December 2016 - Getting Serious About Diversity

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 57 of 67

56 | TH E M R EP 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 ANALYTICS THE LATEST Homebuyers' Optimism Toward the Market is Waning Consumers' were less positive about their income, their confidence in keeping their jobs, and mortgage rates in October. U .S. homebuyers were overall more pessimis- tic about the market in October, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI). The index last month dropped another 1.1 points to 81—the third decrease in as many months—and four of the six components that comprise the HPSI fell during October as well. "The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March," said Doug Duncan, SVP and Chief Economist at Fannie Mae. "Recent erosion in sentiment likely reflects, in part, enhanced uncertainty fac - ing consumers today." According to the index, the share of consumers reporting signifi- cantly higher income over the past year experienced the largest drop, decreasing 8 percent. Consumers expecting home prices to go up in the next year fell 3 percent, and those who expect mortgage rates to drop and those who are confident about not losing their job each dropped 1 percent last month. "Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moder - ate," Duncan said. "Furthermore, consumers' perception of their income over the past year dete- riorated sharply in October to the worst showing since early 2013, weighing on the index." Duncan added that this com - ponent of the HPSI is "volatile from month to month," and that the trend in wage gains from the October jobs report, if sustained, could "foreshadow an improving view in the near future." Fannie reported that the net share of Americans who say they are not concerned with losing their job fell 1 percentage point to 69 percent. At the same time, more consum - ers said they believe now is a good time to buy or to sell a home. Those who believe it's a good time to buy are up four points on the index, to 19 percent, while those who think it's a good time to sell are up two, to 31 percent. Fannie Mae's 2016 Home Purchase Sentiment Index (HPSI) decreased again in October by 1.1 percentage points to 81.7. Overall, the HPSI is down 1.5 points since this time last year. Those who say their household income is significantly higher than it was 12 months ago fell 8 percent points (to 4 percent overall), the lowest it has been in more than three years. Equity Rising with Home Prices Home prices rose 6 percent over the year in September and are expected to rise another 5 percent by next September. H ome prices in September were up more than 6 percent compared to a year ago and look to be up another 5 percent by this time next year, according to the September CoreLogic U.S. Home Price Re - port—and a corresponding rise in home equity has been a boon to homeowners. "Home equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices," said Frank Nothaft, Chief Economist for CoreLogic. "Nationwide during the past year, the average gain in housing wealth was about $11,000 per homeowner, but with wide geographic variation." Anand Nallathambi, President and CEO of CoreLogic, echoed that point. "Home price growth creates wealth for owners with home equity," Nallathambi said. "A 5 percent rise in home values over the next year would create another $1 trillion in home equity wealth for homeowners." According to CoreLogic's most recent home equity report, which covered the second quarter, more than half a million (548,000) residential properties regained equity in Q2, which brought the number of residential properties with equity up to 47.2 million out of 50 million. CoreLogic estimated that another 700,000 residential properties would regain equity if home prices rose another 5 per - cent, which they are expected to do over the next 12 months. Compared to August, September's home prices nation- ally were up about 1 percent. CoreLogic expects October's prices to inch upward by 0.3 percent. Oregon and Washington experienced the largest jumps in single-family home prices over the past year. Each market experienced prices rising by more than 10 percent. Colorado wasn't far behind, with prices up nearly 9 percent since last September. The Denver area experienced the largest bump in major-city markets over the same time frame: 9.4 percent. In Las Vegas, Los Angeles, and Miami, prices in - creased more than 6 percent each. Only one market, Alaska, experienced a drop in home prices since last September. Alaska prices were down 0.3 percent. Similarly, North Dakota was the only state where prices rose less than 1 percent over the year. Most state markets were up by 3 to 6 percent. No metro markets experienced price declines. San Francisco and the D.C. area were home to the two smallest metro-area increases: 2.2 and 3.1 percent, respectively.

Articles in this issue

Archives of this issue

view archives of TheMReport - December 2016 - Getting Serious About Diversity