MReport June 2020

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M REPORT | 51 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 Homebuilder Confidence Growing NAHB/Wells Fargo Housing Market Index rises after record drop. A ccording to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder confidence in the market for newly built single-family homes rose an impressive seven points to 37. Experts explain that this stabi- lization and present positive senti- ment among builders could most likely be attributed to the fact that home construction was considered "essential," which allowed work- ers in the residential construction industry to continue working and earning, even amid the worst of the recent lockdown crisis. Yet another factor contributing to the optimism is the fact that builders appear to be show- ing great adaptability in their approach to the new business environment via utilizing innova- tive methods to not just weather the change but to thrive in the new normal. A sampling of some of these methods includes the incorpora- tion of things like more social media, adopting virtual tours, and sealing deals with online closings. Also interesting to note is that jurisdictions are likewise jumping on board to weather the storm by adapting via the adoption of third-party and virtual inspection mandates. Regarding the demand in the market, low-interest rates are responsible for helping to maintain its level. Furthermore, now that many regions are beginning to open up and relax the stay-at-home mandates, allowing previously fur- loughed employees to get back to work, this demand is only expected to further increase. Added to these optimistic factors for the forward motion of the market is the fact that mortgage application data has shown a consistent rise throughout the month, pointing to signs that more buyers are getting active and beginning to be on the lookout for their next home. The NAHB recently reported that the overall costs for residen- tial construction materials fell more than ever recorded in April. Prices paid for industry fell 4.1%. This significant decline in residential construction prices for goods contributes to the year-to- date decline, which now stands at -5.4%. Up until now, the lowest recorded year-to-date decline was seen in 2009, which was -1.3%—a marked contrast to today's much lower showing. Home Prices in Opportunity Zones Rising Nearly half of all opportunity zones reported larger price increases than the national average. A TTOM Data Solutions found 45% of opportu- nity zones saw median- home prices rose by more than the national average of 11.3% annually during Q1 2020. This is down slightly from the 47% of the opportunity zones that had home prices rise more than the 9.4% average from Q 4 2018 to Q 4 2019. Additionally, 78% of opportunity zones had median prices during Q1 2020 that were less than the na- tional average of $265,900. Homes in 36% of opportunity zones saw prices decline or stay the same. "Home prices in designated opportunity zones around the country keep showing strong gains, tracking the housing market boom now in its ninth year. Nearly half did even better in the first quarter of 2020 than the na- tion as a whole—a notable trend in some of the country's most dis- tressed neighborhoods," said Todd Teta, Chief Product Officer with ATTOM Data Solutions. "As with other recent ATTOM reports, this one needs to be taken in the context of the looming impact of the coronavirus pandemic, which could cut the legs out from under the housing market. For now, though, home prices are going strong in opportunity zones, which offers significant hope to current and potential homeown- ers and investors." Of the 3,010 opportunity zones in the report, California had the most with 389. Florida came in second at 295; Georgia had 148; Texas had 144; and North Carolina was home to 137 oppor- tunity zones. Forty-six percent of opportu- nity zones in the report had a median-home price during Q1 2020 that was $150,000, while 17% had average prices between $150,000 and $199,999. The Midwest had the highest rate of opportunity zones tracts with a median-home price less than $150,000, coming in at 76%. The South had 58% with homes below $150,000, the Northeast was home to 45%, and the West had just 11%. Teta said in a prior report that while home-price growth in op- portunity zones is positive, there's no guarantee they will last. "These areas are among the most vulnerable to economic downturns," he said. "As a result, the recent upswing could change on a dime if the broader housing market flattens out or sags." He added, "But for now, the price gains are a crucial measure that neighborhoods designated as Opportunity Zone tax breaks hold significant allure for potential residents."

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