FHFA: Home Price Escalation Moves To Texas and Southeast From West Coast

According to the Federal Housing Finance Agency, the regulator for Fannie Mae and Freddie Mac, has released its home price indices for April. 

On a Month-over-month (MoM) basis, home price gains were highest in the West South Central (1.6%) and South Atlantic (1.4%). The Pacific grew only 0.2%.

West South Central and East South Central only grew at 0.1%.

 

2001 A Space Oddity: Inventory of Existing Homes For Sales Only at 2001 Levels

According to the National Association of Realtors (NRA), US existing home sales rose 1.1% from April to May to 5.62 million units SAAR.

Existing home sales rose the most in The South and least in the Northeast.

Inventory of existing homes for sale? It is only at 2001 levels.

Yes, it is a 2001 space oddity that inventories are so low.

Mortgage Applications Increase in Latest Weekly Survey Despite Relatively Tight Credit

According to the Mortgage Bankers Association, mortgage applications increased 0.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 16, 2017.

The Refinance Index increased 2 percent from the previous week to its highest level since November 2016. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 9 percent higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.13 percent from 4.14 percent, with points increasing to 0.35 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.

Unadjusted mortgage purchase applications continued their upward trend since 2014.

Mortgage purchase applications continue to be relatively lower (by bubble standards) thanks to the curtailment of low credit score lending.

With mortgage rates generally trending upwards, we shall see how this plays out.

REAL Home Prices Remain 21.35% Below 2006 Peak (As Of December 2016)

How bad was the h0using bubble of the 2000s? Real home prices remain 21.35% below their peak in 2006 during the housing bubble, according to the Bank for International Settlements.

US homeownership is back to pre-1990s levels, but post-1986 levels.

This despite the massive stimulus from The Federal Reserve.

So, what happens when the game of musical chairs stop?

US Housing Starts Fall 5.54% MoM In May, 5+ Unit (Multifamily) Starts Plunge 10% (Permits Out West Fell 13%!)

While the US stock market has been on an unprecedented bull market run (thanks in part to The Federal Reserve), the US housing market has only been on a bull run since February 2012.

But housing starts (particularly the single-family detached market) have been slow to come back after the disastrous overbuilding during the housing bubble years. In fact, 1 unit housing starts are back to 1990-1991 recession levels. Despite staggering Federal Reserve stimulus.

The May housing starts numbers were released and they continue to show slow going for housing starts.  Housing starts declined 5.54% MoM from April to June, not what was expected by housing cheerleaders. 1-unit starts fell 3.87% MoM.

5+ unit (multifamily) starts fell almost 10% from April to March. Particularly since the huge surge in June 2015.

Fed rate hikes have consequences.

Building permits way out west fell a whopping 13%!

Here is a video of Fed Vice Chair Stanley Fischer closely monitoring the housing market and the Fed’s impact on it.

 

Homebuilder Index Falls But Still Near Housing Bubble Peak (While Mortgage Purchase Apps Only At 1997 Levels)

The National Association of Homebuilders (NAHB) released their monthly Market Index reflecting the sentiment of their members. Above 50 means that more members than not are optimistic.

Note that homebuilder optimism has been above 50 (for the most part) since June 2013. Homebuilders can thank The Fed for insanely low borrowing costs that greatly improved their mood.  Builders can build single family detached houses and/or 5+ unit multifamily, so super low interest rates improve every builders’ mood. So the decline in the number of subprime borrowers getting mortgage originations is good news for multifamily builders but not so good for detached housing.

But for existing homeowners, candidates for refinancing are far fewer than they were even in 2016, according to Black Knight.

This helps explain the declining residential loan origination trend for both purchase and refis.

Inventories of existing homes are scarce and getting scarcer by the month. This helps drive up home prices, not good for folks currently renting and wanting to buy.

 

Tight inventory, interest rate increases, declining mortgage refis.  Well, at least mortgage purchase applications are back to 1997 levels.

Yellen: I honestly thought that mortgage applications and refis would be higher given the trillions of dollars of stimulus we threw at it.

Simply Unaffordable! Manhattan Has Nation’s Highest Rents Followed By San Francisco (Wichita KS The Cheapest)

New York City, composed resrticted land masses such as Manhattan, Brooklyn and Staten Island, has the most expensive housing rents in the nation followed by another restricted land mass known as San Francisco.

According to RentCafe.com, Boston MA is the third most expensive area in terms of housing rents.

Boston, of course, is located on the Atlantic Ocean and like New York City and San Francisco is massively congested.

On the flip side, Wichita KS has the lowest rents, followed by Decauter AL and Memphis TN.  These cities are all in “fly-over” states and not on an oceanic coast. Ohio makes the list with Toledo OH and Oregon OH (next to Toledo).  Apparently, few are willing to pay a Lake Erie premium.

New York City, San Francisco and Boston stick out like the proverbial sore thumb on a map of average rent.

Limited available space for construction of new housing supply and restrictions on land use are major drivers of rents. Of course, people and businesses are an important element in rent determination on the demand side. And environmental concerns can limit supply as well, such as in Phoenix AZ.

Simply unaffordable. At least in New York City, Boston and San Francisco.