by Calculated Risk on 12/08/2010 02:15:00 PM

Update: Graph is from CoStar. I think it ends in October (but it appears cut-off).

This is a new repeat sales index for commercial real estate. Previously I've only been using the Moodys/REAL Commercial Property Price Index (CPPI) for commercial real estate.

From CoStar: CoStar Commercial Repeat-Sale Indices

• CoStar’s National All Property Type Index declined 3.88% during October, giving back its positive 3.07% gain in September.

• Reversing two months of increasing prices, all three of CoStar’s “headline” Commercial Repeat-Sale Indices decreased in October, continuing the recent see-saw performance of commercial real estate pricing.

• CoStar’s National All Property Type Index, representing all commercial properties and the broadest industry measure of commercial real estate transaction pricing, slipped to its lowest point since the index peaked in February of 2008. While still decreasing, the rate decline has begun to slow considerably. Since June of 2009 the rate decline has been reduced by half.

• The high volatility apparent in the market on a monthly basis is indicative of two prominent trends. First, monthly swings in pricing, sales volumes and average transaction size are common in markets experiencing a turn. Second, it reflects the tension in a market characterized by the majority of sales occurring at two ends of the spectrum -- distress sales at the bottom end of prices, and keen investor appetite, especially among REITs, for higher quality properties in core markets at the top end of the market. We expect to begin to see the extremes in range of prices replaced with more modest and less volatile monthly price trends when the proportion of distress sales begins to slowly reduce.
emphasis added

Click on graph for larger image in new window.

This graph from CoStar shows the indexes for investment grade, general commercial and a composite index. All three indexes declined in October.

It is important to remember that there are very few CRE transactions (compared to residential), and that there is a high percentage of distressed sales, so prices are very volatile.

by Calculated Risk on 12/08/2010 11:40:00 AM

Earlier the MBA reported on the decrease in refinance activity:

The Refinance Index decreased 1.4 percent from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010.

Click on graph for larger image in graph gallery.

This graph shows the MBA's refinance index (monthly average) and the the 30 year fixed rate mortgage interest rate from the Freddie Mac Primary Mortgage Market Survey®.

December mortgage rates are estimated at 4.75% (the rates quoted by several sources yesterday).

Although mortgage rates haven't risen very far - and are still below 5% - it takes lower and lower rates to get people to refi (at least lower than recent purchase rates).

With 30 year mortgage rates now about 0.5% above the lows in October, this is the end of the recent surge in refinance activity - unless rates drop sharply again.

by Calculated Risk on 12/08/2010 08:01:00 AM

The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 1.4 percent from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010. The seasonally adjusted Purchase Index increased 1.8 percent from one week earlier. This is the third weekly increase for the Purchase Index which reached its highest level since early May 2010.
...
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.66 percent from 4.56 percent, with points decreasing to 0.95 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

Click on graph for larger image in new window.

This graph shows the MBA Purchase Index and four week moving average since 1990.

A few points:
• Mortgage rates were up even more yesterday.

• Refinance activity is falling quickly as mortgage rates rise.

• However purchase activity is picking up a little, possibly because some buyers are accelerating purchases because they are afraid of future rate increases.

Even with the increase in applications (seasonally adjusted), the four-week moving average of the purchase index is about 17% below the levels of April 2010 and suggests weak existing home sales through the end of the year and into January.

by Calculated Risk on 12/07/2010 11:50:00 PM

From David Leonhardt at the NY Times: For Obama, Tax Deal Is a Back-Door Stimulus Plan

Mr. Obama effectively traded tax cuts for the affluent, which Republicans were demanding, for a second stimulus bill that seemed improbable a few weeks ago. Mr. Obama yielded to Republicans on extending the high-end Bush tax cuts and on cutting the estate tax below its scheduled level. In exchange, Republicans agreed to extend unemployment benefits, cut payroll taxes and business taxes, and extend a grab bag of tax credits for college tuition and other items.

As a stimulus package, this is very poorly designed. It will help a little ... but at a very high cost.

by Calculated Risk on 12/07/2010 08:27:00 PM

From "Soylent Green is People":

[I]t's been a complete bloodbath in the market for us. ... Three rate sheets for the worse, an average 4.75% 1.0 point loan today, well up from the October lows of 3.750%. Crushing to say the least.

From economist Tom Lawler:

Benchmark US interest rates are up sharply today in at times frantic trading in response to the tax package “deal” reached between the administration and Congressional Republican leaders. (While yesterday’s silly “60 Minutes” bond market rally lasted longer than an hour, it wasn’t by much!!!) The MBS market also got crushed today, and indicative 30-year conventional conforming fixed-rate quotes, which had moved lower following Friday’s employment report, jumped up sharply today, with most lenders showing something in the range of 4 ¾% and 1 point (for a 60-day lock).

This will impact refinance activity immediately, but might accelerate some purchase activity because of a fear of further rate hikes.

by Calculated Risk on 12/07/2010 04:03:00 PM

Just to be clear, the "extension of the unemployment benefits" is an extension of the qualifying dates for the various tiers of benefits, and not additional weeks of benefits. There is no additional help for the so-called "99ers".

Emergency Unemployment Compensation (EUC) comes in four tiers:
Tier I is for 20 additional weeks;
Tier II is for up to 14 weeks;
Tier III is for up to 13 weeks;
Tier IV is for up to 6 weeks.

As an example, if a worker was receiving Tier I benefits, they will be able to move to Tier II benefits with this proposed extension. Without the extension of the qualifying dates, workers would not be able to move to the next tier.

These two tables are from the Center for Budget and Policy Priorities. The total number of weeks depends on the state unemployment rate.

In 25 states, workers can qualify for 99 weeks of unemployment:

To repeat: this extension doesn't add additional weeks of benefits; it keeps the above structure in place for an additional 13 months.