Thanks Rich. Interesting Thanks Rich. Interesting reversal of the last 16 months.
Is the government out of bullets? Or, will more incentives be created to attempt to prop up the housing market. I would expect another 8% buyer’s credit to crop up around March.
Interest rates to stay low, or event go lower? Would say so, but aside from lots of refi activity, it alone isn’t bringing in the buyers.
I also agree that these low I also agree that these low interest rates might be only bringing in refi’s not many new buyers… assuming majority of people that needed to buy & refi have already done so in the past 2 years, I am curious wouldn’t all these low rates eventually undermine banks profit in the future?
1stimebuy wrote:I also agree [quote=1stimebuy]I also agree that these low interest rates might be only bringing in refi’s not many new buyers… assuming majority of people that needed to buy & refi have already done so in the past 2 years, I am curious wouldn’t all these low rates eventually undermine banks profit in the future?[/quote]
The banks would NEVER lend their money at 4.25is for 30 years! No one would, except for the U.S. taxpayer.
The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans), because only an idiot would lend their money for 30years at these rates and the only idiots around are the US Taxpayer. THe above entities use to make up only 20 or 30% of the mortgage market but times have indeed changed.
sobmaz wrote:The taxpayer is [quote=sobmaz]The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans)[/quote]
Do you have a source for 95%? The sources I’ve seen put it at 50-60% (which is still very high historically speaking).
Also, there are jumbo loans (eg, ~$1M) available in the high-4’s, according to the shopping I’ve been doing. So some banks are writing low rates.
permabear wrote:sobmaz [quote=permabear][quote=sobmaz]The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans)[/quote]
Do you have a source for 95%? The sources I’ve seen put it at 50-60% (which is still very high historically speaking).
Also, there are jumbo loans (eg, ~$1M) available in the high-4’s, according to the shopping I’ve been doing. So some banks are writing low rates.[/quote]
Government Sponsored Entities (GSEs) Fannie Mae, Freddie Mac, and government-owned Ginnie Mae account for almost the entirety of the secondary mortgage market according to an article by Paul Muolo in the May 31st 2010 National Mortgage News. Although this doesn’t come as a huge shock, it truly illustrates just how dependent the housing market is on government support.
The three mortgage giants had a market share of 98 percent of the secondary market in the first quarter of 2010, a decrease from 99 percent in the fourth quarter of 2009. Ten years prior, the three had a 55 percent market share. Fewer and fewer lenders are keeping mortgages on their own books, which illustrates just how little private capital exists in the housing market.
Great, Rich, where was this Great, Rich, where was this last week when I bought a house? Sure, you can link to something, but you can’t make me read. More importantly, you can’t make me learn.
I sincerely do appreciate the effort though.
ctr70
15 years ago
Yes 98% of the lending IS Yes 98% of the lending IS Government backed. There is almost NO LENDING at all outside of fannie, freddie, FHA, VA, USDA (rural loans). The private label mortgage market that pre-2008 I think was probably 60%+ of the market is GONE. It has no pulse. It is near 100% Government backed mortgage loans. W/out this the market would have crashed much, much worse.
The portfolio jumbo market is thawing a bit over $729,750. You can get some decent rates with 20% down or 20% equity, and of course very good credit and fully document-able income over the last 2 yrs. Those are not Gov backed loans.
Diego Mamani
15 years ago
Welcome to the Welcome to the USSR*!!!
*United States Socialist Republic
While it’s true that the taxpayer is footing the bill and guaranteeing 95%+ of all mortgages, it’s also true that the taxpayer doesn’t have the means to do so. We’re just printing money. Heck, maybe gold at $1300 is a bargain?
I’m buying a $800K house this month, with 20% down, so that I can lock-in both the current pre-inflation prices and the ridiculously low interest rates. We’re also buying a few $50K houses in the South East for rental income and further hedging against inflation.
Just wait until the losses Just wait until the losses are realized on all this govt-backed debt. We haven’t even begun to see the damage, and if rates go up, the value of those loans will fall through the floor, and this is on top of the defaults. This is when the real nightmare begins. IMHO, what we’ve seen thus far is just the warm-up to the real show.
I would love to believe that, I would love to believe that, as it’s what should happen in anything resembling a free market. But the game is so rigged, I have to wonder whether the govt really can keep this going in perpetuity.
evolusd
15 years ago
You’re scaring me CAR and I You’re scaring me CAR and I think you’re probably right. I feel like they’re creating a pseudo-bubble in that they’re not letting prices in all asset classes go where they should, but keeping them artificially high with low rates and money printing.
They’ve been overzealous up to this point; I’m sure they’ll do anything they can at the expense of our future to keep things from getting what they deem to be ‘worse’.
evolusd wrote:You’re scaring [quote=evolusd]You’re scaring me CAR and I think you’re probably right. I feel like they’re creating a pseudo-bubble in that they’re not letting prices in all asset classes go where they should, but keeping them artificially high with low rates and money printing.
They’ve been overzealous up to this point; I’m sure they’ll do anything they can at the expense of our future to keep things from getting what they deem to be ‘worse’.[/quote]
Yep. That’s exactly what scares me. How much ammo do they have left? And if they expend this ammo, what with the short and long-term consequences be? I’m afraid things do not look good going forward, and if people think the “pension crisis” looks bad (as many already know, I think this pension nonsense is just a tiny drop in the bucket, and the PTB is using unions as a scapegoat to deflect the attention away from the financial sector which has trillions of dollars in unrealized losses, IMHO), just wait until all the bad debt manifests itself over the next 5, 10, 20 years. If they print enough to cover it, you can be sure that we will all be living in extreme poverty because our cash won’t be able to afford us many of the basic necessities, IMHO.
Hi Rich
Any chance you canput Hi Rich
Any chance you canput up an up to date graph of historical home prices? Would love to see what the graph looks like with a historical context going back 10, 20 and even 30 years if possible. I’m starting to get the itch to call a bottom based upon the collection of things I see going on out there but wanted a look at this before making up my mind.
sdrealtor wrote:Hi Rich
Any [quote=sdrealtor]Hi Rich
Any chance you canput up an up to date graph of historical home prices? Would love to see what the graph looks like with a historical context going back 10, 20 and even 30 years if possible. I’m starting to get the itch to call a bottom based upon the collection of things I see going on out there but wanted a look at this before making up my mind.
thx[/quote]
sdr. It’s too late. I already called it. It was April 17, 2009 at 9:37 pm.
Good call FSD. I’m thinking Good call FSD. I’m thinking in broader terms. In my mind, there really is no such thing as a moment in time that constitutes a bottom. At one point in time you could get a great price on one home but not another. To me a bottom in RE is a period of time where you can find a home within some percentage (for me its 5 to 10%) of the best nominal price you could get on it and where you end up in that range depends upon hard work, having good help and just plain luck.
We have been trading in a pretty narrow range for more than 2 years now. I dont expect us to leave this range up or down for some time. For better or worse, it seems pretty safe to go out shopping to find a great home while sticking to your guns in getting what is a fair to good price in the current market based upon recent sales. Even most of the previously uberbears on this site have bought or are in escrow. I think folks who are still anticipating serious downside ahead are in for disappointment.
sdrealtor wrote:We have been [quote=sdrealtor]We have been trading in a pretty narrow range for more than 2 years now. I dont expect us to leave this range up or down for some time. For better or worse, it seems pretty safe to go out shopping to find a great home while sticking to your guns in getting what is a fair to good price in the current market based upon recent sales. Even most of the previously uberbears on this site have bought or are in escrow.[/quote]
I tend to agree with you, with the caveats that (a) we’re talking about the low/middle markets and (b) people are looking for a place to live for 15+ years, not the bubble average of 5-7.
But, the ongoing high-end weakness is telling. I think it confirms that much of the previous high-end run-up was due to perceived affordability – 5% down, interest-only loans, etc. I’m speaking about homes from $1.2-1.5M, eg, the high-end worker-bee homes. 20% down on $1.3M is $260k, which remains a large amount of cash/equity, even for successful people.
[quote=David Rosenberg]So, while the media types loved the fact that residential re-sale activity jumped 10% in September, the real story is that homeowners are in the process of trading down.The move-up buyer has become a very rare breed, if not D.O.A[/quote]
I think the high-end could compress another 10-15%, at the same time the low end gains. The FHA 5% down vs jumbo 20% down divide has created 2 markets, operating in parallel.
This does not necessarily apply to the all-cash $2M+ wealthy market, which is more erratically tied to business prosperity. But, RSF has a 24-month inventory of homes, and growing. So maybe it does.
GH
15 years ago
Now that the first bump is Now that the first bump is past, we can expect to see a continuation of the downward trajectory. Incomes have simply fallen and no matter how you try to do the math, prices MUST fall. It is of course possible we will soon see a $25K credit for buying, who knows, but I for one would be surprised at nothing except the basic math behind all this mess! I know math and well, just not so much human nature, which is why I called the peak in 2003…
Thanks Rich. Interesting
Thanks Rich. Interesting reversal of the last 16 months.
Is the government out of bullets? Or, will more incentives be created to attempt to prop up the housing market. I would expect another 8% buyer’s credit to crop up around March.
Interest rates to stay low, or event go lower? Would say so, but aside from lots of refi activity, it alone isn’t bringing in the buyers.
I also agree that these low
I also agree that these low interest rates might be only bringing in refi’s not many new buyers… assuming majority of people that needed to buy & refi have already done so in the past 2 years, I am curious wouldn’t all these low rates eventually undermine banks profit in the future?
1stimebuy wrote:I also agree
[quote=1stimebuy]I also agree that these low interest rates might be only bringing in refi’s not many new buyers… assuming majority of people that needed to buy & refi have already done so in the past 2 years, I am curious wouldn’t all these low rates eventually undermine banks profit in the future?[/quote]
The banks would NEVER lend their money at 4.25is for 30 years! No one would, except for the U.S. taxpayer.
The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans), because only an idiot would lend their money for 30years at these rates and the only idiots around are the US Taxpayer. THe above entities use to make up only 20 or 30% of the mortgage market but times have indeed changed.
sobmaz wrote:The taxpayer is
[quote=sobmaz]The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans)[/quote]
Do you have a source for 95%? The sources I’ve seen put it at 50-60% (which is still very high historically speaking).
Also, there are jumbo loans (eg, ~$1M) available in the high-4’s, according to the shopping I’ve been doing. So some banks are writing low rates.
permabear wrote:sobmaz
[quote=permabear][quote=sobmaz]The taxpayer is 95% of the mortgage market. In other words, 95% of all loans (mortgage loans) made these days end up with Freddie, Fanny, FHA or USDA (yep, the USDA makes home loans)[/quote]
Do you have a source for 95%? The sources I’ve seen put it at 50-60% (which is still very high historically speaking).
Also, there are jumbo loans (eg, ~$1M) available in the high-4’s, according to the shopping I’ve been doing. So some banks are writing low rates.[/quote]
Government Sponsored Entities (GSEs) Fannie Mae, Freddie Mac, and government-owned Ginnie Mae account for almost the entirety of the secondary mortgage market according to an article by Paul Muolo in the May 31st 2010 National Mortgage News. Although this doesn’t come as a huge shock, it truly illustrates just how dependent the housing market is on government support.
The three mortgage giants had a market share of 98 percent of the secondary market in the first quarter of 2010, a decrease from 99 percent in the fourth quarter of 2009. Ten years prior, the three had a 55 percent market share. Fewer and fewer lenders are keeping mortgages on their own books, which illustrates just how little private capital exists in the housing market.
http://www.totalmortgage.com/blog/mortgage-rates/us-taxpayers-back-nearly-100-of-secondary-mortgage-market/4085
Great, Rich, where was this
Great, Rich, where was this last week when I bought a house? Sure, you can link to something, but you can’t make me read. More importantly, you can’t make me learn.
I sincerely do appreciate the effort though.
Yes 98% of the lending IS
Yes 98% of the lending IS Government backed. There is almost NO LENDING at all outside of fannie, freddie, FHA, VA, USDA (rural loans). The private label mortgage market that pre-2008 I think was probably 60%+ of the market is GONE. It has no pulse. It is near 100% Government backed mortgage loans. W/out this the market would have crashed much, much worse.
The portfolio jumbo market is thawing a bit over $729,750. You can get some decent rates with 20% down or 20% equity, and of course very good credit and fully document-able income over the last 2 yrs. Those are not Gov backed loans.
Welcome to the
Welcome to the USSR*!!!
*United States Socialist Republic
While it’s true that the taxpayer is footing the bill and guaranteeing 95%+ of all mortgages, it’s also true that the taxpayer doesn’t have the means to do so. We’re just printing money. Heck, maybe gold at $1300 is a bargain?
I’m buying a $800K house this month, with 20% down, so that I can lock-in both the current pre-inflation prices and the ridiculously low interest rates. We’re also buying a few $50K houses in the South East for rental income and further hedging against inflation.
Just wait until the losses
Just wait until the losses are realized on all this govt-backed debt. We haven’t even begun to see the damage, and if rates go up, the value of those loans will fall through the floor, and this is on top of the defaults. This is when the real nightmare begins. IMHO, what we’ve seen thus far is just the warm-up to the real show.
I would love to believe that,
I would love to believe that, as it’s what should happen in anything resembling a free market. But the game is so rigged, I have to wonder whether the govt really can keep this going in perpetuity.
You’re scaring me CAR and I
You’re scaring me CAR and I think you’re probably right. I feel like they’re creating a pseudo-bubble in that they’re not letting prices in all asset classes go where they should, but keeping them artificially high with low rates and money printing.
They’ve been overzealous up to this point; I’m sure they’ll do anything they can at the expense of our future to keep things from getting what they deem to be ‘worse’.
evolusd wrote:You’re scaring
[quote=evolusd]You’re scaring me CAR and I think you’re probably right. I feel like they’re creating a pseudo-bubble in that they’re not letting prices in all asset classes go where they should, but keeping them artificially high with low rates and money printing.
They’ve been overzealous up to this point; I’m sure they’ll do anything they can at the expense of our future to keep things from getting what they deem to be ‘worse’.[/quote]
Yep. That’s exactly what scares me. How much ammo do they have left? And if they expend this ammo, what with the short and long-term consequences be? I’m afraid things do not look good going forward, and if people think the “pension crisis” looks bad (as many already know, I think this pension nonsense is just a tiny drop in the bucket, and the PTB is using unions as a scapegoat to deflect the attention away from the financial sector which has trillions of dollars in unrealized losses, IMHO), just wait until all the bad debt manifests itself over the next 5, 10, 20 years. If they print enough to cover it, you can be sure that we will all be living in extreme poverty because our cash won’t be able to afford us many of the basic necessities, IMHO.
Hi Rich
Any chance you canput
Hi Rich
Any chance you canput up an up to date graph of historical home prices? Would love to see what the graph looks like with a historical context going back 10, 20 and even 30 years if possible. I’m starting to get the itch to call a bottom based upon the collection of things I see going on out there but wanted a look at this before making up my mind.
thx
sdrealtor wrote:Hi Rich
Any
[quote=sdrealtor]Hi Rich
Any chance you canput up an up to date graph of historical home prices? Would love to see what the graph looks like with a historical context going back 10, 20 and even 30 years if possible. I’m starting to get the itch to call a bottom based upon the collection of things I see going on out there but wanted a look at this before making up my mind.
thx[/quote]
sdr. It’s too late. I already called it. It was April 17, 2009 at 9:37 pm.
http://piggington.com/welcome_to_the_bottom
[img_assist|nid=13126|title=bottom|desc=|link=node|align=left|width=100|height=75]
nominal CS hpi
real CS hpi
[img_assist|nid=14196|title=nominal CS hpi|desc=|link=node|align=left|width=367|height=284]
[img_assist|nid=14197|title=real CS hpi|desc=|link=node|align=left|width=367|height=287]
Good call FSD. I’m thinking
Good call FSD. I’m thinking in broader terms. In my mind, there really is no such thing as a moment in time that constitutes a bottom. At one point in time you could get a great price on one home but not another. To me a bottom in RE is a period of time where you can find a home within some percentage (for me its 5 to 10%) of the best nominal price you could get on it and where you end up in that range depends upon hard work, having good help and just plain luck.
We have been trading in a pretty narrow range for more than 2 years now. I dont expect us to leave this range up or down for some time. For better or worse, it seems pretty safe to go out shopping to find a great home while sticking to your guns in getting what is a fair to good price in the current market based upon recent sales. Even most of the previously uberbears on this site have bought or are in escrow. I think folks who are still anticipating serious downside ahead are in for disappointment.
sdrealtor wrote:We have been
[quote=sdrealtor]We have been trading in a pretty narrow range for more than 2 years now. I dont expect us to leave this range up or down for some time. For better or worse, it seems pretty safe to go out shopping to find a great home while sticking to your guns in getting what is a fair to good price in the current market based upon recent sales. Even most of the previously uberbears on this site have bought or are in escrow.[/quote]
I tend to agree with you, with the caveats that (a) we’re talking about the low/middle markets and (b) people are looking for a place to live for 15+ years, not the bubble average of 5-7.
But, the ongoing high-end weakness is telling. I think it confirms that much of the previous high-end run-up was due to perceived affordability – 5% down, interest-only loans, etc. I’m speaking about homes from $1.2-1.5M, eg, the high-end worker-bee homes. 20% down on $1.3M is $260k, which remains a large amount of cash/equity, even for successful people.
From: http://www.scribd.com/doc/40221535/Breakfast-With-Dave-102610
[quote=David Rosenberg]So, while the media types loved the fact that residential re-sale activity jumped 10% in September, the real story is that homeowners are in the process of trading down.The move-up buyer has become a very rare breed, if not D.O.A[/quote]
I think the high-end could compress another 10-15%, at the same time the low end gains. The FHA 5% down vs jumbo 20% down divide has created 2 markets, operating in parallel.
This does not necessarily apply to the all-cash $2M+ wealthy market, which is more erratically tied to business prosperity. But, RSF has a 24-month inventory of homes, and growing. So maybe it does.
Now that the first bump is
Now that the first bump is past, we can expect to see a continuation of the downward trajectory. Incomes have simply fallen and no matter how you try to do the math, prices MUST fall. It is of course possible we will soon see a $25K credit for buying, who knows, but I for one would be surprised at nothing except the basic math behind all this mess! I know math and well, just not so much human nature, which is why I called the peak in 2003…