HOARDING HOMES

The housing inventory crunch is largely due to a spike in the amount of time Americans are staying in their homes. Based on a joint analysis of indicators with Moody’s Analytics, First American Chief Economist Mark Fleming said, “…today, we are in a near unprecedented homebody era, as increasing mortgage rates, low supply, low rates of foreclosure and tight credit have increased homeowner tenure to the highest level in 18 years.” The long-term historical tenure for U.S. homeowners is six years.

BORROWING BOOST

A rate decline led to an application incline according to Freddie Mac’s Primary Mortgage Market Survey (PMMS) for the week ending January 10. The PMMS credits lower energy prices and continued income growth for a 20% increase in mortgage applications last week as rates for a 30-year fixed rate mortgage dipped to the lowest levels since March of last year.

REFINANCE REASONING

The number of Americans who tapped home equity reached a 10-year high in November as the number of borrowers who refinanced to get better interest rates or terms dropped to the lowest level since 2005. Cash-out refinances comprised the largest share of loan origination activity since 2008 according to Black Knight Financial Services’ November Mortgage Monitor report.

MATRIMONIAL MONEY

While wages of men and women with at least a HS diploma are similar early in life, they diverge dramatically with age. The gap peaks at about age 50 with men earning about $76,000/year and women earning about $49,000/year. However, at all ages there is no gap between single women, single men and married women. Married men, however, earn much more and are the cause of the entire gap.

SEASONAL SLOWDOWN?

The ramp up to the holiday season marked a slowdown in home sales according to the latest Pending Home Sales Index (PHSI) from the National Association of Realtors (NAR). NAR Chief Economist Lawrence Yun says November’s 7.7% year-over-year decline “…does not yet capture the impact of recent favorable conditions of mortgage rates.”

RATE ROLLBACK

Mortgage interest rates flashed back to early summer in the last week of 2018 according to Freddie Mac’s Primary Mortgage Market Survey for the week ending December 27. Rates for the 30-year fixed rate mortgage continued their downward trend, dipping close to the point where home sales slowed in the traditionally busy buying season.

EXTENDED EXPANSION

U.S. economic growth needs to continue for seven more months in order to set the record for the longest expansion in U.S. history according to CoreLogic Chief Economist Frank Nothaft, who bases his estimation on over 160 years of business cycle data. Nothaft also predicts 2.4% overall economic growth for 2019 and the potential for 3.4% unemployment, which would mark its lowest rate in 50 years.

SLIGHTLY SLOWER

Homes are staying on the market a tad longer according to the National Association of Realtors (NAR). NAR’s Realtor Confidence Index Survey shows that listings were on the market for an average of 33 days in October, up from 29 days the previous month. Responding Realtors® cited “interest rate” and “low inventory” as the major issues affecting transactions in October.

HIKE HIATUS

Though mortgage interest rates have trended upward most of this year, recent stock market volatility has presented prospective home buyers with an early holiday gift. Rates for a 30-year fixed rate mortgage receded .06% for the week ending December 6 according to Freddie Mac’s Primary Mortgage Market Survey (PMMS). The PMMS has tracked U.S. mortgage interest rates since 1971.

RATE REMINDER

The Federal Reserve is fulfilling expectations and will likely raise rates again when the Board of Governors meets next week, but that doesn’t mean mortgage interest rates will follow suit. Freddie Mac Chief Economist Sam Khater reminds the public that the Fed funds rate and other oft-mentioned indicators such as the stock market aren’t the true drivers of mortgage rate activity, saying, “When stock prices drop, it causes a flight to safety and Treasury bonds. In the short term, this is good for consumers.” The next meeting of the Federal Reserve Board was rescheduled from December 5 due to the declaration of a national day of mourning for former president George H.W. Bush.

AVERAGE OWED

NerdWallet released its 2018 American Household Credit Card Debt Study and it shows big numbers. U.S. consumers with mortgages owe an average of $184,417 nationwide. Average student loan debt is $47,671, while Americans with credit card debt carry an average balance of $6,929.

ABOVE & BELOW

The latest Real House Price Index (RHPI) from First American Financial Corporation shows some interesting ups and downs. Though home prices are up 15.3% year-over-year from August 2018, First American says U.S. home prices average 37% below the 2006 pre-recession peak. First American Chief Economist Mark Fleming puts the numbers in perspective, saying, “Without stronger household income growth, rising mortgage rates will continue to impede consumer house-buying power, reducing affordability.” The RHPI uses incomes and mortgage rates to inflate or deflate unadjusted house prices to capture the true cost of housing.

RATE ROLLBACK

Mortgage interest rates trended downward in the week ending November 22 according to Freddie Mac. The Primary Mortgage Market Survey (PMMS) reported the largest weekly drop since January 2015. Freddie Mac has tracked mortgage rate data since 1971.

NEW NORMS

The Federal Housing Finance Agency (FHFA) announced the third increase in conforming loan limits in three years this week in compliance with the Housing and Economic Recovery Act (HERA). HERA requires annual adjustment of baseline conforming loan limits for Fannie Mae and Freddie Mac to reflect changes in home prices. In most of the U.S., the 2019 maximum conforming loan limit for one-unit properties will be $484,350, an increase from $453,100 in 2018.

BUMMED BUILDERS

This year finds builder confidence is at its lowest level since 8/16, while housing starts and building permits were highest in January and March, respectively. The most recent peaks for existing and pending home sales occurred in 11/17 and 4/16. Prices are rising noticeably slower, inventories are increasing, and affordability is near a decade low, according to economist Elliot Eisenberg, PhD. However, with solid household formation, incomes up and job growth holding strong, Eisenberg predicts, “Housing won’t cause the next recession. It’ll be something else.”