Urban Wire  Housing and Housing Finance

Squeaky-clean loans lead to near-zero borrower defaults—and that is not a good thing

There’s something interesting and important going on in the mortgage market today: borrowers who took out mortgages in the past five years have rarely defaulted, making them better at paying their mortgages than any other group of mortgage borrowers in history. 

This is happening for two main reasons: only the best borrowers are getting loans today and these loans are so thoroughly scrubbed and cleaned before they’re made that hardly any of them end up going into default. A near-zero-default environment is clear evidence that we need to open up the credit box and lend to borrowers with less-than-perfect credit.

http://urbn.is/2bRfalY

August home sales dip, median price growth halted

Realtors blame declining inventory for slight drop in sales; record median price growth ends at four months

Getahn Ward, gward@tennessean.com9:07 p.m. CDT September 7, 2016

615-726-5968 and on Twitter @getahn.

Nashville area home sales were down slightly year-over-year for August, marking a second straight month of decline that Realtors attribute to a drop in inventory and the peak summer moving season winding down.

The region's streak of four consecutive months of record median price of a single-family home, meanwhile, ended last month, according to latest monthly figures from the Greater Nashville Association of Realtors.

After reaching $267,000 for July, the median price declined to $253,000 for August. That, however, was still 7.7 percent higher than the $235,000 local median price of a single-family home recorded in August 2015.

GNAR President Denise Creswell offered this perspective on the 0.8 percent year-over-year decline in overall residential properties sold during the recent month of August to 3,741 closings.

"Considering the time of year and the continued struggle with inventory, a slight decrease in sales is not unexpected," she said. "Once schools are back in session and the holidays begin to approach, the market always slows."

At the end of August, the Nashville area's single-family inventory was 8,412 homes, down 5.5 percent from a year ago and reflecting a 2.7-month supply that represents a seller's market. Overall, the inventory of residential properties was down 9 percent to 12,288, which reflects a 3.3 months supply that's also a seller's market.

Richard Exton, the principal in Nashville-based Manier and Exton, said that declining inventory is likely the significant factor holding back home sales.

"I have anecdotal evidence that sellers looking to move-up are reluctant to place their homes on the market for fear that they will not find something to buy after their house sells quickly," the real estate appraiser said.  "Sellers are unlikely to accept a contract contingent upon the sale of the buyer's existing home, something they might have been willing to do several years ago."

Exton cautioned against reading too much into the month-over-month decline in the marketwide median price as was recorded for August.

"Historically, pricing has followed a stair step pattern as opposed the straight trend line up or down," he said. "Historically, prices rise, then they stabilize, then they rise again."

Exton said he had expected recent stabilization in Nashville area home sales, adding that monthly figures should continue at 2015 levels through next spring. GNAR President Creswell, meanwhile, called the 3,717 sales pending at the end of August a good indicator of local active buyers and sellers going into the fall.

Meanwhile, a separate tracking by the Williamson County Association of Realtors show a roughly 10 percent drop in residential sales to 607 home closings for August. The median price of a single-family home sold in that county rose 6.5 percent to a record $441,990 price for August. That was lower than the $452,706 for July.

Williamson County's Job Growth Highest in Nation

Adam Sichko

Senior Reporter

Nashville Business Journal

Most of us are familiar with the fact that Williamson County is the region's premier corporate address, the fastest-growing county in the state and one of the 20 wealthiest in the nation, based on its median annual household income of $91,000.

Now, for the first time ever, Williamson County is adding jobs at a faster clip than any other county in the nation.

http://bit.ly/1nP4vgB

There were 2,735 sales pending at the end of last month, up 11 percent from a year ago. "It's likely to indicate that we'll have another strong month in March," said Richard Exton, an appraiser with Manier and Exton.

http://www.tennessean.com/story/money/homes/2016/03/07/warmer-weather-lifts-nashville-home-sales-decade-long-record/81440048/

Mortgage Banker's Association predicts mortgage originations will decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015, a 9% decline

The Mortgage Bankers Association announced today that it expects to see $905 billion in purchase mortgage originations during 2016, a ten percent increase from 2015.  In contrast, MBA anticipates refinance originations will decrease by one-third, resulting in refinance mortgage originations of $415 billion.  On net, mortgage originations will decrease to $1.32 trillion in 2016 from $1.45 trillion in 2015.

For 2017, MBA is forecasting purchase originations of $978 billion and refinance originations of $331 billion for a total of $1.31 trillion.

"We are projecting that home purchase originations will increase in 2016 as the US housing market continues on its path towards more typical levels of turnover based on steadily rising demand and improvements in the supply of homes for sale and under construction.  Despite bumps in the road from energy and export sectors, the job market is near full employment, with other measures of employment under-utilization continuing to improve," said Michael Fratantoni, MBA's Chief Economist and Senior Vice President for Research and Industry Technology.  "We are forecasting that strong household formation, improving wages and a more liquid housing market will drive home sales and purchase originations in the coming years.

"Our projection for overall economic growth is 2.3 percent in 2016 and 2017 and 2 percent over the longer term, which will be driven mainly by consumer spending as households continue to buy durable goods, such as cars and appliances.  The housing sector will contribute more to the economy than it has in recent years.  We are forecasting a 17 percent increase in single family starts in 2016 and a further increase of 15 percent in 2017.  Weaker growth abroad will mean fewer US exports, which will be a drag on growth over the next couple of years.  Recurring flights to quality, a demand for safe assets from investors abroad, will keep longer-term rates lower than the domestic growth environment would warrant.

"Coincident with a strengthening economy, we expect the Federal Reserve will begin to slowly raise short-term rates at the end of 2015.  At some point after liftoff, the Fed will begin to allow their holdings of MBS and Treasury securities to run off, likely beginning in late 2016.  Even with these actions, we expect that the 10-Year Treasury rate will stay below three percent through the end of 2016, and 30-year mortgage rates will stay below 5 percent.

"We forecast that monthly job growth will average 150,000 per month in 2016, down from about 200,000 per month in 2015, and that the unemployment rate will decrease to 4.8 percent by the end of 2016, returning to 5.0 percent in 2017 and 2018. The slight rebound will be driven by an increase in labor force participation rates to more typical levels.

"Refinance activity will continue to decline as there are few remaining households that can benefit from an interest rate reduction and because rates will gradually begin to rise from historic lows in the coming years.  Home equity products may see an increase in demand as home prices continue to increase at a decelerating rate," Fratantoni said.

MBA upwardly revised its estimate of originations for 2014 to $1.26 trillion from $1.12 trillion, to reflect the most recent data reported in the 2014 Home Mortgage Disclosure Act (HMDA) data release.

This graph shows the ups and downs since 2000

The Nashville region resumed double-digit gains in home closings last month, but the higher sales amid declining inventory officially pushed the market to where sellers now have the upper hand in negotiations.

Overall, 3,122 residential properties changed hands during September, a 19 percent jump from a year ago and the first double-digit gain posted this year, according to the Greater Nashville Association of Realtors.

The inventory of 9,924 single-family homes at the end of last month equates to a 3.9 month supply that's just below the four to six months range where neither buyer nor seller has an advantage. That's the lowest level since the 3.87 month supply in June more than eight years ago.

"The seller's in a better position because there are fewer choices," said Richard Exton, an appraiser with Nashville-based Manier and Exton.

http://www.tennessean.com/story/money/2014/10/08/nashville-area-home-sales-post-years-first-double-digit-monthly-gain/16922777/

Annual Nashville home sales top 30,000 for first time since 2007

At year-end, 2,032 sales were pending, up 9.4 percent from the same time last year, but down 7 percent from November 2013. That signals that January sales should be better than January 2013 sales numbers, said Richard Exton, an appraiser at Manier and Exton in Nashville.

Historically, January and February are the slowest sales months. But both closings and inventory increase going into the spring as more houses are put on the market.

The median price of a single-family home rose nearly 6 percent for December from a year ago to $198,838; it was up nearly 2 percent from November. Last year, prices continued to rise month-over-month reflecting the decline in inventory, Exton added.

Inventory of single-family homes declined nearly 10 percent from a year ago and 12 percent from November to 8,228. That’s a four-month supply, which is around the tipping point of the level where neither the buyer nor the seller has an advantage.

“It would be reasonable to expect some of the decrease in the inventory is due to owners taking their properties off the market for the holiday season and inventories are likely to rise moving forward, pushing the months of supply up,” Exton added.

http://www.tennessean.com/interactive/article/20140108/BUSINESS/301090027/Annual-Nashville-home-sales-top-30-000-first-time-since-2007