| Last | Change | Percent | |
| S&P Futures | 1828.6 | 3.1 | 0.17% |
| Eurostoxx Index | 3095.7 | -25.2 | -0.81% |
| Oil (WTI) | 103.3 | 0.0 | -0.01% |
| LIBOR | 0.236 | 0.002 | 0.86% |
| US Dollar Index (DXY) | 80.22 | 0.080 | 0.10% |
| 10 Year Govt Bond Yield | 2.75% | 0.01% | |
| Current Coupon Ginnie Mae TBA | 105.4 | -0.1 | |
| Current Coupon Fannie Mae TBA | 104.1 | -0.1 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.31 |
Markets are higher this morning on no real news. Inflation at the consumer level and initial Jobless Claims came in as expected. Bonds and MBS are down small.
The latest CoreLogic Market Pulse is out, and it has some really good stuff on the state of the first time homebuyer. The rise in real estate prices (especially on the coasts) has hit first time homebuyers harder than existing homebuyers (in other words, buyers who currently own a home). Existing homeowners aren't as affected by increasing home prices because they have equity in their existing home. First time homebuyers do not. Of course, historically housing remains very affordable.
CoreLogic also has a piece on the new rental boom, and whether we are experiencing a new age in the single family rental market. We have seen a massive conversion of single family homes into rentals as professional investors have scooped up distressed properties and put them out for rent. Certainly the demand for rental housing has been somewhat driven by a lousy economy, and lousy economies don't last forever. On the supply side, don't forget that professional investors are driven by the economics of a trade going forward, and the potential returns from single family rentals may look a lot different today as the easy money in distressed properties has already been made and future home price appreciation may be harder to come by. For the first time homebuyer, the buy vs rent decision is still almost as skewed towards buying as it has ever been:
If professional investors begin to let some of their rental property go (and given the tight inventory, they would be wise to) we will begin to see some of this property absorbed by "real" buyers - in other words, buyers with a mortgage. This will be the next big change in the mortgage banking industry - the exit of cash-only buyers and the return of a more normal mix of cash buyers vs buyers with a mortgage.
Following on this, tomorrow we will get existing home sales, which is expected to come in around 4.7 million. In normal times, that number is over 5 million and during booms it will approach 7 million. The thing to keep in mind however is that cash sales represent 40% - 50% of all transactions right now, while historically, that number is closer to 20%. In terms of "gettable" business right now, 55% of 4.7 million homes is about 2.6 million purchase mortgages. If we get back to a normal cash / mortgage ratio of 20%, that number becomes 3.8 million, an increase of 46%. And if we get back to historical existing home sales numbers, it tops 4 million. As a purchase shop, we are in a good position to pick up that incremental business.
So LOs, this lousy environment too shall pass. Better days lie ahead, even if the refi boom doesn't return.
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