Mortgage Applications Surge

Home buyer demand hit its highest level in 11 years, as January continues to shape up to be a hot month for the housing market. Weekly mortgage applications jumped 30% for the week ending Jan. 10, a sign that home buyers are emerging, the Mortgage Bankers Association’s seasonally adjusted index shows. The average 30-year fixed-rate mortgage decreased to its lowest level since September, averaging 3.87%, the MBA reports.

Applications for home purchases, a gauge of home buying activity, jumped 16% last week, reaching the highest level since 2009.

Source: “Weekly Mortgage Applications Soar 30% as Homebuyer Demand Hits the Highest Level in 11 Years,” CNBC (Jan. 15, 2020) and “Falling Mortgage Rates Set Off a Stampede of Borrowing,” MoneyWise (Jan. 15, 2020)

Downsizers: ‘Biggest Regrets’

Homeowners who opt to downsize into a smaller place say that saving money was their chief motivator, along with having to manage less space after the children have moved out. But some home buyers could have downsizing regret as they transition into a smaller home.

Homes.com surveyed more than 1,000 consumers who have downsized their homes. They found that those who downsized did tend to spend 62% less than the house they owned prior. However, many downsizers still weren’t happy.

Interesting data at source: “The Upside to Downsizing,” Homes.com (2020)

January Expected to Be ‘Hot for Home Shoppers’

The busy home-shopping season will start early in January this year, according to forecasters. The month of January in recent years has tended to have the second-most listing views across the year (just 1% below February), according to realtor.com® data.

With sub-4% mortgage rates, low unemployment, and higher wages, industry insiders are expecting a bustling winter real estate season.

Source: “New Analysis: January Home Shopping Is Getting More Popular,” The Mortgage Reports (Dec. 31, 2019)

Pending Home Sales Jump

Pending home sales rose 1.2% in November after slipping the prior month, according to the National Association of REALTORS®’ latest housing report, which was just released. Year-over-year contract signings were up 7.4% nationally, according to the report. The West region of the country reported the highest monthly growth in pending home sales at 5.5%

“Despite the insufficient level of inventory, pending home contracts still increased in November,” said NAR Chief Economist Lawrence Yun, noting that housing inventory has been in decline for six straight months. “Favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”

Source: magazine.realtor/daily-news/2019/12/30

 

Average Credit Scores Surge

Americans are boosting their credit scores, which bodes well for applicants seeking a mortgage to snag the lowest rates. The average credit score hit its highest level since 2011, reaching 682–two points higher than a year ago, Experian reports in its State of Credit report. Consumers also are taking on more mortgage debt than a year ago, and delinquency rates are decreasing too.

Comparing borrowing behaviors between genders, women’s average credit scores are four points higher than men’s (686 vs. 682, respectively). Men tend to carry more mortgage debt than women–$220,421 compared to $203,603.

By generation, Gen Xers, millennials, and Gen Zers tend to carry more debt than older generations. They also tend to have higher delinquency rates, the Experian study shows. A breakdown showing their average credit scores and mortgage debts is detailed at: Experian

Universities Want Senior Housing?

Seniors are increasingly heading back to college, and many universities believe they’ll want to buy a home nearby too.

State government subsidies for higher education are below prerecession levels and traditional students are saddled with college debt—causing universities to look at retired baby boomers as a promising source of income, The Wall Street Journal reports. As such, several colleges are taking advantage of their extra land to develop upscale senior housing, looking to generate extra profits.

Senior living facilities on or near campus cater to baby boomers who may wish to take an occasional class or pursue their academic interests. Some baby boomers also view it as an opportunity to mentor younger students.

Source: “Seniors Want to Go Back to Class. Universities Want to Sell Them Real Estate,” The Wall Street Journal (Dec. 19, 2019) [Log-in required.]

Home Flipping Is Losing Fans

Home flipping plunged 12.9% in the third quarter of this year, following an unusually active spring, according to ATTOM Data Solutions’ latest U.S. Home Flipping Report. In the third quarter, 56,566 single-family homes and condos were flipped, down 6.8% from a year ago. This marks the largest quarterly and annual drops in home flipping activity since the third quarter of 2014.

“After a springtime selling binge earlier this year, the home flipping business settled way down over the summer amid a continuing scenario of languishing profits,” says Todd Teta, chief product officer at ATTOM Data Solutions. “The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kind of deals they were getting as recently as last year. Those forces are keeping profits way down from postrecession highs and show no signs of easing.”

Source: ATTOM Data Solutions

Specialty Rooms Are in Demand

home shoppers—particularly millennials—are ranking specialty rooms high on their priority list during their search. These rooms include laundry rooms, home offices, mud rooms, sun rooms, and more. The National Association of Home Builders surveyed buyers to find which of these rooms rank highest on their lists. The NAHB considers specialty rooms anything except bedrooms, bathrooms, or the kitchen—or what’s considered the essentials in a home.

Millennials also showed a strong preference for an exercise room (with 57% wanting one). But that preference tended to wane with age. For comparison, 50% of Gen Xers said they wanted an exercise room, 32% of baby boomers, and only 17% of seniors. Millennials also expressed an interest in media and game rooms and two-story entry foyers, more so than other age groups.

Source: “Specialty Rooms Wanted by Millennial Home Buyers,” National Association of Home Builders’ Eye on Housing blog (Dec. 5, 2019)

5.4% Jolt for Home Prices for 2020

More home appreciation is likely to come in the new year. In a new report released by CoreLogic, economists predict home prices will spike by 5.4% from October 2019 to October 2020. That is even higher than the 3.5% annual appreciation in national home prices posted this October, the real estate data firm notes.

“We expect home prices to rise at least another 5% over the next 12 months,” says Frank Martell, president and CEO of CoreLogic. “Interestingly, this persistent increase in home prices isn’t deterring older millennials. In fact, 25% of those surveyed anticipate purchasing a home over the next six to eight months.”

The CoreLogic Home Price Index is a projection of home prices that is calculated using a variety of economic variables and state-level forecasts.

Home price increases by state is shown in ‘Table 2’ at article source: CoreLogic

Mortgage Prepayments Climb

Mortgage prepayments, a common gauge for housing and refinancing demand, jumped to its highest level since May 2013—a good sign for the market, according to a new analysis from data and analystics firm Black Knight. Mortgage prepayments were at 1.81% in October, more than double the figure a year ago. That represents a 134% year-over-year increase, Black Knight reports.

What’s causing the improvement? Low mortgage rates are prompting more people to refinance their mortgage or buy a home. Consumers typically pay off previous loans when they buy a new home.The uptick is apparent: Existing-home sales increased 1.9% in October to a seasonally adjusted annual rate of 5.46 million—4.6% higher than a year ago, the National Association of REALTORS® reported last week.

Source: “Mortgage Prepays Surge to 6-Year High, Black Knight Says,” HousingWire (Nov. 25, 2019)