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CoreLogic - U.S. overall delinquency rate lowest for an August in at least 20 years but five states post annual gains

Nov 13, 2019
- Iowa, Minnesota, Nebraska, Wisconsin and Rhode Island posted small annual gains in their overall delinquency rates in August
- The nation's serious delinquency rate was the lowest for an August in 14 years
- For the 10th consecutive month, the U.S. foreclosure rate was the lowest in at least 20 years
CoreLogic released its monthly Loan Performance Insights Report. The report shows that nationally, 3.7% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in August 2019, representing a 0.2 percentage point decline in the overall delinquency rate compared with August 2018, when it was 3.9%. As of August 2019, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.4%, down 0.1 percentage points from August 2018. The August 2019 foreclosure inventory rate tied the prior nine months as the lowest for any month since at least January 1999. Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To monitor mortgage performance comprehensively, CoreLogic examines all stages of delinquency, as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next. The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 1.8% in August 2019, unchanged from August 2018. The share of mortgages 60 to 89 days past due in August 2019 was 0.6%, unchanged from August 2018. The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.3% in August 2019, down from 1.5% in August 2018. This August’s serious delinquency rate of 1.3% was the lowest for the month of August since 2005 when it was also 1.3%. The serious delinquency rate has remained consistent since April 2019. Since early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 0.8% in August 2019, unchanged from August 2018. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2%, while it peaked at 2% in November 2008. “Job loss can trigger a loan delinquency, especially for families with limited savings,” said Dr. Frank Nothaft, chief economist at CoreLogic. “The rise in overall delinquency in Iowa, Minnesota, Nebraska and Wisconsin coincided with a rise in state unemployment rates between August 2018 and August 2019.”

The nation's overall delinquency remains near the lowest level since at least 1999. However, five states posted small annual increases in overall delinquency rates in August: Iowa (0.2 percentage points), Minnesota (0.1 percentage points), Nebraska (0.1 percentage points), Wisconsin (0.1 percentage points) and Rhode Island (0.1 percentage points). In August 2019, 47 metropolitan areas recorded small annual increases in overall delinquency rates. Some of the highest gains were in the Midwest and Southeast. Metros with the largest increases were Dubuque, Iowa (2.2 percentage points), Pine Bluff, Arkansas (1.1 percentage points), Goldsboro, North Carolina (0.6 percentage points) and Panama City, Florida (0.5 percentage points). While the nation’s serious delinquency rate remains near a record low, 19 metropolitan areas recorded small annual increases in their serious delinquency rates. Metros with the largest increases were Panama City, Florida (0.9 percentage points), Jacksonville, North Carolina (0.2 percentage points), Wilmington, North Carolina (0.2 percentage points) and Goldsboro, North Carolina (0.2 percentage points). The remaining 15 metro areas logged annual increases of 0.1 percentage point. “Delinquency rates are at 14-year lows, reflecting a decade of tight underwriting standards, the benefits of prolonged low interest rates and the improved balance sheets of many households across the country,” said Frank Martell, president and CEO of CoreLogic. “Despite this month’s near record-low serious delinquency rate, several metros in hurricane-ravaged areas of the Southeast have experienced higher delinquency rates of late. We expect to see these metros to return to pre-disaster delinquency rates over the next several months.”

Powell to tell Congress Fed is unlikely to cut interest rates again

Federal Reserve Chairman Jerome Powell said policymakers at the U.S. central bank are unlikely to cut interest rates in December, so long as the economy remains on its current path of growth. In testimony he provided to the Joint Economic Committee of Congress, Powell reiterated what he said during the Fed's two-day meeting in October: The current level on its benchmark interest rate will likely remain "appropriate," despite persistent risks to the economic outlook. Those risks, he said, include slow global growth and the U.S.-China trade war. "We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective," he said in his Wednesday remarks. Powell is scheduled to appear before Congress twice this week and face a wide range of questions about the state of the U.S. economy. He sounded an upbeat note in his opening remarks, attributing some of the economy's strength to the three quarter-percentage interest rate cuts that officials made this year. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” he said. “This favorable baseline partly reflects the policy adjustments that we have made to provide support for the economy.” However, Powell warned that as a result of the so-called "mid-cycle adjustment," interest rates are historically low, giving the Fed few tools in its arsenal to respond to an economic downturn, should one happen. At the end of October, the Fed cut rates by a quarter-percentage point for the third time this year to cushion the economy against the U.S.-China trade dispute and a global growth slowdown, but signaled that it will take a wait-and-see approach before moving rates again. Rates are currently at a range between 1.75 percent and 2 percent. Because of that, he said that fiscal policy passed by Congress will be important in supporting the economy -- but noted the federal budget is on an "unsustainable path, with high and rising debt." "Over time," he said, "this outlook could restrain fiscal policymakers' willingness or ability to support economic activity during a downturn." Powell's testimony is likely to anger President Trump, who frequently berates the Fed for raising interest rates too high, too quickly. On Tuesday, Trump reignited his criticism of Fed officials saying the S&P 500, Dow Jones Industrial Average and Nasdaq Composite would be 25 percent higher if the "Federal Reserve worked with us." "We are competing against these other countries, nonetheless, and the Federal Reserve doesn't let us play the game," Trump said during a speech at the Economic Club of New York. "It puts us at an economic disadvantage."

MBA - mortgage applications up

Mortgage applications increased 9.6 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending November 8, 2019. The Market Composite Index, a measure of mortgage loan application volume, increased 9.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9 percent compared with the previous week. The Refinance Index increased 13 percent from the previous week and was 188 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 15 percent higher than the same week one year ago. "Mortgage applications increased to their highest level in over a month, as both purchase and refinance activity rose despite another climb in mortgage rates. Positive data on consumer sentiment, and growing optimism surrounding the U.S. and China trade dispute, were behind last week's rise in the 30-year fixed mortgage rate to 4.03 percent," said Joel Kan, Associate Vice President of Economic and Industry Forecasting. "Refinance applications jumped 13 percent to the highest level in five weeks, as conventional, FHA, and VA refinances all posted weekly gains. With rates still in the 4 percent range, we continue to expect to see moderate growth in refinance activity in the final weeks of 2020." Added Kan, "Last week was a solid week for homebuyers. Purchase applications increased 2 percent and were 15 percent higher than a year ago. Low supply and high home prices remain a key characteristic of this fall's housing market, which is why the largest growth in activity continues to be in loans with higher loan balances." The refinance share of mortgage activity increased to 61.9 percent of total applications from 59.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 4.9 percent of total applications.

The FHA share of total applications increased to 13.1 percent from 11.8 percent the week prior. The VA share of total applications increased to 12.7 percent from 12.0 percent the week prior. The USDA share of total applications decreased to 0.5 percent from 0.6 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 4.03 percent from 3.98 percent, with points decreasing to 0.31 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) increased to 3.98 percent from 3.97 percent, with points decreasing to 0.22 from 0.24 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.85 percent from 3.79 percent, with points increasing to 0.28 from 0.21 (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 3.43 percent from 3.38 percent, with points decreasing to 0.28 from 0.31 (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 decreased to 3.40 percent from 3.43 percent, with points decreasing to 0.17 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

VW breaking ground on $800M Tennessee plant expansion for electric vehicles

Volkswagen is set to break ground on its $800 million Chattanooga, Tennessee, assembly plant expansion. Work on the expansion will start Wednesday, according to Tennessee Gov. Bill Lee's office. Volkswagen said it's investing in the plant in order to add electric vehicle production at the facility. It plans to produce the new ID Crozz SUV starting in 2022 in Chattanooga. It's one of just eight facilities across the world and the only in North America where VW said it would produce its upcoming ID electric cars. VW currently produces its Passat sedan and Atlas and Atlas Cross Sport SUVs at the Chattanooga plant. About 3,800 people work there. The expansion will increase the 3.4 million-square-foot plant's size by about a quarter and the company plans to add about 1,000 jobs at the site. Herbert Diess, CEO of Volkswagen AG, said earlier this year that Chattanooga "is a key part" of the company's growth strategy for North America. "Together with our ongoing investments and this increase in local production, we are strengthening the foundation for sustainable growth of the Volkswagen brand in the U.S.," Diess said. The Chattanooga project is part of what Volkswagen Group has said will be a $50 billion investment through 2023 for developing and producing electric vehicles and digital services. Volkswagen's push into electric is coming on the tails of its emissions scandal. VW's North American market share fell below 2 percent for the first time in nearly a decade after federal authorities said the company had cheated on emissions tests, but VW was able to recover thanks to its push into SUVs like the Chattanooga-built Atlas. Volkswagen's SUV sales growth has blossomed from about 15 percent in 2016 to more than 45 percent last year, according to its 2018 year-end sales report. Hinrich J. Woebcken, a former Volkswagen North America CEO who took over amid the scandal and led its recovery, told FOX Business in a statement that he is "glad to see that the turnaround- and comeback story for VW in the U.S. and North America, which was launched some years ago, is now transitioning into the electric future." The move into electric has been inspired by several factors. For one, Volkswagen has forecast that it will sell 150,000 electric vehicles by 2020 worldwide and 1 million by 2025. But the company is also required to invest $2 billion in zero-emissions vehicle charging infrastructure as part of its 2016 settlement with the Environmental Protection Agency. And as long as they're putting in charging stations, they may as well sell more cars to go with them, according to automotive expert Lauren Fix, "the car coach." "They're doing this because they're building the infrastructure," she said.

ATTOM - ATTOM CEO Rob Barber Bylines, “Brokerages Battle It Out With Tech,” for RISMedia

As featured on RISMedia’s HouseCall this month, ATTOM Data Solutions CEO Rob Barber suggests real estate brokerages aren’t letting tech take them down without a fight. In fact, many are using technology as a differentiator—critical leverage in the battle for great agents in an already-crowded industry. The proof is in the headlines. Just a quick glance at the past month’s news shows all kinds of tech developments on the brokerage front. Well-known brokerages are snapping up tech companies left and right, they’re launching their own proprietary tools and solutions, and they’re hiring known tech teams to keep the ball rolling in the future. They need to, too. According to the most recent Technology Survey from the National Association of REALTORS®, less than a third of agents are completely happy with the tech their broker provides. Brokerages that can up their game in the tech department have the opportunity to bring in more agents—potentially even steal them away from competitors—and, most importantly, keep them there for the long haul. How do they go about this, though? In general, brokerages are approaching their tech takeovers in one of two ways: with open platforms aimed at expanding their agents’ leads, branding and marketing opportunities; or, in some cases, with proprietary solutions, which offer agents a proprietary advantage once joining the team. Let’s take a look at both. A lot of the more time-tested brokerages are using open tech solutions—tools that offer a plug-and-play approach (often as a quick fix to keep up with competitors). These tools range from CRMs and texting campaign platforms to tech that helps agents launch their own websites, market their services and hone their individual brand. Property data and predictive analytics tools are also popular options. The approach here is one of empowerment. Brokerages are looking to differentiate themselves from their competitors by offering agents a large arsenal of tools that can both improve their prospects and help them boost their earnings.

The other approach is one of exclusivity. It’s brokerages offering proprietary, firm-only technology that agents can’t leverage anywhere else. It typically requires bigger spend, but the expectation is a bigger reward, too (however, time will tell). These “proprietary” tech solutions are a little more custom-fit and often more advanced. They’re mobile apps designed to help agents on the go, pre-populated with Google and Facebook campaigns to promote new listings, and automated CRMs that tap into property, neighborhood and market-level data instantly. There are even proprietary recruiting and scouting tools that help brokerages find and poach the best local agents. In a fairly new development, some brokerages are even offering internal cash-offer programs to help agents better compete with tech-heavy iBuyers. Given the rise of these new selling solutions in recent years, these programs can go a long way in helping a brokerage stand out among the crowd. Still, brokerages aren’t just differentiating themselves in tools or approach. They’re standing out in how they price these tech advantages, as well. NAR’s survey shows that almost 40 percent of agents pay a monthly technology fee to their brokers. But another 36 percent of brokers don’t charge for their technology at all. Others charge separate fees for each tech product, while others ask for a percentage of commissions for using the firm’s technology. It seems there’s a lot of room for brokerages to differentiate themselves simply by structuring their tech fees in a unique—or better yet, more affordable—manner. In the end, there’s no right or wrong path when it comes to brokerage technology, but one thing’s for sure: Investing in tech pays off. At ATTOM Data Solutions, we’re proud that our property datasets (and the platforms they power) can play even a small role in this growth.

MBA - mortgage credit availability increased in October

Mortgage credit availability increased in October according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from Ellie Mae's AllRegs® Market Clarity® business information tool. The MCAI rose by 0.9 percent to 185.1 in October. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI increased 2.4 percent, while the Government MCAI decreased by 0.9 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 3.1 percent, and the Conforming MCAI rose by 1.3 percent. "Mortgage credit availability expanded in October, driven mainly by an increase in conventional loan programs, including more for borrowers with lower credit scores, as well as for investors and second home loans," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Credit supply for government mortgages continued to lag, declining for the sixth straight month. Meanwhile, the jumbo credit index increased 3 percent to another survey-high, as that segment of the market stays resilient despite signs of a slowing economy." The MCAI rose by 0.9 percent to 185.1 in October. The Conventional MCAI increased 2.4 percent, while the Government MCAI decreased by 0.9 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 3.1 percent, and the Conforming MCAI rose by 1.3 percent. The Conventional, Government, Conforming, and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs that fall under conforming loan limits. The Conforming and Jumbo indices have the same "base levels" as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted "base levels" in March 2012. MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the "base period") relative to the Total=100 benchmark.                                                       

CoreLogic - Amazon HQ2 and the Washington, DC Metro housing market

On November 13, 2018, Amazon stunned the news cycle by announcing that it was choosing not one, but two sites for the location of its second headquarters (HQ2): Arlington County, Virginia, at Crystal City, and Queens, New York at Long Island City. However, just three months after the announcement, Amazon said it would be withdrawing its intent to open the New York location, instead focusing on job growth in Crystal City and other locations. Now a year has passed from the announcement, and one burning question remains: Has the news had any noticeable effect on the Washington, D.C. housing market? In this post, we look at not only home price growth of the metro area, but also of individual zip codes within the region. In this CoreLogic special report, our findings are threefold. First, we see little evidence the metro area has experienced a large increase in housing prices since the November 2018 announcement. Second, and in contrast, we do find some individual zip codes – especially those near the HQ2 location – have had a strong uptick in price gains since the announcement. Lastly, we discovered that the relationship between proximity to the HQ2 site and home price gains have strengthened remarkably since March 2019. The impact of Amazon choosing the district housing market (which includes both the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions) for the location of their HQ2 is unclear at best. Looking at the year-over-year change in the monthly CoreLogic Home Price Index (HPI), the data shows that both metro divisions saw little change in the rate of appreciation after November 2018. In September 2018 (the most recent comparison month between 2018 and 2019), annual home price growth in the Washington-Arlington-Alexandria and Silver Spring-Frederick-Rockville metro divisions rested at 3.4% and 2.1%, respectively, but grew slightly to 3.5% and 2.3% by September 2019. This is hardly what one would call a “boom.” However, when compared to national trends over the same period, there is evidence that these two metro divisions outperformed the broader area. National home price growth descended by nearly two whole percentage points, from 5.3% to 3.5%, as high mortgage rates and uncertain macroeconomic conditions stymied the market towards the end of 2018 and into the first half 2019. While anecdotal, this does suggest that the HQ2 announcement possibly buoyed the market in what might have otherwise been a period of slowing home price growth for the Washington, D.C. metro area.

While evidence is somewhat weak that the HQ2 announcement boosted the regional market, our zip code-level analysis shows a different story. Namely, that there is a correlation between proximity to the HQ2 site and the increase of home price appreciation over the past year. Of the top 10 zip codes with the largest increase in year-over-year growth rates, half are within a 5- mile distance of the HQ2 site and eight are within 10 miles. The top three zip codes with the largest increase in their September 2018 and September 2019 year-over-year growth rates are not immediately adjacent to HQ2. These zip codes are 20815 (Chevy Chase, Maryland), 22180 (Vienna, Virginia) and 22306 (Mount Vernon, Virginia). Each of these areas is at least 7 miles away from HQ2, suggesting little correlation between the HQ2 announcement and the zip codes that have picked up the most gains in home price appreciation. However, there is a cluster of zip codes in the top-10 list that are all within 4 miles of HQ2 and adjacent to one another. These include 22302 (Alexandria, Virginia), 22206 (Arlington, Virginia), 22201 (Arlington), 22311 (Alexandria) and 22204 (Arlington). Each of these has swung from having negative or near-flat price growth just before the HQ2 announcement to near double-digit appreciation in September of this year. Analyzing just the top 10 zip codes isn’t a big enough sample to draw meaningful conclusions about the effects of HQ2 on the Washington, D.C. housing market. So, we took our research one step further and examined the correlation between zip code proximity to the HQ2 site and year-over-year change in the CoreLogic HPI on a month-by-month basis from September 2018 to September 2019. As you can see from the animation below, the correlation between a zip code’s home price appreciation rate and distance in miles from the HQ2 location was flat in September 2018 and remained so through February 2019, when average zip code appreciation was about 3%. From March 2019, you can see the price gradient rise more sharply the closer to HQ2 a zip code is. By September 2019, a clear negative gradient emerges whereby appreciation in zip codes near HQ2 was, on average, much higher than zip codes near the fringe. While not casual, the anecdotal evidence from this blog does suggest the announcement of HQ is starting to show signs that house prices in Northern Virginian submarkets – in particular, those close to Crystal City – are rising at rates much faster than last year and faster than submarkets further away.

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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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