Black Knight: ‘Balancing Act’ Keeping Affordability Stable For Now
Black Knight Financial Services, Jacksonville, Fla., said the average U.S. home value increased by $13,500 last year to within 0.7 percent of a new peak nationwide.
The company’s Mortgage Monitor Report for data as of the end of September noted annual home price increases for the 52nd consecutive month. Other key data:
–Total U.S. loan delinquency rate: 4.27 percent a month over month increase of 0.74 percent.
–Total U.S. foreclosure pre-sale inventory rate: 1.00 percent, a monthly decline of 3.38 percent.
–States with highest percentage of non-current loans: Mississippi, Louisiana, New Jersey, Alabama and West Virginia.
–States with lowest percentage of non-current loans: South Dakota, Montana, Minnesota, Colorado and North Dakota
–States with highest percentage of seriously delinquent loans: Mississippi, Louisiana, Alabama, Arkansas and Tennessee.
Black Knight Data & Analytics Vice President Ben Graboske noted despite the increase in home prices, low interest rates have kept monthly payments needed to purchase a median-priced home almost equal to one year ago.
“Home affordability still remains favorable compared to long-term historic norms, but rising interest rates could put pressure on home affordability,” Graboske said. “Right now, however, affordability remains steady as low interest rates continue to offset rising home prices.”
Even taking into account the fact that affordability can vary, the economy is seeing a “pretty incredible balancing act” between interest rates and home prices at the national level, Graboske said. “Of course, if and when rates rise, that will change. Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms. A 50 BPS increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”
Graboske said should the Federal Housing Finance Agency authorize Fannie Mae and Freddie Mac to raise their conforming loan rates above the current $417,000, originations could rise by 40,000 over the next year.