Discussing the good news about home equity and jobless claims, slowing rent growth could fool some people, insights into August 2018 mortgage data and more!
Strong Economy Boosts Homeowner Equity
U.S. homeowners with mortgages (which account for roughly 63% of all properties) have seen their equity increase by 12.3% YoY, representing a gain of nearly $981 billion since the second quarter of 2017. Additionally, the average homeowner gained $16,200 in home equity between the second quarter of 2017 and the second quarter of 2018.
From the first quarter of 2018 to the second quarter of 2018, the total number of mortgaged homes in negative equity decreased 9% to 2.2 million homes or 4.3% of all mortgaged properties. The number of mortgaged properties in negative equity fell 20.1% compared to the second quarter of 2017.
Great news, especially the decrease in the number of mortgaged homes in negative equity. Negative equity is often referred to being underwater or owing more on the mortgage than the property is currently worth.
It isn’t just CoreLogic reporting good news about home equity. According to the latest ATTOM Data Solutions Equity Report:
13.9 million U.S. properties in Q2 2018 were equity rich — where the combined estimated balance of loans secured by the property was 50 percent or less of the property’s estimated market value — representing 24.9% of all U.S. properties with a mortgage.
Having positive equity means that home owners can sell their homes and use the profits to buy another home. This is much different than just a few years ago when many home owners were underwater and effectively trapped because of negative equity.
Check out this map showing the percentage of homes in each state that were equity rich in Q2 2018 according to Attom:
You can see that 16.9% of homes in South Carolina have lots of equity. This means it is possible to sell your current home and enjoy making a good profit. If you are thinking about selling a home in the Anderson area, contact me!
Weekly Jobless Claims Fall
In the week ending September 15, the advance figure for seasonally adjusted initial claims was 201,000, a decrease of 3,000 from the previous week’s unrevised level of 204,000. This is the lowest level for initial claims since November 15, 1969 when it was 197,000. The 4-week moving average was 205,750, a decrease of 2,250 from the previous week’s unrevised average of 208,000. This is the lowest level for this average since December 6, 1969 when it was 204,500.
Wow! This was unexpected and below the consensus forecast which suggest the labor market and economy is strong.
Median Rent Unchanged Year Over Year
For the first time since 2012, rents nationwide remained at the same level as they were a year earlier, with a median rent of $1,440.
Annual rent appreciation has slowed for six straight months, according to the August Zillow® Real Estate Market Reporti. Rent appreciation has remained below 3 percent annual increase for the past 27 months after growing as fast as 6.6 percent in July 2015.
This will make renting appear to be more attractive to some despite the wealth building advantage of owning a home. However, Zillow also said that home price growth slowed to it’s slowest pace in 2 years in August 2018.
Zillow Senior Economist Aaron Terrazas said:
The feverish housing crunch of the past few years seems to be cracking. Slower rent growth means that renters may feel less urgency to buy. While home values continue to grow at double their historic pace, the speed of appreciation is down sharply from its spring highs.
Before someone decides that renting is better than buying, I strongly suggest that they look at their long range goals. The benefits of home ownership go far beyond wealth building but each individual must decide what is best for them.
Insights into August 2018 Mortgages
Highlights from Ellie Mae’s August 2018 Origination Insight Report:
- The average time to close for all mortgages was 43 days
- The average time to close purchase mortgages was 45 days
- The average 30-year rate for all mortgages was 4.92%
- The closing rate for purchase mortgage was 75.9%
- 72% of purchase mortgages had FICO scores over 700
- The average FHA purchase mortgage FICO was 676
- The average conventional purchase mortgage was 751
Please do not let this discourage you as 65.9% of all FHA mortgages had a FICO scores below 700:
My advice to anyone wanting to buy a home is to talk to several mortgage lenders to discuss your options and your credit history.
Architecture Billings Index Increases in August
From the American Institute of Architects:
Architecture firm billings rebounded solidly in August, posting their eleventh consecutive month of growth. AIA’s Architecture Billings Index (ABI) score for August was 54.2 compared to 50.7 in July (any score over 50 represents billings growth). Most of the growth continues to come from the South and the multi-family residential sector.
AIA Chief Economist Kermit Baker said:
Billings at architecture firms in the South continue to lead the healthy increase in design activity that we’ve seen across the profession in recent months. Nationally, growth across all building sectors remains solidly positive.
While the AIA’s Architecture Billings Index mainly measures new commercial real estate investment, it is still an important economic indicator. Remember, we need a healthy economy for a healthy housing market and a healthy housing market for a healthy economy.
Low Approval Rating for the Low Down
Americans continue to have a low opinion of Congress, with 19% of the public currently approving of the job it is doing. Congressional approval has averaged 30% since Gallup began measuring it in 1974. The current 19% approval among Americans is well below that average, but similar to Americans’ sentiments through most of the period since January of last year.
Something to think about before you cast a vote for an incumbent…
That is all for today! As always, if you have any questions about real estate in the Anderson County SC, Contact Me!