Phoenix Business Journal

A new report shows home prices across the country continued to drop in February, and Phoenix has the unfortunate designation of loss leader.

Phoenix home prices fell 35 percent from February 2008 to February 2009, according to the new S&P/Case-Shiller 20-city home price index. That’s the largest decline of any of the 20 largest cities in the U.S. In addition, Phoenix home prices are down 51 percent from their peak.

The weak housing market continued to plague home sellers in February as home prices extended their losing streak to 31 consecutive months, according to a report issued Tuesday.

The entire 20-city index fell 18.6 percent for February, compared with a 19 percent year-over-year decline in January. The good news is the pace of year-over-year slowing lessened for the first time since October 2007.

While it’s too early to tell, the less intense drop in February could signal a bottoming out of the national housing market. Of the 20 cities in the index, 16 recorded smaller declines in February than in January.

Rounding out the five biggest declines were Las Vegas, San Francisco, Miami and Los Angeles.

Home prices fell 2.2% in 20 major cities in February after a 2.8% decline in January, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s. Prices in 20 cities are down 18.6% in the past year, compared with a 19% drop in the 12 months ending in January. It was the first time in 16 months that the decline in prices did not set an annual record. Prices fell in all 20 major cities in February, led by a 5% drop in Cleveland.

NEW YORK (Dow Jones)--If you don't like latest housing data, wait a few minutes. Things will change.

With a new real estate report coming nearly daily – and some showing conflicting results – data and builder stocks are on a roller coaster.

Take this week, for example.

Wednesday, the Federal Housing Finance Agency reported home prices rose 0.7% from January to February, the second straight monthly gain. Builder stocks jumped.

Then Thursday, builders gained at the open, following cheery numbers from the February 2009 RPX Monthly Housing Market Report. It revealed that home sales increased on a month-over-month basis in 22 of 25 covered metropolitan statistical areas, and 13 of those areas posted their largest sales increases in February since 2006.

But then the stocks fell on news from the National Association of Realtors: Existing-home sales dropped in March, while the median price was shaved 12% from a year earlier.

Months’ supply increased to 9.8 in March, which was “likely understated and to rise further in coming months,” Credit Suisse pointed out in an analyst note.

Those results came as First American CoreLogic said national housing prices tumbled 12.2% in February from a year ago and have declined for 24 straight months.

“We expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices,” noted Mark Fleming, the firm’s chief economist.

Remember real estate is local, and some markets are healing as falling prices lure buyers to the closing table.

“It’s very difficult to paint a national picture other than statistical information,” said Sherry Chris, president and chief executive of Better Homes and Gardens Real Estate LLC. “Does that tell you everything you need to know? There’s no such thing as a national temperature, so to speak, in anything.”

Plus, each report aims for its own niche. The monthly FHFA information, for example, is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae (FNM) or Freddie Mac (FRE). First American says it issues a repeat-sales index tracking increases and decreases in sales prices for the same homes over time.

But such nuances don’t seem to matter to many real estate investors who make decisions based on tone. Was the report good or bad?

Such a strong reaction to what could normally be a “shrug-of-the-shoulders data point” could be short interest, said Rob Stevenson, an analyst with Fox-Pitt Kelton.

If the numbers are good, the initial pop in the stock tends to be followed by a short covering, which drives the price up more meaningfully. Alternatively, shorts may view negative datapoints as additional proof things aren’t getting any better, he said.

That provides them with ammunition to short the names again, leaving these stocks in what has become a normal depressed state.

Indeed, with two seemingly negative reports Thursday, builder shares took a beating before recovering slightly. The Dow Jones US Home Construction Index was recently down 1.58%. Centex (CTX), which had been down more than 8%, was recently showing a 3.5% loss. Ryland (RYL) was recently down 3.5%.

That could quickly change with the next report.

The pace of sales of existing homes in the United States fell 3.0 percent in March to a much lower-than-expected annual rate of 4.57 million units, the National Association of Realtors said on Thursday.

Economists polled by Reuters had forecast home resales to slip to a 4.70 million-unit pace from a revised 4.71 million for February, which was initially reported as 4.72 million.

The inventory of existing homes for sale fell to 3.74 million from the 3.80 million overstock reported for February. The median national home price rose 4.2 percent to $175,200 from February, boosted by seasonal factors. However, prices fell 12.4 percent compared to the same period a year ago.

“It dawned on me that you have to save yourself before you sink,” Teresa Bondora says of her decision to give up her Atlanta-area home.

Teresa Bondora and her family abandoned their two-story brick home in Atlanta rather than fall behind on their mortgage and $30,000 worth of home renovation debt.

The decision was tough for Bondora, a home-schooling curriculum developer raised to believe that preserving good credit and paying bills on-time were key adult responsibilities.

“I was willing to walk away and live with someone else while we get out of debt,” Bondora says. “I’m not worried about anything anymore.”

Bondora isn’t the only homeowner making an about-face in her approach to the stigma of foreclosure; if anything, homeowners like her see that efforts to prevent foreclosure may make them more financially vulnerable than succumbing to it and starting anew.

Despite new refinancing and loan modification programs made available under the Obama administration, mortgage experts say that many homeowners still face difficult choices in the short run. The latest options may not affect the market for a few more quarters, they say.

Full Article

We continue to hear stories about scattered loan modification scams. One loan investor told us he ran into a loan-mod company operating in Southern California under five different names. He said the loan-mod company temporarily prevented him from foreclosing on one of the loans he bought and then tried to work out a settlement with him — which he declined. The investor said the loan-mod firm is charging consumers between $2,000 and $5,000 for their services…

Be careful.

DETROIT FREE PRESS

Short sales, the first choice for many distressed borrowers, have largely been an exercise in frustration. But as lenders are looking for ways to stop the tidal wave of foreclosures, short sales are slowly picking up in Michigan.

The number of short sales in February was 175 in metro Detroit up from 38 in January 2008, according to figures compiled by Realcomp, a Farmington Hills-based multiple listing service.

While that’s less than 5% of total sales for February, the number is moving in the right direction, realty agents say.

A short sale enables a distressed borrower to sell a home for less than what is owed on the mortgage with the lender forgiving the difference. Farmington Hills resident Brian Christian is aiming to work out a short sale with his lender.

But many lenders decline or take so long that the buyer moves on to another deal and the house ends up in foreclosure anyway.

Realcomp plans to partner with government-backed lender Fannie Mae soon on a pilot program that would help streamline the short-sale process in Michigan. It could serve as a national model.

The program would aim to make it easier for distressed homeowners underwater on their mortgages to sell instead of going through a foreclosure.

“We don’t have a lot of the details yet,” said Karen Kage, chief executive of Realcomp. “Whatever we do will be in the best interest of the homeowners and the Realtors trying to make a living selling these properties.”

• SHORT SALES TAKE TIME: They require owner to show hardship