Headlines – Week of August 5, 2012

August 13, 2012

Home Price Index Rises 2.5% – Fourth Consecutive Year-Over-Year Increase

The recent CoreLogic Home Price Index (HPI) showed that home prices nationwide, including distressed sales, increased on a year-over-year basis by 2.5 percent in June 2012 compared to June 2011.

On a month-over-month basis, including distressed sales, home prices increased by 1.3 percent in June 2012 compared to May 2012. The June 2012 figures mark the fourth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 3.2 percent in June 2012 compared to June 2011. On a month-over-month basis excluding distressed sales, home prices increased 2.0 percent in June 2012 compared to May 2012, the fifth consecutive month-over-month increase. Distressed sales include short sales and real estate owned (REO) transactions.

According to the firm, home prices are responding positively to reductions in both visible and shadow inventory over the past year.   Mark Fleming, chief economist for CoreLogic believes this trend is a bright spot because the decline in shadow inventory translates to fewer distressed sales, which helps sustain price appreciation.

Highlights as of June 2012

  • Including distressed sales, the five states with the highest appreciation were: Arizona (+13.8 percent), Idaho (10.4 percent), South Dakota (+10.1 percent), Utah (+8.3 percent) and Wyoming (+7.7 percent).
  • Including distressed sales, the five states with the greatest depreciation were: Alabama (-4.8 percent), Connecticut (-4.0 percent), Illinois (-3.4 percent), Georgia (-2.9 percent) and Delaware (-2.8 percent).
  • Excluding distressed sales, the five states with the highest appreciation were: South Dakota (+10.2 percent), Utah (+9.1 percent), Montana (+8.7 percent), Arizona (+8.7 percent) and Wyoming (+6.9 percent).
  • Excluding distressed sales, the five states with the greatest depreciation were: Delaware (-3.6 percent), Alabama (-3.1 percent), Connecticut (-2.1 percent), New Jersey (-0.9 percent) and Kentucky (-0.4 percent).

 

States with the Most Underwater Homeowners

Another CoreLogic report in July stated that fewer homeowners nationwide are “underwater” on their mortgages, owing more on their loan than their home is currently worth.  The report noted that the number of underwater mortgages fell from 12.1 million – or 25.2 percent – at the end of 2011 to 11.4 million – or 23.7 percent – by the end of the first quarter of this year.

Still, the number remains high in some states. Those with the highest negative equity also tend to have some of the highest percentage of homeowners falling behind on mortgage payments and facing possible foreclosure.

24/7 Wall St. recently identified the following states as having the highest percentage of homes with underwater mortgages.

  • Nevada: 61.2%
  • Florida: 45.1%
  • Arizona: 43.4%
  • Georgia: 37.2%
  • Michigan: 35.6%
  • California: 30.5%
  • Illinois: 28%

Canada Poised To Step Up Transaction Activity In South Florida Condo Market

According to a new report from CondoVultures.com, foreign real estate investors from Canada are poised to increase their transaction activity in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach in the upcoming winter tourism season.

A series of factors for this expected increase include; 1) a strong Canadian Dollar being fueled by that nation’s economic prowess and natural resources; 2) several years of real estate appreciation in Canada’s residential market; and 3) a growing concern in press reports about the possible overheating of the Canadian condo market -are expected to prompt an increasing number of buyers from Canada to look at diversifying into the slowly recovering U.S. housing market where rental rates are surging and resale prices remain discounted.

The potential increase in the number of investors from Canada in South Florida’s foreign-buyer-dependent condo market comes at a time when international purchasers are increasingly challenged by economic and currency volatility in their native countries of Argentina, Brazil, Mexico, and Western Europe.

Despite a weakening in recent months, the Canadian Dollar against the U.S. Dollar is up more than five percent as of Aug. 7, 2012 compared to the same time in 2007 when the U.S. housing market first began to implode.

This compares this to the worsening currency exchange rates of countries active in the South Florida real estate market such as Argentina (down 31.5 percent); Brazil (down 6.1 percent); Mexico (down 16.1 percent); the Euro (down 10.3 percent); and the British Pound (down 23.4 percent) since August 2007.

International buyers have played a major role in acquiring the excess South Florida condo inventory that flooded the market beginning in 2007 at the start of real estate crash.

Of Florida’s estimated $12.8 billion of international sales annually, investors from Canada account for 39 percent of “total international purchases” in the state with a preference for condos (57 percent) compared to single-family houses (32 percent), townhouses (six percent), and other residential product (five percent), according to a report by the National Association of Realtors.

By comparison, Latin America accounts for 26 percent and Western Europe for 23 percent of “total international purchases” in Florida.

Posted by Scott R. Lodde

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