Susan & Rick
In housing rebound news this past week we saw a handful of positive indicators pop up: the nation’s largest housing lender reported a strong gain in earnings, another big bank phones in record mortgage production revenue, and flipping appears to be back in vogue.Wells Fargo’s earnings release this month beat expectations, giving new data to the housing rebound. So far, most of the data showing a positive uptick has been in home sales, home values and a slowdown in foreclosures.
Wells Fargo reported third-quarter earnings of $4.94 billion, or 88 cents a share, beating estimates of 87 cents. Revenue was $21.2 billion. Mortgage lending added $11.9 billion in core loans during the quarter, the bank reported. However, Wells Fargo also noted that new pressure on interest rate-based earnings, and analysts will continue to watch the balance between increasing core loans and decreasing earnings from interest.
Meanwhile, JPMorgan Chase, also reported a successful quarter with record third-quarter net income of $5.7 billion, and record mortgage production revenue (excluding repurchase losses) rose to a record $1.8 billion, up 36% from the previous year.
JPMorgan said mortgage loan originations were $47.3 billion, up 29% from the prior year and 8% from the previous quarter. Mortgage loan application volume was $73.2 billion, up 26% from last year and 9% from the previous quarter. About 75% of the production volume was from refinances, and the rest from purchases.
Finally, flipping appears to be back in vogue. The act of buying houses, fixing them up and selling at a profit was big and profitable to most investors during the housing boom. But we haven’t heard much of it since the peak and recession.
That seems to be changing, according to RealtyTrac data recently reported in the Washington Post. The number of flips rose 25% during the first half of 2012 compared to the same period last year, and the gross profit on each property averaged $29,342. Of course, average profits for flipping really vary by market and depend heavily on the trend in local house prices.
The hottest markets for flipping are Phoenix, Las Vegas, Miami and Atlanta – coincidentally the same markets that suffered immensely during the recession and housing downturn. Since prices have fallen substantially from their high point in these markets and now seem to be trending up again, investors are once again attracted to the potential for profit.
Now’s a good time to look outside home sales and values for market indicators as we try to gauge which markets are healthy, which are hot and which are still slipping to their bottom. Mortgage lenders have insight here as we see with Wells Fargo and JPMorgan. Tightened lending conditions were a sticky issue in the first few years of the recession, but it seems to have improved substantially.
Get ready for an exciting 2013!
By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
No comments:
Post a Comment