Homeowners underwater on their mortgages
September 10, 2013
Homeowners underwater on their mortgages received positive news today as the recent gains in home prices have lifted 2.5 million residential properties into positive equity in the 2nd quarter of 2013. However, CoreLogic reports that 7.1 million residential properties still have negative equity and as home price appreciation moderates in the 2nd half, the pace of improvement will likely slow. Negative equity means that a borrower owes more on a home than it is worth.
The Syrian crisis has somewhat abated today as the White House tells lawmakers diplomacy is priority on Syria. The news has shifted investing dollars out of the safe haven of the Bond markets and back into more riskier assets, such as Stocks. Oil prices are also declining on the news.
In corporate news, McDonald’s reported this morning that revenues rose in August, driven by a surge in sales in its European division. In addition, the International Council of Shopping Centers reported that U.S. chain store sales rose 2.3% year on year for the week ended on September 7.
Read MoreHome prices are expected to rise
August 07, 2013
Housing news dominated the headlines yesterday with positive home price data hitting the wires. First up was CoreLogic reporting that its national Home Price Index on a year-over-year basis in the month ended in June rose by nearly 12% as the sector continues to improve. From May to June, prices rose by almost 2%. In addition, home prices are expected to rise by 12.5% year-over-year basis in July. However, prices are still down 19% from their peak hit back in April 2006. All of the figures include distressed sales.
To further bolster price appreciations in housing, Clear Capital reported that national home prices surged 9.3% in July 2013 from July 2012 and gained 1.6% over the last quarter. Clear Capital did say that prices remain 33.4% below peak values. For the last half of 2013, the firm sees a moderation in home price trends.
President Obama will be in Phoenix, Arizona later today speaking on the housing market and in particular, the future fate of Fannie Mae and Freddie Mac. The government bailed out the two mortgage giants to the tune of nearly $200 billion after the housing market collapsed in 2008 and the plan is for their roles to diminish and let private sector capital take on a bigger role in the mortgage market.
On Monday, there was some good news and bad news reported in the past month if you are a potential homebuyer or looking to refinance your current home. The bad news is that home loan rates on the 30-year fixed conventional mortgage have gone from 3.5% to around 4.5% in the latest survey.
The good news is that mortgage lending standards eased for the fifth consecutive month, reports the Mortgage Bankers Association (MBA). The MBAs Mortgage Credit Availability Index report, which analyzes data from AllRegs Market Clarity product, the MCAI escalated to an index score of 112.3 in July, rising 2.2% from 109.81 in June.
The service sector of the U.S. economy perked up in July expanding more than expected rising to 56.0 from the 52.2 recorded in June. Readings over 50 indicate more companies are expanding instead of contracting. Of the 18 industries that were were surveyed, 16 reported growth last month. However, the employment gauge fell to 53.2 from 54.7.
Read MoreHomeownership rate
July 31, 2013
Housing data was plentiful yesterday with both good news and not so good news. Home prices continue to move higher as evidenced by the 12.2% year-over-year gain in the Case/Shiller 20-city Composite Home Price Index. It was the biggest annual gain since March of 2006. From April to May, prices rose 2.4% for the 20-city index.
Over in the foreclosure front, Corelogic reports that completed foreclosures dropped by nearly 20% from June of 2012 (68,000) to June of 2013 (55,000). The 55,000 in June was slightly higher than the 53,000 recorded in May. Since the beginning of this year, foreclosure inventories have declined by 14%. A completed foreclosure occurs when a property is auctioned and results in the purchase of the home at auction by either a third party, such as an investor, or by the lender.
The homeownership rate in the U.S. has now fallen back to levels not seen in two decades and is well below its record high of 69.2% hit back in 2004, currently at 65.1%. During the recent housing crisis, more than 7 million Americans were ripped from their homes after the bubble burst and busted. The rate is expected to fall to 64% due to foreclosures as people enter the rental markets.
Read MoreNew Home Sales surged
July 24, 2013
Despite the recent rise in home loan rates, New Home Sales surged by 8.3% in June from May to an annual rate of 497,000 units. The 497,000 was above expectations of 483,000 and sales are now up 38% since June of 2012, the largest annual increase since 1992. However, sales in May were revised lower to a 459,000 annual rate from the initial number of 476,000.
Within the New Home Sales report it showed that inventories are at 3.9 months, down from 4.2 months in May. A normal supply is around six months, which is considered a more healthy balance between supply and demand. The median price now stands at $249,700, up 7.4% from the $232,600 recorded in June of 2012.
Ford Motor reported earnings today that were well above estimates driven by record profits in North America. The automakers market share has now increased to 16.5% across the nation. Ford’s net income in the second quarter was $1.2 billion, up from $1 billion in the previous quarter. However, Ford does expect weakness in South America and the European markets.
Read MoreFederal Housing Finance Agency (FHFA) reported today…
July 23, 2013
Consumer bellwether United Parcel Service (UPS) reported that second quarter profits declined by 4% as customers moved to lower price shipping companies. Revenues came in at $13.51 billion versus the $13.59 billion expected. UPS is considered a bellwether along with FedEx due to the high volume and large assortment of goods they move around the globe.
The Federal Housing Finance Agency (FHFA) reported today that housing prices rose 7.3% in the 12 months ended in May as buyers vied for a smaller amount of listings as inventories have declined. In addition, there was a 0.7% rise from April to May. The FHFA Housing Price Index measures transactions for single-family properties that are financed through Fannie Mae and Freddie Mac.
The closely watched S&P 500 Stock Index hit yet another closing record high (1,675) yesterday and can be attributed in part to the easy money policies from the Federal Reserve (the Fed). The Fed has been purchasing $85 billion a month in Treasury Securities and Mortgage Backed Securities in an effort to stimulate the economy and to ensure job growth.
There were no economic reports released today and the rest of the week’s calendar is on the light side with readings on New Home Sales due out tomorrow and Weekly Initial Jobless Claims on Thursday.
Read MoreConversation with James Lileks at the Star Tribune on Student Loans and Mortgages
July 22, 2013
Watch Roy’s recent conversation with James Lileks at the StarTribune. What does he discuss? Mortgages!
Roy answers questions about student loans and mortgages. Click on the following link to watch. http://bit.ly/16Twf44
Read MoreMortgage application volume continues to decline
July 17, 2013
Fed Chairman Bernanke’s speech to the House Financial Services Committee was released this morning saying that that the Fed’s asset purchases are by no means on a preset course. Mr. Bernanke went on to say that Bond buying could be reduced at faster pace, a slower pace, or even increased for a time, depending on outlook and they could begin later this year.
Housing Starts declined by nearly 10% in June from May to 836,000 units annualized and below 958,000 expected to the lowest level since August 2012. The drop was attributed towards a big decrease in apartments. Building Permits, a sign of future construction, fell by 7.7% to 911,000 and below the 1 million expected.
Mortgage application volume continues to decline as the Mortgage Bankers Association reported today that its Market Composite Index, a measure of loan application volume, fell by 2.6% in the latest week. The refi index declined by 4.2% while the purchase index rose marginally by 0.5%. The slowdown in application volume could be attributed towards the recent rise in home loan rates.
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