Discussing some great news about mortgage delinquencies, the average down payments increased, home owner equity increases, home prices and much more!
Good News About Mortgage Delinquencies
In September 2017, 5 percent of home mortgages were in some stage of delinquency, down from 5.2 percent a year earlier and the lowest for any September since 2006, when it was 4.6 percent
The foreclosure inventory rate, meaning the share of mortgages in some stage of the foreclosure process, was 0.6 percent, down from 0.8 percent a year earlier. The foreclosure rate is now back to the pre-crisis level of 0.6 percent.
They also said the “early stage” delinquencies were up compared to the same time last year but this is mainly due to the hurricanes.
Frank Martell, president and CEO of CoreLogic, said:
While natural hazard risk was elevated in 2017, the economic fundamentals that drive mortgage credit performance are the best in two decades. The combination of strong job growth, low unemployment rates, steady economic performance and prudent underwriting has led to continued improvement in mortgage performance heading into next year.
This is really fantastic news and it has been a long hard road to recovery. We must never forget the painful lessons of the past.
If you are buying a home, please make sure you ready for the financial obligation. Pick a home that is VERY affordable in case you have something bad happen. Or the economy hits the skids…
Consumer Credit Market Expected to Remain Strong in 2018
A perfect follow up to the news from CoreLogic is TransUnion’s Consumer Credit Forecast for 2018. They are predicting that the U.S. consumer credit market will perform well in 2018.
They are saying that the mortgage loan delinquency rate will hit the lowest level since 2005!
Matt Komos, vice president of research and consulting for TransUnion said:
From a credit performance standpoint, mortgage loan delinquencies are the biggest story. Serious mortgage delinquency rates are expected to decline materially next year, reaching levels not seen since 2005 when TransUnion began tracking these metrics. This will be driven primarily by strong employment and rising home prices.
Despite expected interest rate rises, the prime rate remains well below historic norms and we believe it will remain at levels that can still be well managed by most consumers. Expected balance growth across all products is a reflection of strong consumer sentiment rather than an indicator of consumers struggling to keep up with their obligations. Coupled with expectations of a strong economy, the consumer credit market is projected to remain on a healthy trajectory.
Very good news and hopefully we will see mortgage delinquency rates continue to decrease.
Is Buying a Home a Full Contact Sport?
Interesting quote from Daren Blomquist, senior vice president with ATTOM Data Solutions:
Buying a home has become a full-contact sport in many markets across the country, and buyers with the beefiest down payments — not to mention all-cash buyers — are often able to muscle out those with scrawnier savings. Despite the increasingly competitive nature of homebuying, the number of residential property purchase loans nationwide increased to a 10-year high in the third quarter.
The median down payment for home bought with a mortgage in Q3 2017 increased to the highest point since 2000 according to their research. Attom said buyers used an average down payment of $20,000 in Q3 2017.
Do not let this discourage you since you can probably buy a home with a smaller down payment!
You can find out exactly how much money you need by discussing your mortgage choices with the lender of your choice.
Homeowners’ Equity Improves
From Eye On Housing (emphasis is mine):
The Financial Accounts of the United States for the third quarter of 2017 were published by the Board of Governors of the Federal Reserve System recently. On a nominal and not seasonally adjusted basis, the aggregate market value of households’ real estate continues to improve.
In nominal terms, households’ owner-occupied real estate increased to $24.2 trillion in the third quarter of 2017, $1,572 billion more than the third quarter of 2016. Total home mortgage debt outstanding was $10.0 trillion on a not seasonally adjusted basis, $279 billion more than the same period of 2016. The market value of households’ real estate grew faster than underlying home mortgage debt. As a result, the value of owners’ equity in real estate, the difference between the value of owner-occupied real estate and home mortgage debt, rose $1.3 trillion in the past four quarters and reached $14.1 trillion over the third quarter of 2017.
They point out that much of the increase in home owner equity is due to rising home prices. This increase in home prices is a good thing unless you are a buyer facing limited inventory and rising home prices.
Something buyers need to remember is that mortgage rates are STILL at historically low levels!
Outlook for Real Estate Increases Despite Inventory Issues
First American just released their Q4 2017 Real Estate Sentiment Index.It is a quarterly survey of title agents and other real estate professionals.
Optimism among title agents and real estate professionals increased this quarter
Overall, confidence for transaction volume growth over the next 12 months increased 0.5 percent from Q3 2017 and increased 5.3 percent compared with a year ago
Confidence for growth in purchase transaction volume over the next 12 months decreased 2.7 percent from last quarter, but was up 7.6 percent compared with a year ago
Prices across all property types are expected to fall by 0.5 percentage points over the next 12 months as compared to last quarter
Interesting that they are predicting a very small decrease in prices…
US Home Values Up 4.24% YoY in November
From Quicken Loans:
Homeowners, on average, have a higher opinion of their home values than appraisers do. However, the gap between the average owners’ estimates and the average appraised values has reached its narrowest margin in 2017. In November, home appraisals were an average of 0.67 percent lower than what owners expected, according to Quicken Loans’ National Home Price Perception Index (HPPI).
Though owner expectations have lagged appraiser opinions, home values continue to climb across the country. In fact, home values have risen 4.24 percent year-over-year – despite a slight 0.09 percent dip from October to November.
It is almost normal for home owners to have a higher opinion of their home’s value than the appraisers.
Bill Banfield, Quicken Loans Executive Vice President of Capital Markets, said:
Appraisals are one of the most important data points when applying for a mortgage. If an appraisal is lower than expected when refinancing, the homeowner will need to bring more funds to closing, or might even need the mortgage to be restructured. The more homeowners and appraisers agree, the smoother the process is.
If the appraisal is lower than the contract price when someone is buying a home, it can cause the deal to fall apart. I suggest you check out my recent article Home Selling and Selecting the Correct Price
Too Many Affordable Homes Becoming Rentals
Hundreds of thousands of homes that may have otherwise sold in a typical year over the past decade – particularly more-affordable homes – have instead been taken off the market and converted to rentals, a trend that exploded in popularity in recent years and is only now beginning to level off.
The share of single-family homes that are rented fell in early 2017, the first decline in a decade, according to the U.S. Census Bureau. After increasing steadily from 13.4 percent in 2007 to 19.2 percent in 2016, the share edged down to 18.9 percent in early 2017 but remains near its highest levels since the data begin in 1979.
Over the past decade, rental activity in the bottom-third of the market has increased. Comparing single-family rentals by when they were last sold, 39 percent of SFR rentals purchased by their owner since 2012 are in the bottom third of the market, compared to 33.5 percent of single-family rentals last sold prior to 2006.
Pressure from investors buying homes has made the limited inventory of affordable or starter homes worse. This can be overcome by buyers that are properly prepared and represented by a Realtor.
I am not saying it will be easy but nothing good ever comes without some work…
New Home Mortgage Applications Increase 12.2% YoY
The Mortgage Bankers Association just said that mortgage applications for new home purchases for November 2017 increased 12.2% compared to November 2016. However, applications did decrease 6% from the previous month.
Lynn Fisher, MBA Vice President of Research and Economics said:
New homes sales continued to recover in November from the impact of hurricanes, up just a bit on a seasonally adjusted basis over the month, and nearly 13 percent higher than a year ago, according to our projections from monthly application activity. Looking ahead to 2018, filling open construction jobs will remain a main challenge for the homebuilding industry.
Great news for both the economy and the housing market. If we had more skilled people to build homes, the new home market could be really kicking butt!
The internet as we know it may be coming to an end! Consider this from Motherboard:
The FCC is blocking a law enforcement investigation into fraudulent comments designed to provide bogus support for the agency’s looming net neutrality repeal. New York Attorney General Eric Schneiderman recently announced his office has been conducting an investigation into who submitted millions of fraudulent comments (some using the identities of dead people) during the public comment period.
The FCC is already facing a lawsuit alleging the agency ignored FOIA requests pertaining to these fake comments. The agency similarly told me there was nothing it could do after someone hijacked my identity to claim I falsely supported killing net neutrality protections.
Detailed analysis of the record 22 million comments filed with the agency indicate the majority of the public overwhelmingly supports keeping the rules intact. But several analysts also found that some group or individual tried to counter this genuine opposition with fake support for the plan. Schneiderman’s office believes these comments were filed by a bot that pulled identities from a compromised database of some kind.
The FCC is “voting” on this today but check out this video of FCC head PAI joking in a private event that is supposed to have a strict no camera policy:
You can see why they do not want any cameras at this event. Obviously, the fix is in…
That is all I have time for today! Be sure to check back as I need to cover this week’s reports on mortgage rates and the Fed increasing their benchmark rate. Plus much much more!
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