Foreclosure Figures Fall in the US

Foreclosure figures in the United States have declined slightly, and this trend is expected to continue as the spring season picks up pace. According to figures from CoreLogic, there were 65,000 completed foreclosures in February compared to 66,000 in February last year, and 71,000 in January 2012.

Since the financial crisis began in September 2008 there have been around 3.4 million completed foreclosures, with 862,000 completed in the 12 months up to February. Around 1.4 million homes were in foreclosure in February this year, compared to 1.5 million in February last year.

This equates to around 3.4% of all homes that still have a mortgage. The number of borrowers in foreclosure fell by 115,000 in February compared to February 2011, which is a decline of 7.6%.

With sales of previously owned homes up in February, and with the beginning of the spring buying season, estate agents expect the inventory to decline further.

During February more than 60 markets in the US saw foreclosure rates decrease compared to a year earlier. The combination of new jobs growth and continued low interest rates show the housing market is finally improving.

During the last 12 months those states with the highest numbers of completed foreclosures include Californian with 154,000, Florida with 87,000, Michigan with 64,000, Arizona with 63,000, and Texas with 58,000. Between them they accounted for 49.4% of all completed foreclosures within the United States.

The states with the highest foreclosure rates include Florida with 12%, New Jersey at 6.6%, Illinois at 5.4%, Nevada and 5%, and New York at 4.9%. Those states with the lowest foreclosure rates include Wyoming, North Dakota, Nebraska, Montana, and Alaska. Montana had highest foreclosure rate at just 1.4% while all the others were 1% or lower.

New Zealand Government Introduces New Bill to Ban Foreign Companies from Buying Rural Land

The New Zealand government is looking at introducing a new bill into Parliament which would prevent foreign companies from buying up rural land, and is due to controversy over Chinese companies trying to purchase lucrative dairy farms on the North Island.

The Chinese company, Shanghai Pengxin had put in a bid to purchase 16 dairy farms in Crafar on the North Island, and this bid had already received approval from the government before being overturned in the High Court. The bid was overturned as the High Court felt any potential benefits must be measured against an alternative buyer.

Labour leader David Shearer wants the law to be changed so governments reject any foreign bids to purchase New Zealand farms unless the bid would result in more exports, and more new jobs being formed than from a New Zealand bid.

Such a law would mean most bids to buy New Zealand land would be turned down, and only those implementing new technologies or introducing new products would be allowed. Although the government already has the power to turn down sales of farms to overseas buyers the Labour leader doesn't think it is being properly implemented, and that most sales result in profits flowing out of the country.

Selling farms to overseas buyers is also likely to raise the price out of reach of native farmers which would be very detrimental to the country.

At the moment any decision by the Overseas Investment Office to sell property to foreigners has to be approved by two government ministers who are able to decide which factors are relevant to the sale. If the new bill is made law it will be much stricter.

New Report Finds Nearly One Quarter of US Homes Are in Negative Equity

A new report from CoreLogic says that 22.8%, or 11.1 million homes in the US were in negative equity by the end of the fourth quarter last year. This is an increase on the third quarter when 22.1%, or 10.7 million homes were in negative equity. Another 2.5 million homeowners had less than 5% equity during the fourth quarter, which is known as near negative equity.

This means the total percentage of homes in negative or near negative equity was 27.8% during the fourth quarter, up from 27.1% in the third quarter of 2011. The total debt for these properties in negative or near negative equity rose from $2.7 trillion in the third quarter to reach $2.8 trillion by the end of the fourth quarter.

The report found that Nevada had the highest percentage of homeowners in negative equity, with 61% of all mortgage properties falling into this category. The second worst state was Arizona with 48% of properties in negative equity, followed by Florida with 44%, Michigan with 35%, and Georgia with 33%.

When combined these five states have an average negative equity percentage of 44.3%, while the combined average of the remaining states is just 15.3%. The majority of homes in negative equity are at the lower end of the market and are valued at less than $200,000. Although these figures are affected by seasonal declines, it's expected this situation will take quite some time to improve. If the economic recovery falters it could mean an increase in the number of foreclosures.

Construction Spending Unexpectedly Rises in the US, but the Housing Market Remains Flat

Spending on construction rose in August due to an increase in state and local government spending, giving a 1.4% gain which reversed the 1.4% loss in July. The construction industry is also up 1.4% compared to July 2010 which is its first positive reading of the year.

Building of multi-family homes such as townhouses and apartments has increased, which is greater evidence of how the housing market has changed as more Americans are choosing to rent rather than buy. Even so, spending on public construction was down 5.3% compared to August 2010 which is mainly due to budget cuts.

The housing market continues to struggle, and work began on 571,000 new homes in August which is the weakest figure for three months. Most experts don't expect the housing market to improve in the near future, and purchases of new homes reached a six-month low in August even though prices fell by an average of 7.7% compared to August 2010 which is the largest fall since July 2009. The problem is that distressed properties still appear far more tempting to potential buyers.

The Federal Reserve is aiming to cut borrowing costs and to kick start housing and refinancing, and last month it announced it would take additional steps to reinvest maturing mortgage debt into mortgage backed securities instead of Treasuries. However government agencies remain under pressure to cut their spending, especially as property tax collections which is the main source of income for many cities and counties fell by 1.2% during the second quarter, which is the third consecutive decline.

Rising Interest Rates are Unlikely to Affect Brazilian Home Sales

Brazil's third largest homebuilder says Brazil property sales are unlikely to be affected by increased borrowing costs so long as the interest rate is kept below 14%.

Duilio Calciolari is the new chief executive officer of Gafisa SA. which is Brazil's third largest homebuilder, and doesn't feel there should be any significant impact if rates go up to 14% to control inflation.

The bank has already raised interest rates to 12%, but employment is extremely strong and banks are becoming ever more willing to finance mortgages. An estimated 9.1 million Brazilians intend to buy property this year, all of which bodes extremely well for Gafisa.

The unemployment rate in Brazil hit a record low in December at just 5.7%, and was 6.5% in March which is the lowest ever recorded rate for that month. The Brazilian president, Dilma Rousseff recently said that the economy is near full employment.

However as the economy continues to expand, the rate of inflation is also accelerating and is now running at 6.51% which is the highest rate since 2005 and above the target range set by the government. A recent central bank survey of 100 economists revealed that most expect the interest rates to end the year at 12.5%.

Mortgage lending grew by 51% in 2010, compared with a 2.6% decline in the US and a 12% increase in Mexico. Property prices have risen significantly since 2008, with prices increasing by 113% in Rio de Janeiro and 91% in São Paulo. In spite of these hefty increases Calciolari doesn't think the housing market is at any risk of a bubble and the prices are just a structural correction due to the increasing mortgage market.

Repossessed US Properties to be Plentiful Until 2013

US foreclosure tracking agency RealtyTrac has told the US real estate press that it will be at least 2013 before the repossession problem is back under control. This is ultimately very bad news for the US housing market, and for homeowners, but the silver-lining for property investors is that there will be plenty more bargain US properties coming onto the market in the coming years.

The statements were made by a Rick Sharga of RealtyTrac in a conference with the National Association of Real Estate Editors, in which he talked about the so-called "shadow inventory". Sharga said that of the 3.5 million homes repossessed in 2009 only about 20% of those were listed for sale, as the banks were overwhelmed by the sheer volume and speed at which the problem escalated.

Needless to say the shadow inventory was huge coming into 2010, and there have been hundreds of thousands of homes repossessed already in 2010. The fact that over 370,000 homes were repossessed this March alone compared to RealtyTrac gives us an idea of the size of the current shadow inventory.

As time progresses the channels to bring these homes to market are getting better. However, the banks and lenders will always give up the best properties for first refusal in their own ranks before listing it to outside investors, and this will therefore always slowdown the process of these homes coming to market.

One thing that is not slowing down is demand to buy these properties as confidence in the international recovery brings increasing numbers of property investors.

Arguably, repossessed property in America is one of the top property investments on the global market right now. Many of the properties are being sold for up to 50% below their replacement build cost, which makes them a no-brainer if we dare call any property investment that after such a catastrophic crash.

In fact, replacement build cost has become the way of measuring the discount being offered by repossessed and other below-market-value properties for sale. As people started buying property again, people would hear that a property was being offered at 20% below market value, and they would soon find out that it was 20% below the peak market value, not the current market value. In the fast-paced world of repossessed sales, replacement build cost is a good measure of current value, with no time to do a proper valuation.

On this measure, a property being sold for 40% below its replacement build cost is most likely at least 20% below its current market value, and could be up to 50% or even 100% below its current market value, depending on the quality of the property, and the neighbourhood etc.

Most repossessed properties are being sold at such low prices that their being a bargain is undeniable. The question then becomes, is it going to regain its former value, and when it comes to America, that is unquestionable in most places. So then the only thing stopping people is their financial situation, or lack of confidence. So, now that both of these things are improving, so the number of potential investors in repossessed US property is also on the rise.

Bright Signs for Overseas Property in 2010: But What About the Second Bite?

There is no doubt about it: as of the end of 2009 and for at least the first quarter of this year, the fear over the depth the financial crisis could plumb has subsided and anyone who has not been put in financial straits during the last 2/3 years is making plans and taking actions as if things are completely back to normal.

Some people are shouting about a second bite, including me in some areas, but I just wanted to explore the possibility that people going back to normal as they are could feed economies sufficiently enough to avoid the dreaded second bite as the stimulus rugs are pulled out from below us.

Okay, firstly there was a report of massive traffic increases to the prominent UK portals: traffic up 25% to Rightmove Overseas, 32% to the Move Channel and 38% Property-Abroad.com, all in the first seven days of the year. Of course there is the possibility that it was as much to do with the freak weather giving people more time to browse, but one thing about the freak weather is that is will have also increased the inclination to browse for a home in the sun.

Now, we have 133% increase in the sales of Miami condos. You will hear a lot of over 100% rises in the first quarter of this year, but this one holds weight because it gave figures. Condo Vultures research showed that 1655 condos were sold in Miami in the "latter part" of the year, compared to only 711 in the first 6 months.

HolidayLettings.co.uk, Rightmove's sister site has now reported an increase in traffic of 55% as over 1 million people visit the site in the first ten days of the year.

Yes, again this can be put down to the winter blues as Britain experienced freak weather, but I was here during the freak weather, and so was all my family and none of them were on holiday lettings booking trips or looking into buying property overseas on Rightmove.

The fear over the second bite comes from the fact that, at some point, probably within the next 4 months central banks, including the bank of England will start to pull back from their stimulus. This will lead to rising interest rates and falling liquidity. It will also mean more job losses as the government starts paying for the stimulus.

However, everyone knows this is going to happen. The people who work in the government departments likely to be affected by the cutbacks know that they work in the departments likely to be affected by the cutbacks. Therefore it is fairly safe to assume that those currently doing the browsing are able to spend in relative security.

Of course people will get caught out, but no more than normal. And of course there will be people browsing for the sake of browsing, but also, no more than normal.

I think that this current surge of activity is genuinely a very bright sign for the overseas property and tourism industries in 2010.

2010 and International Property: Turning Rebound into Recovery... Starring Supply & Demand

2010 is shaping up as the year when things really get moving again in the world of overseas property. 2009 will be known in history as the year the rebound started, and 2010 will determine whether or not the rebound turns into a full scale recovery.

In terms of a property market recovery this looks like being determined by 2 main factors, supply and demand. Before you slap me for stating the obvious, what I mean is: whether demand will continue to rise as government and financial stimuli are removed, and whether or not construction firms can uncurl themselves from the protective ball they rolled into quickly enough to prevent the recovery from stalling.

Sure, this is not the case in all markets; Spain and Dubai are shouting out at me as completely different situations because they are struggling to see any real rises in demand, and have oversupply sufficient to last about 5 years unless sales accelerate rapidly. None the less, that is a pretty good model.

Turkey fits that model perfectly: new home sales in Turkey were 14% higher in the first nine months of this year than last year, and demand has continued to rise, meanwhile construction contracted by almost 20% this year. Now we must all watch and hope that construction can accelerate fast enough so that demand needn't stall on the way up.

Apart from some exceptions, Asia has the supply balance about right for the most part. Thailand is a good example: Thai property developers abandoned the international market early in the crisis, to concentrate on domestic demand, for which they ramped up their development plans; launching new projects throughout this year, so there should be plenty of supply there.

Malaysia however, is now looking at an oversupply problem as developers all (uncurl from their protective balls) come out of the blocks at the same time.

Montenegro could be the one to watch in 2010: when the international crisis came down, most of Montenegro's developers were locked in the country's lengthy planning stages, which meant they were able to simply hold off their plans, without having to cancel developments, or make any kind of announcement. In fact Montenegro has probably been the least talked about market in 2009, and the say no news is good news.

According to a conveyance I interviewed a while back for an article in Overseas Property Mall, many Montenegro developers were left holding land-banks, rather than those in Dubai holding half-finished developments and headaches. 2010 will be the year when all those plans are relaunched, and any that aren't will represent an abundance of cheap land for sale in Montenegro, for any new developers that want to enter the market. The only thing Montenegro will need to watch out for is over-supply, but with the country's lengthy planning phase that really shouldn't be a problem.

Outlook on Spanish Property Market Improving

The outlook for the Spanish property market has been improving in recent months. The rate of decline in house prices slowed in the third quarter, as it had in the second according to new data from the Global Property Guide.

Spanish house prices fell by 7% between Q3 2008 and Q3 2009 according to the GPG index of global house prices. This is slower than the 8.3% contraction between Q2 2008 and Q2 2009 recorded by the Knight Frank estate agency in its index of global house prices.

The quarter on quarter decline in Q3 was just 0.49% according to the GPG index, which is again a lot slower than the 1.9% quarterly decline recorded by Knight Frank in Q2. Based on this slowing in Q3 it is possible that quarterly price growth will run into positive territory in the 4th quarter.

Given the state of the Spanish economy it is entirely plausible that the positive data is because of the increased demand from foreign buyers, which has been seen since April.

New data from mortgagesolutions.com has said that Spanish banks are surprisingly willing to lend to overseas buyers. Overseas mortgage firm Conti has further said that 22% of its enquiries for overseas property mortgages have been for Spanish property purchases.

Recently overseas property portal Property Abroad.com have put Spanish property as second most popular with those searching for property on the site in October. Spain has held second place in the portal's top 10 chart for several months, since being knocked out of 1st place by the popularity of America since May. The Move Channel and Primelocation also put Spain as second most popular in recent monthly charts.

Spain has also been noted for its distressed and repossessed property opportunities. According to overseas property expert Liam Bailey, of sector specialist copywriting firm Write About Property, these opportunities have the potential to be excellent investments, if one chooses carefully, he said in a recent article:

"You simply need to consider who is going to buy the property from you when it is time to sell. If you are buying in one of the areas most popular with expats, and plan your exit strategy based on expatriate buyers, then you must avoid the most over-developed areas; sunbathing is not a spectator sport, and most people will want a half-decent view on at least one side of their holiday properties.

"But if you choose carefully you should be able to resell a property you buy now for at least a 30% profit in 2-4 years."

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Is the American Housing Market Really in Recovery?

In the last few of months the amount of positive data about the American housing market has been increasing.

The trusted Case-Shiller index began recording price increases in Q2, and these were matched by reports of increasing demand, and in line with reports that the US economy was also on the road to recovery.

The US economy grew by 0.9% in the third quarter, but is the US housing market really on the fell of a V-shaped recovery, or is this simply a bounce?

It all started back in Q2... Case-Shiller ended months and months and months of falling prices across the board in August, when they reported that prices had only fallen in 5 out of the 20 states covered in the index. Prices had either risen or stayed the same in the other 15.

This is when reports began to circulate from various sources that the US housing market had stabilised and was on the road to recovery. Throughout July and August more positive data was revealed for June, US construction spending saw an unexpected rise of 0.3%, compared to a 0.8% fall the month before, sales increased by 11% on the month, and pending sales by 3%.

But at the same time, there were also countless news stories on the rising number of repossessions throughout August. Even now there are literally thousands of homes entering the repossession process every week, and many more struggling to avoid it. Unemployment also showed some signs of turning around, but has as yet failed to do so in any real way.

And the picture has remained pretty much the same since August: there have been many positive reports of increased and increasing sales, a lot of positive data on prices, while the problems of repossession and unemployment loom large, threatening to pull the rug out at any moment.

Bringing it back to today, a Wall Street Journal report reads:

Home sales have increased from the severely depressed levels of 2008. The inventory of unsold homes listed for sale also is down. Bidding wars are breaking out for foreclosed homes in the sorts of neighborhoods (near jobs and decent schools) that attract both first-time buyers and investors seeking rental properties.

But more than 6.7 million U.S. households with mortgages, or about 13%, are behind on their payments or are in the foreclosure process, according to the Mortgage Bankers Association. Eventually, many of them will lose those homes, sending more supply onto the market. Unemployment has continued to rise, and the housing market is unlikely to show a sustained recovery until job growth resumes.

The picture of the US housing market as a whole is very similar to that of the UK, but on a much larger scale: there are some positive signs; the people who can afford to buy in cash or get affordable finance, are taking advantage of the bargains and repossessed properties. Meanwhile continually rising repossessions and unemployment threaten to send prices back into freefall at any moment.

Some people have also suggested that it was only the government incentive package, which paid a percentage of a first time buyer's house purchase that was causing the positive data. That scheme terminates this month.

So, the answer to the question: is the US housing market recovering is a resounding maybe according to official data and mainstream sources.

In my personal opinion: what we have seen is not the beginning of the recovery proper, it has been a bounce caused by the government stimulus and improved sentiment. Repossessions and unemployment will begin to re-exert downward pressure on prices in the next 6 months. The proper recovery will only begin when unemployment begins to fall, and even then price growth will be subdued for 2-5 years as America get's back on its feet and the repossession problem is finally brought under control.

That said: there is always criticism of me and others for even reporting on UK house prices as a whole, when every region is different. And this is even more true in the US.

The same WSJ report tells us that house prices in Summit, N.J., known for good schools and an easy, 45-minute train commute to Manhattan, the median home price in September was up 1.2% from a year earlier, according to Otteau Valuation Group, an appraisal company. While in Atlantic City, N.J., which suffers from too much speculative building of condominiums and weak demand for vacation homes, the median price is down about 12% from a year ago.

I agree, it is slightly pointless to report countrywide prices if you look at it from that perspective, but the average US house price and whether it is rising or falling will always be a focus for global property pundits, especially now we have all witnessed the effect it can have on the global economy.

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American Housing Market has Bottomed Says JP Morgan

An upbeat report by JP Morgan has said that the US housing market has passed its trough and is now moving towards recovery. This was backed-up by a Reuters survey of 41 analysts, in which a third said the market bottomed in April.

However, much like the UK there are still far too many negative factors hanging over the housing market for anyone to honestly forecast a period of rapid growth anytime soon. Negative factors like: thousands of homes still facing foreclosure, thousands already foreclosed and bank-owned, and still high unemployment.

The volatility that still exists in the market was shown all too clearly, when it was revealed that existing home sales had fallen in August. It is 4 consecutive monthly rises in existing home sales that have caused most of the optimism that the market has bottomed, for it to suddenly fall has been a massive blow.

None the less, the momentum behind the recovery in global economies does seem to be gathering pace, with news of economic indicators turning positive almost by the day in the world's leading economies, including a rise in UK retail sales last week, a clear sign of a UK recovery.

This is leading to increased activity in the overseas property market, with reports of British buyers returning to the established markets looking for a bargain. With this, and the reports of a US property market in recovery, there is sure to be a lot of activity from foreigners looking to buy a bargain property in America.

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