Real Estate Facing First Test of 2013

I noticed a lot of women wearing sparkling red shoes this holiday season, now I know why. They all want to follow the yellow brick road to Kansas, the land of no cliffs. The market seems to be cheering over:


1. Everyone has to pay more taxes.

2. There's not a dent in the deficit.

3. The debt ceiling is looming, if it's not already here.


Pertaining to real estate, the 10 year treasury yield has risen solidly above 1.8%. I suspect this is going to fluctuate wildly as the markets digest the impact of the fiscal cliff-related decisions. In the next few days, we shall also see how mortgage rates react. More importantly, we should be able to see if the invisible hands of the Feds can hold the agency MBS market steady. So far, since the announcement of QE3, the Feds have already been going full throttle, purchasing $236.9 billion of MBS in 14 weeks. I am not sure what the wizard can do anymore without buying more than the QE3 guidelines he has set for himself.


We know that refinancing has accounted for at least 70% of the mortgage originations in 2012. Freddie Mac reported that the average 30 year mortgage rate was 3.35% for December 2012, a full half percentage point below the 3.96% a year ago and over 1% below the 4.71% average during December two years ago. If rates go up, the refinance business will not just decline, it will vanish. Frankly, I have no clue how rates may affect the HAMP and HARP interventions, but their aggregate volume is not expected to be much.

The bigger test, however are purchases. If you watch CNBC, it is unanimous that the housing bottom is behind us and recovery is well on the way. If you listen to the home builders, they will tell you that their average buyers are over-qualified and a little increase in mortgage rates would have no impact on sales. In the next few weeks, we should be able to see if rates actually matter. It becomes a true test to see how qualified buyers really are, as they try to purchase at a higher cost.

Most of the time, the weekly mortgage application reports from the Mortgage Bankers Association are pretty useless.  They are however  one of the earliest indicators of changes and may prove to be very telling in the next few weeks. If mortgage rates go up, there should be a rush to lock in rates, resulting in a spike of applications when all the procrastinators come off the sidelines. Then the volume will settle down and we shall see how deep and strong the demand pool really is.

Also coming up is the traditional spring selling season for the home builders, starting after the super bowl weekend. This year, the season may be overshadowed by the debt ceiling battle.  I make it a practice not to discuss specific trades, but I have to admit I am salivating over the opportunities in these home builders right now.



 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

One Response to “Real Estate Facing First Test of 2013”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Japan: It isn’t What the Media Tell You
      Known for Being Terrible For the past few decades, Japan has been known for its stagnant economy, falling stock market, and most importantly its terrible demographics.     A chart of Japan's much-bewailed demographic horror-show. Most people consider a declining population to be a bad thing due to the implications for assorted state-run pay-as-you-go Ponzi schemes, primarily those related to retirement. It is hard to be sympathetic, since it would have been possible to...
  • An Update on Polly: She May be Coming Back to Life
      A Twitch of a Toe In our recent update on credit spreads we proposed to use the seemingly deceased  Monty Python parrot Polly as a stand-in for the suspicion of creditors in today's markets.  The question was whether Polly was indeed dead or merely in a deep coma. Depending on this, one should be able to gauge how powerful a miracle will be required to resurrect her.   Meet Polly. Is she alive?   In the first half of November there was actually a small sign that...
  • The Complete Idiot’s Guide to Being an Idiot
      Style Over Substance There are many things that could be said about the GOP tax bill.  But one thing is certain.  It has been a great show. Obviously, the time for real solutions to the debt problem that’s ailing the United States came and went many decades ago.  Instead of addressing the Country’s mounting insolvency, lawmakers chose expediency without exception.  They kicked the can from yesterday to today.   The empty chairs meeting – this is slightly...
  • The Zealous Pursuit of State-Sponsored Collapse
      When Bakers Go Fishing Government intervention into a nation’s economy is as foolish as attempting to control the sun’s rise and fall by law or force.  But that doesn’t mean governments don’t meddle each and every day with the best – and worst – of intentions.  The United States government is no exception.   From the “When the government helps the economy” collection: Breaking a few eggs while baking the bridge to nowhere omelet. [PT]   Over the...
  • Precious Metals Supply and Demand – Thanksgiving Week
      Grain of Salt Required The price of gold fell $7, and that of silver 24 cents. This was a holiday shortened week, due to Thanksgiving on Thursday in the US (and likely thin trading and poor liquidity on Wednesday and Friday). So take the numbers this week, including the basis, with a grain of that once-monetary commodity, salt. We will keep the market action commentary brief.   Relatively modern examples of salt money which was widely used in African countries until the...
  • What’s the Point? Precious Metals Supply and Demand Report
      Questions and Answers A reader emailed us, to ask a few pointed questions. Paraphrasing, they are:   Who cares if dollars are calculated in gold or gold is calculated in dollars? People care only if their purchasing power has grown. What is the basis good for? Is it just mathematical play for gold theorists? How does knowing the basis help your readers? Is it just a theoretical explanation of what has already happened? Prove that if someone has known the basis...
  • The Stock Market and the FOMC
      An Astonishing Statistic As the final FOMC announcement of the year approaches, we want to briefly return to the topic of how the meeting tends to affect the stock market from a statistical perspective. As long time readers may recall, the typical performance of the stock market in the trading days immediately ahead of FOMC announcements was quite remarkable in recent decades. We are referring to the Seaonax event study of the average (or seasonal) performance across a very large...
  • The Party of Spend More vs. the Party of Tax Less
      Eternal Spendathon The Senate just passed a 500-page tax reform bill. Assuming it lives up to its promise, it will cut taxes on corporations and individuals. Predictably, the Left hates it and the Right loves it. I am writing to argue why the Right should hate it (no, not for the reason the Left does, a desire to get the rich).   The Federal debtberg has grown beyond all measure since Nixon's gold default. So has the money supply and the amount of private debt. No-one...
  • The Santa Claus Rally is Especially Pronounced in the DAX
      The Gift that Keeps on Giving Every year a certain stock market phenomenon is said to recur, anticipated with excitement by investors: the Santa Claus rally. It is held that stock prices typically rise quite frequently and particularly strongly just before the turn of the year.   Unbeknown to many, Santa Claus paid a high price for enriching investors [PT]   I want to show you the Santa Claus rally in the German DAX Index as an example. Price moves are often...
  • Heaven Forbid Peace Should Break Out Between the US and North Korea!
      Rude Interruptions As long as the US Empire can be funded and maintained on the backs of its taxpaying public, the chance of a deescalation of tensions not only on the Korean peninsula, but throughout the world are practically nil.  And as long as the nation’s current interventionist ideology holds sway, it will only be through a financial meltdown that the role of the US as global policeman will come to a much-needed end.   Hamhung, North Korea, June 30, 1950; an example...
  • The Rug Yank Phase of Fed Policy
      Bogus Jobs Pay Big Bucks The political differences of today’s two leading parties are not over ultimate questions of principle.  Rather, they are over opposing answers to the question of how a goal can be achieved with the least sacrifice.  For lawmakers, the goal is to promise the populace something for nothing, while pretending to make good on it.   The short and sweet definition of democratic elections by eminent American wordsmith and political philosopher H.L. Mencken...

Support Acting Man

Top10BestPro
j9TJzzN

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com