Morning Report: Home prices continue to climb 6/26/18

Vital Statistics:

Last Change
S&P futures 2724 1.5
Eurostoxx index 378.31 1.12
Oil (WTI) 68.22 0.14
10 Year Government Bond Yield 2.88%
30 Year fixed rate mortgage 4.57%

Stocks are flattish this morning on no real news. Bonds and MBS are up.

Consumer confidence slipped in June, according to the Conference Board. The decline, while still high by historical standards, was driven more by a drop in the outlook than it was by a decline in current conditions.

Home price appreciation continued in April, with some real eye-popping moves in a few MSAs. Seattle and Las Vegas were up 13%, YOY, San Francisco was up 11%. Bringing up the rear was Chicago and Washington, up 3%. While the index has hit its 2006 peak, it is important to remember these are nominal (i.e non-inflation adjusted) numbers. If you adjust for inflation, Dallas, Denver and Seattle have regained their bubble peaks, while everyone else is still lower. Inventory is still tight, but the picture is improving.

Housing demand was up 7% in May, according to Redfin. Redfin measures housing demand by counting the number of offers and requests for home tours. Demand is actually down from a year ago, but the market is still a seller’s market.

Fears of a trade war are causing big asset allocations into government bonds. The government bond ETF GOVT saw record volume on Friday of $600 million. Momentum traders are beginning to pile into the long Treasury trade. Morgan Stanley is calling the top in yields. “While trade tensions have yet to negatively impact U.S. economic data noticeably, the Fed has started to hear more concern from business contacts. We see risk that such tension will impact economic data more in the coming months, even if a benign outcome comes to pass eventually.” FWIW, the Fed Funds futures are still handicapping a toss-up between 1 or 2 more hikes this year.

For mortgage originators, trade fears are probably going to help keep the 10 year below 3%, though it probably won’t be enough to bring back refi volume or to save the year.

Speaking of saving the year, in the second quarter cost cutting was a #1 or #2 concern for 30% of all mortgage originators. Last year, only 11% saw cost cutting as a #1 or #2 concern, focusing more on consumer-facing technology and process streamlining. In the first quarter, mortgage bankers reported a loss on production for only the second time in 10 years.

32 Responses

  1. https://www.supremecourt.gov/opinions/17pdf/17-965_h315.pdf

    the opinions in the travel ban case.
    but scroll down to page 48 of the PDF to see Thomas questioning the authority of district courts to issue universal injunctions.

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  2. Heh.

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    • wonder how many were in places like Detroit where the entire block is abandoned and there is no chance of ever finding a buyer…

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      • There’s no option for a property owner to voluntary cede the property back to the local government and just walk away is there?

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        • Not that I am aware of, although if you don’t pay your property taxes i think the government can take your property

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  3. The new litmus test for the left:

    “Bernie Sanders Is Not the Left
    His refusal to endorse ICE’s abolition is the latest evidence that he’s not the politician that many believe him to be.
    By Sarah Jones
    June 26, 2018”

    https://newrepublic.com/article/149378/bernie-sanders-not-left

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  4. The replies are hilarious

    Liked by 1 person

      • church attendance is down and more people are nonreligious/not believers, but a dystopian theocracy spearheaded by a real estate developer is just around the bend.

        makes sense

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        • Soon as the religious fanatic POTUS stops banging porn queens and Playboy Playmate he’ll get on it.

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        • More to the point, trying to keep people out isn’t the problem that Gilead had. Just like it isn’t the one that East Germany had.

          If the US is such a fascist hellscape post Trump, why are people still trying to get in and why haven’t the progressives started to flee before they are all rounded up. Everyone knows it’s bullshit.

          Trump’s model isn’t Gilead. It’s Mar-a-Lago . The US as a gated community.

          Liked by 1 person

        • That anybody could even put those two ideas together, much less suggest that were in imminent danger of present day reality turning into The Handmaids Tale only indicates one thing: how amazingly unhinged from reality they have become.

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        • why are people still trying to get in and why haven’t the progressives started to flee before they are all rounded up. Everyone knows it’s bullshit.

          I’m pretty sure a lot of them don’t know it’s bullshit. If they knew it was bullshit, they’d pick better bullshit to spout. In this case, I think they are actually deluded enough to believe what they say, and feel like they are fighting the good fight and perhaps somewhat protected by their virtue, but the fact that people are struggling to get into the country doesn’t figure into the equation. The fact that they and their fellow travelers aren’t all arranging to move to Scandinavia or Canada doesn’t register as relevant or conflicting data. Their in a kind of religious fugue, all the time. God is talking to them and that’s all they need to know.

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    • I’ll raise your replies with these comments.

      https://m.dailykos.com/stories/1775503

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    • Its not a matter of how many steps we are from The Handmaids Tale (although we are presently, in the US, as matriarchal as we’ve ever been, so if we were talking about The Woman’s Valet Tale, about how a feminist revolution in America restructured society where men were turned into personal valets and sources of free labor for women, I could almost believe we’re already there). But even if you switched genders, the internal logic and counter-factuals of the story are so outrageous that we’ve never been and never will be any number of steps away from The Handmaids Tale. It’s like saying that we’re only a few steps away from Hunger Games or Twilight or Star Wars. It’s an allegorical fantasy, and nothing else.

      I could go on with my criticisms of the writing but sufficed to say it’s not logical, characters aren’t consistent, motivations aren’t believable, and the alterna-history is absurd.

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    • That guys going to move to Fox before the year is over. He’s been ejected from the Good Tribe. He just may not know it yet.

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  5. https://hotair.com/archives/2018/06/27/joe-crowley-exits-stage-far-left/

    Nobody has learned from the Dave Brat Experience. Nobody is safe in the environment.

    Liked by 1 person

    • Looks like the Left finally has their Tea Party.

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    • “Nobody saw this coming except possibly the inner circle of the two campaigns.”

      Glenn Greenwald did. He’s been talking about this for months. Taibbi too.

      https://theintercept.com/2018/06/27/ocasio-cortez-upset-joe-crowley-democrats/

      But if Cuomo loses to Nixon, then it’s a full on panic by establishment Democrats.

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      • Well, good. I mean, almost certainly awful for New York, but good. They deserve a shakeup. Not that the Republicans haven’t (and ultimately still do) deserve(d) a shakeup. But no reason the Democrats should get to keep on building their fiefdoms, gerrymandering immigration policy and unions, and otherwise enriching themselves while becoming increasingly distant from their constituents.

        A Nixon win in New York would be very interesting. Will Sarah Jessica Parker as Lt. Governor be far behind?

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      • This also goes again to the point that money doesn’t buy elections. From a “big business buying elections” standpoint, Citizens United was irrelevant. It’s not this “thing” that somehow allowed conservatives or populists to be elected for the first time in history, and beyond getting your message out there and building name recognition, the money spent on political advertising accomplishes nothing. As this election proves, 90% of what the big spenders spend accomplished exactly nothing.

        Although Jeb Bush alone should have been evidence enough for that, to the point where nobody would bring up Citizens United or CFR again.

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