Real estate, housing and economic news for 3-11-2016…
National Foreclosure Inventory Falls
Good news from CoreLogic:
- The national foreclosure inventory (the number of loans in the foreclosure process) fell 21.7% year over year in January 2016
- The foreclosure inventory has fallen on a year-over-year basis every month since November 2011
- The national foreclosure inventory is 70.8% below the January 2011 peak
- The foreclosure rate (share of all loans in the foreclosure process) fell to 1.2% in January 2016
- This is down from 1.5% in January 2015
- The foreclosure rate still above the pre-housing-crisis average of 0.6% between 2000 and 2006
- The seriously delinquent inventory fell almost 23% year over year in January 2016
I must remind you this is talking about the entire US. However, the Anderson area real estate market is much better than just a few years ago.
Do Something About It!
- Only 13% approve of the job Congress is doing
- In presidential election years, Congress typically does not undertake much substantive action
- With Congress unlikely to pass major legislation this year, the chances of its approval rating improving are slim
I would say that the only substantive action Congress ever takes winds up hurting the average American. The rise of Sanders and Trump (whether you like them or not) shows that many Americans are ready for a change from the typical candidates.
Whether or not this turns out to be a good thing remains to be seen.
Credit Card Market Expands
The credit card market continued to expand in last year’s third quarter according to the American Bankers Association’s latest Credit Card Market Monitor report.
On a year-over-year basis, purchase volumes rose 6.1% for subprime accounts, 4.2% for prime accounts and 3.5% for super-prime accounts
The number of new credit card accounts increased 16.5% from a year earlier
I must point out that using your credit correctly is a must if you want to buy a home. Ensuring your credit is in tip top shape means you can get a better rate on your mortgage!
Debt Climbs for First Mortgages But Declines in Home Equity Lending
Since I mentioned credit card debt, there is some news from Equifax regarding mortgage debt:
- The total balance of outstanding first mortgages in January increased 2.1% compared to the same time last year
- During that same period, the total outstanding balance for home equity loans has steadily declined
- The total number of existing first mortgages increased of 0.4%
- The total number of HELOCs decreased 3.2%
- The total number of home equity installment loans decreased 2.5%
Amy Crews Cutts, Chief Economist at Equifax said:
Home purchase activity accelerated in 2016 as economic conditions boosted consumer confidence. When first-time homebuyers move into homeownership or existing homeowners upgrade to a larger, more expensive home, new debt is created. This trend is finally dominating the accelerated amortization from borrowers paying a little extra each month or paying their mortgages in full, and foreclosure activity is also greatly diminished.
With many home equity lines of credit (HELOCs) hitting their recast into amortization we are seeing increased payoffs, reducing the debt and numbers of HELOCs outstanding. About 20 to 25 percent of HELOCs active a year prior to their recast anniversary will payoff and close within the year after date. Originations of new loans are not keeping pace with the payoffs.
It is good that the number of people using the equity in their homes as an ATM has decreased. I am surprised that the number of first mortgages has not increased more.
I know there are lots of cash buyers but this does not make sense considering the improving housing market…
Initial Jobless Claims Drop More Than Expected
We got an unexpected surprise as Initial jobless claims fell more than expected last week.
Not only did they fall, they fell to a 5 month low!
Claims have been under 300,000 for a full year.
The 4 week moving average (which accounts for volatility) declined for the 4th straight week.
Check out the chart for the 4 week average:
From the WSJ:
Pay for workers in more than one in eight large U.S. counties rose faster than 4% in the third quarter of 2015 from a year earlier
We MUST see increases in the incomes for ALL Americans if we are going to see a robust and healthy housing market.
Growth in Residential Building
With the problems with limited inventory in many areas/price ranges, any increase in the number of homes being built is a welcome sight. Plus it helps the economy so much!
So some good news came from NAHB that the volume of residential construction loans expanded 4.5% during the final quarter of 2015. The NAHB said this is the 11th consecutive quarter of growth. On a year-over-year basis, the number of residential construction loans is up 18.9%.
How Long to Close on a Home Increased
According to a recent NAR survey, the median days to close a contract was 42 days in January 2016. The average number of days to close a contract was 46 days. Both the average and median time to close has been slowly increasing recently.
Delays due to financing were the biggest cause of delayed closings. Remember these are the average or median time to close.
It takes teamwork with all the agents, the lender, the buyer and the seller working to get a closing to happen on time.
Do You Tweet?
Named to yet another list of real estate peeps to follow on Twitter. Check it out at Great #RealEstate People To Follow On Twitter In 2016!
Surprise! Mortgage Settlement Did NOT Help the Right People
The Wall Street Journal did write an article recently about how wronged borrowers did NOT get their fair share of the mortgage settlement.
BUT for the real story you need to read Naked Capitalism’s take on the WSJ’s woefully inadequate article.
Is it any surprise that the WSJ would write something that does not shed light on how bad the banks or financial institutions TRULY are?
No Capital for Fannie & Freddie Scares Me
As part of its bid to stem the red-hot mortgage market, the United States government has decreed that Fannie Mae and Freddie Mac will no longer have capital by December 31, 2017, in what is shaping up to be a controversial issue for the coming elections.
The Treasury Department has been appropriating the two companies’ quarterly earnings, effectively stripping them of common equity and rendering them insolvent.
I guess this is one way to deal with Fannie and Freddie. Slowly drain them until they die…
But is no more Fanie and Freddie a good thing?
Director of CFPB and Captain Obvious Says Credit Too Tight
CFPB Director Richard Cordray at the Consumer Bankers Association said:
Credit is still too tight, at least in my view, but we can now look in the rear-view mirror and see that some of the undue fears people had about legal liability under the QM rule, or market paralysis due to streamlining the mortgage disclosure forms, can be put in healthier perspective.
I think we can all agree that mortgage lending is too tight. But is the government really helping?
Or should the government help at all with mortgages?
And since it was Cordray that said it, is the CFPB doing anything to ensure that ALL credit worthy Americans can get a mortgage?
The Association of American Railroads reported US rail traffic for last week:
- Total U.S. weekly rail traffic was down 1.9% compared with the same week last year
- Total carloads was down 8% compared with the same week in 2015
- US weekly intermodal volume was up 4.5% compared to 2015
CASS Freight Index
The number of North American freight shipments in February shot up 8.3 percent from January, erasing January’s decline, while expenditures for freight shipments gained 6.3 percent (not quite overcoming January’s drop). The strong growth in freight in February is the expected trend, but the recent four-month slide in freight traffic put the starting point for 2016 significantly lower than in the last several years.
Economic growth slowed more than expected in the fourth quarter of 2015 and continued into January. The robust turnaround this month signals improvement, but current economic conditions do not support a robust rebound.
Glad to hear it improved and they are honest about current conditions.
Bloomberg Consumer Comfort Index Stalled
The Bloomberg CCI is based on Americans’ ratings of the national economy, their personal finances and the buying climate. And it has been stalled for 11 weeks due to conflicting economic signals.
All I am going to say is stalled is better than declining. And you can see the upward trend…