August 1, 2017

If Only They Could Sell Without Taking A Major Hit

A report from Mortgage News Daily. “On July 10th of this year, Vanguard Funding, LLC had their NY Mortgage Bankers license purportedly suspended - not good when your headquarters are in that state. This is on the NMLS Consumer Access page. If you go to the website, management has this message: ‘WE ARE CURRENTLY NOT ACCEPTING APPLICATIONS.’ All of this prompted one to send me, ‘Messages in bold are usually not a good thing. Vanguard definitely had some internal issues plaguing them, but it’s always a surprise to see a good sized fellow IMB apparently closing up shop.’”

“Being one, I know that capital markets folks are often accused of cyphering (putting a message into secret writing). We’re pretty good at deciphering as well. What does the Fed reducing its balance sheet mean for LOs and their borrowers?The NY Fed released a new two-week FedTrade schedule covering the July 28 to August 10 period, and it showed about $1.2 billion a day of Agency MBS purchases. If lenders originate $1.6 trillion total of residential mortgages in 2017, that is $6.4 billion a day - including jumbo, non-QM, and bond programs - non-agency stuff.”

“I bring this up because at some point it will end - and the Fed has done a fine job telling us that. Michael Ehrlich with ThomsonReuters kindly crunched a few numbers for me to determine that there is $5.5 trillion of Ginnie, Fannie, and Freddie (Agency MBS) out there. Of that, the Fed owns about 1/3 - $1.75 trillion - or more than a year’s production of all types of residential mortgages. Not only that, but remember that the Fed was a big buyer when 30-year rates were .75% lower than where they are now, so those bonds are underwater by several points.”

The Arizona Republic. “Oh, Canadians, why aren’t you buying more homes in metro Phoenix? Our neighbors north of the border are spending a record amount on U.S. houses, but their pace of purchases hasn’t picked up much in the Valley. Arizona housing analyst Mike Orr told me Canadians bought 44 Valley homes in June. That’s up from 36 in June 2016, but is ‘dismal’ compared with past years, he said.”

“Last summer, housing expert Tom Ruff of The Information Market did an analysis on Valley homes bought and sold by Canadians using north-of-the-border tax mailing addresses on property records. He concluding that for every Canadian buying a metro Phoenix home, another nine are selling. Diane Brennan, a Scottsdale real-estate agent and a native Canadian, told me any data showing a big increase in Canadians buying Arizona homes doesn’t make sense to her.”

“‘I had many international clients — mostly Canadian and Chinese — during 2010 and 2011 when Phoenix AZ had fire-sale pricing on housing. Much higher current prices coupled with a stronger U.S. dollar have brought my international buyers to a trickle,’ said an unnamed real-estate agent from Arizona, who responded to the Realtor survey.”

From Houma Today in Louisiana. “Houma-Thibodaux home prices barely rose over the past year, an increase far below the national average, new figures show. Locally, the tepid increase offers more evidence of the toll a three-year offshore oil bust has taken on Houma-Thibodaux’s economy. Prompted by a world crude glut, the local oil-based economy has lost an estimated 14,000 jobs during that time.”

“‘Since the oil industry took a downturn, we’ve had a lot more inventory,’ said Michael LaRussa, president of Coldwell Banker LaRussa Real Estate in Houma. ‘Thibodaux’s market is steady. Houma’s is slower because we have a lot of inventory,’ he said. ‘The median home prices have not dropped tremendously, maybe around $10,000, but it really depends on what’s selling.’”

“‘It’s really hit or miss,’ LaRussa said. ‘The average days on the market right now is 129 days. It just depends. I think some of the higher-end market homes are staying on the market. We have a lot of half-a-million-or-above houses still on the market.’”

“The CoreLogic numbers come one month after released a report saying Houma-Thibodaux was the 10th most stable housing market in the country over the past 25 years. It says local home prices have steadily increased since 1992 despite the oil bust and several hurricanes. ‘We’re not really seeing that,’ LaRussa said, ‘but I guess it really matters what you compare it to.’”

The Real Deal on Florida. “The Venezuelan investors who planned to build Wyn 26, a 16-unit condo project in Wynwood, have instead put the site on the market for $2.85 million amid slumping sales, The Real Deal has learned. Dave Colonna of FIP Realty Services, who has the listing, said the developers had received only a couple of reservations since launching sales last fall, and were unable to secure financing. The price for the 10,400-square-foot site at 50 and 58 Northwest 26th Street equates to $274 per square foot.”

“The project planned to have units sized from 1,057 square feet to 1,457 square feet, which is larger than the norm in Wynwood, Colonna said. They were to be priced from the mid-$500,000s to the mid-$800,000s, or between $520 per square foot to $560 per square foot. ‘We marketed it for sale as a condo and did not get much traction because of the size of the units and the price,’ Colonna said. ‘So they decided to sell it.’”

The Daily Gazette in New York. “My husband and I have spent the past seven months renovating a vacant house, and we’re finally moving into it this weekend. To say my thoughts have been dominated by this house — and all the work involved in making it habitable again — is an understatement. So it was a bit jarring to hear the president of the United States suggest that maybe houses don’t deserve all that much consideration, after all.”

“‘Don’t worry about your house,’ President Donald Trump said, in comments to the Wall Street Journal encouraging residents of upstate New York to move to places where job prospects are better.”

“Don’t worry about your house? Trust me, I’d love not to worry about my house. But it’s the biggest investment I’ve ever made in my life, and I don’t have that luxury. Nor do most Americans. In fact, sometimes people email to tell me that they would pick up and move — if only they could sell their homes without taking a major financial hit. Maybe it’s easy to walk away from a house if you’re a billionaire. Most people aren’t billionaires, though.”

“You don’t have to look too far to find evidence of hardship and decline, especially when you survey the Capital Region’s housing stock. Thousands of area residents have walked away from their homes, usually as a result of some sort of calamity, which is why vacant, deteriorating properties abound. The typical vacant house symbolizes failure and loss, and those who lose their homes, or are in danger of losing their homes, spend a great deal of time worrying about it.”

“I’m not in danger of losing my home, but if there’s one thing I’ve learned about home ownership, it’s that it’s a constant source of worry, even when things are going just fine. So don’t tell me not to worry about my house. Because that’s just not an option.”