60% of Americans are Homeowners

 

60% of Americans Are Homeowners

According to the Federal Reserve’s Flow of Funds report released This Week in Real Estate, the collective value of all owner-occupied homes reached a record high of $26.1 trillion in the first quarter; 15% higher than the peak prior to the ‘great recession’ in 2006. Below are a few highlights from the first week of June that influence our business:

U.S. Home Values Reach a Record High of $26.1 Trillion in Q1. The value of all U.S. owner-occupied homes increased to a record $26.1 trillion in the first quarter, according to a Federal Reserve report released Thursday known as the Flow of Funds. That was a gain of 4.3% from a year earlier, the slowest annualized increase since 2012. The collective value of U.S. homes is now 15% higher than the bubble peak reached in 2006. Once that bubble popped, it was a decade before values recovered to the same level. As home values rose in the first quarter, so did homeowner equity, meaning the worth of a home compared to its mortgage. Americans owned 60.4% of their homes in the first quarter, the highest level of equity since 2002. An increase in home equity traditionally has been a support to the U.S. economy as Americans either refinance their first-lien mortgages at higher balances, known as cash-out refis or get home equity loans in a junior lien position. That supports consumer spending, which accounts for 70% of the U.S. economy. Cashed-out equity typically is used either for renovations, college tuition, or to pay off credit card debt, according to Fed economists. Americans converted $19 billion of their home equity into cash in the first quarter, the largest amount since the year-earlier quarter when it was $22.7 billion, according to a Freddie Mac estimate. Most were through cash-out refis, at $16.7 billion, while home equity loans accounted for $2.3 billion.

Borrowers Are Sitting on Record Amounts of Home Equity. The amount of equity in mortgaged real estate increased by about $486 billion in Q1 2019 from Q1 2018, an annual increase of 5.6%, according to the latest CoreLogic Equity Report. The first quarter’s annual increase in home equity marked the lowest such gain in equity since Q4 2012, which reflects slowing price growth. Despite the lower growth rate, borrower equity hit a new high in Q1 2019, and borrowers have gained $5.6 trillion in equity since the end of 2011 when equity stopped declining. The nationwide negative equity share for Q1 2019 was 4.1% of all homes with a mortgage, more than 20 percentage points lower than the peak negative equity share – 26% – recorded in Q4 2009. The number of underwater properties decreased by 268,000 from Q1 2018 to Q1 2019.

AD&C Loan Volume Expands at Start of 2019. After a slight dip at the end of 2018, a consequence of rising interest rates, the volume of residential construction loans increased by 1.5% during the first quarter of 2019. The expansion of construction loans mirrors an NAHB survey showing a slight easing of credit conditions at the start of 2019, with an average 6% rate for speculative single-family construction financing. Tight availability of acquisition, development, and construction (AD&C) loans has been a limiting or cost factor for home building growth, but easing credit conditions and a growing loan base helped expand residential construction activity, albeit modestly. According to data from the FDIC and NAHB analysis, the outstanding stock of 1-4 unit residential construction loans made by FDIC-insured institutions increased by $1.1 billion during the first quarter of 2019, placing the total amount of outstanding loans at $80 billion. On a year-over-year basis, the stock of residential construction loans is up just under 6%, the lowest rate since 2013. Since the first quarter of 2013, the stock of outstanding home building construction loans has nonetheless grown by 97%, an increase of $39 billion.

 


Mortgage Rates Plummet to the High 3’s

 

Mortgage Rates Plummet to the High 3’s

According to a report from CoreLogic This Week in Real Estate, as the pace of home price appreciation has decelerated so too has the percentage of homes selling at or above asking price. At the end of Q1 this year the percentage of homes selling at or above list price was 31.1% compared to 40% in Q2 2018. Below are a few highlights from the last week of May that influence our business:

Share of Homes Selling at or Above List Price Returning to Normal Levels. Ten years after the financial crisis, the national CoreLogic Home Price Index (HPI®) has exceeded its pre-crisis peak and continues to grow but at a slower pace. With home prices reaching many homebuyers’ budget limits, the share of homes selling at or above list price has returned to normal levels. The share of homes selling at or above list price has returned to early 2000 levels. In Q2 2018 that share peaked at more than 40% of total sales – almost triple the level during the trough in January 2008. As annual home price growth started to slow in Q3 2018, the share of home buyers able to negotiate a better price began to rise. As of March 2019, the share of homes that were sold at or above list price has fallen to 31.1% – about the same level as in 2000 and 2001.

Mortgage Rates Drop Well Into the High 3’s. Mortgage rates were decisively lower today, following a massive market movement on news of new tariffs to be imposed on Mexico. In general, trade wars are economically negative. They hurt stocks and help bonds. When bonds are improving, it means bond prices are rising and yields (another word for “rates”) are falling. Long story short, investors are pricing in a new reality where trade tensions do measurable damage to the global economy. This not only forces money out of stocks and into bonds, but it also implies lower inflation and increased odds of Fed rate cuts. The specific implication for mortgage rates was quite good today. Mortgages have been lagging the moves seen in Treasury yields, for the most part. That was NOT the case today – at least for the lower portion of the rate spectrum. The average lender improved by the biggest amount of the past several weeks with top tier scenarios now easily seeing quotes of 3.875%. That said, different lenders have responded to the market movement at drastically different paces. Volatility tends to have that effect.  If the bond market stabilizes at the beginning of next week, we’ll see some more cohesive pricing between lenders.

Nearly Half of Prospective Buyers are Actively House Hunting. Many people start thinking about a home purchase well in advance of actually engaging in the process of finding a home. In a national poll in the first quarter of 2019, 13% of adults reported planning a home purchase within the next year. Of those prospective buyers, 46% are already actively involved in trying to find a home to buy. The latter finding is not different from a year earlier, when 17% of poll participants were planning a home purchase and 46% of them were actively engaged in the search process. Are actively engaged buyers spending a lot of time house hunting? In the first quarter of 2019, 53% of those searching have been at it for three months or longer, while 46% have looked for less than three months. A year earlier, 50% of active buyers reported looking for a home for less than three months. Future polls will determine if there is a trend for more people spending upwards of three months searching for a home.

Looking to purchase a new home or see how much of a mortgage you qualify for? Speak with a HomeServices Lending Mortgage Loan Officer in Oregon or Washington today!

 


Mortgage Rates Decline As The Market Moves

 

 

Mortgage Rates Decline As The Market Moves

This Week in Real Estate mortgage rates fell to the lowest levels in more than a year while new home sales are up 6.7% through the first four months of 2019 compared to the same time the prior year. Conclusion: the market is positioned for a strong summer selling season thanks in part to a healthy job market, continued low-interest rates and steady sales pace of new homes. Below are a few highlights from the third week of May that influence our business:

New Home Sales Post Solid Numbers in April. After an upward revision, March and April newly-built single-family homes sales data indicate that lower mortgage rates and price incentives increased the volume of transactions as the spring home-buying season stabilized after weakness in late 2018. Contracts for new, single-family home sales declined to a 673,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. However, this decline was off a strong 723,000 sales pace in March, making that month’s sales rate the best since the Great Recession. Furthermore, the April rate was the third strongest of this cycle. The March data places the industry back on a trend line that has been in place since 2011. For the first four months of the year, new home sales are 6.7% ahead of the sales pace of the initial four months of 2018. However, those gains have distinct regional clustering. Year-to-date sales are up 10.3% in the South, 6.7% in the West (concentrated in the Mountain states), and 1.3% in the Midwest while recording a 17.6% decline in the Northeast.

Rates Are Back to Lowest Levels in More Than a Year. Mortgage rates fell again today as mortgage lenders got caught up with yesterday’s market movements. Mortgage rates are based on bond market trading levels, but mortgage lenders only adjust rates once per day unless there’s quite a bit of movement. Yesterday saw such movement, and in those cases, lenders typically adjust rates to reflect only part of the overall shift in markets until the shift is confirmed for a certain amount of time. As such, when bond markets began the day in similar territory to yesterday, lenders were able to bring mortgage rates even lower than yesterday. With that, the average lender is back to the lowest rates in more than a year. It should be noted that several lenders are still a bit higher than they were on March 27th and 28th of this year. Other lenders are in noticeably better shape, however. In outright terms, that means rate quotes of 4.125% are common, 4.0% is not uncommon, and 3.875% is possible for the most flawless scenarios–especially in cases where borrowers are willing to pay a bit more in upfront closing costs to buy down the rate.

Grocery Store is Most-Desirable Neighborhood Amenity, Federal Reserve Report Shows. When the Federal Reserve released on Thursday its Survey of Household Economics and Decision-making, known to economists as the SHED report, the biggest number covered by the financial media was: Four in 10 American adults wouldn’t be able to cover an unexpected $400 expense. But buried in the 64-page annual report there were nuggets about the housing market. For example, people said the most important neighborhood amenity is a grocery store. About 87% of respondents said it is “moderately or very important” to have nearby. Next on the list of desired neighborhood amenities was a combined category of “shops or restaurants,” which 75% of people cited as being important to have nearby. The next slot went to banks, with 65% of people citing them as important, then places of worship, at 48%, a library, at 48%, a park or playground, at 43% and public transportation, at 37%. Another housing-related data nugget was insight on “boomerang kids,” the pop term for adult children who return to live at home. About 61% of Americans ages 18 to 21 years are living with parents, according to the Fed report. The share drops to 51% for 22- to 24-year-olds and 26% for 25- to 29-year-olds. About 13% of 30- to 39-year-olds continue to live with their parents.


The Rise of Housing Inventory and Market Prices

The Rise of Housing Inventory and Market Prices

According to the latest National Association of Home Builders Housing Market Index (HMI), builder confidence has reached its highest level since October 2018 and NAR chief economist, Lawrence Yun, predicted at NARs mid-year meeting This Week in Real Estate, that he expects new home sales to reach a 12-year high this year. Below are a few highlights from the second week of May that influence our business:

Builder Confidence Posts Solid Gain in May. Builder confidence in the market for newly-built single-family homes rose three points to 66 in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builder sentiment is at its highest level since October 2018 after declines in late 2018 due to higher interest rates and concerns over slower growth. Builders are catching up after a wet winter and many characterize sales as solid, driven by improved demand and ongoing low overall supply. All the HMI indices posted gains in May. The index measuring current sales conditions rose three points to 72, the component gauging expectations in the next six months edged one point higher to 72 and the metric charting buyer traffic moved up two points to 49. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a six-point gain to 57, the West increased two points to 71, the Midwest gained one point to 54, and the South rose a single point to 68.

Home Prices Continue on Healthy Course in Q1. Inventory increased and metro market prices rose in the first quarter of 2019, but at a slower pace than the previous quarter, according to new research. From the first quarter of 2018 to the first quarter of 2019, home prices rose 3.9 percent, according to a National Association of REALTORS® (NAR) report. On an annual basis, there were higher home prices in 86 percent or 153 of the 178 metropolitan areas in the report. Comparing the largest markets, the median price was $254,800, up from $245,300 in Q1 2018. Lawrence Yun, NAR chief economist, says the first quarter has been beneficial to U.S. homeowners. “Homeowners in the majority of markets are continuing to enjoy price gains, albeit at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over the past year,” he said.

NAR’s Yun Forecast for 2019 Housing Sales: New Homes Will Drive Market Gains. Sales of new homes probably will reach a 12-year high this year as builders scramble to meet demand from entry-level buyers, according to Lawrence Yun, chief economist of the National Association of Realtors. Existing home sales probably will be flat, he said. The number of new houses sold in 2019 probably will total 667,000, the highest level since the beginning of the financial crisis in 2007, Yun said at NAR’s Legislative Meetings & Trade Expo in Washington D.C. on Thursday. Sales of existing homes, which tumbled 3.1% in 2018 as mortgage rates rose to an eight-year high, probably will be flat this year, Yun said. Next year, existing home sales probably will gain 3.7%, he said. Nationally, the inventory of homes on the market has grown for eight straight months on a year-over-year basis, and Yun said he expects that to continue.


May’s Hot Housing Market Increases Mortgage Applications

 

 

May’s Hot Housing Market Increases Mortgage Applications

The Mortgage Bankers Association announced This Week in Real Estate that the mortgage credit availability index for April was the highest reading for that month ever in the eight-year index. A high reading means it’s easier to get a home loan and a low reading indicates a credit crunch. Below are a few highlights from the first full week of May that influence our business:

Leading Indicators Point To A May Pick-Up in Home Sales. Mortgage credit availability is the highest ever recorded for the spring market. Fixed rate for home loans are near 4% and wages are up. What can that mean for the spring selling season? Unless Americans don’t want to own houses anymore – and that hasn’t happened yet – it means this month’s data should look pretty good. The purchase index from the Mortgage Bankers Association, which measures applications for mortgages to buy homes, increased 5% during the first week of May compared with the previous week and was 5% higher than the same week one year ago. MBA’s mortgage credit availability index for April was the highest reading for that month in the eight-year index. And, it was near the record high seen in mid-2018. A high reading means it’s easier to get home loans and a low reading indicates a credit crunch. At the end of March, the U.S. average rate for a 30-year fixed mortgage had the largest one-week decline in more than 10 years, dropping to 4.06%, according to Freddie Mac. Since then, it has bounced around in a narrow band, and this week averaged 4.1%. That’s almost half a percentage point lower than it was a year ago, according to Freddie Mac data. Sales of new homes, which are recorded when a contract is signed, rose 4.5% in March, according to the Commerce Department. Pending home sales, reflecting existing homes with newly signed contracts, rose 3.8% in March, according to the National Association of Realtors. “There is a pent-up demand in the market, and we should see a better performing market in the coming quarters and years,” Lawrence Yun, chief economist of NAR, said in the report.

Lending Conditions Tighten (But Less Than Expected). The recently released results of the Federal Reserve Board’s quarterly Senior Loan Officer Opinion Survey (SLOOS) show some tightening of lending conditions in the first quarter of 2019. While many banks reported that their standards in approving applications for credit cards from individuals or households tightened somewhat, overall, the tightening was not as much as they had anticipated, when they were asked about their outlook for 2019 in the fourth quarter of 2018’s survey. The tightening of credit standards is consistent with the Federal Reserve’s data on Consumer Credit, which, in part, show a decrease in revolving debt from the previous month.

Cooling of Home Price Gains Continued For Eleventh Consecutive Month. National home prices increased 3.7 percent year over year in March 2019 and are forecast to increase 4.8 percent from March 2019 to March 2020, according to the latest CoreLogic Home Price Index (HPI) Report. The March 2019 HPI gain was down from the March 2018 gain of 6.6 percent and it continued a slowdown in home price growth that began in May 2018. The overall HPI has increased on a year-over-year basis every month for seven years (since March 2012) and has gained 59 percent since hitting bottom in March 2011. As of March 2019, the overall HPI was 6.9 percent higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 2.6 percent year over year in March 2019 and were 12.5 percent below their peak.

Looking to purchase a new home or see how much of a mortgage you can qualify for? Speak with a HomeServices Lending Mortgage Loan Officer in Oregon or Washington today!

 


Federal Funds Rate Holds while Homeowner Tenure Slips

 

 

 

Federal Funds Rate Holds while Homeowner Tenure Slips

The Federal Reserve decided to keep the federal funds rate steady This Week in Real Estate, with no expectation of a rate increase until the end of the year, at the earliest. Below are a few highlights from the last few days of April that influence our business:

Federal Reserve: Patience Continues. At the conclusion of its May meeting, the Federal Reserve held the key, short-term federal funds rate steady, with a top rate of 2.5%. The decision was unanimous and widely expected, with members of the Federal Open Market Committee agreeing that while economic growth conditions remain “solid,” inflation pressures remain anchored. We do not expect another federal funds rate increase until, at the earliest, the end of 2019. For housing, the more dovish perspective of the Federal Reserve is an important reason why mortgage interest rates have declined from late-2018 cycle highs. Given that the housing market faced a 10-year low for housing affordability last Fall, the Fed’s approach is a net positive for future housing market activity and offers an offset (but only a partial one) for rising construction costs. These costs are limiting housing inventory, particularly at the entry-level market. Moreover, higher production costs have caused housing affordability to decline in recent years and are the primary driver for NAHB’s call for generally flat conditions for new home sales and starts in 2019.

Homeowners Are Staying Put, Just Not For As Long As Before. At the end of last year, the length of time that a homeowner stayed put hit a record high at an average of 8.17 years. But the latest data from the first quarter of 2019 reveals that the average tenure has begun to backslide as more Americans opt to relocate. Homeowners who sold their home in Q1 2019 had owned their property for an average of 8.05 years, according to the latest from ATTOM Data Solutions. While this is down slightly from the previous quarter, ATTOM points out that it is up from the 7.75-year average seen in Q1 2017. It’s also significantly longer than the average tenure seen in the years leading up to the housing bubble. Between 2000 and 2007, homeowners moved an average of just 4.21 years, ATTOM revealed.

Top Home Technology Features. According to the latest edition of NAHB’s study, What Home Buyers Really Want, 46 percent of recent and prospective home buyers want a security camera in their home, more than any other home technology feature listed in the survey. Three of the four most wanted features are security-related: along with a security camera, a video doorbell and a wireless home security system are wanted by at least 40 percent of home buyers. However, at most 21 percent of homebuyer currently have any one of these technology features installed, indicating that there is market growth potential for these items. In contrast, about the same share of home buyers who want a programmable thermostat (44 percent) have one already installed (41 percent). Four other home technology features are desired by at least a third of buyers: a multi-zone HVAC system (39 percent), a lighting control system (36 percent), and a wireless home audio system and central vacuum system (both wanted by 33 percent of home buyers). An energy management system/display and a smart washer/dryer (controlled remotely) are wanted by 31 percent of home buyers each.  Few home buyers currently have any of these items (14 percent of home buyers at most), which also indicates that there is room for growth in these product areas.


When to Sell Your Home for the Highest Return on Investment

 

When to Sell Your Home for the Highest Return on Investment

ATTOM Data Solutions released its Q1 2019 U.S. Home Sales Report This Week in Real Estate, finding that homeowners who sold their home in the first quarter realized a 31.5% return on their investment. Below are a few highlights from the fourth week of April that influence our business:

New Home Sales Rise in March with Lower Rates. Contracts for new, single-family home sales increased almost 5% on a monthly basis to a 692,000 seasonally adjusted annual rate according to estimates from the joint release of HUD and the Census Bureau. The months’ supply number improved to 6.0, which indicates the market is stabilizing after the fall-off in sales last Fall due to higher interest rates. For the first quarter of 2019, new home sales are running 1.7% higher than the first quarter of 2018. However, while sales were up 9.6% for the quarter in the South (the largest region), sales were down 5.9% in the West, 8.1% in the Midwest and 17.6% in the Northeast.

U.S. Home Sellers Realized Average Price Gain of $57,500 in First Quarter of 2019. ATTOM Data Solutions released its Q1 2019 U.S. Home Sales Report on Thursday, which shows that homeowners who sold in the first quarter realized an average price gain of $57,500 since purchase, representing an average 31.5% return on the purchase price. Meanwhile, the report also shows that homeowners who sold in the first quarter had owned an average of 8.05 years, down slightly from a record-high average homeownership tenure of 8.17 years in Q4 2018 but still up from 7.75 years in Q1 2018. Homeownership tenure averaged 4.21 years nationwide between Q1 2000 and Q3 2007, prior to the Great Recession.

Homeownership Rate Flat, But Household Growth Booming. According to the latest Housing Vacancies and Homeownership data release from the U.S. Census Bureau, the homeownership rate was flat year-over-year at 64.2 percent in the first quarter of 2019. The flat change was due primarily to a strong uptick in new renter households, although growth among owner households continues to strongly outpace renters. While the homeownership rate was flat over the past year, the first quarter of 2019 was the sixth consecutive quarter that owner-occupied households grew by more than a million, at nearly 1.1 million new owner households. Total household growth remains strong, topping 1 percent for six straight quarters, and continues the most significant streak of household growth in more than 12 years.


A Healthy and Opportunistic Spring Market

 A Healthy and Opportunistic Spring Market 

According to data released by the Mortgage Banker’s Association This Week in Real Estate, purchase applications reached their highest level since April 2010, further suggesting a healthy and opportunistic spring market. Below are a few highlights from the third week of April that influence our business:

Builder Confidence Edges Higher in April. Builder confidence in the market for newly built single-family homes rose one point to 63 in April, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels have held in the low 60s for the past three months. The HMI index gauging current sales conditions increased one point to 69, and the component measuring the traffic of prospective buyers rose three points to 47. The measure charting sales expectations in the next six months fell one point to 71. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a three-point gain to 51, the Midwest increased two points to 53, and the South was up one point to 67. The West remained unchanged at 69.

Weekly Mortgage Applications For Homebuyers Hit Highest Level in 9 Years. Mortgage applications to purchase a home rose 1% last week from the previous week and were 7% higher than a year ago. Purchase applications reached their highest level since April 2010. Volume was 14% higher than a year ago. Applications to refinance a home loan brought the total down, falling 8% for the week but still rising 26% from a year ago, when interest rates were higher.

U.S. Weekly Jobless Claims Lowest Since 1969. The number of Americans filing applications for unemployment benefits fell to more than a 49-1/2-year low last week, pointing to sustained strength in the economy. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 192,000 for the week ended April 13, the lowest level since September 1969, the Labor Department said on Thursday. Claims have now declined for five straight weeks. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 6,000 to 201,250 last week, the lowest reading since November 1969. Though the trend in hiring has slowed, job gains remain above the roughly 100,000 needed per month to keep up with growth in the working-age population. The unemployment rate is at 3.8 percent, near the 3.7 percent Federal Reserve officials project it will be by the end of the year.


What You Need to Know About First-Time Homebuyers

 

 

What You Need to Know About First-Time Homebuyers

Signs of a continuing strong housing market were reported This Week in Real Estate as evidenced by the fact that bank repossessions reached an all-time low in the first quarter and applications for new home purchases were up 7% compared to the same time last year and up 19% over the prior month. Below are a few highlights from the second week of April that influence our business:

Builder Applications Hint at Strong Spring New Home Sales. Applications for financing new home purchases were up significantly in March. The Mortgage Bankers Association (MBA) reports that Builder Application Survey (BAS) data for the month shows a 7 percent increase in those applications compared to March 2018 and a 19 percent gain over February. The application data is not adjusted for seasonal variations. With a strong job market, rising wages and lower mortgage rates, housing demand remains strong, as shown by the solid 7 percent growth in new home purchase applications in March,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The confluence of declining mortgage rates with the spring buying season is supporting stronger housing demand and activity. Additionally, the drop in average loan size suggests that builders are tilting production to lower-priced homes, which continues to see the tightest inventories and strongest home-price growth.” Conventional loan applications accounted for 68.7 percent of the total. The FHA share was 18.8 percent, the VA share was 12 percent and RHS/USDA loans received 0.5 percent of the total. The average loan size of new homes decreased from $340,692 in February to $331,794 in March.

Here’s What You Need to Know About First-Time Homebuyers. Earlier this week, we established that first-time homebuyers are not, in fact, being shut out of the housing market as some had feared, thanks to a recent study by the Federal Reserve Bank of New York. Rather, their share of market participation has remained stable over time, rising and falling slightly over the last 17 years in response to market conditions, but averaging about 45% of the overall market. The NY Fed revealed that as of 2016, first-timers comprised a healthy 46% of homebuyers. First-time buyers generally take out smaller mortgages than repeat buyers. And, this gap is widening. In 2000, the average origination mortgage balance was $117,000 for first-timers was and $143,000 for repeat buyers. In 2016, the average origination mortgage balance was $213,000 for first-timers was and $273,000 for repeat buyers. First-time buyers traditionally have lower credit scores than repeat buyers. In 2000, first-time buyers had an average credit score of 670, while repeat averaged 705 – representing a 35-point difference. The subsequent housing boom and then bust drew credit scores down around 2003 and then up again in 2007. They continued to rise until 2013 and then remained stable for three years. In 2016, the spread between the two was 37 points – relatively unchanged from 2000. First-time buyers have smaller student loan balances than repeat buyers. While in 2000, average student loan balances for both first-time and repeat buyers were about the same, around $13,000, although first-timers generally had a slightly higher balance. But average student loan balances have trended upward over the last 17 years, and the disparity between the two demographics grew. As of 2016, the conditional average student loan debt for first-time buyers was $29,000, compared with $42,000 for repeat buyers. First-time buyers are getting older every year. The average first-timer was 35.4 years old in 2016 – quite a bit younger than 2017’s average of 37.9. The age of first-time buyers has increased incrementally every year for the past 17 years. Conversely, repeat buyers are also getting older, averaging 44.7 in 2000 and reaching 47.5 in 2016. First-time buyers are purchasing homes in cheaper neighborhoods than repeat buyers. Researchers looked at the average income in zip codes where buyers were purchasing homes. They determined that there is a relatively consistent difference of about $9,000 in average income in neighborhoods chosen by first-timers versus repeat buyers.

U.S. Foreclosure Activity Decreases 15 Percent in Q1 2019 to Lowest Levels Since Q1 2008. ATTOM Data Solutions released its Q1 2019 U.S. Foreclosure Market Report on Thursday, which shows a total of 161,875 U.S. properties with a foreclosure filing during the first quarter of 2019, down 23 percent from the previous quarter and down 15 percent from a year ago to the lowest level since Q1 2008. The report also shows a total of 58,550 U.S. properties with foreclosure filings in March 2019, up 7 percent from the previous month but down 21 percent from a year ago – the ninth consecutive month with a year-over-year decrease in U.S. foreclosure activity. “While some markets saw a slight uptick in foreclosure filings, that is above pre-recession levels, the majority of the major markets are well below pre-recession levels,” said Todd Teta, chief product officer at ATTOM Data Solutions. “While we did see a slight increase in U.S. foreclosure starts from last quarter, bank repossessions reached an all-time low in the first quarter of 2019, showing continuing signs of a strong housing market.”


Unemployment Hits Record Low as Home Prices Rise to Record High

 

Unemployment Hits Record Low as Home Prices Rise to Record High

As we transition from Q1 to Q2 This Week in Real Estate we do so on the heels of the median value of homes for sale reaching a record high, declining interest rates spurring a refinance surge and unemployment claims at the lowest level since December 1969. Below are a few highlights from the first week of April that influence our business:

Home Prices Hit a Record High. If you’re shopping for a cheap home this spring, good luck. The median value of homes listed for sale in March hit a record $300,000, according to realtor.com.”Despite a slowing growth rate, home prices will likely continue to set new records later this year,” said Danielle Hale, realtor.com’s chief economist. “Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions.” The number of homes for sale listed above $750,000 increased 11% year over year in March, while the number of entry-level homes priced $200,000 or below fell 9%.

Refinancing Activity Soars Due to Rate Declines. Amid growing concerns about housing affordability, the latest data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey show a surge in home refinancing, a week-to-week increase of 39% on a seasonally adjusted basis. The increase is contemporaneous with the fourth consecutive week of mortgage rates’ declining. Despite the widespread decrease in mortgage rates, changes in purchasing activity (i.e., purchases on new or existing homes) were not as sensitive to the drop as were applications to refinance. The data also show that purchase applications are almost 10% higher than they were a year ago, that refinance applications are 58% higher on a year-over-year basis, and that, combined, both purchase and refi applications are almost 30% higher than they were a year ago. Despite the tight lending environment of 2019, as anticipated by banks’ senior loan officers in the Federal Reserve’s Senior Loan Officer Opinion Survey, the data show a rise in applications on a year-to-date and year-over-year basis, which may partially offset tighter lending standards. The mortgage applications for purchase index is usually a leading indicator for forthcoming home sales, but the latter may be conflated by other factors, such as all-cash sales. The prior few months’ data lean less to such a conclusion, as the upward trend of the purchase index in January 2019 was subsequently followed up by increases in new and existing home sales in February.

Weekly Jobless Claims Drop to the Lowest Level Since 1969. The number of Americans filing applications for unemployment benefits dropped to a more than 49-year low last week, pointing to sustained labor market strength despite slowing economic growth. Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 202,000 for the week ended March 30, the lowest level since early December 1969, the Labor Department said on Thursday. Job growth has slowed from last year’s roughly 225,000 monthly average pace. The pace of increase, however, remains more than sufficient to keep up with growth in the working age population, holding down the unemployment rate. The unemployment rate forecast is unchanged at 3.8 percent.


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