This Week in Real Estate 28Sep2011: Market Dynamics Mixed

September 28th, 2011
in econ_news

Econintersect: This week the July 2011 Case-Shiller Home price index was released (analysis here).   Real time data is still showing that Case-Shiller home prices should start contracting beginning with the August release next month.  On the other hand,  CoreLogic this week published its shadow inventory report showing a continuing decline from the peak shadow inventory levels in early 2010.

Current residential shadow inventory as of July 2011 declined slightly to 1.6 million units, representing a supply of 5 months. This is down from 1.9 million units, a supply of 6 months, from a year ago, and follows a decline from April 2011 when shadow inventory stood at 1.7 million units. The moderate decline in shadow inventory is being driven by a pace of new delinquencies that is slower than the disposition pace of distressed assets.

Follow up:

Altos Research published its Mid-cities report covering markets smaller than the Case-Shiller 20 city index.  Home prices and values have the same basic trends as the Case-Shiller index - except this is data updated into September 2011.

“Three mortgages would have been extreme, even in the boom days of the 2000s. Nonetheless, over-leveraged real estate had a profound effect on today’s housing market. We’re not out of the woods yet and the market trends tell us we’re settling in for a long, cold winter.

This month prices decreased in 13 of the 20 markets, and inventory decreased in 19 of the 20 markets. The market trends indicate a further cooling of the market as we approach the fall.”

The Mortgage Bankers Association’s (MBA) Mortgage Applications Survey for the week ending September 23, 2011 showed mortgage applications increased 9.3% week-over-week.

“Mortgage rates declined last week, at least partially in response to the Fed’s announcement that they would shift their portfolio towards longer-term Treasury securities, and that they would resume buying mortgage-backed securities,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “With lower rates, refinance application volume increased to its highest level since August 19, 2011. Purchase application volume also increased. However, the increase was in conventional purchase applications, which were up by 4.9 percent. Purchase applications for government loans fell by 0.6 percent over the week, likely influenced by the pending decline in FHA loan limits.”

The refinance share of mortgage activity increased to 79.7% of total applications from 78.3%t the previous week. This is the highest refinance share of mortgage activity since the survey’s re-benchmark in January 2011.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.25% from 4.29%.  Hat tip to Calculated Risk for the graphic below.

source: CoreLogic, Altos Research, MBA, Calculated Risk

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1 comment

  1. JGBellHimself says :

    Good Morning, CoreLogic:

    This months September 27, 2011 "CoreLogic Reports Shadow Inventory Continues to Decline", is once again, very interesting, for last July.

    However, we note some things that are what we call "a puzzlement".

    For example;
    When we view your months supply chart, we see that IF we compare that last three January and July numbers we see that they are very similar.

    True, the Jan 10 number of months is the highest, but the Jan 09 and 11 months appear to be about the same level

    Is that truly the case?

    When we look at what happened AFTER July, in 09 and 10 there was a Steep increase to the next Jan.

    Is there any reason to believe that will NOT happen this year?

    We expect those answer to be both "yes".

    When we view your total inventory chart, once again 09 appears to be very similar to 11; with a slight decline in REO inventory, but an increase in pending FC inventory. So that IF the banksters move more FC inventory into REO inventory we would be almost identical.

    Two very serious questions:

    First, BoA has recently increase their West Coast NOTS by 116%, more than double. In, of all places, the sand states of Cal, Nev and AZ (with WA & Ore thrown in)

    The question is, of course, does your FC inventory include ALL of those BoA filings? Or will you be adding them later?

    Second, there is a HUGE controversy about Arid-zone-Ahh. No, not The Other One(s).

    Some argue, using your reports, that all three of the categories you show U.S. are almost gone in AZ. Some do not believe that is necessarily true. So, CoreL, can you ask The Putative Economist - aka, One (1) Mark Fleming, chief economist for CoreLogic - to tell U.S. if HE knows? What the numbers really are in AZ?

    And, can he show U.S. that Az is almost empty? Well, of immigrants, true; but...
    of any and all "shadow inventory" ??

    IF this is already shown somewhere, tell me were to go..., to find it.

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