Single family housing starts and permits look healthy, but multifamily remains volatile

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Tara Steele | 2011/11/17  | 10 Comments

Housing starts up

Single family housing starts rose 3.9 percent in October according to the U.S. Commerce Department, improvement that was masked by an 8.3 percent drop in multifamily starts that kept national housing production essentially flat in October up only 0.3 percent. Single family home permits issued rose to its fastest pace since December 2010, up 5.1 percent for the month, a forward-looking economic indicator that we use to consider what starts will look like in the future. The multifamily sector saw a 24.4 percent increase in permits issued, hinting at a continuing multifamily rollercoaster of volatility.

Housing starts for single family combined with multifamily was up 17.2 percent in the Northeast, 9.7 percent in the Midwest and 1.6 percent while starts dropped 16.5 percent in the West. Permits dropped in the Northeast 1.6 percent and 3.7 percent in the Midwest but rose 5.4 percent in the West and 21.5 percent in the South.

Recovery may not be imminent

“The government’s numbers for October housing production are very much in keeping with what home builders have been telling us in our recent surveys,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “While we still have a long way to go toward a recovery, some signs of hope are emerging in certain markets where economic and job growth is occurring and where foreclosures have not been an overwhelming obstacle.”

“The three-month moving averages for both housing production and permitting activity have been gradually rising since this spring, which is consistent with our forecast for slow improvement in market conditions through the end of this year and a positive sign that a more solid recovery will begin to take hold in 2012,” said NAHB Chief Economist David Crowe. “That said, the improvements we are seeing are still limited to scattered local markets where economies are improving, and obstacles such as tight credit conditions for builders and buyers, appraisal issues stemming from new homes being compared to distressed properties, and consumer concerns about job security are definitely slowing the progression of both a housing and economic recovery.”

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This article published on Thursday, November 17th, 2011 at 1:46 pm | Contact the editor

Keywords: featured, new home starts, real estate economy, Real Estate News

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Housing starts are a great indicator of the health of the market and what we can expect. More starts = growth and price increases in the future.

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The total number of rental households has increased to 38 million in the second quarter of this year, an increase of 1.4 million renters in the past 12 months.  Because there has not been an overproduction in multifamily units in the past decade, higher demand for rental units has directly resulted in falling vacancy rates.  The latest census data, which measures rentals of both single-family and multifamily units, report a 9.2 percent vacancy rate, the lowest since 2002.  Private sector data from REIS on just multifamily units at mid-to-large cities in the U.S. fell to a 5.5 percent vacancy rate.

Overly tight mortgage underwriting standards have kept many renters from taking advantage of low home values.  Moreover, elevated foreclosures have forced distressed homeowners into renting.  The total number of home-owning households fell by 600,000

The dynamics of falling rental vacancy rates mean increased landlord pricing power.  Naturally as a result rents have been pushed higher.  According to the rent component of the Consumer Price Index, rents rose by 2.1 percent as of September from 12 months ago, after no rent increase in 2010.  Most economists are calling for a further rise in rents in 2012, simply because of the very low levels of construction of apartment units.

Rising rents mean a better rate of return for real estate investors.  Rising rents also mean more renters will be pulling out calculators to see if it makes more sense to buy a home.

Lawrence Yun, Chief Economist

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

With rents on the rise and mortgage rates at records lows, the argument for buying your first home is just getting stronger. I'm teaching a class for first time buyers next week - check out http://www.thetoplineteam.com/seminars.html for info and registration.

Reporting from Washington—

Is a little-publicized switch in federal mortgage policy causing huge problems for condominium sellers, buyers and homeowner association boards across the country — even depressing prices and blocking refinancings?

Individual owners and realty agents are emphatic that the answer is yes. They say a series of rule revisions by the Federal Housing Administration has caused thousands of common-interest developments to become ineligible for FHA mortgages. This has abruptly shut off loan money for would-be buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments — sometimes 20% or higher versus the FHA's 3.5% minimum — that they often cannot afford.

For its part, FHA says the rule changes it has adopted, which focus on budgets, insurance and financial reserves, have been prudent and are designed to avert losses from delinquencies and foreclosures. But the agency confirms that thousands of developments have failed to obtain or apply for required recertifications under the new rules. Out of approximately 25,000 common-interest developments nationwide with expiration dates for FHA eligibility between last December and Sept. 30 of this year, only 2,100 — just 8.4% — have been approved or recertified by the agency, according to Lemar Wooley, an agency spokesman.

"This has been a nightmare," said Ryan O'Quinn, a homeowner in a town house community in Calabasas. O'Quinn, a member of the board of directors of his homeowner association, has been trying to sell his condo since May. He has had multiple offers and been in escrow four times — twice with the same purchaser — but because the community's eligibility has lapsed, buyers who need FHA financing have been rejected by lenders.

In the meantime, O'Quinn has cut his asking price several times for a total of $81,000 — a value decline that his agent, Anna Nevares of Redfin, a realty brokerage, attributes directly to FHA's policy revisions. Not only did FHA fail to inform the association board about the changes, according to O'Quinn, but every time the board submitted applications for recertification, they were rejected on technical grounds. In one instance, he said, the agency turned down the application solely because the reserve-fund bank account for the association did not carry the words "reserve fund."

In the Maryland suburbs outside Washington, similar scenarios have been playing out. Nancy Reynolds, executive vice president of Community Paperworks Inc., a consulting firm that assists condo associations, said, "There are entire ZIP Code areas where not one condo can meet the new requirements." Owners in such projects find themselves unable to either sell or refinance into today's 4% mortgage market.

Bernard Robinson, an owner of a condo in District Heights, Md., said that because of delinquencies on homeowner association payments in his development that exceed FHA's limit, he and his wife have not been able to refinance.

"We are qualified to refinance personally," he said, but because the development is not certified, "our unit isn't. We've exhausted all our options. They're going to force us to walk away."

Critics say that FHA did not consult adequately with the condo industry before changing its rules — a charge FHA denies — and contend that the agency did not think through some of its policies. Andrew Fortin, government affairs director of the Community Associations Institute, said the rule that is hampering Robinson's refinancing — that no more than 15% of the units in a development be 30 days or more delinquent on their association dues — is often impossible for volunteer boards of directors in large projects to keep track of, much less to certify to FHA.

Even worse, according to other critics, the new rules put board members into legal jeopardy by requiring them to sign certifications attesting that the governing documents comply with all local statutes and that they have no knowledge of situations that could cause any owner to become delinquent at some later date. The mandatory certification carries a maximum penalty of $1 million in fines and 30 years' imprisonment if found to be incorrect. Large numbers of association boards have balked at this requirement, critics say, leading to the drastic drop in certification requests and eligibility.

Bottom line for owners, sellers and buyers: If an FHA loan figures in your plans, first check with the association board. If the development isn't certified, you are cut off — at least for now — from some of the most favorable mortgage terms in the marketplace.

kenharney@earthlink.net

Distributed by Washington Post Writers Group.

LACMA Curator on Moving the Entire Eames House Living Room, Barbie's Scandinavian Dream House, SoCal Modern

Thursday, September 29, 2011, by Adrian Glick Kudler

 

 

 

 

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Photos by Elizabeth Daniels

This weekend, as part of (what else?) the mega mid-century SoCal art survey Pacific Standard Time, LACMA will open California Design, 1930-1965: "Living in a Modern Way." It's the first major exhibition of California mid-century modern design, with more than 350 objects (including an Oscar, a Studebaker Avanti, and a Barbie Dream House) installed in a design by local architecture firm Hodgetts + Fung--they talked to LACMA's Unframed about the project today. Probably the most ambitious part of the show is the exact recreation of the Eames House living room inside an Eames House-inspired frame (Husband and wife team Charles and Ray Eames both designed the Pacific Palisades house and lived in it). We talked to co-curator Bobbye Tigerman about how to relocate a room that's been perfectly preserved since 1988 and other highlights of California Design. This has been edited just slightly for length and clarity.

 

Curbed LA: How did the idea to move the entire Eames House living room into LACMA come about?

 

Bobbye Tigerman: In the course of planning the exhibition, we had always hoped to show an authentic modern interior in the exhibition. And the challenge was that a lot of architecture is preserved in Los Angeles, but very rarely are buildings preserved and not changed since the sixties. So we were looking for a house that was preserved and one of the frontrunners was the Eames House, which is preserved as it was on the day that Ray Eames died in 1988. But when you look at photographs of it as early as the mid-fifties, you have the same arrangement of furniture, a lot of the same objects arrayed throughout the room.

 

Modern design as Cold War propaganda>>

So we approached the Eames foundation, asked them if they would be willing to loan the contents of the living room; we would construct the frame and we would show this really extraordinary interior, that is not just your average modern interior, but was the place where the most influential and legendary pioneers of modern design lived, and demonstrate how they lived. And very fortunately, the Foundation was hoping to redo their floors, so they were thrilled that we would take good care of their belongings while they made some much-needed renovations.

 

CLA: How do you actually move a whole room like that and reinstall it?

 

BT: It took a lot of planning and involved almost every department in the museum--conservation, registrars, art handlers, curatorial, everyone really pitched in and went way beyond the call of duty to make this happen. We made several visits to the house to measure it, to take thousands of pictures so we could recreate the exact locations and object arrangements, and to assess what kind of packing equipment was required to move all of the objects, some of which are very fragile and very delicate and have never been moved since they arrived. One example is the bookcase… the bookcase has never been out of the living room, so we had to be very careful about moving it out.

 

We sort of took a "last out, first in" approach, so we first started with taking all of the textiles--the rugs, the blankets, the pillows--because we were concerned that there was a chance that the organic material could have an infestation. So we put all the susceptible material--all of the textiles and all the books--into a giant, truck-sized freezer that would mitigate any possible infestation. We didn't have any evidence of it, but we just wanted to be sure. We didn't want to let that kind of material into the museum. So all of the textiles and books went first, and then we brought up the furniture, all of the small objects--there's hundreds of small objects on all the tabletops--and then the larger pieces, like there's an oar that hangs from the ceiling, a ladder that's the full height of the room, and the bookcase as well--those rather big, bulky objects--and all the lamps too, all the paper lanterns.

 

CLA: What are the other standout objects, or is it more of a whole room experience?

 

BT: The objects are really extraordinary. I think what's really neat about the room is the juxtaposition of things. Like you'll have very valuable things next to very cheap things, very foreign and exotic things next to very common things, and it was their brilliance to combine all of these very eclectic objects and create this kind of unified space. But you have a compact sofa that they designed and they lived with, you have a small, green footstool that was designed by Charles's daughter Lucia. There is the famous painted wood crow… it's kind of iconic and sits in the middle of the living room. As well as the bookcase, which is based on the design for the Eames Storage Unit… It's made of very special materials. The uprights are champagne aluminum and so it's a very special version of one of their very classic designs.

 

CLA: How will people going to the exhibit experience the room? Will they be able to go through?

 

BT: No, they'll be able to look at it from three different vantage points. One wall, which in the house is all glass, has no glass, so you'll be able to get a very good view on it. And then the other walls, you'll be able to look through glass.

 

CLA: How did the "What Makes the California Look" room recreation come about?

 

BT: We're recreating the cover of the Los Angeles Times Home magazine from October 21, 1951. And on that day, the cover's headline was "What Makes the California Look." And in the photo is what they called an abstract arrangement of objects that kind of embodied California design. And we chose to recreate this cover because of what it says about California design and how it was disseminated and understood by people in California as well as further afield.

 

So the objects in the cover were all part of the Los Angeles County Fair. They were shown at the fair in 1951. They communicated to the fairgoers the best of California design. And then some of them were also chosen to travel in an exhibition that was in Germany, circulated by the US State Department as a Cold War propaganda tool. So it went broad and then began to speak for what California design was. And what's remarkable about the cover is how many of the pieces are still very familiar--you have an Eames fiberglass chair on the cover, still in production; chair and ottoman by Van Keppel-Green; ceramics by Harrison McIntosh--and we were able to locate almost every piece on the cover, and when we weren't able to locate the exact piece, we found very close substitutions.

 

CLA: What's the process for locating those pieces?

 

BT: We first started in our collection, a lot of things we already had in our collection, like the Van Keppel-Green ottoman or the Allan Adler pitcher. And then we went to local collectors, who had many of the different pieces. And sometimes if we didn't have something in the collection, but we found it for example on eBay or with a local dealer, we could buy it and then add it to the collection.

 

CLA: With it showing at the LA County Fair, was this already a pretty popular notion of California design?

 

BT: I think it runs the gamut. You certainly will have objects that were very inexpensive and were wildly available, but there's also incredibly rare and unique pieces too. The subtitle of the show is "Living in a Modern Way," and it comes from a quote by Greta Magnusson Grossman, who is one of our designers, an emigre from Sweden who came to Los Angeles in 1940. She said in 1951 "California design “is not a superimposed style, but an answer to present conditions…It has developed out of our own preferences for living in a modern way." So "living in a modern way" was sort of a guiding principle for us and what we mean by that, and what I think she meant by that, is that it wasn't a style with particular attributes that characterized this period, but it was an attitude, an openness, new materials, new techniques, new ways of doing things, and to have expensive things juxtaposed with inexpensive things, to have the rare with the familiar, was part of this attitude or way of living that she's getting at and that I think a lot of the objects in the show speak to.

 

CLA: That brings us to the Barbie Dream House--what's the relationship between that and the Eames room or the California Look? Is there a line between them?

 

BT: I think there is--the dream house was released around 1962 and it's a cardboard house, all the of the furnishings are made of cardboard as well. The aesthetic kind of feels like a Scandinavian modern style, so Barbie's first dream house was really a modern house. And it's a one-room house, like a studio, with her bed and her living area all in that room. So this idea of open plans and the lack of boundaries between spaces, the permeability of the living and the dining, and the formal and the informal areas is all borne out in this dream house.

 

CLA: How do the exhibition and the design by Hodgetts + Fung play off the Resnick Pavilion?

 

BT: The Resnick Pavilion as you may know has very high twenty foot ceilings and has natural light coming in through the saw-tooth roof. So it allows us to have this really beautiful natural light, very typical of California--bright and airy. So that has really worked well. It has also been a challenge because a lot of the objects, particularly the textiles and the works on paper--the drawings and the prints--require low light levels in order to be shown in a museum so that they don't fade. So the challenge that the designers faced was to create areas within the exhibition that have lower light levels that would allows us to show the sensitive materials there. And they did that by creating these fabric canopies that lower the light certain areas.

 

CLA: What do you hope visitors will walk away from the show feeling about Southern California?

 

BT: I hope that they have a greater appreciation for the design and ingenuity that sprung from here.

 

CLA: Do you see a relationship between the contemporary Southern California design scene and this show?

 

BT: I think design has changed a lot and entirely new fields have appeared since the period of this show and the modes of manufacturing are entirely different, but I think that the driving ideas and the reasons why people came here or why people stayed here--ideas about openness and flexibility, and the ability to accomplish things without the constraints that you might face in other places--I think those are still relevant. And I think designers are still flocking here because of that. So while the conditions may have changed, some of the foundations remain the same.
· Entire Eames House Living Room Being Moved Into LACMA [Curbed LA]

 

 

Planning Ahead for Traffic During Obama’s Visit

September 22, 2011 at 10:22 am - Comment

(MONEY Magazine) -- Most of the news lately about real estate has been dismal: Home prices are swooning, foreclosures ballooning.

There is, however, one bright spot: the rental market, where demand is up and rents are rising. That's partly because those foreclosures have turned more than 4 million former homeowners into renters, but also because many other prospective homeowners, worried about losing their jobs or housing prices falling a lot further still, are reluctant to buy now.

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As with many investments, the best time to get in is when most others are sitting on the sidelines. To figure out whether you can benefit by investing in rental property, here's what you need to know.

THE CASE FOR BUYING NOW

Many factors make this a great time to invest. Mortgage rates are at a 40-year low, and homes in many areas are ultra-cheap. Meanwhile, demand for rentals has risen in more than 500 cities, according to recent Census data. That, in turn, has enabled landlords to charge more. Hotpads.com, a real estate research firm, reports that rents nationwide jumped 11.6% in 2010, to $1,320 a month.

You'll need that rental income to tide you over until home prices bounce back; in fact, the typical investor today plans to hold for 10 years, according to a survey by the National Association of Realtors.

Send The Help Desk your real estate questions.

If you can hang on that long, you've got a good shot at solid gains, especially if you're financing the home purchase. "Whereas leverage is dangerous when buying stocks, it can be a good long-term strategy with real estate," notes real estate investor and Columbia University adjunct finance professor Marshall Sonenshine.

The big catch: "Can you afford to hold the property that long and not need the equity for your kid's college fund?" says Sonenshine. Or whatever other pressing need might crop up.

You'll also face some tough financing rules. Most banks now require a down payment of at least 20% to 25% and evidence you have enough cash to cover six months' worth of mortgage, tax, and insurance payments.

HOW TO FIND A GOOD DEAL

Investment real estate is like produce: It's best bought locally. "Buy something you can get to in 10 minutes," says Seattle real estate investor Bill Snyder.

Familiarity with the neighborhood also limits nasty surprises like a noisy bar or a nearby development competing for renters.

Work with a local realtor who has experience with rentals and can help you assess how attractive a given home will be to tenants.

10 Best cities to buy a rental property

And while prices on multifamily dwellings haven't dropped as much as they have on single-family homes, don't ignore plexes: Intake from a few rents instead of just one will boost your cash flow; a single vacancy won't hurt as much; and you could benefit from economies of scale for things like appliances and painting. But stick to buildings with four units or fewer to avoid stricter financing requirements, such as a bigger down payment and higher mortgage rates.

Once you've identified candidates, crunch the numbers. The goal: to make sure your rental income will at least cover your loan payments, plus a 20% cushion to handle repairs, vacancies, and property management.

To figure out what you'll garner in rent, ask sellers for recent leases, says Snyder, and double-check their numbers by perusing sites like Rentometer and Craigslist for similar rentals in the neighborhood.

Assume your mortgage rate will be at least a half-point higher than rates on owner-occupied properties. Factor in insurance and property taxes, and bank on a 5% vacancy rate. Otherwise, "one empty month can kill you," says Ellie Berlin, a broker with Houlihan Lawrence in Larchmont, N.Y.

KNOW WHAT YOU'RE IN FOR

Brush up on your people skills: Owning rentals also means responding to tenant complaints, like the 2 a.m. phone call about a broken toilet. Want to palm off the grunt work? You can hire a handyman (around $45 an hour) or a management company (8% to 10% of monthly income plus a half-month's rent for filling vacancies), but the luxury will eat into cash flow.

To find your own tenants, creative ads on Craigslist are your best bet. Run credit and reference checks (National Tenant Network, at ntnonline.com, can help). And invest in small touches to make your place stand out, such as cool lighting fixtures or antique door hardware. Those will pay off when it's time to sell too.  

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Home energy efficiency and sustainability have been major policy priorities for the Obama administration, but lurking in the background are two consistent questions: Beyond the documentable savings on utility bills, do such steps add to the resale value of a home? And do they make it easier or faster to sell your property?

Housing groups and housing officials say that definitive statistical data covering multiple regions of the country are scarce. But some localized research projects in Oregon, Washington and California offer promising hints.

In a study covering existing and new houses sold from May 2010 through April of this year, the Earth Advantage Institute, a nonprofit group based in Portland, Ore., found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8% more on average than noncertified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30% more.

The raw sales data in the study were provided by the Portland Regional Multiple Listing Service. "Certified" houses were defined as those carrying Energy Star or LEED for Homes designations or Earth Advantage home certifications. (LEED stands for Leadership in Energy and Environmental Design.) The latest study was the fourth in an annual series conducted by Earth Advantage, each of which has shown clear price premiums for certified houses.

But officials caution that using average sales prices pulled from MLS data without trying to measure "comparable" homes against one another directly may not be conclusive. For instance, newly constructed certified houses may be more expensive to start, and existing certified homes may be larger and more likely to be in higher-cost neighborhoods where homeowner adoption rates for energy-efficiency measures are higher.

Nonetheless, said Dakota Gale, Earth Advantage's manager of sustainable finance, looking back at four years of studies, "we can still see a consistent trend that third-party certification continues to result in a higher sales price, even during the past year when home sales were down."

A study conducted two years ago by the institute in Seattle and Portland identified what may be another plus: Homes marketed with energy-efficiency certifications appear to sell faster on average than those without. The study tried to come up with rough comparability in appraisal terms between certified and noncertified properties, and it found that in Portland, certified homes spent 18 days less time on the market after listing than noncertified counterparts. In both Portland and Seattle, researchers documented price premiums — 9.6% in Seattle, 4.2% in Portland — in a statistical analysis with a 95% confidence level.

A recent study on houses in San Diego and Sacramento published by the National Bureau of Economic Research took a different tack: When you install photovoltaic solar panels on your roof, how much do you get back in market resale terms, beyond monthly energy savings?

Researchers examined a sample of home sales in the $500,000 range in both metropolitan areas between 2003 and 2010 and found that, on average, solar panel installations cost owners $35,967. But with federal and state subsidies, the net average cost came down to $20,892. This net expenditure, in turn, yielded an increase in appraised value by $20,194 — a 97% rate of recovery on the investment.

Though less than 100%, the rate is much higher than most home improvements in the most recent "Cost vs. Value" study conducted by Remodeling magazine — well above major kitchen and bathroom renovations.

Kevin Morrow, senior program manager for green building at the National Assn. of Home Builders, says that although many newly constructed homes come with energy and sustainability certifications, banks don't necessarily recognize their value when it comes to providing mortgage money.

For example, bank underwriters often do not include reduced monthly utility costs in the household income/household expense ratios that affect the maximum mortgage amounts available to buyers.

"The case needs to be made" to lenders, he said, "that, hey, these houses will cost less to operate, so they should be worth more."

Morrow added that appraisers are part of the issue as well if they don't have the training to recognize and credit extra value to houses that have money-saving solar installations, geothermal heating and cooling, Energy Star appliances, water conservation features and other green improvements.

The Appraisal Institute, the largest group representing that industry, says it has sponsored "green" appraisal courses for 2,300 appraisers during the last two years. It says it strongly supports efforts to better incorporate energy and environmental factors into mortgage underwriting and home valuations, including a possible congressional mandate requiring it.

kenharney@earthlink.net

Distributed by Washington Post Writers Group.

REO, preforeclosure properties selling at a larger discount

RealtyTrac: Share of distressed real estate sales dips in Q2

By Inman News, Thursday, August 25, 2011.

Inman News™

The share of bank-owned homes and homes in some stage of foreclosure dropped 5 percent from the first quarter to the second quarter, falling from 36 percent to 31 percent, but was up from 24 percent in second-quarter 2010, according to a report released today by foreclosure data provider RealtyTrac.

And distressed properties are selling at a larger discount these days, RealtyTrac reported:

• The average sales price of a bank-owned (also known as real estate owned or REO) home was $145,211 in the second quarter, which was about 40 percent below the average sales price of a nonforeclosure home. That compares with a 36 percent discount in first-quarter 2011 and a 34 percent discount in second-quarter 2010.
• The average sales price of a preforeclosure home (preforeclosures, which are homes in default or scheduled for sale at public auction, are often sold in a short-sale process) was $192,129 in the second quarter, which is 21 percent below the average sales price of a nonforeclosure home. That compares with a 17 percent discount in first-quarter 2011 and a 14 percent discount in second-quarter 2010.

There were 162,680 sales of bank-owned homes to third parties in the second quarter, RealtyTrac also reported, roughly flat compared with the 162,900 reported in the first quarter and down 10 percent from second-quarter 2010. REO sales accounted for 19 percent of home sales in the second quarter, compared with 23 percent in the first quarter and 15 percent in second-quarter 2010.

There were 102,407 sales of preforeclosure homes to third parties in the second quarter of this year, up 19 percent from the first quarter but down 12 percent compared to second-quarter 2010. These sales accounted for 12 percent of sales in the second quarter of this year, flat with the first quarter and up 10 percent compared to second-quarter 2010.

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"The jump in preforeclosure sales volume, coupled with bigger discounts on preforeclosures and a shorter average time to sell preforeclosures, all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales -- at least in some areas," said James Saccacio, RealtyTrac CEO, in a statement.

"This gives distressed homeowners who do not qualify for loan modification or refinancing -- or who are not interested in those options and want to sell -- a better chance of completing a short sale to avoid foreclosure." Expedited short sales, he added, "also give lenders the opportunity to more pre-emptively purge nonperforming loans from their portfolios," and avoid a lengthy foreclosure and REO process.

Among those metro areas with at least 100 foreclosure-related sales in the second quarter, Louisville, Ky., had the largest average foreclosure discount -- 54 percent below the average sales price of nonforeclosure homes. Florida's Sebastian-Vero Beach metro area was second on the list with an average foreclosure discount of 53 percent, followed by Milwaukee (51 percent), Pittsburgh (51 percent), and Kalamazoo, Mich. (50 percent), RealtyTrac reported.

Top 10 States with Largest Volume of Foreclosure Sales in Q2 2011

California	69,897
Florida	34,558
Arizona	25,756
Nevada	15,685
Michigan	11,668
Texas	11,517
Georgia	10,485
Illinois	9,355
Colorado	8,044
Ohio	6,868

Top 10 States with Largest Share of Foreclosure Sales in Q2 2011 (as a percentage of total sales)

Nevada	65.43%
Arizona	56.64%
California	51.31%
Michigan	40.61%
Georgia	38.42%
Colorado	35.90%
Florida	35.06%
Illinois	34.01%
Oregon	33.41%
Idaho	29.59%
Utah	26.85%

Top 10 States with Highest Average REO Discount

New Jersey	53.53%
New York	52.99%
Kentucky	51.58%
Illinois	49.89%
California	49.64%
Ohio	49.04%
Maryland	48.48%
Wisconsin	46.69%
Michigan	45.95%
Virginia	45.38%

Top 10 States with Highest Average Preforeclosure Discount

Missouri	43.19%
Tennessee	39.24%
Mississippi	39.22%
Indiana	36.93%
Maryland	36.11%
California	35.95%
Texas	35.03%
Delaware	33.84%
Georgia	33.03%
Kentucky	32.76%

9 States with Rise in Share of Foreclosure Sales (Q2 2010-Q2 2011)

Wyoming	96.63%
Nevada	30.71%
Montana	25.59%
Delaware	24.93%
Washington	22.61%
Iowa	21.13%
Arizona	16.07%
Colorado	5.23%
Hawaii	4.21%

Top 10 States with Largest Decline in Share of Foreclosure Sales (Q2 2010-Q2 2011)

New Hampshire	-50.38%
Indiana	-48.76%
Maine	-47.40%
New Jersey	-46.42%
New York	-42.65%
Nebraska	-42.33%
Mississippi	-41.76%
Utah	-34.79%
North Carolina	-32.11%
Kentucky	-30.82%

It's interesting to see how CA stacks up. We have the highest volume of Foreclosure sales (at least partially due to our higher prices in general) and we're 3rd in percentage of foreclosures of our total sales. Lot's of deals to be had.