Distressed Sales Undercut Home Prices in 2011, Study Says

repossessed houses for saleA report released today says that home prices slid by nearly 5 percent last year, but also indicates that most of the decline was due to distressed sales.

CoreLogic’s December Home Price Index found that home prices fell 4.7 percent in 2011 compared with December 2010, marking the fifth consecutive year of the housing slump. But excluding distressed sales, prices only dropped by 0.9 percent in 2011. The discrepancy between the two figures highlights the foreclosure crisis’ obstructive effect on a market recovery

"Until distressed sales in the market recede, we will see continued downward pressure on prices," said Mark Fleming, chief economist of CoreLogic.

Since the housing bust battered the real estate market in 2007, 8.9 million homes succumbed to foreclosure, according to RealtyTrac

And millions more may share this fate. One expert estimated that, in addition to the 2 million homes already stuck in some state of foreclosure, 1.8 million more will join their ranks in both 2012 and 2013, The Huffington Post reports.

Foreclosure filings dropped dramatically last year, a market movement that would seem to indicate the beginning of a turnaround. But experts say the steep decline was not organic, and instead the result of government crackdowns on banks over alleged foreclosure abuses. The abuses include so-called "robo-signing," a practice where bank employees sign foreclosure documents without adequately reviewing them.

In 2011, distressed sales grew the most in Montana, Vermont, South Dakota, Nebraska and New York, according to the CoreLogic study. It also found that Nevada, Arizona, Florida, Michigan and California are the states that have seen the largest decline in home prices since the peak of the housing boom.

Nevada’s home prices have plunged 60 percent since the peak of the housing market, the report says.

If you are interested in knowing more about the foreclosure process and how to invest in real estate, call me 206-713-3244 or email me.

Fannie Mae and Freddie Mac, Who They Are

freddie&FannieFannie Mae and Freddie Mac are publicly traded companies that guarantee the majority of new mortgages in the U.S. They are key players in the government’s foreclosure-prevention initiative.

Fannie Mae, officially the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp., were taken over by the government in 2008 after billions of dollars in losses and years of mismanagement.

Fannie and Freddie operate in the secondary mortgage market. They don’t sell mortgages directly to homeowners; they buy mortgages from banks and other lenders, which can use the money to issue new home mortgages.

To increase access to home loans, Fannie was created as a federal agency in 1938 and chartered by Congress in 1968, followed by Freddie in 1970. But they also are publicly traded corporations and — before their taxpayer bailout — had a duty to maximize shareholder return.

Those divergent missions were criticized as a "fundamentally flawed" business model by the Financial Crisis Inquiry Commission, which Congress created to examine the causes of the economic crisis that began in 2007.

Fannie and Freddie loosened underwriting standards leading up to the financial crisis, buying and guaranteeing riskier loans and ramping up purchases of mortgage-backed securities to please Wall Street analysts and to "ensure generous compensation for their executives and employees," the commission determined.

By 2007, the commission said, the companies had $5 trillion in mortgages resting on razor-thin capital.

The commission found that the companies used their political power for decades to Freddie Macward off effective regulation and oversight, spending $164 million on lobbying from 1999 through 2008. It concluded, however, that although Fannie and Freddie contributed to the financial crisis, they were not the primary cause.

With the housing market in turmoil in 2007 and 2008, Fannie and Freddie reported billions of dollars in losses. They were placed in conservatorship under the Federal Housing Finance Agency (FHFA) in September 2008.

Since then, the Treasury Department has provided $169 billion to cover their losses (with repayments the net cost to taxpayers is $141 billion). The total could rise to $363 billion, the FHFA said. Other estimates put the total closer to $390 billion.

Fannie and Freddie’s future is unclear. The Obama administration and Republicans in Congress agree that Fannie and Freddie should be abolished. Last February, President Obama proposed gradually phasing them out and gave Congress options for shrinking the government’s role in housing finance.

The World's Ugliest Music

Something John Cage would’ve appreciated—a pianist performs "the world’s ugliest music," which happens to be the world’s perfect submarine ping.

To see how that works—it has to do with mathematics, repetition, and what brains perceive as beautiful—check it out:

There Was Some Awesome Jobs News Today

construction

Forget the meh ADP report.

The best jobs news of the day was that stronger-than-expected construction number and a particularly strong residential construction number for December.

As the chart above makes clear, growth in residential construction leads construction jobs, so this seems like a pretty sure driver of more construction jobs on the way in the coming months.

Red: Construction spending growth. Blue: Residential construction spending growth. Green: Construction employment growth.

Spectacular Russian Opera and Ballet Theater

Novosibirsk State Academic Opera and Ballet Theatre is the largest and one of the most technically advanced theaters in Russia.

Its main floor features ticket offices and vestibule; on the second floor and the third floor there is a concert hall with adjoining ‘wings’ featuring rehearsal halls, administrative rooms, wardrobes and theater set departments.

The vestibule.

It was completed in February 1944, the first performance being held on May 12th, 1945. During these years, over 340 opera and ballet performances have been held here. Today, over 800 people work in the theater and about half of them are performers.

Construction works lasted for about 10 years, from 1931 till 1941. Some say that is was built by Germans but it’s not true. During WWII, a lot of exhibits from museums located in the European part of the USSR were kept here, including the Hermitage, Tretyakov Gallery and Bolshoi Theater.

The total area of the building is 11,837 m², the volume is 294,340 m³. The theatre is often called “Siberian Coliseum” for its size and beauty.

They spent over 33 million dollars on its renovation which ended in 2005. After that, its computerized stage equipment became the most technically advanced in Russia.

The concert hall.

The grand hall.

After the reconstruction, they increased the number of seats in the grand hall to 1,774.

The filled the space between the columns of the upper gallery with 16 sculptures.

The ceiling of the grand hall is a kind of the acoustic screen made of pressed carton.

The chandelier is 6 meters in diameter and has a weight of over 2 tons.

This is a theater set for La Bayadère.

The view from the roof of the theater.

Compare it with this photo which was taken a year ago.

The principal construction of Novosibisk theatre’s building is the big dome, 60 metres wide and 35 metres high. The dome is a unique construction that supports itself without girders or columns. The ratio of its thickness (an average of 8 cm) to its radius is less than that of a chicken egg.

This photograph was taken from the top of a neighboring building.

Now, let’s check what happens backstage.

This is a large rehearsal hall for ballet dancers (there is also a small rehearsal hall in the theater).

Assembling the theater set for La Bayadère.

This stage is one of the largest in Eurasia.

We’ve got this high (27 meters above the ground) to see how this setting is fixed.

These electric motors are used to pull the setting up and down.

With this clock they synchronize the process of raising and lowering the theater setting.

Lift devices.

They control the setting from one of the balconies above the stage.

The orchestra pit.

Right now, they are carrying out a sound check.

Karen Movsesyan is an opera singer and head of the theater’s PR department.

Behind the stage, they keep hard setting elements.

Here, they make costumes.

Each costume is made individually for each actor or ballet dancer.

Here they repair musical instruments.

Before another play. They always play to a full house!

Location: Novosibirsk

Can’t we just all get along?

modern classic

This is one of my favorite places in Montreal. For me, the contrast in architecture serves as a metaphor for society. We all come from different places, perspectives and philosophies. We must find a way to live together.

I have taken for granted where I grew up. The world inhabits the streets of Montreal. Though not nirvana, it is a place where we find a way to live together in harmony. Just like this historic church and modern business do.

Respect for others is key to living in a society. When we learn about each other, we might just find that there is much more to this world than what we originally thought.

Your thoughts?

Home Ownership & Home Affordability

Real-Estate-PuzzleLast week I had the opportunity to hear one of the premier economists on the West Coast, Matthew Gardner. Each time I listen to him, I come away more educated, and because I provide real estate services in the greater Seattle area, encouraged.

In regards to homeownership in our area, the data below would suggest that we are in good shape in the Puget Sound.

home_ownership_rates

The homeownership rate is reversing toward it’s historic norms. Excluding owners who haven’t made a payment in a year, it is currently at  62%.

underpriced

If we believe that there was a “Normal” market back in the 1990’s, then it is conceivable that prices should be higher.

affordability

Here are Matthew’s conclusions.

• Prices Will Start to Solidify this Year

• Overly Stringent Financing constraining the Market

• 4-County Area Listings are Down 17% but Sales are Up 12%

• Faster Drop Off in Foreclosures in 2012

• Positive Price Growth in 2012 (1.6%).Conclusions

• Local Prices are down by 15.8% but Non-REO prices are down by 9%

• Limited Income Growth will Slow Home Value Appreciation

• Homeowners, as opposed to investors, would rather wait to pay a higher price than admit to their friends that they bought too soon!

• Recovery Will Be Unequal.

LAS PALMERAS PERU | GREG WRIGHT ARCHITECTS

LAS PALMERAS PERU | GREG WRIGHT ARCHITECTS | Image

Las Palmeras is a breathtaking project by Greg Wright Architects. These 2 holiday houses on the coastline of Peru which sit prominently at the top of a rock cliff overlooking the beach and ocean, are anchored into the rock with a stone sculptural plinth rising up to the living levels, concealing a basement floor below.

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Will 2012 See a Housing Turnaround?

Despite mixed results in the housing sector, many homebuilder stocks are outperforming the overall market by a large margin.

A new report released Thursday showed that U.S. housing starts in December were worse than expected, posting a 4.1 percent decline after rising 9.1 percent in November.

On the other side of the spectrum, the National Association of Home Builders (NAHB) announced last week that its housing market index beat expectations and rose to its highest level in 4 and a half years.

Following last week’s positive news, the PHLX Housing Sector Index closed at an 11-month high of 117.56.

Could all this be perceived as the dawn of a recovery for the country’s battered housing market?

The verdict is still out. Confidence remains low from a historical perspective, although the numbers show the HGX is off to its best start ever this year — up more than 14 percent.

Nonetheless, the HGX has ended four of the past six years in negative territory, witnessing its worst loss in 2008 when the index closed down more than 40 percent.  Will this be the year of a turnaround in housing?

Will 2012 See a Housing Turnaround?” was provided by CNBC.com.