Seeking Alpha

MBA Mortgage Application at -2.5%

Comments (32)
  • American in Paris
    , contributor
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    Misleading titles. Purchases were up. Again. Purchases were up 2%.
    28 Aug 2013, 09:10 AM Reply Like
  • ericmcarter
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    And new home sales were 20% below expectations on their last reading...
    28 Aug 2013, 10:06 AM Reply Like
  • DrewMcVay
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    Do you even know what the MBA tracks? the MBA tracks refinance and purchase applications week over week. Being in the industry, I can tell you that applications are down 2.5% week over week, and I'm not shocked refinance applications are down 70% roughly in the last 3 months, or the fact that purchase applications are down notably.

     

    But yes, you shouldn't have spoken too soon, new contracts to buy homes were down lol. There are no misleading headlines.
    28 Aug 2013, 11:04 AM Reply Like
  • American in Paris
    , contributor
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    And existing home sales hit record highs.

     

    New home sales is a tiny of the fraction of the market and I know of no good why interest rates should be pushing new homes down while existing home sales are up sharply.

     

    The conclusion is obvious. New home sales is an outlier.
    28 Aug 2013, 11:21 AM Reply Like
  • American in Paris
    , contributor
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    New home sales are a tiny fraction of total sales. Probably just an outlier given that total sales were up, not down.
    28 Aug 2013, 11:22 AM Reply Like
  • DrewMcVay
    , contributor
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    Completely wrong. Data is lagging, and you always have to check the source. The National Association of REALTORS puts out Existing home sales. You'll tell me they don't manipulate the numbers, and they are 100% truthful? Likely.... really.... Data is also lagging, so we are just starting to see data that has higher interest rates associated with it, that was not seen before. We'll see what happens going forward, but from someone in the industry I think it's hillarious you have people on the sidelines who have absolutely no idea what they are talking about giving commentary. The market is going in the tank, especially home sales. We are coming into a market where it is no longer the buying season, and interest rates are now higher, I would not be surprised if we saw home sales fall 50% over the next year. The only thing to stop home sales from drastically falling going forward is interest rates returning to a low level, because the economy is no longer getting better.
    28 Aug 2013, 12:04 PM Reply Like
  • American in Paris
    , contributor
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    Drew,

     

    There is no reason to believe that the existing home sales figure are manipulated. And you yourself have provided none, just derision.

     

    And during most of the last half mortgage rates were higher today and sales were not diminished.
    28 Aug 2013, 12:44 PM Reply Like
  • KJP712
    , contributor
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    If you keep the blinds closed a vacant house looks occupied.Only the Postman really knows the full extent of the problem.They only shake their head when you ask about it.
    28 Aug 2013, 09:37 AM Reply Like
  • poclerk
    , contributor
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    KJP712: Postmen shake their heads for any number of reasons and I don't see any investment implications in this behavior. They also scratch their behinds. So if I see my mailman today scratching his behind and shaking his head, what, if anything, am I supposed to buy, sell or hold?
    28 Aug 2013, 09:45 AM Reply Like
  • KJP712
    , contributor
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    Talking to him once in awhile might help.I look at it as free information that might be used for future trades.Most mail carriers are very smart.Depends on where you live,I guess.
    28 Aug 2013, 10:10 AM Reply Like
  • Hungry for Knowledge
    , contributor
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    American,
    That headline seems very straightforward in its title and promised delivery of data.
    Your data points may/may not be accurate (I've not investigated), yet the headline of this news blurb did not attempt to indicate what level purchases were at this week, just mortgage applications.
    28 Aug 2013, 09:43 AM Reply Like
  • American in Paris
    , contributor
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    You are missing the point. Mortgage applications fall into two groups. One for refinancing and the other for purchases.

     

    Mortgage application for loans to buy homes were up 2% this week and in fact up 1% last week.

     

    I don't see the impact of the bogeyman called higher interest rates.
    28 Aug 2013, 11:23 AM Reply Like
  • lasvegasbrad
    , contributor
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    The whole point is about our FAKE recovery.
    28 Aug 2013, 11:01 AM Reply Like
  • American in Paris
    , contributor
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    It is only fake for those left out.
    28 Aug 2013, 11:24 AM Reply Like
  • mobyss
    , contributor
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    "It is only fake for those left out. "

     

    A much larger portion of the public than after previous recessions, especially considering that we're four years into the "recovery".
    28 Aug 2013, 11:54 AM Reply Like
  • CaladesiKid2
    , contributor
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    Declining mortgage applications while home sales contracts are holding near recent highs? Apparently those buying homes do not require financing. This supports the claim that investor funds are speculating on housing. If so, this does not bode well for housing long term as we may have replaced one form of speculation (individual home ownership) with bulk buying speculation. If these are investor acquisitions, then we have a surge in rental properties with absentee ownership. If these investor acquisitions do not 'make their numbers' then we can anticipate another round of bulk selling pressure. With diminished expectations in house price appreciation combined with the expectation for sharply rising property taxes, there is reduced probability for 'making their numbers'.
    28 Aug 2013, 11:02 AM Reply Like
  • American in Paris
    , contributor
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    Wrong. Applications to borrow money to buy homes are up the last two weeks 3%. It is the refinancing applications that are plunging and not surprisingly so.
    28 Aug 2013, 11:25 AM Reply Like
  • DrewMcVay
    , contributor
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    What world are you living in? Not this one.

     

    http://bit.ly/10dAJP3

     

    Keep in mind, this chart is data lagging, so higher interest rates have only begun to be priced into this chart, as the rest of the year continues home sales will continue to decline at a more rapid pace as incomes and jobs continue to shrink. Median household income down 4.4% in the last 2 years, first time homebuyers programs have become prohibitive, rising interest rates, rising housing prices, the lack of benefits offered by employers, higher taxes, all of these are negative factors for housing going forward.
    28 Aug 2013, 12:12 PM Reply Like
  • American in Paris
    , contributor
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    Drew,

     

    What is your favorite reading material, Zero Hedge?

     

    I deal in facts. The impact of interest rates on home purchases is probably weak since no statistical study has been able to isolate a significant effect.

     

    Furthermore, there have been big increases in interest rates in the past without any impact on housing.

     

    Housing purchases depend much more on general economic conditions than they do on interest rates.
    28 Aug 2013, 12:51 PM Reply Like
  • American in Paris
    , contributor
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    Earth Calling Drew,

     

    Incomes and jobs are growing. Not declining.

     

    What is your purpose on this site? This site about investment. Not about Zero Hedge style conspiracy theories and populist rhetoric.
    28 Aug 2013, 12:56 PM Reply Like
  • DrewMcVay
    , contributor
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    Maybe someone will come out and mention affordability, about how rates and home prices are historically low, and we can then all laugh since incomes are also historically low. So much for affordability.

     

    Look for mortgage applications to continue to decline. We are in the busiest seasons of the year and home purchases are going down!?!? That should tell you what to expect this fall/winter if interest rates and home prices continue to stay high.

     

    Dreadddddful numbers are on their way shortly, as well as hundreds of thousands of layoffs from the mortgage industry, broke realtors, layoffs from title companys, appraisers, homebuilders losing jobs, home improvement companies losing jobs, basically anyone that does work around the house (carpenter, plumber, HVAC, exterminators, etc)

     

    There should be millions of jobs lost in the next 12-18 months if things continue their path.
    28 Aug 2013, 11:16 AM Reply Like
  • American in Paris
    , contributor
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    No, to date millions of jobs have been created. These web site is not for belly aching. It is for investors.
    28 Aug 2013, 11:26 AM Reply Like
  • American in Paris
    , contributor
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    Real incomes are no lower than they were during the Housing Bubble.

     

    You are using this message board to vent and is not impressive. I was trained as an economist. I deal in facts, not your conspiracy theories about how the existing home sales figure was manipulated up while you believe the new home sales figure was delivered right from the hand of God.
    28 Aug 2013, 12:54 PM Reply Like
  • American in Paris
    , contributor
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    Yes, you are definitely right. Second quarter real GDP growth of 2.5%. Must be another another darn government lie ...

     

    :)
    29 Aug 2013, 08:39 AM Reply Like
  • American in Paris
    , contributor
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    Gentlemen,

     

    All this whining and complaining is besides the point. Moreover, invoking conspiracy theories because you disagree with the data is an act of desperation and weakness.
    28 Aug 2013, 01:02 PM Reply Like
  • Tack
    , contributor
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    Lately, it's been popular to believe that home prices/sales and interest rates are inversely related. I mean, they just must be, right?

     

    Well, in fact, history since 1970 shows that home prices continue upward in almost any rate environment, even during the radical rate increases from 1975-1981. This pattern was only broken in 2008, and that didn't occur because of a rate effect; it happened because of very poor underwriting, resulting in a collapse of credit payments.

     

    Now, with the 2008 credit crisis behind us, we're seeing homes again sold for cash (40%) and with much tighter credit and downpayment requirements, overall. Consequently, there seems little reason to assume that housing will now adopt a new pattern, vis-a-vis rates, that has never been observed previously. Furthermore, home prices will be buoyed by rental equivalents unless they, too, adopt a new pattern.

     

    http://bit.ly/rroJDX
    28 Aug 2013, 03:45 PM Reply Like
  • WallStreetDebunker
    , contributor
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    Tack: Did you believe at any point during 2004 to 2006 that aggregate home prices in America would decline substantially in subsequent years? How about in South Florida?

     

    I'm guessing that you were well aware of the excesses in the business, but that you thought the market would be slow for a number of years rather than have lower prices. (That was a common viewpoint among real estate professionals at the time.) Am I close?
    28 Aug 2013, 10:14 PM Reply Like
  • Tack
    , contributor
    Comments (12440) | Send Message
     
    WSD:

     

    I actually didn't think about it because I was neither a home buyer nor seller nor investor in realty. However, what made me think that serious trouble loomed was rising down the road one day and hearing a radio commercial saying "get 125% of the value of your home with no need for documentation of income." I thought to myself, that's simply impossible, which, of course, in reality it turned out to be, for obvious reasons.

     

    But, as I stated, that was a credit event, not a rate event, so it doesn't make any sense to now surmise that rates will suddenly lead to a collapse in the realty business. If there is any realty reversal, it's going to occur because the economy turns south, not because rates rise, and, in fact, if the economy sours for any reason, rates will fall.
    28 Aug 2013, 10:38 PM Reply Like
  • WallStreetDebunker
    , contributor
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    OK. Fair enough. Thanks for your response.
    28 Aug 2013, 10:50 PM Reply Like
  • American in Paris
    , contributor
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    Hey WallStreetDebunker.

     

    Gotta love that accelerating US economy. Second quarter real GDP - 2.5%.
    29 Aug 2013, 08:40 AM Reply Like
  • American in Paris
    , contributor
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    Expectations of future income and wealth are key factors in the demand for housing.
    29 Aug 2013, 08:50 AM Reply Like
  • GaltMachine
    , contributor
    Comments (1129) | Send Message
     
    AIP,

     

    The only proof we have that GDP is at this level is based upon the pronouncement of the BEA which is always subject to revision.

     

    Case in point Q1 2011 which was negative after revisions. Funny how no one remembers how massively they missed on that and that's recent history.

     

    Curious as to why no one picked up on and commented upon the revised 2011 Q1 GDP report. It went from 0.3% to negative 1.3%.

     

    http://1.usa.gov/tJ2WiY

     

    The original advance estimate came in at 1.8% on April 28th for a total swing of 3.1%. That truly is an epic miss in my opinion.

     

    If revisions can be this large, is it really wise to be sanguine about the risks when we are in such tepid growth at present?

     

    Revisions like that only serve to fuel the conspiracy kooks and in this case they would have been vindicated.

     

    The 3rd official estimate of Q1 2011 was 1.9%:

     

    http://1.usa.gov/1dq4lF0
    “Gross Domestic Product: First Quarter 2011 (Third Estimate); Corporate Profits: First Quarter 2011 (Revised Estimate)

     

    Real gross domestic product — the output of goods and services produced by labor and property
    located in the United States — increased at an annual rate of 1.9 percent in the first quarter of 2011, (that
    is, from the fourth quarter to the first quarter), according to the “third” estimate released by the Bureau
    of Economic Analysis. In the fourth quarter, real GDP increased 3.1 percent.”

     

    What’s actually astounding about this period is that Q4 2010 came in at 2.8% so the swing from Q4 to Q1 was negative 4.1%!!!

     

    Was there any real-time data at that time that even hinted at that magnitude of negative change?

     

    Truly fascinating from a data dump, geek point of view.

     

    PMI charts and the intermodal rail data were very strong (compared to today) for the period preceding and after the negative quarter and I have no idea how that data would have led you to think a strongly negative quarter was straight ahead.

     

    This is truly fascinating to me as I dig into it.

     

    I bet you could datamine Calculated Risk’s chart porn and find even more non-confirmatory signals.

     

    This was truly a bizarre economic period :)
    29 Aug 2013, 10:44 AM Reply Like
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