MReport November 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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M R EP O RT | 45 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 ORIGINATION Competition Heats Up for Entry-Level Homebuyers Entry-level homes are selling fast as demand runs high, and buyers face more bidding wars. S igns show that the com- petition for entry-level homes is on the rise this season, as homebuyers across the country are quickly pulling affordable homes off the market. According to Zillow's research, there is a high demand for U.S. homes overall as the typical American home sold in only 16 days this September, 28 days less than they sold last year. However, the homes that sold the fastest were affordable homes ranging between $186,000 and $260,000, which sold in 14 days the month prior. Mid-market homes between $260,001 and $344,000 also sold quickly at around 16 days on the market. The country's most affordable homes, which went for $185,999 or less, took approximately 18 days to sell in September. Homes costing $488,000 and up spent the longest time on the mar- ket and took about 33 days to sell. The increase in demand for more affordable, entry-level homes may be due to more telecommut- ers looking for a new place to live and work. Others may be first- time buyers taking advantage of the record-low mortgage rates the market has seen in recent months. The high demand for affordable homes, combined with a lower than usual supply, causes compe- tition to heat up. Zillow reports that the touch competition may be why 12% of buyers are willing to purchase homes without seeing them in person. The difference between the days-on-market for the most affordable homes versus the most expensive homes is getting smaller, which shows an overall high demand for homes across the spectrum of prices. In some metropolitan areas, such as Salt Lake City, Seattle, Pittsburgh, and San Francisco, there was little to no difference in days on the mar- ket between the most and least expensive homes sold. Redfin reported that 56.3% of offers made on its sight faced bidding wars in September, yet another sign of tough competition for homebuyers. However, this is a slight decrease from August, which saw a 59.1% rate of Redfin offers facing bidding wars. Where Reverse Mortgage Activity Is on the Rise Only one out of the 10 HUD regions saw an increase in HECM volume. H ome Equity Conversion Mortgage (HECM) endorsements continued their slight decrease in Sep- tember, dropping by 1.75% from August at 3,937 loans. The full report shows that this is the first time the HECM volume has fallen below 4,000 since the volume peaked in May. The volume seen in September is still much higher than the HECM volume re- ported from January through April of 2020. Despite the overall drop in HECM endorsements, one out of the 10 United States Department of Housing and Urban Development (HUD) regions saw an increase in volume this September. The Mid-Atlantic region increased to 191 loans— a 13% increase from the previous month. The Rocky Mountain and Southwest re- gions showed no change in HECM volume during September. The report also shows that "half of the top 10 lenders had improved endorsements" in September. Open Mortgage increased to 236 loans, having the largest percentage in- crease of 32.6%. Finance of America Reverse and Liberty Reverse Mortgage also showed an uptick in HECM volumes. Finance of America Reverse increased by 23.9% to 394 loans, and Liberty Reverse Mortgage went up 6.7% with 256 loans. HMBS issuance totaled $883 million in September, according to NewViewAdvisors. com. This new HMBS production is likely due to record-low interest rates and lower default rates and the reemergence of propri- etary loans. $7.6 billion in HMBS has been issued in 2020 so far, set to surpass 2019's total of $8.3 billion. It might still be possible for the total issuance to reach 2017's $10.5 billion record by the end of this year. In September, the production of original new loan pools was around $693 million, which increased from $666 million in August. While the reverse mortgage market is booming now, this may change soon as the economy's conditions shift.

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