Housing Heats up with a $1.3 Trillion Dollar Increase in Equity

 

Housing Heats up with a $1.3 Trillion Dollar Increase in Equity

According to the most recent Financial Accounts of the United States, released This Week in Real Estate by the Board of Governors of the Federal Reserve System, the value of homeowner’s equity in real estate reached $15.4 trillion in the third quarter of 2018; that is up $1.3 trillion over the prior four quarters. Below are a few highlights from the first week of March that influence our business:

Housing Starts Heat Up In January, Climb Whopping 18.6%. Housing starts significantly heated up in January, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce. Housing starts rose a whopping 18.6% to a seasonally adjusted annual rate of 1.23 million units, according to the report. “In January, the 18.6% monthly increase in housing starts reflects rising consumer sentiment and builder confidence,” First American Chief Economist Mark Fleming said. “Despite the headwinds, home builders are pushing through new construction projects.” Single-family production rose 25.1% from last month to 926,000 units while multifamily starts came in at a seasonally adjusted annual rate of 289,000 units. Overall permits increased 1.4% in January to a seasonally adjusted annual rate of 1.345 million. Lastly, housing completions in January were at a seasonally adjusted annual rate of 1.24 million, climbing 27.6% from December’s rate. Of these, single‐family housing completions were at a rate of 914,000 units and multifamily units came in at 327,000.

Increase in Housing Wealth. Homeowners’ equity in real estate improved as home prices continue to increase and mortgage debt expands slowly. The latest quarterly Financial Accounts of the United States, published by the Board of Governors of the Federal Reserve System, finds that the value of owners’ equity in real estate, the difference between the market value of owner-occupied real estate and home mortgage debt, rose by $1.3 trillion over the past four quarters and reached $15.4 trillion in the third quarter of 2018. On a nominal and not seasonally adjusted basis, the market value of owner-occupied real estate increased to $25.6 trillion totally in the third quarter of 2018, $298 billion more than the second quarter of 2018 and $1,526 billion more than the third quarter of 2017. Additionally, the improvement in home equity partially reflected slow growth in home mortgage debt. A decade ago, when the loan-to-value (LTV) ratio climbed to the highest level of 63%, the value of owners’ equity in real estate dropped to as low as $6.1 trillion in the first quarter of 2009. Between 2011 and 2018, the market value of households’ real estate rose by 59%, however, home mortgage debt increased by 3% over the same period. As a consequence, the LTV ratio decreased and the value of owners’ equity in real estate rose.

January Marks Seven Years of Annual Home Price Appreciation. National home prices increased 4.4 percent year over year in January 2019 and are forecast to increase 4.6 percent from January 2019 to January 2020, according to the latest CoreLogic Home Price Index (HPI) Report. The overall HPI has increased on a year-over-year basis every month for seven years (since February 2012) and has gained 57.3 percent since hitting bottom in March 2011. As of January 2019, the overall HPI was 5.6 percent higher than its pre-crisis peak in April 2006. Adjusted for inflation, U.S. home prices increased 3.7 percent year over year in January 2019 and were 13.1 percent below their peak.


Highest Homeownership Rates Since 2014

 

Highest Homeownership Rates Since 2014

The Census Bureau reported This Week in Real Estate that the U.S. homeownership rate increased in the fourth quarter of 2018 to 64.8 percent – the highest rate since 2014 – driven mainly by a rise in the 35-44-year-old homeownership rate. Below are a few highlights from the fourth week of February that influence our business:

Homeownership is Highest Since 2014. The Census Bureau reported on Thursday that the national homeownership rate rose slightly in the fourth quarter of 2018 to 64.8 percent, up from 64.4 percent in the third quarter and 64.2 percent in the fourth quarter of 2017. The Census Bureau said that change was not statistically different in either case, but at least it did continue the gradual upward trend in the rate since it hit an all-time low of 62.9 percent in the second quarter of 2016. The headline news, however, was a 1.2-point year-over-year change in the rate for those 34 to 44 years of age to 61.1 percent, by far the largest gain for any age group. The final three months of last year also yielded an additional 1.7 million units (compared to the end of 2017). This made 2018 the strongest year for owner household formation since 2004. We have now seen three years of growth in homeownership – with the last two well in excess of the one million mark – and believe that housing demand continues to be strong.

Pending Home Sales Jump 4.6% in January. Pending home sales rebounded strongly in January, according to the National Association of Realtors. All four major regions saw growth last month. The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.6 percent to 103.2 in January, up from 98.7 in December. Lawrence Yun, NAR chief economist, said “a change in Federal Reserve policy and the reopening of the government were very beneficial to the market. Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers.”

US Consumer Confidence Rebounds in February. American consumers were feeling more confident this month after a rally in the stock market and an end to the partial shutdown of the federal government. The Conference Board, a business research group, says its consumer confidence index rose to 131.4 from 121.7 in January. The index measures consumers’ assessment of current economic conditions and their expectations for the next six months. Consumers’ views of today’s economy were the sunniest since December 2000.


Housing Affordability Brings a Wave of New Buyers to the Market

Housing Affordability Brings a Wave of New Buyers to the Market

The interest rate on a 30-year fixed loan fell to its lowest point in a year, fueling a four-point increase of the Housing Market Index and leaving NAR chief economist, Lawrence Yun, to conclude This Week in Real Estate that “existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low.” Below are a few highlights from the third week of February that influence our business:

Lower Interest Rates, Rising Consumer Confidence Boost Builder Sentiment. Builder confidence in the market for newly built single-family homes rose four points to 62 in February, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment. In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season. February marked the second consecutive month in which all the HMI indices posted gains. The index measuring current sales conditions rose three points to 67, the component gauging expectations in the next six months increased five points to 68 and the metric charting buyer traffic moved up four points to 48.

NAR: Home Sales “Likely to Have Reached a Cyclical Low.” Existing home sales fell again in January although the decline was a minor one compared to the 6.4 percent drop in December. The National Association of Realtors (NAR) said sales of single-family homes, townhomes, condominiums, and co-ops ticked down 1.2 percent from December’s annual rate of 4.99 million to a seasonally adjusted annual rate of 4.94 million. Lawrence Yun, NAR’s chief economist, acknowledged the sluggish sales, but said he does not expect the numbers to decline further going forward. “Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low. Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market in the coming months.” Yun notes that this median home price growth is the slowest since February 2012 and cautions that the figures do not yet tell the full story for the month of January. “Lower mortgage rates from December 2018 had little impact on January sales, however, the lower rates will inevitably lead to more home sales.”

Mortgage Rates Fall to One Year Low, Setting the Stage for a Sunny Spring Selling Season. Rates for home loans fell to the lowest in over a year as investors remained concerned about economic headwinds, setting up the housing market for a strong spring season. The 30-year fixed-rate mortgage averaged 4.35% in the February 21 week, mortgage guarantor Freddie Mac said Thursday. That was down from 4.37% in the prior week and the lowest since early February 2018. The popular product has eked out a weekly increase only once in 2019.


Mortgage Performance Remains Strong As Housing Prices Jump

Mortgage Performance Remains Strong As Housing Prices Jump

Home prices ended 2018 rising at a ‘healthier’ pace according to NAR chief economist Lawrence Yun This Week in Real Estate while unemployment is at a near 50-year low, mortgage performance is strong and household debt levels relative to disposable incomes are at a 35-year low. Below are a few highlights from the second week of February that influence our business:

The 4th Quarter Housing Jump
Metro Home Prices Jump 4% in 2018’s Fourth Quarter. Inventory increased and metro market prices rose at a slower pace in the fourth quarter of 2018, according to the latest quarterly report by the National Association of Realtors®. The national median existing single-family home price in the quarter was $257,600, up 4.0 percent from the fourth quarter of 2017 ($247,800). Lawrence Yun, NAR chief economist, says in light of the various hurdles for 2018, the close of the fourth quarter was promising. “Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” he said. “Housing affordability will be the key to sustained healthy growth in the housing market in the upcoming years. That requires more homebuilding of moderately priced homes,” Yun said. “Housing starts fell far short of historically normal levels, with only 9.6 million new housing units added in the past decade; compared to 15 to 16 million that would have been needed to meet our growing population and 20 million new job additions. “Local zoning law changes, expanding construction worker training programs at trade schools and promoting the use of tax breaks for developers in the designated Opportunity Zones will all play an important role in assuring an adequate future supply of housing,” Yun said.

Consumer Expectations Shift
Consumer sentiment surges higher than expected after the government shutdown ends. Consumer sentiment gained more than expected in early February as U.S. spending confidence recovered after the end of the longest government shutdown in history. “The early February gains reflect the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Fed’s pause in raising interest rates,” said Richard Curtin, chief economist for the Surveys of Consumers. Consistent with the bounce in sentiment, more respondents suggested that it was a good time to buy a major household item/vehicle/house,” said Jon Jill, fixed income strategist at BMO Capital Markets.

Homeowners Are In Great Shape
Mortgage loan delinquencies were down from the third quarter of 2018 in the fourth quarter. The Mortgage Bankers Association (MBA) said the improvements held across all loan types and all stages of delinquency although there was a slight uptick in foreclosure starts. The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.06 percent of all loans outstanding, down 41 basis points (bps) from the third quarter and 111 bps from the fourth quarter of 2017 according to MBA’s National Delinquency Survey. Marina Walsh, MBA’s Vice President of Industry Analysis said, “The overall national mortgage delinquency rate in the fourth quarter was at its lowest level since the first quarter of 2000. What’s even more noteworthy, the delinquency rate dropped from the previous quarter and on a year-over-year basis across all loan types and stages of delinquency.” Added Walsh, “With the unemployment rate near a 50-year low, wage growth trending higher and household debt levels relative to disposable incomes at a 35-year low, homeowners are in great shape, and mortgage performance is quite strong.” Take advantage of steady mortgage rates and contact a HomeServices Oregon or Washington mortgage lending officer for a complimentary consultation.


Washington & Oregon among the highest share of equity-rich properties in the U.S.

Washington & Oregon among the highest share of equity-rich properties in the U.S.

According to a report from ATTOM Data Solutions This Week in Real Estate Washington and Oregon rank 4th and 5th, respectively, with the highest share of equity-rich properties in the country. Below are a few highlights from the first week of February that influence our business:

Equity-Rich U.S. Properties Increase to New High in 2018. On Thursday ATTOM Data Solutions released its 2018 U.S. Home Equity & Underwater Report, which shows that in the fourth quarter of 2018, over 14.5 million U.S. properties were equity-rich – where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value – up by more than 834,000 from a year ago to a new high as far back as data is available, Q4 2013.

The 14.5 million equity-rich properties in Q4 2018 represented 25.6 percent of all properties with a mortgage, down slightly from 25.7 percent in the previous quarter but up from 25.4 percent in Q4 2017. “This report helps to showcase a story of the West coast markets having the highest share of equity-rich homeowners versus the South and Midwest markets, who continue to have stubbornly high rates of seriously underwater homeowners.” States with the highest share of equity-rich properties were California (43.6 percent); Hawaii (39.3 percent); New York (34.2 percent); Washington (34.2 percent); and Oregon (32.9 percent).

Number of Homes Selling Above List Price Drastically Declines. In December, only 19.4% of homes were sold above list price, marking a three-year low. Furthermore, December was the seventh consecutive month to experience a rate drop. Across the country, the share of homes that sold above list price has been moving between 15% and 25% since 2012.

Permit Growth Flat in November. Over the first eleven months of 2018, the total number of single-family permits issued year-to-date (YTD) nationwide reached 799,679. On a year-over-year basis, this is a 5.1% increase over the November 2017 level of 761,229. Year-to-date ending in November, single-family permits grew in the Southern and the Western regions of the country, while the Midwest and Northeast declined by 2.6% and 3.0% respectively, compared to the same time period in 2017. The Western region had the highest growth in single-family (9.8%) while the South recorded the highest multifamily permits growth (13.2%) during the last 12 months.


U.S. Home Seller Profits At 12-Year High

 

U.S. Home Seller Profits At 12-Year High

As reported by ATTOM Data Solutions This Week in Real Estate the average homeowner who sold their home in 2018 realized an average home price gain since purchase of $61,000, a 12-year high. Below are a few highlights from the last week of January that influence our business:

Strong Job Growth Continues in January. The U.S. economy entered 2019 with a strong gain in payroll employment. Total employment increased by 304,000 in January, while the unemployment rate edged up to 4.0%, reflecting the impact of the partial government shutdown. Residential construction employment increased by 23,900 at the beginning of 2019, the largest gain since February 2018. The total construction industry (both residential and nonresidential) added 52,000 jobs in January. Residential construction employment now stands at 2.9 million in January, broken down as 835,000 builders and 2.1 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 11,133 a month. Over the last 12 months, home builders and remodelers added 130,700 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 916,600 positions. In January, the unemployment rate for construction workers rose to 4.7% on a seasonally adjusted basis, from 4.6% in December. The unemployment rate for the construction sector has been trending downwards since February 2010 and remains historically low.

Average U.S. Home Seller Profits at 12-Year High. According to ATTOM Data Solutions 2018 U.S. Home Sales Report, home sellers in 2018 realized an average home price gain since purchase of $61,000, up from $50,000 last year and up from $39,500 two years ago in 2016 to the highest level since 2006 – a 12-year high. That $61,000 average home seller profit represented an average 32.6 percent return on investment compared to the original purchase price, up from 27.0 percent last year and up from 21.9 percent in 2016 to the highest average home seller ROI since 2006. “While 2018 was the most profitable time to sell a home in more than 12 years, those along the coasts, reaped the most gains.” Among 217 metropolitan statistical areas with a population greater than 200,000 and sufficient historical data, the highest returns on investment were almost exclusively in western states, with concentrations along areas of the west coast. Those with the highest average home seller ROI were San Jose, California (108.8 percent); San Francisco, California (78.6 percent); Seattle, Washington (70.7 percent); Merced, California (66.4 percent); and Santa Rosa, California (66.1 percent). Homeowners who sold in the fourth quarter of 2018 had owned their homes an average of 8.30 years, up from 8.13 years in the previous quarter and up from 7.95 years in Q4 2017 to the longest average home seller tenure as far back as data is available, Q1 2000.

Fed Pursues Patience. As expected, the Federal Reserve’s monetary policy body, the Federal Open Market Committee, unanimously agreed to hold steady the federal funds top rate at 2.5%. The Fed’s January statement was consistent with recent policymakers comments suggesting a more flexible stance toward monetary policy at the end of last year and the start of 2019. In particular, the statement indicated that the Fed will “be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.” This is a decidedly more dovish stance for the Fed relative to commentary from the Fall of 2018, reflecting anchored inflation expectations and economic softness in some sectors, including housing. These changes to the Fed’s monetary policy stance are more favorable for housing market conditions in 2019, which are currently challenged by growing concerns over housing affordability and sluggish growth for home building.


 Baby Boomers Aging in Place and the Need for More Homes

 Baby Boomers Aging in Place and the Need for More Homes

According to a report from ATTOM Data Solutions This Week in Real Estate, the average homeowner who sold their home in Q4 2018 realized a 30.2 percent return on their original purchase price. Below are a few highlights from the fourth week of January that influence our business:

Q4 2018 Home Seller Gains
Nationally, homeowners who sold in Q4 2018 sold for an average of $54,500 more than their original purchase price, a slight decline from last quarter, a jump from last year. The $54,500 average home seller price gain in Q4 2018 represented an average 30.2 percent return on the original purchase price, down slightly from an average 30.4 percent return in the previous quarter but up from an average 25.6 percent return in Q4 2017. Among those 20 markets, San Francisco saw the greatest seller gains in Q4 2018, selling for an average of $361,125 more than their original purchase price. Seattle, Tacoma, Bellevue sold for an average of $171,969 more than their original purchase price while Portland, Vancouver sold for $132,500 more than their original purchase price.

Half of Boomer Homeowners Plan to Age in Place
More than half of Baby Boomers plan to age in place, electing to renovate in order to meet their changing needs, according to a new survey released by Chase and Pulsenomics. Among this group, 52% said they will never move from their current home, and 88% said they plan to make improvements to their home, with bathroom renovations topping the project list. Nearly two-thirds of respondents said they think home values are rising in their area, which provides an incentive for homeowners to tap their equity in order to age in place – and enhance their investment. Amy Bonitatibus, chief marketing officer for Chase Home Lending, said Boomers are likely to explore loans that grant access to equity in order to fund home improvements. “With home prices generally healthy across the country, two-thirds of these homeowners are turning to financing options like home equity lines of credit or cash-out refinances to complete their upgrades,” Bonitatibus said. “On average, homeowners are financing about $18,000 per household with more than half saying they intend to start remodeling within a year.”

More Homes Needed to Replace Older Stock
Over the 40-year span from 1961 through 2000, housing starts averaged a little over 1.5 million a year, but they have been nowhere near that high since 2006. As a recent NAHB study explains, one outcome of this shortfall has been a tendency for older homes to remain in service longer. Attempts to improve the stock of housing in the U.S. (for example, through new development standards or building codes) therefore make relatively little sense without a concomitant strategy to increase overall production. The NAHB study showed that the number of homes completed has been running below even the number of net new household formations. It should therefore not be surprising that data from the Census Bureau’s American Community Survey show that the number of homes built before 1970 has been declining at quite a slow pace. There were 52.83 million of them in 2014, and by 2016 the number had fallen only to 52.17 million. This implies that only a little over 6 out of every 1,000 homes built before 1970 are removed from the stock each year. Some of the loss rates the Census Bureau uses to estimate the number of housing units in the U.S. are even smaller, showing less than 1 housing unit per 1,000 being removed from the stock per year in the Northeast and West regions.

For the 2019 Cost vs. Value report of home improvement projects with the highest return on investment click here: https://www.remodeling.hw.net/cost-vs-value/2019/pacific/.


Mortgage Applications Increase Exponentially as Interest Rates Decline

 

Mortgage Applications Increase Exponentially as Interest Rates Decline

Lower interest rates to start the new year results in improved builder confidence for newly-built single-family homes and according to the Mortgage Bankers Association, This Week in Real Estate the Market Composite Index reached its highest level in 8 years to end the first full business week. Below are a few highlights from the third week of January that influence our business:

Purchase Mortgage Applications Reach 8 Year High
January 11 ended the first full business week in a while and mortgage activity responded accordingly. The Mortgage Bankers Association (MBA) reported a strong rebound. Purchase mortgage applications moved higher for the sixth time in the last eight weeks, resuming the upward trajectory that was interrupted by the Christmas holidays. That index was up 9 percent on a seasonally adjusted basis to its highest level since April 2010. The unadjusted Purchase Index rose 43 percent compared with the previous week and was 11 percent higher than the same week one year ago. In commenting on the improved activity, Mike Fratantoni, MBA Senior Vice President and Chief Economist said, “Uncertainty regarding the government shutdown, slowing global growth, Brexit, a more patient Fed, and a volatile stock market continued to keep rates from increasing. The spring home buying season is almost upon us, and if rates stay lower, inventory continues to grow, and the job market maintains its strength, we do expect to see a solid spring market.”

Lower Interest Rates Stabilize Builder Confidence
Buoyed by falling mortgage rates, builder confidence in the market for newly-built single-family homes rose two points to 58 in January on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment. Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months. Lower interest rates that peaked around 5 percent in mid-November and have since fallen to just below 4.5 percent will help the housing market continue to grow at a modest clip as we enter the new year. All the Housing Market Indices posted gains in January. The index measuring current sales conditions rose two points to 63, the component gauging expectations in the next six months increased three points to 64, and the metric charting buyer traffic edged up one point to 44.

U.S. Foreclosure Activity Drops to 13-Year Low in 2018
ATTOM Data Solutions on Thursday released its Year-End 2018 U.S. Foreclosure Market Report, which shows foreclosure filings – default notices, scheduled auctions and bank repossessions – were reported on 624,753 U.S. properties in 2018, down 8 percent from 2017 and down 78 percent from a peak of nearly 2.9 million in 2010 to the lowest level since 2005. Those 624,753 properties with foreclosure filings in 2018 represented 0.47 percent of all U.S. housing units, down from 0.51 percent in 2017 and down from a peak of 2.23 percent in 2010 to the lowest level since 2005. The report also includes new data for December 2018, when there were 52,069 U.S. properties with foreclosure filings, down 2 percent from the previous month and down 19 percent from a year ago – the 6th consecutive month with a year-over-year decrease in foreclosure activity. Lenders started the foreclosure process on 369,170 U.S. properties in 2018, down 6 percent from 2017 and down 83 percent from a peak of 2,139,005 in 2009 to a new all-time low going back as far as foreclosure start data is available – 2006. States that saw the biggest decline in foreclosure starts from last year included Rhode Island (down 39 percent); Hawaii (down 26 percent); North Carolina (down 24 percent); Washington (down 24 percent); and Connecticut (down 23 percent). Those metropolitan statistical areas that all saw a large decline in foreclosure starts from last year included Salinas, California (down 49 percent; San Luis Obispo (down 44 percent); Tyler, Texas (down 42 percent); Durham, North Carolina (down 40 percent); and Portland, Oregon (down 32 percent).

If you’re interested in taking advantage of low interest rates, learning how much you could borrow, or are thinking about refinancing, contact a trusted HomeServices Loan Officer in Oregon or Washington today.


The Rise In American Homeownership Tenure

 

The Rise In American Homeownership Tenure

Homeowners are remaining in their homes longer than ever before according to a report from First American This Week in Real Estate and mortgage applications to purchase a home jumped 17% to start the new year. Below are a few highlights from the second week of January that influence our business:

Plunge in Rates Sparks 23.5% Spike in Mortgage After Unusually Weak Holidays
The combination of lower mortgage rates and an unusually slow end to 2018 caused mortgage applications to surge to start this year. Overall volume jumped 23.5 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. A sharp drop in interest rates to the lowest level since April sparked a mini-boom in refinancing. Those applications surged 35 percent week-to-week to their highest level since July. Volume was still lower by nearly 22 percent than a year ago, when the average rate on the 30-year fixed mortgage was 51 basis points lower. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.74 percent, from 4.84 percent, with points increasing to 0.47 from 0.42 (including the origination fee) for loans with a 20 percent down payment. The rate is 22 basis points lower than four weeks ago. Mortgage applications to purchase a home also jumped 17 percent last week but were just 4 percent higher than a year ago.

Home Price Growth Slows in Most States
Home prices have appreciated consistently since the housing market began its recovery, but now they appear to be slowing down after a six-year run. The latest data from Black Knight reveals that home price growth has slowed in 33 states and in 71 of the nation’s 100 largest markets. Annual gains decelerated by 1.3% from February to October, according to Black Knight’s latest Mortgage Monitor report. October saw growth flatten to just 5.4%, down from February’s four-year high of 6.7%. The report notes that home price appreciation from July through October was the most tepid four-month stretch in nearly four years. And, while the slowdown is apparent across much of the nation, the west saw the most deceleration, with California the standout as price growth fell below the national average for the first time since early 2012.

American Homeownership Tenure is Climbing
Americans are remaining in their homes longer than ever before, consequently tightening the lid on housing supply. First American data indicates that homeownership tenure has risen 10% just from 2017 and has significantly climbed since the market crashed in 2008. “Tenure jumped to seven years during the aftermath of the crash between 2008 and 2016, and the most recent data from December 2018 shows that the median length of time someone lives in their home has increased 10% compared with a year ago,” First American Chief Economist Mark Fleming said.


Mortgage Rates Plummet

 

 

Mortgage Rates Plummet

The market value of U.S. housing increased $1.9 trillion last year according to a report released by Zillow This Week in Real Estate resulting in a total value of $33.3 trillion. Below are a few highlights from the first week of January that influence our business:

U.S. Housing Market Value Climbs to $33.3 Trillion in 2018

In 2018, the total value of the U.S. housing market increased $1.9 trillion, propelling its value to a whopping $33.3 trillion, according to new data from Zillow. This 6.2% increase is up $10.9 billion from 2012, when the housing market crashed. Zillow Senior Economist Aaron Terrazas said seen from the rearview mirror, 2018 was a year of unusually strong, stable home value growth across the country. “During the second half of the year, appreciation slowed sharply in the priciest corners of the country while it picked up in affordable hotspots,” Terrazas said. “Housing wealth may have touched new highs this year, but home value gains don’t translate into dollars in the bank account unless homeowners opt to sell or borrow against their home and, in contrast to previous housing booms, many Americans have been more reluctant in recent years to spend against their home’s worth,” Terrazas said.

Mortgage Rates Lowest in Nearly a Year

Mortgage rates have been plummeting, depending on your definition of the word. To be sure, the past 2 months have no competition in nearly 3 years. The past few days have been special in their own right. Whereas there was cause for concern about the new year bringing a bounce for stock prices and mortgage rates, stocks haven’t done much of anything in the context of their late-2018 volatility, and mortgage rates have dropped another eighth of a percentage point (or more, depending on the lender). There are now lenders quoting 30 year fixed rates as low as 4.375% on top tier scenarios with the average lender back to 4.5%. That’s quite a jump from the 5.125% average at the recent highs (just 2 months ago).

Job Growth Surged in December

At the end of 2018, job growth surged. Total employment increased by 312,000 in December and the unemployment rate rose to 3.9%; however, this increase was good news because it was generated by growth in the labor force. Residential construction employment increased by 1,700 in December. The total construction industry (residential and nonresidential) added 280,000 jobs in 2018, more than the gain of 250,000 jobs in 2017. According to the Employment Situation for December released by the Bureau of Labor Statistics (BLS), total non-farm payroll employment rose by 312,000, faster than the upwardly revised increase of 176,000 jobs in November. It was the biggest monthly gain since February 2018. In 2018, job gains have averaged 220,000 per month, about 20% higher than the average monthly growth of 182,000 over all of 2017. Over the past twelve months, total non-farm payroll employment rose by 2.6 million, compared with the increase of 2.2 million in 2017. Residential construction employment now stands at 2.85 million in December, broken down as 816,000 builders and 2.0 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 6,567 a month. Over the last 12 months, home builders and remodelers added 99,800 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 871,400 positions.


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