Discussing mortgage delinquencies and foreclosures, trends that are changing the housing market, statistics on first time home buyers plus much more!
A rainy Sunday and I was planning on getting the lawn mower ready for another action packed fun filled season of riding around in circles. Maybe tomorrow but it just seems wrong that my grass needs cutting and it is still February…
Well, crying never fixed anything so lets jup into the latest news!
The Conference Board Leading Economic Index for the U.S. Increased
From The Conference Board:
The Conference Board Leading Economic Index® (LEI) for the U.S. Increased in January. Economic growth to continue through first half of 2018. The Conference Board Leading Economic Index® (LEI) for the U.S. increased 1.0 percent in January, following a 0.6 percent increase in December, and a 0.4 percent increase in November.
Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board, said:
The U.S. LEI accelerated further in January and continues to point to robust economic growth in the first half of 2018. While the recent stock market volatility will not be reflected in the U.S. LEI until next month, consumers’ and business’ outlook on the economy had been improving for several months and should not be greatly impacted. The leading indicators reflect an economy with widespread strengths coming from financial conditions, manufacturing, residential construction, and labor markets.
Excellent news but as Ozyildirim points out, this is from BEFORE the recent freakouts in the stock market. We never know what tomorrow holds but things do look pretty good in many areas of the economy.
Why 3.5 Million Americans In Their Prime Years Aren’t Working
The sizzling U.S. labor market has knocked the unemployment rate down to a 17-year low, but millions of Americans in their prime who would have been working back then do not have jobs now.
How come? China, robots, disability benefits, minimum wages and jail-time are the biggest culprits, according to a pair of researchers at the University of Maryland.
The percentage of the U.S. population with jobs sank from a record 64.7% in 2000 to a 28-year low of 58.2% by 2011 before beginning a gradual recovery. The brunt of the decline occurred during the 2007-2009 recession, but the problem had been long in the making.
The popular reasons that usually get mentioned are not why this shift has occurred according to their research. A very interesting article and it makes me wonder what the future holds for America.
It seems like every time I watch the news I wonder what the heck is wrong with America.
Or with people.
Mortgage Delinquencies Decline Sharply in January
From Black Knight:
Calendar-driven effects and fewer hurricane-related delinquencies resulted in a 210,000-loan decline in the number of past-due mortgages. Despite an 8.6 percent monthly decline, delinquencies remain 1.3 percent above last year’s levels.
Active foreclosures predating the hurricanes, but put on hold after the storms, have begun to revert back to that status as post-hurricane foreclosure moratoria become set to expire. As a result, foreclosure starts rose sharply in January, hitting a 12-month high at 62,300 for the month.
Check out the charts:
The recent uptick is mainly due to the hurricanes but we need to keep an eye on these numbers. Still, things are so much better than they were after the economy and housing market crashed.
As with many of the reports I share, Black Knight is talking about the entire US. As always, you need to be more concerned about local market conditions than national reports.
Housing Trends That Are Changing The Market Today
Interesting stuff from House Canary:
Is 2018 a good time to buy a home, sell a home, move up, or invest in real estate — or will you be better off parking your money elsewhere, whether that means buying a house in a different location or an investment in an entirely different industry? While no one knows exactly what will happen with home prices this year, if you have the right sources and know where to look, there is enough evidence to make a sound educated guess.
Very true but what do they say are the trends that are changing the housing market?
They point out how lots of people want to buy homes but can’t afford to do so in their current geographic area. This is a serious and complicated issue and part of why I often talk about the need for better incomes for ALL Americans.
Low Number of Homes Sold
While the number of home sales is much better now than after the housing market crash, things still are not where they should be. Housing Canary say that home sales are low compared to household growth.
I agree. I say this is due to weak income growth and the limited number of affordable homes for sale.
Mortgage Rates Rising
Rates have been super low for so long that people are freaking out that rates seem poised to take off in 2018. But really, as Housing Canary points out, rates have no place to go but up.
The recent tax changes are big and I am going to strongly suggest that you contact your financial advisor and tax person to see how the changes affect you. Especially before you buy or sell any real estate!
With that warning out of the way, the 2 main issues are the changes to the mortgage interest deduction and the deductions for state or local taxes. These changes do not change the reasons that people buy a home or the way that owning a home builds wealth.
They point how many people are in a “wait and see” mode about making major purchases. But they wisely point out that no matter what, you need a place to live.
So if buying a home makes sense for you financially and where you in your life, then it is something you need to strongly consider.
Looking at First Time Home Buyer Statistics
Highlights from Genworth’s First Time Home Buyer Market Report:
- The first-time home buyer market is no longer depressed
- First-time home buyers will continue to maintain a large role in the housing market
- Low down payment mortgages will continue to be an important part of the mortgage market
- The percentage of government backed mortgages will decrease
- The repeat home buyer market has not seen any growth since 2013
- The supply of affordable homes is NOT growing
- Disposable income will increase but increasing mortgage rates will offset this
Some good and some bad. I am concerned about the repeat home buyer market remaining depressed. This is a big part of the reason why inventory is limited.
Deja Moo All Over Again With Mortgages?
The last financial crisis occurred in part because unregulated lending in the mortgage market got out of hand. Believe it or not, it’s starting to happen again, and could ultimately precipitate another disaster unless regulators get their act together.
Make no mistake, regulators have done plenty to rein in the mortgage business since the 2000s. New rules require that lenders carefully assess borrowers’ ability to pay, and that mortgage servicers — which process payments and manage other relations with borrowers — give troubled customers plenty of opportunity to renegotiate their debts before resorting to foreclosure. The Federal Reserve performs regular stress tests to ensure that banks have enough capital to weather defaults.
Problem is, the requirements have weighed most heavily on traditional, deposit-taking banks. The added hand-holding required in mortgage servicing, for example, has roughly quadrupled the cost of handling delinquent loans, turning them into major loss-makers. Together with stringent capital requirements, this has all but guaranteed that banks will lend only to people with the most pristine credit.
Regulators should pay closer attention to the boom in non-bank lending.
The non-banks’ growth has been breathtaking. At the end of 2016, such unaffiliated mortgage companies accounted for more than 40 percent of new conventional mortgages (those eligible for sale to government-controlled guarantors Fannie Mae and Freddie Mac), twice the share they accounted for just eight years earlier. They’re also responsible for a decline in credit standards.
Here is the thing to keep in the back of your mind: If GSE reform happens now, it is a strong possibility that any changes will benefit the Wall Street risk takers and not the average American needing to buy or sell a home.
GSE reform could mean we see even more non-banks making mortgages. And possibly putting the economy and housing market at risk again.
Don’t Let Debt Destroy You
From Gold Telegraph:
Economists report the household debt to be at its highest in decades. Yet, at the same time, we are being told that the economy is doing great. Does anyone see a serious contradiction?
In fact, the current economy only favors the wealthy owing to their flourishing financial assets such as stocks and bonds. Owing to the lack of real assets such as property and commodities, the middle and lower classes are becoming overwhelmed due to the serious consequences of the spending/debt cycle.
Using debt to maintain a standard of living is not sustainable! Before you go any further into debt, remember that the most important things in life are not things!
If you are going to buy a home, do not let your ego overrun common sense and your financial capability. It is better to buy a home that is easily affordable than to worry if you will be able to make the mortgage payment every month.
Well that is it for today! Please remember to hit the share button if you enjoyed this post!