JOHN MURPHY REPORTS

More Help for Housing as Wells Fargo to Expand GSE-free Mortgage Lending

John Murphy — Sun, 26 Feb 2012 16:22:36 +0000

We are starting to see some early signs of the commercial banking sector finally start to move away from the Federal Government’s role in the mortgage market. We have a very long way to go before we can say that the market is weened off of Fannie Mae and Freddie Mac. At this point, Fannie, Freddie and FHA are the market.

Wells Fargo is the largest mortgage originator in the country so it’s a big deal that they are taking this step at establishing a business that provides GSE-free mortgages. This move also appears to show that there may be a return to risk appetite from investors who are once again willing to invest in mortgage backed securities. Although Wells Fargo hasn’t stated for sure if these GSE-free mortgages will be securitized and sold to investors, it may be something they look at down the road again.

Last week there was a story about Wall Street investors starting to step in to buy mortgage backed securities (MBS) again.

Many people ask if we are at the bottom of the housing market yet. Who knows, but stories like Wells Fargo looking at providing GSE-free mortgages and Wall Street starting to invest in MBS again is different this time than it has been every spring since the housing market turned down 6 years ago.

Wells Fargo to Limit HARP 2 Financing (harptwo.wordpress.com)
“I’m amazed people are still paying there mortgage”, Says Wells Fargo Economist. (cohenonrealestate.com)
Plotting the Future of Fannie and Freddie (business.time.com)
Second mortgage complicates refinancing (seattletimes.nwsource.com)
What are Agency Bonds or GSE Bonds? Are they like Treasuries? | LearnBonds.com (learnbonds.com)

Corcoran MN Housing Supply Tight

John Murphy — Fri, 24 Feb 2012 22:06:27 +0000

Corcoran Minnesota is city located in the northwestern suburbs of Minneapolis. It is still mostly a rural setting with a few neighbors scattered throughout. It had been projected that Corcoran would see significant growth in housing units during this decade but with the market softening that got pushed back.

My note today is just to say that I was looking at inventory levels and noticed that there are only 17 homes for sale in Corcoran and there are 10 homes pending. That’s a remarkable ration of pendings vs. actives. Normally we can divide the pendings in to the actives to get the months supply. The base of supply is so small in Corcoran that I’m not comfortable saying that there is a 1.7 month supply of houses. Part of the reason I can’t do that is that Corcoran covers a very large geographic area and the homes for sale range from $100,000 to $1.5 million. There is not a lot of uniformity in the housing stock.

All that said, this is about as little supply as I’ve seen it in Corcoran. Typically there would be more than 30 properties for sale at this time.

Below is the link to the chart for the median home sales price for Corcoran, MN from 2005 through January 2012. Also, check out the Corcoran Home Search.

Median Sales Price for Corcoran.

Lawler: Declining Inventory of Existing Homes for Sale: Don’t Forget Conversion to Rentals (calculatedriskblog.com)
January 2012 Pending Home Sales Highest Since 2005 (johnmurphyreports.com)
Spring Meadows Plymouth, MN – Photos of Ongoing New Construction (northwestplymouth.com)
County Road 116 and Hackamore Intersection to Get Traffic Lights – Medina and Corcoran (johnmurphyreports.com)

Existing Home Sales Jump to 1 1/2 Year High

John Murphy — Wed, 22 Feb 2012 15:25:00 +0000

The existing home sales report just came out from the National Association of Realtors for January 2012. It shows that homes sales continue to pick up and the supply of homes for sale continues to decline.

Housing to Boost GDP, First Time in Years According to Fannie Mae

John Murphy — Wed, 22 Feb 2012 12:30:18 +0000

Image by Getty Images via @daylife

Fannie Mae economists are out with their forecasts for 2012 and they expect the housing market to have a modest, positive impact in the overall GDP numbers in 2012. This is the first time in years that housing will be a net plus to the GDP rather than the net negative drain it as been for the past few years.

Fannie Mae says, “economic indicators suggest a pickup in construction of apartment buildings and a modest uptick in single-family construction. Still, there are challenges that could emerge derailing 2012 growth projections.”

FHFA pushes for privatization of Fannie Mae, Freddie Mac (agbeat.com)
Gov’t seeks smaller role for Fannie, Freddie (seattletimes.nwsource.com)
Fannie Mae Serious Delinquency rate declines, Freddie Mac rate increases (calculatedriskblog.com)
HUD Secretary Donovan Calls On Fannie Mae And Freddie Mac To Do More For Troubled Homeowners (thinkprogress.org)
Fannie Mae CEO steps down during troubled times (agbeat.com)

National Survey Reveals New Normal – Consumer Expectations on Homeownership

John Murphy — Wed, 22 Feb 2012 02:29:51 +0000

This is an excellent detailed analysis of the state of the housing consumer when it comes to real estate and homeownership issues. For those who like to study this kind of material, this is well worth your read. For those of you who are investors, or thinking about becoming an investor, it certainly appears that there will be plenty of supply of tenants for the foreseeable future. It’s been my belief since we housing crash which began in 2007 and then soon followed by the financial crash in 2008 that those events were so massive that they may have permanently changed the psyche of the country when it comes to home ownership. That said, do I think we are headed to a 50% ownership society and 50% rentals? No. But we won’t ever see the 70% ownership numbers again in my lifetime and I would expect we’ll just continue to drift closer to 60/40. While those numbers don’t look huge, they are indeed transformational for the industry, American society and culture.

Big Builder is the industry news source for large national home builders. The study is called, “Housing 360: Insights into Homeownership” where they surveyed 3,000 people and conducted six focus groups. They need to stay on top of the multi-billion dollar new home business and it’s very interesting to read their analysis and insight regarding today’s home consumer and what they are thinking. Apparently many are in the same boat as one gentleman was quoted as saying, “If I could get a full-time job with a decent salary, I’d buy a house.”

Some key highlights of the Housing 360 report:

7 out of 10 think now is a good time to buy a home
Many who bought homes during the boom wish they hadn’t – (perhaps a little buyer’s remorse?)
25% of survey respondents are underwater on their homes
72% still believe it’s important to own their own home
67% say that their current home is fine – general across the board apathy among potential home buyers
47% are concerned that if they did sell in order to go buy a new home, would they get a fair price for their current home?
Of those surveyed who are renters, only 25% said their current home is fine, however, 45% of the renters said there is no urgency to move
Concerns are high about down payment expectations and whether or not they will even qualify for a mortgage

This is by far the most informative article I have read about the current state of potential home buyers and sellers. The National Association of REALTORS publishes a report each year, but all too often that just seems to come off as too self serving. This, on the other hand, is very insightful. I highly recommend you read the article and for those who want the actual research report, please see Hanley Wood Housing 360: Insights into Homeownership.

On a more local note, while this report details what the home builders must do to attract new construction home buyers, clearly the home builders operating in Plymouth, Maple Grove, and Medina Minnesota are doing an outstanding job given the recent explosion in construction and sales activity. To stay on top of what’s happening locally in the northwestern suburbs of Minneapolis, be sure to check out Northwest Plymouth where I continue to chronicle the rebirth of the Twin Cities home construction market.

UK home ownership levels may never recover, expert says (money.marksandspencer.com)
Home Affordability Currently at 1971 Levels (theevergreenscene.com)
Is Now The Time To Consider Real Estate To Round Out Your Investment Portfolio? (connecttimes.com)

Centennial Lakes Park and Ice Skating – Edina, MN

John Murphy — Wed, 22 Feb 2012 01:45:30 +0000

A couple of weeks ago, one of my daughters had the opportunity to attend a birthday party at the Centennial Lakes Ice Rink. It’s one of the more stunning ice rinks in the area as it’s sandwiched in between some large Class A office towers in Edina, MN. If you ever get a chance to go, they have a terrific warming house as well.

For more information, check out the official site to Centennial Lakes Park in Edina, MN.

9 Stunning Spots for Natural Ice Skating Around the World (treehugger.com)
Eleven Cities Ice Skating Tour (janetnewenham.wordpress.com)
Back-yard skating traditions (kellyjomcdonnell.com)

Mortgage Backed Securities (MBS) Back in Vogue with Investors – New York Times

John Murphy — Sun, 19 Feb 2012 13:35:57 +0000

Wall Street investors are betting that the worst is either behind us in the U.S. housing market or the downsize risk is at least accounted for and discounted with the cheap price of MBS today according to the New York Times.

If you recall Mortgage Backed Securities were all the rage in the investment community leading up to the housing crash. They were then shed like the plagued and the Federal Reserve has been one of the only significant buyers of MBS in the past couple of years. Now prices are up 15% and appear like they will continue to rise. I suspect they’ll continue to climb for the next couple of years as the housing market goes in to full recovery mode and the Federal Reserve can start to unload the approximate $1-$2 Trillion it holds in MBS.

The money interests are now betting that we’ve seen a turn in the housing market. Please don’t be confused with higher home prices. I think we’ll continue to see overall home price declines in 2012. It’s been my sense that we’ll start to see a consistent rise in home prices by the spring of 2013 but by then investments in housing will be significantly higher once the printed numbers show house price appreciation.

Economists: Job Growth Won’t Deter Fed From Another Massive Stimulus (huffingtonpost.com)
US MORTGAGE MEMO: Fed Buys $6.25B Agency MBS In Week Feb. 8 (forexlive.com)
Fed Officials Push For More Aggressively Helping Housing Market (huffingtonpost.com)
Home-Price Scorecard Shows a Falling Market (blogs.wsj.com)
Daily Reads: Operation Twist Is Twisted, Gross A Treasury Bull? (learnbonds.com)

Spring Meadows – Custom Homes in Northwest Plymouth – Photo Gallery

John Murphy — Sat, 18 Feb 2012 13:31:09 +0000

The housing boom continues apace in northwest Plymouth, MN. Spring Meadows is a beautiful neighborhood located in the Wayzata School District. It’s just to the west of Vicksburg Lane south of County Road 47 and north of Schmidt Lake Road. The neighborhood is within 5 minutes of both Wayzata High School, Providence Academy and Heritage Christian Academy. Check out the photos of Spring Meadows that I took in mid February 2012 of the ongoing growth of this neighborhood.

If you’re interested in new construction in Plymouth, MN be sure to request the free report – Plymouth MN New Construction Report.

Spring Meadows Monument NW Plymouth MN

Minneapolis Area MLS Membership Drops from 21,000 to 13,000 During Housing Market Crash

John Murphy — Thu, 16 Feb 2012 02:54:53 +0000

Just a quick note to say I heard this in a training session the other day. Unfortunately, no one publishes accurate details as to exactly how many real estate agents are out there in the Twin Cities marketplace. There are more real estate sales people who are licensed but they are not REALTORS. To be a REALTOR, you must join one of the boards and pay your MLS dues. It appears that as the housing market crashed, those willing to pay their dues membership to be REALTORS with access to the MLS crashed as well.

FHA Foreclosures Reach Four Year Low – Delinquencies Rise

John Murphy — Wed, 15 Feb 2012 12:29:02 +0000

FHA foreclosures are falling rapidly. By foreclosures I mean they’ve already gone back to the government. These are HUD homes which you can find at the HUD Home Store…it’s kind of like a thrift store for housing.

While the REO inventory is down there appear to be plenty of addition properties that are making their way through the pipeline and are in some stage of foreclosure.

LPS: Mortgages In Foreclosure Process at an All-Time High (calculatedriskblog.com)
Question #3 for 2012: Will foreclosure activity increase in 2012? (calculatedriskblog.com)
Is the real estate market improving-FHA troubles (kimberlyburnett.wordpress.com)

JOHN MURPHY REPORTS

More Help for Housing as Wells Fargo to Expand GSE-free Mortgage Lending

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