Midweek Housing Update

Here is a summary of housing and real estate finance-related reports out in the past week:

MBA: Weekly Apps Jump, Post-Holiday
Mortgage applications rebounded from a subdued holiday week, jumping by nearly 25 percent as mortgage interest rates fell to nine-month lows, the Mortgage Bankers Association reported in its Weekly Applications Survey for the week ending Jan. 4.

The Market Composite Index (holiday-adjusted) increased by 23.5 percent on a seasonally adjusted basis from one week earlier. The (unadjusted) Refinance Index increased by 35 percent from the previous week. The refinance share of mortgage activity increased to its highest level since February 2018, 45.8 percent of total applications, from 42.7 percent the previous week. The average loan size for refinance applications reached a survey high at $339,800. The seasonally adjusted Purchase Index increased by 17 percent from one week earlier. The unadjusted Purchase Index increased by 59 percent compared to the previous week and was 4 percent higher than the same week one year ago.

ATTOM: Renting More Affordable than Buying in 60% of U.S. Housing Markets
ATTOM Data Solutions, Irvine, Calif., released its 2019 Rental Affordability Report, showing renting a three-bedroom property is more affordable than buying a median-priced home in 442 of 755 U.S. counties analyzed for the report.

The report said renting is more affordable than buying a home in the nation’s 18 most populated counties and in 37 of 40 counties with a population of 1 million or more. It said renting a three-bedroom property requires an average of 38.0 percent of weekly wages across the 755 counties analyzed for the report. The least affordable market for renting is Santa Cruz County, Calif., where 81.7 percent of average wages are needed rent.

The report also noted average fair market rents rose faster than average weekly wages in 394 of the 755 counties analyzed in the report (52 percent.

Quicken Loans Study: Less Than Half a Percent Difference Between Owner, Appraiser Opinions of Home Values
Quicken Loans, Detroit, said its monthly National Quicken Loans Home Price Perception Index found the year ended with owner and appraiser perceptions of home values slightly moving in different directions, although the difference remains less than half a percent nationally.

The report said appraisal values were an average of 0.45 percent lower than homeowners expected in December; in November, there was just an 0.36 difference between the data points.

Despite the dip in perception, appraisal values themselves rose in December at a faster pace than they did in November. The National Quicken Loans Home Value Index reported a 0.79 percent monthly increase in the average appraisal value. The national index also showed the average appraisal jumped 5.15 percent year-over-year.

Zillow: First-Time Buyers Earn $30,000 More Than Non-Buying Peers
Zillow, Seattle, said the typical first-time buyer earns more than the median household income, helping them afford to buy a home.

Zillow’s RealEstate.com subsidiary reported the median income for a first-time buyer is $72,500, compared to the national median household income of $60,700. The difference in income for first-time buyers is more pronounced when compared with their peers who didn’t buy, who have a median income of $42,500.

The report said first-time home buyers tend to put down slightly smaller down payments, with a median down payment of 14.5 percent of a home’s price, rather than the traditional 20 percent down payment. By comparison, 58 percent of repeat buyers put down at least 20 percent.

Morningstar: Private-Label Residential MBS Issuance to See ‘Modest’ 2019 Growth
Morningstar, New York, said it expects private-label residential mortgage-backed securities issuance to grow modestly in 2019, likely at a pace consistent with that of a prior year.

“We don’t expect rising interest rates, a trend in 2018 that might continue this year, to materially affect [residential mortgage-backed securities] issuance,” Morningstar said. “For some originators, higher rates might bolster issuance somewhat by making securitization a more economically attractive alternative to retaining or selling mortgage loans. The issuance might jump, however, if the share of mortgage origination guaranteed by government-sponsored enterprises, or GSEs, Fannie Mae and Freddie Mac declines.”

Morningstar said it expects credit performance of post-2010 RMBS and single-family rental securitizations we rate to remain solid, “and, if the headwinds do not materialize, to continue to strengthen, even if home prices grow at a slower pace.”

Redfin: Gen-Xers, Older Millennials Believe Stocks Better Investment than Real Estate
Redfin, Seattle, reported less than half of homebuyers and sellers ages 35-44 believe that real estate is a better long-term investment than the stock market

The Redfin survey of more than 2,600 people nationwide said just 48 percent of homebuyers and sellers in this age group believe that real estate is a better long-term investment than the stock market.

“The oldest Millennials and youngest Gen-Xers entered their late twenties or early thirties during the housing crash, which explains why they are more skeptical about investing in real-estate,” said Redfin chief economist Daryl Fairweather. “This generation experienced a major setback during the housing bust, which hit just as they were most likely to be getting married, starting a family, and becoming a first time homeowner.”

In every other age group, buyers and sellers who believe that real estate is a better long-term investment outnumbered those who believe the stock market is better. Younger Baby Boomers, respondents aged 55 to 64, were the most optimistic about real estate as an investment.

RCLCO Lists Top-Selling Master-Planned Communities
RCLCO Real Estate Advisors, Bethesda, Md., released its list of top-selling master-planned communities in 2018. It said communities on the 2018 list experienced average growth of 5% over their totals in 2017 for those that were previously ranked.

The report said Texas, Florida and California account for 67% of total sales among the 50 top-selling communities, with the share of total sales in other states increasing from 32% to 33% since 2017. Florida continues to dominate the Top-5 of the list, with The Villages, Lakewood Ranch, and West Villages reaching the first, second, and fifth spots, respectively.

LendEDU Reviews Top CFPB Complaints of Banks in 2018
LendEDU published its third annual report featuring the most and least complained about banks in 2018, representing 244,114 complaints.

Seventy-three banking institutions were included in the report. These banks were all either regional or diversified banks and members of the S&P Banks Select Industry Index. Each bank name was cross-referenced with the CFPB database. A number of the financial institutions were holding companies. All banks, including those with zero complaints, had their subsidiaries accounted for when tallying complaint totals.