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- Thread starter effenheimer_IHB
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NEW -> Contingent Buyer Assistance Program
Thanks for the post, Eff. This is a critically important topic. Here's a speech Ben gave on the topic. Note the reference to Milton Friedman's "helicopter drop" of money.
Ben seems confident that, "the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound." Thank goodness! I might have had a panic attack if the nominal interest rate hit the zero bound, but Ben has it under control.
Deflation: Making Sure "It" Doesn't Happen Here
The economic downturn that's started in North America has spread to Europe and even to emerging markets, affecting Wal-Mart's customers and leading shoppers to change their behaviors like buying cheaper cuts of meat; in Puerto Rico, customers are eating more sandwiches and buying more private-label merchandise in the United Kingdom. In turn, rising food and energy costs are squeezing Wal- Mart's suppliers and leading them to pass price increases along to retailers, Chief Executive Lee Scott said Thursday in a previously recorded call.
http://money.cnn.com/news/newsfeeds/articles/djf500/200808141303DOWJONESDJONLINE000741_FORTUNE5.htm
While you're at it Eff, can you saw one off for the Realtors. The whole housing market was much more basic years ago. If something has changed, <bitter rant> it's the realtors and NAR's expectation that starter home is a hovel or some a dingy apartment-like condo. Really, which group redefined affordability to measure median condo price because median home price got too high. Realtors. </bitter rant>
Yes, twenty years ago, a 1100sf 3/1 was a starter, maybe a 900sf 2/1 but, a 3/2 or 4/2 in 1500sf or 1700sf was a large move up home. Families also didn't average 3 cars, have 63 inch flat panels and have kids sleeping each to their own rooms.
But, hey, expectations are too high, they should buy a hovel, and scrape by to do it. It's the American Dream!
Glad to hear you're OK Liz. Somebody asked about you today on CR and I've been silently concerned since I read it.
Trooper_IHB
New member
New housing starts.....ouch ! H/T Barry at The Big Picture.
I am otherwise jammed up, so I didn't get a chance to take apart the Housing Starts data -- but damn! if these two charts (via Merrill's David Rosenberg) don't tell the entire story:
August housing starts blurb
I am otherwise jammed up, so I didn't get a chance to take apart the Housing Starts data -- but damn! if these two charts (via Merrill's David Rosenberg) don't tell the entire story:
August housing starts blurb
profette_IHB
New member
effenheimer said:
Thanks for the post, Eff. This is a critically important topic. Here's a speech Ben gave on the topic. Note the reference to Milton Friedman's "helicopter drop" of money.
Ben seems confident that, "the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit its zero bound." Thank goodness! I might have had a panic attack if the nominal interest rate hit the zero bound, but Ben has it under control.
Deflation: Making Sure "It" Doesn't Happen Here
effenheimer_IHB
New member
Captain Ben is on the case.
awgee_IHB
New member
People keep asking what the next bubblw will be. Here it is, and we are smack dab in the middle of it:
standardoflivingbubble
standardoflivingbubble
Anonymous_IHB
New member
awgee said:
The economic downturn that's started in North America has spread to Europe and even to emerging markets, affecting Wal-Mart's customers and leading shoppers to change their behaviors like buying cheaper cuts of meat; in Puerto Rico, customers are eating more sandwiches and buying more private-label merchandise in the United Kingdom. In turn, rising food and energy costs are squeezing Wal- Mart's suppliers and leading them to pass price increases along to retailers, Chief Executive Lee Scott said Thursday in a previously recorded call.
http://money.cnn.com/news/newsfeeds/articles/djf500/200808141303DOWJONESDJONLINE000741_FORTUNE5.htm
effenheimer_IHB
New member
File under Cry Me a River:
The housing bust is forcing many to reconsider their notions of housing and what it means to be a homeowner, but perhaps no group has been more challenged on that front than the first-time home buyer: mortgages are tougher than ever to get, prices tend to be dropping in most major housing markets, and home prices can vary wildly in the same neighborhood as one seller frantically tries to get out and another doggedly holds the line on what they think their property is worth. And the list goes on.
Despite the challenges confronting many first-time home buyers, a new study by Coldwell Banker suggests that many have yet to come to grips with market conditions. In particular, first-time home buyers are primarily concerned with affordability when choosing a new home, but their expectations may be too high relative to their current financial buying power, the survey found.
---
One order of tiny violins for Gen-Y, stuck in Memphis.
---
While nearly half of the Coldwell Banker broker respondents surveyed by the company reported that affordability was the No. 1 concern for first-time buyers, 81 percent said today’s first-time home buyers consider move-in conditions to be very important when searching for homes. In contrast, only 7 percent are looking to purchase “fixer-upper” homes that they could buy at a lower price and renovate themselves.
“In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and break into homeownership,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate, LLC. “Today, this group has greater home expectations because they have grown up more accustomed to their parents’ lifestyles.”
---
If they like their boomer parents lifestyles so much, why don't they just keeping living at home? Oh wait, they already do.
---
In other words, many first-time buyers still carry bubble-level expectations of what their first home ought to be.
Survey findings also suggested that first-time home buyers worry more about credit ratings and approval than they did a decade ago, but less about down payments — another holdover of the easy-lending boom, where down payments mattered little and all that mattered was being approved for the loan.
According to 29 percent of brokers surveyed, first-time home buyers were more concerned with down payments 10 years ago than anything else, while only 17 percent said this is the biggest concern in today’s market. Meanwhile, survey respondents said that only 4 percent of first-time home buyers were worried about their credit scores in 1998, while 14 percent said it is more of a concern today.
More evidence that first-time buyers have yet to come back to Earth: 71 percent of brokers noted that first-time home buyers are looking for larger homes than they were 10 years ago; 35 percent of the survey respondents said “investment” is the No. 1 reason they are looking to make their purchase.
---
"Sad" and "amusing" tags in drunken barfight, amusing smashes beer-bottle over the head of sad, takes the cake.
I'm off to the garage to saw-off a clue-by-four for our poor kiddies.
The housing bust is forcing many to reconsider their notions of housing and what it means to be a homeowner, but perhaps no group has been more challenged on that front than the first-time home buyer: mortgages are tougher than ever to get, prices tend to be dropping in most major housing markets, and home prices can vary wildly in the same neighborhood as one seller frantically tries to get out and another doggedly holds the line on what they think their property is worth. And the list goes on.
Despite the challenges confronting many first-time home buyers, a new study by Coldwell Banker suggests that many have yet to come to grips with market conditions. In particular, first-time home buyers are primarily concerned with affordability when choosing a new home, but their expectations may be too high relative to their current financial buying power, the survey found.
---
One order of tiny violins for Gen-Y, stuck in Memphis.
---
While nearly half of the Coldwell Banker broker respondents surveyed by the company reported that affordability was the No. 1 concern for first-time buyers, 81 percent said today’s first-time home buyers consider move-in conditions to be very important when searching for homes. In contrast, only 7 percent are looking to purchase “fixer-upper” homes that they could buy at a lower price and renovate themselves.
“In the past, first-time home buyers were willing to purchase older, more basic houses in an effort to save money and break into homeownership,” said Jim Gillespie, president and chief executive officer, Coldwell Banker Real Estate, LLC. “Today, this group has greater home expectations because they have grown up more accustomed to their parents’ lifestyles.”
---
If they like their boomer parents lifestyles so much, why don't they just keeping living at home? Oh wait, they already do.
---
In other words, many first-time buyers still carry bubble-level expectations of what their first home ought to be.
Survey findings also suggested that first-time home buyers worry more about credit ratings and approval than they did a decade ago, but less about down payments — another holdover of the easy-lending boom, where down payments mattered little and all that mattered was being approved for the loan.
According to 29 percent of brokers surveyed, first-time home buyers were more concerned with down payments 10 years ago than anything else, while only 17 percent said this is the biggest concern in today’s market. Meanwhile, survey respondents said that only 4 percent of first-time home buyers were worried about their credit scores in 1998, while 14 percent said it is more of a concern today.
More evidence that first-time buyers have yet to come back to Earth: 71 percent of brokers noted that first-time home buyers are looking for larger homes than they were 10 years ago; 35 percent of the survey respondents said “investment” is the No. 1 reason they are looking to make their purchase.
---
"Sad" and "amusing" tags in drunken barfight, amusing smashes beer-bottle over the head of sad, takes the cake.
I'm off to the garage to saw-off a clue-by-four for our poor kiddies.
graphrix_IHB
New member
That has my vote for best post of the day, and it should be in the best of the week contest too!
graphrix_IHB
New member
I am posting the entire article from Housing Wire here, as it is a MUST read.
Subprime Delinquencies Surge in July
By: PAUL JACKSON
August 21, 2008
An early look at subprime RMBS performance in July, courtesy of Clayton Fixed Income Services, Inc., suggests that a recent lull in subprime delinquencies may be coming to an end. The percentage of subprime borrowers 60 or more days in arrears at the end of last month surged for both the 2006 and 2007 vintages, up nearly 7 and 11 percent compared to June, respectively.
The increase in recent-vintage subprime delinquencies came despite a sharp increase in cures, as well, signaling that the number of troubled borrowers in the subprime credit class is again swelling — the 2006 vintage saw its cure rate rise 11.8 percent, while the 2007 vintage saw cures rise nearly 20 percent comapred to one month earlier.
Part of the reason, sources told HW Thursday morning, is a that a large volume of repayment plans put into place earlier this year for troubled subprime borrowers are now failing; while no updated statistics were available that time this story was published, a recent report from Moody’s Investors Service found that more than 50 percent of subprime adjustable-rate mortgages modified during the first half of 2007 had become 60 or more days delinquent by the end of March 2008.
“We’re now hitting the back-end of a subprime repayment plan wave that ran late last year through early this year,” said one source, an ABS analyst that asked not to be identified. “Those reset charts we keep seeing don’t account for the delayed onset of defaults due to repayment plans.”
Also getting worse according to Clayton’s data was average loss severity on subprime defaults, which increased to 48.6 percent in July, compared to 46.6 percent in June; higher loss severities mean lenders lose more on every loan that must be liquidated.
More than a few equity-side analysts have touted slowing subprime delinquencies as proof that the mortgage mess was working itself out in recent months; they may now want to rethink their position on the issue.
Alt-A continues to be problematic
As we’ve covered here extensively, Alt-A delinquencies continued to worsen in July as well. The 2005 vintage — which should be seasoned by now — saw delinquencies jump an eye-opening 29 percent to 9.72 percent of remaining loans in the vintage; the increase is somewhat telling as well, given that prepayment rates actually fell by more than 5 percent in the same timeframe.
To explain: High prepayment rates can cause artificial jumps in delinquency by “revintaging” performing loans and leaving the junk behind; but with CPR rates largely declining for every Alt-A vintage during July, fewer borrowers are able to refinance out of an existing loan.
Beyond the 2005 vintage, 2006 vintage Alt-A loans saw 60+ day delinquencies rise from 22.74 percent in June to nearly 25 percent in July; for the 2007 vintage, delinquencies rose from 20 percent to 21.35 percent. Cure rates increased for all recent vintages during the month as well; meaning that while more delinquencies were cured, more still rolled into the 60+ day bucket regardless.
Weighted average loss severity also increased for Alt-A liquidiations during July, according to the Clayton data: hitting 39.7 percent, compared to 28.6 percent one month earlier.
At the end of July, Standard & Poor’s Rating Services increased its loss severity assumptions for 2006 and 2007 Alt-A hybrid and negative-amortization transactions to 40 percent from 35 percent; the continuing increases we’re seeing now in Alt-A losses suggest that S&Pmay again revise its assumptions well before this year is out.
The data in Clayton’s report represents an advance look at July RMBS deal performance, ahead of regular remittance dates.
For more information, visit http://www.clayton.com.
Emphasis added.
We are all subprime now!
Subprime Delinquencies Surge in July
By: PAUL JACKSON
August 21, 2008
An early look at subprime RMBS performance in July, courtesy of Clayton Fixed Income Services, Inc., suggests that a recent lull in subprime delinquencies may be coming to an end. The percentage of subprime borrowers 60 or more days in arrears at the end of last month surged for both the 2006 and 2007 vintages, up nearly 7 and 11 percent compared to June, respectively.
The increase in recent-vintage subprime delinquencies came despite a sharp increase in cures, as well, signaling that the number of troubled borrowers in the subprime credit class is again swelling — the 2006 vintage saw its cure rate rise 11.8 percent, while the 2007 vintage saw cures rise nearly 20 percent comapred to one month earlier.
Part of the reason, sources told HW Thursday morning, is a that a large volume of repayment plans put into place earlier this year for troubled subprime borrowers are now failing; while no updated statistics were available that time this story was published, a recent report from Moody’s Investors Service found that more than 50 percent of subprime adjustable-rate mortgages modified during the first half of 2007 had become 60 or more days delinquent by the end of March 2008.
“We’re now hitting the back-end of a subprime repayment plan wave that ran late last year through early this year,” said one source, an ABS analyst that asked not to be identified. “Those reset charts we keep seeing don’t account for the delayed onset of defaults due to repayment plans.”
Also getting worse according to Clayton’s data was average loss severity on subprime defaults, which increased to 48.6 percent in July, compared to 46.6 percent in June; higher loss severities mean lenders lose more on every loan that must be liquidated.
More than a few equity-side analysts have touted slowing subprime delinquencies as proof that the mortgage mess was working itself out in recent months; they may now want to rethink their position on the issue.
Alt-A continues to be problematic
As we’ve covered here extensively, Alt-A delinquencies continued to worsen in July as well. The 2005 vintage — which should be seasoned by now — saw delinquencies jump an eye-opening 29 percent to 9.72 percent of remaining loans in the vintage; the increase is somewhat telling as well, given that prepayment rates actually fell by more than 5 percent in the same timeframe.
To explain: High prepayment rates can cause artificial jumps in delinquency by “revintaging” performing loans and leaving the junk behind; but with CPR rates largely declining for every Alt-A vintage during July, fewer borrowers are able to refinance out of an existing loan.
Beyond the 2005 vintage, 2006 vintage Alt-A loans saw 60+ day delinquencies rise from 22.74 percent in June to nearly 25 percent in July; for the 2007 vintage, delinquencies rose from 20 percent to 21.35 percent. Cure rates increased for all recent vintages during the month as well; meaning that while more delinquencies were cured, more still rolled into the 60+ day bucket regardless.
Weighted average loss severity also increased for Alt-A liquidiations during July, according to the Clayton data: hitting 39.7 percent, compared to 28.6 percent one month earlier.
At the end of July, Standard & Poor’s Rating Services increased its loss severity assumptions for 2006 and 2007 Alt-A hybrid and negative-amortization transactions to 40 percent from 35 percent; the continuing increases we’re seeing now in Alt-A losses suggest that S&Pmay again revise its assumptions well before this year is out.
The data in Clayton’s report represents an advance look at July RMBS deal performance, ahead of regular remittance dates.
For more information, visit http://www.clayton.com.
Emphasis added.
We are all subprime now!
profette_IHB
New member
I was already giggling and then I read this line and burst into hyterical laughter:
"I’m off to the garage to saw-off a clue-by-four for our poor kiddies."
Good post, Eff.
"I’m off to the garage to saw-off a clue-by-four for our poor kiddies."
Good post, Eff.
freedomCM_IHB
New member
Wow.
2005=40%
2006=30%
2007=20%
Wow.
2005=40%
2006=30%
2007=20%
Wow.
freedomCM_IHB
New member
my bad. all those numbers just wanted to make a nice series in my head.
that said, I wouldn't bet against them hitting 40% soon enough.
that said, I wouldn't bet against them hitting 40% soon enough.
No_Such_Reality_IHB
New member
profette said:
While you're at it Eff, can you saw one off for the Realtors. The whole housing market was much more basic years ago. If something has changed, <bitter rant> it's the realtors and NAR's expectation that starter home is a hovel or some a dingy apartment-like condo. Really, which group redefined affordability to measure median condo price because median home price got too high. Realtors. </bitter rant>
Yes, twenty years ago, a 1100sf 3/1 was a starter, maybe a 900sf 2/1 but, a 3/2 or 4/2 in 1500sf or 1700sf was a large move up home. Families also didn't average 3 cars, have 63 inch flat panels and have kids sleeping each to their own rooms.
But, hey, expectations are too high, they should buy a hovel, and scrape by to do it. It's the American Dream!
lawyerliz_IHB
New member
Water, water everywhere, nor any drop to drink.
Reported 23 inches of rain on Beautiful Merritt Island Florida.
My house is ok, but instead of lawns to the right and left, there
are shallow lakes.
Didn't screw real estate get screwed selling his Palm Bay home.
Lots of homes destroyed by tornadoes and drowned under water
in Palm Bay.
But not enough to cut supply!!
Like that lawyer joke about 500 lawyers on the bottom of the ocean
being a good start!!
Reported 23 inches of rain on Beautiful Merritt Island Florida.
My house is ok, but instead of lawns to the right and left, there
are shallow lakes.
Didn't screw real estate get screwed selling his Palm Bay home.
Lots of homes destroyed by tornadoes and drowned under water
in Palm Bay.
But not enough to cut supply!!
Like that lawyer joke about 500 lawyers on the bottom of the ocean
being a good start!!
no_vaseline_IHB
New member
lawyerliz said:
Glad to hear you're OK Liz. Somebody asked about you today on CR and I've been silently concerned since I read it.
EvaLSeraphim_IHB
New member
I'm glad to hear as well. I figured either you were ok, or were so busy bailing you didn't have time to write. Glad to see that the electricity and internet are working for you! 
graphrix_IHB
New member
Good to hear you are alright Liz. I mean, it can't be that bad because we did get our update from the Space Coast. If you the intarwebs, then you are all good.
lendingmaestro_IHB
New member
It looks like the sheep got sucked into another sucker's rally today.
Trooper_IHB
New member
Glad to hear you are ok LL, was thinking about you as well. (G, I know you said "space coast" just for me)
LM, I am really glad to see you posting. Can you give us an update on how the lending market is ? Is anything getting funded ?
LM, I am really glad to see you posting. Can you give us an update on how the lending market is ? Is anything getting funded ?