Is the housing market recovery really slowing down?
There have been a number of headlines this week highlighting the drop in mortgage applications and new home sales. What, if anything, does that mean for us here in Marblehead and Essex County? While national trends can have significance in framing market sentiment, it is important not to get confused by data from specific areas. We are not Las Vegas, and as the saying goes, “what happens in Vegas should stay in Vegas.”
Here are four brief extracts from the week, after which I will add some local data and comment.
“On housing, mortgage application activity remains slow, with applications for home purchase mortgages around 16 percent below last year’s pace, and refinance applications about 70 percent slower than a year ago. While we have seen …. small increases in the last few weeks, the purchase index has not seen the typical late winter/early spring pickup in activity that has been typical of previous years. The current purchase index levels for each month have been the lowest since the mid to late 1990s.” – Source: Mortgage Bankers Association (MBA).
“Existing home sales are running at the slowest pace since late 2012, and have also started to see year over year decreases in each of the last four months. We expect existing home sales to remain lukewarm through 2014, finishing the year just over the five million unit annualized pace, and essentially flat from 2013. This is despite tight inventories of homes for sale and sustained home price appreciation. The inventory of homes for sale in February was 2.1 million units, close to the lowest levels since the early 2000s and below the series average of almost 2.7 million units.
US home prices trends have been largely positive but are starting to flatten out. We expect slower but still positive home price appreciation through 2015, and that is likely to apply some upward pressure on home sales and purchase originations in the medium term.” Source: FHFA, Case-Shiller, CoreLogic
“There has been a significant divide in terms of the mix of home sales and mortgage applications based on price and loan amounts. There was significant year over year growth in the higher end of the market compared to the lower half both in terms of sales price and average purchase loan amount. The trend is evident in both existing home sales and mortgage applications for purchasing a home. This is also consistent with the greater availability of jumbo mortgage products and lower jumbo mortgage rates compared to conforming mortgage rates.” Source: MBA Weekly Applications Survey, National Association of Realtors
“Mortgage credit availability continued to increase in March according to MBA’s credit availability index.The increase in credit availability was driven by a broader offering of jumbo loans. It is likely that lenders expanded options available to jumbo borrowers in light of the price trends noted earlier in existing home sales and purchase applications, with the higher end of the market seeing more growth on a year over year basis. Mortgage rates will hit the 5 percent level in 2014, averaging 4.8 percent for the year, and increase further to 5.2 percent for all of 2015.” Source: MBA
Comment
19 weeks ago today I flew out from Boston at 10 am when the temperature was 10 degrees. This winter ( and snow is forecast for the Berkshires today) has been not only brutal but long. “…not seen the typical late winter/early spring pick up in activity”. Could the weather possibly have something to do with this???
Despite the winter and extremely low levels of inventory, sales are forecast to be around 5 million this year, much the same as last year.
To me the most relevant comments are the growth in the higher end of the market and the forecast that mortgage rates will increase from their current 4.25% to 5%. That mortgage forecast, by the way, is consistent with what the MBA has been saying for some time.
In early April I wrote an article Buyers moving up the price change. Here is a table showing YTD sales at different price points for Essex County:
Source: MLS, Oliver Reports
In Marblehead we saw another waterfront property receive an accepted offer this week and a $1 million plus house was listed and also received an accepted offer.
I can’t speak for Las Vegas, as fortunately I have never been there, but I can say that the market locally is already very active and looks set for a busy spring – when it finally arrives.
If you – or somebody you know – are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 617.834.8205 or [email protected].
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty
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