Get ready for some good housing numbers

[cjppjc]

Nothing gooses the market like interest rate increases. Although Don might say that Realtors (Which is a designation, not a job description) are gaming the system.

http://www.msnbc.msn.com/id/36231595...ss-real_estate

Homebuyers scramble as mortgage rates rise
Higher payments could price many would-be buyers out of the market
By ADRIAN SAINZ and ALAN ZIBEL
The Associated Press
updated 4:50 p.m. ET, Wed., April 7, 2010

WASHINGTON - The era of record-low mortgage rates is over.
The average rate on a 30-year loan has jumped from about 5 percent to more than 5.3 percent in just the past week. As mortgages get more expensive, more would-be homeowners are priced out of the market — a threat to the fragile recovery in the housing market.
And if you wanted to refinance at a super-low rate, you may have missed your chance. Mortgages under 4 percent are still available, but only for loans that reset in five or seven years, probably to higher rates.
Rates are going up because of the improving economy and the end of a government push to make mortgages cheaper.
For people putting their homes on the market this spring, rising rates may actually be a good thing. Buyers are racing to complete their purchases and lock in something decent before rates go even higher.
"We are seeing some panic among potential buyers who have not found houses yet," said Craig Strent, co-founder of Apex Home Loans in Bethesda, Md. "They're saying: Man, I should have found a house three weeks ago or last month when rates are lower."

In Overland Park, Kan., Sirena Barlow checks mortgage rates online once a day. She's been shopping for a something around $130,000 and wants to sign a contract this month, to take advantage of a tax credit for first-time homebuyers.
Barlow, a legal assistant, has already told her landlord she's moving, so her stress level is high. Her real estate agent, Michael Maher, has been doing his best to calm Barlow and other clients, but rising rates are making them anxious.
"It's like giving hyperactive kids ice cream," he said. "It has really taken the ones who are focused on buying and amped them up a little bit."

[Jay]

Re: Get ready for some good housing numbers

Rates are going up because of the improving economy...

Hah! It couldn't be because the bond market wants to puke could it?!

[jimmygu3]

Re: Get ready for some good housing numbers

Hah! It couldn't be because the bond market wants to puke could it?!

And the article ignores the obvious: If rates rise but buyers' incomes do not, what happens to home prices? As I have said many times, the bottom in housing prices will coincide with a peak in rates. For buyers with cash, it will be the time to get in.

-Jimmy

[Sharky]

Re: Get ready for some good housing numbers

And the article ignores the obvious: If rates rise but buyers' incomes do not, what happens to home prices?

Exactly. For a would-be buyer, the best response to higher rates is to offer a lower price. In spite of what the article quoted in the OP says, no one should get "priced out of the market".

In fact, if prices continue to move down, I could imagine more would-be sellers jumping appearing, in the hope of beating the next wave down in prices.

[flintlock]

Re: Get ready for some good housing numbers

I was going to say the same thing. Prices will only come down in response to this.

[cjppjc]

Re: Get ready for some good housing numbers

Sales will increase. I did not post the whole article, it mentions the affordability issue. However I did title this thread:

Get ready for some good housing numbers

[GRG55]

Re: Get ready for some good housing numbers

Sales will increase. I did not post the whole article, it mentions the affordability issue. However I did title this thread:

Get ready for some good housing numbers

That's the usual response when mortgage rates start to increase...a flurry of sales volume activity created by people who think they should "buy now" before mortgages become more expensive.

Here's something I noticed on Calculated Risk [45,000 homes a month...now that's a good housing number... :eek: ]

Bank of America to Increase Foreclosure Rate by 600% in 2010
A 600% increase in foreclosures

I attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.

After his surprising statement, two questioners from the audience asked questions to verify the numbers.

Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.

This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.

Perhaps this is a good time to start a Trustee Sale service.... One of the panelists who works for a building company said he was flipping houses with his personal money. He noted that in some markets, he can buy a house at auction for less money than builders are paying for finished lots. That is a bit crazy.

There was encouraging news from some in the reality-based community at the conference. Builders are buying up projects in Southern California, so the land market has found a bottom. Prices are still speculative, but the builders are buying to have buildable inventory, so in select markets real demand exists for finished lots and properties with partial improvements...

[cjppjc]

Re: Get ready for some good housing numbers

That's the usual response when mortgage rates start to increase...a flurry of sales volume activity created by people who think they should "buy now" before mortgages become more expensive.

Yes it is. Unless this time is different :cool: there will be a surge in sales. Will it last? Will prices rebound?

[GRG55]

Re: Get ready for some good housing numbers

Yes it is. Unless this time is different :cool: there will be a surge in sales. Will it last? Will prices rebound?

I would imagine that don's favourite profession...realtors...are hoping this time is NOT different...

Could be the increasing sales volume is met with an increase in listings, from all those people that became landlords against their better judgement and flipper dreams.

Here's a chart from the Implode-o-Meter site that, with a few added bits, is almost identical to the familiar iTulip housing chart:

[cjppjc]

Re: Get ready for some good housing numbers

Grg55, you asked:

Could be the increasing sales volume is met with an increase in listings, from all those people that became landlords against their better judgement and flipper dreams.

My best guess is yes. I'm not trying to say housing has bottomed or now is the best time to buy, although maybe it is. I'm just saying as the thread title indicates:

Get ready for some good housing numbers, and nothing gets people on this site more pissed off than good housing numbers reported by the MSM. ;)

[don]

Re: Get ready for some good housing numbers

High Degree of Difficulty: Catching a Big Wave While Couch Surfing....

1.2 million households lost to recession As friends and families double up, ‘overcrowding’ is up fivefold

By John W. Schoen
updated 6:53 a.m. PT, Thurs., April 8, 2010

Since Richard Brown lost his job to the recession and his Boston home to foreclosure a year ago, he’s been working short-term consulting assignments until he gets back on his feet. In the meantime, he’s been “couch surfing.”

“I’ve lived with my brother, my cousin, my friend and my dad,” he said. “The IRS keeps calling me, asking me: ‘What’s your address?’ And I say, ‘What week is this?’”

Armed with college degree and an MBA, Brown, 49, built a solid resume over three decades as a corporate controller for several Fortune 500 companies, including W.R. Grace and Wal-Mart, before launching his own global consulting business with clients in Europe and Mexico. But when the Panic of 2008 sent clients scrambling, he was unable to keep up with a jump in his mortgage payments and lost his home to foreclosure.

Brown represents one of the more than 1.2 million households lost to the recession, according to a report issued this week by the Mortgage Bankers Association that looked at data between 2005 and 2008. That number doesn’t include information from 2009, when job losses and foreclosures continued to rise.

So it's likely that the full impact of the 8.4 million jobs lost and nearly three million homes foreclosed on since the recession began has taken an even bigger toll on the number of American households.

“Given the depth of the downturn in 2009, and the ongoing weakness in the job market through the beginning of this year, this study gives no reason to expect that household formation has picked up at all," said Gary Painter, a professor at the University of Southern California who conducted the study.

The study also shed some light on what happens to the people in those "lost" households. It’s widely assumed that many who lose a home to foreclosure become renters. But since the recession began, there has been a five-fold increase in “overcrowding” of remaining households — defined as more than one person per room, according to the study.

That doubling-up is happening as families who lose their homes move in with friends or family. In other cases, younger people have delayed moving out on their own, instead staying with their parents until the economy improves. Others who fail to find work after graduating from college move back home.

Falling homeownership levels

The decline in households is weighing on both the home buying and rental markets. Since the number of home foreclosures began surging in 2007, the national homeownership rate has been steadily falling. But renters also have been forced to double up or move in with friends or family. That’s a major reason that the vacancy rate for U.S. apartments stood at 8 percent in the first quarter, the highest level since 1986, according to a report this week from Reis, a real estate research firm.

The future pace of household destruction or formation is uncertain. A lot depends on how quickly the job and housing markets recover. The outlook for both is mixed.

Though many economists expect the economy to add several hundred thousand new jobs a month as the recovery gains strength, it will likely take years to restore employment to its pre-recession levels. After the 2001 recession, it took four years of job growth to restore a 2 percent drop in employment. This time around employment levels have fallen by 6 percent.

Homeownership levels, meanwhile, continue to decline. New foreclosures filings are running about 300,000 a month, according to RealtyTrac. There are currently some 5 million homeowners that are 90 days or more past due on their mortgages, according to Fannie Mae chief economist Doug Duncan.
Though the pace of foreclosures has recently begun to taper off, there are indications they may pick up again as lenders redouble efforts to work out bad loans, and mortgage defaults continue to bring new foreclosures.
“Some of the foreclosure backlogs are working their way through the system at this point,” Duncan told CNBC.

Millions more homeowners who are current on their mortgages owe more than their home is worth. Though the government recently issued another round of guidelines to lenders urging them to reduce the principal owed on those loans, the process is mostly voluntary.

Rise in homelessness

So far, lenders have been slow to cut the size of a mortgage to make monthly payments more affordable. As a result, an increasing number of families are walking away from their homes in a process known in the industry as “strategic default.”

That can become contagious, said Duncan, as neighbors follow suit. “If they see someone else in their neighborhood that walks away, it increases the likelihood they will seriously consider not paying theirs,” he said.

It’s not a move to be taken lightly. The resulting damage to a borrower’s credit history can hurt job prospects with a new employer or create a barrier to renting.

In some cases, the loss of a house to foreclosure is leaving families homeless, though there is little national data available on how many are affected. A recent study by the Department of Housing and Urban Development found family homelessness on the rise since the recession began, with the biggest increases in suburban and rural areas.

Other groups, like the National Alliance to End Homelessness, report that a rising number of older adults are without a permanent place to live.
“The limited existing research tells a story of increasing homelessness among adults ages 50 and older,” the group said in a recent report.

The formation of new households isn’t expected to pick up again until at least 2012, according to the MBA study, even as the population continues to increase. Between 2005 and 2008, those 1.2 million households were lost even as the population grew by 3.4 million.

In the meantime, former homeowners like Brown are left scrambling for alternatives. He recently move into a rooming house where he continues to track down consulting work.

“I pay $600 for a third-floor room that gets hot in the summer,” he said.
“It’s a blow. I don’t belong here. I’m an educated person. I’ve held executive positions. And here I am in a boarding house where Russian is a first language.”

http://www.msnbc.msn.com/id/36231884...n_the_economy/

[flintlock]

Re: Get ready for some good housing numbers

Sign of the times: My neighbor dropped by last night to tell me they had been out celebrating his recent college graduate son's new job. A loader at Home Depot.

[GRG55]

Re: Get ready for some good housing numbers

High Degree of Difficulty: Catching a Big Wave While Couch Surfing....

1.2 million households lost to recession As friends and families double up, ‘overcrowding’ is up fivefold

...“I’ve lived with my brother, my cousin, my friend and my dad,” he said. “The IRS keeps calling me, asking me: ‘What’s your address?’ And I say, ‘What week is this?’”

Armed with college degree and an MBA, Brown, 49, built a solid resume over three decades as a corporate controller for several Fortune 500 companies, including W.R. Grace and Wal-Mart, before launching his own global consulting business with clients in Europe and Mexico. But when the Panic of 2008 sent clients scrambling, he was unable to keep up with a jump in his mortgage payments and lost his home to foreclosure.

...

Let's see now...the guy has two post secondary degrees, one of which is an MBA which presumably means he's supposed to know something about how to analyze and exercise good judgement in things financial. He's been Controller for several large companies, which means he should have both learned and exercised financial discipline in complex situations. Finally he has [had?] an international consulting clientele, which means he had ample opportunity to develop a non-USA centric business and economic perspective.

And he gets caught due to a jump in mortgage payments? Sounds like yet another serial equity-withdrawal-option-ARM-mortgage-refinancer...

[don]

Re: Get ready for some good housing numbers

Let's see now...the guy has two post secondary degrees, one of which is an MBA which presumably means he's supposed to know something about how to analyze and exercise good judgement in things financial. He's been Controller for several large companies, which means he should have both learned and exercised financial discipline in complex situations. Finally he has [had?] an international consulting clientele, which means he had ample opportunity to develop a non-USA centric business and economic perspective.

And he gets caught due to a jump in mortgage payments? Sounds like yet another serial equity-withdrawal-option-ARM-mortgage-refinancer...

It's always instructive to examine the individual chosen by the Times as their iconic 'example' of the issue at hand. Nice shooting, GRG55 ;)

[jpatter666]

Re: Get ready for some good housing numbers

Let's see now...the guy has two post secondary degrees, one of which is an MBA which presumably means he's supposed to know something about how to analyze and exercise good judgement in things financial. He's been Controller for several large companies, which means he should have both learned and exercised financial discipline in complex situations. Finally he has [had?] an international consulting clientele, which means he had ample opportunity to develop a non-USA centric business and economic perspective.

And he gets caught due to a jump in mortgage payments? Sounds like yet another serial equity-withdrawal-option-ARM-mortgage-refinancer...

Funny how that works isn't it? My wife has an MBA from Thunderbird (THE international business school in the US) and oversees the financial aspects of a 400M business group and does it very, very well.

But when we met, her personal finances were a mess. I joke with her that unless the numbers involved have at least six digits, she can't handle it. ;)