Morning Report: High end home prices soar

Vital Statistics:

 LastChange
S&P futures4,2078.8
Oil (WTI)68.410.67
10 year government bond yield 1.60%
30 year fixed rate mortgage 3.15%

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

Mortgage applications fell 4% last week as purchases fell 3% and refis fell 5%. “Tight housing inventory, obstacles to a faster rate of new construction and rapidly rising home prices continue to hold back purchase activity,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “ The government purchase index declined to its lowest level in over a year and has now decreased year-over-year for five straight weeks. Purchase applications were down almost 2 percent from a year ago, but that was compared to the week of Memorial Day 2020.”

Loans in forbearance fell 1% last week to 4.18%, according to the MBA. “The share of loans in forbearance slightly declined, dropping by only 1 basis point, due to a slower pace of forbearance exits,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Forbearance re-entries increased to almost 5.6 percent, as more homeowners who had canceled forbearance needed assistance again. There was also an increase in the share of PLS and portfolio loans in forbearance, while the share for Fannie Mae, Freddie Mac and Ginnie Mae loans decreased.”

In a bit of a post-bubble reversal, the highest-priced homes are seeing the biggest price appreciation. Up until very recently, high priced homes languished on the market, as there was little demand for anything over $1.5 million except for a few metros on the West Coast. Now, luxury properties in places like Austin, San Diego, and Phoenix are are seeing price appreciation approaching 20%.

“In the high-end market, we’re not only seeing multiple offers—we’re seeing buyers waiving appraisal and inspection contingencies, which doesn’t normally happen,” said Vincent Shook, a Redfin real estate agent in Phoenix. “The biggest driver is the influx of people from California. Still, competition remains toughest for buyers of affordable and mid-priced homes.”

Shook continued: “Some buyers with more modest budgets are coming to me and saying, ‘I want a four-bedroom home and here’s my maximum price.’ I’ve had conversations where I’ve had to be brutally honest and tell them that home literally does not exist anymore. It existed eight months ago when they started looking, but they wanted to wait in hopes that prices would come down. Prices didn’t come down, and now they’re priced out of the market.”

The Biden Administration has unveiled a home rehab tax credit, which is targeted towards low-and-median income borrowers. The idea is to encourage rehabbing of older homes. The buyer must make no more than 140% of the area median income, and will apply to only 1 in 4 census tracts, and the final sale price of the home cannot exceed four times the area median income.

4 Responses

  1. Interesting.

    https://redstate.com/shipwreckedcrew/2021/06/02/doj-moves-to-dismiss-case-against-january-6-protestor-it-always-begins-with-a-trickle-n389823

    Particularly this part,

    The first charge may be undermined by the potential unconstitutionality of the “Electoral Count Act”, 3 U.S.C. 15, which is the statutory basis for the proceedings taking place in Congress on January 6. The ECA created a procedural mechanism by which Congress supposedly gave unto itself the authority to alter the outcome of the proceedings of the Electoral College as spelled out in the Twelfth Amendment to the Constitution. If the proceedings taking place on January 6 were unconstitutional, then at best they were “ceremonial” and protesters were not actually interfering with “government business or official function” as required by the criminal statute Kelly was charged with having violated.

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    • I think there’s a reasonable argument that if procedures were “ceremonial”, then it was still interfering with “government business or official function”. But even that is a far cry from “attempted coup” and “insurrection” that the press keeps going on about.

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  2. Greenwald on the War on (Domestic) Terror:

    https://greenwald.substack.com/p/the-new-domestic-war-on-terror-has?token=eyJ1c2VyX2lkIjo4NTc0NzI2LCJwb3N0X2lkIjozNzExNDQxOSwiXyI6ImlqVWlBIiwiaWF0IjoxNjIyNjY2MzMwLCJleHAiOjE2MjI2Njk5MzAsImlzcyI6InB1Yi0xMjg2NjIiLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.RB8PtpppjQMM4SndP8ahhfEzd7vV7zfvYdyfblD9cf0

    Just like the first War on Terror, these threats are issued with virtually no specificity. They are just generalized warnings designed to put people in fear about their fellow citizens and to justify aggressive deployment of military and law enforcement officers in Washington, D.C. and throughout the country. A CNN article which wildly hyped the latest danger bulletin about domestic extremists at Tulsa had to be edited with what the cable network, in an “update,” called “the additional information from the Department of Homeland Security that there is no specific or credible threats at this time.”

    My problem is the constant exhortation that the radical-right-wing boogeyman is about to attack has become like “climate change”. A lot of sturm und drang but nothing comes to pass. They are repeatedly wrong by every visible metric and yet there is no cost or penalty, and they just keep warning about imminent (now domestic) terror attacks based on no more foundation than “hey, that’s a pride festival, that’s the sort of things those crazy right-wingers would want to blow up, right? ISSUE A WARNING!”

    But never, “Hey, isn’t weird that pretty much all the public pronouncements of terror threats turn out to be nothing?”

    Not even getting into how inconsistent the terror threats are with everything we know, and with all available data. The terror threats are more Hollywood fictions than in any way related to what we know about right wing groups, domestic terror cells (which tend to be very small, poorly organized, and always on drugs).

    DHS’s color scheme became “the brunt of endless jokes and derision,” concluded a 2007 scholarly study in the journal International Security, noting that it “became perceived as being politically motivated” largely due to the complete lack of specific information about what Americans were supposed to fear or avoid.

    I think the present Right-Wing terror threat warnings are already seen as being politically motivated and substance free–except on Blue Checkmark Twitter.

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