Single-family home price growth in February set new records
Stories of rising house prices are no longer breaking news, but they are quite remarkable nonetheless. Black Knight, in his latest Mortgage monitor, says the 12.3% growth in the selling price of single-family homes in February the highest annual home price growth of any month on their 1992 records. Overall price growth for the month was 11.6%, driven lower by a 6.4% growth rate in condo prices.
The company says this gap is worth watching. Condominiums generally appreciate faster when the housing market heats up, as it certainly has in the past year, and decelerates faster when markets cool. This reversal of historical trends may suggest an underlying weakness in the condominium market. Maybe this is motivated by the pandemic and the fear of living nearby.
Black Knight’s collateral analysis team estimates that the price appreciation of the years is even higher, at almost 15%. The team assesses market conditions for each CBSA and ZIP code in the United States, using the most recent data on sales and active listings, and rates them on a range of market indicators. These include trends in sold / asset prices, inventory levels, sold / asset market times, and seller / list price ratios. Each postal code is then assigned a qualitative rating, ranging from hot to distressed. Historically, about two-thirds to four-fifths of all markets fall into the middle three categories (“good”, “normal” or “mild”), while less than 10 percent are considered “hot” or “distressed” categories above or below normal cycles.
As of February 2021, around 75% of ZIPs were currently either “strong” (47%) or “hot” (28%) markets, the highest share ever recorded for either category and more than double. from the previous record set at the end of 2017. At the same time, categories considered “soft”, “weak” or “struggling” have all but disappeared from the charts. Only 36 of the more than 14,600 ZIPs analyzed fell into these categories and only 7% of postal codes are classified as “normal”, up from 43% to 44% in February 2020 and 2019.
Black Knight Data & Analytics President Ben Graboske said the incredibly low levels of stocks for sale, coupled with historically low interest rates,
continue to exert upward pressure on house prices and tighten affordability. “Of course, the upward pressure on house prices has also helped tighten affordability, and with rising prices, affordability issues are easing. It now takes 20% of median income to make the shift. monthly payment on the purchase of a mid-priced home, reverting to the five-year average after several years of low interest rates mitigating the impact of rising prices on affordability Housing is now the least affordable that it has been – considering interest rates, house prices and incomes – since mid-2019. ”
The monthly principal and interest payment required to buy the mid-price home with a 20% down payment increased $ 108 per month to $ 1,203 year-to-date. This is the highest payment since late 2018, when the average home price was 16% lower, but the 30-year average rate was 17 points higher at 4.87%. The 20 percent of the income required to make this payment is back to the 5-year average, but still below the 20-year average of 23.4 percent. In recent years, the point between an acceleration and a deceleration of the housing market has been around 20.5%. At current price levels it would only take 30-year rates of up to 3.4% to push the payments-to-income ratio to this point.
Graboske says any hopes of 2021 bringing an influx of homes to the market and less price pressure appear dashed for now, as new listings for sale are down 16% and 21% from a year ago on the other in January and February, respectively. “Rather than an influx of homes into the market, we are now 125,000 fewer new listings in the hole compared to the first two months of 2020 and we are moving in the wrong direction. With higher interest rates and lower prices. Continuing shortage of inventory, so it’s important to keep a close eye on home prices and affordability measures in the months to come. ”
These 125,000 less available housing units represent a 40% decrease year over yearand the supply of single-family homes is 46 percent lower. The condo inventory held up better, it only dropped by 15%. New listings typically peak in May, so the volume as well as the direction of interest rates will largely dictate the trajectory of the 2021 real estate market.
The Monitor has also updated the current disposition of loans that are or have ceased to be forborne. As of March 23, seven million homes have been on abstention programs since about the same time last year when the pandemic hit. About 43 percent of these loans came out of the program and are now operational. Another 167,000 are released (2 percent) and are delinquents and are unable to mitigate the losses, but 107,000 of them were not underway as the pandemic approached. Former participants who participate in loss mitigation total 306,000 or 4.0 percent. Fourteen percent of forborne loans have been repaid, and 5 percent are new inflows, within their first three-month forbearance term. Graboske, his leaves 2,198 loans still in the program, about 32 percent.
Black Knight says performance results continue to vary by category of investor. Sixty-eight percent of GSE borrowers are out and two-thirds are performing or have repaid their loans. Borrowers served for bank portfolios or private label securities have the highest number of delinquent borrowers after forbearance, but most were not performing before the program. FHA loans have seen the lowest share of borrowers leave the plans.