Homebuilder Index Falls But Still Near Housing Bubble Peak (While Mortgage Purchase Apps Only At 1997 Levels)

The National Association of Homebuilders (NAHB) released their monthly Market Index reflecting the sentiment of their members. Above 50 means that more members than not are optimistic.

Note that homebuilder optimism has been above 50 (for the most part) since June 2013. Homebuilders can thank The Fed for insanely low borrowing costs that greatly improved their mood.  Builders can build single family detached houses and/or 5+ unit multifamily, so super low interest rates improve every builders’ mood. So the decline in the number of subprime borrowers getting mortgage originations is good news for multifamily builders but not so good for detached housing.

But for existing homeowners, candidates for refinancing are far fewer than they were even in 2016, according to Black Knight.

This helps explain the declining residential loan origination trend for both purchase and refis.

Inventories of existing homes are scarce and getting scarcer by the month. This helps drive up home prices, not good for folks currently renting and wanting to buy.

 

Tight inventory, interest rate increases, declining mortgage refis.  Well, at least mortgage purchase applications are back to 1997 levels.

Yellen: I honestly thought that mortgage applications and refis would be higher given the trillions of dollars of stimulus we threw at it.

Simply Unaffordable! Manhattan Has Nation’s Highest Rents Followed By San Francisco (Wichita KS The Cheapest)

New York City, composed resrticted land masses such as Manhattan, Brooklyn and Staten Island, has the most expensive housing rents in the nation followed by another restricted land mass known as San Francisco.

According to RentCafe.com, Boston MA is the third most expensive area in terms of housing rents.

Boston, of course, is located on the Atlantic Ocean and like New York City and San Francisco is massively congested.

On the flip side, Wichita KS has the lowest rents, followed by Decauter AL and Memphis TN.  These cities are all in “fly-over” states and not on an oceanic coast. Ohio makes the list with Toledo OH and Oregon OH (next to Toledo).  Apparently, few are willing to pay a Lake Erie premium.

New York City, San Francisco and Boston stick out like the proverbial sore thumb on a map of average rent.

Limited available space for construction of new housing supply and restrictions on land use are major drivers of rents. Of course, people and businesses are an important element in rent determination on the demand side. And environmental concerns can limit supply as well, such as in Phoenix AZ.

Simply unaffordable. At least in New York City, Boston and San Francisco.

The Big Chill? Pending Home Sales Fall 5.40% YoY In April (Except UP In West) Culprit? 2000s Levels Inventory

The National Association of Realtors has some n0t-so-great news this morning on Pending Home Sales.  In April, they declined 5.40% YoY and down 1.3% MoM.

But Pending Home Sales rose 5.8% in the West.

One of the culprits? For sale inventory still lurks at 2000s level.

At least The Fed is raising rates!

Is this “The Big (Housing) Chill?

“At least my house in Berkeley in still rising in value!”

 

Case-Shiller Home Price Index Rises 5.89% YoY In March, A 33 Month High!!! (Too Bad Earnings Growth Is 2.33% YoY)

The S&P CoreLogic Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, reported a 5.89% annual gain in March, up from 5.7% last month and setting a 33-month high. The 10-City Composite and the 20-City Composite indices came in at 5.2% and 5.9% annual increases, respectively, unchanged from last month. cshomeprice-release-0530

Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In March, Seattle led the way with a 12.3% year-over-year price increase, followed by Portland with 9.2%, and Dallas with an 8.6% increase. Ten cities reported higher price increases in the year ending March 2017 than in the year ending February 2017. 

As usual, New York City, Washington DC and Cleveland are at the bottom of the YoY growth table.

A 5.89% YoY growth rate in home prices exceeds the 2.33% YoY growth rate in average hourly earnings for production and nonsupervisory workers, a 2.52 ratio of home price growth to hourly earnings growth.

Just to remain everyone, this was the WORST post-recession wage (earnings) recovery since 1965. Yet the USA still has a 2.33x home price to earnings ratio.

You are going to have to face it, we’re addicted to gov!

Sorry Janet, the price(s) are wrong,  at least in terms of home affordability.

 

Million Dollar Dump! Encinatas Calif “Modest” 1-BDR, 1-Bath Home Valued at $1 Million (No Housing Bubble?)

Encinatas California is located on the Pacific Ocean wedged between San Diego to the south and Marine Corps base Camp Pendleton to  the north.  And this is where a “modest” home is valued at around $1 million.

According to Zillow, “This 520 square foot single family home has 1 bedrooms and 1.0 bathrooms. It is located at 237 La Mesa Ave Encinitas, California.” Its Zestimate®? $973,152!!

This charming abode last sold in 2012 (as The Fed ramped up its last major round of Treasury and Agency MBS purchases (known as QE3) for $260,000.

Rediin has a slightly better photo of the microscopic home which they value at “only” $828,586. Interesting fence and opening design (as if it was an afterthough).

And it does have a large backyard, although rather “primitive.”

The house is not for sale at the moment. I would be interested in seeing how many offers they would actually get.

Likely, this home’s “value” is driven by investors seeking to tear down the existing house and constructing a “mansion near the sea.”  Or else this is actually for occupation by someone who wants to squeeze into a 1 bedroom/1 bath house.

Bear in mind that The Fed’s ambitious zero interest rate policies and quantitative easing has driven down lending rates for shorter-term lending like construction loans, creating a virtual bubble in home replacements in hot markets like the California shoreline. Or are some bailing on the over-inflated stock market and bidding up the price of California coastal dumps?

With San Francisco home prices turning down for tthe first time since 2011, will San Diego follow?

I wonder what actress Bette Davis would have said about this house in Encinatas?

Existing-Home Sales Drop 2.3 Percent in April As Inventory For Sale Remain Missing

Yet another month of missing for-sale existing home inventory and rising median prices for existing home sales.

WASHINGTON (May 24, 2017) — Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days, according to the National Association of Realtors®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 2.3 percent to a seasonally adjusted annual rate of 5.57 million in April from a downwardly revised 5.70 million in March. Despite last month’s decline, sales are still 1.6 percent above a year ago and at the fourth highest pace over the past year.

For-sale inventory of existing homes remains in the doldrums as the median price of existing homes continues to rise rapidly.

We see the same limited inventory effect in existing home sales MONTHS SUPPLY.  As the months supply collapses, median prices for existing home sales increases rapidly.

I wonder if The Fed was wise to keep The Fed Funds Target Rate at near zero and engage in a third round of quantitative easing (QE3)? Particularly when housing inventory was declining (meaning that low-rate funding was chasing scarce housing)?

As Verbal Kint said in The Usual Suspects, “And like that, (the for-sale inventory) was gone.”

New Home Sales In April Tank -11.4% MoM As Median Price Declines -3% (The West Coast Suffers -26.32% Decline)

Another disappointing new home sales report.

New home sales tanked -11.4% MoM in April.

New home sales remain considerably below any level around the housing bubble. Despite the YUGE intervention by The Federal Reserve.

But while the level of new home sales is considerably below pre-2008 levels, the MEDIAN PRICE of hew home sales is considerably higher than at the peak of the housing bubble.

New home sales fell the most in The West (-26%) and The Midwest (aka, Kasich Kountry) at -13%. Bear in mind that new home sales in California are mega expensive and unless they start buildig more in Riverside and the Inland Empire, new home sales are likely to be weak.

Is this a bubble?