Discussing the high number of households that are renting, mortgage rates, the latest housing starts and building permits report, foreclosures and much more…
More U.S. Households Are Renting Than at Any Point in 50 Years
From Pew Research:
A decade after the housing bust upended the lives of millions of Americans, more U.S. households are headed by renters than at any point since at least 1965, according to a Pew Research Center analysis of Census Bureau housing data.
The total number of households in the United States grew by 7.6 million between 2006 and 2016. But over the same period, the number of households headed by owners remained relatively flat, in part because of the lingering effects of the housing crisis.
Meanwhile, the number of households renting their home increased significantly during that span, as did the share, which rose from 31.2% of households in 2006 to 36.6% in 2016. The current renting level exceeds the recent high of 36.2% set in 1986 and 1988 and approaches the rate of 37.0% in 1965.
Not good news unless you own rental properties. While being a landlord isn’t for everyone, there is no doubt it can be very lucrative.
Mortgage Applications Increase and Most Rates Decrease
Mortgage applications increased 6.3% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 14, 2017. Last week’s results included an adjustment for the Fourth of July holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.22%, with points decreasing to 0.31 from 0.40 (including the origination fee) for 80% 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 4.18% from 4.19%, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.48% from 3.50%, with points decreasing to 0.39 from 0.45 (including the origination fee) for 80 percent LTV loans.
Not much movement or change reported by the MBA. Let’s see what Freddie reported…
Mortgage Rates Decrease
From Freddie Mac:
- 30-year fixed-rate mortgages averaged 3.96% with an average 0.6 point
- This is down from last week when it averaged 4.03%
- Last year at this time, 30-year fixed-rate mortgages averaged 3.45%
- 15-year fixed-rate mortgages averaged 3.23% with an average 0.5 point
- This is down from last week when it averaged 3.29%
- A year ago at this time, 15-year fixed-rate mortgages averaged 2.75%
Sean Becketti, chief economist, Freddie Mac said:
Continued economic uncertainty and weak inflation data pushed rates lower this week. The 10-year Treasury yield fell 5 basis points this week. The 30-year mortgage rate moved with Treasury yields, dropping 7 basis points to 3.96 percent.
Remember that both the MBA and Freddie are talking about the average mortgage rates and you will need to talk to the lender of your choice to find out what is possible for you.
Good News About Housing Starts and Building Permits
The U.S. Department of Housing and Urban Development (HUD) and the U.S. Census Bureau jointly announced the following new residential construction statistics for June 2017:
Privately owned housing units authorized by building permits in June were 7.4% above the revised May rate and 5.1% above the June 2016 rate. Single-family authorizations in June were 4.1% above the May level.
Privately owned housing starts in June were 8.3% above the May estimate and 2.1% above the June 2016 level. Single-family housing starts in June were 6.3% above the May level.
Privately owned housing completions in June were 5.2% above the May level and 8.1% above the June 2016 level. Single-family housing completions in June were 0.4% above the May level.
I used the chart above to show where we are today compared to long ago. Since the population has continued to grow, you can see why we are experiencing such a problem with inventory in many areas.
The Joint Center of Housing Studies (JCHS) at Harvard University recently wrote a blog that discussed the shortage of housing inventory currently available in both existing homes and new construction.
Regarding Existing Home Inventory:
For the fourth year in a row, the inventory of homes for sale across the US not only failed to recover, but dropped yet again. At the end of 2016 there were historically low 1.65 million homes for sale nationwide, which at the current sales rate was just 3.6 months of supply – almost half of the 6.0 months level that is considered a balanced market.
Regarding New Home Inventory
Markets nationwide are still feeling the effects of the deep and extended decline in housing construction. Over the past 10 years, just 9 million new housing units were completed and added to the housing stock. This was the lowest 10-year period on records dating back to the 1970s, and far below the 14 and 15 million units averaged over the 1980s and 1990s.
The greatest struggle in today’s real estate market is convincing home owners to take advantage of this opportunity. In today’s housing market, a seller could have a serious edge in regards to price as well as other stuff such as the inspection, dates, contingencies, etc.
Lawrence Yun, Chief Economist at the National Association of Realtors, recently said:
Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.
Yun also recently said:
Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.
If you have considered selling your home this year, it is a great time! The number of properties for sale is below historical norms and demand from buyers is high. The best time to sell anything is when supply is limited and demand is high. That describes today’s real estate market!
Architecture Billings Index Increases
The AIA just reported that for the fifth consecutive month, architecture firms recorded increasing demand for design services. The American Institute of Architects (AIA) reported the June Architecture Billings Index increased from the previous month.
This is really good news, especially since we have seen 5 consecutive months.
Foreclosure Filings Down 20%
RealtyTrac just reported that in the first six months of 2017, U.S. properties with foreclosure filings were down 20% from the same time period a year ago and down 28% from the same time period two years ago. This is the lowest six-month total of foreclosure filings since the second half of 2005.
There is no doubt that this is good news! Some other highlights:
Lenders foreclosures in the first six months of 2017 were down 14% from a year ago. This is the lowest six-month total since the second half of 2014.
The national foreclosure activity total in Q2 2017 was 21% below the pre-recession average and Q2 2017 was the third consecutive quarter with foreclosure activity below the pre-recession average.
There number of U.S. properties with a foreclosure filing in June 2017 was down 9% from the previous month and 22% YoY. This is the lowest level since November 2005.
Q2 2017 foreclosure activity was below pre-recession averages in 49 percent of markets.
Well that is all I have time for today! Plenty more good stuff to write about just ran out of time today! Be sure to check back daily!