Morning Report: Housing affordability returns to pre-crisis levels 2/17/17

Vital Statistics:

Last Change
S&P Futures 2338.5 -7.0
Eurostoxx Index 368.5 -1.6
Oil (WTI) 53.1 -0.3
US dollar index 910.9 0.1
10 Year Govt Bond Yield 2.41%
Current Coupon Fannie Mae TBA 102.1
Current Coupon Ginnie Mae TBA 103.2
30 Year Fixed Rate Mortgage 4.11

Stocks are lower this morning on overseas weakness. Bonds and MBS are up.

The index of leading economic indicators rose 0.6%, stronger than expected.

Household debt increased in the fourth quarter, as growth in non-mortgage debt outpaced growth in mortgage debt. The 4th quarter saw $617 billion in newly originated mortgages, the highest level since Q32007. Auto loans and student loans saw an uptick in 90 day delinquencies, while credit cards and mortgages saw an improvement. Remember, this is only the debt side of the equation – both incomes and asset prices (especially housing) are higher than they were in 2007.

Housing affordability remains about in line with pre-crisis levels, according to the NAHB. As of the end of the year, approximately 59.9% of all homes were affordable to a borrower with the median income. You can see the big swing in affordability between the boom and bust years. Tight inventory is being offset by (still) low mortgage rates. California remains the biggest issue regarding affordability. In the San Francisco MSA, just 7.8% of the homes sold were affordable to people earning the median income of $104,700.

The median home price increased 7% in January to $261,100, according to Redfin. Home sales were up 5.6% compared to January 2016, which shows that the uptick in rates hasn’t affected the purchase market. Inventory is down 12% YOY, and listings have dropped 5.1%. 18% of homes sold above list price, and the average sales to list ratio was 93.7%. Days on market fell 7 days YOY to 59.

Despite all the missteps of the initial days of the Trump administration, stocks are partying like it is 1999. This certainly has the political class (and the business press) scratching their heads. First, while the first 100 days of the Official U.S. Airing of The Grievances may seem dramatic, it doesn’t mean much for business (except for some consumer product companies and retailers who suffer from ideologically-driven boycotts). Second, for all the talk in the business press of “uncertainty,” investors are sensing (correctly, I think) that gridlock is going to rule the day in DC. Nothing is more “certain” than gridlock, and if regulations get eased a bit, that is good for business. Gridlock also means the Fed has some room to go slower. At the end of the day, earnings drive the stock market, not the histrionics in Washington and the media.

81 Responses

  1. Good quote from Andrew Sullivan. I need to resist this temptation:

    “After a while, you’re not so much arguing for conservatism as against leftism, and eventually the issues fade and only the hate remains.”

    http://nymag.com/daily/intelligencer/2017/02/andrew-sullivan-the-white-house-mole.html

    I think it does encapsulate the difference between the Republican party and conservative movement of today vs the 1970’s and 1980’s.

    Like

    • He thinks the annoying, smug insufferable left only exists on campus. I cannot think of a place it doesn’t exist…

      Like

    • ” I need to resist this temptation:”

      My plan is to get a better hobby

      i’ve been neglecting my homebrewing. so that’s going to be a bigger priority.
      and my son and I are going to attempt to make a lego stop-motion animation movie. and if nothing else, that’s time consuming.

      Like

  2. Good piece for those who haven’t seen it already.

    “Why Donald Trump Really Is a Populist
    Feb 16, 2017 10:45 AM EST
    By Francis Wilkinson”

    https://www.bloomberg.com/view/articles/2017-02-16/why-donald-trump-really-is-a-populist

    Like

    • This comment from the article made me laugh,

      “tpx
      22 days ago
      Some older middle aged white guy in California, not to mention all his peers who are engineers, university professors, writers, etc. were all exposed to lead most of their childhoods if they were raised in America. All the white American heroes of the latter half of the 20th century were exposed to lead. That might partly explain their abuse of national power, and immoral use of military power, but it did not prevent them from exercising an intellect to learn, think, and solve other complex problems. The children of Flint need a New Black Panther Party to teach them whatever defects they may have encountered environmentally will not prevent them from attaining the same level of achievements of the upper classes that have oppressed them.

      The child in the article who recognizes his exposure to lead does have consequences already demonstrates his cognitive abilities; ones the white elites in his state cannot recognize, and whose inability to accept moral responsibility for failing Flint’s children is a result of their own mental disabilities, possibly caused by lead exposure as children, when lead was being exhausted into the atmosphere at a very high rate. The failure to teach the children of Flint they will not be any less debilitated from lead than the elites who exposed them to it, should be added to the list of American tragedies they will have to face.”

      Like

  3. Like

  4. “Unfortunately, Mr. McCain, like Mr. Bush, sees the world as divided into friends (like Georgia) and adversaries (like Russia). He proposed kicking Russia out of the Group of 8 industrialized nations even before the invasion of Georgia. We have no sympathy for Moscow’s bullying, but we also have no desire to replay the cold war. The United States must find a way to constrain the Russians’ worst impulses, while preserving the ability to work with them on arms control and other vital initiatives.”

    https://mobile.nytimes.com/2008/10/24/opinion/24fri1.html?referer=

    “The severity of this issue, the gravity of it, is so consequential because if you succeed in corrupting an election, then you’ve destroyed the foundation of democracy,” he told me later. “So I view it with the utmost seriousness. I view it more seriously than a physical attack. I view it more seriously than Orlando, or San Bernardino. As tragic as that was, the far-reaching consequences of an election hack are certainly far in excess of a single terrorist attack.”

    http://nymag.com/daily/intelligencer/2017/02/john-mccain-takes-on-donald-trump.html?mid=nymag_press

    Like

  5. I don’t think Rand Paul is over McCain’s insults during his filibuster.

    “He would bankrupt the nation. We’re very lucky John McCain’s not in charge, because I think we’d be in perpetual war,” Paul added.

    http://thehill.com/policy/international/320290-rand-paul-were-very-lucky-john-mccains-not-in-charge

    Like

  6. Apparently Gates and Panetta are in lockstep that these leaks are worthy of investigation. They are, IIRC, the only two men who have served both as CIA director and SecDef, and both are considered to be able to deal outside partisan politics as professional intelligence officers.

    Panetta says that professional intelligence agents don’t leak, but they are duty bound to report to the WH and to their oversight committees in the legislature. Leaks historically proceed from there. The other interesting thing he offered on MTP without any hesitation was that he could not imagine intelligence being withheld from DJT or any POTUS. When Tapper[?][my wife says I have the wrong guy there] asked him if intelligence was incriminating of the POTUS did the agencies have to tell him, he answered “yes”. It is not for intelligence agencies to make decisions on policy, he said, but to gather intelligence and discern its potential. If it is potentially important, it must be shared with the WH and the Congressional oversight committees.

    Like

  7. Heh.

    Like

  8. This is probably about as good of a pick for National Security Advisor as Trump could have made:

    https://en.wikipedia.org/wiki/H._R._McMaster

    Like

    • This is probably about as good of a pick for National Security Advisor as Trump could have made

      I think a good pick for anyone. I have read after the SEAL turned him down that the NSA can now pick his own staff, and I hope that becomes operational for Rex, Mattis, and Kelly, as well. A core of pros can keep us out of big trouble. Not that it is a sure thing, but it beats the alternative.

      Scott – Panetta was referring to those reports when he said that in his experience the leaks come after the intel reports to the political branches. In any case, he wants the leaks hunted down.

      Like

  9. So. No more love for Milo, eh?

    Next time maybe you’ll believe me when I tell you someone’s an asshole.

    Like

    • Whether he is or is not an asshole doesn’t change the merits of his arguments.

      But it does look like that there’s still one subject that’s sufficiently beyond the pale to get him shunned.

      Still, live by outrage, die by outrage. Playing the victim card here really doesn’t suit him.

      Like

      • What’s going on with Milo?

        Like

      • Sorry, but yes, his being an asshole DOES mean that his argument is crap. Being a pedophile, and one who uses the Catholic church’s pedophilia as an excuse, means that his opinion is worthless.

        Like

        • Mich:

          Being a pedophile, and one who uses the Catholic church’s pedophilia as an excuse, means that his opinion is worthless.

          Are you saying Milo is a pedophile? I have not seen that info. Where are you getting that?

          Like

        • He said in a Facebook posting that “boy” referred to younger men that I took to mean 16-17 years old in sexual relationships with older men of means as a way to help gay “boys” gain some measure of independence due to (often?) being cut from their families due to being homo.

          Sounded like rationalization to me though, and I think you agree.

          We both know how those gays can be, amIright?

          Like

        • Mich:

          Do I have to do all your research today?

          And Milo is the asshole? Jeez.

          Like

        • Edit: corked by J!

          Ok, saw the “13 year old” reference in this one. I didn’t listen to the podcast and I wouldn’t trust second hand reporting on it.

          In his Facebook posting he also distinguishes between pre and post pubescence as the pedophilia dividing line (I’m paraphrasing). As I said before, and I’m sensing you agree, that his distinctions are rationalization that homos make so they can enjoy homo sex with young men without the guilt or societal aprobation.

          What should the age of sexual consent be, in your opinion?

          I had sex with a 17 year old when I was eighteen and at nineteen I lusted after but was unsuccessful in bedding a different 17 year old. I happily would have though.

          Is a 17 year old engaging in sex with a 13 year old molesting that 13 year old?

          Like

        • Troll:

          Yiannopoulos specifically referred to relationships between 13-year-old boys and older men.

          Defend him? Really??

          Liked by 1 person

        • I did not see that. I know he was molested by a priest (or claimed to be, and he jokes about it. I didn’t see the reference in the articles you linked. I’ll reread them.

          Like

        • “Sorry, but yes, his being an asshole DOES mean that his argument is crap.”

          That’s pretty much the definition of ad hominem, so there’s no point in going further with this.

          “Defend him? Really??”

          It’s not defending him to point out that the argument being used to condemn him is crap. But this is how everyone who doesn’t call Trump Hitler ends up being labeled a Trump supporter.

          So be it. I’ll go with the truth any day over buying into BS just because it’s politically correct.

          Milo isn’t a pedophile. But he’s trying to play the victim card to avoid having to take full responsibility for his position on the subject and it’s going to backfire because it basically undermines his entire raison d’être.

          Based on the piece, Milo defines actual pedophilia more narrowly than his opponents and also conflates it with the age of consent issue which is related, but separate.

          He did have an ironic quip in his Facebook posts that apparently calling him a white supremacist wasn’t enough to put him beyond the pale so the ante had to be upped.

          Like

        • “Are you saying Milo is a pedophile? I have not seen that info. Where are you getting that?”

          Scott, the more reasonable characterization is that Milo was defending pedophilia by arguing that 13 year olds were capable of giving consent in a relationship with a much older adult. He then argued over the definition of actual pedophilia as a psychiatric disorder.

          He used himself as an example of the younger person and then played the victim card when challenged on it. I.e. his victimhood gave him special standing to make the argument.

          Like

        • jnc:

          Milo isn’t a pedophile….the more reasonable characterization is that Milo was defending pedophilia by arguing that 13 year olds were capable of giving consent in a relationship with a much older adult. He then argued over the definition of actual pedophilia as a psychiatric disorder.

          Thanks…that was my understanding too, after reading a couple of articles last night. It seems to me that there is much greater evidence that Milo is an asshole than that he is a pedophile.

          Like

        • “his being an asshole DOES mean that his argument is crap”

          but that would mean all mine and, definitely, all of Scott’s arguments are crap.

          in fact, I think only Mark would be left.

          Like

        • nova:

          but that would mean all mine and, definitely, all of Scott’s arguments are crap.

          Genuine lol.

          Like

        • I know for sure that I’m out under that standard.

          Like

        • Nah. You guys can be annoying; Milo is certifiably an ass.

          Like

        • You and Scott agree:

          “It seems to me that there is much greater evidence that Milo is an asshole “

          Liked by 1 person

        • jnc;

          You and Scott agree:

          Milo works miracles!

          Liked by 1 person

      • yes — live boy, dead girl rule.
        i’m sure about the first part. the second part is obviously a lie. but it’s there for tradition.

        Like

    • I have always considered him to be more of a performance artist than a pundit.

      Coming from the right is the only way to shock anymore. Art has been dominated by flabby leftism for 50 years now.

      Like

  10. Hmm. Studying economics makes you selfish. Hmm.

    I
    Shall
    Say
    Nothing.

    Like

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