Hard Landing & More Mortgages

Hard Landing

I almost didn't want to do the Toll Brothersearnings report today on TV, because frankly, I feel like a broken record. Oh look, there's a homebuilder reporting poor earnings, missing the Street's expectations and lowering full-year earnings outlooks. And guess what? It's those tighter lending standards and that buyer skittishness that has everyone running for the hills of suburbia.

But one little line in the report put a skip in my broken record: "We estimate that write-downs in the second quarter will be between $90 million and $130 million." That's big. It's not that the big builders haven't been doing that for a while, but most in the know thought they were pretty much done with all the big write-downs -- and by that, I mean land and housing stock that they either walk away from or devalue.

"We just didn't think we would see this level of write-offs this early in the year -- of course for Toll, this is their second quarter, but even for all the builders that reported in the first quarter -- the write-offs, I think, add to the bad news," says Paul Puryear, housing analyst for Raymond James.

"The builders are sending the message here that we're having to price down; we're having to revalue communities, and in addition, to the order trends, which are obviously bad and haven't improved much, the write-offs send the signal that the outlook is still pretty bleak," adds Puryear.

So much for the broken record.

More Mortgages

And here's a question I'm getting a lot around the newsroom: If things are so bad in housing, why is the weekly mortgage application release today touting the title: "Mortgage Applications Increase in Latest MBA Survey"? The index is up almost 20% over last year, and refi's up 48% from a year ago.

Ok, so here's what all this means: this is the "Application" index, which means people filing applications for a loan, but not necessarily getting the loan. Given the current credit crunch, some folks are filing multiple applications for loans, not to mention that the Government Loan Application index is at a two-year high -- obviously folks are refinancing with the help of all those lenders who are afraid of losing their shirts.

And refinancing is the bigger deal. "This suggests that borrowers are actively attempting to stave off sizeable increases in their payments related to adjustable rate mortgage resets and is a positive for the consumption growth going forward," writes Lehman Brothers analyst Drew Matus.

In other words, let's not get all excited that more people are suddenly buying more houses; they're just trying to save their, well, houses.

Questions? Comments? RealtyCheck@cnbc.com