Posted on June 27, 2008Filed under Real Estate Sales Read the complete post or link to it
Consumer confidence is registering all-time lows and it's no surprise why. Americans are bombarded by bad economic news day after day.
Oil prices reach new highs
Stock prices reach new lows
Lenders are getting sued
The weight of the gloom drags down the economy and the press is quick to report on all of it.
When there's good news, though, the stories get brushed aside. And that's why a housing recovery is not getting the coverage it deserves.
On Wednesday, we looked at charts from April showing improvement in most major real estate markets. And we saw the same improvement looking back at March.
So now today, with the Existing Home Sales data showed improvement, we can infer that the trend of improving home prices continued through May 2008.
It reminds of Lou Brown's famous quote:
Now, we won a ball game yesterday. If we win one today, that's two in a row. We win one tomorrow, that's called a winning streak. It has happened before.
Calling this a housing winning streak may be premature, but there's a bevy of anecodal evidence that points to one.
For example, real estate agents in previously beat-down cities like Phoenix and San Diego are reporting an alarming rate of multiple-offer home sales.
I can back that up for Chicago and Cincinnati based on my clients' experiences. If a home is priced right, real estate professionals will tell you, buyers are swooping in.
Unfortunately, this sort of on-the-street reporting doesn't make its way to the papers because economists are most concerned with year-over-year growth. As in, how does this year compare to last year?
The press approach is well-suited for long-term trend analysis but home buyers rarely operate on long-term buying cycles. Generally, they're looking for a home for few months and then make their purchase.
This is short-term and is why month-over-month data may be more appropriate for the average homebuyer. As in, how do home prices this month compare to home prices last month?
Lately, all signs point to improvement and that means that homes will likely be more expensive to buy in July than they were here in June. The long-term charts won't make that conclusion for you but the short-term charts certainly can.
Wednesday, July 9, 2008
Getting Mortgage Rates Clues From The Stock Market
Posted on July 2, 2008Filed under Mortgage-Backed Securities Read the complete post or link to it
The trend is still holding, so to hammer the point home: to know what mortgage rates are doing lately, just check the stock market.
As stocks go down, mortgage rates go down
As stocks go up, mortgage rates go up
This is not a long-term, direct relationship by any means but it's holding true this week.
The interplay between stocks and mortgage rates is a welcome development for home buyers because it's simpler for laypersons to follow the stock market than it is to follow the mortgage-backed securities market. When you know what to expect with rates, after all, the mortgage shopping "experience" can be a little bit less stressful.
So, enjoy it while you can -- by next week, we could back to watching esoteric data like Balance of Trade figures.
(Image courtesy: Google Finance)
The trend is still holding, so to hammer the point home: to know what mortgage rates are doing lately, just check the stock market.
As stocks go down, mortgage rates go down
As stocks go up, mortgage rates go up
This is not a long-term, direct relationship by any means but it's holding true this week.
The interplay between stocks and mortgage rates is a welcome development for home buyers because it's simpler for laypersons to follow the stock market than it is to follow the mortgage-backed securities market. When you know what to expect with rates, after all, the mortgage shopping "experience" can be a little bit less stressful.
So, enjoy it while you can -- by next week, we could back to watching esoteric data like Balance of Trade figures.
(Image courtesy: Google Finance)
12 Bullet Points That Matter To Every Home Buyer In America
Posted on July 8, 2008Filed under On Mortgage Approvals Read the complete post or link to it
Let's Start With The Conclusion
If you plan to buy a new home in 2008 or 2009, give a lot of thought to moving up your timeframe.
Mortgage approvals are about to get more scarce and more expensive for everyone.
The Supporting Evidence From The News
FHA is increasing its mortgage insurance premiums and up-front loan fees for a lot of borrowers
With IndyMac's demise, other banks should follow and Alt-A loans may go the way of Sub-Prime
Fannie and Freddie are in financial crisis again and may be forced to add mandatory loan fees for everyone
Banks are doing the unthinkable just to get suspect loans off their books
Wall Street is losing its appetite for "guaranteed" mortgage bonds
The Anecdotal Evidence From The Street
Lenders have slowed "common sense" exceptions. Meet the guidelines or else.
The new Fannie Mae guidelines are much tougher on high debt ratios
Wall Street is scared and rumors are floating about more bank failures
The Fed is laying the groundwork for another market intervention.
The Relevant Thoughts From A Guy Who Lives, Eats, And Breathes This Stuff
It's an election year so all we're going to hear from now until November is bad news about housing, and bad news about oil prices. That will weigh on Consumer Confidence and should negatively impact mortgage rates.
The purge of the Alt-A mortgage market has been a long time coming and now the window is closing. Don't get caught watching the paint dry.
It doesn't matter how good mortgage rates get if products keep disappearing.
Parting Wisdom
One reason why the markets have been so volatile is because -- about a year ago -- the financial models being used by the banks failed them. Losses followed and swaths of people got fired, but, in the end, lenders still have to lend -- it's what they do. The show must go on, after all.
So, despite the missing roadmap, the banks have still been trying to make it work. They're still issuing new loans to mortgage applicants and they're changing their business rules on-the-fly as market conditions warrant.
However, it's dangerous to drive without a roadmap. Every now and again, one of the mortgage lenders drives right off a cliff. And each time it happens, everybody else on the road slows down, and that trickles down from Wall Street all the way to Main Street.
Therefore, until the path gets more clear for the banks, life as a mortgage applicant should continue to toughen. It won't be easier to get a loan in 6 months than it is today so if you plan to buy "sometime soon", maybe "sometime soon" should be upgraded to "sometime sooner".
(Image courtesy: The Wall Street Journal)
Let's Start With The Conclusion
If you plan to buy a new home in 2008 or 2009, give a lot of thought to moving up your timeframe.
Mortgage approvals are about to get more scarce and more expensive for everyone.
The Supporting Evidence From The News
FHA is increasing its mortgage insurance premiums and up-front loan fees for a lot of borrowers
With IndyMac's demise, other banks should follow and Alt-A loans may go the way of Sub-Prime
Fannie and Freddie are in financial crisis again and may be forced to add mandatory loan fees for everyone
Banks are doing the unthinkable just to get suspect loans off their books
Wall Street is losing its appetite for "guaranteed" mortgage bonds
The Anecdotal Evidence From The Street
Lenders have slowed "common sense" exceptions. Meet the guidelines or else.
The new Fannie Mae guidelines are much tougher on high debt ratios
Wall Street is scared and rumors are floating about more bank failures
The Fed is laying the groundwork for another market intervention.
The Relevant Thoughts From A Guy Who Lives, Eats, And Breathes This Stuff
It's an election year so all we're going to hear from now until November is bad news about housing, and bad news about oil prices. That will weigh on Consumer Confidence and should negatively impact mortgage rates.
The purge of the Alt-A mortgage market has been a long time coming and now the window is closing. Don't get caught watching the paint dry.
It doesn't matter how good mortgage rates get if products keep disappearing.
Parting Wisdom
One reason why the markets have been so volatile is because -- about a year ago -- the financial models being used by the banks failed them. Losses followed and swaths of people got fired, but, in the end, lenders still have to lend -- it's what they do. The show must go on, after all.
So, despite the missing roadmap, the banks have still been trying to make it work. They're still issuing new loans to mortgage applicants and they're changing their business rules on-the-fly as market conditions warrant.
However, it's dangerous to drive without a roadmap. Every now and again, one of the mortgage lenders drives right off a cliff. And each time it happens, everybody else on the road slows down, and that trickles down from Wall Street all the way to Main Street.
Therefore, until the path gets more clear for the banks, life as a mortgage applicant should continue to toughen. It won't be easier to get a loan in 6 months than it is today so if you plan to buy "sometime soon", maybe "sometime soon" should be upgraded to "sometime sooner".
(Image courtesy: The Wall Street Journal)
Bankrate.com Mortgage Trend Index (July 3, 2008)
Posted on July 3, 2008Filed under Market Direction Surveys Read the complete post or link to it
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available.
As a reminder:
The survey is for conforming loans only.
You're welcome to email me about your pending plans to purchase or refinance.
I twitter market updates a few times daily. Follow me, if you want.
Anyway, on to the group's predictions for the next 30 days:
21% of participants predict rates will increase
43% of participants predict rates will decrease
I am predicting that rates will decrease over the next 30 days, but that doesn't mean you should necessarily follow my advice when choosing whether to lock a rate, or float it. My advice may not be appropriate for your individual situation.
From the Bankrate.com survey:
"So long as growth stays steady, money should flow into the mortgage bond market. This drops rates."
I've been using Twitter to communicate the mid-day market shifts to clients. My tweets tell them when rates are likely to change so they can be more pro-active about their finances.
Twitter's simple to set up and it's non-intrusive. You're welcome to follow me if you'd like the updates, too.
Technorati Tags: Bankrate.com
I am a regular participant in the Bankrate.com Mortgage Rate Trend survey and this week's survey is now available.
As a reminder:
The survey is for conforming loans only.
You're welcome to email me about your pending plans to purchase or refinance.
I twitter market updates a few times daily. Follow me, if you want.
Anyway, on to the group's predictions for the next 30 days:
21% of participants predict rates will increase
43% of participants predict rates will decrease
I am predicting that rates will decrease over the next 30 days, but that doesn't mean you should necessarily follow my advice when choosing whether to lock a rate, or float it. My advice may not be appropriate for your individual situation.
From the Bankrate.com survey:
"So long as growth stays steady, money should flow into the mortgage bond market. This drops rates."
I've been using Twitter to communicate the mid-day market shifts to clients. My tweets tell them when rates are likely to change so they can be more pro-active about their finances.
Twitter's simple to set up and it's non-intrusive. You're welcome to follow me if you'd like the updates, too.
Technorati Tags: Bankrate.com
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