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Home Purchase Mortgage Applications Slump To Lowest In 2013

Tyler Durden's picture


While the debt ceiling fracas has done nothing to stymie the demand for high-beta equity lottery tickets, it has decimated the demand for the most leveraged trade an American tends to make... home purchases. While real data is few and far between, we thought that the cracking of yet another foundational pillar of the US economic "recovery" was worthwhile noting although it is squeezed to the back pages as the mainstream media focuses on rumor after rumor to juice equities ever higher. With the hedgies having turned from marginal buyer to marginal seller, it seems the demand for mortgages for home purchases has collapsed to its lowest level in 2013 - even as rates have dropped notably from the year's highs.


Adding to the pain, the NAHB index just missed expectations for the 2nd month in a row...


Chart: Bloomberg


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Wed, 10/16/2013 - 11:06 | Link to Comment superflex
superflex's picture

Now's a great time to kick a realtor in the nuts.

Fuckin parasites

Wed, 10/16/2013 - 11:12 | Link to Comment spastic_colon
spastic_colon's picture

one more data point that will continue to support the fed theory of MORE COWBELL!  Just wait until the dust settles on this debt ceiling thingy and all the embargoed gov't stats crater as an offering to the bullish gods of equities!

Wed, 10/16/2013 - 11:23 | Link to Comment ebworthen
ebworthen's picture

Flippin' Title Company charged me $1,500 for a couple pages and an email when I sold my house.  What a racket.

Wed, 10/16/2013 - 11:58 | Link to Comment serog
serog's picture

What in America is not a racket?

Wed, 10/16/2013 - 11:59 | Link to Comment kito
kito's picture

what in the world is not a racket?

Wed, 10/16/2013 - 12:02 | Link to Comment serog
serog's picture

Thailand prostitution.

Wed, 10/16/2013 - 12:05 | Link to Comment kito
kito's picture

tell that to the 11 year old girls

Wed, 10/16/2013 - 13:30 | Link to Comment W74
W74's picture

Hey, plenty of New York Zydokomuna fly over there for the boys too.

Wed, 10/16/2013 - 11:13 | Link to Comment Devotional
Devotional's picture

"Nothing Else Matters", Metallica

Listen, with the central banks pumping trillions into stock markets and banks then truly nothing else matters.

Wed, 10/16/2013 - 13:29 | Link to Comment W74
W74's picture

Now tell me this song (and video) don't relate to the corporatocracy of today.  Work work work, only to get smacked down.  Pamper to the modern aristocracy only to get nothing in return except spite and contempt.

Wed, 10/16/2013 - 11:08 | Link to Comment Bearwagon
Bearwagon's picture

Let's waste on drink whatever house we still possess.

Wed, 10/16/2013 - 11:11 | Link to Comment Obchelli
Obchelli's picture

Who cares when we have Yellen printing... Repukes caving...


I wish we had crisis every day cause rumors that it will be averted causes market rally more then if there is no crisis

Wed, 10/16/2013 - 11:13 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Ah, but the Permanent Work Visas to the Galactic Empire have soared!

Stay thirsty, stay hungry, my friends.  Think Dos Equis.

Wed, 10/16/2013 - 11:12 | Link to Comment yrad
yrad's picture

This really isnt news. I work in this industry and a slowdown from Nov - Feb is predictable. Granted, these are not "normal" times and any negative move is worrisome but the chart clearly shows a cyclical pattern.

Wed, 10/16/2013 - 11:31 | Link to Comment BandGap
BandGap's picture

Not the first chart.

Continuing - Why were home mortgage applications highest in Jan-Feb of this year if this is a "slow" period?

Wed, 10/16/2013 - 11:54 | Link to Comment serog
serog's picture

Just asking, could it be that those applications were for spring purchases? It takes a good 45-60 days to go from start to finish I thought. 

Wed, 10/16/2013 - 11:35 | Link to Comment adr
adr's picture

There aren't any buyers. The only way you can sell your hoe is if you live in a hot money bubble area where a fool thinks there is a greater fool around the corner, or you sell it for next to nothing.

I looked at a house where I need to move that some guy put $250k into it. Dug an in-ground swimming pool, complete teardown of the inside, top level appliances. He put it on the market for $450k, when surrounding homes were going for $250k. The appraisal came in at $225k.

The banks don't care what you put into a house. They'll price a home with solid gold walls the same as a termite eaten wreck.

Wed, 10/16/2013 - 12:28 | Link to Comment Ghordius
Ghordius's picture

in my experience here in europe nearly nothing you "put in" a house really rises it's market price. particularly swimming pools

and that's the buyers, not the banks. I have witnessed - I kid you not - a house where the buyer demolished the swimming pool of the freshly bought house in order to build one the way his wife wanted

now if you are talking about time-tested structures, this is a different thing. a near-fortress from the 14th Century does command a higher price. it has a certain... solidity. or permanency. and you tend to have less surprises like "a flood like this never happened here since 70 years"

Wed, 10/16/2013 - 13:23 | Link to Comment W74
W74's picture

That "put in" stuff only mattered between 2000 and 2007.  After that it only became a question of own vs. rent rather than what "stuff" was in the house.

Upgrades are for you, the longterm home owner to ENJOY.  They're not for someone else, and they shouldn't be used to bolster the value of a home.  In many ways some amenities that are too unique may not appeal to the average buyer and might actually detract from the home's appeal (and thus traffic and interest, from which follow price).

Granted the reverse isn't true.  A home that does not have certain basics like an HVAC system (in this climate you need both heating and cooling) will detract from the home's value far more than just having one at all. 

Want to take that water heater with you? Nope, the home will lose far more value than the cost of the water heater by not having one at all.  The same goes for anything that's torn, broken or damaged. 

I think a home that's "neutral" in the sense that it's neither a shithole nor something that the previous owners put too much into, is probably the best for this market.  No one wants someone else's upgrades, and certainly isn't going to pay for what they enjoyed and put in in the past.

Wed, 10/16/2013 - 13:10 | Link to Comment W74
W74's picture

Everyone in your industry wanted nothing but HIGHER and HIGHER prices.  That was the only goal right?  Slum houses for a million right?

And now that it's biting you in the ass, and there is little volume, and without cash buyers the number of transactions would be halved yet again, you're upset about it.

Gravy train is OVER.  I've been talking to a friend in the mortgage industry about this for two years now.  A year and a half ago he got into a department (division?) in his company that ONLY did ReFi's.  I feel bad for him since his wifu stays at home and they now have a one year old.  Hope he saved his bonus checks from when he worked 70 hours a week processing application during the ReFi bubble.

Now that there are literally zero people left who either can or for whom it makes sense to game fucking over!!!

Wed, 10/16/2013 - 11:13 | Link to Comment q99x2
q99x2's picture

Why would anyone want a house when they can wait 5 years and get one for half the price?

Wed, 10/16/2013 - 11:17 | Link to Comment prains
prains's picture

in five years you'll be using houses as redoubts to defend while you cook a stray dog on an open fire in the living room, using the furniture as fuel, before moving on to search for more food. Your backpack full of gold will be very very heavy when you're down to 500 calories a day and you weigh 125 lbs.

Wed, 10/16/2013 - 13:31 | Link to Comment Hongcha
Hongcha's picture

Nice thoughts Prains, welcome.  Long machetes and bullion-cutters.

Wed, 10/16/2013 - 11:13 | Link to Comment Dr. Engali
Dr. Engali's picture

I blame the wait...It's the government shut it's the taper.... I'm so confused I don't know who to blame.

Wed, 10/16/2013 - 11:18 | Link to Comment Bearwagon
Bearwagon's picture

Let me help out: Fuck you, Yellen! And Bernanke anyway!

Wed, 10/16/2013 - 11:18 | Link to Comment robilla
robilla's picture

Silly Doctor - you're supposed to blame Bush

There. Feel better

Wed, 10/16/2013 - 11:20 | Link to Comment ebworthen
ebworthen's picture

When people are stretched and stretching a 1% rise in mortgage rates is the last step on the ladder, not the first or second.

Can't count how many talking heads in the MSM who said 4.5% rates wouldn't hurt mortgage applications because it is a "historically low rate."

This ain't 1983 or 1996 kids.

Wed, 10/16/2013 - 11:22 | Link to Comment ChaosEquilibrium
ChaosEquilibrium's picture

OT: Sleight of Hand.....look over THERE....NOT over HERE!


Why is the Italian FTSE-MIB up ~2700 points over the past 40 days?????


Why is the Spanish IBEX up ~1600 points over the past 40 days?????



Wed, 10/16/2013 - 11:22 | Link to Comment hangemhigh77
hangemhigh77's picture

Soon EVERYTHING will be low income housing or no income housing.  They won't be called houses they'll be called hovels, shelter, hideouts, dumps, and redoubts.  The populace will be called, nomads, survivalists, and bums.  permanent open season on politicians and the ruling class who will be called, thieves, liars, motherfuckers, cocksuckers, pricks, scum, bastards, dirtbags,, well I could go on but it's all the things we call them now. let's get this party started already.

Wed, 10/16/2013 - 12:31 | Link to Comment Ghordius
Ghordius's picture

in Germany some 60% rent. 'nuff said

Wed, 10/16/2013 - 11:26 | Link to Comment GrinandBearit
GrinandBearit's picture

Realtor:  "Anytime is a good time to buy a home"

Barber:  "Anytime is a good time for a haircut"

Wed, 10/16/2013 - 11:33 | Link to Comment moonman
moonman's picture

Prostitute: "Anytime is a good time for a fucking"

Congress: "Anytime is a good time for a fucking"

Wed, 10/16/2013 - 11:29 | Link to Comment adr
adr's picture

I'm still looking for signs of this all time high economy. I just don't see them. Most stocks are at or near all time highs, Best Buy will be near its all time high within a few days at the rate its going. Yet the stores have never been worse.

My house sold for $105k in 1998 in basket case condition after the old man that lived in it for 50 years died. A new concrete driveway was put in in 99. New roof, insulation, siding, windows, concrete front steps, in 2002. The previous owners finished the third floor and completely re-did the upstairs bathroom in 2005. They also fenced in the backyard and put in a 300 sq ft tiered brick patio. The house was valued at $170k in 2006. I bought it for $132k in 2009. I put in a new HVAC system, hot water heater and second bathroom.

I'll be lucky if I can sell the home for $105k with nearly $75k in upgrades. My parents home just appraised for $15k more than they paid for it in 1986.


Wed, 10/16/2013 - 11:57 | Link to Comment IridiumRebel
IridiumRebel's picture

America! Fuck Yeah!

Wed, 10/16/2013 - 11:57 | Link to Comment TrustWho
TrustWho's picture

Yellen will expand QE....nuff said

Wed, 10/16/2013 - 12:59 | Link to Comment W74
W74's picture

Consider yourself lucky that you're not paying astronomical Rents.

Unless your house is losing more than 20k per year every year you're winning.  At least your house isn't likely to go to zero unless some of Obama's sons start moving into the neighborhood.

With rent you might as well just light cash on fire.  I'd rather own a home that's only losing a small percentage of value every year.  Renting is a 100% loss.

Just keep that in mind and consider yourself blessed.

Wed, 10/16/2013 - 18:42 | Link to Comment kareninca
kareninca's picture

You're forgetting property taxes.

I've seen them double over the past five years (going from $3,500 to $7,000 for a boring regular house) in some of the towns I watch in New England.

Wed, 10/16/2013 - 11:51 | Link to Comment apberusdisvet
apberusdisvet's picture



When all the so called experts keep pumping the housing "recovery", the question still remains:

Other than the 1% and the 100% cash buyer investor/speculators. who can still qualify for a mortgage?  Certainly not the close to 50% of households on the guvment teat, nor those with 40K of student debt.  Nor those 40% of homeowners still underwater on their current mortgage. Hmm:  not many left, are there?  When I bought my first house the rule of thumb was you could afford no more than 2.5X gross income.  With median h/h at $47k and falling, that implies the ability to purchase a house for less than $120k.  OK folks, where are these houses other than in the rust belt?

Wed, 10/16/2013 - 12:55 | Link to Comment W74
W74's picture

Huge swath of territory from Youngstown, OH to Muncie, IN where you can get hundreds of thousands of homes for under 40K.

Wed, 10/16/2013 - 11:55 | Link to Comment IridiumRebel
IridiumRebel's picture

It's awesome owning a home you can't sell. Ho hum, I'll lower it another 10K. It's gone from 190K to 140K. Life is grand.

Wed, 10/16/2013 - 12:52 | Link to Comment W74
W74's picture

You're trying to sell?  Not to judge, but what's your plan: Renting?  In this environment?  Everyone is getting crushed these days, prices are distorted in all markets.

Wed, 10/16/2013 - 12:14 | Link to Comment Obvious Paradox
Obvious Paradox's picture

I also work in the mortgage industry.  Since the refi bubble popped 2 months ago, we have been faced with the grim reality that is the purchase market in CA.  Looking at Data Quik, the volume of sales is historically good, but 30% of the sales are cash buyers, which means loan originations are not so good.

While there are many young people out there making $50k+ each, prices in the $400k plus range in decent parts of San Diego is really a lot for them to tackle as a FTHB. 

I for one would welcome another 40%-50% hit on RE values, so my kids could buy here at some point, but what is going to make that happen? I know many of you are screaming for the zombie apocalypse, but frankly I think TPTB have the extend and pretend thing down and it isn't going to happen anytime soon.

Wed, 10/16/2013 - 12:49 | Link to Comment W74
W74's picture

Finally someone in the Real Estate industry who understands the value of low prices.  Think about it folks.

Wed, 10/16/2013 - 13:22 | Link to Comment Lord Koos
Lord Koos's picture

Yeah, well duh, it's October.

Wed, 10/16/2013 - 14:23 | Link to Comment tony1787
tony1787's picture

I recently researched the number of homes sold in each month for the past year in my area, and the upcoming winter months are traditionally, reliably low. It's like saying ice cream sales are at a 1-year low in the middle of January big deal. We need to compare it to the same month in the previous year. I did, and it's not significantly different ...not different enough to make it a story.

Also Important: There is a 2-4 month lag from when you apply for a mortgage to when you close. The past month's data represents the beginning of the winter months which are always very slow. Add to that, to just to LOOK at homes, real estate agents require one to be pre-approved. That means one must apply for a mortgage before even LOOKING! ...even more lag for winter months.

Note that I am not arguing that things are fine in the industry, I am merely pointing out that the article doesn't qualify as one of the many other proofs that exist to support this claim.

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