Morning Report: Home Prices rise 10%

Vital Statistics:

 

Last Change
S&P futures 3421 28.6
Oil (WTI) 42.54 0.17
10 year government bond yield 0.64%
30 year fixed rate mortgage 2.91%

 

Stocks are higher this morning on no real news. Bonds and MBS are flat.

 

The upcoming week will be pretty data-light, although we will get real estate prices and new home sales on Tuesday and personal incomes / spending on Friday. Jerome Powell speaks on Thursday.

 

The Wall Street Journal is reporting that the FHFA is negotiating with the mortgage industry to delay the 50 basis point hike for refinances:

As of Friday, the agency was negotiating delaying the fee with industry groups but was opposed to canceling it outright, according to people familiar with the discussions. Industry groups, including the American Bankers Association and the Mortgage Bankers Association, have generally sought to eliminate the surcharge altogether, the people said.

That said, the 50 basis point fee probably equates to something like 1/8% in rate, so it probably won’t end the refi wave. The industry was most concerned about the short fuse on the announcement, and the prospect of losing 50 basis points on loans that are already locked and in the pipeline.

Housing Wire got a quote from ex-MBA president Dave Stevens:

Dave Stevens, former president and CEO of the Mortgage Bankers Association and former commissioner of the Federal Housing Administration, told HousingWire on Saturday that, “If true, it seems clear that Director Calabria listened to industry concerns about the impact of this short time frame to implement. And while the logic of the fee remains in question, this is a good sign and hopefully will lead to a change in behavior going forward where impact assessment conversations can take place prior to major policy announcements.”

Even if they delayed the implementation by a month, it would give people a chance to clear out their pipelines.

 

Loan aggregator Amerihome is no longer doing self-employed borrowers for non-delegated. I guess with so many W2 refinancings out there, why mess around with harder files? Expect to see other aggregators make similar announcements.

 

Lower rates and tight supply has home prices rising at a double-digit clip. The issue is that these increases are happening in a period of economic weakness, which has some pros worried. That said, the COVID crisis has caused many builders to temporarily slow building, and many sellers to pull their listings since they don’t want to have people walking through their homes.

 

 

27 Responses

  1. Supply restriction will push prices up every time.

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  2. This is one of the reasons we’ve decided to sell our rental house this year. The problem is that our tenants may have nowhere to go that they can afford. We’ve given them 2.5 years of low rent but I guess they didn’t save any of it. We feel bad about giving them notice but we can’t list it until they’ve moved out because it kind of looks like a hoarder’s dream come true…………..uggghhh

    Rents and the price of homes here in CA have really skyrocketed! In combination with a housing shortage people are basically screwed.

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    • CA real estate prices are insane. I can’t figure out how normal people can afford to live there

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      • Extraordinarily high incomes with no concern over their extraordinary loss of purchasing power due to cost of living.

        Extraordinary accumulation of debt while barely getting by. A lot of living to paycheck-to-paycheck, I imagine.

        I’ve never understood wanting to live there. It’s nice but if you’ve got even decent money and don’t *have* to stay there, move somewhere cheaper and enjoy so much more purchasing power. But I guess they are paying for the brand.

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        • Gosh Kevin, as someone who was born and raised in CA, I love it here. We have everything; the beach, the desert, the mountains, nice weather and an environmental conscience.

          Having said that, I would move to CO in a heartbeat if I could talk Walter into it so I could be close to our grandsons. No dice from him though. He won’t give up our house, our pool, the beach or anything about it……LOL

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    • I would never own a rental property. If I had an extra house and a relative needed to stay there, I might rent it to that person because I had a relationship with them and would help out, as long as they would defer the cost.

      But I would never own a for-profit rental property. Almost every story I hear is a nightmare.

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      • Re the rental property. It’s actually been a great experience for us. We’ve only had 2 evictions and they just happened to fall in the same year (2012) that I was so sick. Between the hospital bills (pre-medicare and affordable insurance), the lawyers, clean up crews, loss of rent etc. it was a true nightmare and a huge loss of income for us.

        Otherwise, it’s been great and the house was already paid off when we began renting it out so it was straight income for us. Now that the prices have sky rocketed we’ll be much more comfortable in our retirement than we would have been even last year.

        We made good investments here on what I would call just a middle class income, nothing special about us and it’s all worked out fine so far. We have some issues with the tenants and making sure they’re out in the 60 days so we can go in and fix what needs to be fixed but it shouldn’t be too bad. We did a lot of new things to it before they moved in 2.5 years ago. We’ve always upgraded things and kept it clean and nicely groomed.

        I do know it’s much more difficult for young people to get started here now though and it’s too bad really. The rental is really just a starter home, at least that’s what it was for us, and it’s going for about $450K. We paid $63K for it in 1979.

        Our house is pushing $800K now with the warehouse, solar and everything else we’ve done here. We’ll probably stick it out another couple of years and then downsize somewhere I guess.

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        • I’m glad you’ve had a generally good experience and it’s turned out to be a useful investment. But even what you describe sounds like too much work to me! And I’ve known folks who’ve encountered worse. Eh, I’d just never want to be a landlord but I’m glad it has all turned out well for you.

          I have enough trouble cleaning out my own house. I wouldn’t want to have another to worry about once I moved someone out!

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  3. LOL…Richard Spencer endorses Biden:

    https://thefederalist.com/2020/08/24/white-supremacist-who-organized-charlottesville-race-riots-endorses-joe-biden/

    He claims that it isn’t an attempt at “accelerationsim”, but even if not it serves the purpose. The Dem’s embrace of the likes of BLM and intersectionality and “diversity” show that they actually share Spencer’s ideology of racial essentialism, which is fostering more and more racial division and hatred in the country.

    And for those who doubt that his is exactly where we are headed with the left’s policies…

    https://thefederalist.com/2020/08/24/nyu-student-group-advocates-for-racially-segregated-housing/

    But hey, risking a race war might be worth it to avoid another 4 years of Orange Man Bad, right?

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    • The Dem’s embrace of the likes of BLM and intersectionality and “diversity” show that they actually share Spencer’s ideology of racial essentialism, which is fostering more and more racial division and hatred in the country.

      I think this is right. Richard Spencer’s identitarianism has more in common with modern progressives than conservatives or Republicans, who are mostly still in the “color blind” stage of thinking we should all be considering ourselves American, rather than hyphenated or aggregated by skin pigmentation.

      While I think the argument will be that, like the KKK guy who endorsed Hillary it’s an endorsement based on an accurate understanding of his popularity so he’s actually trying to make Biden look bad . . . which may or may not be true, but it’s entirely believable that it’s sincere, and except for things like reparations and kneeling before certain minority groups, Spencer and those groups are on the same page for the most part–racial identity is the most important part of your identity. Always, no matter what.

      But hey, risking a race war might be worth it to avoid another 4 years of Orange Man Bad, right?

      For some people, sure. Although lots of these people want a race war, so . . .

      That being said I think most of this is too far in the weeds for swing voters, independent voters, and voters that would be swept up by GOtV efforts. It will be whoever is emotionally resonating with them, and I’m not in a position to guess, really, but I’m not seeing where the resonance is with Biden. If I’m a low-information voter all I have to hear is “mask mandate” and I’m out. 😉

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  4. Tim Pool unsurprisingly announces he’ll be voting for Trump:

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    • KW:

      I like this lady.

      Yeah, I saw that ad the other day, Thought it was pretty good. I think she is speaking tonight at the R convention.

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      • She is! Looking forward to that.

        Although I’ve long thought the Republicans (as a party) need to have a minority recruitment drive–Justice Democrat and Brand New Congress recruit folks like AOC and get them into power without the help of the DNC. They need folks like this lady who splits the difference between more liberals Republicans and, say, a Candace Owen. They really need to groom some of the YouTube personalities out there. Not necessarily the Hodge Twins but Officer Tatum ought to be speaking at the RNC, especially given how police are such a big issue right now.

        Probably a step (or three) too far but I’d have this guy perform a set.

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  5. I like this lady.

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  6. Nancy Pelosi: Trump and R’s are “domestic enemies”, and “Enemies of the state” who are “doing everything they can [to] suppress the vote with their actions”. But of course it is Trump who is undermining confidence in our elections and sowing division among the body politic, right?

    https://thefederalist.com/2020/08/25/pelosi-republicans-are-domestic-enemies-trying-to-interfere-in-our-election/

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  7. Somewhat amusing….this was me 7 years ago here on ATiM:

    For me a preferred candidate is not so much about what kind of personality he has, but rather what kinds of policies he’s likely to produce. If I thought Obama was the nicest, most genuine and down to earth guy on earth and his opponent was an arrogant, self-aggrandizing prick, I’d still vote against Obama because his ideology is so destructive.

    I’m going to have a chance to prove true to myself!

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    • I’m actually not that much more won over by Biden than Trump. I realize that, looked at from one perspective, they seem very different but Biden doesn’t strike me as being any more authentic or honest than Trump. He’s not as generally bellicose, or when he is it comes off less . . . reality TV star. But it ain’t like they are running Tom Hanks.

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      • KW:

        But it ain’t like they are running Tom Hanks.

        Oh, I agree. I was more focused on the fact that I would vote for “an arrogant, self-aggrandizing prick” if the other choice was someone who had the wrong ideology. Which Biden does.

        Like

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