RISMEDIA, Friday, September 13, 2013— With foreclosure sales in rapid decline nationwide and in high demand in many fast-rising markets, a report released this week by mortgage technology company FNC indicates that housing demand by trade-up buyers is rising as the home equity available to these prospective buyers is improving.
According to FNC’s Foreclosure Market Report, the foreclosure market has rapidly improved in recent months with foreclosure rates approaching pre-crisis levels—an indication of strengthening supply-side conditions. On the demand side, steadily rising home prices and an expectation of continued recovery have stimulated housing turnover by prospective buyers who are in a position to take advantage of low home prices. In the meantime, higher home prices are bringing out trade-up demand from existing homeowners who are experiencing rising home equity, which supports a down payment on their next bigger house.
“We’ve seen hard data from the past 18 months that shows rising home prices and a foreclosure market with diminished impact due to decreasing foreclosure inventories and fewer new foreclosure filings,” said FNC Director of Research Yanling Mayer. “Meanwhile, a very encouraging trend that has been developing is the rising participation of trade-up buyers who are seeing improving home equity position and positive capital appreciation on existing homes.
“An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending,” Mayer said. “These buyers are typically more responsive to market conditions and financial incentives.”
FNC’s report shows that foreclosure price discounts, which compare a foreclosed home’s estimated market value to the price paid by investors or home buyers, have dropped to a 10-year low at about 8.1% in Q2 2013, down from 12.5% a year ago. At the height of the mortgage crisis in 2008 and 2009, foreclosed homes were typically sold at close to 25% below their estimated market value. In many fast-rising markets, such as Phoenix, Las Vegas, and California, investor activity and low foreclosure inventory drove foreclosure prices up, frequently resulting in a price premium relative to estimated market value.
FNC publishes the mortgage industry’s first market-value based foreclosure price discount to gauge the degree of market distress. For more information about the foreclosure price discount, please refer to FNC’s March 2011 report located here.
According to the FNC report, investing in foreclosed property continues to be profitable with gross capital appreciation – the annualized percentage difference between a foreclosed property’s sales price and subsequent resale price – averaged at 7.8% on sales of homes previously purchased at foreclosure sales. In the meantime, ownership duration on distressed investment is up, along with the average ownership duration of all existing home sales.
More highlights from FNC’s Foreclosure Market Report:
• Single-family REO and foreclosure sales are 12.2% of total home sales as of July, down from 17.3% a year ago.
• The median foreclosure price is $98,000 or $67 per square foot, up 6.8% since the housing recovery began 18 months ago. In comparison, the median price on non-foreclosure sales is $205,000 or $118 per square foot, up 21.7% during the same 18-month period.
• Foreclosure price discounts are typically larger for low-tier properties, averaging 13.7% in Q2 2013. One in four homes continues to be discounted heavily. High-end properties, on the other hand, are typically sold close to their market value.
• At 86% of total foreclosure sales, low-tier properties continue to account for the bulk of foreclosure sales. Prior to the housing bubble, low-tier homes contributed more than 90% to foreclosure sales.
• Collateral depreciation on foreclosure sales – the difference between a property’s prior purchase price and foreclosure sale price – continues to decelerate, down to 3.8% in Q2 2013 from 6.4% a year earlier. Among the re-sales of non-distressed homes, for 16 consecutive months the median home is sold at a price above its prior purchase price – enabling potential trade-up buyers to capture a small capital appreciation.
• Despite declining foreclosure rates, Michigan continues to be the nation’s most distressed market with one in three homes sold during Q2 2013 being foreclosed properties.
• Arizona, California, Nevada, and Oregon have seen the fastest declines in foreclosure rates in the ongoing recovery, down respectively from 30.7%, 33.4%, 44.9%, and 24.2% entering 2012 to 11.9%, 12.4%, 15.3%, and 7.2% by Q2 2013. At 3.2% of total home sales, the District of Columbia has the lowest foreclosure rate.
• States with continued high foreclosure rates include Alabama, Illinois, Michigan, Ohio, Rhode Island, South Carolina, and Tennessee. More notably, foreclosure rates in Alabama, Illinois, Indiana, and Kentucky are trending steadily upward in recent months, dampening home prices.
• Among the largest housing markets (MSAs), New York, Boston, Portland, San Francisco, and Washington D.C. have the lowest foreclosure rates at 4.3%, 5.4%, 6.8%, 7.0%, and 8.3%, respectively, compared to a national average of 14.8% in Q2 2013. In contrast, Detroit, Chicago, Cleveland, Atlanta, and Cincinnati have the highest foreclosure rates at 34.7%, 27.1%, 24.3%, 19.4%, and 19.3%, respectively.
• Of the cities identified by the Federal Reserve Board as the largest REO inventory markets entering 2012, Los Angeles, Phoenix, and Riverside, CA., have since improved and are in strong recovery. The recovery in Atlanta is on par with the national trend and in the 18-month period, home prices are up 9.8%; foreclosure rates are down from 32.0% to 19.4%; and the foreclosure price discount is down from 18.8% to 8.7%. Conditions in Detroit are improving despite continued high foreclosure rates. Chicago, however, lags behind the rest of the country in the ongoing recovery – foreclosure rates are elevated at about 27%, contributing to the continued weakness of home prices.
For more information visit http://www.fncrpi.com.
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That boom you heard is Southwest Florida building industry: It’s back
Area home prices to jump by double-digits in next year, research group says
By JUNE FLETCHER | Sunday, September 8, 2013
NAPLES — Southwest Florida is undergoing another growth spurt.
A new study released in the past week by Local Market Monitor shows that the population of the Naples-Marco Island metropolitan statistical area rose 11 percent during the past 12 months, second only to Miami statewide.
Cape Coral-Fort Myers isn’t far behind. Its residence base rose 10 percent year-over-year, tying it for third place with Orlando and North Port-Bradenton-Sarasota.
Both Southwest Florida areas experienced 47 percent growth since peak periods in the second quarter of 2006, second only to Port St. Lucie, the research group’s study said.
But unlike most cities, which grow in population when new jobs are created, Southwest Florida’s growth got a big boost from retirees who are downsizing from pricier regions and picking up housing deals here, said Ingo Winzer, president of Local Market Monitor.
While Southwest Florida’s prices have been rising fast recently, he noted the area still is significantly underpriced based on its “equilibrium price” — the point at which supply balances with demand. The report says Naples-Marco Island is 18 percent below its equilibrium price of $327,087, while Cape Coral-Fort Myers is 27 percent under the equilibrium price of $234,247.
The growing influx of retirees into the market likely will create more service- and consumption-related jobs in the near future, said Bruce Register, director of the Office of Business and Development for Collier County.
“You’d expect some impact on demand,” he said.
Retirees have another positive effect on the economy since most aren’t competing with local workers for jobs, said Scott Cody, research demographer for the Bureau of Economic and Business Research at the University of Florida in Gainesville.
“Moreover, they’re bringing their pensions and Social Security with them, which increase the area’s wealth,” he said.
The UF economic research bureau projects that the estimated 330,000 population in Collier County will grow about 51 percent, to 497,700, by 2040 from 2012. Lee’s population of about 630,000 is expected to expand nearly 68 percent to 1,070,200 during the same period.
Most of that population will be fueled by people coming from other places, Cody said.
Rick Burris, principal planner for Lee County’s Community Development Planning Division, also expects the county’s population will explode during the next few decades, largely because it is affordable compared to many larger metropolitan areas.
While some new residents will be elderly, he also anticipates an uptick in the county’s minority population, which has been growing rapidly in recent years.
He also expects an influx of younger workers attracted by the large corporations Lee County is aggressively courting, such as Hertz and Altos Research.
But rapid growth may bring some downsides, he predicts, particularly for residents who came to Southwest Florida to live a bucolic life in a low-density environment, Burris said.
“As we grow, the challenge will be to attract new people while retaining the old,” he said.
By KELLY FARRELL | Monday, September 9, 2013
EAST NAPLES — A huge new East Naples development with an Old Florida twist soon will offer boat tours through the community to prospective home buyers.
Canadian-based Minto Communities has groundwork underway in the 2,400-acre residential community, Isles of Collier Preserve, off U.S. 41 East near Rattlesnake Hammock Road.
Minto Communities purchased the land from Collier Enterprises, closing in December, and then broke ground in January and began developing the environmentally sensitive land east of Naples Bay.
The Isles of Collier Preserve is to be considerably different than the manicured, gated communities throughout Collier County, developers said.
“Most Naples communities are very manicured. We’ll have some manicured boulevards. We’ll also have a lot of areas that preserve the native habitat with a community carefully carved into the existing environment,” said William Bullock, vice president of Minto Communities Florida.
Some of the initial work, including the guardhouse, entry boulevard and 175 lots, are complete. Construction is underway on the 7,330-square-foot Discovery Sales Center, where an electric boat for tours will soon be docked, and four single-family model homes and three coach homes.
The Isles of Collier Preserve is near Rookery Bay and the Botanical Gardens and has sought to complement those neighbors, sponsoring them and collaborating with them in the community’s design.
“We’ve also done our historical research. The bridges will be reminiscent of the Old 41 markers. There will be a story to be told about this community. It’s a very big last piece of land in Naples and we’re painting a different picture here. We think people will be proud to live here, have a story and a legacy they can tell,” Bullock said.
The community will be active and nature-loving.
“Forget about just the house lifestyle. It’s about understanding what’s around you in the first place,” he said.
The Isles of Collier Preserve is home to several protected species, but also has some exotic vegetation being replaced with native plant species, making improvements to the land, Bullock said.
Company officials said Minto Communities intends to stay ahead of the curve with environmentally conscious construction for this East Naples community, where homes will be beside habitats for American Bald Eagles, gopher tortoises and other endangered and protected animals. Government oversight is thorough due to the sensitivity of the area, including wetlands, estuaries and other ecological features.
More than half of the land is to remain dedicated to natural habitat and preserve. The waterway that runs through the community will provide for tours on the electric boat set to be running by November, as well as kayaking and canoeing when homes become move-in ready sometime in 2014. Recreational trails, walkways and bike paths will allow residents to connect with their environment.
The Discovery Sales Center’s construction is of an Old Florida design that will be an architectural feature of the single-family and coach homes, also coming soon. Seven model homes are anticipated to be open for viewing in January.
Rookery Bay National Estuarine Research Reserve is to the south, Naples Botanical Garden to the North and Naples Bay is on the west of The Isles of Collier Preserve. Hamilton Harbor Yacht Club is also contiguous with The Isles of Collier Preserve and has memberships that can be available to residents.
About 1,600 residences are planned. The homes will be energy-efficient, featuring green Leadership in Energy and Environmental Design (LEED) construction with the consumer having the opportunity for an individual efficiency and sustainability rating for their home.
Many of the homes will start at a list price slightly more than $400,000 with the bulk of the initial homes in the range of $650,000 to $750,000.
“We’re going to let the market dictate a lot,” he said.
There will be many larger estate homes farther back in the community on larger lots that will be well over $1 million. These estate homes will feature the communities’ most breathtaking views, Bullock said.
© 2013 Scripps Newspaper Group — Online
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Affluence and access to great recreational opportunities are the common factors in areas where people routinely live into their 80s.
Collier County, Fla
Unemployment: 6.0%.
Median Home Value: $317,200
Median Household Income: $56,876
Life expectancy: 84.62 females
Amid the tropical environs of Florida’s gulf coast, the seat of Collier County — Naples — has been called one of the 10 best places to retire by AARP. But that ranking is more about the well-planned perks enjoyed by the county’s retirees, not just by the sunshine and citrus they’re absorbing.
AARP, which advocates for Americans 50 and older, plugged the area for its bevy of life-extending amenities, including affordable health plans, exercise habits and doctors per capita. Of course, there’s money here, too. On Marco Island, a pretty, offshore slice of the county, the median household income is $63,201, reports city-data.com, a demographic-tracking website.
A sustainable lifestyle
Living well may be the best revenge, but living long is just as sweet. In some places, the two maxims intersect.
Demographers have found that in many of the nation’s most affluent locales, residents also enjoy some of America’s highest life-expectancy rates. In most cases, elevated income brings better access to leading doctors. But a lifestyle including cleaner air and top-tier recreational opportunities also plays a role.
Take a good whiff of the good life in 10 counties where Americans enjoy the best longevity, based on the comprehensive data from the Institute for Health Metrics and Evaluation in Seattle.
Unemployment rates, median home prices and household income are taken from Census figures and other government sources.
