Since many on this site may be buying or selling a home at any given time, own investment properties, or commercial real estate I'm posting this weekly update to stay current.
The data is well researched from multiple sources concerning the real estate & mortgage market.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
Current Rates -
30 Year Conventional - Mid 6's
15 Year Conventional - Mid 5's
30 Year Jumbo - Low 6's
30 Year FHA - Low 6's
30 Year VA - Low 6's
The decline in mortgage rates since peaking in mid-January, has yet to translate to any meaningful shift in the housing market trends we’ve become familiar with at the national level.
The number of homes actively for sale continued to grow for the 16th straight month on a yearly basis, rising 27.5% in February compared to last year at 847,825 units.
We are seeing slightly lower prices and smaller homes on a national basis. The median list price declined -0.84% Y/Y in February, the median list price per square foot actually still signaled growth of 1.16% Y/Y and the median square feet of listings have continued to decline, down to a 1,791-size home from 1,818 last year.
As we have said many times real estate is returning to a "local market" where some states will do better than others. Right now if you're a buyer in Texas the market is in your favor as the markets where homebuyers will likely find the most negotiating power are D.C. where levels are up 87.4%; Texas up 23.7%; and Florida up 16.1%.
The cross-section between rising active listings and softness in home prices can be seen in the D.C., Texas, and Florida markets, along with a handful of Western states. On the other hand, the states that hit new all-time highs for the month of February were North Dakota, Wisconsin, New Hampshire and a pocket of geographically close states in Kentucky, West Virginia, Virginia, Maryland, and Delaware.
Going forward, it is anticipated that there will continue to be a divergence in housing market performance at the regional and state level as the economic cycle evolves.
Wall Street Journal Article On Looming FHA Foreclosure Crisis -
Editors Note - I have amended this article to take out the "politics/political parties" as that is for The Corral - we want to offer factual housing information for the reader and not political conjecture - If you want to read the full article "Click Here"
Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.
The problems began when the government eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise.
As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little 3.5% down. No skin off lenders’ backs if borrowers later defaulted, since the mortgages were backed by the government.
In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.
The FHA loan portfolio is far riskier than it was before the 2008 housing crisis. The American Enterprise Institute’s Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise, as most have owing to inflation.
No surprise, many are missing payments, especially recent borrowers. About 7.05% of FHA mortgages issued last year went seriously delinquent—90 or more days past when a payment is due—within 12 months. That’s more than at the 2008 peak of the subprime bubble (7.02%).
Under the guise of Covid relief, the government masked the growing troubles in the housing market by paying off borrowers and mortgage servicers to prevent foreclosures. Of the 52,531 FHA loans last year that went seriously delinquent within their first year, only nine resulted in foreclosure.
The FHA instituted a program that pays mortgage servicers to make borrowers’ missed payments for them. Missed payments are added to the loan’s principal, but without interest. The FHA also pays servicers to cut monthly payments for delinquent borrowers by 25% for three years, with the payment reductions also added to the principal without interest.
Consider a borrower who misses five $4,000 monthly mortgage payments. The servicer will add the $20,000 in missed payments to the mortgage and reduce monthly payments by $1,000 for three years—adding another $36,000 to their mortgage. So the borrower is $56,000 deeper in debt, though with no additional interest. If he misses payments again, the servicer rinses and repeats, getting paid $1,750 every time it lathers up. The FHA also lets servicers charge borrowers legal fees—typically several thousand dollars—that are added to the mortgage principal.
The FHA made 556,841 “incentive payments” to servicers over the past year to prevent foreclosures—nearly as many as the new mortgages it insured. Government-backed mortgage relief has become a cash cow for servicers, some of which originated the risky loans they are paid not to foreclose. Moral hazard, anyone?
One result is that many FHA borrowers owe more than their original mortgage and more than their homes are worth. They are essentially trapped in their homes even if they want to sell and move.
Another result is that home prices keep increasing because borrowers who don’t pay their mortgages—and never should have qualified for loans—can’t get foreclosed on or be forced to sell their homes. Getting foreclosed on these days is like flunking out of college—it takes effort. You have to reject repeated offers for mortgage relief.
Government-sponsored enterprises Fannie Mae and Freddie Mac instituted similar “home retention” programs for delinquent borrowers with the government's blessing. The cost of their mortgage relief gets socialized in higher rates charged to home buyers whose mortgages they guarantee.
Taxpayers are on the hook if the FHA insurance fund—financed by premiums on mortgages it backs—goes broke paying off borrowers and servicers to prevent foreclosures. The FHA annual report to Congress doesn’t disclose the cost of such payments, and the agency didn’t furnish them on my request.
The government built a house of cards that could collapse if the government dare to end the mortgage giveaways, as they should. Foreclosures would inevitably increase, which could cause home prices to fall sharply in lower-income neighborhoods with more FHA mortgages. More borrowers would then fall underwater, ballooning taxpayer losses, though homes might also become more affordable for people who don’t already own them.
And who will get blamed? Not the folks who inflated the bubble.
If you would like to watch a video on this potential crisis "Click Here"
My thoughts - what a mess - do we ever learn from our prior mistakes?
Here is a chart of current delinquent FHA Loans -
Top 10 Things to Do to Get Your Home Ready to Sell -
1. Find a Trusted Real Estate Agent:
An experienced agent can guide you through the selling process, market your home effectively, and negotiate the best possible price.
2. Declutter and Depersonalize:
Make your home feel spacious and inviting by removing excess furniture and personal items, allowing potential buyers to envision themselves living there.
3. Stage Your Home:
Staging involves arranging furniture and decor to showcase the home's best features and create a welcoming atmosphere.
4. Enhance Curb Appeal:
Focus on the exterior of your home, including landscaping, painting, and making sure the entryway is attractive and inviting.
5. Make Necessary Repairs:
Address any major or minor repairs that could deter buyers, such as fixing leaky faucets, painting peeling walls, or addressing structural issues.
6. Clean Thoroughly:
A clean and well-maintained home is more appealing to buyers, so ensure it is spotless inside and out.
7. Set a Realistic Price:
Research comparable homes in your area and price your home competitively to attract buyers and avoid it sitting on the market for too long.
8. Get a Pre-Listing Inspection:
Conducting a pre-listing inspection can help you identify potential issues and address them before they become problems for buyers.
9. Highlight with Professional Photos:
Invest in high-quality photos that showcase your home's best features and attract potential buyers online.
10. Be Prepared to Move Fast:
Be ready to accept offers and move quickly once you have a buyer, as the market can be competitive.
Editor's Note - Orangebloods has lots of good Realtors - give them the opportunity to help you with your real estate needs - let's keep it in the "OB Family"!
Final Thoughts -
Great to see Texas Baseball on a run - what a difference a coach can make. I know the SEC is a grind though I think we have the right man to get us back to National Prominence quickly!
Always here to help and answer any questions ITT or send me a DM
Have a great week!
Hook 'Em!
MH
The data is well researched from multiple sources concerning the real estate & mortgage market.
Thus, it is fact based and only analyzing the data/trends without regard to government policy.
As I stated previously let's keep the thread informational for those that might be in the market and leave policy discussions in "The Corral".
Current Rates -
30 Year Conventional - Mid 6's
15 Year Conventional - Mid 5's
30 Year Jumbo - Low 6's
30 Year FHA - Low 6's
30 Year VA - Low 6's
The decline in mortgage rates since peaking in mid-January, has yet to translate to any meaningful shift in the housing market trends we’ve become familiar with at the national level.
The number of homes actively for sale continued to grow for the 16th straight month on a yearly basis, rising 27.5% in February compared to last year at 847,825 units.
We are seeing slightly lower prices and smaller homes on a national basis. The median list price declined -0.84% Y/Y in February, the median list price per square foot actually still signaled growth of 1.16% Y/Y and the median square feet of listings have continued to decline, down to a 1,791-size home from 1,818 last year.
As we have said many times real estate is returning to a "local market" where some states will do better than others. Right now if you're a buyer in Texas the market is in your favor as the markets where homebuyers will likely find the most negotiating power are D.C. where levels are up 87.4%; Texas up 23.7%; and Florida up 16.1%.
The cross-section between rising active listings and softness in home prices can be seen in the D.C., Texas, and Florida markets, along with a handful of Western states. On the other hand, the states that hit new all-time highs for the month of February were North Dakota, Wisconsin, New Hampshire and a pocket of geographically close states in Kentucky, West Virginia, Virginia, Maryland, and Delaware.
Going forward, it is anticipated that there will continue to be a divergence in housing market performance at the regional and state level as the economic cycle evolves.
Wall Street Journal Article On Looming FHA Foreclosure Crisis -
Editors Note - I have amended this article to take out the "politics/political parties" as that is for The Corral - we want to offer factual housing information for the reader and not political conjecture - If you want to read the full article "Click Here"
Why do housing prices keep climbing despite higher interest rates? The federal government has allowed borrowers to take out bigger mortgages than they can afford. To prevent foreclosures, it’s bailing them out when they miss payments. Behold another subprime housing bubble.
The problems began when the government eased underwriting standards by enabling more home buyers whose debt payments exceed 43% of income to qualify for government-backed loans. Such borrowers are risky because they might not be able to make payments if their income drops or expenses rise.
As home prices climbed, the Federal Housing Administration insured more loans to financially stretched borrowers with as little 3.5% down. No skin off lenders’ backs if borrowers later defaulted, since the mortgages were backed by the government.
In 2007, 35% of new FHA borrowers had debt-to-income ratios above 43%. By 2020, 54% did. As housing prices and inflation surged, borrowers became more stretched. The FHA kept insuring mortgages to borrowers who were increasingly leveraged. About 64% of FHA borrowers last year exceeded the 43% threshold.
The FHA loan portfolio is far riskier than it was before the 2008 housing crisis. The American Enterprise Institute’s Ed Pinto and Tobias Peter estimate that 79% of FHA first-time borrowers have a month or less in financial reserves—not enough to make mortgage payments if their household expenses rise, as most have owing to inflation.
No surprise, many are missing payments, especially recent borrowers. About 7.05% of FHA mortgages issued last year went seriously delinquent—90 or more days past when a payment is due—within 12 months. That’s more than at the 2008 peak of the subprime bubble (7.02%).
Under the guise of Covid relief, the government masked the growing troubles in the housing market by paying off borrowers and mortgage servicers to prevent foreclosures. Of the 52,531 FHA loans last year that went seriously delinquent within their first year, only nine resulted in foreclosure.
The FHA instituted a program that pays mortgage servicers to make borrowers’ missed payments for them. Missed payments are added to the loan’s principal, but without interest. The FHA also pays servicers to cut monthly payments for delinquent borrowers by 25% for three years, with the payment reductions also added to the principal without interest.
Consider a borrower who misses five $4,000 monthly mortgage payments. The servicer will add the $20,000 in missed payments to the mortgage and reduce monthly payments by $1,000 for three years—adding another $36,000 to their mortgage. So the borrower is $56,000 deeper in debt, though with no additional interest. If he misses payments again, the servicer rinses and repeats, getting paid $1,750 every time it lathers up. The FHA also lets servicers charge borrowers legal fees—typically several thousand dollars—that are added to the mortgage principal.
The FHA made 556,841 “incentive payments” to servicers over the past year to prevent foreclosures—nearly as many as the new mortgages it insured. Government-backed mortgage relief has become a cash cow for servicers, some of which originated the risky loans they are paid not to foreclose. Moral hazard, anyone?
One result is that many FHA borrowers owe more than their original mortgage and more than their homes are worth. They are essentially trapped in their homes even if they want to sell and move.
Another result is that home prices keep increasing because borrowers who don’t pay their mortgages—and never should have qualified for loans—can’t get foreclosed on or be forced to sell their homes. Getting foreclosed on these days is like flunking out of college—it takes effort. You have to reject repeated offers for mortgage relief.
Government-sponsored enterprises Fannie Mae and Freddie Mac instituted similar “home retention” programs for delinquent borrowers with the government's blessing. The cost of their mortgage relief gets socialized in higher rates charged to home buyers whose mortgages they guarantee.
Taxpayers are on the hook if the FHA insurance fund—financed by premiums on mortgages it backs—goes broke paying off borrowers and servicers to prevent foreclosures. The FHA annual report to Congress doesn’t disclose the cost of such payments, and the agency didn’t furnish them on my request.
The government built a house of cards that could collapse if the government dare to end the mortgage giveaways, as they should. Foreclosures would inevitably increase, which could cause home prices to fall sharply in lower-income neighborhoods with more FHA mortgages. More borrowers would then fall underwater, ballooning taxpayer losses, though homes might also become more affordable for people who don’t already own them.
And who will get blamed? Not the folks who inflated the bubble.
If you would like to watch a video on this potential crisis "Click Here"
My thoughts - what a mess - do we ever learn from our prior mistakes?
Here is a chart of current delinquent FHA Loans -
Top 10 Things to Do to Get Your Home Ready to Sell -
1. Find a Trusted Real Estate Agent:
An experienced agent can guide you through the selling process, market your home effectively, and negotiate the best possible price.
2. Declutter and Depersonalize:
Make your home feel spacious and inviting by removing excess furniture and personal items, allowing potential buyers to envision themselves living there.
3. Stage Your Home:
Staging involves arranging furniture and decor to showcase the home's best features and create a welcoming atmosphere.
4. Enhance Curb Appeal:
Focus on the exterior of your home, including landscaping, painting, and making sure the entryway is attractive and inviting.
5. Make Necessary Repairs:
Address any major or minor repairs that could deter buyers, such as fixing leaky faucets, painting peeling walls, or addressing structural issues.
6. Clean Thoroughly:
A clean and well-maintained home is more appealing to buyers, so ensure it is spotless inside and out.
7. Set a Realistic Price:
Research comparable homes in your area and price your home competitively to attract buyers and avoid it sitting on the market for too long.
8. Get a Pre-Listing Inspection:
Conducting a pre-listing inspection can help you identify potential issues and address them before they become problems for buyers.
9. Highlight with Professional Photos:
Invest in high-quality photos that showcase your home's best features and attract potential buyers online.
10. Be Prepared to Move Fast:
Be ready to accept offers and move quickly once you have a buyer, as the market can be competitive.
Editor's Note - Orangebloods has lots of good Realtors - give them the opportunity to help you with your real estate needs - let's keep it in the "OB Family"!
Final Thoughts -
Great to see Texas Baseball on a run - what a difference a coach can make. I know the SEC is a grind though I think we have the right man to get us back to National Prominence quickly!
Always here to help and answer any questions ITT or send me a DM
Have a great week!
Hook 'Em!
MH
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