Housing Market
Case-Shiller Home Price Index and Home Sales: What the Latest U.S. Housing Market Data Show
The latest U.S. housing market data released Tuesday underscore the persisting trend of uneven performance in the industry.
The S&P/Case-Shiller Home Price Index showed prices hit post-bubble lows in February, and U.S. home sales data show that while not all housing news is dismal, a strong and stable recovery is a long way off.
The U.S. housing sector has been a drag on the economy since a home price bubble burst and helped cause the 2007-2009 recession. While many economists maintain that a budding recovery is blooming in the troubled sector, recent housing market data are simply another wake-up call.
Here's a look at the numbers.
Case-Shiller Home Price Index Falls
The Case-Shiller Home Price Index of 20 cities revealed a price drop from January to February of 0.8% (on a non-seasonally adjusted basis). The 10-city index also fell 0.8%.
The 20-city index declined 3.5% from a year ago, while the 10-city composite slipped 3.6%.
"Nine housing markets and both composites hit post crisis lows," David Blitzer, a spokesman for S&P, told CNN Money. Included in the nine markets are Atlanta, Charlotte, Chicago, Las Vegas and New York.
Blitzer went on to note, "While there might be pieces of good news in this report, such as some improvements in many annual rates of return, February 2012 data confirm that, broadly speaking, home prices continued to decline in the early months of the year."
Foreclosures and other distressed property sales continue to be the main challenge for home prices, Pat Newport, an analyst for IHS Global Insight relayed to CNN.
"We still have 6 million homeowners who are late on their payments," said Newport. "We'll still have lots of foreclosures, which will depress prices."
In fact, with January's mammoth $26 billion mortgage settlement between five major banks and a group of state attorneys general, foreclosures that had been held up for a year or more are now moving forward.
"Enough homes are in the foreclosure pipeline to keep house prices falling through much of this year," Celia Chen, a housing economist at Moody's Analytics, told the Los Angeles Times.
U.S. Housing Market Forecast: How to Profit as Real Estate Rebounds
It was the most atrocious bubble in U.S. history, pushing tens of millions of Americans into financial misery.
Even today, the last of the lawsuits have yet to be filed.
But five years later it's finally coming back.
The housing market has bottomed and there's money to be made on its return.
New Wave of Foreclosures Will Sink the Housing Market Rebound
The long-anticipated housing market rebound will hit a speed bump this year as the number of foreclosures rises again.
With January's mammoth $26 billion settlement between five major banks and a group of state attorneys general, foreclosures that had been held up for a year or more are now moving forward.
The spike in foreclosures will arrive just as other data, such as the 5.1% increase in new construction permits reported on Tuesday, had begun to point to a housing market rebound.
"We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months," Brandon Moore, CEO of RealtyTrac, told CNN Money.
RealtyTrac's February report showed new default notices – the first step in the foreclosure process – were up 1% from January. Default notices increased dramatically in some states, such as Pennsylvania (35%), Florida (33%) and Indiana (37%).
"The pig is starting to move through the python," Daren Blomquist, director of marketing for RealtyTrac, told CNN Money.
Distressed sales already account for about one out of three U.S. home sales.
The National Association of Realtors (NAR) reported this week that 20% of home sales in February were foreclosures and 14% were short sales.
In a short sale, an owner who owes more on their home than it's worth agrees to sell for less, with the bank agreeing to accept the loss.
That's a far cry from a normal housing market, when distressed sales are less than 5%.
For 2012, RealtyTrac predicts a 25% increase in foreclosures, which will push the portion of distressed sales even higher.
And the picture doesn't figure to improve for quite some time. Paul Dales of Capital Economics estimates as many as an additional 3 million foreclosures over the next several years.
The Uneven Impact on the Housing Market
However, the impact of this wave of foreclosures will be felt unevenly.
All of the states that saw increases in new default notices were those in which the courts play a role in foreclosures. The robo-signing issues addressed in the bank settlement occurred almost exclusively in such states.
States that don't use a judicial foreclosure process didn't accumulate a backlog. In fact, foreclosure activity in those states was down 5% in February from the previous month, and down 23% from the February 2011.
But among the 26 states that use a judicial foreclosure process, activity rose 2% in February from the month before. Foreclosure activity was up 24% from the previous year.
That leaves little room for optimism in hard-hit states such as Florida.
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Has the Housing Market Finally Bottomed?
It was the most atrocious bubble in U.S. history pushing tens of millions of Americans into financial misery.
Even today, the last of the lawsuits have yet to be filed.
But five years later it's finally coming back.
The housing market has bottomed and there's money to be made on its return.
The evidence of this case continues to build.
Signs of a Housing Bottom
For instance, the National Association of Homebuilders' Housing Market Index rose five points to 29 in February marking its fifth consecutive monthly increase.
Admittedly, 50 is supposed to be a neutral level for the index. Even still, the current level of 29 is up 20 points off of the low, and is the highest it has been since 2007.
Then there are housing starts, which rose in January to an annualized 699,000 units.
Again, that's not very impressive compared to 2005's total of 2,068,000. But it's still a hell of a lot better than 2009's average of 554,000 and 2010's 586,000.
Incidentally, there's some important data in the details here. Multi-family starts were 175,000, up more than 70% over 2009, while single-family starts of 508,000 were only modestly above the 2009 average.
Meanwhile foreclosures in January 2012 were down 19% from a year earlier.
Since the "robosigning" scandal and the delays that followed it now seem to have passed through the system, that decline suggests that the level of troubled mortgage borrowers is also trending downwards.
The bottom line: Housing has found a bottom and is trending back up again.
Cash for Keys: Avoid Foreclosure, Pay the Bank Less Than What You Owe… and Get $30,000
Tags: bank loans, cash for keys, forclosure program, Foreclosures, Housing Market, mortgage loans, realestate, second-lien, Short Sales
Romney Avoids Nevada's Housing Market Problems with a Tactic That Could Work – for Now
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Money-Markets, CDs, and Bonds: The Ups and Downs of Stashing Your Cash
In today's volatile markets many investors are faced with the same troublesome question – "Where should I park my cash?"
In fact, investors have withdrawn a net total of $328 billion from the stock market since 2007, according to Strategic Insight.
Ever since, a big portion that cash has been looking for a home.
It seems simple enough, but investors are finding the answer to be more complicated than they imagined…
Thanks to our friends at the Federal Reserve, interest rates are at record lows. In fact, they're so low that most investors are getting practically nothing in returns.
Meanwhile, the stock market has put on a New Year's rally, rewarding those who were willing to jump in while leaving cautious investors wondering if they're holding too much boring old cash.
However, in order to have an adequate safety net, your cash on hand should be enough to cover about a year's worth of expenses, according to Shah Gilani, a retired hedge fund manager and Editor of the acclaimed Wall Street Insights & Indictments newsletter.
"That's a good safety net," Shah says.
But no matter how much cash you hold, you still have to balance your need for higher returns against your risk tolerance.
Because whether you're thinking "safety first" or are tempted to reach for a little more yield, the choice you make might determine whether you're able to sleep at night.
Three Places to Park Your Cash
With that in mind, here's a look at three of the most popular places to park your cash.
The Housing Market is Finally Bottoming – Here's How to Play It
The housing market remains a drag on the economy, but there are indications that it is finally starting to bottom.
Prices have stopped declining, and there is even some sign of life in sales.
Not all the news is good, of course. New home sales dropped still further in August from July, falling to a pathetic 295,000 annual rate compared to the 1 million-plus in the good years. And housing starts fell to an annual level of 571,000 from 601,000 in July – that's 12% below their August 2010 level.
Still, this is to be expected. The new home sector should be the last to turn up. There is a massive overhang of existing homes, both through foreclosures and through suppressed sales from homeowners that are "under water" on their mortgages and can't afford to sell.
With the exception of a very few markets – such as North Dakota (4% unemployment and new jobs appearing from the Bakken oil shale) and the overstuffed bureaucrat haven of Washington and its surrounding suburbs – there should be very few new homes built for the next several years.
Housing Market has Changed – Risks are not Recognized
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