Fannie survey says it’s a seller’s market

 Real Estate Market, Residential Mortgage  Comments Off on Fannie survey says it’s a seller’s market
Jun 292017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Based on Fannie Mae’s Home Purchase Sentiment Index (HPSI), it looks like consumers think we’re in a seller’s market. (I’m sure that comes as a big surprise to you.) For only the second time in the history of the index, the net share of those saying it’s a good time to sell exceeded the net share saying it’s a good time to buy. This happened because of an 8-point decline in the good time to buy index to a record low and a 6-point rise in the good time to sell index, which reached a record high.

I think the surprising result isn’t that we’re in a seller’s market but that it took so long for this reality to show up in the index. While the buy index is only slightly lower than it was last year and hasn’t varied a lot over the last 12 months, the sell index is 19 points higher than last year.

Changes in other components of the index were less dramatic. The net share who thinks mortgage rates will rise fell by five points, but the vast majority of respondents still believes rates will rise. The net share who thinks home prices will rise also fell by five points. This result seems anomalous as recent home price data all point to increasing and sometimes rapidly increasing home prices.

The survey also showed that consumers’ confidence in their personal financial situation continues to be strong with a net 71% not concerned about losing their jobs and a much larger share expecting household income to rise this year. The share who believes the economy is on the right track also ticked higher to 47%, which bests the wrong track share by seven points.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for a link to the survey results.

Fannie survey shows homebuyers optimistic

 Real Estate Market  Comments Off on Fannie survey shows homebuyers optimistic
May 152017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Fannie Mae’s Home Purchase Sentiment Index recovered in Apr from its recent swoon to its second highest level in survey history. The index is 3 points higher than last Apr and is similar to the level reached during last year’s spring buying season.

The most interesting results of the survey are the 5-point rise in the net share who thinks now is a good time to buy a home and the 5-point decline in the net share who think now is a good time to sell. I don’t generally put much stock in one month’s data, but the size of the change is a bit alarming and could suggest that home inventory problems will not end soon. However, averaging the data over several months shows that the net share saying “good time to buy” has remained somewhat constant while the net share saying “good time to sell” has been slowly rising. It will be interesting to see if the numbers reverse next month.

One positive conclusion from the survey is that Americans continue to feel better about their financial situations. The net share who feel confident about their jobs jumped 7 points, and the net share reporting their income has increased significantly in the last year rose 2 points. With respect to the economy, the right track/wrong track indicator remains positive with a net 7% saying the economy is on the right track.

I found two other data points interesting. The difference between the expected rise in rental prices and expected rise in home prices has narrowed this year. Last year, respondents predicted rents would rise by 4% while home prices would rise by only 2%. They now expect home prices to rise by 3%, which might create some sense of urgency to act before buying a home becomes unaffordable.

Finally, the net share who think it’s easy to get a mortgage today continues to rise, suggesting consumers have less apprehension about the mortgage process.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for a link to the survey results.

Is CFPB’s Cordary on borrowed time?

 Regulations  Comments Off on Is CFPB’s Cordary on borrowed time?
Feb 242017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

There was much cheer in the real estate industry after last year’s surprising election results. Finally, it would get some relief from the overreaching efforts of the Consumer Financial Protection Bureau (CFPB). Specifically, many figured that Bureau director Richard Cordray’s days were numbered. Well, it hasn’t worked out that way.

Dodd-Frank, which created the CFPB, stipulates the Predsident may only fire Cordray “for cause.” A three-judge panel of the D.C. appeals court last year ruled that the “for cause” language is unconstitutional, which seemed to clear the way for a “you’re fired” moment. However, the court first stayed that ruling and now has agreed to rehear the case. The new hearing is set for late-May with a decision unlikely until late summer.

Industry insiders think it now is unlikely Trump will fire Cordray until the case is decided because the President would have to show cause. It is certain Democrats would file suit to block the firing, which likely would postpone the firing while that case was adjudicated.

The Bureau’s actions over the next few months may dictate the urgency with which Trump feels to act. Recently, it seems the Bureau has focused on aggressive enforcement actions rather than creating new regulations, which make it more likely to fly below the radar.

Meanwhile, Congressional Republicans are moving a bill to replace the Bureau’s single director with a 5-member commission, similar to many other government agencies. However, the bill needs Democratic support to pass, and unless and until the appeals court rules, Dems seemingly have little incentive to acquiesce.

Once the court rules, it’s likely the losing side will appeal to the Supreme Court. That appeal wouldn’t be heard until the fall court term, and at that point Republicans expect the Senate will have confirmed Neil Gorsuch to the court.

Thus, the case may not be resolved for many months, with Cordray in charge of his own destiny. And that actually may be how this plays out. Political pundits believe Cordray is eyeing a run for Ohio governor in 2018. If he can ride out the current court battle, he can leave under his own terms later this year just in time to file for the election.

Fannie housing index shows renewed confidence

 Real Estate Market, Residential Mortgage  Comments Off on Fannie housing index shows renewed confidence
Feb 142017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Fannie Mae’s Home Purchase Sentiment Index reversed a 5-month slide in Jan, climbing two points. The index is 1.2 points higher than this time last year, which may bode well for spring home buying.

The rise mirrors increases in other measures of consumer confidence, which recently hit post-recession highs. In the Fannie survey, I think the most interesting result was the five-point rise in the net share of consumers reporting significantly higher income in the last year. A higher percentage also expects their financial situation to improve in the coming year. Given the growing concern about home affordability, if consumers are feeling more flush, it may abate some of this concern.

One dramatic result of the survey was the share who expects home prices to rise in the next year, which increased 7 points. This probably reflects growing concerns about home affordability, but interestingly, it runs counter to the recent hard data, which shows home prices moderating. If home prices continue to moderate, it might give you an opportunity to present prospective homebuyers with this contrarian news that would come as a welcome surprise.

Finally, the share who said now is a good time to sell rose two points, while the share saying it’s a good time to buy fell three points. I suspect this, too, reflects concerns about affordability.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for the survey results.

Freddie Mac predicts uncertain future for housing

 Real Estate Market  Comments Off on Freddie Mac predicts uncertain future for housing
Feb 052017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Freddie Mac recently released its housing outlook for 2017, and I think the key word is uncertainty. While the economy remains mildly expansionary, we’re faced with a plethora of unknowns that make it likely that last year, which was the best for housing in a decade, will be a high point.

The most obvious source of uncertainty is the election result. The new administration has promised lower taxes and regulation, increased infrastructure spending, and tougher trade policies, but the details are yet to be determined. Some economists have suggested the policies will be inflationary. Other have suggested recessionary. I suggest it’s way too early to tell.

Freddie economists note that the proposed lower tax rates may reduce the appeal of the mortgage interest deduction (MID) and suggest that could impact housing demand. I think that’s a stretch. I’ve never met a homebuyer who based his decision on the MID.

Another area of uncertainty for TX is foreign investment in real estate. 10% of US foreign residential purchases occurred in TX. Foreign investment is impacted by currency fluctuations and capital controls of other countries, among other factors, and those are starting to limit the availability of foreign investment capital.

Finally, Freddie economists suggest that mortgage rates, which start this year higher than last year, will continue to rise. However, as they note, global events, such as the Brexit, helped contain US rates last year. The calendar is loaded with potential surprises this year, and they could keep a lid of US rates again.

Fannie housing survey dips again

 Real Estate Market  Comments Off on Fannie housing survey dips again
Nov 022016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

The Fannie Mae Home Purchase Sentiment Index dipped again in Sep, moving further away from the high it hit in Jul. Fannie says the drop indicates increasingly cautious consumers. However, some of the caution may be misplaced.

Of the 6 index components, the one that decreased the most was the net share of consumers who expect mortgage rates to go up as opposed to go down. 49% said rates will rise whereas only 5% think they’ll fall. As I’ve been reporting in my weekly rate updates on Star Bits, I expect rates will stay within the same pretty narrow range over the coming year.

More disconcerting was the drop in the share of consumers who think now is a good time to buy. The net share – the difference between those who think it’s a good time to buy and those who don’t – dropped 5 points to the lowest level in the survey’s history.

Some of the consumer caution may be reflected in the job concern component. An increasing share is concerned about losing their jobs in the next year. However, that is balanced by a higher percentage who report their income is significantly higher than it was last year.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010, and you’ll find a link to the survey results at the end of my blog.

Fannie housing index sets record high

 Real Estate Market  Comments Off on Fannie housing index sets record high
Aug 242016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Fannie Mae’s Home Purchase Sentiment Index (HPSI) climbed to its highest level in July, rebounding from Jun. That could mean good news for the end of the summer homebuying season.

All six components of the index rose in Jul. Maybe the most encouraging result was the “good time to sell” component, which reached another survey high. That might portend a loosening of the very tight inventory situation in many areas.

Another encouraging result is the increase in the percentage who said they would buy if they move. Sixty-seven percent said they would buy while only 26% said they would rent, an all-time low for the survey.

Respondents’ concern about their personal financial situation rebounded in Jul. Only 16% expressed concern about losing their job in the next year, and 11% more think their income will rise than think it will fall. While these are positive numbers, the rebound simply returns them to their previous, flat trend.

I found two other interesting data points. Forty-one percent more people think home prices will rise than fall in the next year. That’s a huge turnaround from the spring. And the percentage who thinks mortgage rates will rise in the next year continued to fall, reaching a survey low.

However, Fannie economist Doug Duncan threw some cold water on the HPSI record high, noting that the increase only returns the index to its previous, slow upward trend. I would say that’s better than the alternative.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for the survey results.

Use your real estate commission as your down payment

 Loan Guidelines, Residential Mortgage  Comments Off on Use your real estate commission as your down payment
Jun 022016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Today’s news spool is going to cover a couple loan guideline changes that may help you in your business.

As I reported several weeks ago, FHA is changing its treatment of deferred student loans to be consistent with other loan programs. If a student loan appears on a homebuyer’s credit report without a corresponding payment, we can use 1% of the loan balance as the effective payment for qualifying the buyer. Previously, we had to use 2% of the balance. FHA originally said the effective date for the change was 6/30, but it recently clarified to say that lenders MUST start using the lower percentage on 6/30. We can (and we will) start using the lower amount immediately.

If you’re buying a home, and you’re representing yourself in the transaction, Fannie Mae and Freddie Mac will allow you to use your commission on the transaction for a conventional loan.

Fannie is a bit more restrictive. While you can use the commission to cover closing costs, you have to demonstrate sufficient funds to close not counting the commission, and your commission counts towards the limit on interested-party contributions. This is the percentage (like 6%) we quote you when you ask, “How much can the seller contribute towards closing costs.”

With Freddie, the commission can count towards your funds to close. Additionally, you can use your commission to cover closing costs and down payment, and it does not count towards the contribution limit. Thus, you can get the seller to contribute the max towards your closing costs and use your commission to cover the rest.

How will trended credit data affect your homebuyers?

 Loan Guidelines  Comments Off on How will trended credit data affect your homebuyers?
May 082016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

Fannie Mae has announced that this summer it’s going to require that lenders start using “trended” credit data to qualify borrowers. What in the world is trended credit data and how will its use affect a homebuyer’s ability to qualify for a mortgage?

Currently, a credit report is a snapshot in time of one’s credit usage. The report shows current account balances, limits, and minimum payments. A trended credit report shows how those amounts have varied over the last two years. Thus, it augments usage with insights into credit habits. Do you pay off your credit cards each month? Do you pay more than the minimum balance? A trended report will reveal these habits.

TransUnion claims credit scores based on trended data will increase the number of what it calls prime and super-prime consumers by more than 3 million. Analysts expect those who pay off their credit card debt every month will see their scores rise. Other winners may include folks whose trended data shows their revolving balances decreasing over time.

While Fannie is clear about the use of trended data, it’s not clear how it’s going to happen. Trended data is being built into the newer credit scoring models, specifically FICO 9. Fannie and Freddie still require lenders’ use of credit scoring models that are generations older than FICO 9.

We can hope that the trended credit data announcement means Fannie is finally going to update its credit model. If it does, it may lead to a larger pool of potential homebuyers. Reports indicate the new models reduce the score penalty for medical collections and do a better job of scoring those who use credit sparingly.

Fannie survey paints a downbeat picture of housing

 Real Estate Market  Comments Off on Fannie survey paints a downbeat picture of housing
Apr 182016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

by G. Steven Bray

As we head into the spring home-buying season, Fannie Mae’s latest Home Purchase Sentiment Index (HPSI) presents a somewhat pessimistic picture of the housing market. The index dropped 2.5 points last month to its lowest level since Sep 2014.

Much of the drop can be attributed to consumers’ concerns about the economy. Despite decent government job numbers from the Labor Dept, respondents expressed a significantly greater concern about their job security and household income. This was reflected quite starkly in the right track/wrong track index – the percentage difference between those who think the economy is on the right track versus the wrong track. The index, which has been in a downtrend since Dec, decreased to its lowest level (-25) since Mar 2014.

Also disconcerting are the survey’s good time to sell and buy indicators. The good time to sell indicator fell 8 points, and the good time to buy indicator fell 2 points. This may be a reflection of respondents’ concerns about their financial situation.

While the survey’s results were mostly downbeat, I did see a couple bright spots. Respondents still expected rent and home prices to rise in the coming year, which could give potential homebuyers a sense of urgency. Additionally, respondents expected rents to rise twice as fast as home prices. An increasing percentage also said they would buy rather than rent if they were going to move.

While the concern about the economy is troubling, I’m not convinced the index has turned over. It remains above 80 despite month-to-month variations, and the recent drop may be a reflection of the ongoing political debate. Economic reports continue to be mixed, which suggests a more steady housing market.

Fannie’s housing survey reflects the attitudes of 1000 consumers about the housing market and the economy. Fannie has conducted the survey each month since June 2010. Click here for a link to the survey results at the end of my blog.