Foreclosure Activity, Affordability, Confidence, and Delinquency

Ariel view of suburban neighborhood

From home inventory, performance, prices, foreclosures, household confidence, and the COVID-19 pandemic, the following is a quick housing market roundup of news and trends from this past week to help your credit union navigate the market going forward.

CA Foreclosure Activity Begins Small Uptrend
Although the California and Nevada housing markets don’t exhibit the highest monthly growth rates in foreclosure filings as of Oct. 31 (default notices, scheduled auctions or bank repossessions), the Los Angeles region ranks No. 3 in “foreclosure starts” (196 filed) in the nation when it comes to metropolitan areas with at least 1 million residents, according to ATTOM Data Solutions. The others are New York, Chicago, Miami, and Houston.

Also, lenders foreclosed on 194 properties in California (REO/repossessions) — which helped rank the state No. 3 on the top REO list nationwide with Alabama, Florida, Texas, and Pennsylvania.

Across the country, 2,577 U.S. properties were foreclosed. However, put into context, overall foreclosure actions (default notices, scheduled auctions or bank repossessions) are still below last year’s levels by about 80 percent.

The real estate firm said it is no surprise that nearly all metro areas where foreclosure activity increased on a month-over-month basis are also places where unemployment rates are higher than the national average, and in many cases where there have been COVID-19 infection hotspots. Click here for more information and trends. 

CA Affordability Driven by Lack of Homes for Sale
Higher home prices across California are being driven by dearth of inventory that is depressing housing affordability, according to an analysis of the third quarter 2020 by the California Association of Realtors.

The report found that 28 percent of the state’s households could afford to purchase the $693,680 median-priced home, down from 33 percent in second-quarter 2020 and down from 31 percent a year ago. A minimum annual income of $127,200 was needed to make monthly payments of $3,180, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.15 percent interest rate.

Additionally, 42 percent of the state’s homebuyers were able to purchase the $512,000 median-priced condo or townhome. An annual income of $94,000 was required to make a monthly payment of $2,350.

Juxtaposed to California, more than half of the United States’ households (55 percent) could afford to purchase a $313,500 median-priced home, which required a minimum annual income of $57,600 to make monthly payments of $1,440.

For more information and data on various metropolitan regions across California with regard to housing affordability, inventory, and home prices, click here. In addition, you can click here for CAR's third-quarter 2020 Housing Affordability Report presentation slides.

U.S. Housing Confidence Inches Up, but Tempered
Across the United States, consumer housing confidence is inching upward — but it’s being tempered by households’ concerns over income and employment going forward.

Three of six components in Fannie Mae’s monthly Home Purchase Sentiment Index increased month over month, with consumers reporting a more optimistic view of both homebuying and home-selling conditions, in addition to expecting mortgage rate declines.

However, consumers also reported greater pessimism regarding their personal finances and employment outlook. The continuing evolution of the COVID-19 pandemic and the 2020 election outcomes may have longer lasting and unexpected impacts on consumer sentiment, as the nation saw following the 2016 elections. Both factors will shape the housing market in the coming months.

To view the entire survey and responses regarding whether consumers feel it’s a “good or bad time to buy,” “good or bad time to sell,” home price expectations, job concerns, household income, and mortgage rate expectations, click here.

Report: ‘Needlessly Delinquent’ Mortgage Borrowers
A recent Urban Institute report says a broader outreach strategy could help 400,000 “needlessly delinquent” mortgage borrowers across the nation.

Not all eligible borrowers have taken advantage of forbearance under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the report states. These 400,000 borrower households have become delinquent since the COVID-19 pandemic began.

Borrowers may not know they are eligible for forbearance, or they do know but incorrectly fear having to make “double payments” when the forbearance period ends. “To provide information and support to these borrowers, it is important to understand who they are,” the report states.

For more information, click here.

Pin It