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Mortgage Applications Tumble As Citi Warns Oil-Drop Risks Housing/Jobs Slump
Mortgage applications for home purchases fell almost 7% last week, fading recent gains and hovering once again back at 20 year-lows (entirely unable to reflect the housing 'recovery' for the average joe). The plunge in applications comes as mortgage rates crash back to 4% - the lowest in 19 months. The reason - apart from unaffordability - is explained by Citi's Will Randow who notes the spillover effects of the "unequivocally good for everyone" drop in oil prices has a dramatic effect on both jobs (prolonged price drop means a loss of ~200k jobs) and housing (starts expected to drop 100k if oil prices remain low). Maybe talking-heads should reconsider that "unequivocally good" narrative.
Mortgage applications tumble back near 20-year lows...
And Architect activity is plunging...
Even as Mortgage rates near record lows...
* * *
As Citi explains, the drop in oil could be responsible for the apparent lack of demand...
The upstream oil & gas industry (i.e. extraction, support activities for operations, and related machinery manufacturing) has added roughly ~0.2M jobs since nonfarm payrolls bottomed in July 2010 (TTM avg), which represents 16% of goods producing jobs added and 2% of total jobs added since then. Assuming a prolonged decline in oil prices below $60 per barrel causes the ~0.2M jobs added to cease, our sensitivity analysis leads us to believe that ~0.1M cumulative US Housing Starts are potentially at risk, factoring in that ~0.2M jobs are eliminated at the current ~1.7 jobs per US household ratio.
Among US homebuilder end-markets, Houston and other parts of Texas appear to have the largest potential risk associated with lower oil prices and related job losses. The last time oil prices sustained (current dollar) price levels below $60 per barrel, annual TX housing permits bottomed at ~40K homes (TTM) versus ~160K homes in October 2014 (TTM), but did eventually recover, even at sustained lower oil price levels. So, similarly, it appears downside risk is near ~0.1M in incremental lost Housing Starts, predominantly in Texas.
Charts: Bloomberg
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"We levered some folks...
What I always think about these days, as my old man gets ever older, is WHO are all these elderly going to sell their houses to when they simply have to downsize and move to assisted living (paid or family - same end result)?
As a demographic they are sailing into the mother of all depressions in their final years at zero percent interest rates and the younger demographics pre-loaded with a edu-mortgage.
Supply meet demand.
Regards,
Cooter
We juggled some folks.
Oh fuck me.....6 to 10 Million legal illegals will get new Obama homes
Weeeeeeee! Stay calm!
.
My guess is, because of Reverse Mortgages (ReMo), they won't need to sell. Wouldn't FedGov just end up with the property (ReMo is FedGov guaranteed)? I suppose it depends. Would Fedgov sell the properties, or do we go full Socialist Retard and government becomes a more obvious landlord than it is now?
Why doesn't the MBA publish the number of falsified mortgage apps? A friend of mine in the biz said they are back to 2006-2007 levels.
With the valuers also getting pressured into upping the supporting sales price,
2005/6 is here again.Hosing crash 2.0 soon.
PS was going to correct the typo, but its better like that.
which is why my wife and I downsized 13 years ago--now our friends in that development cannot sell their 3400 sq foot homes to move to a house with a first floor master with maintenance, albeit with zero lot lines.
the next problem is as our genertion here dies we have hmes for sale and nobdy to sell to.
but its a smaller home.
Four undocumented immigrant families per house
C'mon, be creative and stick it to the banks. Take out a reverse mortgage and let the bank worry about selling the house to get "their" money back. If all the Boomers do this, the banks will be in a world of hurt :)
"Whaaaaaaaaaat?", says Stevie Liesman, "The decline in oil prices acts like a tax cut to the American consumer who nobody in their right mind ever should underestimate. This is all false. Once the full impact of the fallin gasoline prices is felt, as soon as Mr and Mrs America go out and refill their SUV and realize the amount of extra pocket spending money they'll have, the economy will be growing at a 7% annual rate!. I tell ya'! The housing slump we all know is because of stringent lending standards. Believe me, if those folks in Ferguson could have afforded a home, there'd of been no rioting because that big kid would never have been stealing cheroots, he'd of been mowing the lawn. It's all racism. Nuffing to do wif oil prices."
whats that old phrase? Cutting off our nose in spite of our face?
'To spite'
But I thought getting a mortgage was as easy as pie these days...what about the lowering of lending standards we keep hearing about.
it is really pathetic ... housing numbers
especially considering earlier this year fair isaac (FICO) rejiggered credit scores (to make a good score easier to achieve) ... and mel watt (FHFA) on the move to lower GSE mortgage down payments to low as 3% (so taxpayer can't eat another sh!t sandwich down the road)
I got ripped the other day here for even suggesting getting a loan was somewhat difficult.
And I talked to my mortgage buddy in Seattle last night. He says the market is tough there (qualifying buyers with major lenders), and that business is quite slow. Something isnt adding up.
But...but....real estate, like stawks, only always go up! Never been a better time to buy buy buy than right now! Etc, etc.
Losing/
:55 USD Redbook (MoM) -1.2% -1.3%
08:55 USD Redbook (YoY) 4.1% 3.9%
09:45 USD Manufacturing PMI (Dec) 53.7 55.4 54.8
11:30 USD 4-Week Bill Auction 0.020% 0.040%
07:45 USD Chain Store Sales (WoW) 3.0% -1.5%
07:45 USD Chain Store Sales (YoY) 1.1% 2.9%
08:30 USD Building Permits (MoM) (Nov) -5.2% -3.4% 4.8%
08:30 USD Building Permits (Nov) 1.035M 1.060M 1.080M
08:30 USD Housing Starts (Nov) 1.028M 1.030M 1.045M
08:30 USD Housing Starts (MoM) (Nov) -1.6% 2.1% 1.7%
These numbers are pathetic.
Trying to juggling that thing sure does seem pathetic.
re retail sales
november had a very favorable seasonal adjustment
december has a very unfavorable seasonal adjustment
ISIS has unfavorable seasonal adjustments to hostages as well, in BLS speak.
Judging by the vast number of emails I'm getting from retailors , desperation is
setting in, ramping up to sheer panic.
I always do my Xmas shopping in Jan. for the next Xmas.Not that I do much anyway.
But...but..... PROMISE ZONES!
Promises were meant to be broken, just like trusts.
"He's dead, Jim"
This is racist
Here is a sobering excerpt from a recent news article re. oil prices:
"In Houston, Texas, where the first oil industry layoffs have been declared, property developers expect a decline of up to 12% in home sales next year."
http://www.ibtimes.co.uk/us-oil-states-hit-by-early-slowdown-signs-post-...
Ouch. That's gonna leave a brown mark
200k expsoure in energy jobs is ridiculous - will be ten times that number to include manufacturing / distribution / suppliers / services
if the perception is three years at least for prices in the cellar no way this ends at 200k
Taking that fifteen FRNs that I save per tank with cheaper gas and buying, guess what? That's right! Hookers and blow, baby! Gotta support the GDP! Why buy PMs? I mean we can't EVER devalue our "money" right? Well, not so you would notice anyway. Freakin bag of m&m peanuts...a dollar twenty nine at Staples, bag half empty too! But the hookers are full!
Here we go again! The housing bubble never went away. Until homes are affordably priced no one should be buying. You should see the crap that passes for million dollar homes in the Bay Area. Makes you wanna puke.
Low gas prices have absolutely Nothing to do with housing, I call BS = FEAR. Those losing there jobs in the field can't afford a house anyway.
The causality implied by the article is fucked up. Global economic activity is decelerating due to incremental inefficiency of capital allocation. Falling oil prices reflect this, albeit in turbocharged fashion (demand declining, BUT ALSO malinvestment is pouring EVEN MORE supply into the market). In the US, rising taxes and medical/eduation/food expenses are crowding out consumption, which has already been (over)stimulated by 7+ years of free credit. Oil price declines are a symptom of the same disease that is also causing job losses and lowered demand/prices for homes. . .
a 3% refi would be sweet.
<--Dollar will crash before real estate
<--Real Estate will crash before dollar
Real estate is tangible and has value in the long-term. Currencies are IOUs, glorified and pretty pieces of paper printed and handed out by governments. Whether because of modern printing options or in an effort to thwart counterfeiters most of us will admit countries have raised the bar concerning the appearance of their currency. This has almost become a full blown beauty contest and taken our minds off what is really behind these pretty little tokens.
A piece of paper with great power, based only on faith, they are mere promises of stored value and wealth, and the value of these promises can change in an instant. With this in mind currencies may not be the best place to store your wealth. The article below delves deeper into currencies as a great "Trojan horse" for governments to fleece the average citizen of their wealth.
http://brucewilds.blogspot.com/2014/10/currencies-are-ious.html
How these lower prices effect a particular nation will vary and will effect both their currency and how competitive they will be going foward. The recent decision by OPEC members to keep their production ceiling unchanged has sent crude prices into a tailspin. Dropping oil prices add a new surprising new dimension to the stability of the world financial system.
While often heralded as a godsend to the economy and the end consumer we must remember lower prices hurt both producers and those in the business of oil exploration, drilling, and sales. The shale boom has been one of the bright spots in the economy in recent years and acted as a tailwind that accounted for much of America's growth. Expect this to come to an abrupt halt and with it thousands of jobs. The article below delves deeper into the economic damage lower oil prices can foster.
http://brucewilds.blogspot.com/2014/11/dropping-oil-prices-increase-risk-to.html
There are plenty of dupes out there chasing low rates and buying to beat the rate hikes. They dont understand once the rate hikes happen the circus is over and they are holding an anchor. (If and when they do, Sayonara)