Homeownership Fueling ‘Tremendous’ Wealth Gains – Industry Outlook

By March 14, 2022Industry Outlook

Homeownership Fueling ‘Tremendous’ Wealth Gains According to a recent report released by the National Association of REALTORS®, home prices have accelerated at a record pace over the last decade, resulting in tremendous wealth from long-term homeownership.

A homeowner who purchased a typical single-family existing home 10 years ago at a median sales price of $162,600 realized an increase in housing wealth of $229,400. Of that wealth gain, 86% can be attributed to price appreciation.

“Owning a home continues to be a proven method for building long-term wealth,” says Lawrence Yun, NAR’s chief economist. “Home values generally grow over time, so homeowners begin the wealth-building process as soon as they make a down payment and move to pay down their mortgage.”

Source: “Housing Wealth Gains for the Rising Middle-Class Markets,” National Association of REALTORS® (March 9, 2022)

Mortgage Delinquencies Drop to Record Low Based on CoreLogic’s data dating back to 1999, the percentage of homes with mortgages that have past due payments or are currently in foreclosure has dropped to the lowest levels on record in more than two decades.

The nation’s overall delinquency dropped to 3.4% at the end of 2021. The majority of states posting a year-over-year decrease in delinquencies, according to CoreLogic’s newly released Loan Performance Insights report.

Declining unemployment rates and higher home prices are also contributing to more homeowners staying afloat.

Source: “U.S. Mortgage Delinquency Rate at a Record Low in December,” CoreLogic (March 8, 2022) and “Mortgage Delinquencies Drop to Survey-Record Low,” National Mortgage News (March 8, 2022)

Millennials Fear More Debt Based on a recent Rocket Mortgage survey, debt is a significant concern for millennials, and their worries may be so great that they are reluctant to buy a home.

Millennials reported wanting to save more money for a down payment and being concerned by the excessive costs of housing. They would much rather delay purchasing a home if it meant having to take out a loan, the Rocket Mortgage survey found.

The generation is entering the housing market at a time of soaring home prices, low housing inventories, high inflation, and heavy competition for what homes are available.

Their debt aversion may stem from having heavier student loan debt than previous generations. They may feel like they already have enough debt and are scared to take on more.

Source: “Almost Half of Millennials Are So Scared of Debt They’re Putting Off Buying a House,” Fortune (March 4, 2022)

 

 

Jumbo Loans Reach 16-Year High – According to a new report from CoreLogic, a real estate data firm, a greater number of Americans are purchasing more expensive homes to take advantage of mortgage rates that are still historically low. When rates are cheaper, buyers have extra buying power.

In 2021, mortgage rates on jumbo loans reached an all-time low. As a result, lenders reported the highest dollar volume in jumbo originations since 2005. The number of jumbo loans more than doubled in 2021 compared to the prior year.

Jumbo loan originations are predicted to fall this year, however, as mortgage rates are expected to rise and home prices are forecast to moderate.

Source: “2021: A Banner Year for Jumbo Loan Securitization,” CoreLogic (March 4, 2022)

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