Discussing the latest news on mortgage delinquencies, home owner and appraiser opinions on home values and much more!
Mortgage Delinquencies Decline
Great news from CoreLogic as they reported that in October 2017, only 5.1% of home mortgages were in some stage of delinquency. This is down from the 5.2% of October 2016.
The foreclosure inventory rate ( the share of mortgages in some stage of the foreclosure process ) was 0.6% in October 2017. This is down from 0.8% back in October 2016 and is back to the pre-crisis level of 0.6%.
The number of early stage delinquencies were increasing but this is mainly due to the impact of the hurricanes as Frank Martell, president and CEO of CoreLogic, explained:
While the national impact of the recent hurricanes will soon fade, the human impact will remain for years. For example, the displacement and rebuilding in New Orleans after Hurricane Katrina extended for several years and altered the character of the city, an impact that still remains today. The reconstruction of the housing stock and infrastructure impacted by the storms should provide a small stimulus to local economies. This rebuilding will occur against a backdrop of wage growth, consumer confidence and spending in the national economy which should continue to provide a solid foundation for real estate demand in the storm-impacted areas and beyond.
It is so good to see the tremendous improvement from where we were back in the dark days after the housing market imploded. I hate to see the increase in early stage delinquencies and my heart goes out to those affected by these hurricanes.
Home Owners Opinions of Value Close to Reality
The views of homeowners, and those who appraise their properties, are continuing to move closer together. Home appraisals were an average of 0.5 percent lower than what owners expected in December, according to the National Quicken Loans Home Price Perception Index (HPPI). These two data points have moved closer together since November, when appraised values were 0.67 percent lower than homeowners’ estimates, and far improved from one year ago when there was a full 1 percent difference in valuation.
Increasing equity continues to be another source of good news for homeowners. The National Quicken Loans Home Value Index (HVI) reported the average appraisal value climbed 0.65 percent higher from November to December, and jolted ahead 6.17 percent compared to the previous December.
Check out the chart showing the gap between home owner and appraiser opinions of home values:
Remember that if a home does NOT appraise, it can derail a home sale. It is essential that you remember this when selling a home!
Housing Will Continue to Gain Ground in 2018
The newly enacted tax law will create a more favorable tax climate for the business community, which should spur job and economic growth and keep single-family housing production on a gradual upward trajectory in 2018, according to economists speaking at the NAHB International Builders’ Show.
NAHB Chief Economist Robert Dietz said:
We expect that tax reform will boost GDP growth to 2.6 percent in 2018, and this added economic activity will also bode well for housing, although there will be some transition effects in high-tax jurisdictions. Ongoing job creation, expected wage increases and tight existing home inventory will also boost the housing market in the year ahead.
Sounds good but they are predicting mortgage rates will hit 4.31% in 2018 and 4.82% in 2019. They are predicting that single family starts will increase 5% in 2018.
While the increase in single family starts is great, that is still below the average back in 2000 to 2003. With the tight inventory issue, increasing mortgage rates and home prices, anyone interested in buying a home is advised to get the lead out!
Supporting Mortgage Lending in Rural Communities
Proposed changes to the housing finance system could substantially reduce the ability of community banks to effectively access mortgage funding and serve consumers in rural communities.
Nearly 74 million people, about a quarter of the United States population, live in rural areas. That includes 15 million people of color. But according to the authors of a new paper published by the Center on Regulation and Markets at Brookings, these families are often overlooked in policy discussions on proposed changes to the Government Sponsored Enterprises (GSEs), which provide the largest share of mortgage financing in rural areas.
GSE mortgage financing meets a critical rural housing need, and it also supports community banks, which are often the only full-service financial institution in many rural areas. How mortgage financing is supported in the future will profoundly affect lending in rural communities and the health of community banks and credit unions.
With the possibility of GSE reform finally happening, it is very important that mortgage lending for areas such as Anderson County is not negatively affected.
Not that GSE reform seems to be going well…
A Bad Start on Reforming Fannie and Freddie
This was supposed to be the year when the U.S. government would finally address one of the biggest pieces of unfinished business from the 2008 financial crisis: reforming Fannie Mae and Freddie Mac, the quasi-state entities that dominate the U.S. mortgage market.
Unfortunately, the Trump administration’s actions so far suggest it’s unwilling or unable to handle the task.
I have been hoping that we would finally see GSE reform that would remove the risks to taxpayers while keeping mortgages available to credit worthy home buyers.
Save any criticisms about the Trump administration NOT fixing this in their first year since the previous administration had 8 years…
Not that I am defending the Trump administration…
Americans Remain Negative on Tax Bill After Its Passage
A majority of Americans continue to disapprove of the nation’s new tax reform law after its late December passage, just as they did a month ago when it was still being debated.
Gallup assessed attitudes toward the tax bill in early December and found disapproval outweighing approval by almost 2 to 1: 56% vs. 29%. A month later, after Congress passed the bill and President Donald Trump signed it into law on Dec. 22, a new Gallup survey finds little substantive change. Approval has edged up four percentage points to 33% as the percentage with no opinion dropped by a similar amount, but these changes are not statistically significant.
Congress’ job approval is 20% in January — not a significant shift from the 17% measured in early December before the bill’s passage, although the past couple of months are up from the 2017 nadir of 13% recorded in October and November. The current reading roughly matches the monthly average for all of 2017 but is well below the 28% monthly high point last year, which was measured in February after Trump was inaugurated, giving the GOP control of the presidency and Congress.
Do not let your political beliefs allow you to ignore reality about the economy or the housing market. Too many will be overly optimistic or pessimistic based on their political beliefs instead of relying upon facts.
I understand how hard it is to find the truth and facts today. The key is considering different viewpoints as well as the ugly but honest truth…
Let’s Wrench Power Back From the Billionaires
Food for thought from The Guardian:
Here is where we are as a planet in 2018: after all of the wars, revolutions and international summits of the past 100 years, we live in a world where a tiny handful of incredibly wealthy individuals exercise disproportionate levels of control over the economic and political life of the global community.
Difficult as it is to comprehend, the fact is that the six richest people on Earth now own more wealth than the bottom half of the world’s population – 3.7 billion people. Further, the top 1% now have more money than the bottom 99%. Meanwhile, as the billionaires flaunt their opulence, nearly one in seven people struggle to survive on less than $1.25 (90p) a day and – horrifyingly – some 29,000 children die daily from entirely preventable causes such as diarrhoea, malaria and pneumonia.
Not only that, but at a time of massive wealth and income inequality, people all over the world are losing their faith in democracy – government by the people, for the people and of the people. They increasingly recognise that the global economy has been rigged to reward those at the top at the expense of everyone else, and they are angry.
This is only a tiny slice of this must read article. I do not think all of Sander’s policies or ideas are realistic but he does hit the nail on the head here…
That is it for today! I hope you will subscribe so you never miss another post…