BluefoxToday blog : May 2010

Southern Nevada condo market still wallows in the Lehman moment, especially the high-rise luxury segment that occupies choice space for the most part on and around the Strip. Units are hard to sell because mortgage financing has dried up, sharp value declines have scared would-be buyers to sit and wait and the glut of vacant inventory gives no one enough confidence to commit to anything. Las Vegas luxury condominium developers had a totally different vision in mind when they started their projects a few years ago, when the thinking was that if you build it they'll come. Well, they did build it, but they aren't coming.

MGM Mirage's CityCenter unveiled its massive multi-use development on the Strip in December, including a high-rise condo component scattered in several buildings. Just like everyone else in Las Vegas, it has found that selling them is no walk in the park.

The condo-hotel Vdara has managed to close on only 78 out of 1,543 units through April, according to SalesTraq, a Las Vegas real estate information boutique. Although it began closings only in March CityCenter had announced earlier in the year the sale of 698 condos. Mandarin Oriental has closed through April on 32 uber-luxury units out of 227 available, while months ago it reported contracts on 205 of them. Veer Towers has 670 condominiums in two distinct leaning structures where closings just kicked off in May, with 480 of them sold according to CityCenter.

To address the major issue of mortgage availability MGM Mirage began offering seller financing to some buyers. It chopped off 30% from the condo prices over the winter to bring them closer to market. Evidently these changes haven't been enough, though, to excite the recession-weary prospects since the sales figures are very weak. On top of a dysfunctional mortgage and real estate markets comes a dispute with Perini Building Company over construction payments that will make some people reconsider their plans. Buying into a condo project under litigation is generally to be avoided.

Metrostudy, a housing industry research shop from Houston, reported recently that Las Vegas has 8,200 empty condominiums, including the ones from CityCenter. Moreover, SalesTraq informs that at this sales pace there is a 20-year supply of them. That is a tough environment where to successfully market condominiums no matter how luxurious they are. And no matter what kind of Las Vegas Strip views they offer. To efficiently move this CityCenter inventory requires further price cuts, down to where the Southern Nevada high-rise condo market is, otherwise the marketing budget currently in use is mostly thrown away.

I am pleased to report that today around noon we surpassed 10,000 active listings and our inventory is GROWING quickly!

This is great news for buyers frustrated with writing multiple offers only to get outbid time and time again as sale prices were drawn well above the list prices and cash buyers had preference over financed buyers!

If you decided to throw in the towel and sit on the sidelines from the Las Vegas Real Estate gold rush you may want to consider to jump back in soon!

We do still need about twice as many active listings  to turn this from a big time seller's market back into a stable market (I estimate 18000-24000 listings.)

Give us a call at 702-966-2494 if you would like to be set up on a free up to date home search!

Mortgage Rate Forecast for May 28, 2010

Here are some of the events affecting mortgage rates today:

What Mortgage Backed Securities Are Doing Today:

• The price of the FNMA 30-Year 4.5% MBS coupon opened at 101.72 this morning - the same as yesterday's close.
  
  
• At 9:30 AM, the 4.5% MBS coupon was trading at 101.94 - up 7/32 from its opening.

Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be up to 0.250 points better in price this morning as compared to yesterday afternoon.

Price Trend in Mortgage Backed Securities:

The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 4-28-2010 to 5-28-2010:

Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:

• Personal Income and Outlays Report - there was a 0.4% increase in personal income in April. This follows a gain of a gain of 0.3% in March and a 0.1% gain in February. Year-over-year, personal income is up 2.5%. While income is up, consumer spending was flat in April, indicating people are holding onto their money. Year-over-year, consumer spending is down 4.6%. Inflation is still almost nonexistent as the core Personal Consumption Expenditures (PCE) index is up only 0.1%, the same as in March.
  
  This report provides us with a measurement of the consumer's ability to spend and their current spending habits. Because consumer spending makes up two-thirds of the U.S. economy, any related data usually has an impact on the mortgage market and mortgage rates. This report had no impact on mortgage rates this morning.
  
  
• The Revised University of Michigan Index of Consumer Sentiment - came in at 73.6, better than the 73.3 reading analysts were expecting, and better than the 72.2 reading the previous month. An increase in consumer confidence indicates that consumers may be more apt to make large purchases in the near future. However, consumer sentiment report usually does not have much of an impact on the mortgage market or mortgage interest rates.

In other news, prices of bonds and mortgage backed securities fell significantly yesterday which led to higher mortgage rates as the stock market rallied on comments from China that it would continue investing in Europe.

Trend in Mortgage Rates:

The chart below shows the trend in mortgage rates over the past year:

Mortgage Rate Lock Advice:

Prices of mortgage backed securities are no longer at their highs of 2010. Yesterday, the price of the FNMA 30-Year 4.5% Coupon fell 59 basis points and closed within 97 basis points of its all-time high of 102.69 which was on November 30, 2009. This morning, the MBS coupon was within 78 basis points of that all-time high. As a comparison, what that means is this: if a 30 year fixed mortgage rate was 4.875% with no points yesterday, and if price of the MBS 4.5% coupon were to go as high as 102.69, then the best the 30 year fixed mortgage rate would be is 4.75% with 0.25 point today.

If I were applying for a mortgage today, I would lock the rate as mortgage rates were already at their lows for 2010, and they're now rising. While it's still possible that mortgage rates could go lower again with the ongoing economic crisis in Europe, it won't be by much, and I would not risk the chance waiting for it.

Be sure to check out today's mortgage rates.

The Lakes April 2010 Real Estate Resale Market Report:

• Listings (5/15/2010):  55
• Under Contract (5/10/2010):  86
• Sold April 2010:  20

Since Last Month's Report:  Listings UP +2, Pendings UP +10, Sold Units UP +2

Why Las Vegas Pendings Aren't Selling

View Last Month's The Lakes Market Report Right Here!

For More Las Vegas Communities and Reports Click Here

When the housing market began recently unraveling at warp speed and quickly lugged the overextended mortgage industry along with it things looked quite bleak for the U.S. economy. Housing, after all, is one of its major components and should it be hit with a serious medical condition, taking a simple pain killer wouldn't help much. Then if ever, when the fury of the real estate sector's downturn became better understood, drastic action was called for.

The Federal Reserve bravely stepped forward intent on showing how it's done. Right on the heels of the private investor vanishing from the secondary mortgage market the Fed knew that to avoid an utter disaster with global consequences it had to quickly fill the vacuum. It began buying MBS, or mortgage-backed securities, insuring that home loan interest rates wouldn't shoot through the roof. That was essential to keep the housing market on its wobbly feet, giving it something concrete to rely on. There was some early howling against this vast government interference but it soon abated as stark reality set in. Without the Fed's decisive action Stone Age would have been right around the corner.

Congressional Budget Office, or CBO, reports that the Fed's asset collection now exceeds $2 trillion, of which MBS make up well over half. Other holdings include Treasury securities and bank loans. It earns interest on all that paper, as it should. CBO projects that the Fed will haul in about $70 billion in profit this year on its portfolio, money that it'll eventually remit to the Treasury. The central bank assumed far more risk than it usually does by purchasing MBS, but it seems to be paying off. Who says the public sector can't make money?

The government has bailed out scores of mortgage lenders and financial institutions during this notorious housing meltdown, partly with the idea that they would then help distressed homeowners ward off potential foreclosure. To a large extent, the results are disappointing. Their playbook instead often included such selfish tactics like paying absurd bonuses and completing acquisitions, tricky moves that stimulated much of the angry population into voluntary Wall Street watchdogs with a mission.

What if the Obama Administration came up with a new initiative using the $70 billion Fed profit to make a real and lasting difference in the mortgage foreclosure predicament? The current programs addressing it, the HAMPs, RAMPs and STAMPs and such, have principally proved inefficient. Now is the time to try a fresh angle to try to sort this housing and mortgage mess out and here is a nice down payment for it.

Photo by wwarby

Charleston Heights April 2010 Real Estate Resale Market Report:

• Listings (5/15/2010):99
• Under Contract (5/15/2010): 142
• Sold April 2010:  37
  

Since Last Month:  Listings are UP +13 units, Pendings are DOWN -4 units, Solds are DOWN -3 units.

Why Las Vegas Pendings Are Not Closing

Last Month's Charleston Heights Real Estate Market Report

For More Las Vegas Communities and Reports Click Here

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Mountain's Edge April 2010 Real Estate Resale Market Report:

• Listings (5/15/2010):  189
• Under Contract (5/15/2010):  391
• Sold April 2010:  90

Since Last Month:  Listings are UP +14, Pendings are DOWN -5, Sales are DOWN -2

Last Month's Mountain's Edge Real Estate Market Report

Mountain's Edge is a newer community so many of the listings are short sales or bank owned.

Las Vegas Area Real Estate Market Watch was created for informational purposes only. 

This is for all the buyers wondering "where is the inventory"?  The inventory is here, this graph shows that buyer interest is extremely high and gobbling up all that new inventory coming online!

This is also for people saying "shadow inventory exists"!  Well I believe it exists but it also exists in short sales which has tripled to quadrupled it's formerly stagnant close ratio since late spring.

These are Listing/Under Contract & Pending/Sold Trends from December 2007-March 2010.

I do expect a frenzy of pendings & closes as the tax credits for first time buyers comes to a contracted halt at the end of April. Pendings have also begun their traditional "spring" rise.  Let the closings begin!

For the last 18 months most lenders have added additional "Quality Control" in the mortgage process between Underwriting and Funding.  Many of those same Investors require the tax transcripts pulled prior to the loan being submitted for Underwriting, and they perform additional Automated Appraisal Valuations on each file - again as a Quality Control measure... trying to get rid of Fraud.

In an Announcement earlier this month, Fannie Mae made it clear to Lenders that they need to do more to determine "Undisclosed Liabilities."  In particular, Fannie suggests the following:

• Refreshing a credit report just prior to closing may uncover additional debt or credit inquiries.
  
• New vendor services are becoming available to provide borrower credit report monitoring services between the time of loan application and closing.
  
• Credit inquiries listed on the credit report should be investigated to determine whether the borrower did in fact open additional debt resulting in repayment obligations. In some cases, it is possible to obtain a direct verification with the creditor associated with the inquiry.

Okay - for the most part I think the extreme measures we are going to are warranted.  They are a pain, time consuming, and add to the overall cost of processing a loan... but I get it.

But can you imagine having to actually verify if credit was issued from every inquiry? 

So a week before closing, the borrower shops for a sofa, a refrigerator, a lawn mower... and it will show up on the final credit report pulled the day before closing... and we'll have to WAIT to see if Lowe's actually issued credit to them?  OUCH!

We ALL need to be talking to borrower's about this important, and possibly problematic change in the system! For more information on Credit Inquiries click here.

If you are looking for a mortgage in NC - please call Steve and Eleanor Thorne 919.648.5058 First Financial Services.

Arlington Ranch April 2010 Real Estate Resale Market Report

• Listings (5/15/2010):  29
• Under Contract (5/15/2010):  61
• Sold April 2010:  8

Arlington Ranch changes since last month:  Listings UP +6, Pendings UP +6, Sold units DOWN -6

Click Here for Last Month's Report

For More Las Vegas Communities and Reports Click Here

View Arlington Ranch in a larger map