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Fannie Mae, Freddie Mac to delist shares from NYSE
Unexpectedly: "Housing starts fell more than expected in May to a five-month low as a homebuyer tax credit expired . . ."
Wednesday, June 16, 2010
Northern Virginia Bits Bucket 6/16/2010
Posted by Harriet at 6:00 AM
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18 comments:
We've talked about flipping. How about flopping?
Yesterday's article in CR 5 Second Short got me to thinking. I have always associated summer with flip flops. I never realized that was a Real Estate term too.
flops
"Unexpectedly: "Housing starts fell more than expected in May to a five-month low as a homebuyer tax credit expired . . .""
Unexpectedly - ??
Nope, there are some of us that have been waiting for the drop !
All those Sellers that didn't get a Contract during the Tax Credit..
We'll see who has to sell come August
well does bernanke go out and start torpedo bombing cash on the banks to lower interest rates even further?
In the discussion on high density development around the EFC metro the comment was made that:
"Commercial is ideal from a bang/buck ratio. It taxes at twice residential..."
Isn't a law in Viginia that localities must tax residential and commercial properties at the same tax rate.
Or am I misinterpreting the comment? Does it mean the properties assess twice as high, so taxes are double?
Pat-
Banks benefit from the spread between the short term and long term rates. Short term rates are at 0% so he can't make that lower. Lower long term rates help individuals, but generally hurt banks, because there is less spread to be made in the borrow short term lend long term scheme banks run.
Spunky-
Are you talking about housing starts or housing sales?
Housing starts are how many houses were started to be built by construction companies. Low starts is actually bad for those of us who want to buy. It means that there will be fewer houses to choose from, and obviously a lower supply helps support prices at higher levels.
I am amazed people finding surprising that when the inventory of houses is near all time highs very few builders want to start new projects. My guess is it will be a long steady process of few houses being made and slowly trying to work through the excess inventory.
Housebuyer-
I am talking about both
where I am looking (not Arlington!)the cost per sq/ft for new vs. resale is not too different.
I work w/ Builders & they are ramping up on Spec homes - but not so the averageBuyers would notice ;)
Poppy-
I tried walking by the construction site you were talking about a couple of days ago. It looks like the address is 2721 Merillee. I saw a couple of signs that said Halstead at Dunn Loring posted on the fences, so I wouldn't be surprised if the Hallstead is making a third condo complex there. There were not any clear signs though that specifically stated what the site was supposed to be.
In more non-surprising news, banks who have the right to get their money back want their money back:
WaPo Banks go after money lost in foreclosures.
housebuyer,
Thanks for the info. A potential 3rd Halstead building could be interesting.
Delisting Of Fannie, Freddie Foreshadows Fundamental Change
NEW YORK (Dow Jones)--Federal regulators' decision Wednesday to remove shares of Fannie Mae (FNM) and Freddie Mac (FRE) from the New York Stock Exchange and have them trade on an electronic bulletin board marks a fundamental change for the two mortgage agencies now that they are operating under conservatorship.
The conservator, the Federal Housing Finance Agency, said the move was a result of both companies trading around $1 for more than 30 days.
"It's a formality," said Todd Abraham, a portfolio manager at Federal Investors Inc. "It's surprising that it didn't happen before."
Freddie Mac's shares haven't closed below $1 since Aug. 7, 2009, though they have hovered around the $1 level, while Fannie's have closed under $1 every day since May 19.
Freddie was recently down 40% at 73 cents, while Fannie traded 38% lower at 57 cents.
Other market participants, however, said they saw the move as a clear message, for anyone still in doubt, that Fannie and Freddie are government tools for fixing the housing market, no longer independent companies that can be traded for their worth.
"The delisting isn't a signal of where [the government] wants to go with Fannie and Freddie as it is disabusing people of the idea that they are independent entities," said Jim Vogel, agency strategist at FTN Financial.
The government took over the nominally independent mortgage finance companies at the height of the credit crisis in September 2008. Since then, while many plans for reform and restructuring have been discussed, there is no clear plan on how to get them out of government protection.
By withdrawing the shares from trading on the New York Stock Exchange, a process known as delisting, the government essentially rules out the option of the agencies resuming their former status as large, publicly traded companies, market participants said.
Analysts and others said they expected the government to continue extending its support to the agencies, as long as they served as vehicles to help deal with the housing crisis.
"The message is that the conservatorship relationship with the government is here to stay for a while," said Mustafa Chowdhury, head of U.S. rates research at Deutsche Bank. "The government has capitalized the GSEs to an extent where it's almost impossible to have a clear smooth separation again."
But the abrupt nature of Wednesday's announcement--like earlier moves, including the buyout of delinquent mortgages--shook investor confidence.
"The decision makes sense," Vogel said. "It's the lack of communication and transparency that surrounds some important operations of both companies that occasionally tries investor patience."
Agency debt securities were little moved in the secondary market. The risk premium--the added return investors demand to hold a particular security instead of super-safe Treasurys--on Fannie's 3-year bond, for example, narrowed by 0.7 basis point, according to Tradeweb data.
Senate approves home tax credit extension
"Reid, D-Nev., added the proposal to a bill extending jobless benefits through the end of November. Nevada has the nation's highest foreclosure rate, and Reid is facing a tough re-election campaign."
Hmmm...through the end of November. I'm sure that's just a coincidence.
FNM and FRE are being pushed towards slow death...and rightly so. With 90% mortgages backed by these entities and FHA, key questions are - how far housing has to fall to revive the private market? How soon do we get back to wage-adjusted prices?
With disinflation in the air, most of the adjustment will have to occur in nominal terms.
I just looked at inventory for the first time in a while. Clearly we haven't seen an explosion in inventory, but if you adjust April inventory down slightly for the tax credit inventory has basically been increasing in a straight line all of 2010. I will be very interested to see how long this continues and whether inventory will fall significantly when the winter months come.
The other thing I find interesting is how tight inventory still is in the further out areas. PWC and Manassas for example have basically all time lows for June inventory while Arlington is only ~10% below 07-08 inventory levels.
HB, also, MOI for >$1 mill. in Arlington is about one year.
hb, Ace,
I've been keeping an eye on it. I think inventory will flatten and start declining as soon as July or August throughout most of NoVa. Why? I just don't think there are that many owners who want to sell at today's comps.* If inventory continues to rise, to me that would be a sign of more distressed sales of one form or another hitting the market.
Ace, can you remind us what MOI for >$1 mil in Arlington has looked like in the recent past?
(I know, I'm still here, just cutting back, I'm not a good cold turkey person).
* this feeling is again based purely on my neighborhood bias. Back in April we had 22 listings 8 active, since then 3? have delisted (maybe just 2) the rest got contracts and are slowly but regularly closing. There have been very few new listings such that currently? There are 2, 1 normal 1 REO, active listings in a SFH neighborhood of slightly over 1000 homes. The recent comps have mostly been nice and low, but it doesn't appear there are many other takers for those profits amongst the long-term owners. It's just dead out there. In June. Bizarro world.
Cara, sorry, I haven't been keeping track of it. I just checked it when the May #s came out (using MRIS zip code sales stats), out of curiosity.
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