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Housing Market

Housing Market

Let's Make the Mortgage Due for Fannie Mae and Freddie Mac

You can call it a bailout, a rakeover – I mean, takeover – or socialism for cash.

But, whatever you call it, it's not going to last.

The $187.5 billion bailout of Fannie Mae and Freddie Mac back in 2008 was absolutely necessary.

But here's why it's time for the government to get out of the mortgage business for good...

Top News

What Today's Housing Market Numbers Really Mean

Today's mixed numbers from the Case-Shiller price index have some prognosticators wondering if the housing market has plateaued.

U.S. home prices posted their largest annual gain since 2005 and increased 11.3% in Q4 compared to the previous year. However, growth slowed toward the end of the year, particularly in December.

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Housing market

This Echo of the Housing Market Bubble Is About to Triple Loan Payments

The housing market bubble isn't over, after all.

Thousands of home equity loans made in the peak years of the housing bubble are just starting to reach their 10th birthday, which for many borrowers will bring very bad news.

You see, most home equity loans are interest-only for the first 10 years. But after that, the borrower must start paying down the principal, which can cause their monthly payments to triple or more.

This 'wave of disaster' is just getting started...

Stock Market

The Five Biggest Asset Bubbles in History

Between the stock market, bitcoin, and tech IPOs, today everyone seems in a race to spot the next biggest asset bubbles readying to pop.

The term "asset bubble" indicates that there is a marked, noticeable divergence between the market price of an asset and its fundamental value. In other words, something that people store value in – a coin, a house, a share of stock – is valued much, much higher than the thing itself could possibly be worth.

Bubbles usually end with crashes: double- or triple-digit percentage losses in the price of the inflated asset over a very short time.

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Housing Market

New Rental Securitization Deal Likely Heralds Double Dip in Housing

Today, in New York, investors will be pitched the first-ever REO-to-rental securitization deal. The $500 million deal bundles foreclosed single-family homes, "real-estate-owned" by Blackstone Group, into securities that pass-through rental payments to investors.

The new securitization of rental properties comes at a time when home prices have rebounded dramatically across the country. But rather than confirming a bull market in housing, the "trade," as Reuters calls the transaction, likely heralds a coming double-dip.

The upward trajectory of housing prices, fueled by private equity companies and hedge funds' cash purchases, now faces institutional liquidity demands – and their potential exit.

Here's what the Blackstone deal is all about, why its structure is problematic, how the ratings agencies will view it, and what it portends for the future.

This is a very big deal...

Housing Market

The All-American "Short Squeeze" No One Else Sees

Everyone knows the U.S. housing "recovery" has been resurrected on slippery ground. But now that we're finally about to slip – big time – no one sees it coming…

Then again, how could they?

The numbers are incredibly misleading…

According to the Commerce Department, new residential home sales in July fell a whopping 13.4% from their June sales pace. And sales in April, May, and June were all revised significantly lower.

Yet according to the National Association of Realtors, existing home sales (completed transactions that include single-family homes, townhomes, condominiums, and co-ops) increased 6.5%… to a seasonally adjusted annual rate of 5.39 million in July, from a downwardly revised 5.06 million in June.

On the surface, the divergence is confusing. But not when you look below the surface, where the real money gets made.

As you'll see (before anyone else), the housing "recovery" is just one giant "short squeeze."

And you can make a flat-out killing the moment it ends…

Housing Market

Why Millions of Americans are Still "Trapped" in Their Homes

For millions of Americans who were underwater on their mortgages, the tide is finally receding.

That's good news for the housing market, of course, and for the U.S. economy as a whole, as housing is a major engine of the economy.

Housing not only generates construction jobs, one of the hottest job sectors in the country right now, it also sparks spending on home furnishings and appliances. And as home prices increase, people feel more wealthy and tend to spend more.

The number of homeowners underwater – those who owe more on their mortgage than their home is worth – dropped in the first quarter to 25.4% percent of all mortgages, or 13 million homeowners, from 31.4 % a year earlier, real estate researcher Zillow reports.

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Fight Club: Is the Home Mortgage Interest Deduction Worth Keeping?

Garrett Baldwin: Don't Just Cut the Mortgage Deduction… Cut All Deductions and Lower Taxes

If home ownership is the American Dream… then why do we need government to subsidize it?

The home mortgage interest deduction (HMID) is a lopsided tool of economic alchemy that favors the rich, and artificially increases housing prices due to the "stimulus" it creates.

According to the Congressional Budget Office, this tax break will "cost the government" more than $1 trillion over the next decade. The HMID mostly benefits households earning $75,000 to $500,000 a year. According to the Tax Policy Center, this range of Americans earns 77% of the tax savings from the HMID.

Housing Market

Why the Housing Market Recovery is Bypassing Young Buyers – and What that Means to the Market

Think of the housing market as a ladder with first-time homebuyers at the bottom and homeowners on the upper rungs, with homes priced higher as you proceed upward.

The first-time homebuyers make it possible for those in the lower-priced homes to sell and move up to costlier homes, which in turn enables the sellers of those homes to move up to costlier homes – and so on.

But amid the housing market recovery – sales of new and existing homes are up and prices have been rising – many first-time buyers are being shut out of the market.

And that has far-reaching implications for the market as a whole, given the role those first-timers play in creating demand from the bottom of the ladder.

"They're the first rung of the ladder," Douglas Duncan, senior vice president and chief economist at Fannie Mae, told Money Morning.

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Housing Market

Here's How Much Higher Mortgage Rates Will Raise Your Monthly Payments

Where will higher mortgage rates raise monthly mortgage payments most?

These three charts from the real estate site depict how higher mortgage rates will affect monthly mortgage payments in different markets throughout the United States.

The charts are based on the percentage of income homeowners spend on their monthly payments, with a pre-housing bubble baseline of 20% of median household income.

The first chart shows how much more expensive than historical norms monthly payments will become in six of the priciest metropolitan areas when mortgage rates climb to 5%, assuming homes appreciate in line with Zillow projections.

Monthly payments in the San Jose metro area will increase the most (22% over the baseline) followed by Los Angeles (19%), San Diego (14%), San Francisco (11%), Portland, OR (7%) and Denver (1%).

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