Mortgage and Housing at Seeking Alpha

• China's Housing Bubble Spells Trouble
  Rob Abbanat submits:

  I am loath to rent. I just can’t stomach the idea of paying for someone else’s mortgage. When I first arrived in China back in 2006, I fully intended to buy property once I got the lay of the land. But when I started looking, I quickly realized that residential real estate was pricey, even by Boston standards.

  And since then, it has only gone up. Conversely, rents are very reasonable and have increased only modestly. Renting here always seems to make more sense than buying. Anyway, after nearly four years in China, I spent the last two weeks looking for a new apartment to rent in a better part of town, which has opened my eyes to what appears to be a frighteningly large bubble. While I haven’t done any formal research, there is a tower of anecdotal evidence that suggests that the current market prices of residential real estate are unsustainably high, at least in Shanghai and other first-tier cities.

  
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• Addressing Second Lien Writedowns
  Rortybomb submits:

  R.A. (Ryan Avent!) writes in response to my previous entry:

  [Mike's thesis] places the government in a bind. If it forces banks to write down worthless second mortgages to clear the way for new modifications, then the banks suddenly look shaky again. If it doesn’t, then lots of homeowners are stuck in loans they can’t modify and may not be able to afford.

  
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• Analyzing the Real Forces Behind Current Housing Supply and Demand
  Jeff Miller submits:

  OK, here I go with another educational concept that has no immediate and actionable investment advice. I heard a couple of uninformed comments about housing. One was that the market needed to push prices down so that it would clear. This reflects ignorance. Markets clear at the current price.

  The other was about shadow supply. Let's take a closer look.

  
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• Two Years Until Market-Clearing Prices Hit Housing - Dan Alpert
  Edward Harrison submits:

  Ann Lee and Dan Alpert joined Bloomberg’s Pimm Fox Tuesday to talk about the housing market recovery. Lee, a professor of finance at New York University, was sceptical that population growth predicts any substantial increase in housing transactions and prices simply due to the continued pressure on wages and disposable income. and Dan Alpert, managing director at Westwood Capital LLC, said we are not looking at market-clearing prices in the near-term because home ownership percentages need to drop. This process will take two to two and a half years in his view.

  Short clip below.

  
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• Did Anticipated Government Subsidies to the Mortgage Market Magnify the Housing Price Cycle?
  Casey B. Mulligan submits:

  In 2008 I was of the opinion that easy monetary policy cannot explain much of the housing boom. When Professors Krugman and Delong came to agree with me, I immediately realized that I was likely wrong.

  Here was my reasoning in 2008:

  
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• Housing Quote of the Day
  Tim Iacono submits:

  From a story by Diana Olick at CNBC late yesterday on the possibility of the federal government getting behind a large-scale program to reduce principal balances on underwater mortgages comes a keen observation from housing consultant Howard Glaser.

  Home prices have fallen so far in the hardest hit areas, the areas where the bulk of the troubled loans are, that banks would have to write down principal 30 to 50 percent to put borrowers back in the green. Accounting rules require that banks write down the value of those loans on their books, and experts tell me that if banks really accounted for all the losses in the home loan market, they'd all be insolvent.

  
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• Is U.S. Residential Property a Good Buy?
  Prieur du Plessis submits:

  The chart below, the Affordability Index of US Residential Property, comes courtesy of the New Observations on Real Estate, Mortgages & Life blog. The Index is computed by factoring in home prices, mortgage rates and income.

  Let’s have an open thread and discuss in the comments section whether this represents a buying opportunity, or is it a question of fools rush in where wise men fear to buy? Click on the "comments” section below and share with me your views on whether I should part with my South African rand for a residential property in some part of America.

  
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• Brett Weisel Highlights Opportunity in California Real Estate Foreclosures
  The Manual of Ideas submits:

  We recently had the pleasure of interviewing Brett Weisel, founding partner of San Francisco-based investment bank Thomas Weisel Partners (TWPG) and general partner of CA Residential Opportunity Fund, LP. The latter seeks to "capitalize on a historic opportunity to acquire deeply discounted residential properties across several carefully selected California counties."

  In the following interview, Brett Weisel discusses the strategy of buying foreclosed homes and reselling them in today's tough real estate market.

  
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• Is There Hope for a Real Solution in the New Short Sale Plan?
  Tom Lindmark submits:

  Another Monday brought another set of plans to straighten out the mess that housing has become. This time, there’s a two pronged approach. Pressure the banks into writing off their second mortgages and get the homeowners to move on via short sales.

  Here are the details as I see them:

  
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• Housing: More Short Sales Coming?
  John Lounsbury submits:

  David Streitfeld has an interesting article this morning in The New York Times discussing the outlook for an increase in the number of housing short sales and government efforts to facilitate these. A short sale is one in which the lender agrees to accept a sale price less than the outstanding mortgage balance.

  Short sales can be advantageous to both mortgagor (borrower) and mortgagee (lender). The credit impairment for the borrower is less than for a foreclosure. The lender can often recover more of the outstanding debt than by going through foreclosure. Even if the sales prices are comparable, the short sale occurs much more quickly and with significantly less attendant expense than do foreclosures and subsequent resale.

  
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