Mortgage

12 States Hit Price Peaks; National Median Sales Price Up 38% in Past 5 Years

According to Black Knight Financial Services Home Price Index (HPI), home price gains set another new record in June 2017, rising 0.9% from Many and 6.2% year-over-year. Moving into July, CoreLogic recently reported that home prices measured by HPI were up 6.7% on an annual basis and increased 0.9% from June. CoreLogic said its analysis of the largest 100 metro areas in the country found the housing stock in 34% of them to be overvalued while 28% undervalued. Of the top 50 markets, 46 percent were deemed overvalued, 16% were undervalued, and 8% were at value. Looking ahead, the CoreLogic HPI forecast indicates that home prices will increase by 5% on a year-over-year basis from July 2017 to July 2018.

“In July, home price growth in the Pacific northwest and mountain states led the nation with the highest appreciation rates,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year.”

In other housing news, the National Association of Realtors (NAR) just released Pending Home Sales Index (PHSI) dropped 0.8% in July, which was 1.3% lower than the PHSI a year earlier and has now fallen year-over-year in three of the last four months (the West was the only region to show a slight gain).

Lawrence Yun, NAR chief economist, continues to blame the weak market on the lack of homes for sale and called the inventory woes throughout the country “staggering.” “With the exception of a minimal gain in the West, pending sales were weaker in most areas in July as house hunters saw limited options for sale and highly competitive market conditions. The housing market remains stuck in a holding pattern with little signs of breaking through. The pace of new listings is not catching up with what’s being sold at an astonishing fast pace.”

According to Yun, the national median home sales price has risen 38% in the past five years, while hourly earnings have increased by less than a third of that, at 12%. The unsustainable trend is putting considerable pressure on affordability in some markets, especially first time buyers, and is pricing out some buyers who would otherwise be looking to buy a home. “The reality, therefore, is that sales in coming months will not break out unless supply miraculously improves. This seems unlikely given the inadequate pace of housing starts in recent months and the lack of interest from real estate investors looking to sell,” stated Yun.

Finally, how much money do you need to make to afford a median priced home in the US? According to mortgage search company HSH, you’ll need a salary of $56,000 per the 2nd quarter data, which is up 10% from the previous quarter. (Based on 20% down, 30 year fixed mortgage, 4% interest with base cost including principle, interest, property tax, and homeowners insurance.)

Check out how much you would have to earn to purchase a median priced home in these markets:

Seattle, WA – $93,853

San Francisco, CA – $181,341

San Jose, CA – $221,363

Dallas, TX – $61,039

Boston, MA – $98,518

New York City, NY – $99,136

Washington, DC – $88,664

 

Builder confidence is up, home prices continue to rise, U.S. hits record levels

According to the recently released National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index, builder confidence is back on the rise after some concern over construction labor problems in the last report. The index rose 4 points from its July reading to 68, beating analysts’ consensus predictions of 65.

“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said NAHB Chief Economist Robert Dietz. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building materials costs.”

Additionally, home prices continued to rise in the second quarter of 2017 against a diminished housing inventory that is hitting all-time lows. According to the National Association of Home Builders and First American Title Insurance Leading Markets Index (LMI), nearly 300 markets across the U.S. posted an increase in economic and housing activity from the first to the second quarter. The LMI measures current home prices, permit, and employment data to plot the economic health of an individual market. The index shows the market is currently running at an average of 102% of normal housing and economic activity in the second quarter, despite employment activity of 98% of normal and single-family permits at just 54% of normal activity, which is far below historical levels.

“This report shows that the housing and economic recovery is widespread across the nation and that housing has made significant gains since the Great Recession,” NAHB Chairman Granger MacDonald said. “However, the lagging single-family permit indicator shows that housing still has a ways to go to get back to full strength.”

In other housing related news, CoreLogic’s recently released Loan Performance Insights Report, shows that, nationally, 4.5% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in May 2017 – the lowest amount in nearly a decade.

“Strong employment growth and home price increases have contributed to improved mortgage performance,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Early-stage delinquencies are hovering around 17-year lows, and the current-to-30 days past due transition rate remained low at 0.8%. However, the same positive economic conditions helping performance have also contributed to a lack of affordable supply, creating challenges for homebuyers.”

Finally, American’s debt level hit another record high in the second quarter, after surpassing its pre-crisis peak earlier in the year. Total U.S. household debt was $12.84 trillion in the second quarter, up $553 billion from a year ago, according to a Federal Reserve Bank of New York report published recently. The proportion of overall debt that was delinquent came in at 4.8% – on par with the previous quarter. Total U.S. debt is about 14% above the trough of household deleveraging brought on by the 2007-2009 financial crisis and deep recession, a pullback that interrupted what had been a 63-year upward trend.

Builder Confidence is Up, Home Prices Continue to Rise

Builder Confidence is Up, Home Prices Continue to Rise, U.S. Hits Record Levels

According to the recently released National Association of Home Builders (NAHB) / Wells Fargo Housing Market Index, builder confidence is back on the rise after some concern over construction labor problems in the last report. The index rose 4 points from its July reading to 68, beating analysts’ consensus predictions of 65.

“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said NAHB Chief Economist Robert Dietz. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building materials costs.”

Additionally, home prices continued to rise in the second quarter of 2017 against a diminished housing inventory that is hitting all-time lows. According to the National Association of Home Builders and First American Title Insurance Leading Markets Index (LMI), nearly 300 markets across the U.S. posted an increase in economic and housing activity from the first to the second quarter. The LMI measures current home prices, permit, and employment data to plot the economic health of an individual market. The index shows the market is currently running at an average of 102% of normal housing and economic activity in the second quarter, despite employment activity of 98% of normal and single-family permits at just 54% of normal activity, which is far below historical levels.

“This report shows that the housing and economic recovery is widespread across the nation and that housing has made significant gains since the Great Recession,” NAHB Chairman Granger MacDonald said. “However, the lagging single-family permit indicator shows that housing still has a ways to go to get back to full strength.”

In other housing related news, CoreLogic’s recently released Loan Performance Insights Report, shows that, nationally, 4.5% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in May 2017 – the lowest amount in nearly a decade.

“Strong employment growth and home price increases have contributed to improved mortgage performance,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Early-stage delinquencies are hovering around 17-year lows, and the current-to-30 days past due transition rate remained low at 0.8%. However, the same positive economic conditions helping performance have also contributed to a lack of affordable supply, creating challenges for homebuyers.”

Finally, American’s debt level hit another record high in the second quarter, after surpassing its pre-crisis peak earlier in the year. Total U.S. household debt was $12.84 trillion in the second quarter, up $553 billion from a year ago, according to a Federal Reserve Bank of New York report published recently. The proportion of overall debt that was delinquent came in at 4.8% – on par with the previous quarter. Total U.S. debt is about 14% above the trough of household deleveraging brought on by the 2007-2009 financial crisis and deep recession, a pullback that interrupted what had been a 63-year upward trend.

The Market

A PERL in the South Bay

PERL Mortgage expands with a grand opening in El Segundo

Written by Alisha Henson

Starting from humble beginnings with a single employee and brokering mortgage operations from the kitchen table, founder and president, Ken Perlmutter, began PERL Mortgage with the slogan: Your Lender For Life. Over the course of 23 years, PERL has become known as a nationally recognized lender, “Big enough to matter … and small enough to care.” Four years into the company being established, Executive Vice President and business partner, Steve Laner, joined PERL to continue its legacy. Recently becoming a local South Bay resident, Steve has helped with the steady growth of the California expansion alongside Divisional Vice President, Todd Seabold, with branch openings in Century City, Santa Monica, Seal Beach, Claremont, Temecula and Placentia communities. On July 13, PERL celebrated the grand opening of its seventh location at The Point in El Segundo. The expansion—the full-service loan lender’s most recent California flagship—allows the company to provide South Bay residents with a wide variety of loan products in an effort to fit every lifestyle, local loan officers, and unparalleled loan execution from open to close. As part of the continuous commitment to serving the community, PERL recently partnered with local charity, Walk with Sally, to support its efforts to provide free mentoring programs for children and families impacted by cancer. “It was important for us to share our success by giving back to a local charity,” says PERL’s Russell Hossain, SVP, Chief Business Development Officer. “I know that this is near and dear to many of our employees, and we are happy to be part of an organization with such a great cause. We look forward to the continued partnership for many more years to come.”


Luxe DIGS

Musical Spin – $12.75 Million

Written by Wendy Bowman

OneRepublic frontman Ryan Tedder—also a songwriter and music producer for various artists including Madonna, U2, Adele, Beyoncé and Ariana Grande—can add high-end house flipping to his resume. Tedder and his wife, Genevieve, collaborated with Alvarez Morris Architectural Studio to restore and expand the 1959 mid-century modern estate they purchased two years ago, adding a bedroom, family room and three-car garage, along with replacing and modernizing all systems and baths. Situated at 1007 Loma Vista Drive in the lower Trousdale Estates section of Beverly Hills, the five-bedroom, 5,386-square-foot residence now is on the market for $12.75 million. Listing agent David Gray of Partners Trust shares that the couple’s keen eye for real estate has turned into a passion for big-returns.

“The pair purchased another home more suitable for their family after acquiring this one, but wanted to restore, expand and modernize this Trousdale estate as if it were their own,” he says. The Tedders reportedly originally purchased the home from X-Men: First Class producer Gregory Goodman, so expect a scene-stealer.

 

 


Belle Vie – $13.95 Million

Written by Wendy Bowman

French singer and composer Sébastien Izambard is selling his Malibu residence for $13.95 million. “The home enchants from the moment of arrival,” says listing agent Santiago Arana, principal of The Agency. “Upon entering the tucked-away, private driveway, the property reveals a stunning modern rustic farmhouse boasting panoramic ocean views, lush green gardens and ultimate privacy.” Found at 29829 Harvester Road, the two-level abode was built in 1979 and has since been updated with 5,000-plus square feet of light-filled living space including eight bedrooms; a spacious living room sporting cathedral-style ceilings; and chef’s kitchen that flows to a formal dining room. Outdoors, the 4-plus-acre lot boasts a duo of detached guest houses, vegetable garden and fruit trees, and a professionally designed tennis court. “This is a perfect celebrity retreat for privacy, with lots of space, and amazing mountain and ocean views,” says Arana. “At this home, you can have it all—from organic garden fruits and veggies to beautiful horses within the grounds.”

Market Muse | June 9th, 2017

Market Muse with Warren Dow reports:

  • Home prices are on fire – and look to continue to stay hot through balance of 2017
  • The national housing report 63% of homeowners with mortgages have seen a rise equity since 2016
  • Millennials are the largest group of home buyers for the fourth consecutive year.
  • Fannie Mae has declared it’s a sellers market

 

What’s happening in the housing market

Home prices are on fire – and look to continue to stay hot through balance of 2017

According to its recently released Home Price Index (HPI,) CoreLogic reported that home prices are up both year over year and month over month. Nationwide, home prices increased year over year by 6.9% in April 2017 compared to April 2016 and increase month over month by 1.6% in April 2017 compared with March 2017. The CoreLogic HPI Forecast indicates that home prices will increase by 5.1% on a year over year basis from April 2017 to April 2018.

CoreLogic also reported that U.S. homeowners with mortgages (which is roughly 63% of all homeowners) have seen their equity increase by a total of $766.4 billion dollars since the 1st quarter of 2016 – an increase of 11.2%. Today, nearly 9 million borrowers have regained equity since the height of the housing crisis in 2011.

On the other hand, the total number of residential mortgages with negative equity decreased 3% from the 4th quarter of 2016 – to 3.1 million homes or 6.1% of all mortgaged properties. CoreLogic Chief Economist stated, “One million borrowers achieved positive equity over the last year, which means mortgage risk continues to steadily decline as a result of increasing home prices.”

And there’s more news on mortgages out today – Freddie Mac just released it Primary Mortgage Market Survey, showing the 30-year fixed mortgage dropping for the 4th consecutive week and hitting its lowest level in nearly seven months. 30-year fixed mortgages averaged 3.89% with an average .5-point for the week ending June 8, 2017, down from last week when it averaged 3.94%. For reference, a year ago at this time the 30-year fixed rate mortgage averaged 3.6%.

With the market so hot, one has to wonder what’s happening with home flipping – the practice of buying and then reselling the same property within a 12-month period. Well, ATTOM Data Solutions just released its Q1 2017 US Home Flipping Report, which showed that home flipping fell to the lowest level in two years during the 1st quarter of 2017. Interesting, at the same time, the share of those flips using mortgage financing rose to a 9-year high. The company reported that there were 43,615 single family homes and condos flipped during the 3-month period, down 8% from the previous quarter and 6% from a year ago. Flipping accounted for 6.7% of all single-family home and condo sales during the quarter, an increase from 5.8% in the fourth quarter, but unchanged from a year earlier.

So what’s up with the millennials?

The National Association of Realtors (NAR) just released it 2017 Home Buyer and Seller Generational Trends study, which found that millennials were the largest group of home buyers (34%) for the fourth consecutive year. By comparison, baby boomers were 30% of buyers.

“Millennials have been fairly slow to get into the market, but we are seeing an uptick in millennial buyers this year – which is a good sign, because as home values rise, we want a wider number of people to participate in this housing recovery,” said Lawrence Yun, chief economist at NAR. “There’s a pent-up demand and as the economy continues to improve, we expect to see more people in their early thirties, adults who are still living with their parents – clearly not their idea of the American dream – to begin to look for their own housing units.”

In other housing news, economists at Freddie Mac see the U.S. housing market “on track to eclipse last year as the best in over a decade.” The company’s May Outlook gives credits to the housing market’s strong start to 2017 in part to the surprising downward movement of interest rates since March. After rising to 4.3% in March, mortgage rates have dipped back down near the 4.0% range and have been holding pretty steady. The general sentiment is that the Fed will increase rates a few times before the end of 2017. All told, Freddie Mac thinks 2017 is shaping up to be the best year for housing in over a decade.

Finally, Fannie Mae has declared it’s a sellers market.

Based on Fannie Mae’s monthly National Housing Survey, the net share of Americans who said that now is a good time buy a home reached a record low of 27%, (a decrease of 8%,) while the net share who stated that it is a good time to sell a home reached a record high of 32%, a gain of 6% in May 2017.

Fannie Mae said it was only the 2nd time in the survey’s history that the net share of those saying it’s a good time sell surpassed the net share of those saying it’s a good time to buy. In fact, the “sell” component is 19 point higher that the same time in 2016. All of this makes perfect sense since the market has been on fire and continues to stay hot.

Look for more market muse episodes soon.

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Q4 Loans in 2016 Among Highest Quality Since 2001

Q4 Loans in 2016 Among Highest Quality Since 2001

According to CoreLogic’s recently released Housing Credit Index (HCI,) the loans originated in the fourth quarter of 2016 are among the highest quality mortgages originated since 2001, (in terms of overall credit risk.) The HCI Index compares loans with those originated in previous quarters based on borrower credit scores, debt-to-income and loan-to-value ratios. CoreLogic found that the average credit score for money purchase loans rose 4 points from 733 in the fourth quarter of 2015 to 737 in the fourth quarter of 2016.

Frank Nothaft, chief economist for CoreLogic, stated “While our index indicates somewhat less risk than both a quarter and a year earlier, this partly reflects the large refinance share of fourth-quarter originations. Refinance borrowers typically have a lower loan-to-value, debt-to-equity ratio and debt-to-income ratios than purchase borrowers.” Nothaft also noted that with interest rates expected to rise further this year, “Refinance volume will decline with higher mortgage rates, and lenders generally will respond by applying the flexibility in underwriting guidelines to make loans to hard-to-qualify borrowers. As this occurs, we should observe our index signaling a gradual increase in default risk.”

In other housing news, the number of permits issued to builders on a national basis fell 6.2% from January to February, according to the seasonally adjusted numbers in the latest new residential construction report jointly released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. The biggest decrease was in permits to construct multi-family buildings with five or more units, where builders received 26.9% fewer permits in February than January and 15.7% fewer than they did in the same month a year earlier. On the positive side, permits for single-family homes rose 3.1% in February over the previous month, and 13.5% over the same month in the previous year, according to the report.

Finally, the share of homes sold for cash fell to the lowest level in nearly a decade in 2016. According to a recent report from CoreLogic, 32.1% of all home sales last year closed with a mortgage. This was a decrease of 2.2% from 2015, (the previous low point for cash sales was in 2007 at 27% of total home sales.) CoreLogic also noted that distressed home sales accounted for only 8.9% of all sales for 2016, the lowest share since 2007.