Is a Housing Bubble Near?

Lou Barnes  of  inman.com discusses his thoughts on the current US mortgage status. He states:

“Take two things for certain. First, there’s never been nor ever will be a housing bubble without a corresponding bubble in mortgage credit.

Second, no matter who may yap about credit being too easy (usually complainers about the federal role in mortgages), stick with the Fed’s quarterly accounting of U.S. financial flows, Z-1.

We just got the 1st Quarter 2016 report — it lags because it’s a huge effort to compile accurately. Buried in it, 125 pages deep, are all of the mortgage accounts.

Total U.S. home loans outstanding grew by $19 billion, 0.19 percent to $10.008 trillion — that’s the first time over $10 trillion since 2011. A growth rate like that…no bubble. Impossible.

The sustained rise in U.S. home prices at a slope of 5 percent to 6 percent is fueled by a lot of cash (thank you, stock market), and concentrated in the healthiest metro areas and probably overstated nationally.

Mortgage equity withdrawal

Since the mortgage bubble blew for good in 2007, mortgage accounting has been odd. Every foreclosure results in subtracting the loan amount from Z-1, as does a write-off anticipating loss (one or the other, not counted twice). We have been making new loans, but a constant subtraction has been underway as well.

Another calculation is mortgage equity withdrawal (MEW): net of home sales and purchases, loan payoffs and new loans, and refinances, is mortgage lending turning home equity into cash and adding it to the economy, or not? By how much?

MEW in this last quarter is still negative about 1 percent. In normal times, as far as records go back (late 1970s) until 2002, MEW added 2 percent to 4 percent to disposable U.S. household income. In the suicidal glory days of the mortgage bubble, 2003-2007, MEW supercharged household income, averaging 8 percent per year!

MEW has been a drag ever since, a net drag on the U.S. economy.

MBSs and HELOCs

Z-1 sub-accounts tell more juicy stories. Total subprime MBSs (mortgage-backed securities) are now down from $2.2 trillion in 2007 to $580 billion (including a couple of hundred billion in good Jumbo MBS), and still writing down $20 billion every 90 days.

The cumulative subprime loss is twelve times the total TARP (Troubled Asset Relief Program) assistance to Fannie and Freddie, long since repaid. Do not believe the propaganda that Fannie and Freddie were the cause of the bubble.

Home equity lines of credit are still falling, now more because of pinched underwriting standards than write-offs. The remaining balance now is $625 billion versus $1.1 trillion at the top. The second mortgages used in 100 percent subprime lending blew a big hole in the top total.

Total loans for apartments are barely $1 trillion, one-tenth of single-family, condos and townhouses. Some have expressed worry about an apartment bubble, and it’s not there either — we have built a lot of them, but annual growth in credit has been about 7 percent.

Commercial real estate loans can be a dangerous, bubbling playground, $2.5 trillion outstanding, but the annual growth rate is only 3.5 percent.

There is no housing bubble out here. Nor real estate bubble, period. Instead, these mortgage growth rates are so low that real estate has not really contributed at all to this overall economic recovery. So there.

Key Takeaways

Total U.S. home loans outstanding grew by $19 billion, 0.19 percent to $10.008 trillion — that’s the first time over $10 trillion since 2011.

With a growth rate like that, a bubble is impossible.”

Jim Onseti-1

Jim Onesti, McCann Team
jonesti@mccannteam.com — 215.440.2052 Direct 
Berkshire Hathaway HomeServices — Fox & Roach Realtors — The McCann Team
530 Walnut Street — Suite 260 — Philadelphia PA 19106 — 215.627.6005 Main

15 New Homes coming to Front and Dickinson

I just sold a fantastic lot to one of my Developers at Front and Dickinson Street in The Pennsport section of Center City Philadelphia. Fifteen homes will be built, delivery Spring 2017. Each home will have Garage Parking, 10 year tax abatement, Roof deck and 2500-3200 square feet. There are corner homes available as well. These 4-story homes will have amazing views and top of the line finishes throughout. Contact me for details and to reserve a unit. Jimconstruction-plans-and-hat

Awesome Old City Development Opportunity!

Development Parcel for Two Town Homes in Old City
300 block Cherry Street – Asking $350k per parcel

Zoning use registration permit on file and complete for (2) two 3,740 square foot town homes plus bonus cantilever areas!

One parking spot for each town home

800 square foot outdoor space additional to each home.

Resale $1,250,000 each !!

304 Cherry – Site Plan

For more information contact me today!
Jim Onesti 215.440.2052 or jonesti@mccannteam.com
McCann Team — BHHS Fox & Roach — 215.627.6005

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Another Investor Success Story!

100% SOLD OUT! 74 E Laurel in Northern Liberties
another recent project Jim Onesti sold out
for one of our Developers in record time

8
Homes in 8 Months !!
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For More Than 16 Years I Have Been Selling Out Developments and
Getting TOP DOLLAR For My Developers!
Specializing in finding off market development deals and then selling out the finished product! We have the largest marketing budget in Philadelphia.

We have the most experience selling all sizes of developments from single rehabs to 100+ unit condo and town-home developments!

Known for our knowledge, work ethic and the best Marketing Plan in town.

We Are NOT Your Competition!!

We are not builders or developers! We sell real estate for our clients. We promote our clientshomes 1st and foremost. Many Realtors develop homes for themselves and their partners. As a result, most of these Realtors also spend much of their time, focus and energy on their own projects and on their profits, keeping the “Home Run” development deals for themselves and pushing ready, willing and able buyers to their own
homes first before their client’s homes.

Our philosophy is; you can only be GREAT at one career at a time!

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When You Are Ready To Get Your Property SOLD
For The Best Possible Price in The Shortest Possible Time
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Discount Brokers: The Real Deal

We have all heard the old saying, “If it sound like it is too good to be true, it probably is.” Unfortunately, this is typically the case with discount brokers. Whenever the real estate market reaches a high point, tons of new, discount brokers and startup companies seem to appear out of nowhere. They come promising dramatically decreased commission percentages in exchange for their discounted services. Now, we understand how appealing this may look but I want you to be informed and aware of the risk involved when you come in contact with these operations.

As an experience realtor, I have seen the poor service that these organizations provide on numerous occasions. Many of these companies require upfront payment in order to list the property in the MLS and then disappear, leaving clients baffled, confused and alone.  Eventually, the companies disappear completely, leaving a great deal of wreckage behind.

Be Forewarned! These individuals do not do the same job as legitimate, real estate professionals. They will not take the time to market your home, manage paperwork, host open houses or guide you through the negotiation process like genuine professionals. They will simply cash your check, list the property and disappear.

Bottom line, if your home is not a discount property, then do not list with a discount broker. Those flashy and appealing discounted rates could end up costing you more than you ever imagined. Be safe, be smart, and beware of the discount broker.

For a name you know and a Realtor you can trust, contact me today!
Jim Onesti – BHHS Fox & Roach – McCann Team – 215-627-6005 Main
215.440.2052 Direct or jonesti@mccannteam.com