Mortgage Lending Slid to 16-Year Low in 2011
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2012 Sep 18, 4:38am 13,783 views 41 comments
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Raw
2012 Sep 18, 6:09am
People are paying cash and they're buying like crazy. As there is nothing much left to buy builders are starting to build.
It's gonna be a wonderful decade.
http://lansner.ocregister.com/2012/09/18/homebuilder-confidence-index-at-6-year-high/166409/
Raw
2012 Sep 18, 6:12am
Please don't read this Darrell. If you do please have a stiff drink first.
Raw
2012 Sep 18, 6:17am
What matters is housing demand is at 15 year lows and falling.
Now go ahead and take a another sip of Koolaide.
You did not even read the article did you? You are afraid to face the truth.
Goran_K
2012 Sep 18, 6:21am
You did not even read the article did you? You are afraid to face the truth.
Please note that the NAHB/Wells index comes from a builder survey that tabulates “a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.†So, the West isn’t yet cured from the long housing drought, but the survey indicates local builders see opportunity for new home sales.
It's a survey of opinion, not actual housing starts. The index almost reached the same level in 2011, did home building skyrocket?
Exactly.
Raw
2012 Sep 18, 6:25am
You didn't read the article did you? It says;
"Mortgage Lending Slid to 16-Year Low in 2011"
Why else do you think prices are falling?
Many homes fell by 80% or more. The down payment 5 years ago is all cash now. You don't need a mortgage anymore, which is why mortgage lending is sliding.
That is a good thing, Darrell, a very good thing.
Raw
2012 Sep 18, 6:28am
You did not even read the article did you? You are afraid to face the truth.
Please note that the NAHB/Wells index comes from a builder survey that tabulates “a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.†So, the West isn’t yet cured from the long housing drought, but the survey indicates local builders see opportunity for new home sales.
It's a survey of opinion, not actual housing starts. The index almost reached the same level in 2011, did home building skyrocket?
Exactly.
There would be a lag period between being confident and actually building. Confidence come first. Now wait for the avalanche of homes being built.
Raw
2012 Sep 18, 6:41am
We need MORE inventory. BUILD BUILD BUILD
Build Baby Build. We need more jobs, more wealth, more prosperity.
What a great country we live in.
This is data from 2011, 2012 data will be higher. Does it matter though? Is sales volume an indicator of which way prices will go?
At our current pace (4m resale homes / year) volume is still higher than any year of the 1980s boom.
Volume looks low now because sales volume during the 2000s were off the charts.
Goran_K
2012 Sep 18, 7:03am
This is data from 2011, 2012 data will be higher. Does it matter though? Is sales volume an indicator of which way prices will go?
At our current pace (4m resale homes / year) volume is still higher than any year of the 1980s boom.
Volume looks low now because sales volume during the 2000s were off the charts.
Naturally as population increases, the number of homes selling should steadily rise as builders build each year, and new people try become home owners. So one would expect that homes trading in the market today in 2012 would naturally be at a higher level in nominal terms than 1982.
What is really interesting about Darrel's data is that not only has the amount of mortgages actually decreased in absolute terms, the amount of purchase mortgages per year have decreased to mid 1990s levels, when they should be higher. This shows that the market has actually retracted despite there being nearly a 40,000,000+ population change since 1995.
2012 is higher than 1997?
Do you have a link to back that up?
You've been repeating the same thing over and over and you can't support it?
Naturally as population increases, the number of homes selling should steadily rise as builders build each year, and new people try become home owners. So one would expect that homes trading in the market today in 2012 would naturally be at a higher level in nominal terms than 1982.
Okaay... If we had 3 million re-sales in 1995 what would be a healthy number of re-sales for 2012?
2012 is higher than 1997?
Do you have a link to back that up?
You've been repeating the same thing over and over and you can't support it?
Why bother when it it's true? Thank you for posting it.
2010/2011 looks quite a bit lower than 2012?
Maybe you should change your slogan to: Housing demand was exceptionally low in 2010! SELL SELL SELL!!
Goran_K
2012 Sep 18, 7:22am
Okaay... If we had 3 million re-sales in 1995 what would be a healthy number of re-sales for 2012?
Well if you look at this chart, you could trend a line from 1995 (ignoring the free credit bubble):
Any line you draw would certainly be higher than 4,000,000.
Well if you look at this chart, you could trend a line from 1995 (ignoring the free credit bubble):
Sure, I can agree with that. Though the graph stretched out to the 80s is better to draw a trend line, right?
Now if you believed that the volume of existing home sales was somehow correlated with the future of home prices, would that graph predict doom and gloom?
Goran_K
2012 Sep 18, 7:32am
I don't know about doom and gloom. Doesn't that depend on the perspective?
Someone who owns a $900,000 home in Torrance that they bought in 2007 probably would say doom and gloom (if they were really emo).
Someone who was frugal about their housing needs, and saved a lot of cash 2000-2010 might say "Happy days".
We're on a rooGoran_K says
I don't know about doom and gloom. Doesn't that depend on the perspective?
Someone who owns a $900,000 home in Torrance that they bought in 2007 probably would say doom and gloom (if they were really emo).
Someone who was frugal about their housing needs, and saved a lot of cash 2000-2010 might say "Happy days".
We're on a roll.. I agree with that too.
My point being that not only is "housing demand is at 15 year lows.... and falling" untrue, I'm not sure how one could draw the conclusion that "Speculation nation funded the Spring/Summer jump" from either the number of 2011 home loans or 2011/2012 resale volume.
Dramatically lower housing prices is "gloom and doom"?
Huh?
Nonsense. Dramatically lower housing prices is bullish optimism and watch the economy accelerate as prices dive down to early 1990's levels.
Housing demand was exceptionally low in 2010! SELL SELL SELL!!
Goran_K
2012 Sep 18, 7:38am
I'm not sure how one could draw the conclusion that "Speculation nation funded the Spring/Summer jump" from either the number of 2011 home loans or 2011/2012 resale volume.
Well you can never be 100% sure. I mean, lots of foreign asian money and Facebook millionaires could have bought all the houses nationally fresh with cash.
Or declining purchase mortgage applications, and increasing cash sales could indicate that investors have made their presence felt in the market since mortgages are hard as heck to get now days.
I tend to not believe the fantastic, and try to stay grounded with my theories. I'm not an expert in everything, but I'm pretty good at the common sense thing.
Hmmm... Housing Demand was higher in 1994 than it is today.
Is housing demand at 18 year lows?
Yes.
Goog was higher in 2007 than it is today.
Is Goog at 5 year lows?
"Housing demand was exceptionally low in 2010! SELL SELL SELL!!"
I'm not sure how one could draw the conclusion that "Speculation nation funded the Spring/Summer jump" from either the number of 2011 home loans or 2011/2012 resale volume.
Well you can never be 100% sure. I mean, lots of foreign asian money and Facebook millionaires could have bought all the houses nationally fresh with cash.
Or declining purchase mortgage applications, and increasing cash sales could indicate that investors have made their presence felt in the market since mortgages are hard as heck to get now days.
I tend to not believe the fantastic, and try to stay grounded with my theories. I'm not an expert in everything, but I'm pretty good at the common sense thing.
Was the spring/summer jump in 2011 or 2012? The article talks about 2011 data.
Raw
2012 Sep 18, 9:10am
Hmmm... Housing Demand was higher in 1994 than it is today.
Is housing demand at 18 year lows?
Yes.
You have even started talking to yourself.
I am very worried about you Darrell, very very worried.
Goran_K
2012 Sep 18, 9:26am
Was the spring/summer jump in 2011 or 2012? The article talks about 2011 data.
There's a lot more herd mentality now (speculators). Robert Shiller's analysis is what I see in the market today.
Goran_K
2012 Sep 19, 1:40am
Are they speculators, or investors? I'm seeing quite a bit of both in Phoenix... I'd call it honestly (something the trolls on here have a real problem with) about 50% to 50%. I see plenty of flippers on hard money loans and borrowed time but I also see plenty of buy and hold investors.
Well, to be accurate, a speculator is just a form of investor, just a form no one wants to be accused of being. I'm sure you're not a speculator Roberto. You seem too intelligent to be part of the herd. :)
That being said, I can find no other explanation for prices nominally rising, purchase mortgages declining, and the amount of cash transactions increasing without some form of speculation occurring.
Sure it could be Facebook IPO millionaires, or Chinese manufacturing moguls and their families making up the cash transactions, but that seems far more unlikely than "investors" trying to find a place to park their money to get better returns in a ZIRP environment created by the FED.
Is housing demand at 18 year lows?
Yes.
No.
http://www.bloomberg.com/news/2012-09-19/sales-of-u-s-existing-homes-climb-to-a-two-year-high.html
Purchases of previously owned houses increased 7.8 percent to a 4.82 million annual rate, the most since May 2010, [...] Another report showed construction began on more single-family homes last month than at any time in the past two years. [...] The median price of an existing home climbed 9.5 percent to $187,400 from $171,200 in August 2011.
RentingForHalfTheCost
2012 Sep 19, 1:45am
You didn't read the article did you? It says;
"Mortgage Lending Slid to 16-Year Low in 2011"
Why else do you think prices are falling?
Many homes fell by 80% or more. The down payment 5 years ago is all cash now. You don't need a mortgage anymore, which is why mortgage lending is sliding.
That is a good thing, Darrell, a very good thing.
Couldn't be further from the truth. Remove the free money mortgage and houses would be worth less than half. All cash buyers are there, but they are not the driving force in prices. Why else would the Fed be trying to push interest rates down? The prices are still inflated and subsidized. When the gravy train ends, good luck to everyone. I'll just give my months notice and move to a sweeter place. Put your overpriced home up for sale when the spiral starts. That'll be interesting. Kinda like the Facebook avalanche.
Raw
2012 Sep 19, 1:56am
Many homes fell by 80% or more. The down payment 5 years ago is all cash now. You don't need a mortgage anymore, which is why mortgage lending is sliding.
That is a good thing, Darrell, a very good thing.
Couldn't be further from the truth. Remove the free money mortgage and houses would be worth less than half. All cash buyers are there, but they are not the driving force in prices. Why else would the Fed be trying to push interest rates down? The prices are still inflated and subsidized. When the gravy train ends, good luck to everyone. I'll just give my months notice and move to a sweeter place. Put your overpriced home up for sale when the spiral starts. That'll be interesting. Kinda like the Facebook avalanche.
Cash buyers are an indicator of where the smart money is going. The smart money says this is the time to buy. Heed the obvious or be sorry.
Goran_K
2012 Sep 19, 2:03am
Cash buyers are an indicator of where the smart money is going. The smart money says this is the time to buy. Heed the obvious or be sorry.
How many houses are you buying Raw?
freak80
2012 Sep 19, 2:05am
When the gravy train ends, good luck to everyone.
Are you suggesting the gravy train will end? What world are you living in? One with sound money or something? ;-)
Raw
2012 Sep 19, 2:21am
Cash buyers are an indicator of where the smart money is going. The smart money says this is the time to buy. Heed the obvious or be sorry.
How many houses are you buying Raw?
I am running out of cash, so I will pursue getting land which are still a bargain. If you can get me a home in a prime location that is truly a bargain I will find the money.
Goran_K
2012 Sep 19, 2:26am
I am running out of cash, so I will pursue getting land which are still a bargain. If you can get me a home in a prime location that is truly a bargain I will find the money.
Don't you think it's risky to tie up all your money into houses?
Raw
2012 Sep 19, 2:30am
I am running out of cash, so I will pursue getting land which are still a bargain. If you can get me a home in a prime location that is truly a bargain I will find the money.
Don't you think it's risky to tie up all your money into houses?
It is risky, but I am diversified.
RentingForHalfTheCost
2012 Sep 19, 2:30am
Couldn't be further from the truth. Remove the free money mortgage and houses would be worth less than half. All cash buyers are there, but they are not the driving force in prices. Why else would the Fed be trying to push interest rates down? The prices are still inflated and subsidized. When the gravy train ends, good luck to everyone.
Yes, this is a bubble driven by cash.
Gary Anderson strategicdefaultbooks.com
Simply not true. This is a bubble driven by free money. The cash is buying the below market priced housing. The free money is putting pressure on the prices to stay stable or rise. Cash is much smarter than free.
RentingForHalfTheCost
2012 Sep 19, 2:31am
I am running out of cash, so I will pursue getting land which are still a bargain. If you can get me a home in a prime location that is truly a bargain I will find the money.
Don't you think it's risky to tie up all your money into houses?
It is risky, but I am diversified.
Yah, you have a red house, a blue house, a green one, some Home Depot stock, and you are waiting for the dividends to start from the home builders. Completely diversified. ;)
RentingForHalfTheCost
2012 Sep 19, 2:34am
When the gravy train ends, good luck to everyone.
Are you suggesting the gravy train will end? What world are you living in? One with sound money or something? ;-)
Absolutely, what I am suggesting. It is how we solve the debt problem in this country. We either solve it now, or it will find its own solution. Most likely war. I hope not, but greed normally leads to that. We really haven't gotten any brighter. We think we are, but greed is more of a problem now than ever before. Housing is a great place to see it unfold.
Raw
2012 Sep 19, 2:37am
Yah, you have a red house, a blue house, a green one, some Home Depot stock, and you are waiting for the dividends to start from the home builders. Completely diversified. ;)
LOL. You are funny.
You forgot Apple, the greatest company ever in the history of mankind.
RentingForHalfTheCost
2012 Sep 19, 7:44am
You forgot Apple, the greatest company ever in the history of mankind.
It is by far the greatest company named after a fruit. I give you that.
However, I would beg to argue that the only reason people are happy there is the financial reward. I know many engineers that are not happy there, but stay because of the shares. I think the greatest company should go to the company that figures out how to make people happy without bribing them with stock. :)
RentingForHalfTheCost
2012 Sep 20, 9:24am
Simply not true. This is a bubble driven by free money. The cash is buying the below market priced housing. The free money is putting pressure on the prices to stay stable or rise. Cash is much smarter than free.
Free money is cash. I said it was causing a mini bubble. You are saying I disagree with you but I don't think I am.
Gary Anderson strategicdefaultbooks.com
Oh, I thought you were saying the cash only buyers were causing the bubble. My bad. Free money is great when you are the receiver, but when you want to live within your means and not feed into the debt problem it sucks. I witness so many people living on borrowed money that they will never repay. I knew it when it started happening in 2004 and it is still happening. Tight lending standards my ass. I just sold a car and the buyer got an auto loan at 2%. Removing inflation and the credit union is paying the person to take the loan. How can that be healthy. If you followed the money trail there has to be kickbacks from the gov't and forgiveness for bad debt to make that auto loan profitable for them. Stupid stuff.
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http://online.wsj.com/article/SB10000872396390443995604578004231728567010.html
If loans and refis are dropping, what kind of MBSes do you suppose the FedRes will be buying into 2015?
#housing