MReport March 2017

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TH E M R EP O RT | 53 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 DATA U.S. Residents Satisfied with Home Size Only 38 percent of Americans dream of owning a larger home. O nline real estate market- place Point2 Homes re- cently issued the results of a survey intended to discover home-size preferences across multiple regions of the world. The firm surveyed 29,000 partici - pants across nine target countries to find out just how large homes were in various nations. The data revealed that, second only to Australia at 2,032 square feet, United States residents owned the largest homes, with the average home coming in at 1,901 square feet. U.S. natives stated that they desired home sizes somewhere between 1,500 and 2,000 square feet, while Australians went one step further, with the average respondent stating that a home with 2,501 square feet was of a desirable size. Respondents in the United Kingdom, with an average home size of 1,590 square feet, desired the same size home as residents in Australia: 2,501 square feet. Interestingly, Canadians, with an average home size of 1,792 square feet, reported dreaming of homes, which ranged from 1,001 to 1,500 square feet. But how many residents wanted a larger home in their respective country? Thirty-eight percent of participants surveyed in the United States indicated that they desired a larger home, which, rather surpris - ingly, was the lowest percentage of all nine countries surveyed. Sixty- six percent of Mexican respondents indicated that they wanted a larger home, giving the United States' southern neighbor the top spot for the share of individuals who de - sired a larger home. Brazil and the United Kingdom tied for second place with 62 percent of respon- dents indicating that they wanted larger homes. However, U.S. residents do come in top when considering one specific metric. According to the survey, individuals in the United States enjoy the largest amount of space dedicated to one person, with an average 656 square feet allocated to each individual. The report noted that this figure is nearly double that of Brazilians, and it is 202 square feet more than what British residents enjoy. Affordability: The End of a Six- Month Trend Despite the recent decline in affordability, housing affordability matches that of two decades ago. T he First American Financial Corporation Real House Price Index for November showed a relatively low affordability for homebuyers. This contrasts to the previous six months, during which affordability improved. "We saw a widespread decrease in affordability in November, as all but three of the 43 major mar - kets First American tracks saw increasing year-over-year growth in real house prices," stated First American Chief Economist Mark Fleming. The Real Home Price Index measures nationwide price move - ments for single-family residences by adjusting for changes in in- come levels and interest rates to determine potential homeowners' ability to borrow. The resulting figures are used as a measure of affordability for homebuyers throughout the United States. "Year-over-year, real house prices have increased two percent. The shift in real house prices signals a decrease in affordability, driven primarily by rising mort - gage rates," Fleming stated. Real house prices increased 4.4 percent between October and November, and the 2.5 percent year-over-year gain in wages seen in November, down from October's wage growth of 2.8 percent, was not enough to offset the gain in home prices. Fleming noted that the considerably high level of wage growth "was not enough to coun - teract the upward pressure on real house prices in most local housing markets caused by the post-election increase in mortgage rates and unadjusted house price growth. He went on to state that: "Rising mortgage rates will, over time, moderate price growth more into alignment with the current pace of income growth." The report noted that real house prices are 37.1 percent below their peak in July 2006 and 15.5 per - cent lower than the prices seen in January of 2000. Essentially, the Real Home Price Index is indeed showing an increase in the expensiveness of homes, but "while affordability has declined compared to a year ago, housing is still as affordable as it was nearly two decades ago," Fleming concluded. "Rising mortgage rates will, over time, moderate price growth more into alignment with the current pace of income growth." —Mark Fleming, Chief Economist, Fannie Mae

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