Wednesday, August 02, 2006

Mortgage Applications At 4 Year Lows

From Marketwatch:

Mortgage applications fall to 4-year low

Mortgage applications are down 29% in the past year, reflecting a severe slowdown in the housing market after four years of strong growth.

Applications for loans to purchase a home fell 3.3% to the lowest level since November 2003. The number of purchase loans is down about 22% in the past year.

The number of applications for loans to refinance a loan rose by 2.3% to a four-week high. The number of refinance loans is down about 39% in the past year.

The share of loans to be used for refinancing rose to 37% from 35.6%; it's the highest share since mid-March.

From Reuters:

Home loan demand sinks to four-year low

U.S. mortgage applications last week sank to their lowest level in over four years, as home purchase loan demand tumbled for the third straight week, an industry trade group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended July 28 decreased 1.2 percent to 527.6 -- its lowest since May 2002 -- from the previous week's 533.8.

It was the third straight week that overall mortgage activity slumped, despite a decline in interest rates during that period.
...
After historically low mortgage rates fueled a five-year housing boom, most analysts agree that the market is cooling off from its record run.

Nearly all recent measures of housing activity have pointed not just to a slowdown, but to a sector that is struggling. Sales are sliding, supply is swelling and price appreciation is abating.

35 Comments:

Anonymous Anonymous said...

What will be David Lereah's and the RE Industries response?

8/02/2006 07:06:00 AM  
Anonymous Anonymous said...

What will the NY Times & NY Magazine say about this? They have been the biggest cheerleaders of real estate for the past six years.

How about all these new condos going up everwhere, will they continue to sell out at at $800 a square foot to people who put 50% down??

According to them mortgage rates don't matter because everyone makes in the mid six figures and is a white, white collar corporate professional transplanted into this area from another part of the country.

8/02/2006 07:13:00 AM  
Blogger grim said...

I don't know what the response will be, but I'm certain it will be an analogy.

The market never goes down, it simply...

"Lands like a hot air balloon"

"Deflates like a souffle"

"Turns slowly like a large ship"

"Takes a breather"

"A balloon that slowly leaks out air"

I'm sure you all get the point.

8/02/2006 07:17:00 AM  
Anonymous Anonymous said...

Want a laugh.

http://www.realtor.org/PublicAff...06? OpenDocument

Leave it to Mr. Lereah to include his usual incredible commentary:

"David Lereah, NAR’s chief economist, said the small rise in the index is good news, indicating that the trend is stabilizing. 'Once again, we have various housing indicators moving in different directions, which itself is an indicator of a market in transition,' he said. 'The housing market is striving for balance – a process that will take several months. A quieting in the movement of indicators should restore confidence to home buyers who’ve been on the sidelines, waiting for the right time to get into the market, and now is the best time we’ve seen since the 1990s in terms of housing choices and flexible terms.'”

8/02/2006 07:21:00 AM  
Blogger thatbigwindow said...

I smell an advertising campaign coming soon...

Keep your eyes out for NAR sponsered commercials with real estate propaganda.

8/02/2006 07:23:00 AM  
Anonymous Anonymous said...

June 2005 June 2006 Difference

Loan Amount $500,000 $500,000 -

Rate, 30-Year Fixed 5.6% 6.7% +20%

Rate, 1-Year ARM 4.2% 5.7% +36%

Payment,30-Year $2,870 $3,226 +12%

Payment,1-YrARM $2,445 $2,902 +19%

8/02/2006 08:02:00 AM  
Anonymous Anonymous said...

Ok. when are sellers going to wake up and smell the coffee?

party's over guys...

JM

8/02/2006 08:13:00 AM  
Anonymous Anonymous said...

Buyers control this market not sellers.
Just bid 35% less. If the Grubbing sellers whines then walk.
Anything more will put you underwater at some point.

Boooooooyaaaaaa

Bob

8/02/2006 08:23:00 AM  
Anonymous Anonymous said...

"Qualified Buyers"(QB) control this market and are in the driver seat!
These QB's dictate the terms of any real estate transaction.

Qualified means someone that can really afford to buy a house not some idiot/moron (about to be foreclosed or bankrupt in short time) using a risky loan.

Bob

8/02/2006 08:26:00 AM  
Anonymous Anonymous said...

Reponse will be -

"Well - its seasonal numbers...oops....this is the season....I mean....its just a lag in the data....I mean....ignore that man behind the curtain - the great oz has spoken.....

8/02/2006 08:27:00 AM  
Anonymous Anonymous said...

"Buyers control this market not sellers.
Just bid 35% less. If the Grubbing sellers whines then walk.
Anything more will put you underwater at some point."

Agreed. I like when I hear realtors say "The sellers may be offended with that offer."

1) Like I give a s...

2) Did sellers worry about offending borrowers with selling a 700k house really worth 500k?

3) Are the sellers going to pay the difference in my monthly payment to offset their hurt feelings?

8/02/2006 08:30:00 AM  
Anonymous Anonymous said...

I've been trying to decide on a 'price point' where I'd jump in and buy (for awhile, thought in the 8s, now thinking in the 7s).

But when you run the numbers on these still-crazy prices, it just doesn't make any sense. To throw away the interest income coming in from NOT buying an overpriced house (and they're ALL overpriced relative to 4 years ago), just doesn't make any sense.

I go from optimistic that things will work out in NJ, and then get pessimistic when running numbers in a spreadsheet.

The big hit comes from property taxes. $12K+ a year to live in a nice area just isn't worth it. $15K to 17K property taxes are worse yet.

NJ just doesn't make financial sense, even for those with the a fabled 6-figure income.

8/02/2006 09:04:00 AM  
Blogger grim said...

It's makes even less sense when those "fabled individuals" get hit with AMT.

grim

8/02/2006 09:17:00 AM  
Anonymous Anonymous said...

Even we are THE "QB", but we don't want to pay those bubbles! SOme sellers pull the house off market temperaly or not list online to make the inventory decrease.

8/02/2006 09:20:00 AM  
Blogger lindsey said...

A metaphor that we won't see, but seem more appropriate to me:

"It's falling like an octogenarian pushed from the top of the stairs"

I like it because it implies the damage as well as the decline.

8/02/2006 09:50:00 AM  
Anonymous Anonymous said...

That has a certain ring to it:

"Real estate, like an octogenarian pushed from the top of the stairs."

8/02/2006 10:08:00 AM  
Blogger Rich52 said...

Not Northern, NJ but there arn't many new const. in norhtern NJ. So..



Check out this flipper.

OLP: $795,000 long before construction completed.

Tried FSBO: $779,000. I checked out this place a couple of months ago. Now the seller keeps calling every few weeks after he drops the price.

Listed it with an agent about a month ago, $749,000. Now listed at $739,000. There other homes in the same development for sale for less by other flippers, same exact models. They keep lowering there price around $10k a month.

BTW, this flipper closed in april for $720k, looks like he's going to be out some serious cash, if it even sells.

8/02/2006 10:40:00 AM  
Blogger skep-tic said...

anyone think that the property taxes will have to go down at some point?

like another poster here, I was running numbers on a house. I initially thought that if it dropped 40% in price it would be a good value to live there. But it has $23,000 in taxes! In other words, about 1/3 of your monthly housing cost would be money down the drain.

if these taxes aren't reduced, house prices may go lower than anyone can imagine. it just doesn't make sense otherwise

8/02/2006 10:42:00 AM  
Blogger Rich52 said...

Sorry, forgot the MLS ID in the pervious post. Here it is: MLS ID#: 622648

8/02/2006 10:43:00 AM  
Anonymous Anonymous said...

monthly mtg + Property taxes + utility cost + maintenance = INSANE

What do you think will give?

Scratch off property taxes Not going to hapen.
Utility cost going down...maybe a little but the trend is up longer term.

Maintenance --Many may get off their lazy rears and cut their own grass.

HOUSE PRICES ARE GONG TO CAVE IN.

JUST RUN THE NUMBERS IT IS COMPLETELY BONKERS.

8/02/2006 11:01:00 AM  
Anonymous Anonymous said...

35% off 2005 peak prices not off some DREAMERS wish list price should be the goal of every rational Qualified buyer.

8/02/2006 11:02:00 AM  
Blogger chicagofinance said...

RE: Lereah - noting from the TODAY show video from yesterday. He's already setting this entire slowdown to be the fault of the Fed. At some point he will publish and article and flat out blame the Fed in an "I told you so" tone.

8/02/2006 11:05:00 AM  
Blogger BergenBuyer said...

I don't see taxes going down unless major changes happen at the state level (ie consolidation of services, cutting benefits to public employees, cutting the # of public employees, etc). The price of a house will have no effect on the taxes. The tax value is all relative. If my house is assessed at $500K and I pay $5K in taxes and my neighbor is $1M and pays $10K in taxes, it doesn't matter if the market tanks and now my house is worth $250K and my neighbor is $500K, the town is still going to look for the same taxes of $5K and $10K coming.

I don't see taxes coming down anytime soon, or if they do come down, don't expect a big drop. I actually see them rising, there's not going ot be as many houses built and that menas less tax dollars to collect. Ask your mayor why your taxes have gone up each year, but at the same time there's been a few developments that have created new tax revenues of $1M to the town. Where did that $1M go? Maybe you weren't so upset about that 5%/yr increase in taxes because you thought it's keeping pace with inflation, etc., but you didn't realize it's really 10-15% because it was subsidized by the new developments kicking in more cash. Now that development has stopped, you're going to pick up the 10-15% increase.

8/02/2006 11:05:00 AM  
Anonymous UnRealtor said...

Also follow the regular property tax hikes. One house I was interested in had taxes that went up 5% to 6% every year since 2003. And it's going up again this year.

They can stuff that debt slavery.

The only way to rationally deal with these crazy property taxes, is for prices to come down -- a lot.

8/02/2006 11:08:00 AM  
Anonymous Anonymous said...

property taxes increasing at double digit rates utility cost soaring higher while gas remains at $3 bucks is breaking the back of housing.
Smart buyers will/are chuckling at realtors.

8/02/2006 11:24:00 AM  
Blogger skep-tic said...

the taxes are more worrisome because they are beyond your control. it goes against the whole principle of owning as a means to fix costs.

at some point, doesn't a laffer effect take place. taxes become so high that no one is willing to buy?

8/02/2006 11:25:00 AM  
Anonymous Anonymous said...

"It's falling like an octogenarian pushed from the top of the stairs"

I AM THE PUSHER ROBOT

I AM PROGRAMMED TO PROTECT YOU FROM THE TERRIBLE SECRET OF SPACE

DO YOU HAVE STAIRS IN YOUR HOUSE?

8/02/2006 11:27:00 AM  
Anonymous Anonymous said...

I think house prices are to high so the few buyers left are refusing to buy.
Property taxes are now a important consideration in any offer. These cost only go up. So $20,000 + annualized taxes can really eat up a nice chunk of income.

8/02/2006 11:29:00 AM  
Anonymous Anonymous said...

This is from a newspaper from a town not near here, but the trends are the same. Same BS frmo builders and RE agents. This housing bubble is not just isolated to NJ and CA.

http://www.rapidcityjournal.com/articles/2006/08/02
/news/business/news699.txt

SAS

8/02/2006 01:50:00 PM  
Anonymous Anonymous said...

My husband & I are first time buyers looking for a home in Somerset county. We are seeing a decrease in inventory turns but we aren't seeing any significant price decreses.

For example: mls 2285421 listed at $594.9K on 6/5/06 and closed on 7/31/06 for $599.5K. Granted it is only $5K but how can people be buying above asking prices!? Could this be a cash at closing deal that is skewing the numbers?

~First Time Buyer

8/02/2006 02:29:00 PM  
Anonymous UnRealtor said...

First Time Buyer, the answer is that there are still some Greater Fools out there.

Saw a recent closing this week for a tear down property. Some idiot paid $300K over asking on an already bloated price.

There are other properties listed that are in better locations, on larger lots, and come with an actual mint condition house included, for less money (some even on the same street on which this chump bought!).

It just doesn't compute how someone can pay $1M+ for a property, and not have clue one.

A fool and his money are indeed soon parted.

8/02/2006 03:13:00 PM  
Anonymous Anonymous said...

Thanks unrealtor...luckily the word is slowly getting into the mainstream media which will hopfully educate the fools that are messing up the comps!
~First Time Buyer

8/02/2006 03:56:00 PM  
Anonymous Anonymous said...

Has anyone noticed the ReMax sign billboards changing over the last 6 months; from "The sign that sells your home" to "The sign that brings you home".
Ya gotta love it!

8/03/2006 02:37:00 AM  
Anonymous Anonymous said...

UnRealtor said...

"A fool and his money are indeed soon parted."

8/02/2006 04:13:06 PM


What I wanna know is how did they get together in the first place?

8/03/2006 02:39:00 AM  
Anonymous Anonymous said...

One word..inheritance.

8/03/2006 02:02:00 PM  

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