Tuesday, May 15, 2007

"Weakening Demand for Mortgages Across the Board"

Burried in a WSJ article today on credit standards for subprime loans, was a very juicy tidbit. According to the Federal Reserve survey of banks "almost a third of the banks surveyed had experienced lower demand for mortgages of all types over the past three months regardless of the loan category."

It should be noted that this is the exact same data economists were using to call a bottom to the market in January when these applications were showing signs of life. I take this news as a healthy indicator that we are no where near the bottom.

This also brings up another secret theory of mine (well I guess its not so secret now). Housing trouble will hit all segments of the market. While I think the move-up theory holds some weight (if first time buyers can't buy, then others can't move up)....I think there are bigger, more structural issues in play, related to family income and expense ratios. Everyone seems to be blaming their housing slump woes on subprime......but this bubble deflating was going to happen regardless. Subprime just exacerbated the situation and made it come to a head as opposed to a slower unraveling. Affordability affects everyone, not just subprime. My theory was boosted last week when Toll Brothers, supposedly a more upscale builder, reported lower than expected profits.

Separately, I tracked down the article on "the Realignment of America" from Tuesday's (May 8ths) WSJ. He basically categorizes metro areas based on population inflows and outflows (and who makes up those flows, Americans or immigrants). Sacramento was listed as part of the shifting center of gravity, one of the interior boom towns.

9 comments:

... said...

Wow, your last paragraph contained a juicey tidbit, one which will earn you the scorn of doom and gloom bloggers.

Tt is true and also why Forbes listed Sac as "overpriced" but didn't understand why.

Anonymous said...

Oh Sippin, don't make me take away that big spoon you use to stir up trouble >; )

I've been beating the economic fundementals drum loudly for years.
I am axiously awaiting the 2006-2007 census estimates which should be out in Dec.

And I don't consider myself a doom and gloomer. I'd say I'm mostly pissed off

... said...

What me?

G - you're not a G&D,I'm talking about "falling knives" etc.

Anonymous said...

LOL I thought all of us "economic fundementals" types were G & D ers.

Lander said...

Not in Their Back Yard

Anonymous said...

Nice find Lander!

Cmyst said...

Well, that article made me extremely uncomfortable!
I live off Harvard, but evidently on the opposite side of EDH Blvd. Not that it matters, I would imagine.

Wouldn't you know that this would come up now that we just put a few hundred dollars in mulch down and planted the raised bed veggies???

Anonymous said...

Cmyst,

You didn't know about the asbestos?
Really? I thought everyone knew >; (

Cmyst said...

I only heard about it around a month or so ago, on Lander's blog. So, I knew -- but I was doing the "lalala" thing. Years ago I heard something about it in the news, but heck. I was living a different life in those days, and didn't pay much attention to things that didn't seem to affect me. In those days, if you'd have told me I'd be living in EDH one day, I would have thought you were smoking something pretty strong.