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Tag: Black Knight Inc

  • Home prices may be on the verge of cooling off

    Home prices may be on the verge of cooling off

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    After rising steadily since January, home prices may now be turning lower again.

    The latest read on home prices shows they hit another all-time high in July, rising 2.3% from the same month last year, according to Black Knight. That’s a bigger annual gain than the roughly 1% recorded in June, and August’s annual comparison will likely be even larger because prices began falling hard last August.

    But prices weakened month to month, according to Black Knight. While still gaining, which they usually do at this time of year, the gains fell below their 25-year average. This after significantly outdoing their historical averages from February through June. It’s a signal that a slowdown in prices may be underway again.

    “In addition to monthly gains slowing below long-term averages, Black Knight rate lock and sales transaction data also points to lower average purchase prices and seasonally adjusted price per square foot among recent sales,” said Andy Walden, vice president of enterprise research at Black Knight. “All of these factors combined underscore the need to focus on seasonally adjusted month-over-month movements rather than simply relying on the traditional annual home price growth rate.”

    Behind the cooling off: mortgage rates. They rose sharply last summer and fall, causing prices to drop. They then came down for much of the winter and a bit of the spring, causing home prices to turn higher again. Now rates are back over 7% again, hitting 20-year-plus highs in August.

    Add to that, new listings rose from July to August, atypical for that period of the year. Some sellers may be trying to cash in on these historically high prices. Active inventory, however, is about 48% below the levels seen from 2017 to 2019.

    “While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high mortgage rates putting a damper on demand,” said Danielle Hale, chief economist for Realtor.com.

    A drop in prices would come as some relief to buyers, but unlikely enough.

    The jump in home prices since the start of the Covid pandemic, combined with much higher mortgage rates has crushed affordability.

    It now takes roughly 38% of the median household income to make the monthly payment on the median-priced home purchase, according to Black Knight. That makes homeownership the least affordable it’s been since 1984.

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  • Here’s how much cash you may have in your home, thanks to new record high prices

    Here’s how much cash you may have in your home, thanks to new record high prices

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    Home prices are on a tear again across much of the nation after falling for much of last year. That means giving back to homeowners the equity they lost.

    Home prices in June hit record highs in 60% of U.S. markets, according to a new report from Black Knight, set to be released Monday. Its national home price index hit a new high in June, up 0.8% from June of last year — a stronger annual growth rate than May.

    Nearly every major market saw gains month to month, with the overall index gaining 0.67% from May to June.

    Home prices are rising again, because there is far too little supply to meet the current demand. Higher mortgage rates have been a huge deterrent for current homeowners to list their homes for sale because they don’t want to trade up to these higher rates on another purchase.

    That home price growth has made homeowners wealthier again. Home equity levels are now back to within 3% of last year’s peaks.

    Total equity hit over $16 trillion with tappable equity, which is the amount most lenders will allow you to take out while still leaving 20% equity in the home, rising to $10.5 trillion, just 4% off its 2022 peak. Per homeowner, that is roughly $200,000 in cash sitting in the house, ready for the taking.

    As a result, negative equity, or so-called underwater borrowers, are nearly nonexistent in today’s market. Just 344,000 homeowners currently owe more on their homes than the properties are worth.

    While that number is a 70% jump from this time last year, according to Andy Walden, Black Knight’s vice president of enterprise research strategy, “everything is relative.”

    “There are less than half as many underwater homeowners than there were in 2019 before the onset of the pandemic, with only 3.9% having less than 10% equity, down from 6.6% in 2019,” Walden said.

    Of course, all of this virtually destroys home affordability for today’s potential buyers: Affordability stands at a 37-year low.

    As a comparison, current homeowners, most of whom carry mortgages with rates between 3% and 4%, need just 21% of the median household income to make the average monthly mortgage payment — principal and interest. Prospective homebuyers today are looking at paying more than 36% of their income on that payment thanks to higher home prices and higher rates.

    The average rate on the popular 30-year fixed mortgage hit 7.2% on Thursday, according to Mortgage News Daily. Just two years ago it was around 3%.

    “The small relative share of income needed for existing homeowners to meet their mortgage obligations, along with the strong credit quality of today’s mortgage holders and an acute focus on loss mitigation by the industry at large, are all contributing to today’s 16-year low in seriously delinquent mortgages,” Walden said.

    Correction: Just 344,000 homeowners currently owe more on their homes than the properties are worth. An earlier version misstated the number.

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