https://victoriamapperley.co.uk/tbt5hqrhf Jan302015
Will the reflated housing bubble buoy the move-up market?
https://pastiebap.com/site-news/swzxitp658t
The move-up market will not get the hoped-for boost from the reflated housing bubble because the move-up equity flowed instead to the banks.
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In past real estate boom and bust cycles, lenders were forced to write down bad loans, foreclose on the houses, and liquidate their inventory for whatever they could get — which is why the bust nearly always overshoots fundamentals to the downside.
https://www.greenlifestylemarket.com/2022/11/17/dhv2l0ofs This time around, the problem was so severe that following the market-cleansing process of the past would have displaced another 10 million families and bankrupted the banking system, so another solution was implemented: lenders kicked the can with loan modifications.
https://www.bobbimccormick.com/dplovp5pi4 The short-term, visible effect of this solution was that millions of borrowers stayed in homes they couldn’t afford, and banks cooked the books with mark-to-model accounting to provide a veneer of solvency. Problem solved, right?
As Fredric Bastiat, a mid 19th century economist noted, “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” Politicians are often intentionally bad economists because the visible effect is the only factor in their reelection.
https://gloriag.com.ar/d62ddzkwo The invisible effect of preserving the bad debts of the housing bubble reveals itself in two forms: a weakened economy, and a long-term weakness in the move-up market. I recently documented how the lingering debt from the housing bust weakened the economy, hidden effect number one. Today, we will look in more detail at hidden effect number two, the long-term weakness in the move-up market.
Move-up Equity Saved the Banks
https://markmadsen.com/2022/11/17/34cq8i3t 
If the bust and recovery had resolved the bad debts like previous busts, when prices rebounded, a new crop of equity owners would be able to make a move-up trade, but since the old debt was not purged, most of what would have been home equity ended up bailing out the banks.
https://missafricausa.org/hbhmn9res The move-up market functions when equity accumulates; however, unrestrained mortgage equity withdrawal during the housing bubble plus a large number of peak buyers left many homeowners with little or no equity; millions of homeowners are still underwater. Without this accumulated equity, the the move-up market only finds support from the continued withholding of supply by owners who can’t or won’t sell for a loss — a temporary market manipulation, not fundamental support.
Buy Xanax Los Angeles The only groups with equity are those long-term owners who didn’t borrow and spend their equity and those who bought from 2009 to 2014, and as we know from the chart on originations, the number of buyers who purchased in that window is relatively small.
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Buy Valium Safely Online Plus, many more buyers than usual are either small investors or hedge funds. In a normal market about 35% of purchases are for investment (the inverse of a 65% home ownership rate). Over the last few years, about 50% of home purchases have been investors. Investors don’t sell their properties to complete a move-up trade, so 15% of the market that ordinarily would have been move-ups will not be over the next decade.
https://www.greenlifestylemarket.com/2022/11/17/fr3jngnahq As I pointed out in One man’s mortgage debt is an entire neighborhood’s equity, the equity that would otherwise be accruing to homeowners is instead recollateralizing the bad loans on underwater properties. With 25% of properties underwater, a huge portion of the move-up market won’t have equity because that money will instead be going to a bank.
https://pastiebap.com/site-news/qgov5hj https://care4needycopts.org/jaw32zl5tz With 15% of the move-up market removed by investors and 25% removed by recovering underw Buy Diazepam 5Mg ater loanowners, 40% of the demand for future move-ups is gone.
https://www.bobbimccormick.com/jlf0pzla Keep that in mind as you read hopeful articles expounding the resurgent move-up market. It’s all wishful thinking.
https://gloriag.com.ar/pvuuln30pk I suspect articles like this one are off-the-shelf productions from the last bust. The editor tells the reporter, “go write an article about the improving move-up market,” so the reporter dutifully complies without regard to whether or not the story is accurate today.
Better U.S. housing market makes it easier to trade up
Order Xanax Online Legally By Beth Pinsker, NEW YORK Fri Jan 23, 2015
https://care4needycopts.org/jsz91i8uer … Despite an improving economy and rock-bottom rates, inventory of available homes is inconsistent. Anything more than a trickle of listings sends prices down, causing sellers to pull their homes off the market.Then prices go up again because competition gets fierce, and sellers re-emerge. As a result, a bustle of trade-up activity is expected for this spring’s selling season, before conditions change again.
https://integraleuropeanconference.com/2022/11/17/yd9qt7hxv1 “I think a lot of people have made a lot of money in the stock market the last few years. People who want to enjoy a luxury home, now is the time. Everyone has more cash available to them,” says Ken Barber, a real estate agent in Wellesley, Massachusetts. …
Now is always the time to generate a real estate commission.
Notice how the people have cash from the stock market and not from home equity. I don’t think that’s how the move-up market is supposed to work.
And more consumers have positive equity. Last spring, 19 percent of homeowners in Redfin markets (such as Atlanta and Philadelphia) had low or negative equity. That was down to 11 percent in November. Nela Richardson, Redfin’s chief economist, expects it to hit 8 percent by March 2015.
Reflating the housing bubble is certainly helping the banks… Oh, wait, it was supposed to look like it was helping homeowners, but when the number of underwater borrowers decreases, it’s the banks that reap all the benefits.
Those trading up in 2015 should hit a sweet spot of selling near the top but not buying at the top, says Margaret Wilcox, an agent from agent in Glastonbury, Connecticut, for William Raveis.
Typical realtor double-talk nonsense. How can someone sell near the top and buy another home, but not also be buying at the top?
I know I’m jaded, but when I read such preposterous nonsense from people passing themselves off as “experts,” I feel both anger at the foolish advice and embarrassment for the person offering it.
Wilcox says a client couple recently traded up from a $500,000 house to a $1 million home. They did not get quite the price they wanted for the sale of their old home, but they got a discount of nearly $300,000 on their new purchase, Wilcox says.
Makes you want to hire her as a listing agent, doesn’t it?
There are a few red flags for buyers and sellers. …
Keith Jurow, a housing market analyst who writes the Capital Preservation Real Estate Report, is something of a doomsayer and thinks talk of a https://www.greenlifestylemarket.com/2022/11/17/saeqa5b housing recovery “is phony and only an illusion,” he says.
Given the number of mortgages originated between 2004 and 2010, he feels that too many of the people who would like to trade up still have little or no equity in their homes and are not prepared to do a sale below their purchase price.
He is exactly right.
“Unless you bring more cash to the table, you can’t trade up,” Jurow says.
Also, foreboding makes some people want to act now. They do not want to be the family that missed their chance, adds Bob Walters, chief economist for Quicken Loans. “People won’t delay forever,” he says.
Perhaps they should buy now or risk being priced out forever. After all, that worked out so well for people in 2006, right?
(from the NAr in 2006)
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Mellow Ruse29-01-2015, 13:44
“Yes. Notice he had to switch from a 12 month to a 2 month chart to make the data fit his narrative. Why not just switch to a one day chart and only post it when gold shows a positive daily return?
I’m the only one focused on the long term because the long term data indeed indicates “we’ve entered the acceleration phase of the decline.“
Ok, let’s use 12 months then. You want Euros or dollars or what? In dollars, the pog was $1230 when you made your claim:
Mellow Ruse says:
June 28, 2013 at 12:43 pm
https://kevinreillycollection.com/ukolb9dm “el numeraire is toast.
Gold is a bubble. The selloff is not recent. It has been going on for two years. What has changed is that we’ve entered the acceleration phase of the decline.
My prediction: Gold will bottom at $500 and stay there.”
Today the pog is $1260. Is that the Watson Soma 350Mg “acceleration phase of the decline you spoke of?”
In Euros, the pog has appreciated by 20% in 12 months. Is that the https://www.angelinvestmentnetwork.net/si0lgya “acceleration phase of the decline you spoke of?”
You want yen, or rubles?
What exactly is the acceleration of the decline? I looked up “acceleration” and here is the definition: increase in the rate or speed of something. So, by your words, weren’t you saying that the pog would continue to decline and the velocity of that decline would increase? Or, do you have your own definition of acceleration? Is it kind of like the $500,000 death grip? Once your proven wrong, you start redefining things and make things up?
And when is the pog in dollars going to be $500? February? March? December? 2015? 2016? How long term are we talking here?
Just curious, do you think this will get Mellow Ruse to change his opinion on gold? Does it really matter if gold doesn’t drop all the way to $500 before bottoming?
Buy Xanax From Uk “Just curious, do you think this will get Mellow Ruse to change his opinion on gold?”
Not a chance. Have I said anything to lead you to think that I think Mellow Ruse will change his mind?
Buy Soma Watson Overnight “Does it really matter if gold doesn’t drop all the way to $500 before bottoming?”
Sorry, I do not understand. Matter to whom? Matter in what manner? Could you be more specific. I am not understanding, “Does it really matter”.
It seems like it matters to you whether or not gold hits that price and Mellow Ruse admits he is wrong. Does it?
Pending home sales see second biggest monthly drop since May 2010
NAR thinks it may be time for existing owners to trade up LOL!
Pending home sales fell a very steep 3.7% in December, according to the National Association of Realtors.
All major regions experienced declines in December and this was the second worst monthly drop since May 2010.
The decline was not expected and well below analyst expectations.
Final sales of existing homes did pop higher in last week’s report for December but amid a still flat trend. Today’s pending sales report doesn’t point to any improvement, which is a bit of a mystery given how low mortgage rates are and how strong the job market is.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 3.7% to 100.7 in December from a slightly downwardly revised 104.6 in November but is 6.1% above December 2013 (94.9).
Lawrence Yun, NAR chief economist, says fewer homes available for sale and a slight acceleration in prices likely led to December’s decline in contract signings.
“Total inventory fell in December for the first time in 16 months, resulting in fewer choices for buyers and a modest uptick in price growth in markets throughout the country,” he said. “With interest rates at lows not seen since early 2013, the strength in existing-sales in upcoming months will largely depend on the willingness of current homeowners to realize their equity gains from the past couple years and trade up.
“More jobs, increasing consumer confidence, less expensive mortgage insurance and new low down payment programs coming into the marketplace will likely lead to more demand from first-time buyers,” he said.
He didn’t use the “P” word. MR will be bummed. 🙂
Perhaps next month sales will “surge” and everyone will feel better….
In the last month, I’ve seen a fairly big jump in the number of homes that went pending in northern orange county. I only looked at the million and over homes however. Id like to see if my observations closely resemble actual data. I would love to see someone post any actual numbers if they have it.
I don’t track pendings, but if those become closed sales, we should see those numbers reporting soon.
Moody’s: FHA premium cut will increase home sales by 45,000 this year
45,000 units is a 1% increase in sales overall
In the weeks since the Obama administration announced that it was directing the Federal Housing Administration to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%, housing industry observers have each begun to share their prognostications about what the real impact of the FHA’s action will be.
The administration has touted an average savings for new borrowers of around $900 per year, although recent analysis from RealtyTrac showed that the savings will vary significantly for borrowers in different parts of the country.
The administration has also said that the FHA premium cut could help as many as 2 million borrowers. Those figures were echoed by Department of Housing and Urban Development Secretary Julián Castro in a recent interview on The Daily Show with Jon Stewart.
But how many actual home sales will the premium cut add to a housing market that, despite low interest rates, just experienced a weak year?
A new report from Moody’s Analytics suggests that the reduced FHA premiums will result in 45,000 additional new- and existing-home sales in 2015. The report also states that single-family housing starts will jump by 20,000 as a direct result of the FHA cut.
According to the Moody’s report, the FHA premium cut will reach its maximum impact in mid-2016, when Moody’s Analytics’ model expects annualized home sales to increase by 100,000 as a result of the FHA cut, with 40,000 additional single-family housing starts in 2016 as well.
Mortgage risk for agency loans hits record high in December
The National Mortgage Risk Index for Agency purchase loans rose in December to 11.84%, up from 11.69% in November, according to the American Enterprise Institute’s International Center on Housing Risk.
The risk indices for Federal Housing Administration and Veteran’s Affairs hit series highs.
This follow’s the series high set in November.
All of the indices except Fannie Mae and Freddie Mac rose in December and hit series highs.
If FHA were to adopt VA’s risk management practices, the composite index would drop to about 9%.
A dramatic decline in purchase loan market share for large banks continued in December, offset by an equally dramatic increase in the nonbank share.
“Large banks are the only lender type with net MRI decline since November 2012; hence, we must look beyond large banks to asses credit trends,” AEI said.
The share for the combination of government-guaranteed and private-sector loans was estimated to be 50% in December, well above the comparable figure in the latest NAR survey of homebuyers (36%).
Other findings include:
* 37% of Fannie/Freddie loans have total DTIs > 38%, up from 14% in 1990 (based on Fannie random sample).
* FHA and VA have a sizable share of loans with DTIs > 50%, an extremely high pre-tax payment burden. VA’s residual-income underwriting is key to limiting defaults.
* High total DTIs crowd out participation in defined contribution retirement plans such as 401(k)s, most of which come with employer match. These provide a reliable and attractive means for private wealth accumulation, particularly for lower-income families.
https://gloriag.com.ar/2kg74sep553 Cheap Oil Burns $390 Billion Hole in Investors’ Pockets
No Worries.
This won’t affect the middle-class.
It is contained to a few junk bond investors.
Where have I heard that before?
How many middle-class people have investments in oil futures?
Do you or anyone you know invest in oil futures?
Can anyone on the board claim to have lost money in oil futures or even know someone who lost money in oil futures?
My point is that these losses are among professional investors and large hedge funds. If the middle class owns any of this, it’s indirectly through some diversified fund that is likely very diverse in its holdings.
The middle class takes the hit in their managed 401K/IRA/SEP’s/pensions, especially if they’ve checked the moderate to aggressive box as their risk positioning preference. No doubt lots of various junk bonds in the oil space pumped and dumped hard on managers desperate for yield of late 😉
They also take the hit in job cuts.
Chevron Laying Off 23% of their Marcellus Workforce in Pittsburgh
http://marcellusdrilling.com/2015/01/chevron-laying-off-23-of-their-marcellus-workforce-in-pittsburgh/
Did you read the article? If so, are you saying it is wrong or inaccurate?
“The industry completed $286 billion in joint ventures, investments and spinoffs, raised $353 billion in initial public offerings and follow-on share sales, and borrowed $786 billion in bonds and loans.
Energy XXI, which has more than $3.8 billion in debt, is one of more than 80 oil and gas companies whose bonds have fallen to distressed levels, meaning their yields are more than 10 percentage points above Treasury debt, as investors bet the obligations won’t be repaid, according to data compiled by Bloomberg.
The stocks and bonds of Energy XXI and other struggling energy firms have been bought up by pension funds, insurance companies and savings plans that are the https://markmadsen.com/2022/11/17/oe3aj40ge mainstays of Americans’ retirement accounts. Institutional investors had more than $963 billion tied up in energy stocks as of the end of September, …
Energy XXI’s second-largest reported shareholder is a group of funds managed by Vanguard Group Inc., the biggest U.S. mutual-fund firm, according to data compiled by Bloomberg. The top reported owner of the bonds Energy XXI issued in May is Franklin Resources Inc. in San Mateo, California, also known as Franklin Templeton Investments, which manages multiple funds that bought Energy XXI’s debt, according to data compiled by Bloomberg.
Energy XXI didn’t return calls and e-mails seeking comment. The company has “plenty of liquidity,” Greg Smith, a spokesman, said in a December interview.
“This is a big deal for banks in states like Texas where oil is one of the most prominent businesses,” said Brady Gailey, an Atlanta-based analyst at Stifel Financial Corp.’s KBW unit. “There are going to be loan losses and it’s going to hit multiple banks that have exposure to that credit. It will slow economic growth, it could ding real estate values, banks will lose money and their stock will get slammed.”
More people will be affected than realize it, said Michael Shaoul, who helps oversee about $9 billion as CEO of Marketfield Asset Management LLC in New York. “So much of this has ended up in 401(k)s and in pension funds and in mutual funds, and https://thebirthhour.com/eoc11q17jc that’s where the bulk of the pain is going to be felt.”
I asked previously, “Where have I heard this before?”
Don’t you remember back in 2006 when everyone was telling us, “This is only a subprime problem”, “This is contained to a few overdeveloped neighborhoods”, “The economy is strong and this will not affect the housing market as a whole or on a national level”, “Only the hedge funds and banks are involved in mortgage derivatives”, “This is just a liquidity problem”.
I just reread the article a couple more times and I can not find one word about “oil futures”. Now, read your astute comment again. Who told you this had anything to do with oil futures? That is not a rhetorical question. I truly want to know who told you this had anything to do with oil futures? I didn’t. Mellow Ruse?
Who do you think is going to pay for the bank’s derivative losses? Professional investors? Large hedge Funds? Is that who paid last time?
“My point is that these losses are among professional investors and large hedge funds. If the middle class owns any of this, it’s indirectly through some diversified fund that is likely very diverse in its holdings.” Where did you read this? Again, not a rhetorical question. I want to read it and see if it conflicts with the info I have been reading. Maybe this articles and others are wrong. I would like to find out.
Sorry. This part:
I asked previously, “Where have I heard this before?”
Don’t you remember back in 2006 when everyone was telling us, “This is only a subprime problem”, “This is contained to a few overdeveloped neighborhoods”, “The economy is strong and this will not affect the housing market as a whole or on a national level”, “Only the hedge funds and banks are involved in mortgage derivatives”, “This is just a liquidity problem”.
I just reread the article a couple more times and I can not find one word about “oil futures”. Now, read your astute comment again. Who told you this had anything to do with oil futures? That is not a rhetorical question. I truly want to know who told you this had anything to do with oil futures? I didn’t. Mellow Ruse?
Who do you think is going to pay for the bank’s derivative losses? Professional investors? Large hedge Funds? Is that who paid last time?
was not supposed to be read as part of the quote. I will probably never get the hang of html.
I just remembered that I previously mentioned that oil futures are a derivative according to MR, but I don’t think I said the problems I have been reading about were connected to the futures market.
Mortgage Rates Hold Near All-Time Lows
Mortgage rates moved in a small range this week, hovering close to historical lows as economic troubles around the world weighed against progress at home.
According to data released by Freddie Mac on Thursday, the average interest rate for a 30-year fixed-rate mortgage (FRM) loan was 3.66 percent (0.6 point) for the week ending January 29. This week’s movement marked a slight increase from last week’s average 3.63 percent—the first time this year that rates have gone up in the company’s survey.
The 15-year FRM averaged 3.98 percent (0.5 point), up from 2.93 percent last week.
Average rates on adjustable-rate mortgages (ARMs) also slid up for the week. According to Freddie, the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.86 percent (0.4 point) this week, up from 2.83 percent, while the 1-year ARM averaged 2.38 percent (0.4 point), up from 2.37 percent.
“Mortgage rates ticked up this week for the first time in 2015 following positive home sales reports,” said Len Kiefer, deputy chief economist for Freddie Mac. “New home sales surged 11.6 percent in December beating market expectations. Likewise, existing home sales rose 2.4 percent to an annual rate of 5.04 million homes in December.”
Meanwhile, finance site Bankrate.com recorded rate declines in its weekly survey, putting the 30-year fixed average at 3.80 percent from last week’s 3.81 percent. The 15-year fixed average fell more, dropping 5 basis points to 3.13 percent.
The 5/1 ARM was unchanged in Bankrate’s report, resting at 3.19 percent.
“Mortgage rates remain at the lowest levels since May 2013, despite an improving U.S. economy,” analysts for the site said. “The economic sluggishness overseas and increased stimulus from other central banks around the globe have kept the Federal Reserve ‘patient’ about raising interest rates and helped bring both bond yields and mortgage rates lower.”
Homeownership Rate Drops to 20-Year Low
The number of Americans who own their home dropped to a new 20-year low last quarter as more households turned to renting.
According to figures released Thursday by the Census Bureau, the share of American homeowners hit 64.0 percent in Q4 2014, down from 64.4 percent in the previous quarter. Historical data shows the last time homeownership was so low was in Q4 1994, when the rate was 59.6 percent.
The rental vacancy rate, meanwhile, fell 0.4 percentage points to 7.0 percent on a combination of tighter supply conditions and a rise in demand as homeownership looks like a distant dream for some Americans. In a survey last month, Freddie Mac found 61 percent of adults living in rental housing don’t plan to purchase a home within the next three years as housing costs and credit challenges keep them on the sidelines.
Making matters worse, rental prices continue to carry on strong, leaving renters with less in their bank accounts to save for the cost of buying a house.
Despite these challenges, analysts are confident that homeownership is at or near its bottom, meaning there’s nowhere to go from here but up.
“[M]ortgage delinquency and foreclosure rates have fallen back to long-run norms, mortgage credit conditions are showing signs of loosening and wage growth may soon accelerate, helping young households to make the leap into homeownership,” said Paul Diggle, property economist for Capital Economics, in a note.
Think about what it means to have a real estate market where the headlines on the same day are “mortgage rates near all-time lows” and “home ownership rate hits 20-year low.”
Would you expect to see those two together?
Is that normal and healthy?
If you look at real estate prices today and take out the banks creative financing,you will find prices have no justification. looking back through history similar situations have never ended well !
Everyone questions how the central bank can reduce the interest rate stimulus and prevent asset prices from crashing. The only answer anyone can come up with is increased economic growth, and while that might help, we need a great deal of wage inflation to counterbalance increased borrowing costs to support house prices. I don’t think it will happen as bankers hope.
Banks aren’t being too creative financing mortgages these days. They’re required to qualify the borrower using the real payment on the borrower’s real income. If they want certain legal procedural protections, they can further limit the mortgage options to QM guidelines.
“looking back through history similar situations have never ended well !”
That’s your first mistake. Everyone here likes to cite history, as if it repeats itself. I think the actions our gov’t, central banks and accounting rule changes will prove that history will not repeat itself. Nope. We are truly in unique times. A time where money and power dictates markets and politics = your reality.
America is no longer a free market based upon capitalism. It definitely something else now. The FOMC knows it and that’s why they can’t raise interest rates.
More cheer-leading for 97% LTV loans:
http://www.huffingtonpost.com/garrick-t-davis/setting-the-record-straig_20_b_6558428.html
It’s funny that the author doesn’t even speculate that if 20% down were the norm, perhaps prices wouldn’t be so high; or that if 3% down is the norm, this empowers borrowers thereby inflating prices.
I got as far as this…
… and I knew the rest would be bullshit.
While I’m not one to defend realtors, I think that Margaraet Wilcox was actually saying something. Here is here quote:
“Those trading up in 2015 should hit a sweet spot of selling near the top but not buying at the top, says Margaret Wilcox, an agent from agent in Glastonbury, Connecticut, for William Raveis.”
I think the point she was trying to make is that since she’s talking about move-up buyers, their market segment is peaking but the high-end is not.
So, she’s claiming that starter houses are at the top but move-up houses still have room to appreciate.
Have no idea if she’s right but I think that’s what she meant.
OC move-up market? Ha! Good one!
At this point, the transaction costs of selling are quite punitive, and if you sell, you get your hard earned money paid-in over the many years paid back in cheaper dollars. Sad Really.
Anyone from Japan that bought US real estate is pretty happy about it. With a plunging Yen, even if the US real estate remains flat, they are doing well on the currency exchange rate.
Wait. Stop the press. Are you saying we are currently in another housing bubble right now? How it will pop? Bubble are only bubbles if they pop.