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Housing Trends: A Statewide Market Retrospective of Peak, Crash and Climb

Thu, 01 Mar 2018 03:00:00 GMT

A Closer Look at the CoreLogic Special Report

The housing market has gone through historical fluctuations over the past 12 years. The latest Special Report from CoreLogic chronicles the housing price index (HPI), beginning with the pre-crash peak years, through the market correction during the recession, up to December 2017.

During this period, the U.S. economy lost over 8.7 million jobs and the housing market fell 33 percent. As the market has largely recovered and housing prices are increasing throughout the country, now is a good time to look back and evaluate how the market reacted, changed and improved.

The national HPI peaked in April 2006, reaching its maximum decline in March 2011 before returning to peak in October 2017. Of all 50 states, Nevada experienced the biggest drop during the recession, with a 60 percent decline in home prices (Figure 1). Even after a 93 percent increase from its trough-to-current home price level, Nevada’s growth rate is still 23 percent below its pre-recession peak, and 9 percent of mortgaged properties are still underwater. This is one of the highest negative equity levels in the country, exceeded only by Louisiana which fell by just 9 percent during the crash.

During the recession, both Arizona and Florida prices dropped considerably to 51 percent and 50 percent below their respective peaks, and as of December 2017 they remained 16 percent below their peak price. Meanwhile, California experienced a 42 percent decline in home prices. Homes in this market have since recovered and now stand 2 percent higher than they did before the recession.

North Dakota had a shallow 2 percent peak-to-trough price decline during the recession, and with the energy boom, home prices have risen 48 percent above the prior peak in July 2008. While Nebraska and Iowa have experienced less significant growth rates, the numbers in these states tell a similar tale. Home prices in Nebraska dropped only 5 percent from the July 2006 peak, and have since experienced a healthy 27 percent increase from the lowest home price level. Iowa home prices also dropped by 5 percent from their peak and now stand 15 percent above the prior peak in 2006. However, the equity gain in these states is still below the national average of $14,888, standing at $7,720 for Iowa, $8,344 for North Dakota and $8,054 for Nebraska from the third quarter of 2016 to the third quarter of 2017.

Recovery has varied from state to state, and certain states are still not back to their respective pre-recession price levels. The West Coast states experienced significant price dips, but have since rebounded, while energy boom states in the middle of the country experienced comparably shallow drops and prices have risen considerably. To read more, download the free report, Evaluating the Housing Market Since the Great Recession.

CoreLogic.com

Mortgage Performance: PLRMBS Issuance Resurgence

Wed, 21 Feb 2018 03:00:00 GMT

A Closer Look at the Private Label Lending Product

While issuance volumes are nowhere near pre-crisis levels, the Private Label Residential Mortgage Backed Securities (PLRMBS) market has continued to provide access to funding for mortgage loans that don’t conform to the current tight credit markets. We observe a cycle starting in 2009 where a limited number of PLRMBS issues have made it to market through 144A rule offerings with deal volumes by vintage and origination amounts by vintage both peaking in 2017 (as of December 2017 remittance).

The collateral reveals the overwhelming tendency is to issue BC/Subprime deals that tend to revolve around NPL/RPL loans. These deals could include NPL/RPL portfolios being securitized from GSE auction purchases as well. Likewise, we see several legacy PLRMBS deals being called and the remaining outstanding loans re-securitized into new 144A issues. In more recent vintages starting in 2014, we’re starting to also see the emergence of a limited number of non-QM loans being included to some deals.

Issuer wise, the diversification has been significant. No less than 55 firms from 2009 to date have issued into the PLRMBS segment. However, roughly 50% of all deals issued during this time have been issued by only 5 issuers: Bayview, Sequoia, Credit Suisse, JPMorgan and Towd Point.

While the deal volumes are not comparable to pre-crisis there has been a slow but gradual resurgence the last few years. If 2015 to the present is any indication, we can expect a continued growth trend and have already reached $50B in closing balances for 2017. Going into 2018, there should be continued interest in securitizing NPL /RPL loans and further defining the evolving non-QM credit box. The question mark is with respect to the public side and whether or not we’ll see issuance under Reg AB II.

In our next installment, we’ll take a look at the traits and relative performance on the book of issued PLMBS deals between 2009 to date.

CoreLogic.com

Housing Trends: U.S. Single-Family Rents Up 2.7 Percent Year Over Year in November

Tue, 20 Feb 2018 03:00:00 GMT

Houston Rent Growth Remains Strong Due to Hurricane Harvey

National rent growth decelerated in November 2017 compared with November 2016
High-end segment growth accelerated in November 2017 compared with November 2016
Of 20 select metros analyzed, only Honolulu and Miami experienced a decrease in single-family rents in November

National single-family rent prices climbed steadily between 2010 and 2017, as measured by the CoreLogic Single-Family Rent Index (SFRI). However, the Index shows overall year-over-year rent growth has decelerated slowly since it peaked early last year (Figure 1). In November 2017, single-family rents increased 2.7 percent year over year, a 1.6-percentage point decline since the growth rate hit a high of 4.3 percent in February 2016. The Index measures changes to the cost to rent single-family rental homes, including condominiums, using a repeat-rent analysis to measure the same rental properties over time. The analysis is conducted both nationally and for 75 individual Core Based Statistical Areas (CBSAs).

Using the Index to analyze specific price tiers reveals important differences. Figure 1 shows that the Index’s overall growth in November 2017 was pulled down by the high-end rental market, which is defined as properties with rent prices 125 percent or more of a region’s median rent. Rent prices on higher-priced rental homes increased 2.3 percent year over year in November 2017, up from a gain of 1.7 percent in November 2016. Rent prices in the low-end market, defined as properties with rents less than 75 percent of the regional median rent, increased 3.8 percent year over year in November 2017, down from a gain of 5 percent in November 2016.

Rent growth varies significantly across metro areas. Figure 2 shows the year-over-year change in rent prices for 20 select CBSAs in November 2017. Seattle-Bellevue-Everett, Wash., had the highest year-over-year rent growth with an increase of 5 percent. Only two CBSAs among this group of 20 showed a decrease in rent prices: Urban Honolulu, Hawaii (-1.6 percent) and Miami-Miami Beach-Kendall, Fla. (-0.2 percent). The November 2017 results for Houston is notable with rent growth of 2.5 percent year over year in November 2017, compared with a decline of 1.5 percent in November 2016. While rents in Houston are showing strength due to increased demand after Hurricane Harvey, markets in Florida continue to show weakening rent growth despite Hurricane Irma. Tampa-St. Petersburg-Clearwater, Fla showed 1.5 percent point lower year-over-year increases in rents compared with November 2016. Miami-Miami Beach-Kendall, Fla. continued to experience rent decrease in November 2017.

CoreLogic.com

Videos: U.S. Housing Policy Outlook February 2018

Tue, 20 Feb 2018 03:00:00 GMT

115th Congress Second Session

Alyson Austin, principal communications for CoreLogic, sits down with Global Head of Public Policy and Industry Relations, Stuart Pratt, to discuss the Second Session of the 115^th United States Congress and what might happen in 2018. The questions range from whether Congress will be able to accomplish GSE Reform to what banking related bills, if any, might pass this year.

CoreLogic.com

Housing Trends: Forecasts Suggest Homebuyers Typical Mortgage Payment Could Rise Over 15 Percent This Year

Thu, 15 Feb 2018 03:00:00 GMT

Expected Mortgage Rate Increases Mean Rise in Payments Could Be Triple Forecasted Home Price Gain

The CoreLogic Home Price Index Forecast suggests U.S. home prices will rise less than 5 percent this year, but if some 2018 mortgage rate forecasts pan out the mortgage payments homebuyers face could increase closer to 15 percent.

One way to measure the impact of inflation, mortgage rates and home prices on affordability over time is to use what we call the “typical mortgage payment.” It’s a mortgage-rate-adjusted monthly payment based on each month’s U.S. median home sale price. It is calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment. It does not include taxes or insurance. The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for in order to get a mortgage to buy the median-priced U.S. home.

A consensus forecast[1] suggests mortgage rates will rise by about 0.85 percentage points, or 85 “basis points,” between November 2017 and November 2018. The CoreLogic HPI Forecast suggests the median sale price will rise 2.6 percent in real terms over the same period (or 4.6 percent in nominal terms). Based on these projections, the inflation-adjusted typical mortgage payment would rise from $804 in November 2017 to $910 by November 2018, a 13.3 percent year-over-year gain (Figure 1). In nominal terms the typical mortgage payment’s year-over-year gain would be 15.5 percent.

An IHS Markit forecast calls for real disposable income to rise by just under 4 percent this year, meaning homebuyers would see a larger chunk of their incomes devoted to mortgage payments.

When adjusted for inflation the typical mortgage payment puts homebuyers’ current costs in the proper historical context. Figure 2 shows that while the inflation-adjusted typical mortgage payment has trended higher in recent years, in November 2017 it remained 36.4 percent below the all-time peak of $1,263 in June 2006. That’s because the average mortgage rate back in June 2006 was about 6.7 percent, compared with an average rate of 3.9 percent in November 2017, and the inflation-adjusted median sale price in June 2006 was $245,259 (or $199,900 in 2006 dollars), compared with a November 2017 median of $212,460.

[1] Based on the average mortgage rate forecast from Freddie Mac, Fannie Mae, Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders and IHS Markit.

CoreLogic.com