Economy Watch: Mortgage Applications Drop as Rates Rise; Vegas Market Closer to Normal; Income Patterns Return to 1920s
- Sep 12, 2013
The Mortgage Bankers Association reported on Wednesday that mortgage refinance activity is at its lowest level since 2009. The organization’s Refinance Index has, for the week ending September 6 (with an adjustment for Labor Day), dropped 71 percent since its most recent peak during the week of May 3, just before interest rates started their upward creep.
On the whole, according to the MBA, mortgage applications are down as well. The number of applications dropped 13.5 percent for the week of Sept. 6 compared with one week earlier.
That trend – which is the latest slide in weekly mortgage applications – follows the trend in interest rates for mortgages. The MBA notes that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.8 percent from 4.73 percent week-over-week, with points increasing to 0.46 from 0.33 (including the origination fee) for 80 percent LTV
Vegas Market Closer to Normal
On Wednesday, the Greater Las Vegas Association of Realtors reported a month-over-month increase in available homes listed for sale without any sort of pending or contingent offer. By the end of August, the GLVAR said 5,612 single-family homes were listed without any sort of offer. That’s up 19.9 percent from 4,681 such homes listed in July and up 41.1 percent from one year ago.
The Vegas market is worth tracking because it was the poster child for the impact of the housing bubble, and then the recession, on local markets. As of the summer of 2013, however, it’s made something of a recovery, though the latest numbers suggest that price increases might be slowing down there as inventory goes up (a common pattern in residential markets).
Still, the market is healthier than it used to be: the GLVAR reports fewer foreclosures and short sales in the market. In August, 25 percent of all existing home sales were short sales, down from 28 percent in July. Another 8 percent of all August sales were REO, unchanged from July. The remaining 67 percent of all sales were the traditional type, up from 64 percent in July and as high as that percentage has been in several years.
U.S. Income Patterns Return to the 1920s
A study released this week by the School of U.C. Berkeley, the Paris School of Economics and Oxford University details the percentage of income of the top 1 percent of households (in terms of net income) compared with everyone else in the United States. According to the study, which based its findings on IRS statistics, the income gap between those groups is the largest it’s been since the 1920s.
The top 1 percent, for the purposes of the study, was defined as households with incomes above $394,000 in 2012. Between 1993 and 2012, the real incomes of the 1 percent grew 86.1 percent, while the incomes of everyone else grew 6.6 percent, according to the study. The recession put a dint in the amassing of wealth at the top, but only a temporary one: from 2009 to 2012, incomes of the top 1 percent expanded more than 31 percent, largely on the strength of a rising stock market, while the incomes of everyone else grew 0.4 percent.
Wall Street continued its upward movement on Wednesday, with the Dow Jones Industrial Average gaining 135.54 points, or 0.89 percent. The S&P 500 advanced 0.31 percent and the Nasdaq was up 0.48 percent.