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33 » VISIT US ONLINE @ DSNEWS.COM MARKET CHANGES CHALLENGE HOME BUYERS, SELLERS As the housing recovery downshifts from last year's pace, the latest survey of real estate agents by the national brokerage Redfin finds home- buyers and sellers are having trouble getting on the same page with each other and with the new shape of the market. Examining a number of markets nationwide, Redfin's quarterly survey showed house sellers continue to lose their market advantage, with only 24 percent of agents agreeing with the state- ment that "sellers have all the power." In the first quarter, that share was above one-third of agents. Most sellers seem not to have gotten the memo, however, with 40 percent still planning to list their homes above market value even as sales figures continue to fall compared to last year and home price increases level off. "Typically it takes seller six to nine months to adjust to a price change, but this latest shift is longer," said Redfin's chief economist, Nela Richardson. "Prices have moved down and then up so much over the past five years that it's even more difficult for sellers to have a realistic baseline for what their homes are worth in the current market." Redfin cautioned sellers against overpricing homes in May, especially as shoppers regain leverage in the market. In fact, 58 percent of Redfin agents now say sellers have unrealistic expectations about the value of their homes compared to 49 percent last year. While slowly improving inventory levels may still push some buyers into more aggressive offers, as Richardson explains, "e demand side of real estate is moving from 'please take my offer' to 'take it or leave it as you please.'" Meanwhile, homebuyers appear to have traded one set of problems—low inventory and economic uncertainty—for another: affordability and financing challenges. According to survey responses, the greatest hurdle for buyers today is declining affordability, with 43 percent of agents citing that as a common challenge. Also commonly cited were problems saving for a down payment (18 percent) and dif- ficulty and getting a mortgage (16 percent). Given these concerns, 40 percent of Redfin agents surveyed in the second quarter said now is a good time to buy a home, down from 46 percent during last year's spring. PENDING HOME SALES SURGE IN MAY Pending home sales surged in May, spurred by lower interest rates and increased inventory, the National Association of Real- tors (NAR) reported Monday. e group's Pending Home Sales Index (PHSI), which measures contract sign- ings as an indicator of future sales figures, jumped 6.1 percent month-over-month to 103.9. It was the largest one-month increase since April 2010, when the index spiked 9.6 percent as first-time buyers moved to sign purchase contracts to qualify for the First- Time Homebuyer Tax Credit. With both new and existing-home sales showing promise in May, the associa- tion expects the momentum to continue. "Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory, and improved job creation," said NAR chief economist Lawrence Yun. "However, second-half sales growth won't be enough to compensate for the sluggish first quarter and will likely fall below last year's total." All four regions of the country posted increases in pending sales numbers, with the Northeast leading with an 8.8 percent month-over-month gain to an index of 86.3. e Northeast was also the only region where pending sales increased year-over-year, rising 0.2 percent. In the Midwest, NAR reports pending home sales were up 6.3 percent to an index of 105.4, while pending sales in the West rose 7.6 percent to 95.4. Pending home sales in the South, meanwhile, increased 4.4 percent to 117.0. Still, Yun says waning affordability and tight credit access are still major obstacles for first-time homebuyers, who only accounted for 27 percent of May's existing-home sales. With pending home sales still down 5.2 percent compared to a year ago, the market is feeling that group's absence. As most first-time buyers—Millennials especially—battle challenges with debt, "[s] olid income growth and a slight easing in un- derwriting standards are needed to encourage first-time buyer participation, especially as renting becomes less affordable," Yun said. Overall, NAR anticipates existing-home sales will finish 2014 totaling 4.95 million, down 2.8 percent from 2013. GSES FORECLOSURE PREVENTION ACTIONS NEARLY 3.2M THROUGH Q1 Fannie Mae and Freddie Mac have completed nearly 3.2 million foreclosure prevention actions since the start of the government's conservator- ship of the two companies in 2008. According to the Federal Housing Finance Agency's Fore- closure Prevention Report, 88,000 actions were performed in the first quarter of 2014 alone. e agency found that foreclosure prevention actions in Q1 allowed 2.6 million borrowers to remain in their homes, while 1.6 million borrow- ers received permanent loan modifications. "ere were nearly 54,700 permanent loan modifications in the first quarter, bringing the total number of permanent modifications to more than 1.6 million since conservatorship," the FHFA said. "In addition, the enterprises completed approximately 16,100 repayment plans and 2,900 forbearance plans to help delinquent borrowers during the quarter." Properties currently utilizing the Home Affordable Modification Program (HAMP) totaled 431,000 in the first quarter of 2014. Of all permanent loan modifications in the first quarter, 42 percent reduced monthly homeowner payments by over 30 percent. "Approximately 27 percent of borrowers who re- ceived permanent loan modifications during the quarter had portions of their mortgage balance forborne," the FHFA said. e FHFA found that approximately 14,900 short sales and deeds-in-lieu were completed dur- ing the quarter, bringing the total to more than 566,800 since the start of the conservatorship. Seriously delinquent loans fell by 8 percent in Q1 2014. Fannie Mae and Freddie Mac's seriously delinquent rate fell to 2.2 percent at the end of the quarter, compared with 6.7 percent for Federal Housing Administration (FHA) loans, 3.6 percent for Veterans Affairs (VA) loans, and 5.0 percent for all loans. e Enterprises' 30-59 day delinquency rate fell to 1.4 percent in Q 4 2013, while the 60-day plus delinquency rate continued to slide, settling at 2.6 percent in Q 4 2013. Foreclosure starts declined 25 percent to nearly 84,700 in Q1 2014, while third-party sales and foreclosure sales fell slightly to 47,300. REO inventory was down as well, dropping 3 percent to roughly 146,000.

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