Underwater Homeowners in St Louis Continues To Decline

There were 123,546 St Louis homeowners with negative equity, or in a seriously underwater condition on their mortgage meaning they owe more than the current value of their home, in the St Louis MSA during the 2nd quarter of 2015 according to the most recent data by RealtyTrac.  This works out to 17 percent of all St Louis metro area homeowners with a mortgage being underwater on their mortgage which is an improvement from 21 percent just 2 quarters prior.

As the table below shows, for the immediate St Louis, MO area, the city of St Louis had the highest rate of underwater homeowners at 1 out of every 4 homeowners with a mortgage and St Charles county had the lowest percentage at 7%.

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St Louis Foreclosure Activity Increases In July

St Louis foreclosure activity increased in July 32.23 percent from the month before to 1,194 foreclosures actions in the St Louis metro area, or a rate of one foreclosure activity for every 1,028 homes, according to the latest data from RealtyTrac.  As the table below shows, the foreclosure activity in July 2015 was up almost 150 percent from July 2014, however, when we look at the 12-month rolling average, we can see that the activity has risen about 6 percent from a year ago.

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St louis Foreclosure Activity July 2014 - July 2015

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Over Half Of St Louis Foreclosure Sales In July Were Cash Sales

Over half of the St Louis Foreclosures  (bank and government owned) sold in July were sold for cash, according to the latest data from MORE, REALTORS.  In July 2015, there were a total of 323 foreclosure sales in the 5-county core St Louis market with 179 of them, or 55.4%, being cash sales.  As the table below shows, the number of foreclosure sales in St Louis in July 2015 was down 12.5% from July 2014 while the median sales price was up 1.8%.

There were a total of 3,754 home sales in St Louis in July 2015, an increase of 18.2% from July 2014 and, as the table below illustrates, 20.1% of those sales were cash sales as well.  The median price of homes sold was up 3.1% from the year before.

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Mortgage Originations In 2nd Quarter Rise…4th Consecutive Rise Since 14 Year Low

The Federal Reserve Bank of New York just released it’s Quarterly Report on Household Debt and Credit for the 2nd quarter of 2015 in which some encouraging facts were revealed with regard to the home mortgage market, including:

  • New home loan originations during the quarter increased to $466 billion…this marks the fourth consecutive quarterly increase since originations hit a 14-year low a year ago
  • As the chart below illustrates, roughly 95,000 individuals had a new foreclosure add to their credit report during the quarter, marking the lowest number of new foreclosures since the data was first tracked 16 years ago.
  • Mortgage delinquencies improved with the share of seriously delinquent mortgages (90+ days) dropping to 2.5% from 3.0% during the prior quarter.
  • Mortgage delinquencies improved again, with the share of mortgage balances 90 or more days delinquent decreasing slightly;
  • The median credit score for borrowers obtaining a home mortgage during the 2nd quarter, as the chart below shows, rose to above 750, while the bottom 10th percentile of borrowers, also known as “sub-prime”, rose to 650.  As the chart illustrates, back in 2000 the median was around 700 and the lowest percentile was barely above the 550 mark.

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St Louis Mortgage Delinquency and Foreclosure Rates Drop To Lowest Level in Years

For the month  of May, 2015, less than 3 percent (2.95%) of St Louis mortgages were seriously delinquent (90+ days) marking a slight decline from the month before and a decline of 13 percent from a year ago, according to data just released by CoreLogic.  The St Louis foreclosure rate also hit the lowest level in a long time in May at 0.67 percent, a slight decline from 0.69 percent the month before and a decline of 10% from a year ago when the foreclosure rate was 0.77 percent.

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Rental Vacancy Rate In U.S. During 2nd Quarter Hits Lowest Level In Over 10 Years

The rental vacancy rate in the U.S. during the second quarter of this year was 6.8 percent, the lowest level in over 10 years, according to data just released by the U.S. Census Bureau.  This was a decline of over 9 percent (9.33%) from the 2nd quarter of 2014 when the rental vacancy rate was 7.5% and is the lowest level the rental vacancy rate has been at in over 10 years.

As the chart and table below shows, the U.S. homeowner vacancy rate also declined during the 2nd quarter of this year to 1.8 percent which ties the lowest level the homeowner vacancy rate has been at in over 10 years as well.

St Louis Rental Vacancy Rate Increases During 2nd Quarter-

As the table below shows, rental vacancies in St Louis increased slightly during 2nd quarter rising to 8.7 percent from 8.6 percent the previous quarter.

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Foreclosure Sales In St Louis Decline Over 4 Percent In June From Year Ago

Foreclosure Sales In St Louis (the 5-county core market) in June 2015 totaled 374 sales, a decline of 4.3 percent from June 2014 where there were 391 foreclosure sales.  The median price of the homes sold in June 2015 was 60,150, and increase of 7.2 percent from a year ago when the median price was $56,100.

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Foreclosure Sales and Prices By County – Change from June 2014 – June 2015:

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St Louis Rental Vacancies Increase In First Quarter – Still 3rd Lowest Level In 6 Years

St Louis Rental Vacancies remain at historically low levels in spite of a slight increase in the first quarter of this year to 8.6% from 8.5% in the 4th quarter of 2014.  The St Louis vacancy rate for first quarter of 2015 was also up significantly from the first quarter of 2014 when the vacancy rate for St Louis stood at just 7.2% although, as the table below shows,  we have to remember that was the lowest vacancy rate we had seen in over 10 years.

On a national level, the rental vacancy rate has declined as well, down to 7.1% for the 1st quarter of 2015, down from 8.3% for the 1st quarter of 2014.  As the chart below illustrates, all four regions in the U.S. have seen a decline in rental vacancy rates from the 1st quarter of 2014 to the same quarter in 2015.  This, coupled with the facts that St Louis has a higher vacancy rate for 1st quarter 2015 than that of the region, as well as has seen an increase in rate from a year ago while the region saw a decline, may be a warning sign that the St Louis market, while performing well, is not keeping up with the region and the nation.

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St Louis Foreclosures Increase In First Half Of 2015

St Louis Foreclosures during the first half of 2015 increased in the St Louis metro area 26.52 percent from the second half of 2014 and 25.18 percent from the same period last year, according to a report released today by RealtyTrac.  According to the report, there were 5,468 foreclosure filings in the St Louis metro area during the first half of 2015 which equates to 1 in every 224 housing units in the metro area.

As the table below shows, with the exception of St Charles County, all of the counties making up the St Louis core market saw an increase in foreclosure activity in the first half of this year from the last half of last year.

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Only About One Third Of Low Income Missourians In Need Receive Federal Rent Assistance

Within the last few days, STL Today published an article titled “The affordability crisis in the St Louis rental market“, based upon a study recently released by the Urban Institute, revealing that “there is literally no affordable, non-subsidized housing available to St. Louis low-income families.”  While the focus of the article was non-subsidized affordable rentals, it also discussed the increasing number of extra-low-income families forced to pay over 50% of their income on rent.  I was surprised to hear this as I know federal spending on assistance programs has increased significantly over the last decade and I keep hearing that the economy is improving, unemployment is down, etc, so I would have expected a better report.  This prompted me to look into it a little further.

Missouri’s Low-Income Families and Rental Housing-

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St Louis Foreclosure Activity Trends Downward In Most Areas But Franklin County Spikes Upward

St Louis foreclosure activity in May 2015 continued the downward trend with a drop of almost 9 percent from the month before for the St Louis MSA as a whole, according to data just released this morning by RealtyTrac.  As the table below shows, foreclosure activity in May was up over 55% from May 2014, however, when we look at the 12 month rolling average, which gives a better indication of the trend (blue area in table) we see that for the 12 month period ended in May foreclosure activity is down over 13% from the same time a year ago.

Franklin County is the exception to the good news…

Franklin county, on the other hand, saw a big jump in foreclosure activity during May with action on 29 properties during the month, a decline from the month before, but a whopping 625% increase from a year ago.  The twelve month rolling average for Franklin County shows May 2015 was up 219% from May 2014.  In spite of this huge increase in foreclosure activity, Franklin County still has one of the lower foreclosure rates in the St Louis, MO area, in terms of number of foreclosures per total housing units, with just 1 foreclosure action for every 1,498 housing units.

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Jefferson County Has Highest Rate of Foreclosures In Area

During the 2nd quarter of this year, there was foreclosure activity on one out of every 887 housing units in Jefferson County, giving it the highest foreclosure rate of the main counties making up the St Louis real estate market, according to a report just released by RealtyTrac.  St Charles County, with foreclosure activity on just 1 of every 1,620 housing units, had the lowest foreclosure rate for 2nd quarter of 2015.

From a housing density standpoint, St Charles County was number one with 2.56 people per housing unit and the City of St Louis had the least density with just 1.82 people per every housing unit.

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St Louis Foreclosure Activity 2nd Quarter 2015 - St Charles County Foreclosure Rate

St Louis Makes List Of Top Ten Metros In U.S. For Rate Of Zombies

That’s right, Zombies are very real and very present in St Louis…at least Zombie foreclosures that is!  That’s right.  According to a foreclosure zombie report just released this morning by RealtyTrac, St Louis made the list of “Top 10 Zombie Foreclosure Rates Among Major Markets”, coming in at number 6 on the list with 1 of every 1,627 housing units being a zombie foreclosure.  In the number 1 spot on the list was Tampa Florida where 1 of every 217 housing units is a zombie foreclosure (the complete list, and infographic, is below).

What is a Zombie Foreclosure?

Yet another new term that is common place in the real estate community now, but was not 10 years ago, is “Zombie Foreclosure”.  This term has been applied to homes whereby the homeowner is in default on their mortgage and headed to foreclosure but vacates the home prior to actually losing it in foreclosure.  This often results in the property becoming blighted while going through the process, and until the bank obtains ownership of the home, as no one is there taking care of it and the owner has given up.  Zombies are not good for neighborhoods nor home values of the surrounding homes.

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St Louis Foreclosures Rise In April However Trend Is Down Almost 40 Percent

St Louis foreclosures increased in April from the month before in the St Louis area counties of St Charles, Jefferson and Franklin, were fairly level in St Louis County and declined almost 12 percent in the city of St Louis.  For the 5 counties that make up the core of the St Louis real estate market, the median increase in foreclosure activity in April 2015 from the month before was, as the table below shows, 10.68%, and, compared with foreclosure activity from April 2014, the median increase in foreclosure activity was almost 30 percent, according to data released this morning by RealtyTrac.

However, it is not uncommon to have monthly spikes or dips, so it is better to look at a 12 month rolling average to see what the overall trend is.  As the table shows, when we look at the 12 month rolling average for St Louis foreclosure activity, we see that there was only a slight increase in April 2015 from the month before and nearly a 40 percent decline from a year ago.  It’s only been recently that RealtyTrac began publishing the rolling 12 month data but I think it has really helped see what the real trends are with regard to foreclosures.

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Mortgage Delinquency Rates Drop To Pre-Bubble Level

The mortgage delinquency rate (home owners that are 60 days or more delinquent on mortgage payment) dropped to 2.95 percent in the first quarter of 2015, marking the first time the mortgage delinquency rate has been below 3 percent since the 3rd quarter of 2007 when the rate was 2.61 percent, according to a report released this morning by TransUnion.  This is also the 13th consecutive quarter the mortgage delinquency rate has declined from the prior quarter.

Subprime delinquency rate is over 9 times higher…

The report also shows that the mortgage delinquency rate for subprime borrowers fell in the first quart of this year as well, down to 27.23 percent from 29.76 percent during the prior quarter.  Even with the improvement, the mortgage delinquency rate for subprime borrowers is still over 9 times greater than for borrowers overall.  This is a great improvement from the peak however, in the first quarter of 2010, when the rate was 40.48 percent for subprime borrowers.


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Baltimore Tops List Of Metros For Highest Returns From Flipping Homes

Flipping homes accounts for a smaller percentage of home sales today at about 4 percent of total home sales in the U.S., then in the recent past when they accounted for 6 percent of more of the homes being sold (6.8% at the recent peak in 1st quarter 2012), according to a report released today by RealtyTrac.

According to RealtyTrac, Baltimore Maryland is the best place to flip homes based upon the gross profit margin calculated as a return on investment (ROI) coming with a 94.1% ROI!  Before you get too excited, don’t think that is what the investor walked away with, the gross margin is just based upon the difference between the purchase price and sale price and does not take into account any expenses for remodeling, resale, etc.  As the table below shows, the next 4 out of 5 cities at the top of the list can all be found in Florida.

Memphis Tennessee is the metro area with the highest percentage of flips with home flipping accounting for over 10 percent (10.6%) of all the home sales. The table at the bottom lists the 20 markets with the highest percentage of flipping.

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House Flipping In St Louis During 1st Quarter Drops By Sixty-Nine Percent From Year Ago

House flipping in St Louis accounted for just 2.4 percent of the home sales in the St Louis metro area during the first quarter of this year, according to data just obtained from RealtyTrac.  This is a decline a 69 percent from a year ago when “flips” accounted for 7.7 percent of all St Louis home sales.

Highlights from the 1st Quarter 2015 report:

  • There were 115 house flips during the 1st quarter of 2015
  • This was a 57% decline from the prior quarter and a 69% decline from the 1st quarter of 2014
  • Average days to flip a home during the quarter was 169
  • Average purchase price was $79,398, average sale price $101,495
  • Average gross margin on flips during the quarter was 22%
  • Average gross return on investment during the quarter was 27.8% which is down from 47.9% a year ago

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Landlord Charged With Discrimination Over Cat

Paula Anderson, a landlord who owns a two-bedroom home in Santa Fe, New Mexico, was charged with discrimination by HUD after HUD’s investigation revealed that there was cause to believe Anderson had violated the Federal Fair Housing act as follows:

As described in paragraphs 7 to 25 above, Respondent Anderson violated 42 U.S.C. §§ 3604(f)(1) and (f)(2) as defined by 42 U.S.C. § 3604(f)(3)(B) because she discriminated in the terms, conditions, or privileges of Complainant’s tenancy and made her dwelling unavailable by refusing to allow Complainant to live with her assistance animal and daughter at the subject property when such accommodations were necessary to afford Complainant an equal opportunity to use and enjoy her dwelling. 42 U.S.C. §§ 3604(f)(1), (f)(2), and (f)(3)(B); 24 C.F.R. §§ 100.202(a), 100.202(b), and § 100.204(a). 

The interesting thing about this case is that the “assistance animal” is a cat and while many landlords may be familiar with service dogs, particularly as used by visually impaired people, the claim by a tenant that a cat is a service animal may seem like a stretch and not be taken serious by a landlord but this case proves that it needs to be taken seriously.

Read the entire case here – The Secretary, United States Department of Housing and Urban Development vs Paul Anderson

Distressed Home Sales In February Fall Back to 2008 Rate

Distressed home sales (foreclosures, REO’s and short sales) made up 13.5 percent of the home sales in the U.S. in February, 2015, a decline of 18% from a year ago when the rate was 16.5 percent and is a decline of 5.6% from January when the rate was 14.3%, according to a report just released by Corelogic.  The rate of distressed home sales in February 2015 marks the lowest rate for the month of February since February 2008, according to the report.

 

REO Sales down almost two-thirds from peak

During the peak, January 2009, distressed home sales accounted for 32.4 percent of al home sales with REO sales making up 27.9% of that share.  In February, 2015, REO sales accounted for 9.7 percent of all home sales, a decline of nearly two-thirds (65.23%).

Short Sales down only slightly

Quite different than the figures for REO sales, short sales accounted for 4.5% of all home sales back in January 2009 and still accounted for 3.8% of them in February 2015, for a decline of just 15.6% percent.

Still far from “normal”

Even with the declines, we are a far way from “normal”….prior to the real estate market crisis, distressed home sales made accounted for just about 2% of home sales so we still have a long way to go.

 

Michigan is the king of distress

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Twenty Percent Of Homeowners That Did Distressed Sales Expected To Return As Buyer in Coming Decade

Between 2006 and 2014 nearly 9.3 million homeowners in the U.S. were either foreclosed on, did a deed of lieu of foreclosures, or did a short sale of their home, according to a recent report by the National Association of REALTORS (NAR).  Here in Missouri, there were 158,000 foreclosures or distressed sales during that same period.

According to the NAR report titled “Return Buyers” Many Already Here, Many More to Come”, almost one million (950,000) of the 9.3 million people that lost their home, or did a distressed sale, have already likely purchased a home again, however an additional 1.5 million return-buyers will likely purchase a home in the next five years.    In Missouri, NAR estimates that 21,000 of the 158,000 homeowners that lost their homes in foreclosure, did a deed in lieu or short-sold their home have already purchased another home, however predicts that there are 30,000 more in Missouri that will be a return buyer from now until 2023.

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St Louis Foreclosures Rise In March

Foreclosure activity in St Louis was on the rise in March with the foreclosure rate for the St Louis metro area increasing 14 percent from a year ago and over 64 percent from February, according to the latest data from RealtyTrac.  As the chart below shows, foreclosure activity for the larger Missouri counties that are included in the St Louis MSA saw foreclosure actions decline from a year ago with the exception of Franklin County which saw a big increase.

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The Rights Of Missouri Landlords Are About To Be Trampled On Again

Section 347.057  of the Missouri Limited Liability Company Act states “A person who is a member, manager, or both, of a limited liability company is not liable, solely by reason of being a member or manager, or both, under a judgment, decree or order of a court, or in any other manner, for a debt, obligation or liability of the limited liability company, whether arising in contract, tort or otherwise or for the acts or omissions of any other member, manager, agent or employee of the limited liability company.”  So, like a corporation, LLC’s provide protection to the individuals, (or other LLC’s, or corporations) that own the LLC from personal liability for business conducted by the LLC.  Without the ability to protect one’s personal assets from liability from business operations, many businesses wouldn’t exist nor would the products and services they provide.  For example, would you be willing to buy stock in a company such as Ford, or Johnson and Johnson if you were going to be personally named in all the lawsuits brought against those companies?  I doubt it.

Landlords, rehabbers, developers and speculators often own and operate their real estate inside of LLC’s for many reasons including for liability reasons, tax benefits as well as to sometimes conceal or protect the identity of the individuals or companies involved.  All of these things (including concealing the identity of the members of the LLC) are lawful purposes of the LLC and have legitimate purposes.

Proposed legislation could strip protection away from property owners in Missouri:

House Bill 864 (bill contents below), introduced by Representative Sheila Solon from District 031 Continue reading “The Rights Of Missouri Landlords Are About To Be Trampled On Again

Percentage of Underwater Homeowners Increases For First Time In Nearly Three Years

Seriously underwater homeowners, those people whose mortgage debt is 125 percent or more of their current home’s value, increased to 13.2% of all home loans during the 1st quarter of 2015, marking the first increase in rate from the prior quarter since February 2012, according to a report released this morning from RealtyTrac.  As the chart below shows, the percentage of homeowners that are seriously underwater, peaked during the 2nd quarter of 2012 at 28.6% and has decreased every quarter until reaching the most recent low of 12.7% during the 4th quarter of last year.

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St Louis Foreclosures Decline In February

St Louis foreclosures declined in February for the St Louis MSA with a total of 843 foreclosure actions occurring during the month, a decline of over 22 percent from the month before and a decline of over 10 percent from a year ago, according to data just released this morning by RealtyTrac.

As the table below shows, foreclosure activity decreased in all of the counties in the core St Louis market during February from the month before and all, except Franklin County, saw a decrease from a year ago.

On a national level, RealtyTrac reported 101,938 foreclosure actions occurred during the month of February in the U.S., a decline of 4% from January, a decline of 9% from February 2014, and the lowest level since July 2006.

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Want to Buy St Louis Foreclosures? Bring Your Cash And Bid High!

If you are like a lot of people and see St Louis foreclosures, or REO’s (real estate owned by banks and other lending institutions as a result of foreclosure) as a good opportunity to buy a residence for yourself or as an investment either for rental or for “flipping”, you best have cash and be prepared to “buck up” if you want to succeed!  I say this because cash buyers continue to dominate the REO and foreclosure market with 61% of all REO and Foreclosure sales this year in St Louis being cash sales thus far.  As the table below shows, while the number of foreclosure sales has declined this year from last year at the same time, the percentage of them going to cash buyers has not.

Good deals on St Louis foreclosures are selling fast and often for list price or more.

For the month of February, in the five county core St Louis market (city of St Louis and counties of St Louis, St Charles, Jefferson and Franklin) there were 273 foreclosure or REO homes sold and they were sold, on average, at 98% of list price.  If we drill down a little and find the “best” deals out of the gate, the ones that sell in the first 10 days, there were 48 foreclosure homes sold in February (18% of the overall total number of foreclosures sold) and they sold, on average, for 105% of the list price.  

So, if you are planning on buying St Louis foreclosures, cash is king and, for the new deals that hit the market with an attractive price, realize that even a full price offer may not buy it.  For some personal advice from me on how to be successful buying St Louis Foreclosures and REO’s, read my report here.

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St Louis REO (Foreclosure) Sales Through End of February- Number of Cash Sales

Two St Louis Areas were the most profitable zips in the U.S. for flipping property in 4th quarter

Two zip codes in the city of St Louis made RealtyTrac’s list of “Zips with the highest gross returns (from flipping property)” for 4th quarter, 2014.  The 63139 zip code, which includes the Dog Town area of St Louis, came in number 2 on the list with an average gross return on investment of 163.9% and the 63116 zip code, which includes Tower Grove South, Holly Hills, Dutchtown South and Bevo, came in 9th on the list with an average gross return on investment of 127.7%.

To be eligible to be considered for the list, there had to be at least 10 single family homes “flips” completed during the 4th quarter of 2014.  In the 63139 area of St Louis, there were  18 such home flips during the quarter with an average purchase price of $9,000 and an average gross profit of $14,750 from the flip.  In the 63116 zip area, there were 21 flips during the quarter with an average purchase price of $27,721 and an average gross profit of $35,407.   The table below shows the data for all 10 top gross returns from flipping property zips in the U.S.

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St Louis Foreclosures Increase In January Nearly 50 Percent From Year Before

St Louis foreclosures increased dramatically in January with 1,116 foreclosure actions in the St Louis metro area during the month, an increase of 52.25 percent from December and an increase of 47.42 percent from January 2014, according to data just released this morning by RealtyTrac.

As the table below shows, all of the counties in the core St Louis market saw an increase in foreclosure activity during January from the month before and all, except Jefferson County, saw an increase from a year ago.

On a national level, RealtyTrac is reporting that foreclosure activity in January increased 5 percent from December but declined 4 percent from January 2014.

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St Louis Ranked Seventh In Number of Completed Foreclosures In 2014

St Louis had 6,215 completed foreclosures in 2014 putting it 7th on the list of metros in the U.S. in terms of the number of completed foreclosures.  As the table below, which lists the 25 top metro areas for foreclosures, shows, Tampa saw the most foreclosures with over 18,000 being completed during 2014, according to newly released data from Corelogic.

According to the Corelogic report, there were  563,294 completed foreclosures in the U.S. during 2014, the lowest total for any 12 month period since November 2007 when it was 589,570.

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Over Half Of St Louis Foreclosures Are Zombies – Highest Rate in Nation

Over half (51%) of the foreclosures in St Louis are “Zombies” meaning that the owners have abandoned or vacated their home prior to their lender completing the foreclosure process, according to a report released this morning by RealtyTrac.  Just like the number of St Louis foreclosures is down significantly from a year ago, the actual number of Zombie foreclosures has declined 59% from a year ago.

The chart below shows zombie foreclosure data for the 10 metro areas in the U.S. with the highest percentage of Zombie foreclosures.  Beneath that is a table showing the 10 metro in the U.S. with the most number of Zombie foreclosures which shows New York leads the nation with over 19,000 zombie foreclosures as well as a chart showing the States with the highest number of Zombies.

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St Louis Ranked As One Of Top 50 Markets To Rent To Millenials

The city of St Louis made the list of the top 50 markets to rent to Millenials, published by RealtyTrac.  In determining the best markets in the U.S. for renting to millennial (most of whom are in their 20’s or early 30’s), RealtyTrac looked at rental markets where the gross annual yield on rentals was at least 9 percent, where Millenials make up more than 22 percent of the market (the national average) and where the Millenial population had increased at least 5% from 2007 through 2013.

For the city of St Louis, as the table below shows, the Millenial population grew 18% from 2007 to 2013 and in 2013 accounted for over 28% of the market.

St Louis One of the best cities to rent to millenials

Source: RealtyTrac

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