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52 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t local edition ANALYTICS Borrowers Betting on the Housing Market Home finance balances continue to increase for tHird consecutive montH. GeorGia // Outstanding home finance balances increased for the third straight month in January, signaling what might be the start of a long-term resur- gence in borrowing, Equifax reported in its most recent National Consumer Credit Trends release. According to the company, home finance balances outstand- ing totaled $8.59 trillion as of January. That number includes first mortgage, home equity installment, and home equity re- volving balances. It was the first time in more than three years balances have increased for a full three-month period. "Home purchase transactions, in which first-time homebuyers take on entirely new-mortgage debt and move up buyers increase their existing mortgage debt, have finally overtaken foreclosures and accelerating pay-downs, resulting in increases [in] home finance balances," said Equifax chief economist Amy Crews Cutts. "American con- sumers have shed more than $1.5 trillion in mortgage debt since the start of the financial crisis and only now seem interested in investing in housing again." From the start of 2013 to the start of this year, first mortgage balances increased 2.5 percent, rising from $7.7 trillion to $7.9 trillion—the biggest annual in- crease in more than three years. In that same time, total home equity balances fell more than 6 percent, dropping to $622.3 bil- lion from $664.3 billion. Meanwhile, from January 2013 to January 2014, Equifax reported first mortgage delinquencies (at least 30 or more days overdue) dropped 22.8 percent, while home equity installment delinquencies fell 22 percent. Home equity re- volving delinquencies were down 10.6 percent. Winter Was all Bite, little Bark tHe cold season ate up Home purcHase power last quarter. Colorado // Winter storms in many parts of the country caused delays in appraisals and closings, leading January home sales to plummet 26.9 percent over the month, according to the RE/MAX National Housing Report for January. Meanwhile, tight inventory continues to drive up home prices, and homes continue to fly off the market rather quickly. While home sales were down nearly 27 percent over the month, they were down 7.1 percent from January last year, according to the RE/MAX report, which includes data from 52 metros across the nation. "We usually expect to see fewer home sales in the winter months, but January experienced particularly severe storms in large parts of the country, which disrupted appraisals, inspections and closings," said Margaret Kelly, CEO of RE/MAX. She added, however, that "the real story for home sales in 2014 will begin to unfold in the com- ing spring and summer months." The median home price declined over the month—fall- ing 6.3 percent to $173,475. However, January's median price continued a 24-month trend of year-over-year increases, rising 11.6 percent since January 2013. Forty-five of the 52 markets observed reported year-over-year home price gains in January. The year-over-year rise in home prices is a reflection of the tight inventory that has persisted into this year, according to RE/ MAX. As of January, the market holds 5.3 months' supply of homes, which is lower than the inventory reported a month ago and a year ago. A few markets are experi- encing inventories far below the national average. RE/MAX found the lowest inventories in Denver, Colorado (1.1 month); San Francisco, California (1.4 months); Los Angeles, California (2.5 months); Boston, Massachusetts (2.7 months); San Diego, California (2.7 months); Houston, Texas (2.7 months); and Seattle, Washington (2.7 months). Metros with the greatest year- ly home price gains in January include: Detroit, Michigan (35.2 percent); Atlanta, Georgia (28.6 percent); Las Vegas, Nevada (23.5 percent); San Francisco, California (22.3 percent); Los Angeles, California (20.2 percent); and Miami, Florida (18.7 percent). For homes sold in January, the average number of days on market was 75. "The low Days on Market average is associated with continued high demand and a reduced inventory of homes for sale," according to RE/MAX. Outstanding home finance balances increased for the third straight month in January, signaling what might be the start of a long-term resurgence in borrowing.