Archive for May, 2010
Anyone who thought the housing market might be able to continue its positive trend without the home buyer credit got a swift dose of reality today. The Mortgage Bankers Association reported that mortgage applications for home purchases fell off a cliff, declining by 27% last week to a level not seen since May 1997. Clearly, the housing market is already missing the home buyer credit.
For a little perspective, consider mortgage applications for new purchases since 1990.
More than 100,000 Maryland homeowners are at least a month late on their mortgage payments, according to data released Wednesday from the Mortgage Bankers Association.
The data show that 9.82% of mortgage loans in the state are at least a month past due. Adding in loans that are already in foreclosure, and 9.21% of mortgages are either more than three months late or foreclosed.
Current efforts to reform financial regulation are “cosmetic” and won’t prevent another crisis, economist Nouriel Roubini told an audience on Tuesday at the London School of Economics.
“The way I think about this crisis is not in terms of black swans (a sudden, rare event), but white swan events," Roubini said. "Crises are much more common than we think.”
US stocks fell for a second day as Germany’s ban on certain bearish investments and a jump in mortgage foreclosures to a record triggered a flight from equities.
Boeing Co., United Technologies Corp. and 3M Co. slid more than 1.6% to help lead declines in the Dow Jones Industrial Average. American Apparel Inc. slumped 24% after saying it anticipates it won’t be in compliance with debt covenants. Equities pared losses as the euro extended its rebound from a four-year low against the dollar and the Federal Reserve said it was in no hurry to sell mortgage assets.
People whose mortgage payments are reduced through loan modifications often are still drowning in other types of debt. The loan-mod treatment can be akin to using a small Band-Aid to try to cover up a mortar-sized wound.
We may be relying too heavily on that limited loan-mod cure partly because another more holistic therapy, bankruptcy, is no longer as attractive to the patients.
National home prices increased 1.7% in March 2010 compared to the same month one year ago, marking the second month of year-over-year increases in the CoreLogic home price index (HPI).
The March results are better than the upwardly revised 0.8% year-over-year increase in February, the first in more than three years, CoreLogic said. In 51 of the country’s 100 largest Core Based Statistical Areas (CBSAs), prices increased year-over-year in March, up from 42 CBSAs in February.
However, from February to March, the HPI declined 0.3%. That follows a 1.7% decline from January to February. Since the HPI peaked in April 2006, the decline in home prices was 30.5% in March.
The five best states for price appreciation were Maine (12.9%), Massachusetts (7.7%), Virginia (7.3%), California (6.2%) and Hawaii (5.2%). The states with the greatest depreciation were Idaho (11.1%), Nevada (8.8%), Illinois (8.2%), Maryland (6%) and Alabama (5.6%).
The significant share of distressed sales in the market continues to influence the HPI forecast, CoreLogic said, adding longer-term, the forecast for home prices is more positive as the national economic recovery is expected to gain further traction in 2011. From March 2010 to March 2012, national home prices are expected to increase by 2.7%.
This chart shows the state-by-state changes in house prices:
When CoreLogic removed distressed sales from its dataset, year-over-year prices increased 1.9%, up from the 0.2% increase in February. In addition, when distressed sales are excluded, the peak-to-current drop in prices was 21.5% in March.
CoreLogic believes the price increases in the past two reports won’t be sustained in the short-term.
“The surge in home sales in March is giving the market a boost this spring,” said CoreLogic chief economist Mark Fleming. “As the influence of the tail end of the tax credit and spring buying season fade, price growth will fade with it as we go into summer.”
Detroit, at a 6.1% decline, is the market CoreLogic predicts to have the most price depreciation in the next 12 months, followed by Seattle (4.1%), Nassau-Suffolk NY (3.4%) and Baltimore (3.3%). The top metro areas predicted to increase the most over the next twelve months are San Jose (6.8%), Buffalo-Niagara Falls (4.9%), Denver (4.7%) and San Diego (4.4%).
Write to Austin Kilgore.
The share of US mortgages in foreclosure or at least 30 days delinquent slipped to 14.01% in Q110, from 15.02% in the previous quarter, according to the quarterly survey out today from the Mortgage Bankers Association (MBA).
The delinquency rate on one-to-four-unit residential units rose to a seasonally adjusted 10.06% at the end of the quarter, up 59 basis points (bps) from Q409 and up 94 bps from the same time last year. The serious delinquency rate of loans 90+ days past due or in foreclosure slipped 13 bps from last quarter to 9.54%, but is up 230 bps from the same period last year.
The highest overall delinquency rates were in Nevada (14.03%), Mississippi (12.7%) and Georgia (12.1%). Serious delinquency rates were highest in Nevada and Florida:
The share of loans on which foreclosure actions began during the first quarter rose 3 bps from the previous quarter to 1.23%. The percentage of loans in the foreclosure process at the end of the quarter rose to 4.63%, a record high.
Half the states saw an increase in the rate of foreclosure starts on a year-over-year basis, with the largest increases in Oregon, North Carolina and Maryland. The largest decreases occurred in Florida, Rhode Island and California.
MBA chief economist Jay Brinkmann, in a call on the quarterly report, noted a trend of "pretty flat quarter-to-quarter" delinquency rates, which reflects current trends in employment levels.
“The economy has begun to generate jobs and layoffs have declined, although new claims for unemployment insurance remained higher in the first quarter than we expected," Brinkmann said in a statement. "The percent of loans behind one payment had been declining as first-time claims for unemployment began falling in March 2009. Those new claims stopped falling during the first quarter of this year, which likely halted the decline in the underlying 30-day delinquency rate."
He added: "If mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad."
Write to Diana Golobay.
