Discussing foreclosure activity decreasing, unemployment claims, mortgage rates and home home prices, UofM Consumer Survey and more…
ATTOM Data Solutions (you know them as RealtyTrac) just released their Q1 and March 2017 U.S. Foreclosure Market Report:
- Q1 2017 foreclosure activity was below pre-recession levels nationwide and in 102 out of 216 metropolitan statistical areas (47%) analyzed in the report
- U.S. foreclosure filings were down 11% from the previous quarter and down 19% from a year ago to the lowest level since Q3 2006
- The first-quarter foreclosure activity total was 16% below the pre-recession average of properties with foreclosure filings
- The number of U.S. properties with foreclosure filings in March 2017 was up 1% from the previous month but down 24% from a year ago
- This is the 18th consecutive month with a year-over-year decrease in overall U.S. foreclosure activity
- The number of U.S. properties that started the foreclosure process in March was up 6% from the previous month but also down 24% from a year ago
- Foreclosure starts were down on a year-over-year basis for the 21st consecutive month in March
Daren Blomquist, senior vice president with ATTOM Data Solutions:
U.S. foreclosure activity on a quarterly basis first dipped below pre-recession averages in the fourth quarter of last year, and this report shows that trend continuing for the second consecutive quarter. The number of local markets dropping below pre-recession levels continues to grow, up from 78 a year ago to 102 in this report.
Lots of good news in this report. I shared mainly the statistics for the U.S. but can assure you that the number of foreclosures in the Anderson SC area is much lower than it was just a few years ago.
In the week ending April 8, the advance figure for seasonally adjusted initial claims was 234,000, a decrease of 1,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 247,250, a decrease of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 250 from 250,000 to 250,250.
This is below economists forecasts but I sometimes think my dog could forecast better than some of the experts…
This is also the 110th straight week that claims have been under 300,000. This could encourage the Fed to raise interest rates again but they are also going to look at the most recent jobs report. Which was extremely weak…
Doug Duncan, chief economist for Fannie Mae, in a recent article said:
The disappointing figures for March probably will not be enough to shake up the Fed with regard to its decision on whether to raise rates. However, should the next report show that the economy again only added about 80,000 jobs, or less, then I think that might delay the Fed [in making its decision].
And we have to be concerned with N. Korea, Syria and some other yet to be discovered madness that could cause the Fed to NOT raise rates. Which means, home buyers still have a great opportunity with super low mortgage rates.
Speaking of super low mortgage rates, Freddie Mac just reported that the 30-year mortgage rate dropped for the 4th consecutive week and hit a new low for 2017!
- 30-year fixed-rate mortgages averaged 4.08% with an average 0.5 point
- This is down from last week when it averaged 4.10%
- A year ago at this time, 30-year fixed-rate mortgages averaged 3.58%
- 15-year fixed-rate mortgages averaged 3.34% with an average 0.5 point
- This is down from last week when it averaged 3.36%
- Last year at this time, 15-year fixed-rate mortgages averaged 2.86%
Sean Becketti, chief economist, Freddie Mac:
Following a weak March jobs report, the 10-year Treasury yield dropped about 5 basis points. The 30-year mortgage rate fell 2 basis points to 4.08%. Not only did the average 30-year fixed-rate mortgage decline for the fourth consecutive week in our survey, it also fell to a new 2017 low.
You may have missed yesterday’s article where I talked about the MBA reporting that rates decreased and Treasury yields.
More importantly, I talked about how some buyers are not taking advantage of today’s low rates because they think they need more down payment money or their credit score is too low. Which isn’t always true…
But what IF the Fed or something else causes mortgage rates to rise? What effect would higher mortgage rates have on home prices?
What Would Happen to Home Prices If Mortgage Rates Increase?
There is no doubt that the super low mortgage rates have helped the housing market recover faster. But, I am sure you have heard or read many experts predicting that mortgage rates are going to increase.
The MBA, Fannie, Freddie, and the NAR have all said that interest rates will increase this year. Increasing mortgage rates will affect home buyers and could hurt demand.
56% of economists in a recent Pulsenomics survey said that “rising mortgage interest rates, and their impact on mortgage affordability” will impact housing the most in 2017. If mortgage rates do increase, this should decrease the number of home buyers. And this should negatively affect house prices.
This is just simple supply and demand…
They also asked the question “In your opinion, at what level will the 30-year fixed rate mortgage rate significantly slow home value appreciation?”
Check out the results:
As you can see, most of the experts think that mortgage rates would have to hit 5% to affect house prices. How much home prices would decrease is hard to say. Also, increasing mortgage rates could translate into monthly payments that are even higher despite the slightly lower home prices.
From the UofM Survey of Consumers:
Consumer sentiment inched upward in early April mainly due to more favorable views of current economic conditions. The Current Economic Conditions Index rose to its highest level since 2000 and nearly reached its all-time peak of 121.1 set in 1999. The Expectations Index improved only slightly, remaining largely unchanged at favorable levels for the past three months.
While partisanship had no impact on the Current Conditions Index (Democrats and Republicans differed by just 0.4 points), the data suggest the beginning of a convergence on the Expectations Index, with the figure for Democrats rising 7% and falling for Republicans by 7%, although the gap still remained an astonishing 50.5 Index points. Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality.
Nice to see the improvement but again we see which flavor of Kool-Aid people prefer affects how they perceive things. It disturbs me how divided America has become.
United we stand, divided we fall…
Consumer confidence climbed for the sixth time in the last seven weeks as Americans became more upbeat about the U.S. economy than at any time since 2001, Bloomberg Consumer Comfort Index figures showed Thursday.
The lowest jobless rate since May 2007 and steady hiring help explain why Americans’ optimism about the national economy is the highest in more than 15 years. While the figures show the gains in sentiment since the presidential election are being sustained, the optimism has yet to translate into a pickup in spending that’s needed to drive economic growth.
Nice but as they point out, this has not turned into spending. And a big part of our economy is driven by people buying useless crap they don’t need to impress people they don’t care about…
When we reported Wells Fargo’s Q4 earnings back in January, we drew readers’ attention to one specific line of business, the one we dubbed the bank’s “bread and butter”, namely mortgage lending, and which as we then reported was “the biggest alarm” because “as a result of rising rates, Wells’ residential mortgage applications and pipelines both tumbled, specifically in Q4 Wells’ mortgage applications plunged by $25bn from the prior quarter to $75bn, while the mortgage origination pipeline plunged by nearly half to just $30 billion, and just shy of all time lows recorded in late 2013 and 2014.”
Fast forward one quarter when what was already a troubling situation, just got as bad as it has been since the financial crisis for America’s largest mortgage lender, because buried deep in its presentation accompanying otherwise unremarkable Q1 results (EPS small beat, revenue small miss), Wells just reported that its ‘bread and butter’ is virtually gone, and in Q1 the amount of all-important Mortgage Applications has tumbled by a whopping 23% to just $59 billion, below the lows hit in early 2014, and at fresh lows since the financial crisis.
How much of this decline is due to the recent scandals that Wells Fargo has been involved in?
HomeAdvisor just launched a new quarterly index of sentiment among home improvement contractors. In collaboration with The Farnsworth Group, they surveyed 1,744 companies, asking their leadership about their current and expected future business prospects.
Some of the key findings:
- The owners and managers of home improvement companies are feeling extremely confident about their business prospects
- Revenue growth in the industry is robust, and is expected to remain extremely strong
- Most respondents said that they are having trouble hiring enough skilled laborers
Interesting stuff. It is a good sign that the economy is doing better when people start making home improvements.
Mortgage Lenders Maintain Positive Sentiment for 2017
The Lenders One® Cooperative, a national alliance of independent mortgage bankers, correspondent lenders and suppliers of mortgage products, has issued the results of the second annual Lenders One Mortgage Barometer, a survey of 200 mortgage lending professionals. According to the 2017 Lenders One Mortgage Barometer, a large majority of lenders (94 percent, up from 62 percent last year) expect an increase in mortgage purchase production.
Continued economic improvement should give first-time home buyers the boost they need to enter the market. In fact, about three in five lenders (59 percent) say it is very likely that there will be an increase in first-time home buyers in 2017. The optimism around first-time home buyers aligns with the recent report from the National Association of Realtors® that showed the share of sales to first-time home buyers grew from 2015 to 2016 and was the highest it’s been since 2013. However, many lenders are predicting some challenges to mortgage industry growth with respondents seeing consumer debt as the highest risk factor this year (41 percent).
That is a serious increase in the number of lenders that expect an increase in purchases. I hope they are correct, don’t you?
Housing and Urban Development Secretary Ben Carson’s two-day visit to Miami — his third stop on a national listening tour — started with a big glitch.
Carson, Miami-Dade County Public Housing Director Michael Liu and five other people got stuck inside an elevator Wednesday on the way down from a visit to the rooftop of the Courtside Family Apartments in Overtown.
I could not help but laugh at the irony of this situation. I am sure some of you have read some of the reports about Carson “finding $500M missing” at HUD. I suggest you do some research as this appears to be an exaggeration.
I am not saying that government agencies, including HUD, don’t make mistakes or waste taxpayer money. And there is no doubt that Obama shoveled a bunch of money via HUD when he came into office.
Maybe he was trying to boost the economy or maybe he was returning favors for being elected. I will let you draw your own conclusions…
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