The Perfect Storm

Over the last 2 weeks i have been looking at various data sets and speaking with people in the business and outside of the business.  And I have come to the conclusion that we could be heading for the perfect storm.

Over the last few months we have see a few interesting trends.

Home sale prices in both Ada and Canyon county have steadily risen.  And this was interesting to me, and here is the reason why.

According ot MLS data, we have 4092 active listing in the area, of those 1428 are distress properties.  Both of these numbers have been going down for the last 5 months, with less and less homes on the market.

(If you just look at SFR only, there is actually only 3326 active listings)

Sales have either held pretty steady or slighly lower.

In speaking to RE agents, of the homes on the 36% of distress homes on the market, about 1/2 of them are hole/dives or need a bic lighter remodel.  so that means about 3300 are decent homes. 

Of those 357 are over the $350K price range.

So that puts the middle income folks with about 2943 to chose from.

Stay with me...

Corelogic released numbers saying that foreclosures and dipping and people 90 days behind are dipping also in Idaho.  Thus less and less distressed properties coming on the market.

Now, we have tons of people out there that want to sell their homes, but can't, because they are too upside down on their homes to sell them.

I have spoken with a few title officers who do the title work for major banks, they are not holding onto any homes.

So what does this mean....

The Perfect Storm

With less and less homes on the market, we have started seeing bidding wars and multiply counters offers, just today I saw a home listed for $155K sell in a bidding war for $165K a 6% equity increase.

At the rate we are right now, selling Ada last month 692, Canyon last month 338, total of 1030, that means we have a 2.86 month of supply.

Even if you just took the raw numbers 1030 / 4092 = 3.97 month supply.  And to me that is a Seller's Market.

But who can sell? 

We could see an actual shortage by early winter, and watch out for spring!

Eventually we will see equity increase enough for some people to start to put their homes on the market again, and things will normalize.  But I feel for most of 2012 it is going to be a sellers market for the sellers who can.

What do you think, log in and comment, I will be quite interested in what you think!

The next perfect storm, rates.
Well plending any deal, over the weekend, I am looking at the US government defaulting.  Now we will pay our bills, but it is the rating agencies that are going to spank Uncle Sam.

If the rating agencies such as Moody's and S&P drop the US rating from AAA to AA, here is what is going to happen.

The 10 year bond will probably jump .50 to 1.0 in Yield, which means the Mortgage Back Securites will also jump that much if not more.  So that means we will see rate in the mid 5's.

Then for 2-3 weeks we will have some bouncing, in the mean time, Washington will send some heavies over to the rating agencies and "convince" them that the US isn't all that bad and it would be in their best interest to give US back the AAA rating.

At which time we will see some easing in rates and eventually back down to where they are now.

IF we don't get back the AAA rating then rates will probably stay in the 5's and may tick into the low 6's.  And NO that isn't all that bad, remember during "THE DAY" when we sold homes by the 6 packs, rates were in the high 6's.

This weekend, something needs to happen and voted on by Monday, if not and Tuesday will roll around, you will find me at a bar, drinking and watching CNBC.  It will not be pretty.

Some other news of interest

-It was reported this week that since the new Frank/Dodd bill has gone into affect, reforming all of our mortage industry, the average closing costs for a loan has risen by 8.8%.  Way to go Congress.

-QRM or the Qualified Residential Mortgage rule that would of made it a requirement for 20% down is DEAD.

And a word of caution!

In Idaho now it can take up to 7 days to get a driver's license, why, well now they have to mail it to you.  Before if you had a expired driver's license, you would walk in, wait, wait, wait, but eventually you would walk out iwth a new ID.

Not anymore, now you have to wait up to 7 days for them to mail it to you.

So a word of caution, MAKE SURE YOUR CLIENTS HAVE A VALID DRIVER'S LICENSE 7 DAYS BEFROE THEY CLOSE ON A HOME LOAN.  Title will not take a expired Dr. ID, or you hold file will have to wait, wait, wait 7 days.