CNBC RE discussion
Mark - Do we have a weak housing market here? We've noticed that since June. I mean, rates really spiked in June, and went out of control in July, if you remember. 30-year fixed rates went up around 5%. In July, new home sales went from 48,000 not seasonally adjusted in June, to 33,000, a drop of 21% month over month, and from July until November, they've been languishing in the low 30,000 with exception of October, which was 38,000. And that was due to a 6,000 month-over-month gain in the south, which I can't pin my finger on as to where it came from. If you were to average, look at the year in context, it started out going vertically through June. As soon as rates spiked, it fell off, and it's been -- it's been flat and around the 30,000, 32,000 mark. In fact, we're only going to do about 430,000 new home sales in all of 2013, and remember, the estimates, one year ago for 2013, was 450,000 to 600,000. That's a big miss.
Josh Brown - You have a three-month high in mortgage rates, you've got purchase applications down 3.5%, refis are down 7.7%. Does this get much worse? Or, is this kind of like a short-term trough as people get accustomed to the fact that rates are going to gradually rise next year?
Mark - According to our research, house prices on a monthly payment basis today, with rates at 4.75%, are more expensive than they were in 2006 at the height of the bubble, and that's because from 2003 to 2006, people used other than 30-year fixed rate loans. Remember, 70% of all the loans originated in California, Arizona, Nevada, all of the places experiencing this hyperappreciation right now. People used loans like pay-option a.r.m.s, interest only loans, so when you normalize it for that, the house prices are in another bubble and the states right now, if, in fact, 2006, 2007 was actually a bubble. So that being said, I don't know what's going to prompt or spur volume and house price gains -- would an up tick in -- would an up tick in wages make the difference? |
