Case-Shiller index: More evidence for Tampa home price stabilization?

The S&P Case-Shiller home price index shows Tampa Bay home prices declining 21.3 percent from April 2008 to April 2009.

Normally we don't pay much attention to month-by-month price changes, but it's worth quoting the figure this time. Local home prices fell only 0.7 percent from March to April, an annualized rate of 8.4 percent. From February to March prices plunged 2.7 percent, Case Shiller said.

Combining data from Case-Shiller, Realtors and other real estate companies, the price stabilization trend seems unmistakable through April and May. The big question for us is whether the flattening will continue or whether rising interest rates and foreclosures will smear more grease under the skids.

Tampa Bay was tied for 7th worst on the 20-city index. Phoenix home prices crash and burned at -35.3 percent. Las Vegas wasn't much better at -32.2 percent. Once again, Miami felt more pain than we did. Its home prices fell 27.3 percent.

Two upper Midwest trouble spots were Detroit and Minneapolis, where home values fell 25.4 percent and 22.1 percent respectively.

Foreclosure bailout: As efficient as a drunken postal worker

The New York Times explains why the Obama administration's foreclosure prevention plan isn't working as hoped:

Somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit.

Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November.

Go figure: New home sales down, but appliance sales up

Competition from foreclosure homes continues to take a big chunk out of national new home sales, which fell unexpectedly in May to an annual seasonally adjusted rate of 342,000.

Sales dropped a hair from April, snuffing out the expectation that improving weather in May is supposed to stimulate new home construction in much of the country.

Year over year, new home sales dropped by a third. You can blame the housing glut. Builders sold hundreds of thousands, if not millions, of unnecessary homes from 2004 to 2007. That surplus has boomeranged on them brutally.

With such a dismal housing report, it's interesting that production of "durable goods" like washing machines, stoves and computers rose in May.

Maybe Americans figure that if they can't afford to change houses, they might as well enjoy the latest stainless steel refrigerator.

A new home report tailored to Tampa Bay comes out in mid July. You'll read it here first.

Will they ever learn in Washington?

The mad geniuses in Washington have their paws in the mortgage honey pot again. From the Wall Street Journal:

Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to "roll the dice" in the name of affordable housing. That didn't turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity -- with your money. He and New York Representative Anthony Weiner have sent a letter to the heads of Fannie and Freddie exhorting them to lower lending standards for condo buyers.

Tampa Bay home sales end 8 month lucky streak

Tampa Bay area home sales slipped 1 percent in May, snapping a trend of 8 straight months of rising home sales.

According to the Florida Association of Realtors, sales totaled 2,243 in May, 27 fewer than the 2,270 sales recorded in May 2008.

But home prices, while down 20 percent from a year earlier, marked their highest level so far in 2009. The region's median sales price was $141,100 in May, up from $135,200 in April.

Overall sales in Florida rose 16 percent year over year, from 12,044 to 13,921. Prices statewide declined 29 percent, from $203,800 last year to $144,400 this May.

Sales seemed to suffer in late May for two reasons. Mortgage rates began to rise after scraping new lows in April and early May. Home loans available for 4.6 percent in April rose to 5.7 percent in late May.

What's more, foreclosure sales, which have accounted for about half of all transactions in previous months, have begun to weigh on housing appraisals. Banks are wary of over-lending when appraisals come in so low.

Since Pinellas and Hillsborough county Realtors reported a modest rise in home sales in May, I assume sales were correspondingly weak in Pasco and Hernando counties. Those four counties make up the Tampa Bay metro area.

Home sales down: Kill the appraiser

The National Association of Realtors is spinning today's lackluster existing home sales news as a positive. Sales actually fell nationally when you compare May 2008 to May 2009.

(I expect Tampa Bay area sales in May to buck the national trend and show a year to year improvement. I'll post those numbers in an hour or two.)

Realtor economist Lawrence Yun is blaming appraisers for failing to value homes high enough:

First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.

Realtors said existing home sales came in at an annual rate of 4.77 million in May, 3.6 percent below the 4.95 million pace in May 2008.

That being said, appraisals ARE a problem. When appraisers include all the foreclosure sales, it makes it damned near impossible to refinance your house for anything near what you paid in 2005-2007. More Yun:

Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales. In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.

When housing stimulus doesn't stimulate

The government's jump start of the housing industry doesn't seem to be as electrifying as planned:

The Mortgage Bankers Association today lowered its forecast of mortgage originations in 2009 to $2.03 trillion, a drop of over $700 billion from its March forecast.  $84 billion of the drop is due to lower purchase originations and the rest is due to lower rate/term refinancings and very low volumes in the Fannie Mae and Freddie Mac Home Affordable Refinance Program (HARP).  MBA is now forecasting $737 billion in purchase originations and $1,297 billion in refinance originations

The March increase in refinance originations was driven by two factors. The first factor was the drop in interest rates. The subsequent increase in interest rates, however, began to choke off the refinance wave in May, much earlier than anticipated in the March forecast. The second factor was the large volume of loans expected from HARP. While generally accepted estimates were that around 1.5 to 2 million borrowers might avail themselves of this program, with many more potentially eligible, to date only about 13,000 loans have been completed according to press reports.

On the other hand, the banks are dragging their feet on this government-guaranteed refinancing. We made a call to our own bank and were told that refinancing through the "Obama plan" could take 6 months.

They clearly aimed to discourage us. For without as much as taking a breath, they pressured us to sign up for less generous traditional refinancing with all the lucrative closing costs attached.

More here

We were jackasses when we bought those $250,000 condos

The magazine Scientific American offers up mass psychology to explain the housing bubble. It seems we were overcome by irrational "animal spirits" when we assumed a $165,000 house was worth $289,000:

Animal spirits—the gut feeling that, yes, this is the time to buy a house or that sleeper stock—drive people to overconfidence and rash decision making during a boom. These feelings can quickly transmute into panic as anxiety rises and the market heads in the other direction.

Animal spirits propelled Internet stocks to indefensible heights during the dot-com boom and drove their values earthward just a few years later. They were present again when reckless lenders took advantage of low-interest rates to proffer adjustable-rate mortgages on risky, subprime borrowers. A phenomenon like money illusion prevailed: the borrowers of these mortgages failed to calculate what would happen if interest rates rose, which is exactly what happened during the middle of the decade, causing massive numbers of foreclosures and defaults.

I think I speak for most Floridians who bought during the housing boom: Hee Haw.

Wachovia + Florida = Not a Lot of Love

Wachovia Bank has put out an economic report for Florida that has few kinds words for our housing industry. Economists assume our recession will linger longer than the national recession. Thanks, fellas. A snippet:

Florida faces an even more difficult road to recovery. The Sunshine State went into recession a full nine months ahead of the nation, and excesses in housing and commercial real estate are considerably worse than the nation as a whole.

The housing bust is clearly Florida’s largest immediate problem. Single-family housing is extremely overbuilt, particularly along Florida’s central Atlantic coast, in southwestern Florida, in central Florida, in the outlying areas around Orlando and in many other of the outlying areas around the state’s other major employment centers. Permits for new single-family homes have tumbled 90 percent from their peaks nearly four years ago and the inventory of vacant, developed lots remains excessive throughout much of the state.

Page 20 of the report includes a take on Tampa Bay. It's none too pretty here either:

The Tampa-St. Petersburg metropolitan area has been hit especially hard by this downturn. Tampa had seen some of the strongest growth during the expansion, and home building and home prices rose much more than the underlying demographics support. The problem was most acute to the north of Tampa, in Pasco and Citrus counties. Both areas now boast significant supplies of vacant developed lots and have seen home prices and lot values collapse in recent years.

Tampa’s hard landing is somewhat surprising given the diversity of the local economy. The housing boom proved to be too large, however, with prices soaring 70 percent between 2002 and 2006. The unwinding from this boom is dragging down the entire economy. Home prices have plummeted 42 percent over the past three years. Home construction has plummeted more than 90 percent from the peaks reached three years ago.

Pinellas County home sales okay in May

They could be worse. Pinellas County home sales, I mean. In May of this year, 971 homes sold in Pinellas. In May 2008, sales were 941. That's a modest rise of 3.2 percent.

The median sales price declined 20 percent in that May-to-May period, from $175,000 to $140,000. The statistics come from the Pinellas Realtor Organization: Download Pinellashomesales.

The Pinellas report follows last week's Hillsborough County home sales report for May. Hillsborough showed wilder swings in sales and prices. While Hillsborough home sales were up 9.4 percent in May - nearly three times the rate of Pinellas - prices dropped much further at 32.5 percent.

Single family home listings continued to decline in Pinellas. They stood at 6,910 in May. The peak was 11,003 listings in February 2006. Condo listings have also shrunk, but not as dramatically.