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Mortgage Applications Plunge Most In 3 Months; "Purchases" Collapse To 19 Year Lows

Tyler Durden's picture





 

Despite the surge in "seasonally-adjusted new home sales", un-seasonally-adjusted mortgage applications tumbled 8.5% this week, the biggest drop in 3 months as the modest January bounce has been almost entirely unwound. This pushes the broad MBA mortgage applications index down to near its lowest in 14 years. However, the home-purchase index continues to collapse. Purchase applications are down 30% from their May highs plunging in the last few weeks to their lowest level since 1995. Must be the weather, eh? Or is it like Bob Shiller warned yesterday, the unwind of "bubble thinking," especially as "gains are slowing from month-to-month and the strongest part of the recovery in home values may be over."

 

 

"I think there are pitfalls ahead and this momentum will dissipate."

 

Charts: Bloomberg

 


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Wed, 02/26/2014 - 12:15 | Link to Comment PR Guy
PR Guy's picture

 

Get back to doling out sub-prime mortgages. What could possibly go wrong?

I'm sure the Occupy Movement will keep us safe

http://www.youtube.com/watch?v=IWzAGDOrt0o&feature=c4-overview&list=UU-Y8tHCwNCHYzGL8iw5IOXA

Wed, 02/26/2014 - 12:19 | Link to Comment Buckaroo Banzai
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Somehow, the residential real estate market in the Washington, DC metro area is still going strong. Huh.

Wed, 02/26/2014 - 12:41 | Link to Comment RSloane
RSloane's picture

There is massive getrification in progress in DC. As more money flows in real estate overall pushes higher. There are small apartment buildings that were once low income subsidized housing units that are being sold as luxury accomodations, after being given exhorbitant face-lifts. Corners that were once known for drug dealing are being levelled and private secure monthly parking spaces are being sold. Of course the Dem representative claims that crime has fallen drastically in DC due to 'strong social programs' but the truth is the indigent population is going to be gone, baby, gone.

Wed, 02/26/2014 - 13:03 | Link to Comment onewayticket2
onewayticket2's picture

Cash buyers....no apps?

Wed, 02/26/2014 - 13:06 | Link to Comment Apply Force
Apply Force's picture

Right on.  The road to serfdom, with the rich (whether here or from abroad) gobbling up properties.  Energy scarcity will drive all of our normal metrics down and down, anyway.  Preparation and patience.

Wed, 02/26/2014 - 20:19 | Link to Comment Wolfbay
Wolfbay's picture

Maryland doing great also. The most millionaires per capita in the country .Only one Fortune 500 company,little manufacturing,not high tech or financial center,small agri- business. Makes sense.

Wed, 02/26/2014 - 12:20 | Link to Comment Confabulator
Confabulator's picture

I was always under the impression that Americans had more appetite than the British... It seems that the odds have changed now.

Wed, 02/26/2014 - 12:30 | Link to Comment Master_Blaster
Master_Blaster's picture

I want to believe this data, I do - listed my house in the Seattle area on Friday and got full ask price. Signed last night - Hope I'm right in selling at this point....but the demand was nuts so i'm not sure what to believe.

 

 

Wed, 02/26/2014 - 12:39 | Link to Comment greatbeard
greatbeard's picture

>> got full ask price

I wish you well and understand your consternation.  They have made this market extremely difficult to participate in, both buyers and seller.  Although ZH is one of the very few media outlets I get my input from, they certainly have erred on the side of negativism over the years.  It's my natural tendency to see thing in the same light as ZH, hence my frequenting the site, but the reality is obviously somewhere between here and the cheerleaders.  Best thing to do is operate your life for your own well being as best you can and not let either side effect you much.

 

Wed, 02/26/2014 - 13:03 | Link to Comment swmnguy
swmnguy's picture

It's all local.  Not just market-to-market within the US; it's block to block, and even house-to-house.  The market between fully-qualified buyer and unencumbered seller with equity to have flexibility to price it right never did collapse totally.  My exact house, two blocks over, is worth a hell of a lot less, but two blocks closer to the creek, worth a hell of a lot more.  My neighbor's house and mine are both way up in the weird la-la-land of Zillow estimates, but my house would sell for $50k more IMHO due to layout and general upkeep.

"Best thing to do is operate your life for your own well being as best you can and not let either side effect you much."  Great advice in general.  Most available information is to broad to be anything more than a barometer.  Each of us knows our own situation and needs to act accordingly.  If you have equity and can price it right, you'll be fine.  If you're underwater, better grow gills.  Same goes for buying.  If you have a big enough downpayment (100% would be best), and enough financing approved, and the total monthly nut (including insurance and tax, whether you escrow or not) and an emergency fund, is what you can afford and/or cheaper than what you'd have to spend anyway renting, by all means go ahead and do the deal.  If not, do not do the deal. Most of us are buying a financial agreement, not a house.  It's easy to miss the distinction, because most of us do need to live indoors.  But it's crucial to realize that a bad deal on a great house is not going to end well.  A great agreement on a crappy house might actually be better in the long run.

It's not even local.  It's individual.

Wed, 02/26/2014 - 14:04 | Link to Comment DavrosoftheDaleks
DavrosoftheDaleks's picture

Great quote you gave: " you are buying a financial agreement rather than a house" in regards to buying a house with a significant mortgage.  I'm going to keep that in mind as my wife and I look for a new house.  Thanks!

Wed, 02/26/2014 - 14:38 | Link to Comment swmnguy
swmnguy's picture

Thank you.  I actually stole it from, weirdly, my realtor.  Spread it around.  Everybody should bear that in mind.

Wed, 02/26/2014 - 13:12 | Link to Comment NotApplicable
NotApplicable's picture

There is nothing in error about the negativism here, as applied to REALITY. However, we're discovering that there isn't that much left that is real (in relation to TRUE market forces).

So, you can either be a "capitulating bear" who recognizes that the ponzi is the only game in town, trying to front-run the scam. Which works right up until it doesn't, of course. Or you can "miss out" on the "gains" by sitting on the sidelines, stacking.

It all comes down to time-preference and sustainable risk exposure. Short-term, ponzi players win every day. Long-term though, they will ALL miss the exit, as their "wealth" is trapped within the system.

 

Wed, 02/26/2014 - 13:51 | Link to Comment Luckhasit
Luckhasit's picture

Best advice I've ever heard on this site. And so right on.

Wed, 02/26/2014 - 12:56 | Link to Comment tbd108
tbd108's picture

Seattle is perhaps the only place outside the center of the empire (DC) that is doing OK. Boeing, Microsoft, Amazon, Starbucks, have everything to do with this. I live in the Seattle area and my wife sells real estate here (I am an engineer) and we and our neighbors are doing well. However with real unemployment in the US at 23% (see Shadow Stats) the rest of the country is going to hell in a hand basket. Comments otherwise are either pollyannaish or trolling.

Wed, 02/26/2014 - 13:06 | Link to Comment swmnguy
swmnguy's picture

I agree with the overall point you're making.  Here in Minneapolis though, certain areas are doing great.  As I point out in another comment above, all real estate is local; it isn't even local, it's individual.  There are certainly parts of Minneapolis that were crap RE markets pre-bubble, were the epicenter of fraud and exploitation during the bubble, and are now back to crap.  And there are areas that never really changed that much.

But the basic fact is that with U6 at 23%, you can't honestly say anything is going in the right direction.

Wed, 02/26/2014 - 13:53 | Link to Comment tbd108
tbd108's picture

I came from Minneapolis (Apple Valley) to Seattle when Delta bought out Northwest. The whole south suburban area has crashed since then. I am glad to hear that things are better to the north although I am concerned about the med tech business in the far north with special taxes added to their products (I am an avionics engineer who crossed over to mech tech after 9/11 then came back when things got better).

Wed, 02/26/2014 - 19:04 | Link to Comment swmnguy
swmnguy's picture

Sorry; got called away on Clark Kent-type business.  Hope you see this.

I don't know much about the 'burbs around here.  I live in S. Mpls, near 42nd and Park if you know the area.  I used to live near 37th St. and 11th Ave., near Powderhorn Park.  I know the S. Mpls residential real estate market pretty darned well for an amateur.  Basically, everything south of 38th Street between Lyndale and Hwy 55/Hiawatha is doing just fine, except for the odd foreclosure here and there.  All of Longfellow is fine.  The Uptown area is slowly spreading East. 

The areas of rot are where they've always been, between Lyndale and Hwy 55/Hiawatha, from downtown south to about 38th. And of course the Near North Side is still a ghetto, and that's where the most egregious fraud happened.  Nordeast is slowly turning over as the old Eastern Europeans move into assisted living or die, and it's very slowly becoming more like the Uptown with hipsters etc., but prices haven't really exploded over there yet.  The "U" area is the same as it's always been; overpriced deathtraps for students.  Cedar/Riverside and the Eastern half of Phillips is now Little Mogadishu.  The Somali population isn't doing nearly as well as the Mexicans have; they're still in the first phase immigrant groups go through where they're still just stunned by what happens in the winter, and all these weird stoic white people.

The market between seller with equity and buyer with money never did really "tank" here.  Of course, it never got nearly as inflated as it did South of the river, either.  But I'd say there's been a renewed sentiment among 30-somethings with kids to move back into the city.  My wife works for Mpls Public Schools as a Special Ed Assistant, and my kids are in middle and high school respectively, and every year for about the past 5 years there are lots more kids in the Public Schools.

Long term, I wouldn't want to be invested in the exurbs.  I'd guess new developments by Lakeville, Chaska etc. are a dead letter.

I think the med-tech tax is going to be repealed, by the way.  Nobody who voted for it will admit it any more.

Good luck out west!  Gotta be better weather than we've been having.  It's just been plain butt-ass cold.  Very few days with highs in the 20s, and lots of snow piled up everywhere.  Not as bad as what I grew up with in the '70s out by Marshall, but still by this time of year, a fellow eyes the extension cord and the rafter beams in the garage and thinks about it.  Until Sunday, when pitchers and catchers reported in Ft. Myers.  Then I knew eventually, somehow, winter would end sooner rather than later.  No way to tell that by looking out the window.

Wed, 02/26/2014 - 13:07 | Link to Comment NotApplicable
NotApplicable's picture

Only "insiders" have the ability to pick the top of a fraudulent market. So, be happy you got out ahead.

I'd much rather come out with a little less cash than to have a property sit on the market while waiting for the jackpot.

Wed, 02/26/2014 - 13:19 | Link to Comment WTFMOFO
WTFMOFO's picture

We ae experiencing the same type scenarios in the Nashville area.  Homes go pretty quickly when put on the market..especially the county S of Nashville called "Williamson".  It's home to the small citiies of Brentwood, Franklin and Nolensville. Brentwood where I live was the wealthiest city in the U.S in 2010 based on cost of living.  Our home prices are back above all time highs and are selling like crazy.

I think most of what we are seeing is a segregation of have's and have nots.  Our county was also voted the most conservative county in the U.S.  To live in the county you pretty much need to "have"as it's pretty much where the Country Music stars, Dave Ramsey, Dolly Parton, the Tn Titan Football players and a host of others live.  Toss in our big presence of Healtcare and IT (My wife is a director over 18 hospitals of which her company owns over 200 hospitals and their headquarters are here (they are the largest provider in the U.S), along with 5 of the top 10 healthcare companies in the U.S).

We've been in the market looking for a 3+bedroom place since early December in the $375K-$450K range. We've contacted our agent when a home comes on Zillow or Trulia that we'd like to see... on at least 6 occassions when we requested to go look at a house they had "contracts pending"  within the 1st week on market and were sold within 45 days, with most going for over ask price.

My neighbor sold hers a few months back.  She started out asking $364K, in the first  3 days on market she had 4 offers and the one she accepted was 10% above asking price.

Again, it's the have's and have nots.  If you live in the Nashville area, have kids and are upper middle class then you are trying to move into this county.

Wed, 02/26/2014 - 13:36 | Link to Comment MarkD
MarkD's picture

Homes selling here in NH. The problem is if you bought from 02 to 09 you are extreemly lucky to break even and most are priced well below original purchase price. Also an alarming amount are empty.

So selling yes...... but at what price.

Wed, 02/26/2014 - 14:53 | Link to Comment PTR
PTR's picture

I said it in a different post: 15%-ville in the North Side of Chicago is nuts.  Stuff goes on the market and it's selling in 2-3 weeks with multiple viewings. Granted, we're talking the demographic of young/middle-aged families in the 15% & higher buying first-time or upgrade home, but how quickly they are going versus 12 months ago, you'd think that their firstborn were being threatened.  

 

I'm curious to see how long until the freight train comes... [it's been said that the most profits are made right before the freight train runs you down]

Wed, 02/26/2014 - 13:05 | Link to Comment RSloane
RSloane's picture

No, this is how it works:

72 hrs ago - "Wall Street plunges amid dismal housing data"

This morning - "Wall Street ticks higher amid strong housing data"

Now - "Wall Street doesn't give a shit about housing data, its going to do its own thing"

 

Wed, 02/26/2014 - 12:17 | Link to Comment dynomutt
dynomutt's picture

Looking at that chart, how is this not just more of the "new normal" ?

Wed, 02/26/2014 - 12:27 | Link to Comment financialrealist
financialrealist's picture

yep...need a new starting point...the 2000's boom was an anomaly. we're not going back to those levels.

Wed, 02/26/2014 - 12:19 | Link to Comment Frostfan1
Frostfan1's picture

It must be low inventory, of course......

Wed, 02/26/2014 - 12:34 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Psst; you don't need a fucking mortgage if you have enough freshly printed fiat.

Wed, 02/26/2014 - 12:25 | Link to Comment Yen Cross
Yen Cross's picture

    If oil prices keep going up Realtors are going to have to start hiring Rickshaw drivers to shuffle prospective buyers to properties.

Wed, 02/26/2014 - 12:30 | Link to Comment TheRideNeverEnds
TheRideNeverEnds's picture

Market doesn't care, havent had a downtick since the open. 

Wed, 02/26/2014 - 12:30 | Link to Comment Seasmoke
Seasmoke's picture

Now prices Just need to go back to 1996 level and we ALL can start over again....RESET

Wed, 02/26/2014 - 12:36 | Link to Comment LordAarioc
LordAarioc's picture

Shiller is a Professor at Yale and he's Captain Obvious and giving no real insight, just a bunch of spin and propaganda. Is this where our education system has gone. That even Ivey League schools have baffoons teaching these future skulls and crossbone kids?

Wed, 02/26/2014 - 12:36 | Link to Comment william114085
william114085's picture

I don't trust senior citizens who wear big blonde wigs

Wed, 02/26/2014 - 12:56 | Link to Comment dizzyfingers
dizzyfingers's picture

LordAarioc

 

"Ivey League"....

Got spellcheck?

Wed, 02/26/2014 - 12:36 | Link to Comment Stuck on Zero
Stuck on Zero's picture

The title is all wrong.  Rephrase it a la NAR like this:

 

Home Sales Prepped for Huge Rebound In Spring

 

Wed, 02/26/2014 - 12:36 | Link to Comment Lewshine
Lewshine's picture

Housing? C'mon - That's sooo 2008-ish! Look, the economy, otherwise known as the US stock market, has no need for: Consumers, jobs, real estate or retail sales - ALL that is needed, is one Fed economist with access to plenty of paper and ink!! Everything else is just noise in which to lie about.

Onward and upward!

Wed, 02/26/2014 - 12:39 | Link to Comment thamnosma
thamnosma's picture

Always a good time to buy no matter what.

Wed, 02/26/2014 - 12:44 | Link to Comment abatis
abatis's picture

Housing is so old school economy, with global warming all that is needed is moar shade for the peoples.

Wed, 02/26/2014 - 12:44 | Link to Comment STG5IVE
Wed, 02/26/2014 - 12:49 | Link to Comment dexter_morgan
dexter_morgan's picture

figures don't lie, but liars sure do figger

Wed, 02/26/2014 - 12:50 | Link to Comment Rising Sun
Rising Sun's picture

New home sales jump 10%, but mortgage apps are tanking.

 

So the ones with cash (hedge funds, private) are buying and the ones who are broke (the herd) are not.

 

The herd are renters now. 

 

The switch to real estate has been on for a while - the markets are going to take a beating very soon.

Wed, 02/26/2014 - 12:58 | Link to Comment Judge Crater
Judge Crater's picture

The key factor for housing in the United States is the reliability of baseline power plants.  For Las Vegas, which relies on coal-fired electric power plants and hydro power, the electricity supply should be reliable.  On the other hand, the New York City metropolitan area is a disaster waiting to happen, the Indian Point nuclear reactors are on borrowed time and NYC's power usage has spiked up thanks to the massive overbuilding going on for the past 8 years.  Hurricane Sandy gave everyone a brief warning of what happens when the power supply goes down.  One accident at Indian Point and Manhattan will be on brownout status for months.  Electrical manhole fires, subway slowdowns, elevator hoist motors fried and air conditioning out in high rises.  If that scenario of power outages in New York takes place, real estate prices in NYC will drop sharply as investors flee the Manhattan real estate market (with the exception of the druglord investors).  Falling Manhattan real estate prices will spook the national market.

Wed, 02/26/2014 - 13:07 | Link to Comment nightshiftsucks
nightshiftsucks's picture

Houses are still selling like hot cakes in San Ramon Ca.

Wed, 02/26/2014 - 13:08 | Link to Comment I Write Code
I Write Code's picture

But other ZH article today says new home sales are up?

So basically, if you go back to 2008 and remove all distressed sales, and look only at retail sales, you get a totally different curve.  I guess even distressed sales mostly get cleaned up and put back on the market, I don't even know if the distressed sale (foreclosure, short sale) gets counted in the first place.

I notice several condos in my west Los Angeles neighborhood are being sold by Berkshire Hathaway, I guess they 've been sneaking around for the last couple of years snarfing them up.  Presuming they can save most of what would otherwise be a 6% realtors fee, they should be able to show a nice profit.

You think this curve is bad now, wait until the next phases of Obamacare hit.  OMG.  Won't affect us in 1%-ville, but the mass of the market statistics are going into critical care.

Wed, 02/26/2014 - 13:16 | Link to Comment abatis
abatis's picture

If you have cash that you think will be somewhat worthless down the road, trading for a house or two now is at least a place to park for awhile or rent/barter with the other peoples. Over time realestate has been a pretty good way to preserve wealth. Queen Elizebeth II owns 6.6 billion acres around the world that the family has been collecting for awhile. I think they will make it through a downturn,

Wed, 02/26/2014 - 15:46 | Link to Comment Deathrips
Deathrips's picture

And how much tax does she pay on it?

 

Us simple people have to pay the govt rent to own ...."our" property.

 

Financed assets are going to shit with the interest rates rise. Unfinanced stuff is going to go up.

 

Watch and learn.

 

RIPS

Thu, 02/27/2014 - 09:40 | Link to Comment jay35
jay35's picture

Real news that didn't affect mortgage rates, which went up instead of down.

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