Builder home "sales" at risk...But now that the monthly payment has skyrocketed over the past 6 weeks [from much higher mortgage rates] now they [homebuyers] can "afford" 20% less. Thus, right now builders and mortgage lenders are scrambling to try and recover the lost "affordability" through shoving higher-risk ARMs down borrowers throats, requiring much larger cash-in at close, removing upgrades etc. Needless to say, this spike in mortgage rates from the low 3%'s to the mid-to-high 4%'s changes everything for the majority of New Home buyers several months back, which don't really "buy" the house at the time of contract. - Mark Hanson, private housing market consultantFor the record, Hanson has been by far the most accurate of any of the housing market analysts out there (I'm talking the real ones, not the Wall Street shills plus the interminably, tragically stupid Mark Zandi). He was a former mortgage broker who adds invaluable, truthful insight to the entire sector. The comment above is from a note to his subscribers, but you can follow his freebie material here: LINK
I wanted to share Part 2 of my housing market analysis, which was posted on Seeking Alpha last night. From a couple of the comments already posted, it's apparent that the commenters did not read Part 1, which you can access HERE.
I'm just stupefied by the number of "Squawkers" that push the housing recovery idea and yet completely ignore the decline going in income and disposable income; the spike in mortgage rates; and the percentage of people who are either nominally still underwater on their house or technically underwater - meaning they don't have enough equity to cover the cost of selling, new down payment and moving. I review that in Part 1. I didn't put the number in there because a lot of people would not believe it, but Mark Hanson - who's work is close to impeccable - has come up with up to 66% of all current mortgaged homeowners are zombified - i.e. underwater + technically underwater.
All the evidence I look at - most of which does not make it into the media - is telling me that the housing market is now set up for a serious decline. In Part 2, I review new home sales and show how the numbers are overstated and why new homes sales are about to hit the skids. Please take the time read it, especially if you have been duped into thinking that housing is "cheap" right now: The Coming Housing Crash Part 2
The insiders know everything I've outlined in Parts 1 and 2. That's why they are now heavily promoting the housing "recovery" and why - per Hanson's quote above - they're now trying to shove buyers into ARMs to make sales happen. Sound familiar? It sure does to anyone reading this who got foreclosed out of a home with an ARM mortgage in the last 5 years. Just for the record, KB Homes reported their numbers yesterday, reported a loss and also reported a 27% cancellation rate on contracts. You'll see why that's relevant when you read my analysis.
Hopefully I'll get Part 3 written and published by the end of next week. Have a great weekend.