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Turning the Tide in Title

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Th e M Rep o RT | 39 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 Association of Home Builders (NAHB) showed that 56 of ap- proximately 350 metro markets nationwide have returned to or exceeded their last normal levels of economic and hous- ing activity, as recorded before the recession. This is nine more metros than a year ago, suggest- ing that although the lion's share of metros in the U.S. is still un- derperforming, more are coming back to stable ground. Among large metros, Baton Rouge, Louisiana, remained atop the NAHB's list of most- improving cities. According to the NAHB, Baton Rouge is 40 percent better than its last normal market level. Other major metros at the top of the list include Honolulu, Hawaii; Oklahoma City, Oklahoma; Austin and Houston, Texas; Los Angeles and San Jose, California; Harrisburg and Pittsburgh, Pennsylvania; and Salt Lake City, Utah. Among small metros, Odessa and Midland, Texas, are now at double their strength prior to the recession, according to the LMI report. Similarly, housing economies are greatly improving in Bismarck and Casper, Wyoming, as well as Grand Forks, North Dakota. Even though the majority of metros are not yet back to pre- recession strength, the remaining 294 metros are, on average, at 88 percent of the economic capacity they once had, and nearly 250 of those metros have improved in the past year. Additionally, more than a third of all markets are operating at a level of at least 90 percent of previous norms, which, according to Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., bodes well for a continuing housing recovery in the year ahead. According to the NAHB's chief economist, David Crowe, the one lagging component in the LMI is single-family housing permits, which are only 43 percent of the way back to normal. Meanwhile, home prices are 26 percent above their last normal level and employment is at 95 percent of its previous norm. "In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered," Crowe said. "Markets are gradually returning to normal levels of housing and economic activity," said NAHB chairman, Kevin Kelly. "When we see more- sustainable levels of job growth, this will unleash pent-up demand and bring more buyers into the marketplace." Job growth appears to be growing steadily as well. The Federal Reserve released the results of its latest Beige Book survey this month, which found that economic conditions across the U.S. and across the board have largely improved since the end of the first quarter. As for demand, the latest results are mixed. While Redfin's latest Real-Time Demand Pulse, released June 2, showed a 2.1 percent drop in home tours among home shoppers in April, it also showed a 15.8 percent rise in home tours compared to the year prior. deeper Pool of Borrowers Foretells more Housing activity Loosening credit restrictions are working together with rising borrower quaLifications to expand the market. Washington D.c. // In its most-recent quarterly report, LendingTree recorded a Borrower Health Score of 77.7 in the year's opening months, a decline of 4.5 points from the prior quarter. While the latest drop illustrates Americans still have some ground to make up from the financial crash, Q1's score is still 1.3 points above where it was a year ago, implying "a broader trend of improving borrower qualification levels," the company says. "As home prices improve and lenders loosen restrictive lend- ing guidelines, there is a wider pool of borrowers that are able to qualify for a loan," said Doug Lebda, founder and CEO of LendingTree. "Potential borrowers with a solid financial portfolio who may not have qualified for a mortgage two years ago may find it easier to qualify today." With mortgage rates still his- torically low, Lebda anticipates a more active home-buying season, expanding the pool of potential borrowers further. Key to the first-quarter decline in borrower health was a rise in the average loan-to-value (LTV) ratio of potential borrowers to 88.75 percent, compared to Q 4 2013's average of 88.6 percent. Meanwhile, the average credit score of prospective borrowers remained flat at 635. Leading the nation in borrower health scores was Washington, D.C. with a score of 98.7. The average credit score of potential borrowers in the nation's capital was 679 in Q1, while the average LTV was 86.59 percent. Also included in the top five states were New Jersey (with a health score of 97.2), California (94.8), Hawaii (94.3), and Massachusetts (94.1). Out of that group, all states had an average credit score above the national aver- age, and all except Massachusetts had a lower-than-average LTV. ORIGINATION LocaL Edition ORIGINATION

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