Discussing several big reports on home prices, lenders easing credit standards for mortgages, an interesting study on consumer perceptions about housing and more…
The value of commercial building permits issued in the Upstate during the first quarter has fallen off by 9% year-over-year. According to a recent report from The Market Edge, a Tennessee-based research company, only Greenwood and Spartanburg counties saw an increase in the values attached to commercial building permits in the first quarter. Overall, the value of commercial building permits was $368.1 million in Q1 2017 compared to $404.3 million in the same quarter a year ago.
Well that does not sound good BUT this is probably based on info from before BMW announced they are expanding their Upstate SC plant. This should lead to even more suppliers expanding or locating in the Upstate.
While you never want to put all your eggs in one basket, it is nice to have BMW growing.
More mortgage lenders say they have eased credit standards recently and expect further easing in the coming months, according to Fannie Mae’s second quarter 2017 Mortgage Lender Sentiment Survey®. On net, the share of lenders reporting they have eased mortgage credit standards over the prior three months has ticked up gradually since the fourth quarter of 2016. Additionally, when anticipating the next three months, the net share of lenders saying they plan to ease credit standards for GSE eligible, non-GSE eligible, and government loans reached or surpassed survey highs this quarter.
Concerns regarding economic conditions were a top driver for changes in lending standards. Across the three loan types, the share of lenders who reported growth in purchase mortgage demand dropped to the lowest net reading in years for the second-quarter period. The drop in purchase mortgage demand also reflects the latest findings in the Fannie Mae National Housing Survey®, in which the net share of consumers who reported that now is a good time to buy a home dropped to a record low. The results of both surveys mirror the ongoing narrative for housing: Tight inventory has pushed up home prices, which is weighing on affordability and constraining sales.
Again we hear about problems resulting from the limited inventory. Lenders easing credit standards will not help the inventory problem. This is because it could mean even more buyers competing for the limited inventory.
As you can see in the chart below, demand for purchase mortgages is very weak:
Some of the highlights from the Black Knight Home Price Index Report for April 2017:
- US Home prices in April 2017 increased 1.2% from March 2017
- US Home prices in April 2017 increased 6.0% Year-Over-Year
- The Black Knight Us Home Price Index is the highest it has ever been
- Home prices in nine of the nation’s 20 largest states hit new peaks in April
- Home prices in 18 of the 40 largest metros also hit new peaks in April
Remember this is more of a big picture type of report and does not tell you what is happening in your local market. More on home prices further down…
Highlights from NAR’s latest Housing Opportunities and Market Experience Survey:
- 70% think it is a good time to buy a home
- 71% think it is a good time to sell a home
- The percentage that think it is a good time to sell increased from 69% in Q1 2017 and 61% in Q2 2016
- 60% think home prices have increased within their communities in the last year
- 52% think home prices will increase in their community in the next 6 months
- 40% think home prices will stay the same in their community in the next 6 months
- 31% of non-homeowners think it would be very difficult to qualify for a mortgage
- 30% of non-homeowners think it would be somewhat difficult to qualify for a mortgage
- 72% of those making less than $50,000 think it somewhat difficult to qualify for a mortgage
- Only 28% of those making over $100,000 think it would be somewhat difficult to qualify for a mortgage
- 54% think the economy is improving
- 42% think homes are affordable for buyers with average incomes in their community
- 29% have thought about moving to a more affordable area
- 12% think they may have to delay buying a home due to the increases in mortgage rates
Interesting stuff. Instead of thinking it would be difficult to buy a home, I suggest contacting a local Realtor so you KNOW exactly what is happening.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.5% annual gain in April. The 10-City Composite annual increase came in at 4.9%. The 20-City Composite posted a 5.7% year-over-year gain.
David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices said:
As home prices continue rising faster than inflation, two questions are being asked: why? And, could this be a bubble? Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a four- month supply. Adding to price pressures, mortgage rates remain close to 4% and affordability is not a significant issue.
The question is not if home prices can climb without any limit; they can’t. Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash. Housing starts are trending higher and rising prices may encourage some homeowners to sell. Moreover, mortgage default rates are low and household debt levels are manageable. Total mortgage debt outstanding is $14.4 trillion, about $400 billion below the record set in 2008. Any increase in mortgage interest rates would dampen demand. Household finances should be able to weather a fairly large price drop.
Scary that Blitzer mentions a housing bubble. We learned many painful lessons from the housing bubble…
This is another national report but it does help to drive home that home prices are still increasing. Again, find out what is happening locally by speaking to a Realtor in your area.
A Seattle law that requires many businesses to pay a minimum wage of at least $13 an hour has left low-wage workers with less money in their pockets because some employers cut working hours, a study released on Monday said.
Low-wage workers on average now clock 9 percent fewer hours and earn $125 less each month than before the Pacific Northwest city set one of the highest minimum wages in the nation, the University of Washington research paper said.
Interesting. You may remember that I wrote about another study last week that showed the number of jobs in Seattle did not decrease after the minimum wage was raised. With conflicting studies showing different things, it gets really hard to decide what is best for America.
Well that is all I have time for today as I have bigger fish to fry…