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» VISIT US ONLINE @ DSNEWS.COM 55 REPORT: HOME PRICES AFFECTED BY FORECLOSURE STATUS Everyone wants a good deal, but the home- purchasing process is filled with emotion. Buyers will often talk of "falling in love" with a potential new home, or say that a home "speaks to them." But some buyers give into negative emotions and inversely refuse to consider homes that are in the foreclosure process or already bank-owned because they stereotype them as "run down" or "beat up." But is it really possible to see through the cloud of emotions and avoid poor purchase decisions? RealtyTrac suggests that buyers should look at the data. e company released a study last month detailing, for the first time ever, which types of single-family homes sell at the steepest discounts and which single-family homes sell at the highest premiums. e report used four different variables (foreclosure status, equity, occupancy, and year built) to develop 24 different property "profiles" that were compared against a control group. RealtyTrac used data from homes not in foreclosure that were sold in the 12 months leading up to March, 2014. e company wanted to determine if and how those variables really affected purchase price. Some of the results were intuitive, while other findings were not. Perhaps predictably, the property profile pro- viding the greatest average discount in the study was that of a vacant, older home scheduled for a foreclosure auction with negative equity. Proper- ties matching these profile characteristics sold at an average discount of 28.2 percent below market value when compared to the control group. Daren Blomquist, vice president at Realty- Trac, commented on the study: "One notable exception to the negative equity marker was homes in default with positive equity, which sold at the second biggest discount nationwide. e top five property profiles with the biggest discounts nationwide all sold at average discounts of 25 percent or more." Four of the 24 property profiles analyzed sold at an average premium above market value when compared to the control group. "On the other end of the spectrum, it may surprise many to see that nationwide and in several states some profiles of bank-owned homes actually sold at a premium," Blomquist continued. "Overall bank-owned properties nationwide sold at a 2.5 percent premium, and bank-owned properties built before 1950 sold at a 6.7 percent premium." e big winner, the profile with the biggest premium, was that of a home not in foreclosure but with negative equity, with no filters for equity, occupancy, or year built. Properties matching this profile sold at a premium of 19.2 percent above market value. ADP: HIRING SURGES IN JUNE Employment in the private sector rose in June at the highest rate in nearly two years, according to the ADP National Employment Report issued in July for the month of June. By ADP's calculation, private sector employ- ment rose by 281,000 new jobs created, sur- passing most already-optimistic projections. e increase represents a gain of 102,000 private sector jobs over May's 179,000 job increase, signaling that employers are ac- celerating their hiring as demand continues to increase. e report, which is derived from ADP's actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. Mark Zandi, chief economist of Moody's Analytics, said, "e job market is steadily improving. Job gains are broad-based across all industries and company sizes. Judging from the job market, the economic recovery remains fully intact and is gaining momen- tum." Of particular note to the housing industry is that construction payrolls added 36,000 new jobs. Professional businesses services saw the greatest increase, clocking in at a 77,000 job gain. "e June jobs number is a welcome boost," said Carlos Rodriguez, president and chief executive officer of ADP. "e number of construction jobs added was particularly encouraging, representing the highest total in that industry since February of 2006." e report could be a good omen for the Obama Administration as it seeks to reassure the American public that the economy is not in danger of giving back recent gains after a lackluster first quarter of 2014. e govern- ment issued jobs report from the Bureau of Labor Statistics, encompassing both the public and private sector job rolls, is due out ursday. e median economist job growth predic- tion for June, in the Bloomberg monthly survey, forecasts a growth of 205,000 new jobs. Economists also predict that the unem- ployment rate will hold steady at 6.3 percent. If these numbers hold, it will be a signal to investors and consumers alike that economic fears that discourage spending and invest- ment are unfounded at this point in time. POSSIBILITY OF A NEW BUBBLE CONCERNS LENDERS As home prices continue to rise—albeit slow- er than last year—many commentators insist that fears of a new housing bubble in the making are overblown. However, a new survey released Tuesday suggests lenders aren't buying it. In a survey of U.S. and Canadian mortgage lenders conducted by the Profes- sional Risk Managers' International Asso- ciation (PRMIA), FICO found 56 percent of respondents directly involved in the industry are concerned that "an unsustainable real estate bubble is inflating." "e home loan environment has bifurcated," said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. "Six million homeowners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33 percent. Yet with home prices soaring in many cities, total homeowner equity in the U.S. is at its highest level since late 2007. "at doesn't feel like a healthy, sustainable growth situation," he continued. Surveyed about common concerns that arise during the underwriting process, most of the bankers surveyed—59 percent—pointed to "high debt-to-income ratio" as their top worry when approving any consumer loan. ose respondents aren't alone in their con- cern. In a recent report, the American Enterprise Institute's International Center on Housing Risk suggested that high debt-to-income levels are to blame for today's still-high loan risk. "As consumer confidence picks up and people increase their borrowing, lenders are understand- ably concerned about growing indebtedness," said Mike Gordon, FICO's executive vice president of sales, services, and marketing. "When I talk with bankers, they tell me they're happy to see growing consumer optimism, but they're wary of a return to reckless borrowing." e second and third most common concerns were "multiple recent applications for credit" at 13 percent and "low FICO Score" at 10 percent, FICO reported.

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