Today’s News Synopsis:
According to Lender Processing Services, the national mortgage delinquency rate increased to 9.2% in May. Reis reports national office vacancies increased by 0.1 percent in the second quarter to 17.4 percent. The former CEO of Irvine Co. believes the housing and commercial real estate market will be rocky for the next year or two due to the volume of underwater loans. The former secretary of labor under President Clinton, Robert Reich, believes the U.S. economy will have a very slow recovery, and may experience a double dip.
In The News:
Yahoo - “Mortgage rates scream buy, but who is listening?” (7-3-10)
“Under normal circumstances, 4.58 percent would be irresistible. A decade ago, if you’d told David Christensen, owner of Mountain Lake Mortgage in Lakeside, Mont., that rates would drop this low, he wouldn’t have believed you. And if rates did somehow fall this far, he never thought he would lack for customers, as he does now. Yet both have come true. Christensen argues that mortgage lending standards have tightened so much since the financial crisis that many people with decent but not-stellar credit can’t qualify. Lenders are demanding stronger credit scores and higher down payments or home equity.”
Robert Reich – “Slouching Toward a Double Dip or a Lousy Recovery at Best” (7-3-10)
“In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. ”
Housing Wire – “National Mortgage Delinquency Rate Swells to 9.2% in May: LPS” (7-6-10)
“The national mortgage delinquency rate grew to 9.2% in May, up 2.3% from a month earlier and 7.9% from a year earlier, according to the latest report from mortgage performance data and analytics provider Lender Processing Services (LPS: 31.41 -0.16%).”
Bloomberg - “Profit Upgrades Clash With El-Erian’s Fading Recovery” (7-6-10)
“Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004 just as stocks post the biggest losses in 16 months on concern that the economy will sink back into a recession. Profit for Standard & Poor’s 500 Index companies will jump 34 percent in 2010, compared with a projected gain of 27 percent on March 29, according to more than 8,000 estimates compiled by Bloomberg. The revision, the most during any quarter in at least six years, came as lower-than-forecast home sales, manufacturing and private-sector job growth sent the benchmark gauge for American equities down 16 percent since April 23.”
Bloomberg - “Office Vacancy Rate in U.S. Climbs to 17-Year High, Reis Says” (7-6-10)
“Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report. The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis.”
Bloomberg - “Property Bonds Slump Most Since ’09 on Slowdown: Credit Markets” (7-6-10)
“Bonds sold by real-estate companies are performing the worst compared with the rest of the market since March 2009 on concern the slowing economic recovery will cause more defaults. Yield premiums of bonds sold by real-estate investment trusts, shopping-mall owners and office landlords widened 9 basis points, or 0.09 percentage point, more than those on other debt in June, and continued to rise this month, according to Bank of America Merrill Lynch indexes.”
Orange County Register – “Adjustable mortgages back in fashion?” (7-6-10)
“DataQuick reports that 10% of Orange County home buyers who financed their home purchases in May used some sort of adjustable mortgage — the highest level of variable-loan use since August 2008. The bottom for adjustable-loan use was April and May of 2009, when just 2.4% of financed deals had variable financing.”
Orange County Register – “Real estate outlook ‘rocky’ for 2 years” (7-6-10)
“The former CEO and vice chairman of the Irvine Co. says that the outlook for housing and commercial real estate will be rocky for the next year or two because of the volume of underwater loans.”
Housing Wire – “CMBS Delinquency Rate Triples From a Year Ago, Passes 7%: Realpoint” (7-6-10)
“Delinquencies in commercial mortgage-backed securities (CMBS) in the US reached 7.2% in May from 6.9% in April, and more than triple the rate a year ago, according to the analytics firm Realpoint. Realpoint tracks delinquency data on nearly $800bn of CMBS pools for the monthly reports. In May, the total delinquent unpaid balance for these loans reached $57.3bn, a $2.9bn increase from the previous month.”
Looking Back:
One year ago, a study of 3.5 million mortgages nationwide found that in June loan servicers held 32,000 foreclosure sales. Vacancy rates for rental properties increased to 5.3% in the first quarter of 2009.
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