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Saturday, February 12, 2011
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18 comments:
Check out this:
"Mortgage Rates jump. Will House Prices Fall?"
wsj - money article from December.
Has charts going back to the early 70's.
cheryl
got a link?
Obama plan may raise mortgage rates/Fees
Foreclosure filings drop as officials question process
"In Maryland, where Wells Fargo and Ally Financial last month dismissed pending foreclosures because they were approved by a "robo-signer," foreclosures fell by 70 percent from last January. In Massachusetts, where the state supreme court in January invalidated some foreclosures and called into question many others, there was a 66 percent fall. "
pat,
Yes. Type that title into your search engine.
The article just confirms my memory (and debunks all the claims of the youngsters here).
p.s. moving to MA or MD?
why early foreclosers won't be chasing homes this summer
deficiency judgements
"The bank sold the home for far less than Palacios owed on it, as often happens with foreclosures. What Palacios did not see coming was the letter from his lender demanding that he pay the shortfall: $148,064.02. "I really thought I was through with this house," said Palacios, who fell behind on payments when the economy soured and his cleaning business stumbled"
national trends could drag down DC
"But if the federal government cuts back on private defense contractors, as Defense Secretary Robert M. Gates proposed in August, that's a "much bigger deal," because defense contracting jobs are more than double the size of the federal payroll, Fuller said.
Another possible stumbling block for the housing market - nationally and locally - may be mortgage interest rates.
,,,
but employment trends will outweigh interest rate issues
"
cheryl
good chart, wish it just had the inflation corrected numbers and sales volumes.
I seem to recall in the early 80's when rates shot up, sales volumes slowed hard.
also the market changed hard in the early Zero's. Equity declined hard.
Sellers with equity were able to handle trouble much better then the massive real estate option markets.
does anybody think tightening rents and decreased vacancies may be evidence the banks are manipulating the market?
Let us assume steady population, for every foreclosure, a family should move into a rental and a investor should be picking up a new rental property to put out on the market.
That should balance the market supply.
so either we have demand from immigration or the banks are holding foreclosures off the market
pat,
I have the same memories of the early 80's. Assumptions, buy-downs, owner finance, ARMS and neg am loans. Nothing much was selling.
I don't believe there is any conspiracy. Boomer kids (gen Z?) are spilling out of colleges and looking to rent. The older ones are ditching room mates for their own place. Little is in the pipeline.
When we moved here in 1981 all the apartment complexes within 5 miles of Tysons had months-long waiting lists.
I truly think that the banks are moving as fast as they can to clear reo inventory.
But you need to look at the time lag, because bond prices are more closely correlated in time with 30-year mortgage rates than are not Fed. Reserve actions, and that the latter take time to have an effect.
This is shown on the chart in the article VA_Investor cited, which is here:
Money/WSJ article
If you look at the chart, you see that interest rates didn't really jump up until late in 1979, and then in 1980-1983, you see real prices declined following mortgage rate increases.
We also have to consider how different the inflation rates were then vs. now, which makes borrowing a very different decision and affects how people view housing prices (and rents).
"than are Fed..."
This is a good example of why economists and others use multivariate models where they can control lots of other factors, rather than just eyeball charts.
Ace,
We don't have sharp rate increases now so we don't know if they will go hand in hand with inflation.
I've heard the theme here over and over that rate increases will crater prices and, historically, this is simply not true.
As an owner, I welcome inflation as the vast majority of my costs are fixed. The possibility (probabilty) of higher rates is the reason I believe FHA is worth the extra cost as these loans are assumable at original rates.
Could you clarify what you believe the short-comings of the chart are?
Pat-
Assuming a constant population is a very bad assumption. There are currently ~100MM households and on average there are just under ~1MM new households created each year. During 2008-2009 there were virtually no new households created as people moved in with friends and family. So as people are becoming less afraid about losing their jobs not only are we getting the usual 1MM households, but we are/will make up for the ~2MM households that were not created during the recession. So the fact that new houses are being made at a much slower pace than households are being created is causing rental vacancies to decrease.
It's very easy to seach population increases in the DC Metro area.
I wouldn't count on any decrease that would affect rents or home prices (on the downside).
cheryl says
"I wouldn't count on any decrease that would affect rents or home prices (on the downside)."
i concur.
but i don't think the population is growing much
The DC Metro area has the fastest population growth on the East Coast beating out Boston and New York (per Jobs.com quoting the WaPo which cites the census bureau).
Aricle is 11 months old.
Plenty of supporting articles/data found when searching: D.C. Metro population growth.
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