MReport March 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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54 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Home Inventory Drops in January The year began with the number of available homes falling by nearly 14%. H ousing inventory across the nation fell annu- ally by 13.6% in January during the same period where the average home price rose 3.4% to $300,000, according to January's drop is the largest annual decline in four years and brings the supply of for-sale homes to its lowest level since began tracking data in 2012. According to the data, the decline represents a loss of 164,000 listings across the nation. The number of newly-listed properties also fell by 10.6% from last year. "Homebuyers took advantage of low mortgage rates and stable list- ing prices to drive sales higher at the end of 2019, further depleting the already limited inventory of homes for sale. With fewer homes coming up for sale, we've hit an- other new low of for sale-listings in January," said Danielle Hale, re-'s chief economist. "This is a challenging sign for the large numbers of millennial and Gen Z buyers coming into the housing market this homebuying season as it implies the potential for rising prices and fast-selling homes—a competitive market." San Jose, California, saw inventory fall year-over-year 40% in January, while prices grew by more than 10%. The entry-level market was hit hardest by the decline in supply. Properties priced under $200,000 saw inventory fall by 19% annu- ally—an increase from December 2019's 18.1%. Mid-tier properties (priced be- tween $200,000 and $750,000) saw supply fall by 12% year-over-year compared to December's 10.2% decline. The supply of homes priced over $750,000 fell 5.9% year-over-year, which is also an increase from December's drop of 4.4%. Average listing prices rose by 3.4% annually to $299,995 in January. Prices in 18 metros, though, rose by more than 10% year-over-year. The report states that of the 50 largest metros, 46 saw annual average price gains, with Philadelphia's 16% hike leading the nation. Phoenix's had the highest year- over-year median price growth of 14.5%. The average home price in the metro was $399,750. San Jose had the highest aver- age home price of the 50 largest metros at nearly $1.1 million. Are Americans Worried About Their Mortgage Debt? Millennials are the most concerned about the money they owe on their homes. A new survey by LendingTree found that almost 60% of Americans feel burdened by debt in 2020, with 12.4% most concerned about mortgage debt. The report states that even though mortgage debt is the largest source of debt, people feel less burdened by it, as that type of debt is considered a "good debt" as it contributes to consumers' financial future. Fourteen percent of all millennials surveyed are concerned over mortgage debt—the highest among the three generations polled. Thirteen percent of Gen X's surveyed were concerned about mortgage debt and just 10% of baby boomers were worried. Credit card debt was the leading source of worry among those polled at 36.7%. Baby boomers had the most concern over this segment at 44%. Twenty-nine percent of millennials were concerned about credit card debt. A report by LearnBonds in January found that mortgage debt hit a new record of $15.8 trillion in Q 3 2019. This is the highest amount since the 2008 economic crisis when it stood at $14.7 trillion. The home mortgage sector rates showed a steady decline in recent years to hit a low of $13.3 trillion in the third quar- ter of 2013, and from the 2013 Q 3, the debt has increased in a steady trajectory to hit the latest figures recorded in 2019. From the data, there was $401 billion in newly originated mortgage debt in 2018 Q 4. "Generally, the mortgage is among the largest component of household debt across the United States," LearnBonds notes. "However, the mortgage rates have been low since the last quarter of 2018. The Federal Reserve Bank resorted to lower- ing the rates in the wake of trade uncertainty which affected the global economic growth." Additionally, debt-to-income (DTI) ratios are on the decline, loan-to-value (LTV) ratios are on the rise, and average credit scores for conventional conforming home loans ticked up as of Q 3 2019, according to data from CoreLogic. The average DTI for con- ventional conforming loans was 36% for Q 3 2019, down one point from a year earlier. CoreLogic noted that this shift may be a result of a "relaxing of affordability pressures" as mortgage rates eased in 2019. "Homebuyers took advantage of low mortgage rates and stable listing prices to drive sales higher at the end of 2019, further depleting the already limited inventory of homes for sale." —Danielle Hale,'s chief economist

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