[A Recent "Jump" in the Housing Market]
An AP story in today's Boston.com reports: "Sales of new homes surged 27 percent last month, bouncing off the previous month's record low and blowing past expectations as government incentives and better weather boosted sales."
Not everyone views this jump as good news. One pseudonymous commenter writes:
This is a blimp [sic] on the radar cause [sic] by the government! Here are the reasons why the housing market will continue to drop:Let's wait and see if the predictions bear out!
1. Fed's 8K house credit will end in April.
2. 10% unemployment with a higher under employment rate.
3. Fed ended the purchase of 1.2 trillion dollars of mortgage backed securities.
4. Higher percentage of people underwater. This will only mean more strategic foreclosures.
5. Feds to raise interest rate in the near future.
6. Lending standards will continue to tighten especially when Feds are no longer a player in the mortgage business.
7. In today's market, the average income cannot buy the average house.
8. More ARMs will reset this year and next year.
Buying a house now is like catching a falling knife! I find it ironic that our government caused this mess by trying to legislate "affordable housing" and now trying to legislate unaffordable housing.
UPDATE: Last year I posted about a prediction that came to me in the form of an email sales pitch. The emailer predicted a dramatic rise in mortgage defaults and foreclosures. Around that time, MarketWatch.com was reporting:
According to the MBA's quarterly National Delinquency Survey, 1.37% of mortgages entered the foreclosure process in the first quarter, up from 1.08% in the fourth quarter.Here is data from February 19 of this year:
Total foreclosure inventory was also up, with 3.85% of all mortgages somewhere in the foreclosure process at the end of the first quarter, compared with 3.3% in the fourth quarter -- also a record jump. The delinquency rate, which includes loans that are at least one payment past due but not those in foreclosure, was a seasonally adjusted 9.12%, up from 7.88% in the fourth quarter.
The Washington-based MBA survey covers 45 million mortgages, representing between 80% and 85% of all first-lien residential mortgages outstanding in the United States.
The delinquency rate for mortgages on one- to four-unit residential properties was a seasonally adjusted 9.47% of all mortgages outstanding in the fourth quarter, down from 9.64% in the third quarter and up from 7.88% in the fourth quarter of 2008, according to the MBA's quarterly delinquency survey. Delinquencies include mortgages that are at least one payment or more past due but not yet in foreclosure.Although I think the seller inflated language a bit, I'd say the prediction was accurate, by and large.
Meanwhile, 1.2% of outstanding mortgages entered the foreclosure process in the fourth quarter, down from 1.42% in the third quarter and up from 1.08% in the fourth quarter of 2008.
The percentage of mortgages at some point in the foreclosure process at the end of the fourth quarter was 4.58%, up from 4.47% in the third quarter and 3.3% in the fourth quarter of 2008.