Housing Market Roundup Nov. 9, 2021

We’re starting to get a lot of year-end housing market reports—which means we should be soon getting 2022 forecasts. Here is a roundup of recent reports to come across the MBA NewsLink desk:

Most Expensive U.S. Zip Codes in 2021: Top 10 Areas Surpass $4 Million Median Sale Price

This year saw double-digit home price growth and record home prices; PropertyShark, New York, said for the first time, the 10 most expensive zip codes in the U.S. exceeded $4 million in median home sales price; and a record 127 zip codes made the company’s annual list of most expensive U.S. zip codes.

At nearly $7.5 million, Atherton, Calif.’s 94027 remains #1 most expensive zip code for fifth consecutive year; but a record $5.5 million median sale price gives Boston’s 02199 the #2 spot, followed by Sagaponack, N.Y. 11962 ($5 million); Ross, Calif. 94957 ($4.58 million); Miami Beah 33109 ($4.47 million); Beverly Hills, Calif. 90210 ($4.12 million); Santa Barbara, Calif. 93108 ($4.10 million); Santa Monica, Calif. 90402 ($4.06 million); Los Altos, Calif. 94022 ($4.05 million); and Medina, Wash. 98039 ($4.0 million).

Nationally, 30 zips feature median sale prices higher than $3 million, more than double the number of areas in 2020. The country’s 100 most expensive zip codes are located in 10 states, with 70% from California.

Speaking of California, the Bay Area claims 47 of nation’s priciest zip codes; Los Angeles County remains the priciest county with 21 entries; and once again, San Francisco boasts highest concentration of pricey zip codes, while New York City dropped out of top 20, although it did have 17 of the priciest zip codes.

Consumers’ Attitude Toward Housing Conditions Remains Mixed

The Fannie Mae Home Purchase Sentiment Index increased by 1 point to 75.5 in October, as consumers once again reported mixed feelings about homebuying and home-selling conditions, as well as increased pessimism regarding the larger economy.

Overall, four of the index’s six components increased month over month. In October, slightly greater shares of consumers reported that it’s a good time to buy a home and sell a home – with those numbers now sitting at 30 percent and 77 percent, respectively, up from 28 percent and 74 percent last month. Consumers also reported even stronger expectations that mortgage rates will increase over the next 12 months. Year over year, the full index is down 6.2 points.

“The HPSI remained relatively flat this month, staying within the general bounds it began to set in June 2020 – following the initial shock of the pandemic to the index,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “While homebuying and home-selling sentiment remain at historically low and high levels, respectively, more consumers now expect that their personal financial situation will not improve over the next 12 months. This is particularly true among surveyed homeowners and older age groups.” 

Redfin: 34% of Recent Movers Live in Single-Income Households, Up From 29% Before Pandemic 

Redfin, Seattle, said more than one-third (34%) of people who moved during the coronavirus pandemic live in a home where only one adult has a full-time job. By comparison, just 29% lived in a single-income household before the pandemic, based on an August Redfin survey of 1,023 U.S. residents who have moved to a new home since March 2020.

As the portion of people living in single-income households increased, the share living in dual-income households declined. Slightly more than half (58%) of the recent movers Redfin surveyed live in a home with two adults working a full-time job, down from 62% before the pandemic.

“While some people chose to move down to a single-income household, others had no choice,” Redfin Deputy Chief Economist Taylor Marr said. “Thousands of Americans lost their jobs during the pandemic, and scores of parents had to leave the workforce when daycares and schools shut down. Most workers are rethinking where their careers fall on life’s priority list.”

Higher Mortgage Rates Boost Buyer Urgency

Redfin also reported as home prices ticked up unseasonably, fast sales became more common in October as homebuyers felt an increased sense of urgency to purchase a home.

Redfin reported the national median sale price during the four-week period ending October 31 rose by 13% from a year ago and 1.5% from just three weeks earlier. Mortgage rates have risen by 30 basis points since August.

“Rising mortgage rates have lit a fire under many homebuyers,” said Redfin Chief Economist Daryl Fairweather. “Fear of missing out (FOMO) is always a powerful force in this supply-constrained housing market, but especially so today for buyers who weren’t able to snag a home last year before mortgage payments shot up by 15%. With this renewed FOMO, the housing market is heating up from the slight lull a few months ago.”

Redfin reported 45% of homes that went under contract had an accepted offer within the first two weeks on the market, above the 41% rate of a year earlier and the 30% rate in 2019. Since the four-week period ending September 19, the share of homes under contract within two weeks is up 1.6 percentage points. During the same time in 2019, the share fell 1.2 points. Additionally, 33% of homes that went under contract had an accepted offer within one week of hitting the market, up from 29% during the same period a year earlier and 19% in 2019. Since the four-week period ending September 12, the share of homes under contract within a week is up 2.6 percentage points. During the same time in 2019, the share fell 1.2 points.

Black Knight: October Origination Activity Down 6%

Black Knight, Jacksonville, Fla., released its Originations Market Monitor, showing origination activity fell by 6% in October, while locks on rate/term refinance mortgages fell by another 23%.

The report said while rate locks on cash-out refinances (-0.3%) and purchase loans (+0.4%) remained relatively flat in October, overall volumes fell by 5.9% due to a more than 23% decline in rate/term refinance locks. Rate/term refinance activity is now down nearly 63% from the same time last year when 30-year rates were still in the sub-3% range.

Rates on FHA and VA loans jumped roughly 15 basis points over the course of the month, while jumbo mortgage offerings continued to rise at a slower rate and are now 10 basis points below conforming rates.

The report said the decline in rate/term activity drove the refinance share of the market down to just 45% of all lock volume, the lowest it’s been since June. Average credit scores on both cash-out and rate/term refinances fell slightly from September, as higher credit borrowers tend to sit on the sidelines in rising rate environments.

The report also noted conforming loan products gained back market share in October, while government products lost ground and the jumbo share ticked up slightly.

“The dynamics of the refinance market are changing, with a sharp shift away from rate/term refis to cash-out lending,” said Black Knight Secondary Marketing Technologies President Scott Happ. “This shift tends to happen in any rising rate environment, never mind one in which American mortgage holders have more than $9 trillion in tappable equity available to them. While we did see cash-out locks tick down in October, the overall trend toward an equity-centric refi market remains strong and one we will continue to watch closely in the coming months.”