The Treasury market may be about to prove the haters wrong.
You can’t swing a dead cat these days without hitting someone warning about an imminent rise in rates on longer-term Treasury bonds—especially as the end looms for the Federal Reserve’s $600 billion bond-buying program. There are plenty of reasons cited for this expected aversion to U.S. government debt. Fiscal irresponsibility is one. Higher inflation is another.
Indeed, the Labor Department’s consumer-price index, which is being released on Friday, is expected to be up 2.6% in March from a year earlier. That is largely because of higher food and energy prices, though core inflation excluding those items is also expected to drift higher.
That would follow a string of reports this week that separately have shown producer prices and import prices are also on the rise.
Largely because of such concerns, some well-known bond investors like Bill Gross and Dan Fuss have cautioned that rates will rise once the Fed stops buying Treasury debt at the end of June.
After all, the Fed has purchased the equivalent of more than two-thirds of Treasury issuance since last fall. The worry is that when the central bank stops buying, no one else will step up, forcing rates higher.
Yet that reasoning seems flawed, given the unsteady nature of this recovery and the reaction in the markets when the Fed stopped buying bonds last year. If anything, rates have been rising when the Fed is buying, and falling when it isn’t—serving as both a gauge of growth prospects and a sign of how reliant markets and the U.S. economy have become on the Fed’s so-called quantitative-easing programs.
For example, the 10-year Treasury yield dropped from roughly 4% last April to 2.5% in August amid a growth scare following the end of the Fed’s first round of bond buying.
It is difficult to see why this time should be so different, although the labor market is in better shape than a year ago. The surprising weakness of first-quarter economic growth is a stark reminder of the recovery’s vulnerability.
When the Fed does exit from the market, investors just might pile back in. If history is a guide, Treasurys could yet surprise the bond gurus with their strength.
This is the video included in the huffington post article about flippers.
While it is possible to flip short sales and close concurrently, trying to get everything to align is tougher than it looks – and why these guys get a bad name. They make it sound easy!
Mozart mentioned the Shea Homes presentation last night to the City of Encinitas regarding new tract developments they’d like to build around Leucadia.
We at bubbleinfo.com try to be responsive to our readers!
I’m also hoping to have Richard supplement our regular video fare – here’s his review of the Leucadia sites that have Shea’s name on them. He’s getting better at his videos, though he isn’t as suspicious as JtR.
I’m guessing that the City is going to allow the Vulcan tract to suffice for all low-income requirements – hit the pause button at the 3:47-minute mark:
As a professional gambler, Billy Walters built his fortune winning at a game few have mastered: the high-stakes, high-risk world of multimillion-dollar sports betting. In a good year, he can rake in as much as $15 million from gambling, and he claims he’s never had a losing year.
But when it comes to residential real estate, Mr. Walters, 64, claimed his track record has been far less lucrative. “We’ve lost money on every home we’ve bought and sold here,” he said. “It’s not what I do for a living. If it was, I’d be in trouble.”
He said that he’s likely to continue his losing streak, recently listing his Carlsbad home—one of seven he owns with his wife, Susan—for $29 million, a bit less than he spent assembling it. Situated on a quiet surfing beach, it’s one of eight homes the couple has owned in the area over the years. The couple said they’re selling partly because Susan, who oversees interior design for all their homes, is ready for a new project.
The Walterses’ five-bedroom, nine-bathroom home is currently the priciest home on the market in this sleepy, oceanfront town about a half hour north of San Diego. Brian Guiltinan, a local broker, said that while high-end sales have improved dramatically in the past few months, only six homes have ever sold in San Diego County for more than $20 million. But Mr. Walters’s home “is really unique in the area, which makes it tough to put a price tag on.” (Listing agent Doug Harwood said the home is priced to sell.)
“March could be the month where we begin to see the return to the kind of levels of foreclosure activity we would expect given the underlying conditions,” says RealtyTrac’s Rick Sharga. “We actually did start to see increased levels of foreclosures in the non-judicial states in particular California was up, Nevada was up by about 35%. Even some of the states like Florida that had foreclosure activity pretty much seize up show a little bit of forward movement in foreclosures. So the dam might be starting to burst.”
Diana: It’s a slow burst, which means that instead of a big spike, we are going to see foreclosures plateau at a high level for a prolonged period of time. That will only put more downward pressure on home prices everywhere. About three quarters of the top 200 markets in the nation saw their foreclosure activity rise at the end of 2010, year-over-year, so this is not just relegated to the troubled states we’re always talking about, like California, Florida, Arizona and Nevada.
You can argue all you want about new regulations to safeguard the market in the future and pricey penalties to pay for the wrongs of the past, but as foreclosure activity begins to percolate back up again against the backdrop of a still very weak housing market, the industry needs to focus on the present and what exactly they can do to jumpstart home sales and loosen up credit.
Foreclosures in San Diego County are down over the last few weeks, and cancellations went ballistic. Because she doesn’t offer any ideas to jumpstart home sales and loosen up credit, let’s give her a hand.
How to Jumpstart Home Sales:
Publicize the Mortgage Underwriting Guidelines. If people knew the rules, they’d be more interested in trying them on for size.
Publish hyper-local sales data. With precise, relevent data, both buyers and sellers will make better decisions.
Educate sellers about pricing. They are winging it – give them a hand!
How to Loosen Up Credit
Have the cost of mortgage insurance be based on credit score/loan quality.
Have a no-doc EZ-qualifier loan with ample down payment. Whether it’s 30%, 40% or 50% down payments, have something available at regular interest rates for those with high credit scores only.
Publicize the local grants available, and other first-time homebuyer programs.
If they used a few million dollars from the latest servicer penalty to effectively advertise all of the above, we might get somewhere!
Every agent needs to know the inventory – especially the newer agents.
Wednesdays are the day when realtors throughout North SD County Coastal are having our listings open for previewing. It is an efficient time to quickly see 5-10 properties, re-aquaint with old friends, and get a free lunch or three:
Hat tip to kwaping for sending this along, from theAP:
WASHINGTON – The federal government on Wednesday ordered 16 of the nation’s largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.
Government regulators also directed the financial firms to hire auditors to determine how many homeowners could have avoided foreclosure in 2009 and 2010.
Citibank, Bank of America, JPMorgan Chase and Wells Fargo, the nation’s four largest banks, were among the financial firms cited in the joint report by the Federal Reserve, Office of Thrift Supervision and Office of the Comptroller of the Currency.
The Fed said it believed financial penalties were “appropriate” and that it planned to levy fines in the future. All three regulators said they would review the foreclosure audits. Under the agreements reached, the lenders and servicers have 45 days to hire an auditor and will “remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies.” There is no minimum or maximum dollar amount identified.
In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.
Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.
“I want to know what abuses (the government agencies) identified, which banks committed them and how their proposed consent agreement is going to fix these problems,” said Rep. Elijah Cummings, D-Md., the ranking member of the House Government and Oversight Committee. “Based on what I have read … I am not encouraged at all.”
Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, said the agreements struck were a “step towards addressing the improper and fraudulent practices to which many of the country’s largest mortgage servicers have admitted.”
The other lenders and service providers cited by the agencies include: Ally Financial Inc., Aurora Bank, EverBank, HSBC, MetLife Bank, OneWest Bank, PNC, Sovereign Bank, SunTrust Banks, U.S. Bank, Lender Processing Services and MERSCORP.
Citigroup said in a statement that it had “self-identified” needed changes in 2009 and that it has helped more than 1.1 million homeowners avoid foreclosure.
“We are committed to working with our regulators to further strengthen our programs in these areas and meeting these new requirements,” the company said.
Ally Financial, formerly known as GMAC, said it had not found “any instance where a homeowner was foreclosed upon without being in significant default.”
Without specifically identifying instances of bad foreclosures, the government agencies noted in its report that the “deficiencies in foreclosure processing observed among these major servicers may have widespread consequences for the housing market and borrowers.”
John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer housing watchdog, said the government’s action is a year too late. It does little to help those who are just now wrestling with a foreclosure and those who have already been displaced, he said. Rather than moving swiftly to seize people’s homes, the banks should have done a better job helping people lower their mortgage payments through modification programs, he said.
“This should have happened a long time ago,” he said. “There are so many people who, if they had received a meaningful modification, could have stayed in their homes.”
Home sales in Southern California grew between February and March, but remain 5.2% below year-ago levels, data firm DataQuick said Wednesday.
The La Jolla, Calif.-based research firm said home sales grew 35.1% on a month-to-month basis in March, but signs in the housing market still point to consumer resistance as the job market remains subdued.
In the counties of Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange, DataQuick reported 19,412 new and resale home sales in March, up from 14,369 in February.
Even still, that number is trending below the 20,746 sales recorded during the same period last year.
“Sales always increase from February to March,”DataQuick said in a release. “Last month’s sales count was 21.4% below the 24,706 average for all the months of March since 1988. Sales so far this year are 20% below the norm. During the last half of 2010 sales were 25% to 30% below average”
Sales of newly built homes fell to their lowest levels in 23 years last month.
Foreclosures are going to continue to plague the market “for a good while,” DataQuick concluded. However, the research firm sees “mortgage availability” as the key to unleashing a buyer’s market. Foreclosure resales made up 36.4% of all resales last month, down from 37% a month earlier.
“If a well-crafted home loan program comes down the pike, it’s going to make some lending institution the dominant player, at least for a while,” said John Walsh, DataQuick president.
In March, adjustable-rate mortgages accounted for 7.8% of last month’s purchase loans, while jumbo loans — or loans at the limit of $417,000 — made up 15.9% of March’s purchase lending, compared to 15.6% in February.
Cash purchases made up 30.5% of March home sales, with buyers paying a median of $205,250. Government-insured FHA loans represented 32% of all mortgages used to purchase homes last month.
This year’s March sales in SoCal were 5% lower than last year?
What about the housing tax credits?
The mainstream media said that the tax credits were the cause for the rejuvenated market last tear, and just wait until this year when sales fall off a cliff.
The HW reporter only covers housing, and Dataquick…..well, all they cover is housing.
Yet nobody wants to look a little deeper at the situation, and within five minutes discover the real problem with sales today.
The ONLY reason a SoCal home doesn’t sell today is because its list price is too high – and in most cases, WAY too high.
Detached and attached March sales in San Diego County (from MLS):
Year
# of Sales
Avg. SP
Avg. $-per-sf
SP:LP
DOM
2010
2,996
$411,249
$241/sf
99%
67
2011
2,815
$420,169
$232/sf
97%
82
Year-over-year sales in March were down 6%, and the average cost-per-sf was down 4%? That’s all? The average sales price went up? Either the tax credits didn’t have much impact, or this year’s market has held up pretty good so far.
Here are today’s Active Listings in SD County:
SD Co.
# of ACT
Avg. SP
Avg. $-per-sf
DOM
ACT
12,132
$705,002
$311/sf
95
Today’s average list price is 83% ABOVE LAST MONTH’S AVERAGE SALES PRICE, and the $$-per-sf is 34% higher. There’s no surprise that recent sales are slightly lower with this much greed in marketplace.
But the over-priced turkeys do help the good buys stand out – thank you OPTs!
If today’s sellers would get off their high horse, sales would easily surpass last year’s healthy pace.
You can’t swing a dead cat these days without hitting someone warning about an imminent rise in rates on longer-term Treasury bonds—especially as the end looms for the Federal Reserve’s $600 billion bond-buying program. There are plenty of reasons cited for this expected aversion to U.S. government debt. Fiscal irresponsibility is one. Higher inflation is another.
