Freddie Mac Archives

Number Of Stable Housing Markets Doubles

Over the last year, the number of states and metro areas whose housing markets have returned to their stable range of activity has doubled, according to new data released by Freddie Mac. The Multi-Indicator Market Index measures U.S. real estate markets against their long-term average to determine how quickly they have recovered. According to the most recent release, the national housing market is on its outer range of stable activity, though it is still well below its all-time high. Len Kiefer, Freddie Mac’s deputy chief economist, says individual markets are moving at their own pace. “When we observe MiMi’s annual improvement, it’s clear housing markets continue to recover with some markets firing on all cylinders, others inching along, and the vast majority still working to get back to their long-term benchmark normal range,” Kiefer said. “Regardless, nearly twice as many states and metro areas have entered their stable range of housing activity compared to a year ago. Western markets show little signs of slowing down with their local employment pictures continuing to improve and with applications to purchase a home still showing double-digit growth on an annual basis. In many Southern metro areas, home sales are improving, which is good news, but their levels still remain depressed.” Thirty of 50 states plus Washington D.C. are now in stable range. More here.

Real Estate Rebound Continues On Track

Freddie Mac’s Multi-Indicator Market Index measures the real estate recovery by comparing current data to long-term norms in local markets across the country. The index tracks home purchase application data, payment-to-income ratios, proportion of on-time mortgage payments, and the local job market in all 50 states and the top 100 metropolitan markets. According to the most recent results, the housing market’s rebound is on track and has entered the outer range of stable housing activity. In fact, 29 of 50 states are now in a stable range, along with 47 percent of the top metro areas. Freddie Mac’s deputy chief economist, Len Kiefer, says housing markets across the country are getting back to their long-term benchmark averages. “The nation’s housing market continues to improve, riding the wave of the best year in home sales since 2007,” Kiefer said. “With the MiMi purchase applications indicator at its highest level in more than seven years, we expect home sales to remain strong. Low mortgage rates are fueling the recovery across the country. Places like Denver, Austin, and Salt Lake City, and most markets in California, are seeing robust home purchase demand and, in many cases, double-digit growth over last year.” Despite the rosy outlook, however, Kiefer also cautions that there’s still room for improvement and income growth will have to be stronger to sustain the gains throughout 2016. More here.

The Homeownership Rate & Millennial Buyers

Since 2004, the homeownership rate has declined from its all-time high of 69.2 percent to 63.4 percent as of the second quarter of this year. And, though the percentage of Americans who own their own home has declined among all age groups, the number of Millennial homeowners is particularly low. Millennials – typically defined as those between the ages of 18 and 34 – have been slow to enter the housing market and many analysts believe it is one of the chief reasons residential real estate has been slow to recover since the housing crash. And though there has been a spike in home sales this year and an increasing number of first-time buyers active in the market, their numbers remain low compared to historical averages. Sean Becketti, Freddie Mac’s chief economist, says student loan debt plays a role but isn’t solely responsible for the lower-than-normal number of young Americans buying homes. “The low homeownership rate among Millennials is still something of a puzzle,” Becketti said. “However, student debt plays a role – higher balances are associated with a lower probability of homeownership at every level of college and graduate education.” But while student loan debt has tripled over the past 10 years, the rate of homeownership among Americans with student loans was just one percent lower than the rate of those without student loans, indicating debt isn’t the only thing holding young buyers back. More here.