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.