US mortgage carnage

[Uncle Festivus]

Woops, the green shoot boys getting a bit ahead of themselves, but will spin some positive out of it?

Optimism that the housing slump had hit bottom was damaged Tuesday when the government reported that construction on new housing projects slowed to a record low pace in April. New construction of single-family homes and apartments plunged 12.8% to a record-low annual rate of 458,000, much weaker that the 519,000 rate expected by economists surveyed by MarketWatch.
The drop was caused by construction of multifamily housing, which fell 46.1% to a record low 78,000. This was the biggest drop since January 1994.

http://www.marketwatch.com/story/housing-starts-hit-record-low-in-april

 

[dhukka]

Woops, the green shoot boys getting a bit ahead of themselves, but will spin some positive out of it?

http://www.marketwatch.com/story/housing-starts-hit-record-low-in-april

What a chart, of course the permabulls will spin this as a "bottoming process" a bottoming process that some have been calling for 3 years now.

 

[Bushman]

What a chart, of course the permabulls will spin this as a "bottoming process" a bottoming process that some have been calling for 3 years now.

It's a two-tier market over there. I wonder what the adjusted numbers are if you discount the basket case states of California, Arizona, Florida and Nevada? That is the epicentre. The rest is muddling along. Maybe a moot point but those four states are the reason for the carnage.

 

[Aussiejeff]

It's a two-tier market over there. I wonder what the adjusted numbers are if you discount the basket case states of California, Arizona, Florida and Nevada? That is the epicentre. The rest is muddling along. Maybe a moot point but those four states are the reason for the carnage.

Looks pretty much across the board to me.

http://www.nahb.org/fileUpload_details.aspx?contentTypeID=3&contentID=45409&subContentID=154673

The most noticeably shocking stats are the ones for 5+ unit & multi-family developments. Both have literally fallen off the cliff since the March figures. Right across the country too.

Doesn't bode too well for construction contractors?

 

[Bushman]

Looks pretty much across the board to me.

http://www.nahb.org/fileUpload_details.aspx?contentTypeID=3&contentID=45409&subContentID=154673

The most noticeably shocking stats are the ones for 5+ unit & multi-family developments. Both have literally fallen off the cliff since the March figures. Right across the country too.

Doesn't bode too well for construction contractors?

Those are the 'McMansion' residential estate developments. It is a sombering development and flies in the face of the 'green shoots' statements concerning the bottom of the US housing market.

 

[Aussiejeff]

Those are the 'McMansion' residential estate developments. It is a sombering development and flies in the face of the 'green shoots' statements concerning the bottom of the US housing market.

You mean, ObamaNutz is yanking our chain???

 

[GumbyLearner]

Woops, the green shoot boys getting a bit ahead of themselves, but will spin some positive out of it?

http://www.marketwatch.com/story/housing-starts-hit-record-low-in-april

I have posted this vid from the US version of 60 minutes before.
It is around 6 months old.

I will post it again, to remind the insane equity bull's one more time.

The Mortgage Meltdown

 

[jonojpsg]

Hang on a sec, let's have a look at that chart more closely. Pretty much all the recessions (the official grey shaded sections) have come at the end of the steep decline in housing starts, which makes sense given that a drop off in housing will ripple through the rest of the economy.

The drop off over the last three years is not dissimilar to the previous recessions and from the looks of things we are nearing what looks like a probably bottom. Yeah it's bad but surely there is a case from this chart that the bottom is, if not reached then very near?

Jusy my thoughts

PS Am not a permabull

 

[Uncle Festivus]

The Curious Case Of Benjamin Bernanke (and his parallel virtual world)

"At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained," Bernanke said in prepared testimony to Congress' Joint Economic Committee.[FONT=arial,helvetica]Wednesday, March 28, 2007[/FONT]

Ben Bernanke, Chairman of the Federal Reserve, commented that "the decline in housing activity appears to have moderated" and mortgage applications had swelled for three weeks running. Aug 12, 2009

In the accompanying statement Fed Chairman Bernanke said data "suggests that economic activity is levelling out" a positive indication of their assessment on the US economy.
Aug 12, 2009

Mmmm.... or levelling out with downward bias, in Fed speak?

NEW YORK--U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures, which have severely strained housing and the economy.

Foreclosure activity jumped 7% in July from June and 32% from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.

Filings -- including notices of default, auction and bank repossession -- have escalated with unemployment.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," James J. Saccacio, RealtyTrac's chief executive, said in a statement.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

http://www.foxbusiness.com/story/markets/industries/retail/home-foreclosures-set-record-july/

What the! Must be the 'virtual' USA, the one where the unemployment rate is now 16.3% (U6 figures)

U-6 Total unemployed, plus all marginally attached
workers, plus total employed part time for
economic reasons, as a percent of the civilian
labor force plus all marginally attached workers..

http://www.bls.gov/news.release/empsit.t12.htm

 

[Uncle Festivus]

Meanwhile back at the real world ranch, banks are in for another write down.....

Moody’s Investors Service has revised its loss projections for US subprime residential mortgage backed securities (RMBS) issued between 2005 and 2007.
On average, Moody’s is now projecting cumulative losses of 18.7% for 2005 securitizations, 38.4% for 2006 securitizations, and 48.1% for 2007 securitizations, reported as a percentage of original balance.
As a result of the revision, Moody’s has now placed 5,698 tranches of subprime RMBS with an original balance of $584 Billion and outstanding balance of $319 Billion, on review for possible downgrade.
Even though the Case-Shiller index in recent months has reported very modest home price gains, Moody’s believes the overhang of impending foreclosures will impact home prices negatively in the coming months.
​

Reset......UP!

Late in the day on New Year's Eve, holders of adjustable-rate mortgages across the country got a jolt when the rate used to calculate their loans jumped by two-thirds, sending their loan payments up by 9% in many cases.

http://online.wsj.com/article/SB100...992077988.html?mod=WSJ_Markets_LEFTTopNewsInt

The foreclosure crisis is far from over, according to RealtyTrac's Rick Sharga. The company will release its year-end report on Thursday showing foreclosures rose 21% over the previous year.

http://online.wsj.com/video/more-foreclosure-trouble-ahead/58FF9A4A-74C5-4228-820B-3091506C96AC.html

 

[Uncle Festivus]

I like this part the best -

.......as the U.S. recovery accelerates into the new year.

So wasn't US housing the catalist that started this whole thing off?

Just as well it (house prices) is irrelevant these days, now that there is a recovery going on?

Home prices dropped more than forecast in October, a sign housing will remain a weak link as the U.S. recovery accelerates into the new year.
The S&P/Case-Shiller index of property values fell 0.8 percent from October 2009, the biggest year-over-year decline since December 2009, the group said today in New York. The decrease exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg News.
A wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances.

http://www.bloomberg.com/news/2010-...-than-forecast-in-s-p-case-shiller-index.html

Such good news - market must go - UP!

Consumer confidence 'unexpectantly' falls in Dec too.

 

[Vicki]

I like this part the best -

So wasn't US housing the catalist that started this whole thing off?

Just as well it (house prices) is irrelevant these days, now that there is a recovery going on?



http://www.bloomberg.com/news/2010-...-than-forecast-in-s-p-case-shiller-index.html



Such good news - market must go - UP!

Consumer confidence 'unexpectantly' falls in Dec too.

Reminds me of the over optomistic 'know it alls' just before the gfc.
They were convincing themselves that the dow was headed for new highs by xmas 07 I think, of 15000 pnts. [it was then 13000 pnts]

Only one guy, speaking live from his Hong Kong office, had the gumption to buck the uphoria hype, & said bluntly the dow was heading towards 11000 then maybe 8000pnts!
That was his 12 mnth outlook.
For 11-12, think he forcasted more like 5000pnts? [And the studio broke-out with laughter, before he could even finish with the realestate bubble opinion!]

Who's laughing now!

Vicki

 

[Julia]

Vicki, more with respect to the Australian situation, economists and financial advisers here pre GFC were almost unanimous in declaring there was nothing much to worry about. Then when it became pretty damn clear there was plenty to worry about they almost with one voice further declared that no one should be taking a loss, just hold on and the market will soon make new highs.

Yeah, right. We are still, I think, some 30% off the market high pre GFC.

Why did this happen? Were they all really so woefully incompetent at reading market signals?

Of course not. They simply had their own interests at heart in that if their clients had gone to cash at the early bad signs, their delicious trail commissions would have ceased. And if that had happened, then hell, they'd have actually had to try to think about how to make a living.

 

[Uncle Festivus]

The double dip approaches, even according to the flawed case shiller metrics -

This is why it's flawed - and US banks will ultimately have to stump up more money (from the Fed as usual) and maybe, just maybe, come clean on their still deteriorating balance sheets?

http://boombustblog.com/reggie-midd...ward-price-movement-in-search-of-equilibrium/



Merdith Whitney has called it for a while now - double dip in housing and muni bond crash ie the USA is broke!

http://www.financialpost.com/relate...sees+double+housing+market/3182272/story.html

 

[Uncle Festivus]

Wal Street blowing bubbles yet again? Short memory syndrome?

http://www.newrepublic.com/article/112395/wall-street-hedge-funds-buy-rental-properties#

Rising Home Prices Are 'Unsustainable'””Realtors

http://www.cnbc.com/id/100831431

Blackstone Mortgage Trust Inc. BXMT +0.71%, which is managed by the private-equity giant, sold $573.8 million in stock late Wednesday, raising funds to acquire and originate loans backing properties such as malls and office towers. Market participants said the deal gives Blackstone, already a significant commercial real-estate lender, more dry powder to build that business.

Mortgage REITs have been playing a growing role in the commercial real-estate sector. Traditional commercial real-estate lending by banks is remains slow, as many mid- and small-sized banks grapple with troubled loans made before the real-estate bust and are reluctant to dive back into the space.

http://blogs.wsj.com/moneybeat/2013/05/23/blackstone-taps-demand-for-commercial-mortgage-reits/

Way to go! Buy up all the distressed property, securitise the loans to other investors, raise the rents on the incumbents then flip them all at once when prices start to dive again? Sounds like a tried & true recipe for......property crash part 2?

 

[Knobby22]

Way to go! Buy up all the distressed property, securitise the loans to other investors, raise the rents on the incumbents then flip them all at once when prices start to dive again? Sounds like a tried & true recipe for......property crash part 2?

Surely they can't fool all the people all the time! I think investors may be harder to find this time.

 

[Uncle Festivus]

REIT's again....has the housing bust II started already?

Leveraged contagion....

REITs may have needed to sell about $30 billion of government-backed mortgage securities in just one week last month to maintain the amount of borrowing relative to their net worth, according to JPMorgan Chase & Co. Those types of sales deepened losses in the mortgage-bond market, which had the worst quarter since 1994, accelerated the exit from fixed-income funds and fueled a jump in home-loan rates to a two-year high.
..
Investors pulled about $60 billion from U.S. bond funds in June, the biggest monthly redemptions in records going back to 1961.

http://www.bloomberg.com/news/2013-07-10/reits-deepening-bond-losses-as-leverage-forces-sales.html