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Elsy Camacho
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Date Archives: July 2020

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July
28

Two Reasons We Won't See a Rush of Foreclosures This Fall

Two Reasons We Won't See a Rush of Foreclosures This Fall | MyKCM

The health crisis we face as a country has led businesses all over the nation to reduce or discontinue their services altogether. This pause in the economy has greatly impacted the workforce and as a result, many people have been laid off or furloughed. Naturally, that would lead many to believe we might see a rush of foreclosures like we saw in 2008. The market today, however, is very different from 2008.

The concern of more foreclosures based on those that are out of work is one that we need to understand fully. There are two reasons we won't see a rush of foreclosures this fall: forbearance extension options and strong homeowner equity.

1. Forbearance Extension

Forbearance, according to the Consumer Financial Protection Bureau (CFPB), is "when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage." This is an option for those who need immediate relief. In today's economy, the CFPB has given homeowners a way to extend their forbearance, which will greatly assist those families who need it at this critical time.

Under the CARES Act, the CFPB notes:

 "If you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 days)." 

2. Strong Homeowner Equity

Equity is also working in favor of today's homeowners. This savings is another reason why we won't see substantial foreclosures in the near future. Today's homeowners who are in forbearance actually have more equity in their homes than what the market experienced in 2008.

The Mortgage Monitor report from Black Knight indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes (See graph below):Two Reasons We Won't See a Rush of Foreclosures This Fall | MyKCMBlack Knight notes:

"The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses."

Bottom Line

Many think we may see a rush of foreclosures this fall, but the facts just don't add up in this case. Today's real estate market is very different from 2008 when we saw many homeowners walk away when they owed more than their homes were worth. This time, equity is stronger and plans are in place to help those affected weather the storm.

July
25

Texas Unemployment Fell to 8.6% - Faster Improvement than USA

Texas' June unemployment rate fell to 8.6% — a drop from the 13% May jobless rate, according to a Friday morning U.S. Bureau of Labor Statistics report.  While it's an improvement from April's record-high 13.5% unemployment rate, June's figure shows the devastating financial toll on Texans as the coronavirus pandemic upends the economy. Before the pandemic began, the unemployment rate in February was 3.5%. Almost 3 million Texans have filed for unemployment benefits since mid-March.

The DFW area has lost 227,000 jobs due to the pandemic, but as bad as that sounds it is so much better than the rest of the nation.  And, in addition, the DFW area gained 9,000 financial jobs in May – the only notable green shoots among the 12 largest metros in the nation.  Finance and insurance are economic strengths for Dallas-Fort Worth, and they're helping the local labor market hold up much better than most metros during the pandemic.

  • Dallas Morning News, Jul 7, 2020
July
24

House Hunters Have Slim Pickings Thanks to Pandemic

Homebuyers hoping to take advantage of record low mortgage rates are facing a big problem:  There aren't enough houses on the market.   In North Texas, the supply of homes offered for sale is the smallest since January 2018.  "Unless a buyer is looking for a luxury home, there are fewer to choose from," Jim Gaines, chief economist for the Real Estate Center at Texas A&M University, said in a new report, noting the state's supply of active listings plummeted to its lowest level in three and a half years.   Only 17,222 single family homes were up for grabs in the more than two dozen counties included in the North Texas survey.  With the pandemic, fewer home sellers are putting their properties on the market – especially in the low and moderate price ranges.   "This disparity exemplifies the shortage of affordable housing during a time when the rocky economic atmosphere may make lower-priced homes look for financially feasible to the potential homebuyer," said Gaines.

  • Dallas Morning News, July 15, 2020
July
23

DFW new, existing home sales rebound, but new home prices fall for fourth straight month

Sales of new and existing homes rose sharply in June across Dallas-Fort Worth.

New and existing home sales in North Texas rebounded in June, although prices of new homes fell.

In DFW, existing home sales in June rocketed 38.3 percent over May, according to the latest RE/MAX National Housing Report.

The report surveys 53 metro markets throughout the U.S. and also found that Dallas-Fort Worth year-over-year home sales rose 9.3 percent, the third-highest gain in the nation.

Total new home sales in Dallas-Fort Worth bounced back in June as well, reflecting a market turnaround, according to a report from HomesUSA.com.

Homebuilders also reported a jump in local pending sales and fewer days on market for new homes sold in June.

Dallas-Fort Worth's total new home sales in June were 1,453 vs. 1,412 in May, for a gain of about 3 percent. Pending sales in DFW in June were 1,737 versus 1,653 in May, a gain of 5 percent. Days on market in DFW ticked down to 97.21 days in June vs. 97.61 days in May.

"Dallas-Fort Worth new home sales noticeably accelerated in June and home demand is growing as buyers continue to push local pending sales higher," said Ben Caballero, owner of HomesUSA.com. "The good news for buyers is that the average new homes price in Dallas-Fort Worth improved a bit in June for the fourth month in a row."

DFW posted an average new home price of $370,483 in June versus $371,025 in May and $372,898 in April.

Turning back to the RE/MAX report, existing home prices in DFW are up 3.5 percent over last year.

Housing inventory in DFW is down 37.2 percent compared to last year.

Mark Wolfe, broker and owner of RE/MAX DFW Associates, said sales in the Dallas and Fort Worth exurbs primarily north of the major cities are "exploding" and contributing to the overall uptick in sales.

Some markets nationwide are reporting that the combination of the pandemic, economic uncertainty and social unrest is causing more families to relocate further away from the city.

"Although Dallas is not really experiencing that much social unrest, we are seeing families that wish to move further out for safety, with many fearing that this pandemic will be with us for a long time," Wolfe said.

Nationwide, June home sales posted a near-record 37 percent gain over the pandemic-impacted May, according to the RE/MAX report.

Nationwide home sales returned to near seasonal levels – just 6.9 percent lower than last June, which was the third-highest sales month of 2019. All 53 metro markets in the report posted gains over May and a third of them topped last June.

The June results were far different than those of May and April, which both reflected widespread job losses and stay-at-home mandates in many states.

  • Dallas Business Journal, July 21, 2020
July
2

A Historic Rebound for the Housing Market

A Historic Rebound for the Housing Market | MyKCM

Pending Home Sales increased by 44.3% in May, registering the highest month-over-month gain in the index since the National Association of Realtors (NAR) started tracking this metric in January 2001. So, what exactly are pending home sales, and why is this rebound so important?

According to NAR, the Pending Home Sales Index (PHS) is:

"A leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two."

In real estate, pending home sales is a key indicator in determining the strength of the housing market. As mentioned before, it measures how many existing homes went into contract in a specific month. When a buyer goes through the steps to purchase a home, the final one is the closing. On average, that happens about two months after the contract is signed, depending on how fast or slow the process takes in each state.

Why is this rebound important?

With the COVID-19 pandemic and a shutdown of the economy, we saw a steep two-month decline in the number of houses that went into contract. In May, however, that number increased dramatically (See graph below):

A Historic Rebound for the Housing Market | MyKCM

This jump means buyers are back in the market and purchasing homes right now. Lawrence Yun, Chief Economist at NAR mentioned:

"This has been a spectacular recovery for contract signings and goes to show the resiliency of American consumers and their evergreen desire for homeownership…This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery."

But in order to continue with this trend, we need more houses for sale on the market. Yun continues to say:

"More listings are continuously appearing as the economy reopens, helping with inventory choices…Still, more home construction is needed to counter the persistent underproduction of homes over the past decade."

As we move through the year, we'll see an increase in the number of houses being built. This will help combat a small portion of the inventory deficit. The lack of overall inventory, however, is still a challenge, and it is creating an opportunity for homeowners who are ready to sell. As the graph below shows, during the last 12 months, the supply of homes for sale has been decreasing year-over-year and is not keeping up with the demand from homebuyers.

A Historic Rebound for the Housing Market | MyKCM

Bottom Line

If you decided not to sell this spring due to the health crisis, maybe it's time to jump back into the market while buyers are actively looking for homes. Connect with a RE/MAX DFW Associates agent today to determine your best move forward.

- Keeping Current Matters - June 2020

July
2

What Are Experts Saying About the Rest of 2020?

What Are Experts Saying About the Rest of 2020? | MyKCM

One of the biggest questions on everyone's minds these days is: What's going to happen to the housing market in the second half of the year? Based on recent data on the economy, unemployment, real estate, and more, many economists are revising their forecasts for the remainder of 2020 – and the outlook is extremely encouraging. Here's a look at what some experts have to say about key areas that will power the industry and the economy forward this year.

Mortgage Purchase Originations: Joel Kan, Associate Vice President of Economic and Industry ForecastingMortgage Bankers Association

"The recovery in housing is happening faster than expected. We anticipated a drop off in Q3. But, we don't think that's the case anymore. We revised our Q3 numbers higher. Before, we predicted a 2 percent decline in purchase originations in 2020, now we think there will be 2 percent growth this year."

Home Sales: Lawrence Yun, Chief Economist, National Association of Realtors

"Sales completed in May reflect contract signings in March and April – during the strictest times of the pandemic lock down and hence the cyclical low point…Home sales will surely rise in the upcoming months with the economy reopening, and could even surpass one-year-ago figures in the second half of the year."

Inventory: George Ratiu, Senior Economist, realtor.com

"We can project that the next few months will see a slow-yet-steady improvement in new inventory…we projected a stepped improvement for the May through August months, followed by a return to historical trend for the September through December time frame."

Mortgage Rates: Freddie Mac

"Going forward, we forecast the 30-year fixed-rate mortgage to remain low, falling to a yearly average of 3.4% in 2020 and 3.2% in 2021."

New Construction: Doug Duncan, Chief Economist, Fannie Mae

"The weaker-than-expected single-family starts number may be a matter of timing, as single-family permits jumped by a stronger 11.9 percent. In addition, the number of authorized single-family units not yet started rose 5.4 percent to the second-highest level since 2008. This suggests that a significant acceleration in new construction will likely occur."

Bottom Line

The experts are optimistic about the second half of the year. If you paused your 2020 real estate plans this spring, connect with a RE/MAX DFW Associates agent today to determine how you can re-engage in the process.

 

-Keeping Current Matters - July 2020

July
1

Pending Home Sales: May Posts Record Monthly Gain After Consecutive Declines

Pending home sales reached a 44.3 percent monthly increase in May—a new record, according to the National Association of REALTORS® (NAR).

After two previous months of declines, pending home sales are showing a market rebound, with every major region recording a month-over-month increase. According to NAR, the Pending Home Sales Index (PHSI) increased to 99.6 in May—the highest MoM growth since NAR began the series in January 2001. Since the same time last year, pending home sales have fallen 5.1 percent.  NAR expects existing home sales to reach 4.93 million units in 2020, with new home sales potentially hitting 690,000. In addition, in 2021, NAR expects sales to rise to 5.35 million units for existing homes and 800,000 for new homes.

 

"This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership," said Lawrence Yun, NAR's chief economist. "This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery."

"More listings are continuously appearing as the economy reopens, helping with inventory choices," Yun said. "Still, more home construction is needed to counter the persistent underproduction of homes over the past decade. The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10 percent—even after missing the spring buying season due to the pandemic lockdown."

"All figures light up in 2021 with positive GDP, employment, housing starts and home sales," Yun added.

"New home sales took a similar upward turn last week, but today's pending data is a more important indicator of market activity since it covers existing homes, which made up roughly 80 to 90 percent of sales in recent years. This move confirms that May closings could represent a low-point for home sales, with June and July numbers looking much better," Danielle Hale, chief economist at realtor.com®, said in a statement.

  • RISMEDIA, June 29, 2020
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