Friday, July 27, 2018

Housing comments from Soylent Green

by Bill McBride on 7/27/2018 04:23:00 PM

Long term readers will remember mortgage broker "Soylent Green is People". He sent me these comments on housing that I'll pass along:

"A bit of a panic is breaking out amongst my Realtor friends. Sales are down. There are more cancellations right before closings than usual. Builders are getting a few drop outs as well on some of their units, but that could be tied to overseas buyers with other concerns. If this sales "air pocket" continues, we might see some Agents have to actually marketing, rather than just shilling their homes at the first buyer through the door. A few Agents have seen their listings grow long in the tooth, even some traditionally priced towards first time home buyers. That's a deja vu event today for 2013 vintage agents, but not so for old dogs like me.

On the mortgage side of things, more and more loans have begun funding in the upper 4's to low 5's. Customers are really chafing at anything priced above 4.75%. In order to expand volume, some lenders are duking it out on price  while others are expanding their debt to income ratios, lowering the buying threshold, just as we saw back in 2006."
CR Note: Higher mortgage rates and the new tax policy appear to be impacting home sales in some areas. But this is a slowdown from a hot market, and I expect the key sectors - single family starts and new home sales - will see further growth.