Mortgage Professionals Should be Optimistic About the Future

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Th e M Rep o RT | 43 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 SERVICING The laTesT median U.s. Home Price Hits six-year High Study finds Midwest markets post the country's biggest annual increases in median sales prices. t he latest Residential & Foreclosure Sales Report from RealtyTrac shows the median price for a home in the United States hit its highest point in 73 months in October, even as price appreciation continued to slow in more than half of the country's major metros. According to the report, the median price of single-family homes and condos rose 2 percent to $193,000 nationwide in October, hitting its highest mark since the beginning of the recession in September 2008. October's read- ing also represented a rise of 16 percent from a year earlier, though it remained 19 percent below the median price peak of $237,537 that occurred in August 2006. Among the 97 metropoli- tan statistical areas included in RealtyTrac's study, the company says 20 reached new post-recession median sales price peaks in 2013 or 2014, including Denver; Pittsburgh; Columbus, Ohio; and Charlotte, North Carolina.. "Home prices have risen substantially in the lower price ranges," said Phil Shell, manag- ing broker of RE/MAX Alliance near Denver. This price range— generally under $400,000—has, consequently, led to a compres- sion in the middle of the market and a leveling-off of prices for upper-echelon homes, he said. Some markets, particularly in the Midwest, have seen huge increases in median home prices. Most notable is Toledo, Ohio, where the median price in October was up 33 percent from the previous year. Detroit, up 27 percent annually, was a close second, followed by Cleveland and McAllen-Edinburg-Mission, Texas, which both recorded a 21-percent increase in their me- dian home price. Other major markets with double-digit increases in me- dian prices during the month of October included: Memphis, Tennessee (18 percent); Austin, Texas (17 percent); Miami (16 per- cent); and Houston (16 percent). Cincinnati—which actually posted a 4-percent annual decline in October 2013—saw a 15-percent year-over-year rise in October 2014, as did Chicago. Even in places where prices have begun to level off, the turnaround from a year ago is significant. Craig King, COO of Chase International in Lake Tahoe and Reno, Nevada, said while the median sales price in Reno was unchanged from September to October, it was up 15 percent from October 2013, marking the 29th consecutive month that market has recorded a year-over- year increase. O.B. Jacobi, president of Windermere Real Estate in Seattle (which posted a 10-percent growth in annual appreciation this year), at- tributed the local market's 10-percent annual growth rate in its median home price to a combination of "a strong local economy, low housing supply, and high buyer demand." Still, 54 percent of American metros surveyed by RealtyTrac are appreciating at far more mod- erate speeds. Phoenix, which was a hotbed for investor interest after the crash, saw its median price increase 6 percent annually in October, which is down sharply from the 25-percent gain the city boasted a year earlier. Similarly, Los Angeles claimed a 24-percent annual increase in October 2013 but just a 9-percent growth rate in October 2014. Oxnard-Thousand Oaks-Ventura in Southern California, Jacksonville, Florida; Boston, and San Diego also dipped to single-digit appreciation after reporting gains of roughly 20 percent the previous year. lenders show tepid Optimism in Business Outlook Majority of those polled don't expect to see drastic changes in business conditions for next six months. i n a survey conducted as part of the Collingwood Group's Mortgage Industry Outlook Report for October 2014, the majority of mortgage industry professionals polled said they did not expect business conditions to be drastically different in the next six months. Along a one to 10 scale, with one being "much worse" and 10 being "much better," 34 percent of respondents said they expected business conditions to be "a little better" in six months (a six on the scale), while 22 percent said they expected business conditions to be "a little worse" (a five on the scale), the Collingwood Group reported. Many respondents said seasonal trends tend to affect their outlook on business conditions, such as one lender who reported the winter months hurt production in 2013, and they expected that to be the case again in 2014. Only about 3 percent of respondents said they thought business conditions would be "much worse" in six months, while just 1 percent thought business conditions would be "much better," according to the Collingwood Group. A majority of respondents indicated "uncertainty, yet tepid optimism" regarding business conditions, the Collingwood Group said. The company reported that none of the survey respon- dents expected the results of the recent mid-term elections to significantly impact the mortgage industry. "I remain optimistic we'll see a move towards collabora- tion," said Brian Montgomery, the Collingwood Group's vice chairman. "The Republicans will hold both chambers for the first time in almost a decade, so I suspect they'll be anxious to move forward on a host of issues that go beyond housing finance reform." Likewise, most survey respondents said there had been little change in business conditions over the previous 12 months. Business conditions were "a little worse" for 22 percent of respondents and "a little better" for 31 percent, according to the Collingwood Group. Overall, the numbers were almost split 50-50 when rating business conditions better or worse compared to a year earlier—48 percent said they were worse, while 52 percent said they were bet- ter. About 4 percent said business conditions were "much worse" than the previous year, while about 1 percent said they were "much better."

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