The passing of the converged Tax Cuts and Jobs Act bill This Week in Real Estate, the first major tax reform since President Reagan, overshadowed the fact that existing-home sales in November reached its strongest pace in almost 11 years.Below are a few highlights from the third week of December that influence our business:
* Existing-Home Sales Soar 5.6% in November to Strongest Pace in Over a Decade. Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, according to the National Association of Realtors. All major regions except for the West saw a significant hike in sales activity last month. Total existing-home sales jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million). November existing-home sales in the Northeast leaped 6.7 percent to an annual rate of 800,000, (unchanged from a year ago). Existing-home sales in the South expanded 8.3 percent to an annual rate of 2.34 million in November, and are now 4.0 percent higher than a year ago. In the Midwest, existing-home sales jumped 8.4 percent to an annual rate of 1.42 million in November, and are now 6.8 percent above a year ago. Existing-home sales in the West declined 2.3 percent to an annual rate of 1.25 million in November, but are still 2.5 percent above a year ago.
* CoreLogic: Mortgage Credit Risk Increased From Q3 2016 to Q3 2017.CoreLogic released its Q3 2017 Housing Credit Index (HCI) Tuesday which measures trends in six home mortgage credit risk attributes. The HCI indicates the relative increase or decrease in credit risk for new home loan originations compared to prior periods. The six attributes include borrower credit score, debt-to-income ratio (DTI), loan-to-value ratio (LTV), investor-owned status, condo/co-op share and documentation level. In Q3 2017, the HCI increased to 111.1, up 18 points from 93.1 in Q3 2016. Even with this increase, credit risk in Q3 2017 is still within the benchmark range of the HCI. The benchmark range of 90 to 121 is measured as within one standard deviation of the average HCI value for 2001-2003, considered to be the normal baseline for credit risk. The increase in the credit risk, as measured by the HCI during the past year, was partly due to a shift in the purchase-loan mix to more investor loans and to a shift in the refinance-loan mix to borrowers with lower credit scores and higher DTI. This trend for refinance loans may reflect the rise in the FHA-to-conventional share of refinance activity. “The CoreLogic Housing Credit Index is up compared to a year ago, in part reflecting a shift in the mix of loans to the purchase market, which typically exhibit higher risk,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Further, the Index shows higher risk attributes for both purchase and refinance loans, although the risk levels still remain similar to the early 2000s. When looking at the two most recent quarters in which the mix of purchase and refinance loans were similar, the CoreLogic Housing Credit Index for each segment remained stable. Looking forward to 2018, with continuing economic and home price growth, we expect credit-risk metrics to rise modestly.”Full Story...http://www.corelogic.com/about-us/news/corelogic-analysis-shows-mortgage-credit-risk-increased-from-q3-2016-to-q3-2017.aspx
* 34 Things You Need to Know About The Incoming Tax Law. It’s official. Congress has ushered through the first major tax overhaul since Ronald Reagan was president. Among the many changes the most significant to homeowners is: (1) those who sell their house for a gain will still be able to exclude up to $500,000 (or $250,000 for single filers) from capital gains, so long as they’re selling their primary home and have lived there for two of the past five years and (2) mortgage interest deduction has been lowered; anyone buying a new home will only be able to deduct the first $750,000 of their mortgage debt, down from $1,000,000.