The Commerce Department reports sales of new single-family homes rose 14.8 percent in April. Mortgage application volume increased 11.3 percent on a seasonally adjusted basis from one week earlier. The NAR predicts commercial vacancy rates will increase from 16.9 percent in the first quarter of this year to 17.6 percent in the first quarter of 2011. According to Freddie Mac, home prices declined 1.1% in quarter 1 of 2010 compared to the same quarter one year ago.

In The News:

Washington Post - “New home sales jump 14.8 percent in April” (5-26-10)

“The sales of new single-family homes rose 14.8 percent in April compared with the previous month to a seasonally adjusted annual rate of 504,000, according to Commerce Department data. It was up 47.8 percent compared to the same period a year ago.”

Mortgage Bankers Association - “Mortgage Refinance Applications Continue to Increase, Purchase Applications Decline Further in Latest MBA Weekly Survey” (5-26-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 21, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 11.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 10.3 percent compared with the previous week.”

NAR - “Commercial Real Estate Vacancies to Peak Near Early 2011″ (5-26-10)

“With an elevated level of sublease space available, vacancy rates in the office sector are projected to increase from 16.9 percent in the first quarter of this year to 17.6 percent in the first quarter of 2011, but should ease later next year. Annual office rent is likely to fall 2.3 percent this year and decline another 2.1 percent in 2011. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, is forecast to be a negative 24.6 million square feet this year and then a positive 25.5 million in 2011.”

Mortgage Bankers Association – “MBA Study Examines Industry Risk Management Practices That Contributed to Housing Crisis” (5-26-10)

“Multiple factors including poor data, incomplete performance metrics, and, short-term focus and unrealistic optimism among senior business managers contributed to the collapse in the US housing and mortgage markets, according to a study released today by the Mortgage Bankers Association (MBA).”

Housing Wire – “Freddie Sees House Prices Down Slightly in Q110″ (5-26-10)

“Home prices declined 1.1% in Q110 compared to the same quarter one year ago, according to purchase-only edition of Freddie Mac’s (FRE: 1.17 +1.74%) Conventional Mortgage Home Price Index (CMHPI). Compared to Q409, prices are down 2.1%. However, despite the declines, prices in some regions of the country are still above 2005 levels.”

Bloomberg - “Toll Brothers Buys Land as Quarterly Home Orders Rise” (5-26-10)

“Toll Brothers Inc., the largest U.S. luxury homebuilder, increased its land holdings for the first time in four years in anticipation of a recovery in the market.”

Orange County Register – “4 big local landlords cut rent 5.3%” (5-26-10)

“Equity Residential, Essex Property, AIMCO and AvalonBay — own a combined 39,577 units in Southern California. (That’s a visual taste of their Orange County offerings above. Click for larger images!) Thanks to my trusty spreadsheet, this foursome’s collective SoCal rents — factoring in their relative number of local units owned — dropped 5.3% vs. a year ago. (RealFacts, which surveys numerous owners of large complexes, had Orange County rents down 4.8% in the year ended in the first quarter.)”

Orange County Register – “O.C. real estate giant to split into two companies” (5-26-10)

“The legacy component, consisting mainly of its title insurance and other insurance-related businesses, will be renamed First American Financial, trading on the New York Stock Exchange under the symbol of FAF. The newer, technologically advanced real estate and consumer data and analysis businesses formerly known as First American CoreLogic will form the second company, operating simply as CoreLogic. Its stock symbol will be CLGX.”

Bloomberg - “Home Prices in U.S. Cities Rise Less Than Forecast” (5-25-10)

“Home prices in 20 U.S. cities rose less than forecast in March from a year earlier, a sign the housing recovery is cooling. The S&P/Case-Shiller home-price index of property values in 20 cities increased 2.3 percent from March 2009, the group said today in New York. The median forecast of economists surveyed by Bloomberg News projected a 2.5 percent advance. Nationally, prices last quarter dropped 3.2 percent from the previous three months.”

Bloomberg - “Home Prices Decline 3.1% in First Quarter, FHFA Says” (5-25-10)

“U.S. home prices fell 3.1 percent in the first quarter from a year earlier as record foreclosures added to the inventory of houses on the market. The annual drop was double the 1.5 percent decline in the fourth quarter, the Federal Housing Finance Agency said today in a report. Measured from the prior three months, prices fell 1.9 percent in the first quarter, the Washington-based agency said.”

Housing Wire – “Moody’s Says Court Ruling Gives FDIC Broad Powers Over Failed Bank Assets” (5-25-10)

“A ruling by the Eleventh Circuit Court of Appeals is giving the Federal Deposit Insurance Corp. (FDIC) broad-reaching powers to dispose of the assets of failed banks, according to Moody’s Investors Service. In its latest credit outlook report, the rating agency said the ruling is likely to up the risk to bank-sponsored asset-backed securities (ABS), as recourse to compensation will be diminished, leaving involved parties little alternative than to sue the FDIC in instances of alleged grievance over the handling of these assets.”

Housing Wire – “Freddie Production Stays Flat Despite Delinquent Buy-Outs, Analyst Says” (5-25-10)

“The aggregate unpaid principal balance of Freddie’s mortgage-related investments portfolio grew by $3.9bn in the month, due to delinquent mortgage buyouts from Participation Certificate (PC) pools first announced in February. The total portfolio size is back to year-end 2009 levels, but securities holdings are down $61bn to accommodate the loan purchases. Net production of Freddie pass-throughs this year — including the effect of the buy backs — is flat, according to Jim Vogel, a strategist at FTN Financial, a financial services provider for the investment and banking community.”

Housing Wire – “New $3bn Foreclosure Prevention Program Added to Wall Street Reform Bill” (5-25-10)

“The Senate passed the Restoring American Financial Stability Act last week, approving a new program that would reduce mortgage payments for the unemployed. The program would provide $3bn from the Troubled Asset Relief Program (TARP) to lend up to $50,000 to unemployed homeowners, who could reasonably resume making payments again within two years. The program was modeled after the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) in Pennsylvania.”

Looking Back:

One year ago, the S&P/Case-Shiller home-price index decreased 18.7 percent from March 2008. Freddie Mac estimated that the U.S. housing slump would end in June 2009. Orange County building industry lost 32,300 construction jobs from the September 2007 peak. President Obama signed a $500 million fraud protection bill.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Research from NAR shows that most small-scale, exterior home modificaitons, such as door replacements and wood deck additions, are the most profitable at resale. The Federal Reserve’s commercial/multifamily mortgage debt decreased by 0.8 percent from the second quarter 2009. Radar Logic estimates that housing will continue to have trouble in 2010, but does not believe that a second collapse will occur. According to ForeclosureRadar.com, foreclosure cancellations in California climbed 40% in November.

In The News:

NAR - “Exterior Remodeling Proves Best Bang for Your Buck, Realtors® Report” (12-17-09)

“Despite a slow market and a slight decrease in the resale value of most remodeling projects, Realtors® report that the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors® who completed a recent survey. On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement – a new addition to this year’s list – recouped 128.9 percent of costs, followed by upscale fiber-cement sliding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.”

Mortgage Bankers Association – “MBA Study Shows Narrowing in Profit Margins For Independent Mortgage Bankers and Subsidiaries” (12-17-09)

“Independent mortgage bankers and subsidiaries made an average profit of $902 on each loan they originated in the third quarter of 2009, according to the Mortgage Bankers Association (MBA).  This profit marks a decrease from the second quarter of 2009 when profits averaged $1,358 per loan, according to the MBA’s most recent Quarterly Mortgage Bankers Performance Report. This report measures the performance of independent mortgage bankers and subsidiaries of banks, thrifts and hedge funds.”

Mortgage Bankers Association – “MBA Analysis: GSEs Increase Multifamily Mortgage Holdings; Banks Decrease Construction Loans and Increase Commercial/Multifamily Mortgages in Third Quarter 2009″ (12-17-09)

“The $3.43 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $28 billion or 0.8 percent from the second quarter 2009.  Multifamily mortgage debt outstanding dropped to $912 billion, a decrease of $1 billion or 0.1 percent from second quarter. The level of commercial/multifamily mortgage debt outstanding decreased in the third quarter, to $3.43 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data.”

Housing Wire – “Housing Won’t Collapse in 2010, says Radar Logic” (12-17-09)

“The US housing market could be in for some serious trouble in 2010, but predictions of a second collapse are ‘exaggerated,’ according to a report from Radar Logic, a real estate data and analytics company. Housing values could significantly recover in the spring of 2010 as low prices attract a blend of owner-occupiers and investors.”

Housing Wire – “Total Mortgage Has Record Origination Year” (12-17-09)

“Total Mortgage Services said it expects to originate a company-record $750m in mortgages in 2009. It’s a 67% increase from 2008’s level of $450m in originated loans for the Milford, Conn.-based lender, which originates mortgages in more than 20 states. Total Mortgage credits low interest rates for the boost in both purchase and refinance activity.”

Housing Wire – “Foreclosure Cancellations Rise 40% in California” (12-17-09)

“Foreclosure cancellations in California climbed 40% in November, according to a monthly report from ForeclosureRadar.com, which tracks foreclosures in California. Analysts adjusted the numbers to account for November’s four fewer filing days. Average daily foreclosure filings declined only 1%. Notice of trustee sales declined 13.4%, and the amount of real estate owned (REO) property increased 2.4%. Sales to third parties increased 8% on a daily average basis.”

Bloomberg – “Luxury-Home Owners in U.S. Use ‘Short Sales’ as Defaults Rise” (12-17-09)

“Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.”

Bloomberg - “General Growth Considering ‘Indications of Interest’” (12-17-09)

“General Growth Properties Inc., the mall owner seeking to emerge from bankruptcy next year, will consider all offers for the company and may sell shares to the public to raise capital. General Growth won permission this week from a bankruptcy judge to restructure about $10.25 billion in debt at some of its properties. The Chicago-based company is trying to restructure $3 billion of additional secured debt, it said today in a statement. ”

Bloomberg - “U.S. Mortgage Rates Rise to 4.94%, Freddie Mac Says” (12-17-09)

“Mortgage rates for fixed 30-year U.S. home loans rose for a second consecutive week after hitting a record low this month. The rate for the week ended today increased to 4.94 percent from 4.81 percent. It set a record low 4.71 percent in the week ended Dec. 3. The average 15-year rate was 4.38 percent, the McLean, Virginia-based company said today in a statement.”

Looking Back:

One year ago, Lawrence Yun of the NAR estimated that commercial real estate would be damaged by job losses. CAR expected home prices to increase by 12 percent in 2008. Delinquencies for homes increased to 4.6 percent during the third quarter. The MBA reported that mortgage loan application volume increased during the week of December 12, 2008.