Housing Rolling Along 2

In Todays Wall Street Journal...


The Mortgage Bankers Association reported that applications for home loans surged 8.8% in the latest week, as applications for purchase jumped 7.1% and refinancing applications soared 11%. "An increasing proportion of refinancing activity is now accounted for by homeowners locking in fixed mortgage rates. Despite a lot of weekly volatility, refinancing activity has been little changed over the past 6 months and is actually 5.5% above its year-ago level," noted Steven Wood of consulting firm Insight Economics. Average mortgage rates were mixed, with 30-year rates flat and 15-year rates higher by a couple ticks. The average one-year Treasury adjustable-rate mortgage rate declined.
 
I am suprised about all this talk about interest rates rising. Since I am in the mkt actively trying to do the NNJ CT home buying /selling spread, I was suprised to get a quote today for 30yr fixed at 5.8. During the housing boom of 2000-2006, I refinanced my 30yr from 6.5 I think to 5.75.

Lo and behold, all the media reports of intrest rates rising, the 30 is only at 5.87.Does'nt that show the the housing bubble is not really caused by interest rates? but something more nebulous like fear/greed/overhype underhype and actual fundamentals like rising inventories?
 
Quote from traderdragon2:

Bubbles typically last a lot longer than people anticipate. I dont think this is anywhere near over.

How can anyone say this is over *before* the majority of the interest only arms from hell have reset?

The local san diego paper,recently, had a list of declines for areas from their peak prices.

These are median home prices for resale of single family homes.

Coronado: -64%
Carlsbad southeast: -32%
Point Loma: -31%
Poway: -28%
Escondido West: -25%


At the peak, the median price of a Corondao home was 3 MILLION DOLLARS.

Imagine being the bag holder who bought at the top and is down 64% right now. Try telling him he wasnt caught in a real estate bubble.



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These are median selling prices of homes sold.

I don't think it necessarily means Coronado prices dropped 64%.
It is possible less expensive homes are selling more.

On another note I would love to see a Real Estate correction or whatever you call it.

Maybe the #'s on a 6 or 8 family apt building would work then.
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Quote from traderdragon2:

Yup, that pretty much sounds like socal. Everyone thinks their home is going to double in the next 5 years. Heh. Not anymore. That euphoria is gone and starting to be replaced with a lot of worry and dread. It could get ugly here.


Not sure about 50% decline from here, but there is plenty of room to go down.

I dont this this bubble is going to pop as much as deflate. We'll know in the next 3 years.

I have too many friends here in extreme pain making their mortgage payments and they havent hit their first ARM reset yet. Their interest only loans will reset too. double whammy. Have no idea how they will make their payments if they are just clawing by already.
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FWIW, I wish them the best. As their friend, I would be advising them to sell...even at a loss...or to refinance into a long-term fixed rate. Tell them, that if they refinance, also borrow the money to pay a lot of points to bring the rate down. I've found that when you borrow from a mortgage to pay points, you pay something like $7 for every $1000 borrowed, but your payment drops by something like $14. Basically, you're getting a 20% return on money you are borrowing at 6%.

SM
 
note the sarcasm...

Sounds like there is great news out of the UBS-sponsored investor conference today...

BOSTON (MarketWatch) -- Pulte Homes Inc. (PHM :
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PHM28.43, -0.51, -1.8% ) Chief Executive Richard Dugas said the home builder is shortening its land pipeline, lowering sales volumes and cutting costs as it navigates a difficult housing market. He said the company has faced tougher conditions since March when "literally overnight" demand for homes pulled back significantly, driving a sharp rise in inventories of new and existing homes. The market experienced a "double impact" when speculators stopped buying homes, and also put homes up for sale to exit the hottest markets. Dugas at a UBS-sponsored investor conference Thursday said cancellation rates have doubled since last year, which is further boosting the inventory overhang, while builders are offering incentives and concessions to nervous buyers.

He's not the only one unclear about where a bottom "MIGHT" be.
 
I can assure you that prices in southeast carsbad have not dropped close to the number reported above.

I was just out there helping my brother look for deals.

The deal are like this. a 4000 sq foot tract home selling in La Costa Oaks that was worth 1.2 at the top is asking a value range marketing price of 1.1 to 1.2.

No one is buying. houses are not selling but no one seems to big taking the big haircut yet. They will, just not yet.
 
just to keep in mind that corrections can take 2 forms-price (which in my opinion are highly probable in spec areas like NV, FL, AZ )


and TIME , which is the least discussed and of a higher probability in established areas like NYC, Grennwich CT, Summit NJ where there does not seem to be a shortage of F.U. Wall St money.
 
Quote from EqtTrdr:
Quote from TraderD:

He really did push ARMs citing Fed research about 1 year ago. There was a thread on it here, with links etc.



exactly correct
exactly correct
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Time to reflect. I should have listened to Greenspan. If he says that ARMs are safe (2 years ago) it means they are. And they were at least for 2 years. Funny, how he basically spelled it out:) It would be really stupid of him to set himself up in a big way.
Recalling Vic Sperandeo, one should watch political angles and draw conclusions. They wanted housing to roll, and they kept it rolling.
 
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