Morning Briefing: 2.6 million homeowners join the equity rich

by Steve Randall17 Nov 2016
2.6 million homeowners join the equity rich
The number of US homeowners with a loan-to-value ratio of 50 per cent or lower increased by 2.6 million in the year to the end of the third quarter of 2016.

Figures from ATTOM Data Solutions’ RealtyTrac show that 23.4 per cent of all homeowners with a mortgage were equity rich, a total of 13,125,367.

“Close to one in every five U.S. homeowners with a mortgage is now equity rich thanks to a combination of rising home prices and lengthening homeownership tenures,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.

The highest share of equity-rich homeowners were in San Jose (55.7 per cent), San Francisco (49.8 per cent), Honolulu (39.3 per cent), Los Angeles (38.2 per cent) and Pittsburgh (34.5 per cent).

At the other end of the scale, 6,063,326 US homeowners were seriously underwater at the end of the third quarter of 2016. That’s a decrease of 854,000 from a year earlier and amounts to 10.8 per cent of all homeowners with a mortgage.

Las Vegas (25 per cent) followed by Ohio cities Akron, Cleveland and Toledo had the largest shares of homeowners who have a loan-to-value ratio of 125 per cent or more.
 
Mortgage applications down 9 per cent
The rise in mortgage rates following the election saw applications for mortgages drop 9.2 per cent last week according to the Mortgage Bankers’ Association.

Its index decreased by 10 per cent on an unadjusted rate with the refinance index down 11 per cent to its lowest level since March. The purchase index was down 6 per cent adjusted and 10 per cent unadjusted compared to the previous week.

"Following the election, mortgage rates saw their biggest week over week increase since the taper tantrum in June 2013, and reached their highest level since January of this year," said David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association. "Investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks, spurring a commensurate drop in refinance activity." 

The share of refinance loans was down to 61.9 per cent from 62.3 per cent a week earlier.
 
California home sales, prices higher in October
Home sales in California were up in October and so were median prices.

The California Association of Realtors reports that there were 442,970 existing single-family home sales in the month (SAAR); up 4.1 per cent from the previous month and up 8 per cent from October 2015.

The statewide median price was up 1.2 per cent from September and up 7.3 per cent from October 2015 to reach $513,520.

However, the data belies the continuing problem of low inventory for the state.

“While this month’s sales and price gains are encouraging, the market continues to experience a supply issue that won’t abate any time soon,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “A shortage of new listings remains a threat to home sales in the short run, and with available inventory below normal levels, the dearth of listings suggests that the market will remain tight over the near term.”
 

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