- The distressed share of all home sales in Region 4 (North Carolina, South Carolina, Kentucky, and Tennessee) has fallen steadily over the 3 quarters ending in September.
- The distressed share was just 21% in the 3rd quarter, down from 33% six months earlier.
- This decline has helped to firm up the prices of distressed properties and expectations for future price growth.
- To find the full surveys for each region, click here >
The share of total sales made up by short-sales and foreclosures continued to decline in Region 2 (New York, New Jersey, and Pennsylvania) over the three-quarter period ending in September. However, the price discount on both types of distressed properties rose in the 3rd quarter suggesting that the slim reserve of distressed sales are less desirable (e.g. commute, neighborhood, etc.) or are in poorer condition than the majority of properties.
To find the full surveys for each region, click here >
- The share of buyers making a downpayment of 20% or more accounted for one third of all transactions in Region 1 (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut) during the 3rd quarter.
- Downpayment requirements have been elevated for some time, but the new, lower conforming loan limits resulted in higher downpayment requirements in many parts of the high priced Northeast.
- While the limits changed on October 1st, banks and mortgage brokers were putting the new requirements in place in advance of the statutory change anticipating long pipelines of mortgages waiting for closings.
To find the full surveys for each region, click here >
The share of distressed sales eased for the 3rd consecutive quarter in Region 3 (Delaware, Maryland, District of Columbia, Virginia, and West Virginia). As a result, the price discount on these properties relative to non-distressed sales improved. Demand for distressed sales by investors remains intense in this area as rent growth has been strong and is forecast to remain so.
To find the full surveys for each region, click here >
- Roughly 45% of homebuyers put down 10% or less for a home purchased during the 3rd quarter in Region 5 (Georgia, Florida, Alabama, Mississippi, Virgin Islands, and Puerto Rico).
- Both the reduction of the conforming loan limits as well as the proposed Qualified Residential Mortgage rule could have a stifling effect on home sales in parts of this market as both measures increase downpayment requirements.
- To find the full surveys for each region, click here >
- The share of cash purchases made in Region 7 (Indiana, Illinois, Wisconsin) during the 3rd quarter rose from 22% to 26% at the same time the investor share eased.
- In an environment of record low mortgage rates, at or below 4% for much of this period, these trends suggest that tight lending standards continue to force homebuyers to bring large amounts of cash to the table, limiting the pool of eligible borrowers.
- To find the full surveys for each region, click here >
Many baby boomer parents who are approaching retirement age have been frustrated at receiving virtually nothing on their lifetime savings from CDs (certificate of deposits) at banks. Some baby boomer parents have become frustrated with their children – adult children – who can’t or won’t leave home. Household formation, after all, has slowed to a crawl despite decent overall population gains in the past 3 years during the Great Recession and the subsequent slow job market recovery. (The population can increase without a similar household increase if people double and triple up, or continue to live with family members.)
A perfect solution may be at hand for this type of situation. Parents buying a home for their kid – with all cash or something close – can then have their kid pay them the prevailing mortgage interest rate of around 5 percent or so. That 5 percent return surely beats the near-zero rate offered on bank CDs. At the same time, it is a great way to help the child leave the nest with compassion. Anecdotal stories on this trend have been surfacing in the past year. Recent unprecedented high levels of all-cash deals in today’s market also give indirect supporting evidence to this hypothesis. However, it is still unclear how prevalent the trend is, or whether there are hidden drawbacks to this strategy.
Have any of you had any clients like in the above situation? And does this kind of approach make sense? Let us know in the comments.
Every week the Research staff analyzes key data releases and explain what they mean for you and your business. In this update, we give the highlights of the most important data releases for the week of June 6-June 10, 2011, along with graphs that show the latest movement and overall trends.
- The share of total sales made up by short-sales and foreclosures has fallen steadily in Region 2 (New York, New Jersey, and Pennsylvania) over the three-quarter period ending in March.
- This steady decline has caused the price discount on short-sales relative to the market to decline.
- For the survey from your region, click here >
- The share of distressed sales, both short-sales and foreclosures, surged relative to total sales in Region 1 (Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut) during the 1st quarter.
- With no tax credit in 2011, fewer traditional sellers are on the market and entering the sales mix.
- For the survey from your region, click here >
