Discussing the decrease in distressed sales, home affordability, increasing number of HELOCs, consumer confidence, home buyers heading South plus more!
Share of Distressed Home Sales Drops to 10-Year Low!
ATTOM Data Solutions just reported that distressed home sales — including bank-owned (REO) sales, third-party foreclosure auction sales, and short sales — accounted for 12.5% of all home sales in Q3 2017. This is the lowest level since Q3 2007!
Daren Blomquist, senior vice president at ATTOM Data Solutions said:
Distressed sales nationally are now the exception rather than the rule, and we would expect the distressed sale share to return to the pre-recession norm of single-digit percentages within the next year given the current downward trajectory.
Attom also reported that the median sales price nationwide in the third quarter was up 10 percent from a year ago. It hit a new all-time high ($248,000) and this is the second consecutive quarter where median home prices nationwide were above the pre-recession peak.
Positive Economic Signal from Latest Cass Freight Index Report
The September 2017 Cass Freight Index Report gave us a positive indicator for the economy with both the Shipments and Expenditures continued to increase YoY. Shipments were up 3.2% YoY and decreased 0.9% MoM. Expenditures were up 4.6% YoY and 0.3% MoM.
This is a very good sign for the economy and hopefully will continue…
Will Affordability Continue to Improve?
From First American Chief Economist Mark Fleming (emphasis is mine):
Though consumer house-buying power improved in August, affordability is likely to fade as mortgage rates are expected to rise in the months to come, but lower affordability is only significant to potential first-time buyers. Existing homeowners with fixed-rate mortgages benefited from the rising prices with increased equity. If you’re renting and thinking of buying, then now is the time.
If buying a home makes sense for you then you really should consider it…
While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.
I could not say it better myself. Unless you are living “rent-free”, you are paying a mortgage: yours or your landlord’s!
The Return of the HELOC?
Approximately 10 million consumers are expected to originate a home equity line of credit (HELOC) between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016).
While it is good to be able to use the equity in your home, remember to be careful and not overdo it. Your home’s equity is not an ATM…
However, using a HELOC to improve your home or to consolidate other debts at a much lower interest rate can be a smart move. Just be sure you completely understand the numbers and can handle the additional payments comfortably.
U.S. Senate Unanimously Endorses “National Month for Renters” Resolution
From Ali Solis, Make Room President and CEO at Make Room:
For the first time, the entire U.S. Senate has acknowledged the devastating impact of America’s rental affordability crisis on families and communities and the need for a comprehensive and sustained response. We are deeply grateful to Senators Cassidy and Van Hollen for moving this critical legislation so quickly through the Senate. Solving the rental affordability crisis can lead to tremendous benefits – more stable families and communities, greater equality of opportunity, and stronger economic growth. It’s my hope that passage of S. Res. 312 will jump-start the effort to craft meaningful solutions.
We must remember that we need affordable rentals so that people can work on achieving the American Dream. It is very hard to make progress if you are spending the majority of your income on housing.
Yet More Evidence That Housing Affordability Is Getting Worse
Evidence continues to pile up revealing that housing affordability is getting worse, particularly for low-income households. One of the latest examples, an analysis by Freddie Mac, examines rent changes for a sample of apartment buildings that the company financed at least twice between 2010 and 2016. The bottom line: it wasn’t easy for poor families to find an apartment they could afford in 2010 – in fact, only 11.2 percent of unsubsidized apartments were affordable to very low income households – and matters have gotten worse. In 2016, only 4.3 percent of units still met that standard.
Again, the lack of affordable housing is a very serious issue that must be addressed now!
A Glance at Housing Finance
2 snippets from the latest Housing Finance at a Glance Report from the Urban Institute:
Home prices remain affordable by historic standards, despite increases over the last five years and the recent interest rate hikes. Even if interest rates rise to 4.75 percent, affordability would still be at the long-term historical average.
In July 2017, the first-time homebuyer share of GSE purchase loans fell for the third consecutive month to 45.9 percent, after hitting the highest level in recent history in April (48.1 percent).
I hate to see the number of first-time home buyers fall. We could finally be coming to the end of one of the greatest periods to buy a home ever…
Americans’ Confidence in the Economy Steady Last Week
Americans’ confidence in the U.S. economy continued to tilt slightly positive last week. For the week ending Oct. 29, Gallup’s U.S. Economic Confidence Index stood at +3, on par with the previous week’s reading of +4. The measure has remained in positive territory for two weeks in a row, after briefly dipping to -1 during the week of Oct. 9-15.
In general, Americans have been more positive about the economy in 2017 compared with any other year since Gallup began tracking economic confidence in 2008. Between 2008 and November 2016, the index’s weekly averages were routinely negative. Only after the 2016 presidential election did the measure swing to the other side of the ledger, where it has remained for most of 2017 so far.
Good to hear and hopefully it will mean more people have the confidence to buy a home! If only there was another indicator of consumer confidence to consider…
Consumer Confidence Increased to Highest Level in Almost 17 Years
From The Conference Board:
The Conference Board Consumer Confidence Index®, which had improved marginally in September (an upward revision), increased again in October. The Index now stands at 125.9 (1985=100), up from 120.6 in September. The Present Situation Index increased from 146.9 to 151.1, while the Expectations Index rose from 103.0 last month to 109.1.
Lynn Franco, Director of Economic Indicators at The Conference Board said:
Consumer confidence increased to its highest level in almost 17 years in October after remaining relatively flat in September. Consumers’ assessment of current conditions improved, boosted by the job market which had not received such favorable ratings since the summer of 2001.
Consumers were also considerably more upbeat about the short-term outlook, with the prospect of improving business conditions as the primary driver. Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.
Wages Rose For Bottom 90% in 2016 But Top 1% Wages Fell
Newly available wage data show that the annual wages of those in the bottom 90 percent grew 0.5 percent from 2015 to 2016, and did so because wage growth disproportionately favored the vast majority of wage earners. At the same time, the highest earners, those in the top 0.1 percent, saw a 6.3 percent drop in their annual wages. How is that for a change! Annual wages averaged over all workers remained basically unchanged in 2016, but the share of all wages earned by the bottom 90 percent increased in 2016, resulting in improved wages for that group. Who says reducing inequality does not matter!
This is a step in the right direction as far as income inequality is concerned. But you always need to be saving for a rainy day and not spending frivolously…
Study Finds Home Buyers Heading South
A LendingTree study looked at where residents in each state are looking to move and discovered a southern tilt in preferences of out-of-state home buyers. LendingTree reviewed purchase mortgage loan requests for primary residents in all 50 states in the last year – from October 2016 to October 2017 – to find the percentage of all requests from residents looking to move outside of their current state. The results reveal the most popular new destination for each state along with the percentage of out-of-state requests for that location.
Florida was the number one destination BUT South Carolina leads out-of-state mover popularity. LendingTree created a Moving Popularity Score Index to analyze destination states adjusted by population. South Carolina scored highest, as mortgage loan requests from out-of-state movers were 56% greater than suggested by its share of the national population.
I strongly suggest anyone thinking about moving South to consider Anderson County SC…
Well that is it for today! I ran out of time before I ran out of things to discuss so be sure to check back tomorrow for more Ugly But Honest Real Estate News!