********************************************** Phoenix creating another housing bubble? This past year marked a dramatic turnaround for the housing market in Phoenix. Just two years ago prices were down 56% of their peak values of 2006 and 2007, and foreclosures plagued the city. Speculation was that banks were holding shadow inventory and were slowly releasing it, which made it uncertain how much inventory was available. Additionally, the US was barely crawling out of a severe economic recession, so many were weary of putting money in real estate. But seemingly overnight the housing market improved. Suddenly, the Phoenix area had limited inventories, while the number of foreclosures continued to be reduced.Banks claimed that their distressed sales had been flushed out. All of a sudden there was actually a shortage of housing. Prices have soared in Phoenix this year, climbing nearly 30% over the past year to an average of $175,000, based on a July report from Arizona State University. What caused this drastic turnaround nearly overnight? The primary reason is the fundamental principal of economics: demand finally met supply. During the recession there was an excessive glut of housing on the market. Due to the weak economy people were afraid to buy, causing a high supply and low demand. However, banks worked through all the foreclosures and returned homes to the market. With additional sources of capital in Phoenix, investors are purchasing homes and creating new business models, which include rentals. Now, as the recovery continues, there is a major lack of supply in the Phoenix area. A healthy month’s supply of homes is around five to six months; currently in Phoenix there is a two-month supply. The prices have risen rapidly in response to this lack of supply. Furthermore, Phoenix is attracting investors from all over the world. It has become a modern day gold rush. Large investment firms are investing large amounts of capital in purchasing vast quantities of homes, fixing them up, and then marketing them as rentals. For years they have been buying homes at auctions. Over the last year Wall Street hedge funds with high levels of cash have been coming into the Phoenix market and buying homes. Adding to this, new prospective homebuyers, families and individuals, have been rushing to purchase homes before it’s too late. They want to get in before prices go even higher and they are priced out of the markets they are interested in. Finally, the population of Phoenix is continuing to increase. Earlier this year Forbes Magazine ranked the Phoenix-Mesa-Glendale area as the eighth-fasted growing city in the nation, behind Austin, Houston, Dallas, Raleigh, Salt Lake City, Seattle, and Provo. The population of Phoenix is forecast to increase 2.7% in 2013. Research shows that given this growth rate, homebuilders are not building enough homes to keep up with the increasing population. Slow black Friday highlights wealth gap US online sales increased 16% to $2.29 billion on Cyber Monday - the first Monday after Thanksgiving that is traditionally a big day for e-commerce - according to the Adobe Digital Index. This comes after a disappointing four days for sales in the US that showed a fall from last year. The National Retail Federation said Sunday that US shoppers spent an average of $407.02 from Thursday through Sunday, down from $423.55 last year. Nomura strategist Bob Janjuah believes this general picture of lackluster consumer spending is proof that Federal Reserve policy has increased the gap between rich and poor. I think these policies arent achieving the success in the real economy that they were meant to achieve, he said yesterday. What youve seen is that (the wealth) gap has got bigger and bigger and bigger during the six years that weve had a Democrat president. Emmanuel Saez, a professor of economics at the University of California, Berkeley, updated his research into income inequality in September which uses data from tax filings. He found that the share of the USs overall wealth for the countrys richest top 1% is back to pre-Wall Street Crash levels. The top 1%s share at the end of 2012 was equal to 50.4%, a level higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the roaring 1920s, Saez said. Under Obamas leadership, the top 1% of incomes have grown by 31.4% while the bottom 99% of incomes has grown only by 0.4%, he said. The Federal Reserve started adding to its balance sheet shortly after the global financial crash of 2008. After a short break it started a second program in 2010 and launched its third open-ended $85 billion-a-month program late last year. Meanwhile, the Bank of England has made similar moves despite admitting in a report in August that the top 5% of households had benefited the most. CoreLogic mortgage fraud consortium database CoreLogic today announced the company’s proprietary Mortgage Fraud Consortium database passed the 100-million-loan application landmark. Unique to the industry, the database consists of loan-level application and fraud-outcome data contributed by members of the CoreLogic Mortgage Fraud Consortium in return for aggregated information used to help detect and prevent mortgage fraud. Launched in 2009, the CoreLogic Mortgage Fraud Consortium brings industry leaders together to enhance understanding of current and emerging fraud trends in the loan origination cycle. CoreLogic uses the data gathered from the now more than 100 million loan applications to generate predictive fraud models, develop industry- and lender-level benchmarking standards, and to identify common fraud characteristics and adaptations in schemes. According to the latest CoreLogic Mortgage Fraud Report, the findings of which are mined directly from the consortium database, fraud risk among US mortgage applications declined 5.6% year over year in the second quarter of 2013, with fraudulent residential mortgage loan applications totaling an estimated $5.3 billion nationally. “As mortgage fraud patterns adapt and evolve, the collaborative environment of our consortium allows members to gain a broader understanding of what’s driving the latest schemes,” said Susan Allen, vice president of product management for CoreLogic. “The 100 million loan applications now included in the mortgage fraud consortium database further expand our ability to identify trends in specific fraud conditions, such as owner occupancy, short sale fraud and undisclosed debt.” The CoreLogic Mortgage Fraud Consortium data helps power the LoanSafe� product suite and enables alerts which help members ensure all mortgage liabilities are disclosed, which can support regulatory compliance. With access to data that validates the existence of mortgage debts, lenders are better able to strengthen compliance efforts associated with the Qualified Mortgage (QM) and Ability to Repay rules, as well as adherence to investor quality control expectations. CoreLogic Mortgage Fraud Consortium members represent nearly 80% of US residential mortgage activity. Fourteen of the top 20 residential lenders in the country contribute data to and participate in the CoreLogic Mortgage Fraud Consortium. WSJ - number of US banks shrinking The number of banking institutions in the US has dwindled to its lowest level since at least the Great Depression, as a sluggish economy, stubbornly low interest rates and heightened regulation take their toll on the sector. The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp. The decline in bank numbers, from a peak of more than 18,000, has come almost entirely in the form of exits by banks with less than $100 million in assets, with the bulk occurring between 1984 and 2011. More than 10,000 banks left the industry during that period as a result of mergers, consolidations or failures, FDIC data show. About 17% of the banks collapsed. The consolidation could help alleviate concerns that the abundance of US banks leads to difficulties in oversight or a less-efficient financial system. Meanwhile, overall bank deposits and assets have grown, despite the drop in institutions. Seven thousand is still an awful lot of banks, particularly in an era where brick-and-mortar branches are becoming less profitable, said David Kemper, chief executive of Commerce Bancshares Inc., a regional bank based in Missouri. Theres no reason why we need that many banks, especially if those smaller banks have a much lower return on capital. The small banks bread and butter is just not there anymore. Realtytrac - winter move trends realtor recently surveyed 1,300 people interested in buying a home at this time of year if they can. Four key reasons for the decision were clear: - 26% thought sellers would be more motivated to sell and to negotiate - 24% believe home prices would be better now - 24% were unable to purchase in the spring or summer buying seasons - 20% thought there would be less competition from other buyers at this time of year Putting a damper on those thoughts and dreams was the reality of the market presenting major challenges to those wannabe homeowners: - 45% said there was not enough inventory within their price range - 34% said there was not enough inventory on the market - 29% said the weather at this time of year makes the house search unpleasant - 7% said there were still too many buyers in the market The reasons why the respondents are continuing to look are nothing out of the ordinary: - 28% were looking to relocate - 19% are existing homeowners looking to downsize to a smaller or less expensive home - 19% are first-time buyers - 15% said they are looking to move up to a larger or more expensive home When it comes to financing their purchase, of these potential winter-time buyers: - 13% are planning to put down 3.5% (using an FHA loan) - 23% plan to put down 10 to 20% - 22% plan to put down 21 to 99% - 19% are all-cash buyers Of those all-cash buyers: - 29% are downsizing to a smaller or less expensive home - 26% are relocating - 11% are moving up to a larger or more expensive home - 11% are looking for a vacation home With the number of foreclosures — both short sales and bank-owned properties — rapidly declining over the past year, the chance of these buyers finding a true “bargain” in the marketplace is difficult at the very least considering the hordes of buyers — including investors — who are still out there vying for the same properties. Multiple offer situations are getting more and more commonplace every day. Add to that the competition from the large institutional buyers paying too much to win out at foreclosure auctions in certain markets, plus tight lending standards that look like they’re going to get even tighter come 2014, and you have a situation that makes successfully buying a bargain dream home very close to being a Christmas miracle. Obamacare error rate remains secret Even as President Barack Obama prepares to make a fresh push for his troubled healthcare program today, questions still remain about the error rates being seen HealthCare.gov. The federal agency running the site on Monday repeatedly refused to reveal how many Obamacare enrollments to date have software-related errors that could delay enrollees insurance coverage, even as it announced a major fix of those problems going forward. The Centers for Medicaid and Medicare Services also refused to say when it had learned that up to 80% of the software errors affecting enrollment data were due to a single bug related to enrollees Social Security numbers, and why it was disclosing that fact only Monday when it announced that bug has been fixed. The bug may have affected an unknown number of the more than 125,000 enrollments that a source told CNBC have enrolled in coverage through HealthCare.gov since Oct. 1. Despite these ongoing issues, the White House said Saturday that the website is working at an acceptable level. Obama is expected to discuss the healthcare program, formally known as the Affordable Care Act, at 2:30 p.m. Tuesday. In his remarks, the President will discuss the ongoing work to strengthen the website and reach Americans seeking these new healthcare options, a White House official told Reuters. He will also focus attention back on the core principles of reform that have been lost in the attention on the website, and invoke the successes that are already flowing from the law. However, it may be tough to shift the focus away from the website. An insurance industry source told CNBC that insurance plans are still having serious problems with files. Questions about the so-called 834-error rate were already pressing before CMS afternoon conference call with reporters about the status of HealthCare.gov, the federal governments marketplace for selling health insurance in 36 states. The number 834 refers to the type of file insurers use to enroll people. The insurance industry source said the HealthCare.gov repair team has repeatedly put in supposed fixes that seem to solve problems on the website side but dont all resolve the problem on the insurers side. Asked about the 834 issue, White House spokesman Jay Carney on Monday said it is a high priority to make sure that people who have enrolled through HealthCare.gov are aware of the steps they need to take to call the websites call center or their insurer to make sure their enrollment has been processed correctly if they are not sure it has been. See you at the top! Chris McLaughlin ************** Copyright Loss Mitigation Institute LLC 2012. All Rights Reserved.
Posted on: Wed, 04 Dec 2013 14:37:14 +0000
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