Foreclosure Mess – Round 2

Foreclosure Mess

(Round 2)

The latest foreclosure crisis is creating situation that will have to result in major changes to the system and more than likely, billions of dollars of loses for banks.  I spent a lot of time reading up on it this weekend and here is the abbreviated version of what the issues are (as I currently understand them): (more…)

Monday Morning Coffee

Monday Morning Coffee

Importance of Title Insurance

Good morning,

I hope you had a great weekend.  Zach and I took our stab at clothes shopping.  Bought him some size 4 pants that looked a “little” large.  Once we got them home, I was informed that the correct size was “4T”.  Ah well, back to Target. 

Things are getting interesting with foreclosures as the number of banks with “issues” with their foreclosure process is growing.  In several states the Attorney General is stepping in and of course, politicians all over are jumping on the issue.  The timing of this is fortuitous if your goal is higher home prices because although demand has slumped after the tax credit,  if the banks have to delay foreclosures again for a couple of months to sort his out, it will keep inventory from growing too quickly and help prop up prices.  However, it does point out a very large concern all buyers should have, and that is Title Insurance. 

Typically, the seller’s agent picks a title company and it just happens that they have a friend selling the policy.  As a buyer, you need to make sure your agent is making sure you have a title policy from a company that is financially able to withstand the potential issues.  Espcially if you are purchasing a home that has recently been foreclosed on.  You do not want to have your ownership challenged only to find that the company insuring your purchase has gone out of business.  A few companies that are likely to survive any crisis would be Chicago Title, Fidelity Title and First American Title.   As a bare minimum, make sure they are publicly traded so you can look at their financial strength. (more…)

Resale Numbers and the Success of HAMP

Resale Numbers Dissappoint – but…  HAMP was a Success!

NAR released the July home resale numbers, and as predicted, they fell significantly.  The fell far below analysts expectations, and even farther that I predicted in my Coffee on Monday.  Here are two graphs that illustrate the results (once again taken from www.CaluclatedRiskBlog.com)

This first one shows home sales by month (resale homes only):

Existing Home Sales Slump in July

You can see the trend was clearly down until early 2009 when the administration stimulated the housing market with the tax credit.  Sales spiked in November of 2009 with the scheduled expiration of the tax credit and then again early this year with the real end of the tax credit.  Now, we have resumed the downard trend.  Based on August numbers in the San Diego market so far (I know, small sample size), it looks like things may get a little worse (July sales were down in San Diego 20% from a year ago and I think August will be down about 24%), I will look at the numbers more closely in next week’s Coffee. 

With the combination of slower sales and more homes being put on the market by builders (new construction spurred by the short term rise in demand), banks (more aggressively processing foreclosures), and individuals (summer season sees more homes offered for sale), inventory as measured by months of sales, spiked:

Nationwide Inventory Jumps to over 12 months

Ouch, that’s a big jump.  Inventory rising that quickly in one month is a bad indicator.  Plus, as foreclosures will continue to be put on the market, this number could grow to 14-15 months.  Inventory levels over 6-7 months usually result in lower prices.  Fortunately, we are in much better shape here in San Diego with inventory levels still under 5 months.  However, significantly lower sales levels in August will drive that number up.

I found an interesting article about a meeting at the Treasury between top players there (including Geitner) and several prominent bloggers.  You can see the article here.  The blog this is taken from is www.interfluidity.com.  The interesting part was when they addressed HAMP, you know, the Home Affordable Modification Program.  While it has been considered by most to be a failure, the Treasury thinks it was a success because it basically pushed the foreclosure problem down the road 3-6 months so the banks could recover.  The argument was that if all the homes had been foreclosed on instead of going through the delay, the system might have failed:

The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those.

It’s an interesting take, and correct from the standpoint that it helped the system.  Isn’t it interesting that when the politicians sold it to us, they emphasized the saving of people’s homes rather than saving the system.  Also a sidelight to watch is  now that the stimulus is over, we are seeing the foreclosures that were delayed by HAMP start to be processed just as demand is falling.

Monday Morning Coffee – Home Sales Data out Tomorrow

Monday Morning Coffee

New Listings Plus Home Sales Data out Tomorrow

Good morning,

I hope you had a nice weekend.  Mine was interupted by something called the Security Tool virus.  A bundle of joy that took 5 hours to fix (of course, I didn’t fix it – luckly, I have a client who is much more familiar with network security who spent a good part of his weekend fixing it.  Thanks Marc!)  I did find time to work with Cori and make our first ever batch of jam from our tree (golden nectarines).  The good news is it tastes good and the jars sealed.  The bad news is it didn’t jell, so we have lots of golden nectarine sorta jelly runny stuff.  Oh well.

This week, the big real estate news will come on Tuesday when the National Association of Realtors announces the Existing Home Sales for July.  Last month was off a bit as the affect of the tax credit started to appear.  This month, I expect it to be off a lot.  The “experts” are predicting a rate of 4.65M annual sales (June was 5.27M).  I think that the number will be closer to 4.0M – in which case the stock market will probably react negatively as a number that low could be seen as a strong indicator of a double dip in housing. (more…)

Monday Morning Coffee

Good morning,

I hope you enjoyed the weekend.  It was a nice mix of work and play (although if you had told me 30 years ago I would have call working in the yard “play”, and I think I would have told you you were nuts – right Dad?)  We started thinning out our spaghetti squash and I weighed a couple of them and realized that one plant was giving us about 75lbs of squash, which is about $110 worth of food from one seed.  I thought this was pretty cool until I realized we have to eat another 55lbs of squash to get this benefit.  Why can’t they make steak plants?

I took a look at some new data on mortgages and foreclosures from Fannie, Freddie and FHA.  I posted the information (which came from CalculatedRiskBlog.com) on the site yesterday, so I won’t bore you here.

Although the market is slow, we are continuing to receive offers, and are actually having some success getting a few into escrow.  I should have 2 small, detached condos in the 4S area to tell you about next week (although photos will be a week later).

That’s it, enjoy the coffee!

Birds And The Wisdom They Impart

by Elisabeth Folino

 
This morning, listening to the birds greet a beautiful sunny winter’s morning, it occurred to me that rain or shine the birds always greet the mornings in exactly the same way. They always start it singing with all their might, greeting the day with their beautiful songs and just getting on with the business of living life fully. One can learn so much by watching them.

I like to feed the birds on my balcony; I live in an apartment and can’t have any pets as it is against the rules. I mainly get sparrows and speckled turtledoves, a couple of pigeons and in summer, I get regular visits from rainbow lorikeets. All are fun to watch and all bring joy to my heart. Watching them is relaxing and a form of meditation for me.

The other day, one of the pigeons had got himself stuck in my balcony railing. I thought he was dead. It made me so sad and then, when I went outside, it started to struggle. My heart was filled with joy; it was not dead just exhausted from the effort of trying to free himself.

As I approached the bird, he got more frantic so I soothingly told him not to struggle. He froze, perhaps in fear. I like to think that he could feel the vibration of my not wanting to harm him. I gently placed my hand under him (he was so light) and I lifted him up to set him free. He flew up to the roof of my flat and watched as I put the usual seeds out. Low and behold, after his ordeal, he came right back down to my balcony and ate his breakfast with the rest of the birds.

Why am I sharing all this? Well, for one, it was amazing to actually hold a wild pigeon in my hands even if it was for just one second and I just had to share, but I also could not resist sharing the lesson that this situation brought my way.

Life is full of obstacles; some very real, like the bars holding the pigeon back, and some are imagined but we struggle against them till we are exhausted. Sometimes the answer is with a friend. All it takes is a little lift, a little guidance in the right direction and away we go, free again to soar just like my little feathered friend.

The biggest lesson however, from all this, is how my little feathered friend recovered from the situation. He didn’t sit on the roof looking down at the evil balcony that had tried to trap him; he didn’t relive the frightening situation over and over again. Nope! Down he came to eat his breakfast and live the life he was meant to live.

We can learn so much from birds. They truly know how to live in the now. I believe the lesson here is that sometimes life is hard and we get stuck but often help, in the form of a friend, can set us to set us free. Remaining free, however, is up to us.

Another thing that I have noticed is that while feeding, some of the birds are rather aggressive and tend to chase away the others trying to keep all the seeds to themselves. The funny part is that they can’t chase all of them away and that while they are so busy chasing the others away, they are missing out.

How often do we do that in life? Instead of just getting on with a job, we watch and criticize others only to find that while we have been busy trying to assert ourselves and prove how good we are, that all of a sudden a quiet achiever has managed to do the job and reap the rewards we were so trying to reap.

Isn’t it amazing how so many life lessons can be found just by observing nature’s creatures!

Have a Great Week!

Scott Voak

Updated Foreclosure Data

Updated Government Foreclosure Data

This week, the government released some updated foreclosure date from Q2.  These charts are re-prints from a blog I subscribe to called CalculatedRisk.   It can be found at www.CalculatedRiskBlog.com  I highly recommend it as the person who runs it does a pretty good job of assimilating different economic data.  Even if I don’t always like it, which brings me to the following charts:

Government Guaranteed and Owned Foreclosures

This first chart shows that Fannie, Freddie and FHA are now the proud owners of almost 250,000 homes (this is not all the foreclosures, just the ones taxpayers are on the hook directly for).  The number is increasing as banks are processing more foreclosures for people who just don’t qualify for a loan modification. 

This next chart taxes it a step farther and is really what caught my attention, it shows how many people are upside down on their mortgages.  This is important because if the economy were to go into another recession, these are people who have less incentive to hold onto their homes.  I look at it as the worst case, since anyone with positive equity would try to sell and avoid foreclosure. 

Almost one-third of homeowners are underwater

 The number are scary – 30.6% of homeowners under water and a total of almost $2.4B under water (this is just the portion of their loan in excess of the home value).  Also, these are first mortgages; more people are under water if you consider their second mortgages also.  But, it’s not all bad.  The next chart made me happy I don’t live in Nevada!

Negative Equity by State

Ouch.  California doesn’t look as bad as some of these other states.  And, for those of us in San Diego, we’re better off than most of California.

 Combining all three of these charts, it is evident that the housing recovery is tenuous at best.   Combined with the slowing pace of sales after the tax credit expiration I believe it is cause for concern.

Treasury Department Foreclosure Report

Foreclosure and Mortgage Deliquencies

Q4 2009

I finally finished the OCC and OTS Mmortgage Metrics Report for the fourth quarter of 2009 (I know you’re jealous at how much fun I get to have).   The report looks at all first liens held by most of the largest mortgage servicers.  It covers almost 34 million loans totaling almost $6 trillion.  It is the raw data before it gets spun by the press or politicians.  Here are some highlights and lowlights from the report:

Delinquent Mortgages

• Mortgage performance declined for the seventh consecutive quarter.  Delinquent mortgages and mortgages in foreclosure rose to 13.6% of all mortgages (once again, just talking about first mortgages).

• The percentage of mortages 30-59 days late stayed stable, most of the increase was in seriously delinquent mortgages.  This may be a positive as it is showing that the pace of new delinquencies is not picking up, and that loans are staying seriously delinquent longer which is an indication that banks are working longer to modify before moving to foreclosure.

• Option Arms continue to be the worst performing loans with only 662% current.

• There was a large increase in the number of seriously delinquent prime loans as the number jumped fro 838k to 976k in one quarter.  Almost 1 in 25 prime borrowers is more than 60 days late on the mortgage.

• Overall, 7.1% of all mortgages are seriously delinquent (60+ days late) and an additional 3.4% are 30-59 days late.

• Although the Sub-Prime and Alt-A loans have the highest percentage of delinquencies, the Prime loans have the highest number – this is important as if the percentage of prime loans going bad keeps rising it has a real chance of bringing the market down again.  However, these are also the borrowers that have the best chance of recovering if employment and the economy continue to recover after the stimulus expires.

Home Retention Actions

• The number of home retention actions slipped by 19.1% compared to the third quarter.  This is probably likely to the fact that HAMP received so much publicity in the third quarter that most people who were eligible applied then. 
• Discouraging number on the HAMP program was that although 349k people had entered the 3 month trial period in the second and third quarters, only 21k of those received permanent modifications during the fourth quarter.  That’s about a 6% conversion rate (it’s too early to have data to see how many re-default).  If that is an accurate number (it is possible that many were delayed past 3 months by paperwork issues, etc.) then the program is really a failure.  Let’s hope the numbers get better.
• More than 50% of HAMP trial plans and modifications are for prime borrowers
• There were almost twice as many home retentions started as foreclosures (this would also explain the increase in seriously delinquent mortgages as they stay delinquent until fully modified).
• The percentage of loans modified that had principal reductions fell to 6.8%.  Rate reduction and capitalization (adding your late payments back to the loan) were the most common modifications.
• HAMP modifications only included principal reduction 0.1% of the time, but they did utilize principal deferral 26.8% of the time.
• 42% of all modifications decreased payments by 20% or more – this is important to the  borrower being able to keep up with payments on the modified mortgage.
• 82% of HAMP modifications decreased payments by 20% or more.

Modified Loan Performance

•  The performance of modifications continues to improve over time:
  • Only 33.5% of loans done in the second quarter of 2009 were 60+ days late six months later compared to 42.7% of loans in the first quarter.
  • Only 14.7% of loans modified in the third quarter were 60+ days late 90 days later as compared to 30.8% of the loans done in the first quarter of 2009.
• Loans 30+ days late were obviously a higher percentage; 47.5% after 6 months for loans modified in the second quarter and 29.8% after 3 months for loans modified in the third quarter.  Both of these are significantly better than they were prior to the second quarter.
• The highest Re-Default rate is for Government-Guaranteed loans (FHA, VA, etc.)  with 67.8% 60% days late a year after modification (these are obviously reflecting pre-HAMP modifications as none have been modified for a year yet).
• One reason to be a little more positive about HAMP modifications (if more get completed) is that they seem to be reducing payments by 20% or more, and historically loans that have payments reduced by 20% or more have a re-default rate of only 39.8% a year later (as opposed to 67% if the payments are unchanged).

Foreclosures

• Newly initiated foreclosures declined in the 4th quarter as homes are staying in the seriously delinquent phase longer as lenders are working harder on modifications.
• Completed foreclosures increased by 8.6% over the previous quarter and 35.7% higher than a year ago. 
• There are almost 4x as many foreclosures as short sales and Deed-in-Lieu actions, although short sales are up 96.8% over a year ago.
• 7.8% of all subprime mortgages are in foreclosure while only 2.3% of prime mortgages are in foreclosure (however since there are more prime mortgages, there are actually more total prime loans in foreclosure than subprime).

A couple of key numbers to look at next quarter will be:

• How many of the HAMP trial periods get converted to permanent modifications.
• If the loans that are seriously delinquent transfer into the foreclosed or modified category.
• If loans modified in the third quarter of 2009 and later continue to have a lower re-delinquency rate.

I expect that the data for the first quarter will continue to improve and the real questions will come with the second and third quarter data as that data will reflect the market after the stimulus has expired.

Monday Morning Coffee – How does Greece affect your mortgage?

Monday Morning Coffee

Greece Defaulting Could Ripple into Your Mortgage

February 14, 2010

Good morning,

I hope you had a very nice Valentines Day.  We celebrated a day early and enjoyed a quiet night at the Rancho Bernardo Inn (no 6:00 am wake-up!)  I’ve been reading a lot of various “experts” talk about what direction the market is going to go.  What I have found is the stock analyists in general say we’re going up (they sell stocks, so that makes sense).  People in the bond market say we’re going down (also makes sense as they want to sell bonds).  People selling gold, well they’ve been saying the end is near since just about the begining.  So, I don’t have any answers at this point, but I sure don’t feel very comfortable with rising debt, Greece potentially defaulting and the end of the stimulous around the corner.  My guess is that the Fed steps in and extends (although at about 1/2 the rate) the purchase of mortgages in an effort to provide a soft landing for the real estate market.

I was spending some time trying to write out in easy terms how we got into this mess (mostly hoping it would help me see how we were going to get out of it).  After about 6 hours, a client showed me a very cool web site (if he had come in the day before, I could have saved the 6 hours!).  This is the best description I have seen for how we arrived where we are today, and it is done at about the 8th grade level.

We have a new site up for our listing in the Garden Gate community of 4S Ranch.  We started showing this 4 bedroom, 2300+ sf home yesterday and currently have one offer in.  If you know someone who would be interested, please have them call me!

We also have a great 3 bedroom condo in Pacific Beach for rent.  It is located on Crown Point with a view of the water.

That’s it for this week.  Enjoy the coffee!

Just Five More Minutes
  by: Author Unknown, Source Unknown

While at the park one day, a woman sat down next to a man on a bench near a playground.

“That’s my son over there,” she said, pointing to a little boy in a red sweater who was gliding down the slide.

“He’s a fine looking boy” the man said. “That’s my daughter on the bike in the white dress.”

Then, looking at his watch, he called to his daughter. “What do you say we go, Melissa?”

Melissa pleaded, “Just five more minutes, Dad. Please? Just five more minutes.”

The man nodded and Melissa continued to ride her bike to her heart’s content. Minutes passed and the father stood and called again to his daughter. “Time to go now?”

Again Melissa pleaded, “Five more minutes, Dad. Just five more minutes.”

The man smiled and said, “OK.”

“My, you certainly are a patient father,” the woman responded.

The man smiled and then said, “Her older brother Tommy was killed by a drunk driver last year while he was riding his bike near here. I never spent much time with Tommy and now I’d give anything for just five more minutes with him. I’ve vowed not to make the same mistake with Melissa.

She thinks she has five more minutes to ride her bike. The truth is, I get Five more minutes to watch her play.”

Have a Great Week!

Scott Voak

Monday Morning Coffee – What happens when the Fed stops buying Mortgages?

Monday Morning Coffee

What Happens when the Fed stops buying MSBE’s?

Januray 17, 2010

Good morning,

I hope you had a great weekend.  We were very busy as we had 18 friends over for dinner on Friday night and went to the San Diego Association of Realtors Installation Dinner where our friend Mark Marquez was installed as President on Saturday night.  So now, it is a race for bed!

Updated my blog earlier today with a post on what is going to happen when the Fed stops buying MSBEs in March.  The short version is that the market will slow, interest rates will rise and they will step in again to resume purchases, but on a smaller scale with rates up about 1% over the year.  The long version is here.

We have a new couple of new homes this week, but due to lingering issues with the office move, I do not have single property sites up for them yet.  Both are short sales:

Palomino Plan 3 in 4S – 4550sf 6 bedroom home with a 4 car garage on a very large lot.  It is priced at $900k.  We have offers on this and will probably be off the market early in the week.

Canyon Ridge Plan 2 in 4S – 3600+ sf 4 bedroom home with an loft and an office over the garage.  This is also a large lot and has a pool (but there is an issue with underground water that needs to be dealt with or at least acknowledged).  There are no showings on this until next weekend when we will have an open house (owners are packing).  It is priced at $800k.

That’s it – I will have single property sites for them next week.

Enjoy the Coffee!

This week I am revisiting a story I posted last year for an update.  It’s the one about the autistic basketball player and hits home for Cori and I as Zach’s Fragile-X puts him on the autistism spectum.  As he is getting older, his issues are becoming more pronounced and we gain more respect every day for both our own son and other families that navigate the world of autism/Fragile-X every day.  He is almost 4, and although I prefer he take up soccer to basketball (due to my own limited skills), any way he can have a moment like this would be worth it.  Videos like this are a great source of hope for parents who have handicapped children.

Have a Great Week!

Scott

Prediction for when the Fed stops buying MBSEs

I was looking at numbers over the last year as they related to sales values to try and figure out what effect that Fed’s purchases of Mortgage Backed Securities has been.  A major problem it getting accurate numbers is that housing prices are reported as an average or median price.  In markets that are consistent, this is a good method to use.  However, when the market changes (as it has recently) the median price especially becomes less and less meaningful.  Here’s a quick explanation:

Let’s say there are 10 houses that sell. 

• 4 are two bedroom homes that sell for $200k.
• 2 are four bedroom homes that sell for $400k.
• 4 are six bedroom homes that sell for $600k. 
• In this case, your median price is $400k (median is the price of the average home, not the average price of homes). 

 Now, let’s say the price for each home increases $50,000.  However, due to a factor such as loans being difficult or no inventory being available on 6 bedroom homes, we sell the following homes:

• 4 two bedroom homes for $250k.
• 2 four bedroom homes for $450k.
• 1 six bedroom home for $650k.
• In this case, your median price is $250k. 

Here is a simplistic example showing that the median price fell even though the price on every home increased.  It is also the reason why current data on housing prices is to be viewed a little skeptically.  My guess is that the data on median prices is under reporting the gain in housing because the shift has been towards more less expensive homes selling which brings the median down. 

So, I looked at my favorite housing micro-economy, 4S Ranch.  Here I can break houses down to similar sizes and ownership (condo vs fee simple) and look at what a slice of homes has done over several years.  In some of the data segments, there are not enough sales to be meaningful,  but in others, there is a large enough sample size to give a relatively clear picture.  A problem does come into play when one segment has several short sales or foreclosures in a quarter as they skew the prices downward.  Going through the home sales for the past year and trying to adjust for foreclosures, etc.  I come to the following conclusions (with reservation as this is not exact by any means and there is a good margin for error):

• Detached homes priced under $650k were up 5-12% (the 12% is a little shaky due to small sample size).  I would feel fairly comfortable saying these homes are up in general about 7% in the last year.
• Homes priced above $800k slumped early in the year, but have made it back to about even. 

I think a large part of the difference here is the fact that loans are much easier to get in the lower price ranges (in fact, all of the homes I have sold over $800k in the last year have been bought by buyers with large downpayments.  There are almost no loans above $700k to be had).  The only reason that loans below $700k are available at current interest rates is that the Fed has been buying them from the banks to the tune of many BBBBillions of dollars a week.  If this ends as scheduled in March, rates are going to have to rise for the following very simple reason – we have to entice someone else to buy the loans.  Here’s a fictional conversation between Bank of America and China:  Remember those BBBBillions of dollars of loans we sold you a couple of years ago?  We know it didn’t turn out real well for you what with all those defaults and foreclosures.  But….how about buying a couple hundred BBBBillion more?  It is not too hard to see that China (or any other buyer of mortgages) is going to want a higher return for taking on the risk.  A higher return for them means higher rates for you and me. 

So, if the Fed stops buying mortgages as planned in March, rates will rise rather quickly.  How high and how fast?  Well they have to rise high enough that the rest of the world will buy the loans, but not high enough that people stop buying houses.  Market “experts” think rates will rise between .75% and 2%.  If they rise 1.5%, it could take someone who qualifies for a $640k loan down to about a $495k loan.  That would take the wind right out of the housing market.  A buyer who has been looking at a $675k house an imagining the four bedrooms is not going to put the same payment into a three bedroom condo.  They will likely sit on the sidelines and we will see the number of transactions slow dramatically until prices fall enough to put our buyer back into a four bedroom house. 

So, do I think prices are neccessarily going to drop 20%?  No.  For the same reason I predicted in August that the Home Buyer Tax Credit would be extended – politicians are running the show.  I am not an economist, but I have at least a basic understanding of the markets.  However, I think it is fairly easy to predict what is going to happen – so, here it goes:

• Rates will start to rise in mid-late February (loans that start in mid February will be completed in mid March and have to be sold in late March, when the Fed is scheduled to stop buying them).
• By the end of March it will be pretty clear that rising rates have slowed down the housing market and talk will start fresh about a housing led double-dip recession.
• Democrats who control the entire political engine in Washington will very quickly realize that a summer recession with ever increasing unemployment and vacant foreclosed homes will translate into a lot of lost seats in the House of Representatives in the November election.
• By mid-April (if not sooner) the Fed will announce that they will resume buying MBSEs although on a smaller scale (this will be an attempt to create a soft landing).
• The market will stabilize again although we are not likely to see the same enthusiasm for real estate as we are seeing right now.  This is because the Fed eventually has to get out of buying all the mortgages the banks can write (don’t they?), and as they do, rates will slowly creep up.

Since I am making the prediction, it is sure to not happen, but I think we will end the year with mortgage rates about .75-1% higher than they are today and prices within 3-5% of where they are although they may bounce around a lot before settling down.