Just some interesting tidbits and articles

Rates pretty much recovered from Wednesday massive sell off.. that inspired this look at Fridays rally from a MBS blogger:

Lots of mortgage brokers and bond traders are breathing a sigh of relief.

Sam Zell: Speeding up foreclosures would help housing market:

“Well, the inventory is going down,” Mr. Zell said, according to a transcript. “The affordability is going up. The government is making serious efforts to provide financing. And I think it’s slowly working. And the best thing that could happen is if we could accelerate all the foreclosures. Because I think they represent a drag on the market.”

I agree completely. Liquidating into a market with low rates, tax credit and prices still above historic norms certainly makes a lot of sense.

Wells Fargo CEO says California in 'financial ruin':

“The state of California is in financial ruin,” Stumpf told those attending a statewide microfinance lenders’ conference at Stanford University. “The budget deficit in California is staggering.”
...
“Today we’re charging off loans to people we should have made loans to,” said Stumpf, reiterating that the bank avoided many of the exotic mortgages offered by rivals.

The main brunt of the State, county and local cuts have yet to be felt. Usually governments are expanding during downturns to be the "spender of last resort". But this time there is no rainy day fund or another till to tap. I also enjoyed the second quote, the fact that a CEO of a major institution can talk so flippantly about giving out money to people who could never hope to pay it back is just amazing to me.

HUD came out with the guidance for using the tax credit during the purchase of a home instead of after.

The great news here is that the tax credit can't be used as a source for the initial 3.5% down payment. It can be used for closing costs or additional down payment but it does not allow for 100% financing. Its effect will be marginal on the market.

NAHB / Wells Fargo Housing Opportunity Index for Q4 2008

(click to enlarge)

I like the National Association of Home Builders / Wells Fargo Housing Opportunity Index because it hasn't changed since they instituted it except to add more cities. When affordability got ultra-low they didn't change their methodology to try to redefine affordable. Now this may seem like a small thing to most, But the C.A.R. changed their methodology when affordability got low because they (apparently) couldn't exactly go around saying houses are unaffordable. To their credit NAHB/WF didn't change and as another hit to their credibility, C.A.R. did.

Ventura's lack of long history in the index and significant addition of new housing during the boom make it hard to make a judgement as to what historical affordability is. We can see in both charts that affordability is improving but still low. As we enter the recession affordability will still improve because fewer buyers will be able to buy between still high prices, job losses and continued mortgage credit tightening. Falling prices will eventually help as will lower interest rates but this is a tough environment to push volume.

NAHB / Wells Fargo Housing Opportunity Index for Q3 2008

(click to enlarge)

I like the National Association of Home Builders / Wells Fargo Housing Opportunity Index because it hasn't changed since they instituted it except to add more cities. When affordability got ultra-low they didn't change their methodology to try to redefine affordable. Now this may seem like a small thing to most, But the C.A.R. changed their methodology when affordability got low because they (apparently) couldn't exactly go around saying houses are unaffordable. To their credit NAHB/WF didn't change and as another hit to their credibility, C.A.R. did.

Ventura's lack of long history in the index and significant addition of new housing during the boom make it hard to make a judgement as to what historical affordability is. We can see in both charts that affordability is improving but still low. As we enter the recession affordability will still improve because fewer buyers will be able to buy between still high prices, job losses and continued mortgage credit tightening. Falling prices will eventually help as will lower interest rates but this is a tough environment to push volume. If loan modifications take hold and slow down motivated inventory coming on market the best we will get is low inventory and low sales with continued falling prices.