RSS Feed by Calculated Risk on 5/23/2010 03:07:00 PM
Sunday, May 23, 2010
"Feeling like a foolish child"
I received so many positive emails after posting this Friday night; here it is again for those who missed it. Singer-songwriter Tim Miller captures the anger and despair of a victim of predatory lending in "Love, Your Broken Home" (some rough language). Click here for YouTube.
Weekly Summary and a Look Ahead
by Calculated Risk on 5/23/2010 12:12:00 PM
Three housing related reports will be released this week: existing home sales on Monday, Case-Shiller house prices on Tuesday, and new home sales on Wednesday.
On Monday, the April Chicago Fed National Activity Index will be released at 8:30 AM. This is a composite index of other data. At 10 AM the National Association for Realtors (NAR) will release the April existing home sales report. The consensus is for an increase to 5.6 million sales in April as a seasonally adjusted annual rate (SAAR). Also on Monday, the DOT will probably release the Vehicle Miles Driven for March. This has been showing declining Year-over-year miles driven.
On Tuesday, the March Case-Shiller house price index will be released at 9:00 AM. The consensus is for a slight decline in the house price index. At 10:00 AM, the Conference Board will release Consumer Confidence for May (consensus is for an increase to 59). Also on Tuesday, the FHFA house price index, and the Richmond Fed survey will be released.
On Wednesday, the April Durable Goods Orders will be released at 8:30 AM. The consensus is for a 1.5% increase. At 10 AM, the Census Bureau will release the April New Home sales report. The consensus is for an increase to 425K (SAAR) from 411K in March. Since new home sales are reported when a contract is signed, April was the last month that reported sales will be positively impacted by the tax credit.
On Thursday, the first revision of the Q1 GDP report will be released at 8:30 AM. The consensus is for an upward revision to 3.5% from the initially reported 3.2%. Also on Thursday, the closely watched initial weekly unemployment claims will be released. Consensus is for a decline to 450K from 471K last week.
And on Friday, the BEA will release the Personal Income and Outlayreport for April at 8:30 AM. Also on Friday the Chicago Purchasing Managers Index for May will be released. And of course the FDIC will probably have another busy Friday afternoon ...
There will be several Fed speeches this week, and a few other economic releases (trucking index, restaurant index).
And a summary of last week:
The MBA reported a record 14.69 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q1 2010 (seasonally adjusted).
Click on graph for larger image in new window.This graph shows the percent loans delinquent by duration. Loans 30 days delinquent increased to 3.45%, about the same level as in Q4 2008.
Delinquent loans in the 60 day bucket increased too, and are also close to the Q4 2008 level. This suggests that the pipeline is still filling up at a high rate, but slightly below the rates of early 2009.
The 90+ day and 'in foreclosure' rates are at record levels. Obviously the lenders have been slow to start foreclosure proceedings - and the 90+ day delinquent bucket is very full. Also lenders have been slow to actually foreclose - and the 'in foreclosure' bucket is at record levels.
The second graph shows the delinquency rate by state (red is seriously delinquent: 90+ days or in foreclosure, blue is delinquent less than 90 days).
Thirty four states and the District of Columbia have total delinquency rates over 10%. This is a widespread problem.
Total housing starts were at 672 thousand (SAAR) in April, up 5.8% from the revised March rate, and up 41% from the all time record low in April 2009 of 477 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Single-family starts were at 593 thousand (SAAR) in April, up 10.2% from the revised February rate, and 65% above the record low in January 2009 (360 thousand).
Permits declined sharply suggesting that starts will decline next month.
This graph shows the builder confidence index from the National Association of Home Builders (NAHB).The housing market index (HMI) was at 22 in May. This is an increase from 19 in April. This is the highest level since August 2007 - and builders were seen as depressed then!
The record low was 8 set in January 2009. This is still very low ... Note: any number under 50 indicates that more builders view sales conditions as poor than good.
On a month-over-month basis, the national average home price index fell by 0.3 percent in March 2010 compared to February 2010.This graph shows the national LoanPerformance data since 1976. January 2000 = 100.
The index is up 1.7% over the last year, and off 30.5% from the peak.
Moody's reported that the Moody’s/REAL All Property Type Aggregate Index declined 0.5% in March. This is a repeat sales measure of commercial real estate prices.This is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index. CRE prices only go back to December 2000.
Commercial real estate values are now down 25% over the last year, and down 42% from the peak in August 2007.
The American Institute of Architects’ Architecture Billings Index increased to 48.5 in April from 46.1 in March. This index is a leading indicator for Commercial Real Estate (CRE) investment. Any reading below 50 indicates contraction.According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So there will probably be further declines in CRE investment through all of 2010, and probably into 2011.
Best wishes to all.
On Loan Mods and Credit Scores
by Calculated Risk on 5/23/2010 08:58:00 AM
From Carolyn Said at the San Francisco Chronicle: Loan modifications often damage credit scores
Struggling homeowners who get a loan modification to reduce their mortgage payments are often unaware that it can seriously ding their credit score.And on short sales:
...
"A lot of people don't understand that by making the payments due on their temporary loan mod they're reported as delinquent immediately," said Margot Saunders of the National Consumer Law Center in Washington. "It's a huge misunderstanding."
...
"A lot of lenders are reporting these modifications as paying under a partial payment plan. FICO regards that status as a serious delinquency," said Craig Watts, a spokesman for FICO ...
Watts said it is a "widespread myth" that short sales and deeds in lieu of foreclosure have less impact on credit scores than do foreclosures.There is much more in the article ...
"Generally speaking, when you can't pay your mortgage, in the eyes of the FICO score what matters is that you were not able to fill your obligation as you originally agreed and that failure is highly predictive of future risk," he said.
Saturday, May 22, 2010
Spain: Regulators seize CajaSur; U.K.: Bonfire of the Quangos?
by Calculated Risk on 5/22/2010 08:39:00 PM
Some news from Europe ...
From Bloomberg: Regulator Seizes CajaSur, Lender Hurt by Bad Loans
The Bank of Spain removed the managers of CajaSur ... a savings bank with assets of about 19 billion euros and 486 branches ... and put the bank under a provisional administrator.This is a fairly large bank. The 45 or so 'cajas' are local government owned banks that are focused domestically with about 70% of their portfolios exposed to the Spanish real estate market.
And in the U.K. it looks like the proposed austerity measures will lead to 100s of thousands of public job cuts, from the police to active duty front line soldiers. The ministers are promising a “bonfire of the quangos” (quasi-autonomous non-governmental organisation), but it sounds like this will go far beyond the NGOs ...
From the Times: 300,000 jobs in public sector face the axe
Detailed research by The Sunday Times shows that at least 300,000 workers, including civil servants and frontline staff, will lose their jobs over the next few years.
Some estimates suggest that the number of job losses could reach 700,000.
These will include tens of thousands of health service managers as well as many thousands of doctors and nurses ... Thousands of police officers and their civilian support staff ... 20,000 jobs will be lost at the Ministry of Defence ... including some frontline soldiers ...
Mothballed Condos Offered For Sale
by Calculated Risk on 5/22/2010 04:48:00 PM
In November 2007 Lennar mothballed a major condo project in Irvine called "Central Park West". I posted a short video of the project (poor quality) in 2008.
Jeff Collins at the O.C. Register has an update: Prices cut 25% on new ‘urban’ condos
What a difference three years makes.This is real shadow inventory coming back on the market ...
When homebuilder Lennar Corp. first launched home sales in its urban-styled Central Park West community in Irvine, prices started at $500,000 and ranged up to $2.9 million.
Fast forward to today’s “grand opening” for Central Park West’s four-story condo buildings — the project’s low-rises. Prices now start in the upper $300,000’s and range to over $1 million – at least 25 percent below the original pricing.
Sales at the sleek, industrial-chic Central Park West began in early 2007, but were halted abruptly by the fall of that year amid cascading home prices.
