D.R. Horton Swings to Profit

D.R. Horton swung to the black in its fiscal first quarter on a double-digit jump in home-building revenue and showed optimism for the spring selling season.

Hope Puts Spring in Home Builders’ Stocks

The stocks of home builders, shunned by investors for most of the past year, are suddenly in vogue again.

Appraisers say "Don’t Blame the Messenger" for Low Home Prices

The
Appraisal Institute has apparently had enough and has decided to fight back
against what it perceives as unwarranted blame for depressed home prices.  In a press release the Institute says, ” Don’t blame the real estate appraiser if it turns out that
house you’re trying to sell or buy isn’t worth what you thought it was.”

Speaking for the Institute, its
president Sara W. Stephens, MAI said that real estate agents, homebuilders and
others have placed blame for the market’s distressed condition on appraisers
who produce opinions of value that don’t match a home’s listing, contract or
sales price, delaying a recovery in the housing market and called that
accusation “nonsense.”

“The fact is that appraisers are
undertaking the same thorough research and thoughtful analysis that they always
have in order to continue producing reliable, credible opinions of value,”
Stephens said. “Don’t shoot the messenger.”

It is unclear why the Institute
decided to refute the claims about appraisers at this time.  We did a search and found a number of
articles with the blame appraisers theme, but none that were more recent than
last summer except for charges from the National Association of Realtors that low
appraisals are among the reasons for recent high levels of sales contract
cancellations.  NAR, however, has been complaining
about low appraisals since at least the spring of 2009. 

Noting that buyers and sellers often
have emotional value attached to a home or are unaware of the market, Stephens
pointed out that appraisals completed for mortgage transactions are used to
assist lenders, who are the clients, not buyers or sellers, in making lending
decisions – and are not intended to confirm a listing, contract or sales price.
There’s no reason to assume the contract price is the “correct” price simply
because it’s higher than the appraisal, she said.

As to the claim that appraisers are
using distressed sales as comps for market rate properties, Stevens said that
qualified appraisers know how to handle adjustments for distressed properties
and added that in some markets, distressed sales are so prevalent that it would
be improper not to use them as comparables.

The Institute also released two
handouts.  The first explains the process
of conducting an appraisal
in a declining market and includes a discussion of
how an appraiser discounts a distressed comp. The second handout attempts to
explain what an appraisers job really is, making the points that:

  • Appraisals aren’t intended to confirm a home’s sales
    price.
  • Appraisers don’t set the real estate market; they
    reflect what’s happening in the market.
  • Appraisers work not for buyers or sellers, but for
    lenders.
  • Appraisers are independent, third-party experts with
    no motive to be biased.
  • Appraisals sometimes are assigned to the least
    qualified, least competent appraisers, but especially in a distressed market,
    competent and qualified appraisers – such as designated members of the
    Appraisal Institute – should be hired for difficult assignments.
  • Appraisers know how to use distressed sales as
    comparables.

…(read more)

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Case-Shiller: Seven Months of Price Declines Comes to an End

For the first time in eight months the S&P/Case-Shiller
Home Price Indices rose over levels of the previous month.  Data through April 2012 showed that on
average home prices increased 1.3 percent during the month for both the 10- and
20-City Composites.

Prices are still down 2.2 percent for
the 10-City and 1.9 percent for the 20-City over figures for one year earlier
but this is an improvement over the year-over-year losses of 2.9 and 2.6
percent recorded in March.  Improvements
in the annual figures were also recorded by 18 of the 20 cities when compared
to March with only Detroit and New York faring worse.  The 10-City Composite now has an index of
148.40 and the 20-City 135.80; the base of 100 was set in January 2000.

Nineteen of the 20 cities and both
Composites posted positive monthly returns, with Detroit being the only
exception.  Phoenix continues to lead
cities with improving trends and had a 2.5 percent increase in April and the
highest annual rate of return among all 20 cities.  Atlanta, Cleveland, Detroit, and Ls Vegas
continue to have average home prices below their January 2000 levels while both
Composites have returned to levels in the early and mid 2003 period.

David M. Blitzer, Chairman of the Index
Committee at S&P Indices said, “With April 2012 data we finally saw some
rising home prices.  While one month does
not make a trend, particularly during seasonally strong buying months, the combination
of rising positive monthly index levels and improving annual returns is a good
sign.”

 “We
were hoping to see some improvement in April,” Blitzer said.  “First, changes in home prices are very
seasonal, with the spring and early summer being the most active buying months.  Second, while not as strong, and we believe
less reliable, the seasonally adjusted data were also largely positive, a
possible sign that the increase in prices may be due to more than just the
expected surge in spring sales. 
Additionally, the last few months have seen increased sales and housing
starts amidst a lot of talk of better housing markets, so some price gains were
anticipated.”

Atlanta posted the only double-digit
negative annual return at -17.0 percent, its 22nd consecutive month
of negative annuals returns.  Ten of the
20 cities saw positive annual returns – Boston, Charlotte, Dallas, Denver,
Detroit, Miami, Minneapolis, Phoenix, Tampa, and Washington, DC.  There were no new city lows in April.”

Atlanta and Phoenix, two markets we
have followed closely in 2012 for their contrasting trends, have continued
along their opposite paths,” Blitzer said. 
“Atlanta continues to be the only city with double-digit negative annual
returns – 17.0 percent, whereas Phoenix fared the best in terms of annual
returns at +8.6 percent in April.”

Case-Shiller Home Prices

Click Here to View the Case Shiller Chart

…(read more)

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Why Home Prices Are Rising Again (According to Case-Shiller)

It wasn’t hard to see this coming: Home prices rose in April after a spring that brought more buyers chasing fewer homes.