The National Association of Home Builders sponsors an economic
publication for the housing industry which publishes at
HousingEconomics.com. In mid-July it released a study on
Metropolitan Area House Prices and Affordability written by
Elliot F. Eisenberg, Ph.D.
One cannot deny that the study is self-serving, but the findings are
at least a little revealing of some of the reasons that housing prices,
particularly of new houses, continue to climb in a tough market.
It's been a rough week for the housing market. Homebuilder confidence
is in the gutter, existing home sales fell substantially and the bad news
emanating from the subprime debacle continues top headlines. Now we have
new home sales and builders reporting earnings.
There was mixed news on the existing housing front in last month. The
monthly survey by the National Association of Realtors (NAR) ® showed the
sales of existing homes, including single-family houses,
townhouses, condos, and co-ops declined 3.8 percent off of the pace in
May to a seasonally adjusted annual rate of 5.75 million units. This is a
decline of 11.4 percent from annualized June 2006 sales of 6.49 million
units.
"Home buyers have been getting mixed signals about the
housing market, which is causing some of them to hesitate," Lawrence Yun,
NAR senior economist, said. Two bright spots in the June
report are...
In perhaps the only good news in the mortgage and real estate worlds
this week, both long and short term interest rates for the week ended
July 19 barely budged from their positions a week earlier.
With
hedge funds that had heavily invested in residential literally bleeding dry and announcing severely reduced earnings expectations,
layoffs, or worse, more or less static interest rates had to be seen as
good news.
...on Tuesday Countrywide reported a 33 percent drop in net income for
the second quarter and announced that payments were delinquent on nearly
24 percent of its subprime mortgage loans compared to 15.33 percent at
the same time in 2006. More disquieting, there is evidence that problems
in the company's subprime sector appear to have spread to their
higher rated prime loans, specifically home equity
products on which 4.56 percent of customers were behind in payments
compared to 1.77 percent during the same period last year.
Another lender is still alive but retrenching. Indymac Bank
announced late last week that...
A lot of people are getting nervous about their mortgages, and some
have real reason to worry as they approach the reset
dates on their adjustable rate, interest only, or option payment
loans.
We have talked before about avoiding foreclosure but it is probably
time to do so again. Fortunately, there are a few new options out there
for homeowners who are in trouble or fear they soon may be...
The homebuilding industry is obviously in distress. But, in testimony
before the House Financial Services Committee, Federal Reserve Chairman
Ben Bernanke made an interesting statement about employment in the home-
building industry. Remarking that there was a bit of
a "puzzle" about government unemployment reports which...
Short-term adjustable rate mortgages (ARMs) were unchanged during the
last week, but longer term fixed and adjustable rate mortgages did move;
if up or down depends on whether you accept the surveys behind the
reports of Freddie Mac or the Mortgage Bankers Association (MBA).
According to Freddie Mac's Primary Mortgage Market
Survey, the 30-year fixed-rate mortgage...
An otherwise very smart real estate attorney once said to a
friend "Nobody understands dual agency." It seemed like a weird thing for
a lawyer to say at the time but Newsweek has just proven
his point.
In a rather remarkable short piece promoting buyer
agency in the "Tip Sheet" portion of the July 15 edition, the
magazine made the following points...
At the end of June the five agencies that regulate federally chartered
banks and their subsidiary lending corporations issued final
guidance to those institutions regarding subprime
lending, particularly the so-called exotic or non-traditional
loans that are threatening to bring down those lenders who haven't
already filed bankruptcy or shut their doors.
Also General Electric (GE) announced that it was
getting out of the subprime mortgage business and that it has already rid
itself of $3.7 billion in loans, about 75 percent of its total portfolio,
to reduce its exposure to the volatile market...
