Len Kiefer Archives

Low Rates Help Sustain Market Momentum

Mortgage rates and home prices have been headed in opposite directions for a while now. Following the housing crash, rates dropped to record lows and have hovered there over the past few years while home prices skyrocketed back from their post-crash decline. This, of course, has been fortunate for the housing market and potential home buyers – as price increases and their effect on affordability conditions have been muted somewhat by consistently low mortgage rates. Buyers who may’ve been discouraged by price spikes in their local market continued to find opportunities because of their ability to lock in a low rate on a long-term loan. This remains true. In fact, according to Freddie Mac’s Multi-Indicator Market Index – which compares current conditions to historic norms – 75 percent of the top 100 metropolitan areas are showing a three-month improving trend, despite the fact that prices are still rising. Len Kiefer, Freddie Mac’s deputy chief economist, says mortgage rates are the reason. “Nationally, MiMi in July was largely unchanged for the third consecutive month,” Kiefer said. “Despite rising house prices, the majority of housing markets have sustained their momentum due in large part to low mortgage rates. For example, purchase applications, as measured by MiMi, were up more than 17 percent year-over-year and remain at their highest level since December 2007.” More here.

Majority Of Markets Show Improving Trend

Of the top 100 metropolitan areas included in Freddie Mac’s Multi-Indicator Market Index, 84 percent are showing an improving three-month trend. The index – which compares current housing conditions to long-term norms – also found 42 of the 50 states on the upswing. Len Kiefer, Freddie Mac’s deputy chief economist, says it was the 50th straight month the index registered year-over-year gains. “Nationally, MiMi in June was largely unchanged at 85, marking a 5.76 percent year-over-year increase and the 50thconsecutive month of year-over-year increases,” Kiefer said. “Low mortgage rates and consistent job gains are helping to bolster home buyer demand, which is reflected in the MiMi purchase applications indicator. Purchase applications, as measured by MiMi, rose 1.75 percent month-over-month in June to the highest level since December 2007.” But though the index’s results are definitely positive, the upward trend was even stronger last year at this time when all of the top 100 metros were showing gains. Also in the report, the most improved metropolitan areas since last year at this time include Orlando, Denver, Tampa, Chattanooga, and Dallas. Among states, Oregon, Colorado, Florida, Tennessee, and New Jersey lead the list. More here.

Housing Trends Improve In Nearly Every State

The residential real estate market’s rebound following the housing crash has been gradual, with month-over-month volatility sometimes masking the fact that things were getting better one small step at a time. Year-over-year results, on the other hand, have consistently revealed the slow upward grind of housing markets across the country. As proof of that, Freddie Mac’s most recent Multi-Indicator Market Index – which compares current conditions to long-term norms in each of the 50 states and the top 100 metropolitan areas – found that 88 percent of metros are showing an improving three-month trend. Additionally, 46 of 50 states are trending upward. Len Kiefer, Freddie Mac’s deputy chief economist, says the improvement has been consistent, if varied from region to region. “Nationally, MiMi in May registered 85, a 7.3 percent year-over-year increase and the 49th consecutive month of year-over-year increases,” Kiefer said. “Many of the Western markets continue to see strong home sales. However, it’s the Southern states where MiMi continues to register some of the strongest gains buoyed by an improving employment picture. For example, the majority of Southern states showed stronger employment growth than the national average and all of the eight markets in Florida that MiMi tracks are now back to their historic benchmark levels of housing activity.” More here.

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.

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.

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.

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.

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.

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.