Archive for July, 2009

Realtor coaching students…promising signs for  the housing market. Here is a report from bizjournals. Two crucial element not included in this report are:

1) How many of the sales were short sales and REOs.

2) Even with this slight increase in sales there is still nearly a years worth of unsold homes.

Here is the report….

An index that measures pending home sales nationally rose 5.3 percent from May to June, a sign that the housing market could improve at the end of the year, according to the National Association of Realtors.

The index, which is based on sales contracts signed in June, was 89, a 5.3 percent increase over the previous month.

“The rise in pending home sales was broad-based with all four regions showing gains,” said Lawrence Yun, NAR’s chief economist. “This is welcome news because a rise in contract activity is necessary for an overall housing recovery. With a tax credit now available to first-time home buyers, increases in home sales could be sustained with the momentum carrying into 2009.”

Even with the uptick in pending contracts from month to month, the index is 12.3 percent below where it stood in June 2007, an indication of how much the market has slowed.

With roughly 2.5 million first-time home buyers taking advantage of the temporary federal tax credit, existing-home sales are likely to rise 7 percent nationally to 5.51 million in 2009 from a expected total of 5.15 million this year.

Home prices are projected to increase 3 to 6 percent next year.

New-home sales are forecast to drop 8.8 percent to 464,000 in 2009 from 509,000 this year. Housing starts, including multifamily units, should fall 17.2 percent next year to 795,000 from 960,000 in 2008.

The International Monetary Fund said there’s no end in sight to the U.S. housing recession and warned that deteriorating credit conditions for consumers and banks may prolong a period of slow economic growth.

“At the moment, a bottom for the housing market is not visible,” the IMF said in its Global Financial Stability Report, released today in Washington. “Stemming the decline in the U.S. housing market is necessary for market stabilization as this would help both households and financial institutions to recover.”

The IMF, which a year ago failed to foresee the depth of the subprime mortgage collapse, stood by its April forecast for about $1 trillion in losses stemming from the U.S. mortgage crisis. While U.S. policy makers have helped contain the financial losses, “credit risks remain elevated” and banks need to raise more capital.

Worldwide asset writedowns and losses have totaled $469 billion in the past year and $345 billion has been raised.

The Washington-based lender in the report said the Federal Reserve’s decisions to expand lending to Wall Street firms “have succeeded in containing systemic risks.” Still, weakness in housing threatens to extend the slump.

“The growing concern is that, with delinquencies and foreclosures in the U.S. housing market rising sharply, and house prices continuing to fall, loan deterioration is becoming more widespread,” the IMF said.

`Few Signs’

Jaime Caruana, head of the IMF’s capital market division, speaking to the press in Washington today, said housing data in the U.S. showed few signs of improvement. “Some indicators continue to go south,” he said. Improving affordability, he said, should at some point help the market recover.

Falling share prices are making it harder for banks to raise capital, increasing the risk of a downward spiral in the global economy, the IMF said. The outlook for banks may make investors reluctant to provide fresh funds needed to restore the strength of financial institutions, the fund said.

“As economic growth slows, banks will face continued headwinds in maintaining earnings due to falling credit quality, declining fee income, high funding costs, and exposures to monoline and mortgage insurers,” Jaime Caruana, director of the IMF’s monetary and capital markets unit, said in a statement.

Fannie, Freddie

The fund warned that the frailty of the financial system would be increased by the failure of Fannie Mae and Freddie Mac, the two largest sources of U.S. mortgage financing. Shares of both companies are down more than 80 percent in the past year.

The U.S. Congress two days ago passed legislation to stem foreclosures for 400,000 homeowners and aid Fannie Mae and Freddie Mac, its most sweeping effort to halt the biggest housing slump since the Depression. President George W. Bush may sign the bill into law this week.

IMF economists said that the global holdings of Fannie Mae and Freddie Mac debt meant that “there would have been systemic consequences had confidence in the debt come into question.”

The report said oversight of Fannie Mae and Freddie Mac was too weak. “Part of the problem stems from the current regulatory framework, which has allowed their balance sheets to expand to their current systemic significance,” the fund said.