Do you have to pay it back?

Posted on February 17, 2023 by grim

From CNBC:

Consumer debt hits record $16.9 trillion as delinquencies also rise

Consumer debt hit a fresh record at the end of 2022 while delinquency rates rose for several types of loans, the New York Federal Reserve reported Thursday.

Debt across all categories totaled $16.9 trillion, up about $1.3 trillion from a year ago, as balances rose across all major categories.

Despite a decline in originations, mortgage balances increased to $11.9 trillion, up about $250 billion from the third quarter and about $1 trillion from a year ago. Originations for new home loans and refinancings fell to $498 billion, less than half where they were for Q4 in 2021 and a drop of about $135 billion from the third quarter.

Mortgage loans considered in “serious delinquency” of 90 days or more rose to a rate of 0.57%, still low but nearly double where they were from the year prior. Auto loan debt delinquencies rose 0.6 percentage point to 2.2%, while credit card debt jumped 0.8 percentage point to 4%.

“Credit card balances grew robustly in the fourth quarter, while mortgage and auto loan balances grew at a more moderate pace, reflecting activity consistent with pre-pandemic levels,” said Wilbert van der Klaauw, economic research advisor at the New York Fed.

“Although historically low unemployment has kept consumers’ financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers’ ability to repay their debts,” he added.

The rise in balances came amid an aggressive rate-hiking campaign from the Fed as it battled inflation running near its highest levels in more than 41 years.

Posted in Economics, National Real Estate, Risky Lending | 53 Comments

Hottest Markets

Posted on February 15, 2023 by grim

From the US News & World Report:

The Hottest Housing Markets in the U.S.

Now that the demand for housing is showing renewed signs of life amid lower mortgage rates, declining inflation and a reduced risk of recession, it’s certainly an opportune time to analyze which markets are the hottest across the country. While the term “hottest” may no longer mean desperate buyers bidding thousands over asking prices and waiving inspections, it does mean returning to the basics of healthy demand, supply and financing options.

…

With regional Housing Market Index totals ranging up to 71.7 versus a national value of 64.4, the following six MSAs are the hottest housing markets ranked from first to fifth, with the third highest a tie between Austin and Durham:

  • Raleigh: 71.7
  • Denver: 67.5
  • (Tie) Austin: 67.3
  • (Tie) Durham: 67.3
  • Phoenix: 66.9
  • Richmond: 66.8

Besides benefitting from huge amounts of interest due to the combination of record-low mortgage rates and the desire for more living space during the COVID-19 pandemic, these markets have managed to hold onto their popularity even as workers have returned to offices and lending rates have trended up. Each MSA also offers the lure of big-city amenities without the disadvantages of the largest cities such as New York, Los Angeles or Chicago.

Posted in Demographics, Economics, National Real Estate | 173 Comments

Just the beginning?

Posted on February 13, 2023 by grim

From DSNews:

January Foreclosure Filings Up 36% YoY

Foreclosure volume continues in America, with year-end totals reaching 31,557, which includes default notices, scheduled auctions, or bank repossessions, a 36% increase compared to the previous year. The numbers reported in January 2022 represent a 2% increase compared to December 2021.

Nationwide, one in every 4,425 housing units had a foreclosure filing in January 2023.

“The uptick in overall foreclosure filings nationwide points toward a trend that may suggest more increased activity is on the horizon as we enter the new year,” said Rob Barber, the CEO at ATTOM, the real estate data conglomerate that produced the January 2023 U.S. Foreclosure Market Report. “While both completed foreclosures and foreclosure starts have stalled slightly over the past month, the annual increase in overall activity seen over the past 21 months may indicate a more substantial trend that could continue into 2023.”

States with the highest overall foreclosure rates were Delaware, Illinois, New Jersey, and Maryland.

Metro areas Fayetteville, North Carolina; Bakersfield, California; Cleveland; Detroit; and Laredo, Texas reported the most foreclosure activity.

Other than Cleveland and Detroit, among the metropolitan areas with a population greater than one million, January’s highest foreclosure activity included Chicago; Riverside, California; and Las Vegas.

Foreclosure completions declined in January for the first time since June 2021, the company reported.

Florida, Maryland, Michigan, New Jersey, and Texas reported the greatest annual decreases in complete foreclosures.

Only three states—New York, Pennsylvania, and California—bucked the trend with an increase in REOs.

Posted in Economics, Housing Bubble, Mortgages, National Real Estate, Risky Lending | 129 Comments

You still can’t afford it

Posted on February 11, 2023 by grim

From Bankrate:

Home prices are down — but not enough to ease affordability

Home prices are still high. But they’re not rising quite as much.

Nearly 90 percent of the country’s metro areas saw single-family home prices rise in the fourth quarter of 2022, according to the newly released Metropolitan Median Home Prices and Affordability Report for Q4 2022 from the National Association of Realtors (NAR). The national median price for an existing single-family home now stands at $378,700. While that’s a 4 percent year-over-year increase, it actually represents quite a slowdown compared to the previous quarter’s 8.6 percent rise in home prices.

“A slowdown in home prices is underway and welcomed, particularly as the typical home price has risen 42 percent in the past three years,” said Lawrence Yun, NAR’s chief economist, in a statement.

However, thanks to inflation, increased interest rates and other factors, the monthly mortgage payment on that median-priced home, with a 20 percent down payment, would now be $1,969, according to NAR — a jump of $720 (or 58 percent) over one year ago.

With median home prices rising just 4 percent year-over-year, but monthly mortgage payments rising a whopping 58 percent, it’s clear that the housing market is somewhat in flux.

Nearly all (166 out of 186) of metropolitan areas tracked by NAR saw home price gains in Q4 2022. But the amount of those gains is shrinking. Double-digit price increases occurred in just 18 percent of those areas — down from 46 percent in Q3.

As always in real estate, it’s a matter of location, location, location. The Northeast region had the highest year-over-year price appreciation in Q4 with 5.3 percent growth. The South saw 4.9 percent, the Midwest 4.0 percent and the West 2.6 percent.

Posted in Economics, Housing Bubble, National Real Estate | 56 Comments

Who needs to buy?

Posted on February 10, 2023 by grim

From NJ1015:

Here’s where millionaires choose to rent in New Jersey

There are over 100 millionaires that rent in one city in New Jersey. If you’ve been paying any attention at all to real estate and building trends in this state, it’s not hard to guess that it’s Jersey City.

With a mass exodus out of NYC by many people following the pandemic and then fears of crime on the rise in the Big Apple, Jersey City looks pretty good.

Trendy restaurants and dazzling new apartment buildings along with lavishly renovated older buildings, make it very attractive if you can afford it.

Along with the close proximity to all the action of New York, you’ve got access to major transportation hubs and an up-and-coming exciting vibe in New Jersey’s second-largest city.

More than a hundred millionaires who choose to rent over homeownership currently live in Jersey City. The city is also the fifth hotspot for well-off renters in the country.

The largest group of millionaire renters are Millennials, followed by Gen X. Most wealthy renters work in management or industries like financial services, legislation, software development, and sales. The average home of a millionaire renter has 3 bedrooms. In Jersey City, it’s 4 bedrooms.

The high-income bracket of people earning more than $150K a year has also seen significant growth, with Jersey City having an increase of 75% in this income category after only five years. Most of our millionaires in New Jersey do own their own homes and are spread throughout the state in suburbs in sprawling mansions.

Posted in Demographics, Economics, Employment, New Jersey Real Estate, NYC | 96 Comments

Corelogic December Housing Market Data

Posted on February 9, 2023 by grim

From CoreLogic:

U.S. Home Price Insights – February 2023

December 2022 National Home Prices

Home prices nationwide, including distressed sales, increased year over year by 6.9% in December 2022 compared with December 2021. On a month-over-month basis, home prices declined by 0.4% in December 2022 compared with November 2022 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results).

The CoreLogic HPI Forecast indicates that home prices will decrease on a month-over-month basis by 0.2% from December 2022 to January 2023 and on a year-over-year basis by 3% from December 2022 to December 2023.

The effect of rising mortgage rates on housing demand in 2022 became even more evident in December, with annual home price growth dipping to 6.9%, down from a series high of 20% appreciation in April. Only nine states registered double-digit year-over-year price increases in December, compared with 48 that posted double-digit gains in April.

While the national unemployment rate remained at a low 3.5% in December, according to the U.S. Bureau of Labor Statistics,  layoffs may be affecting housing demand in some expensive metro areas, particularly those that rely heavily on the tech industry. As noted in the latest US CoreLogic S&P Case-Shiller Index, San Francisco and Seattle posted significant home price deceleration in November. Idaho was the only state to register an annual home price loss in December (-1%), compared with its 17% gain recorded in April 2022. Nevertheless, the pandemic-induced migration to suburban, exurban and rural areas may be winding down, as part of the U.S. workforce gradually returns to offices.

Posted in Economics, Housing Bubble, Housing Recovery, Mortgages, National Real Estate | 87 Comments

Sorry buyers…

Posted on February 8, 2023 by grim

From Bloomberg:

Buyers Are Flocking to NYC’s Suburbs. Too Bad There Aren’t Many Homes to Sell.

In the midst of the worst US housing slump in a decade, a wave of finance and tech layoffs and drumbeats of a potential recession, open houses in affluent New York suburbs are packed. 

Offers come in fast — sometimes for hundreds of thousands over asking. 

A typical scene played out on a cloudy Sunday last month in Scarsdale, a suburb about 20 miles (32 kilometers) north of Manhattan known for its bucolic setting and high-rated schools. At the tail end of an open house, a dozen people were still wandering in and around a 1926 Tudor-style house listed for about $1.93 million.

An older couple took video on their iPhone for their offspring too busy to attend, while a younger man walked around with his infant in a chest carrier. The house was in need of some touch-ups. Somebody whispered that the hardwood floors were scratched, another said that the refrigerator looked warped, and a pair of kitchen cabinet doors was missing. It hardly mattered. 

With few other homes on the market, the 3,400-square-foot (316-square-meter) house attracted almost 100 groups of visitors, and netted six bids. It went under contract five days after the open house for $2.28 million.

“Demand is very high in all price ranges,” said Laura Miller, the listing agent with Houlihan Lawrence. “There are tons of buyers and not enough inventory.”
…
In New York, the economy remains strong despite layoffs at employers such as Goldman Sachs Group Inc. and Alphabet Inc.’s Google. Three-day hybrid work policies, becoming standard in some industries, mean greater demand for homes with more space, but within a commutable distance.

Many sellers may be waiting until March to put homes on the market but the for-sale signs aren’t coming out yet. New listings in January so far have dropped 5% in the US, according to Realtor.com. The New York area has seen even deeper slides, with new inventory down more than 40% in Manhattan and Brooklyn, the most in the country, and more than 20% in Westchester and Bergen counties. 

“We are begging people to sell right now,” said Arlene Gonnella, an agent at Weichert Realtors in Short Hills, one of New Jersey’s most expensive areas. “We are trying to tempt them with buyers who are ready, willing and able to pay up.”

Posted in Demographics, Economics, Employment, New Jersey Real Estate, NYC | 103 Comments

30yr fixed dips below 6%

Posted on February 5, 2023 by grim

From Insider:

Mortgage rates are falling back near 6%, reopening the housing market for 3 million home buyers, according to Freddie Mac

Mortgage rates are falling back near 6%, and that could help reopen the housing market to about 3 million buyers who were priced, according to Freddie Mac.

The government-sponsored enterprise said that the average 30-year fixed-rate mortgage inched lower to 6.09% on Thursday, notching its fourth-straight week of declines. That’s the lowest rates have been since peaking at over 7% in November of last year, Freddie Mac chief economist Sam Khater said in a statement.

“This one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” Khater added.

Mortgage rates skyrocketed over the course of 2022, influenced by the Federal Reserve’s rate hikes aimed at taking some heat out of the economy.

From the MPA:

US mortgage rates fall from November peak following Fed rate hike

Long-term US mortgage rates slipped following the Federal Reserve’s slowdown in its monetary policy tightening.

The 30-year fixed-rate mortgage hit a low of 6.09% this week, according to Freddie Mac’s Primary Mortgage Market Survey. That’s down from 6.13% a week ago and nearly a full point drop from November’s peak of over 7%, providing a boost for mortgage-ready homebuyers.

“According to Freddie Mac research, this one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price,” Freddie Mac chief economist Sam Khater said.

From CNBC:

Mortgage rates drop to the 5% range for the first time since September

The average rate on the 30-year fixed rate mortgage has fallen to 5.99%, according to Mortgage News Daily.

The housing market hasn’t seen the rate with a five handle since a brief blip in early September. Before that, it was in early August.

The rate started this week at 6.21% and fell sharply Wednesday after Federal Reserve Chairman Jerome Powell said inflation “has eased somewhat but remains elevated,” which was a shift from previous language.

That sent bond yields lower, and mortgage rates loosely follow the yield on the 10-year Treasury.

“Measured steps can continue as long as the economic and inflation data is there to support them. This means rates can make progress down into the 5′s but are unlikely to stampede quickly into the 4′s,” said Matthew Graham, chief operating officer at Mortgage News Daily. “I’m not saying that won’t happen–just that it would take a bit more time than some of the rate rallies we remember from the past.”

Posted in Economics, Mortgages, National Real Estate | 132 Comments

Jobs Day!

Posted on February 3, 2023 by grim

From the NYT:

The government will provide its latest snapshot of the labor market on Friday, and economists expect it to show that January was another month of solid job growth.

Forecasters surveyed by MarketWatch expect the Labor Department to show that U.S. employers added 187,000 jobs last month, a moderate slowdown from December.

But the hiring number probably won’t tell the whole story. Economists and policymakers will also be watching the unemployment rate, labor force participation and hourly earnings. An increase in the ranks of those available to work could alleviate the tightness in the labor market that is driving up wages and contributing to inflation.

“The question is, will we continue to see a Goldilocks labor market?” said Betsey Stevenson, a professor of economics and public policy at the University of Michigan. “The Goldilocks labor market will be one where we continue to grow a little bit and wage pressure seems to subside a bit.”

Taken together, the numbers in the January report could help indicate the impact of the Federal Reserve’s efforts to cool the economy and tame rapid inflation. So far, the Fed’s rate increases appear to be gently constraining the labor market with limited pain for workers. But as high interest rates filter through the economy more deeply, a big question is whether policymakers can achieve their goals without causing significant job losses.

Posted in Economics, Employment, National Real Estate | 149 Comments

Dippitty dip dip

Posted on February 2, 2023 by grim

From Fortune:

From US News and World Report:

Home Prices Continue to Come Down as Higher Mortgage Rates Bite

Home prices continued their downward slide in November, though they remain up year over year, according to the CoreLogic Case-Shiller monthly index released on Tuesday.

Nationally, prices fell 0.6% in November, but are up 7.7% annually, following October’s 9.2% increase.

Miami, Tampa and Atlanta led the cities posting the largest increases, at 18.4%, 16.9% and 12.4%, respectively.

“November 2022 marked the fifth consecutive month of declining home prices in the U.S.,” said Craig J. Lazzara, managing director at S&P DJI. “As the Federal Reserve moves interest rates higher, mortgage financing continues to be a headwind for home prices. “Economic weakness, including the possibility of a recession, would also constrain potential buyers. Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

The data reflect prices before mortgage rates topped 7% and various markets continue to see declines in the rate of appreciation.

“The latest S&P Case-Shiller report provides evidence of the slowing housing market during the fall, with home prices continuing to decelerate in October,” Lisa Sturtevant, Bright MLS chief economist, said before the release. “However, the data released today do not account for the full impact of rising mortgage rates, which were above 7% in November.

Posted in Housing Bubble, National Real Estate | 111 Comments

Fed Day!

Posted on February 1, 2023 by grim

From Reuters:

Fed expected to deliver small rate hike but keep anti-inflation tilt

The Federal Reserve is expected to raise its target interest rate by a quarter of a percentage point on Wednesday, setting aside the rapid hikes used last year to curb a surge in inflation in favor of a more stepwise hunt for a stopping point.

The expected increase would set the U.S. central bank’s benchmark overnight interest rate in the 4.50%-4.75% range, the highest since November 2007, when the economy was on the eve of what would prove to be a long and deep recession.

Policymakers hope to avoid that sort of outcome this time, and economic data since their last policy meeting in December generally has moved in the right direction: Inflation is slowing under the impact of higher interest rates and tighter financial conditions, while the economy continues to grow and create jobs.

The rate-setting Federal Open Market Committee is due to release its policy statement at 2 p.m. EST (1900 GMT). Fed Chair Jerome Powell is scheduled to hold a news conference half an hour later to elaborate on the decision.

Posted in Economics, Mortgages, National Real Estate | 145 Comments

Survivorship bias? Literally.

Posted on January 31, 2023 by grim

From the NY Post:

Single women are outpacing men in homeownership

All the single ladies … are buying property. 

Indeed, a recent study found that single women are outpacing single men in homeownership. 

This new trend has come as a shock to many — and is bound to have long-term effects on the financial market and generations to come. 

Single women own roughly 10.7 million homes in America, compared to 8.1 million owned by single men, according to a recent analysis from LendingTree that looked at 2021 census data. 

The surprising development has spread nearly all across the country, with single women being more likely to own a home in 48 of 50 states — all but North and South Dakota.

Women dominate ownership at the highest rates in southern states like Louisiana, Alabama and South Carolina, which typically have cheaper home prices. 

Meanwhile, Florida, Delaware and Maryland reported the widest gender gap among single homeowners. The Sunshine State has a 4.55% gap equating to 262,000 more single women owning homes than men. 

North Dakota and South Dakota, the sole states where single men own more homes than single women, are known to be homes to job markets saturated with male-dominated professions, such as oil rigging and construction.

Posted in Demographics, Economics, National Real Estate | 42 Comments

Sorry West

Posted on January 30, 2023 by grim

From the Washington Examiner:

Huge hit to home prices in west in 2023, Goldman warns: Phoenix, SF, Seattle

Houses in several overheated cities in the western United States will see massive price declines in 2023, researchers at Goldman Sachs predict.

In a report released this week, the bank’s economists noted a stark regional divide in expectations for home prices, with cities west of the Mississippi facing steep price corrections in the face of elevated mortgage interest rates.

“On one hand, the model suggests that expensive [metropolitan areas] in the Pacific Coast and Southwest regions could see cumulative incremental home price declines of 15-20%, given how dramatically affordability has declined over the past couple of years. On the other hand, the model suggests that the Mid-Atlantic and Midwest regions will likely face limited price declines,” the economists wrote.
…
Meanwhile, Miami and Baltimore are the two urban areas Goldman Sachs identified that are expected to see housing price increases both this year and next. Philadelphia, New York, and St. Louis are forecast to see a slight decline in housing prices this year, but then see prices go back up in 2024.

The researchers said that price trends at the metro level will be dictated by a “tug-of-war between housing demand and supply” over the next two years.

“[Metropolitan statistical areas] with stronger affordability like Chicago and Philadelphia — for which payments on new mortgages only cost roughly a quarter of monthly income — should see smaller home price declines than metros with poor affordability like many cities in the West — some of which are seeing mortgage payments claim three-quarters of monthly income,” the report reads.

Posted in Demographics, Economics, Employment, Housing Bubble, National Real Estate | 79 Comments

Sounds like more of the usual

Posted on January 28, 2023 by grim

From NJ Business:

Year-end NJ Housing Data Shows Market Softening

Rising interest rates, low inventory, and climbing prices have cooled the housing market in 2022, with closed sales down 17.8% over 2021, according to year-end data reports from New Jersey Realtors.

“The 2022 market has softened due to the rise in interest rates and elevated home prices,” said 2023 New Jersey Realtors President Nick Manis. “However, there’s still buyer interest and activity on the inventory that is available.”

Closed sales for single family homes were down 18.6%, with 73,613 units sold during the year, compared to 90,416 sold in 2021. The median sales price for single family homes rose 8.7% to $473,000.

The townhouse/condo market saw a similar decrease in closed sales of 17.8% to 25,214. Units were on the market for an average of just 35 days during 2022, a decrease of 12.5% over 2021.

Inventory remains a concern, with just 13,595 single family homes for sale in the month of December in 2022, a decrease of 9.8% over an already-low 15,066 units for sale in 2021.

Posted in Economics, Housing Bubble, Mortgages, New Jersey Real Estate | 59 Comments

Worst behind us?

Posted on January 26, 2023 by grim

From the NY Post:

Here’s when US home price declines could end, Goldman Sachs says

The ongoing plunge in US home prices may be nearing its end, Goldman Sachs analysts said in a note to clients this week.

Long-term mortgage rates have cooled by nearly a full percentage point after surging above 7% as the Federal Reserve enacted a series of interest rate hikes last year. The trend should improve housing affordability and cause price declines to reach a floor, according to the Wall Street Bank.

“The sharpest declines in the US housing market are now behind us,” Goldman analysts Ronnie Walker and Vinay Viswanathan said in a client note released on Monday.

The strategists added that they “expect a peak-to-trough decline in national home prices of roughly 6% and for prices to stop declining around mid-year.”

Overheated housing markets on the West Coast and in the Southwest will likely experience “larger declines” in home prices compared to the national rate due to a glut in inventory, the note said. Meanwhile, markets located in the Mid-Atlantic and Midwest regions will see “more most declines.”

The surge in mortgage rates has caused a major correction in the US housing market in recent months, sending prospective buyers to the sidelines and causing sellers to rethink their plans or slash their asking prices to lure interest.

Other firms, including Pantheon Macroeconomics, project larger declines in home prices before a floor is reached. In December, Pantheon’s Ian Shepherdson said prices could fall by up to 20% during a multi-year market correction.

Posted in Demographics, Economics, Employment, Housing Recovery, Mortgages, National Real Estate | 120 Comments