U.S. Foreclosure Filings May Jump 20% This Year as Crisis Peaks

The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.

“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said in an interview at Bloomberg headquarters in New York. “But it’s probably not going to feel good in the process.”

A record 2.87 million properties got notices of default, auction or repossession in 2010, a 2 percent gain from a year earlier, the Irvine, California-based data seller said today in a report. The number climbed even after a plunge in filings in the last part of the year — including a 26 percent drop in December — as lenders came under scrutiny for their practices.

Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent.
Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. They have fallen as much as 33 percent since peaking in 2006, based on the S&P/Case-Shiller Index of 20 cities.

Banks seized more than 1 million homes in 2010, according to RealtyTrac. That was up 14 percent from a year earlier and the most since the company began reports in 2005.

About 3 million homes have been repossessed since the housing boom ended in 2006, Sharga said. That number could balloon to about 6 million by 2013, when the housing market may “absorb the bulk of distressed properties,” he said.

“What makes this almost inevitable is the fact there are 5 million seriously delinquent loans not yet in foreclosure,” Sharga said. “They’ve got to eventually get in the pipeline unless the homeowners cure the defaults.”

As many as 250,000 foreclosure filings that would have occurred at the end of 2010 were delayed by the ongoing probe into lender practices, according to RealtyTrac. Those proceedings will be pushed into this year, resulting in an “ugly” first quarter, Sharga said.

Attorneys general in all 50 states are investigating whether banks and loan servicers used faulty documents and signatures on loan documents, a process that has come to be known as robo-signing. Companies including JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. halted some repossessions as they reviewed their procedures.

Foreclosure filings in December totaled 257,747, the lowest monthly tally since June 2008. The number fell 2 percent from November and 26 percent from a year earlier, the biggest annual decline in RealtyTrac records.

Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com

Housing’s Anemic End to Five-Year Slump Means Little Boost to U.S. Economy

This may be the year the U.S. housing market starts crawling up from rock bottom. Held back by foreclosures, the pace will be so weak it won’t do much for economic growth.

Home prices probably will start to gain in 2011’s third quarter and rise 0.6 percent for the year, the first annual advance since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. Real residential investment, an inflation- adjusted measure of homebuilding, will increase 9.6 percent in 2011 after five years of declines to a record low, based on the median forecast of 30 economists at a Federal Reserve Bank of Chicago symposium last month.

“There’s a good chance of a housing turnaround this year, but it’s not going to be enough to give much help to the economy,” said Karl Case, co-creator of the S&P/Case-Shiller Index that tracks U.S. home prices. “We’re coming off 50-year lows and we still have to deal with the foreclosure mess.”

Housing demand may be stabilizing after transactions plunged last year. Home sales and construction will rise in every quarter of 2011, according to estimates by the Mortgage Bankers Association, the National Association of Realtors, Fannie Mae and Freddie Mac. Lender delays in pushing through foreclosures may be the biggest challenge to a broader recovery, said Mark Zandi, chief economist for Moody’s Analytics Inc.

Housing was a driver of economic growth before its collapse led to the worst recession since the 1930s. Residential investment contributed half a percentage point to gross domestic product growth in 2004, an 18-year high that outstripped defense spending, according to Bureau of Economic Analysis data. Last year, inflation-adjusted investment in new homes probably drained 0.17 percentage point from GDP, based on the average of 2010’s first three quarters.

Affordability and a decline in the inventory of homes for sale will boost demand for housing in 2011, said Joel Naroff, president of Naroff Economic Advisors in Holland, Pennsylvania.

The National Association of Realtors’ affordability index, a gauge of median income against home prices, reached an all- time high of 184.5 in November. The number of new homes available for sale dropped to a 42-year low in that month, while the inventory of previously owned homes on the market fell to 3.7 million, the third consecutive decline, according to data from the Commerce Department and the Realtors group.

“This may be the year we see the beginning of a normal housing market outside foreclosure-overwhelmed areas,” such as California, Arizona, Nevada and Florida, Naroff said. “That doesn’t mean housing is going to be great, because we’re coming off such low levels.”

Date: 12 January 2011 | For the full report, please visit http://www.businesstimes.com.sg

KB Home Rises After Posting Unexpected Fourth-Quarter Profit on Cost Cuts

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, rose the most in two months after reporting an unexpected fourth-quarter profit.

KB Home climbed 6.42 percent to $15.25 at 4:10 p.m. in New York Stock Exchange composite trading after saying net income in the three months ended Nov. 30 was $17.4 million, or 23 cents a share. Eight analysts surveyed by Bloomberg estimated a median loss of 18.5 cents. KB Home, which cut costs as demand for new homes slumped, expects to post a 2011 profit, according to Chief Financial Officer Jeff Kaminski.

“These favorable results demonstrate that we have the capability to generate earnings on lower revenue levels,” Jeffrey Mezger, president and chief executive officer, said on a conference call with analysts today. “We cannot control the market but we can control how we operate within it.”

U.S. homebuilders are struggling with competition from foreclosures and decreased demand as unemployment hovers above 9 percent. KB Home has offered smaller, more efficiently designed homes in the slump.

“The company is proving it can build and sell lower-cost homes profitably and it is finally showing up in the results,” said Buck Horne, an analyst at Raymond James & Associates in St. Petersburg, Florida. Horne rates the stock “strong buy.”

Date: 08 January 2011 | For the full report, please visit http://www.bloomberg.com