Low Supply of Homes for Sale
U.S. Real Estate Week
Mon, Feb 29, 2016
Morgan Stanley is the latest firm to settle federal and state probes concerning “deceptive” handling of mortgage-backed securities (MBS). This settlement, which totals $3.2 billion, will be the fourth multi-billion dollar deal to be struck among the largest U.S. financial institutions for their MBS practices.
A smoking gun.
a May 31, 2006 email showed the head of Morgan Stanley’s team asking a colleague, “please do not mention the ‘slightly higher risk tolerance’ in these communications. We are running under the radar and do not want to document these types of things.”
I wonder how much of that settlement money, or the money from any of these settlements, actually goes to those hurt and how much of the money goes to administrative overhead for the cities, affordable housing groups, etc. that get the money?
As a former government employee, the phrase, “slush fund” keeps popping to mind.
Another reason for the low supply of homes for sale. Buyers are staying in their current homes longer before moving.
Nice review of the low inventory of homes for sale. Read the whole thing.
- Not as many new homes.
- Fewer distressed properties.
- Fewer job relocations.
- Staying put in the golden years.
- Stuck homeowners.
“lowest since January 2005”
The most recent existing-home sales report from National Association of Realtors said that total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and is now 3.8% lower than a year ago (1.86 million). Meanwhile, unsold inventory is at a 3.9-month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 (3.6 months).
The supply of property coming onto the market in England and Wales has fallen by 8% year on year and as a result prices are set to keep rising.
Another future housing supply constraint? When mortgage rates eventually increase, some homeowners may be somewhat reluctant to sell their current homes with great mortgages to buy homes which will, of course, have higher mortgage rates.
But back to CoreLogic’s theory of behavior modification. As of October of last year the company says nearly three-quarters of homeowners with a mortgage carried an interest rate below 5 percent and the average rate on outstanding mortgages is 3.8 percent. Going forward, CoreLogic asks “how will these owners finance major expenses, college tuition, a new car, or large medical bills? What about debt consolidation? Will they be willing to give up their low first mortgages and refinance into higher rates or will they instead tap equity via HELs and HELOCs?”
And what about those owners or need larger homes or want more amenities? “Will they be as quick to sell and move up to a larger home (and a larger first mortgage at a higher rate) as they have in the past? Or will they consider remodeling instead, and use home equity products finance it?”
I’ve had several clients say they absolutely do not want a home that needs work, that they almost got divorced when they remodeled a home once.
I had one client say he ended up getting divorced from his first wife because of the contentiousness of a remodel project. Married again, he wouldn’t consider a home that needed any work.
According to the agency, 28 percent of all HARP refinances for underwater borrowers ‒‒ those with a loan-to-value ratio greater than 105 percent ‒‒ were for 15- and 20-year mortgages, through December. Such loans help borrowers build equity faster than traditional 30-year mortgages, and FHFA found that borrowers who refinanced through HARP had a lower delinquency rate compared to HARP-eligible borrowers who did not refinance through the program.
FHFA estimates these borrowers could save as much as $2,400 a year on their mortgage payments.
Get a look at the current housing bust in a fracking town.
What is Escrow? (Humor)