Thursday, November 19, 2009

It just keeps gettin' worse....

There was actually a lot of housing news this week. Nearly all of it is bad. The default rate is unbelievable, new housing starts are down, and even sales are down on a national level. Here's some of the highlights ( or lowlights....)

The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972.

The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago. The combined percentage of loans in foreclosure or at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.42 percent, up six basis points from last quarter and up 35 basis points from one year ago.

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Brinkmann expects foreclosures to possibly peak in 2011 (last quarter he said late 2010). He changed the forecast for two reasons: he expects unemployment to stay fairly high, and he thinks the prime borrowers will hang on before defaulting, and all the foreclosure moratoria will delay foreclosures - a longer trailing effect than usual.

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The Market Composite Index, a measure of mortgage loan application volume decreased 2.5 percent on a seasonally adjusted basis from one week earlier.

The Refinance Index decreased 1.4 percent from the previous week and the seasonally adjusted Purchase Index decreased 4.7 percent from one week earlier. The seasonally adjusted Purchase Index has declined for six consecutive weeks and is at its lowest level since November 1997. (that's a 12 year low!)

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.90 percent, with points increasing to 1.17 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest contract rate observed by the survey since mid-May of this year.
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Criminal charges have finally been filed against James B. Duncan, Hendrix Moreno Montecastro and Maurice McLeod, three Riverside County businessmen who allegedly orchestrated a major securities and mortgage fraud that drove many investors to financial ruin in California and Arizona.

These two ass clowns bought hundreds of houses in Southern Riverside Co (corona, murietta and temecula mostly). They used investors to buy homes are grossly inflated prices. Scammed the investors and at the same time set crazy high comps that were then used to justify the prices of other sales. It's just amazing how a few fraudulent sales can set the comps and drive the market up. I guess it's easy when every one is high on bubble kool aid.

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Total housing starts were at 529 thousand (SAAR) in October, down 10.6% from the revised September rate, and up from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Starts had rebounded to 590 thousand in June, and have move sideways (or down) for five months.

Single-family starts were at 476 thousand (SAAR) in October, down 6.8% from the revised September rate, and 33 percent above the record low in January and February (357 thousand). Just like for total starts, single-family starts have been at this level for five month.

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Not much "good" news. Dataquick did report the median in the IE rose slightly last month. But even they acknowledged that it's primarily due to fewer low end homes being available and the fact that there are currently few foreclosures on the market. Thus the sales mix is moving towards more expensive homes and bringing up the median.

1 comment:

Anonymous said...

So overall future of real estate market is unclear until 2011. I don't know when real estate sector is going to improve and would regain its earlier position.
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