The latest news about mortgage delinquencies and foreclosures, home purchase sentiment, if the housing market is shifting, why it is a good time to sell, home prices and home price growth expectations, home equity hits record high and much more!
Delinquencies and Foreclosures at Lowest Level in 12 Years
Nationally, 4.3 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in June 2018, representing a 0.3 percentage point decline in the overall delinquency rate compared with June 2017, when it was 4.6 percent.
As of June 2018, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.5 percent, down 0.2 percentage points from 0.7 percent in June 2017. The June 2018 foreclosure inventory rate was the lowest since September 2006, when it was also 0.5 percent and was the lowest for June since 2006.
Great news but Dr. Frank Nothaft, chief economist for CoreLogic, pointed out how natural disasters can cause a substantial increase in mortgage delinquencies. Which is something to think about as we have a hurricane bearing down on the Carolinas…
Home Purchase Sentiment Increases
From Fannie Mae:
The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased in August for the first time since May. The uptick can be attributed to increases in the job- and income-related HPSI components
Check out the chart showing how consumers feel about buying a home:
Check out some of the findings:
- 87% said it is a good time to buy a home
- 36% said it is a bad time to buy a home
- 54% said it is a good time to sell a home
- 26% said it is a bad time to sell a home
- 48% think home prices will increase in the next 12 months
- Only 10% think home prices will decrease in the next 12 months
- 58% think mortgage rates will increase in the next 12 months
Despite rising home prices and mortgage rates, the majority recognizes that it is a good time to buy a home. The key thing is IF it is a good time for each individual to buy a home!
If you are interested in buying a home, take the first steps and talk to a mortgage lender about your options and budget. Then sit down with a local experienced Realtor to discuss what is realistic/possible in your price range in the area you want to buy a home.
Home Buying Market Changing?
It’s been called the most competitive home-buying season ever and the strongest seller’s market ever. Whatever you call it, it cannot be denied that 2017 gave us one of the hottest housing markets recorded in American history.
But is the market starting to change? According to home buyers surveyed by ValueInsured:
Nearly half (48%) of all homeowners report noticing lighter open-house traffic and a less competitive home-buying season in their neighborhood this Spring compared to Spring 2017
Despite the number of homes sold slowing, home prices are still growing. Once again, it is simple supply and demand.
Demand may be lower BUT it it still strong compared to the inventory of homes for sale. Inventory is SO low that it is preventing home prices from falling for now…
Strong demand and increasing home prices means…
It Is a Good Time to Sell a Home
Pending home sales (homes going into contract) are down 2.3% from last year and have fallen YoY for seven straight months. The number of homes going under contract is not due to a decrease in demand BUT because of the lack of inventory.
Strong demand and limited supply means it is a good time to sell. The latest Existing Home Sales report revealed that total housing inventory of homes for sale decreased 0.7% in July 2018 and only a 4.3 month supply of homes for sale.
If there is less than a 6 month supply of homes for sale, it is considered a seller’s market. Above 6 months of supply is considered a buyer’s market and exactly 6 months of supply is considered a balanced market.
The number of homes for sale in most areas is firmly in the seller’s market territory. Demand is stronger than supply and this means prices will continue to increase (even if it is at a slower pace than in the recent past).
The lack of homes for sale and strong demand means NOW is a good time to sell a home. Of course, you need to sit down and discuss the specifics of your local market with a Realtor that is experienced in your area/price range/type of home.
FHFA Home Price Index Up 6.4%
Speaking of increasing home prices, the latest FHFA Houe Price Index revealed that US home prices increased 6.4% year -over-year. Check out the home prices for each state:
Please remember that there is a HUGE difference between national and state reports and what is actually happening in your local market. This is why anyone looking to buy or sell MUST work with a local Realtor!
For example, if we look at WUAR data for the homes sold in Anderson County SC during Q2 2018, we see that the average price was 6.3% higher than Q2 2017. And the median price was 6.5% higher than Q2 2017.
This is for ALL areas/types of homes in Anderson County SC so it only illustrates the difference betwen the national and state reports and what is happening in our area. You MUST fine tune your comparisons when determining what a specific home is worth in Anderson County so contact me if you have any questions!
Tappable Home Equity Hits Record High
From Black Knight:
Despite the slowdown in the rate of home price appreciation seen throughout the second quarter, total tappable equity – the amount of equity available to homeowners with mortgages to borrow against before hitting a maximum 80 percent combined loan-to-value ratio – reached a record high. There is now nearly three times as much tappable equity available than at the bottom of the market in 2012.
Ben Graboske, executive vice president of Black Knight Data & Analytics, said:
As the second quarter came to a close, the total amount of tappable equity available to homeowners with mortgages surpassed the $6 trillion mark for the first time in history. There is now $636 billion more tappable equity available than at the start of 2018, and nearly three times as much compared to the bottom of the market in 2012.
After the strongest Q1 rise in home prices in five years, momentum shifted in the second quarter. Q2’s 2.7 percent gain in home prices was the lowest second quarter gain in five years. This is made all the more notable by the fact that Q2 has historically been the strongest quarter for home price gains.
Please remember that the equity in your home is not to be abused! That being said, it is possible that many home owners could sell their homes and use the equity as down payment for a bigger/nicer/different home.
Stronger Economy Means Restrictive Rates?
When Boston Federal Reserve Bank President Eric Rosengren switched from advocating low interest rates to tighter monetary policy, he argued it was time to start crawling back toward “normal” rates even with 5 percent unemployment and weak growth and inflation.
Two years later, Rosengren has joined colleagues in beginning to lay the groundwork for those rate hikes to potentially continue longer and to a higher level than currently expected as the outlook for the economy strengthens.
This is not hair on fire. There is upward pressure on inflation, and given that we are already at 2 percent, labor markets are already tight … that is going to be a situation where we start persistently having inflation above what our target is. There is an argument to normalize policy and probably be mildly restrictive.
Is the Fed thinking the economy is starting to overheat? While the economy is doing pretty good, I am not sure it is close to overheating…
Not all Americans are experiencing the same economy. Things are better for some than for others…
Consider this snippet from Why things suck by John A. Kilpatrick, a Ph.D. in Finance, a Director of Greenfield Advisors, and Managing Director of Accre.com:
Today, though, the middle class seems out of reach for a lot of Americans. Poverty seems to be growing, rather than shrinking, and it is nearly impossible for a single-wage-earning household to make ends meet. Home ownership is increasingly out of reach for young families. Indeed, the proportion of home buyers who are “first time buyers” is unsustainably low.
Kilpatrick goes on to look at real wages and inflation in this short must read article. Do yourself a favor and check it out.
Home Price Growth Expectations Continue to Decrease
From the NY Fed:
Expectations about income and spending growth remained stable, while expectations about household financial situations improved. Home price growth expectations retreated for the second month in a row, while expectations about the growth in government debt rose to a level not seen since 2015.
Median home price change expectations declined to 3.6% in August from 3.7% in July and 3.9% in June, still remaining above its trailing 12-month average of 3.4%.
Perceptions of households’ financial situations compared to a year ago were largely unchanged. One-year ahead expectations of households’ financial situations improved considerably with 44.5% of respondents expecting to be better off financially, compared to 41.4% in July and 11.0% expecting to be worse off financially, compared to 12% in July.
I also expect home price growth to decrease as it starts to resume a more historically normal pace. The positive outlook for household financial situations should help the economy to continue to grow/improve.
Small Business Optimism Hits Record High
The NFIB Small Business Optimism Index soared to 108.8 in August, a new record in the survey’s 45-year history, topping the July 1983 highwater mark of 108. The record-breaking figure is driven by small business owners executing on the plans they’ve put in place due to dramatic changes in the nation’s economic policy.
NFIB President and CEO Juanita D. Duggan said:
Today’s groundbreaking numbers are demonstrative of what I’m hearing everyday from small business owners – that business is booming. As the tax and regulatory landscape changed, so did small business expectations and plans. We’re now seeing the tangible results of those plans as small businesses report historically high, some record breaking, levels of increased sales, investment, earnings, and hiring.
Incredibly good news, especially since the NFIB reported that both job creation and unfilled job openings hit new records.
The Revolving Door Still Spins
From The Washington Post:
Ten years after the financial crisis brought the U.S. economy to its knees, about 30 percent of the lawmakers and 40 percent of the senior staff who crafted Congress’ response have gone to work for or on behalf of the financial industry, according to a Washington Post analysis.
The pattern, which applies about equally to both parties, is a stark illustration of how policymakers sought to profit from the financial sector after dealing with one of the worst financial episodes in U.S. history.
Critics of the revolving door say it helps explain why Congress — even as it deployed hundreds of billions of dollars to bail out Wall Street — didn’t take tougher steps to rein it in.
Well that is all I have time for today! As always, if you have any questions about real estate in the Anderson SC area, Contact Me!