45.8% Of Mortgaged Residential Properties In The U.S. Considered Equity-Rich

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During the 2024 REALTORS Legislative Meetings This Week in Real Estate, Chief Economist Lawrence Yun forecasted that average interest rates will settle at 6.5% by year-end. Additionally, existing-home sales in 2024 are expected to rise to 4.46 million, a 9% increase from 2023’s figure of 4.09 million. Furthermore, mortgage applications increased for the first time in three weeks, driven by the first weekly average rate decline in over a month, as per Freddie Mac and the Mortgage Bankers Association. According to ATTOM, in the first quarter of 2024, 45.8% of mortgaged residential properties in the U.S. were considered equity-rich, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market value, resulting in record amounts of equity. Below are a few newsworthy events from the first week of May that influence our business:  
AS HOME VALUES SOAR, AMERICANS ARE SITTING ON RECORD HIGH HOME EQUITY. According to a new report by data analytics firm Intercontinental Exchange (ICE), American homeowners with mortgages held nearly $17 trillion in home equity during the first quarter of 2024 – a new record high. What’s more, $11 trillion of that equity is tappable, meaning the homeowner can cash out a portion of their home’s value while maintaining a 20% equity stake in their homes. On average, these homeowners can tap into about $206,000 per mortgage. ICE estimates that about 48 million homeowners have some amount of tappable equity, which they can access through a home equity loan or a home equity line of credit (HELOC). Data from the National Association of Realtors shows that home prices increased in more than 90% of the country’s metro areas during the first three months of the year. According to Realtor.com, the median listing price moved up to $424,900 in March, up from $415,500 in February. (In March 2020, before the pandemic hit, the median listing price was $320,000.) Overall, home prices have doubled in many markets over the past decade, significantly increasing homeowner wealth. Read the full story here.
MORTGAGE APPLICATIONS TICK UP AS INTEREST RATES EASE. Mortgage demand ticked up last week as interest rates decreased following the news of a slowing job market. Applications increased by 2.6% on a seasonally adjusted basis during the week ending May 3, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. “Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. According to the MBA, the average 30-year conventional rate dropped to 7.18% as of May 3, down from 7.29% the prior week, while the average rate for Federal Housing Administration (FHA) loans fell 17 basis points to 6.92%, the first time in three weeks it has been below 7%. Purchase loan application volume ticked up by 2% from one week earlier. Meanwhile, refinance volume rose by 5% from the prior week. Read the full story here.
U.S. CONSUMER CONFIDENCE RETREATS IN APRIL. The Conference Board Consumer Confidence Index deteriorated for the third consecutive month in April. Despite these three months of weakness, the gauge continues to move sideways within a relatively narrow range that’s largely held steady for more than two years. “Despite April’s dip in the overall index, since mid-2022, optimism about the present situation continues to more than offset concerns about the future,” said Dana M. Peterson, Chief Economist at The Conference Board. Read the full story here.

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