by Calculated Risk on 12/16/2010 07:18:00 PM

With some people once again trying to rewrite history, here is an excerpt from a piece Tanta wrote in 2008. This captures my view on the role of Fannie and Freddie:

I think we can give Fannie and Freddie their due share of responsibility for the mess we're in, while acknowledging that they were nowhere near the biggest culprits in the recent credit bubble. They may finance most of the home loans in America, but most of the home loans in America aren't the problem; the problem is that very substantial slice of home loans that went outside the Fannie and Freddie box ...

Fannie and Freddie had about as much to with the "explosion of high-risk lending" as they could get away with. We are all fortunate that they couldn't get away with all that much of it. It is a fact that their market share dropped like a brick in the early years of this century, except of course for years like 2003, when fixed rates dropped to cyclical lows, refis boomed, and GSE market share shot up again, only to plummet in the years following during the purchase boom.

But they didn't like losing their market share, and they pushed the envelope on credit quality as far as they could inside the constraints of their charter: they got into "near prime" programs (Fannie's "Expanded Approval," Freddie's "A Minus") that, at the bottom tier, were hard to distinguish from regular old "subprime" except--again--that they were overwhelmingly fixed-rate "non-toxic" loan structures. They got into "documentation relief" in a big way through their automated underwriting systems, offering "low doc" loans that had a few key differences from the really wretched "stated" and "NINA" crap of the last several years, but occasionally the line between the two was rather thin. Again, though, whatever they bought in the low-doc world was overwhelmingly fixed rate (or at least longer-term hybrid amortizing ARMs), lower-LTV, and, of course, back in the day, of "conforming" loan balance, which kept the worst of the outright fraudulent loans out of the pile. Lots of people lied about their income (with or without collusion by their lender) in order to borrow $500,000 to buy an overpriced house in a bubble market. They weren't borrowing $500,000 from the GSEs.

I miss T. Best to all.

by Calculated Risk on 12/16/2010 03:50:00 PM

On mortgage rates from Tom Lawler:

This morning most major mortgage lenders were posting indicative quotes for a 60-day lock on a 30-year fixed-rate prime conventional conforming mortgage in the range of 5 1/8% and 1 point, reflecting the sharp runup in secondary mortgage market yields.

And some resources for following the House vote:
• U.S. House: Office of the Clerk. This is a running account of what is happening on the floor. Watch for H.RES.1766

Providing for consideration of the Senate amendment to the House amendment to the Senate amendment to the bill (H.R. 4853) to amend the Internal Revenue Code of 1986 ...

• And a live video feed from the House (currently in recess in session)

While we wait for paint to dry ...
• From Mark Thoma: Initital Claims for Unemployment Fell Last Week. Why Should We Care? (see the 2nd graph for a relationship between initial claims and payroll employment)
• CoreLogic: House Prices declined 1.9% in October
• Housing Starts increase slightly in November
• Weekly Initial Unemployment Claims decline to 420,000

Graph galleries: House Prices, Housing Starts, and Weekly Claims

by Calculated Risk on 12/16/2010 02:29:00 PM

A weekly update on hotels from HotelNewsNow.com: STR: San Francisco tops weekly increases

Overall, the industry’s occupancy increased 8.6% to 52.2%, ADR was up 2.6% to US$98.75, and RevPAR ended the week up 11.5% to US$51.56.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change. The graph shows the 4-week average, not the weekly occupancy rate.

On a 4-week basis, occupancy is up 7.2% compared to last year and 2.6% below the median for 2000 through 2007.

This is the slow season for hotels, and the key will be if business travel picks up early next year.

Note: RevPAR (revenue per available room) was up 2.7% compared to the same week two years ago (in 2008) for the second time this year.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 12/16/2010 11:17:00 AM

Notes: CoreLogic reports the year-over-year change. The headline for this post is for the change from September to October 2010. The CoreLogic HPI is a three month weighted average of August, September and October, and is not seasonally adjusted (NSA).

From CoreLogic: Home Price Index Shows Decline for Third Straight Month, October Home Prices Declined 3.93 Percent Year Over Year

CoreLogic ... today released today released its October Home Price Index (HPI) which shows that home prices in the U.S. declined for the third month in a row. According to the CoreLogic HPI, national home prices, including distressed sales, declined by 3.93 percent in October 2010 compared to October 2009 and declined by 2.43 percent* in September 2010 compared to September 2009. Excluding distressed sales, year-over-year prices declined by 1.5 percent in October 2010 compared to October 2009. ...

“We are continuing to see the weakness in home prices without artificial government support in the form of tax credits. The stubborn unemployment levels and seasonality are also coming into play,” said Mark Fleming, chief economist for CoreLogic. “When you combine these factors with high shadow and visible inventories, the prospect for a housing recovery in early 2011 is fading.”

Click on graph for larger image in graph gallery.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index is down 3.93% over the last year, and off 30.2% from the peak.

The index is 2.2% above the low set in March 2009, and I expect to see a new post-bubble low for this index - possibly as early as next month or maybe in early 2011.

by Calculated Risk on 12/16/2010 08:57:00 AM

Click on graph for larger image in new window.

Total housing starts were at 555 thousand (SAAR) in November, up 3.9% from the revised October rate of 534 thousand, and up 16% from the all time record low in April 2009 of 477 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959).

The increase this month was due to single-family starts, but the level is still very low. Single-family starts increased 6.9% to 465 thousand in November.

The second graph shows total and single unit starts since 1968. This shows the huge collapse following the housing bubble, and that housing starts have mostly been moving sideways for two years - with a slight up and down over the last six months due to the home buyer tax credit.

Here is the Census Bureau report on housing Permits, Starts and Completions.

Housing Starts:
Privately-owned housing starts in November were at a seasonally adjusted annual rate of 555,000. This is 3.9 percent (±12.0%)* above the revised October estimate of 534,000, but is 5.8 percent (±12.0%)* below the November 2009 rate of 589,000.

Single-family housing starts in November were at a rate of 465,000; this is 6.9 percent (±13.5%)* above the revised October figure of 435,000.

Building Permits:
Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 530,000. This is 4.0 percent (±2.9%) below the revised October rate of 552,000 and is 14.7 percent(±1.7%) below the November 2009 estimate of 621,000.

Single-family authorizations in November were at a rate of 416,000; this is 3.0 percent (±1.0%) above the revised October figure of 404,000.

This was close to expectations of 550 thousand starts. The low level of starts is good news for housing, and I expect Starts to stay low until more of the excess inventory of existing homes is absorbed.

by Calculated Risk on 12/16/2010 08:30:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending Dec. 11, the advance figure for seasonally adjusted initial claims was 420,000, a decrease of 3,000 from the previous week's revised figure of 423,000. The 4-week moving average was 422,750, a decrease of 5,250 from the previous week's revised average of 428,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week by 5,250 to 422,750.

This is the lowest level for the 4-week moving average since the first week in August 2008. The level is still high, but the decline in the 4-week average is good news.