ICYMI: Housing Market News for the Week of October 23, 2020

Mortgage News for the Week of October 23, 2020

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Redfin CEO Expects ‘Absolutely Insane’ Demand in Housing Market to Last into 2021

The CEO of real estate brokerage Redfin told CNBC on Thursday he anticipates the coronavirus pandemic-driven boom in the housing market will persist into next year.

Existing home sales increased 9.4% in September, surpassing expectations, and the median purchase price rose nearly 15% year over year, according to data released earlier Thursday by the National Association of Realtors.

“There’s no way it can last forever. This level of demand is absolutely insane. I would expect it to last into 2021, at least,” Glenn Kelman of Redfin said on “Power Lunch.” “There are so many people now who have decided they’re not going to be able to buy a home by year-end, who expect to do so going into 2021, especially as their kids shift school districts. I do think we’re going to see this for some time.” Read more from CNBC.

MBA Economists Forecast Record Purchase Volume Next Year

Purchase mortgage originations are expected to hit a new record high of $1.54 trillion next year. That forecast, which would be an increase of 8.5 percent over the projected total in 2020, was made at the Mortgage Bankers Association's (MBA's) virtual 2020 Annual Convention and Expo by Mike Fratantoni, Chief Economist and Senior Vice President for Research and Industry Technology; Joel Kan, Associate Vice President of Economic and Industry Forecasting; and Marina Walsh, CMB, Vice President of Industry Analysis.

While purchase mortgages will gain ground, the three say that, after a nearly 80 percent jump in refinance activity this year, those originations are predicted to slow next year, decreasing by 46.3 percent to $946 billion. Read more from Mortgage News Daily.

Fall Home Sales Surge Ahead of Normal Patterns

Home sales and home prices are increasing by double digits, with homes flying off the market in record time. Existing-home sales increased for the fourth consecutive month in September, up nearly 21% compared to a year ago, the National Association of REALTORS® reported on Thursday. All major regions of the U.S. saw month-over-month and annual gains in September. The Northeast experienced the largest increase in home sales.

“Home sales traditionally taper off toward the end of the year, but in September they surged beyond what we normally see during this season,” says Lawrence Yun, NAR’s chief economist. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.” Read more from NAR's Realtor Magazine.

September Single-Family Housing Starts Reached Highest Level Since 2007

Single-family housing starts soared in September, a new report from the U.S. Census Bureau shows, despite an overall rate that was dragged down by a decline in multifamily starts.

Privately owned housing starts in September rose to an annual rate of 1.415 million, 1.9% above the revised August estimate of 1.388 million and 11.1% above the September 2019 rate of 1.274 million, the Bureau said. Single-family housing starts in September were at an annual rate of 1.108 million, which is 8.5% above the revised August figure of 1.021 million, and a level not seen since 2007, Doug Duncan, chief economist at Fannie Mae, said. Read more from Housing Wire.

Homeowner Profits Soared in Q3

The contribution made to household wealth by homeownership is underlined in ATTOM Data Solutions' third-quarter U.S. Home Sales Report. The company said that a typical homeowner who sold a home during the quarter had a gain of $85,000. This was $10,000 more than that realized by sellers in the previous quarter and up from $66,000 in the third quarter of 2019.

This typical home-sale profit represented a 38.6 percent return on investment (ROI) compared to the original purchase price. The typical ROI in the previous quarter was 37.5 percent and it was 33.7 percent a year ago. Read more from Mortgage News Daily.

Housing Boom: Sales of Million-Dollar Homes Double

The pandemic is driving a major boom in the housing market that's breaking all kinds of records and exposing a very uneven economic recovery between the haves and the have-nots. The most dramatic increases are happening at the top end of the market — sales of homes costing $1 million and up have more than doubled since last year.

Millions of people are working from home while juggling their kids' remote schooling. And many who can afford to are buying bigger houses. Read more from NPR.

What Hurts a Home Appraisal? And Seven Things You Can Do to Fix Them

The current housing market has many people considering buying or selling a home right now. Maybe you’ve checked to see how much you can afford, and you believe now might be a good time to list your house and upsize to a new one. Or maybe like so many others, your home is already under contract, and it’s time for an appraisal. Whichever the case, being aware of what hurts a home appraisal and how to increase the value of your home is always a great idea.

There are many things you can do to ensure your home is worth top dollar. When you’re deciding which improvements to implement, remember some improvements are more costly than others, and all should be weighed against the amount of value you’ll receive in return. Read more from Redfin.

Mortgage Market Update

Mortgage Rates Remain Very Low

Mortgage rates remain very low, providing homeowners who have not already taken advantage of this environment ample opportunity to do so. Mortgage rates today are on average more than a full percentage point lower than rates over the last five years. This means that most low- and moderate-income borrowers who purchased during the last few years stand to benefit by exploring refinancing to lower their monthly payment.

We hope you enjoyed this week's Market News. For more information about how PMA can help you, please contact us.

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Information and analysis is obtained through third parties and is deemed accurate but not guaranteed. Philadelphia Mortgage Advisors is a licensed mortgage lender by the PA Dept. of Banking and Securities, NJ Dept. of Banking & Insurance, the state of DE, the Florida Office of Financial Regulation, MD Mortgage Lender #23004 and VA State Corporation Commission #MC - 6797. NMLS #128570.