Housing Bubble Bursting?

[Greg Bell]

oops..didn't see above..

 

[Brad Ellis]

Randolph,

Thank for posting the link- it proves- IF one actually reads it- that the answers are sane, logical and forthcoming. Apparently, per our spokesman and confirmed in our financials, we outperform the market in virtually every category as regards losses.

Once again, the reporter evidences the lack of understanding between defaults and credit losses. Fitch's rating refers to "the company's long-term issuer default rating." Absolutely defaults result in credit losses but not at the rate or level of the default percentages. The actual credit losses are a much lower level- and THAT is what you reserve against- credit losses and not default rates.

The simple fact of the matter is that we lose less money per non-performing loan than do our competitors. It is for that very reason that our paper remains investment grade while many of those in the industry have fallen by the wayside.

The problem area for everyone in this market segment is the 80/20 loan. We realized that early last year and changed lending policies on those.

So, their statement that the "...expectation that 2007 will be a transitional year for the company and industry." is probably sensical since everyone must face this for the balance of the year. It is not just for Indymac but for the industry in general.

Our folks have been doing this for 15 years now. From a standing start we grew to $100B in volume +/- and have become America's 7th largest mortgage lender. Even in a down cycle like we are in now, we are profitable with continued profitability forecasted by both our folks charged with that and by the financial analysts who monitor the industry. Many of those analysts also expect us to increase our market share during this tough period.

If the OC Register wants to portray this performance, fully certified by a recent OTS in depth analysis and audit (and that was SINCE the sub-prime hits for the industry and SINCE the markets for the paper had already negatively reacted to everyone's portfolios), there is not much to be done or to be said. I'll just chalk this up to a source who has a vested interest in sensationalism. You know- reporters.

I am very comfortable with our position, both in the market and in terms of our own profitability. And, although the stock took a big hit last year and earlier this year (like many) I continue to pay attention to what the markets do. One of the most telling stats is the calls/puts open interest that I look at daily.

You may find that of interest since the ratio of calls to puts at various strike prices are overwhemlngly bullish, often at 2-3-4 to 1 with very few opposite.

And, just for your own edification, I have not sold a single share of stock since this all happened and continue to be a buyer on dips and am nearly back to even (within a couple of hundred bucks). I expect I'll be back in positive territroy before year end and am VERY glad to be working for such a fine firm.

Brad

 

[Brad Ellis]

Randolph,

Referencing your post 3397, it is interesting just how this stuff is presented. Same facts, but just on what parts to report- here is the same data presented in a slightly different way:


"Daily Real Estate News | May 15, 2007
Home Foreclosures Fall Slightly
U.S home foreclosures fell slightly in April from the two-year high set in March, according to real estate data firm RealtyTrac.

Although the total was down 1 percent from March, the April total was 62 percent higher than a year ago.

States with the highest foreclosure rates were Nevada, Colorado, Connecticut, California, Ohio, Georgia, Florida, Arizona, Illinois, and Michigan. California reported the largest number of foreclosure filings — 30,505, down 3 percent from March.

Source: Reuters News (05/15/07)"

Please do not get me wrong- F/Cs are still a problem and them being up 62% year over year is no party- but I find it interesting that Bloomberg just happened to omit the part that says they are down from March.

In my book this is not material, but it is an illustration of how easy it is fro the press to say just about anything it wants and people will believe just about anything they read.

Brad

 

[Randolph Kinney]

The housing hangover hangs on

http://www.marketwatch.com/tvradio/playerFull.asp?media=0&band=0&remPref=1&guid=%7BF8F0CAE7-A527-4E76-9F74-407F7C8E0B25%7D&siteid=nbk

The high rate of home foreclosures should continue "for the rest of this year" and "into next year and maybe into '09 as well." So says Gina Martin, financial economist at Wachovia. She tells Steve Potisk that "resets" on adjustable rate mortgages have led to "much higher payments for consumers." And she says stores like Home Depot are facing sales problems since "there's not a lot of building going on."

Brad, here is someone's opinion about the effects of the problems that defaults and foreclosures are expected to have and are having. It is a recording.

I have noted your posting of the total foreclosures was down 1 percent comparing April to March, however, that is not very encouraging when the year over year comparison is 62 percents, is it? In fact, it is pointing to more problems coming:

There were 147,708 default notices, auction sale letters and bank repossessions last month as declining prices made it harder to refinance, particularly for borrowers with poor or limited credit

 

[Randolph Kinney]

Home builders' confidence falls back to 16-year low

http://www.marketwatch.com/news/story/residential-builders-confidence-16-year-low/story.aspx?guid=%7B9FC95AF0%2DE6C0%2D46F1%2D8050%2DE5C544D6B2F2%7D&dist=

WASHINGTON (MarketWatch) -- Tightening lending standards shook U.S. home builders in May, sending a gauge of their confidence back down to a 16-year low, an industry trade group reported Tuesday.


The National Association of Home Builders/Wells Fargo housing market index slid three points to 30 in May, matching the 16-year low set in September. Economists were predicting the home builders' index would remain at 33, according to a survey conducted by MarketWatch.

All three components of the housing market index declined in May. The index of current sales fell two points to 31, a low for this business cycle. The index for future sales fell three points to 41, the lowest since September. The index for buyer traffic at developments dropped four points to 23, also the lowest since September.


Builders' confidence fell in three of four regions. In the South, the index dropped four points to 33. The index fell three points to 32 in the West and six points to 32 in the Northeast. It rose one point to 23 in the Midwest.


The index was at 46 a year ago, and 70 two years ago. It peaked at 72 in June 2005.

 

[Randolph Kinney]

Housing bust holds down core inflation in April

http://www.marketwatch.com/news/story/housing-bust-holds-down-core/story.aspx?guid=%7BF7A5B6F3%2D728E%2D4CEE%2DB75B%2D95F6FCC9FDB5%7D

WASHINGTON (MarketWatch) -- A growing glut of housing on the market helped moderate U.S. consumer price increases in April, raising hopes that the Federal Reserve can declare victory over inflation.


The consumer price index increased a smaller-than-expected 0.4% in April, boosted by higher prices for energy and groceries, the Labor Department reported Tuesday.


Excluding food and energy, however, the core consumer price index rose 0.2% as expected, knocking the annual gain in the core down to a one-year low of 2.3%.

 

[moh malekpour]

Housing Market Still Under Pressure

http://biz.yahoo.com/ap/070515/home_prices_realtors.html?.v=7

Reports Show Home Sales, Prices in 1Q Below Last Year's Rate As Foreclosures in April Surged


WASHINGTON (AP) -- The pace of existing home sales slowed in the first quarter by almost 7 percent compared to a year ago, the National Association of Realtors said Tuesday.
In the latest indication of the housing market's slowdown, the NAR said home sales reached a 6.4 million annual rate compared to 6.9 million in the same quarter of The report came on the same day that RealtyTrac Inc., an industry research firm, said mortgage lenders foreclosed on 62 percent more U.S. homes in April than a year ago.

"We expect foreclosure activity to at least stay above last year's levels for the remainder of 2007, fueled by a combustible mix of risky loans taken out in the last few years -- many in the subprime market -- and slowing home price appreciation," James Saccacio, chief executive officer of Irvine, Calif.-based RealtyTrac, said in a prepared statement.

Home prices are also still falling. The national median existing single-family home price in the first quarter was $212,300, down 1.8 percent from a year ago when the median price was $216,100, according to the NAR's quarterly survey of housing market conditions. The median is a typical market price where half the homes sold for more and half the homes sold for less.

At least part of the decline in the median prices of homes is because sales have shifted away from more expensive homes, a release from the NAR, a realtors trade group, said.

 

[Randolph Kinney]

Median Home Price in U.S. Declines 1.8 Percent to Two-Year Low of $212,300

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFFqbOOz9qHA&refer=worldwide

May 15 (Bloomberg) -- U.S. home prices tumbled to a two-year low in the first quarter, with declines in almost half of U.S. cities, the National Association of Realtors said.


The median price for houses and condominiums slid 1.8 percent to $212,300 in the first three months of this year, the lowest since the first quarter of 2005 when it was $199,700, the Chicago- based real estate trade group said. The median price for a single- family home fell in 62 of 145 metropolitan areas.

Declining prices, coupled with reports today showing foreclosures are continuing to rise and confidence among homebuilders is slumping, demonstrate that the yearlong housing slump isn't abating.


Tighter lending standards have made it more difficult for buyers to get home loans.

U.S. foreclosure filings jumped 62 percent in April from a year earlier and the number of households falling behind on mortgages probably will climb further this year as home prices fall and lending standards rise, RealtyTrac Inc. said.

 

[Randolph Kinney]

Southern California Home, Condominium Sales Fall to 12-Year Low in April

http://www.bloomberg.com/apps/news?pid=20601206&sid=a3dYTIjylQW4&refer=realestate

May 15 (Bloomberg) -- The number of homes sold in Southern California fell 29 percent last month to the lowest level in 12 years as stricter lending practices cut the amount of mortgage money available, DataQuick Information Systems said.


A total of 19,269 new and existing single-family houses and condominium units were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month, down from 27,114 a year earlier, La Jolla, California-based DataQuick said today in a statement. Last month's sales count was the lowest for any April since 1995, when 15,303 homes sold.


Southern California's home sales decline is the result of fewer low-cost homes selling, partly due to the collapse of the subprime mortgage industry and tightened lending practices among remaining financial companies, DataQuick analyst John Karevoll said. Subprime loans are made to borrowers with poor or limited credit histories. Such loans often are used by first-time buyers purchasing lower-cost homes.


``The fact is there are loans that were being offered one year or two years ago that aren't being offered anymore,'' Karevoll said in a telephone interview. ``Even outside the subprime market, you're going to find people are more cautious about how they fund loans.''


The median price paid for a home in Southern California was $505,000 last month. That matched a record set in March, and was up 6.1 percent from a year earlier, DataQuick said. When adjusted for the drop in lower-cost homes sold, the median price was about 1 percent below the year-earlier level, DataQuick said.

Brad, finally DataQuick has done the analysis (after being laughed at I am sure for not doing it). Median home prices are not really up 6.1% year over year; they are down 1% year over year if you equalize the data for the missing low price homes this year. Why is that? Due to a collapse of subprime lending and tightening lending standards, according to DataQuick.

Now lets see if NAR does the same. :new_smile-l:

I am certain that there is more distortion in the sales data than just the entry-level homes not selling. The move up market is also impacted. It is going to be useless data and comparison unless DataQuick and NAR do the detail analysis. :new_2gunsfiring_v1:

 

[Terrel L. Shields]

NAR did admit today that 33 states have seen falling prices last month and about 60+ metro areas saw prices tumble and about 80 saw increases