Morning Report: Pending home sales rebound in May

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S&P futures 3012 3.1
Oil (WTI) 38.64 0.19
10 year government bond yield 0.65%
30 year fixed rate mortgage 3.16%

 

Stocks are flattish a the US gets more cases of COVID. Bonds and MBS are flat.

 

We have a short week, with the markets closed on Friday and SIFMA recommending an early close on Thursday. We will get the FOMC minutes and the jobs report, which could be market-moving.

 

Freddie Mac reported that delinquencies hit a 2 year high, rising to 0.81% in May from 0.64% in April.

 

Demand for affordable homes is outpacing the demand for more expensive ones. According to Redfin, affordable home prices rose 5.5%, while luxury homes rose 2%. “Spending so much time at home during quarantine has made a lot of people realize that it might be time to stop renting a cramped apartment in the city and time to start owning their first single-family home,” said Pam Henderson, a Redfin agent in Dallas. “With mortgage rates at record lows and remote work on the rise, some renters are having an epiphany: They could buy a lower-priced home in the suburbs for close to what they’re paying in rent.”

 

Pending home sales rose 44% in May as the real estate market rebounded. “This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership,” said Lawrence Yun, NAR’s chief economist. “This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery. More listings are continuously appearing as the economy reopens, helping with inventory choices,” Yun said. “Still, more home construction is needed to counter the persistent underproduction of homes over the past decade.”

29 Responses

  1. I wonder if exuberance in the May housing mkt in metro DFW will be tempered by June-July cramming of hospitals in metro DFW.

    There seems to me to be a lot of pissing into the wind going on.

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    • I don’t know. All I can say is there is a stampede out of NYC in these parts

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      • I’m not in a position to stampede everywhere, and I’m in the suburbs (what was, 10 years ago, more like the exurbs) so I’m reasonably all right. But if I was in the middle of a big city? I be going as far out as I reasonably could. And even now, if I had a whole lot of cash in the bank, I think I’d relocate to someplace actually rural.

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  2. This should be interesting:

    “Exclusive: Sen. Elizabeth Warren introduces nationwide eviction moratorium bill

    The coronavirus is exposing America’s housing crisis. Democrats in Congress are proposing a nationwide eviction moratorium.

    By Jen Kirby
    Updated Jun 29, 2020, 11:04am EDT

    Currently, states and localities have their own rules, which amounts to a confusing patchwork of eviction policies. The CARES Act, the massive stimulus package Congress passed in March, imposed a 120-day moratorium on evictions for tenants in federally assisted housing or in homes with federally backed mortgages — about 12.3 million of the 43.8 million rental units in the US, according to the Urban Institute. Those protections are set to expire on July 25, 2020.

    Warren’s bill would keep those safeguards in place for an additional eight months, and extend those benefits beyond those in federally backed housing to almost all renters, unifying the mishmash of state eviction moratoriums currently in place. The bill would also bar landlords from charging additional fees for nonpayment of rent, and require landlords to give tenants 30-days notice of eviction after the moratorium ends.”

    https://www.vox.com/2020/6/29/21306066/eviction-moratorium-senate-bill-elizabeth-warren-chuy-garcia

    So glad I don’t own any rental property.

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    • Who steps in when the landlords go bankrupt or lack the cash to maintain the housing (if they do, of course). Or in some cases do basic stuff like pay the electric and water bills?

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      • Ultimately the bank, but if the government prohibits foreclosures, then i don’t know what happens

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        • The Fed bails everyone out with free money?

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        • well, if the landlord is broke and the bank can’t touch the property until foreclosure is compete, then I’m not really sure..

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  3. People have been going around our sleepy town and painting Black Lives Matter and Fuck the Police all over the place. I guess some private Facebook group is behind it, and if you look at the members, they are all blue bloods who went the Hotchkiss, and then places like Harvard and Smith.

    we live in the strangest time

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    • At some level (maybe just in cultural historian, academic analysis later on) I think there will be an opinion that a great deal of this has to do with the human race not knowing how to manage or live with social media.

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      • Now the left wingers on our town facebook pages are trying to sell the idea that white supremacists who want to make BLM look bad are behind it..

        This is just 2 bong hit logic at this point.

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        • Now the left wingers on our town facebook pages are trying to sell the idea that white supremacists

          Well I think it’s certainly the new, broad-spectrum version of white supremacists–with a new coat of paint but the same fundamentally supremacist narcissism underneath. But when most people throw that accusation, they are thinking about rednecks and Trump supporters and Republicans and not radical leftists and antifa.

          The manual for these new white supremacists is White Fragility, whose ultimate message is (despite the surface message of “being white is the worst”) remains one of “only white people can fix things, only white people are responsible for bad things, only white people have the power to make a difference in the world and we’ve abused it and now we must suffer but it’s still all about whitey”.

          So while I think ultimately your facebook townspeople are correct, I think they are misidentifying the actual white supremacists.

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    • Liberal/progressive friends are angrier at people trying to clean the graffiti over the weekend than those who did it in the first place.

      I hope Dave Chappelle finishes his 8:46 piece with a take on what came afterwards.

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      • Tim Pool makes an interesting point how Chappelle talks about the police brutality and potential racism–but doesn’t talk about any of the other talking points in terms of starting autonomous zones, the often Marxist rhetoric, the tearing down of abolitionist statues and memorials celebrating the end of slavery, etc. That Chappelle is an example of what most black people are actually concerned with, rightly or wrongly, and much of what BLM is talking about is irrelevant to them.

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    • Justice Elena Kagan, writing for the court’s liberals, said Congress should have the flexibility to impose limits on the president’s power to get rid of agency heads. She faulted the majority for second-guessing Congress, which created the agency to “address financial practices that had brought on a devastating recession, and could do so again.”
      “Today’s decision wipes out a feature of that agency its creators thought fundamental to its mission — a measure of independence from political pressure,” Kagan wrote in her dissent.

      Not sure why having an unaccountable head who can pursue their own agenda without oversight is remotely preferable or immune from corporate influence. Or how preventing the president from having a choice in who heads a significant agency makes sense.

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      • It’s the old progressive conceit that you can separate governing from politics and leave it to the “experts”.

        That’s fundamentally incompatible with US Constitution as envisioned by the framers. It’s specifically designed to have ultimate accountability in the hands of the elected officeholders.

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        • Would have loved to see her dissent if there were a mechanism to allow voters to elect the heads of these agencies beyond picking the president, and the argument that would no doubt be made that the public could not be trusted to pick the head of a bureau supposedly meant to protect the public.

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  4. The politics and legal aspects of all of this mystify me so I just continue to do my best and hope that things don’t get worse. Here’s the comment I posted today on a COVID preparedness group that I’ve been a part of since early March. Lots of good people there doing the right thing.

    The most difficult part of this pandemic is not seeing my family. My daughter and son, with spouses and 3 grandchildren live in CO. We were there in November last year for my grandson’s 2nd birthday and haven’t seen any of them since. My other daughter lives in SF and has been isolating herself since this began. She did drive down here to So Cal in May for a 2 week visit and was able to work from our house. We had so much fun and even heated the pool so we could swim.

    I’ve been very careful personally, as has my husband. I was able to have hip replacement surgery on May 27th after waiting 9 weeks because of Covid. It was frightening in some respects, being in the hospital overnight and interacting with so many offices and labs ahead of surgery. I’m beginning to wonder if I was the lucky one though because cases are climbing again here in CA and I think they may have to cancel elective surgeries again.

    My daughter (the one in CO with the 2 year old) is 8 weeks pregnant and hoping to drive here with her husband and son in the middle of July but I can tell she’s nervous about bringing the virus here, even though they both work from home, the little guy is back in daycare. And I’m worried about her catching it because they’re saying now that pregnant women who contract it get more sick than non-pregnant women of the same age. Not sure it’s true, but it is something to worry about.

    It’s hard for me not to resent people who don’t, or didn’t, have the consideration for the rest of us to wear masks and now the cases are climbing. We’ve tried so hard here to do the right thing by protecting ourselves and others….. 😥

    I’m sad too that so many states are seeing a climb in cases and hospitalizations, who knows what things will look like in the Fall now? I feel it’s going to get a lot worse before it gets better but I desperately hope I’m wrong. I can’t change any of it though so will try to keep following the rules and stay safe and healthy.

    I still have a lot to live for!

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    • lms:

      It’s hard for me not to resent people who don’t, or didn’t, have the consideration for the rest of us to wear masks and now the cases are climbing.

      Do you (or does anyone else) have the stats on any of the following questions? I am quite interested.

      1) What are the odds of any one American actually coming within 6 feet of a random stranger that has covid? (I understand that this is highly dependent on location, and so, for example, the odds in CA would probably be much lower than this number and the odds in New York City would be much higher.)

      2) What are the odds of catching covid from a stranger vs the odds of catching it from someone you know?

      3) What are the odds of catching covid from someone who has it by simply walking by them on the street or in a store with 1 foot in between you as you pass? How much do those odds change with each foot of distance between you when you pass each other? How much do those odds change if you are wearing a mask? How much do those odds change if the other person is wearing a mask?

      4) According to the NYT tracker, California (to take one state at random) currently ranks 28th out of 50 states in terms of both number of confirmed cases per 100k people (567) and number of deaths (15) per 100k people. (For perspective, New York ranks number 1 in both, at 2,044 and 160.) What would CA’s numbers be if, all other things being equal, every resident of CA had been wearing a mask on the street and in stores since, say, April 1?

      5) Texas, which has even fewer cases (548) and deaths (8) per 100k people than California, is currently being called a “hot spot” because of an increase in the number of daily new cases being reported. The number of new cases being reported daily in Texas has steadily climbed from 1,107 on June 1 to 6,057 on June 27. (Deaths, btw, have remained largely static.) How much of this rise can be attributed to an increase in the number of people being tested, and how much is due to increased spread of covid? How much of this rise can be attributed to people who don’t wear masks on the street or in stores?

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      • According to the NYT tracker, California (to take one state at random) currently ranks 28th out of 50 states in terms of both number of confirmed cases per 100k people (567) and number of deaths (15) per 100k people. (For perspective, New York ranks number 1 in both, at 2,044 and 160.) What would CA’s numbers be if, all other things being equal, every resident of CA had been wearing a mask on the street and in stores since, say, April 1?

        Impossible to know. Probably less, maybe significantly less, but it’s hard to know.

        And ultimately someone is going to have to go through all the reported COVID deaths to provide context or the number is kind of meaningless. Lots of indications a number of non-COVID deaths are reported as COVID because of a positive test result (up to and including deaths by murder).

        Some of the big cities tend to indicate that mass transit and large residential buildings with shared ventilation are bad ideas when it comes to infectious viruses, and I’m not sure mask wearing can do anything about that.

        How much of this rise can be attributed to an increase in the number of people being tested

        Given the number of deaths now versus April and May, I’d say probably all of it and then some.

        How much of this rise can be attributed to people who don’t wear masks on the street or in stores?

        Might be some but we don’t have and will never actually have the data to know one way or another. But people will assert we do, because any correlation will be ceased on to prove someone’s presumptions!

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    • Sorry for all you are going through lmsinca. With regards to this:

      “It’s hard for me not to resent people who don’t, or didn’t, have the consideration for the rest of us to wear masks and now the cases are climbing. We’ve tried so hard here to do the right thing by protecting ourselves and others”

      I think a large chunk of the country wrote this off when the protesters got a pass from the authorities for violating pretty much every COVID rule that was in effect and now people who just want to go to the pool, a restaurant or an outdoor concert are all saying fuck it.

      Reopening is continuing on the east coast regardless, so I’m not sure how much difference individual behavior makes at this point. We’ll see what happens after July 4th weekend.

      I still wear a mask without complaint when I’m required to when going out or in the office. However, I have an N95 one so it’s actually worthwhile.

      I think the bigger problem with getting everyone to go along with the COVID recommendations is the general sense that there’s no overall plan on how to get from where the country is now to back to some semblance of “normal”.

      NoVA is a better person to comment on this, but it seems that had a full two week nationwide real lock down (no home improvement stores being left open, etc, just food and hospitals and you couldn’t go inside the grocery store) been announced in April or early May most people would have been on board with it. But I don’t sense a willingness to do that now.

      On a related note, I’ve ordered one of these for myself for long term use:

      https://www.indiegogo.com/projects/leaf-mask-world-s-first-fda-uv-c-n99-clear-mask#/

      https://www.leaf.healthcare/

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      • I think a large chunk of the country wrote this off when the protesters got a pass from the authorities for violating pretty much every COVID rule that was in effect and now people who just want to go to the pool, a restaurant or an outdoor concert are all saying fuck it.

        Probably, although I wrote it off much earlier because (a) Fauci basically came out and said they lied about the efficacy of masks early on to keep there from being a run on masks, in which case why should they be trusted with anything and (b) for whatever efficacy there is, everybody would have to wear them, and that never seemed to be happening and (c) seemed clear to me that sanitation, social distancing, and other changes (like: do all meetings online) are much more important than wearing masks.

        And (d) I wasn’t planning on going to any protests or large gatherings. I can see an argument for masks in those contexts. But again everybody else would need to be on the same page.

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    • Not sure it’s true, but it is something to worry about.

      The government and the media feel that is their primary goal in this whole thing. Unfortunately, going overboard on the advocacy of paranoia often backfires, and I think that’s happened for many people in this case.

      t’s hard for me not to resent people who don’t, or didn’t, have the consideration for the rest of us to wear masks and now the cases are climbing. We’ve tried so hard here to do the right thing by protecting ourselves and others…

      I get that but we have multiple generations of parents who have largely abdicate what I would consider normal roles in raising their kids–so we have entire generations who, up until this point, couldn’t be bothered to cover their mouths when coughing or sneezing in public. To expect those people to suddenly reform based on a single pandemic seems doomed to disappointment.

      And I can’t imagine I’m the only one who generally intends to wear a mask (for the social politeness of doing so rather than a belief in the need in the situation) but occasionally doesn’t, so some of these people may just be a situation where they need something and running to get a mask of minimal benefit to themselves or others in the given situation (most of them) is something they decide not to do, not because they are bad but because everybody has competing priorities.

      That being said, every time I look at the rising cases stats and the number of folks in hospitals I feel like I’m being mislead, stories that could easily be told at other times about other times are instead now being amplified for reasons beyond the communication of information.

      Even as cases spike (so far as I’ve seen almost always reported without the context of increased testing) actual deaths reported as being COVID-19 deaths has been trending down.

      When charts are shared (and retweeted a million times) showing all the countries going and staying down while the US spikes up, it’s hard not to notice that many countries are missing from the chart (countries ramping up more rigorous testing regimens, maybe, like the US?) and there’s no context providing the number of tests done in these other countries versus the US.

      My problem has been and remains how both the government (federal and state) and the media is reporting on this. That I think there recommendations are generally awful is par for the course (there’s good stuff in there, too), but I can’t find much that’s come from the media on this that I don’t think is worse than the pandemic.

      And the hard part is: while nobody wants to get it and certainly nobody wants to die from it, lockdowns and mask wearing might not work in the long run (unless that becomes our lives from now on). We might have to deal with this, and future similar viruses, the way we have historically–once a population is infected, you find treatments, search for vaccines, but otherwise let it run its course.

      And it’s up to the individual to protect themselves.

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      • “I get that but we have multiple generations of parents who have largely abdicate what I would consider normal roles in raising their kids–so we have entire generations who, up until this point, couldn’t be bothered to cover their mouths when coughing or sneezing in public. To expect those people to suddenly reform based on a single pandemic seems doomed to disappointment.”

        Worse than that, you also had the first public health issue treated as a civil rights issue with HIV/AIDS in the 1980’s.

        Do you recall seeing the old comic book PSA’s admonishing kids not to worry about drinking from someone else’s can of soda because that’s not how HIV spread, never mind all the other germs you can pick up that way?

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        • jnc:

          Worse than that, you also had the first public health issue treated as a civil rights issue with HIV/AIDS in the 1980’s.

          If social distancing and masks are justifiably compelled by law because of covid, shouldn’t gay sex have been justifiably outlawed because of HIV?

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        • I do remember that! Now walk that stuff back. And what will happen if we get another “civil rights” issue disease? We will be getting recommendations that you must social distance and wear masks and not touch other people, unless those people have the civil-rights-issue disease, then you need to not social distance and you need to touch them to show you’re not a bigot. But then go back to social distancing and no-touch rules for everyone else, because . . .

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        • “shouldn’t gay sex have been justifiably outlawed because of HIV?”

          Never mind that, they couldn’t even countenance the public health authorities shutting down the bathhouses in San Francisco.

          Imagine what the reaction to test and trace or quarantine would have been.

          And of course the irony that Dr. Fauci was hated by the ACT UP people back then.

          https://www.washingtonpost.com/history/2020/05/20/fauci-aids-nih-coronavirus/

          Like

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