Monthly Archives: February 2021

A property is considered equity rich when its value is more than double the amount of the loans used to purchase it. In other words, if you owe $90,000 on a home worth $200,000, you’re equity rich. It’s a good position to be in as a homeowner, especially if you’re considering selling in the near future. Because of this, ATTOM Data Solutions’ quarterly Home Equity & Underwater Report tracks how many of the nation’s 59 million mortgaged homes could be considered equity rich. According to their most recent report, 30.2 percent of the country’s mortgaged homes qualified during the fourth quarter of 2020 – an improvement over 26.7 percent at the end of 2019. Todd Teta, ATTOM’s chief product officer, says homeowner equity has been improving for a while. “When it came to homeowner equity in the United States, the fourth quarter was more of the same as the third, which was more of the same as the second: a scenario that has continued to improve,” Teta said. “The housing market kept booming despite damage caused by the virus pandemic to the broader economy – a surge that continued to boost the equity that most property owners have in their homes.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were up last week from the week before. Increases were seen for 30-year fixed-rate mortgages with conforming loan balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate loans. Rates for jumbo loans fell from one week earlier. Mortgage rates have now increased in four of the first six weeks of 2021. But despite rising, rates are still near record lows and buyers are still active. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says purchase demand continues to outpace year-before levels. “Purchase applications cooled the first week of February, but home buyers are still very active,” Kan said. “Purchase activity was 17 percent higher than last year, and the average purchase loan size continued to increase, reaching another survey high of $402,200, as the higher-priced segment of the market continues to perform well.” The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

The coronavirus caused a significant decline in the number of homes available for sale last year. It didn’t, however, reduce the number of interested buyers. That combination – high buyer demand and low for-sale inventory – caused prices to rise, competition to intensify, and houses to sell quickly. But, according to the National Association of Home Builders latest Housing Trends Report, market conditions didn’t hurt buyers’ optimism. In fact, at the end of 2020, prospective home buyers were more optimistic about their upcoming home search than they were at the end of 2019. Survey results showed 37 percent of potential buyers said they expect their home search will get easier in the months ahead. That’s a significant improvement over the year before, when just 23 percent said they expected an easier time finding a home. Similarly, 54 percent said it would be the same or harder to find a home, which is a big drop from the 65 percent who said the same in 2019. In short, home buyers are optimistic that inventory will improve over the coming months and help bring more balance to the market. (source)

Fannie Mae’s Home Purchase Sentiment Index surveys Americans each month to gauge their feelings about the housing market and their personal financial situation. The survey asks participants for their opinion on mortgage rates, home prices, their income, job security, and whether they think now is a good or bad time to buy or sell a home. In January, the index rose 3.7 points from the month before, with much of the improvement due to a 16 percent jump in the number of respondents who said now is a good time to sell a house. Doug Duncan, Fannie Mae’s chief economist, says there are several factors responsible for the increase. “Overall, the index’s monthly increase was driven largely by a substantial jump in the share of consumers reporting that it’s a good time to sell a home, with many citing favorable mortgage rates, high home prices, and low housing inventory as their primary rationale,” Duncan said. However, while the good-time-to-sell component saw a significant increase, the index remained mostly unchanged in other areas, including job concerns, mortgage rate expectations, and whether now is a good time to buy. (source)

Spring is typically the season when the housing market heats up. And, while it’s still more than a month away, prospective buyers hoping to start their home search in the coming weeks should be prepared. The winter market hasn’t ever really cooled down and it’s a good sign that it’ll be a fast-moving and competitive spring. For example, according to one recent analysis, home buyer demand, at the end of January, was 60 percent higher than it was last year at the same time. Additionally, the number of homes for sale was down 36 percent and the number of new listings fell 13 percent from year-ago levels. In other words, there are still a lot of home buyers and a lower-than-normal number of homes for sale. Expectations are that, as the season wears on and the coronavirus-vaccine rollout continues, more homes will become available for sale, which will help balance the market. But, at least for the first half of the year, buyers should be prepared to compete for the homes that are available. That means, having your finances and financing in order and being prepared to act quickly when you find a home that meets your needs. (source)

A lot has been written about how the coronavirus and remote work have led home buyers to flee urban centers and head to the suburbs. The idea that Americans – who can work from home and no longer have to worry about their commute – are leaving expensive city centers and moving to more affordable homes in the suburbs has been a consistent theme since the pandemic began. It makes sense. After mitigation efforts forced more of us inside, we began reevaluating what we want in our homes. That, naturally, led to rising interest in moving somewhere where we could have more for less. But are the suburbs always more affordable than living in the city? According to one recent analysis, not necessarily. That’s because, in some areas, the suburbs are actually more expensive than living in the urban core. In metros like St. Louis, Cincinnati, Kansas City, and Indianapolis, for example, home buyers looking for a more affordable option have to look in the city to find a better price. That is the opposite of trends seen in higher-priced coastal cities like New York or San Francisco. It’s also a good reminder that what’s true in one location may not be true in another. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week, with rates for 30-year fixed-rate loans with both conforming and jumbo balances falling from the week before. The decline led to an increase in refinance applications, which helped push overall mortgage application demand 8.1 percent higher than one week earlier. Joel Kan, MBA’s associate vice president of economic and industry forecasting, said refinance activity was at its highest level in almost a year. “The one-week reversal in the recent upswing in rates drove an increase in both conventional and government refinance activity, as borrowers continue to lock in these historically low rates,” Kan said. “MBA’s refinance index hit its highest level since March 2020.” Demand for loans to buy homes, on the other hand, was relatively flat from the week before, though it remains 16 percent higher than last year at the same time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

When there are fewer homes for sale, the homes that are available sell quickly. That’s no surprise. It’s common sense. And, since inventory has been low for quite a while now, the challenges of rising prices, intense competition, and bidding wars are familiar to anyone who has recently looked for a home to buy. But while low inventory is nothing new, the combination of a lower-than-normal number of homes for sale and the housing market’s typical seasonal slowdown have caused recent listings to sell even more quickly than usual. In fact, they’re selling faster than they have in years. How fast? Well, according to one recent measure, 55 percent of homes that went under contract during the week ending January 24 had an offer accepted within two weeks of hitting the market. That’s faster than at any time since at least 2012. Fortunately, winter’s lack of listings should start to turn around as the spring season approaches and more homeowners put their homes up for sale. When that happens, price increases and competition should both begin to moderate. (source)

December isn’t typically a popular month with home buyers. And while there are many reasons for this, last year, buyers largely ignored them. In fact, there were more buyers who signed contracts to buy homes during the month than ever before. According to the National Association of Realtors’ Pending Home Sales Index, contracts to buy hit an all-time high for the month, even though they fell slightly from November. Lawrence Yun, NAR’s chief economist, says there’s no shortage of interested home buyers. “Pending home sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” Yun said. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more listings.” In short, buyer demand has been elevated for a while now and will likely continue to be as we approach the spring and summer sales season. Yun believes, with rates expected to stay low and the economy poised to improve, this year’s market will see more new homes built, more sales than last year, and slower home-price appreciation. (source)

Last year was an unusual year for the housing market. Expectations of a busy spring sales season were dashed when the coronavirus took hold and mitigation efforts caused interested buyers to delay their plans. But what looked like it may have been a lost year turned into something entirely different. The market rebounded faster than predicted and buyers returned in droves. Sales skyrocketed in early summer and then out performed year-before levels through the end of the year. According to one recent analysis, strong demand and fewer homes for sale also led the market to its biggest growth in any year since 2005. In fact, U.S. housing stock gained $2.5 trillion in value last year and is now worth $36.2 trillion. Naturally, a lot of that value is on the coasts, with cities in California accounting for four of the top 10 metros with the highest housing value. New York was number one overall, though. Its housing stock was worth $3.1 trillion in total. (source)