Quick, what does Nashville have in common with both L.A. and Des Moines?
All three were among the cities added last month to the Improving Markets Index run by the National Association of Home Builders and First American Title Insurance. Two-thirds of the country's metro areas are now esteemed members of that club.
“The IMI has almost doubled in the past two months as stronger demand during prime home buying season boosted prices across a broader number of metropolitan areas,” noted NAHB Chief Economist David Crowe. “Similar home price gains, and hence the IMI, may be tempered in the future as we see data from typically slower months for home sales.”
Nashville’s ranks 35th of 50 major metro areas on Clear Capital’s just-released Home Data Index Market Report.
The report (read here) forecasts housing strength for 2013 and uses an array of public and proprietary data sources. It notes home prices nationwide in 2012 finished the year strongly, rebounding from the market lows of early 2012.
Clear Capital is based in California.
Analyst Stephen Atkinson at BMO Capital Markets on Wednesday added to the optimism surrounding shares of Louisiana-Pacific. Prediciting a 20 percent jump in 2013 sales, Atkinson hiked his price target for LP shares (Ticker: LPX) to $24 from $18, leaving about 15 percent of upside from their current levels. Like others have said recently, Atkinson expects prices for oriented strand board to drop this year and next, but they'll still be high enough to power some serious profit growth.
John Perry at Deutsche Bank also has hiked his price target for Healthcare Realty Trust, but the REIT's outlook is nowhere near as bright as for LP. Perry's $24 target — up from $20 — is $1 below where Healthcare Realty (Ticker: HR) closed Wednesday's session, and he rates the stock — along with most of the other REITs he covers — a 'hold.'
The fundamentals in the housing market definitely support strong optimism, but the sentiment surrounding shares of Louisiana-Pacific seems to be getting a bit frothy these days. The stock (Ticker: LPX) is up more than 2 percent today, taking it near its April 2007 levels, and the technicals suggest there's plenty more upside.
On top of that, analysts have been ramping up their profit estimates of late: In the past two months, the consensus for the Q4 EPS number LP execs will report a month from now has gone to 16 cents from 11 cents. The outlook for all of 2013 is up 25 percent since Halloween.
The latest CoreLogic data on area foreclosures and mortgage loan delinquencies shows a big month-to-month drop in both. The foreclosure rate in October hit its lowest point since September of 2009, while the percentage of loans behind 90 days or more hadn't been that low since July of that year. CoreLogic's numbers reinforce several positive data points from other parts of the local housing market and suggest 2013 should see a pick-up in construction as well as a decent improvement in the finances of local banks that rely more heavily on mortgage lending.
Bone McAllester Norton attorney David Anthony says a Tennessee Court of Appeals decision last week should help lenders bidding on foreclosed assets prevail in litigation after they buy distressed assets. The appeal judges said that a 14 percent discount to a property's appraised value is "commercially reasonable" and thus gives banks the backing they might need in court. But Anthony warns that there's a good chance the new guidelines will be tweaked in the not-too-distant future.
This opinion is creditor-friendly, but not overly so. Keep in mind, a bank conducting a foreclosure must still bid at least 86% of a property’s highest value. Taking into account costs of the foreclosure, the costs of “owning” property, and other administrative costs associated with foreclosure, I question whether we’ll see a later opinion on different facts that affirms a lower percentage (65%-75%).
Tennessee had 2,538 homes in foreclosure for the third quarter of 2012, up 16.9 percent from Q3 2011, according to numbers RealtyTrac released today.
Third-quarter sales of foreclosed homes in the state represented 10.77 percent of all sales, the report shows. Approximately 193,000 U.S. properties either in some stage of foreclosure or bank owned were sold during the third quarter, an increase of 21 percent from the previous quarter, RealtyTrac reports. The number is down 3 percent from the third quarter of 2011.
For Nashville-area numbers, read here.
Home prices in the Nashville MSA rose 2.9 percent in October versus numbers from a year ago, say the researchers at CoreLogic. That's up from about 2 percent in August and less than 1 percent early this year. Excluding so-called distressed sales, year-over-year prices rose 3.7 percent. September's gains, however, were revised to 2.3 percent from an initial reading of 2.9 percent.