Posts filed under “Real Estate”

Mortgages, Foreclosures & the Fed

The WSJ discusses one of the nasty side effects on Mortgages and Real Estate of rising rates and slowing real estate: Delinquencies and foreclosures:

"As home-price appreciation has tapered off and mortgage rates have risen, foreclosures have started to pick up, with the Midwest region hit hardest.

Yield_curveThe rate of foreclosure — the process by which banks can ultimately take back the properties that secure mortgages — is a key indicator that real-estate analysts and investors use as a signal of market distress.

In the past several years, foreclosures across the U.S. have been hovering around historically low levels, as home prices have risen nearly 50% in five years. This appreciation enabled borrowers to sell their homes relatively easily to resolve mortgage difficulties.

Now, a survey of the latest data confirms, that is starting to change, with an uptick across the U.S. in foreclosure rates and mortgage delinquencies (or late mortgage payments). But even the new higher rates of foreclosure and delinquencies are still low in historic terms.

Nationally, the number of mortgage loans that entered some stage of foreclosure rose to 117,259 in February, up 68% from the same month a year earlier, according to Irvine, Calif., online foreclosure-data service RealtyTrac.

Delinquencies are up as well. Data provider LoanPerformance, a subsidiary of First American Real Estate Solutions, reported that 3% of the most vulnerable loans — those made to borrowers with less than a stellar credit history — were 90 days delinquent in February. That is up from 2.84% in February 2005. Meanwhile, 90-day delinquencies for loans made to borrowers with better credit were up to 0.76% in February, from 0.67% a year earlier."  (emphasis added)

Getting the blame for the uptick in delinquencies is the "greater prevalence of riskier adjustable-rate and subprime mortgages, as well as higher interest rates and energy costs." 

Surprisingly, the Midwest is the region with highest rates of loan foreclosures and delinquencies:  the big three are Indiana, Ohio and Michigan. One must suspect the fallout from GM is to blame in part.

Then, there is the uptick in treasury yields. Higher rates are not a blessing in disguise –despite what you may have read by Charles "Whoopee-higher-rates-are-here-again" Biderman.

Foreclosures Pick Up With Midwest Hardest Hit

April 14, 2006; Page A8

See also

Mortgage-Bond Market Stays Strong
WSJ, April 14, 2006; Page B5

As Markets Bet on Rate Increases, Fed Officials Seem Less Committed
April 14, 2006; Page A1

Category: Federal Reserve, Fixed Income/Interest Rates, Inflation, Real Estate

Hot Homes Get Cold

Category: Real Estate

Quote of the day

Category: Fixed Income/Interest Rates, Real Estate

Then & Now

Category: Commodities, Consumer Spending, Earnings, Economy, Employment, Fixed Income/Interest Rates, Inflation, Psychology, Real Estate

Real Estate: Come to Our Sale Price Improvement Event!

Category: Real Estate

New Real Estate Phase: Repricing Houses Downwards?

Category: Economy, Federal Reserve, Markets, Real Estate

Exisiting Home Sales Pop

Category: Economy, Federal Reserve, Real Estate

Household Borrowing and the Mortgage Resets

Category: Real Estate

Coming Soon: Mortgage Payment Resets

Category: Economy, Real Estate, Retail

Real Estate Round Up

This past week saw a lot of Real Estate related data, all of which fits our long term thesis about the macro economy and what’s to come over the next few years.

For those of you who may be newer to the site, we have been dicussing this for quite a while: starting in December 2004, we noted how Real Estate was a prime driver of the economy, and in Spring 2005, how new hiring was overly reliant on the Real Estate Sector; in August 2005, we called that Housing was beginning to show signs of cooling, and that this would eventually wreak havoc on consumer spending. In the Fall 2005, we noted how dependent GDP had become on Mortgage Equity extraction. You can find all of these by using the site search function, right sidebar.

Now as  of March 2006, most of these concepts have become widely recognized and (mostly) accepted — but when they were first introduced here, there was no small amount of incredulity and pushback surrounding them.

Looking forward, I see rates rising, housing cooling further, the consumer cutting back, and the stimulus driven economy slowing, if not slipping into an outright recession.

On to the round up:

Existing Home Sales Slip 5th Consec Month

Home Foreclosure Surge

Home Prices Decellerate

Supply Up, New Homes Sales Down

New Homes Sales: 4th Drop in 6 months

• And the most ironic piece of all, The WSJ’s Greg Ip Discovers Data Manipulation

There’s more all over the web if you want to surf, but that’s the main gist of it.


UPDATE March 5, 2006 4:44pm

The NYT’s Sunday Magazine is all about Real Estate

Go to Introduction: The For-Sale Society

See the Sunday Times Mag TOC after the jump . . .


Read More

Category: Real Estate