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RISMedia is pleased to announce that NFL Hall of Fame quarterback Steve Young will be this year’s special celebrity guest speaker at the company’s annual Power Broker Reception & Dinner honoring the nation’s top 500 brokerage firms. The event will take place on Friday, November 8th in San Francisco during the annual NAR Convention and Expo.
Young played college football for Brigham Young University (BYU), and professionally for the Los Angeles Express of the United States Football League, and the NFL’s Tampa Bay Buccaneers and San Francisco 49ers. He was a quarterback for 14 seasons during the 1980s and 1990s.
He was named the NFL’s Most Valuable Player in 1992 and 1994, and the MVP of Super Bowl XXIX. He was ranked 63 on The Sporting News list of the 100 Greatest Football Players in 1999.
He is a member of the College Football Hall of Fame and the Pro Football Hall of Fame. At the time of his retirement, he had the highest passer rating among NFL quarterbacks and is currently ranked third. He is also still ranked highest amongst retired players.
Regional Spotlight—Central Ohio home sales are on track to be the second highest year ever, despite the decrease in inventory according to the Columbus REALTORS® Multiple Listing System (MLS).
So far, there have been 23,292 homes and condos sold this year between January 1 and October 31. The current record for the first ten months of the year is 23,540 back in 2005. The 2,032 homes and condos sold in October fell 2.1 percent from the previous year (2,075).
“Sales dipped last month, not because we don’t have the demand, but because we don’t have the inventory,” says Chris Pedon, 2013 president of Columbus REALTORS®. “We’ve been publishing the lack of inventory for the last several months. We have buyers. But we need more houses and condos to show them.”
The number of residential homes on the market has dropped to just under 10,300, 1.4 percent less than a year ago and the lowest level of inventory at this time of year since 2002. Inventory has averaged almost 14,900 for the last five years, but has been dropping steadily over the last couple years.
As a result, home prices are rising. The average price of a home sold in central Ohio last month was $171,355, up 5.5 percent in the last year. Year to date prices (January through October) are averaging $174,589, 3.8 percent above the same period in 2012.
According to the latest Housing Market Confidence Index (by the Ohio Association of REALTORS®), 89 percent of central Ohio REALTORS® describe the current housing market as moderate to strong, but 95 percent expect the housing market to be moderate to strong over the next six months. As for home prices, 79 percent expect home prices to rise over the next year.
The Federal Housing Finance Agency (FHFA) Office of Inspector General (OIG) has published an evaluation report detailing Freddie Mac's involvement in unsecured lending to Lehman Brothers just prior to that firm's bankruptcy. The last Freddie Mac loan to that firm resulted in a loss of $1.2 billion.
Prior to its filing for bankruptcy Lehman was the fourth largest investment bank in the United States with $639 billion in assets. Lehman traded and underwrote stocks and bonds, traded commodities, was active in the credit derivatives market, and became a major player in both commercial and residential securitization markets. Lehman sold mortgages to Freddie Mac and also served as one of its investment bankers. Lehman underwrote common and preferred stock offerings for Freddie Mac as well as various debt securities offerings.
In 2007 it underwrote more mortgage-backed securities (MBS) than any other firm. Its $85 billion mortgage-backed portfolio was equal to approximately four times its shareholders' equity and this high degree of leverage made it vulnerable to the increasing losses it was incurring in its residential housing and commercial property investments.
On June 9, 2008, Lehman announced a $2.8 billion second quarter loss and on September 10, 2008, it posted a third-quarter loss of $3.9 billion. Its increasing losses were reflected in the price of its common stock.
Freddie Mac had been lending to Lehman since 2005, typically what are known as "Fed Funds" or overnight loans. In January 2008 the nature of those loans changed to longer term, typically a month, loans which often were rolled over into new loans. In August 2008 Freddie Mac made two short-term unsecured loans to Lehman Brothers totaling $1.2 billion which were due on September 15, the day Lehman filed for bankruptcy protection.
Like other companies, Freddie Mac typically invests its cash in a manner intended to ensure that such funds will be returned to it so it can pay its own obligations as they become due. Choosing counterparties capable of meeting their obligations is not only a function of its financial condition and credit history but also a function of time. The longer the term for which money is lent, the greater the risk of default. Such assessments were the responsibility of the Credit Risk Management (CCRM) staff of Freddie Mac's Risk Oversight Division.
During 2008, CCRM's oversight of risk with the Lehman loans focused primarily on whether such loans should be limited to overnight (24 hours) or longer (up to 30 days) terms. Indeed, in 2008, some CCRM staff questioned whether Freddie Mac should be making unsecured loans to Lehman at all. However, those concerns, which would have reduced the extent of the Enterprise's exposure, were overruled at senior levels within Freddie Mac as were repeated recommendations that any loans be limited to shorter terms.
Freddie Mac was historically regulated by the Office of Federal Housing Oversight (OFHEO) which was replaced by the FHFA on July 30, 2008. No examination had been performed by OFHEO related to capital markets counterparties prior to the Lehman bankruptcy. Following the default FHFA examiners conducted a series of targeted examinations related to counterparty credit risk management and management of Freddie Mac's liquidity and contingency portfolio and made a number of findings regarding Freddie Mac's operations. It recommended that certain actions be taken to better manage counterparty risk and particularly to clarify that Fed Funds investments do not carry any implied government guarantee.
FHFA's Examiner-in-Charge at Freddie Mac has indicated that the monitoring of counterparty risk is a priority for the Agency and that "significant resources" will be dedicated toward the examination of such risk in the 2013 Examination Plan. During the second half of 2012, FHFA conducted several targeted examinations relating to various aspects of counterparty risk and now requires the GSEs to report on counterparty risk (quantitatively and qualitatively) on a monthly basis. Freddie Mac has amended its Liquidity and Contingency Policy to reflect that its activities are consistent with FHFA and Treasury guidance and suspends unsecured term lending. Second, the Capital Markets Counterparty Credit Risk Management Policy was revised to clearly define the roles and responsibilities of Freddie Mac staff involved in managing the Enterprise's counterparty credit risk program and defines Fed Funds lending as an unsecured investment.
OIG notes that FHFA and Freddie Mac are making attempts to recover the $1.2 billion lost in the Lehmann bankruptcy. Freddie Mac filed a proof of claim but it stands behind secured creditor's claims. FHFA, through the Office of General Counsel, has worked to improve the chances of Freddie Mac's recovery and it is possible that Freddie Mac may ultimately recover $1.2 billion but stands to recover no less than $251 million.
OIG says that while FHFA and Freddie Mac have already taken steps to address the shortcomings in Freddie Mac's risk management and control systems, it recommends that that FHFA should:
Mortgage rates were all over the board on Wednesday in terms of their movements relative to each other and trading levels in the Secondary Mortgage Market. Some lenders were priced slightly weaker while a few were notably stronger, but none of them so far off from yesterday's rates as to suggest a change in the prevailing conventional best-execution rate of 3.375%. (Read More:What is A Best-Execution Mortgage Rate?).
Typically, it's the prices of mortgage-backed-securities (MBS) that have the most influence on the day-to-day movements in interest rates and the costs associated with those rates (because it's less common for the actual quote interest rates to change on any given day, while it is almost always the case that the closing costs associated with that rate will be changing). And while some lenders did indeed offer better pricing today, in line with the improvements in MBS, there was certainly an uncommon level of disconnection.
In part, this is a symptom of markets having been closed yesterday and most of Monday. With today being the last day of the month, it has created a sort of crunch-time for lenders to conduct October's business. Additionally, we have the important Employment Situation Report coming up on Friday and mortgage rates tend to err on the conservative side heading into the report.
Loan Originator Perspectives
"I feel today would be a good day to lock up loans. Friday's jobs data can definitely move the market, but with rates at this level there is much more room for a move higher in rates than lower. And the election is right around the corner and who knows what impact that might have on rates. MBS are at their best levels in quite some time. If your lender repriced better, i would lock if within 30 days. If your lender doesn't reprice, you might still consider locking but definitely lock up before Friday. " -Victor Burek, Benchmark Mortgage.
Today's Best-Execution Rates
Ongoing Lock/Float Considerations
September Existing-Home Sales Down but Prices Continue to Improve
Posted By susanne On October 22, 2012 @ 3:37 pm In Real Estate Information,Real Estate News | Comments Disabled
September existing-home sales declined modestly, but inventory continued to tighten and the national median home price recorded its seventh back-to-back monthly increase from a year earlier, according to the National Association of REALTORS®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 1.7 percent to a seasonally adjusted annual rate of 4.75 million in September from an upwardly revised 4.83 million in August, but are 11.0 percent above the 4.28 million-unit pace in September 2011.
Lawrence Yun, NAR chief economist, said the market trend is up. “Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” he says. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.47 percent in September from 3.60 percent in August; the rate was 4.11 percent in September 2011.
The national median existing-home price for all housing types was $183,900 in September, up 11.3 percent from a year ago. The last time there were seven consecutive monthly year-over-year increases was from November 2005 to May 2006.
Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 24 percent of September sales (13 percent were foreclosures and 11 percent were short sales), up from 22 percent in August; they were 30 percent in September 2011. Foreclosures sold for an average discount of 21 percent below market value in August, while short sales were discounted 13 percent.
Total housing inventory at the end September fell 3.3 percent to 2.32 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, down from a 6.0-month supply in August. Listed inventory is 20.0 percent below a year ago when there was an 8.1-month supply.
“The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,” Yun says.
The median time on market was 70 days in September, unchanged from August, but down 30.7 percent from 101 days in September 2011. Thirty-two percent of homes sold in September were on the market for less than a month, while 19 percent were on the market for six months or longer.
NAR President Moe Veissi says some buyers who could easily afford a mortgage can’t assume they’ll get one. “Home buyers need to be more focused on the mortgage process in the current environment where lenders and banking regulators are being risk averse,” he says. “Shopping for competitive mortgage terms is a good idea, but it may be more important to find a bank that is willing to work with you given your credit history. REALTORS® can often recommend lenders that may have more reasonable underwriting standards.”
First-time buyers accounted for 32 percent of purchasers in September, compared with 31 percent in August; they were 32 percent in September 2011.
All-cash sales were at 28 percent of transactions in September, up from 27 percent in August; they were 30 percent in September 2011. Investors, who account for most cash sales, purchased 18 percent of homes in September, unchanged from August; they were 19 percent in September 2011.
Single-family home sales declined 1.9 percent to a seasonally adjusted annual rate of 4.21 million in September from 4.29 million in August, but are 10.8 percent higher than the 3.80 million-unit level in September 2011. The median existing single-family home price was $184,300 in September, up 11.4 percent from a year ago.
Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5 percent above the 480,000-unit pace a year ago. The median existing condo price was $181,000 in September, which is 10.0 percent higher than September 2011.
Regionally, existing-home sales in the Northeast fell 6.3 percent to an annual level of 590,000 in September but are 7.3 percent above September 2011. The median price in the Northeast was $238,700, up 4.1 percent from a year ago.
Existing-home sales in the Midwest slipped 0.9 percent in September to a pace of 1.10 million but are 19.6 percent higher than a year ago. The median price in the Midwest was $145,200, up 7.0 percent from September 2011.
In the South, existing-home sales increased 0.5 percent to an annual level of 1.93 million in September and are 14.2 percent above September 2011. The median price in the region was $163,600, up 13.1 percent from a year ago.
Existing-home sales in the West fell 3.4 percent to an annual pace of 1.13 million in September but are 0.9 percent above a year ago. With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4 percent higher than September 2011.
For more information, visit www.REALTOR.org .
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The nation's shadow inventory dropped to 2.3 million housing units in July, down 10.2 percent from where it stood one year earlier. According to CoreLogic's report on the subject, released this morning, in the same month in 2011 the inventory was 2.6 million units. The dollar volume of the inventory in the most recent month was $382 billion compared to $397 billion the year before. The shadow inventory has now returned to the approximate level of March 2009. The current inventory represents a 6.3 month supply.
CoreLogic estimates the current stock of properties in the shadow inventory or pending supply by calculating the number of properties that are seriously delinquent, in foreclosure, or held as real estate owned (REO) by banks by not currently listed by multiple listing services.
The July inventory represented just over three-fourths of the 2.7 million properties that were seriously delinquent, in foreclosure or in bank-owned inventories (REO) at the time the data was compiled. Currently the flow of new seriously delinquent (90+ days) into the shadow inventory has been roughly offset by sales of REO and short sales.
Properties that are already in REO in July totaled 345,000 or 15 percent of the inventory and represent a 1.0 month supply at the current rate of absorption. There were 1 million seriously delinquent loans, a 2.9 month supply. Properties in some state of foreclosure numbered 900,000, a 2.5 month supply.
Seriously delinquent loans are the main driver of the shadow inventory and between April and July this number declined substantially in a number of states. These delinquencies were down 3.2 percent in Arizona, 2.8 percent in Pennsylvania, 2.3 percent in New Jersey and 2.2 percent in both Delaware and Maine.
Roll rates are the transition rates of loans from one state of performance to the next. CoreLogic said that, beginning with this report, cure rates are factored in as well to capture the rise in foreclosure timelines and further enhance the accuracy of the shadow inventory analysis.
Transition rates of "delinquency to foreclosure" and "foreclosure to REO" are used to identify the currently distressed non-listed properties most likely to become REO properties.
Anand Nallathambi, president and CEO of CoreLogic commented, "Broadly speaking, the shadow inventory continued to shrink in July. The reduction is being driven by a variety of resolution approaches. This is yet another hopeful sign that the housing market is slowly healing."
"The decline in shadow inventory has recently moderated reflecting the lower outflow of distressed sales over the past year," Mark Fleming, CoreLogic's chief economist said. "While a lower outflow of distressed sales helps alleviate downward home price pressure, long foreclosure timelines in some parts of the country causes these pools of shadow inventory to remain in limbo for an extended period of time."
As of July 2012, Florida, California, Illinois, New York and New Jersey make up 45 percent of all distressed properties in the country.
Housing Remains Bright despite Overall Slowdown
Posted By susanne On July 25, 2012 @ 3:50 pm In Consumer News and Advice,Finance and Economy,Real Estate Trends,Today's Marketplace,Today's Top Story,Today's Top Story - Consumer | Comments Disabled
Recent data indicate a slowdown in economic activity for the remainder of 2012, yet modest growth is still expected, according to Fannie Mae’s Economic & Strategic Research Group. Breaking pace with a strong first quarter, consumer spending has weakened in recent months as the consumer confidence index fell to the lowest level since January. Contributing to the downturn is an uncertain job market. The June employment report showed significantly fewer hires compared to the first quarter monthly average, and ongoing concern regarding the European debt crisis and domestic financial markets may suppress a meaningful increase in private payrolls before the end of the year. In light of these trends, the group has revised down the 2012 gross domestic product (GDP) growth projection from 2.2 percent to 2.0 percent.
“The data from the past month collectively point to decelerating economic growth, but growth nonetheless,” says Fannie Mae Chief Economist Doug Duncan. “It’s now clear that our bias toward downside risks noted in the June forecast have materialized, pushing down our already modest growth projections. However, despite signs of deteriorating momentum for economic activity, housing continues to be a bright spot as news from the housing market has been relatively upbeat, presenting a rare upside boost to the economy.”
The housing market continues to show positive signs. Compared to the same time last year, home sales increased by 9 percent and single-family housing starts are approximately 20 percent higher, though the levels are still considered below healthy norms.
Residential investment is expected to increase this year but from a very low base, and is expected to contribute to economic growth for the first time since 2005. According to Fannie Mae’s June 2012 National Housing Survey, homeowners are showing greater confidence in one-year-ahead home price expectations, and their broad attitudes regarding the housing market continue to improve.
The share of polled consumers who say they would buy a home if they were going to move increased by 6 percentage points to the highest level seen in the survey’s two-year history. This is likely due in part to low interest rates and the assumption that home prices have hit bottom.
For more information, visit www.fanniemae.com
The Appraisal Buzz is proud to publish this article from Andrew Belt. We asked him to do a special article for July 4th due to his military background. Thankfully he obliged. We hope you enjoy reading this as much as we did. We want to thank Andrew and all the servicemen and women, past and present, for their sacrifices for our great Country.
by Andrew Belt
"AND OUR FLAG WAS STILL THERE." I have this inner voice, right at the millisecond pause immediately following this verse, wanting to scream out "Hell yes it was" and make Francis Scott Key proud of today's generation of defenders. On this 4th of July we salute the brave men and women who have protected the United States Flag and its symbol of freedom for centuries. And we wish a heart-felt "Welcome Home" to the veterans of the 10-year Iraq war.
We Americans are a very diverse people. We concentrate most of our time moving in different directions, celebrating our freedom and compartmentalizing our lives. But we have a great capacity for pulling together in times of calamity and festivity. We reacted as one with patriotic fervor when the World Trade Center was attacked. From flooding in Louisiana to fires in Colorado, aid, volunteers and compassion flow to our stricken areas. We will watch with great pride as our athletes compete later this month in the 2012 London Olympics. And on July 4th, amidst the hillside blankets and oceans of scurrying kids, we will pause and suddenly be reminded that there is a common thread between us.
That thread came with great sacrifice, centuries of blood, sweat and tears and entire generations of excruciating hard work, "honest work."
For many of us, that 15 minute show of bombs bursting in air will suddenly bring those sacrifices into focus. The revolution, as our patriots defended our new land and freedom from the red coats. The GIs who stormed Omaha beach to triumph over the Germans and literally saved the world. The warriors who fought inch by inch up Iwo Jima and planted our flag in the Pacific. The Korean War veteran who froze to death in Inchon while surrounded by divisions of Chinese. The Vietnam veteran who called in a napalm airstrike on his own position to save his company. The modern American soldier who is battling an entire region of plain clothed suicide bombers using IEDs and Stone Age guerilla warfare…
As a Veteran myself, four glorious years walking the earth as an active duty United States Marine, looking back, it was probably a pinnacle. It was a conduit allowing me in a very deep personal way to be part of the 237 years of "I love this land." There truly is something to be said about the value of something you had to fight for. The theaters have changed and so has the mission. But sending rounds down range in combat hasn't changed at all. It's the same trigger squeeze. It's the same cold steel and, I assume, the same thought of "this is my flag and I'll be damned if someone or something is going to threaten it." The esprit de corps of what prior defenders of the flag gave and instilled in us.
I know that's what got me through the city of An Nasiriyah in late march 2003, as my infantry scout team fought its way across the Euphrates river into the heart of what later became known as "ambush alley", a seven mile stretch of hell intended to stop the American forces. And that same spirit has helped countless others through their sacrifices to ensure our future freedom.
The one thing that remains the same, the spirit that binds us as a nation, is symbolized by that flag. As we drift off in thought for a brief moment this year, with sparklers blazing and smoke billowing, reflect on the thread that binds us. The American to your right and the American to your left will be joining you in celebrating our nation's birthday and sharing your pride in the "land of the free and the home of the brave!"
Andrew has been in the real estate industry for over 9 years and is a proud United States Marine Veteran. Andrew's career in the mortgage and valuation industry began after his honorable military service ended in 2003. Belt formed the company on the belief that today's financial firms are in great need of valuation service providers that are built upon the same founding values of our military; SERVICE, LOYALTY, HONESTY and INTEGRITY.
Do you have any comments or would you like to submit content of your own? Email firstname.lastname@example.org
Refinancing activity increased to 81 percent of all applications from 79 percent the previous week and the Refinancing Index rose one percent. The seasonally adjusted Purchase Index however fell 9 percent; unadjusted it was down slightly more than 9 percent and was 2 percent lower than during the same week in 2011.
"Refinance volume increased again last week, but the composition of activity changed markedly. Despite rates remaining near all-time lows, conventional refinance application volume declined, and the HARP share of refinance activity dropped to 20 percent," said Michael Fratantoni, MBA's Vice President of Research and Economics. "On the other hand, FHA refinance volume exploded to an all-time high, more than doubling over the week. New, lower FHA premiums on streamlined refinance loans came fully into effect, and borrowers seized the opportunity to lower their mortgage rates without increasing their FHA premiums. Purchase activity fell off last week, but this is likely only a recalibration following the Memorial Day holiday, as the level of activity remains within the narrow band seen for the past 3 years."
Purchase Index vs 30 Yr Fixed
Refinance Index vs 30 Yr Fixed
Mortgage rates were mixed. The average contract interest rate for 30-year FRM with conforming loan balances ($417,500 or less) decreased to 3.87 percent, matching the lowest rate in the history of the survey, from 3.88 percent, with points increasing to 0.49 from 0.43. Jumbo 30-year FRM (balances greater than $417,500) decreased to 4.06 percent, the lowest rate in the history of the survey, from 4.12 percent, with points decreasing to 0.38 from 0.41. The effective rates of both conforming and jumbo loans decreased.
Even though the interest rate for FHA-backed 30-year FRM increased one basis point to 3.72, points decreased to 0.47 from 0.59 and the effective rate decreased from the previous week. Rates also increased for 15-year fixed-rate mortgages, from 3.23 percent with 0.48 point to 3.25 percent with 0.45 point. The effective rate also increased.
The 5/1 adjustable rate mortgage (ARM) rate decreased to 2.75 percent, the lowest rate in the history of the survey, from 2.78 percent, with points dropping to 0.33 from 0.49. The effective rate decreased. The ARM share of application activity decreased to 4 percent of total applications.
All interest rates are for 80 percent loan-to-value ratio loans and points include the origination fee.
MBA reports that during the month of May investors filed 6 percent of applications for home purchase mortgages, unchanged from April. Investor activity in several regions did increase, including East South Central and South Atlantic which were up by 0.5 percent.
Data is derived from MBA's Weekly Mortgage Applications Survey which covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.
Improving Foreclosure Prices Drive Recovery
Posted By susanne On June 6, 2012 @ 3:38 pm In Business Outlook,Consumer News and Advice,Finance and Economy,Home Owner News,Real Estate Information,Real Estate News,Real Estate Trends,Today's Marketplace,Today's Top Story | Comments Disabled
Significant price increases in bank-owned foreclosures are driving gains at the national, regional and local levels, helping home prices turn the corner with small quarterly and yearly gains.
National average prices for bank-owned foreclosures (REO) were up 8.1 percent over a year ago on a median price-per-square-foot basis, according to May data from Clear Capital, and have outpaced non-REO price declines of -0.7 percent by 8.8 percentage points.
“Strength in REO-only price trends as well as some early indications of price gains spreading from low tier sectors to the mid, and higher-priced homes is helping confirm that the country continues to make progress on its recovery, and we are expecting to see improvements extend over the next several months,” says Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital.
Clear Capital reported today that in May national median home prices grew on both a quarterly and yearly basis for the first time since August 2010. Regional performance improved across the board with the West, South and Northeast also seeing quarterly and yearly gains. However, the Midwest sustained declines, but milder since last.
“National real estate prices in May have finally moved past the continued losses of the last few years. The subsequent stabilization pattern seen in recent months has progressed into the start of moderate growth,” says Villacorta.
Short-term quarterly price trends picked up slightly at the national level, with appreciation of 0.4 percent turning into the first quarterly gain since November of 2011. The positive move at the broader market level is a reflection of the increasing strength at the regional level.
Helping to support growth at the national level, the West saw a notable jump in prices over the quarter, taking the lead over all the regions with growth of 2.7. The South recorded home price appreciation of 1.2 percent quarter-over-quarter, doubling the small gains of 0.6 percent reported on last month. Similarly, the Northeast matched the national level gains of 0.4 percent over the quarter, showing a modest uptick over the gains of 0.2 percent reported last month.
The Midwest continued to absorb price declines. With prices declining only -2.0 percent over the quarter the magnitude of the declines are subsiding, as compared to last month’s quarterly losses of -2.7 percent.
While growth in REO-only prices is driving broader market gains for most of the regions, the impact on overall prices depends on the level of REO market saturation. For example, the Northeast has seen incredible growth in the REO-only sector shown above, yet has only recorded 1.6 percent gains year-over-year in overall prices. Because the Northeast has a mere 10 percent REO saturation, the lowest level across all regions, even substantial growth in the REO-only price segment hasn’t swayed overall prices significantly. Additionally, the Northeast’s REO-only prices are more sensitive to shifting demand, fueling the seemly high annual gains, says Villacorta.
The Midwest is the only region that continues to see REO-only price declines on a year over year basis. While REO-only price growth has led the other regions into broader based growth, the Midwest has yet to receive assistance from this sector on overall progress. It’s worth noting that the Midwest’s REO saturation levels are still the highest of all the regions. As such, price weakness in the REO-only segment has been harder for the market to shake off, resulting in sustained declines at the broader level, as seen in overall yearly declines of -3.1 percent.
However, each of the three regions now seeing gains in REO-only prices first saw long term reductions in REO saturation rates. And while the Midwest continues to face declines, it has achieved a reduction in its REO saturation rate over the last several years, from a high of 45 percent in 2009, down to 37 percent in May.