U.S. home mortgage applications fall almost 19% in June 2009
With interest rates creeping back up to previous levels, it is no surprise that refinance activity has slowed considerably as of late. In the article they state the the “5%” level is where the rates need to be for the market to maintain the activity that began when the government started aggressively pushing interest rates down to try and decrease the amount of defaults and foreclosure that have been associated with these sub-prime and Alt-A loans resetting to higher rates that are tied to the LIBOR or 10-year treasury bond.
News (Reuters):
U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday.
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U.S. real estate rescue threatened by second liens on homes
Duh, did we forget where the appreciation went while the home prices were going through the roof? Oh yeah, the homeowners used their house like a ATM, pulling cash out to finance all kinds of other purchases. They really need to address this issue, personally I would want to make sure the 2nd got paid off no matter what because the borrower pulled cash out with that, at least with the 1st you have the house that is the collateral for the loan.
It will be very frustrating if we bail out all these homeowners and they got to make these choices to get extra consumption and the U.S. taxpayers has to foot the bill for that as well. With taxes on the rise, makes me wonder why should everyone work so hard with these lessons being taught.
News:
The U.S. Treasury Department’s effort to help 5 million homeowners win reworked mortgages, part of a plan to stabilize housing, could fall flat if Wall Street does not relax its interest in the properties.
While the initiative empowers Fannie Mae and Freddie Mac to refinance borrowers whose homes have lost value in recent years, big banks own a small stake in many of those loans and could effectively block the plan.
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U.S. foreclosure filings rise in 6% in February
U.S. home foreclosure activity resumed its upturn in February after a brief dip, despite numerous programs meant to quell the record pace of failing mortgages, RealtyTrac reported on Thursday.
Filings, which include notice of default, auction sale or bank repossession, rose 6 percent in February after slipping 10 percent in January, and leaped 30 percent from a year ago, the Irvine, California-based real estate data firm said.
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U.S. home prices fall 18% in October compared to 2007
I like the line ”People are skeptical about the underlying value of properties, which is making them cautious and fearful,” Peter Morici said. This underlines the fact that we had a huge overvaluation on real estate assets and until prices come down to a level that is near the traditional 1.5 times your annual income, we will see prices fall to that level.
I still don’t understand why people don’t seem to know that a home is a liability until you pay it off and your living rent-free. What should happen is once the prices come down to a reasonable level, the government should then help provide real fixed rate loans to soak up the excess homes that people can afford. That helps build communities and that is beneficial to us all.
News:
Prices of U.S. single-family homes plunged a record 18.0 percent in October from a year earlier, Standard & Poor’s said on Tuesday, with the drop in prices accelerating as the broader economy deteriorates.
Prices fell at the fastest monthly pace since March, an indication that government steps, such as encouraging lenders to modify delinquent loans, have not cushioned the housing bust, which continues to weigh on the economy.
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U.S. new home sales plunge 11.5 percent in August
US new home sales plunged 11.5 percent in August despite a sharp drop in prices, government data showed Thursday, with tight credit blamed for further distress in the battered real estate sector.
The Commerce Department report on new home sales underscored the gloom over the US housing sector, struggling with the worst slump in decades, and a credit crisis that has strangled mortgage lending.
The monthly data came as Congress struggled to pass an emergency 700-billion-dollar bailout of financial firms that the government argued was crucial to prevent a wider economic collapse.
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U.S. July pending home sales fell 3.2 percent
No surprise here, as the market worsens and the credit situation gets much tighter we should expect this trend continue. Fundamentally nothing has changed in the economy so we should not expect it to rise like the Phoenix as many dovish analysts have been predicting. Lets review the U.S. problems that need to be addressed so we can understand the challenges.
1. Two Front War (expensive +$$$$$ = Inflation)
2. Credit Tightening (-$$$$$)
3. Bailouts (Adding Price Inflation)
4. Budget Deficit (More Inflation)
5. Rising Unemployment (Less Money for Consumption)
6. Higher Prices for Essentials [Food & Gas] (Less Money for Discretionary Spending -$$$$$$)
7. Exportation of Manufacturing Jobs (Reduce Discretionary Income through the lack of Higher Paying jobs which also effect local service based businesses which there Middle Class incomes use -$$$$$)
These are just some of the items that are going to make our recovery difficult and long. Unless we see things fundamentally change in a way that addresses these issues, I think anyone who is calling for a bottom is either noise or the problem is getting worse because of the delay in address these critical problems in the U.S. economy that affects the world by its reduced consumption.
Release:
Pending sales of existing U.S. homes fell more sharply than expected in July, partially erasing gains from the previous month, data from a real estate trade group showed on Tuesday.
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