Gary Pierpont Blog

All signs recently have been pointing to a sustained housing market, but CNBC reported two conflicting numbers today. Housing starts fell in August 3.0%, which was a larger drop than expected — but it’s mostly been in the Northeast, which fell 33%, according to the attached video. On the other hand, building permits in August increased by 3.5%. Combined, the two numbers seem to indicate that things are still positive, but maybe our last article about overvalued doesn’t mean a bubble, might actually be right.

Fourteen of the top 100 U.S. markets, in terms of home prices, are now “above the long-term fundamental value for that market”. CNBS insists that  this is not a bubble, though in the opinion of this writer, the argument  — that bubbles ultimately pop, and just because home prices are over valued doesn’t mean that they’re going to come down — is more than a little bit fallacious. Still, if you’re not in one of those 14 markets, then the fact remains that fundamentals indicate there’s still room for growth.

There’s a new book out by Bethany McClean — Shaky Ground: The Strange Saga of the U.S. Mortgage Giants — published by Columbia Global Reports, and focused on Fannie Mae and Freddie Mac. Kai Ryssdal interviewed Bethany, and it’s available as a podcast. Additionally, the site includes a reasonably lengthy excerpt from the book. Between the interview with the author and the excerpt, there should be enough of a preview for you to decide if Shaky Ground is your cup of tea or not. 

Boral Limited, a multinational company founded in Australia, focused on building and construction materials, thinks the financial markets are making too much out of any Fed rate hike. According to their CEO, Mike Kane, points out that “consumer confidence is rising, unemployment is low, and the nation’s new housing stock is 40 per cent below its long-term average.” The company doesn’t believe the Feds could increase rates enough to have a substantial impact on the market, and is confident enough that it’s looking to put $800 million to work in acquisitions.

We’ve been reporting for a while that many sectors of the housing market seem to have fully recovered, and almost all are doing well. However, the recovery in mortgage applications through Q1 seems to have stalled. Brena Swanson for Housing Wire gives a nice little summary on the current thinking, providing a completely understandable, short analysis of three reports: a new Capital Economics report, the latest Fannie Mae housing survey, and last week’s Mortgage Bankers Association’s survey.

Normally this blog covers topics directly related to the real estate and mortgage industries, with a few homeowner tips thrown in. However, sometimes it’s good to step a little outside of the same-old same-old. Yesterday, The Street published an article on how to beat the market in September — and their recommendation covers 5 stocks that take advantage of the current housing market. Now, we’re not investing experts, so don’t consider this an active recommendation, but the article is worth a read.

Well, that’s it. Summer is over. OK, not technically for another week or two, but now that we’re past Labor Day, the kids are back to school, and that means — clutter. Organizing expert Marie Kondo provided some great tips to the Huffington Post on how to avoid the fairly natural clutter that occurs when the days get back to rushed breakfasts, and running the kids back and forth to various extra-curricular activities. Marie is the author of The Life-Changing Magic Of Tidying Up: The Japanese Art Of Decluttering And Organizing.

This blog recently reported on the tremendous up-tick in investment in housing by foreigners; however, at the same time that increased investment is happening, foreign governments are cutting back. Now, foreign governments typically own very little property; however, their central banks invest heavily in mortgage-backed securities, as well as agency-backed securities (i.e., Fannie, Freddie, and FHLBS securities). It’s unclear if the current cut-backs are just a reaction to the slowing of growth in China, or represent something deeper.

Last month, this blog reported that availability of mortgage credit, as benchmarked by the mortgage credit availability index set to 100 for March, 2012, had increased 0.5% month over month. It continues to set new records, hitting 126.1 in August (it was 116.4 for July when we previously reported). As with last month, the increases are chiefly led by availability in the jumbo mortgage market, so if you’re looking to buy big, now might well be the time. The upcoming jobs report is expected to tip the Feds hand one way or the other with a rate increase, but right now, credit availability is the best it’s been since June, 2011 — the extent of historical data.

The second quarter of 2015 was a banner one for the mortgage industry, with the highest level of originations since Q4 2007. The actual figure, $395 billion, is up $65 billion quarter-over-quarter, and $98 billion year-over-year. Forbes goes in-depth on the market share of the top 5 banks, which is notable primarily because their share has shrunk dramatically over the last few years, from 53% to 35%. That’s good news for borrowers, as it means you have more choices from banks in good financial shape.