Home Prices Continue to Fall, Near Double Dip

Home prices fell 3.3% year-over-year in February, according to the latest 20-city composite Home Price Indices data from Standard & Poor’s and Case-Shiller. The 20-city composite value is essentially where it was in its April 2009 trough, according to the index and prices for the 10- and 20-city composites are lower than they were a year ago but are still slightly above their April 2009 low.

The only city to see a year-over-year gain was Washington, D.C., which saw a 2.7% growth rate over February 2010. For the cities which had new lows in the previous month, 10 of 11 of those cities saw new loans again in February 2011.

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“There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing,” said David M. Blitzer, chairman of the Index Committee at S&P Indices. “Ten of the 11 MSAs that recorded index lows in January fell further in February. The one exception, Detroit, is 30% below its 2000 price level. The 20-City Composite is within a hair’s breadth of a double dip. Fourteen MSAs and both Composites have continued to decline month-over-month for more than six consecutive months as of February.”

Cities that are now seeing home prices below their January 2000 levels include Atlanta, Cleveland, Las Vegas and Detroit, with Phoenix barely surpassing its 2000 level, according to Blitzer. Several cities including Washington, D.C., Los Angeles, New York and San Diego have maintained large gains over their January 2000 levels.

“Recent data on existing-home sales, housing starts, foreclosure activity and employment confirm that we are still in a slow recovery,” Blitzer said. “Existing home sales and housing starts rose in March, but remain close to recent lows. Foreclosure activity showed decreases in mortgage delinquencies in the fourth quarter of 2010, but are still close to historic highs. The nation and 34 states registered a decline in their unemployment rates for March.”

View the full S&P/Case-Shiller February report.

Written by Elizabeth Ecker

 

 

 

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  • As has been said over and over, our market is highly dependent on home values. It is the most significant factor when projecting growth in our industry. It impacts not only financial qualification of seniors but also their outlook. When seniors can envision their home values growing at least as fast if not faster than the growth in negative amortization, it seems they are far more likely to enthusiastically look into reverse mortgages.

    This fiscal year will be another bad fiscal year for endorsement volume. It is the second straight year in a row. By February most HECM marketing advisors were no long talking about endorsement volume for this fiscal year but for the calendar year. By August, they will no doubt abandon discussion about promise for any part of this year except for some bright spots like Savers.

    Now it is time to ask a very serious question. Has social media marketing lived up to its hype? Or was it the typical irrational exuberance of those who get carried away with the latest and most recent marketing idea? So far the evidence is harshly indicating the latter.

    One most notable spokesperson for the ability of Social Media to overcome the economic environment was a person who used to comment frequently on this website. This individual went over the top with video clips and website development but did not have nearly the enthusiasm for content and compliance. This person fell out of the industry for awhile and has returned as a loan originator at the lender whose originators find real help from its old staid stagecoach image, not exactly cutting edge technology or the electronic media. It was clearly disappointing watching this spokesperson go from someone who was over-reliant on a specific media to latching onto one of most recognized corporate logos in reverse mortgage lending today.

    While some individual mortgage loan originators are doing better because of the electronic media, the TOTAL expected endorsement volume for the current fiscal year proves this marketing source alone cannot offset the devastation that a poor economy causes. That is not to say that developing this media for marketing purposes is a mistake but rather it is nothing more than another arrow in the marketing quiver. To value it as more could prove to be little more than the same irrational exuberance as it was for our friend who today rides on the stagecoach, not the social media image this person worked so hard to obtain. As the old adage goes: “Actions speak louder than words” or “your actions speak so loudly I cannot hear what you are saying.”

  • Kevin,

    Despite your reply, somehow DISQUS did not notify me of it. I apologize for getting back to you so late.

    Two points. One is how social media is revolutionizing the industry and increasing overall sales (LOL). The second is the shift in how to gain (or lose) more of the EXISTING market share.

    If the social media were that revolutionary and dependable, you would be scolding me about how REALLY wrong I am. You would be bragging about all of the originators you had to hire over the last twenty-four months to help you take care of so much INCREASED volume or how you went from a one guy broker business to full eagle status with inordinate profits and with a huge selling staff and so many leads you could not handle that you were scouring the country for more NMLS licensed originators. You would gleefully be punishing me with increased industry sales data that could only have happened through a greater emphasis on marketing on the so called social media. But you don’t nor can you.

    What you are saying is that your source of obtaining sales has changed to some degree. (Two out of four sales does not a marketing rule make.) While that is important and significant, it is little more than a marketing media emphasis issue. Anyone who did not see that coming is blind. The Baby Boom generation created the Internet and why they would not use it to find reverse mortgages escapes me. But that is little more than a gradual change in emphasized media than a source of increased sales for the industry. For example, there is a fundamental reason why the industry relies on TV and mass mail marketing sales more than radio sales. All that social media marketing is doing is drawing from what would otherwise be TV and mass mailing leads. It is not creating a new pipeline of leads. It is simply resulting in what can be described as “stealing” from other sources. Sorry but those are THE facts.

    All I point to is Golden Gate Financial. They made a huge mistake in trusting that marketing through the Internet alone would provide the sales they needed to become a Top Ten lender. If the social media substantially increased sales, there would be less or no TV advising using celebrities today. Even Pat Boone is being brought back into our industry in the hope of seeing increased overall industry sales. Hopefully such moves actually increase overall industry sales and do not simply result in a shift of sales between lenders.

    Your reply only substantiates my position on the value of the social media. It is only 1) a fundamental turnaround in the housing market and 2) a change of perception of what our product is in the eyes of the financial community which will substantially change our volume from where we were in 2006-2008. Not even the return of proprietary products will substantially increase the number of reverse mortgage closings near term. Not even the over 7,300,000 new seniors who turned 62 in the last twenty-four months are far more comfortable with the Internet than prior generations have helped increase sales volume.

    I am tired of hearing about the social media as being so “amazing.” Show some evidence of its intrinsic value to revolutionize sales volume in the REVERSE MORTGAGE INDUSTRY and we will all humbly listen. I point to its absolute and utter dismal failure to do little more than shift the source of sales in two years. Your own experience only reinforces that position.

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