Homeowner Equity Growth Streak Continues

Homeowners with a mortgage saw their equity rise 13.3 percent year over year, according to CoreLogic’s Home Equity Report for the first quarter of 2018, released Thursday. The average homeowner gained $16,300 in home equity between the first quarter of 2017 and the first quarter of 2018. That is the highest growth in home equity in four years.

Western states saw the largest uptick in home equity. California homeowners gained $51,000 on average in home equity, while Washington homeowners saw about $44,000 on average, in equity.

Source: “Homeowner Equity Report,” CoreLogic (June 7, 2018)

 

Fannie, Freddie’s Role Is Shrinking?

Mortgage giants Fannie Mae and Freddie Mac, two government-sponsored enterprises, will likely be guaranteeing a lot fewer new loans over the next decade, as the private sector steps up its role, according to a new report by the Congressional Budget Office.

During and after the financial crisis — from 2008 to 2013 — Fannie Mae and Freddie Mac backed about 60 percent of new mortgages. However, the CBO report predicts a big change: The two firms likely will only back about 40 percent of new mortgages by 2024 as private sources of capital take their place.

Fannie and Freddie’s market share is already showing signs of shrinking. In the first half of 2014, they backed about 50 percent of new mortgages.

Neither Fannie Mae or Freddie Mac issue loans directly. Instead, they purchase loans and resell them in bundles. In 2011 and 2012, they increased the fees they charge to guarantee mortgages, which reduced their advantage over private-sector firms.

Source: “Fannie Mae, Freddie Mac to Lose Market Share to Private Capital: CBO,” Reuters (Dec. 16, 2014)

Prospects of Condominiums Comeback Are High

Condo sales have been on a roller coaster ride in recent years, as the recession hit the sector hard. But is the country ready for a condo revival?

“Condo sales moved sideways several years after the recession before picking up steam again in 2013,” CoreLogic Deputy Chief Economist Sam Khater writes on the company’s blog. “This year, it continues to rebound and currently accounts for 12.3 percent of all sales in 2014.”

As of June 2013, 22 of the 25 top condo markets reported rises in sales compared to prior years. But interest-rate rises in the second half of 2013 caused sales to cool off somewhat, similar to what occurred in the overall market. By June 2014, only 14 of those same markets were showing increases year-over-year, CoreLogic reports.

Housing analysts are optimistic the condo market is poised for a big rebound, particularly since the largest cohort in the U.S. is the 20-to-24 age group.

“This specific age cohort might currently be driving today’s rental market, but they will likely be driving the first-time home buyer and condo markets over the next five to 10 years, driving demand for newly built condos,” Khater notes. “That demand is heavily needed in the market now, given that newly built condos were hit harder in the last housing downturn than newly constructed homes overall.”

Source: “The Long-Term Rising of Condo Sales,” CoreLogic (Sept. 30, 2014)