Housing Market Is Heating Up, if Not Yet Bubbling. Banks find appalling new way to cheat homeowners. This article originally appeared on Alternet. A few months ago, Ceith and Louise Sinclair of Altadena, California, were told that their home had been sold. It was the first time they’d heard that it was for sale. Their mortgage servicer, Nationstar, foreclosed on them without their knowledge, and sold the house to an investment company. If it wasn’t for the Sinclairs going to a local ABC affiliate and describing their horror story, they would have been thrown out on the street, despite never missing a mortgage payment. As finance writer Barry Ritholtz has explained, home purchases involve a series of precise safeguards, designed to protect property rights and prevent situations where borrowers who are perfect on their payments get evicted. Any observer of the mortgage industry since 2009 is no stranger to foreclosure fraud, and the fact that virtually nobody has paid the price for this crime.
Nationstar is at the forefront of a massive shift in mortgage servicing. Existing Home Sales in August: 5.48 million SAAR, 4.9 months of supply. By Bill McBride on 9/19/2013 10:00:00 AM The NAR reports: August Existing-Home Sales Rise, Limited Inventory Continues to Push Prices Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.7 percent to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July, and are 13.2 percent higher than the 4.84 million-unit level in August 2012.Total housing inventory at the end of August increased 0.4 percent to 2.25 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, down from a 5.0-month supply in July.
Unsold inventory is 6.3 percent below a year ago, when there was a 6.0-month supply. Click on graph for larger image. This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in August 2013 (5.48 million SAAR) were 1.7% higher than last month, and were 13.2% above the August 2012 rate. Home Prices in 20 U.S. Cities Increased at Slower Pace. Residential real-estate prices increased in June at a slower pace, a sign the rate of improvement in the housing market is cooling.
The S&P/Case-Shiller index of property values in 20 cities rose 12.1 percent in June from the same month in 2012 after rising 12.2 percent in the year ended in May, which was the biggest gain since March 2006, the group said today in New York. The increase matched the median forecast of 25 economists in a Bloomberg survey. Increasing property values are boosting household wealth, helping underpin consumer spending, which accounts for about 70 percent of the economy. At the same time, a jump in mortgage rates shows signs of curbing sales and refinancing, which will make it more difficult to tap home equity. Consumer confidence unexpectedly increased in August as Americans grew more optimistic about the outlook for the economy, another report today showed.
Increasing property values are boosting household wealth, helping underpin consumer... Read More Close Open. 2007: The Ongoing Impact of the Housing Sector. Note: This was first published 6 years ago. I thought it was prescient enough, and mostly right, to bring to your attention again. Who should we blame for the problems in the credit markets? This week in Outside the Box my good friend Barry Ritholtz takes on the task of pointing his prodigious finger at the guilty parties. As he notes, there is plenty of guilt to go around.
This is a problem that is going to stay with us more than a few weeks. The Ongoing Impact of the Housing Sector By Barry Ritholtz August 24, 2007 With John Mauldin enjoying the beginning of his summer sight-seeing in Europe, its up to us worker drones to address the various goings on the capital markets. Today, we will take a quick review of the impact of the ongoing fallout from the Housing market on the consumer, and look at what is occurring in the broader financial system. How we got to where we are today You may recall, late last year, I penned a commentary titled Real Estate and the Post-Crash Economy. . - Barry L. Maintaining Stability in a Changing Financial System | Federal Reserve Bank of Kansas City. Housing, Housing Finance, and Monetary Policy | Federal Reserve Bank of Kansas City. 30 year fixed rate mortgages are awesome.
Matt Yglesias writes about the 30-year fixed rate mortgage in the United States and asks whether it would survive the end of government subsidies through Fannie Mae and Freddie Mac: One is that if you look at other developed countries you generally don’t see the American-style 30-year fixed rate mortgage. Instead you either have short-term loans that need to be periodically refinanced at new interest rates, or else something more like an Adjustable Rate Mortgage. From these two stylized facts you can draw two conclusions. One is that absent a specific government subsidy for the fixed rate mortgage it would vanish and we would become more like Canada.
As it happens, I come from a country where 30-year fixed rate mortgages have a long history, so I will now abuse this platform to explain how they work at excruciating length. The industry likes to say that there has been a default on a Danish mortgage bond. Why are 30 year fixed rate mortgages so awesome for borrowers?
Fannie Mae and Freddie Mac Need to Be Reformed, Not Scrapped - Economic Intelligence. It appears that Washington is finally getting around to grappling with the largest unresolved question left over from America's housing meltdown: What's to become of the government-backed mortgage giants, Fannie Mae and Freddie Mac? Their fate has been in limbo since the federal government bailed them out and put them in conservatorship in 2008. Now, however, the two government-sponsored enterprises (GSEs) are reaping enormous profits as housing markets rebound.
This has gotten lawmakers' attention. House Republicans have introduced a typically radical bill that would eliminate Fannie and Freddie altogether. A bipartisan Senate proposal would wind down Fannie and Freddie over five years and replace them with a similar functioning institution that charges a fee to insure loans in the event of catastrophic losses.
And President Obama weighed in recently as well, saying it's time to end Fannie and Freddie “as we know them.” [See a collection of political cartoons on the economy.] Sales of U.S. Existing Homes Rise to Highest Since 2009. Sales of previously owned U.S. homes jumped in July to the second-highest level in more than six years as buyers rushed to lock in mortgage rates before they increased any more. Purchases advanced 6.5 percent to a 5.39 million annual rate last month, beating the 5.15 million median forecast of economists surveyed by Bloomberg, figures from the National Association of Realtors showed today in Washington. Sales were the strongest since a government tax credit temporarily boosted demand in November 2009, and second-highest since March 2007. The data reflect closings of contracts signed a month or two earlier, when mortgage rates were just beginning to edge up from record lows, persuading buyers to complete transactions as borrowing costs subsequently shot up.
Gains in employment and wages will probably give households the means and confidence to sustain demand throughout 2013. Stocks Decline Tax Credit Lean Inventory Sales Outlook Consumer Confidence. Luxury Item Investing Returns. The illusory housing recovery. Apparently there is life in the UK housing market. According to ONS, UK house prices increased by 3.1% in the 12 months to June 2013, up from a 2.9% increase in the 12 months to May 2013. Predictably, vested interests like estate agents, surveyors and developers are crowing. The director of the Royal Institute of Chartered Surveyors, Peter Bolton King, claims the housing market is "on the road to recovery". I wish I could be so positive. But this "recovery" is not quite what it seems. Here's a lovely chart from the ONS report: No, you aren't seeing things.
This might have something to do with it: The Mayor of London's property report (from which this graph is taken) says that "average private sector rents in London are around twice the national average". But buy-to-let is not the only - or even the principal - cause of booming house prices in London. So there is actually very little recovery in the London residential housing market. But what about the rest of the country? Related links: Affording a home harder for average buyer - Aug. 13, 2013. Ogden, Utah, is the most affordable major housing market, according to the report.
NEW YORK (CNNMoney) Of all homes sold between April and June, 69.3% were affordable to a family earning the median income of $64,400, according to an index compiled by the National Association of Home Builders (NAHB) and Wells Fargo. That's down significantly from the first quarter, when 73.7% of homes sold were affordable and from late 2011, when affordability peaked at 78%. "Housing affordability has been hovering near historic highs for the past several years, largely due to exceptionally favorable mortgage rates and low prices during the recession," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.
Related: America's Best Places to Live But all of that is starting to change now that both home prices and rates have been on the rise. The Ogden, Utah, metro area was the nation's most affordable major housing market. Related: Best Places to Live: Most affordable markets. Don’t Kill Fannie Mae. Blackstone Said to Acquire GE Apartments for $2.7 Billion. Blackstone Group LP (BX), the largest manager of private-equity real estate funds, agreed to buy 80 U.S. apartment properties from General Electric Co. (GE) for about $2.7 billion, a person with knowledge of the deal said. The firm is acquiring the properties from the conglomerate’s GE Capital unit, said the person, who asked not to be identified because the transaction isn’t public. GE has been paring its real estate holdings as part of a strategy to shrink its finance division. The deal represents one of the largest investments by Blackstone in apartments in the U.S., where surging rental demand has sent vacancies to the lowest level in a decade, according to Reis Inc.
(REIS) In residential real estate, New York-based Blackstone has focused on buying single-family homes to rent, spending more than $5 billion to acquire more than 30,000 U.S. houses in the aftermath of the foreclosure crisis. To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net. Did We Waste a Financial Crisis? Remarkably, five years after the crisis, the health of the financial industry is just as hard to determine. A major bank or financial institution could meet every single regulatory requirement yet still be at risk of collapse, and few of us would even know it. Despite endless calls for change, many of the economists I’ve spoken with have lamented that the reports that banks issue about their finances remain all but useless.
The sprawling Dodd-Frank Act, which rewrote banking regulation in 2010, didn’t resolve things so much as inaugurate a process of endless rules-writing by regulators. Meanwhile, the European Union is in the early stages of figuring out how it will change the way it regulates banks; and the gargantuan issue of coordinating regulations across borders has only barely begun. All of these regulatory decisions are complicated, in part, by a vast army of financial-industry lobbyists that overwhelms the relatively few consumer advocates.
The problem isn’t Citigroup’s. AEI’s FHA Disinformation Campaign Ignores Basic Finance. How one discredited “mortgage expert” from the American Enterprise Institute launched an ongoing disinformation campaign to destroy a successful government program that helped stabilize the mortgage markets. Much of the brouhaha concerning the fate of the Federal Housing Administration can be traced to the actions of one dishonest man, a crackpot who is treated with utmost deference by the current Chair of the House Financial Services Committee and by friends in the media. Genesis of the Disinformation Campaign As recently as last September, the House was capable of passing a piece of legislation, known as the FHA Emergency Fiscal Solvency Act of 2012, with a lopsided bipartisan vote of 402 to 7.
The Senate version of the bill, sponsored by Pat Toomey, was co-sponsored by Richard Burr, Kay Hagan and Mark Warner. According to two knowledgeable sources, neither of whom are Democrats, Pinto was lobbying in the Senate to kill the bill, and he persuaded Sen. I know, you’re thinking, “Duh.” Fortress to Blackstone Say Now Is Time to Sell on Surge. Private-equity managers from Fortress Investment Group LLC (FIG) to Blackstone Group LP (BX), which made billions by buying low and selling high, say now is the time to exit investments as stocks rally and interest rates start to rise. Fortress, the first publicly traded buyout firm in the U.S., is preparing holdings for public offerings while struggling to find attractive new deals, Wesley Edens, who runs Fortress’s $14.3 billion private-equity business, said on a conference call with investors yesterday.
That environment extends to credit and distressed investments, said Pete Briger, who oversees the New York-based firm’s $12.5 billion credit business. “This is a better time for selling our existing investments than making new investments,” Briger said on the call. “There’s been more uncertainty that’s been fed into the markets.” Leon Black, chairman and chief executive officer of Apollo Global Management LLC, in Beverly Hills, California. Close Close Open Photographer: Patrick T. Blackstone, Deutsche Bank in Talks to Sell Bond Backed by Home Rentals. It’s Not Everyone’s Time to Buy a Home. When I read it, I immediately felt anxious.
I recognized the feeling. It’s the feeling you get when you think you have to act on something right away or you’ll miss out. After all, if John Paulson, the guy who made “The Greatest Trade Ever,” was saying I should rush out and buy a house, I’d better get on it! After allowing myself to get all worked up about this, I did what I’ve done several times before. John Paulson doesn’t know me or my situation. There is absolutely no reason I should be making decisions based on something he said. The same holds true for the other three people who just happened to express similar concerns to me about buying right now. Then there was the third conversation I had. It’s time for this person to downsize to a different home. This is madness! Buying a home is one of the biggest financial decisions that most of us will make in our lifetimes. There’s a simple way to fix this problem. . ■ Can you afford it, and do you have enough saved for a down payment?
Datapoint: Aftermath of Credit/Housing Bubble. Home Sales Probably Increased in June: U.S. Economy Preview. Home sales probably climbed in June to the highest level since November 2009, showing residential real estate is becoming a mainstay of U.S. economic growth. Combined purchases of existing and new houses rose to a 5.74 million annualized pace last month, according to the median forecasts of economists in a Bloomberg survey. Other figures may show manufacturing is improving, eliminating a source of weakness for the expansion. The housing gains will probably be sustained as would-be buyers with access to credit rush to lock in mortgage rates before they climb much more. The construction-industry rebound, combined with rising demand for autos, is contributing to a stabilizing in manufacturing that will help the world’s largest economy gain momentum in the second half of the year.
“The housing market is clearly recovering this year about as fast as you’d expect in a normal expansion,” said Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado. Growing Confidence. House-flipping is back, flourishing again. Calculated Risk. Unexpected Drop in Starts Curbs U.S. Housing Rebound: Economy. Asset Classes. MBA: Mortgage Refinance Applications Decline as Mortgage Rates Increase in Latest Weekly Survey. Calculated Risk. U.S. Banks Face Two Ratios as FDIC Sets Capital Vote. How Spitzer as comptroller could impact Wall Street. World Economics Association - real-world economics review - issue no. 64 - rbutler - San Diego State University Mail. 'It's a proto-fascist ideology. Top bankers as predators and us as prey' | Joris Luyendijk.
'It's a proto-fascist ideology. Top bankers as predators and us as prey' | Joris Luyendijk. 'It's a proto-fascist ideology. Top bankers as predators and us as prey' | Joris Luyendijk. FHA Swamped By Defaults; Congressional Report Shows FHA Could Suffer Losses as High as $115 Billion; Shut Down Fannie, Freddie, FHA.
Lechmere: The Employer's "Right" to Keep Employees Isolated and Uninformed.