Home price index: Nation, California see slip in September

Home prices in the nation's largest cities fell from August to September, according to a closely watched index, renewing a decline in values with the end of the busy spring and summer months.

The Standard & Poor's/Case-Shiller index of 20 American cities, a key measure that is closely watched by economists, fell 0.6% from August to September and 3.6% from September 2010.

"Any chance for a sustained recovery will probably need a stronger economy," David Blitzer, chairman of the S&P index committee, said in a release announcing the new data Tuesday.

All of the California cities in the index posted declines from the prior month. Los Angeles and San Diego were down 0.8% and San Francisco fell 1.5%. A drop in sales and weakening in values is common from August to September, as many families tend to close their purchases and complete their moves before the start of the school year.

Home prices in the California cities are comparatively healthy despite the state's high unemployment rate, because the markets tracked by the index are close to key job centers such as Hollywood and Silicon Valley and are also near the ocean -- where overbuilding was relatively constrained. The index does not track prices in California's Central Valley or the Inland Empire, where housing is still weak.

The Case-Shiller index also includes adjusted data, but the experts who publish these numbers have cautioned that the large number of foreclosures on the market have distorted the statistics. The adjusted data showed the 20-city index fell the same amount from August to September.

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Photo: A sign showing a property for sale. Credit: Images_of_Money via Flickr

U.S. home sales increase in October

More people closed deals on home purchases last month than was expected by economists, driving down the number of homes available for sale to an eight-month supply.

Sales rose 1.4% from the prior month, and 13.5% above the same month a year earlier. Each month, the National Assn. of Realtors reports the figures in the form of an annual sales pace adjusted for seasonal variations. Last month's pace was 4.97 million, the group reported.

With the increase in sales last month, the number of homes on the market continued to decrease, which real estate agents view as a positive sign for their business because fewer homes on the market drives prices up and increases commissions. Less supply on the market, however, also means fewer options and increased competition for consumers looking to purchase a property.

U.S. housing inventory at the end of October fell 2.2% to 3.33 million previously owned homes available for sale, which represents an eight-month supply at last month's sales pace. A big chunk of the homes selling these days are bank-owned homes, so the housing supply could increase if new foreclosure actions continue to pick up.

The median price paid for all types of previously owned homes -– houses, condominiums, town homes -– was $162,500 last month, which was a 4.7% decline from October 2010. The share of so-called distressed homes -– foreclosures and short sales -– made up 28% of the market last month.

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Photo: A sign showing a property for sale. Credit: Images_of_Money via Flickr

Higher FHA loan limits reinstated for high-cost housing markets

Uncle Sam has thrown California and other high-priced housing markets a lifeline.

President Obama on Friday signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Los Angeles and Orange counties, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change became effective Friday.

Similar ceilings applying to loans that can be backed by Fannie Mae and Freddie Mac will not increase. The California Assn. of Realtors and its larger national partner association had lobbied for all of the loan limits to be reinstated.

The group is “pleased the Senate and House were able to come to a reasonable compromise,” LeFrancis Arnold, president of the group, said in a statement Friday. “However, we are disappointed that the Senate and House could not agree on increasing the loan limits for Fannie Mae- and Freddie Mac-insured loans.”

A bipartisan group of California lawmakers had sought the increase of all of the old limits, but the House Appropriations Committee had raised concern that Fannie and Freddie, which have received more than $150 billion in financial rescue money from taxpayers, have received public scrutiny for “questionable business practices,” The Times previously reported.

The FHA has also come under increased scrutiny as that agency said in a report to Congress this week that it could be headed for its own taxpayer bailout.

Rep. Brad Sherman (D-Sherman Oaks), in a statement said the passage of the higher FHA loan limits would help “prevent a collapse of housing prices in high-cost areas like Los Angeles.”

Indeed, sales of properties in Orange and Los Angeles counties with loans between $625,500 from $729,750 fell sharply, to 102 last month, according to San Diego real estate firm DataQuick. That was a 71% decline from 350 in September and down 71.5% from 358 sales in October 2010.

But the Obama Administration warned this week that it is important for the federal government to get out of the mortgage business.

“We believe that lowering the limits is a step to ensuring that private capital will return to the market,” Carol Galante, the acting FHA commissioner, said during a congressional confirmation hearing Thursday. “We understand at the present time FHA is playing a somewhat outsized role in the market.”

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Photo: Simon Salloom, a Coldwell Banker real estate agent, walks through a condominium in Santa Monica. Credit: Mel Melcon/Los Angeles Times

Two O.C. loan officers indicted in Las Vegas foreclosures case

In what appear to be the first criminal charges to stem from the fracas over improper foreclosures last year, two Southern California title loan officers have been indicted by a Nevada grand jury for allegedly filing tens of thousands of improper documents related to Las Vegas-area foreclosures.

The Clark County grand jury charged Gary Trafford, 49, of Irvine and Geraldine Sheppard, 62, of Santa Ana on 606 counts, alleging that the two headed up a vast “robo-signing” operation that resulted in the filing of tens of thousands of fraudulent foreclosure documents.

The documents were filed with the Clark County recorder’s office between 2005 and 2008, according to the indictment. The two title loan officers worked for the firm Lender Processing Services, a foreclosure processing company based in Florida that has been used by most of the largest banks in the nation to process home repossessions.

"I am not allowed to speak with you. I have no comment at this time," Sheppard said when reached by phone. Trafford could not be reached for comment.

The two have not been arrested, a spokeswoman for Nevada Atty. Gen. Catherine Cortez Masto told The Associated Press. LPS said in a statement that it is working with the authorities.

The company, in its statement, acknowledged that some of its documents were flawed but said the documents did not result in wrongful foreclosures.

“I am deeply committed to ensuring that LPS meets rigorous standards of professional conduct and operating excellence,” LPS Chief Executive Hugh Harris said in the statement. “I have full confidence in the ability of our leadership team and over 8,000 dedicated employees to deliver on that commitment."

Trafford is charged with 102 counts of offering false instruments for recording, a felony; false certification on certain instrument, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

Sheppard is charged with 100 counts of offering false instruments for recording, a felony; false certification on certain instruments, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

The indictment says that two title loan officers directed the fraudulent notarization and filing of paperwork used to initiate foreclosure on homeowners in the Las Vegas area. Nevada alleges that the two directed their employees to forge foreclosure documents, notarize the signatures on the documents they had forged and then file the fraudulent paperwork with the Clark County recorder's office in order to begin foreclosures on homes throughout the county.

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Photo: A foreclosure sign in front of a bank-owned home for sale in Las Vegas. Credit: Robyn Beck / AFP/Getty Images

Construction of new homes increases, except in West

Construction of single-family U.S. homes appeared to pick up last month, but not in the West.

Single-family homes were started at a rate of 434,000, a 5.1% increase over the prior month.

The increase follows news of an increase builder sentiment. Economists called the jump in new single-family-home starts a positive sign, as the nation's beleaguered real estate market was at least showing life.

"This was a good report," Patrick Newport, U.S. economist with IHS Global Insight, wrote in a note Thursday. "It has supporting evidence that the single-family market is finally getting off the mat and that the multi-family segment is continuing to make small strides, and that we should expect good housing starts numbers the rest of this year."

Overall housing starts -- including the volatile apartment building sector -- fell in October 0.3% over the prior month, to a seasonally adjusted annual rate of 628,000. The decline was attributed to a drop in apartment building construction.

The West was the only region that did not see an increase, falling 16.5%. Starts were up 17.2% in the Northeast, 9.7% in the Midwest and 1.6% in the South.

Another measure of housing activity considered less volatile than starts, permits issued, also showed new building gaining ground last month. New permits in October were at a seasonally adjusted annual rate of 653,000, 10.9% above September and 17.7% above October 2010.

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Photo:  Suburban homes under construction in Rancho Cucamonga. Credit: Getty Images

 

Home prices fall in October as mortgage changes take hold

Uncle Sam’s steps to exit the mortgage market took a toll on Southern California’s housing market in October as fewer higher-cost homes sold.

The median price, the point at which half the properties sold for more and half for less, dropped because sales of more expensive homes took a dive with government-backed financing for those homes scaling back last month.

CHART: Southern California home prices for October

The region’s median sale price was $270,000 in October, according to real estate market tracker DataQuick. That was the lowest since January, a 3.6% decline from September and a 4.6% drop from October 2010.

“For a few months now, lower prices and amazingly low mortgage rates have kept resale activity slightly ahead of last year,” John Walsh, DataQuick president, said in a statement. “Of course, that’s not saying a lot when you consider sales were 25% to 30% below average.”

With 16,829 new and previously owned homes sold, October’s sales pace was 29.3% below the average for that month going back to 1988, when DataQuick records start. Sales were down 7.3% from September and up 0.5% from October 2010.

One big change to the market last month was the federal government's first step to reduce its role in the mortgage business by lowering the size of home loans it will guarantee.

The government currently supports about 90% of new mortgages — essentially propping up the home loan market after credit dried up and home sales plunged in the wake of the subprime mortgage crisis. The loan limit determines the maximum size of a mortgage that the Federal Housing Administration, Fannie Mae and Freddie Mac can buy or guarantee.

So-called nonconforming jumbo loans that are offered on the private mortgage market typically require bigger down payments and carry a higher interest rate, resulting in higher monthly payments for borrowers. In Los Angeles and Orange counties, the limit for FHA, Fannie and Freddie loans dropped from $729,750 to $625,500.

According to DataQuick, sales of properties in those two counties with loans between those limits fell 71% from the month before and 71.5% from a year earlier.

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Photo: A home for sale in Altadena. Credit: Associated Press

Falling prices mean rising affordability, California Realtors say

Call it the silver lining of falling home prices.

With low interest rates and cheaper housing throughout the Golden State, the percentage of homebuyers who could afford to purchase a home increased in the third quarter, a real estate group said Thursday.

The number of households who could afford a home priced at the statewide median of $292,120 rose in the third quarter, according to an index produced by the California Assn. of Realtors. Fifty-two percent of California households could afford that price, compared to 51% in the second quarter.

Now if these households would only buy.

Beth L. Peerce, president of the group, said in the news release that one problem potential homebuyers could face is tight credit. Many first-time buyers don’t qualify for a loan, she said. Indeed, some analysts have noted that banks have tightened their loan criteria since the housing crash. But it was those loose lending standards that caused the real estate bubble in the first place, so many other analysts also argue that more carefully scrutinizing borrowers is appropriate.

The federal government has been providing enormous support to the mortgage market through loans backed by the Federal Housing Administration, though it has recently taken steps to scale back that support.

In California, potential buyers needed to earn at least $61,530 a year per household to qualify for the median-priced home. The median is the point at which half the homes in the state sold for more and half for less.

The real estate group calculated the monthly payment for a mortgage on such a home to be $1,540, including taxes and insurance, and assuming a 20% down payment and a 4.63% effective composite interest rate.

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Photo: A home on the market in Altadena features a sign of the times. Credit: Associated Press

 

Dick Bove is sick of all the bad news

Richard X. Bove is sick of all the bad news.

The widely quoted Rochdale Securities analyst –- who makes frequent appearances on cable news shows -- is now taking aim at what he views as the media's doomsday-like interpretation of financial events.

In an analyst's research note (a medium best-known for its staid commentary on specific companies or economic events) Bove on Tuesday delivered a sarcastic missive titled "Is It Possible That the World Is Not Ending?"

"Like most people every morning I wake up, look at the news on TV and scan three newspapers," he wrote. "The message is always the same. It is time to slit my throat and leave this morass of misery."

From the European debt crisis to the U.S. housing market, Bove laments, the focus is overwhelmingly negative.

Bove is known for being unusually frank in his commentary.

His point is that perhaps things are not as bad as “the media” would make them seem.

"The GDP figures for the third quarter were up by 2.5%. Just about every banking company that reported earnings beat their estimates and some had record revenues. Approximately 73% of the S&P companies reporting beat earnings estimates at last count,” he continued. “In October, the S&P 500 rose 10.8%; bank stocks were up by 13.4%."

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Banks, regulators start massive review of foreclosures

Some people who lost their homes to a foreclosure system wrought with error and misconduct may now request their cases be independently reviewed and potentially may be compensated.

A large-scale review of foreclosures that occurred in 2009 and 2010 began on Tuesday with federal regulators requiring the nation’s largest mortgage servicers to start mailing letters to potential victims. Independent consultants that the banks were ordered to hire in April will conduct the assessments. More than 4 million borrowers could be eligible.

“The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions,” said John Walsh, acting Comptroller of the Currency, who along with the Federal Reserve and Office of Thrift Supervision ordered the reviews. “These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions.”

The actions affect 14 large mortgage servicers that were required to correct the shortcomings and errors in their foreclosure processes. The outreach effort that began Tuesday is a first step.

Each mortgage servicer is required to mail one letter to each customer who is eligible for the review. An advertising campaign will also begin shortly to get the word out to people potentially harmed by the errors, federal officials and bank representatives said Tuesday.

A financial compensation schema for borrowers found to have been foreclosed on improperly has not been developed yet, and neither banking officials nor regulators gave an estimate for how much the actions would cost the banks.

The actions by the federal regulators come after it was revealed last year that banks employed so-called robo-signers, people who signed foreclosure documents en masse without properly reviewing them; took back their homes even though they were being reviewed for a loan modification; and made other errors in the foreclosure and servicing processes.

The enforcement orders are separate from work being done by a committee of attorneys general that also hope to reach a settlement with the nation’s largest banks over faulty foreclosure practices. Those negotiations remain ongoing, even though some states have voiced concern over the direction of the negotiations, and California has dropped out altogether.

A website for borrowers who want to learn more about the federal claims process has been created, IndependentForeclosureReview.com, as has a toll-free phone line, (888) 952-9105.

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Photo: A foreclosure notice hangs in the window of a home on Sand Pine Trail in the gated Willow Walk community in Hemet. Credit: Gina Ferazzi / Los Angeles Times

 

Case-Shiller index: 'Glimmer of hope' as home prices rise slightly

The closely watched Case-Shiller index of home prices in American cities rose slightly in August from the prior month.

Prices of previously owned single-family homes rose 0.2% in August over July, according to the Standard & Poor's/Case-Shiller index of 20 metropolitan areas. The index dropped 3.8% from the same month a year prior.

“We see a modest glimmer of hope with these data,” David M. Blitzer, chairman of the index committee at S&P Indices, said in a statement.

Ten out of the 20 metro areas covered by the index saw home prices rise over the prior month.

California cities stumbled. Los Angeles fell 0.4% over the prior month; San Diego, 0.2%; and San Francisco, 0.1%. Atlanta saw the biggest decline, down 2.4%. Las Vegas fell 0.3%, and Phoenix was down 0.1%.

The Midwest has made gains in recent months, and Chicago and Detroit were both up 1.4% over the prior month. Washington, D.C., also has fared better than other regions and gained 1.6% over the prior month.

The monthly rise in the 20-city index made for the fifth consecutive month of gains. Earlier this year, the index dropped below its previous bottom, hit in April 2009, confirming a double dip in prices, but has come up above that since. Some economists predict a renewed decline in prices in fall and winter.

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Photo: A home for sale in Durham, N.C. Credit: Bloomberg

New home construction surges in September; recovery still elusive

New residential construction surged 15% in September, turning in its best performance in 17 months, though economists warned that a housing recovery has yet to take hold.

While new construction is key to getting the economy going, much of the new building came from the apartment sector, which can be very volatile. Many economists also noted that permits pulled for new construction, also an important measure of builders’ plans for the future, declined in September.

Nevertheless, the news of the increase cheered investors on Wall Street as well as several housing analysts who follow the numbers closely.

“A strong residential construction number is a welcome relief for an economy struggling to hang on to expansion and a hopeful harbinger of better days to come,” Celia Chen, a housing economist with Moody’s Analytics, wrote in a research note Wednesday morning. “Caution, however, needs to be taken in interpreting the surprisingly strong top-line housing starts for September.”

Builders started new residential units at a seasonally adjusted annual rate of 658,000 in September, a 15% increase over the prior month and up 10.2% from the same month the year before, according to the U.S. Commerce Department.

Single-family homes were built at a rate of 425,000 units, which is only 1.7% above a revised August estimate, meaning the bulk of the increase came from the building of structures with five or more units.

News of the increase in new home starts came one day after builder confidence in the market rose, according to a closely watched index that measures builder sentiment. The National Assn. of Home Builders/Wells Fargo Housing Market Index jumped by four points to 18 in what was the biggest one-month gain since April 2010, when a tax credit for buyers was fueling purchases. Sentiment remains pretty dismal, however, as a number above 50 indicates more builders view conditions as good than poor.

“A stagnant economy and labor market has meant that housing recovery over the past year has been painfully slow, but we do believe that housing is gradually healing and recovering,” Nishu Sood, a home-building analyst with Deutsche Bank, wrote in a research note Wednesday.

Despite that cautious optimism, economists also pointed to the housing permits number released Tuesday by the Commerce Department, which signaled a more mixed picture for housing. New residential building permits were issued at a seasonally adjusted annual rate of 594,000 units, which is 5.0% below the revised August rate, though still up 5.7% from September 2010.

“We would warn against getting too excited as the fundamental picture has not changed; household formation is still too low and the excess supply is still too high to warrant a major rise in home building,” read part of an analysis by Capital Economics.

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Photo: Homes under construction in Southern California. Credit: Getty Images