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APRIL'S HOME PRICES SHOW STRONGEST YEAR-TO-YEAR GAIN IN SIX YEARS By Mark Lieberman, Economist for the Five Star Institute Existing home sales rose to 4.62 million (seasonally adjusted annualized rate) in April, up from a downwardly revised March rate of 4.47 million, the National Association of Realtors (NAR) reported last month. Economists had forecast the April sales pace would be 4.66 million. The median price of an existing home climbed 10.1 percent to $177,400 from $161,100 in April 2011, the strongest year-over-year gain since January 2006. The median price in April reached its highest level since July 2010 when it was $182,100. The inventory of homes for sale in April rose to 2.54 million, the highest level since last November, bringing the months' supply of homes on the market to 6.6. The 10.0 percent year-over-year gain in the sales rate was the strongest since October when sales were up 14.0 percent on an annual basis. Distressed homes—foreclosures and short sales sold at deep discounts—accounted for 28 percent of April sales (17 percent were foreclosures and 11 percent were short sales). That's down from 29 percent in March and 37 percent in April 2011, NAR said. Foreclosures sold for an average discount of 21 percent below market value in April (compared with an average discount of 19 percent in March), while short sales were discounted 14 percent in April compared with 16 percent in March. 44 The months' supply of existing homes for sale remains well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories as tracked by NAR are 20.3 percent below their year-ago level, however, anecdotal evidence suggests there is still a large "shadow" inventory of homes available for sale, especially bank-owned properties. Regionally, existing home sales rose in April in every region of the country led by a 5.1 percent month-to-month increase in the Northeast where sales were up19.2 percent during April 2011. Sales rose 4.4 percent over March in the West (a 7.3 percent year-year gain), 3.5 percent in the South (6.5 percent year-year), and 1.0 percent in the Midwest (14.4 percent year over year). The median price of an existing home rose month-month and year-year in all four regions. At $256,600, the median price of an existing home reached its highest level since August 2010. The median price of an existing home in the South rose to $153,400, the highest level since July 2010, while the median existing-home price in the West rose to $221,700, also the highest since July 2010. The year-to-year price gain in the West, 15.9 percent, was the strongest since November 2005. The year-to-year price increase in the Northeast was the first since last June. SURVEY SHOWS STRUGGLING HOMEOWNERS RELUCTANT TO SEEK HELP According to a survey conducted by Money Management International (MMI) in late April, struggling homeowners are reluctant to seek professional help for mortgage relief. The survey found that half of the 1,019 respondents would first seek help from a family member or friend, followed by 26 percent who said they would see a lender and 13 percent from a housing counseling or mortgage relief program. When asked about their concerns with mortgage assistance programs, 53 percent of those surveyed said they were afraid of scams or fraudulent services. Fifty-one percent of respondents expressed concern about the cost associated with such services, and 45 percent were afraid the process would be too confusing or that they would end up with a solution they could not fully understand. "Homeowners face real concerns when considering who to turn to for help with mortgage troubles," said Jo Kerstetter, VP of education and community relations for MMI. "For the millions of homeowners who still face possible foreclosure, it is important to remember that quality help is available for free from HUD-certified housing counselors nationwide." In related findings, the survey showed that 63 percent of respondents who had sought mortgage relief help said they did so when they were one to three months behind on their payments, while 22 percent sought help when they were four to six months behind. Four percent were seven or more months behind on payments before they sought help. Of those who had yet to seek assistance, 57 percent of respondents said they would seek help only after a job loss, while 35 percent said they would look for help if they felt they would likely miss a payment. Twenty-seven percent would only seek help after missing a payment. KNOW THIS Fiserv is forecasting home prices to stabilize by the end of summer, then rise at an annualized rate of 3.9% over the next five years.

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