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Posts Tagged ‘NAR’

[Interview] Robert Dorsey, Chief Data and Analytics Officer, FNC Co-Founder

November 18, 2010 | 11:03 pm | Podcasts |

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[Interview] Erica Ferencik, Realtor, Novelist, Writer, Former Standup Comedienne

June 27, 2010 | 10:47 pm | Podcasts |

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[NAR] Existing Home Sales Decline 2.2%, But a ‘Northeaster’ Weighed Down the Results

June 22, 2010 | 12:55 pm | |


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NAR released its May existing home sales report today. This was one of the most bizarre existing home sale reports I can recall.

First of all, the expectation of a drop in sales activity was widely expected due to the end of the federal tax credit, yet economists surveyed were anticipating an increase in sales in May? Real estate professionals were bracing themselves for a decline in sales in May.

Economists surveyed by Dow Jones Newswires expected existing-home sales to climb by 5.0%, to a rate of 6.06 million. The surprise decline followed two increases driven by a tax incentive for first-time buyers that the government enacted to spur a housing sector recovery.

I viewed the impact of the tax credit as “poaching” sales from the next 60-90 days rather than a vehicle to jump start the housing market. We really need jobs first.

But if you look closely at the data, M-O-M sales were up or flat in each of the 3 regions except the northeast, which posted an 18.3% seasonally adjusted decline.

The report headline was generally accurate “May Shows a Continued Strong Pace for Existing-Home Sales” if you remove the northeast from consideration.

Sales price showed the same pattern. While US prices were up 2.7% M-O-M, the northeast prices declined 2.2%.


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My interpretation of this “Northeaster” centers around foreclosures. The south and west posted significant foreclosure activity and price declines nearly 2 years ahead of the northeast. The midwest hasn’t seen the same volatility as the other regions. Perhaps the west and south have been pummeled enough that they are actually seeing a bottom in both sales and prices trends. Foreclosure activity is flowing freely while the northeast seems to be lagging in that regard.

Ok, I’m reaching through generalizations but why the disparity by region?

Here are this month’s metrics:

  • existing-home sales fell 2.2 percent to a seasonally adjusted annual rate of 5.66 million units in May down from a revised 5.790 million in April
  • existing-home sales are 19.2 percent higher than the 5.1 million-unit pace in May 2009.
  • housing inventory fell 3.4 percent to 3.89 million existing homes available for sale from April 10 but is 1.1% above last year
  • there is an 8.3-month supply down from an 8.4-month supply in April and down from a 9.7 month supply last year.
  • national median existing-home price was $179,600 in May, up 2.7 percent from May 2009.
  • distressed homes accounted for 31 percent of sales last month, compared with 33 percent in April 10 and 33 percent in May 09.


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[The Housing Helix Podcast] Travis Waller, CDPE, CRS, RE/MAX, Distressed Property Realtor

June 11, 2010 | 2:33 pm | | Podcasts |

Last January I moderated a distressed property panel at the Inman Real Estate conference in New York.  One of the panelists was Travis Waller, a sharp real estate agent from New Jersey who spoke with great clarity on his specialty, distressed real estate.  In this podcast we have a great conversation via Skype on what life will be like after the end of the federal tax credit for first time and existing home buyers, how banks are coming to grips with property disposition, differences between short sale and foreclosure transactions, marketing distressed property, to name a few.

It’s great insight from someone who deals with distressed property first hand.  Follow Travis on Twitter.

Check out the podcast.

The Housing Helix Podcast Interview List

You can subscribe on iTunes or simply listen to the podcast on my other blog The Housing Helix.


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[Interview] Travis Waller, CDPE, CRS, RE/MAX, Distressed Property Realtor

June 11, 2010 | 2:24 pm | | Podcasts |

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[NAR] Pending Home Sales Index

June 2, 2010 | 2:16 pm | |


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NAR released its PHSI today and there were no surprises. The expiration of the federal tax credit for first time buyers and existing home owners (signed contract by April 30, close by June 30) showed its impact on sales trends.

By the way, my above chart shows how ridiculous seasonal adjustments are – the non-seasonal adjusted line better reflects whats going on.

The pending sales data set is about 20% the size of existing homes and is comprised of existing single family and condo sales. Its dubbed a forward looking index but it really is a current looking index. The “meeting of the minds” between buyer and seller occurs just before contract signing. Its forward looking in the context of closing data but it is not forward looking on the condition of housing.

Consecutive M-O-M Gains

  • Sales were up 6% from March to April and up 22% from April 09 to April 10. Last month
  • Sales were up 7.9% from February to March and up 8.3% from March 09 to March 10.

Analysts have expressed fear the housing market will suffer with the end of the government subsidy. But the job market has been improving. The Labor Department is scheduled this week to release employment data for May, and economists surveyed by Dow Jones Newswires are expecting a gain of 515,000 non-farm payroll jobs.

The same thing happened last fall as the initial tax credit within the federal stimulus plan was set to expire on November 30 only to be renewed and expanded a few weeks later. No renewal this time.

Regionally things were not so consistent. Month over month gains in

  • Northeast +29.5%
  • Midwest +4.1%
  • South -0.6%
  • West +7.5%

Buyers they better close by June 30th. Not an automatic assumption in today’s mortgage environment.


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[In The Media] Bloomberg Radio The Hays Advantage 12:30pm

June 2, 2010 | 9:15 am | | Public |

Just a bit of house cleaning…err NAR’s Pending Home Sales Index being released at 10am this morning.

I’ll be on The Hays Advantage show with Kathleen Hays on Bloomberg Radio talkin’ pending home sales (contracts) today at 12:30 on AM1130, XM channel 129 or SIRIUS channel 130.

Always enjoy being on her program.


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[NAR] Existing Home Sales Jump Artificially

May 25, 2010 | 11:23 pm | |


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Last month NAR told us that this month would see another period of robust sales activity as buyers sought to beat the expiration of the first time buyers and existing hoimewoners tax credit on April 30th.

NAR was right about the jump in existing home sales this month.

Still, no real trend is apparent here.

The federal government provided a stimulus to buy homes to help jump start housing and the economy. Pure market forces didn’t deliver the buyers to the closing table this month on their own. What I love about sales stats over housing price stats is sales trends tend to lead price trends. So its a bit weird to say that prices are stabilizing when a key driver of demand was the tax credit – that fueled surge in sales which helped stabilize prices. Remove the stimulus and prices fall.

Lawrence Yun, NAR chief economist, said the gain was widely anticipated. “The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” he said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy and mortgage interest rates that remain historically low.”

When sales drop over the next few months, it would be reasonable to expect sales prices to fall too as the artificial stimulus leaves the economy.

Here are this month’s metrics:

  • existing-home sales increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March
  • existing-home sales are 22.8 percent higher than the 4.70 million-unit pace in April 2009.
  • housing inventory rose 11.5 percent to 4.04 million existing homes available for sale, an 8.4-month supply up from an 8.1-month supply in March.
  • inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million in July 2008.
  • national median existing-home price was $173,100 in April, up 4.0 percent from April 2009.
  • distressed homes accounted for 33 percent of sales last month, compared with 35 percent in March.


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[The Housing Helix Podcast] Leah Caro, President/Principal Broker of Bronxville-Ley Real Estate, President of Westchester Putnam Association of Realtors

May 17, 2010 | 3:42 pm | Podcasts |

I have a great conversation with Leah Caro, President and Principal Broker of Bronxville-Ley Real Estate and President of Westchester Putnam Association of Realtors.

I met Leah when I was the keynote speaker at the last two annual Westchester Real Estate, Inc. awards luncheons. She is a candid and knowledgeable real estate broker who is very active within her profession, currently serving as the Chair of the Professional Standards Committee for the New York State Association of Realtors, and is a Director in both the State and National REALTOR Associations among others.

Check out the podcast.

The Housing Helix Podcast Interview List

You can subscribe on iTunes or simply listen to the podcast on my other blog The Housing Helix.


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[Interview] Leah Caro, President/Principal Broker of Bronxville-Ley Real Estate, President of Westchester Putnam Association of Realtors

May 17, 2010 | 3:25 pm | Podcasts |

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[NAR] Existing Home Sales – 3 Month Decline, Supply Most in Nearly 2 Years

March 24, 2010 | 12:06 pm |


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NAR released their February Existing Home Sales report.

Its becoming apparent to even the most optimistic that job growth will be the yardstick that determines when housing will improve to a point where it is self-sustaining.

“It’s a fragile recovery” in housing, said Scott Brown, chief economist at Raymond James & Associates, in St. Petersburg, Florida. “We ultimately need to see job growth to get a sustainable rebound.”

Seasonally we expect inventory to rise in the spring, we also expect sales to rise.

Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, figures from the National Association of Realtors showed today in Washington. There were 3.59 million houses for sale, a 312,000 increase from January that marked the biggest gain since April 2008.

NAR’s chief economist is calling for a second surge or we are headed for problems.

Sales are up 7% compared with a year ago, the NAR’s data showed.

“We need to have a second surge,” said Lawrence Yun, chief economist for the real estate lobbying group. However, the jury’s still out, he said.

“Has everything in the gas tank been used up?” Yun asked. “Or is this just a pause before the next step up?”

It’s hard to imagine a “pause” in February. I was surprised a complaint about the weather wasn’t used.


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[HVCC and AMCs Violate RESPA?] Here’s a possible solution

March 16, 2010 | 12:01 am | |

I was provided an interesting solution to the AMC appraisal issue from Tony Pistilli, a certified residential appraiser who has been employed for over 25 years in the appraisal area, at governmental agencies, mortgage companies, banks and has been self employed.

He wants appraisers to get the word out. His solution is compelling.

Anyone who reads Matrix knows what I think of the Appraisal Management Company and the Home Valuation Code of Conduct (HVCC) problem in today’s mortgage lending world.

Here’s a summary of the his article before you read it:

  • Appraisers, Realtors, Brokers HATE the HVCC.
  • AMC’s and Banks LOVE the HVCC.
  • Regulators are disconnected from the problem just like they were when mortgage brokers controlled the ordering of appraisals during the credit boom.
  • Appraisers and borrowers are paying for services the banks receive.
  • Banks should pay for the services received from the AMC’s.
  • Appraiser’s fees should be market driven.
  • Banks should be held accountable for the quality of the appraisal.

AMC/HVCC appears to violate RESPA (Real Estate Settlement Procedures Act) since a large portion of the appraisal fee is actually going for something else coming off the market rate fee of the appraiser.

(RESPA) was created because various companies associated with the buying and selling of real estate, such as lenders, realtors, construction companies and title insurance companies were often engaging in providing undisclosed Kickbacks to each other, inflating the costs of real estate transactions and obscuring price competition by facilitating bait-and-switch tactics.

The Ultimate Solution for the Appraisal Industry

by Tony Pistilli, Certified Residential Appraiser and Vice-Chair, Minnesota Department of Commerce, Real Estate Appraiser Advisory Board, Minneapolis, Minnesota

Since the inception of the Home Valuation Code of Conduct (HVCC) in May 2009, there has been much discussion, and misinformation, about the benefits and harm caused by the controversial agreement with the New York Attorney Generals office and the Federal Housing Finance Agency. This agreement, originally made with the Office of Federal Housing Enterprise Oversight, requires Fannie Mae and Freddie Mac to only accept appraisals ordered from parties independent to the loan production process. Essentially, this means, anyone that may get paid by a successful closing of the loan cannot order the appraisal.

In the past 6 months while the Realtors© and Mortgage Brokers associations point fingers at appraisal management companies for their use of incompetent appraisers who don’t understand the local markets, appraisers are complaining that banks are abdicating their regulatory requirements to obtain credible appraisals by forcing them to go through appraisal management companies at half of their normal fee.

Banking regulations allow banks to utilize the services of third party providers like appraisal management companies, but ultimately hold the bank accountable for the quality of the appraisal. Unfortunately, the banking regulators have yet to express a concern that there is a problem with the current situation.

I need to state that appraisal management companies can provide a valuable service to the lending industry by ordering appraisals, managing a panel of appraisers, performing quality reviews of the appraisals, etc. However, banks have been enticed by appraisal management companies to turn over their responsibility for ordering appraisals with arrangements that ultimately do not cost them anything.

The arrangement works like this, the bank collects a fee for the appraisal from the borrower; orders an appraisal from the appraisal management company who in turn assigns the appraisal to be done by an independent appraiser or appraisal company. During this process the appraisal fee paid by the borrower gets paid to the appraisal management company who retains approximately 40% to 50% and pays the appraiser the remainder. So for the $400 appraisal fee being charged to the borrower, the appraiser is actually being paid $160-$200 for the appraisal. Absent an appraisal management company the reasonable and customary fee for the appraisers service would be $400, not the $160 to $200 currently being paid to appraisers.

Rules within the Real Estate Settlement Procedures Act (RESPA) have allowed this situation to occur, despite prohibitions against receiving unearned fees, kickbacks and the marking up of third party services, like appraisals. RESPA clearly states, “Payments in excess of the reasonable value of goods provided or services rendered are considered kickbacks”.

Banks are allowed to collect a loan origination fee. This fee is intended to cover the costs of the bank related to underwriting and approving a loan. Ordering and reviewing an appraisal is certainly a part of that process. Understanding that banks ultimately have the regulatory requirement to obtain the appraisal for their lending functions, why is it that borrowers and appraisers are paying for these services that are outsourced to appraisal management companies? Does the borrower benefit from a bank hiring an appraisal management company? Does an appraiser benefit from a bank hiring an appraisal management company? The answer to those two questions is a very resounding, no! Clearly the only one in the equation that benefits is the bank, so why shouldn’t the banks be required to pay for the outsourcing of the appraisal ordering and review process?

It is here where I believe the solution for the appraisal industry exists. Since banks are the obvious benefactor from the appraisal management company services, the regulators should require that the banks, not the borrowers or appraisers, pay for the services received. This one small change in the current business model would allow appraisers to receive a reasonable fee for their services and in turn they should be held more accountable for the quality and credibility of the appraisals they perform. Appraisal fees would be competitive among appraisers in their local markets, much like the professional fees charged by accountants, attorneys, dentists and doctors. Appraisal management companies would suddenly be thrust into a more competitive situation where their services can be itemized and their quality and price be compared to those of competing providers. This will ultimately lead to lower fees and improved quality of services to the banks. The banks will then have a very quantifiable choice, do they continue to outsource their obligations to an appraisal management company and pay for those services or do they create an internal structure to manage the appraisal ordering and review process? Either way, the banking regulators need to hold the banks more accountable at the end of the process.

When all of the previously discussed elements are present, I believe the appraisal industry will be functioning the way it was intended. Appraisal independence will be enhanced and borrowers will be rewarded with greater quality and reliability in the appraisal process. This is exactly the change that is needed, in addition to the HVCC, to stop the current finger pointing and address the poor quality and non-independent appraisals that have been and are still rampant in the industry.


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