Showing posts from February, 2020

Average FICO score reaches record high, Experian says

The average U.S. FICO score hit a record high of 703 in 2019, driven by Americans in their 30s, as a strong labor market helped people to pay their bills on time. The share of Americans with FICO scores above 700 rose to 59%, the largest ever,  Experian  said in a report on Thursday. The improvement was driven by Millennials getting their financial lives in order as the oldest members of the cohort approach the age of 40. “Millennials, ages 24 to 39 in 2020, now outnumber Baby Boomers and are finally hitting their credit stride,” the Experian report said. “Their economic emergence is reflected by a 25-point increase in their average  FICO  score since 2012 – the biggest increase of any generation.” The average age Americans achieved a FICO Score of 700 was the youngest ever: 54. Nine years ago, the average age was 62, the report said. Scores above 700 “are considered the marker of good credit by many lenders,” the report said. About 1.2% of Americans had a perfect FICO score

The Best Time To Sell Is Quickly Approaching

Although homebuying season seemed to have  arrived early  this year,  Zillow  says that homes listed in May generally sell for more than other times during the year. In fact, the  Mortgage Bankers Association  said that January 2020 was the strongest January for purchase mortgage applications in  11 years . Even so, as the weather heats up, American home shoppers continue to come out of their winter hibernation to look for new digs. And families with kids, which make up a large percentage of homebuyers, are more likely to be eager to buy, sell or move over the summer to not interrupt their child’s  school experience . Spring is the universal start to homebuying season, but in May specifically, homes that hit the market early in the month sell for almost 1% more than expected, according to the Zillow report. Not only do they go for more, but homes sold in May also sell about six days faster than on average, Zillow said in the report. Although homes on the market in May could

84% of Americans say homeownership is a priority

Although  median home prices have been on the climb  for almost eight years, Americans are still holding onto the dream of homeownership, according to  Nerdwallet’s 2020 Home Buyer Report  released on Tuesday. In a survey of more than 2,000 adults, 84 percent said homeownership is a ‘priority,’ a nine percent increase from 2019. Millennials  were the most passionate about homeownership, with 88 percent saying buying a home is one of their main goals. Eighty-five percent of  gen-Xers , 84 percent of gen-Zers and 79 percent of baby boomers said the same, with 55 percent noting homeownership is a “good investment.” “There is colossal pent-up demand for homeownership, both among young people who are ready to pair up and start families, and those who see owning a home as the next step in adulthood,” said NerdWallet home and mortgage expert Holden Lewis in a prepared statement. Eleven percent of Americans plan to purchase a home by 2021, while another 39 percent are expecting to mak

30 Year Fixed Rates At A 3 Year Low

The average U.S. fixed rate for a 30-year mortgage fell to 3.45% this week, matching the three-year low set three weeks ago. The rate declined as global money managers spooked by the coronavirus named Covid-19 piled into the U.S. bond markets, boosting competition for securities back by home loans.  Although the rate is only four basis points below the previous week’s level, it’s almost a percentage point below the 4.35% of the same week a year ago, according to  Freddie Mac . “Given the  recent volatility  of the ten-year Treasury yield, it’s not surprising that  mortgage rates  again have dropped,” said Sam Khater, Freddie Mac’s Chief Economist. “These low rates combined with high  consumer confidence  continue to drive home sales upward, a trend that is likely to endure as we enter spring.” According to the survey, the 15-year FRM averaged 2.95% this week, down from last week’s rate of 2.99%. This time last year, the 15-year FRM came in at 3.77%. The five-year Treasury-in

Racial Disparities Persist on Path to Homeownership

While the overall U.S. homeownership rate has been rising, it's not equal among all races. The National Association of REALTORS® released a report Tuesday, “ Snapshot of Race & Home Buying in America ,” that breaks down ownership rates by race across the country. For non-Hispanic white Americans, the homeownership rate consistently stayed above 71% from 2016 to 2019, while for black Americans in that same period, it was a full 30 percentage points lower at 41%. Hispanic Americans held at about 45% during that three-year period, and the ownership rate among Asian Americans was more than 53%. The report also offers a look at each race’s motivation to purchase, types of homes purchased, and other statistics that relate to race in the homebuying process. The finding show many differences and some hurdles to homeownership. For example, 62% of African Americans were rejected for a mortgage because of their debt-to-income ratio, and 50% of Hispanic Americans were rejected due to

More people want to purchase a home this year, but will they be able to?

Mortgage rates are  low ,  applications are up  and an increase of Americans say they  plan on purchasing a home . In fact, 84% of Americans said buying a home is a priority to them, up significantly from 2018’s 75%, according to the latest  NerdWallet  Home Buyer Report. The survey estimates that nearly 100 million Americans plan on purchasing a home in the next five years, while about 27 million are planning to buy in the next 12 months. More Americans are seeing the brighter side of things, as 44% said they feel better about their ability to buy a home this year. “There is colossal pent-up demand for homeownership, both among young people who are ready to pair up and start families, and those who see owning a home as the next step in adulthood,” says Holden Lewis, NerdWallet home and mortgage expert. “These folks feel optimistic, but are aware that there’s a lot they don’t know,” Lewis said. “They’re looking for guidance so they can feel confident about finding a good hom

U.S. home prices rise 3.8% in December

U.S. home prices increased 3.8% in December from a year earlier, a faster pace than the prior month’s 3.5%, according to S&P CoreLogic Case-Shiller National Home Price Index. Measuring the nation’s largest urban areas, the 20-City composite index rose 2.9% in December from a year ago, faster than November’s 2.5% pace, according to the report issued on Tuesday. Craig Lazzara, managing director and global head of index investment strategy at  S&P Dow Jones Indices , said the housing market continued its trend of stable growth in December. “At the national level, home prices are 59% above the trough reached in February 2012, and 15% above their pre-financial crisis peak,” Lazzara said. According to the index, Phoenix; Charlotte, North Carolina; and Tampa reported the highest year-over-year gains among all of the 20  cities . “At a regional level, Phoenix retains the top spot for the seventh consecutive month, with a gain of 6.5% for December,” Lazzara said. “Charlotte a

Wells Fargo agrees to pay $3 billion to settle DOJ, SEC investigations over fake accounts

Earlier this year,  Wells Fargo  revealed  that it had set aside more than $3 billion to pay for a looming settlement over the bank’s fake account scandal, and now, the other shoe has dropped. The  Department of Justice  and  Securities Exchange Commission  announced Friday afternoon that Wells Fargo will pay $3 billion to settle three separate investigations into the bank’s practices that led to 5,000 Wells Fargo employees opening two million fake accounts in order to receive sales bonuses. The settlements cover criminal and civil investigations by the DOJ and separate allegations from the SEC that the bank misled its investors by claiming the success of its cross-selling strategy, wherein employees were incentivized to open multiple accounts for the same customer. But the scheme blew up back in 2014 when the  Consumer Financial Protection   Bureau , the  Office of the Comptroller of the Currency  and the city and county of Los Angeles fined the bank  $185 million  for the bank

California court dismisses a $60 million lawsuit against Zillow

A U.S. District Court judge on Tuesday dismissed a lawsuit against Zillow alleging damages stemming from the hacking of a listing for a $150 million home. An LLC that owned a 12-bedroom luxury home in Bel-Air sued Zillow in February 2019 claiming $60 million in damages after a hacker accessed the account and falsified information to make the property seem less desirable.

Single-family building permits rise to a 12-year high

Permits for new houses rose to a more than 12-year high in January as builders began shifting into high gear amid a property shortage. Single-family home  authorizations , as permits are known, jumped to 987,000 at a seasonally adjusted annual pace, the highest since June 2007, the  Commerce Department  said on Wednesday. The January rate was a gain of 6.4% from December. Overall permits, including multifamily units and single-family homes, jumped 9.2% to an annual pace of 1.551 million, the highest level since March 2007. Housing starts, recorded when the construction crews begin working, dropped 3.6% to a seasonally adjusted annual rate of 1.567 million units in January, following three consecutive months of increases, the Commerce Department said. Overall, the construction report was stronger than expected, according to  Goldman Sachs  economists. As a result of the building data and a separate report on wholesale prices also released on Wednesday, the investment bank added

Los Angeles is now the least affordable housing market

For the past two years, the least affordable housing market has been San Francisco, with a median home price of $908,750. The  National Association of Realtors  said that  California , in general, is the least affordable place to live in the U.S., citing high home prices. Now, the  National Association of Home Builders  and  Wells Fargo  Housing Opportunity Index has given the title of least affordable housing market to Los Angeles. In Los Angeles-Long Beach-Glendale, California, only 11.3% of homes sold during the fourth quarter of 2019 were affordable to families earning the area’s median income of $73,100. “Growing household formations, ongoing job creation and rising wage growth are fueling housing demand,” said NAHB Chief Economist Robert Dietz. “But a record-low resale inventory, coupled with underbuilding as builders deal with supply-side constraints, continue to put upward pressure on home prices even as interest rates remain at low levels.” Because of this,  Zillow  s

Housing is in the middle of an inventory crisis

It’s no surprise to anyone in the real estate or mortgage industry that there’s a  critical shortage  of homes for sale – the four-month supply of homes for sale today is between 30-40% lower than the number of homes for sale in a normal, healthy market. It’s also no surprise that a big part of this shortage is due to builders staying on the sidelines instead of gearing up production to meet demand. But what might be surprising are some of the other factors contributing to this lack of supply, and the impact these factors are having on prices, sales, and the housing market in general. Supply and demand are two of the most basic components of economic theory. Too much supply, and products become commodities with falling prices. Too much demand, and scarcity creates bidding wars which drive prices higher. This, in an overly simplistic way, describes what’s happened over the last decade in the housing market. The combination of an over-supply of new construction along with millions

Record number of renters believe renting is more affordable than owning

A  recent report  from  CoreLogic  showed that home prices increased 4% year over year in December, and projected the U.S. price index will rise by 5.2% by December 2020. As home prices continue to rise nationally, it’s little wonder that  Freddie Mac’ s latest “Profile of Today’s Renter and Owner” found that the majority of current renters believe renting is more affordable than  owning . However, the percentage of renters who hold that belief has increased dramatically in the past year. A whopping 84% of renters said they believe renting is more affordable than  owning  – an all-time high for the survey. For comparison, this number is up 17 percentage points from February 2018. The survey also found that affordability issues affect the average renter more than a homeowner. Freddie Mac said there are 42% of renters who paid more than a third of their household income on rent. This is compared to only 24% of homeowners who spend that amount on mortgage payments. But there

GDP may slow to 1.5% in 2020’s first quarter

Remember when the GDP slowed to a three-year low in 2018’s fourth quarter, and everyone started talking about the possibility of a recession? Get ready for a remix, brought to you by China. GDP growth in 2020’s first quarter probably will slow to 1.5% from 2.1% in the prior period, according to a forecast from  Wells Fargo  economists on Wednesday. That would be the weakest pace since 1.1% at the end of 2018. For the rest of 2020, growth probably will average above 2% – unless the Chinese  coronavirus  that emerged in December takes an unexpected turn, the forecast said. “The risks just keep on coming,” the report said. “The emergence of a novel coronavirus out of China introduces new uncertainty.” They’re predicting a slowdown, not a recession, defined as two consecutive quarters of GDP contraction. It’s not likely to be enough to prompt the  Federal Open Market Committee  to cut the overnight lending rate that’s used as a  benchmark  for investors in bonds including mortgage

Low mortgage rates offsetting home affordability issues

A three-year low in mortgage rates is making it easier for Americans to afford homes even as property prices increase, according to a report Wednesday from the  National Association of Realtors . An index measuring home affordability for first-time buyers rose to 107.3 from 96.3 a year earlier. A reading of 100 means the household median income is exactly enough to buy the median-price starter home. A broader index that measures the overall market, not just entry-level buyers, rose to 162.9 from 145.7 a year earlier. Americans trying to buy homes have been challenged with a shortage of available properties and prices that have increased at a faster pace than incomes. Cheaper financing lowers their monthly payments, making it easier to purchase properties. The median price of a starter home was $233,800 in the fourth quarter, up 6.6% from a year earlier, according to the NAR data that went into the index calculations. The median household income for families buying their first ho

Everybody loves Phoenix – popular metros to move to

In the fourth quarter of 2019, 26% of home-searchers looked to move to another metro, compared to 25% in the same period the year before, according to a new  report  from  Redfin . This ties the all-time high set during the third quarter of 2019. Phoenix reclaimed its No. 1 spot during Q4 after falling to No. 3 in Q3. The net inflow in Q4 2019 was 6,509, compared to 5,254 in Q4 2018. Both top origination and top out-of-state origination for Phoenix was from Los Angeles. Known as an  iBuyer hub , Phoenix seems to attract homebuyers of all kinds. Since 2018,  Zillow ,  Offerpad ,  Opendoor  and  Redfin  (to name a few) have been buying and selling homes in the Arizona city. Portland, Oregon re-entered the top 10 list of metro areas with the highest net inflow of Redfin users, coming in at No. 7 after falling out of the list in Q1 of 2019. “The ability to work remotely is a huge factor in people relocating, especially within the same time zone,” said Portland Redfin agent Megan W

Home assistants and high-tech faucets remain popular in kitchen remodels

One in 10 homeowners remodeling a kitchen upgrades electronics as part of the project, and among this group nearly one-third include a home assistant such as Amazon Alexa or Google Home, according to the  2020 U.S. Houzz Kitchen Trends Study. Noon Home Home Assistants and Charging Stations Remain Popular These numbers are in line with the popularity of home assistants and charging stations  in last year’s report . This year among the 11% of renovating homeowners updating electronics as part of their kitchen renovations, 31% are including a home assistant, while 49% are including a docking or charging station. Th e  Kohler  Sensate faucet with Kohler Konnect turns on or off with voice command via integration with a home assistant device. Photo from Kohler High-Tech Appliances and Faucets Less Popular Compared With Last Year Among renovating homeowners upgrading faucets and appliances as part of their kitchen remodels, high-tech features remain fairly prevalent. Half (5

U.S. inventory of homes for sale reaches record low

The nation’s inventory of homes for sale tumbled 14% in January, falling to the lowest level since at least 2012, according to a  report. The inventory of entry-level homes saw the steepest drop in the series that goes back to 2012, the report said. The supply of properties priced under $200,000 fell 19%, while homes priced $200,000 to $750,000 declined 12%. A supply shortage is choking the housing market, as evidenced by December’s 4.9% drop in  pending  home sales, the largest in almost a decade, according to the  National Association of Realtors . Mortgage  rates  at three-month lows and a strong jobs market can’t help buyers if there aren’t enough homes to purchase. The increase in competition is worsening their plight by driving up prices, said Danielle Hale,’s chief economist. “This is a challenging sign for the large numbers of Millennial and Gen Z buyers coming into the housing market this homebuying season as it implies the potential for risin

Time Spent Searching for a Home is Rising

Of the 11% of American adults considering a home purchase in the final quarter of 2019, only 43% reported being actively engaged in the process to find and buy a home.  A year earlier, the comparable share of active buyers was a much stronger 54%.  This finding suggests that mortgage interest rates steadily below 4.0% in recent months have not motivated more prospective buyers to get started trying to find a home to buy. Across generations, 46% of Millennial prospective buyers are actively looking for a home to buy, along with 43% of Gen X buyers, 41% of Gen Z buyers, and 37% of Boomer buyers.  Across regions, prospective buyers in the Northeast are the most likely to already be actively searching for a home (49%), followed by those in the South (43%), West (41%), and Midwest (39%).

Home Prices Up Again

Home prices increased 4% year over year in December,  CoreLogic  said in its latest Home Price Forecast. The company now predicts the U.S. price index will rise by 5.2% come December 2020. Throughout 2019, CoreLogic indicates the U.S. housing market experienced  varied price growth . This is especially so for the nation’s lower-priced homes, which saw home prices climb significantly in 2019.   “Moderately priced homes are in high demand and  short supply , pushing up values and eroding  affordability  for first-time buyers,” said Frank Nothaft, chief economist at CoreLogic. “Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median.” Out of the top 50 markets covered in the report, CoreLogic says that 40% were overvalued, 20% were undervalued and the remaining 40% were at value in December 2019. According to the company’s data, these are the 12-month HPI cha

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Coronavirus panic puts pressure on mortgage rates

Coronavirus is sparking a global bout of anxiety to a degree not seen since the SARs epidemic 18 years ago. That’s likely to result in lower mortgage rates as global investors pour money into the U.S. bond markets. Pandemics are terrible things for humans to experience, and already more than 300 people, many of them children, have died in China. We’d all choose for that not to happen if we had that power. But since we don’t, we’re left to analyze the potential fallout. Economists around the world are shrinking their economic forecasts based on the latest coronavirus updates. Mark Zandi, chief economist of  Moody’s Analytics , said he has already shaved 15 basis points off his 2020 GDP forecast and is watching developments. Instead of a 1.85% expansion of U.S. GDP this year, he’s now expecting 1.7%. “This is another hit to the U.S. economy,” Zandi said in an interview with HousingWire. “It’s just a question of how big.” Investor fear is good for mortgage rates because it sends