Collingwood covers interest rates, millennials and housing bubbles during industry webinar

Posted on August 16, 2018 in Uncategorized | Add Your Voice

Collingwood covers interest rates, millennials and housing bubbles during industry webinar

‘”How do you handle a housing bubble,” asked a webinar hosted last week by National Mortgage News and CoreLogic. Featured speakers, including Tim Rood, chairman of The Collingwood Group, a Situs company, weighed in on the issue, projecting relative growth and sound fundamentals in the housing market for the next three to four years, at which point there may be a normalization of supply and demand.

Rood discussed one of the latest hot topics in mortgage lending – rising interest rates. In response to concern that higher interest rates could dampen housing demand, Rood said, “Interest rates have gone up, but on a relative basis are very low. Bottom line, rising rates are not going to derail the housing market.” Rood also discussed interest rates in the context of the overall economy, suggesting that if gross domestic product (GDP) growth continues, “we are going to see a trend towards higher rates as inflation follows growth.”

Shortly after the potential housing bubble horizon, The Collingwood Group projects a dramatic expansion of household creation. Over the next five to eight years, millennials are projected to create roughly 25 million new households. Rood said that as these new borrowers enter the housing market, there will likely be a re-emergence of products aimed at expanding affordability, such as non-amortizing and 40-year loans.

To listen to a recording of the webinar, click here.

Rumors of the death of the housing market may be exaggerated

Rumors of the death of the housing market are exaggerated, economists said. The chief executive of Redfin sounded alarmed, speaking of a “significant slowdown,” as the real-estate website issued a profit warning.

“There have been a lot of stories that housing is done. These stories are a little premature,” said Richard Moody, chief economist at Regions Financial Corp.

Moody said analysts seemed to be conflating woes in the existing-home market that have been caused by lean inventories. So far in 2018, single-family construction is running 7% faster than last year’s pace, he noted. Permits are 5.7% higher.

Read more: MarketWatch

More million-dollar cities on the horizon

Real estate website Zillow is predicting that within a year it will add 23 new metros, mostly in California, to its “$1 Million City List.” That means two dozen cities with a median home value of $1 million or more will be added to the 197 that already exist.

Zillow reported that U.S. home values are expected to rise 6.6 percent over the next year, leading to home-value appreciation in the double digits in some areas, like California. The San Francisco metro alone could gain seven $1 million cities by next June. The metro already has 46 $1 million cities, which is more than any other metro area in the country.

The Los Angeles metro is expected to gain five new $1 million cities in the next year, while Seattle and San Jose will each add two, Zillow reported. Across the country, the New York metro is expected to gain three new million-dollar cities, while Boston should join the list.

“The number of million-dollar cities has doubled over the past five years. These markets tend to be affluent and exclusive suburbs with very strict building restrictions in communities adjacent to finance and tech hubs,” said Aaron Terrazas, Zillow senior economist.

Read more: DS News

Here’s why America’s houses are getting older

A few more gray hairs, a creaky back … do you ever catch yourself feeling, well, old? It’s not just you: America’s housing stock is also aging.

The median age of owner-occupied homes as of the most recent Census survey, in 2016, is 37 years old. That’s up sharply from 31 in 2005, according to an analysis from the National Association of Home Builders (NAHB).

The home builder industry group is interested in the issue because it’s the lack of construction of new homes over the decade since the bubble burst that’s accelerating the overall aging of the housing market.

The NAHB’s analysis also shows that, for all the bellyaching about the lack of starter homes being built now, newer homes are more likely to be owned by younger Americans. A full 50% of homes built in 2010 or later are owned by those under 44, while 56% of the oldest homes, those built in 1969 or earlier, are owned by people 55 and up.

Read more: MarketWatch

Homebuilder sentiment falls to the lowest point in almost a year as affordability becomes a bigger worry

U.S. homebuilders are slowly losing confidence in their business.

A monthly index of builder sentiment fell one point to 67 in August, the lowest level since September 2017. Sentiment was unchanged from one year ago, according to the National Association of Home Builders.

Anything above 50 is considered positive sentiment, and the index hit a recent high of 74 last December. Yet there are signs of growing concern among builders.

“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” said NAHB Chairman Randy Noel, a homebuilder from LaPlace, LA. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”

Read more: CNBC

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