On a seasonally adjusted basis, the Mortgage Bankers Association’s Purchase Index, a measure of mortgage loan application volume for home purchases in the U.S., has fallen to its lowest level since 1995. On an unadjusted basis, the index is down 15 percent year-over-year having ticked up a nominal 0.1 percent over the past week.
To quote MBA’s Chief Economist, Mike Fratantoni: “Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it.”
While a lack of inventory is certain to be fingered for the slowdown in applications, according to the National Association of Realtors’ own data, inventory levels of existing-homes for sale are up 10.9 percent on a year-over-year basis.
On the national level I think it’s a serious case Speculator Binge Hangover.
Seen from the Las Vegas front, what I see is pent-up supply coming back with wishful sellers thinking they can get back in the money after 8 years of a very painful slump.
But the reality is that few suckers are biting apart from the new construction in Summerlin and such. Some property sold in 2006 for $400K got sold for sub $100K at the bottom and it’s not coming back to $400K. I see a ton of lowered expectation now and I think prices there will be a bit soft.
As far as specuvestors are concerned, the wave that bought at the bottom flipped and resold to other investors already. The ones that bought at market price in the past 6 months are seeing that they can’t flip easily AND cannot find good enough tenants to get proper cash flow. 2014 will be an interesting year and I am staying on the sidelines in the LV market until some distressed inventory comes online.
On a national level agreed the recurring news and statistics aren’t great.
Of course our local factors are not just offseting but outweighing this for now.
I guess there’s two ways to look at it –
will SF suffer a similar or acerbated hangover once these national level factors catch up with us..
or..
If SF continues to do well while nationally things aren’t so good think how crazy the local market could be if the national factors change and locally we stay strong…
[Editor’s Note: With Bay Area Home Sales Off To A Slow Start In 2014, it might depend upon how you define doing well.]
I know that inventory levels remain very low – not sure how they compare YOY but that is helping to constrain sales in SF.
But yes, I do think SF housing is doing well in SF itself.
Prices appear to have passed previous peak levels. Certainly medians and medians per sq ft (although I know not perfect..) are at record levels.
Reading between the lines(!) I’m guessing you don’t think SF is currently doing well. Thats interesting but does make me wonder what would be needed for SF to be considered a good market by you.
The number of SFH in San Francisco for sale are still ~20% below year ago levels. The argument of people being trapped in “underwater” homes or phantom inventory are not so relevant in SF compared to the national market.
I keep expecting to see a bump in inventory given the dramatic rise in prices the past year but it still hasn’t materialized. Could it be, like rent control, people have a disincentive to sell and move because unless they move out of the area, they will have to also face limited inventory and dramatically higher prices compared to the recent past?
I find it hard to believe the pattern of 2013 could be sustained for 2014 and it will be an interesting spring to see how the inventory and sale price trajectories change.
If and when the vaunted new iteration of stated income loan comes online, then a percentage of sellers who are currently worried about not being able to trade up will likely start to sell. That should increase inventory. The structure of the new stated loan is going to be tied to cash in the bank, 350k in the bank gets you a 1m stated income loan, etc. As for weighing in with regional volume statistics while challenging conclusions based upon local price, that reads as simple Socratic method.
“Could it be, like rent control, people have a disincentive to sell and move because unless they move out of the area, they will have to also face limited inventory and dramatically higher prices compared to the recent past?”
I know several people that would be chomping at the bit to sell if they had more confidence they could land somewhere. If you need the money from your sale to get your next property, it can be tough, as with financed purchases at max you are getting a 60 day rentback, which is a tight timeline to find something that works in a tight inventory, actually successful bid on it, and close in time.
If the inventory picks up a bit and there are more options, less competitive scenarios, etc I think you will see an even bigger increase of inventory as more sellers will list, realizing they can actually afford to move to something else.
Dodd Frank. Anyone tried to get a mortgage lately?
I got one at the end of December. Conforming non-owner-occupied loan on a 2-unit duplex on the Peninsula, 15-year fixed rate etc. Took all of 17 days from acceptance of my offer to close of escrow. Pretty typical delay in my experience (things were a little slower due to Christmas).