Morning Report: Average home sizes falling again 2/21/17

Vital Statistics:

Last Change
S&P Futures 2352.8 4.8
Eurostoxx Index 372.3 1.3
Oil (WTI) 54.5 1.1
US dollar index 91.4 0.4
10 Year Govt Bond Yield 2.45%
Current Coupon Fannie Mae TBA 102.045
Current Coupon Ginnie Mae TBA 103.17
30 Year Fixed Rate Mortgage 4.14

Stocks are up as the markets have a risk-on feel to them. Bonds and MBS are down small.

Not much in economic data, but we will have Fed-speak all day, with Kashkari, Harker, and Williams speaking.

The highlight of the week should be the FOMC minutes coming out tomorrow. Other than that, we get existing home sales, new home sales and the FHFA House Price Index.

The initial look at February manufacturing indicates a slight decline as the flash PMI falls from 55.5 to 54.3. Services came in at 53.9.

Goldman is tempering their enthusiasm for the S&P 500, warning that investors are overly optimistic. They predict the stock market will go nowhere for the rest of the year. Their concerns are that the good earnings from Q4 won’t continue, and any sort of fiscal stimulus out of Washington will take time to be felt.

Despite TRID’s best efforts, about 17% of consumers end up being surprised by the existence of closing costs when getting a mortgage. The surprises run the gamut of points, up front MI and taxes.

Speaking of taxes, here are some tax tips from NAR.

House Financial Services Committee Chairman Bill Huizenga (R-MI) has introduced a bill to clarify the definition of points and fees under the CFPB QM rule by excluding title charges and escrowed T&I.

We are starting to see average new home sizes decline, which is a function of the emerging first time homebuyer and the market for starter homes. After the real estate bust, the only segment of the new home market that was working was the ultra-luxury end, which meant that average home sizes increased. From 2009 to 2015, it looks like average square footage increased by close to 400 square feet. Now, as more and more starter homes and townhouses are being built, we are seeing average size decline again. Strange to think that the luxury end is the only part that works in the aftermath of a bust, but there you go.

One often overlooked advantage to buying versus renting: The fact that making your mortgage payment every month amounts to a savings plan as you pay down your principal on your loan.

The Despot reported better than expected earnings this morning as more and more people do work on their homes. Comps were up 6.3%.

9 Responses

  1. In hindsight, I think it’s safe to say that the concept of fiscal conservatism died when Reagan failed to eliminate the Department of Education. It’s now just a way to get elected and gin up a base that doesn’t really believe in it.


    • Well yes. Also Trump’s not a fiscal conservative. The base didn’t vote for fiscal conservatism. They voted for what Ross Douthat identified a while back:

      “But without a vision of the common good, a party is basically just a faction, seeking only the interests of its constituents, with no sense of its responsibilities to the country as a whole. And the Obama-era Republican Party’s worst tendency has been toward just this sort of factionalism: Not an ideological extremism, exactly, but rather a vision of government that you might call “small government for thee, but not for me,” in which conservatism is just constituent services for the most reliable Republican groups and voters.”


    • Yep… We are energy independent and the strategic value of the ME is declining by the year.. We are demanding NATO shoulder more of the burden and yet, Trump wants to increase defense spending…

      The Department of Education was just a sop to the teacher’s union by Carter / Mondale…

      Liked by 1 person

      • Agreed, and even that department, so worthy of elimination, still stands.

        Fiscal conservatism died under Reagan. Or at least it was exposed as merely campaign rhetoric.

        And to be fair, Republican voters would be the first to turn on Republicans if real cuts in government spending occurred.


  2. This is from a year into his term.

    Course, it’s Scarborough, so…

    And since he’s criticizing a democrat I think I’m supposed to mention an intern killed herself in his office.


  3. Cause of death depends on who he’s criticizing. If it’s Republicans, it was medical, if it’s Democrats it was suicide because he was having an affair with her.


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