Keith is MarketWatch's real estate columnist who has shown for 9 years why the real estate recovery is an illusion and why the crash will soon resume.
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Articles by Keith Jurow
Opinion: The COVID-19 lockdown is squeezing real estate from all sides and threatens to burst the housing and mortgage bubble
Recently the Federal Housing Finance Administration (FHFA) — conservator of Fannie Mae and Freddie Mac — extended the moratorium for both evictions and foreclosures until the end of the year. Many homeowners breathed a sigh of relief. Indeed, over the past few months the number of borrowers with active forbearances has declined. But that’s no reason for optimism. The more serious matter is how many homeowners are now delinquent.
Opinion: The feared jumbo mortgage debacle is here - thanks to the coronavirus - and ready to pound the housing market
Back in January, my column for Marketwatch detailed the massive danger that jumbo mortgages posed for U.S. mortgage and housing markets. After months of actions to counter the impact of COVID 19, the potential jumbo mortgage disaster is clearer than ever. Jumbo mortgages are loans that are larger than the limits set for Fannie Mae, Freddie Mac or the FHA to guarantee or insure. During the craziest years of the housing bubble, 2004 through 2007, close to $3.1 trillion in jumbos was originated.
This hard truth about the mortgage markets isn’t being told
Everyone wants to know what impact the coronavirus and the government response to it will have on housing markets. While it is too early to hazard a guess, some things are becoming increasingly clear. Already, it looks as if the U.S. is moving towards a temporary moratorium on mortgage payments. Fannie Mae and Freddie Mac unveiled an emergency program which provides a two-month deferral of mortgage payments for any homeowner who claims to be facing a hardship because of the virus.
Years Later, Jumbo Loans Still Haunt the Housing Market
Years Later, Jumbo Loans Still Haunt the Housing Market Lenders, mortgage servicers, investors and homeowners should prepare for trouble in the mortgage market, writes Keith Jurow.
Jumbo mortgages are haunting the housing market, and things could get really scary
The U.S. housing-market crash a dozen years ago is evidently ancient history for many mortgage lenders. Mortgage underwriting standards have eased considerably in the past couple of years; one of the largest U.S. mortgage originators now offers a jumbo mortgage of up to $1 million with only 10% down if you have a FICO score of at least 760. Borrowers who can scrape up a down payment of between 30% and 40% might be able to receive up to $3 million.
Opinion: This home mortgage disaster is ready to punish housing markets
In a MarketWatch column last March, I discussed the serious threat that cash-out refinances (cash-out refis) pose for major U.S. housing markets. Eight months later, the problem continues. To reiterate, in a cash-out refinance mortgage the borrower pulls out some of the equity in the house by taking out a new mortgage larger than the previous one. The homeowner pockets the difference and can use the money in any manner.
This Widening Crack in the Mortgage Market Could Sink U.S. Home Prices
Wall Street and the news media have paid considerable attention to U.S. home mortgage modifications, but not much notice has been given to the growing problem of re-defaults on these modifications. Re-defaults are a massive problem—and endanger the U.S. mortgage and housing markets. What is a mortgage modification? In the midst of the housing collapse more than a decade ago, mortgage modifications were rolled out to enable millions of delinquent homeowners to avoid having their home foreclosed.
This Widening Crack In Mortgage Market Could Trouble Housing
This Widening Crack In Mortgage Market Could Trouble Housing
Opinion: This widening crack in the mortgage market could sink U.S. home prices
Wall Street and the news media have paid considerable attention to U.S. home mortgage modifications, but not much notice has been given to the growing problem of re-defaults on these modifications. Re-defaults are a massive problem — and endanger the U.S. mortgage and housing markets. What is a mortgage modification? In the midst of the housing collapse more than a decade ago, mortgage modifications were rolled out to enable millions of delinquent homeowners to avoid having their home foreclosed.
This widening crack in the mortgage market could sink U.S. home prices
This widening crack in the mortgage market could sink U.S. home prices Wall Street and the news media have paid considerable attention to U.S. home mortgage modifications, but not much notice has been given to the growing problem of re-defaults on these modifications. Re-defaults are a massive problem — and endanger the U.S. mortgage and housing markets. What is a mortgage modification?
One Guess For Why U.S. Home Prices Haven't Corrected
One Guess For Why U.S. Home Prices Haven't Corrected
Here’s the real reason why U.S. home prices haven’t been smashed
In a recent column, I focused on five key factors which indicate that housing markets may be topping out. Yet one other important factor may be the main reason why housing prices have not already deflated. Investors have always played an important role in housing markets. I have written extensively about the crazy bubble years of 2004-06. Rampant speculation was one of the primary causes of the buying mania and subsequent collapse.
5 Signs That Housing Prices Could Be Rolling Over Again
5 Signs That Housing Prices Could Be Rolling Over Again Your local housing market may be weaker than you think, writes Keith Jurow.
5 signs that home prices could be rolling over again
There are growing signs that U.S. home prices are no longer rising. If this is indeed the case, now is the time for sellers or prospective sellers to take a good look at the state of housing markets around the country. To make smart decisions, home sellers as well as buyers need to find out whether home price gains are simply slowing or whether housing markets are actually topping out.
Easily Home Equity Credit Threatens Homeowners and Economy
Easily Home Equity Credit Threatens Homeowners and Economy | RealClearMarkets
Lax standards for home equity lines of credit repeat bubble-era madness
Home equity lines of credit (HELOC) are back in a big way. Because they caused such terrible damage after the housing bubble collapsed, it's time to take a good look at them and see why they again pose real potential harm. A HELOC is similar to a business line of credit. The lender uses the house as security and provides a homeowner with a line of credit that has a fixed limit.
Opinion: Why out-of-control bubble-era mortgages still threaten to smash major U.S. housing markets
The 2004-07 bubble era in U.S. housing markets was a time of utter madness. Much has been written about it, but almost nothing has been said about the craziest aspect of it — the cash-out re-financing lunacy. Although traditional refinancing had been done by homeowners to lock in lower interest rates for their mortgage, what became known as a cash-out refinancing was different.
Why '08-Era Mortgages Are a Disaster Waiting to Happen
Why '08-Era Mortgages Are a Disaster Waiting to Happen
Opinion: Why bubble-era home mortgages are a disaster waiting to happen
Remember all those sub-prime mortgages that blew up in 2007 and popped the housing bubble? The widely-held consensus is that millions of them were foreclosed as housing markets cratered. Since then, the remaining ones have been quietly disappearing as markets recovered. Here is the problem: That is just a fairy tale. The truth is these mortgages are still dangerous and could soon undermine the housing recovery.
Why the Housing and Mortgage Crack-Up Is Far from Over
Why the Housing and Mortgage Crack-Up Is Far from Over
Why Housing Recovery In the U.S. Is Built on Quicksand
Why Housing Recovery In the U.S. Is Built on Quicksand
Opinion: Why the U.S. housing recovery is built on quicksand
Home price gains since 2013 have been much less impressive than you think. While reports show that home prices have recovered nationwide, the increase has been uneven and not as strong as you have been led to believe. Consider RealtyTrac’s latest report on 148 major U.S. metropolitan areas. The average gain on the sale of property was 30%. Not bad, except the average holding period was just over eight years. That comes to an annual price increase of 3.75%.
Will Re-Defaults of Mortgage Modifications Undermine Housing?
Will Re-Defaults of Mortgage Modifications Undermine Housing? | RealClearMarkets
Will Re-Defaults of Mortgage Modifications Undermine Housing Markets?
Much has been written about residential mortgage modifications, yet hardly anything has been said about the problem of re-defaults on modified mortgages. In large part, this is due to the paucity of accurate data about borrowers re-defaulting. It is time to clearly lay out how extensive this problem really is, what it means for mortgage markets and the dangers it poses for investors.
Emperor Xi: Part I
On February 25th, the Central Committee of the Chinese Communist Party (CPC) announced that it would recommend an end to term limits on the offices of president and vice president. Previously, an officeholder was limited to two five-year terms. We fully expect the recommendation to be approved (recommendations from the Central Committee are always approved). Thus, President Xi Jinping will be able to maintain his current position beyond his second term, which ends in 2023.
Antifragility, Path Dependency, and Value Investing (Part 2)
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. Part 1 of this article appears here. Path dependency is a very important concept. It’s something we constantly think about, and thus, we’ll take a small detour to explore it.
Italian Election Result: Political Uncertainty is Business as Usual for Italy
No outright winner emerged from the Italian general election, but as David Zahn, Franklin Templeton’s head of European Fixed Income, explains, that situation is normal for Italy. He expects a muted response from European bond markets but cautions there may be consequences down the road if the authorities fail to take the need for reform seriously.
Italian Election Results: Populist Undercurrents
Italian general elections were held on March 4, 2018. The election results point to a hung parliament, with no party or coalition winning enough votes to form a government. The election came against an improving economic picture and Italian equities have performed strongly over the last year, outpacing many other developed markets including the broader eurozone and the U.S. We offer the market and political implications of the election below.
Harleys, Bourbon & Denim
The US doesn't face "secular stagnation" caused by outside or uncontrollable forces, like foreigners (and bad trade deals), technology that steals jobs, or Unions that are too weak. Growth is slow because government has grown too big. In 2000, non-defense government spending was just 14.7% of GDP.
The Dishonest Claims about Healthcare
A recent paper from the World Economic Forum – the group that runs the Davos conference – stated that Americans pay more for healthcare than other countries but get inferior outcomes. That rhetoric was amplified by Warren Buffett, when he called health care costs a “hungry tapeworm” eating into the American economy. But, before you assume that Americans are not getting good value for their health care dollars, let’s look at the data.
Gregg Fisher - The Advantage of Multi-Factor Investing
Gregg S. Fisher founded Gerstein Fisher in 1993 based on a vision of offering a quantitative investment management approach grounded in sound economic theory and more efficiently implemented through technology. Today the firm embodies that vision and continues to reflect Gregg’s commitment to ongoing research and quantitative, factor-based investing. Throughout his career, Gregg has worked to bridge the gap between academic theory and real-world investment practice.
The Arithmetic of Risk
"The collapse of major bubbles is often preceded by the collapse of smaller bubbles representing ‘fringe’ speculations. Those early wipeouts are canaries in the coalmine. Once investor preferences shift from speculation toward risk-aversion, extreme valuations should not be ignored, and can suddenly matter to their full extent.
The Blockchain Pipe Dream
Even after a sharp correction earlier this year, the price of Bitcoin and other cryptocurrencies has remained unsustainably high, and techno-libertarians have continued to insist that blockchain technologies will revolutionize the way business is done. In fact, blockchain might just be the most over-hyped technology of all time. NEW YORK – Predictions that Bitcoin and other cryptocurrencies will fail typically elicit a broader defense of the underlying blockchain technology.
Weekly Market Summary
: The long term trend in US equities remains firmly higher. Expectations should be for equities to rise in the months ahead. The near term directional edge is more muted. Worldwide, equities are in the process of retesting their February lows. The US is being held up mostly by technology and financial stocks. Whether the US follows the rest of the world lower is largely dependent on politics: specifically, whether trade war rhetoric evolves from saber rattling to reality.
Economists vs. Scientists on Long-Term Growth
Artificial intelligence researchers and conventional economists may have very different views about the impact of new technologies. But right now, and forgetting the possibility of an existential battle between man and machine, it seems quite plausible to expect a significant pickup in productivity growth over the next five years.
Inflation and Honest Data
’80s Flashback Data from Afar Not Theoretical Some Thoughts on the Trump Tariffs San Diego and the Strategic Investment Conference I’m going to wrap up our series on the problems of collecting and analyzing data in the first half of this letter, and then I’ll quickly comment on the Trump tariffs. I think both topics will feature in this week’s Strategic Investment Conference.
Antifragility, Path Dependency and Value Investing (Part 1)
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. The following is excerpted from IMA’s last quarterly letter to clients. What do you do when a company you own makes a large acquisition? With the Discovery and Gilead acquisitions, we now have not just one but two reasons to walk you through our thinking on large acquisitions. Our thinking can by summarized in a very brief phrase: We are skeptics.
What the Steel and Aluminum Tariffs Mean for Your Investments
Yesterday, President Trump announced that the U.S. will be imposing tariffs on steel and aluminum imports. This shocked markets here in the U.S. and around the world, driving them back down just as it looked like they were recovering from the downturn last month. What happened? And is this a more serious threat going forward? In a word, yes.
Market Thoughts for March 2018
Brad McMillan, Commonwealth’s CIO, recaps the economic news for February. Last month, there was a 10-percent market drawdown in the U.S., something we haven’t seen for almost two years. Although many were worried that this was the “big one,” the markets recovered more than half of their losses by month-end, and the economic fundamentals remain sound. Job growth is strong, business confidence is high, and consumer confidence is at the highest level since 2000. Will this good news continue into March?
Oil and the Uphill Road to Fiscal Balance in the Middle East
A recent visit to the United Arab Emirates (UAE), Oman and Bahrain showed just how much the region’s fortunes are still levered to oil prices, despite the efforts of several countries to diversify. And even though oil prices have recovered significantly over the past year, we think the six countries in the Gulf Cooperation Council (GCC) will still need to tighten their belts to improve, and in some cases even maintain, their current fiscal health.
Trade Wars are Bad, and Nobody Wins
Yesterday’s announcement by President Trump of imminent tariffs on steel and aluminum imports was taken poorly by global stock markets.
Take the Long Way Home: Economic Expansion Gets a Boost
Surging leading economic indicators, coupled with fiscal policy, suggests a higher and longer trajectory for economic growth. But accompanying higher inflation and tighter financial conditions point to an era of higher market volatility. Volatility spikes are to be expected, but don’t historically signal impending doom for either stocks or the economy.
With Target-Date Funds, History Does Repeat
Target-date funds played a big part in helping defined contribution (DC) plan participants stay invested through February’s market turmoil. And history does repeat: in the severe 2008–09 financial crisis, these funds kept many participants positioned to take part in a lengthy bull market. Keeping Investors on Course in February’s Sell-Off In early February of this year, equity markets suddenly tumbled and volatility reawakened.
Navigating a USD Bear Market with Equity Factors
The US Dollar appears to have entered a new bear market. In this mid-quarter update, we analyze equity factors and their performance tendencies in recent USD bull and bear markets. Download the slides for Navigating a USD Bear Market with Equity Factors.
Three Powerful Ways to Get More Done
We’d all like to get more done in our day. Recently, best-selling author Dan Pink outlined three powerful, research-backed ways to improve your productivity. His talk took place at the business school at the University of Toronto to promote Pink’s new book When – The Scientific Secrets of Perfect Timing.
Where do we go from here?
Okay, that was a little intense. Now that we've had our long-awaited 10% correction, where do we go from here? I have some ideas. My final thoughts call the Greater Fools by their name. The KMI is a visual summary of current stock market conditions.
The Test Most Advisors Fail: “How do you justify your fees?”
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives Before I give a talk to advisors, I ask the sponsor to send out a survey to participants asking a number of questions. The key one is: What’s the most difficult question you get asked by prospects? The responses center on how to justify fees and value. The problem is that very few advisors know the right way to answer these most commonly asked questions.
Buffett Whispers of Danger
In the 2017 Berkshire Hathaway Annual Letter, Warren Buffett told us what he is doing, and, in as quiet a voice as he could use, what he says to do. Our readers will not be surprised at our summation of Buffett’s letter, but here we go anyway. 1. Buffett explains his bet of the S&P 500 Index against a basket of hedge funds: “The bet illuminated another important investment lesson: Though markets are generally rational, they occasionally do crazy things.
Should You Drop Your Broker-Dealer Status?
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. The more I talk to dual-registered advisors, the more I hear that many of them are looking to get out of the brokerage business entirely and operate as a fee-only RIA firm. If this is something that has crossed your mind, here are the pros and cons and what you should consider.
The Fallacy of America's "Crumbling Infrastructure"
3. Politics Often Dictate Where Infrastructure Money is Spent President Trump wants to spend $1.5 trillion rebuilding America’s infrastructure – roads, bridges, airports, railroads, ports, water systems and whatnot – over the next decade.
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