KeNo's Housing and Economic Portal: Friday June 17 Housing and Economic stories

Thursday, June 16, 2011

Friday June 17 Housing and Economic stories

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TOP STORIES:

Do Realtors' bonus commissions rub House buyers the wrong way? - (weblogs.sun-sentinel.com) Agents who make their first sale in the luxury oceanfront condominium will get a 3 percent commission and $10,000 or a vacation package for a three-night stay at The Ritz-Carlton Toronto. A second sale results in the 3 percent, plus $15,000 or a four-night package at The Ritz-Carlton LA Live. A third sale nets an agent 3 percent, plus $20,000 or a seven-night package at The Ritz-Carlton Hong Kong. The program will be in place for the next three months. Units at the 242-unit condo are priced from $700,000 to nearly $5 million, with the two penthouse units on the market for more than $10 million. Lionheart Capital, a Miami-based private equity firm, brought in Ritz-Carlton after buying the remaining 146 condos from Catalfumo Construction of Palm Beach Gardens last year for $117.3 million. Ophir Sternberg, president of Lionheart, insists he's not tossing around incentives because the two-tower condo is struggling. He said sales are already strong: more than $45 million since his firm took over.

Distressed Houses Sold at 27% Discount - (www.bloomberg.com) U.S. homes in the process of foreclosure sold at an average 27 percent discount in the first quarter and purchases of distressed properties fell to less than half the peak set two years ago, according to RealtyTrac Inc. The discount reflects the price of distressed properties relative to normal sales. A total of 158,434 homes that sold in the period received notices of default, auction or repossession, down 16 percent from the fourth quarter and 36 percent from a year earlier, RealtyTrac said in a report today. At that pace, it would take three years to clear the supply of distressed and bank-owned houses, the Irvine, California-based company said. “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery,” Chief Executive Officer James Saccacio said in the statement.

OECD: America risks a crisis unless it raises interest rates - (www.telegraph.co.uk) Interest rates should be lifted to 1pc by the end of the year from their current band of between 0pc and 0.25pc, according to the latest semi-annual outlook from the Organisation for Economic Co-operation and Development (OECD). Doing so would avoid the Federal Reserve having to raise rates more quickly later to counter inflation, according to the think-tank's economists. The twin policy prescription comes as the US central bank prepares to end its second, $600bn (£369bn) of quantitative easing (QE) next month. Although Ben Bernanke, the Fed chairman, has said a third shot of QE is unlikely, he has also signalled he is in no hurry to raise the target for the federal funds rate – the economy's key lending rate.

Example: Builders Urge Congress to Maintain Socialized Lending to Ensure Healthy CEO Bonuses - (www.nahb.org) With some members of Congress actively pushing to abolish Fannie Mae and Freddie Mac and end the federal backstop for housing, the National Association of Home Builders (NAHB) told Congress today that maintaining an appropriate level of government support is absolutely essential to preserve financial stability. Testifying before the Senate Banking Committee, NAHB First Vice Chairman Barry Rutenberg, a home builder from Gainesville, Fla., said that absent a federal role to help reassure mortgage market investors, the cost and availability of mortgage credit would be subject to unpredictable volatility. “The historical track record from the 1998 Russian crisis to the tragedy of Sept. 11 clearly shows that the private sector is not capable of providing a consistent and adequate supply of housing credit without a government backstop,” said Rutenberg. “Therefore, as the private market transitions to assume a greater responsibility, there must be a predictable, permanent federal role in order to ensure a consistent supply of mortgage liquidity and to allow rapid and effective responses to market dislocations and crises.”

America's Foreclosure Wastelands - (www.businessinsider.com) Enter next phase of the housing crisis. First quarter sales data released yesterday by RealtyTrac showed that foreclosure accounted for 28 percent of all sales -- the highest amount in a year. The slow return of millions of REO homes to the market will keep home prices from recovering. RealtyTrac's James J. Saccio warns: "At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure." If millions more distressed mortgages, aka the shadow inventory, enter foreclosure, then things could get even worse. Nevertheless the number of properties in foreclosure declined in the first quarter. Foreclosure filings were reported on 681,153 properties, a 15 percent decline from the previous quarter and a 27 percent decline year-over-year.