Mortgage Woes Stuck in High Gear?
- May 20, 2010
May 20, 2010
By Dees Stribling, Contributing Editor
Some 9.38 percent of all U.S. single-family mortgage loans outstanding were delinquent at the end the first quarter of the year according to the latest report on that doleful subject by the Mortgage Bankers Association, released on Wednesday. That’s the raw number, anyway; the seasonally adjusted number for the same period is worse: 10.06 percent.
Is the delinquency rate increasing or decreasing? That depends on whether you adjust or not. The seasonally adjusted rate was up 59 basis points from the fourth quarter of 2009. The non-seasonally adjusted delinquency rate decreased 106 basis points from 10.44 percent in 4Q09.
In any case, that’s just the delinquency numbers, or mortgages that are one payment behind. The percentage of mortgages in the foreclosure process at the end of 1Q10 was 4.63 percent, a modest increase of 5 basis points from 4Q09.
Does it all mean the mortgage crisis has reached some kind of awful plateau? The MBA says maybe. “Simply put, fundamental market factors may be having a greater influence on the delinquency rates than is normally the case, but mathematical models have difficulty discerning the difference over a short period of time,” said Jay Brinkmann, MBA’s chief economist, in a statement.
CRE Values Still Sliding
The Moody’s/REAL Commercial Property Price Index fell by 0.5 percent in February compared with January, according to a report issued on Wednesday by Moody’s Investors Services Inc. Prices were down 25 percent from the same month in 2009 and 42 percent off the bubble peak in October 2007.
Still, some commercial property segments have seen modest price appreciation since last fall. Apartments rose 3.3 in 1Q10 compared with the last quarter of 2009, and industrial properties were up 0.8 percent.
Unsurprisingly, offices and especially retail are dragging the averages down, noted Moody’s. Office prices slumped 3.2 percent between 4Q09 and 1Q10, while retail property prices were down 4.7 percent. Those figures are nationwide; in the largest U.S. metro areas, the valuation contraction for offices and retail is even more pronounced: 19 percent and 7.2 percent, respectively.
Stage Set for Deflation?
According to the U.S. Department of Labor, consumer prices dropped by 0.1 percent in April, the first decline since March of last year. Prices rose by 0.1 percent in March, so presumably prices are yo-yoing around a little for now.
Energy prices were down 1.4 percent in April, while food was up slightly: 0.2 percent. Takeout food and energy (though it would be hard to live without them), and the “core index” was flat for the month. In the 12-month period that ended on April 30, core index only rose 0.9 percent, the lowest rise since miniskirts were in style.
Wall Street didn’t seem to care one way or the other about the prospect of deflation, but it was still fairly volatile in the trading pits. The Dow Jones Industrial Average lost 66.58 points, or 0.63 percent, while the S&P 500 dropped 0.51 percent and the Nasdaq declined 0.82 percent.