Discussing the big Case-Shiller report on home prices, FHFA stopping their rental pilot program, a shifting housing market, how GSE reform could be costly for consumers and remodeling to remain strong
US Home Prices Increase 6.2%
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 6.2% annual gain in June, down from 6.4% in the previous month. The 10-City Composite annual increase came in at 6.0%, down from 6.2% in the previous month. The 20-City Composite posted a 6.3% year-over-year gain, down from 6.5% in the previous month.
Another report of slowing US home price growth…
David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
Home prices continue to rise across the U.S. However, even as home prices keep climbing, we are seeing signs that growth is easing in the housing market. Sales of both new and existing homes are roughly flat over the last six months amidst news stories of an increase in the number of homes for sale in some markets. Rising mortgage rates –30 year fixed rate mortgages rose from 4% to 4.5% since January – and the rise in home prices are affecting housing affordability.
It really isn’t surprising to see US home price growth slowing to a more historically normal level. Just don’t let national reports make you think the same thing is happening in every local market.
And don’t think that slowing home price growth means that home prices are decreasing. It simply means the rate of increases is not as fast as it has been.
FHFA Stopping Single Family Rental Program
The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac (the Enterprises) will conclude their single-family rental pilot programs and then terminate their participation in the single-family rental market except through their previously existing investor programs – Fannie Mae’s Multiple Financed Properties and Freddie Mac’s Investment Property Mortgages.
FHFA Director Mel Watt said:
What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises.
I never understood why they undertook this program as it does not really help people become home owners. It did help Wall Street investor types to snatch up more single family homes to turn into rentals.
A Shift to a Buyer’s Market?
You may have missed yesterday’s post that had several reports about slowing home price growth. Some may be fooled into thinking this means we are going to shift from a seller’s market to a buyer’s market.
However, according to the Q3 2018 Zillow Home Price Expectations Survey we will not see the US housing market shift to a buyer’s market until 2020 at the earliest. This survey asks over 100 real estate experts and economists their opinions and predictions for the US housing market.
The survey results included a prediction of 5.9% home price growth this year, 4.2% next year and finally settling down to below 3% from 2020 through 2022. They are talking about the entire US and you should talk to a LOCAL Realtor to determine what is happening in your area!
Remember, the national and local housing markets are constantly changing. Home are selling every day and new homes hit the market every day.
Change is constant…
GSE Reform Could Make Home Buying More Expensive
The Congressional Budget Office looked at GSE reform and found that home buyers may face higher borrowing costs. But the government would save billions and considering the federal deficit, that might be a bad thing.
Besides, I do not think the idiots in Washington can get meaningful GSE reform to occur. If they do start tinkering with the GSEs and the the secondary mortgage market, let’s just hope they do not cause more harm than help.
Remodeling To Stay Strong in 2018
Big-ticket residential remodeling activity nationwide rose 1.3% in the second quarter from the first. The second quarter of 2018 was the RRI’s 25th consecutive quarter of year-over-year gains since 2011.
The RRI as of the second quarter of 2018 stood at 114.4, its highest ever reading. The number means the economic conditions known to influence remodeling activity are 14.4% better than the old peak in early 2007, just before the Great Recession.
Mark Boud, Chief Economist at Metrostudy, said:
The U.S. economy is in the midst of its longest streak of consecutive monthly job growth in history, and, the median existing home price has recorded seventy-six consecutive months of year-over-year gains. With record setting levels in employment growth and home equity, it is little wonder that Americans are investing in home upgrades. We expect the remodeling industry to close strong in 2018, with more moderate, but still-steady growth in 2019.
How many people are deciding to remodel instead of selling their home? Many people are scared that their home could sell before they find a home to buy.
There are ways to deal with this situation. Sadly not every home owner is aware of what to do if your current home sells before you find your next home
Well that is all I have time for today! Be sure to hit the share buttons and sign up for free email notifications of new posts!