Monday Morning Cup of Coffee is a quick look at the news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.
The yields on benchmark U.S. Treasurys soared to their highest level in almost two years, climbing to more than 2.5% on Friday, an article in the Financial Times reported.
Yields increased as investors bet that the Federal Reserve would soon start winding down its emergency bond-buying program.
The article cited two top fund managers warning that the rise in rates threaten the sustainability of the housing economy.
Jeffrey Rosenberg, chief fixed-income strategist at BlackRock, commented in the article saying higher payments made new mortgages less affordable.
He added, “Housing has been held up by falling rates, not by rising incomes. Without rising incomes, this puts some concern into the sustainability of the housing recovery.”
According to the report, the global financial market experienced a rocky week due to the Federal Reserve deciding to scale back purchases, with stocks as well as bonds tumbling.
Home prices are skyrocketing through the roof, causing some concern for a potential price bubble, a CNBC article stated.
Tight inventories, investor appetite and cheap money made home prices soar in most big cities.
The article explained that even though home values are still far from their peak in 2006, they still have risen too far too fast.
Homeowners spent three times their annual incomes on homes at the end of last year compared to pre-bubble norms of 2.6 times.
Bidding wars escalated home prices well above the asking price, with one house in New York City selling 10% above the asking price, the article said.
Economists fear today’s prices are not sustainable and if investors do not back down, a bubble is bound to happen.
But these violent swings are not happening everywhere.
According to the report, parts of the country like Los Angeles and Phoenix are posting gains of almost 20%, compared to areas such as Chicago and Philadelphia rising only 3%.
Meanwhile, other markets show prices are flat or declining in some cases.
The governor of New Jersey continues to battle the state’s commitment to affordable housing, an article in The New York Times said.
Most recently, Governor Chris Christie tried to seize up to $165 million from housing trust funds held by municipalities and earmarked for affordable housing.
However, according to the article, a state appellate court ruled that the state could not take the money unless local governments and nonprofit developers were given a chance to challenge the action.
Additionally, the court said it expected the state’s affordable housing agency to create and promote the development of affordable housing.
Previously, Christie has attempted to dismantle the independent state agency that oversees affordable housing development.
In addition, he tried to weaken the state law that prohibits local governments from using zoning to exclude housing for poor and working-class people.
The Massachusetts housing crisis is waning, with the number of homeowners facing foreclosure falling to its lowest level last month since 2005, an article in the Boston Herald said.
According to the report, statewide, 248 foreclosure petitions were filed in May, plummeting 86% from the 1,779 filed at the same time last year.
As a whole, 2,698 petitions for foreclosure have been filed, decreasing 66% from the 7,877 filed for the same period in 2012.
The significant improvement is attributed to median home prices escalating 11% so far this year.
Additionally, the state passed a law last year requiring banks to notify borrowers of their rights to pursue a loan modification before foreclosing.
The Federal Deposit Insurance Corp. did not close any banks for the week ending June 21.
bswanson@housingwire.com
