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Strategies & Market Trends : 50% Gains Investing
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From: Dale Baker5/5/2006 5:02:48 AM
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Flipper Anomalies and a Flight from ARMs

I thought the jump in activity was a little surprising as well, although as Sloan says the "index can be volatile". I asked Mike Morgan at MorganFlorida if he could step outside Florida and comment on the numbers. Here was his reply:

A year ago most speculators did not have to close on homes. They could simply flip their contracts prior to closing. No need to apply for a mortgage. That was shut down starting about a year ago. So we actually have a double counting of mortgage applications being reported now. The flippers that never had to get a mortgage before now have to get a mortgage and close, even if they are flipping the property the same day and the new buyer has to get a mortgage. So not only are mortgage applications not realistically up, but they are substantially down. The Fed and MBA is double counting mortgage apps for those flippers that only need the mortgages to close.

The builders are not selling more homes. Take out the flippers and you have a horrible decrease in “true” mortgage applications. The real year-to-year numbers will not show up for another year. There is no soft landing to this housing market. The smart money knows this and is positioning accordingly. The money that sits on the Street and does not make a trip out in the field is still star struck by the numbers based on misleading foundations.

globaleconomicanalysis.blogspot.com
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