THE BASIS POINT

Jim Cramer’s Housing Solution

Some people think CNBC’s Jim Cramer is smart while others see him as an over-energetic entertainer. Regardless, he certainly seems to like Wells Fargo’s mortgage channel. Here’s a piece he just wrote, and it’s got some good stats on their mortgage operation.

While we’re on Wells, its economic team notes the following on housing:

Most of the economic reports dealing with housing have shown a little more strength recently. New home sales rose, sales of existing homes climbed, and new home construction has also improved lately. Low mortgage rates, an improving job market, and some reported easing in mortgage underwriting standards has raised hopes that the momentum will carry over into 2012. The news has not been universally positive. The latest S&P/Case-Shiller data shows price declines accelerating in October. The 20-city index fell 0.6 percent in October and has tumbled at a 6.4 percent pace over the past three months. Home prices are down 3.4 percent over the past year. Moreover, price declines have been fairly widespread, with 16 of the 20 markets surveyed reporting price declines in October. The sharp drop in home prices over the past three months should raise some caution flags for those expecting dramatic gains in 2012. That said, 2012 will be a better year. We have slightly increased our forecast for the next two years, which marks the first time we have raised our expectations for housing in any significant way in well over a year.

But what’s good for housing isn’t always good for those in the mortgage business. Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence. Analysts say tight lending standards and a search for yield by investors (NOO purchases) has driven all cash purchases of homes higher. Per the report, 38% of homes purchased in 2011 were bought with all cash, up from 34% in 2010, and double the 19% rate in 2006.

A better housing market would certainly help the housing agencies, as WSJ veteran Holman Jenkins says in his editorial called The Fannie & Freddie Hate Storm:

So where ultimately do Fannie and Freddie rank amid the confluence of ridiculous subsidies, private-sector opportunism and ungovernable global capital flows that contributed to the crisis? Who knows exactly, but the exaggerated ferocity of the debate lately is a reliable Washington hallmark of an argument fading into irrelevancy. The financial crisis isn’t over, and around the world the problem is not housing but governments whose commitments far exceed their resources.