patrick.net

https://www.cnbc.com/2022/08/05/-santanders-tim-wennes-a-shakeout-among-mortgage-lenders-is-coming.html

A ‘shakeout’ among mortgage lenders is coming, according to CEO of bank that left the business

https://www.barrons.com/articles/housing-market-prices-bubble-51658863104

This Housing Market Won’t Be Like Last Time. History Still Has Lessons.

1977-1982, The Great Inflation Housing Bubble: Real, inflation-adjusted house prices nationally increased 18% over the first three years and then fell 10% over the next three. The number of both existing and new single-family houses sold fell 50% from 1978 to 1982. At the bottom in 1982, real prices were back to 1977 levels.

1985-1993, The Savings & Loan Housing Bubble: Real, inflation-adjusted house prices nationally increased 21% over the first four years then fell 13% over the next four. The number of existing single-family houses sold fell 12% from 1988 to 1991. Sales of new houses fell 32% from 1986 to 1991. At the bottom in 1993, real prices were back to 1986 levels.

1997-2012, The Great Recession Housing Bubble: Real, inflation-adjusted house prices nationally increased 76% over the first nine years and then fell 37% over the next five. The number of existing single-family houses sold fell 42% from 2005 to 2008. Sales of new houses fell 76% from 2005 to 2011. At the bottom in 2012, real prices were back to late 1999 levels, 12 years earlier.

https://www.reddit.com/r/personalfinance/comments/wiyzvi/how_do_i_get_out_of_a_bad_adjustable_rate_heloc/

How do I get out of a bad Adjustable Rate HELOC?

I’m got a 75K balance on an adjustable rate HELOC.
The rate just went from 5% to 6.3% in 1 month.
I pay interest only currently.
I can lock the rate - to prevent it from going higher - but then I would have to pay principal and interest.
How do I get myself out of this mess ?

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/wixk0x/i_made_a_massive_mistake_by_buying_a_house/

I made a massive mistake by buying a house without walking inside of it

https://www.forbes.com/sites/johnwake/2022/08/04/2-reasons-house-prices-will-start-falling-sooner-than-expected/

2 Reasons House Prices Will Start Falling Sooner Than Expected

Many real estate analysts are forecasting U.S. house prices to fall because mortgage interest rates have risen so much. Some are expecting small declines, others, large, but most mention that house prices are “sticky” on the downside and because of that they don't expect prices to start falling until many months after house sales have started falling. Most don't expect these sticky prices to start falling significantly until next year.

A good example of sticky house prices was in 2006. Nationally, the number of single-family houses sold fell 8% in 2006 but house prices actually went up 7% in 2006 before they started to tank in 2007. The number of houses sold fell long before house prices because, as economists like to say, house prices are sticky on the downside.

House prices don’t fall right away because some sellers will decide not to sell if they can’t get the price they want anymore. Many other sellers still want to sell but emotionally they have trouble accepting that prices are actually falling so they’re slow to lower their asking prices. They get paralyzed thinking about how much more money they could have made if they had sold at the top of the market.

In our coming house price correction prices will still be sticky on the downside but two changes since 2006 will make prices a lot less sticky. First, home buyers and sellers have a lot more information about the real estate market today and, second, landlords have bought a lot more single-family houses in recent years than they did last time.

In a falling market it’s a lot easier for landlords to sell than for families who live in the houses they own. The families would have to find new places to live if they sold. Not so for landlords.

Investors purchased a record 21% of single-family houses sold in the U.S. in the first quarter of 2022, according to Redfin. In the first quarter of 2006, investors only bought 10%. Having double the landlord purchases should make house prices less sticky on the downside than in 2006 because it’s easier for landlords to sell when prices start falling.

A much larger difference between 2006 and 2022 is the amount of information available about the real estate market. This may be hard to believe today, but it wasn’t easy to find the sold prices of the houses in your neighborhood in 2006. Zillow didn’t exist until 2006! Today, asking prices and sold prices are all over the internet.

A common explanation of the 2000s boom was that it was a credit bubble. Today, we don’t have all those exotic Liar’s Loans, negative amortization, and interest-only mortgages but, nevertheless, house prices increased faster in 2021 despite not having a credit boom.

Instead of being caused by a credit boom, the pandemic housing boom was caused by sharply falling mortgage rates and a change in the demand for houses caused by the pandemic. But a critical factor that amplified the recent boom is usually ignored. No matter what caused the boom, the huge amount of online information home buyers and sellers had access to increased the speed and height of the boom.

Buyers and sellers could see for themselves how fast house prices were increasing. Buyers felt less fear offering more than the asking price because they could easily see online how fast prices were skyrocketing and how common it was for houses to sell over asking price.

The huge amount of information available to house buyers and sellers today reinforces any upward price momentum so prices go up faster and further. With so much information online, buyers respond more quickly to increases in prices which increases prices even more in a feedback loop.

In the same way, when sellers can easily see asking prices, price reductions, and declining sold prices in real time, it should also speed up the start of our next U.S. house price correction.

And, of course, this time house sellers know prices can go down. In 2006, a lot of sellers didn’t think they could.

Even though we don’t have all the crazy mortgages of the 2000s, today we have a lot more landlord-owned single-family houses, and everyone has easy access to a ton more information about current, local house price trends.

We will still have sellers who are slow to lower their asking prices in softening markets but since they have so much more real time information about the market, they will likely lower their prices faster and house prices will probably start to fall a lot sooner after sales start to fall.

House prices have already started falling in Canada and Australia and in some cities the declines have been shockingly steep. If house prices are less sticky on the downside than experts expect, prices will fall sooner and more steeply in the U.S. as well.

https://www.nationalmortgagenews.com/news/mortgage-players-confirm-more-sweeping-layoffs

Mortgage players confirm more sweeping layoffs

https://fortune.com/2022/08/08/new-home-prices-falling-homebuilders-oversupply/amp/

The pandemic housing boom saw builders get a little greedy. Eager to turn a higher profit, homebuilders ramped up production of unsold homes. Their thinking? Builders could easily find buyers before the so-called spec homes—short for speculative houses—are finished. When the housing market was hot, it went as planned. But the ongoing housing correction has flipped the script. Now homebuilders are fearing what six months ago was unthinkable: oversupply.

There’s not only a record number of unsold homes under construction, there’s also a record number of total homes under construction. Even sold homes are a liability for builders: Spiking mortgage rates are translating into a spike in buyers pulling out of their contracts. Look no further than homebuilding giant D.R. Horton, which saw its cancellation rate jump to 24% in its fiscal third quarter ending June 30.

Earlier this summer, HousingWire lead analyst Logan Mohtashami told Fortune that higher mortgage rates would both slow down the housing market and "put builders on their ass." As the housing cycle "turns over," existing home inventory—which is builders' true competition—will continue to rise. That will cause new-home sales and housing starts to fall, Mohtashami says.

Historically speaking, house price cuts always materialize first in the new-construction market. Homebuilders, who lose money for every additional day they hold on to an unsold home, are more willing to relent. It's a completely different story for homeowners: They won't give in until market forces make them. If inventory continues to rise, sellers in some markets might finally have to relent a bit.

https://www.lasvegasrealtor.com/housing-market-statistics

Las Vegas single-family home Median price falls 3.13% during the month of July, to $465,000

https://www.businessinsider.com/rapidly-cooling-housing-market-caught-biggest-buyers-off-guard-2022-8?gifted=0260cca6-881b-4807-ba03-dff301a56e0f

The Rapidly Cooling Housing Market Caught the Biggest Buyers Off Guard

Julie Essig, a real-estate agent in Boise, Idaho, often tells her sellers to first see what they can get by cutting a deal with Opendoor, one of several property-technology companies that buy up homes quickly with cash and then sell them for a profit.

But she's never advised one of her clients to take an offer from the so-called iBuyer — until this spring, as home mortgage rates were marching higher.

In May, at what Essig described as the peak of Boise's real-estate market, one of her clients sold a home to Opendoor for $521,400, she told Insider. The company soon relisted the home for $5,600 more.

"I was really surprised at how much they were offering. I would have listed it at $485,000," Essig told Insider.

She suggested that her client take the offer since their take-home haul from the transaction, minus Opendoor's fees, would be the same and they wouldn't need to widely list the home.

More than 45 days later, the property remains on the market, priced at $459,000 after four price cuts since the beginning of June. The price dropped almost $50,000 in July alone.

From Phoenix to Boise, housing markets are cooling so fast they’ve caught some of the biggest buyers by surprise Leonard ParkerAugust 5, 2022

From Phoenix to Boise, housing markets are cooling so fast they’ve caught some of the biggest buyers by surprise Demand from homebuyers is falling, creating spelling problems for businesses that buy homes and then sell quickly. Opendoor, Offerpad and Redfin expect to sell much of their inventory at a loss.

The effect is worst in markets like Phoenix, which were iBuyer’s darlings at the start of the pandemic.

Julie Essig, a real estate agent in Boise, Idaho, often tells her sellers to see what they can get first by making a deal with Opendoor, one of several real estate technology companies that buy homes quickly with cash and then sell them for a profit .

But she never advised any of her clients to take up an offer from the so-called iBuyer — until this spring, when home mortgage rates marched higher.

In May, when vinegar marked the peak of the Boise real estate market, one of her clients sold a home to Opendoor for $521,400, she told Insider. The company soon relisted the house for another $5,600.

“I was really surprised at how much they offered. I would have listed it at $485,000,” Essig told Insider.

She suggested her client to accept the offer as their take home transport from the transaction would be the same minus Opendoor’s fees and they would not have to comprehensively list the house.

More than 45 days later, the property is on the market at $459,000 after four price drops since early June. In July alone, the price dropped nearly $50,000.

Also read: Arizona's hot housing market is cooling off fast

Vinegar has a front row seat in the rapidly cooling Boise housing market, recently identified as America’s Most Overpriced Market by Moody’s Analytics. The aftermath of rising interest rates and excessive exuberance early in the pandemic has hit this city and similarly hot spots that have been favorites of Opendoor and other iBuyers suddenly having to rein in losses.

This correction, fueled by mortgage rates rising at an unprecedented rate, is being felt by Opendoor and Offerpad executives. They revised down their expectations for the third quarter during earnings presentations this week. iBuyers are bearing the brunt of falling home prices as they must bear the downside risk until they can resell the homes.

Shareholders of the companies saw a bit of “The Hunger Games” under iBuyers. Shares of Offerpad, a smaller iBuyer, plunged more than 15% after its earnings report, while shares of Opendoor rose a corresponding amount after it released financials for the period.

Now iBuyers plan to sell homes at a loss to take them off their balance sheets, an eerie reminder of the behavior that brought down Zillow’s iBuying division last year, albeit not to the same extent or for the same reasons.

What goes up must also come down The pain is not felt evenly across the country or in iBuyers’ portfolios.

“The markets with the biggest gains are the hardest hit,” Offerpad CEO Brian Blair said as he unveiled the company’s second-quarter earnings.

Blair said the company is slowing acquisitions in markets like Phoenix because of recent volatility. He identified these types of markets as the primary source of the company’s $21.2 million in writedowns related to home prices from April through June.

Opendoor sees the same dynamic

Daniel Morillo, Opendoor’s chief investment officer, said the company’s East Coast markets were performing well, particularly in the Southeast and Florida. Central markets are more mixed, he said, and western markets like Phoenix; Las Vegas; Sacramento, California; and Tucson, Arizona are “a little bit more challenged”.

Rapid market change surprises iBuyers iBuyers like Opendoor and Offerpad have braced themselves for a slowdown – after all, record transaction volumes and house price increases couldn’t last forever. But they didn’t expect how quickly the market would cool down, Opendoor’s chief financial officer Carrie Wheeler told analysts during the earnings call.

This rapid market change has resulted in iBuyers getting their hands on the homes they bought just a few months earlier. Redfin’s iBuying business, a real estate agent with lower fees than traditional agents, is likely to suffer a loss on the homes it bought in April and May after factoring in holding costs, selling costs and repairs, its CEO Glenn Kelman said during the company’s earnings call company this week.

June and July are less of a concern, Kelman said, because the company bought fewer homes and paid less for them during those months.

Those losses “will not be enough to sink our battleship,” Kelman said, expressing confidence that the iBuying business would survive this transition period.

“Our guidance assumes that home prices will continue to decline moderately through the end of 2022, but we continue to expect our real estate division to post significant full-year gross profit,” Kelman told analysts during the conference call.

Kelman acknowledged that iBuyers played a role in the rapid slowdown in the real estate market. In 2017, the share of inventory sold by iBuyers, builders and other institutions was 27%. That number is now nearly 35%, Kelman said. Unlike the average homeowner, these types of sellers are quick to lower prices if the homes don’t sell, he added.

“iBuyers price the listing below any comparable current offer and price it even lower if it doesn’t receive an offer during opening weekend,” Kelman said. “That makes market corrections sharper, but maybe shorter. The good news is that buyers are already reacting to falling prices and mortgage rates.”

A brief market correction would be good news for Offerpad and Blair, who said a buyer’s market is better for iBuyers. The challenge is the transition period.

“The hardest part is when it’s going from a seller’s market to a buyer’s market,” Blair said. “This transitional period at the top, it’s getting foggy like never before. And that’s exactly where we are in this cycle right now.”

https://slaynews.com/economy/number-of-homes-for-sale-across-us-soars-as-increased-demand-higher-prices-see-buyers-hit-pause/

The number of homes listed for sale across the United States has soared to a record high in July, according to reports.

Patrick says

https://slaynews.com/economy/number-of-homes-for-sale-across-us-soars-as-increased-demand-higher-prices-see-buyers-hit-pause/

The number of homes listed for sale across the United States has soared to a record high in July, according to reports.

Realtor.com said the rise in unsold homes is due to a decline in pending inventory.

That is like saying the reason for a flood is excess water.

They are careful to avoid any absolute numbers in order to maximize the sense of impending doom. Inventory remains below historical norms at a time when the pool of potential buyers is going up. I expect prices to inversely track with mortgage rates but I don't expect a collapse in prices. Rising mortgage rates mean People are being priced out of a monthly payment but this will not force sellers to lower prices as long as they can pay their mortgages (likely at 3%).

I remember in the mid 90's when an 8% mortgage was typical. My dad remembers rates in the teens. People still bought and sold homes.

If you are waiting for bargains, remember the best deals didn't happen in 2008, they happened in 2010 through 2012. It takes years for foreclosures to become available to joe home owner.

stfu says

I remember in the mid 90's when an 8% mortgage was typical. My dad remembers rates in the teens. People still bought and sold homes.

I remember the 1970's and 1980's. I remember when gold went from $100 an ounce to $800 an ounce in 10 years and a "nice home" was $80,000.

National debt was about $900 billion when gold peaked. I expect a repeat, in fact, I expect an overshoot. Gold will be roughly (and I know this sounds unbelievable) about $30,000 an ounce. We're in for crazy fucking times ahead.

I don't expect the system to survive it this time but I'm overly optimistic...

stfu says

at a time when the pool of potential buyers is going up

Ummm.... Nope.

https://www.bloomberg.com/news/articles/2022-08-09/home-listings-soar-in-cooling-us-housing-market

Non Paywall:
https://archive.ph/21zQB

Supposedly for Phoenix:

https://www.realtor.com/news/trends/where-the-most-sellers-are-slashing-prices/?cid=push_braze_marketing_apps_marketing-insights_48473293-ff7d-4883-9b96-a5f35d94a399_v2

Here Are the 10 Cities Where Sellers Are Slashing Home Prices the Most

https://fortune.com/2022/08/09/housing-bubble-2022-call-robert-shiller-housing-market/

Robert Shiller predicted the 2008 housing bubble. Here’s his 2022 call

On Sunday, Shiller spoke with Yahoo Finance. He told the outlet that he once again thinks the U.S. housing market is headed for trouble.

“Home prices haven’t fallen since the 2007–09 recession. Right now things look almost as bad,” Shiller said. “Existing home sales are down. Permits are down. A lot of signs that we’ll see something. It may not be catastrophic, but it’s time to consider that.”

A drop in home prices, Shiller says, looks very possible.

https://finance.yahoo.com/news/housing-sentiment-decade-low-203654331.html

Housing sentiment slides to a decade-plus low

zzyzzx says

stfu says

at a time when the pool of potential buyers is going up

Ummm.... Nope.

https://www.bloomberg.com/news/articles/2022-08-09/home-listings-soar-in-cooling-us-housing-market

Non Paywall:
https://archive.ph/21zQB

You misunderstood. I'm not talking about the pool of people that can afford a mortgage at the increased rates (as your link pertains to). I'm talking about demographics. There are more Millennials than Boomers, and there are more Gen Z's than Gen X.

https://www.statista.com/statistics/797321/us-population-by-generation/

At some point they will buy homes at the same rate that their predecessors did.

I will also point out that the article you linked to says "US HOME SUPPLY SOARS!!!!!!" but they never give you the absolute numbers. Even with soaring inventory it is still below what was considered normal 24 months ago. But continue to hope for a crash, and invest accordingly.

https://fortune.com/2022/08/11/housing-market-inventory-shifts-2022/

Just look at July inventory data. Active listings on realtor.com jumped 128,200 last month to 747,500. That’s the single biggest jump in the site’s database that goes back to 2016. The previous record hike was May 2022 (+106,900 homes) which nearly got surpassed by the June 2022 jump (+102,900 homes).

Among the 917 regional housing markets tracked by realtor.com, 898 saw rising inventory levels—the number of unsold listings—between March and July. Of those, 346 markets saw at least a 100% uptick. In 57 markets, inventory rose by over 200%. That includes Idaho Falls, Idaho (387% uptick); Ogden, Utah (372% uptick); Provo, Utah (371% uptick); Coeur d'Alene, Idaho (365% uptick); and Salt Lake City (355% uptick).

But balance could soon be on the way. Logan Mohtashami, lead analyst at HousingWire, thinks we could reach pre-pandemic inventory levels in 2023. Heading into 2022, Mohtashami was on "team higher rates." In his mind, spiking mortgage rates were the only way to pull us out of an "overheated" housing market where historically tight inventory levels gave home shoppers little choice but to engage in bidding wars.

There's another reason to expect more inventory: Homebuilders currently have both a record number of homes under construction and a record number of unsold homes under construction. Those builders are already struggling to sell them. As those new abodes hit the market, it could see some regional housing markets get temporarily oversupplied.

https://www.ajc.com/news/atlanta-based-angel-oak-pays-175-million-sec-fine/OP7KSMGGHJG6JCWQHZJCZ5TMH4/

Atlanta-based Angel Oak pays $1.75 million SEC fine

The company “improperly” moved money around to hide how many of its loans were not being paid back on time, SEC officials said.

https://finance.yahoo.com/news/mortgage-rates-5-percent-140011104.html

Mortgage rates surpass 5% again

The rate on the 30-year fixed mortgage increased to 5.22% from 4.99% the week prior, according to Freddie Mac. While the rate remains lower than the 5.81% registered in June, it’s still 2 percentage points higher than the start of the year.

The jump in rates is discouraging news for sidelined, price-shocked buyers, who are contending with tough affordability conditions. Meanwhile, homeowners are growing wary about selling, as the cooler market has forced some to lower their asking prices.

How can a financial institution lend at rates lower than inflation? Fraudulent market?

Weren't rates close to 6% at one point?

GNLusedtobeWine says

How can a financial institution lend at rates lower than inflation? Fraudulent market?

It's called a mafia front. They are laundering money.

Ever seen a store of some store NOBODY ever enters? That's a front. I used to have a "furniture rental store" near me, and I walked by it often, and never saw a single person enter it. When you see a "bidness" that never gets any traffic, but inexplicably stays around for years, that's a front.

GNLusedtobeWine says

Weren't rates close to 6% at one point?

5.5 IIRC

zzyzzx says

A drop in home prices, Shiller says, looks very possible.

This really isn't a prediction. It's very possible we'll get hit by an astroid.

Shiller is okay at stats, but this isn't even a prediction. It's a maybe guess type play. And any moron that knows what interest rates are knows that housing is gonna slow down. There's nothing outside of hipster areas indicating a crash.

Any crash in housing would be employment created. We have boomers retiring. Employers cannot even find people that want to work. And many boomer kids have stayed with their parents, so they're not selling. In my opinion housing is fine or the foreseeable future in 90% of markets. A few might get beaten up and bring down the median and averages, but I see no doom coming. Aside from the feds doing a mega bump in rates, housing is pretty damn stable right now.

$80,000 PRICE REDUCTION PLUS 1 Point for Buyer Assistance for Mortgage.

Aug 11, 2022
Price Changed
$695,000

Jul 25, 2022
Price Changed

Jul 14, 2022
Price Changed

Jun 28, 2022
Relisted (Active)

Jun 16, 2022
Pending (Yikes, this market is in freefall. I’m outta here!)

Jan 28, 2022
Listed (Active)
$825,000

Fire sale in the condo complex next door in Tri Valley hood. Five signs went up almost overnight. I remember when I coulda bought one of those places cash for 80K, but was too nervous about overextending myself. They are half a million and above now.

zzyzzx says

Rocket Mortgage’s profits drop dramatically in Q2 2022

this is a good canary in the coal mine as far as real estate industry and real estate prices
.



.

zzyzzx says

Mortgage rates surpass 5% again

From what I've seen the 30 year mortgage rate is typically about 2.5% greater than the Fed Funds rate. The mortgage rate got ahead of itself as the Fed was announcing future increases. The Fed Funds rate is 2.5% now, and the Fed is likely to add 0.75% to it next month. I hope they increase the Fed Funds rate to 5% like they did around 1999-2000. That will give them enough margin to reduce the rate without going back to zero interest rate policy (ZIRP) like 2009 - 2016. Obama got too much of a free pass.

.

richwicks says

It's called a mafia front. They are laundering money.

Yeah, Russian mob is notorious with this.

Check this out: https://www.facebook.com/ConspiracyCentral.Jellysmack/videos/1098160527574667/

.

Ceffer says

Fire sale in the condo complex next door in Tri Valley hood. Five signs went up almost overnight. I remember when I coulda bought one of those places cash for 80K, but was too nervous about overextending myself. They are half a million and above now.

Offer $80K for them.

Once or twice a year I'll check on our favorite property baron to see if he's sold any of his holdings. In a strange coincidence, I did a search today and there was a recent transaction. Ducky just sold the family homestead. Given his impeachable timing, I'd say we're at the peak...