Low mortgage rates nudge buyers to jump into the market despite COVID-19

Despite the coronavirus pandemic, buyers became more motivated to purchase a home in the next 12 months, according to LendingTree's latest survey.

In a survey of more than 1,000 prospective homebuyers, LendingTree found that 53% of respondents were more likely to buy a home in the next year due to the COVID-19 outbreak. These potential buyers cited record-low mortgage rates (67%) and reduced home prices (30%) as some of their top motivators to purchase in the next 12 months.

In addition, 32% of those who want to buy next year said they were able to save a larger down payment due to reduced spending amid COVID-19. Meanwhile, 28% said that being confined in a smaller space during shelter-in-place mandates has made homeownership more appealing.

However, the most-cited reason of those who were less likely to buy a home was economic uncertainty amid the coronavirus crisis (70%), followed by the inability to tour homes in person (42%) and loss of income (38%).

Over the past two months, six in 10 homebuyers have toured virtually, while 33% of those who haven't yet said they plan to do so.

The pandemic has also impacted how much money the respondents (65%) plan to spend on a new home. Among this group of potential buyers, 44% have plans to buy a more affordable home, while 21% want a pricier home.

Source: Mortgage Professional America 6-5-2020 Author: Candyd Mendoza

CoreLogic: Home prices expected to decline annually for first time in nine years

CoreLogic’s newly released U.S. Home Price Insights report, which evaluates April data and makes monthly and yearly projections, forecasts month-over-month price growth but predicts a 1.3% annual decline.

Prices grew 1.4% from March to April per the company’s numbers, boosted by increased home sales pre-pandemic during the year’s first quarter. With purchase activity slowing considerably as the outbreak took hold stateside, prices are expected to keep growing from April to May, though at a slower pace of 0.3%.

The yearly slide, though, marks the first time in more than nine years that CoreLogic has expected home prices to decline annually. The last time the company anticipated a retreat in year-over-year home prices was January 2012.

It’s a stark contrast to this year’s April, which saw home prices nationwide increase 5.4% year over year — even with the coronavirus pandemic exerting downward pressures all over the housing market.

“The very low inventory of homes for sale, coupled with homebuyers’ spur of record-low mortgage rates, will likely continue to support home price growth during the spring,” said CoreLogic chief economist Frank Nothaft.

“If unemployment remains elevated in early 2021, then we can expect home prices to soften. Our forecast has home prices down in 12 months across 41 states.”

A handful of markets were identified by CoreLogic as exhibiting particularly high risk of price decline over the next 12 months. Some, such as Prescott, Arizona (above 60% probability of price decrease); Cape Coral-Fort Myers, Florida (above 60%); and North Port-Sarasota-Bradenton, Florida (40-60%) are typically vacation destinations, expected to see property values fall as visitors stay home and rental properties are sold. Others have already been hit hard by the oil and gas downturn, like Huntington, West Virginia (above 60%), or are located in areas dependent on the energy industry, like College Station, Texas (above 60%).

Still, Frank Martell, CoreLogic president CEO, was cautiously upbeat about the market despite acknowledging that

“the next 12 to 18 months are going to be very tough times for the broader economy.”

“Tight supply and pent-up demand, particularly among millennials, provides optimism for a bounce-back in the housing market purchase activity and home prices over the medium term. … As employment and economic activity begin to pick up, as it will surely do, we expect housing to be a driver in a national recovery,” Martell said.

Source: Scotsman Guide 6-2-2020 Author: Arnie Aurellano

Housing ‘Likely’ Hit Low Point

Realtor.com’s May Monthly Housing Trends report forecasts that the U.S. housing market has “likely” reached its low point, with signs of recovery and even strengthening emerging in April and May. Growth is expected to continue over the summer.

According to the data, the national median list price hit a new all-time high of $330,000 in May, while also rising just 1.6% annually. May’s growth exceeded April's 0.6% year-over-year increase, which was the slowest rate of growth in three years.

The average list price began May up 1.4% and rose during the month—growing 3.1% during the last week of May. New listings were down 29.1% for the week ending May 9 but recovered to being down just 22.9% by the week of May 30.

The rate of decline in newly listed properties has improved from a drop of 44.1% year-over-year in April to down 29.4% in May. Despite these positive trends, COVID-related challenges linger; homes were on the market 15 days longer than this time last year.

“May’s home price data demonstrate the underlying strength of the U.S. housing market despite the challenges brought by the COVID-19 pandemic,” said realtor.com Chief Economist Danielle Hale. “The fact that home prices are at all-time high shows that the momentum the market had prior to the pandemic has helped to keep buyer and seller expectations stable. Ongoing inventory shortages, that continue to worsen, also push home prices higher even while homes sell more slowly.”

Hale added:

“As a sense of normalcy returns, we expect to see a shortened, but strong summer home-selling season, as long as seller confidence continues to improve and more homes are listed for sale.”

Thirty-five of the nation’s top 50 metros reported an increase in the median annual list price, which is up from 30 metros in April.

Los Angeles-Long Beach-Anaheim (plus-14.9%); Pittsburgh (plus-14.0%); and Cincinnati, Ohio-Kentucky-Indiana (plus-12.1%) posted the highest year-over-year median list price growth in May. The biggest declines were seen in Detroit-Warren-Dearborn (-3.4%); San Antonio-New Braunfels, Texas (-3.2%); and Seattle-Tacoma-Bellevue (-3.1%).

Along with home prices, Freddie Mac reported the average rate for a 30-year fixed-rate mortgage rose slightly to 3.18% from the prior week’s 3.15%.

“While the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery,” said Sam Khater, Freddie Mac’s Chief Economist. “While homebuyer demand is up and has been broad-based across most geographies, supply has been slower to improve. In fact, the gap between supply and demand has widened even further than the large gap that existed prior to the pandemic.”

Source: MReport 6-4-2020 Author: Mike Albanese