Morning Report: Washington is worried about the rise in home prices

Vital Statistics:


  Last Change
S&P futures 3857 16.4
Oil (WTI) 65.06 -0.06
10 year government bond yield   1.54%
30 year fixed rate mortgage   3.21%

Stocks are higher this morning as techs rebound. Bonds and MBS are up strong.


The percentage of loans in forbearance fell 3 basis points to 5.2%, according to the MBA. “The pace of forbearance exits increased; this continues the trend reported in prior months,” said MBA Chief Economist Mike Fratantoni. “Of those homeowners in forbearance, more than 12 percent were current at the end of February, down somewhat from the almost 14 percent at the end of January. The improving economy, the soon-to-be passed stimulus package and the many homeowners in forbearance reaching the 12-month mark of their plan could all influence the overall forbearance share in the coming months.”


While interest rates are falling this morning, we do have some risks this week with a few Treasury auctions: a 3 year bond sale today, a 10 year on Wed and a 30 year on Thursday.


The MBA is forecasting that origination will hit $3 trillion this year, and over half of that will be purchase activity. Much of this is predicated on a sharp drop in refinance volume as mortgage rates hit 3.5% and strong economic growth. The business press and the analyst community is putting a lot of weight on the prediction that the stimulus package will unleash a massive wave of consumer spending and that unemployment will fall to 4.7% by the end of the year. Of course one major risk is that higher energy and rent consume any extra income, and that won’t be supportive of a rip-roaring recovery.


Note that Janet Yellen sees full employment in 2022, based on the stimulus package. Here is what that means. The current employment-population ratio is 57.6%. Pre-COVID, it was 61.1%. Assuming the US population is 330 million, that means we need 11.6 million people to get jobs in order to get back to pre-COVID levels. With last month’s job increase of 380k, that would take 2.5 years to get back to full employment at that pace.


The rapid rise in home prices is worrying politicians and policy wonks. “The dream of homeownership is out of reach for so many working people,” said Senate Banking Chair Sherrod Brown (D-Ohio). “Rising home prices and flat wages means that many families, especially families of color, may never be able to afford their first home.”

One think to keep in mind is that the hip new lens to view everything nowadays is the “K-shaped recovery.” The K represents the fortunes of the rich and the fortunes of the poor (one goes up while the other goes down). This is how Washington will view everything and housing policy will focus almost exclusively on low-income lending. The problem is that the banks hate FHA, and non-bank servicers can get eaten alive by FHA advances. Not sure what Washington is going to do about that, but the answer is more homebuilding.



28 Responses

  1. Irish view of UK Royal Family…

    “Harry and Meghan: The union of two great houses, the Windsors and the Celebrities, is complete,” by the Irish Times’s Patrick Freyne:

    “Having a monarchy next door is a little like having a neighbour who’s really into clowns and has daubed their house with clown murals, displays clown dolls in each window and has an insatiable desire to hear about and discuss clown-related news stories. More specifically, for the Irish, it’s like having a neighbour who’s really into clowns and, also, your grandfather was murdered by a clown.”


  2. It’s a poll, so take it with a huge grain of salt, but wow.

    Explains a lot if true.


  3. WSJ has an op-ed about a NYC area private school – apparently very posh – teaching a new curriculum.

    “it is essential that parents/caregivers and educators acknowledge racial differences (as opposed to a ‘colorblind’ stance)” and offered reading recommendations such as Robin DiAngelo’s “White Fragility.” Families at Riverdale are encouraged to join school-sponsored “affinity” groups to bond with people from their ethnicity or skin color. One is called simply “the POC,” short for “parents of color.”

    WTF is the goal of this new racism? And how is it being passed off as anything but?

    My twin granddaughters attended a public elementary school that looked like the UN and nobody told anyone to stick with their own “color” and no kids did. That is how it works for a lot of folks. It doesn’t take a curriculum. Just good teachers, and reasonable sized classes, team sports, and a freaking playground. It isn’t that hard, especially in the suburbs.


    • It is how the parents atone for sending their kids there in the first place. Getting your kids into the right NYC school is a bloodsport.

      I remember in the 1990s, a boardroom coup at Citigroup between Jack Reed and Sandy Weill that revolved around getting a kid into the 92 st Y. Mind you, we are talking about nursery school.

      Found the story


    • The goal seems to be to sneak it in under the banner of anti-racism. To find a new socially virtuous way to do. A natural human instinct to Balkanize, and place yourself in a superior group. You can’t be in the superior group if everybody doesn’t buy into the Balkanization.

      And also in the case of folks like DiAngrlo it’s to make their own instinct towards racism palatable. They talk about doing the work, but they are actually avoiding doing the work. Color-blindness is “doing the work”. White fragility is saying “I can’t help I’m racist but I’ll admit it so that makes it okay”. And also draggging every other person to say they are all racist too.

      Also no individual responsibility. Some people dig that.


    • Mark:

      WTF is the goal of this new racism?

      As I suggested to you the other day, it is to destroy traditional American culture. That is not hyperbole or exaggeration or a mischaracterization. It is the literal truth.

      Critical Race Theory derives from the broader ideas of Critical Theory, which itself is an offshoot of Marxian analysis. It rejects the idea of objective truth and principles of neutrality, and interprets everything in terms of socially constructed hierarchies that are designed to perpetuate the existing “power structures”. Thus race neutral policies are simply a means by which the existing “white” power structure perpetuates itself and its “privilege”, and therefore must be torn down. This is also, for example, how we end up with the notion, also being introduced into our schools, that math is racist. This was also the whole point of the NYT’s 1619 Project, ie to reject the idea of America as a history of slow evolution towards the realization of universal values articulated in our founding documents, and to reframe our founding as being irredeemably rooted in racism and our history as a constant struggle to maintain that founding power structure. BTW, this too is being introduced into our schools.

      CRT is also not limited just to race. A key concept within it is so-called intersectionality, which posits that different power structures are designed to oppress different minority groups, and that therefore the biggest victims are those that sit in the “intersection” of various oppressions. Hence, black women are more victimized than either black men or white women, and black lesbians are more victimized than either white lesbians or black heterosexual women. You might imagine that trans-people would throw a monkey wrench into this oppression olympics hierarchy, given the ambiguity of where they land on the male/female hierarchy, but that seems to have been solved by simply placing them at the top, at least for the moment, which is presumably why this infinitesimal portion of the population has become the over-represented focus of so much policy insanity, especially in our schools.

      If you want to have a metric of how pervasive all of this has become, just keep an eye out for use of the word “equity” where you once would have expected to see the word “equality”. It is a very subtle semantic shift, and to the ordinary person it comes across as a distinction without a difference (almost certainly intentionally so), but under CRT the distinction is crucial. Pursuit of “equality” is just another way that existing power structures maintain power over victims. What these victims need is “equity”. The difference is often explained through use of a simplistic but enticing cartoon. And it is this pursuit of “equity” rather than “equality” which justifies what you quite correctly characterize as “this new racism”. Rather than race- (or sex- or whatever-) neutral policies, we need race-conscious policies. Thus, instead of teaching kids to interact with each other in a colorblind manner, kids must be taught to make race the focal point of their interactions. To be anti-racist, you must adopt racism.

      Again, the ultimate goal is to literally destroy the liberal order on which American culture is based, and upend the “power structures” that perpetuate it. And if it has occurred to you that an ideology that sees all social interaction as a power struggle between oppressors and victims, and seeks to destroy existing power structures must, by its own logic, be seeking to establish its own power and create its own victims, you won’t be the first. Of course, practitioners of CRT would dispute this by simply claiming that “logic” is just a social construct created by existing power structures to keep its victims down!

      In any event, yes Mark, this “new racism” is increasingly becoming part and parcel of the education system across the US. How do you think that is happening, if it is not being supported (explicitly or tacitly, wittingly or unwittingly) by at least one of the two major political movements in the US?

      That is how it works for a lot of folks. It doesn’t take a curriculum. Just good teachers, and reasonable sized classes, team sports, and a freaking playground. It isn’t that hard, especially in the suburbs.

      You are correct, of course. All the more reason for you to suspect that the true underlying goal of the curriculum is actually quite different from what you (and I) think the goal should be.


      • Thanks for this insufferably bad news analyzed well. I will keep an eye on it in my community if it arises, and speak against it, if it does. There may be significant legal implications here that I will now try to follow in the legal periodicals.

        I had not understood the distinctive use of the word “equity”. Thanks for that, as well.


        • Mark:

          More on the proliferation of CRT and its growing influence on our culture, particularly in schools.

          The science program at Fieldston would make any parent swoon. The electives for 11th- and 12th-graders, according to the school’s website, include immunology, astronomy, neuroscience, and pharmacology.

          But physics looks different these days. “We don’t call them Newton’s laws anymore,” an upperclassman at the school informs me. “We call them the three fundamental laws of physics. They say we need to ‘decenter whiteness,’ and we need to acknowledge that there’s more than just Newton in physics.”


        • So a school that prides itself on its scitech has let some non-scientist describe physics. Newton’s laws are the fundamentals of the mechanics of motion in the visible world, not of all physics, and Newton was so freaking smart that he warned that while force apparently equaled the rate of change of momentum with respect to time that depended on mass being a constant in all cases, which he had no way to measure.

          Physicists and engineers will continue to call the 3 laws [inertia, acceleration, reaction] Newton’s. Probably gravitation will continue to be described as Newton’s, for obvious reasons.

          These educators are pissing in the wind.

          I will be looking for this BS locally as well. Thank you.


        • It’s a hysteria, IMO. And while in fact in full swing (at least to political and ideological junkies who, from one side or the other, tend to be obsessed with such things) I don’t think it’s reached peak craziness, to the point where it breaks through and goes to far for all the folks who don’t really pay attention to this stuff.

          I expect the bubble will burst (and perhaps a swing back in the other, ultimately no more desirable direction, will ensue) but not sure when or how. But as is not uncommon with hysterias, those promoting the hysteria often go too far, too fast, and end up scaring people on their own side–or attacking them. Or both. While that’s already happening I don’t think it’s happening at the level that it’s going to in the not too distant future.

          And eventually, even some folks who seem hellbent on saying “everything is okay, it’s all fine” are going to have lines crossed for them.

          But ultimately I’m just guessing.


        • Mark:

          These educators are pissing in the wind.

          Don’t bet on it. Twenty years ago I would have had the same attitude with regard to corporate America, yet look what has happened. Look around you….this shit is everywhere (including the West Wing now) and is growing. Just do a little research of your own into how this woke shit is creeping into the hard sciences in universities.


        • Even 10 years ago I had the same attitude about corporate America. And I think that would have been mostly right, then.

          Obama –> Trump –> Antifa –> BLM –> Biden . . . it was a perfect storm, with all the oil-soaked rags just laying around to catch fire. And suddenly it is a hysteria that swept the country.

          Part of it has to be the final collapse of the media as any kind of object news reporting with the election of Trump. Not that it was good before that, but clearly it was possible for it to get much worse.


        • KW:

          Even 10 years ago I had the same attitude about corporate America.

          I was originally going to say 10 years too, but then I started thinking….I moved back to the US from the UK in 2006, and it was shortly after that that I first started noticing the the HR department starting to push this stuff. BTW, before I left the UK in 2006, it didn’t exist here. Now it is even worse than in the US. Truly.


        • IMO it burns out once it becomes a caricature of itself. And it has approached that point.


      • TL;DR*

        it’s “heads i win, tails you lose”

        *joking, nice analysis


        • nova:


          I had to look that up, but now that you mention it, I admit that after I posted, I thought to myself “TL;NOWRI”.


      • The best equity cartoon ever



          Was not intended as an instruction manual.


        • Intended as a prediction from a lefty liberal surrounded by much more lefty liberals. And accurate, as it turns out.


        • Accurate. But always dismissed because a non-trivial segment of humanity employ fantastical thinking and believe humanity is perfectible and the human condition can actually be improved through the centralized control of “experts”.


        • The left is vulnerable to mocking, and they open themselves up to it.

          And the more they try and suppress it, the funnier they get.

          Humor is the left’s Achilles Heel.


        • You say “left” but I think it is the authoritarians’/totalitarians’ Achilles Heel. The left *used* to be the side of the aisle mocking uptight right-wingers. But they also used to be pro-individual freedom and freedom of expression.

          Even 15 years ago, their mocking of the right could be incisive. Jon Stewart or Stephen Colbert, whatever you thought of their politics, could be funny, and cutting, with their mocking of the right.

          Now Stephen Colbert and Seth Myers are spectacularly unfunny and Jimmy Kimmel is often little more than just a woke scold with a laugh track (and not even that, now).

          And now they fact check right-wing jokes and memes and parody articles from the Babylon Bee. They’ve become completely humorless.


      • and interprets everything in terms of socially constructed hierarchies that are designed to perpetuate the existing “power structures”.

        Which in itself is a huge form of gaslighting, and deception, as this is used in a process to create new, largely unaccountable, arbitrary power structures at which they are at the top and everyone else is on the bottom. They eventually tend to topple because keeping themselves at the top means pitched battles with their own top supporters well before all of the rabble are adequately restrained or eradicated.

        But they have no problem with “power structures”–they are all about “power structures”. They just want to have a power structure where they rule and everybody else obeys. IMO.

        And clearly, couching all of that power-grabbing in the sheeps clothing of social justice and equity is just the way to sneak it all past casual viewers and the hoi poloi, while promising the people on their side paying closer attention a seat at the table that, ultimately, isn’t actually going to be there for the vast majority of them.


      • If you want to have a metric of how pervasive all of this has become, just keep an eye out for use of the word “equity” where you once would have expected to see the word “equality”. It is a very subtle semantic shift, and to the ordinary person it comes across as a distinction without a difference (almost certainly intentionally so)

        If this all doesn’t blow up and some ground is clawed back in the other direction over the next decade or so, expect equity to be replaced with some new term. As you say: subtle semantic shift. But constantly deconstructing the language seems to be a part of the larger program, and one of the ways they do that is by constant redefinition. Everybody using consistently agreed-upon and well-understood terms clearly works against the mission.


  4. Definitely no reason to question the integrity of the election. Move along, nothing to see here.

    The city of Green Bay literally gave the keys to the election to a Democratic Party operative from New York.

    In case you were wondering, the word “literally” is being used properly. Read the story.


    • “the word “literally” is being used properly”

      that’s hilarious. Because I was wondering if “figuratively” was the correct word.


      • nova:

        that’s hilarious. Because I was wondering if “figuratively” was the correct word.

        There is no more depressing indication of how our authorities on language have so casually allowed it to get corrupted than the fact that the official definition of “literally” now includes:

        used in an exaggerated way to emphasize a statement or description that is not literally true or possible

        So in short, “literally” now means “not literally”. Literally!


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