Almost Half of All Homeowners Considered Equity Rich

Bob Vaughan

As home prices continue to soar, the number of homeowners that are now considered “equity rich” has reached nearly 45%, a 13% increase year-over-year. For a homeowner to be considered equity rich they must have at least 50% equity in their home, which has become a much easier feat with rising home prices across the country. Idaho, Vermont, Utah and Washington had the highest rate of equity rich owners in Q1 of 2022. In the opposite case, only 3.2% of mortgaged homes were considered seriously underwater in the first quarter of 2022. Any homeowner owing 25% more than the current market value of their home is considered seriously underwater. Mississippi, Louisiana, and Wyoming had the highest level of mortgages considered seriously underwater. As home prices continue to rise as the back half of 2022 comes into sight, it’s expected that more and more homeowners will be considered equity rich going into 2023. By the same token it’s expected less homeowners will be considered seriously underwater on their mortgage.

First-Time Buyers Becoming Timid About Homebuying

Bob Vaughan

Fannie Mae’s Home Purchase Sentiment Index tracks the housing market and consumer confidence to either buy or sell a home. In April, this index reached 68.5 marking the lowest level in the index since May 2020. The index is made up of six components including whether or not consumers believe it’s a good time to buy or sell and whether or not mortgage rates will rise or fall. According to the survey 76% of consumers think it’s a bad time to buy a home. The largest portion of survey responders that answered this way were between the ages of 18 to 34, showing that an increase in interest rates is concerning to many first-time homebuyers. Also included in the survey are questions about a consumer’s employment and income outlook. 84% of consumers believed they had nothing to worry about in regard to losing their jobs, but only 26% of consumers were making more money than this time last year.

New Mortgage Volume Slips 1.2%

Bob Vaughan

According to a report from the Mortgage Bankers Association, new mortgage application volume fell 1.2% for the week ending May 20th. Refinances made up 32.3% of total application volume, marking a 0.7% decrease from the previous week. As interest rates start to steady, it will be interesting to see the effect on new mortgage demand.

 

  • The FHA share of new mortgage applications increased to 11.3% this week.
  • The VA share of new mortgage applications fell to 10.4% this week.

Year-Over-Year Mortgage Applications are Down 55%

Bob Vaughan

The week ending May 13th saw new mortgage application volume fall 11% according to a report from the Mortgage Bankers Assocation. Comparing new mortgage applications to this time last year, the total volume is down 55.8%, led by a 75.8% decrease year-over-year in refinance mortgage applications. Rates being much higher than this time last year has caused current homeowners who missed out on refinancing lain 2021 to be on the sideline right now. Purchase application volume is only down 15.2% from this time last year as many homebuyers are seeing the affordability of owning a home versus renting in today’s market even with higher interest rates.

 

  • The FHA share of total application volume increased from 10.5% to 11.1% last week.
  • The VA share of total application volume remained constant at 10.5% last week.

 

Numbers Drop for New Mortgage Applications

Bob Vaughan

According to a report from the Mortgage Bankers Association, mortgage application volume fell 5% last week. This drop was paced by an 8% fall in refinance mortgage applications, marking a number 68% lower than this time last year. Purchase mortgage application volume was down 14% year-over-year. The average 30-year fixed interest rate is now 2% higher than this time last year, making it clear why we are seeing these application trends in today’s market.

 

  • The FHA share of total applications increased to 9.9% from 9.5% the week prior.
  • The VA share of total applications increased to 10.1% from 9.9% the week prior.

Mortgage Applications Numbers Continue to Fall

Bob Vaughan

During the period ending April 8th, mortgage application volume fell 1.3% according to a weekly survey from the Mortgage Bankers Association. Refinance application volume fell 5% from the previous week and 62% year-over-year. Almost four months into 2022, mortgage rates are up 1.5% causing refinance volume to drop drastically. Rates continuing to rise could cause further decreasing mortgage application volume as the year continues.

 

  • The FHA share of mortgage applications increased to 9.5% from 9.2% of total application volume last week.
  • The VA share of mortgage applications increased to 9.9% from 9.8% of total application volume last week.

Lee County Tops Country in Population Growth

Bob Vaughan

According to statistics recently published by Census.gov, Lee County ranks 9th in the highest population growth country wide between July 1st 2020 and July 1st 2021. Lee County reportedly grew by 23,297 people during this period, less than 700 people fewer than Montgomery County in Texas which finished 8th in new population growth rankings. Punta Gorda, FL ranked as the 4th highest growth percentage during the same period, with a 3.7% population increase. 

 

https://www.census.gov/newsroom/press-releases/2022/population-estimates-counties-decrease.html

New Mortgage Interest Declines

Bob Vaughan

The application volume for residential mortgages fell 6.8% for the period ending March 25th according to a report from the Mortgage Bankers Association.  With rates still rising, the incentive for people to refinance is less now than any point in 2021. Refinance application volume fell 15% from last period and is down 10.1% year over year. Refinance volume only makes up 40.6% of total mortgage application volume currently.

 

  • The VA share of mortgage application volume went from 9.8% to 9.5% last period.
  • The FHA share of mortgage application volume went from 8.8% to 9.3% last period.

Mortgage Application Volume Rises 8.5%

Bob Vaughan

The week ending March 4th saw mortgage application numbers increase by 8.5%. This increase was also in line with the first average mortgage rate decrease in about three months. Compared the same time last year, mortgage application volume overall was down 35.8% with the largest drop in applications coming from refinance applications specifically (49.9%). Refinances made up 49.5% of new mortgage applications this past period.

 

  • The FHA share of mortgage applications increased to 8.7% from 8.6% this past period.
  • The VA share of mortgage applications increased to 10.4% from 10.2% this past period.

2021 Q4 Home Price Trends

Bob Vaughan

According to the national home price index, there was a 18.8% growth rate between December 2020 and December 2021. In the 34 years this data has been tracked, this is the highest calendar year increase ever. In the final quarter of 2021 housing prices still increased quite a bit, but not as quickly as they had in the earlier quarters of the year. During 2021 all 50 U.S. states and the District of Columbia house prices rose. The top five states with the highest annual appreciation were Arizona, Utah, Idaho, Florida, and Tennessee. Specifically, the area with the highest annual price increases in the country was the Cape Coral-Fort Myers area with a 34.6% increase according to the FHFA’s House Price Index. Home buyers in entry and mid-level markets can expect to see the biggest effect of these home price increases with the low level of inventory even as mortgage rates continue to tick upwards.

Mortgage Application Volume Sees 12% Spike on Demand for Refinances

Bob Vaughan

This past week, mortgage application volume increased 12%. This increase was led by a somewhat surprising uptick in demand for refinances according to the Mortgage Bankers Association survey. When you compare these numbers to last year, mortgage applications dropped 37% overall with refinances specifically seeing over a 50% decrease. Refinance applications made up 57.3% of total applications this past week. With rates creeping up, seeing more refinance inquiries is definitely interesting.

 

  • The FHA share of total applications decreased from 8.6% to 7.7% this past week.
  • The VA share of total applications decreased from 9.9% to 9.1% this past week.

New Lending Guidelines Threaten Some Condo Sales

Bob Vaughan

Starting in December, lenders enacted new condo financing guidelines in regards to the condo questionnaires filled out by management companies.

New questions were added to the condo questionnaire that generally relate to the possibility of “deferred maintenance” to the subject building. These questions must be answered by the condo associations management company or condo boards in order for lenders to approve the condo for financing. We have been seeing pushback from several management companies’ legal teams since these questions are highly subjective and aren’t black and white. Some lenders do have possible workarounds such as meeting minutes, inspection reports, and engineering reports, but in general the new documentation needed to finance condos has been tedious to gather and confusing for all parties involved. These new condo guidelines are still temporary in nature and we are optimistic for improvement to this process in the future.

When financing a condo, it’s more important than ever to work with someone who understand the guidelines and knows what is required to get the financing approved.

Please call us with any condo questions!