New Home Sales Up, but Still Dismal.

New home sales in December rose by 17.5% from November, but only to a dismal rate of 329,000. Relative to a year ago, sales are down 7.6%.

While the level was substantially better than the expected rate of 300,000, it is still a very bad level. The eight lowest months on record (back to 1963) for new home sales have all been in the last eight months.

The monthly increase at first glance looks pretty good, but it comes after the November numbers were revised down by 10,000, so even there the increase could be seen as only 13.4%. We are still down from a year ago, and it is not like a year ago was a great time in the homebuilding industry, either.

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Many Americans say it’s a good time to buy a home

Low interest rates and home prices that have fallen sharply from their peaks likely have many Americans believing now is a good time to take action — even if it’s still difficult to get financing and there’s potential for prices to dip even lower, said Dennis Jacobe, chief economist for Gallup. Read about the five states where housing will recover first.

Many Americans are still worried about their home values, with 27% saying that home prices in their communities will fall this year and 42% concerned that their own house will lose value, according to the survey results. Twenty-one percent said they expect home prices in their area to increase. A random sampling of 1,018 adults participated in the poll earlier this month. Read about double-digit rent hikes coming this year.

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Home prices in Dallas-Fort Worth see largest drop since early 2009

Dallas area home price losses ballooned in November – down 4.2 percent from a year earlier.

The decline was the largest for the Dallas area since early 2009, according to the latest Standard & Poor’s/Case-Shiller Home Price Index report.

It was the fifth month in row that home prices for Dallas dropped in the closely-watched housing market indicator.

Dallas’ price decrease was significantly worse than the overall 1.6 percent year-over-year decline Case-Shiller reported for all of the 20 U.S. markets in the index.

“With these numbers, more analysts will be calling for a double dip in home prices,” Standard & Poor’s David Blitzer said Tuesday in the report.

The slide in Dallas-area home prices has wiped out all the gains the market made in late 2009 and early 2010 when residential values were moving higher.

Since then, the number of home sales in North Texas and nationwide has fallen sharply and the supply of distressed houses – mostly foreclosures – on the market has grown.

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New-home sales, starts sink in Dallas-Fort Worth

Homebuilders hoped that 2010 would be the comeback year for the battered Dallas-Fort Worth housing market.

But after a flurry of sales early in the year, buyers retreated, forcing builders to cut back on construction.

North Texas builders started only 3,341 homes in the fourth quarter – 10 percent fewer than in the same period of 2009, housing analyst Metrostudy Inc. said Wednesday.

At the same time, the number of new homes sold in the final three months of 2010 fell almost 20 percent from a year earlier.

"Those numbers are definitely unwelcome news to a sector of our economy that has been down for such a long time," said D'Ann Petersen, business economist with the Federal Reserve Bank of Dallas. "They show the North Texas housing sector is still weak, despite the temporary uptick from the tax credits.

"The high level of foreclosures and existing homes on the market will likely continue to dampen new-home demand and construction in the near term," she said. "The good news is that job growth continues to be positive, and builders' inventories are relatively lean."

Residential starts in North Texas last year were more than 70 percent below where they were at the peak of the market in 2006. And it was the lowest total for fourth-quarter home starts in the D-FW area in almost two decades.

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Housing Statistics Hit Rough Waters

A widely repeated statistic on underwater homes could use a cold shower.

Several research companies track the troubling spread of negative equity—where the value of a home falls below the debt owed—as real-estate prices have tanked. And the number of such homes has risen from almost nothing during the housing market's peaks in the middle of last decade to nearly one in four U.S. homes with mortgages today.

The statistic has been wielded by the media and public officials to paint a troubling portrait of homeowners trapped by crippling debt, unable to tap their homes for credit or to sell and move for jobs elsewhere.

But in a rare instance of mild good news in the housing market, the 1-in-4 figure, and the fear it provokes, seem overblown. It is calculated using assumptions in ways that inflate the number of underwater homes. And more than half of these homes are underwater by a small margin, meaning that for various reasons those homes are unlikely to trigger an epidemic of defaults.

"Everyone likes to get headlines, so they tend to overstate problems like this, without doing ground-level research," says Kenneth Rosen, chair of the University of California, Berkeley, Fisher Center for Real Estate & Urban Economics. "We probably overstate the number of people who are in trouble by quite a bit."

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Prepping foreclosed homes for resale can be hazardous

FARMERS BRANCH – Most of the modest houses along this street off Josey Lane are sporting some kind of Christmas decorations.



Contractor Rich Dake looks over the condition of a foreclosed house in Farmers Branch before he and his crew get to work preparing it for resale.



But the only sign of the season at one home reads: "This house has been winterized."



"We put these signs up at all of the properties," said Rich Dake, who cuts off the water and treats the drains in foreclosed houses to prevent freezes.



An attic air conditioner was apparently a good idea to a former resident of a foreclosed home in Farmers Branch.



"Last week, we took three trailer loads of trash out of this place," he said. "You wouldn't believe what I've found."



Stolen appliances, oceans of junk and even the occasional abandoned cat – it's all part of the business of securing and fixing up Dallas-area foreclosed homes.



After more than 20 years in the business of handling foreclosed properties, Dake has a sixth sense about what he's going to discover in an empty house.



"Usually before I even open the door, I can tell what I'm going to find inside."



The three-bedroom house was a bit worse than usual. "It was stacked deep with boxes and trash," said Dake, of Contractor Services Unlimited Inc.



Out back, under a collapsed patio cover, were more piles of junk.



Dake and his work crew emptied the place out, swept and vacuumed the floors, cleaned the kitchen and cut the grass.



The lender that owns the property decided to sell "as is" – complete with cracks in the walls and carpet that's seen better days.



"This is the kind of house an investor will buy, put a little money into it and rent it out," Dake said.



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Nov. existing-home sales up 5.6% to 4.68 million

Sales of existing homes rose 5.6% to a seasonally-adjusted annualized rate of 4.68 million, the National Association of Realtors said Wednesday, a figure that was pretty close to the MarketWatch-compiled economist poll of 4.66 million.

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Mortgage help falls far short, panel says.

Specifically, the program is expected to prevent roughly 800,000 foreclosures -- significantly less than the 3 to 4 million foreclosures that the White House aimed to stop, and vastly fewer than the 8 to 13 million foreclosures expected by 2012, the Congressional Oversight Panel for the government’s much-maligned $700 billion bailout package said in a report about foreclosures.



“Treasury has tweaked its main foreclosure prevention effort, the Home Affordable Modification Program (HAMP), but the changes have not resolved the panel’s core concerns,” the panel said.



The report comes as Treasury Secretary Timothy Geithner is set to testify before the panel on Thursday about the bailout package, known as the Troubled Asset Relief Program. Geithner is expected to be grilled with questions about the government’s mortgage modification program and the $50 billion in TARP funds it allocated for foreclosure prevention.



The Treasury Department refuted the panel’s assertion that the program has largely failed most troubled borrowers.



“This program, in less than two years, has already provided critical support to struggling homeowners,” said Treasury spokesman Mark Paustenbach. “This program will continue to help many more avoid foreclosure. The success of the administration’s efforts must also be measured in how it transformed the mortgage servicer industry. Prior to HAMP, there were few, if any, modifications taking place. HAMP was a game-changer.”



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2011 hopes for Dallas-Fort Worth housing market rest on jobs

Housing industry prognosticators are hoping for modest gains in the North Texas market in 2011.

That's what they were wishing for in 2010, too.

It all depends on the economy, industry forecasters say.

"Jobs are key – not only the number of jobs, but equally important are the kinds and quality of jobs, incomes associated with new jobs and the permanence of the jobs created," said James Gaines, economist at the Real Estate Center at Texas A&M University. "If all the new employment is for low-wage, temporary workers, it won't have much positive impact on the housing market."

With expectations for modest economic growth in 2011, Gaines doesn't look for a sharp rebound in the North Texas housing market.

"Best news is probably that we don't see things getting worse, but we also don't see significant improvement," he said. "Tight credit and slow job gains will keep home sales relatively flat.

"As the job market does improve and more people are employed, there may be a slight increase in volume, but I don't think it will be more than a few percentage points, at best."

The local housing market has a lot of ground to make up.

The number of pre-owned homes sold each month in North Texas has fallen by more than 50 percent from its peak in mid-2006.

And new home sales have plunged more than 60 percent during the same period.

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BofA Restarts Some Foreclosures

Bank of America Corp. said it restarted about 16,000 foreclosure cases across the U.S. on Monday, but it may be weeks before it is known whether the bank's submission of new documents will pass muster with local judges.



The bank instructed its foreclosure attorneys this week to prepare new affidavits in 7,800 cases where court approval is required to foreclose on a home, out of a total of 102,000 frozen by the bank amid documentation concerns. In states where no court approval is required, attorneys were asked to lift the hold on 8,000 delayed foreclosure sales out of 30,000.



The nation's largest bank as measured by assets is scrambling to get its foreclosure engine restarted amid widespread scrutiny of its mortgage practices. It and several U.S. banks halted foreclosures following allegations employees signed hundreds of foreclosure documents a day without carefully reviewing their contents.



Bank of America officials previously said they would resubmit affidavits on pending foreclosures starting Oct. 25, with foreclosure sales resuming in November. But those efforts hit several snags, including the hiring of new law firms to handle new foreclosure paperwork, as the bank refiled just a "handful" of cases as part of an initial pilot test of the process. "We are taking a deliberate and phased approach," said bank spokesman Dan Frahm.



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Walk appeal

The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of "walkability" were directly linked to higher home values.

The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors.

It's an important point for home-buyers who are trying to identify which homes will hold their value, said Joseph Cortright, the report's author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.-based consulting firm.

Walkable places have some of the best chances of performing well in years ahead, he said.

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Dallas-area home prices are largely unchanged, a U.S. agency reports

Dallas-area home prices were basically unchanged from a year ago in the third quarter, according to the latest U.S. government estimate.

The Federal Housing Finance Agency also said that Fort Worth-area prices were down 1.15 percent from a year ago in its report released Wednesday.

Nationally, prices were down 3.2 percent from third quarter 2009, the agency said. That compares with a 0.3 percent gain in the Dallas area.

The federal home price index is based on mortgages issued by government-sponsored mortgage companies – Freddie Mac, Fannie Mae and FHA. That makes the data different from price reports that use a broader measure.

The National Association of Realtors reported recently that Dallas-Fort Worth area home prices were up 1.6 percent in the third quarter based on sales through the local Multiple Listing Service.

Texas, with its overall 1.1 percent rise, was one of the top states for home price gains in the third quarter, the FHFA said.

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Housing-market bust is changing buyer behavior

Twenty-seven percent of first-time buyers who purchased a home between July 2009 and June 2010 received a gift from family or friends to help with the down payment, according to the National Association of Realtors’ annual Profile of Home Buyers and Sellers survey, released at NAR’s annual conference here.

That’s up from 22% a year earlier, and is the highest percentage in the more than 20 years the survey has been conducted, said NAR spokesman Walter Molony.

Also, 9% of first-time buyers received a loan from a relative or friend in the most recent data, compared with 6% who said the same in the results released last year, according to NAR. The survey included responses from 8,449 home buyers.

It’s likely many parents were motivated to help their children take advantage of a now-expired home-buyer tax credit of up to $8,000, and other favorable conditions, including lower prices and mortgage rates, researchers said. Tougher lending criteria may have also been a factor playing into the trend, Molony said.

First-time home buyers made up a record 50% of all buyers during the period, up from 47% in last year’s figures, according to the report.

While gifts have helped young buyers make down payments for years, “more people are having to do it because even if their credit is good, they need [more of] a down payment,” said Hope Harvey, a property manager and sales broker with Sugar Ski & Country Club, in Banner Elk, N.C.

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'Shadow' inventory of foreclosed homes could add to housing troubles

The Dallas-Fort Worth area has one of the lowest "shadow" inventories of unsold homes among major U.S. cities, according to a new study. But the addition of these houses to the market still significantly adds to the supply.

Shadow inventory homes are properties that have been foreclosed on or are in the process of foreclosure but are not currently listed for sale. Housing analysts say this pending supply will keep prices depressed in many cities.

Nationwide, there were more than 2 million shadow inventory homes in August – an eight-month supply – according to researchers at CoreLogic Inc. In the Dallas area, the shadow inventory was 6.7 months, the California-based mortgage and finance analysts said in a report released Monday.

Among the 50 largest U.S. cities, the average shadow inventory is almost 16 months, CoreLogic found.

The highest shadow home inventory was in the Miami area. All of the Texas markets were near the bottom of the shadow inventory list, with the lowest in Austin.

Statewide, Texas' shadow home inventory is 5.5 months, according to CoreLogic.

"Not surprising that Dallas and Texas, in general, show relatively low shadow inventory," said Dr. James Gaines, economist with the Real Estate Center at Texas A&M University. "We simply didn't get as overextended nor have we had the volume of foreclosures relative to other markets."

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Home Sales Fell 2.2% in October

Sales of previously owned homes fell in October amid weak demand and concerns about the foreclosure process, putting sales for 2010 on pace to close at their lowest level in 13 years.

Existing-home sales declined to a seasonally adjusted annual rate of 4.43 million units last month, down 2.2% from September, the National Association of Realtors said Tuesday.

The figures provide the first sign of the impact that suspensions of foreclosed property sales have had on the housing market. Several banks halted those sales in late September to address questions about the integrity of the foreclosure process.

Housing markets across the country have been fueled by sales of bank-owned properties, and delays had prompted fears of a new round of aftershocks for battered housing markets.

"To the extent people had any concern about being able to get clear title, they're going to stand back on distressed properties," said Douglas Duncan, chief economist at Fannie Mae. He said foreclosure delays were one of many factors that justified the mortgage company's "continued view of weak demand."

Still, foreclosures and other distressed sales accounted for 34% of all sales last month, compared with 35% in September, according to a NAR survey of real-estate agents.

Ivy Zelman, chief executive of research firm Zelman & Associates Inc., said the foreclosure suspensions had contributed "modestly" to October's decline and said she expected a similar impact in November.

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2010 a record year for foreclosure filings in Dallas-Fort Worth

Dallas-Fort Worth home foreclosure filings hit a record in 2010 – but not by much.

For all of this year, 63,835 homes have been posted for foreclosure in the four-county area, Foreclosure Listing Service said Thursday. That's only 4 percent higher than 2009's total.

Foreclosure postings in North Texas were up more than 20 percent in 2009 and 17 percent in 2008.

"The rate of increase has slowed, and it looks like 2010 is kind of the pivotal year as far as foreclosures here are concerned," said George Roddy, president of the Addison-based foreclosure-tracking firm. "But they are still going to be high into 2011."

Filings for December foreclosure sales have already been made, so the full-year numbers are available.

The biggest increase in home foreclosure filings this year was in Denton County, which was up 10 percent from 2009.

Dallas County residential foreclosure filings rose only 2 percent for 2010.

So far, foreclosure moratoriums caused by problems with lender paperwork and procedures haven't affected the rate of D-FW foreclosure filings.

For December's auctions, almost 6,100 North Texas homes are threatened with foreclosure – 16 percent more than a year earlier. It was only the third month in 2010 that postings topped 6,000.

Roddy said it's too early to forecast the results of lenders' foreclosure problems and calls for government intervention in the process.

"It's becoming more muddled as to what the outcome is," he said. "Will it be massive lawsuits?

"And what will the impact be on the consumer and home values?"

Not all the foreclosure postings each month result in home sales by lenders. In more than half the cases, the foreclosure is delayed or the borrower makes a new agreement with the mortgage company.

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Short sales often turn into long stories

It's a good thing first-time homebuyer Harley Summers wasn't in a hurry to get a house.

He bought his Allen home using a short sale that turned out to be anything but short. It dragged out for almost four months.

"It was a very long and frustrating process," said Summers, who wrapped up the deal last week. "The biggest advice I can give to anybody is don't pursue it unless you are an incredibly patient person."

Short sales are the big buzz in today's housing market. They are called short because the buyer gets the property for less than the previous owner still owed.

And that's what makes the transaction so complicated – it requires both the seller and the mortgage company to take a loss.

So why even do such a deal?

"The lenders are trying to reduce their costs if a home goes into foreclosure," said Dallas agent Logan Waller, who specializes in distressed properties. "The lender can see the property value decline by roughly 20 percent when the house is vacated.

"And they have other big expenses associated with a foreclosure."

Sellers are trying to get out of the property without a foreclosure, Waller said. "Their credit is not tarnished as bad with a short sale," he said.

A typical short sale negotiation can drag on for six months.

"We've had some of them in our inventory for a year," he said. "Sometimes we get to the closing table and the seller has disappeared.

"We see it with buyers, too – they give up."

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The housing crisis in 1933, and today

Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled ... and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.

Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.

Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”

While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.

The prelude to the crisis might sound familiar. It was a period of grand economic growth and overconfident lending and borrowing. The 1920s featured interest-only loans, balloon payments, an assumption of ever-rising prices and the firm belief in the easy availability of a string of refinancings.

And then came the crash, the defaults, and the markets froze.

By comparison, only 2.95% of mortgages as of Oct.1, 2007, when Pollock wrote his paper, were labeled seriously delinquent, meaning roughly 1.5 million loans 90 days past due or in foreclosure. That’s risen to 9.11%, as of the second quarter this year, according to the latest figures from the Mortgage Bankers Association. Read more on foreclosures drop, but delinquencies rise, in MBA's second-quarter report.

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U.S. home sales drop 1.8% in September

The housing market took another step back in the latest measure. Pending U.S. home sales dropped 1.8 percent in September from August, the National Association of Realtors said Friday.

“This is after two consecutive months of rise – a step backward,” said Lawrence Yun, chief economist of the National Association of Realtors. “We don’t view this as a fundamental shift in the market.

“I’m not sure how much of this latest drop is due to the foreclosure moratorium some banks initiated,” he said at the Realtor’s annual meeting in New Orleans. “The data is consistent with soft activity right after the tax credit.”

Home sales across the country have been in a slide since federal tax credits that boosted purchases expired at the end of April.

Yun said it will be later this year before it’s clear how the home sales market will behave going forward in 2011.

Pending sales in September were down almost a quarter from the same month in 2009, when buyers were scrambling to qualify for the first round of federal tax credits.

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If mortgage rates plunged to zero

Imagine financing a home purchase with a no-interest mortgage. You’d probably never want to move again.

Granted, it’s doubtful you’ll ever have that luxury.

But if rates continue to drop, as some in the mortgage industry suggest they may — especially after the Federal Reserve’s recent statement that it was prepared for more extraordinary measures to pump up the economy — mortgage rates could inch in the direction of 0%. Continued concerns of deflation may also put pressure on mortgage rates.

“So long as the Fed allows the word ‘deflation’ to get bandied about, mortgage rates will ease lower,” said Dan Green, loan officer with Waterstone Mortgage, in Cincinnati, in an email.
How much lower?

“In theory, the only stopping point there is is 0% — that’s where all nominal interest rates have to stop,” said Mike Larson, real-estate analyst for Weiss Research.

Think about it: 0% financing has long worked as an incentive in the auto industry. And home builders have been known to pay down mortgage rates for their buyers, so these days it wouldn’t be unheard of for them to entice people with a 2% or 3% mortgage rate, at least for a period of time, Larson said.

But mortgages are different than car loans.

“Do I think we will see [0% mortgages] in our lifetimes? No, I don’t,” Larson.

Even during times of deflation, try telling an investor that he’d do well to buy a security with zero return, said Keith Gumbinger, vice president of HSH Associates, a provider of consumer loan information. It’d be a hard sell.


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Dallas housing is still one of the chepest in the country...

Even with big price declines in some major cities, Dallas has some of the cheapest housing in the country, according to a new report by Coldwell Banker Real Estate.

The residential sales firm looked at home prices in almost 300 markets for its annual Home Listings Report.

The cheapest place to buy a house is Detroit, where the average four-bedroom, two-bath property will run you only $68,007.

The same size house will cost an average of $1.83 million in Newport Beach, Calif., the most expensive market on Coldwell Banker's list.

In Dallas, a similar home is $180,228 – the 56th-lowest price in the ranking.

Coldwell Banker uses its nationwide home listings to come up with the annual report. Relocating workers sometimes use the study to compare the cost of homeownership in various markets.

"Our study shows that homeownership in the United States is generally affordable, with nearly 30 percent of the studied markets averaging $200,000 or less for a four-bedroom, two-bathroom home," Coldwell Banker CEO Jim Gillespie said in the report.

Coldwell Banker found 25 U.S. housing markets where the average was more than $750,000. In 10 cities, it topped $1 million.

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Investing extra dollars: mortgage vs. stocks

While there’s no one-size answer on whether to retire home debt or invest excess cash elsewhere, there are a couple of rules of thumb on the matter — and plenty of exceptions, depending on your age, cash flow and risk tolerance.

Other considerations aside, to determine which is more advantageous, compare the mortgage rate you have with the return you can get from another investment. Keep in mind the tax benefits of mortgage interest deduction; if you’re in a marginal tax bracket of 20%, for example, a 5% mortgage is more like one at 4% if you’re deducting the interest.

“If you believe over the next 10 years you can achieve a rate of return of X, then if your mortgage is higher than that, you should be paying off your mortgage. If the rate that you think you will be able to get from however you are comfortable investing is higher than your mortgage, then you wouldn’t pay it off,” said Norman Boone, president of Mosaic Financial Partners in San Francisco.

So, for example, if your choice is paying off a 4.5% mortgage or investing in a 2% certificate of deposit, it’s better from an investment standpoint to pay down the mortgage. Conversely, if you’re holding a 4.5% mortgage and you’re confident enough that you can earn 6% annually in the stock market, stocks are the better bet.

Of course having confidence in this unsteady economy could be the challenge: “Most people are probably not going to get a 6.5% return on their portfolio in the next 10 years” as the economy struggles to recover, Boone said.

Their mortgage debt, however, is guaranteed to linger until it is paid in full. And that makes paying down the mortgage — even in with today’s low rates — a wise move right now for some borrowers, especially those nearing retirement.

That said, if you have a longer investment horizon, it could be a different story. The total annualized return on a portfolio of 60% stocks and 40% bonds, rebalanced each year, is 9% over the past 50 years through August, according to Ibbotson Associates, a unit of investment researcher Morningstar Inc.

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Ally's GMAC Mortgage Halts Home Evictions in 23 States

Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.
GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.
GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

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Dallas-Fort Worth home listings rise 15 percent in a year

The number of for sale signs is growing in North Texas neighborhoods, and an increase in foreclosed houses coming on the market is part of the cause, analysts say.
Sales listings in the Dallas area have grown almost 5 percent in the last three months, according to a new report from Altos Research. The number of houses on the market is 15 percent higher than a year ago, the latest statistics from the Realtors' Multiple Listing Service show.

"When you look at year-over-year inventory counts, we're much higher, and most sellers don't want to first list their properties for sale in August or September," said Altos Research vice president Scott Sambucci. "This would indicate that the new sellers hitting the market are going to be distressed or bank foreclosures to an extent.

"But banks are smart – they aren't going to just throw a bunch of inventory on the market during a seasonally slow time of year," Sambucci said. "So while some of the inventory is REO [real-estate owned], not all of it is."

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Banks' Plans for Foreclosed Homes Will Drive Market

The speed at which house prices fall over the next few months could depend less on mortgage rates and Americans' appetite for home buying than on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future.

Unlike home owners, banks often are much quicker to slash prices to unload properties quickly.

The upshot is that, the more homes being sold by lenders, the faster prices tend to fall. That pattern was clear over the past two years: Price declines that began four years ago accelerated rapidly in 2008 as banks dumped foreclosed properties at fire-sale prices. By January 2009, the share of distressed sales had soared to 45% of all sales nationally; it was even higher in hard-hit markets such as Phoenix, according to analysts at Barclays Capital.

Even though mortgage defaults kept mounting, housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.

The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.

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Dallas-area home prices rose just 1.2% in June

Dallas-area home prices are still ahead of where they were a year ago, but the rate of increase has dwindled from earlier in 2010.

In June, home prices in Dallas area were up just 1.2 percent from a year ago, according to the latest Standard & Poor's/Case-Shiller Home Price Index.

That's a fraction of the more than 4 percent year-over-year gain the area saw in January.

And the Dallas area's June increase was much less than the 4.2 percent nationwide gain, Case-Shiller found.

"We've been saying all along that we think the second half of the year will not look good – maybe even worse than it really is," said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University.

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Foreclosures drop, but new delinquencies rise...

Still, the Washington-based group's quarterly delinquency report showed that short-term delinquencies are on the rise -- a foreboding number that could signal more foreclosures in the future.

The percentage of mortgage loans somewhere in the foreclosure process was 4.57% in the second quarter, down from 4.63% in the first quarter. The latest percentage is still up from a 4.3% rate a year ago.

However, the proportion of home loans one payment behind is now 3.51%, said Jay Brinkmann, the MBA's chief economist. This percentage peaked in the first quarter of 2009 at 3.77%, before falling to 3.31% by the end of last year.

Brinkmann cited a pair of reasons why some mortgage holders are falling behind.

"First, 30-day delinquencies are very closely tied to first-time claims for unemployment insurance. The number of first-time claims fell through most of 2009 but leveled off in 2010 and have started to rise again," he said in an MBA news release. See story on latest jobless claims.

"This increase in unemployment directly impacts mortgage delinquencies," he said.

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More Texans fall behind on mortgage bills

More Texans have fallen behind in their mortgage payments, the latest industry research shows.

In the second quarter, 9.28 percent of Texas homeowners with loans had late payments, the Mortgage Bankers Association reported Thursday.

That's up from 8.77 percent in the first quarter, according to the Washington, D.C.-based mortgage industry trade group. It was the highest late mortgage rate for Texas since the fourth quarter of 2009.

Fewer Texans – 3.39 percent – were 90 days or more behind in payments at the end of June. Those loans are considered the most likely to go into foreclosure.

The national picture improved.

Nationwide, 9.85 percent of homeowners with loans had one or more late payments. That's a decrease of almost a quarter percentage point from the first quarter of 2010. And 1.11 percent of U.S. home mortgage holders went into foreclosure in the second quarter.

In Texas, 0.7 percent of home loans fell into foreclosure during the same period – a slight improvement from the first quarter.

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Fewer Dallas-Fort Worth homeowners upside down on loans

The number of Dallas-Fort Worth homeowners who owe more than their houses are worth has declined significantly in the last year.

Just over 14 percent of Dallas-area homeowners who have loans were upside down at the end of June, researchers at CoreLogic report. The negative equity rate was 30.45 percent for the D-FW area a year earlier.

In the Fort Worth area, 13.5 percent of homes were underwater with debt at the end of June. About 155,000 D-FW home loans have negative equity, according to the report released Thursday.

Nationwide, 23 percent of residential properties with loans had negative equity in the second quarter, CoreLogic reports. That's down from 24 percent in the first quarter and is the second consecutive quarter of improvement.

Homeowners who owe more than their houses are worth are considered more likely to default on their loans.

"Negative equity continues to both drive foreclosures and impede the housing market recovery," Mark Fleming, chief economist for CoreLogic, said in the report. "With nearly 5 million borrowers currently in severe negative equity, defaults will remain at a high level for an extended period of time."

CoreLogic estimates that 11 million homes nationwide have negative equity. Altogether the owners owe $766 billion more than their properties would sell for. The improvement in negative equity in the D-FW area comes at a time when home prices have increased marginally and the number of sales has risen.

But foreclosure rates in the D-FW area remain high.

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July Existing-Home Sales Fall as Expected but Prices Rise

Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors®.

Existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun said.

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North Texas foreclosure filings increase after three months of declines

After three straight months of declines, North Texas home foreclosure filings have turned higher again.

More than 5,900 Dallas-Fort Worth homes are threatened with foreclosure sale next month. That's an 18 percent jump from a year ago, Addison-based Foreclosure Listing Service said Thursday.

"I thought we had seen a little mellowing in the foreclosure market – evidently not," said George Roddy, president of the Addison-based foreclosure tracking firm.

Foreclosure postings for September are at their highest level since April.

And so far in 2010, 48,081 foreclosure filings have been recorded in the area, an increase of 7 percent from the same period last year.

Foreclosures in the area are "setting a new record high for this nine-month period," Roddy said. "Year-to-date residential posting activity has increased in each of the four counties located within the D-FW area."

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Dallas-Fort Worth home prices edge higher in report

Dallas-Fort Worth home prices continued to edge higher during the second quarter.

D-FW was one of 100 U.S. metropolitan areas that saw improved home prices from a year earlier, the National Association of Realtors said Wednesday.

Median home sales prices in the area rose 2.1 percent in the second quarter from the same period the previous year, the Realtors said. That beat the nationwide increase of 1.5 percent.

And it was more than double North Texas' first-quarter gain.

Almost two-thirds of the U.S. markets that the Realtors track had year-over-year price rises at midyear.

But analysts aren't overselling the latest numbers, which are compared with the depths of the housing shakeout in 2009.

"The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount," said Realtor economist Lawrence Yun.

"Now as more normal, nondistressed home sales are occurring, the median price in many areas is showing higher values," he said.

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