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Market Update 2012
1. 9-2012 Market Update
What’s UP/Down with Housing and Lending?
www.kendalltodd.com (c) KendallTodd, Inc. - 2012
2. Key Takeaways
1) US Economy: Corporate earnings / sales declining (negative).
2) Jobs: Continue to improve (positive).
3) Savings: Increasing – 4.2% last month (positive).
4) Inventory: Dropped to 2005 levels (positive).
5) Valuation: Rising for first time since 2007. (positive).
6) Future: Builders -26% more single family starts YOY (positive).
7) Local: Some markets better than others, population growth critical.
8) Recovery: Housing moving from headwind to neutral. (positive).
9) Overall: Slow housing recovery is under way – ‘U’ shaped, not ‘V’.
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(c) KendallTodd, Inc. - 2012
39. Key Takeaways
1) US Economy: Corporate earnings / sales declining (negative).
2) Jobs: Continue to improve (positive).
3) Savings: Increasing – 4.2% last month (positive).
4) Inventory: Dropped to 2005 levels (positive).
5) Valuation: Rising for first time since 2007. (positive).
6) Future: Builders -26% more single family starts YOY (positive).
7) Local: Some markets better than others, population growth critical.
8) Recovery: Housing moving from headwind to neutral. (positive).
9) Overall: Slow housing recovery is under way – ‘U’ shaped, not ‘V’.
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(c) KendallTodd, Inc. - 2012
Editor's Notes
7-2012 – Builder confidence in the market for newly built, single-family homes rose six points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, released today. This is the largest one-month gain recorded by the index in nearly a decade, and brings the HMI to its highest point since March of 2007.Housing Starts increased to 760 thousand in June, Highest since October 2008
5-2012 – Residential spending and nonresidential business spending is up, while public spending is still dropping from the bubble high, this should lead to new inventory on the market for home buyers, but questions the ability for public infrastructure to continue with no investment.
7-2012 – Inventory decreased 24.4% year-over-year in June from June 2011. This is the sixteenth consecutive month with a YoY decrease in inventory, and the largest year-over-year decline reported.Months of supply increased to 6.6 months in June.
7-2012 – The second graph shows New Home Months of Supply.Months of supply increased to 4.9 in June from 4.5 in May. The all time record was 12.1 months of supply in January 2009.
7-2012 – The inventory of completed homes for sale was at a record low 41,000 units in June. The combined total of completed and under construction is at the lowest level since this series started.
7-2012 – The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier.
7-2012 – The Refinance Index increased 22 percent from the previous week and is at the highest level since mid-June. The Refinance Index increased 22 percent from the previous week and is at the highest level since 2009.
7-2012 Net worth from house related equity increased $372 billion in Q1 - 2012
7-2012 This graph shows the change in asking house prices in June, adjusted for the mix and seasonal factors. Although these are just asking prices, this suggests prices have continued to increase through June, and that seasonally adjusted closing prices will continue to increase through July and August on the repeat sales indexes.
7-2012 FNC released their May index data today. FNC reported that their Residential Price Index™ (RPI) indicates that U.S. residential property values increased 0.6% in May (Composite 100 index). The other RPIs (10-MSA, 20-MSA, 30-MSA) increased between 0.5% and 0.8% in May. These indexes are not seasonally adjusted (NSA), and are for non-distressed home sales (excluding foreclosure auction sales, REO sales, and short sales).The year-over-year trends continued to show improvement in May, with all four composite indexes down 1.8% to 2.1% compared to May 2011. For all the indexes, this is the smallest year-over-year decline in the FNC index since year-over-year prices started falling in 2007 (five years ago).
7-2012 only LPS, Radar Logic and FNC showed some decrease, but year over year, things are looking positive.
7-2012 “The recent upward trend in U.S. home prices is an encouraging signal that we may be seeing a bottoming of the housing down cycle,” said AnandNallathambi, president and chief executive officer of CoreLogic. “Tighter inventory is contributing to broad, but modest, price gains nationwide and more significant gains in the harder-hit markets, like Phoenix.”The index was up 1.8% in May, and is up 2.0% over the last year.
7-2012 The second graph is from CoreLogic. The year-over-year comparison has turned positive.This is the third consecutive month with a year-over-year increase, and excluding the tax credit bump, these are the first year-over-year increases since 2006.
5-2012 Distressed property as a percentage drops to 29% of all properties sold - NAR
7-2012 – LPThe total delinquency rate has fallen to 7.20% from the peak in January 2010 of 10.97%. A normal rate is probably in the 4% to 5% range, so there is a long ways to go.The in-foreclosure rate was at 4.12%, down from the record high in October 2011 of 4.29%. There are still a large number of loans in this category (about 2.03 million).
7-2012 – LPS: "New problem loan rates continue to improve, reaching a low not seen since July of 2007, after eight consecutive monthly declines"
7-2012 This graph shows the small business optimism index since 1986. The index decreased to 91.4 in June from 94.4 in May.This index remains low, and once again, lack of demand is the biggest problem for small businesses. (In the survey, the "single most important problem" was "poor sales".
7-2012 – Unemployment claims continue to drop to 385,750, in line with 386,000 and still a short term uptrend is in place.
7-2012 – Note box gap shows length and total recovery gap between this job loss recession and prior recessions.
7-2012 – Note with population growth, when we compare it to the Great Depression, it was minimal by comparison.
7-2012 – Dropped in July to 72
7-1-2012 – And from Freddie Mac today: 30-Year Fixed-Rate Mortgage Averages a Record-Breaking 3.49 PercentFreddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgages rates continuing their streak of record-breaking lows. The 30-year fixed rate mortgage averaged 3.49 percent, more than a full percentage point lower than a year ago when it averaged 4.55 percent. Meanwhile, the 15-year fixed-rate mortgage, a popular choice for those looking to refinance, also set another record low at 2.80 percent.
7-1-2012 – Keep credit scores high, as under 620 makes getting a loan difficult.
5-1-2012 – Personal saving rate dropping back to 2009 recession lows at 3.7%
7-2012 – overall inflation peaked year in 2011, dropping in 2012, as gas prices drop, concerns over food prices still on horizon.
7-1-2012 – For Q1 2012, the Net Equity Extraction was minus $107 billion, or a negative 3.6% of Disposable Personal Income (DPI).
7-1-2012 – As of Q1 2012, there were 1.9 million borrowers who were only 5 percent underwater. If home prices continue increasing over the next year, these borrowers could move out of a negative equity position."This is some improvement, but there are still 11.4 residential properties with negative equity.
7-1-2012 – NV still over 65%, with ND lowest at 8.8%
7-1-2012 – The 99,057 total bankruptcy filings for the month of June represented an 18 percent decrease compared to the 120,698 filings in June 2011.
7-2012 – First time home buyers scared off in 2010, see 10 year low retouched.The typical buyer was 45-years-old, a jump from 39-years-old in 2010, with household income of buyers was $80,900. 64% are married, the highest share since 2001. 27% of the buyers said there reason to buy was simply they wanted a home of their own.
7-2012 – Renter nation, exponential expansion expected for renters…
7-2012 Rents are still trending higher, 51% of apartment surveyed had increased rents in the prior month, versus 11% that we decreasing, and 38% remaining unchanged.
7-2012 – HARP is having an impact, with estimates of 3 to 4M home owners that could significantly reduce their payments, only recently have the higher interest rates taken some advantage. 2nd lien holders not re-subordinating their loans; Mortgage insurance companies who won’t port MI contracts to the refinanced loanLoan level pricing adjustments, which can add 0.75% to the upfront cost of a loan for HARP loans up to $1,500, andAppraisal fees and concerns over valuations
