Biden addresses housing in his State of the Union, calling for a $10K credit/rate buydown for middle class buyers and a $10K credit for middle class sellers who sell homes below the local median price point. Additionally, Biden announced a proposal to provide tax credits for builders to construct or preserve 1.2M affordable rental units and 400,000 starter homes to address chronic supply issues. Furthermore, Biden proposed $20B in competitive grant programs to help communities around the country to build housing. Any of these proposals need to pass through congress to see fruition but could certainly provide a boost to the housing market and relief on the supply side. A tax credit for first-time homebuyers was available in 2008 and 2009.
Mortgage Rates improved this week as the price of mortgaged backed securities improved to their best levels since mid-January. The next couple of weeks will be informative as to whether we have broken out of our negative pattern. Rates are up approximately 0.125% from this time last year
Jobs – The BLS Reported 275,000 job creations in February, stronger than the 200,000 anticipated. They did massively revise January’s reading, lowering the creations from 353,000 to 229,000. They also revised the December reading lower by 43,000 jobs. Average hourly earnings rose 0.1% and are up 4.3% year over year (a 0.1% decline from last month’s reading). Weekly earnings rose 0.4% last month and are up 3.7% year over year. The headline unemployment figure increased from 3.7 to 3.9%, the highest level since Jan 2022. The U-6, broader measure
Home Equity – Core Logic’s Q4 Equity Report showed that equity increased 8.6% year over year through appreciation and amortization. It might be a good opportunity to remove mortgage insurance if you purchased in the last few years. The total amount of homes with negative equity fell 1.1% from Q3 to Q4 and is down 15% year over year. There 1.2M homes or 2.1% of mortgages with negatives equities, which is approximately 1.2% of all properties.
The ISM Servicing Index for Feb fell 0.8 to 52.6%. Within the report, prices paid (an inflationary component) fell 5.4 points to 58.6. While still above 50 the decline points toward a reduction in inflation.
Home Values – CoreLogic reported that home prices fell 0.1% in January and increased 5.8% year over year – a gain of 0.3% from the previous report. Core Logic is projecting values to increase a modest 2.5% in 2024. Last year they forecasted 3% appreciation, and we ended up seeing 5.5%.
Fed – Fed Chair Jerome Powell spoke to the senate yesterday and the prepared remarks followed the same line he has been on. During the Q&A session he said they are ‘not far’ from gaining ‘confidence’ to start the easing cycle of rate cuts.
Mortgage Applications to purchase homes rose 11% last week and are down 8% year over year. Refinance applications increased 8% last week and are down 2% from this time last year. Refinances are making up approximately 30% of all transactions.