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Home sales up
Pending home sales rose in February, signaling a second surge of home sales in response to the home buyer tax credit, according to the National Association of Realtors (NAR). The Pending Home Sales Index (PHSI) rose 8.2 percent to 97.6 from a downwardly revised 90.2 in January, and remains 17.3 percent above February 2009 when it was 83.2. The data reflects contracts and not closings, which usually occur with a lag time of one or two months. Lawrence Yun, NAR chief economist, said the improvement is another hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.” The PHSI in the Northeast rose 9.0 percent to 77.7 in February and is 18.9 percent higher than February 2009.
In the Midwest the index jumped 21.8 percent to 97.9 and is 18.7 percent above a year ago. Pending home sales in the South increased 9.2 percent to an index of 107.0, and the index is 17.5 percent higher than February 2009. In the West the index fell 4.8 percent to 98.0 but is 14.6 percent above a year ago.
Olick - home sales up, but…
Diana Olick of CNBC points out that all may not be as it seems in NAR's report: " I find it interesting that before [HAFA] even went into effect today, the Administration upped the incentives a week ago, doubling the amount of cash to $3000 offered as borrower "relocation expenses" and juicing the payoffs to the others as well. Of course they want to push short sales because of course they know that their modification program isn't working as planned. We're already seeing inventories shrinking way down out West, where banks are holding on to foreclosed properties and manipulating prices to their advantage. I'm also starting to hear rumblings among the number crunchers that the wave of foreclosures we keep hearing about is about to hit with a thunderous roar. Servicers are ramping up the mod process and pushing those who don't qualify out the door more quickly than ever. A big jump in inventories, which we already saw last month, right in the midst of the Spring market will turn home prices on their heels. Don't get me wrong, I'm loving the jump we saw today in the Pending Home Sales Index, but there was just something a little too hesitant in the Realtors' report. They seem to be talking about hints and hopes, rather than real change."
No double dip?
According to Jeffrey Lacker, President of the Federal Reserve Bank of Richmond, the US recovery is "sustainable" and the economy is unlikely to see another dip. “Friday’s employment report is evidence that the labor market is bottoming out,” Lacker said . US nonfarm payrolls rose 162,000 in March, after February’s drop of 36,000. The unemployment rate held steady at 9.7 per cent for the third straight month, as expected. Referring to public jitters over the Fed potentially raising the discount rate, Lacker said there are huge reserves in the system, and that general sentiment suggests the spread (between the discount rate and the fed funds rate) ought to remain at 50 (0.50 percentage points), rather than 100 basis points. “We won’t know what normal spread is until reserves are back to their normal operating range.” Lacker believes that as the recession recedes the government should sell some of the $1.25 trillion in mortgages that it has purchased to bolster the economy during the financial crisis. "Asset sales are a logical place to start if you want to drain reserves," Lacker said.
So is the government ready to cut off life support? “My comfort level is diminishing somewhat,” Lacker said, referring to the timescale on the government’s exit strategy. “Extended period is not a fixed number of months or meetings,” he said, referring to the Fed's stance of keeping an accommodative interest rate policy for an "extended" period of time.
HAFA rolls out
Laurie Maggiano, policy director of the Treasury’s homeownership preservation office and one of the driving forces behind Home Affordable Foreclosure Alternatives (HAFA), is encouraging real estate agents to provide the Treasury with feedback on the program and suggested they submit any issues directly to the Department, particularly if they haven’t received an answer on a short sale offer within the 10-day window as directed under HAFA for borrowers that don’t qualify for a federal modification. That window expands to 30 days if the borrower hasn’t applied for a mod but comes to the servicer with a short sale already in hand. She says that for the most part servicers are better prepared than they were for HAMP. “We’re cautiously optimistic that they’re ready to go” and have their staff and processes in place to hit the ground running, Maggiano said. Maggiano said Bank of America had already received 20 HAFA applications on the program’s first day, and Wells Fargo, too, was “moving full speed ahead.” She stressed that the Treasury has significantly streamlined the program in order to help servicers and borrowers alike avoid the financial and social pitfalls of foreclosure.
Office vacancies rise
According to a report by the real estate research firm Reis, office vacancy rates are now at their highest level in 16 years as unemployment levels across the country continue to decrease the demand for space. 700 million square feet, or 17.2%, of the more than 4 billion of available office space nationwide was unoccupied as of the end of March. The last time office vacancies were this high was in 1994. The number of empty offices has been on the rise since the start of 2008, as soaring unemployment and a wave of business failures have crushed commercial real estate. Nearly three-quarters of the country's major metropolitan areas experienced an increase in office vacancies in the first quarter of 2010. The city of Detroit has the highest office vacancy rate. Mired by troubles within the automotive industry, just over a quarter of all of the office space in the metropolitan region now sits empty, according to Reis. Washington, D.C. boasts the lowest vacancy rate, with just 10.4% of all office space vacant as of the end of March. Office rents continued to decline, falling 0.8% in the quarter. California's Orange County and New York City saw the biggest decline in rents so far this year, falling 2.3% and 2.1% respectively.
Above Post Written by: Chris Mclaughlin with Short Sale Riches.com
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