Market Update
May 23rd, 2007 Categories: Weekly Market Updates
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Weekly Commentary
Everyone seems to be in agreement about the real estate market. It’s in a free fall, they say. But some few of us remain a bit confused.
There’s still money to be made in real estate, after all, when the right property is purchased at the right moment and sold in a similar fashion, and when one locality or sector of the market outperforms others, as downtown Los Angeles is currently outperforming the suburbs. Further, the data on mortgage applications still points in powerfully positive directions, with the purchase money loans index well above 400 and showing no signs of going into the kind of “free fall” that so many analysts say the real estate market has entered.
A recent editorial in San Diego’s North County News helped to clarify the perceptions that so many analysts have been wailing about. “We’ve heard much in recent months about the record number of foreclosures in the county. But those numbers must be put in perspective. Earlier this month we reported that foreclosure filings on properties in San Diego County had climbed by 49 percent from February to March to 2,551. That figure represents one in every 408 households.
”Scary as they seem at first glance, those numbers don’t look so bad upon closer inspection. Of those 2,551 foreclosure filings, 1,998 were in default and 415 had been notified that their property would be sold for repayment. That leaves only 138 properties that were actually foreclosed on that month — or a little less than 0.025 percent of San Diego County’s 600,000 single-family homes, condos and duplexes.”
The Mortgage Bankers Association adds these clarifications: “At the end of last year, delinquencies of subprime mortgages amounted to 13% of outstanding loans. That means that 87% of subprime borrowers were making their payments on time. The delinquency rate remains below its recent high of 14.9 % in the second quarter of 2002, though it might exceed that figure before the end of this year. Foreclosures of subprime mortgages amount to 4-1/2% of outstandings, but have been higher than that as recently as 2002. They were twice that high in early 2002, but received little comment in the press at that time.”
The market, without question, has slowed—very dramatically in some areas. And defaults and foreclosures, in some areas, are coming in at levels normally associated with recessions. But, as was said at the outset, the market is neither dead nor in a free fall. A sober look at the actual numbers should make that clear.
May 23, 2007
KEY INDICATORS
Gold $658.70/ounce [down]
Crude Oil (Brent) $69.52/barrel
[up]
U.S. Dollar to…
Euro .7435 [up]
Japanese Yen 121.57 [up]
6-mo Treasury Bill Yield 4.98%
10-yr Treasury Note Yield 4.83%
[both up, margin narrowing]
30-yr Fixed-rate Mortgage 6.47%
15-yr Fixed-rate Mortgage 6.20%
1-yr ARM 6.04%
[HSH average rates: fixeds both up slightly more than 10 bps; ARM down 4 bps]
Mortgage Bankers Association Mortgage Applications Index
week ending 5/11
Overall
675.5 (down 0.8%; up 3.6%
the week prior)
Purchase Money Loans
432.3 (down 1.4%; up 2.6%
the week prior)
Refinancing Loans
2115.5 (up 0%; up 4.9%
the week prior)
Weekly Jobless Claims 5/12
293,000 first computation –
298,000 prior week (with 1,000 upward revision)
Housing Starts April
Up 2.5% - housing permits down
8.9%
Conference Board Leading Indicators Index April
Down 0.5%
Industrial Production April
Up 0.7% - cap. utilization 81.6%
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government foreclosure said,
April 29, 2008 @ 4:43 am
government foreclosure
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