Morning Briefing: Home equity surges as prices continue upwards

by Steve Randall02 Nov 2016
Home equity surges as prices continue upwards
Nationwide home prices were up 6.3 per cent in September compared to a year earlier, CoreLogic’s data reveals. In the month from August, prices were up 1.1 per cent. The figures include distressed sales.

The continued rising prices has seen homeowners’ equity rise sharply since the market crash.

“Home-equity wealth has doubled during the last five years to $13 trillion, largely because of the recovery in home prices,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Nationwide during the past year, the average gain in housing wealth was about $11,000 per homeowner, but with wide geographic variation.”

CoreLogic is forecasting a slower pace of increase for the month to October at 0.3 per cent; and for the 12 months from September 2016 at 5.2 per cent.
 
Multifamily/commercial originations rise
Originations of commercial and multifamily mortgages have increased this year according to new figures from the Mortgage Bankers’ Association.

Originations were up 2 per cent year-over-year for the first 9 months of 2016 while the third quarter saw a 5 per cent increase year-over-year and a 7 per cent increase from the second quarter of 2016.

"Rising property values, robust property fundamentals, low interest rates and a strong transaction market continue to drive potentially record setting paces in commercial and multifamily mortgage originations,” said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. 

Industrial and multifamily financing led the gains in the third quarter with the dollar volume for industrial rising 32 per cent and multifamily up 26 per cent.
 
Luxury home prices edging higher
The average price of luxury homes edged up 1.4 per cent in the third quarter based on analysis of the top 5 per cent of homes in more than 1,000 US cities.

Data from Redfin shows that inventory in the $1 million plus sector was down 2.4 per cent in the third quarter of 2016 compared to a year earlier and there was a 17.2 per cent drop in homes priced at $5 million and above.

Price growth lags the more affordable segment of the housing market and sales at the very high end were stuck in neutral,” said Redfin chief economist Nela Richardson. “The super high-end homes are particularly out of sync with the rest of the market and seem to be bending toward a price correction given the tepid sales growth and double-digit pop in inventory at price points over $5 million.”

The sharpest rise in prices was seen in Delray Beach, FL with a 70 per cent rise year-over-year to an average $2.98 million. However, Miami saw a slump in condo prices, down 10 per cent to an average $1.4 million.
 

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