Monthly Archives: May 2021

When you own a home and its value increases, you build equity. And when the amount of equity you’ve built is more than double what you owe on your mortgage, you’re considered equity rich – at least, according to ATTOM Data Solutions’ 2021 U.S. Home Equity & Underwater Report. The report, which looks at the number of equity-rich properties across the country, found that almost one in three homes qualified during the first quarter. In fact, 31.9 percent of the 55.8 million mortgaged homes included in the analysis were equity-rich. That’s up from 30.2 at the end of last year and nearly 5.5 percent higher than last year at the same time. Todd Teta, ATTOM’s chief product officer, says it’s a great time to be a homeowner. “It continues to be a great time to be a homeowner most everywhere in the country,” Teta said. “The ongoing price spikes we’re seeing help to cut down the number of seriously underwater properties and boost the level of equity-rich properties.” (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates fell last week from the week before. Rates were down across all loan categories, including 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, and 15-year fixed-rate mortgages. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says rates are now lower than they’ve been in months. “Mortgage rates fell last week to the lowest levels since February, tracking the dip in Treasury yields,” Kan said. “The decline in rates helped the refinance index reach its highest level in eight weeks … The first week of May was also strong for the purchase market. Applications were up 13 percent from a year ago, which was around the time the housing market awakened from the pandemic-induced stall in activity.” Overall, demand for mortgage applications was up 2.1 percent week-over-week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

In order to be approved for a mortgage, borrowers have to meet certain standards. How well they meet those standards not only determines whether they’re approved to borrow but also the terms of the loan they receive, should they be approved. Lending standards aren’t fixed, though. Which means, there are times when they’re stricter and times when they loosen. That’s why the Mortgage Bankers Association tracks mortgage credit availability each month – to help potential borrowers know what to expect. In April, according to their most recent report, lending standards loosened from the month before, making credit more available. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says credit availability has improved as the housing market and economy have made gains. “The uptick in credit supply comes as the housing market and economy continue to strengthen,” Kan said. “One trend that has developed in recent months is the rising demand for ARMs, driven by higher rates for fixed mortgages and faster home-price appreciation.” Still, despite the improvement, credit availability hasn’t yet returned to where it was before the pandemic’s onset last March. (source)

In a competitive market, home buyers have to make their offers as attractive as possible. Good homes are in high demand and homeowners will, most likely, have more than one offer to choose from. That means, you have to make a strong case, if you hope to have yours chosen. So what’s the most effective strategy for winning a bidding war in a hot market? Well, according to one recent analysis, the single most effective strategy is an all-cash offer. In fact, 41 percent of surveyed real-estate agents named it as the best route for buyers in a bidding war. But all-cash offers aren’t possible for most buyers, which is why a higher down payment, additional earnest money, escalation clauses, and submitting before the review date were also popular strategies with today’s home shoppers. There are, of course, other ways to make your offer stand out, such as waiving the inspection or financing. However, those come with significant risks, since they remove protections put in place to save buyers from costly consequences. (source)

In April, Fannie Mae’s Home Purchase Sentiment Index found a widening gap between the number of respondents who say it’s a good time to sell a home and those who say it’s a good time to buy one. The index – which is based on a survey that asks Americans for their opinions on the housing market and economy – shows the share of participants who say it’s a good time to buy fell from 53 percent to 47 percent month-over-month. Conversely, the share who said it’s a good time to sell rose from 61 percent to 67 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says there are plenty of Americans who want to buy a home but conditions have made it challenging. “The decrease in home buying sentiment likely indicates that some consumers, potentially flush with savings – perhaps boosted in part by stimulus payments – may be attempting, but failing to buy a home due to heightened competition for relatively few listed homes,” Duncan said. In other words, the growing gap between home-buying and home-selling sentiment isn’t due to a lack of buyer interest. Low inventory has been holding buyers back. But as more homes are listed for sale, the now widening gap between buying and selling sentiment should begin narrow. (source)

While the housing market outperformed expectations last year, it wasn’t untouched by the economic impact of the pandemic. There were scores of American homeowners who were suddenly without work or a way to cover their mortgage payment. Which is why the most recent Mortgage Monitor from Black Knight Financial is an encouraging sign. The report – which looks at loan-level residential mortgage data – found that, in April, the number of Americans paying their mortgage on time rose to the highest level since the pandemic began. In fact, 91.6 percent of mortgage holders made their monthly payments, up from 91 percent in March. Ben Graboske, Black Knight’s president, said that wasn’t the only metric pointing toward a strong recovery. “Despite mortgage delinquencies tending to trend seasonally upward starting in April, our McDash Flash daily performance dataset instead shows strong early payment activity for the month, ” Graboske said. That’s also good news – as is the fact that the number of borrowers with at least one payment past due is now down 34 percent since February. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, average mortgage rates were mostly flat last week, with slight increases for loans backed by the Federal Housing Administration and 30-year fixed-rate loans with both conforming and jumbo balances. But despite flat rates, demand for loans to buy homes was down for the second week in a row. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says home buying demand is being held back by low inventory and higher prices. “Both conventional and government purchase applications declined, but average loan sizes increased for each loan type,” Kan explained. “This is a sign that the competitive purchase market, driven by low housing inventory and high demand, is pushing prices higher and weighing down on activity.” Still, overall demand for mortgage loans was down just 0.9 percent from the week before and purchase demand remains 24 percent higher than last year at this time. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Everybody with a home to sell wants to get as much as they can for it. But beyond sprucing it up and making sure it looks its best, what else can you do to be certain you get a good offer? Well, according to a new analysis from ATTOM Data Solutions, you can also choose the right day to sell. ATTOM looked at 40.1 million home sales between 2011 and 2020 to determine which days of the year brought sellers the biggest premiums. The results show the month of May gives homeowners their best shot to sell their home above its estimated market value. Todd Teta, ATTOM’s chief product officer, says May – which had 10 of the best days to sell – also had the single best day based on premiums. “The month of May is particularly poised to garner the greatest sale premiums,” Teta said. “Among the top five days fetching the biggest home seller premiums, May 23 is the best day of the year to sell a home, producing a premium of 19.3 percent above market value.” Overall, May sales were found to be 13.4 percent above estimated values. However, if you have to wait until June, don’t despair. Premiums are still nearly 12 percent as the spring market rolls into summer. (source)

New home sales peaked at the height of the housing boom in 2005. But following those all-time highs, sales plummeted and the subsequent recovery took more than a decade. In fact, annual sales still haven’t reached the highs of 15 years ago – though they’ve largely made up the lost ground. In one way, however, new home sales are doing better than ever. According to an analysis of recent sales, 25.7 percent of homes sold during the first quarter of 2021 were newly constructed homes. That’s up from 20.4 percent last year at the same time. It’s also the highest share of total home sales on record. So what’s behind the increase? Well, for one, there are fewer existing homes available for sale. Many Americans have recently refinanced or remodeled their homes and are staying put. That means, new construction is filling in where existing inventory is lacking. The other reason is buyer demand. With low mortgage rates boosting the number of buyers, home builders have incentive to build more, and they are. This combination of low mortgage rates, high buyer demand, and fewer existing homes, has fueled a boom in the new-home market, which will likely stay hot for the foreseeable future. (source)

The S&P Case-Shiller Home Price Indices are considered a leading measure of U.S. home prices. According to their most recent release, home values continue to show strength. In fact, the index found prices were up over the month before in all 20 included cities and are now rising faster than at any point since 2006. Craig J. Lazzara, managing director and global head of index investment strategy at S&P, says recent increases are among the highest they’ve recorded in more than 30 years of collecting price data. “More than 30 years of S&P Case-Shiller data help us to put February’s results into historical context,” Lazzara said. “The National Composite’s 12 percent gain is the highest recorded since February 2006, exactly 15 years ago, and lies comfortably in the top decile of historical performance. Housing’s strength is reflected across all 20 cities.” Price increases are good news for homeowners thinking about selling a home this year, as low inventory means more competition for available homes. (source)