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Category: Real Estate Market

  • Fannie survey says it’s a seller’s market

    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

    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.

    May 15, 2017

  • Fannie housing index shows renewed confidence

    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

    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

    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

    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.

  • Fannie survey paints a downbeat picture of housing

    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.

  • Housing stronger than indicated by Fannie housing survey index

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

    by G. Steven Bray

    Industry reporters focused on the negative in the latest Fannie Mae housing survey. The headline Home Purchase Sentiment Index (HPSI) dropped about 2% from Dec to a reading of 81.5. But if you analyze the survey data, I don’t think the results are as dire as the headlines would have us believe.

    The most significant negative I saw in the report is the year-long decline in the share of folks who think now is a good time to buy a home. I suspect that’s a reflection of the so-called affordability crisis. Whether a crisis actually exists, the media is beating it into people’s heads that housing is becoming unaffordable.

    On the flip side, the share of folks who think now is a good time to sell is trending higher. This could lead to more inventory hitting the market for the spring selling season.

    If concern about personal finances was the factor driving the decline in folks saying it’s a good time to buy, it’s not showing up in the survey results. The share that expects their personal financial situation to improve has been rising for the last 6m, and job security has remained steady within the survey’s margin of error during the same period. However, while folks don’t express concern about their personal situation, the right track-wrong track survey of the economy continues to grow increasingly negative.

    I noticed several other positive nuggets in the report:

    – A steadily increasing share of folks expects mortgage rates to increase in the next year. That may create a sense of urgency among potential homebuyers.

    – Respondents expect rental rates to rise almost twice as fast as home prices. Got any renters sitting on the fence?

    – And, finally, the respondents are becoming increasing positive about the ease of qualifying for a mortgage.

    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. You’ll find a link to the survey results at the end of my blog.

    Click here for the survey results.

  • Number of homeowners set to explode

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

    by G. Steven Bray

    If you’re worried about the strength of the housing market, you may want to look at the Mortgage Bankers Association’s recently released Housing Demand report. The report predicts as many as 12.7 million new home-owning households by 2024, and it provides the statistics to back it up. That’s roughly 1.3 million a year – pretty significant.

    MBA considered two scenarios. In the first, it held homeownership rates at 2014 levels, which were the lowest in decades. Under this scenario, MBA predicts 10.3 million new owner households by 2024. In the second scenario, it assumed that homeownership rates will revert to their long term averages, which are less than the pre-crash highs but higher than today’s low. Under this scenario, MBA predicts 12.7 million new owner households.

    As you might imagine, the Millennial generation contributes positively to homeownership under both scenarios. However, it may surprise you that Baby Boomers are the main source of growth, 9.9 million households (96%) under the first scenario to 9.6 million (76%) under the second scenario.

    Based on other recent studies that show Baby Boomers preferring to age in place, I’d suggest the results may underestimate the already enormous effect of that generation on the number of new owner households.

    Regardless of which scenario plays out, it appears the next decade will witness much stronger housing demand and one of the largest expansions in the history of the US housing market.

    Click here to view the report.

  • TX home prices: Bubble or no bubble

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

    by G. Steven Bray

    Corelogic released a report last week identifying 14 metros that, in its opinion, are overvalued, and low and behold, 5 of those 14 are in TX. Corelogic defines overvalued markets as those in which prices have increased above the sustainable level based on the metro’s per capita income.

    The Austin metro led the pack with prices 42% higher than the sustainable level. The Houston area came in second at 25% overvalued. The Dallas metro came in eighth, San Antonio placed ninth, and Ft. Worth was 12th.

    Corelogic claims that the oil and gas boom is responsible for the population and job growth that has pushed up prices and that the current lower oil prices will lead to a bust.

    James Gaines at the Texas A&M Real Estate Center disagrees. He acknowledges that home prices in these metros have risen at almost twice their normal rate for the past few years, and he credits the oil and gas boom for some of that increase. However, he notes that supply and demand are very unbalanced at this time with most metros at 3 or fewer months of housing inventory for sale. If demand does fall, these markets have a lot of room to absorb it before they become buyer-dominated.

    A further point is that job growth in most TX metros, especially Austin and the DFW area, has been more diversified than in previous oil and gas booms. Tech, telecomm, and health sciences, which have fueled a lot of recent job growth, are unlikely to suffer from declining oil prices.

    So, Gaines says, “Bottom line, we don’t think there is really a bubble.”