CoreLogic released its Q3 2022 Homeowner Equity Report This Week in Real Estate that shows homeowners with a mortgage realized year-over-year equity growth of 15.8% or $2.2 trillion gain since the third quarter of 2021. That is an average of $34,300 per borrower. Freddie Mac reports that mortgage rates have declined four consecutive weeks, dropping three-quarters of a point from their high, marking the largest decline since 2008. As a result, housing affordability has increased nearly 8% over the last four weeks. Below are a few newsworthy events from the first week of December that influence our business:
US Home Equity Gains Rose Annually in Q3 but Fell Sharply from Q2. The third quarter Homeowner Equity Report shows that U.S. homeowners with mortgages (which account for roughly 63% of all properties) saw equity increase by 15.8% year over year, representing a collective gain of $2.2 trillion, for an average of $34,300 per borrower, since the third quarter of 2021. “At 43.6%, the average U.S. loan-to-value (LTV) ratio is only slightly higher than in the past two quarters and still significantly lower than the 71.3% LTV seen moving into the Great Recession in the first quarter of 2010,” said Selma Hepp. “Therefore, today’s homeowners are in a much better position to weather the current housing slowdown and a potential recession than they were 12 years ago.”
A Holiday Gift to Home Buyers: Lower Mortgage Rates. The 30-year fixed-rate mortgage averaged 6.33% this week, according to Freddie Mac, dropping for the fourth consecutive week after hitting a high of 7.08%. Mortgage rates are falling due to increasing concerns about lackluster economic growth, says Freddie Mac Chief Economist Sam Khater. “Over the last four weeks, mortgage rates have declined three-quarters of a point – the largest decline since 2008,” he says. Housing affordability has increased about 8% over the last four weeks as mortgage rates move closer to 6%. “If inflation continues to slow down, mortgage rates may stabilize near 6% in 2023,” Nadia Evangelou, senior economist and director of forecasting at the National Association of REALTORS.
Homebuying Sentiment Stabilizes After Long, Slow Slide. Fannie Mae’s Home Purchase Sentiment Index (HPSI) showed some signs of life in November, posting its first increase in nine months. The index, which distills answers to six questions from the company’s monthly National Housing Survey (NHS) gained 0.6 points compared to its all-time low in October. “Both consumer homebuying and home-selling sentiment are significantly lower than they were last year, which, in our view, is unsurprising considering mortgage rates have more than doubled and home prices remain elevated,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. Following eight months of consecutive declines, the HPSI did tick up slightly in November but is essentially unchanged since hitting its all-time low last month.
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