JP Morgan and Citigroup are expanding in “jumbo” mortgages used to buy the most expensive homes, helping revive a market that shriveled amid a three-year jump in homeowner defaults. JPMorgan resumed buying new jumbo loans made by other lenders this month, after halting purchases in March, spokesman Tom Kelly said. Borrowers must have checking accounts with the bank, he said. Citigroup is again offering the loans through independent mortgage brokers, spokesman Mark Rodgers said. The two New York-based banks are signaling new interest in a market hobbled since 2007, when record-breaking defaults on home loans caused investors to flee securities backed by mortgages. With the recession sapping demand for new consumer and corporate loans, lenders are competing harder for creditworthy customers, said Harry Davis, banking professor at Appalachian State University in Boone, North Carolina.

 

The National Association of Realtors reported that existing home sales ticked up 2.4% last month to a seasonally adjusted annual rate of 4.77 million units compared to the downwardly-revised rate of 4.66 million in April. The sales missed expert forecasts of 4.82 million annual units, according to a consensus estimate of analysts compiled by Briefing.com, and are off 3.6% from the 4.95 million-unit pace 12 months ago.

 

The number of homes listed for sale in many U.S. cities continued to fall in April in what some analysts see as a sign that the market may be nearing a bottom…The supply of homes for sale in 29 major metropolitan areas at the end of April was down 3.6% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif.

This is excellent news although the period being examined is relatively short.

In some of the markets most affecting Maui real estate Bakersfield inventory was down 14%, Orange County was down 8%, San Diego and Sacramento 5%, Las Vegas down 11%, Los Angeles down 14%.

This is GREAT news.

 

Maybe the moment of maximum pessimism is at hand after all…So let me play devil's advocate and consider the positive case for buying a home right now. The key factor: Interest rates. If you can borrow at 4.5% or 5% over 30 years, many purchases start to look appealing. Especially if we get a hefty dose of inflation down the line. If that happens, your monthly payments will be low and you'd get to repay the principal over time with devalued dollars. That's a double win.

 

The entire article is worth a read.

• Existing sales rose 5% from January to a 4.72 million annual rate
• Months of supply increased slightly to 9.7 months

How does that affect Maui real estate? Directly it doesn't at all. But both of these data points seem to indicate that we are at or near a bottom.

 

Prices here held up far better than for Maui real estate generally.

 

Now obviously none of this is good news but we are now weeing prices at 2004-type levels and that makes it a heck of an opportunity.

•  New home sales rose 4.7% in February to a 337,000 unit annual rate, rebounding from the all-time low hit in January… Around 5-6 months of supply would be consistent with a balanced market; 

•  Meanwhile, existing home sales gained 5.1% in February to 4.72 million after hitting a 12-year low, but inventories were unchanged, remaining badly elevated at 9.7 months. 

• Similarly, durable goods orders at first glance looked much better than expected,Against the expected bigger negatives from investment and inventories, the consumption picture at least looks a bit better. 

• Real consumer spending fell 0.2% in February, as expected, but January was revised up to +0.7% from +0..4%.  As a result, we now see 1Q consumption rising 1.3% instead of +0.9%.  While the swing into positive territory would be a positive development, the upside we’re forecasting would mark a meager rebound

Don't get us wrong, none of this is good news, but it is better than things have been recently. While there is no direct impact on Maui Real Estate directly, over time an economic improvement will help us.