Morning Briefing: Purchase originations set to hit $1.1 trillion as refinancing slumps

Purchase originations set to hit $1.1 trillion as refinancing slumps… Affordability increased in almost all major markets says title insurer… Fixer-upper homes see double-digit increase…

Purchase originations set to hit $1.1 trillion as refinancing slumps
Purchase originations are set to rise to $1.1 trillion next year, the Mortgage Bankers’ Association says.

That represents an 11 per cent rise from 2016 but the thirst for refinance loans will slump by 40 per cent to $529 billion. The overall total will also be lower than in 2015 with $1.63 trillion compared to this year’s $1.89 trillion.

"We are projecting that home purchase originations will increase further in 2017, building on an estimated 10 percent increase in 2016. Strong household formation coupled with further job growth, rising wages, and continuing home price appreciation will drive strong growth in purchase originations in the coming years," said Michael Fratantoni, MBA's Chief Economist and Senior Vice President for Research and Industry Technology.

The lower trend will continue into 2018, the MBA forecasts, with purchase originations of $1.18 trillion and refinance originations of $410 billion for a total of $1.59 trillion.
Affordability increased in almost all major markets says title insurer
Housing in most US markets is getting more affordable according to a new report from title insurer First American Financial.

“Contrary to popular opinion, housing isn’t getting more expensive. In fact, on a purchasing-power adjusted basis, housing is becoming more affordable,” said Mark Fleming, the firm’s chief economist.

First American’s Real House Price Index, which takes into account consumer’s house-buying power,  shows a price rise of 0.8 per cent between July and August 2016 but compared to August 2015, it reveals a price decline of 2.5 per cent.

“Until there is a meaningful increase in mortgage rates, likely starting later this year and continuing into 2017, real house price levels will remain low in most major markets. At the moment, affordability is actually increasing in more markets than it is decreasing,” said Fleming.

Those markets include San Francisco, San Jose, New York, Washington and Boston.

“Interest rate declines, combined with meaningful gains in incomes, have provided the consumer with greater buying power, which increases housing affordability,” Fleming concluded.
Fixer-upper homes see double-digit increase
There’s been an 12 per cent rise in the number of ‘fixer-upper’ homes in the last five years with the largest rise in expensive homes in hot markets.

Zillow’s analysis shows that those homes priced in the top third of their markets saw a sharper rise with inventory up almost 35 per cent; in the lower third there was a 3 per cent rise.

"Across the country, homes are selling fast and for high prices," says Svenja Gudell, Zillow's chief economist. "Sellers are in the driver's seat, with the freedom to list their home for sale 'as-is' without worrying about price cuts or the home sitting on the market." 

The age of those homes requiring some TLC has almost doubled in just 9 years with the median age at the end of 2015 at 28 years compared to 15 years in 2006.