Madeleine Romanello: September 2009
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Madeleine Romanello
September 2009
“If you can’t explain it simply, you don’t understand it well enough.”
Is a home still a good investment?
92% say yes!! Despite all of the bad news in the media about homeownership and mortgages, most Americans still believe buying a home is a great investment for the future.
Sources: Bankrate.com 8/09
JD Power Survey The study also found that the proportion of first-time home buyers increased considerably — to 56% in 2009 from 44% in 2008. Many of these first-time buyers may be attracted by improved home affordability and the perception of a strong buyer’s market.
Sources: Housing Wire 7/31/09
Reports are still looking good!! Pending home salesUP! Existing home sales UP! New construction
UP!
New Home Sales up 9.6% in July Sales are now up 32 % from the bottom in January, but off 69 % from the frenzied peak four years ago.
Sources: Associated Press 8/26/09
U.S. Existing Home Sales $0 -100,000 $100,000 -250,000 $250,000 – 500,000 $500,000 – 750,000 $750,000 – 1,000,000 $1,000,000 – 2,000,000 $2,000,000 +
Sources: Bubble Meter.com 8/22/09
Year over Year +38.8% +8.7% -6.2% -8.9% -10.6% -23.3% -32.4%
Mortgage Rates – 30 year fixed
5/21/2009
Source: Federal Reserve
Mortgage Rates “The end of the low interest rate environment for home loans may be arriving sooner rather than later. In comments contained in a speech, Richmond Fed President Jeffrey Lacker indicated that the Federal Reserve may consider a premature end to its program of purchasing mortgage-backed securities.”
urce: Examiner.com 8/27/09
Prices The Standard & Poor’s (S&P)/Case-Shiller US National Home Price Index showed some positive quarterly improvement, gaining 2.9% in the second quarter of 2009 over the first quarter. It marks the first quarter-over-quarter improvement in three years.
Sources: Case Shiller 8/25/09
HomeGain 3rd Quarter Realtor Survey In the next six months, do you think the values of homes in your market will:
Sources: Homegain 8/2009
Prices Knowing that the pace of declines had slowed once before, in early 2008, Robert Shiller, the Yale economist who helped create the index, said “It really is too soon to call this a turning point.”
Sources: Wall Street Journal 8/25/2009
Prices
Sources: Calculated Risk 8/09
Supply & Demand
Sources: Seeking Alpha 8/24/2009
Supply & Demand
Sources: papereconomy.com 8/14/09
Supply & Demand “One of the most vital fundamentals (in housing), the ratio between supply and demand, is still out of whack.” - Newsweek
Sources: Newsweek 8/31/2009
Shadow Inventory The Zillow survey indicated that many homeowners could be waiting on the sidelines to sell. When asked about future plans to sell, 29 percent of homeowners said they would be at least "somewhat likely" to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround, creating "shadow inventory" that could slow a recovery.
Sources: Zillow Q2 Homeowner Confidence Survey 8/09
Delinquency Rates Single-family mortgages set a new record delinquency rate of 13.16% in the second quarter of 2009, according to the quarterly survey by the Mortgage Bankers Association.
Sources: Mortgage Bankers Association 8/09
Sources: Seeking Alpha 8/24/2009
‘Cure Rate’ Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006.
Sources: Wall Street Journal 8/24/2009
Sources: Seeking Alpha 8/24/2009
Prime Mortgages “While subprime mortgages sparked the first round of housing problems two years ago, now "troubles are lurking further up the food chain," says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustablerate loans to prime borrowers are resetting to higher payments. ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”
Sources: Wall Street Journal 8/3/09
Prime Mortgages If you look at prime jumbo, the highest quality mortgages, 6.2% are seriously delinquent. That sounds like a low number. But two years ago that number was 1%. It's a very straight trajectory from September 2007, pretty closely mimicking unemployment.
Sources: Fortune.com 8/12/09
Causes of Mortgage Foreclosures (2
urce: Wall Street Journal, Stan Liebowitz 7/3/09
nd
half 2008)
Mortgages Underwater “Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said. “The negative-equity rate will rise and spin off more foreclosures,” Stan Humphries, Zillow’s chief economist, said in an interview. “I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”
Sources: Bloomberg.com 8/12/09
Mortgages Underwater Karen Weaver, global head of Deutsche Bank's securitization research said last week that 48% of U.S. mortgage owners will end up owing more than their home is worth by 2011. According to Deutsche Bank, home prices may fall another 14% before hitting a bottom.
Sources: Fortune.com 8/12/09
Mortgages Underwater At what point of being underwater do homeowners start falling into foreclosure rapidly? Once you get to the point where negative equity is significant -- for example, 25% or more -- there have been studies that suggest you get more strategic defaults.
Sources: Fortune.com 8/12/09
Mortgages Underwater First American’s researchers believe more than 15.2m mortgagors are underwater, representing nearly one-third of the nation’s mortgage market.
Sources: First American CoreLogic 8/09
Modifications
Sources: Center for Responsible Lending 8/09
Short Sales On August 20, 2009, Freddie Mac confirmed in writing that its servicers are not allowed to renegotiate short sales commissions. According to the policy, as a condition of the servicer's acceptance of a short sale offer, servicers cannot renegotiate the sales commission below the amount agreed to by the real estate broker and the seller/borrower. However, if the negotiated commission exceeds 6 percent, servicers are required to limit it to 6 percent. This Freddie policy is consistent with Fannie Mae's policy. - National Association of Realtors®
Sources: NAR 8/26/2009
September 2009
“If you can’t explain it simply, you don’t understand it well enough.”
Is a home still a good investment?
92% say yes!! Despite all of the bad news in the media about homeownership and mortgages, most Americans still believe buying a home is a great investment for the future.
Sources: Bankrate.com 8/09
JD Power Survey The study also found that the proportion of first-time home buyers increased considerably — to 56% in 2009 from 44% in 2008. Many of these first-time buyers may be attracted by improved home affordability and the perception of a strong buyer’s market.
Sources: Housing Wire 7/31/09
Reports are still looking good!! Pending home salesUP! Existing home sales UP! New construction
UP!
New Home Sales up 9.6% in July Sales are now up 32 % from the bottom in January, but off 69 % from the frenzied peak four years ago.
Sources: Associated Press 8/26/09
U.S. Existing Home Sales $0 -100,000 $100,000 -250,000 $250,000 – 500,000 $500,000 – 750,000 $750,000 – 1,000,000 $1,000,000 – 2,000,000 $2,000,000 +
Sources: Bubble Meter.com 8/22/09
Year over Year +38.8% +8.7% -6.2% -8.9% -10.6% -23.3% -32.4%
Mortgage Rates – 30 year fixed
5/21/2009
Source: Federal Reserve
Mortgage Rates “The end of the low interest rate environment for home loans may be arriving sooner rather than later. In comments contained in a speech, Richmond Fed President Jeffrey Lacker indicated that the Federal Reserve may consider a premature end to its program of purchasing mortgage-backed securities.”
urce: Examiner.com 8/27/09
Prices The Standard & Poor’s (S&P)/Case-Shiller US National Home Price Index showed some positive quarterly improvement, gaining 2.9% in the second quarter of 2009 over the first quarter. It marks the first quarter-over-quarter improvement in three years.
Sources: Case Shiller 8/25/09
HomeGain 3rd Quarter Realtor Survey In the next six months, do you think the values of homes in your market will:
Sources: Homegain 8/2009
Prices Knowing that the pace of declines had slowed once before, in early 2008, Robert Shiller, the Yale economist who helped create the index, said “It really is too soon to call this a turning point.”
Sources: Wall Street Journal 8/25/2009
Prices
Sources: Calculated Risk 8/09
Supply & Demand
Sources: Seeking Alpha 8/24/2009
Supply & Demand
Sources: papereconomy.com 8/14/09
Supply & Demand “One of the most vital fundamentals (in housing), the ratio between supply and demand, is still out of whack.” - Newsweek
Sources: Newsweek 8/31/2009
Shadow Inventory The Zillow survey indicated that many homeowners could be waiting on the sidelines to sell. When asked about future plans to sell, 29 percent of homeowners said they would be at least "somewhat likely" to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround, creating "shadow inventory" that could slow a recovery.
Sources: Zillow Q2 Homeowner Confidence Survey 8/09
Delinquency Rates Single-family mortgages set a new record delinquency rate of 13.16% in the second quarter of 2009, according to the quarterly survey by the Mortgage Bankers Association.
Sources: Mortgage Bankers Association 8/09
Sources: Seeking Alpha 8/24/2009
‘Cure Rate’ Fitch found that the cure rate for prime loans dropped to 6.6% as of July from an average of 45% for the years 2000 through 2006.
Sources: Wall Street Journal 8/24/2009
Sources: Seeking Alpha 8/24/2009
Prime Mortgages “While subprime mortgages sparked the first round of housing problems two years ago, now "troubles are lurking further up the food chain," says Joshua Shapiro, chief U.S. economist at MFR Inc. White-collar job losses have accelerated while more adjustablerate loans to prime borrowers are resetting to higher payments. ‘You put all that together, it leads me to believe that the next leg down on home prices is going to come from the top,’ he says.”
Sources: Wall Street Journal 8/3/09
Prime Mortgages If you look at prime jumbo, the highest quality mortgages, 6.2% are seriously delinquent. That sounds like a low number. But two years ago that number was 1%. It's a very straight trajectory from September 2007, pretty closely mimicking unemployment.
Sources: Fortune.com 8/12/09
Causes of Mortgage Foreclosures (2
urce: Wall Street Journal, Stan Liebowitz 7/3/09
nd
half 2008)
Mortgages Underwater “Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb, Zillow.com said. “The negative-equity rate will rise and spin off more foreclosures,” Stan Humphries, Zillow’s chief economist, said in an interview. “I see a substantial downside risk to prices and don’t think we’ll see a bottom until the middle of next year.”
Sources: Bloomberg.com 8/12/09
Mortgages Underwater Karen Weaver, global head of Deutsche Bank's securitization research said last week that 48% of U.S. mortgage owners will end up owing more than their home is worth by 2011. According to Deutsche Bank, home prices may fall another 14% before hitting a bottom.
Sources: Fortune.com 8/12/09
Mortgages Underwater At what point of being underwater do homeowners start falling into foreclosure rapidly? Once you get to the point where negative equity is significant -- for example, 25% or more -- there have been studies that suggest you get more strategic defaults.
Sources: Fortune.com 8/12/09
Mortgages Underwater First American’s researchers believe more than 15.2m mortgagors are underwater, representing nearly one-third of the nation’s mortgage market.
Sources: First American CoreLogic 8/09
Modifications
Sources: Center for Responsible Lending 8/09
Short Sales On August 20, 2009, Freddie Mac confirmed in writing that its servicers are not allowed to renegotiate short sales commissions. According to the policy, as a condition of the servicer's acceptance of a short sale offer, servicers cannot renegotiate the sales commission below the amount agreed to by the real estate broker and the seller/borrower. However, if the negotiated commission exceeds 6 percent, servicers are required to limit it to 6 percent. This Freddie policy is consistent with Fannie Mae's policy. - National Association of Realtors®
Sources: NAR 8/26/2009
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