Home Builders, Mortgage Rates and Home Prices

Homebuilders May Be Giving Up On 2009
July 24, 2009

Despite a rally of optimism yesterday for homebuilder shares, foreclosures and unemployment are making 2009 an inhospitable climate for new construction across the U.S. The largest builders have halted projects until demand recovers. As pessimism sets in regarding the second half of 2009, any reopening of development is sure to be slow and cautious.

Kentucky Takeaway: Builders across the state are bracing for a worse second half in 2009, hoping the low point will not be even worse than the previous bottom of November 2008. To be sure, the sector is dependent on some other economic factors to help improve conditions before lasting progress can be made.
http://www.bloomberg.com/apps/news?pid=20603037&sid=a3yc2pD4CFUs


Rates On The Rise
July 23, 2009

Freddie Mac reported that mortgage rates rose from 5.14% to 5.2% last week, indicating how difficult it could be for the federal government to keep rates low during the housing crisis. Investor concerns about inflation are applying upward pressure on the rates, and the potential for higher rates (as well as the soon-to-expire $8000 first-time federal credit) could push new buyers into the market.

Kentucky Takeaway: With some hope that the overall market is stabilizing, that could offset the problems that are going to follow the rise in unemployment. It will be interesting to see if first-timers take the plunge.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aOJY2tDGMRxA


More Talk of Mortgage Cram-Downs
July 23, 2009

Disappointed with how loan modifications are going so far, some members of Congress are ready to discuss cram-downs again. Sen. Sheldon Whitehouse, who was in favor of it back in the spring when the House passed it originally, was talking about it again this week, as witnesses expressed frustration with current progress to a Senate Judiciary subcommittee. Meanwhile, Bernanke is attempting to improve communication between the lenders and buyers.

Kentucky Takeaway: Communication and efficiency will be key to mitigating the crisis. While it is still doubtful that cram-downs will become a reality, pressure is increasing on the banks with each passing week.
http://www.latimes.com/business/la-fi-mortgage-cramdowns24-2009jul24,0,2857279.story


NE Now Strongest Home Price Region
July 23, 2009

With three positive months in the second quarter, the Northeast now possesses the highest median sale price in the country at $249,400. The second quarter has given many hope that the recovery has begun after sluggish activity during the first quarter’s colder months. Investors have faired well with cash purchases on foreclosures, a trend that is expected to continue.

Kentucky Takeaway: Though not part of the Northeast, Kentucky will see investors swoop in on foreclosures, as well. The double-digit unemployment rate will have a negative effect and (as always) bears watching.
http://www.nytimes.com/aponline/2009/07/23/business/AP-Home-Sales-Northeastern-Cities.html


Settlement Talk for BOA’s Countrywide Borrowers
July 23, 2009

Accused by Kentucky Attorney General Jack Conway of possible predatory lending practices, Countrywide has announced the establishment of a $150 million fund to address loan modifications for its nearly 400,000 borrowers nationwide. The fund applies to those borrowers who were foreclosed upon within twelve months of taking out their mortgage loans.

Kentucky Takeaway: $1.64 million has been set aside for Kentuckians, as more than 1,000 borrowers are expected to be eligible for the program. Conway’s office estimates that borrowers will receive an average of more than $1,500.
http://www.bizjournals.com/louisville/stories/2009/07/20/daily45.html