Citing mortgage woes, the National Association of Realtors reports that their forward-looking national Pending Home Sales Index (based on signed contracts) fell 6.5 percent from July to August and is down 21.5 percent year-over-year. In the West, the Index fell 2.7 percent and is down 27.1 percent as compared to August 2006.
“The impact was greater in high-cost markets that are more dependent on jumbo mortgages. In some areas, as much as 30 percent of signed contracts were falling through in August when the credit crunch problem peaked,” [NAR senior economist] Yun said. “The problem has since become less severe, though jumbo loan rates are still higher than they would be under normal conditions. Therefore, sales activity in late fall will better reflect market fundamentals.”
We’re not exactly sure what “normal conditions” may be (and if anything would argue that the past few years have been anything but), but we do understand fundamentals (a return to which might not be such a great thing for the market).
And citing mortgage woes of thier own, today Morgan Stanley announced a 25% reduction in “residential mortgage origination and servicing jobs.” Which isn’t a great thing for 600.
∙ Mortgage Problems Continue to Hamper Pending Home Sales [realtor.org]
∙ Morgan Stanley Cuts 600 Jobs in Home Loan Business [Bloomberg]
People and press have gone after mortgage originators, appraisers, banks, wall street, and Hedge Funds. In retrospect, of course, no money down teaser rates/”affordability products” to someone with no job or source of income seems like a bad idea (just the way buying a stock in 1999 with no business operations because it has the word “Net” in it wasn’t such a great idea (the stock was NETJ)). But it’s not just the lending practices– all of this lending/borrowing/buying was predicated on the myth that housing would continue to go up at a torrid pace forever. So what about the N.A.R. and the sales practices that perpetuated this myth? Whether it’s David Lereah or Lawrence Yun or a realtor who tells me that “You can’t lose buying a house in SF and tells me incorrect things about a house, how long it’s been on the market, etc.” I can cite many more specific, more egregious examples, but I come back to the same thing. There is no regulation and there are no consequences for any practices at all in selling a house– ironic given that it is the single largest financial decision most households will ever make.
It appears that when you have human beings involved things get whacky….Seems like everyone was smelling the cookies and all reached simotaniously and then grand ma came home and closed the cookie jar. All parties involved are guilty.
i can’t believe more folks haven’t commented on this posting. maybe they were all on vacation like me. anon, i can’t believe you mentioned realtors by name. dude, be careful. that can be construed as libel. i know of several over here in south beach that do worse things but i would never name them.
David Lereah and Lawrence Yun aren’t realtors, they’re the ex/current economists for NAR.