-rate average rose to 5.74 percent, and the 15-year fixed rate gained to 5.32 percent. Meanwhile, the 1-year adjustable rate dipped to 5.83 percent.
The 30-year Treasury bond yield increased to 4.53 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average climbed 130.43 points, or 1.02 percent, finishing at 12,876.31. The Nasdaq gained 42.97 points, or 1.76 percent, closing at 2,488.49.
Stock figures are current as of 7:30 p.m. Eastern Standard Time.
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NAR: Median resale price falls at record rate
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The National Association of Realtors reported today that 28 of 149 U.S. metro areas tracked had double-digit percentage declines in median resale single-family home prices in the first quarter compared to first-quarter 2007, and the overall median price dropped at a record annual rate.
One hundred of the metro areas had price declines, according to the report, while prices rose in 48 metro areas and remained flat in Honolulu.
Nationally, the median price among those metro areas tracked was $196,300, down 7.7 percent compared to first-quarter 2007. That compares with a 5.8 percent year-over-year price decline in the fourth quarter, when prices fell in 77 of 150 reporting metro areas. The year-over-year U.S. median rice drop was the steepest since NAR began tracking metro prices in 1979.
Sales of resale single-family homes and condos experienced double-digit percentage drops in all but eight states in the first quarter compared to the same quarter last year, with sales rising in three states: Indiana, up 11.4 percent; New Jersey, up 4 percent; and Alaska, up 2.4 percent. Data was not available for New Hampshire.
Total sales of resale single-family homes and condos reached a seasonally adjusted annual rate of 4.95 million units in the first quarter, which was down 22.2 percent below the 6.36 million rate in first-quarter 2007 and down 0.9 percent from 5 million in fourth-quarter 2007, the Realtor group reported.
The seasonally adjusted rate is a projection of a monthly sales rate over a 12-month period, adjusted to account for typical seasonal fluctuations in sales activity.
Binghamton, N.Y., topped the list of metro areas with an 11.8 percent year-over-year price gain in the first quarter, followed by Peoria, Ill., up 10.4 percent; Spartanburg, S.C., up 10.1 percent; Elmira, N.Y., up 9.6 percent; and Yakima, Wash., up 9 percent.
Three Texas metro areas also ranked in the top-10 list for the highest year-over-year price gains in the first quarter. El Paso, Texas, was up 8.5 percent; Amarillo, Texas, rose 8.2 percent; Glens Falls, N.Y., was up 7.7 percent; Farmington, N.M., rose 6.3 percent; and Beaumont-Port Arthur, Texas, was up 6.1 percent.
The Sacramento, Calif., metro area had the steepest year-over-year decline in the median price of resale single-family homes in the first quarter, down 29.2 percent.
Lansing, Mich., was next with a 26.9 percent decline; San Diego, Calif., dropped 22.9 percent; Sarasota, Fla., fell 22.2 percent; Los Angeles fell 21.3 percent; Grand Rapids, Mich., fell 20.7 percent; Las Vegas fell 20.2 percent; Memphis dropped 18.2 percent; and Miami, down 17.2 percent.
Three metro areas tied for 10th place in steepest year-over-year price drop in the first quarter, at 17 percent: Cape Coral, Fla., Davenport, Iowa; and Palm Bay, Fla.
Lawrence Yun, NAR chief economist, said the results of the latest report "are highly unusual results because there were very few jumbo loan originations in the latest quarter, so sales are much slower in high-cost areas, and at the same time foreclosures related to subprime mortgages rose."
Those neighborhoods with little subprime exposure are faring better, Yun said, while "prices have fallen in neighborhoods with a wide prevalence of subprime loans because more foreclosed properties are being sold at discounted prices."
More than half of all foreclosures are related to subprime mortgages, which account for about 10 percent of all homeowners, Yun said.
Median first-quarter metro area single-family median home prices ranged from a low of $65,400 in the Saginaw, Mich., metro area, to $780,000 in the San Jose, Calif., metro area.
Youngstown, Ohio, ranked second for its low median price in the first quarter, at $67,700, NAR reported, followed by Decatur, Ill., at $79,400. San Francisco ranked as the second-most costly metro area for homes, with a median price of $701,620, followed by Honolulu at $620,000.
Home sales dropped the most in Maryland, down 38.6 percent, in the first quarter compared to the same quarter last year. Washington, D.C., followed with a 33.9 percent decline; Utah was down 33.9 percent; Idaho, down 33.1 percent; Delaware, down 31.8 percent; Arizona, down 31 percent; Rhode Island, down 29.8 percent; Oregon, down 29.5 percent; Washington, down 29.4 percent; and Massachusetts, down 29.1 percent.
The national median resale condo and co-op price was $216,900 in the first quarter, down 3 percent compared to first-quarter 2007. Twenty-three metros had year-over-year rises in median condo and co-op prices in the first quarter, while 31 had price declines and one was unchanged, NAR reported.
First-quarter condo prices rose 36.4 percent year-over-year in Bismarck, N.D., were up 15.3 percent in New Orleans, and were up 15.3 percent in Wichita, Kan. Condo prices dropped most in Sarasota, Fla., down 35 percent; Sacramento, Calif., down 33.4 percent; and Miami, down 26.4 percent, according to the report.
NAR Metro Price Data, Q1 2008
| Metro area | Med. Price, Q1 '07 | Med. Price, Q1 '08 | % change |
| Sacramento, Calif. | $365.3 | $258.5 | -29.2% |
| Riverside, Calif. | $397.0 | $287.1 | -27.7% |
| Lansing, Mich. | $126.7 | $92.6 | -26.9% |
| San Diego, Calif. | $595.2 | $459.0 | -22.9% |
| Sarasota, Fla. | $337.0 | $262.3 | -22.2% |
| Los Angeles | $583.7 | $459.4 | -21.3% |
| Grand Rapids, Mich. | $129.7 | $102.8 | -20.7% |
| Las Vegas | $310.1 | $247.6 | -20.2% |
| Memphis | $135.9 | $110.8 | -18.5% |
| Miami | $385.3 | $318.9 | -17.2% |
| | | | |
| | | | |
| Metro area | Q1 '07 | Q1 '08 | % change |
| Binghamton, N.Y. | $98.1 | $109.7 | 11.8% |
| Peoria, Ill. | $107.8 | $119.0 | 10.4% |
| Spartanburg, S.C. | $118.4 | $130.3 | 10.1% |
| Elmira, N.Y. | $75.3 | $82.5 | 9.6% |
| Yakima, Wash. | $136.1 | $148.4 | 9.0% |
| El Paso, Texas | $124.0 | $134.6 | 8.5% |
| Amarillo, Texas | $112.9 | $122.2 | 8.2% |
| Glens Falls, N.Y. | $151.5 | $163.1 | 7.7% |
| Farmington, N.M. | $178.8 | $190.0 | 6.3% |
| Beaumont, Texas | $115.8 | $122.9 | 6.1% |
*Price figures are in 1000s and are based on sales prices of single-family resale homes.
Source: National Association of Realtors.
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Senate considers $300 billion FHA expansion plan
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The fate of a plan to authorize the Federal Housing Administration to guarantee up to $300 billion in loans to help troubled borrowers refinance into more affordable mortgages could be decided Thursday by members of the Senate Banking Committee.
Committee Chairman Chris Dodd, D-Conn., has included his version of the FHA expansion approved by the House last week in his own bill, "The Federal Housing Finance Regulatory Reform Act of 2008."
Although Dodd's plan differs in some details from the House proposal -- first put forward in March by Rep. Barney Frank, D-Mass. -- both programs would allow the government to guarantee refinance loans only when lenders agree to write down some of an existing mortgage's principal. To prevent house flipping, borrowers would be charged exit fees if they sold or refinanced their home within five years.
While Frank hopes the plan could help up to 2 million borrowers, the Congressional Budget Office estimates that about 500,000 borrowers could be helped over five years, at an estimated cost to taxpayers of $1.7 billion.
The Bush administration, which last year created the more limited FHASecure program to help borrowers facing foreclosure, has threatened to veto the plan, which it has criticized as a bailout of lenders and speculators.
The administration maintains that FHASecure has helped 150,000 borrowers refinance since the program was launched, and that plans to expand the program in July will allow a total of 500,000 troubled borrowers to refinance into government-backed loans by year-end (see story).
But Democrats are hoping that by tying FHA expansion to other housing legislation the administration supports -- including a bill that would strengthen oversight of Fannie Mae and Freddie Mac -- they can win over Republican lawmakers and force a compromise.
In a statement, Dodd called the plan a "temporary initiative" to address the systemic risk foreclosures pose to the economy and financial system.
"This measure can assist hundreds of thousands of Americans who, due to no fault of their own, find themselves at risk of losing their homes," Dodd said. Alluding to the $30 billion in loans the Federal Reserve provided in March to keep Bear Stearns out of bankruptcy and facilitate the sale of the company to JP Morgan Chase, Dodd said FHA loan guarantees could be expanded at a fraction of the cost.
The massive housing bill approved by the House last week in a 266-154 vote last week (see story) won the support of 39 Republicans. In the Senate, Dodd has been in talks with the ranking Republican on the banking committee, Sen. Richard Shelby, R-Ala., in the hopes of reaching an agreement before Thursday's vote.
Shelby has opposed giving Fannie Mae and Freddie Mac more leeway to buy and guarantee loans, and Dodd's bill would set tighter loan limits for the government-sponsored entities, or GSEs, than the legislation passed by the House last week.
While the House legislation would make permanent the temporary increase in the $417,000 conforming loan limit -- allowing loans of up to $729,750 in high-cost areas -- Dodd's bill would cap the upper limit at $625,500.
Shelby told Reuters that while he is still negotiating with Dodd's staff, it would not bother him to let the bill fail if the talks don't produce results.
The bill is not expected to pass without Shelby's support. Although Republicans are in the minority in the Senate, holding 49 seats, either party must put together at least 60 votes to move bills through procedural roadblocks, Reuters reported.
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Report: Real estate search strategy lacks vision
Inman News
Inman News
A wide range of property-search Web sites is available to consumers -- including those set up by multiple listing services, brokers and third-party aggregators -- and there are a lot of unknowns in selecting the best online strategy to market properties, according to a paper prepared by industry consultants.
"Right now, it looks as if the industry has set off on a sea voyage without maps, compass or GPS, and the officers are bickering with each other and with the crew over the course and the destination," according to the "Tales of an Industry Lost at Sea" report, prepared by the principals of the Larson/Sobotka law firm and consulting group and Focus Forward Consulting.
"Everyone knows the waters are dangerous, but there is no agreement whether the officers should fear pirates, sharks, storms, reefs, or all of them."
Brian Larson, a co-author of the report and president of Larson/Sobotka Business Advisors LLC, said in a statement that the industry lacks strategic goals relating to consumer searches for real estate information on the Web. "Couple that with the lack of useful data about consumer desires, expectations and behavior, and you have an industry adrift. MLSs, associations and brokers, who should be natural strategic partners, are bickering about tactics," he said.
While there has been much debate about the value of public real estate search sites set up by MLSs, for example, "The true impact of public MLS sites remains unmeasured," the report states.
Also, "No one has demonstrated the impact of national aggregator sites or broker site traffic, whether good or bad," and "little reliable data is available to demonstrate a consumer preference for listing information available on a public MLS site vs. broker (data exchange) sites or national aggregator sites."
The consultants propose to conduct an industry-supported consumer study of 15 to 18 markets in North America to gauge consumer desires in real estate searches. The group also proposes a study of traffic to broker and MLS Web sites and an analysis of Web metrics from companies including Hitwise and comScore Media Metrics.
A lack of strategy to deal with current challenges in the marketplace "does not bode well for the industry as it faces the challenge of new information channels like RSS feeds, widgets, blogs and user-generated content," according to the report, which calls for industry groups including brokers, MLSs and associations to unite toward a common strategic vision.
The report defines several general types of national aggregator sites. Realtor.com represents a Web site that is powered by MLS-supplied real estate information, while RE/MAX's remax.com is a national brand site that directs consumers to local and regional franchise affiliates. Zillow and Google Base represent another kind of site that couples aggregated property listing information with other features, such as property valuation or general classified search.
The report also lumps real estate search sites into two broad categories: "pass-through" and "destination" sites.
Destination sites seek to provide a range of tools to keep an audience at the site for an extended period, while pass-through sites are designed to quickly move consumers on to a broker's Web site.
Realtor.com and Zillow.com are examples of destination sites, while Google Base represents a pass-through site, according to the report.
"In theory, brokers might prefer to partner with pass-through sites rather than destination sites: pass-through sites hold the consumer's attention for a shorter time and encourage the consumer to 'form a relationship' with a broker's site. But in fact, there is little data to support the preference," the report states.
In closing, the paper presents a possible united strategic vision by industry groups in the year 2010.
The paper suggests that MLS public sites, where appropriate, will be built to maximize the amount of traffic sent to broker Web sites, that "MLSs and associations have developed information and educational programs to help brokers understand what works with consumers on the Web," and that NAR has launched a real estate information portal as "either a tool strictly for brokers" or "to enhance consumer contact with brokers and not detract from it."
Also, "When MLSs are asked to assist in transmitting brokers' data to national aggregators, the MLSs prioritize their efforts to get listing data to aggregators that are proven to deliver the most and the best traffic to broker sites," the paper offers, and MLSs and associations will have deployed tools "to make broker Web sites the places where consumers expect to find the best real estate information and to assist brokers in making the best use of new communication channels."
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