Thursday, August 28, 2008
Updated in April 2008:
Updated in June 2008:
Update August 2008:
(Click to enlarge)
A new California Association of REALTOR® forecast has been posted. You will notice they increased the number of sales by 53,300 since their previous forecast 2 months before. The C.A.R. also expects the median price to come in at $27,000 below their previous forecast and $178,000 below their original forecast. You'll notice the "e" next to 2008, this is now an estimate not a forecast. Let's hope their estimates are better than their forecast.
Wednesday, August 27, 2008
In their latest monthly reports, Fannie and Freddie disclosed that they cut back on commitments to buy mortgage securities in July. Those purchase commitments, net of planned sales, totaled about $16.3 billion, down from $55.1 billion in June. The companies are providing less support to the mortgage market, while reducing their capital needs.
Fannie increased its holdings of "liquid" investments, cash and short-term securities that can easily be sold, to $103.6 billion, up 43% from June. The move gives the company more flexibility to reduce its future borrowings if market conditions worsen, company officials said.
The GSE can shrink by lowering its purchases below the amount loans in its portfolio get paid off. I don't know what that level of purchases is currently but at the very least they appear to be planning to grow more slowly. I'm sure we will see additional guideline tightening in the near future. I think Freddie Mac is overdue for a tightening based on the guidelines I've read and what I've seen on the broker boards.
So if Fannie/Freddie aren't going to save housing I guess FHA will, except they are raising fees:
In a posting on its Web site Tuesday, the FHA said the upfront premiums charged to most borrowers will be 1.75% of the loan amount, effective Oct. 1. That is up from the 1.5% that was in effect until July 14, when the FHA adopted a "risk-based" pricing system that created a range of charges depending on borrowers' credit scores and the amount of the down payment or equity they owned in the home.
The FHA tried to make the increase risk-based but Congress stopped them in the new housing bill. So they just increased the rate for everyone. The biggest issue with FHA is that they are only insurance, someone else (Fannie/Freddie, Ginne, or the FHLB) would have to take the loans off the lenders hands in order for them to make more loans. Ginnie Mae has started becoming more aggressive in getting FHA loans securitized but the slowdown with Fannie/Freddie and FHA increasing fees is a significant development.
Monday, August 25, 2008
Saturday, August 23, 2008
Tuesday, August 19, 2008
Tuesday, August 12, 2008
I'm working on getting a running total of SFV sales and pendings going, the first step will be to see if I'm even in the ballpark. The current sales for July according to my calculations is 744 for SFH homes with a $435,000 median. For condos sales are around 190 with a $270,000 median. Late reporters should increase both these numbers so I think the final tally will be in the 750-760 ballpark for SFH and 195-200 area for condos.
This would represent a increase of 10.8% MOM and 20.5% YoY for SFH sales and a decrease of 17.3% MoM and 31.1% YoY for condo sales. Active inventory is basically flat (slightly up) and pendings are either between 1060 and 1170 depending on various factors, this brackets last months pendings of 1128. Sales should be positive for the SFV through the rest of the year, the YoY comparisons are very easy. Something catastrophic will have to happen for that not to be the case.
We will see how things look once the official numbers come out then I can fine tune my efforts a bit better. Once I have that dialed in I can have running totals down to the city level if people are interested. I will also work at defining the short sale and REO market versus the rest of the market.
Here are the charts as things stand with the above numbers.
July only SFH sales:
I think DQ numbers should be reported tomorrow, if they are I'll get the Ventura County charts up.
Wednesday, August 6, 2008
Robin Hood: Rob? Tsk tsk tsk. That's a naughty word. We never rob. We just sort of borrow a bit from those who can afford it.
Little John: Borrow? Boy, are we in debt. "-Robin Hood, Disney Animated Film
Fannie Mae announced that they will change their Loan Level Pricing Adjustments (LLPA) and raise their Adverse Market Delivery Charge. The LLPAs are variable depending on the loan FICO and LTV. They raised the fees in some areas and lowered it in others. They Adverse Market Delivery Charge is a flat fee per loan that was raised from .25% to .50%. I will take a crack at a possible explanation for the changes. For background you can look at the charts for purchases displayed in the announcements, here is the old fee structure and here is the new.
What I did was combine the Adverse Market Delivery Charge with the LLPA fees and then took the difference between the results and we get the following:
(click to enlarge)
You will notice that the fees impact the people with downpayments the most. Basically, they feel like they have pricing power in this group.
Looking at the last May 2008 LTV chart, I added a shaded area to correspond with the downpayment size getting hit with the most fees.
(click to enlarge)
Loans are very concentrated around this point. Everyone to the left of the pink area gets hit by only a .25% increase, possibly a recognition that these loans are ultra-safe and banks might portfolio them instead of selling them to secondary if the price gets too high/attractive. Everyone to the right (ignore VA and FHA, I don't believe they get assessed these fees) is private mortgage insurance territory. Basically, Fannie isn't putting any more pricing pressure on the MI companies since MI above 90% is getting scarce. They are also trying to limit fees on the more economically sensitive borrowers. Fannie will definitely get flack for raising fees but I'm sure they will point out to their friends in Congress that they are trying to take from the rich, not the poor.
Tuesday, August 5, 2008
On a different note, I've noticed several flips come on the market lately that originated at either the courthouse foreclosure auction or the REDC type auction. What was interesting about these flips was the purchase price was low enough for an investor to attempt a flip, still have a profit margin and be the lowest priced listing nearby. If the servicers start pushing volume during the fall and winter months things could get interesting. I notice Hudson & Marshall is starting to do some absolute auctions in other states as well. I think July will represent the sales volume peak of 2008 and prices will start accelerating downward again through fall and winter.