Skip to content Sitemap

RealtyTrac – number of equity rich US properties increases to 14 million in Q2

ATTOM Data Solutions released its Q2 2017 US Home Equity & Underwater Report, which shows that at the end of the second quarter of 2017 there were more than 14 million (14,038,372) US properties that were equity rich — where the combined loan amount secured by the property was 50% or less of the estimated market value of the property — up by nearly 320,000 properties from the previous quarter and up by more than 1.6 million properties from a year ago. The 14 million equity rich US properties represented 24.6% of all US properties with a mortgage, up from 24.3% in the previous quarter and up from 22.1% in Q2 2016. The report is based on publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide along with an industry standard automated valuation model (AVM) updated monthly in the ATTOM Data Warehouse of more than 150 million US properties. The report also shows that more than 5.4 million (5,433,684) US properties were still seriously underwater — where the combined loan amount secured by the property was at least 25% higher than the property’s estimated market value — at the end of Q2 2017, down by more than 64,000 properties from the previous quarter and down by more than 1.2 million from a year ago. The 5.4 million seriously underwater properties represented 9.5% of all properties with a mortgage, down from 9.7% in the previous quarter and down from 11.9% in Q2 2016. “An increasing number of US homeowners are amassing impressive stockpiles of home equity wealth, enjoying the benefits of rapidly rising home prices while staying conservative when it comes to cashing out on their equity — homeowners are staying in their homes nearly twice as long before selling as they were prior to the Great Recession, and the volume of home equity lines of credit are running about one-third of the level they were at during the last housing boom,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “However, this home equity wealth is unevenly distributed across different geographies, value ranges, occupancy statuses and lengths of ownership, with a disproportionately high equity rich share among high-end properties, investor-owned properties and properties owned for more than 20 years.”

States with the highest share of equity rich properties at the end of Q2 2017 were Hawaii (38.3%); California (36.6%); New York (34.2%); Vermont (33.5%); and Oregon (32.2%). Among 91 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of equity rich properties were San Jose, California (52.0%); San Francisco, California (47.0%); Los Angeles, California (40.0%); Honolulu, Hawaii (40.0%); and Portland, Oregon (35.0%). Among 7,192 US zip codes with at least 2,500 people, those with the highest share of equity rich properties were 15201 in Pittsburgh, Pennsylvania (74.4%); 11220 in Brooklyn, New York (74.2%); 11228 in Brooklyn, New York (71.6%); 78207 in San Antonio, Texas (71.3%); and 11355 in Flushing, New York (71.1%). Some characteristics of the 14 million equity rich US properties as of the end of Q2 2017:

–  44.0% of properties with an estimated market value over $750,000 were equity rich, compared to an equity rich rate of 29.6% for properties valued between $300,000 and $750,000; 21.0% for properties valued between $100,000 and $300,000; and 15.5% for properties valued up to $100,000.

–  45.7% of properties owned more than 20 years were equity rich, while only 10% of properties owned less than a year were equity rich.

–  27.1% of non-owner occupied (investment) properties with a mortgage were equity rich as of the end of Q2 2017 compared to 23.8% of owner-occupied properties.

–  Highest share of seriously underwater in Cleveland, Baton Rouge, Akron, Las Vegas, Toledo

States with the highest share of seriously underwater properties as of the end of Q2 2017 were Nevada (17.4%), Louisiana (17.1%); Illinois (16.8%); Ohio (16.5%); and Indiana (16.4%). Among 91 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of seriously underwater properties were Cleveland, Ohio (21.8%); Baton Rouge, Louisiana (21.0%); Akron, Ohio (20.5%); Las Vegas, Nevada (20.2%); and Toledo, Ohio (20.2%). “Ohio housing has been increasing in value quarter over quarter, and the report shows the number of homes with negative equity has decreased substantially in 2017, with a decrease of nearly 100,000 properties statewide compared to a year ago,” said Matthew Watercutter, senior regional vice president and broker of record for HER Realtors, covering the Dayton, Columbus and Cincinnati markets in Ohio. “A shortage of inventory and increase in overall cost for new construction has caused the value of existing homes to increase at an accelerated rate in 201, lowering the overall number of homes underwater.”Among 7,192 US zip codes with at least 2,500 properties with mortgages, those with the highest share of seriously underwater properties were 89109 in Las Vegas, Nevada (69.9%); 48235 in Detroit, Michigan (69.1%); 60466 in Park Forest, Illinois (68.4%); 08611 in Trenton, New Jersey (68.0%); and 48228 in Detroit, Michigan (67.5%).

Some characteristics of the 5.4 million seriously underwater US properties as of the end of Q2 2017:

–  30.4% of properties with an estimated market value of $100,000 or less were seriously underwater compared to a seriously underwater rate of 9.1% for properties valued between $100,000 and $300,000; 4.9% for properties valued between $300,000 and $750,000; and 4.7% of properties valued above $750,000.

–  11.7% of properties owned between 10 and 15 years were seriously underwater, the highest share of any five-year period up to 20 years. Only 7.2% of properties owned more than 20 years are seriously underwater.

–  19.2% of non-owner occupied (investment) properties with a mortgage were underwater as of the end of Q2 2017 compared to only 6.8% of owner-occupied properties.

US consumer sentiment rose in August

US consumer sentiment increased in the first half of August to its highest level since January, as consumers cited a positive outlook for future economic conditions. The University of Michigan on Friday said its preliminary reading on overall consumer sentiment during August was 97.6, up from 93.4 in July. Economists surveyed by The Wall Street Journal had expected an August figure of 94.5.

MBA – mortgage applications slightly increase in latest MBA weekly survey

Mortgage applications increased 0.1% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 11, 2017. The Market Composite Index, a measure of mortgage loan application volume, increased 0.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1% compared with the previous week. The Refinance Index increased 2% from the previous week. The seasonally adjusted Purchase Index decreased 2% from one week earlier. The unadjusted Purchase Index decreased 3% compared with the previous week and was 10% higher than the same week one year ago. The refinance share of mortgage activity increased to 47.8% of total applications, its highest level since February 2017, from 46.7% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications. The FHA share of total applications remained unchanged from the week prior at 10.2%. The VA share of total applications decreased to 10.5% from 10.7% the week prior. The USDA share of total applications remained unchanged from the week prior at 0.8%.

Oil nudges higher on tightening supplies, weak dollar

Oil prices edged higher on Friday, with investors offered some encouragement from data hinting that oversupply was easing steadily and a weaker dollar. But prices were still on track to close the week 2 to 3% lower after concerns about weaker Chinese oil demand weighed earlier in the week. At 1152 GMT, benchmark Brent crude futures were up 6 cents at $51.09 a barrel on the day but still about 2% lower on the week. US West Texas Intermediate (WTI) crude futures were up 11 cents at $47.20 a barrel, although they were also set to end the week more than 3% lower. “Falling US commercial stocks are supportive and I also believe that high US product demand, and gasoline demand in particular, is helping too,” Tamas Varga, senior analyst at London brokerage PVM Oil Associates, said of Friday’s move up. He also said a weaker dollar was bullish for oil prices as equity markets piled pressure on the greenback.

CoreLogic – US economic outlook: August 2017

Major cities have been the entry gateway for immigrants to both the US and Canada.  Today, about 13% of the US population and 21% of the Canadian population is foreign born.  In Miami, New York, Los Angeles, and San Francisco, more than one-third of the population is foreign born. Immigrants to Canada have concentrated in the Toronto metro area, with the Vancouver metro second, and these two areas account for one-half of all immigrants in Canada. While immigrants add to economic growth and housing demand, there has been growing concern over the role played by nonresident foreign buyers.  These buyers are often high-wealth and may add to speculative pressures, especially for expensive homes.  Further, these buyers may effectively restrict supply if they leave their homes vacant.  These effects will be greater in areas where nonresident buyers account for a larger portion of sales.  While the share of home sales to foreign buyers will vary by locale, the National Association of Realtors reports that the overall share of existing homes sold to nonresident foreign buyers in the US has remained relatively small since 2010, averaging about 2.2% of sales. Two Canadian metros have sought to minimize the effect that nonresident foreign buyers have by implementing a 15% tax on sales to these buyers.  This was enacted after steep price increases in the Toronto and Vancouver markets.  The new tax on sales was effective April 21 in Toronto and has been in place in Vancouver since August 2016. After imposing the nonresident foreign buyer tax in Vancouver, home-price growth slowed from a torrid 26% annual rise in August 2016 to 8% in June 2017.  As a benchmark, two neighboring cities that do not have a foreign buyer tax, Victoria and Seattle, have seen home-price growth remain robust since August 2016, suggesting the tax may have had its intended effect. In contrast, two months after enacting the tax in the Toronto area, price growth has yet to slow, perhaps because of the far larger size of the Toronto market. In summary, nonresident foreign buyers appear to have a larger effect on prices for expensive homes and a bigger effect in smaller markets than in larger markets.  Affordability is affected further if homes are kept vacant.

NAR – home prices jump 6.2% in second quarter; eclipse 2016 high

The headstrong supply and demand imbalances in much of the country slightly tempered the pace of sales and caused home prices to maintain their robust growth in the second quarter, according to the latest quarterly report by the National Association of Realtors (NAR).  The national median existing single-family home price in the second quarter was $255,600, which is up 6.2% from the second quarter of 2016 ($240,700) and surpasses the third quarter of last year ($241,300) as the new peak quarterly median sales price. The median price during the first quarter increased 6.9% from the first quarter of 2016.  Single-family home prices last quarter increased in 87% of measured markets, with 154 out of 178 metropolitan statistical areas (MSAs) showing sales price gains in the second quarter compared with the second quarter of 2016. Twenty-three areas (13%) recorded lower median prices from a year earlier. Twenty-three metro areas in the second quarter (13%) experienced double-digit increases, down from 30 areas in the first quarter (17%). Overall, there were slightly more rising markets in the second quarter compared to the first quarter, when price gains were recorded in 85% of metro areas.  Total existing-home sales, including single family and condos, slipped 0.9% to a seasonally adjusted annual rate of 5.57 million in the second quarter from 5.62 million in the first quarter, but are still 1.6% higher than the 5.48 million pace during the second quarter of 2016. At the end of the second quarter, there were 1.96 million existing homes available for sale4, which was 7.1% below the 2.11 million homes for sale at the end of the second quarter in 2016. The average supply during the second quarter was 4.2 months — down from 4.6 months in the second quarter of last year.

Last quarter, a rise in the national family median income ($71,529)5 was not enough to offset weaker affordability from the combination of higher mortgage rates compared to a year ago and rising home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $56,169, a 10% down payment would require an income of $53,213, and $47,300 would be needed for a 20% down payment. The five most expensive housing markets in the second quarter were the San Jose, California, metro area, where the median existing single-family price was $1,183,400; San Francisco, $950,000; Anaheim-Santa Ana, California, $788,000; urban Honolulu, $760,600; and San Diego, $605,000. The five lowest-cost metro areas in the second quarter were Youngstown-Warren-Boardman, Ohio, $87,000; Cumberland, Maryland, $98,200; Decatur, Illinois, $107,400; Binghamton, New York, $109,000; and Elmira, New York, $111,600. Metro area condominium and cooperative prices — covering changes in 61 metro areas — showed the national median existing-condo price was $239,500 in the second quarter, up 5.4% from the second quarter of 2016 ($227,200). Eighty-seven% of metro areas showed gains in their median condo price from a year ago.

Total existing-home sales in the Northeast rose 1.3% in the second quarter and are 0.4% above the second quarter of 2016. The median existing single-family home price in the Northeast was $282,300 in the second quarter, up 3.2% from a year ago. In the Midwest, existing-home sales increased 4.2% in the second quarter but are 0.5% below a year ago. The median existing single-family home price in the Midwest increased 6.6% to $204,000 in the second quarter from the same quarter a year ago.Existing-home sales in the South dipped 3.0% in the second quarter but are 2.5% higher than the second quarter of 2016. The median existing single-family home price in the South was $229,400 in the second quarter, 6.7% above a year earlier. In the West, existing-home sales decreased 3.7% in the second quarter but are 3.1% above a year ago. The median existing single-family home price in the West increased 7.5% to $372,400 in the second quarter from the second quarter of 2016.

Chinese takeovers of US companies plummet this year amid tough Trump talk

–  As of early August, Chinese dealmaking in the US has dropped by 65% this year, according to Dealogic.

–  The sharp decline comes amid greater uncertainty around whether the Trump administration will allow the deal to be completed.

–  The Dealogic report estimated a further drop in Chinese deals in the US, putting $75 million in advisor fees at risk.

As the Trump administration looks to take a tougher stance against Beijing, Chinese investments into the US have more than halved this year, according to Dealogic. “Amid growing regulatory scrutiny of China outbound M&A targeting the US, volume has seen a 65% year-on-year decline in 2017 year-to-date,” Nicholas Farfan and Karl But of Dealogic Research said in an Aug. 8 note. “In comparison, such deals peaked at $65.2 billion last year, with high-profile deals including HNA’s acquisition of 25% of Hilton Worldwide.” “With tightening restrictions, Chinese buyers may look to stop pursuing or shelve potential acquisitions in the US,” the note said. The pressure and uncertainty is coming from both countries. On Beijing’s side, authorities are reportedly targeting some of the largest Chinese dealmakers to try to keep capital from fleeing the country and contributing to yuan weakness. On the American side, reports indicate the Committee on Foreign Investment in the United States is looking to use national security concerns to prevent more Chinese purchases of US firms, especially in technology. Anecdotally, Gregory Husisian, chair, export controls and national security group at law firm Foley & Lardner, noted that an increasing number of clients are concerned about working with Chinese buyers due to the potential for regulatory intervention. The dealmaking industry could also suffer some significant business setbacks. The Dealogic analysts estimate about $9.7 billion in pending Chinese deals to buy US firms could fall under regulatory scrutiny, potentially putting $75 million in advisor fees at risk.

NAHB – single-family starts hold steady in July after upward June revision

Nationwide housing starts fell 4.8% in July to a seasonally adjusted annual rate of 1.16 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Single-family production slipped 0.5% in July to a seasonally adjusted annual rate of 856,000 after a strong, upwardly revised June reading. Year-to-date, single-family starts are 8.6% above their level over the same period last year. Multifamily starts dropped 15.3% to 299,000 units. “The overall strengthening of the single-family sector is consistent with solid builder confidence in the market,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Kerrville, Texas. “The sector should continue to firm as the job market and economy grow and more consumers enter the housing market.” “New-home production numbers this month are in line with our forecast for a slow and steady recovery of the housing market,” said NAHB Chief Economist Robert Dietz. “We saw multifamily production peak in 2015, and this sector should continue to level off as demand remains solid.” Regionally in July, combined single- and multifamily housing production rose 0.6% in the South, and fell 1.6% in the West, 15.2% in the Midwest and 15.7% in the Northeast. Overall permit issuance in July was down 4.1% to a seasonally adjusted annual rate of 1.22 million units. Single-family permits held steady at 811,000 units while multifamily permits fell 11.2% to 412,000. Regionally, overall permits rose 19.2% in the Northeast. Permits fell 1.4% in the South, 7.9% in the West, and 17.4% in the Midwest.

Fiat Chrysler joins BMW, Intel in developing self-driving cars

Fiat Chrysler (FCAU) said Tuesday it will partner with BMW and Intel (INTC) to develop a platform for self-driving cars. The Italian-American automaker will contribute engineering and other technical resources to the existing BMW-Intel alliance, which launched in July 2016 to create an automated driving system for global manufacturers. Fiat Chrysler also said its involvement in the group will accelerate product development. Earlier this year, the alliance announced its plan to test 40 autonomous cars on public roads by the end of 2017. The companies, including Intel-owned Mobileye, expect to offer solutions for fully automated driving by 2021. The alliance’s goal is to create the “most relevant” self-driving platform that automakers can adopt while maintaining their brand identities. “In order to advance autonomous driving technology, it is vital to form partnerships among automakers, technology providers and suppliers,” said FCA CEO Sergio Marchionne. “Joining this cooperation will enable FCA to directly benefit from the synergies and economies of scale that are possible when companies come together with a common vision and objective.” In a joint announcement, the companies said they invite other automakers and technology firms to adopt their platform. Financial terms of the Fiat Chrysler deal weren’t disclosed.

CoreLogic – US single-family rents up 2.8% year over year in June

–  National rent growth decelerated in June 2017 compared with June 2016

–  Low-end rent growth more than doubled high-end rent growth

–  Orlando had the highest year-over-year rent growth in Q2

Single-family rents, as measured by the CoreLogic Single-Family Rental Index (SFRI), climbed steadily between 2010 and 2016. However, the index shows year-over-year rent growth has decelerated slowly since February 2016, when it peaked at a 4.4%. As of June 2017, single-family rents increased 2.8% year over year, a 1.6 percentagepoint decline since the February 2016 peak. The index measures rent changes among single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. Using the index to analyze specific price tiers reveals important differences. The index’s overall growth was pulled down by the high-end rental market, defined as properties with rents 125% or more of a region’s median rent. Rents on higher-priced rental homes increased 1.9% year over year in June 2017, down from a gain of 3% in June 2016. Growth in the low-end market, defined as properties with rents less than 75% of the regional median rent, increased 4.4% in June 2017, down from a gain of 5.5% in June 2016.

Rent growth varies significantly across metro areas. Rental vacancy rates are available quarterly from the US Census Bureau Housing Vacancy Survey. Figure 3 shows the relationship between the rent growth and rental vacancy rates for 37 metro areas that are available for both CoreLogic’s rental index and the Census’s vacancy survey in Q2 2017. Cities with limited new construction and strong local economies that attract new employees tend to have low rental vacancy rates and stronger rent growth. Orlando experienced 4.5% year-over-year rent growth in Q2 2017, driven by employment growth of more than 3% year over year and a rental vacancy rate of 7.1%, slightly lower than the 7.3% national single-family rental home vacancy rate in Q2 2017.  In contrast, Oklahoma City, which has been hit with energy-related job losses since early 2015 and a rental vacancy rate of 11.5% in Q2 2017, experienced a 3% year-over-year decrease in rents, according to CoreLogic data.

DSNews – further simplifying foreclosures

Foreclosures can be a messy process for all involved—from the homeowner that loses their home, to the servicers that eventually take care of the property—it is anything but a pleasant experience. In addition, the entire process can be complicated by a slew of paperwork, payments, and transfers with many moving parts that are easy to miss. But, according to The Journal Times, one county in Wisconsin is making a small change to its foreclosure procedure that could go a long way in ensuring smooth transitions of title, one that the rest of the country could possibly benefit from if it goes as planned. The proposed change is as simple as removing a middle-man, the article notes. In Racine County, as of now, when a foreclosure is sold through the sheriff’s office the buyer receives a copy of the deed and is required to take that deed down to the Register of the Deed’s office to get it filed. However, this little step is often overlooked, according to the Racine County Register of Deeds, which can cause big problems for borrowers and the state, since the tax bill will continue to be sent to the old owner to never be paid. This can lead to further complications, like tax interception. The proposed bill, Senate Bill 175, would allow the Clerk of Courts Office to simply take the deed directly to the Register of Deeds Office, and eliminate the middle man, who has little incentive to make sure the task gets accomplished.

Currently, this practice has been implemented in Milwaukee County, but if passed would become state-wide practice. Critical and constant examination of foreclosure requirements and best practices are vital to streamlining and simplifying the industry, and taking a look at what certain states and municipalities are doing is just one of the many ways for the industry to stay ahead of the curve.

Wells Fargo accused of ripping off mom-and-pop shops

Wells Fargo has already admitted to charging people for overdrawing bank accounts that they didn’t have and for car insurance that they didn’t need. Now, it’s being accused of ripping off vulnerable mom-and-pop businesses. For several years, Wells Fargo’s merchant services division overcharged small businesses for processing credit card transactions, a lawsuit alleges. Business owners who tried to leave Wells Fargo were charged “massive early termination fees,” according to the lawsuit filed in US District Court. The “overbilling scheme” targeted less sophisticated businesses by using “deceptive language” in a 63-page contract designed to confuse them, the lawsuit filed on August 4 claims. The lawyer filed court documents to seek class action status. The latest controversy centers on Wells Fargo Merchant Services, a joint venture that is 60% owned by Wells Fargo and 40% controlled by First Data (FDC). A former employee of the Wells Fargo (WFC) business claimed that he was instructed to target these small businesses. “We used to be told to go out and club the baby seals: mom-pop-shops that had no legal support,” he said in an interview. The former Wells Fargo employee spoke on the condition of anonymity, but CNNMoney verified that he worked for Wells Fargo Merchant Services. The former Wells Fargo employee said that when he worked there, from 2011 to 2013, it was nearly impossible for business owners to leave the merchant agreement. “God would have had a hard time” escaping the contract, he said. “It really was like a shady used car deal.”

One of the plaintiffs in the suit, Queen City Tours, claims it was assessed a $500 early termination fee after trying to leave Wells Fargo Merchant Services. The North Carolina company, which focuses on African-American themed tours in Charlotte and is owned by military veteran Juan Whipple, alleges in the lawsuit that Wells Fargo charged it monthly fees of $20 to $35 for failing to have a minimum number of transactions. That’s despite the fact that the company claims the contract said there would be no such fees. The tour company says in the lawsuit that its business is seasonal, and that it has few sales during off-peak months.The second plaintiff, the Pennsylvania restaurant Patti’s Pitas, claims it was “pounded by excessive fees” — even after it went out of business in May 2017. When Patti’s Pitas tried to leave the contract, it was told it couldn’t because of a three-year term that the owner wasn’t aware of, the lawsuit said. Wells Fargo, which was already under heavy legal scrutiny regarding unauthorized bank and credit card accounts, eventually closed the account without a termination fee. Regarding the lawsuit, the bank said, “We deny these claims and intend to defend against [it].” The company added that it believes its “negotiated pricing terms are fair and were administrated appropriately.”Wells Fargo declined to respond to the specific claims by the former employee.

Oil prices pushed lower by strong dollar

Oil prices edged down Monday, depressed by a strong dollar and concerns that reduced global appetite for crude might frustrate efforts by major producers to cut supply. Brent crude, the global oil benchmark, fell 0.46% to $51.87 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were down 0.43% at $48.61 a barrel. The appreciating US dollar helped push down crude futures. The Wall Street Journal Dollar Index, which tracks the greenback against a basket of other currencies, rose 0.23% to $86.17 Monday. As oil is priced in dollars, the commodity becomes more expensive for holders of other currencies as the greenback appreciates. Last week, the International Energy Agency published revised figures for global crude demand. At the end of 2017, demand is now seen at 33 million barrels a day, compared with a previous estimate of 33.6 million barrels. The new estimate is “only marginally above the current level of OPEC output,” according to Commerzbank analysts. “In other words, there will no longer be any significant supply deficit in the second half of the year, so there is hardly likely to be any further inventory reduction,” they said in a note. Since 2016, the Organization of the Petroleum Exporting Countries and a handful of nations outside the cartel have cut global oil supply by about 2% in an attempt to rebalance the market. While global inventories have declined, stockpiles remain above the five-year average–the level to which OPEC wants to return and oil prices have moved little. “Since the end of July we have basically gone sideways with small movements for brent crude, so we are pretty range bound,” said Bjarne Schieldrop, chief commodities analyst at SEB Markets.

Mortgage scams

The latest attack involves well-known mortgage company Nationstar. According to a scam alert issued by New Mexico Attorney General Hector Balderas, callers who claim to be with Nationstar are asking for money to be sent to an attorney in Florida promising a loan modification on the victim’s mortgage. The scammers are asking New Mexicans to wire money upwards of $1200, money that they may never get back, Balderas cautioned. The alert stated that the calls come from Ymax or Magic Jack phone numbers and can appear to come from any area code. “Calls and offers like these are scams and New Mexico homeowners need to be vigilant, because once you wire that money you may never get it back,” said Balderas. “If you are struggling to make your mortgage payments, there is legitimate help available to you from our Keep Your Home New Mexico program. Please contact our office and we will work with you to see what options are available to you and your family.” “Foreclosure can feel like a hopeless, scary situation, but the worst thing you can do is nothing at all. Ignoring the problem will only make it worse so please contact Keep Your Home New Mexico if you need assistance,” Balderas added.

Trump to ramp up trade pressure on China with call for probe on Monday

–  President Donald Trump will order his top trade adviser to determine whether to investigate Chinese trade practices that force US firms operating in China to turn over intellectual property.

–  The move could eventually lead to steep tariffs on Chinese goods.

–  Trump has said he would be more amenable to going easy on Beijing if it were more aggressive in reining in North Korea.

President Donald Trump on Monday will order his top trade adviser to determine whether to investigate Chinese trade practices that force US firms operating in China to turn over intellectual property, senior administration officials said on Saturday. The move, which could eventually lead to steep tariffs on Chinese goods, comes at a time when Trump has asked China to do more to crack down on North Korea’s nuclear missile program as he threatens possible military action against Pyongyang. Trump has said he would be more amenable to going easy on Beijing if it were more aggressive in reining in North Korea. An administration official, however, insisted diplomacy over North Korea and the potential trade probe were “totally unrelated,” saying the trade action was not a pressure tactic. “These are two different things,” the official said, speaking to reporters on a conference call. Trump will direct US Trade Representative Robert Lighthizer to determine if an investigation is warranted of “any of China’s laws, policies, practices or actions that may be unreasonable or discriminatory, and that may be harming American intellectual property, innovation and technology,” the official said. “China’s unfair trade practices and industrial policies, including forced technology transfer and intellectual property theft, harm the US economy and workers,” a second official said. “The action being taken on Monday is a reflection of the president’s firm commitment to addressing this problem in a firm way.”

Black Knight – June Mortgage Monitor: low-down-payment purchase lending at seven-year high 

–  Over the past 12 months, 1.5 million borrowers have purchased a home using down payments below 10%

–  Such low-down-payment loans currently account for nearly 40% of all purchase originations

–  Five-to-nine-percent-down-payment purchase lending grew at twice the rate of the overall purchase market in late 2016; less-than-five-percent-down loans saw growth at about the market average

–  The average credit score on high-LTV purchase loans today is approximately 50 points higher than those originated in 2004 – 2006; among GSE loans, average credit scores are approximately 60 points higher​

–  FHA/VA market share is declining as GSEs expand low-down-payment lending footprint; over a quarter of GSE purchase lending in 2016 and early 2017 involved down payments of less than 10%

The Data and Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of June 2017. This month, in light of much commentary and speculation on the re-emergence of purchase loans with loan-to-value (LTV) ratios of 97% or higher, Black Knight looked at low-down-payment purchase lending trends, gaining some early insight into the performance of these products. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, in general, low-down-payment purchases are on the rise, but this does not necessarily mean a return to the practices – and risks – of the past. “Over the past 12 months, approximately 1.5 million borrowers have purchased homes using less-than-10-percent down payments,” said Graboske. “That is close to a seven-year high in low-down-payment purchase volumes. The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low-down-payment loans have ticked upwards in market share over the past 18 months as well. In fact, they now account for nearly 40% of all purchase lending. The bulk of the growth has not been among the various three-percent-or-less down payment programs that have been reintroduced in the last few years, but rather in five-to-nine-% down payment mortgages. This segment grew at twice the rate of the overall purchase market in late 2016, whereas lending with down payments of less than five% grew at about the market average. “However, low-down-payment purchase lending today has a much different risk profile than it did back in 2005-2006 during the run-up to the financial crisis. At that time, half of all low-down-payment purchase originations involved ‘piggyback’ second liens, as opposed to a single high-LTV first lien mortgage. It’s also worth noting that while the total share of purchase lending going to borrowers putting less than 10% down was relatively similar then to what we see today, today’s low-down-payment mortgage products and secondary risk characteristics are markedly different. In the pre-crisis years, a large proportion of low-down-payment loans were more risky adjustable rate mortgages (ARMs). In contrast, ARMs are virtually nonexistent today among high-LTV loans. Perhaps the most telling difference is that borrowers using these programs today have average credit scores roughly 50 points higher than those approved for high-LTV purchase loans in 2004-2007. Among GSE loans with down payments under five%, average credit scores are 60 points higher today.”

Overall, defaults among current high-LTV mortgages remain low and performance has been much better than among similar loans in 2005-2006, likely due to a much improved borrower risk profile. After 15 months of observation, the serious delinquency rate of 97% LTV GSE originations is markedly higher than that of 95% LTV loans. However, in looking at the 2015 vintage, only one in approximately 450 GSE loans with an LTV of 96% or higher observed within the study was 90 or more days past due 15 months after origination. Based on early performance observations, today’s 96+% LTV GSE purchase loans have a serious delinquency rate over 90% below that of those originated in 2004 and 2005. Although the FHA/VA served historically as the primary source for such lending – particularly in the years immediately following the onset of the financial crisis – the market share in this segment has recently declined as the GSEs have expanded their low-down-payment lending footprints. In 2016 and early 2017, Fannie Mae and Freddie Mac accounted for over 10% of all sub-five-percent-down purchase lending, their largest such market share since early 2008. In fact, over 25% of all GSE purchase loans are now going to borrowers with down payments of less than 10%, indicating a significant change in the landscape of GSE purchase lending. While their market share has declined, the FHA/VA still controls the majority of the sub-five-percent down purchase space with over 80% of all such lending coming from those two entities.

As was reported in Black Knight’s most recent First Look release, other key results include:

– ​ Total US loan delinquency rate: 3.80%​

​-  Month-over-month change in delinquency rate: 0.12%

–  Total US foreclosure pre-sale inventory rate: 0.81%

​-  Month-over-month change in foreclosure pre​-sale inventory rate: -2.71%

– ​ States with highest percentage of non-current loans: MS, LA, AL, WV, ME

​-  States with the lowest percentage of non-current loans: MT, OR, MN, ND, CO

– ​ States with highest percentage of seriously delinquent loans: MS, LA, AL, AR, TN

Oil slides as output rises at Libyan’s largest oil field

Oil prices fell as much as 2% on Monday on selling triggered by a rebound in production from Libya’s largest oil field along with worries about higher output from OPEC and the United States. Output at Libya’s Sharara field was returning to normal after a brief disruption by armed protesters in the coastal city of Zawiya, the National Oil Corporation (NOC) said. The field has boosted Libya’s oil production, which climbed to more than 1 million bpd in late June. Global benchmark Brent crude futures were down 85 cents, or 1.62%, at $51.57 a barrel at 11:39 a.m. EDT (1540 GMT) after trading as low as $51.37 a barrel. US crude futures were down 89 cents, or 1.8%, at $48.69 per barrel, after sinking to a low of $48.54 a barrel. Both contracts stood well below levels hit last week, which marked their highest since late May. Doubts have emerged about the effectiveness of output cuts by the Organization of the Petroleum Exporting Countries and other big producers including Russia. OPEC output hit a 2017 high in July and its exports hit a record. “The petroleum markets are tipping toward the lower end of their recent trading range as oil producers meeting in Abu Dhabi have been slow to assure the market that compliance with this year’s production cuts will be improved, although we continue to note that adherence to the limits has actually been quite strong by historical standards,” Tim Evans, Citi Futures’ energy futures specialist, said in a note. “The recent increase in OPEC production has mostly been a function of recovering volumes from Libya and Nigeria.” Officials from a joint OPEC and non-OPEC technical committee are meeting in Abu Dhabi on Monday and Tuesday to discuss ways to boost compliance with the deal to cut 1.8 million barrels per day in production.

NAHB – housing market continues to make gains, though permits fail to keep pace

In a further sign that the housing sector is continuing to gain momentum, nearly 300 markets nationwide posted an increase in economic and housing activity from the first quarter to the second quarter, according to the National Association of Home Builders/First American Leading Markets Index (LMI) released today.

The LMI measures current home price, permit and employment data to plot the economic health of an individual market. Based on the 337 markets tracked by the index, nationwide markets are now running at an average of 102% of normal housing and economic activity. However, individual components of the LMI are at different stages of recovery. While employment has reached 98% of normal activity and home price levels are well above normal at 152%, single-family permits are running at just 54% of normal activity. “This report shows that the housing and economic recovery is widespread across the nation and that housing has made significant gains since the Great Recession,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “However, the lagging single-family permit indicator shows that housing still has a ways to go to get back to full strength.” “The overall index is running above 100% of normal largely due to healthy home price appreciation,” said NAHB Chief Economist Robert Dietz. “At the same time, the reason why single-family permits are barely halfway above normal is because builders continue to face persistent supply-side headwinds, including rising material prices and a shortage of buildable lots and skilled labor.”

Despite these challenges, the housing market continues to gradually move forward. The LMI shows that markets in 196 of the 337 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the second quarter of 2017. This represents a year-over-year net gain of 68 markets. “With 89% of all metro areas posting a quarterly increase in their LMI score, this is a strong signal that the overall housing market continues to make broad-based gains,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.76—or 76% better than its historical normal market level. Other major metros leading the group include Austin, Texas; Honolulu; Provo, Utah; and Spokane, Wash. Rounding out the top 10 are Ventura, Calif.; San Jose, Calif.; Nashville, Tenn.; Los Angeles; and Charleston, S.C. Among smaller metros, Odessa, Texas, has an LMI score of 2.14, meaning that it is now at more than double its market strength prior to the recession. Also at the top of that list are Midland, Texas; Walla, Walla, Wash.; Florence, Ala.; and Ithaca, N.Y.

Goldman sees unemployment below 4%, job market

–  Goldman Sachs economists said the job market is doing better than they expected and doing so well it could “overshoot” full employment.

–  The economists revised their forecast for unemployment to 3.8% next year from 4.1%.

–  The economists expect the Fed will move faster than the market believes to raise interest rates — at a pace of one hike per quarter in 2018 and 2019.

Goldman Sachs economists say the outlook for jobs is even better than they thought, and unemployment could go as low as 3.8% next year. The firm’s economists, in a note over the weekend, talked about a labor market “overshoot,” with the trend in job growth remaining in the 150,000 to 200,000 range, twice its estimate of what the economy needs to maintain a healthy labor market. Friday’s July employment report showed job growth, at 209,000, well above the consensus 180,000 expected by economists. That follows 231,000 jobs in June, another month in which 200,000-plus growth was unexpected. The unemployment rate fell to 4.3% in July, a decline of 0.1 from June. The economists forecast the strong labor market should put the Federal Reserve on track to raise interest rates once a quarter, even if inflation remains below the Fed’s 2% target. Missing in the recovery has been a steady rise in inflation, signs of which are also missing in the labor market, in wage acceleration. The markets have doubted the Fed will be able to raise rates because of the lack of inflation, but Goldman economists disagree. Looking at such measures as the long-term unemployment rate, job openings and quits, and reports of skill shortages, “the labor market is about as tight as in the full-employment years 2006 and 1989, though not yet as overheated as in 2000. And while the recent hard wage data have mostly disappointed, surveys of wage growth among employers and households signal a wage acceleration to around 3% by the end of 2017,” they wrote. Wage growth in July was 2.5% on an annual basis. The economists said broader growth measures also look firm, and third-quarter GDP is tracking at about the same as the 2.6% reported for the second quarter. However, the rebound in productivity growth is fading. They forecast second quarter was a weak 0.6%.

CoreLogic – US Home Price Report shows prices up 6.7% in June 2017

–  National Homes Prices Almost 50% Higher Than March 2011 Bottom

–  Four of the Top 10 Markets Considered Overvalued

–  Unsold Housing Inventory is Lowest for Any Q2 in Over 30 Years

–  Tight Inventory Driving Out Affordability

CoreLogic released its CoreLogic Home Price Index (HPI) and HPI Forecast for June 2017 which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.7% from June 2016 to June 2017, and on a month-over-month basis, home prices increased by 1.1% in June 2017 compared with May 2017,* according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.2% on a year-over-year basis from June 2017 to June 2018, and on a month-over-month basis home prices are expected to increase by 0.6% from June 2017 to July 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “The growth in sales is slowing down, and this is not due to lack of affordability, but rather a lack of inventory,” said Dr. Frank Nothaft, chief economist for CoreLogic. “As of Q2 2017, the unsold inventory as a share of all households is 1.9%, which is the lowest Q2 reading in over 30 years.”

Of the nation’s 10 largest metropolitan areas measured by population, four were overvalued in June according to CoreLogic Market Conditions Indicators (MCI) data. These four metros include Denver-Aurora-Lakewood, CO, Houston-The Woodlands-Sugar Land, TX, Miami-Miami Beach-Kendall, FL and Washington-Arlington-Alexandria, DC-VA-MD-WV. By comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income, the MCI categorizes home prices in individual markets as undervalued, at value or overvalued. Because most homeowners use their income to pay for home mortgages, there is an established relationship between income levels and home prices. The MCI defines an overvalued market as one in which home prices are at least 10% higher than the long-term, sustainable level, while an undervalued market is one in which home prices are at least 10% below the sustainable level. “Home prices are marching ever higher, up almost 50% since the trough in March 2011. With no end to the escalation in sight, affordability is rapidly deteriorating nationally and especially in some key markets such as Denver, Houston, Miami and Washington,” said Frank Martell, president and CEO of CoreLogic. “While low mortgage rates are keeping the market affordable from a monthly payment perspective, affordability will likely become a much bigger challenge in the years ahead until the industry resolves the housing supply challenge.”

US adds fewer private sector jobs than expected in July: ADP

US private employers added 178,000 jobs in July, below economists’ expectations, a report by a payrolls processor showed on Wednesday. Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 185,000 jobs, with estimates ranging from 151,000 to 225,000 jobs added. Private payroll gains in the month earlier were revised up to 191,000 from an originally reported 158,000 increase. The report is jointly developed with Moody’s Analytics. The ADP figures come ahead of the US Labor Department’s more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists polled by Reuters are looking for US private payroll employment to have grown by 180,000 jobs in July, down from a gain of 187,000 the month before. Total non-farm employment is expected to have increased by 183,000. The unemployment rate is forecast to tick down to 4.3% from the 4.4% recorded a month earlier.

Anthem to cut back Obamacare plan offerings in California

–  Anthem is pulling back from 16 of 19 pricing regions in California where it offered Obamacare options this year, state officials said on Tuesday.

–  The move, which takes effect for 2018, means Anthem will offer Obamacare coverage in three pricing regions comprising 28 counties in California.

US health insurer Anthem is pulling back from 16 of 19 pricing regions in California where it offered Obamacare options this year, state officials said on Tuesday. The move, which takes effect for 2018, means Anthem will offer Obamacare coverage in three pricing regions comprising 28 counties in California. That is just 41% of its current enrollment, or about 108,000 consumers, leaving some 153,000 consumers without Anthem Obamacare options, state officials said. “The market for these plans has become unstable. And with federal rules and guidance changing, it’s no longer possible for us to offer some of those plans,” Brian Ternan, president of Anthem Blue Cross of California, said in a statement on the company’s website. US President Donald Trump on Monday threatened to cut off subsidy payments that make the plans affordable for lower income Americans and help insurers to keep premiums down, after efforts to repeal the law signed by his predecessor, President Barack Obama, failed in Congress. Trump has repeatedly urged Republican lawmakers to keep working to undo Obama’s Affordable Care Act

MBA – Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 2.8% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 28, 2017. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3% compared with the previous week. The Refinance Index decreased 4% from the previous week. The seasonally adjusted Purchase Index decreased 2% from one week earlier to its lowest level since March 2017. The unadjusted Purchase Index decreased 2% compared with the previous week and was 9% higher than the same week one year ago. The refinance share of mortgage activity decreased to 45.5% of total applications from 46.0% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6% of total applications. The FHA share of total applications increased to 10.3% from 10.2% the week prior. The VA share of total applications decreased to 10.1% from 10.5% the week prior. The USDA share of total applications remained unchanged at 0.8% from the week prior.

NAR – realtors report finds 11% increase in commercial member income, 19% increase in sales transaction volume

Commercial real estate markets continue to improve, with Realtors® specializing in commercial real estate reporting both an increase in member’s gross income and sales volume, according to the National Association of Realtors (NAR) 2017 Commercial Member Profile. The annual study’s results represent Realtors, members of NAR, who conduct all or part of their business in commercial sales, leasing, brokerage and development for land, office and industrial space, multifamily and retail buildings, as well as property management. “There has been an uptick in Realtor® members who choose to specialize in commercial real estate at the same time as commercial professionals report improvements in the market and their business activity,” said 2017 NAR President William E. Brown, a Realtor® from Alamo, California. “A stronger commercial market is a good indicator of a growing economy, so the outlook is positive for commercial members in the year ahead.” The median gross annual income for commercial members in 2016 was $120,800, an increase from $108,800 in 2015. Brokers and appraisers tend to report the highest median annual incomes, while sales agents report the lowest among licensees. Those with less than two years of experience reported a median annual income of $31,500 in 2016, down from $43,400 in 2015; members with more than 26 years of experience reported a median annual income of $162,200 in 2016, down from $165,400 in 2015. Commercial members completed a median of eight sales transactions in 2016, a decrease of one since 2015. A quarter of commercial members reported having one to four transactions, and 27% reported having more than 20 transactions. While the number of transactions decreased slightly in 2016, the sales volume increased again this year. The median sales transaction volume in 2016 among members who had a transaction was $3,500,000, an increase from $2,931,000 in 2015. Only 7% of commercial members reported not having a transaction at all, which decreased from 8% in 2015. The median years of experience in real estate increased to 24 years in 2017, up from 20 years in 2016, as did the median years of experience of members in commercial real estate – up from 15 years in 2016 to 19 years in 2017.

Forty-seven% of NAR’s commercial members are brokers, and 30% are licensed sales agents, consistent with last year. Seventeen% of commercial members have a broker-associate license while appraisal license holders account for 5%, also consistent with last year. The median age of commercial members remained the same as last year, at 60 years old. Almost three out of four commercial members are male, identical to last year’s results. Men reported being active in any real estate capacity for a median of 25 years and in commercial real estate for a median of 20 years, the same as last year. Women have been active in real estate for a median of 19 years (up from 14 years last year) and in commercial real estate for a median of 15 years (up from 11 years last year). Commercial members who manage properties typically managed 82,000 total square feet, representing 15 total spaces, up from 50,000 square feet and 17 spaces in 2015. Those who manage offices typically managed 25,000 total office square feet, representing seven total offices, up from 20,000 office square feet and five offices last year. Thirty-three% of commercial members were involved in international transactions in 2016, down 2% from 2015. Eighteen% of commercial members reported an increase in international transactions, while only 1% had a decrease. Sixty-five% (up from 60% in 2016) of respondents are members of any of several commercial affiliated institutes, councils, or societies. These commercial organizations include the CCIM Institute, the Institute of Real Estate Management, the Counselors of Real Estate, the Realtors Land Institute and the Society of Industrial and Office Realtors.

MBA – commercial/multifamily borrowing up 20% year-over-year

According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, second quarter 2017 commercial and multifamily mortgage loan originations were 20% higher than during the same period last year and 28% higher than the first quarter of 2017. “Borrowing and lending backed by commercial and multifamily properties has been strong the first half of this year,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Reflecting broad industry trends, borrowing backed by industrial properties increased by two-thirds compared to the first half of 2016, while borrowing backed by retail properties dropped by one-sixth.  As was the case during the first quarter, commercial/multifamily mortgage bankers’ originations increased despite a slowdown in the volume of sales transactions.” A rise in originations for industrial and office properties led the overall increase in commercial/multifamily lending volumes when compared to the second quarter of 2016.  The second quarter saw a 91% year-over-year increase in the dollar volume of loans for industrial properties, a 33% increase for office properties, a 21% increase for multifamily properties, a 14% increase for hotel properties, a 7% increase in health care property loans, and a 9% decrease in retail property loans. Among investor types, the dollar volume of loans originated for Commercial Mortgage Backed Securities (CMBS) loans increased by 168% year-over-year.  There was a 26% year-over-year increase for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) loans, a 2% decrease in life insurance company loans, and a 21% decrease in the dollar volume of commercial bank portfolio loans. Second quarter 2017 originations for hotel properties increased 139% compared to the first quarter 2017.  There was a 39% increase in originations for industrial properties, a 39% increase for office properties, a 34% increase for retail properties, a 25% increase for multifamily properties, and a 34% decrease for health care properties from the first quarter 2017. Among investor types, between the first and second quarter of 2017, the dollar volume of loans for CMBS increased 117%, loans for life insurance companies increased 25%, originations for GSEs increased 22%, and loans for commercial bank portfolios decreased by 5%.

NAHB – Cantwell-Hatch Bill would help ease affordable housing crisis

The National Association of Home Builders (NAHB) today called on Congress to pass the Affordable Housing Credit Improvements Act of 2017 (S. 548), legislation that would promote the construction of sorely needed rental apartments and help alleviate the nation’s affordable housing crisis. Testifying before the Senate Finance Committee, NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas, told lawmakers that it is essential to increase the resources supporting housing production in order to meet the growing need for affordable rental housing. “S. 548, a bipartisan bill championed by Sens. Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah), takes a significant and needed step to boosting supply by increasing Low Income Housing Tax Credit (LIHTC) allocations by 50%,” said MacDonald. “Enacting this bill is expected to result in an additional 400,000 LIHTC units over the next 10 years. NAHB estimates that added construction would increase federal tax revenue by $11.6 billion and state and local revenues by $5.6 billion.” The number of renter households considered “severely cost burdened,” meaning they spend more than half of their monthly income on rent, is at an all-time high of 11.4 million, according to the Harvard University Joint Center for Housing Studies. In starker terms, that translates to more than one in four of all renters in the US “Fees, regulatory compliance, modern building and energy codes, building materials, land and labor costs determine whether a project is financial viable,” said MacDonald. “If we want to provide affordable rental housing for lower-income households, we cannot do so without a subsidy.”

This is why the LIHTC, a unique private-public partnership, is such an indispensable program. Since its inception, the program has produced and financed more than 2.9 million affordable apartments for low-income families, seniors and individuals with special needs. Moreover, the tax credit is an important job creator, generating approximately $7.1 billion in economic income and roughly 95,000 jobs per year across many industries. The Affordable Housing Credit Improvements Act would further promote the construction of affordable housing throughout the nation by making permanent the 4% credit rate for acquisition and bond-financed projects, which would provide more certainty and flexibility in financing these properties. In addition, the legislation would allow energy tax incentives to be used in combination with LIHTCs and help combat local opposition to affordable housing projects by prohibiting local approval and contribution requirements. “The nation lacks enough affordable housing for hard-working families,” said MacDonald. “The only effective long-term solution is to increase supply. Passing this bipartisan legislation would greatly enhance our ability to meet the growing demand for more affordable rental units.”

Black Knight – Home Price Index report: May 2017 transactions

The Data and Analytics division of Black Knight​ Financial Services, Inc. its latest Home Price Index (HPI) report, based on May 2017 residential real estate transactions. The Black Knight HPI utilizes repeat sales data from the nation’s largest public records data set, as well as its market-leading, loan-level mortgage performance data, to produce one of the most complete and accurate measures of home prices available for both disclosure and non-disclosure states. Non-disclosure states do not include property sales price information as part of their publicly available county recorder data. Black Knight is able to obtain the sales price information for these states by combining and matching records across its unique data assets.

–  Another Strong Month as US Home Prices Rise 1.1% in May, Gaining 6.1% Year-Over-Year

–  The national-level home price index (HPI) hit another new peak in May, marking a 4.6% gain in home prices so far in 2017

–  At 6.1% vs. April’s 6.0%, year-over-year price appreciation continued to accelerate in May

–  Rhode Island led all states in monthly gains at 1.7%; Utah, Idaho, Montana and Washington all followed at 1.6%

–  Spokane, Wash., and Carson City, Nev., led all metropolitan areas with 1.9% monthly appreciation

–  Seattle, Wash., home prices continue to lead the nation, seeing a 10.3% gain in 2017 alone; San Jose, Calif., followed with 9.0% growth year-to-date

–  Home prices in every state and the 40 largest (by population) metros increased in May, while 11 of the 20 most-populous states and 20 of the 40 largest metros hit new peaks

Oil near two-month high as producers set to meet again

Oil was flat near two-month highs on Monday, putting July on track to become the strongest month so far this year, as news of a producers’ meeting next week added to bullish sentiment driven by the threat of US sanctions against OPEC-member Venezuela. Investors also eyed a tightening US market after heavy inventory falls and slower new oil rig additions last week. “Sentiment in the oil market became very bullish after OPEC said it will meet with partners in Abu Dhabi next week to discuss compliance,” said Frank Schallenberger, head of commodity research at LBBW. Some OPEC and non-OPEC members will meet on Aug. 7-8 in Abu Dhabi to assess how the group can increase compliance with production cuts that began on Jan. 1. Benchmark Brent crude traded at $52.47 a barrel at 1332 GMT, down 5 cents from Friday’s close. Brent earlier hit $52.92 a barrel, its highest since May 25. US light crude oil traded briefly above $50 per barrel for the first time in two months before easing back to around $49.53 a barrel. Hedge funds and money managers have raised bullish bets on US crude oil to their highest in three months, US data showed.The United States is considering imposing sanctions on Venezuela’s oil sector in response to Sunday’s election of a constitutional super-body, which Washington has denounced as a “sham” vote.

NAR – pending home sales recover in June, grow 1.5%

After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors (NAR).The Pending Home Sales Index*, www.nar.realtor/topics/pending-home-sales, a forward-looking indicator based on contract signings, climbed 1.5% to 110.2 in June from an upwardly revised 108.6 in May. At 0.5%, the index last month increased annually for the first time since March. Lawrence Yun, NAR chief economist, says the bounce back in pending sales in most of the country in June is a welcoming sign. “The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” he said. “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.” Added Yun, “Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1% lower than a year ago.”

Yun does note that there could potentially be a sliver of increased hope in the months ahead for prospective first-time buyers, who continue to struggle reaching the market1. Sales to investors last month were the lowest of the year (13%), which helped push all cash transactions to 18% – the smallest share since June 2009 (13%). “It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” said Yun. “Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford. However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.” Heading into the second half of the year, Yun expects existing-home sales to finish around 5.56 million, which is an increase of 2.6% from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5%. In 2016, existing sales increased 3.8% and prices rose 5.1%. The PHSI in the Northeast inched forward 0.7% to 98.0 in June, and is now 2.9% above a year ago. In the Midwest the index decreased 0.5% to 104.0 in June, and is now 3.4% lower than June 2016.Pending home sales in the South rose 2.1% to an index of 126.0 in June and are now 2.6% above last June. The index in the West grew 2.9% in June to 101.5, but is still 1.1% below a year ago.

Charter stock jumps 7% on SoftBank reportedly planning a direct bid

–  Charter’s stock is up 7% in trading Monday.

–  SoftBank is planning to make offer to buy Charter this week, Bloomberg reports.

–  Chairman Masayoshi Son originally tried to combine Charter with SoftBank-owned Sprint.

Shares of Charter Communications shot up 7% in trading Monday on talk the Japanese conglomerate SoftBank Group will make a direct bid for the US cable operator despite Charter’s rejection of a merger proposal by Sprint. SoftBank chairman Masayoshi Son is planning to make a bid to directly purchase Charter later this week, Bloomberg reported. Charter has a market value of $95.5 billion, according to FactSet. Son originally sought to merge Sprint, the wireless company controlled by SoftBank, with Charter to create a media and communications behemoth, according to a report from The Wall Street Journal, citing people familiar with the situation. But Charter rebuffed the Sprint proposal, according to The Wall Street Journal in a following report. Son is Sprint’s chairman. The new acquisition plan from Son may revive deal talks that seemed to have ended after Charter said it did not want to purchase Sprint. Bloomberg reported that Son’s original deal would have created a new public corporation to combine Sprint and Charter.The combination would enable Charter, the second-largest US cable company, and Sprint, the fourth-largest wireless carrier, to bundle deals for customers with cellular phone service, cable TV, telephone and broadband internet service. Charter and Comcast had both reportedly been talking with Sprint about various deals, with an exclusivity window closing last week. However, Son appears to be insisting on a splashy mega deal with Charter, the unidentified sources told the Journal. Meantime, Sprint had also reportedly been discussing a possible merger with its rival T-Mobile. These talks could gain legs again, along with the Sprint-Charter dialogue, the Journal reported. Notably, Sprint is set to report first-quarter earnings on Tuesday.

NAR – existing-home sales retreat 1.8% in June

Existing-home sales slipped in June as low supply kept homes selling at a near record pace but ultimately ended up muting overall activity, according to the National Association of Realtors (NAR). Only the Midwest saw an increase in sales last month. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 1.8% to a seasonally adjusted annual rate of 5.52 million in June from 5.62 million in May. Despite last month’s decline, June’s sales pace is 0.7% above a year ago, but is the second lowest of 2017 (February, 5.47 million). The median existing-home price for all housing types in June was $263,800, up 6.5% from June 2016 ($247,600). Last month’s median sales price surpasses May as the new peak and is the 64rd straight month of year-over-year gains. Total housing inventory at the end of June declined 0.5% to 1.96 million existing homes available for sale, and is now 7.1% lower than a year ago (2.11 million) and has fallen year-over-year for 25 consecutive months. Unsold inventory is at a 4.3-month supply at the current sales pace, which is down from 4.6 months a year ago. First-time buyers were 32% of sales in June, which is down from 33% both in May and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%. According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage declined for the third consecutive month, dipping to 3.90% in June from 4.01% in May. The average commitment rate for all of 2016 was 3.65%.

Properties typically stayed on the market for 28 days in June, which is up from 27 days in May but down from 34 days a year ago. Short sales were on the market the longest at a median of 102 days in June, while foreclosures sold in 57 days and non-distressed homes took 27 days. Fifty-four% of homes sold in June were on the market for less than a month. Inventory data from realtor.com reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in June were Seattle-Tacoma-Bellevue, Wash., 23 days; Salt Lake City, Utah, 26 days; San Jose-Sunnyvale-Santa Clara, Calif., 27 days; San Francisco-Oakland-Hayward, Calif., 29 days; and Denver-Aurora-Lakewood, Colo., at 30 days. “Prospective buyers who postponed their home search this spring because of limited inventory may have better luck as the summer winds down,” said President William E. Brown. “The pool of buyers this time of year typically begins to shrink as households with children have likely closed on a home before school starts. Inventory remains extremely tight, but patience may pay off in coming months for those looking to buy.” All-cash sales were 18% of transactions in June, down from 22% both in May and a year ago, and the lowest since June 2009 (13%). Individual investors, who account for many cash sales, purchased 13% of homes in June, down from 16% in May and unchanged from a year ago. Fifty-six% of investors paid in cash in June.

Distressed sales – foreclosures and short sales – were 4% of sales in June, down from both May (5%) and a year ago (6%) and matching last September as the lowest share since NAR began tracking in October 2008. Three% of June sales were foreclosures and 1% were short sales. Single-family home sales dipped 2.0% to a seasonally adjusted annual rate of 4.88 million in June from 4.98 million in May, but are still 0.6% above the 4.85 million pace a year ago. The median existing single-family home price was $266,200 in June, up 6.6% from June 2016. Existing condominium and co-op sales were at a seasonally adjusted annual rate of 640,000 units in June (unchanged from May), and are 1.6% higher than a year ago. The median existing condo price was $245,900 in June, which is 6.5% above a year ago. June existing-home sales in the Northeast fell 2.6% to an annual rate of 760,000, but are still 1.3% above a year ago. The median price in the Northeast was $296,300, which is 4.1% above June 2016. In the Midwest, existing-home sales rose 3.1% to an annual rate of 1.32 million in June (unchanged from June 2016). The median price in the Midwest was $213,000, up 7.7% from a year ago. Existing-home sales in the South decreased 4.7% to an annual rate of 2.23 million (unchanged from a year ago). The median price in the South was $231,300, up 6.2% from a year ago. Existing-home sales in the West declined 0.8% to an annual rate of 1.21 million in June, but remain 2.5% above a year ago. The median price in the West was $378,100, up 7.4% from June 2016.

Average US gas prices rise first time in 11 weeks

The average price of a gallon of regular-grade gasoline rose about a penny nationally over the past two weeks, to $2.32. Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the slight increase comes after 11 weeks of decline. The current price is about 10 cents above where it was a year ago. Gas in Reno, Nevada, was the most expensive in the contiguous United States at an average of $2.99 a gallon. The cheapest was in Jackson, Mississippi, at $1.97 a gallon. The US average diesel price is $2.51, the same as it was two weeks ago.

CoreLogic – US housing policy outlook: July 2017

Recently, we released our first quarter CoreLogic National Fraud Risk Index and, as we expected, the index hit a new high of 132. This was up from 122 in the fourth quarter and 113 a year ago. Keep in mind, the index is relatively new… it was started in 2010, after the high risk levels that contributed to the mortgage crisis. So today’s heightened number doesn’t necessarily mean that we’re seeing a lot more fraud. What it does show, however, is that conditions are present for fraud to grow. The shift from a refi to a more traditional purchase market is a big driver of the change in the index. That’s because you have more moving parts and players in a purchase transaction and more opportunities for financial gain…and for fraud. Housing affordability is another factor. Rising home prices and bidding wars mean that buyers have to stretch in order to qualify for a loan. We’re seeing the early signs of this in the percentages of applicants that are reporting income that is high relative for their area. Also, the higher debt-to-income ratios that we’re seeing suggest that applicants are at the maximums that they qualify for. These conditions historically have supported fraud for housing schemes. Speaking of fraud schemes, we’re hearing about a new one and the return of an old one. The new scheme involves reverse occupancy or investment income misrepresentation. Here’s the way it works: the applicant says that he or she intends to buy a property as an investment and rent it out. The future rental income is used to qualify the borrower. But the borrower doesn’t rent it and moves in instead. This scheme is gaining traction in New York and other large metro areas, like Los Angeles. The old scheme, which appears to be making a comeback, is aimed at out-of-state investors, usually from high-cost states. Home flippers pitch low-cost, rust-belt properties—often priced under $100,000. The flippers try to get investors to buy sight unseen and promise to manage the properties for them. Of course they dangle the prospect of very high returns. All too often the prices and returns are inflated.

Wall St flat as tech earnings awaited

US stock indexes opened little changed on Monday, ahead of Google parent Alphabet’s earnings report and a two-day Federal Reserve meeting, which kicks off on Tuesday. Analysts have raised their expectations for S&P 500 earnings to 9.6%, compared with an 8% rise projected at the start of the month, according to Thomson Reuters I/B/E/S.”With indices trading at record highs and central banks favoring a less accommodative stance, earnings will become increasingly important in maintaining or expanding on these levels,” said Craig Erlam, senior market analyst at online forex broker Oanda. Alphabet reports results after market close, while Amazon and Facebook are due to report results later this week. Tech continues to be the best performing S&P sector this year, despite investors worrying about stretched valuations. At 9:35 a.m. ET (1335 GMT), the Dow Jones Industrial Average was down 13.28 points, or 0.06%, at 21,566.79, the S&P 500 was down 1.69 points, or 0.06%, at 2,470.85. The Nasdaq Composite was up 1.45 points, or 0.02%, at 6,389.20. Eight of the 11 major S&P 500 sectors were lower, with the materials index’s 0.18% fall leading the decliners. The market will also keep an eye on political developments in Washington, with rising doubts about President Donald Trump’s ability to legislate his pro-growth policies after the failure of the healthcare bill.

The International Monetary Fund shaved its forecasts for US growth to 2.1% for both 2017 and 2018 from its earlier estimates of 2.3% and 2.5%, respectively, citing lack of details on the Trump administration’s stimulus measures.The Fed is not expected to tighten its monetary policy when it meets on Tuesday, but the market is awaiting its statement for clues on future interest rate hikes. Shares of Halliburton were up 0.2% after the oilfield services provider swung to a quarterly profit. Egg producer Cal-Maine Foods fell 8.6% after its quarterly results fell below expectations. Hasbro was down 6.7% after the toymaker posted the smallest sales beat in one and a half years. WebMD Health jumped 19.7% after KKR & Co agreed to buy the US online health publisher in a deal valued at about $2.8 billion. KKR was off 0.7%. Declining issues outnumbered advancers on the NYSE by 1,366 to 1,128. On the Nasdaq, 1,165 issues rose and 1,068 fell.

Forest fires and building prices

Canadian lumber prices continue to rise, this time because of forest fires. The US Commerce department proposed a tariff on Canadian softwood lumber this spring to right what it said was a trade imbalance. An additional tariff proposed in June could mean up to 30% in duties on lumber, affecting the ability of US homebuilders to increse their inventory in this tight housing market. Now, prices are set to rise again after devastating forest fires forced three large lumber producers in British Columbia to shut down in July. From a Wall Street Journal article on Sunday: “Lumber futures at the Chicago Mercantile Exchange, an indicator of price expectations for the months ahead, rose above $400 per 1,000 board feet in mid-July. That was near a 12-year high reached in April before the Trump administration accused Canada of unfairly subsidizing its forestry industry and started slapping tariffs as high as 30% on some timber imports to the US Canadian officials deny the allegations.” The lumber shortage has already affected US hombuilders, with a fifth reporting a shortage of framing lumber in May, the article said. And confidence among homebuilders fell to an eight-month low in July amid concerns over rising lumber costs.

Black Knight Financial Services – First Look at June 2017    

The Data and Analytics division of Black Knight Financial ​Services reports the following “first look” at June 2017 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

–  Despite upward seasonal pressure, mortgage delinquencies held steady at 3.8% in June

–  While total non-current inventory saw a three% seasonal rise over Q2 2017, the inventory of serious delinquencies (loans 90 or more days past due) and active foreclosures fell by seven%

–  In total, serious delinquencies and active foreclosures have declined by 17% (nearly 200,000 loans) this year

–  Low interest rates helped push prepayment activity up another 5.3% in June, following May’s 23% rise

–  Though hitting calendar-year highs for two consecutive months, the national prepayment rate remains over 20% below last year’s levels

Student loan debt up more than 450% since 2003

While total US household debt in the first quarter of 2017 surpassed its $12.68 trillion peak reached during the recession, according to data from the New York Fed, it’s the astronomical increase in student loan debt that is perhaps the most shocking. Outstanding student loan balances have increased more than 457% since 2003, according to a FOX Business analysis of statistics from the Federal Reserve Bank of New York’s Center for Microeconomic Data. In the first quarter of 2003, $241 billion in student loans were outstanding, compared with the first quarter of 2017, when that number jumped to $1.34 trillion. In the first quarter of 2017 alone, student loan debt jumped 2.6%. The New York Fed notes in a recent report that student loan balances have increased each of the 18 years it has been releasing the analysis, while other household dues have been less consistent. From the first quarter of 2003 to the first quarter of 2017, student loan debt rose the fastest out of all types of household debt. Mortgage debt, for example, increased only 74% to $8.6 trillion. Auto loan debt jumped 82% to more than $1.16 trillion. Overall household debt was up 75% over the same timeframe. Not only that, but student loan delinquencies have also remained high. According to the New York Fed, 11% of total student loan debt was at least 90 days delinquent or in default during the first quarter of this year. The amount of balances transitioning into delinquency has averaged about 10% annually over the past five years. Meanwhile, the price of higher education continues to skyrocket. For the 2016-2017 school year, the average cost for a private, nonprofit four-year degree, including room and board, was more than $45,300, according to data from The College Board Opens a New Window. – a 3.4% increase over the previous year. For a public, four-year in-state education over the same time period, that number increased 2.7% to $20,090.

NAR – foreign US home sales dollar volume surges 49% to record $153 billion

Fueled by a substantial increase in sales dollar volume from Canadian buyers, foreign investment in US residential real estate skyrocketed to a new high, as transactions grew in each of the top five countries where buyers originated. This is according to an annual survey of residential purchases from international buyers released today by the National Association of Realtors (NAR), which also revealed that nearly half of all foreign sales were in three states: Florida, California and Texas. NAR’s 2017 Profile of International Activity in US Residential Real Estate found that between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153.0 billion of residential property, which is a 49% jump from 2016 ($102.6 billion) and surpasses 2015 ($103.9 billion) as the new survey high1. Overall, 284,455 US properties were bought by foreign buyers (up 32% from 2016), and purchases accounted for 10% of the dollar volume of existing-home sales (8% in 2016). “The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of US property over the past year,” said Lawrence Yun, NAR chief economist. “While the strengthening of the US dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the US is a safe and secure place to live, work and invest.”

Although China maintained its top position in sales dollar volume for the fourth straight year, the significant rise in foreign investment in the survey came from a massive hike in activity from Canadian buyers. After dipping in the 2016 survey to $8.9 billion in sales ($11.2 billion in 2015), transactions from Canadians this year totaled $19.0 billion – a new high for Canada. Yun attributes this notable rise in activity to Canadians opting to buy property in US markets that are expensive but still more affordable than in their native land. While much of the US continues to see fast price growth, home price gains in many cities in Canada have been steeper, especially in Vancouver and Toronto. “Inventory shortages continue to drive up US home values, but prices in five countries, including Canada, experienced even quicker appreciation2,” said Yun. “Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the US and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future.” Foreign buyers typically paid $302,290, which was a 9.0% increase from the median sales price in the 2016 survey ($277,380) and above the sales price of all existing homes sold during the same period ($235,792). Approximately 10% of foreign buyers paid over $1 million, and 44% of transactions were all-cash purchases (50% in 2016).

Buyers from China exceeded all countries by dollar volume of sales at $31.7 billion, which was up from last year’s survey ($27.3 billion) and topped 2015 ($28.6 billion) as the new survey high. Chinese buyers also purchased the most housing units for the third consecutive year (40,572; up from 29,195 in 2016). Rounding out the top five, the sales dollar volume from buyers in Canada ($19.0 billion), the United Kingdom ($9.5 billion), Mexico ($9.3 billion) and India ($7.8 billion) all increased from their levels one year ago. This year’s survey once again revealed that foreign buying activity is mostly confined to three states, as Florida (22%), California (12%) and Texas (12%) maintained their position as the top destinations for foreigners, followed by New Jersey and Arizona (each at 4%). Florida was the most popular state for Canadian buyers, Chinese buyers mostly chose California, and Texas was the preferred state for Mexican buyers. The upswing in foreign investment came from both recent immigrants and non-resident foreign buyers3 as each increased substantially to new highs. Sales to foreigners residing in the US reached $78.1 billion (up 32% from 2016) and non-resident foreign sales spiked to $74.9 billion (up 72% from 2016).“Although non-resident foreign purchases climbed over the past year, it appears much of the activity occurred during the second half of 2016,” said Yun. “Realtors® in some markets are reporting that the effect of tighter regulations on capital outflows in China and weaker currencies in Canada and the U.K. have somewhat cooled non-resident foreign buyer interest in early 2017.”

Oil dives as consultant sees OPEC crude output rise in July

Oil prices fell about 2% on Friday after a consultant forecast a rise in OPEC production for July despite the group’s pledge to curb output, reigniting concerns the global market will stay awash with crude. Petro-Logistics, which tracks OPEC supply forecasts, said OPEC crude production would rise by 145,000 barrels per day (bpd) this month, taking the group’s combined output above 33 million bpd. Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month’s gains, it said. Benchmark Brent crude futures were down 92 cents or about 1.9% at $48.38 a barrel at 12:16 p.m. (1616 GMT), while US West Texas Intermediate (WTI) crude futures traded at $45.99 a barrel, down 93 cents or 1.98%. OPEC and some non-OPEC states, such as Russia, pledged to cut production by 1.8 million bpd between January this year and the end of March 2018. The UAE energy minister, whose country’s oil output has been rising, said he was committed to the output cut and he hoped the deal would have a significant impact in the third and fourth quarters. “We have the OPEC meeting in Russia on Monday and that’s going to be top of mind,” said Dan Katzenberg, Senior Exploration and Production analyst at Baird and Company in New York. The meeting gathers several ministers from OPEC and non-OPEC member countries in St. Petersburg. Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss steps for continuing the production cuts. The committee, known as the JMMC, can make recommendations to OPEC and other producers to adjust the deal, if necessary. However analysts expressed skepticism that the group will address rising production from Nigeria and Libya, two OPEC members exempted from the cuts.

NAHB – remodeling market indicator remains in positive territory

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 55 in the second quarter of 2017, down three points from the first quarter of 2017. For 17 consecutive quarters, the RMI has been at or above 50, which indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity. “While remodelers continue to see robust demand across the country, the lack of skilled labor continues to be a serious issue,” said NAHB Remodelers Chairman Dan Bawden, CAPS, GMB, CGR, CGP, a remodeler from Houston. “Remodelers are finding they have to decline projects because they can’t hire enough skilled staff to keep up with the demand.” An overwhelming majority of respondents—84%—stated that the cost/availability of labor is the most significant challenge residential remodelers are currently facing. At 55, current market conditions declined three points from the first quarter of 2017. Among its three major components, major additions and alterations waned three points to 54, minor additions and alterations decreased six points to 53, and the home maintenance and repair component fell three points to 57. The future market indicators index stood at 55, also slipping three points from the previous quarter. Calls for bids fell three points to 56, amount of work decreased five points to 53, and the backlog of remodeling jobs dropped four points to 58. Meanwhile, appointments for proposals rose one point to 55. “The RMI has remained above 50 for the past four years, indicating strong demand for remodeling work,” said NAHB Chief Economist Robert Dietz. “However, the challenges posed by rising labor and material costs will constrain remodelers’ ability to increase production at a faster pace.”

Olick – These are the top ZIP codes for rental returns

–  HomeUnion is one of several companies helping landlords narrow down the best rental areas for their investments.

–  The list considers a range of variables, including nearby school rankings and area job growth.

More Americans are renting homes today than at any time in more than half a century. As a result, more investors are looking to cash in on that trend as landlords of single family rental homes. If you’re one of them, you want to know where you’ll get the most bang for your buck. Try this ZIP code: 33434. That is the finding of HomeUnion, one of several companies that help investors find, purchase, renovate, manage and sell single-family rental homes. With so much real estate data available now, most of these companies are compiling lists of best bets. HomeUnion is offering a list of projections for investors looking to hold and rent properties over the next five years. Its analysts are considering factors beyond just vacancies and rent appreciation, examining permitting activities for both apartments and single-family homes, as well as area job growth and school rankings. HomeUnion updates its data each quarter. “We’re looking at the supply-and-demand factors in each market and all of the neighborhoods within those markets,” said Steve Hovland, director of research. “As we get new information, we apply that to our methodology.” Historically, most mom-and-pop landlords choose homes in their backyards. It’s a practical choice, as they often manage the properties themselves and need to be nearby should a pipe break or a basement flood. With the recent growth of rental management companies to do the dirty work, investors are increasingly looking nationally and don’t necessarily want to have to travel to see the properties they buy. That means statistics are key, and potential investors are hungrier than ever for data. “They know real estate is a good investment, and they want to invest, but to do all the due diligence takes a lot of work, and most of our investors are already busy with other jobs,” said Hovland. So, will every house in each of those Top 20 markets yield top dollar? Not necessarily. There will always be renters who fail to pay and extenuating circumstances that can suddenly cause a local market to turn. As with the other multitude of lists and rankings, this is just a guide.

Black Knight – May Mortgage Monitor: underwater borrower population below two million for first time since 2006 

– ​​​​​​ The number of underwater borrowers declined by 16% in the first three months of 2017

–  350,000 borrowers regained equity in Q1 2017, bringing the total underwater population down to 1.8 million

–  The underwater population has fallen by nearly one million borrowers since last year, a 35% annual decline

–  Nearly half of remaining underwater borrowers live in the bottom 20% of homes by price in their markets

–  Tappable equity has risen by $695 billion from last year, bringing total lendable equity to just under $5 trillion

–  Over 40 million Americans have tappable equity available in their homes today; the largest population on record

The Data and Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of May 2017. This month, Black Knight finds that rising home prices have both decreased the number of borrowers underwater on their mortgages while increasing the amount of tappable – or lendable – equity available to homeowners. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, continued growth in the equity landscape has also improved the net worth of many – but not all – homeowners with mortgages.  “The steady upward trajectory of home prices continues to improve the equity positions of many homeowners,” said Graboske. “This is plainly visible in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth. Over the past year, we’ve seen a 35% decline in the total underwater population, with a 16% decline in that population over the first three months of 2017 alone. Home prices rose 2.3% in the first quarter, as compared to 1.8% over the same period last year, helping an additional 350,000 borrowers regain equity in their homes. As of today, there are 1.8 million underwater borrowers remaining, the first time this population has fallen below two million since 2006. “What stands out is the disparity we see in this improvement. As has been the case for some time now, negative equity has become more and more a localized phenomenon. But it’s also becoming concentrated among a particular class of homeowner. Nearly half of all borrowers who remain underwater own homes in the lowest 20% of prices in their respective markets. While the nation as a whole now has a negative equity rate of just 3.6%, among owners in that lowest price tier, it’s over eight%. In fact, these lowest-price-tier properties are more than twice as likely to be underwater as those in the next price tier up, and 6.5 times more likely to be underwater than those living in the top 20% of the market. This is the highest differential we’ve seen between high and low price tiers since we began keeping track in 2005. In some areas, the disparity between the lowest price tier and the highest is staggering. In Detroit, for example, borrowers whose homes are in the lowest 20% of prices are 50 times more likely to be underwater than those in the top 20%.”

Rising home prices are also increasing the amount of equity available for homeowners to borrow against. Looking solely at borrowers with at least 20% equity in their homes, Black Knight found that total tappable (or lendable) equity increased by $695 billion dollars over the last year. “Over 40 million Americans with a mortgage now have tappable equity available in their homes,” Graboske continued. “This is the largest this population has ever been. Growth over the last year brought the total lendable equity market to just under $5 trillion as of the end of Q1 2017. If home prices continue to rise at or near their current rate of appreciation, tappable equity will likely hit record highs by this summer. Though nearly half of the country’s 100 largest metropolitan areas have already reached record levels of tappable equity, as a whole these areas remain geographically concentrated. The majority are found in more coastal areas, specifically in large city centers. In fact, more than half of the nation’s tappable equity lies in the 10 largest metro areas. California alone contains nearly 40% of available equity. While the growth in tappable equity is obviously good news for both homeowners and lenders alike, it does represent some risk as well. Investors in mortgages and mortgage servicing rights – as well as others with a stake in the broader mortgage market – need to be prepared to account for a higher share of equity-driven prepayment risk, as well as an increased chance of borrowers adding on second liens that primary loan servicers and investors may not be aware of.” As was reported in Black Knight’s most recent First Look release, other key results include:

​-  Total US loan delinquency rate: 3.79%​

​-  Month-over-month change in delinquency rate: -7.13%

​-  Total US foreclosure pre-sale inventory rate: 0.83%

​-  Month-over-month change in foreclosure pre​-sale inventory rate: -2.97%

​-  States with highest percentage of non-current loans: ​MS, LA, AL, WV, ME

​-  States with the lowest percentage of non-current* loans: OR, ID, MN, ND, CO

​-  States with highest percentage of seriously delinquent loans:MS, LA, AL, AR, TN

Amazon is quietly rolling out its own Geek Squad to set up gadgets in your home

For 15 years, Best Buy’s Geek Squad installation and repair service has served as one key advantage over Amazon that the e-commerce giant seemed unlikely to match.But over the last few months, Amazon has quietly been hiring an army of in-house gadget experts to offer free Alexa consultations as well as product installations for a fee inside customer homes, multiple sources told Recode, and job postings confirm. The new offering, which has already rolled out in seven markets without much fanfare, is aimed at helping customers set up a “smart home” — the industry term used to describe household systems like heating and lighting that can be controlled via apps, and increasingly by voice. While Amazon has a marketplace for third parties to offer home services like TV mounting and plumbing, these new smart-home-related services seem important enough to Amazon that it is hiring its own in-house experts. And perhaps for good reason. Smart-home gadgets make up one of the fastest-growing segments of the consumer electronics industry, but they can be difficult to set up and integrate with each other. That hurdle has led to higher-than-normal return rates, experts say, so Amazon is likely looking at the in-home services as one way to lower that number. Perhaps more importantly, controlling the smart home by voice is one of the most promising use cases for Alexa, the virtual assistant built into the Echo line of gadgets, which Amazon is betting heavily on. So it’s not totally surprising that Amazon would make the effort to close the education gap for these products by sending its own hires into customer homes. An Amazon spokesman declined to comment. Amazon is charging $99 for installation services like setting up an Ecobee4 Alexa-enabled smart thermostat, though some services are discounted by 20% this week. Multi-device set-ups that take more than an hour may cost more. In eligible cities, shoppers can book the installations during the checkout process.

New York City’s ‘Billionaire’s Row’ is dead — and a record-breaking foreclosure could be the ‘nail in the coffin’

A full-floor penthouse in the landmark One57 condo building is headed to the auction block after it was seized under foreclosure, Bloomberg reported. This is most likely the largest foreclosure in the history of high-end real estate in New York City, experts say. “I don’t know of a foreclosure that’s larger than that,” Donna Olshan, president of Olshan Realty, told Bloomberg. The apartment, which was the eighth-priciest sold in the building, will go to auction on July 19. It was purchased for $50.9 million in 2014, with a $35.3 million mortgage loan from Banque Havilland. It was due to be paid in full a year after purchase, but no such payment was made by the shell company the unit was registered under. Havilland is now forcing the auction to recoup the funds it’s missing, plus interest, according to court filings. One57 is emblematic of New York City’s Billionaire’s Row, a stretch of 57th Street near Central Park, which in recent years has become a magnet for new condos courting high-priced investment. One57 is considered the most expensive of the new buildings, with record-breaking sales that included a $100.5 million top-floor penthouse. This is the second apartment in the building to face foreclosure in the last two months. A unit on the 56th floor, which sold for $21.4 million in July 2015, hit the auction block on June 14. It’s unclear if the property has changed hands yet.

Oil pares losses, but rising supply a worry

Oil dipped on Monday, paring some earlier losses triggered by rising drilling activity in the United States and no let-up in supply growth from both OPEC and non-OPEC exporters, but the outlook remained gloomy. Brent crude futures were last down 11 cents on the day at $46.60 a barrel by 1430 GMT, while US crude futures were last down 13 cents at $44.10 a barrel. “The market is in trouble and looks very vulnerable to lower numbers,” PVM brokerage said in a note. The Organization of the Petroleum Exporting Countries has agreed with some non-OPEC members to curtail production until March 2018 but the move has failed to eliminate a global glut of crude. Several key OPEC ministers will meet non-OPEC Russia on July 24 in St Petersburg, Russia, to discuss the situation in oil markets. Kuwait said on Sunday that Nigeria and Libya had been invited to the meeting and their production could be capped earlier than November, when OPEC is scheduled to hold formal talks, according to Bloomberg. Libya said on Monday it was ready for dialog but added that its political, economic and humanitarian situation should be taken into account in talks on caps. Brent prices are 17% below their 2017 opening despite strong compliance by OPEC with the production-cutting accord.

 

CoreLogic – US home price report shows prices up 6.6% in May 2017

–  Price Appreciation Outstripping Income Growth in Many Markets

–  Many Markets Still Lack Adequate Inventory

–  Tight Inventory Impacting Rental Markets

CoreLogic released its CoreLogic Home Price Index (HPI™) and HPI Forecast™ for May 2017 which shows home prices are up strongly both year over year and month over month. Home prices nationally increased year over year by 6.6% from May 2016 to May 2017, and on a month-over-month basis, home prices increased by 1.2% in May 2017 compared with April 2017,* according to the CoreLogic HPI. Looking ahead, the CoreLogic HPI Forecast indicates that home prices will increase by 5.3% on a year-over-year basis from May 2017 to May 2018, and on a month-over-month basis home prices are expected to increase by 0.9% from May 2017 to June 2017. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state. “The market remained robust with home sales and prices continuing to increase steadily in May,” said Dr. Frank Nothaft, chief economist for CoreLogic. “While the market is consistently generating home price growth, sales activity is being hindered by a lack of inventory across many markets. This tight inventory is also impacting the rental market where overall single-family rent inflation was 3.1% on a year-over-year basis in May of this year compared with May of last year. Rents in the affordable single-family rental segment (defined as properties with rents less than 75% of the regional median rent) increased 4.7% over the same time, well above the pace of overall inflation.” “For current homeowners, the strong run-up in prices has boosted home equity and, in some cases, spending,” said Frank Martell, president and CEO of CoreLogic. “For renters and potential first-time homebuyers, it is not such a pretty picture. With price appreciation and rental inflation outstripping income growth, affordability is destined to become a bigger issue in most markets.”

US factory orders fall; core capital goods orders revised up

New orders for US-made goods fell more than expected in May, but orders for capital equipment were a bit stronger than previously reported, suggesting the manufacturing sector remained on a moderate growth path. Factory goods orders dropped 0.8%, the Commerce Department said on Wednesday after a revised 0.3% decline in April. It was the second straight monthly decrease in orders. Economists had forecast factory orders falling 0.5% in May after a previously reported 0.2% drop in April. Factory orders were up 4.8% from a year ago. Manufacturing, which accounts for about 12% of the US economy, is losing momentum after gaining steam since mid-2016 amid a recovery in the energy sector that led to demand for oil and gas drilling equipment. Activity is slowing against the backdrop of a moderation in oil prices and declining motor vehicle sales. Motor vehicle manufacturers reported on Monday that auto sales fell in June for a fourth straight month, leading to a further increase in inventories, which could weigh on vehicle production. The dollar held steady against a basket of currencies as investors awaited the release of minutes of the Federal Reserve’s June 13-14 policy meeting later in the day.US stocks were trading slightly lower while prices for US Treasuries rose.

Wednesday’s report from the Commerce Department also showed orders for non-defense capital goods excluding aircraft – seen as a measure of business spending plans – rising 0.2% instead of slipping 0.2% as reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, nudged up 0.1% instead of the previously reported 0.2% decrease. Moderate capital expenditure comes despite relatively strong business confidence. A survey this week showed a measure of factory activity rising to a near three-year high in June. In May, orders for machinery jumped 1.1%. Mining, oilfield and gas field machinery orders surged 8.5%. Orders for electrical equipment, appliances and components increased 1.0% and orders for primary metals advanced 0.6%. Orders for transportation equipment fell 3.0%. That was the biggest drop since last November and reflected an 11.6% tumble in nondefense aircraft orders. Motor vehicle orders gained 0.1% after rising 0.9% in April. Unfilled orders at factories fell 0.2% after two straight monthly increases. Manufacturing inventories slipped 0.1% after rising for six consecutive months, while shipments gained 0.1%. The inventories-to-shipments ratio was unchanged at 1.38

Olick – Two major lending changes mean it’s suddenly easier to get a mortgage

–  The nation’s three major credit rating agencies, Equifax, TransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete.

–  Mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan.

–  These changes come at a time when lenders are competing for a shrinking market of borrowers.

Two major changes in the mortgage market go into effect this month, and both could help millions more borrowers qualify for a home loan. The changes will also add more risk to the mortgage market. First, the nation’s three major credit rating agencies, Equifax, TransUnion and Experian, will drop tax liens and civil judgments from some consumers’ profiles if the information isn’t complete. Specifically, the data must include the person’s name, address, and either date of birth or Social Security number. A sizeable number of liens and judgments do not include this information and have subsequently caused some misrepresentations and mistakes.Of about 220 million Americans with a credit profile, approximately 7% have liens or civil judgments against them. With these hits to their credit removed, their scores could go up by as much as 20 points, according to a study by credit rating firm Fair Isaac Corp. (FICO). “It’s a significant impact for still a very large number of people,” said Thomas Brown, senior vice president of financial services at LexisNexis, who is concerned that the move will add significant risk to the mortgage system. “If you look at someone that has a tax lien or a civil judgment, they can be anywhere from two to more than five times more risky just because of the presence of that information,” he said. “That’s very, very significant.” Credit reports, however, can have mistakes on them that end up sidelining consumers from qualifying for loans. Twenty% of consumers have at least one mistake on one of their three credit reports, according to a Federal Trade Commission study. The concern is that those who do have legitimate liens and judgments against them will get credit that is undeserved. “It doesn’t really do a consumer well to be extended credit that they can’t afford, they can’t reasonably service,” said Brown.

In addition to the FICO changes, mortgage giants Fannie Mae and Freddie Mac are allowing borrowers to have higher levels of debt and still qualify for a home loan. The two are raising their debt-to-income ratio limit to 50% of pretax income from 45%. That is designed to help those with high levels of student debt. That means consumers could be saddled with even more debt, heightening the risk of default, but the argument for it appears to be that risk in the market now is unnecessarily low. “In this case, we’re changing the underwriting criteria, and we think the additional increment of risk for making that change is very small,” said Doug Duncan, Fannie Mae’s chief economist. “Given how pristine credit has been post-crisis, we don’t feel that is an unreasonable risk to take.” During the last housing boom, anyone with a pulse could get a mortgage, but after the financial crisis, underwriting rules tightened significantly. As a result, current default rates on loans made in the last eight years are lower than historical norms. At the same time, younger borrowers with high levels of student loan debt are being left out of the housing recovery, unable to qualify for a home loan. Duncan said a consumer’s debt level is just one of many factors considered by lenders when underwriting a mortgage. “We look at all the other criteria that are information rich, in terms of assessing that individual’s risk profile, and they have to look good in all those other areas,” he added. The level of risk to the mortgage marketplace, banks and nonbank lenders alike, will rise. Fannie Mae and Freddie Mac are still under government conservatorship, which means losses would be incurred by taxpayers. “Is Fannie taking on more risk than they should by going up to a 50% DTI limit? Those are legitimate questions that the [Consumer Financial Protection Bureau] or Congress should be answering,” said Guy Cecala, CEO of real estate trade publication Inside Mortgage Finance.

And all these changes come at a time when lenders are competing for a shrinking market of borrowers. Higher interest rates have meant far fewer mortgage refinances, and high home prices have resulted in fewer homebuyers. In response, lenders expect to ease other credit standards further. In fact, those expectations reached a record in the second quarter of this year on a Fannie Mae lender survey. The study noted that easing credit standards might be due in part to increased pressure to compete for declining mortgage volume. “For the third consecutive quarter, the share of lenders expecting a decrease in profit margin over the next three months exceeded the share with a positive profit margin outlook. For the former, the percentage citing competition from other lenders as a reason for their negative outlook reached a survey high,” Duncan wrote in the report. Fannie Mae also noted in its announcement of the DTI changes that its appetite for risk remains the same. That may mean a shift in other parts of a borrower’s risk profile. “There is the belief that there is this windfall for consumers, that consumers will just be able to get more credit,” said Brown of LexisNexis. “Well, the reality is the risk in the marketplace has not changed. The information that’s used to assess risk is what’s changing, and so for banks and others extending credit, if they want to maintain the same loss rates, they have to tighten credit somewhere else. It’s just pure math.”

Amazon.com to create 1,500 full-time jobs at its first Utah fulfillment center

Amazon announced it will be creating 1,500 full-time jobs at its Salt Lake City, Utah fulfillment center on Wednesday.”We are excited to continue growing our team with the first fulfillment center in Utah,” said Akash Chauhan, Amazon’s Vice President of North American operations. The hourly associates will receive a competitive salary and a comprehensive benefits package, according to a press release from the company. “We consider this a perfect pairing, as Amazon and Salt Lake City are both known for our customer service and ease of doing business. We are very excited for the 1,500 new full-time jobs Amazon will create in our community, and look forward to a long future of working together,” said Salt Lake City Mayor Jackie Biskupski. The company’s expansion in the beehive state comes after a patent revealed that Amazon wants to create beehive drone delivery centers.