https://www.greenlifestylemarket.com/2022/11/17/1detrjd Mar242014
Spring house price rally called off due to affordability problems
https://victoriamapperley.co.uk/knfpslql68
The spring house price rally of 2014 shows signs of weakness because buyers can’t afford higher house prices at higher interest rates.
Most housing analysts predicted a robust spring rally with increasing home sales and increasing prices. In the post Bold California housing market predictions for 2014, I outlined my reasoning for why it would not come to pass. The new mortgage regulations change how real estate markets work, and real estate analysts, realtors, and financial reporters failed to grasp the implications of the new changes.
Buy Valium Norway When house prices go up absent an increase in wages, affordability declines. In simpler terms, if potential buyers don’t make more money, but prices go up anyway, fewer buyers can afford to buy, and those that do must substitute down to lower quality housing. This phenomenon prices out marginal buyers, and it removes the motivation to buy from others because they don’t want to accept lower quality homes. This reduces demand, which is what we are seeing today. For those who still need to sell property fast when demand is low, checking out https://webuycospringshomes.com and selling a house with no hustle might be a good option.
The reason housing analysts missed this fact is because housing markets didn’t work that way in the past. Buyers prefer stable 30-year fixed-rate financing, but when affordability becomes a problem, they substitute to less desirable adjustable-rate mortgages to close the deal. The substitution to less desirable and less stable financing options lead to previous housing bubbles and busts. The Dodd-Frank law effectively removed these unstable loan products from the market and prevented a recurrence of the previous boom and bust cycles (at least so far).
With buyers unable to use toxic financing options because lenders won’t offer them due to the new restrictions, the barrier of affordability becomes much more rigid, and future housing markets will be very interest rate sensitive. Whereas in the past, at this point in the cycle, we would see an explosion of adjustable-rate mortgages with increasingly unstable terms, so far in this new Dodd-Frank era, the cycle is broken — and that’s a good thing; in fact, that was the whole point of Dodd-Frank’s housing regulations.
U.S. Housing Recovery Hits Hurdles
Rising Mortgage Rates, High Prices Constrain Buyers
https://missafricausa.org/ufjeugis By Jonathan House, Updated March 20, 2014 12:34 p.m. ET
https://pastiebap.com/site-news/xhx6u1ap WASHINGTON—A broad measure of home sales fell again in February, the latest sign of … worsening affordability undermining the housing recovery.
https://www.bobbimccormick.com/eyukuxab8tt Sales of previously owned homes fell 0.4% in February from January to a seasonally adjusted annual rate of 4.6 million, the National Association of Realtors said Thursday. That matched a forecast by economists surveyed by Dow Jones Newswires and was the sixth decline in sales in the past seven months.
https://care4needycopts.org/bzwjyvg “Existing-home sales remain in a rut,” said BNP Paribas economist Laura Rosner.
Sales will increase over the next few months per its usually seasonal pattern, but when sales volumes are compared to last year, or compared to historic norms, they will be down, perhaps quite significantly.
https://gloriag.com.ar/m2xzf8z1et The financial media will treat us to complaints from realtors about tight credit — which is really a complaint about the ban on affordability products — and we’ll hear complaints from lenders about excessive mortgage regulations — which is also a complaint about the ban on affordability products. Both realtors and lenders will lobby to relax the Dodd-Frank standards in willful ignorance to the good these regulations are doing by preventing another housing bubble.
The National Association of Realtors said the median home price in February was $189,000, up 9.1% from a year earlier, https://www.greenlifestylemarket.com/2022/11/17/4hoacwyq1 in part because supply constraints are driving up prices.
https://thebirthhour.com/qatnergo The supply constraint was caused entirely by lenders changing policies from foreclosure to can-kicking loan modifications. The other side of the equation, demand, was boosted by record low interest rates, which have since begun rising, and should continue to go up.
https://care4needycopts.org/t9hmoyir New guidance from the Federal Reserve on Wednesday could put further upward pressure on mortgage rates in the coming weeks.
https://missafricausa.org/6mhhhky0hcd Though the Fed’s official policy statement affirmed its plan to keep rates below their longer-run trend for the foreseeable future, the projections of individual officials did point to a slightly more aggressive path for interest-rate increases in 2015 and 2016.
None of the headwinds facing housing are going to change: the regulations preventing the proliferation of unstable mortgage products will remain; the economy will remain weak and income growth tepid; and the federal reserve will continue removing stimulus from the economy, driving up interest rates.
Home Sales Usually Pick Up in Spring, but This Year May Disappoint
By Conor Dougherty, March 20, 2014
Buy Xanax Wholesale The spring home-selling season really begins to ramp up in March, but there are signals that demand this year might fizzle.
https://victoriamapperley.co.uk/9x34zzz February’s drop in existing-home sales was one ominous sign, especially since traffic reports — which are a proxy for home sales 30 to 60 days out — show a slump in buyer interest.
https://militaryanalizer.com/n6dgwzyly “ The spring selling season is off to a weaker start than people in the industry had been expecting or hoping for,” saidTom Lawler, founder of Lawler Economic & Housing Consulting LLC. …
https://gloriag.com.ar/kmnag7p0 “Hoping for” is the more accurate description. Other than hope for increased employment, what reason did anyone have to believe spring home sales would be strong? Higher prices and higher interest rates work against the market, not for it.
One reason for the slump in existing home sales is that fewer investors are buying. But the same forces that are pushing away investors — higher prices, less to buy — have also soured some regular homebuyers.
https://www.angelinvestmentnetwork.net/o8h543n08r (See: Institutional home buying abruptly tapers off)
A February survey of buyer traffic from Credit Suisse showed a marked drop from January, with declines in 42 of the 50 markets it tracks. Unlike data from real estate agent groups, which measure closings, the Credit Suisse data give a sense of where demand will be 30 to 60 days down the line — the heart of the spring selling season.
A broad decline signals trouble in the market. While it’s possible weather may have kept some potential home shoppers from searching, it’s more likely that inability to buy due to bad credit, excessive debt, insufficient savings, and low income caused many potential buyers to stop looking.
https://pastiebap.com/site-news/o47swui The problem is that now that housing is getting closer to normal, the onus of the recovery has shifted to the https://markmadsen.com/2022/11/17/y3t16idz7hp normal issues such as job and income growth. Job growth was relatively steady in 2013, but has slowed down in the past few months.
Income growth has also been weak, and with rents continuing to rise, many potential homebuyers — particularly first-time home buyers — are having a harder time saving up a down payment.
In other words, the fundamentals of housing stink. The bank’s restricted inventory policies and the activity of institutional investors sparked a rally from 2012 through mid-2013. Christopher Whalen says, the “‘recovery’ in the housing sector is probably over”. He may be right.
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How did home sale prices rise so much last year, even though, historically speaking, sales volume was very low? Low inventory.
There is no reason to expect a significant increase in inventory. Low inventory means low sales volume. And, the so called big jump in spring inventory appears not in the cards. You can’t sell something that is not for sale.
NAR does not like this at all, and they will complain and complain. They make their money from sales volume and that is not coming back for a long time. However, it does not matter if credit becomes easier. There is so little for sale, credit terms are not a factor.
This is how stagflation looks. Prices grinding higher on weak economic conditions with very little for sale. Buyers scramble for the handful of decent properties on the market. This is the new normal.
And, don’t get to fixated on the taper. A large portion of the taper is needed since the FED is buying so much Treasury and Mortgage paper, it has dislocated the market. They can’t just buy as much because the market can not support that level of buying. And, they are still buying lots of paper.
Then, we have Japan, who is printing like a madman. Not to mention China will need to perform a stimulus soon. Does not matter who is expanding credit … as long as someone is, prices will continue to grind higher.
“This is how stagflation looks. Prices grinding higher on weak economic conditions with very little for sale. Buyers scramble for the handful of decent properties on the market. This is the new normal.”
It’s rare that we agree, but in this case we do. I believe we will see a mini-bubble form over the next few years due to lack of inventory. Lenders plan to ride their policy of can-kicking and inventory restriction back to the peak, but I don’t think this is realistic. Affordability matters now, and as interest rates go up, and wages don’t, it will become increasingly difficult to keep the air in the mini-bubble, and prices will drift gently lower for several years.
It seems to me like in this new “Financialization” economy, nothing moves “gently lower” or gently higher … including housing.
>>>it will become increasingly difficult to keep the air in the mini-bubble, and prices will drift gently lower for several years.
JMO, We are going to have another crash.
It’s possible. If interest rates go up, demand will really evaporate. The missing ingredient will be supply. Unless something changes that puts more must-sell supply on the market, it’s difficult to get prices to go down quickly.
>>>Unless something changes that puts more must-sell supply on the market
The demographics in much of OC are not favorable. Gentrification has created many elderly, empty nest households in many OC neighborhoods. Orange County is old, and getting older every day. As they die, and/or downsize, this will pull inventory onto the MLS.
>>>How did home sale prices rise so much last year, even though, historically speaking, sales volume was very low? Low inventory<< Order Xanax Bars Online >>There is no reason to expect a significant increase in inventory. Low inventory means low sales volume.<<>>Then, we have Japan, who is printing like a madman. Not to mention China will need to perform a stimulus soon. Does not matter who is expanding credit … as long as someone is, prices will continue to grind higher.<<<
Yet despite all the printing in Japan & America we still have no inflation. Listen … there is no inflation (wages rising). The rise in USA housing had nothing to do with organic economic growth and everything to do with QE and perverted markets.
The answer is for the world to hold a giant "Chapter 11 Bankruptcy". The US now has over 40 trillion in PRIVATE DEBT and about 17.5 Trillion in public debt. It's going to be written down during the next economic crises/reset. That's deflationary … we are going to have an economic depression.
I believe we will reach an inflection point where you will either have high inflation or deflation. Confidence is everything in this game. The masses still need the confidence even if it’s blind. Housing is based on returns, affordability, and rental parity in this go round. I just want housing prices to stabilize so far it actually did though at the limit of affordability. Somehow we will get that moving forward. I’m expecting the next few years to be “normal” where prices will, more or less, keep pace with inflation. Wait until a couple of significant countries default on their bonds, then you will have money scrambling for physical assets. That should provide some support for housing though rates will stay high due to higher risk of default. We’re heading toward a dead economic zone thanks to all the wasteful spending of year’s past.
We cannot have sustainable inflation without rising incomes (PERIOD). Rising incomes is what makes prices rise … once you really get an understanding of this, it’s easy to see what’s coming next, and it ain’t Weimar Republic style inflation.
The FED gave the banks over 1.020 trillion in QE last year, and the Govt borrowed 680 billion last year (2013 Deficit). YET OUR ECONOMY GAINED ABOUT 280 BILLION IN GDP GROWTH.
Think about that … between QE & Govt Borrowing, that’s 1.7 Trillion last year … and our benefit is about 280 billion in GDP growth. That’s a bad deal for the United States of America. And to top it off, we still do not see incomes rising (No Inflation).
The writing is on the wall and this is the reason why Gold has declined in value, and will continue to decline in value in the coming years. The FED can’t continue QE and 0% interest rates much longer … they know it.
JMO, the shit is about to hit the fan.
I agree that we can never have Weimar style hyperinflation like the gold bugs advertised. However, we do have, in my estimate inflation running at 4-5% in the last few years. Don’t think so? Just look at your fuel, food, medical, college tuition costs among others…Yes the cost of clothing, appliances, and other consumer goods has not gone up and rent to some degree and this is where the FED based their numbers on and it’s blatantly wrong because that is not the whole picture. What we have is stagflation. The worst of both world.
It could reach a point where workers will simply demand wage increases (due to rising cost of living) or we keep living on debt based consumerism to carry on until debt implosion. Yes there are some that glad to have a job but there are those that are very tired of being over worked and under paid for their overlords. Either way, there will be some turbulence times ahead as various groups demand “social justice”. Maybe a second wave of workers unite.
“I agree that we can never have Weimar style hyperinflation like the gold bugs advertised.”
Why not?
awgee …
The govt and the Fed spent 1.7 trillion last year between the deficet & QE, yet the benefit to the economy was about 15% of that.
I.E. We are Printing (QE & deficit borrowing) about $8 for every $1 in economic GDP growth … YET no wage growth … NO INFLATION. The “Weimar” style inflation that many expected, just isn’t gonna happen in the new world.
The market is starting to figure this out, and that’s why gold has been hammered.
I was just checking it out and the house/property we bought in 2001 has appreciated at a 19% rate annulized. I don’t know the numbers on the stock market, but it seems to have risen drastically in the last few years.
Isn’t that inflation? Or what most consider inflation?
In my world, as small as that may be, inflation is an increase in the money supply, nominally as M2, M3, or MZ. And by my observation, all have increased dramatically. I don’t know why you are including GDP or wage growth when measuring inflation.
Was the Weimar inflation dependent upon wage inflation, or was it a direct result of currency printing by the Weimar Republic?
Are you saying that at no time in history, currency devalutation has not occured without a concurrent rise in wages?
I do enjoy the debate, but we’re just going to have to wait and see what’s going to happen next. Either way, we’re going to see fireworks in the near future.
You believe that the Central Banks are going monetize the debts with inflation. <— I think this has already failed with 7 trillion in deficit spending since Obama, and about 4 trillion in QE.
I believe that during the next economic crisis, we're going to experience a reset where private debt will be reduced by about 50% either in the form of legislation/law, default and/or bankruptcy. This will be a deflationary event that will slash the cost of ALL ASSETS, including Gold.
https://partyhosthelper.com/tn1c8dco “You believe that the Central Banks are going monetize the debts with inflation.” Huh? Unless everything I have read in the last 5 years is a lie, the Central banks have already monetized debt, to historical levels. Like you said, 7 trillion is deficit spending, 4 trillion in QE. I don’t know how much more evidence you need. Have you checked out the stock market lately? Have you checked out how much is being held at the Fed for the banks as reserves? To my surprise, home prices have risen dramatically. What is all that if not inflation and the results of inflation?
How exactly can the government reduce the debt by legislation? Will they just pass a law saying, “Hey China, we no longer owe you the money we promised and will no longer pay the interest.”? Or will just not pay the interest on the debt that retirement funds are holding? Or maybe that the Federal reserve is holding? Seriously, how will Congress do that?
I don’t have to wait and see. I can see it now. I guess you can wait and see, but how long will you wait for?
A few posts ago, my post reads, the house we bought in 2001. I meant 2011. Is the rise in housing costs not reflecting the creation of currency and subsequent purchase of mortgage securities with with that created out of thin air. Looks like inflation. Sounds like inflation. Spends like inflation. Devalues currency like inflation. But it isn’t inflation? Neither are the rising costs in health care, tuition, etc.? Yeah, I guess so. If you just exclude all the things that cost more, you are right, there is no inflation.
>>>Like you said, 7 trillion is deficit spending, 4 trillion in QE. I don’t know how much more evidence you need.
AND WHERE IS THE INFLATION? I’m talking about incomes!
>>>Have you checked out the stock market lately?
That’s not inflation! That’s an unsustainable “asset” bubble.
>>>Have you checked out how much is being held at the Fed for the banks as reserves?
Yes I do no about the reserves that the Fed pays the banks to hang on to. Have you checked how much more money your neighbors make with all this QE/Debt expansion?
>>>How exactly can the government reduce the debt by legislation?
Write Downs! Forced Hair Cuts to bond and debt holders. This is what should have happened instead of TARP during the last debacle.
>>>A few posts ago, my post reads, the house we bought in 2001. I meant 2011. Is the rise in housing costs not reflecting the creation of currency and subsequent purchase of mortgage securities with with that created out of thin air.
I consider that an asset, and I do understand why the FED doesn’t use rising housing prices to determine inflation. Now with that said, I think it’s an asset that is also a bubble.
I wonder what your home price would be if mortgage rates where the same in 2001 (prior to 9/11)? My guess would be maybe 10% more than what you paid for it back in 2001. Real Incomes have not risen much (if any at all) since 2001. Productivity & Off Shoring jobs more than anything has depressed incomes.
>>>I don’t have to wait and see. I can see it now. I guess you can wait and see, but how long will you wait for?
FYI, I have respect for you, and I would never want to say anything to piss you off … I have read your comments in here for a long time. I know you’ve been talking about Gold in here before. You’re a Gold Bug. How’s that “wait and see” thing working out?
Gold is down because the market is starting to realize that all this PRINT TO INFINITY BULLSHIT is not creating sustainable inflation. It’s just not happening.
During the next economic crisis, I believe the only thing that will rise will be the US Dollar (and purchasing power), just like it did in 2008 when the shit hit the fan, and again in 2010 when it looked like the shit was going to hit the fan (before more QE).
What I’m saying is, this big fcukin’ scam is just about over. OVER!
expansion of the money supply is inflation. Even as credit contracts, I think they will keep printing – WTF else are they going to do? They can’t stop. The printing press staves off deflation nominally. That’s their only weapon.
the hyperinflationary event will come as faith is lost worldwide in the dollar and repatriation of dollars begins in earnest. Then it won’t even matter the size of QE, GDP, wage growth etc.
That’s right Matt … your theory of hyperinflation is now in the mainstream. I hear commercials about it on the radio, late night TV, etc, etc, etc.
FYI, It’s now contrarian to believe that prices on assets, goods, energy and services are actually going to decline.
Don’t forgot about the 1.7 trillion hiding in excess reserves. As rates increase the FED will need to pay more IOER in order to keep this money from spilling out. It’s impossible to know how much of it has been already used as collateral for speculative purposes, but if those with the excess reserves suddenly find a better return than the FED is handing out, look out. What does an instant 1.7 trillion look like jamming through fractional banking?
FYI, The FED and certainly the Banks are smarter than many of us believe … this is money to be used to soften the blow in future write downs.
They (TBTF Banks & The Fed) know it’s coming … many of us know it’s coming … and people owning Gold are starting to realize it’s coming.
>>>However, we do have, in my estimate inflation running at 4-5% in the last few years. Don’t think so? Just look at your fuel, food, medical, college tuition costs among others
JMO … in my opinion, the 4-5% inflation in energy & food is totally unsustainable. When the market starts to roll over as it did in late 2008, energy & food will be cut down. Crude Oil dropped from over $140 to less than $40 within a few months. Short term market QE manipulation has propped Crude back up, but it’s unsustainable.
Medical is an enigma right now. We don’t know how this will be impacted due to the highly partisan “Obama Care” Law.
Tuition cost rises mainly due to gov’t subsidies in the form of grants & perverted interests rates and borrowing.
>>>It could reach a point where workers will simply demand wage increases (due to rising cost of living)
Yes … I think we could see a day where the silent majority steps out in the streets of this country with pitchforks & torches, and demands change … Change Back to the OLD WAY. The 1%’ers have received most of the income advances for most of the last 25 years or so. The other 99% of people are become more and more pissed off.
BTW, I totally agree that the FED uses bogus numbers to determine inflation. But, the one thing I do agree with the FED on it this:
http://finance.yahoo.com/blogs/daily-ticker/without-wage-growth-inflation-t-stick-bernanke-ignore-20110415-120633-416.html
The FED didn’t expect banks need so much $$$ to recap and the private sector using low rates not to hire but to issue debts to buy back shares. I think we’re going to see some movement for wage growth soon. Workers in various cities are now demand raises to the minimum wage. Yes wage should grow but employers could hire less or charge more which feed inflation. Wage did not grow in the past due is due to globalization which pit labor of one country against another. Now, since the developing countries has a lot of wage growth already. Businesses are more inclined to move back to the US creating some pressure for wage increases here. Problem is there are mis-allocation of skill sets in the US labor forces that will need time to get sorted out so here we are.
In that respect, housing could be stronger than it currently look. But this is just my 2 cent.
Lee, you sound just like the folks who calculate CPI. Fuel, food , health care, and college tuition , even though having risen in cost, should not be included in inflation calculations? IF you deem the rising cost of a particular item to unsustainable, the effect it has had on people’s wallets is not real? If you find a rising cost to be an enigma, that is a sign that there is no inflation? Yeah, I guess if you just deny or rationalize all the rising costs, you are right; inflation is minimal.
Worst spring ever????
Irvine Renter?
Mike?
The spring of 2011 was pretty bad. There was no spring rally at all as prices declined on low volume. This year will be better than 2011. And of course 2008 was really, really bad as prices fell sharply on high volume.
Bank of America finds the housing recovery hard to believe
Bank of America Merrill Lynch (BAC) analysts just emailed a research note reminding clients they feel the Fed needs to continue to back the mortgage market if the so-called housing recovery is to remain intact.
Justin Borst and Chris Flanagan say the fundamental numbers behind household formation — mortgage purchase application activity — remains critically weak.
The housing recovery may not continue, they indicate, if the Federal Reserve continues to pull back on its purchase of mortgage-backed securities and decides to raise rates sooner-than-later.
“While the Fed’s seeming communication stumble and the bear flattening dominated this week’s news, we view the ongoing weakness in mortgage purchase application activity as the main story,” they write.
“Until proven otherwise, these numbers are awful, and create a need for continued Fed accommodation and a positive technical backdrop for securitized products, especially credit,” they add.
The latest mortgage applications came in weak. The analysts don’t see those numbers improving should the Fed begin to raise rates. Indeed, the opposite is more likely to happen.
“We believe the demand side for mortgage credit remains intrinsically weak and find it hard to believe that it will strengthen into higher rates,” they write.
Can-Kicking and Bulk Sale of NPLs Reduces Foreclosure Rate
The number of loans in foreclosure has dropped by more than 500,000 since last year, according to Black Knight Financial Services (BKFS) “First Look” Report focused on February mortgage data. The BKFS “First Look Report” focuses on approximately 70 percent of the overall market.
The Data and Analytics Division of BKFS found that foreclosure inventory at the end of February was 4.1 million—nearly 1 million fewer than February of last year.
Black Knight reported that the total U.S. delinquency rate (loans 30 or more days past due, but not in foreclosure) was 5.97 percent in February, 2014. The 91,993 foreclosure starts in February marked a 2.21 percent drop from the previous month.
Foreclosure starts in February posted a 30% year-over-year decline.
“At the national level, the foreclosure pipeline continues to clear rapidly; the percentage of active loans in foreclosure has dropped over 34% in the last 12 months, representing over 500,000 fewer borrowers,” said Herb Blecher, SVP of Black Knight Financial Service’s Data & Analytics Division. “As delinquent and new problem loans have also improved dramatically, the inflow of loans in foreclosure, at roughly 92,000, is now the lowest in over seven years.”
The total number of properties that are 30 days or more past due, but not in foreclosure, was 2.9 million, down nearly 420,000 for the year.
The report found that the monthly prepayment rate, historically a good indicator of refinance activity, declined almost 64% year-over-year
States with the highest rates for homeowners who are non-current were Mississippi (14.15 percent), New Jersey (13.63 percent), Florida (12.88 percent), New York (11.75 percent), and Louisiana (11.27 percent).
The five states with the highest seriously delinquent rates were Mississippi (5.36 percent), Nevada (3.99 percent), Rhode Island (3.97 percent), Alabama (3.67 percent), and Louisiana (3.55 percent).
Survey Finds Growing Frustration over Dodd-Frank
The results of a recent small-bank survey found small banks are facing rising compliance costs and finding it harder to serve customers due to the new regulations from the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The study was published through the Mercatus Center, a university-based research center at George Mason University.
The anonymous, online survey queried approximately 200 banks with $10 billion or less in assets. The survey banks revealed frustrations over the Dodd-Frank rollout.
One anonymous banker objected to “the maddening pace of illogical and unnecessary regulation (that would not) have done anything to prevent the 2008 collapse.”
A concern of small banks was the pace and volume of the new regulations. The survey asked banks to compare Dodd-Frank’s regulatory burden with the existing Bank Secrecy Act rules—widely perceived as compliance-intensive.
“More than 95 percent expect Dodd-Frank to be at least as burdensome,” the report said.
The survey found the Consumer Financial Protection Bureau (CFPB) was also cited as a concern, with regulators providing additional anxiety for small banks. A third of reporting banks said they hired additional compliance or legal personnel.
Some banks polled quit offering residential mortgages altogether.
“Of the surveyed banks, nearly 6 percent already discontinued residential mortgages and an additional 10 percent anticipate doing so. Although those numbers may seem small in the scope of the national mortgage market, discontinuations will ripple through the communities these small banks serve,” the report said.
As burdens increase on smaller banks, consolidation is expected in order to combat increases in cost that are more easily handled by larger institutions.
The report commented, “The five largest banks by assets now hold more than 40 percent of assets and deposits, which is much higher than the approximately 20 percent held in 2000. Of the surveyed banks, 94 percent expect further consolidation.”
Increased regulations threaten small banks profitability, and in many ways, their very survival. The report noted that small banks serve an important purpose in the banking landscape.
“They serve small towns, rural communities, small businesses, and borrowers with unique needs and credit histories that don’t fare well in unbending large-bank credit models. Small banks can make smart lending decisions based on information gleaned from their deep ties with their communities,” the report said.
What these articles keep telling me is there is almost no market for mortgages if they cannot offload the risk to somebody else.
Not at today’s interest rates.
If risk were allowed to be priced in to mortgages, plenty of money would be available to buy them, but any policy that raising interest rates is opposed because it also endangers the reflation of the housing bubble. So what we get is ongoing efforts to keep a government guarantee to keep interest rates down and pass all risk on to the US taxpayer.
We can either have low interest rates with government backing or high interest rates with private capital.
Problem is, higher prices demand greater amounts of credit, yet greater amounts of credit demand higher rates, yet the incremental cost of debt capital will destroy $billions in equity values going forward.
Clearly, ivy-league educations are highly over-rated 😉
FED is stuck between high and low interest rates. Too low and we’ll have another bubble on hand, too high than their bond portfolio ain’t worth jack-shite. Best case is a semi crash so they could unload some of the bond when the market reset and re-buy them when rates again start to creep higher. It would be okay too if rates are range bound. This is speak off course that they have control. If they lost control than anything is fair game.
One of the unintended consequences of Dodd-Frank… making the TBTF banks even bigger.
Somewhere in that regulation, the TBTF banks are supposed to have a viable wind-down plan in the event of bankruptcy. In the real world, I don’t think anyone believes there would be a forced wind-down rather than another bailout, so everyone wants to become TBTF.
ding ding ding we have a winner
“…One anonymous banker objected to ‘the maddening pace of illogical and unnecessary regulation (that would not) have done anything to prevent the 2008 collapse.’ …”
Seriously? ATR/QM rules would not have “prevented the 2008 collapse” – that’s factually accurate, because there could never have been a housing bubble on such a grand scale in the first place. It really hurts creditors’ profits when they may only originate mortgages based on borrowers’ real income and the real payment. This is all just so illogical and unnecessary. We must get back to the days of mortgages based on borrowers’ fake income and fake payments!
That’s exactly what they all want. Volume and fees with no consequences. If I were in the industry, I’d probably want the same… no, I probably wouldn’t. I have a bad habit of seeing the bigger picture.
Home Prices Flat in First of Week’s Reports
The Data & Analytics division of Black Knight Financial Services (BKFS) reported no monthly change in its Home Price Index (HPI) for January, underlining the question as to where other home price reports—including the monthly Case-Shiller Home Price Indices—will land for the year’s first month.
BKFS’ latest report shows the index registering $232,000 in January, unchanged from the end of 2013. Year-on-year, the index was up 8 percent from $215,000.
“Prices have flattened out due to seasonal effects and a slowing in the market,” said Raj Dosaj, VP of behavioral models and HPI for Black Knight Data & Analytics.
Given January’s flatness, national prices remain 14 percent off their peak of $270,000 in June 2006.
Of the 20 largest states, California posted the biggest year-over-year increase at 14.8 percent. On a monthly basis, it ranked among the top five largest states, reporting a gain of 0.3 percent.
As for this week’s other indices, Dosaj expects to see flat to dropping prices, “as they tend to be impacted by seasonal effects more strongly than the Black Knight HPI,” as they include short and REO sales that are more prone to seasonal volatility.
“Going forward we should see positive growth in 2014 but at a more moderate pace compared to 2013. Somewhere between 2-4 percent for the year is likely,” he said.
12 ways you know you’re a Realtor
You might be a Realtor if…
1. You reach for the lockbox at your own house.
2. Somewhere out there you know there is a Frisbee with your face on it.
3. Saturday is your Monday.
4. Your best work story (“I walked in and …”) is NSFW.
5. Tardy clients are why you’re the Candy Crush champ.
6. You want GSE reform now.
7. Your first time buyers, armed with a Google search, will tell you they know more than you with your 20 years of experience.
8. There are no photos of you not holding your phone.
9. You are your own GPS.
10. You took calls at your own wedding.
11. Your mini-SUV has had more passengers than a NYC taxi.
12. There is no small, old and weird. There is cozy, vintage and quaint.
I think the readers of OCHN could add to this list. I’ll start…
13. You told the truth once and it cost you a sale, so you vowed never to let the truth kill a sale ever again.
14. You own a house because you don’t want to throw you money away on rent, but you lease a Mercedes because you want to throw away as much money as possible on interest and depreciation.
Since US wages are NOT indexed to inflation, most millennials already have a non-shelter mortgage, and software ‘bots’ don’t need to buy or rent ANY shelter, question is, how many OC freshly minted QE slumlords will take their money off the table before it disappears?
Bill Gates: People Don’t Realize How Many Jobs Will Soon Be Replaced By Software Bots
http://www.businessinsider.com/bill-gates-bots-are-taking-away-jobs-2014-3
The listing above in Ladera Ranch is off. It says that there are 3 bdrms. and 3 baths and its only 1,000 s.f. and the price is $275 per s.f. but the listing price is close to $500,000…therefore the size is off or the price per s.f. is much closer to $500 s.f. My parents lived in a small 2/2 condo that was about 800 s.f. It was small and cramped but there was love in there (and I’m not joking when I say that).
The system is not picking up the house size properly. We are working on the issue. The remaining numbers are correct because they come from other blanks in the MLS feed.
So we have a normal housing market but our politicians need to reel in the spending and balance the budget. It is supposed to be very hard to get into your first house! I remember BOA advertisements in 2007 “we make home loans to undocumented workers”. Sick! My guess is in 2018 prices will be back to where they were at the peak. We need a president that is willing to make the tough spending cuts.
We have talked some about the influence of foreign buyers on the U.S. housing market. There is an interesting article in today’s LA Times about the San Gabriel Valley and how Chinese buyers are affecting the market…
Motivations vary by location. Luxury estates in San Marino are bargains by Chinese standards; inexpensive Inland Empire homes are purchased as investments; top-shelf schools draw throngs to Irvine.
Eva Chen and her husband travel between their homes in Shanghai and Arcadia, where they purchased a property near Santa Anita Park in October. They scooped up the second home as an escape from pollution and a shot at better schools for their two infants.
Compared with housing prices in China, the $1.27-million Arcadia property didn’t seem expensive.
“The Arcadia house is cheaper,” Chen said.
http://www.latimes.com/business/la-fi-chinese-homebuyers-20140324,0,5923659.story#ixzz2wuQlkodn
We were due for another one of these articles.
Are the Chinese buying California homes in large numbers?
Let’s just cut to the chase: Foreign buyers are really the Chinese.
Just as the Japanese stopped buying American real estate in the late 80’s and early 90’s as their economy went to hell in a hand-basket, the same will happen to the Chinese.
The Chinese economy is a complete fraud, and is presently in the middle of the 1st inning of a complete debacle. It is the biggest bubble of all-time.
The big difference I see is that there is more of a willingness by Chinese buyers of American real estate to try and live in America.
From what I’ve heard/read, many believe their economy is one big bubble, albeit a bubble that won’t pop violently; however, from a personal standpoint, I know of quite a few buyers who are in a rush to liquidate their Chinese real estate in favor of American real estate.
Although “foreign buyers represent 5-7% of the housing market”, are there any data points for how much of the Irvine and/or SGV housing market is made up of foreign buyers?
The implied message I read in these types of articles is to stay away from these ethnic enclaves.
I think the implied message is to buy in these areas because dumb money will always support prices there.
Share of investor all-cash home purchases hit 74.5% in February
The rate of home purchases relying on cash with no mortgage financing climbed to a 10-month high of 30.1% of home sales in February.
The renewed level of activitiy is also putting a dent in government-backed mortgage market share.
The share of investor all-cash home purchases hit 74.5% in February, up from 71.8% in January. That rate marked the highest level of all-cash purchases by investors in 10 months.
A breakdown of the figures from the monthly Campbell/Inside Mortgage Finance HousingPulse Tracking Survey shows that some of the increase in investor purchases investors is coming from purchasing distressed properties at a higher rate. Distressed property purchases made up 25.6% of the total home purchases in January. That rate is the highest in seven months.
February also saw a decrease in the use of Federal Housing Administration mortgage-insurance financing. One year ago, the FHA share of home purchases was 25.3%. In February, the rate of FHA purchases was 19.4%.
Homeowners may not be using FHA financing as much because they are more able to use cash themselves. The share of home purchase transactions by current homeowners involving cash climbed to 26.3% in February. That was up from 25.0% in January and marks the highest level in almost a year.
THEY’RE STARTING TO GET IT!
===================================
Mortgage tax breaks trickle up, new study shows
By Nick Timiraos ~ WSJ
Federal tax benefits for homeowners primarily help wealthier people borrow more money to buy larger houses rather than boost homeownership, according to a new study.
The ZIP Code-level analysis of Internal Revenue Service data, conducted by a team of economists for the right-leaning R Street Institute, examined how tax benefits are distributed across income levels and major metropolitan areas. The study estimates that tax preferences, particularly the mortgage-interest deduction, have helped drive up the size of houses by as much as 18% in the nation’s most affluent areas while not broadly encouraging people to buy homes.
MORE: http://finance.yahoo.com/news/mortgage-tax-breaks-trickle-study-233900898.html
It’s great to see the truth printed in the financial media. I hope people come to understand it because if flyover country realizes they are providing subsidies to California, political will to curb the deduction might gain traction.
If the US Congress tells China, “Hey, about all that money we owe you, it’s worthless – and uhhhh…we’re not paying you back the loans nor any of the interest”.
I mean, does China just take that sitting down? I don’t know how they would respond exactly, but based on the restraint shown by neo tsarist Russia the last few months, if you piss the Chinese off enough I just can’t imagine their Maoist govt showing the same level of RESTRAINT.
And in case Chinese military action does result, well I think maybe we all owe Taiwan and any of China’s other defensless neighbors a huge apology well in advance. Our bad.
It looks to me like they want out. Will they get out before the music stops?
http://www.zerohedge.com/news/2014-02-18/china-sells-second-largest-amount-us-treasurys-december-and-guess-who-comes-rescue
If China and Japan keep selling Treasuries, interest rates are going to move higher soon, perhaps much higher.
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