THE HOUSING MARKET

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thelivyjr
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THE HOUSING MARKET

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MARKETWATCH

"Home-price growth slows again, Case-Shiller says"


By Andrea Riquier

Published: Aug 29, 2018 8:12 a.m. ET

The numbers:

The S&P/Case-Shiller national index rose a seasonally adjusted 0.3% and was up 6.2% for the year in June.

The 20-city index rose a seasonally adjusted 0.1% and was up 6.3% compared with a year ago.

What happened:

Economists and housing watchers have said for years that prices couldn’t continue growing as fast as they were.

The market finally got the message.


For now, price-growth is decelerating, prices are not declining: the national index’s 6.2% annual gain was down from 6.4% in the three-month period ending in May.

The 20-city’s annual gain was also down two ticks, from 6.5%.

That’s still double the rate of inflation and wage gains, but it’s a step in the right direction for bringing the market back in reach of more buyers.

Big picture:

The West is still the best, and Las Vegas is the one to beat.

After years of Seattle charting the strongest price growth, Vegas led the way in June, followed by Seattle and San Francisco.

New York, which has been slammed by recent tax-law changes, was the only metro to chart a monthly decline.

But its 3.8% annual gain wasn’t the lowest: Washington, D.C., prices rose only 2.9% for the year.

Six of the 20 cities had greater price increases in the year ending in June versus May.

https://www.marketwatch.com/story/home- ... 2018-08-28
thelivyjr
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Re: THE HOUSING MARKET

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MARKETWATCH

"Pending home sales stumble as housing market momentum wanes"


By Andrea Riquier

The numbers:

Pending-home sales declined 0.7% in July, the National Association of Realtors said Wednesday.

What happened:

NAR’s index, which tracks real-estate transactions in which a contract has been signed but the transaction hasn’t yet closed, fell to a reading of 106.2, missing the consensus forecast of a flat reading.

It was the seventh-straight month in which the index was lower on an annual basis — by 2.3% in July.

In the first eight months of 2018, the index has charted monthly increases four times and monthly decreases four times.


In July, the pending home sales index in the Northeast rose 1.0%, while the index in the Midwest inched up 0.3%.

Pending home sales in the South fell 1.7%, while in the West, they were down 0.9%.

Big picture:

Housing has stalled out.

In July, total home sales — existing and new — sank below a key psychological benchmark to the lowest in two years.

What had been a seller’s market across most of the U.S. hit a tipping point this year, as buyers decided the slim pickings on the market weren’t worth it.


The Realtors’ pending home sales data are frequently considered an early read on the important existing-home sales reports, since contract signings precede closings by several weeks.

In recent years, that relationship has broken down somewhat.

But the big picture remains constant: a market starved for supply isn’t conducive to healthy momentum.

The group forecasts a full-year decline for existing-home sales in 2018, and only a 2% increase in 2019.

What they’re saying:

“It appears sales activity crested in late 2017,” said Freddie Mac Chief Economist Sam Khater earlier in August.

“It is clear affordability constraints have cooled the housing market, especially in expensive coastal markets."

"Many metro areas desperately need more new and existing affordable inventory to break out of this slump.”

Market reaction:

The Dow Jones Industrial Average was little-changed in mid-morning trading.

https://www.marketwatch.com/story/pendi ... 2018-08-29
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Re: THE HOUSING MARKET

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MARKETWATCH

"Mortgage rates tick up again as Fannie, Freddie start a second decade in limbo"


By Andrea Riquier

Published: Sept 8, 2018 7:55 a.m. ET

Mortgage rates rose for a second week, buoyed by a selloff in the bond market, even as housing faces a grim reminder of unfinished work in the mortgage market.

The 30-year fixed-rate mortgage averaged 4.54% in the Sept. 5 week, according to Freddie Mac’s weekly survey, up two basis points.

The 15-year fixed-rate mortgage averaged 3.99%, up from 3.97%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.93%, up eight basis points.

Those rates don’t include fees associated with obtaining mortgage loans.

Mortgage rates follow the path of the benchmark U.S. 10-year Treasury note.

Bond prices have ticked down, pushing yields up, as the rosy economic data of the past week made safe-haven assets less attractive.

Thursday is an auspicious anniversary for Freddie and its counterpart, Fannie Mae.

It’s 10 years to the day since the United States government hustled the two companies, on the brink of a liquidity crisis, into state control.

That arrangement, known as conservatorship, was meant to be temporary, until Congress found a permanent, stable path forward.

But that hasn’t happened.

Still, many observers of the two enterprises have argued that over the past decade, they’ve reformed themselves into the staid, dependable guarantors that the American mortgage market has long needed, with no support from Washington.

Fannie and Freddie help the housing market by buying mortgages from banks and other lenders, enabling those financial institutions to free up their balance sheets for more lending.

The enterprises shed their own risk by, among other things, selling securities to investors. More certainty — and more capital — would help the two companies, and might in turn bolster the housing market, which is flagging.

In a release, Sam Khater, Freddie’s chief economist, noted that interest rate rises, even by just a few basis points, erode affordability in a market that’s already stretched thin.

“This weakening in affordability is hindering many interested buyers this fall, even as the robust economy brings them into the market,” Khater said.

“The good news is that purchase mortgage applications have recently rebounded to above year ago levels.”

https://www.marketwatch.com/story/mortg ... ewer_click
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Re: THE HOUSING MARKET

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MARKETWATCH

"Bernanke, Geithner and Paulson ‘have invented alternative history’ of Lehman collapse, professor says"


By Greg Robb

Published: Sept 13, 2018 4:01 p.m. ET

Nearly ten years ago, Lehman Brothers, declared bankruptcy after a frantic weekend of unsuccessful talks to find a buyer at the New York Fed.

Lehman’s collapse followed the takeover of Bear Stearns in early March by J.P. Morgan Chase that was assisted by a Fed loan and the government takeover of Fannie Mae and Freddie Mac.

The outcome has always been controversial.


After rescuing Bear Stearns and the GSEs, no public money was provided Lehman to stay afloat.

Days later, the Fed reversed course, providing assistance to two other investment banks, Goldman Sachs and Morgan Stanley, through access to loan programs.

Goldman’s total borrowing peaked at $69 billion while Morgan Stanley’s peaked at $107 billion.

The Fed also rescued American International Group through an initial $85 billion line of credit.

This was followed by the broad $700 billion bank bailout that Congress passed, known as the Troubled Asset Relief Program.

Ben Bernanke, Timothy Geithner and Henry Paulson have all said that they wished to rescue Lehman but that their hands were tied because Lehman did not have enough collateral to allow the government to provide a financial lifeline.

Laurence Ball, in a new book “The Fed and Lehman Brothers, Setting the Record Straight on a Financial Disaster,” debunks this official narrative.


An economics professor at Johns Hopkins University, Ball says there was no discussion of Lehman’s collateral or the legality of a loan during the crucial weekend.

In addition, he said that Lehman did have enough collateral, if anyone had looked.

Other analysts, including Joseph Gagnon of the Peterson Institute for International Economics, have argued that Lehman was probably deeply insolvent at the time of its bankruptcy.

MarketWatch sat down with Ball to discuss the findings of his book.

Henry Paulson said this recently:

“The thing we get the most criticism for is letting Lehman go down."

"Despite the fact that the three of us have all said, you know, we did everything we could to save Lehman."

"We didn’t believe then and don’t believe now a single authority we had that would have worked."

"Many people say well 'they were able to save Bear Stearns, they were able save AIG, why couldn’t they save Lehman?'“

"We answer it and most people still don’t believe us.”

You don’t believe them.


I don’t believe them.

They have been asked that question again and again and they have given the same answer again and again.

And when I first started researching this I didn’t know what the right answer was — there were such starkly different claims.

But having spent four years looking at the evidence — and there’s a lot of evidence, what Secretary Paulson is saying there is just simply not true.

What the three officials say is that Lehman didn’t have enough collateral so that the Fed couldn’t legally give them a loan.

Yes, that’s the sense of it.

And actually that is absolutely incorrect in two related, but distinct, senses.

First of all, in terms of their decision-making— again there’s a big record from some investigations with subpoena power about what people were discussing in that weekend — they were discussing various economic and political ramifications of letting Lehman fail or not letting Lehman fail.

They were not discussing does Lehman have enough collateral — do we have the legal authority.

So that was not the reason that they made the decision.

In addition, at this point it is possible to go back and put together the numbers, there is enough data on what Lehman’s assets were, what its liquidity needs were, and if one actually does that exercise, it is clear that Lehman did have ample collateral for the loan it needed to survive.

So, if the Fed had asked is there enough collateral, the answer would clearly have been yes.

They could have made a loan, it would have been legal, it would not have been very risky, and probably the whole financial crisis and Great Recession would have been less severe.

Paulson was trying to say to Wall Street, we’re not going to bail out Lehman, let this be a lesson for you.

In essence that’s Elizabeth Warren’s anti-bailout view.

But it didn’t last more than a day or two.


What I, in my opinion, establish with absolute certainty in the book, is that the official explanation about legal authority and collateral was simply not correct.

Again the fact that those three impressive people say it again and again, very strongly, does not make it true.

As far as what then is the real reason, there we have to be a little bit more speculative, and my conclusions there are not terribly original: I think it was political.

Of course, many people have said all along obviously it was political but everything I’ve seen is consistent with that.

It wasn’t just Elizabeth Warren, it was everybody.

It was the one completely bipartisan issue with Bernie Sanders saying this is a giveaways to the rich and conservatives saying this is socialism taking over the banks.

The two presidential candidates, Barack Obama and John McCain, both issued very stern statements.

This was right after the takeovers of Fannie Mae and Freddie Mac.

Obama and McCain issued statements saying we can’t have any more of this nonsense.

So there was tremendous political pressure.


In addition to that, there was an underestimation of the damage the failure would do, maybe some wishful thinking.

And you’re absolutely right that there was a 180 degree turn in a day-and-a-half when they rescued AIG.

I would put a positive interpretation on that.

They made a bad mistake, one that they have not owned up to.

But at least they quickly saw what a bad mistake it was.

Henry Paulson widely was quoted as saying I can’t be “Mr. Bailout.”

But I think he realized pretty quickly that being “Mr. Caused The Worst Depression Since The 1930s” would be even worse, so we’re lucky that he and the other policy makers at least were flexible enough to shift course.

Because Lehman was the accelerant on the financial crisis?

Yes.

Federal Reserve economists several days before the Lehman bankruptcy predicted that the unemployment rate would peak at 6% because of strains on financial markets.

Lehman was the event that caused strains on financial markets to turn into... people use metaphors like tsunami, trainwreck and so on.

Earlier in 2008, in March, Bear Stearns has been rescued.

Lehman failed in September.

What happened in between?


There were the big five investment banks and Bear Stearns was the fifth biggest and they were very invested in real estate.

So there was a lot of speculation that maybe this could happen to another one of these investment banks.

And the fourth biggest, Lehman Brothers, was also heavily invested in real estate, so there was speculation perhaps Lehman Brothers could be the next one to go.


Lehman Brothers actually had a very sharp shift in its business strategy.

Up until the Bear Stearns event, they were continuing to try to expand in real estate.

They actually thought “Gee, this is great."

"Real estate prices are depressed and we will buy low and make a lot of money.”

But after Bear Stearns, they realized they had a big problem and they tried hard to raise capital, they looked for an acquirer, and Secretary Paulson was very involved trying to be a broker for that.

Now I think they talked to basically every global investment bank, every sovereign wealth fund, Warren Buffett, Carlos Slim, anybody with money, and no deal was done.

I think various people I think including Secretary Paulson think the problem was that Richard Fuld, the Lehman CEO, didn’t fully face reality and had an unrealistically optimistic view about what his company was worth and wasn’t going to engage in a fire sale.

Of course that changed at the very, very end, when they faced bankruptcy.

I can certainly understand why Paulson and Fed officials were very frustrated.

They did work very hard for six months to try to arrange at Lehman takeover and were not successful.

The problem with the investment banks is they had long-term investments funded by short-term paper?

The basic mechanism by which they got in trouble is well understood.

It’s really the same story for all five banks: Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman and Bear.

They all had similar problems with then quite different outcomes.


But there were three interrelated problems.

Number one, they made these big bets on real estate during the housing boom and they lost a lot of money on those.

Factor number two was they had very low equity and once they started losing money on real estate it didn’t take long before their equity started getting close to zero and people started to question their solvency and their viability.


And then problem number three was exactly what you said: reliance on short-term funding — largely overnight repos — so that once people lost confidence, you had essentially the same phenomenon as a bank run.

The people who were providing them funds on a daily basis said: “We don’t want to be providing funds for somebody who might go bankrupt.”

So Lehman Brothers filed for bankruptcy at 1:45 a.m. on a Monday morning because they were supposed to open for business in a few hours and pay somebody a billion dollars and they just didn’t have billion dollars.

They were out of cash because their short-term financing was not rolled over.

The Fed’s job is to step in when there is a bank run.

That’s right.

According to classic central banking doctrine, going back to Walter Bagehot in the 19th century, the central bank is the lender of last resort, if there is a bank run, a panic.

And again, it could be an old-fashioned bank run with the depositors running and taking their cash out or it could be this 21st century version of repurchase agreements cut off.

The central bank’s job is to provide enough cash to keep things going.

Lehman could have been kept going long enough to work out some kind resolution that was better than just telling them you have six hours to prepare a bankruptcy petition for the largest bankruptcy in U.S. history.

Instead of acting, the two Fed officials, Bernanke and Geithner, deferred to Paulson?

The politics are interesting.

Under the law at the time, it was the Fed’s sole responsibility to decide whether or not to make emergency loans.

There was a procedure in which, if the New York Fed had chosen to, they could have told the Board of Governors in Washington we’d like to make a loan and to get approval for that loan by a vote of the Board of Governors.

The role of the treasury secretary legally in that process was exactly the same as the role of the secretary of agriculture or the mayor of Baltimore.

Now, what actually happened was that Paulson got on an airplane and flew to the New York Fed and started telling Geithner and others what to do, and at some point said: “Lehman has to declare bankruptcy.”

As far as I can tell, just by force of personality, he took over and told people what to do.

I should say Geithner, in his most recent discussions, made the point that the Dodd-Frank Act has limited the Fed’s ability to be the lender of last resort and that’s possibly dangerous as far as handling future crises.

One of the ways in which the Fed’s authority has been limited is now the law says the secretary of treasury has to approve [a loan].

I worry because the treasury secretary is inherently a political appointee that might lead to politically motivated decisions.

I have to say it is ironic that Geithner would bring up that point, because again he chose to follow the instructions of the treasury secretary, even though at the time he wasn’t legally required to do so.

What are the lessons for today?

There are takeaways at several levels I think.

One is I think the whole financial crisis has confirmed the traditional thinking about central banking.

I think we saw how beneficial it was when the Fed did perform its role as a lender of last resort with AIG and Bear Stearns.

We saw how damaging it was when the Fed did not step up to the plate at the key moment with Lehman.

So, one narrow thing we learned is that the part of the Dodd-Frank Act that restricts the Fed’s ability to be lender of last resort was a mistake and that’s dangerous and that ought to be repealed.

Now, of course, in reality a number of parts of Dodd-Frank probably will be repealed and it’s not going to be the lender-of-last-resort part but maybe someday.

I think more broadly, from my research, I became persuaded the financial crisis didn’t have to be nearly as severe as it was.

People have told a story in which there were these big mistakes made involving the real-estate bubble and too much debt and risky behavior on Wall Street and when you sin like that there has to be punishment.

I think the punishment didn’t have to be so bad.

I think if Lehman have been rescued we might be looking back at that episode the way we look back at the savings-and-loan crisis of the 1980s or the dot-com bubble of the early 2000s.

Those were cases in which people made mistakes, financial institutions lost a lot of money, there was some effect on the economy, but much much milder.

The whole Great Recession was not necessary.

I can’t help saying the other thing we learned is you’ve got to really be careful listening to government officials.

Paulson, Bernanke and Geithner are correctly viewed as the class of government officials as far as very intelligent, competent, dedicated public servants, but still the story they’re telling is just not accurate.


If what Paulson, Bernanke and Geithner were saying was “Hey we did a pretty good job overall, yes at 2 a.m. on Sept. 14th we didn’t quite get it right on Lehman Brothers in this incredibly crazy confusing situation,” I would be the last person to insist on perfection in that kind of situation.

But what irks me is that they have not owned up at all to any kind of mistake and they’ve invented this alternative history of what happened on the Lehman weekend that just isn’t accurate.

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Re: THE HOUSING MARKET

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MARKETWATCH

"Mortgage rates hit 6-week high with housing market at a crossroad"


By Andrea Riquier

Published: Sept 15, 2018 9:30 a.m. ET

Rates for home loans rose to a six-week high as upbeat economic data and a bulging deficit spurred a yield-lifting bond sell-off and big questions gripped the housing market.

The 30-year fixed-rate mortgage averaged 4.60% in the Sept. 13 week, according to Freddie Mac’s weekly survey.

That was up six basis points during the week, and marked the third straight weekly gain.

The 15-year fixed-rate mortgage averaged 4.06%, up from 3.99%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.93%, unchanged during the week.

Those rates don’t include fees associated with obtaining home loans.

Mortgage rates follow the 10-year U.S. Treasury note, which jumped over the past week on signs of wage growth, which signals faster inflation.

A report from the Congressional Budget Office also found that the deficit had widened meaningfully, signalling more supply of government bonds would be necessary.

More supply might dampen demand, and when bond prices fall, yields rise.

After a dismal summer selling season, the housing market seems stuck.

More would-be buyers are dropping out, choosing to rent rather than compete for scarce, over-priced homes to purchase.


With little relief on the horizon, observers increasingly believe substantial shifts in housing policy are needed.

One of the biggest issues facing the housing market is what’s often called “exclusionary zoning,” a phrase that admittedly makes eyes roll and many people tune out.

Exclusionary zoning simply means that powerful people in a community try to make it harder for newcomers to enter.

That can mean limiting the number, or the type, of new homes that can be built — only single-family homes, no apartment buildings, for example.

It can also mean setting rules for housing characteristics, such as specifying minimum yard sizes or minimum parking requirements.

Efforts like those are often referred to as “Not In My Backyard.”

They’re intended to maintain the character of an existing community, a goal that’s both logical and clearly within the rights of existing residents.

But it happens at the expense of people who can’t play by the same rules — often people of color and those at lower income levels.

And while it’s understandable that homeowners would seek to protect their investments by maintaining certain price levels in their communities, it’s also clear that such efforts exacerbate not only the housing crisis, but also social inequity.

Anti-Nimby (sometimes called “Yimby”) efforts have been gathering steam and may get a bigger boost from an unlikely source.

The Department of Housing and Urban Development said in August that it wants to “streamline and enhance” a rule on desegregation.

Revamping the “Affirmatively Furthering Fair Housing” rule would “provide for greater local control and innovation; seek to encourage actions that increase housing choice, including through greater housing supply,” HUD said.

A 2015 academic paper found that lowering regulations on building in high-density areas like New York and Silicon Valley would boost U.S. GDP by nearly 10%.

As the noted scholar Edward Glaeser wrote, “Whether these exact figures are correct, they provide a basis for the claim that America’s most important, and potentially costly, regulations are land use controls.”

Many housing advocates are optimistic that HUD’s move could be a step toward bringing such controls back in line with the needs of the housing market.

https://www.marketwatch.com/story/mortg ... ewer_click
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Re: THE HOUSING MARKET

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MARKETWATCH

"Opinion: Mortgage lenders may again lower standards as applications drop, former CitiMortgage CEO says"


By Sanjiv Das

Published: Sept 17, 2018 4:32 p.m. ET

I remember it like it was yesterday.

Ten years ago, the collapse of Lehman Brothers pulled the U.S. financial system, as well as the U.S. economy, into the abyss.


I was still relatively new to my job, having become CEO of CitiMortgage in July 2008.

But after three decades in financial services, including running services in Morgan Stanley’s Institutional Securities Group, I knew there were no good options, only less bad ones, regarding how to get through the crisis.

As Tim Geithner, the former U.S. Treasury Secretary observed, “There was a plane going down, the arsonists were on the plane…and your first obligation is to figure out how to land that plane safely.”

With the U.S. economy now flying again, it’s important to revisit the lessons of the crisis to avert another tailspin.

Here’s what’s called for now:

1. Seasoned leadership

After Citigroup’s fortune deteriorated in December 2007, it named Vikram Pandit as its CEO, and he brought in a new management team.

Pandit knew what to do because he was a veteran executive who understood the risks of lending.

He surrounded himself with those who had experience in their respective divisions.

Pandit recruited me in part because I had worked at CitiMortgage in the 1990s as a managing director, and for my experience managing mortgage risk.

My new role called on me to understand the risks that CitiMortgage was facing, such as credit risk, operations risk, and prepayment risk.

Next, I had to reform how the business operated, from how mortgages were underwritten via Citi’s third-party partners to introducing several mortgage assistance programs that reduced payments for those without a job.

Keeping people in their homes was a priority for us, and our actions helped to shift the paradigm within the industry.

Now, a decade after the crisis, two headwinds are putting pressure on mortgage companies.

First, interest rates are going up.

Second, the housing supply is constrained, which has resulted in a sharp appreciation in home prices.


With mortgage applications declining, executives have a choice to make: Should underwriting standards be lowered?

When volume becomes the defining metric for how loan officers and mortgage companies get paid, then loan quality deteriorates — and we’ve seen how that movie ends.

We in the industry should be mindful not to take shortcuts or return to suspect practices.

Those who managed through the great financial crisis won't have to think twice about making the right decision.

2. Responsible lending

These days a fresh crop of startups are eager to lend money to customers.

Indeed, I welcome innovation and disruption in financial services.

But it’s important that these organizations value responsible lending, from having their salespeople rigorously fill out loan documentation, to their understanding the borrower’s ability to repay.

Of course, all Americans should be given an opportunity to borrow, a belief that has bipartisan support.

But loans should always be underwritten on the ability of the borrower to repay.

Every loan represents a partnership between the lender and the borrower, not just to each other, but to making sure America’s housing market remains robust and resilient.

After the 2008 meltdown, the new team at Citi led by Pandit launched the “Responsible Finance Initiative” in which we made clear that we would help contribute to the U.S. economic recovery, promote consumer choice, and advocate for reforms that benefited consumers.

We condensed this initiative to three basic questions: (1) Is what I am doing creating value? (2) Are my interests aligned with those of my clients? (3) Is what I’m doing adding more systemic risk to the financial sector?

These questions should guide everyone in the financial services industry, from the CEO running a large bank to the loan officer at the local branch.

3: Dialogue between bankers and non-bankers on emerging risks

As a banker and now as a non-banker, I have come to recognize the importance of looking across the entire industry to identify systemic risks.

As the CEO of the third largest non-bank financial company (NBFC) in the mortgage business, Caliber Home Loans, I realize how important NBFCs are to the housing and broader financial services industry.

NBFCs now originate about 50% of all new mortgages and have cast a wider net of credit across a broader spectrum of borrowers.

We have had a positive experience in providing credit to individuals who have been neglected by larger lenders, as borrowers have demonstrated their ability to repay.

Additionally, the nature of systemic risk has substantially changed.

For example, banks and NBFCs are both concerned with credit risk.

But the proliferation of NBFCs creates the enhanced issue of liquidity risk, which means having enough capital to service loans.

Because there isn’t one single coordinator or regulator of mortgage risks, it’s important for bankers and non-bankers alike to discuss emerging systemic risks.

By heeding the lessons of the great financial crisis, we have a better chance of never again experiencing what we went through 10 years ago.

Sanjiv Das is the CEO of Caliber Home Loans. He was the CEO of CitiMortgage during the 2008 credit crisis.

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Re: THE HOUSING MARKET

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MARKETWATCH

"Housing starts roar back even as builder permits fall to 15-month low"


By Andrea Riquier

Published: Sept 19, 2018 11:30 a.m. ET

The numbers:

Housing starts ran at a 1.282 million seasonally adjusted annual rate in August, the Commerce Department said Wednesday.

That was 9.2% higher than July’s pace, and 9.4% higher than a year ago.

What happened:

Home builders broke ground on more homes in August, in good news for the supply-starved housing market.

August’s pace beat the MarketWatch consensus of 1.249 million.

But they applied for fewer permits: the 1.229 million pace of permits in August was down 5.7% for the month and 5.5% compared to a year ago.

August’s pace of permitting was the lowest since May 2017.


Builder confidence is treading water this year, with sentiment unchanged in September, according to an industry group.

Strong consumer demand is offset by high input costs, and new tariffs aren’t helping.

Big picture:

The government’s new-home reports are based on small samples, and can be subject to large revisions.

For the year to date, starts are up 6.9% compared to the same period a year ago.

In August, single-family starts edged up slightly: they were 1.9% higher for the month.

Single-family permits, the metric some economists consider most critical to understanding builder activity, plunged 6.1%.

Most single-family houses are built for purchase, rather than rent, so analysts view increased activity in that area a builder bet on a stronger economy and healthier consumers.

What they’re saying:

“Permits have clearly faded from the cycle high 1.38 million set in March of this year, and suggest that starts will likely remain rangebound for the rest of the year,” noted Robert Kavcic, a senior economist with BMO Capital Markets.

“This is consistent with our view that residential construction looks to be largely a wash on overall economic growth at this stage of the cycle.”

Stephen Stanley, chief economist at Amherst Pierpont, Securities,was more blunt: “To be clear, there is fundamental softness in housing.”

Stanley elaborated: “Industry sources suggest that the relentless torrid home price appreciation in recent years has finally reached a point that numerous prospective buyers are balking."

"In addition, high-end homes in high-tax states are starting to see some effect from tax law changes implemented in December."

"On top of that, new home construction has been impacted by a run-up in materials costs this year, squeezing builders in a vice between rising costs and a diminishing appetite of prospective buyers to pay up.”


Market reaction:

Home builder stocks are under pressure this year, largely because investors fear rising interest rates will dampen buyer demand.

PulteGroup, Inc. shares are down 19% in the year to date, while shares of D.R. Horton, Inc. have lost more than 15%.

https://www.marketwatch.com/story/housi ... 2018-09-19
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Re: THE HOUSING MARKET

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MARKETWATCH

"Existing-home sales hold steady as housing market begins to find some balance"


By Andrea Riquier

Published: Sept 20, 2018 11:31 a.m. ET

The numbers:

Existing-home sales ran at a seasonally adjusted annual 5.34 million rate in August, unchanged compared to July, the National Association of Realtors said Thursday.

What happened:

After falling for four straight months, sales of previously-owned homes stabilized in August.

Existing-home sales were 1.5% lower than a year ago.

And although sales seem to have stagnated in 2018, in the year to date, they’re only 1.2% lower than the same period a year ago, the Realtors said.

The flat reading missed the MarketWatch consensus forecast of a 5.37 million rate.

Sales surged 7.6% in the Northeast, the smallest region surveyed, but decreased 0.4% in the South.

In the Midwest, they rose 2.4%, while in the West, the priciest area, they slumped 5.9%

Big picture:

The housing market seems to be wobbling toward some equilibrium.

“Prices are still rising, rising, rising,” said NAR Chief Economist Lawrence Yun, but at a slightly slower pace, he stressed.

Buyer reluctance may have helped inventory notch its first increase in nearly three years, rising 2.7% compared to a year ago, while price gains moderated to a 4.6% yearly increase.

It was the fourth month of sub-5% yearly price growth, and left the national median price at $264,800.


At the current pace of sales, it would take 4.3 months to exhaust available supply.

What they’re saying:

“We welcome increased inventory,” Yun said.

He characterized the August results as “steady” but noted that the 4.6% annual gain in prices still outpaced wages.

Market reaction:

The 10-year Treasury yield was up slightly in morning trading, hovering near recent highs.

U.S. stocks held onto strong gains after the housing data was released.

https://www.marketwatch.com/story/exist ... 2018-09-20
thelivyjr
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Re: THE HOUSING MARKET

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MARKETWATCH

"Mortgage rates jump to four-month high as housing market hits a bump"


By Andrea Riquier

Published: Sept 20, 2018 3:15 p.m. ET

Rates for home loans jumped in step with yields in the bond market even as fresh reminders of familiar headwinds stalked the housing market.

The 30-year fixed-rate mortgage averaged 4.65% in the Sept. 20 week, according to Freddie Mac’s weekly survey.


That was up five basis points during the week, and marked the fourth straight weekly gain.

The 15-year fixed-rate mortgage averaged 4.11%, also up five basis points.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.92%, down from 3.93%.

Mortgage rates track alongside the benchmark 10-year U.S. Treasury note yield, which roared to a four-month high as trade war fears eased and Federal Reserve officials doubled down on their intentions to raise interest rates.

The popular 30-year fixed-rate mortgage is also at a four-month high, and while a few basis points wouldn’t dampen demand for home financing in a healthy market, current market conditions look vulnerable.

Builders broke ground on more homes in the most recent month, but applied for far fewer permits — a sign that construction activity may soon start to decline.

Sales of previously-owned homes are 1.2% lower in the year to date than in the same period last year, just months after finally regaining a post-crisis high.

If rates are really on the rise now after several years of false starts, they could be an additional headwind.

At current average rates, a monthly payment on a median-priced home, assuming a 20% down payment, would cost about $82 more per month than when paying the 3.99% full-year average rate from last year, according to Zillow’s mortgage calculator.

There is outsize demand for homes, if they’re available — but that’s a big “if.”

And with more and more signals that the current economic cycle is entering its final innings, housing is starting to look like a bellwether, not an outlier, say some analysts.

https://www.marketwatch.com/story/mortg ... ewer_click
thelivyjr
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Re: THE HOUSING MARKET

Post by thelivyjr »

MARKETWATCH

"Home-price gains decelerate to 11-month low as housing market tries for a soft landing"


By Andrea Riquier

Published: Sept 25, 2018 2:21 p.m. ET

The numbers:

The S&P CoreLogic Case-Shiller 20-city index rose 0.1%, seasonally adjusted, in July, and was up 5.9% compared with a year ago.

What happened:

Home-price gains were weaker in the three-month period ending in July than in the prior month.

The Case-Shiller national index rose a seasonally adjusted 0.2% and was up 6.0% for the year in July, down from a 6.2% increase in June.

The more closely-watched 20-city index had notched a 6.4% gain last month.

Those were the slowest paces of growth since last summer.

In July, Las Vegas was the number-one metro area yet again, with a 13.7% annual increase.

It was followed by Seattle, at 12.1%, and San Francisco, at 10.8%.

Only five cities had stronger price gains in July versus in June.

Big picture:

“Rising home prices are beginning to catch up with housing,” said David Blitzer, who chairs the committee that compiles the price indexes.

If would-be buyers balk at sky-high prices and stay away, prices should reflect that.

The question now is whether this slight dip will lure more buyers back and kick-start more price growth.

What they’re saying:

“Amidst homebuyers’ budget constraints and slight improvements in supply levels, home prices grew at a slower pace last quarter,” economists at mortgage financier Freddie Mac said Monday, before the Case-Shiller release.

“For the year, we anticipate that home prices will increase 5.5%, with the growth rate moderating to 4.5% in 2019.”

Also on Tuesday, the Federal Housing Finance Agency, regulator of Freddie and its counterpart Fannie Mae, released its home price index, which also showed deceleration.

Nationally, prices grew an annual 6.4% in July, FHFA said, down sharply from 6.8% in June, May, and April — and even lower than some of the yearly gains notched earlier in the year.

Market reaction:

The benchmark 10-year U.S. Treasury note, which mortgage rates often follow, has jumped in recent weeks as investors grow more certain that a Federal Reserve interest rate increase is in the cards.

https://www.marketwatch.com/story/home- ... 2018-09-25
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