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Tag: Freddie Mac

Metro Housing Markets Improve Year-Over-Year

According to Freddie Mac’s Multi-Indicator Market Index – which measures how far individual housing markets have rebounded since their post-recession lows – nearly 100 percent of the nation’s top metropolitan areas have shown year-over-year improvement. Additionally, 49 of 50 states have also posted positive annual gains. Len Kiefer, Freddie Mac’s deputy chief economist, says the nation’s housing markets continue to improve and, if global economic uncertainty keeps mortgage rates low for an extended period, there may be more gains to come. “Seven years into the recovery from the Great Recession, most of the nation’s housing markets remain below their historical benchmarks, but continue to grind higher month-by-month,” Kiefer said. “Nationally, MiMi in April 2016 is 84.1, a 7.37 percent year-over-year increase and the 48th consecutive month of year-over-year increases … If global factors like the Brexit put significant downward pressure on long-term mortgage rates, the U.S. housing market could benefit from increased affordability, helping to partially offset the impact of house prices, which are rising around six percentage points year over year nationally.” Compared to last year, the most improved metro areas included Orlando, Tampa, Denver, Cape Coral, and Portland. More here.

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Older Homeowners Hold Key To The Future

There are more than 67 million current homeowners over the age of 55 in America today. That represents two-thirds of the nation’s home equity and a significant slice of the country’s existing housing stock. Whether these homeowners decide to move sometime soon or plan to stay in their current home through their retirement will have a big impact on the housing market, affordability, mortgage demand, and the homes that are available to younger, aspiring home buyers in the coming years. Because of this, Freddie Mac has launched a new survey aimed at uncovering baby boomers’ thoughts about homeownership and their plans for the future. According to the results, 63 percent of these homeowners say they’d prefer to age in place and large majorities say they are very satisfied with their homes, communities, and quality of life. But though the number who say they’d like to stay where they are is big, so is the number that say they’d like to move again. In fact, nearly 40 percent of respondents said they plan to move at some point in the future – that’s roughly 27 million Americans. Whether or not these homeowners do or don’t move, however, the only thing for sure is that their decision will have a lasting impact on the residential real-estate market for years to come. More here.

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Local Housing Markets Continue To Improve

Though still below it’s all-time high, Freddie Mac’s most recent Multi-Indicator Market Index shows the housing market continuing to improve. In fact, the index – which compares long-term norms to current data in an effort to measure how quickly markets have bounced back following the housing crash – shows a 7.23 percent overall improvement to the national housing market since last year. Additionally, the market has now rebounded 41 percent from its low in October 2010. Len Kiefer, Freddie Mac’s deputy chief economist, says residential real estate should finish the year strong. “The U.S. housing market is poised to have its best year in a decade and the spring home buying season is off to a strong start,” Kiefer said. “Pent up demand for homes and near record-low mortgage rates are bolstering housing markets across the country. The National MiMi currently stands at 83.8, the highest since September of 2008. Home purchase applications are up nearly 14 percent from one year ago, mortgage delinquencies continue to trend down, and robust employment growth are all positive signs.” According to the release, 36 of 50 states and 65 percent of the included metropolitan areas are now within their long-term normal range. Since last year, the most improved cities were Orlando, Denver, Tampa, Cape Coral, and Portland. More here.

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Housing Poised For Best Year In A Decade

Housing markets across the country are trending positive and it could lead to real estate’s best year in a decade, according to Freddie Mac’s chief economist, Len Kiefer. “The U.S. housing market is poised to have its best year in a decade,” Kiefer said upon release of this month’s Multi-Indicator Market Index. “The National MiMi currently stands at 83, the highest since September of 2008. And the trends are nearly all positive.” The index – which compares current market data to long-term norms – looks at things like demand for home purchase loans, proportion of on-time mortgage payments, and the job market in all 50 states and the top 100 metropolitan areas. Year-over-year, the index has improved by 7.46 percent and 35 states have returned to their long-term stable range. According to Kiefer, the improving national trend can be found in local markets as well. “We still see pockets of weakness in the Midwest and South, while the Northeast and West are generally doing better,” Kiefer said. “But most markets in the Midwest and South are improving according to MiMi.” In fact, the index found 59 percent of included metro areas are now within their stable range with Austin, Denver, Salt Lake City, Honolulu, and Los Angeles rounding out the top five. More  here.

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Optimistic Outlook Sees Brighter Days Ahead

According to Freddie Mac’s March Outlook, the housing market is poised to have its best year since 2006. The optimistic forecast is based on the belief that an improved job market – combined with low mortgage rates and a growing number of housing starts – will help boost sales this year and build momentum for 2017. “Housing markets are poised for their best year in a decade,” Sean Becketti, Freddie Mac’s chief economist, said. “In our latest forecast, total home sales, housing starts, and house prices will reach their highest levels since 2006. Low mortgage rates, robust job growth and a gradual increase in housing supply will help drive housing markets forward. Low levels of inventory for-sale and for-rent and declining housing affordability will be major challenges, but on balance the nation’s housing markets should sustain their momentum from 2015 into 2016 and 2017.” According to the outlook, Freddie Mac expects housing starts to increase this year, which will help slow down the rate at which home prices have been increasing. In fact, the outlook says annual house price appreciation will be 4.8 percent in 2016. In 2015, it was about 6 percent. More here.

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Misinformation Keeps First-Time Buyers Away

Before the housing crash, first-time home buyers typically accounted for 40 percent of home sales in any given year. Last year, that same group accounted for just 32 percent of buyers. And yet, the Harvard Joint Center for Housing Studies expects the country’s 86 million millennials – along with other first-time buyers – to form about 1.2 million new households per year for the next 10 years. Danny Gardner, Freddie Mac’s vice president, wrote recently that the gap between pent-up demand and actual home buyers can be explained, in part, by persistent misunderstandings about how the buying process works, what it takes to be approved for a loan, and how much is needed for a down payment. “Information is part of the answer,” Gardner wrote. “We have to drive a stake through a few stubborn myths that are draining life out of the market. These familiar myths lead potential buyers to overestimate the credit, income, and down payment savings they need for an affordable mortgage.” Among the mistaken beliefs that may be keeping young Americans out of the market, believing that they need a 20 percent down payment is a big one. In fact, new programs allow qualified buyers to purchase a home with as little as 3 percent down and 40 percent of buyers put down less than 10 percent. Other common buyer misconceptions include, feeling their credit score is inadequate, the process is too complicated, and a previous rejection will prevent them from being approved again. More here.

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Why Buyers Need To Watch The New Home Market

Last year, home sales were stronger than they’ve been in a long time. After years of volatility and gradual gains, the buyer boom was a welcome relief. However, the return of buyer demand created a new concern for housing. As more prospective buyers entered the market, there were fewer homes available for them to choose from. This caused home prices to rise. Now – though the housing market remains strong at a time when global economic uncertainty has slowed the U.S. economy – analysts and industry experts are keeping an eye on housing affordability and what affect it may have on sales in 2016. Sean Becketti, Freddie Mac’s chief economist, says the issue isn’t going to be resolved quickly. “Housing was one of the few bright spots in the economy last year, and we expect continued improvement in 2016,” Becketti says. “The imbalance between demand for housing and the supply of both houses and apartments has supported rapid growth in both house prices and rents. The gap between demand and supply will not be closed any time soon, thus we project continued house price appreciation in 2016.” In short, how quickly that gap is closed will be determined by how quickly new homes are being built and put up for sale in any particular area. Though rising equity will lead to more homeowners putting their homes up for sale, new home construction is the real key to balancing the market and stopping affordability from becoming a bigger issue – which is why home buyers would be wise to keep an eye on the new home market. More here.

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Local Markets Stable In Majority Of Metros

The housing market has come a long way since hitting its bottom in 2010. To prove it, Freddie Mac’s Multi-Indicator Market Index tracks just how far individual states and metropolitan areas have progressed since then. The index takes a look at home purchase applications, payment-to-income ratios, proportion of on-time mortgage payments, and the local employment picture in each market and determines how it compares to their long-term averages. According to the most recent release, 57 of the 100 metro areas included in the survey are within their stable range. At the same time last year, only 28 metros had values in stable range. Len Kiefer, Freddie Mac’s deputy chief economist, says the latest results show a strong year-over-year improvement, though there’s a lot of variation from market to market. “The regional variation of housing activity continues to become more pronounced,” Kiefer said. “For example, we’re still seeing declines in oil-dependent housing markets, whereas the hardest hit metros from the Great Recession continue to see some of the best improvement as they recover. And at the same time, other markets are seeing even stronger improvement because of robust home sales fueled by strong local economies that remain largely affordable for the typical home buyer. In the short term, we expect home buyer affordability to remain strong with mortgage rates continuing to look very attractive to prospective home buyers.” Among the metro areas that were most improved from last month, Orlando, Denver, Portland, Albany, and Phoenix led the way. More here.

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Optimism High Despite Affordability Concerns

Since the Fed’s decision to increase interest rates, there has been a lot of discussion about whether or not tighter monetary policy will halt the housing market’s progress. According to Freddie Mac’s chief economist, Len Kiefer, there is no need for worry. “We do expect home buyer affordability to decrease in the coming year, but we don’t expect tighter monetary policy to generate a spike in longer-term interest rates in the foreseeable future,” Kiefer says. “The Fed has committed publicly to measured increases in short-term rates. While mortgage rates will rise modestly, they will still remain at historically low levels. Combined with stronger job and income growth, the net result may be strong growth in household formation, construction, and home sales.” Among the reasons for Kiefer’s optimism, Freddie Mac’s recently released Multi-Indicator Market Index ranks high. That’s because the latest index shows the best year-over-year improvement since July 2014 and an increasing number of states and metro areas whose local housing markets have entered their long-term stable range. That means more markets where home purchase applications and home values are headed upward and mortgage delinquencies are falling. Overall, though affordability conditions may decline this year, the strength of the economy and housing market should help lessen the impact for the average American home buyer. More here.

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Housing Momentum To Carry Into Next Year

Freddie Mac’s recently released December Insight & Outlook takes a look at how far the housing market’s recovery has come and where it may be headed as we enter 2016. According to the report, the economy has largely rebounded from the financial crisis. With unemployment declining, consistent economic growth, and a strengthening housing market, residential real estate and the economy have come a long way and the outlook is mostly positive heading into next year. But the report cautions that those same economic gains could also begin to pose a problem for potential home buyers, as rising mortgage rates and increasing home prices lead to declining affordability conditions. So what should buyers expect in 2016? Freddie Mac believes that a strong job market combined with pent-up demand will overcome the challenges of decreasing affordability. In fact, their outlook calls for a 3 percent increase in home sales over 2015’s total – which is on pace to be the best since 2007. They also believe that – though mortgage rates will begin to rise – they will remain historically low. Additionally, home price increases will begin to moderate, as new home construction rises and buyer demand falls. Overall, Freddie Mac expects the strength of the economy will help alleviate home buyers’ affordability concerns and that 2015’s momentum should carry into the coming year. More here.

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