Discussing if it is a good time to rent, mortgage delinquencies and foreclosures, existing home sales and prices and much more…
From ATTOM Data Solutions’ Q1 2017 U.S. Residential Property Loan Origination Report:
More than 1.4 million loans were originated on U.S. residential properties (1 to 4 units) in the first quarter of 2017, down 30% from the previous quarter and down 21% from a year ago.
The total dollar volume of loan originations in the first quarter was also down 21% from a year ago to the lowest level since Q1 2014. Also, refinance originations are at more than a 10-Year low.
No way to sugar coat it but this is not good at all! Maybe this is a blip and hopefully will not become a trend. I am thinking this is a blip since more decided to buy rather than rent in the first quarter of 2017.
Based on the most recent analysis from the US Census Bureau, more people decided buying a house was better than renting in Q1 2017. This is the 1st time since 2006 that the number of new homeowner households was larger than the number of new renter households.
Of the 1.22 million new households that were created in Q1 2017, 854,000 were new-owner households. This means the home ownership rate for new households was 70%!
The home ownership rate has only come close to this when the home ownership rate was 69.2% way back in Q2 2004. It is great to hear since the US home ownership rate is currently 63.6%.
A recent Wall Street Journal article discussed the increase in first-time home buyers:
The return of first-time buyers is accelerating. In all they have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae, which defines first-time buyers as anyone who hasn’t owned a home in the past three years.
Ralph McLaughlin, Trulia’s Chief Economist, explained what an increase in new home owner households could indicate:
Strong renter household formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis, so any sign this trend is reversing is something to take note of. We look forward to future releases of these data to determine whether this is a statistical blip or a trend.
As more people buy a home, the home ownership rate and the economy will improve.
But is it a good time to rent?
I get asked if it is a good time to buy all the time. But I cannot recall every being asked if it is a good time to rent! I want to make sure you know why it is NOT a good time to rent.
Let’s look at some more data from the Census Bureau. Here is a chart showing how rent has increased since 1988:
Can you say up? Rents have continuously increased for almost 30 years. And it doesn’t look like rents will stop increasing any time soon!
Someone that bought a home 30 years ago with a fixed rate mortgage has been making the SAME mortgage payment all these years…
And after 30 years, they are close to paying off the mortgage! Having a car that is paid off is very nice but it is even better when it is your home!
- First-lien mortgage delinquencies rose by 13 percent, the largest monthly increase since November 2008
- However, total U.S. loan delinquency rate fell 3.58% YoY
- The inventory of loans in active foreclosure continues to decline, hitting a 10-year low
- Total U.S. foreclosure starts fell 12.44% from the previous month and 10.05% YoY
- At just 52,800, April saw the fewest monthly foreclosure starts since January 2005!
The rise in delinquencies sounds really bad but Black Knight said that the delinquency rate increase was primarily calendar-driven. This is because the month ended on a Sunday and March is typically the calendar-year low.
While the headline sounds scary, overall this report is very good.
After beginning the year with a marginal decline, the Architecture Billings Index has posted three consecutive months of growth in design revenue at architecture firms. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending.
AIA Chief Economist, Kermit Baker, Hon. AIA, PhD said:
Probably even better news for the construction outlook is that new project work coming into architecture firms has seen exceptionally strong growth so far this year. In fact, new project activity has pushed up project backlogs at architecture firm to their highest level since the design market began its recovery earlier this decade.
This is seriously awesome news! With 3 consecutive months of growth, we are almost to the point that I would call it a trend. Let’s keep our fingers crossed that the growth continues.
Mortgage applications increased 4.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 19, 2017. The refinance share of mortgage activity increased to 43.9 percent of total applications from 41.1 percent the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to its lowest level since November 2016, 4.17 percent, from 4.23 percent, with points increasing to 0.39 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) decreased to its lowest level since November 2016, 4.11 percent, from 4.23 percent, with points increasing to 0.31 from 0.30 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to its lowest level since November 2016, 3.45 percent, from 3.51 percent, with points increasing to 0.38 from 0.33 (including the origination fee) for 80 percent LTV loans.
Remember these are the average rates. Serious buyers need to sit down with a mortgage lender to discuss their options, budget and get Pre-Approved.
That being said, these are some tasty mortgage rates!
Stubbornly low supply levels held down existing-home sales in April and also pushed the median number of days a home was on the market to a new low of 29 days.
Total existing-home sales in April 2017 decreased 2.3% from the level in March. However, home sales were 1.6% above the April 2016 level.
The median existing-home price was up 6.0% from April 2016. April’s price increase marks the 62nd straight month of year-over-year gains.
Properties typically stayed on the market for 29 days in April, which is down from 34 days in March and 39 days a year ago, and surpasses last May (32 days) as the shortest timeframe since NAR began tracking in May 2011. 52% of homes sold in April were on the market for less than a month (a new high).
Remember this is talking about the entire US and will not tell you what is possible or realistic for every home. For more information about the real estate market in the Anderson SC area, you can read the Weekly Market Reports!