Index of pending home sales climbs to 19-month high

The most Americans in more than a year and a half signed contracts in November to buy homes, raising hopes that a boost in sales will follow, a real estate industry group reported Thursday.

An index of pending purchase agreements rose to 100.1 last month, up 7.3% from October, according to the National Assn. of Realtors. The reading is the highest since the gauge spiked to 111.5 in April 2010 when buyers rushed to take advantage of an expiring federal tax credit. The November increase followed a 10.4% gain from September to October.

A reading of 100 is typically considered a healthy level, according to the association. The index is up 5.9% from November 2010.

But economists cautioned that many potential buyers are canceling deals before the sale goes through.

"Housing affordability conditions are at a record high and there is pent-up demand from buyers who've been on the sidelines, but contract failures have been running unusually high,” Lawrence Yun, the realty group's chief economist, said in a statement.

The latest jump in pending home sales could be a result of buyers' recommitting to contracts after hashing out problems that had put deals on hold. Most home-buying agreements are finalized a month or two after a contract is signed.

The largest growth in signed contracts last month came in the West, with a 14.9% boost, followed by increases of 8.1% in the Northeast, 4.3% in the South and 3.3% in the Midwest.

Last week, the Commerce Department said that housing starts were up 9.3% in November from October even as statistics from DataQuick showed home sales down 4.2% in California in the same period (though they were up 4% from a year earlier).

Home prices have continued to fall in the nation’s largest cities, dropping 1.2% from September to October, according to the Standard & Poor’s/Case-Shiller index — probably leading some potential buyers to try to wait for the market to bottom out.

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Photo: Donna McWilliam / Associated Press

Freddie Mac: Record low mortgage rates haven't rescued housing

Lenders were offering 30-year fixed-rate mortgages to solid borrowers at an average of 3.95% this week, according to Freddie Mac, the ninth consecutive week of rates at or below 4%.

That wrapped up a year of record lows for the survey, which dates back to 1971. In 1981 and 1982, the average 30-year mortgage carried an interest rate of more than 16%, and the typical rate was above 8% as recently as 2000, Freddie Mac said. This past year, the average was 4.45%.

Despite the record low rates, applications for mortgages to buy homes dropped as the year ended, even after seasonal adjustments, the latest Mortgage Bankers Assn. survey found. Even the demand for refinance mortgages, which accounted for more than 80% of all applications, fell slightly.

“Remarkably low rates are not enough," said Mortgage Bankers Assn. economist Michael Fratantoni, noting that many homeowners have difficulty refinancing because of "lack of equity in their properties, poor credit and a weak job market.”

With loans hard to get and demand for home loans waning, Morgan Stanley analysts titled their housing outlook for 2012 "The Year of the Landlord."

"While we had forecast lower prices [for 2011], we did hold out some hope that at the very least transactions would pick up slightly from 2010 levels," said the report from a team led by analyst Oliver Chang.

"However," the report said, "it proved to be too optimistic a prediction. Not only did total home sales fail to rise, but also mortgage applications for purchase continued to fall -- indicating that not only is tight mortgage credit limiting demand, but even the desire to buy a home continued to wane."

The recent bottom in rates stems from anxiety over the European debt crisis, which has increased demand for U.S. Treasury securities. That has depressed the yield on Treasuries, which act as a benchmark for mortgages.

This week's typical offering rate of 3.95% on the 30-year loan was up slightly from an all-time record low of 3.91% set a week earlier. The 15-year fixed loan, popular with refinancers, averaged 3.24%, up from 3.21%. Start rates on adjustable loans also were up very slightly from record lows, Freddie Mac said.

Borrowers would have paid about 0.75% of the loan amount upfront to obtain the fixed rates, Freddie Mac said. Its survey asks lenders across the nation what rates they are offering to borrowers with 20% down payments or home equity, good credit and income sufficient to repay the mortgages.

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Photo: Culver City home for sale, November 2011. Credit: Genaro Molina / Los Angeles Times

Home prices fall in October, Case-Shiller report says

Home prices in the nation’s largest cities fell in October for the second straight month, continuing to dash hopes that the sluggish housing market is headed for an upturn.

The Standard & Poor's/Case-Shiller index, a measure closely followed by economists, showed price drops in 19 of 20 cities since September. Overall, prices slipped 1.2% month-over-month and fell 3.4% compared with October 2010.

The decline is typical of the season, when home buyers back off after the busy summer period. But coming off of five straight months of increases, the retreating prices in the fall suggest that weakness in the market may stretch into 2012.

Atlanta was on particularly shaky ground, according to the index. Prices there declined 5% in October after falling 5.9% in September and were down 11.7% over the last 12 months. Atlanta, along with Cleveland, Detroit and Las Vegas, had average prices that were lower than they were in January 2000.

In Los Angeles prices were down 1.5% in October after sliding 0.8% the month before. Year over year, L.A. prices are down 4.9%.

The Case-Shiller data cast a pall on recent, more promising market feedback. Last week, the Commerce Department said construction of new homes and apartments was up 9.3% last month from October and up 20.1% compared wikth November 2010.

Sales in California were up 4% last month compared with the same period a year earlier, though they fell 4.2% from October, according to real estate research firm DataQuick. The median home price in the state was $244,000, down 4.3% from a year earlier but up 1.7% from October, the report found.

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Five-month supply of distressed homes casts shadow on market

A “shadow” supply of 1.6 million homes facing foreclosure or already owned by banks is estimated to hang over the U.S real estate market -- these are properties that typically go uncounted by most real estate listing services.

The estimate represents about five months of supply as of October 2011, and was published Wednesday by the Santa Ana real estate data firm CoreLogic. This compares with a shadow supply of about 1.9 million units in October 2010, representing about seven months' supply then.

Florida, California and Illinois account for more than one-third of these properties, which can stand in the way of a housing recovery as most will end up as either foreclosures or so-called short sales, where a bank allows a home to be sold for less than the debt on the property.

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

 

 

Realtors group says it overestimated home sales from 2007 to 2010

A national real estate group sharply revised downward the number of homes it calculated were sold from 2007 to 2010, revealing a much weaker housing market than had been previously estimated.

In 2010, for instance, the National Assn. of Realtors revised its estimate of home sales 14.6% lower than what it had previously reported -- to about 4.2 million homes sold that year.

From 2007 to 2010, sales and inventory as reported by the group were downwardly revised by 14.3%, the group said on Wednesday. The group overstated sales during that period by about 3.5 million units, according to the Associated Press.

The drop was due to changes in the way the U.S. Census Bureau collects data and some sales being counted twice. Roughly half the revisions resulted from a decrease in people selling their own homes and instead turning to real estate agents as the housing market turned bleak in 2007, the group said.

Homes sold by owners are typically not counted by the local listing services tracked by the national real estate group. So when a greater share of home sellers than usual began using agents who use those listing services, that artificially increased the final home sale numbers, Lawrence Yun, chief economist for the group, said in a statement.

The revisions underscore a lack of data on the housing market. There is no government tally of home sales nationally, instead officials rely on private real estate groups to provide sales numbers. The government does publish an estimate of new home sales and starts.

The revised figures were checked by government agencies and by the Santa Ana firm CoreLogic, which first discovered the discrepancies in the real estate group’s figures earlier this year.

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Photo: For-sale signs in Palo Alto. Credit: Paul Sakuma / Associated Press

KB Home earnings fall, but orders increase

Los Angeles home builder KB Home posted lower earnings in the fiscal fourth quarter compared with a year earlier as the company sold fewer homes in higher cost areas. But another development signaled some cause for optimism: New orders for homes from the company grew.

The company reported net income of $13.9 million, or 18 cents a share, for the three months ending Nov. 30. That compared with $17.4 million, or 23 cents, during the same period a year earlier.

"We believe these results demonstrate our success in adapting to current market realities and positioning our business for the future,” Chief Executive Jeffrey Mezger said in a statement.

Revenues in the fourth quarter grew 6% over the previous year to $479.9 million, and net orders increased 38% to 1,494. For all of 2011, the company widened its net loss to $178.8 million. That compared with a 2010 loss of $69.4 million.

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Photo: Associated Press

California sues Fannie Mae and Freddie Mac

California Atty. Gen. Kamala D. Harris has filed suit against mortgage titans Fannie Mae and Freddie Mac for refusing to answer subpoenas issued to the companies this year.

The suits, filed Tuesday in San Francisco County Superior Court, comes after investigators with the state attorney general's office presented the two firms with questions regarding their foreclosure, lending and mortgage-related practices in the state.

SEE THE DOCUMENTS:

California Sues Fannie Mae

California Sues Freddie Mac

The subpoenas ask the government-controlled finance companies to answer questions about their activities in California, including their roles as landlords that own thousands of foreclosed properties, The Times previously reported. The attorney general's office is also seeking details of Fannie and Freddie's mortgage-servicing and home-repossession practices.

In addition, investigators want to learn more about the companies' purchases and sponsorship of mortgage-backed securities in the Golden State. According to separate suits filed by Harris against Fannie and Freddie, the two companies refused to answer the questions. The filing of the suits was reported earlier by the Wall Street Journal.

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Photo: Atty. Gen. Kamala D. Harris in downtown Los Angeles. Credit: Al Seib / Los Angeles Times

New construction up sharply in November

New construction on homes and apartments increased sharply in November, a bright spot for the beleaguered U.S. real estate market.

New housing starts last month rose 9.3% over a revised October estimate and were up 20.1% above November 2010. Homes and apartments were built at a rate last month that would produce 685,000 new units this year, when adjusted for seasonal variations, according to the Commerce Department.

The gains were largely driven by the volatile apartment sector, meaning the uptick could reverse itself. Single-family housing starts in November were up 2.3% over October, though down 1.5% over November 2010. Homes were built last month at a seasonally adjusted annual rate of 447,000 units.

"This was a good report," wrote economists Patrick Newport and Michelle Valverde of the consultancy IHS Global Insight. "The single-family market is finally getting off the mat and ... the multi-family segment is continuing to make small strides. ... [W]e should expect good housing start numbers in the upcoming months."

Starts were at their highest level in 19 months. Month over month, starts were up 22.6% in the West, 3.15 in the South and 53.8% in the Northeast. Starts were down 18.2% in the Midwest.

The number of building permits issued to builders also showed improvement, with new permits up 5.7% over October and 20.7% above the November 2010 rate. Permits were issued at a seasonally adjusted annual rate of 681,000 units.

"By historical standards, home-building activity is still very depressed, but at least it appears to be on an established upward trend,” Paul Diggle, property economist with Capital Economics, wrote in a note.

The new-home market this year has suffered worse than the one for previously owned homes as foreclosures continue to provide stiff competition for newly built properties.

New-home builders have turned to developing models for multi-generational families and touting their green credentials to distinguish themselves from foreclosure properties –- often competing against the very models they built during the boom years as little as four years ago.

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Photo: A home under construction in Buckingham, Pa. Credit: William Thomas Cain / Getty Images

Green Dot to move headquarters to Pasadena

Green Dot, a provider of prepaid financial services, has agreed to move from Monrovia to east Pasadena in a deal brokers say is the biggest office lease of the year in the Tri-Cities market.

Green Dot leased all 141,540 square feet at 3465 Foothill Blvd. from landlord Wells REIT II, a private real estate investment trust, brokerage CBRE Group Inc. said.

The value of the 10-year lease was not disclosed, but real estate experts familiar with prices in the Pasadena-Glendale-Burbank market valued it at about $45 million.

“This single lease transaction will lower the vacancy rate in Pasadena by a full percentage point, so it’s very significant for the Tri-Cities market,” said Todd Doney of CBRE, who represented the tenant.

Green Dot will consolidate multiple offices in Monrovia into its new headquarters on Foothill between Sierra Madre Villa Avenue and Rosemead Boulevard.

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Photo: Green Dot leased all 141,540 square feet at 3465 Foothill Blvd. Credit: CBRE Group Inc.

CIM Group buys Beverly Hills offices

Los Angeles developer and landlord CIM Group spent $47.8 million for two Beverly Hills office buildings that were once part of the former William Morris Agency headquarters.

CIM Group, which is the largest commercial property owner in Hollywood, bought 150 and 151 S. El Camino Drive.

The three-story buildings with a combined total of more than 116,000 square feet of office space lie on two blocks just south of Wilshire Boulevard and the so-called Golden Triangle heart of downtown Beverly Hills, said broker Bob Safai of Madison Partners.

He represented seller Brickman, a New York real estate investor that had loaned money to the previous owners of the former William Morris campus and ended up taking control of it.

Talent agency William Morris Endeavor, a successor to William Morris, is a tenant at 150 S. El Camino but scheduled to move next year, according to real estate data provider CoStar Group. It is not clear where the world’s largest talent agency will land next.

The building at 151 El Camino was completed in 1951 and is vacant. CIM Group is asking for rent of nearly $4 a square foot per month, real estate brokerage Cushman & Wakefield said.

CIM Group paid $412 per square foot for the two buildings, a high price by Los Angeles County standards but far below the $783 a foot paid by previous owners Cape Horn Group of Chile and Lincoln Property Co. of Dallas in 2008 for the entire former William Morris campus. The seller was William Morris, which merged with Endeavor in 2009.

The William Morris campus then included 150 S. Rodeo Drive, and Brickman ended up owning all three buildings. Santa Monica real estate investment trust Douglas Emmett Inc. paid Brickman $42 million, or $570 a square foot, for 150 S. Rodeo Drive in April.

CIM Group owns office, retail and residential properties. Among its holdings is the Hollywood & Highland shopping and entertainment complex in Hollywood.

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Photo: Beverly Hills offices acquired by CIM Group. Credit: Madison Partners 

Nevada sues major foreclosure processing firm

This post has been updated. See below for details.

Nevada has filed suit against a major player in the foreclosure business, Lender Processing Services, claiming the company is responsible for perpetrating widespread consumer fraud in the Silver State.

The lawsuit against Florida-based LPS and several of its subsidiaries alleges that the company falsified, forged or fraudulently filed “countless” documents in foreclosure cases across the Silver State, requiring employees to execute or notarize as many as 4,000 foreclosure documents a day. The company is used by many major banks to process foreclosures, and the suit said the company is responsible for more than 50% of foreclosures annually.

“The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed,” Atty. Gen. Catherine Cortez Masto said in a statement. “We will protect the integrity of the foreclosure process. This lawsuit is the next, logical step in holding the key players in the foreclosure fraud crisis accountable.”

The suit also alleges that the company fraudulently notarized documents and forged signatures and hid the scope of the problem by “misrepresenting” that the problems were clerical errors. The suit also alleges that LPS imposed “inappropriate and arbitrary” deadlines on foreclosure attorneys working for them, leading to errors in the foreclosure process.

The suit also alleges the company blocked communication between those attorneys and their clients and demanded improper referral fees from those attorneys.

[Updated at 1:25 p.m., Dec.16: LPS, in a statement, said it had been cooperating with Masto’s office for more than 14 months, and that it would defend itself against the suit “vigorously.”

The company also accused Masto’s office of violating Nevada law by using a Washington firm, Cohen Milstein Sellers & Toll, to investigate the company. The company said that it has discovered problems with its past document practices, but added, "The company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by our employees."]

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