Implode-Explode Heavy Industries news feed

New home sales rose 25% in October

Thu, 05 Dec 2013 15:04:11 GMT

New home sales rose 25% in October, suggesting that a critical sector of the economy is continuing to gain strength as the end of the year approaches.
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The question mark is when household formation will rebound, after an extended shortfall, Levenson said. The number of households has historically risen by about 1.5% a year, as young people graduate from school or college and leave their parents' homes, according to Census data. That rate fell by two-thirds during the recession.

Overseas Money Pours Into Miami Real Estate

Mon, 02 Dec 2013 21:38:04 GMT

``The 41 towers proposed for downtown will add 12,100 new units--well shy of the 22,200 units that were built during the 2003 to 2008 boom, but still a remarkable turnabout given that downtown construction was essentially dormant until 2011... While the growth feels similar to the bubble-fueled oversupply that remains a painful memory in Miami, developers note that robust international demand has created a new cash-financing model they believe is safer than the easy bank loans that fueled the last boom. They typically require buyers to put down at least 50% before closing, which means the owners would lose their money if they walked away. ''

CNBC's Diana Olick Has It Right, Says Housing Markets Headed for Trouble

Sat, 30 Nov 2013 03:09:57 GMT

``CNBC's Diana Olick says the downturn in home sales is worse than expected. I'm guessing she means worse than she and the cheerleading squad at CNBC expected, I'm not really sure... but it can't be me she's talking about, because the numbers today are nowhere near as bad as I expect them to get in the months ahead.''

Insight: A new wave of U.S. mortgage trouble threatens

Wed, 27 Nov 2013 15:31:54 GMT

U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country's biggest banks.
The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along.

... the worst case scenario for some banks could be bad, eating deeply into their earnings and potentially cutting into their equity levels at a time when banks are under pressure to boost capital levels.

Banks have some options for reducing their losses. They can encourage borrowers to sign up for a workout program if they will not be able to make their payments. In some cases, they can change the terms of the lines of credit to allow borrowers to pay only interest on their loans for a longer period, or to take longer to repay principal.

A Bank of America spokesman said in a statement that the bank is reaching out to customers more than a year before they have to start repaying principal on their loans, to explain options for refinancing or modifying their loans.

Housing Boom Fizzles in Some Hot Markets

Wed, 27 Nov 2013 15:30:01 GMT

``"The housing data has downshifted in recent months, presumably because of the pop in mortgage rates beginning in the spring," Thomas Simons, an economist at Jefferies LLC, told Bloomberg. "Low inventories may also be impeding sales."''

Pretti: Fed Has Displaced "Normal" Housing Cycle With Investment Cycle

Tue, 26 Nov 2013 21:40:38 GMT

... there has been virtually no pickup in mortgage purchase applications since the cycle bottom was seen in mid-2010. This is in spite of a meaningful recovery in home prices. There has not been a housing cycle in memory that wasn't accompanied by a meaningful increase in mortgage applications. Sheer increase in population alone would support an upward bias to these numbers, but that has been absent over the last three years.
Listening to the mainstream media would lead us to believe this is simply a normal housing recovery. Yet the actual data alone set against historical context would lead us to believe housing is in a recession. Why this dramatic juxtaposition? I believe the answer is very simple. This is not an economic cycle for housing, but rather an investment cycle.

Pending Sales of U.S. Existing Homes Drop for Fifth Month

Mon, 25 Nov 2013 22:06:13 GMT

``The number of contracts Americans signed to buy previously-owned homes unexpectedly fell in October for a fifth consecutive month amid higher borrowing costs that are denting the real-estate recovery. The gauge of pending home sales decreased 0.6 percent after a 4.6 percent drop in September, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent gain in the index from the month before... Higher mortgage rates and price increases driven by a tighter supply of homes for sale may be keeping some prospective buyers out of the real-estate arena.

Housing inventory disappears in California for the fall

Sun, 24 Nov 2013 20:19:46 GMT

``[The drop since early 2012] was over a 50 percent drop in total inventory over a short period time. So it is no coincidence that home prices over this short period also increased dramatically in conjunction with low interest rates brought on by the Federal Reserve. However, housing inventory hit a temporary bottom in February of this year... The housing market seems to be at a lull trying to decide where it will go. Home prices in California are up 25 percent over the year and clearly this is an unsustainable pace. The California housing market is addicted to a boom and bust cycle. We are in a boom of sorts so to think we'll have a steady market following the latest boom simply goes against recent history of the market.''

China's Real Estate Bubble Hits Manhattan

Thu, 21 Nov 2013 22:03:11 GMT

``Fosun International Ltd., a Chinese conglomerate that invests in everything from steel to pharmaceuticals to Club Med, has agreed to buy the office tower at 1 Chase Manhattan Plaza from JPMorgan Chase & Co. for a whopping $725 million. This isn't an isolated incident... This time may be different, but I can't help but be reminded of other recent periods when wealthy foreigners splurged on premiere U.S. real estate. It was usually a sign of overheated capital markets in their home countries... Like the Arabs flush with oil money, the Japanese ended up having more capital to invest than good places to put it. Making matters worse, their spending pushed up the prices of every property they coveted far above any fundamental value.''

Home Sales Plunge At Fastest Rate In 16 Months

Thu, 21 Nov 2013 19:02:15 GMT

``With the fast money exiting, existing home sales missed expectations for the 4th month in a row - dropping to the lowest annualized number since June (very much against the trend in recent years). This is the biggest month-over-month drop in existing home sales since June 2012 but, of course, NAR has an excuse... "low inventory is holding back sales."''

'Golden visas' draw foreign buyers to Iberian real estate

Sun, 17 Nov 2013 18:15:54 GMT

``Buyers from China, Russia, the Middle East or elsewhere who spend at least 500,000 euros on real estate in either country get a permit that lets them travel freely within Europe's 26-country Schengen zone without restriction. The incentives, along with depressed housing prices, are showing the first signs of nibbling at the huge market glut of 3 million empty homes on the Iberian peninsula. '' -- The US is doing something similar...

Beijing goes hunting for overseas real estate bought with dirty money

Sun, 17 Nov 2013 00:29:36 GMT

``the Chinese government is embarking on a worldwide hunt to seize the properties with help from foreign governments, according to asset recovery and anti-corruption specialists... For a corrupt official with money to invest, putting funds directly into an overseas bank or stock market can be risky, because financial institutions are required by global anti-money laundering agreements to report suspicious funds. But real estate agents in most countries have no such requirements. So when Chinese buyers land with suitcases full of cash, as they have in recent months, real estate deals can get done quickly.''

Home equity lines due for reset may be looming financial disaster

Thu, 14 Nov 2013 17:27:44 GMT

... these credit lines, which are second mortgages with floating rates and flexible withdrawal terms, carry mandatory "resets" requiring borrowers to begin paying both principal and interest on their balances after 10 years. During the initial 10-year draw period, only interest payments are required.
But the difference between the interest-only and reset payments on these credit lines can be substantial -- $500 to $600 or more per month in some cases. If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house if there is sufficient equity.

According to federal financial regulators, about $30 billion in home equity lines dating to 2004 are due for resets next year, $53 billion the following year and a staggering $111 billion in 2018.

Yellen defends QE as best way to normal economy - preview remarks

Wed, 13 Nov 2013 22:15:56 GMT

``Janet Yellen, President Obama's pick to be the first woman to lead the Federal Reserve, on Wednesday defended the central bank's unpopular and unconventional asset purchase program, calling it the best way to get the economy back to normal. "I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," she said. Yellen's comments came in her prepared statement to the Senate Banking Committee. Although the hearing is on Thursday morning, the committee released the text of her opening remarks early''

Mystery Behind Spanish Banks' Extend-And-Pretend

Tue, 12 Nov 2013 13:06:07 GMT

``A big part of the answer--revealed by a spate of bank earnings reports in recent days--is that Spanish lenders had been making their loan books look healthier than they really were by refinancing big numbers of loans to struggling homeowners and businesses.''

Realtors & Mortgage Brokers: Toughest Year for Housing Markets Since 2010 Ahead - Mandelman Matters

Mon, 11 Nov 2013 22:16:45 GMT

``To call what we've been through these last 28 months or so a "recovery," is almost like referring to a patient in the hospital "recovering," because his doctor just gave him a shot of morphine. Oh, he's feeling better, there's no question about that, but "recovering?" No. In fact, it's just as likely that he's dying.... First of all, the demand hasn't gone anywhere recently... it left the building in 2008 and it hasn't returned, nor will it until we fix what was so badly broken. The percentage of underwater mortgages is still off the charts. Different groups like to spin this situation to varying degree, but everyone pegs the percentage between 25 and 50 percent... household formation is running just under 35 percent of what it's been anytime in recent history. I mean, I knew intuitively that it was low, but I had no idea it was that low.''

Existing Home Sales For September: The Real Decline Is Worse Than The Headline Reports

Sat, 09 Nov 2013 22:55:16 GMT

The existing home sales headlines this morning reported... a 1.9% decline from the August number. However, the August number was revised down substantially... Thus in effect, the drop from August to September was actually 3.5%, considerably worse than what was just reported. Moreover, the downward revised number for August shows that August sales were flat to July's vs. the 1.7% increase that was originally reported back then. In other words, the market was starting to slow down considerably over the summer despite reports that were released showing the contrary.
But not only were the headline-reported numbers actually worse than what was reported, but the "real devil is in the details." First, if you look at the actual data, and not the seasonally adjusted data, it shows a stunning 17.4% drop in sales from August to September...

Tim Berners-Lee: encryption cracking by spy agencies 'appalling and foolish'

Thu, 07 Nov 2013 19:42:14 GMT

``He said the agencies' decision to break the encryption software was appalling and foolish, as it directly contradicted efforts of the US and UK governments to fight cybercrime and cyberwarfare, which they have identified as a national security priority. Berners-Lee also said it was a betrayal of the technology industry. ''

October Mortgage Purchase Applications Collapse To Decade Lows

Thu, 07 Nov 2013 02:39:09 GMT

``What is perhaps most worrisome is that this is the lowest level of mortgage purchase activity for this time of year in a decade.''

The "Oh Crap" Moment For Housing Is Now In The Can - Mark Hanson

Sat, 02 Nov 2013 22:03:43 GMT

``Contrary to 'New' Home Sales, Existing Sales are where the Fed's go-go juice really showed up thanks to the Twist/QE 3, 4 increase in "purchasing power" beginning in Q4 2011 and the new-era "investor" rush to market in mid-2012. This is evident in the demand divergence between the two series. As such, the "post-surge" housing market "demand collapse" will be much more evident in this series than it was by the 27% MoM drop in New Home Sales in July. ''