This Week in Real Estate: December 27, 2016


As 2016 comes to a close there are varying degrees of optimism about the 2017 market. Regardless of what may or may not materialize in the future, what exists today, according to a report released by the National Association of Realtors, is the annualized pace of sales ending November 2016 is now the highest since February 2007. Below are a few highlights from the third week of December that influence our business:

* Existing-Home Sales Forge Ahead in November. A big surge in the Northeast and a smaller gain in the South pushed existing-home sales up in November for the third consecutive month, according to NAR. Lawrence Yun, NAR chief economist, says its been an outstanding three-month stretch for the housing market as 2016 nears the finish line. “The healthiest job market since the Great Recession and the anticipation of some buyers to close on a home before mortgage rates accurately rose from their historically low level have combined to drive sales higher in recent months,” he said. Total existing-home sales rose 0.7 percent to a seasonally adjusted annual rate of 5.61 million in November. November’s sales pace is now the highest since February 2007 (5.79 million) and is 15.4 percent higher than a year ago (4.86 million). The median existing-home price for all housing types in November was $234,900, up 6.8 percent from November 2015. November’s price increase marks the 57th consecutive month of year-over-year gains. Existing-home sales in the West declined 1.6 percent to an annual rate of 1.25 million in November, but are still up 19.0 percent higher than a year ago. The median price in the West was $345,400, up 8.5 percent from November 2015.
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* Third Quarter Produces Highest Quality Loans Since 2001. CoreLogic released a report this week featuring it’s Housing Credit Index (HCI) that measures variations in home mortgage credit risk attributes over time – including borrower credit score, debt-to-income ratio (DTI) and loan-to-value ratio (LTV). A rising HCI indicates that new single-family loans have more credit risk than during the prior period, and a declining HCI means that new originations have less credit risk. The current HCI shows mortgage loans originated in Q3 2016 continued to exhibit low credit risk versus the previous quarter and Q3 2015. In terms of credit risk, Q3 2016 loans are among the highest-quality home loans originated since the year 2001. HCI highlights as of Q3 2016: (1) the average credit score for homebuyers increased 5 points year-over-year between Q3 2015 and Q3 2016, rising from 734 to 739, (2) the average debt-to-income for homebuyers fell slightly between Q3 2015 and Q3 2016, falling from 35.7 percent to 35.4 percent, (3) the loan-to-value for homebuyers decreased about 1 percentage point between Q3 2015 and Q3 2016, declining from 86.8 percent to 85.6 percent.
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* Foreclosure Inventory Below 500,000 For 1st Time in Nearly 10 Years. There was a slight uptick in a couple of housing distress measures in November, but the general trend continues down. Foreclosures, foreclosure starts and delinquency rates all ticked up from October levels. The 60,400 starts represented an increase of 6.9 percent from the previous month, but were 9.31 percent below starts in November 2015 and still near a 10-year low. A decline of 6,000 homes in the process of foreclosure compared to October brought the foreclosure inventory below the half million mark for the first time in nearly 10 years. The inventory now numbers 498,000 units, 0.98 percent of all homes with a mortgage.
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Have a productive week.

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