Archive for June, 2010
Anyone Interested in Seconds… A look at 2nd Quarter Sales Data..
June 24th, 2010 categories: For Buyers, For Sellers, Investing in Real Estate, Market Data
Second Quarter 2010 Single Family Home Sales Data:
| County | Total Sales | Total # Foreclosure | Total # of Short Sales | Distressed Sales expressed as % of Total Sales | Active listings | # Sales in 1 Month | Absorption Rate |
| Cook County | 6,215 | 1,803 | 568 | 38% | 19,288 | 2,521 | 7.65% |
| Lake County | 1,402 | 351 | 134 | 35% | 5,833 | 619 | 9.42% |
| McHenry County | 604 | 149 | 89 | 39% | 2,912 | 253 | 11.50% |
| Dupage County | 1,538 | 240 | 123 | 24% | 5,568 | 671 | 8.29% |
| Will County | 1,312 | 319 | 141 | 35% | 4,595 | 513 | 8.96% |
In the second quarter of 2010, Foreclosure Sales and Short Sales together represent 24% -39% of all sales in each of the five counties researched.
There are three (3) times as many foreclosures than Short Sales in the second quarter of (April-June) 2010.
The Real Estate Market is still a buyers market. In each of the five counties surveyed it is taking anywhere from 7 months -12 months to close on a home.
The next few quarters for the real estate market will be challenging for several reasons.
The First Time Home Owners Tax Credit Expired April 30, 2010 and fewer qualified buyers are looking to purchase a home even though Mortgage Interest Rates are at a all time low.
There is speculation of a Double Dip in the Real Estate Market as a result of more Foreclosures come on the market. Right now the “Shadow Inventory” of foreclosures is paying attention to the abosorption rates discussed above.
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What Me Worry?
June 23rd, 2010 categories: Market Data
“What Me Worry?” was the phrase used in Mad Magazine and I think it is appropriate here.
They say bad news comes in threes:
First, the National Association of Realtors reported existing homes sales dipped 2.2% last month.
Second, the National Association Of Home Builders shows sales of new homes dropped a record 32.7% in May. This is the lowest level in four decades.
Finally, the Mortgage Bankers Association showed mortgage applications dropped off by 5.9% even when mortgages are at a all time low.
All three indicate the real estate market is struggling after the First Time Home Buyer Tax Credit expired April 30, 2010.
Lets hope there is a silver lining somewhere for real estate in the near future.
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Channel 5 News Report on Chase Bank
June 16th, 2010 categories: National News/Local News, Short Sales
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Fannie Mae and Freddie Mac Shares to Be Pulled Off NYSE
June 16th, 2010 categories: National News/Local News
The NYSE plans to delist the shares of Fannie Mae and Freddie Mac. This means Fannie and Freddie Mac will no longer be traded on the New York Stock Exchange.
As of June 15, 2009, one share of Fannie Mae stock was selling at .92 cents while Freddie Mac shares were at $1.22.
In September of 2008 the Government took over both Fannie and Freddie when the housing bubble collapsed. So far taxpayers have poured $145 billion dollars into Fannie and Freddie to keep them afloat during the housing crisis and now they are being pulled from the NYSE.
What does this mean to you and I?
Well it means to date there is no confidence in our government running these two agencies and no market to sell these guaranteed mortgage back securities to private investors.
Remember Fannie and Freddie were created by Congress to buy mortgages from banks and then package them into bonds and sell them into the open market as mortgaged backed securities to investors. When the rating system of these mortgages collapsed and loans started to go into default then the market lost all confidence.
Today 31 million home loans worth $5.5 trillion dollars or half of all mortgages are guaranteed by Fannie and Freddie Mac.
When you see Congress debating over financial reform they are really debating over how to fix Fannie and Freddie as they are crucial to the success or failure of our housing market and banking markets.
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Where are all the Foreclosures? Only the Shadow Knows ….
June 14th, 2010 categories: Ask the "Specialist", Just "My" Opinion
How many foreclosures are out there? As far as I can tell “Only the Shadow Knows”.
The new buzz is there is a large shadow inventory of foreclosures yet to hit the housing market.
Keeping this inventory of homes off market helps to stabalize prices of homes in the short term.
Imagine all these homes coming on the market at one time. There would not be enough buyers to absorb the number of homes for sale and this would cause home prices to tumble.
But lets say we hold onto the homes and keep them off market.
The result would be a steady flow of homes for sale and a more steady market and this would be good for the real estate market.
Why because the ratio between home buyers and homes for sale is an important number. This is called the Absorbtion Rate.
If there are more homes for sale than buyers this is called a buyers market. In a buyers market home prices will be lower.
If there are more buyers than homes this is called a sellers market. In a sellers market home prices will be higher.
So the logical thing for banks to do right now is to keep homes off the market until there are fewer homes than buyers. By keeping homes off the market banks feel the homes will be worth more.
In math we were taught the theory of ”two negatives equal a positive”.
I am not sure this is the right position for the bank because we are talking about money here and the value of money does not remain stable over time.
We can see that now in the stock market and in the Euro Zone, and Greece. What was worth a dollar today may not be worth that in the future. So if the bank holds on to a bad asset too long it might be actually worth less. This is a gamble the banks are taking.
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