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Is Bob Shiller Right? Mortgage Applications Collapse Back To 5 Year Lows
After the initial post-Taper-talk rate-rise-driven marginal-buyer-crushing collapse in mortgage applications in the US, the un-Taper provided a brief period of hope for the NAR and market apologists that all-cash buyers are all we need and mortgage applications dead-cat-bounced on the rate drop. However, all that hope ended in early November and as of this morning's print, mortgage applications have plunged back to the almost record lows of October 2008 (levels not seen since December 2000). As Bob Shiller recently explained, "we can't trust momentum anymore," in housing and the speculators are leaving the buildings.
Chart: Bloomberg
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looks like a good time to put a low ball offer on a 3 acre property I've had my eye on?
Yes, definitely. However, municipalities are in a bind. Properties are being listed much lower than the tax-assessed values, so without any new buyers the counties may be forced to lower assements. People starting to see through the lie as they look at realators listings and the city's "valuations". If you wait two months (assessments are typically done in January) you may get a tax break on your new purchase.
Just saying...
Salaries are down. Savers have been decimated. Where would home sales come from?
But the carnage hasn't even begun yet. Wait until the great baby-boomer "die off" begins. A tsunami of homes is coming to a market near you.
I live in a 70's era neighborhood. Estate sales every weekend. For every estate sale there's a big house going on the market. Unfortunately, these houses were built when a single wage earner could raise 4 kids. Nobody needs a 4 bedroom house anymore except 4 immigrant families.
Exactly my point. Property taxes fund most municpalities. If the tax assements don't match the selling prices all hell will break loose regardless of whatever the TBTF banks are doing. All eCONomies are indeed local and when local property owners look at their tax bills, they will investigate this and then go next door and see thier local CONgress critter. An epic state/federal battle is coming (just ask detroit and the many cities to follow). location, location, location, bitchez....
randoom, duo and laws of physics. you guys have pretty much laid it out. all done but the crying. good posts.
"If the tax assements don't match the selling prices all hell will break loose regardless of whatever the TBTF banks are doing"
Already happened in my area however the county did drop the property taxes because the assessments were inflated 30% after the housing markets crashed and burned. I know quite a few people whose homes dropped in so-called market value by 20k to 30k and I still see the empty houses that some entity is trying to make it look like it isn't abandoned but it is not 'on the market'... at the same time the liars on local radio and tv is proclaiming there is a shortage of housing inventory.
I'm seeing the "die off" already with numerous acquaintances in their 50's and early 60's just dropping dead the past year or so. Two of them on the same golf course! So glad I quit golf now!
When baby boomers die, the Fed will just print more people. Duh!
Lower assessments? Not around here. Mine went up again this year after jumping $600 last year because they 'found' a structure that was here for more than a decade. Neighbors are reporting the same thing. The county has been combing aerial photos for years and are now jumping fences to find anything they can tax. They also have not lowered a single property I can find below the $10k an acre threshold, despite numerous properties selling below $7k an acre. A home down the road, built in like 2005 on 20 acres sold for $167k last year, down from $325k. Met the owners recently and they said the county hasn't budged an inch on taxes despite the lower selling price and dropping values. My neighbors dropped $8k on taxes for 54 acres in greenbelt while the politically connected corporation that owns the adjoining 545 acres spent $1.1k for pasture that takes off probably $500k in hay a year. They are not based in this county. After removing 'impact fees'(upfront taxes) in 2010 to try and rekindle building, they put them back, over $5k as I understand, down from $10k prior to 2008 but still up from what I paid. They know their jobs, raises, and pensions are based on keeping the tax pig alive and well fed. And if you don't like your taxes? You get a 10 day window to appeal them to a board of county employees...
Like I said, location, location, location...
but if you think that those few high-income locations are going to fund the liabilities of all the government municipalities in major cities, you don't understand basic math. Like most large property owners, my attorney and I are very aware of exactly how to appeal any new assessments. I also know my local "representation" well, where they live, etc. etc.
You won't see lower assessments from your city/town because they simply can't afford to lower them. Instead they will have to raise them and hire people to go through al the abatement requests. Probably have to hire another lawyer to fight all the people who are seeing houses on their street sell for 25% less than their assessed value. Up until now in most places assessments were 25% LESS than appraisals and sale value...no more because the towns have no choice. Better to fight the people than cut the schools...guaranteed
It won't change the outcome one bit. Raise my taxes, I will raise my prices and my rents. If my rents and prices can't be paid, then I can't pay my taxes and eventually my representitive loses his job or has a horrible "accident". At the end of the day all eCONomies are really local and that which cannot be sustained won't be.
Let me clear, I am long sharecropping and black markets.
Localities should have to buy any reassessed property at the price they assess it at within 90 days of that assessment, if the owner chooses to sell.
Sorry, I can't understand anything you're saying. Your avatar is way too distracting.
I like that plan, but I'm with Hulk, I had to read it 5 times to actually get the message. Is there a way to make it bigger?
You are dreaming...cut? How's about an increase
I sold all my property except primary residence back in June when rates went up slightly. I've never gone broke taking profits.
BREAKING: U.S. October new-home sales rose 25.4% to 444,000 annual rate. so there you have it: Blackrock et al. still buying.
The Blackrock plan. Keep stroking the "Bearded Potato", take cheap QE cash and buy all the residential real estate you can. Make everyone a rent paying serf. Keep buying till you own it all. Satan's Landlord.
Fate the Magnificent
"Push the Button, Max"
Stocks are DOWn this morning for the 4th day in a row! BULLISH! Buy the fricking dip already people!
They can't BTFD cause they already BTATFH you mook!
So it's time for them to STFB!
But...but...Bernanke said to take all my savings and cash out my credit cards and mortgage and buy stocks!
So much for animal spirits, right Bob?
HE is wrong. Speculators are running out of the buildings.
And why wouldn't mortgage application fall?
1. There are fewer people in the workforce (regardless of the fraudulent unemployment numbers)
2. The people coming into the workforce are coming into lower paying jobs
3. Government taxes (of all kinds, not just Federal Income Tax) on those who can afford to buy a house continue to increase
4. People have a huge drain from student loans, auto loans and cell phone/media costs which come first before buying a house.
5. The parasitic anti-social psychopaths on Wall Street created a plethora of investment funds tasked with the sole purpose of buying up real estate and bidding up prices ... so that the prices are even FURTHER out of reach of people who would normally buy houses.
6. Builders do not want to build small houses. They seemingly only want to build large expensive houses.
Obviously the result is exactly what should be expected. Lower ability to pay + Higher prices = Fewer Mortgages
Here is the thing that the brainwashed populace doesn't understand. When you are creating fiat currency out of thin air, what you pay for something in fiat terms is totally irrelevant. You have an infinite supply of fiat nothingness with which to buy all valuable and productive assets and to enslave the world.
The people in general assume that "the dollar" has some sort of finite value and that the people who run the game are honest, honorable and have the best interest of the human population and this world at heart. Evidence indicates that it is the exact opposite. The "people" running the show are DISHONEST, DISHONORABLE and care nothing about the people and the world ... only themselves. If something benefits the people at large, it is only because it benefits those in power more.
Faced with the above, all of the financial arguments we torture ourselves with ... are truly trivial and irrelevant.
The people don't have unlimited access to unlimited fiat, but the government does. They can buy all sorts of shit with borrowed money from the FED. But you and I can't borrow from the FED @ 0%.
Randoom, don't forget Obamacare costs.
7. Obamacare insurance premiums will take another huge bite out of after tax income. Heaven forbid you get sick and have to pay the high deductibles. Then you have NO ability to pay.
Sounds about right. Still can't sell Mom's old place. Great house in a good school district with low taxes and it's been totally refurbished (carpet, paint, appliances, fixtures).
Hit the market July 2 with an ask of $224K
Late August dropped the ask to $218K
Month later dropped it to $209K
Last month dropped it to $199K
More traffic every time I drop the price but NOT ONE SINGLE OFFER the entire time. None. Not even a lowball from a cash buyer. The market for "regular guy" houses is dead as dead can be.
We're about to do the same thing.
NOBODY is going on the hook for a new house unless they know their health insurance won't be Obmacared into oblivion next year.
I'd think the opposite, given rental costs are close to 2x the cost of ownership for local RE... while you might be able to afford your own house + insurance premiums, you probably can't pay rent and afford health insurance... the landlord has to get his due...
The problem that we have is everyone already owns a house who actually wants one... and has probably locked into (refied into) incredibly low rates... so, the fact that people can't afford ANY increase in insurance premiums ought to scare the hell out of those who care to look...
Sounds like it was overpriced to begin with, and now you are chasing a declining market. It's like trying to catch a falling knife... not good. Price it 3-5% below current market to sell it fast; otherwise, put a renter in it and hang onto it. Just my 2 cents.
prices still going up tho. [/sarc]
It's all good news as long as it's bad enough!
I am in the market for a shack in Montana.
put wheels under your shack, and pull it behind you. If it doesn't have afoundation, it can't be taxed......fee'ed maybe, but not taxed.
Note to self:
Check out this option.
And how are RV Applications doing?
We bought a Class C last summer. We initially low balled the price so drastically that we didn't expect the dealer to sell it to us. They initially said no. A month later they called back and told us they now accept our price if we were still interested, and would throw in two brand new tires. We now own a Class C. The RVs next to it on the lot have not moved.
Jesusfuckingchrist, did you see the New Home Sales reports for September and October that just hit the news?
http://mam.econoday.com/
Massive revision to August to the downside, a massive miss for September vis-a-vis expectations, and a massive beat for October.
So are you dazzled or baffled?
neither. October numbers are a lie.
I am looking at a 1999 Class A 34' with 36K miles, Ford V-10 for $15K! I want something older but solid so I can so some of my own touches like bulletproofing panels of and welding a gunsafe into the frame. Watching a lot of Mad Max movies for ideas....
Avoid the V-10, and find a powerstroke.
EM-50 Urban Assault Vehicle - oldie but a goodie. ;-)
ditto on nixing the v10. and avoid the 6.0l motor unless you're ready to make quite a few mods. If you find an older 7.3l motor, grab it!!! i'm currently pulling a 8500lb 29ft 5th wheel with a 2003 f250 6.0l.
What's the big deal here? Perfectly normal that mortgages, and finance, collapses to a "new normal". lol! - I love that label - so pretentious. The normal, with baby boomers now entering retirement, is that housing and everything connected to it except maintenance, will not be in growth, but in retract, mode. That includes mortgage applications. There are not many 60+ year olds who have the future cash flow for a long term housing loan.
Or even more importantly young buyers who have minimum wage jobs, few prospects for the future, and who would rather own iPhones than vehicles or houses.
Its easier to get a car loan..a student loan...credit cards..than it is to get a house loan.....so the sheeple are doing just that...going for the free money...the money they think they will never have to pay back..it just comes out of the machine....its easier to rent and not pay the rent...you can stay in the apartment for 6more months free of charge....no one has good credit anymore.....the death of America...just steal it
Hoffman lives again.
I wonder what happens to the retired who take out a reverse mortgage on a property that is 30% to 50% overpriced.
Nothing..they die...bank eats it...heirs get nothing....
So has that turned out to be a deal for the person who did the reverse mortgage? Did they lock in a higher value or does that get adjusted as prices drop?
Keep moving folks, no bad news here. We have new shiney trinkets from China on aisle 5 at half-off ...
Earl, we have a clean up in aisle 5, The Merovingian shit himself again ...
Michael Snyder: We Are Near The Peak Of An Absolutely Massive Stock Market Bubble
Michael Snyder presents a great compilation of the Bubble signs in the markets. We will add Bitcoin and Quark to the list. The way Gold is smashed today again is making us wonder: is it "Gold market" pricing in Taper or preparation for No Taper announcement by the FED? NYSE Margin Debt normally peaks before the Top in the Equity markets, what will be the Catalyst this time? http://sufiy.blogspot.co.uk/2013/12/michael-snyder-we-are-near-peak-of.h...