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Saturday, October 23, 2021

Florida’s Housing Market: Median Prices, All-Cash Sales Up.

 By Marla Martin

Florida Realtors’ data: Median prices up 18.3% for single-family homes to $355,000 year-to-year; up 17.2% to $255,000 for condos. Single-family home sales down 1.3% year-over-year; condo sales up 4.9%. However, Sept. 2020 saw a huge sales surge because the pandemic shifted transactions into summer and fall, says Chief Economist O’Connor.

ORLANDO, FL – Florida’s housing market reported higher median prices, a rise in all-cash sales and constrained inventory levels in September compared to a year ago, according to Florida Realtors® latest housing data.

“The September data shows that while median prices are well above their year-ago levels for both single-family and condo-townhouse properties, the rate of price growth month-to-month has slowed down quite a bit over the past few months,” says 2021 Florida Realtors President Cheryl Lambert, broker-owner with Only Way Realty Citrus in Inverness. “Of course, demand and a lack of inventory continue to put rising pressure on home prices. If mortgage rates start to increase more in the coming months, as many analysts predict, that could ease the intense demand we’ve been seeing.”

The statewide median sales price for single-family existing homes in September was $355,000, up 18.3% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $255,000, up 17.2% over September 2020. The median is the midpoint; half the homes sold for more, half for less.

Closed sales of single-family homes statewide last month totaled 28,302, down 1.3% year-over-year, while existing condo-townhouse sales totaled 11,845, up 4.9% over September 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“However, a year ago in September, we were in the midst of a huge surge in sales resulting, in part, from the pandemic shifting transactions that would otherwise have occurred during spring, into the late summer and fall,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “If we instead compare this September’s sales counts to those two years ago from September 2019, closed sales of single-family homes were up by over 20%, and closed sales of condos and townhouses were up by 31.5%. And so, relative to pre-pandemic levels, the Florida resale housing market is still performing exceptionally.”

In a continuing trend, the share of closed sales that were all-cash purchases rose last month compared to the previous year. In September, single-family existing home sales paid in all cash increased by 38.5% year-over-year, while all-cash sales of condo-townhouse units rose by 22.9%.

On the supply side of the market, new listings and inventory (active listings) remained restricted last month, O’Connor says.

“New listings of single-family homes only increased by 2.2% year-over-year in September, the lowest increase since February 2021,” he notes. “New listings of condos and townhomes, meanwhile, declined on a year-over-year basis for the first time since January, down by 7.3%. This slowdown in new listings relative to the pace of sales has resulted in our levels of inventory stalling out. While it’s good news that inventory isn’t falling again, that scenario isn’t entirely out of the cards in the coming months. In the longer run, the only way this shortage can be addressed is by building more new homes.”

Single-family existing homes continued at a very low 1.3-months’ supply in September, while condo-townhouse inventory was at a 1.7-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 2.90% in September 2021, a slight uptick from the 2.89% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors Tools and Resources. Realtors also have access to local market data (password protected) through Florida Realtors SunStats resource.

© 2021 Florida Realtors®


Tuesday, October 19, 2021

NAR Research: Student Loan Debt Makes Home Buying Difficult

 How much does student-loan debt impact buyers? A three-year NAR study calls for reform, noting that millennials are “drowning in student loan debt.”

WASHINGTON – Experts from the housing and higher-education fields joined policy thought leaders from the National Association of Realtors® (NAR) last Wednesday to discuss the current student loan debt crisis and how it affects the economy, housing market, and debt holders. The event explored the findings of NAR’s September report, The Impact of Student Loan Debt.

For the past eight years, NAR has been collecting and examining research to measure the impact of student loan debt on future homebuyers. The report found that student loan debt is one of the most significant hurdles for potential buyers and their ability to purchase a home.

“Today’s millennials are drowning in student loan debt,” said NAR Vice President of Policy Advocacy Bryan Greene to open the event. “Many are concerned that to address student loan debt, we would have to take the load off students and put it on taxpayers. Others advocate help from private employers. We need to talk about all options and explore what reforms are possible.”

According to the report, half of the people with student loans (51%) said it delayed them from buying a home. Jessica Lautz, NAR vice president of demographics and behavioral insights, explored and explained the research recently done.

“We first started researching this topic because of NAR members’ children – they couldn’t afford a home because of the burden of student loan debt. We knew they weren’t alone because there are 40 million Americans holding student loan debt,” says Lautz. “Half of the non-owners say student loan debt is delaying them from buying a home. We asked participants in our research to pretend they paid off their student loan debt – they said the first thing they would invest in is long-term savings and the second would be buying a home. So, we know they want to get into homeownership, but they are having a hard time getting there.”

The Mortgage Bankers Association (MBA) spoke about today’s competitive housing market. Already challenged student-loan holders must face other buyers making all-cash offers in a competitive bidding process. Due to this intense competition, MBA says it supports down payment assistance, which is clearly needed for first-time homebuyers especially in low-income areas.

Senior Vice President of Public Policy for the National Fair Housing Alliance Nikitra Bailey outlined how student loan debt has a disproportionate effect on people of color. NAR’s research found that white student debt holders (30%) are less likely than Black (47%) or Hispanic (47%) ones to say they’re currently incurring student loan debt for themselves.

“Today Black homeownership is as low as it was when discrimination was legal,” says Bailey. “After 20 years of taking out student loans, Blacks still owe 95% of the balance of the debt and are more likely to default. Post-secondary education is now a necessity to succeed, yet a degree is not a shield from racial disparity. Our proposed Down Payment Targeted Assistance Program addresses student loan debt as a burden that leads to the lack of ability to save for a down payment, mostly among Blacks and Latinos. And our Keys Unlock Dreams Initiative will help close the racial wealth and homeownership gap.”

Rachel Fishman, deputy director for research, higher education at New America, was able to explain the burden on parents who take out Parent PLUS loans. These federal loans continue to be an in-between space where parents take on the student loan debt of their child.

“When we talk about student loan debt, we talk about the student, but we need to start correlating the family,” said Fishman. “My hope is to raise awareness about this issue … to start addressing the root cause of debt – food insecurity, housing affordability, childcare. Families are juggling these things on balance sheets along with student loan debt. Among other recommendations, we seriously need to address college affordability for a four-year degree.”

The last speaker for the event was Ben Kaufman, head of investigations & senior policy advisor at the Student Borrower Protection Center. He closed the forum with statistical intel that outlined the chronological timeline of the student debt crisis. Kaufman’s figures showed the increasing financial instability student loan debt is creating and how it stands in the way of people being able to purchase a home.

“Student loan debt has exploded in the U.S.,” Kaufman says. “There are more people borrowing, and they are borrowing more. People think of a student loan debt holder as a young person, but actually, two-thirds of borrowers are over the age of 30. Even before COVID, the rate of delinquency on student loans was higher than the delinquency on mortgages at the peak of the financial crisis.

“Before COVID, a borrower was defaulting on a student loan every 26 seconds. So much of this is policy choices, for generations every single day in Washington, all levels of government, have been making decisions on this. It is imperative to claim your seat at the table so your voices can be heard. If your voices were heard from the onset, I don’t think we would see the consequences we see today.”

Source: National Association of Realtors® (NAR)

© 2021 Florida Realtors®

Monday, October 4, 2021

Borrowers Withdrew $63 Billion in Equity in 2nd Quarter of 2021

 Black Knight: As a result of rising home values, the average homeowner could refinance their mortgage and withdraw $173,000, while keeping 20% equity in their home.

JACKSONVILLE, Fla. – Black Knight estimates that borrowers pulled $63 billion in equity in the second quarter of 2021, the most in a single quarter in almost 15 years. There remains $9 trillion in tappable equity, a 37% year-on-year gain, due to surging home prices.

Home values have soared to such a degree that the average homeowner could refinance their mortgage and withdraw $173,000, while keeping 20% equity in their home; the sum of such tappable equity rose $20,000 for the average homeowner from the previous quarter.

Homeowners’ equity will cushion homeowners exiting forbearance, according to Black Knight’s Ben Graboske. Ninety-eight percent of homeowners still in forbearance as of mid-August have at least 10% equity, while 28% of mortgage holders were fully underwater in the last downturn.

Although mortgage originations had fallen 5% from the first quarter, it was the fourth straight quarter to post over $1 trillion in total lending, and more than 2.2 million people opted to leverage rising home values and low rates and refinance their homes.

More than 50% of borrowers who exited their forbearance plans in April and May 2020 fully repaid their mortgages, likely due to low rates encouraging refinancing – but more borrowers who are now leaving forbearance are remaining in loss mitigation programs.

Source: HousingWire (09/08/21) Kromrei, Georgia

© Copyright 2021 INFORMATION, INC. Bethesda, MD (301) 215-4688

Rising Prices Push Home Equity to Its Highest Level in 10 Years

 By Alex Veiga

Homeowners with a mortgage gained an average $51,500 in home equity in the second quarter – a 29.3% year-to-year increase. It’s the biggest jump since 2Q 2010.

LOS ANGELES (AP) – Soaring home prices have pushed up average homeowner equity growth to the highest level in more than a decade, though recent signs of a cooling U.S. housing market point to more moderate gains in the second half of the year.

Homes with a mortgage gained an average of $51,500 in equity in the second quarter, an increase of 29.3% from the April-June quarter last year, according to real estate information company CoreLogic. That’s the highest quarterly average gain in home equity since the second quarter of 2010, the firm said.

That works out to nearly $3 trillion in equity gained by U.S. homeowners with a mortgage, which is about 63% of all homes, CoreLogic said. Average homeowner equity jumped nearly 20% in the first quarter from a year earlier.

Home equity growth can have broad impacts on the economy, giving homeowners more financial flexibility to spend on big purchases or build a nest egg. Rising home values also make it increasingly tougher for would-be homeowners to buy.

Homeowners in California, Washington state and Idaho saw among the biggest average equity increases in the second quarter: $116,000 in California, $103,000 in Washington state and $97,000 in Idaho.

The surge in homeowner equity gains follows a record run up in U.S. home prices this year amid a searing hot housing market fueled by ultra-low mortgage rates, a thin inventory of properties for sale and many would-be buyers’ desire for more living space during the pandemic.

S&P said this week that its closely watched S&P CoreLogic Case-Shiller 20-city home price index surged 19.9% in July from a year earlier, the largest gain on records dating back to 2000.

Still, there are signs the soaring home price gains fueling homeowner equity may have peaked. The National Association of Realtors’ most recent housing market snapshot showed the median home price of previously occupied U.S. homes rose 14.9% in August from a year earlier to $356,700. That’s a more modest gain than earlier this year, when year-over-year increases were running at 20%-25%.

“It seems that there was that shift from July to August where there starts to be a little bit of pushback in terms of where prices have gone,” said Ali Wolf, chief economist at Zonda Economics, a real estate industry tracker.

Wolf projects that U.S. home price growth will slow to about 5% next year, citing expectations of modestly higher mortgage rates and a small but notable increase in the number of homes on the market.

“The days of runaway home price growth are behind us,” she said.

In its most recent quarterly housing forecast, mortgage buyer Freddie Mac envisions home prices growing 5.3% next year, down from a projected 12.1% increase in 2021.

If those home price outlooks hold, it would translate into a less torrid pace for homeowner equity growth next year. Still, the outsized growth in homeowner equity this year will have ripple effects for the broader economy, and the housing market. Rising homeowner equity creates a buffer for borrowers against potential financial hardship, such as job loss. And it can give homeowners financial flexibility to borrow against their equity to pay off high-interest debt or finance large purchases, such as home improvement projects, which can give a boost to the economy.

“It is good for wider economic growth, but there’s an ugly side to today’s level of pricing,” Wolf said. “Those who have chosen not to purchase a home or have been unable to are finding it very hard to enter the market now, and in a lot of cases these individuals are missing out on wealth accumulation.”

The surge in home prices this year has made it tougher for would-be homeowners to buy. First-time buyers accounted for 29% of home sales in August, according to the National Association of Realtors. A year ago they made up 33% of buyers.

The U.S. homeownership rate was 65.4% in the second quarter, down from 66.6% last year and 66.2% a decade ago.

The increase in home equity has helped limit the number of homeowners who end up “underwater” on their mortgage, or owing more on their loan than their home is worth. Also known as being in negative equity, that can happen when a home’s value declines, or when the size of the mortgage increases, say when someone takes out a home equity loan.

At the end of the second quarter, 1.2 million homes, or 2.3% of all U.S. homes with a mortgage, were in negative equity, CoreLogic said. That’s down 30% from the same quarter last year.

Among U.S. metropolitan areas, Chicago had the biggest share of homes with negative equity in the April-June quarter at 5.2%, the firm said.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Housing Affordability Hits Its Lowest Point in 13 Years

 When calculating affordability, low mortgage rates have offset rising home prices so far, but 75% of U.S. counties are now less affordable than their historical average.

MIAMI – According to ATTOM Data Solutions LLC, about 75% of counties across the country were less affordable than their historical average during the third quarter of 2021 – an increase from 56% of counties one year earlier (third quarter of 2020) and the worst rate since 2008.

ATTOM reports that 430 out of 572 counties analyzed in the third quarter of 2021 are less affordable than their past averages, up from 317 counties.

The rising lack of affordability comes as the median national home price shot up 18% over the last year to about $315,500. Major ownership costs on the typical home consumed 24.9% of the average national wage of $64,857 in the third quarter, up from 24.3% in the second quarter of 2021 and 22.3% in the third quarter of last year. Lenders generally consider 28% as a ceiling.

The report also found that total homeownership costs are only below 28% in 303 of the counties analyzed.

Home prices have been going up for 10 years, and in the third quarter of 2021, about 67% of counties saw year-over-year price increases of at least 10%. The biggest price increases among counties with at least 1 million people include Middlesex County, near Boston, where prices are up 32% over the same time last year, as well as Arizona’s Maricopa County, up 24%.

ATTOM found homeownership most affordable in three Pennsylvania counties: Schuylkill County at just 9.5%, Fayette County at 10.6%, and Cambria County at 10.9%.

Counties that require the highest share of wages to afford a home include Kings County in Brooklyn (78.7% of weekly wages), Santa Cruz County, California (77.7%), Marin County, California (75.1%), and Maui County, Hawaii (66.2%).

The quickly rising pace of home prices may be starting to even out, however, which may help affordability. In August 2021, about 46.1% of homes sold for more than their initial list price, down from 47.2% in July and from a June peak of 50.4%.

Source: South Florida Business Journal (09/30/21) Medici, Andy

© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688

Monday, September 27, 2021

Florida’s Housing Market: Median Prices, New Listings Up in August

 By Marla Martin

Florida Realtors’ data: More new listings and higher median prices – up 18% for single-family homes to $354,000; up 16.1% to $252,500 for condos – than a year ago. Single-family home sales rose just 0.2%, but condo sales were up 13.1%. Chief Economist O’Connor: Condo-townhouse market “remains the hotter market for now.”


ORLANDO, Fla. – Florida’s housing market reported higher median prices, more new listings and a rise in all-cash sales in August compared to a year ago, according to Florida Realtors® latest housing data.

“The data shows that new listings continue to increase, which is hopeful news for buyers who may have been waiting to see more for-sale inventory come on the market,” says 2021 Florida Realtors President Cheryl Lambert, broker-owner with Only Way Realty Citrus in Inverness. “New listings for single-family homes in August rose 10.6% year-over-year, while new listings for condo-townhouse properties increased 1.4%. Still, it’s likely to take some time before inventory levels rebuild.”

Closed sales of single-family homes statewide in August totaled 29,550, up slightly (0.2%) year-over-year, while existing condo-townhouse sales totaled 12,550, up 13.1% over August 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

The statewide median sales price for single-family existing homes last month was $354,000, up 18% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $252,500, up 16.1% over August 2020. The median is the midpoint; half the homes sold for more, half for less.

Florida Realtors Chief Economist Dr. Brad O’Connor notes that while closed sales of single-family homes were up by only a fraction of a percentage point compared to a year ago, “that increase remains impressive given the rate at which homes were selling at this time last year. The market for condos and townhouses, however, remains the hotter market for now.”

In a continuing trend, the share of closed sales that were all-cash purchases rose last month compared to the previous year. In August, single-family existing home sales paid in all cash increased by 48.3% year-over-year, while all-cash sales of condo-townhouse units rose by 32.9%.

On the supply side of the market, inventory (active listings) remained constrained in August.

“Inventory levels at the end of August were not much different than they were at the end of July, but are still well below where they were a year ago,” Dr. O’Connor says. “Active listings (inventory) of single-family homes were down 32.4% year-over-year, while active listings of condos and townhouses were down 52.4%.”

Single-family existing homes continued at a very low 1.3-months’ supply in August, while condo-townhouse inventory was at a 1.7-months’ supply.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 2.84% in August 2021, down from the 2.94% averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors Tools and Resources. Realtors also have access to local market data (password protected) through Florida Realtors SunStats resource.

© 2021 Florida Realtors®

8 Experts: Sky-High Housing Prices Won’t Fall

 By Swapna Venugopal Ramaswamy

Today’s market isn’t like the boom-bust cycle leading up to the Great Recession: Tough loan standards are the norm, plus many factors have kept the housing supply low.

MCLEAN, Va. – Exuberant buying – with multiple offers and bidding wars – has become common across the country, reminiscent of the fevered market before the 2008 housing crash. Home prices nationwide increased year-over-year by 18% in July 2021, the largest annual growth that CoreLogic Home Price Index has measured in its 45-year history.

That leads to the inevitable question: Will history repeat itself?

USA TODAY spoke to eight experts to find out if a housing crash is on the horizon.

The short answer? No.

For one, they say the housing market in 2021 is not like the boom-bust cycle leading up to the Great Recession. In the years before 2008, mortgage lenders made subprime loans to borrowers without verified income or adequate down payments while pushing risky loan products. This time, tough loan underwriting standards are the norm even with rock-bottom interest rates.

On the supply side, a decade of underbuilding of homes, regulatory barriers, high construction costs combined with people staying longer in their homes have kept housing inventory low.

When it comes to demand, buyers’ desire for more space during the pandemic, low mortgage rates, rising savings, an improved labor market and millennials reaching their peak homebuying age have contributed to the tightening of the inventory.

But … home price growth will decelerate in the coming year, experts predict.

Stronger mortgage market

In the mortgage market of 2006, there was a proliferation of high credit risk mortgage products, while about one-third of all mortgages were low or no-documentation loans or subprime loans, says Frank Nothaft, chief economist for CoreLogic.

“It was a complete erosion and deterioration of credit underwriting standards in the economy, in the mortgage market,” he says. “The no-documentation loans were commonly referred to as liar loans because you’d lie about your income, you’d lie about your employment, you’d lie about your financial assets.”

This time around, it is completely different, he says.

“We have high-quality mortgage origination standards, and so we don’t have mortgage finance fueling home price growth today,” he said.

Forbearance programs

One of the lifelines for homeowners during the COVID-19 pandemic has been forbearance, an ability to skip or make smaller monthly payments on mortgages under the CARES Act.

That left homeowners with more cash for emergencies.

In May 2020, two months after the pandemic caused havoc in the economy, more than 4 million U.S. mortgages were in forbearance. Currently, there are an estimated 1.6 million homeowners in forbearance plans, which will start winding down by the end of September, according to the Mortgage Brokers Association.

Given the strong housing market and price appreciation, banks are more likely to work with borrowers to restructure their loans.

Those who are not able to make the payments might decide to sell their homes and enter the rental market, says Jeff Taylor, managing partner at Mphasis Digital Risk, a technology and risk firm that consults with mortgage lenders.

“We are currently guesstimating about probably 8% to 10% will actually have to go through the foreclosure process,” he says. “And it’s going to be geographically spread out so it will not have a big impact on the housing market.”

To put that in perspective, more than 11 million mortgages entered the foreclosure process between 2008 and 2012 – which included the Great Recession – according to the Federal Reserve Bank of St. Louis.

Two economies

“The pandemic caused much more economic damage to lower-wage earners than mid-and upper-tier salary types, who tend to be homeowners more than renters,” says Jonathan Miller, a state-certified real estate appraiser in New York and Connecticut.

With a rapid run-up in prices, homeowners have a record amount of equity at their disposal and, unlike the mid-2000s, are not leveraged to the hilt, Miller says.

“They’re not using equity like an ATM in their home – like they did during the bubble – because the economy is fundamentally better,” he says. “I anticipate more of a plateauing phenomenon,” with home prices, he says, rather than “some sort of sharp correction.”

Millennial homebuyers

The most significant housing demographic patch ever recorded in history – roughly 32.5 million people between ages 27 to 33 – will be actively trying to buy homes through 2024, according to housing analyst Logan Mohtashami.

“While I have been on record many times saying this housing cycle is the unhealthiest housing market post-2010, it’s not because we have a terrible credit boom. It’s because homeowners look great financially, they live in their homes longer than ever and the inventory shortage is creating forced bidding,” he says.

Indeed, homeowners nationwide are remaining in their homes longer than ever. In 2020, a typical homeowner lived 13 years in a home, up from 8.7 years in 2010, and 6.4 years in 2005, respectively, according to Redfin, a full-service real estate brokerage.

Not over-leveraged

The additional scrutiny of income and assets and the end of ‘silent seconds’ (a second mortgage placed on an asset for down payment funds that are not disclosed to the original mortgage lender) have been instrumental in establishing the ability to pay for home buyers, says Benjamin Keys, a professor of real estate in the Wharton School at the University of Pennsylvania.

“Default rates on mortgages were extremely low prior to the COVID programs put in place, and I expect that default rates will return to that level when the economy fully recovers,” he says.

Most of the growth in home prices is automatically addressed by lower mortgage rates and higher incomes, says Taylor Marr, lead economist for Redfin.

“The higher income includes all of the stimulus money that has gone out over the last year that allowed people to put a little bit more money down to cover the closing and moving cost,” Marr says.

Marr adds that he expects the strong demand to continue as more listings come on the market.

“It really will be just moving forward in a healthy direction where price growth is expected to slow down from double digits to single digits next year as mortgage rates rise,” he says. “But not so much where there’s a correction in prices.”

Still facing a housing shortage

An underbuilt market is one of the factors helping sustain valuation in the hot housing market.

An analysis by housing giant Freddie Mac suggests that the housing shortage has increased 52% from 2.5 million in 2018 to 3.8 million in 2020.

The decline in entry-level housing is even more pronounced than the overall shortage, it found. The share of entry-level homes in overall construction declined from 40% in the early 1980s to around 7% in 2019.

“A lack of supply rather than credit-driven speculation is driving house price growth,” says Leonard Kiefer, deputy chief economist at Freddie Mac. “House prices may be high, but there are some fundamental economic forces and not just speculation and very loose credit holding up the values.”

Even a price drop should not affect the housing market because of the pent-up demand and people who were priced out, says Lawrence Yun, chief economist for the National Association of Realtors.

“They’ll just jump back into the market, viewing it as a second opportunity,” he says. “We are still facing a housing shortage with inventory still down from one year ago and significantly down from two years ago.”

Why home price growth will slow

Most experts predict an increase in inventory heading into spring 2022.

Some of it will come from new construction, or from older homeowners who had postponed listing their home for sale the last two years because they didn’t want to sell and move during a pandemic, says Nothaft.

A segment of the population of borrowers who are in forbearance and are unable to make mortgage payments also are expected to sell their homes, he said.

“I don’t think that’s going to be a big number, but it will add to the inventory for sale,” says Nothaft.

Added to that, if mortgage rates go up next year, it could further erode affordability and reduce the number of prospective home buyers in the marketplace. “So between less demand and more supply, the price growth will slow down,” says Nothaft.

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