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CoreLogic – single-family rental market steadying as concerns for home-buying affordability linger

Oct 16, 2019
– U.S. single-family rent prices increased 3% year over year in August 2019—

– Phoenix had the highest year-over-year rent price increase at 6.6%

– Low-end rent prices were up 3.7%, compared to high-end price gains of 2.7%

CoreLogic released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for August 2019 shows a national rent increase of 3%, compared to 3.1% in August 2018. Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4%, and have stabilized over the last year with a monthly average of 3%. August marked the 64th consecutive month in which low-end rentals propped up national rent growth. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.7% year over year in August 2019, down from a gain of 4.1% in August 2018. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.7% in August 2019, up from a gain of 2.6% in August 2018.

Among the 20 metro areas shown in Table 1, and for the ninth consecutive month, Phoenix had the highest year-over-year increase in single-family rents in August 2019 at 6.6% (compared to August 2018). Las Vegas and Tucson, Arizona experienced the second- and third-highest rent gains in August at 5.8% and 5.3% respectively, while Miami saw the lowest rent increases of all analyzed metros at 1.5%. Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced high year-over-year rent growth in August, driven by the annual employment growth of 2.7%. This is compared with the national employment growth average of 1.4%, according to data from the United States Bureau of Labor Statistics. Orlando, Florida also experienced an elevated annual employment growth of 4%, which played a role in its above-average, year-over-year rent increase of 3.7% in August. “National rent increases have settled in around 3% over the past year, and the rate of increase for entry-level rentals has eased over the past six months,” said Molly Boesel, principal economist at CoreLogic. “However, home-buying affordability remains a top concern across generations and is keeping many consumers in the rental market. If this trend continues, we may see another uptick in rent price growth in the coming year, particularly in urban areas where we’re seeing increasing demand from millennials.”

US-China trade war: Beijing won’t buy $50B of crops overnight
China’s promise to buy $50 billion a year in U.S. crops isn’t one the world’s second-largest economy expects to keep overnight. “Many things” need to happen before the purchases — which President Trump has called a key part of a “phase one” trade deal between the two countries — can begin, China’s Ministry of Rural Affairs said. Speaking at a rally on Friday, Trump said farmers would need to buy more land and equipment to meet the surge in demand for American agriculture. “There will be more tractors sold, they’re going to be bigger and better and more powerful and they’re going to be made by John Deere and Case and Caterpillar,” Trump said, ticking off the names of American manufacturers. Reaching the $50 billion benchmark, however, may take up to two years and require the U.S. to lift tariffs on Chinese imports as a goodwill gesture. Even if a deal is signed, China could have trouble living up to its end of the bargain, according to a global markets research team at the Tokyo-based investment bank Nomura. Customs data show China imported $124.7 billion of agriculture products in 2017 and $136.7 billion last year, the analysts wrote. “So by shifting some purchases from other countries to the U.S., this target might be reachable,” they added. “However, meeting this target will surely be quite difficult for three reasons: 1) Chinese demand might be limited due to rising domestic output and falling demand on African Swine Fever (ASF); 2) China could face complaints from other countries, if it significantly ramps up its agriculture purchases from the U.S. in a non-market-based manner; 3) the production capacity of U.S. farmers may also be a constraint.”

The U.S. and China announced the framework last week for the first phase of a trade deal that would see Beijing raise its agricultural purchases to as much as $50 billion from about $8 billion to $16 billion in addition to reforming intellectual property practices. In return, the U.S. agreed to not raise tariffs on Chinese products from 25 percent to 30 percent on Oct. 15. A decision has not yet been made on the tariff increase scheduled for Dec. 15. While there’s hope that Trump and Chinese President Xi Jinping will sign an agreement next month at the Asia-Pacific Economic Cooperation conference in Chile, an op-ed in the state-run China Daily warned against celebrating until the two leaders put pen to paper. “While the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the champagne should probably be kept on ice” for now, according to the column. The economies of both the U.S. and China have suffered as the trade war has dragged on. China’s gross domestic product growth slowed to 6.2 percent in the second quarter, its weakest in 27 years. Meanwhile, the U.S. grew at a 2 percent rate in the April-to-June period, down from 3.1 percent the prior quarter. A continuation of the trade war is expected to weigh on both economies, and slow growth around the world.

MBA – mortgage applications up
Mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 11, 2019. The Market Composite Index, a measure of mortgage loan application volume, increased 0.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 4 percent from the previous week and was 199 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 4 percent compared with the previous week and was 12 percent higher than the same week one year ago. “The ongoing interest rate volatility is impacting a borrowers’ ability to lock in the lowest rate possible. Despite a slight rise in mortgage rates last week, refinance applications increased 4 percent and were 199 percent higher than a year ago,” said Joel Kan, Associate Vice President of Economic and Industry Forecasting. “Purchase applications slowed for the second week in a row. While near term economic uncertainty is still a factor, other fundamental issues, such as a lack of housing inventory in many markets, is preventing purchase activity from meaningfully rising. However, purchase applications were still much higher than a year ago. This is a reminder that the purchase environment in 2019 continues to be stronger than in 2018.” The refinance share of mortgage activity increased to 62.2 percent of total applications from 60.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5 percent of total applications. The FHA share of total applications increased to 11.3 percent from 10.3 percent the week prior. The VA share of total applications increased to 12.9 percent from 12.3 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) increased to 3.92 percent from 3.90 percent, with points decreasing to 0.35 from 0.37 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) remained unchanged at 3.90 percent, with points decreasing to 0.23 from 0.28 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.77

percent from 3.75 percent, with points decreasing to 0.19 from 0.29 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.32 percent from 3.35 percent, with points increasing to 0.31 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs increased to 3.37 percent from 3.25 percent, with points decreasing to 0.23 from 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

Millennial millionaires are flocking to this zip code
The top zip code where millennial millionaires are living isn’t in California, New York or even Florida, according to a new report. Instead, the zip code with the most millennial millionaires is in northwestern Michigan. Coldwell Banker Global Luxury, along with WealthEngine, released a report on wealthy millennials on Wednesday, which analyzed their lifestyles, choices and spending habits. According to the report, millennial millionaires make up 2 percent of the millionaire population in the U.S. and about 0.2 percent of the general population in the country. About 93 percent of that group has a net worth between $1 million and $2.49 million and about 45 percent of that group is between the ages of 34 and 37. Compared to 76 percent of millionaires overall, 67 percent of wealthy millennials are married. Only 20 percent of millennial millionaires have a college education, but 42 percent of millionaires overall do. As far as homeownership goes, the two groups are similar. 94 percent of millionaires overall are homeowners and 92 percent of millennial millionaires also have their own homes. However, only about 63 percent of other millennials have purchased property. Overall, the average real estate portfolio of millionaires is $919,000, while millennial millionaires have an average of $1.4 million in their real estate portfolios, according to the report. “A Look at Wealth 2019 Millennial Millionaires” also found that 44 percent of millennial millionaires live in California — however, the zip code with the highest number of the group is actually in Traverse City, Mich.

“Millennials tend to prefer markets that are more affordable — often in suburbs or second-tier cities, where their dollar will carry them further,” the report said. “Even if they have the money, they may still choose a nontraditional luxury neighborhood over the prestige of a traditional luxury neighborhood, if it means they can walk to the corner café.” According to the report, Traverse City’s luxury homes start around $500,000 and the city itself has had a revitalization over the last 10 years. Coldwell Banker Global Luxury also found the favorite car models of millennials, compared to millennial millionaires. According to the report, wealthier young people prefer BMW 3 Series cars, while other millennials prefer Chevrolet Silverado cars.

According to the report, millennials aren’t actually buying cars as much as they used to, instead depending on public transportation and ride-hailing apps like Uber and Lyft. However, the top car models for millennial millionaires is the BMW 3 Series (BMW) For other millennials who are buying cars, the top model is the Chevrolet Silverado (pictured), according to the report. (Chevrolet) And even though there’s a stereotype that millennials love traveling, only about 38 percent of young millionaires are interested in travel. Many wealthy millennials are also generous, according to the report. About 56 percent of the group donates to charity — with political causes at the top of the list of charities. “Millennials are more likely to give than other generations,” the report said. “They are especially passionate about aligning with causes they care about, whether it’s for the environment or political parties.” “According to WealthEngine statistics, 35 percent of them say they have donated to charities,” the report added. “As wealth increases and they become more generous over the course of their lives, this number jumps to 56 percent among millennial millionaires.”

NAR – locations close to public transit boost residential, commercial real estate values
Neighborhoods located within a half-mile of public transit services outperformed those in areas farther from public transit based on a number of factors, according to a report released today by the American Public Transportation Association(link is external) and the National Association of Realtors®. “The Real Estate Mantra – Locate Near Public Transportation” highlighted the critical role public transportation plays in determining real estate values, revealing that commercial and residential real estate market sales thrive when residents have mobility options close by. The report explored seven metropolitan regions – Boston; Hartford; Los Angeles; Minneapolis-St. Paul; Phoenix; Seattle; and Eugene, OR – that provide access to heavy rail, light rail, commuter rail and bus rapid transit. Residential properties within these areas had 4-24% higher median sale prices between 2012 and 2016, the report found. Commercial property near public transit also witnessed value gains in the studied cities, where four of the regions saw median sales prices per square foot increase between 5-42%. Transportation costs in transit-oriented areas are significantly lower than in other regions, with an average annual savings of $2,500 to $4,400 for the typical household. One in four households in close proximity to transit does not own a vehicle, according to the study. The seven sample areas were examined by residential and commercial sales performance, rent, neighborhood characteristics, local government interventions and housing affordability.

“Public transit’s benefits go beyond moving people from point A to point B,” said APTA President and CEO Paul P. Skoutelas. “Public transportation is a valuable investment in our communities, our businesses, and our country. Public transportation gets people to jobs and educational opportunities and helps businesses attract employees and customers.” “Access to public transportation is an extremely valuable community amenity that increases the functionality and attractiveness of neighborhoods, making nearby communities more desirable places to live, work and raise a family,” said NAR 2019 First Vice President Charlie Oppler, who spoke at Monday’s press conference along with 2019 New York State Association of Realtors® President Moses Seuram. “The results of our report, conducted over multiple years alongside the American Public Transportation Association, should reiterate to policymakers at all levels of government the importance of investing in modern, efficient infrastructure that facilitates growth and helps our nation keep pace in a rapidly evolving world.” Neighborhoods with high-frequency public transportation are in high demand. While property values and rents have risen, contributing to healthy local economies, the rapidly increasing demand for housing near public transit has resulted in constrained housing supplies. “As the conversation surrounding housing affordability continues, public transportation agencies are critical allies in working with elected officials and community leaders in the effort to increase housing opportunities and maximize value around stations,” said Skoutelas.

CoreLogic – housing’s contribution to longevity of economic growth
Economists have measured business cycles dating back 165 years in America, and none have lasted more than a decade. That is, until the current expansion. The economic recovery that began mid-2009 set a longevity record as it entered July 2019, and the recovery is expected to continue at least into next year. During this period the economy set other milestones as well: Nonfarm private-sector payroll employment through September has grown for 115 consecutive months, also the longest string of employment growth recorded for the U.S. During the last nine years the expansion has created more than 20 million jobs, raised family incomes and rebuilt consumer confidence. As we found in CoreLogic’s Special Report: The Role of Housing in the Longest Economic Expansion, these economic forces have driven a recovery in home construction, prices and equity. Residential building and contractor jobs are up by nearly one million from the trough in January 2011, accounting for about 5% of private nonfarm employment gains. The increase would have been even greater if builders could fill all the job openings that they have. Job openings in construction are the highest since records began to be kept in 2000 and would have added further to employment totals if companies could find workers to hire. Home prices have rebounded from their trough in all metros. The CoreLogic Home Price Index for the U.S. has recorded a 59% increase in prices since January 2011. The rise in prices has been the key ingredient in the recovery in home-equity wealth. In turn, higher levels of wealth add to consumer purchases. CoreLogic’s Home Equity Report has documented the rise in wealth per homeowner: Between the first quarter of 2011 and the second quarter of 2019, the average equity per borrower increased from $75,000 to $176,000 and rose $5,000 in the past year alone. (Exhibit 3) Aggregated across all homeowners, home-equity wealth has increased by $10 trillion since 2011 and stands at a record $18.7 trillion as of mid-2019. This gain in home-equity wealth has supported an additional $200 billion in consumer expenditures over this period, helping to sustain the economic expansion’s longevity.

NAHB – builder confidence hits 20-month high
Builder confidence in the market for newly-built single-family homes rose three points to 71 in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Sentiment levels are at their highest point since February 2018. “The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB Chief Economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.” 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. All the HMI indices posted gains in October. The HMI index gauging current sales conditions increased three points to 78, the component measuring sales expectations in the next six months jumped six points to 76 and the measure charting traffic of prospective buyers rose four points to 54. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a one-point gain to 60, the Midwest was up a single point to 58, the South registered a three-point increase to 73 and the West was also up three points to 78.

CoreLogic releases most recent HPI forecast validation report
– Analysis shows 16 metros had forecasts with less than a 1% difference from actual values

CoreLogic released its latest CoreLogic HPI Forecast Validation Report that compares its 12-month CoreLogic Home Price Index (HPI) Forecast to the actual CoreLogic Home Price Index. The report compares the changes in national and key metro-level forecasts made in June 2018 to the actual HPI index, which includes data through June 2019. The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. National values are derived from state-level forecasts by weighing indices according to the number of housing units for each state. Published every six months, the Forecast Validation Report is designed to provide transparency into CoreLogic forecasting abilities. The report showed:

– Sixteen large metros had forecasts with less than a 1% difference from actual values, including the Phoenix, Houston and Milwaukee metros all coming in within 0.3%. The top 10 major metros all had forecasts within 0.5% of actual values.

– The national forecast prediction of a 5.7% increase was within 2.4% of the 3.3% increase of the HPI for the 12-month period ending in June 2019. Long-term affordability concerns, coupled with consumer sentiment about the general economic climate along with other economic factors caused actual home prices to increase at a slower rate.

– The most accurate metro-level forecast was for the Phoenix-Mesa-Scottsdale, AZ area, which at 5.9% came on target of the actual HPI increase of 5.9%.

– The widest metro gap was in the San Jose, California metro areas, with a 13% over-estimation of actual increase. CoreLogic noted that the variance in this under-valued metro was mainly due to a concern over long-term affordability.

– Severe inventory shortages and rising interest rates impacted the forecasts of several metros – including the Chicago and San Francisco areas – reflecting the overall market volatility of the past 12 months.

– Slowing home price appreciation across many markets over the last 12 months caused much more volatility in housing markets than has been observed over the last three years.

“The latest HPI Forecast Validation report continues to demonstrate why CoreLogic is the gold standard when it comes to home price forecasting,” said Ann Regan, executive, product management for CoreLogic. “While our national forecast results reflect the difficulties of forecasting in an extremely volatile market, our forecasts were still able to provide accurate, region-specific forecasts for major metro areas, providing HPI clients with the reliability they need in the current market.”

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Residential refinance mortgages more than double in fourth quarter of 2019

20 Mar, 2020
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MBA - February new home purchase mortgage applications increased 25.9 percent

19 Mar, 2020
The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for February 2020 shows mortgage applications for new home purchases increased 25.9 percent compared from a year ago. Compared to January 2020, applications decreased by 1 percent. This change does not include any adjustment for typical seasonal patterns. "Despite a monthly decrease in February new applications and estimated new home sales, the year-over-year trends were strong, with new applications increasing 26 percent, and our estimate of new home sales increasing 8 percent," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Looking ahead, there is significant uncertainty regarding how the coronavirus epidemic will impact the housing market, and some of January's record-level activity could have been attributed to the warmer winter weather, lower mortgage rates, and the tight inventory of existing homes on the market - especially in lower price tiers." MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 746,000 units in February 2020, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. The seasonally adjusted estimate for February is a decrease of 13.8 percent from the January pace of 865,000 units. On an unadjusted basis, MBA estimates that there were 64,000 new home sales in February 2020, a decrease of 3 percent from 66,000 new home sales in January. By product type, conventional loans composed 69.3 percent of loan applications, FHA loans composed 18.5 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 11.4 percent. The average loan size of new homes decreased from $346,140 in January to $340,169 in February. NAHB - HUD, Fannie Mae and Freddie Mac suspend foreclosures and evictions President Trump announced today that he has directed the Department of Housing and Urban Development to suspend foreclosures and evictions for mortgages insured by the Federal Housing Administration through the end of April. The Federal Housing Finance Agency also announced that Fannie Mae and Freddie Mac will follow suit and suspend all foreclosures and evictions for at least 60 days for home owners with mortgages backed by the two government-sponsored enterprises. “This foreclosure and eviction suspension allows home owners with an Enterprise-backed mortgage to stay in their homes during this national emergency,” said FHFA Director Mark Calabria. “As a reminder, borrowers affected by the coronavirus who are having difficulty paying their mortgage, should reach out to their mortgage servicers as soon as possible. The Enterprises are working with mortgage servicers to ensure that borrowers facing hardship because of the coronavirus can get assistance.” Earlier this month, FHFA announced that Fannie Mae and Freddie Mac would allow borrowers impacted by the coronavirus to suspend mortgage payments for up to 12 months. New home construction dips again in February Construction of new homes fell again in February, but not as much as the previous month. Those declines follow a December surge which had pushed home construction to the highest level in 13 years. Builders started construction on 1.60 million homes at a seasonally adjusted annual rate, a decline of 1.5% from 1.62 million units in January, the Commerce Department reported Wednesday. Analysts had expected a more significant drop. The economic impact of the coronavirus outbreak was not apparent in the February numbers. Application for building permits, considered a good sign of future activity, fell 5.5% in February to an annual rate of 1.46 million units. However, permits for single-family home construction rose 1.7%. Single-family housing starts were up 6.7% to 1,072,000 in February over the revised January figure of 1,005,000. The report on housing starts showed that home building declined the most in the Northeast, falling 25.1%, followed by a 8.2% drop in the West. Home building fell modestly in the West and South regions. The National Association of Home Builders reported Tuesday that its survey of builders' sentiment declined slightly in February, but remains high. The group said that builder confidence reflected a decline in mortgage rates, a low supply of existing homes and a strong labor market with rising wages and the lowest unemployment rate in a half century. But that could change drastically in the coming months as American industry braces for the impact of COVID-19, which is grinding the economy to a near halt as people stay home, airlines cancel flights and public events are called off. "Due to the slowdown in economic growth and the volatility in markets from the coronavirus, mortgage rates will remain lower for longer, which will help homebuyers in the longer run," said Adam DeSanctis of the Mortgage Bankers Association. "However, we may start to see these homebuilding trends take a turn for the worse, depending on the industry's ability to continue day-to-day operations during these difficult times." The average rate on a 30-year-fixed mortgage ticked up slightly to 3.36% last week from 3.29% the previous week, which was the lowest level since mortgage buyer Freddie Mac started tracking the average in 1971. It could fall further this week after the Fed on Sunday slashed its benchmark rate to nearly zero. CoreLogic - single-family rent price increases double the rate of inflation, spurring affordability concerns in the midst of economic volatility - For the 14th consecutive month, Phoenix had the highest year-over-year rent price increase at 6.4% - Lower-priced rentals experienced increases of 3.5%, compared to gains of 2.6% among higher-priced rentals CoreLogic released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for January 2020 shows a national rent increase of 2.9% year over year, down slightly from a 3.2% year-over-year increase in January 2019. Rent prices are now increasing at double the rate of inflation, presenting affordability challenges among current and prospective renters. Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%, and have stabilized at around 3% over the past year. Low-end rentals propped up national rent growth in January, which has been an ongoing trend since May 2014. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.5% year over year in January 2020, down from a gain of 3.9% in January 2019. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.6% in January 2020, down from a gain of 2.9% in January 2019. Among the 20 metro areas shown in Table 1, and for the 14th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in January 2020 at 6.4% (compared to January 2019). Tucson, Arizona experienced the second-highest rent price growth in January 2020 with gains of 5.2%, followed closely by Las Vegas at 4.9%. Honolulu experienced the lowest rent increases out of all analyzed metros at 0.6%. Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced the highest year-over-year rent growth in January 2020, driven by annual employment growth of 3.2%. Austin, Texas experienced a 3.6% employment growth, which played a role in its above-average rent growth of 3.4% in January. This is compared with the national employment growth average of 1.5%, according to data from the United States Bureau of Labor Statistics. “The single-family rental market benefited from low unemployment rates over the past year, resulting in an increase in rental demand,” said Molly Boesel, principal economist at CoreLogic. “However, rents are increasing at about double the rate of inflation, which has negatively impacted affordability.” Home sales 'robust' despite coronavirus outbreak, real estate CEO says With many companies struggling amid the coronavirus pandemic, one industry may not be feeling the hurt yet, according to real-estate company Hovnanian Enterprises Inc.'s CEO. "The last two weeks, in one word, have been robust," Hovnanian Enterprises Inc. chairman and CEO Ara Hovnanian shared with FOX Business' Liz Claman on Tuesday. "We have been selling a lot of homes. Frankly, it's been surprising." Hovnanian admitted that going into the outbreak, his company was already seeing strong sales, so they are remaining cautiously optimistic. "New sales closings have been progressing regularly," Hovnanian said on "The Claman Countdown." "Customers want their home. They want to nest. If they're going to be inside for a while, they want to do it in their own home." He recognized the situation is changing quickly, but as of now, he's encouraged. Coronavirus spurs Trump to invoke Defense Production Act 'just in case we need it' President Trump will invoke the Defense Production Act because of the coronavirus pandemic, he said at a press conference Wednesday. "We'll be invoking the Defense Production Act just in case we need it. I think you all know what it is, and it can do a lot of good things if we need it," Trump said, adding that he'd sign it after the presser. The decision means the private sector can ramp up manufacturing of emergency supplies, including medical equipment. In addition, the administration is pushing for direct payments to relieve people suffering financially because of the virus. Trump said the size of those checks is "to be determined." Trump had said he hoped he didn't need the Defense Production Act because "it's a big step" in a Tuesday's press conference. President Trump declared a national emergency and enacted emergency powers outlined in the Stafford Act on Friday. MBA - mortgage applications decrease in latest MBA weekly survey Mortgage applications decreased 8.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2020. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 8 percent compared with the previous week. The Refinance Index decreased 10 percent from the previous week and was 402 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index remained unchanged compared with the previous week and was 11 percent higher than the same week one year ago. "The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10 percent decrease in refinance applications. However, refinance activity remains very high. Excluding the spike two weeks ago, the index remained at its highest level since October 2012, and refinancing accounted for almost 75 percent of all applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "The Federal Reserve's rate cut and other monetary policy measures to help the economy should help to bring down mortgage rates in the coming weeks, spurring more refinancing. Amidst these challenging times, the savings that households can gain from refinancing will help bolster their own financial circumstances and support the broader economy." Added Kan, "Purchase activity was flat but remained over 10 percent higher than a year ago. The purchase market was on firm footing to start the year and has so far held steady through the current uncertainty. Looking ahead, a gloomier outlook may cause some prospective homebuyers to delay their home search, even with these lower mortgage rates." The refinance share of mortgage activity decreased to 74.5 percent of total applications from 76.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications. The FHA share of total applications increased to 7.3 percent from 6.9 percent the week prior. The VA share of total applications increased to 14.5 percent from 13.1 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.74 percent from 3.47 percent, with points increasing to 0.37 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.77 percent from 3.58 percent, with points increasing to 0.32 from 0.20 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.71 percent from 3.57 percent, with points increasing to 0.28 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.10 percent from 2.90 percent, with points increasing to 0.37 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs increased to 3.19 percent from 3.02 percent, with points decreasing to 0.19 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

ATTOM - U.S. counties with the greatest single family rental growth

16 Mar, 2020
The high-level takeaways from ATTOM Data Solutions’ newly released 2020 U.S. Single Family Rental Market Report are potential rental returns decrease from a year ago in 59 percent of the U.S. counties analyzed, while the highest potential SFR returns are in the Baltimore, Vineland, Macon, Mobile and Atlanta Metros. ATTOM’s annual single family rental report this year analyzed single-family rental returns in 389 U.S. counties with a population of at least 100,000 and sufficient rental and home price data. Rental data comes from the U.S. Department of Housing and Urban Development, and home price data comes from publicly recorded sales deed data collected and licensed by ATTOM Data Solutions. According to the report, the average annual gross rental yield (annualized gross rent income divided by median purchase price of single-family homes) among the 389 counties analyzed is 8.4 percent for 2020, down slightly from an average of 8.6 percent in 2019. The report revealed the counties with the highest potential annual gross rental yields for 2020: Baltimore City/County, MD (28.9 percent); Cumberland County, NJ, in the Vineland-Bridgeton metro area (20.1 percent); Bibb County, GA, in the Macon metro area (18.2 percent); Mobile County, AL (15.7 percent); and Clayton County, GA, in the Atlanta metro area (15.1 percent). Baltimore City, Cumberland and Bibb counties also had the top three yields in 2019. ATTOM’s report also pointed out that among counties with a population of at least 1 million, the highest potential gross rental yields in 2020 are in Wayne County (Detroit), MI (14.5 percent); Cuyahoga County (Cleveland), OH (11.8 percent); Cook County, IL (9.3 percent); Dallas County, TX (9.1 percent); and Harris County, TX (8.7 percent). Here are the Top 10: Saint Clair, IL (21.0 percent); Jefferson, AL (20.7 percent); Mobile, AL (19.6 percent); Baltimore City, MD (18.5 percent); Caddo, LA (17.3 percent); Beaver, PA (15.7 percent); Lorain, OH (15.4 percent); Madison, IL (10.0 percent); Summit, OH (9.9 percent); and Spartanburg, SC (8.1 percent). ATTOM’s 2020 SFR market report also noted the counties with the lowest potential annual gross rental yields: San Francisco County, CA (3.8 percent); San Mateo County, CA (3.8 percent); Williamson County, TN, in the Nashville metro area (3.9 percent); Kings County (Brooklyn), NY (4.3 percent); and Santa Clara County, CA (4.3 percent). Moreover, along with Kings County and Santa Clara County, the lowest potential annual gross rental yields in 2020 among counties with a population of at least 1 million are in Orange County, CA (5.0 percent); Queens County, NY (5.1 percent); and Los Angeles County, CA (5.2 percent). Impossible Foods raises $500M in new funding, says it can 'thrive' in coronavirus pandemic Plant-based meat producer Impossible Foods has raised around $500 million in its latest funding round. The Redwood City, California-based food-tech startup that makes alternative meat products using a molecule called heme that makes food look, taste and bleed like real beef or pork, announced Monday its latest series F funding round led by new investor South Korea's Mirae Asset Global Investments. Impossible said the new investment will go toward accelerating its manufacturing and scale helping it to expand its retail presence in more international markets and increase supply of newer products like its plant-based Impossible Sausage and Impossible Pork. The funding news comes with the widening coronavirus pandemic resulting in school closures and businesses like restaurants, bars and gyms to shutter in an attempt to contain virus from spreading. What's more, grocery store shelves have become increasingly empty as Americans stock up. "With this latest round of fundraising, Impossible Foods has the resources to accelerate growth -- and continue to thrive in a volatile macroeconomic environment, including the current COVID-19 pandemic." With this latest round of fundraising, Impossible Foods has the resources to accelerate growth -- and continue to thrive in a volatile macroeconomic environment, including the current COVID-19 pandemic," Impossible Foods' Chief Financial Officer David Lee said in a statement. Impossible Foods has raised $1.3 billion in funding, including its latest round. Other investors include Horizons Ventures, Khosla Ventures and Temasek. And the $5 billion market for plant-based foods has grown increasingly competitive as larger food companies like Kellogg's, Nestle and Tyson roll out their own versions of plant-based meat at lower price points. As a result, Impossible Foods lowered its wholesale prices by 15 percent. And its competitor Beyond Meat told analysts earlier this month it wants to have at least one of its products comparably priced to real meat by 2024. MBA - commercial/multifamily mortgage debt grows in the fourth quarter of 2019 The level of commercial/multifamily mortgage debt outstanding at the end of 2019 was $248 billion (7.3 percent) higher than at the end of 2018, according to the Mortgage Bankers Association's (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report. MBA's report found that total mortgage debt outstanding in the final three months of 2019 rose by 2.1 percent ($75.0 billion) compared to last year's third quarter, with all four major investor groups increasing their holdings. Multifamily mortgage debt grew by $30.4 billion (2.0 percent) to $1.53 trillion during the fourth quarter, and by $116.7 billion (8.2 percent) for the entire year. "In 2019, the amount of mortgage debt backed by commercial and multifamily properties grew by the largest annual amount since before the Global Financial Crisis," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Every major capital source increased their holdings, and some by double digits. Continuing the recent trend, the growth in multifamily mortgage debt outpaced that of other property types." Added Woodwell, "Looking ahead, a key question will be how the coronavirus and related economic shocks will affect the market's momentum in 2020. At this point it is still too early to tell." The four major investor groups are: bank and thrift; commercial mortgage backed securities (CMBS); collateralized debt obligation (CDO) and other asset backed securities (ABS) issues; federal agency and government sponsored enterprise (GSE) portfolios and mortgage backed securities (MBS); and life insurance companies. MBA's analysis summarizes the holdings of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under "Life Insurance Companies"), and in CMBS, CDOs and other ABS for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issues). Commercial banks continue to hold the largest share (39 percent) of commercial/multifamily mortgages at $1.4 trillion. Agency and GSE portfolios and MBS are the second largest holders of commercial/multifamily mortgages, at $744 billion (20 percent of the total). Life insurance companies hold $561 billion (15 percent), and CMBS, CDO and other ABS issues hold $504 billion (14 percent). Looking solely at multifamily mortgages, agency and GSE portfolios and MBS hold the largest share of total debt outstanding at $744 billion (49 percent of the total), followed by commercial banks with $459 billion (30 percent), life insurance companies with $149 billion (10 percent), state and local governments with $88 billion (6 percent), and CMBS, CDO and other ABS issues with $48 billion (3 percent). In the fourth quarter of 2019, CMBS, CDO and other ABS issues saw the largest rise in dollar terms in their holdings of commercial/multifamily mortgage debt, with an increase of $23.1 billion (4.8 percent). Commercial banks increased their holdings by $21.5 billion (1.5 percent), agency and GSE portfolios and MBS increased their holdings by $16.1 billion (2.2 percent), and finance companies saw the largest decrease at $117 million (0.4 percent). In percentage terms, CMBS, CDO and other ABS issues saw the largest increase - 4.8 percent - in their holdings of commercial/multifamily mortgages, and state and local government retirement funds saw their holdings decrease the most, at 1.0 percent. The $30.5 billion rise in multifamily mortgage debt outstanding between the third and fourth quarters of 2019 represented a 2.0 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase, at $16.1 billion (2.2 percent), in their holdings of multifamily mortgage debt. Commercial banks increased their holdings of multifamily mortgage debt by $6.7 billion (1.5 percent). CMBS, CDO and other ABS issues increased holdings by 9.5 percent to $4.1 billion. Private pension funds saw the largest decline (7.2 percent) in their holdings, by $65 million. In percentage terms, REITs recorded the largest increase in holdings of multifamily mortgages (23.9 percent), and private pension funds saw the biggest decrease (7.2 percent). Between December 2018 and December 2019, commercial banks saw the largest gain (6.1 percent) in dollar terms in their holdings of commercial/multifamily mortgage debt - an increase of $82 billion. State and local government decreased their holdings of commercial/multifamily mortgages by $1.5 billion (1.4 percent). In percentage terms, finance companies saw the largest increase (14.9 percent) in their holdings of commercial/multifamily mortgages, and state and local government retirement funds saw the largest decrease (3.3 percent). The $116.7 billion rise in multifamily mortgage debt outstanding during 2019 represents an 8.2 percent increase. In dollar terms, agency and GSE portfolios and MBS saw the largest increase in their holdings of multifamily mortgage debt at 10 percent ($69.2 billion). State and local government saw the largest decrease in their holdings down $1.3 billion (1.4 percent). In percentage terms, REITs recorded the largest increase in their holdings of multifamily mortgages, 52 percent, while private pension funds saw the largest decrease, 24 percent. China's economy skids as virus paralyzes factories, households China factory production plunged at the sharpest pace in 30 years in the first two months of the year as the fast-spreading coronavirus and strict containment measures severely disrupted the world's second-largest economy. Urban investment and retail sales also fell sharply and for the first time on record, reinforcing views that the epidemic may have cut China's growth by half in the first quarter and that authorities will need to do more to restore growth. Industrial output fell by a much larger-than-expected 13.5% in January-February from the same period a year earlier, data from the National Bureau of Statistics (NBS) showed on Monday. That was the weakest reading since January 1990 when Reuters records started, and a sharp reversal of the 6.9% growth in December. The median forecast of analysts polled by Reuters was for a rise of 1.5%, though estimates varied widely. "Judging by the data, the shock to China's economic activity from the coronavirus epidemic is greater than the global financial crisis," said Zhang Yi, chief economist at Zhonghai Shengrong Capital Management. "These data suggest a small contraction in the first-quarter economy is a high probability event. Government policies would need to be focused on preventing large-scale bankruptcies and unemployment." The dire batch of official economic data on Monday also showed a shocking declines in the retail and property sectors. Fixed asset investment fell 24.5% year-on-year, dashing forecasts for a 2.8% rise and skidding from the 5.4% growth in the prior period. Private sector investment dived 26.4% from a year earlier. Retail sales shrank 20.5% on-year, compared with a rise of 0.8% tipped by analysts and 8% growth in December as consumers shunned crowded places like shopping malls, restaurants and movie theaters. China's jobless rate rose to 6.2% in February, compared with 5.2% in December and the highest since the official records were published. While officials say the epidemic's peak in China had passed, analysts warn it could take months before the economy returns to normal. The fast spread of the virus around the world is also sparking fears of a global recession that would dampen demand for Chinese goods. The NBS in a statement on Monday said the impact from the coronavirus epidemic is controllable and short-term and authorities would strengthen policy to restore economic and social order. Mainland China has seen an overall drop in new coronavirus infections, but major cities such as Beijing and Shanghai continued to wrestle with cases involving infected travelers arriving from abroad, which could undermine China's virus fighting efforts. "While domestic conditions should improve slowly in the coming months, the mounting global disruption from the coronavirus will hold back the pace of recovery," said Julian Evans-Pritchard, Senior China Economist at Capital Economics. Prior to a significant deterioration in the virus, analysts had predicted a rapid V-shaped recovery for China's economy, similar to that seen after the SARS epidemic in 2003-2004. However, the outbreak escalated just as many businesses were closing for the long Lunar New Year holidays in late January, and widespread restrictions on transportation and personal travel, as well as mass quarantine, delayed their reopening for weeks. Both exports and imports fell in the first two months from a year earlier, while slumping demand pushed factory prices back into deflation. Factories may not be back to full output until April, some analysts estimate, and consumer confidence may take even longer to recover. The pain in the industrial sector was also seen in China's real estate market. Property investment fell at its fastest pace on record while home prices stalled for the first time in nearly five years. Despite those numbers, NBS spokesman Mao Shengyong said short-term policies to support the property market were not among the government's broad swathe of stimulus options. Authorities have been ramping up support since the virus outbreak escalated, with most aimed at helping cash-starved companies stay afloat until conditions improve. Other major global economies have more recently unleashed a wave of stimulus to prop up growth and ensure financial stability. China's central bank said on Friday it was cutting the amount of cash that banks must hold as reserves (RRR) for the second time this year, releasing another 550 billion yuan ($78.82 billion) to push down borrowing costs. Mao from the NBS told reporters after the data release there is room for China to appropriately raise budget deficit ratio this year, and Beijing would expand effective investment to cope with the economic downward pressure. China has cut several key interest rates since late January, and some analysts are expecting another reduction in its benchmark lending rate this week. It has also urged lenders to extend cheap loans to the worst-hit firms and tolerate late payments, though analysts note that will likely saddle banks with more bad loans. The government has also announced fiscal support measures, including more funding for the virus fight, tax waivers, cuts in social insurance fees and subsidies for firms. "I'm worried about the small firms. The pressure of rent remains a problem and tax waivers don't mean much, as there's no revenues," said Hua Changchun, chief economist at Guotai Junan Securities. "If Q1 GDP growth turns negative, there would be huge pressure to achieve the full year target, unless we can have a 8%-10% of GDP growth in the second quarter." NAHB - Fed cuts interest rates to zero The Federal Reserve on Sunday evening slashed interest rates to zero in a dramatic move to boost the economy and keep borrowing costs as low as possible for consumers and businesses in the wake of the coronavirus crisis. The Fed reduced the federal funds target rate by a full percentage point, from 1% to 1.25% down to 0% to 0.25%. NAHB Chief Economist Robert Dietz provides analysis on how the Fed action will provide a stimulus to the economy and housing in this Eye on Housing blog post. In an official statement, the Fed said: “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4%. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” The moves comes less than two weeks after the Fed made an emergency 50-point basis rate cut and pledged to purchase $1.5 trillion in bonds to keep the financial markets from seizing up. In today’s announcement, the Fed also announced that in order to support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, the central bank will purchase at least $500 billion of Treasury bonds and $200 billion of mortgage-backed securities over the coming months.
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