NEW YORK (Reuters) – Sales of foreclosed homes fell in 2010 as the market struggled with weak demand, though they still represented more than a quarter of total sales, according to a RealtyTrac report released on Thursday.
Sales of these distressed properties also fell in the fourth quarter, hurt by continued weakness from the expiration of the homebuyer tax credit and temporary halts in foreclosure sales from several major lenders.
Sales of homes owned by banks or in some stage of foreclosure decreased 31.1 percent in 2010 from 2009 to 831,574 and were down 13.8 percent from 2008. Sales of homes that were not in foreclosure also decreased for the year, down nearly 19 percent from 2009, RealtyTrac said.
Sales of foreclosed homes made up 26 percent of all home sales, down from 29 percent in 2009 and up from 23 percent in 2008.
"We're still seeing the volume of sales activity on these types of properties way beyond what we would normally see in a given year, but it's not keeping pace with how quickly the industry is creating the inventory," said Rick Sharga, senior vice president at RealtyTrac.
The glut of inventory on the market -- and more coming with fresh foreclosures -- is one of the biggest challenges for the struggling housing market. However, demand remains weak, pushing prices down further. The average sales price on foreclosed homes was 28.1 percent below the average of regular properties in 2010, compared to 27 percent the year before.
In the fourth quarter, foreclosure sales were down 22 percent from the previous quarter and down 45.4 percent from the fourth quarter 2009. Sales volume fell to its lowest level since the first quarter of 2008.
(Reporting by Leah Schnurr; Editing by Andrew Hay)
DETROIT (Reuters) – Back from the brink with the help of U.S. taxpayers, General Motors Co is expected to report its first annual profit since 2004 with fourth-quarter earnings curbed by rising commodity costs and the drag from its European operations.
GM's results, due on Thursday, come at a pivotal time for investor sentiment in the U.S. auto industry, still widely seen as being in the early stage of recovery from its near-collapse in 2008 and 2009.
Analysts have been encouraged by GM's strength in China and its progress in slashing costs and debt in a bankruptcy funded by the Obama administration in 2009.
But since GM's record-setting $23 billion initial public offering in November, investors have also become concerned about the pressure on profit margins from rising commodity prices, higher costs for launching new vehicles and the risk of a sustained spike in oil prices.
GM's closest rival Ford Motor Co reported a fourth-quarter profit last month that fell far short of expectations after a $1 billion surge in costs from the third quarter.
The results sent both Ford and GM shares lower as investors worried about the risk that higher costs for everything from steel to plastic to the engineering teams behind new vehicles would erode profitability in future quarters.
GM shares have fallen 11 percent in the four weeks since Ford's results. Ford is down 21 percent in the same period.
GM management led by Chief Executive Dan Akerson had cautioned in a January meeting with analysts that fourth-quarter earnings would be below the rate for the first three quarters of the year.
"Ford has obviously taken a lot of wind out of the upside speculation of GM," said Josef Schuster, founder of IPOX Schuster LLC and a fund manager specializing in IPOs.
"If Ford is not meeting the earnings (expectations), it's hard to imagine that GM would strongly outperform," said Schuster, whose funds hold GM shares.
Analysts polled by Thomson Reuters I/B/E/S on average forecast fourth-quarter profit for GM of about $966 million and a full-year 2010 profit of about $5.3 billion.
Fourth-quarter revenue is expected to be nearly $33 billion with earnings of 46 cents per share, according to the average forecasts.
From 2005 to 2009, GM had lost about $88 billion in its slide to bankruptcy.
In the decade prior to then, annual U.S. auto sales averaged almost 17 million vehicles. The total plunged to a low of 10.4 million in 2009, the year that GM was overtaken by Toyota Motor Corp as the global top seller.
FOCUS ON EUROPE, ASIA
GM sells more than 70 percent of its vehicles outside its home market, led by China. GM now sells more vehicles in China than in the United States.
One remaining weakness has been Europe. GM has said it hopes to break even in its European operations in 2011.
GM's European Opel unit has been a challenge for the automaker since it dropped plans to sell it in 2009. The unit lost $1.3 billion in the first three quarters of 2010.
For GM to keep the U.S. Treasury from losing on its $52 billion bailout, the remaining 33 percent U.S. government stake in GM would have to be sold at about $53 a share.
The stock closed on Wednesday at $34.59, down 3 percent.
Many analysts resumed coverage of GM in late December by setting 12-month share price targets of $42 to $50, citing the restructured automaker's balance sheet.
Some of the glow on GM's future, analysts said, was because of tax losses carry-forwards that are likely to keep GM from having to pay U.S. cash taxes through 2020.
Chris Liddell, the company's chief financial officer, wooed fund managers during GM's IPO roadshow with a promise that the automaker would never again become "a $100 billion pension plan with a small company attached."
As part of Liddell's effort to develop a "fortress balance sheet," GM contributed $4 billion in cash to its U.S. pension plans in December and added another $2 billion in common stock in January.
Aaron Bragman, an analyst with IHS Automotive, said GM's 2010 results would show the success of the controversial bailout of the top U.S. automaker.
"Look how well they've done in what is still essentially a down market" for U.S. auto sales, said Bragman. "There is your proof that the government-sponsored bankruptcy was beneficial."
Bragman said the challenge is for Akerson to keep GM focused on product development to make the turnaround stick.
GM has won over many investors, but it has yet to fully "win the hearts and minds of the U.S. consumers," which is key to sustaining its recovery, he said.
(Editing by Richard Chang)
HANOI, Vietnam – Vietnam raised fuel prices by up to 24 percent, adding to soaring inflation and causing gridlock in the capital Hanoi as motorists scrambled to fill their tanks before the hike took effect.
The increase announced Thursday takes fuel prices to record levels and follows a decision earlier this week to raise electricity rates. Vietnam has been grappling with high inflation as food costs jump. The consumer price index rose 12.2 percent from a year earlier in January.
Traffic jams choked busy roads in Hanoi as car drivers and motorcyclists rushed to fill up before the 10 a.m. deadline when the price increase took effect.
The gasoline price was increased 17.5 percent to 19,300 dong (92 cents) per liter and the diesel price hiked by 24 percent to 18,300 dong (87 cents) per liter. Crude oil has surged to nearly $99 a barrel on the New York Mercantile Exchange amid unrest in Libya that has disrupted oil supplies from the world's 15th largest exporter of crude.
Economists warn the fuel price hikes and a 15 percent increase in electricity prices that will take effect March 1 will lower living standards and undermine the government's attempts to curb double-digit inflation.
"How could we survive with all of these price increases while our incomes remain the same?" said Nguyen Thanh Hoa, 36, a state employee with two children to feed and an unemployed husband. She was among those rushing to fill her motorbike at a gas station in central Hanoi.
The fuel and electricity hikes combined with the recent devaluation of Vietnam's currency, the dong, would make it almost impossible for the government to curb inflation to under 7 percent, said economist Nguyen Minh Phong.
"We have to prepare to see the annual inflation rate to double the government's target," he said.
Phong said the living standards of ordinary Vietnamese would suffer.
"State employees like me and farmers would be hardest hit," said Nguyen Hoai Anh, 45. "I would have to travel less by motorbike to save money," he said.