Most interesting is that the offers were all resembling the 2005-2007 bullshit as no one had any real skin in the game. I looked over the offers and said to my realtor, “here we go again, 2005-2007” … once again we get real stupid.
That quote is from someone who emailed me describing the process of selling his home recently. He agrees with me that the housing market is about to do another cliff-dive.
I just published an article discussing the near-distressed bond deal floated by Beazer Homes this week. Despite the belief that we’re supposed to be in a housing market recovery, Beazer’s bond deal was rated two slim notches above “distressed” by Moodys. I don’t know have current statistics, which would be severely distorted by the massive intervention in the markets from the Fed’s QE anyway, but historically companies with a “triple hook” rating (CCC/Caa) have a very high probability of eventually ending up in bankruptcy. When this happens again to Beazer, it will be either chapter 22 or chapter 33 (chapter 11 x 2 or 3).
You can read the details of my article here: Beazer’s Triple Hook Bond Deal.
Interestingly, Wells Fargo’s quarterly earnings report contained data which re-confirmed my view that the housing market is starting to drop hard. Wells Fargo underwrites roughly 22% of all mortgages – they are twice as big as the next largest mortgage underwriter. According to their numbers, home purchase mortgage applications dropped over 10% from Q1 2013 to Q1 2014.
Last week, in what is supposed to be the start of the best seasonal period for home sales – and with no supposed distractions from bad weather – the Mortgage Bankers Association reported a 14% drop year over year for the week for purchase applications. I’ll let the reader decide what this means for the health of the housing market…