Talking about foreclosures, a possible shortage of appraisers, mortgages for buying a new home increase and much more…
All Aboard: Rail Traffic Increases
The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending April 8, 2017. For this week, total U.S. weekly rail traffic was up 7.1% compared with the same week last year. Total carloads for the week ending April 8 were up 9.8% compared with the same week in 2016, while U.S. weekly intermodal volume was up 4.6% compared to 2016.
Excellent news but not all commodity groups are increasing. Still, a positive indicator for the economy.
The good news is that the FHFA reported 14,558 completed foreclosure prevention actions in January 2017 and their delinquency rate remained flat. The bad news is there were some increases in foreclosures:
- Third-party and foreclosure sales increased 16 percent from 5,764 in December 2016 to 6,705 in January 2017
- Foreclosure starts increased 10 percent from 15,133 in December 2016 to 16,604 in January 2017
The good news is that despite the increase from the previous month, foreclosure sales and starts in January 2017 were down compared to January 2016.
One of the most important issues facing residential real estate in the coming years has to do with the appraisal profession. Research by the National Association of REALTORS® shows that though appraisers are generally satisfied with their work and expect to stay in the industry, their median age is close to 55. As a result, a big wave of retirements is expected in the next 10 years.
This could be a very very serious problem for buyers and sellers alike. Let’s hope more people decide to become appraisers. Otherwise, we may see some serious delays and cost increases in the home buying process.
Fixing Mortgage Industry Would Boost Lending $300 Billion a Year
More from Jamie Dimon:
Much of what we consider good in America – a good job, stability and community involvement – is represented in the achievement of homeownership. Owning a home is still the embodiment of the American Dream, and it is commonly the most important asset that most families have.
So it is no surprise the financial crisis, which was caused in part by poor mortgage lending practices and which caused so much pain for American families and businesses, led to new regulations and enhanced supervision. We needed to create a safer and better functioning mortgage industry. However, our housing sector has been unusually slow to recover, and that may be partly due to restrictions in mortgage credit.
He goes on to suggest that getting rid of regulations would cure all the problems in mortgage lending. Can we trust the same financial companies that caused the Great Recession to NOT repeat the same mistakes?
I seriously doubt it.
But we do need common sense reforms to housing finance. The key part of these reforms is a healthy dose of common sense and not making the tax payers liable in case anything goes wrong.
PNC Financial Services Group’s retail banking earnings fell over the quarter and over the year, due to lower gains on residential mortgage servicing rights and lower mortgage loan revenues overall, the bank revealed in its first quarter earnings report released on Thursday.
Wells Fargo saw drops as well, with a drop in mortgage originations, but a slight boost in revenue. The bank’s first quarter income was $5.5 billion, in line with Q1 2016.
The story was similar at JPMorgan Chase. JPMorgan Chase posted a net income of $6.4 billion, slightly down from Q4 2016’s 6.7 billion. JPMorgan’s mortgage department struggled as well. Mortgage banking posted a drop to $1.5 billion in income for Q1 2017 from Q4 2016’s $1.6 billion.
Could we see some of the big banks get out of mortgage lending? I doubt it but the decrease in profits does help to explain Dimon’s comments above.
A new Urban Institute report corrects the record on the benefits and flaws of the Community Development Block Grant (CDBG) program.
The Trump administration’s proposed budget slashes funding for the Department of Housing and Urban Development (HUD) by roughly 13 percent. A chunk of that comes from eliminating the Community Development Block Grant (CDBG), currently worth $3 billion. Among other things, it helps fund local infrastructure, community revitalization projects, affordable housing, education initiatives like head-start, and programs like Meals on Wheels. According to the administration, CDBG “is not well-targeted to the poorest populations and has not demonstrated results.”
According to HUD, between 2005 and 2013, CDBG created or retained 330,546 jobs, assisted over 1.1 million people with homeownership and improvements, benefitted over 33 million people nationwide through public improvements, and provided public services to over 105 million people.
Lots of differing stories floating around about the cuts at HUD. I am torn as to how I feel about CDBG. Some of the CDBG is great and some sounds like money wasting BS.
I hope the good is retained and the BS eliminated. But that could be said about most parts of the government…
The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for March 2017 shows mortgage applications for new home purchases increased 6.7 percent compared to March 2016. Compared to February 2017, applications increased by 23 percent relative to the previous month. This change does not include any adjustment for typical seasonal patterns.
Excellent news. Please remember this is national and not local so it may not reflect what is happening in every market.
Growth in Americans’ wages has been leveling off lately, contrary to expectations that a steadily falling jobless rate will quickly lead to a sustained acceleration.
Blame it on dismal productivity and lingering, albeit diminishing, slack even with unemployment at an almost 10-year low of 4.5 percent.
While hopes are riding high, actual wage performance is what counts in terms of household spending and the economy.
I have been preaching about the need for good paying jobs since the depths of the Great Recession. We must have an increase in wages for ALL Americans if we are going to have a strong economy and housing market.
To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.
Rents have already started to rollover but we suspect the correction has only just begun.
And while much of the rent compression has come in high-cost and commodity-exposed regions, dozens of low-cost markets are also starting to experience substantial rent declines.
Not good but with such strong demand for rentals, is this cause for concern? Maybe it is or maybe it isn’t. I wouldn’t panic yet.
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