– Santa Rosa, California Posts Biggest Drop Among US Metro Areas;
Median Down Payment on Home Purchases Increases 20% From a Year Ago;
– Construction Loan Originations Up 33% to Two-Year High, Up 345% in Houston
ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q4 2017 US Residential Property Loan Origination Report, which shows that more than 1.9 million (1,903,364) loans secured by residential property (1 to 4 units) were originated in Q4 2017, down 20% from the previous quarter and down 19% from a year ago. 818,158 of the residential loans originated in Q4 2017 were refinance loans, down 17% from the previous quarter and down 34% from a year ago. 791,637 of the residential loans originated in Q4 2017 were purchase loans, down 22% from the previous quarter and down 1% from a year ago. 293,570 Home Equity Lines of Credit (HELOCs) were originated on residential properties in Q4 2017, down 25% from a nine-year high in the previous quarter and down 7% from a year ago. The loan origination report is derived from publicly recorded mortgages and deeds of trust collected by ATTOM Data Solutions in more than 1,700 counties accounting for more than 87% of the US population. Counts and dollar volumes for the two most recent quarters are projected based on available data at the time of the report (see full methodology below). “The falloff in refinance originations continued for the third straight quarter, but purchase originations held steady compared to a year ago despite ballooning down payment amounts that make it more difficult for first-time homebuyers to compete — as evidenced by the three-year low in the share of FHA buyers,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “And while the rise in construction loans in part reflects homeowners reconstructing in the wake of hurricane Harvey in southeast Texas, the widespread rise in construction loans in other parts of the country indicates that more homeowners are staying put and remodeling rather than trying to move up into another home that comes with a big down payment and probably a higher mortgage interest rate.”
The median down payment on single family homes and condos purchased with financing in Q4 2017 was $18,000, down from a record high $19,100 in the previous quarter but up 20% from $14,950 in Q4 2016. The median down payment of $18,000 was 7.1% of the median sales price of the homes purchased with financing during the quarter, down from a four-year high OF 7.3% in the previous quarter but still up from 6.2% in Q4 2016. “The median down payment in the greater Seattle area of 14.1% is twice the national average and continuing to rise,” said Matthew Gardner, chief economist at Windermere Real Estate covering Seattle. “This is good news for homeowners in our market as it provides them with a layer of protection should home prices see a downturn in the future.” Among 143 metropolitan statistical areas analyzed for down payments, those with the biggest median down payments were San Jose, California ($268,000); San Francisco, California ($174,500); Santa Rosa, California ($123,450); Los Angeles, California ($119,800); and Ventura, California ($107,000). Residential loans backed by the Federal Housing Administration (FHA) accounted for 12.0% of all residential property loans originated in Q4 2017, down from 12.9% in the previous quarter and down from 12.3% a year ago to the lowest share since Q4 2014 — a three-year low. Residential loans backed by the US Department of Veterans Affairs (VA) accounted for 6.6% of all residential property loans originated in Q4 2017, unchanged from the previous quarter but down from 7.6% in Q4 2016.
A total of 29,357 construction loans backed by residential real estate (1 to 4 units) were originated in Q4 2017, up 12% from the previous quarter and up 33% from a year ago to the highest level since Q3 2015 — a more than two-year high. Construction loans are those that finance improvements to real estate. Houston documented the most residential construction loan originations among 42 metropolitan statistical areas analyzed for construction loan data in the report, with 4,241 originated in Q4 2017 — up 345% from a year ago to an all-time high as far back as data was available for the report, Q1 2006. Residential construction loan originations also spiked in the Texas metros of Beaumont-Port Arthur (up 2,135%); El Paso (up 787%); and Corpus Christi (up 126%). Other metro areas with increases in residential construction loan originations included Kansas City (up 104%); San Francisco, California (up 80%); San Diego, California (up 57%); Jacksonville, Florida (up 53%); and Orlando, Florida (up 41%). Among the 120 metropolitan statistical areas analyzed in the report, those with the biggest year-over-year decrease in loan origination volume in Q4 2017 were Santa Rosa, California (down 47%); San Jose, California (down 39%); San Luis Obispo, California (down 38%); Denver, Colorado (down 37%); and Boulder, Colorado (down 37%). Only eight of the 120 metropolitan statistical areas analyzed in the report posted a year-over-year increase in total loan originations in Q4 2017: Lexington, Kentucky (up 40%); Raleigh, North Carolina (up 37%); Huntington, West Virginia (up 27%); Asheville, North Carolina (up 13%); Davenport, Iowa (up 7%); Memphis, Tennessee (up 4%); Dayton, Ohio (up 3%); and Charleston, South Carolina (up 2%).
Tiffany’s same-store sales, forecast disappoint
Tiffany missed analysts’ estimates with quarterly same-store sales numbers on Friday and forecast a full-year profit largely below expectations as the jeweler invests heavily to turn its business around. The company, which has been marred by several quarters of declining sales, has been taking numerous steps to diversify its revenue by introducing cheaper silver jewelry as well as everyday home items to appeal to a wider customer base. But the investments are expected to take a toll on the company’s earnings, Chief Executive Officer Alessandro Bogliolo said. “Increasing investment now in certain areas, such as technology, marketing communications, visual merchandising, digital and store presentations … will hinder pre-tax earnings growth in the near term,” Bogliolo said. Tiffany forecast full-year profit between $4.25 and $4.45 per share, compared with analysts’ estimate of $4.37 per share, according to Thomson Reuters. Same-store sales, on a constantcurrency basis, rose 1% in the reported quarter, missing estimates of a 2.8% rise. In January, the company reported worldwide same-store sales that rose 5% in November and December, prompting a rise in its full-year profit forecast. The company’s net earnings fell to $61.9 million, or 50 cents per share, in the fourth quarter ended Jan. 31, from $157.8 million, or $1.26 per share, a year earlier.
NAHB – multifamily drop pushes total housing starts down as single-family makes gains
A decline in multifamily starts pushed overall housing production down 7.0% in February to a seasonally adjusted annual rate of 1.24 million units, according to newly released data from the US Department of Housing and Urban Development and the Commerce Department. Multifamily production fell 26.1% to a seasonally adjusted annual rate of 334,000 units after an exceptionally high January report. Meanwhile, single-family starts posted a 2.9% gain to 902,000 units. “The uptick in single-family production is consistent with our builder confidence readings, which have been in the 70s for four consecutive months,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders must manage rising construction costs to keep home prices competitive.” “Some multifamily pullback is expected after an unusually strong January reading. Multifamily starts should continue to level off throughout the year,” said NAHB Chief Economist Robert Dietz. “Meanwhile, the growth in single-family production is in line with our 2018 forecast for gradual, modest strengthening in this sector of the housing market.” Regionally in February, combined single- and multifamily housing production increased 7.6% in the Midwest. Starts fell 3.5% in the Northeast, 7.3% in the South and 12.9% in the West. Multifamily weakness pushed overall permit issuance down 5.7% in February to a seasonally adjusted annual rate of 1.3 million units. Multifamily permits fell 14.8% to 426,000 while single-family permits were essentially unchanged, edging down 0.6% to 872,000. Permit issuance rose 12.7% in the Northeast and 3.4% in the Midwest. Permits declined 3.4% in the West and 12.4% in the South.
Peter Thiel – Silicon Valley is a ‘totalitarian place’
Billionaire investor Peter Thiel argues Silicon Valley is is a ‘totalitarian place’ where people are not allowed to have dissenting views. Peter Thiel, who cofounded PayPal and was an early Facebook investor, said there are better places than Silicon Valley for technology entrepreneurs to start their businesses. “Silicon Valley will continue producing great companies but perhaps not quite as many,” Thiel said. Silicon Valley has been the motor of innovation for the past 20 years, but Thiel, who spent most of his career there, sees potential in Los Angeles. “It’s a more diversified economy,” he said. “And I think it has much less of a sense of everyone being on top of one another thinking the same way in one place.”
CoreLogic – homeowner equity increased by $908 billion in 2017
– Negative Equity Share Fell to 4.9% in Q4 2017
– Quarter Over Quarter, 19,000 Residential Properties Regained Equity in Q4 2017
– About 2.5 Million Mortgaged Residential Properties Are Still in Negative Equity
CoreLogic released the Home Equity Report for the fourth quarter of 2017, which shows that US homeowners with mortgages (which account for roughly 63% of all properties, according to a 2016 American Community Survey) have seen their equity increase 12.2% year over year, representing a gain of $908.4 billion since the fourth quarter of 2016. Additionally, homeowners gained more than $15,000 in home equity between the fourth quarter of 2016 and the fourth quarter of 2017. While home equity grew nationwide, western states experienced the largest increase. Washington homeowners gained an average of approximately $40,000 in home equity, and California homeowners gained an average of approximately $44,000 in home equity. On a quarter-over-quarter basis, from the third quarter of 2017 to the fourth quarter of 2017, the total number of mortgaged homes in negative equity decreased 1% to 2.5 million homes, or 4.9% of all mortgaged properties (the third quarter of 2017 data was revised. Revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results.). Negative equity in the fourth quarter of 2017 decreased 21% year over year from 3.2 million homes – or 6.3% of all mortgaged properties – in the fourth quarter of 2016. “Home-price growth has been the primary driver of home-equity wealth creation,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The CoreLogic Home Price Index grew 6.2% during 2017, the largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years. Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to US consumption spending over the next two to three years.”
Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in a home’s value, an increase in mortgage debt or both. Negative equity peaked at 26% of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009. The national aggregate value of negative equity was approximately $283.1 billion at the end of the fourth quarter of 2017. This is up quarter over quarter by approximately $5.7 billion (or 2.1%), from $277.4 billion in the third quarter of 2017 and down year over year by approximately $3.2 billion (or 1.1%), from $286.3 billion in the fourth quarter of 2016. “There are wide disparities in home-equity gains by geographic area, with higher-priced, capacity constrained markets along the East and West Coasts registering the largest increases,” said Frank Martell, president and CEO of CoreLogic. “The average homeowner in California and Washington had a wealth gain of about $40,000, reflecting the high price of homes in California and the rapid appreciation in Washington. In contrast, the average owner in Louisiana had little change in their housing wealth during 2017, given much lower prices and modest price growth.”
NAHB – builder confidence remains on solid footing in March
Builder confidence in the market for newly-built single-family homes edged down one point to a level of 70 in March from a downwardly revised February reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) but remains in strong territory. “Builders’ optimism continues to be fueled by growing consumer demand for housing and confidence in the market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are reporting challenges in finding buildable lots, which could limit their ability to meet this demand.” “A strong labor market, rising incomes and a growing economy are boosting demand for homeownership even as interest rates rise,” said NAHB Chief Economist Robert Dietz. “With these economic fundamentals in place, the single-family sector should continue to make gains at a gradual pace in the months ahead.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI component gauging current sales conditions held steady at 77, the chart measuring sales expectations in the next six months dropped two points to 78, and the index gauging buyer traffic fell three points to 51. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 57, the South decreased one point to 73, the West fell two points to 79, and the Midwest dropped four points to 68.