BiggerPockets

Optimists

AP

A wave of foreclosures is forcing down home prices in most major U.S. cities. But economists and real estate agents are noticing what they call a key first step for any housing recovery: a drop in the glut of homes for sale in markets hit hardest by foreclosures.

If we were to see several consecutive months of supply getting smaller, it would point to an improving housing market," said Celia Chen, senior director at Moody's Analytics. "Even if it is investors buying them, they are renting them out in hopes that prices in the next several years will rise.

NAR

According to the latest Realtors Confidence Index, the gap between the indices of Prospective Home Buyer Traffic and Prospective Home Seller Traffic has narrowed, with an increase in Prospective Buyer Traffic. A continuation of the narrowing of the gap between buyer and seller interest would be favorable to the strengthening of real estate markets nationwide.

In many cases, and in recent years, market prices have already declined substantially. The size of the shadow inventory, mortgages, 30 days overdue or in forecolsure, suggests that problems may not be resolved for two or three years. However, the shadow inventory is declining in size and we may be near the end of continued price declines in many markets.

Pessimists

Standard and Poors

“There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing. says David M. Blitzer, Chairman of the Index Committee at S&P Indices. Ten of the 11 MSAs that recorded index lows in  January fell further in February.

Wall Street Journal

The enormous supply overhang of existing homes (particularly factoring in all those in foreclosure or soon to be) promises to keep pressure on prices for some time,” said Joshua Shapiro, chief U.S. economist at MFR Inc. “From a longer-term perspective, it is important to keep in mind that in the seven years leading up to the peak in July 2006, the nonseasonally adjusted national 20 city home price index jumped by 155% (126 index points)… So far, this index has dropped by 32% (66 index points) in the 55 months since the peak.

I could fill the page with pessimists, hardly a positive thought out there today. I think the most positive take away is that at least  this is an orderly retreat, rather than the kind of screeching declines we have seen. 

Thanks For Reading
Howard 
www.yourpropertypath.com

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac

Fixed mortgage rates rose slightly for a second week in a row, but continue to remain quite low.  Low rates have benefited from relatively benign inflation reports. Inflation as measured by the 12 month growth in the core price index for  consumer spending, a metric preferred by the Federal Reserve, is hovering near the lowest pace since 1960 when this data series began.

Sales of distressed properties continue to place downward pressure on house prices. In January, these homes accounted for 37 percent of existing home sales and rose to 39 percent in February, based on figures from the  National Association of Realtors. House prices were down 3.1 percent in January from the same month last year according to the  S&P/Case-Shiller Home Price Indices

Mortgage Bankers Association for the week of 3/30/2010

Market Composite Index: (loan application volume) a measure of mortgage loan application volume,decreased 7.5 percent on a seasonally adjusted basis from one week earlier 

Refinance Index: decreased 10.1 percent from the previous week.  The seasonally adjusted Purchase Index decreased 1.7 percent from one week earlier.

Purchase Index:  decreased 1.5 percent compared with the previous week and was 21.9 percent lower than the same week one year ago. 

Refinance Share of Mortgage Activity:  decreased 10.1 percent from the previous week  

Arm Share:  decreased to 5.7 percent from 5.9 percent of total applications from the previous week. 

MBA outlook: (Excerpted from mbaa.org) 

MBAA makes some interesting observations amid a general optimism.  The world economy,  has been growing fast boosting boost to US growth through gains in exports. Last quarters  growth was just revised upward. True, housing is a laggard, but even here MBAA expressed optimism and sees growth patterns, in stark contrast to Dr. Shiller of Case Shiller.   

Treasury and mortgage rates increased towards the end of last week, as global markets calmed following the recent crises in Japan and the Middle East.  Refinance volume predictably fell in response to these rate increases.  As rates climb back to 5 percent, fewer homeowners have both the incentive and the ability to refinance, said Michael Fratantoni, MBAs Vice President of Research and Economics

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