FEATURED ARTICLE: GSE REFORM: HOUSING FINANCE SAVIOR OR LOOMING DISASTER?
HISTORICAL U.S. MEDIAN HOME PRICES
2010 peak. The catch, of course, is that broad national housing trends may not reflect local markets. Todd Teta, ATTOM Data Solution’s Chief Product Officer, explained that while foreclosure filings were widely down, there “was also some evi- dence of distress gradually return- ing to the housing market in 2018, with foreclosure starts increasing from the previous year in more than one-third of all state and local housing markets. “Some of that distress was driven by natural disasters, most nota- bly in Houston, where foreclosure starts increased 61 percent,” Teta continued. “But natural disasters do not explain the increase in markets such as Detroit, Minneap- olis-St. Paul, Milwaukee and Austin – all of which posted double-digit
percentage increases in foreclo- sure starts in 2018."
MEDIAN HOME PRICE
ANNUAL HOME PRICE APPRECIATION
Some of that distress was driven by natural disasters, most notably in Houston, where foreclosure starts increased 61 percent. But natural disasters do not explain the increase in markets such as Detroit, Minneapolis-St. Paul, Milwaukee and Austin – all of which posted double- digit percentage increases in foreclosure starts in 2018.”
12.5%
FULL FAITH & CREDIT Prior to the mortgage meltdown, Fannie Mae and Freddie Mac each had a $2.25 billion line of credit with the Treasury. Such lines of credit – tiny in the context of the $5 trillion in debt they owned or guar- anteed before the housing crisis – were seen as an unstated signal to the investment community that Fannie Mae and Freddie Mac were secure places where money could be safely stashed. In addition, with implied federal backing, Fannie Mae and Freddie Mac had lower borrowing costs, much to their advantage and the benefit of consumers. “We estimate that Freddie Mac
10%
8.4%
$300,000
6.6% 7.1%
6.7%
5.6%
5.5%
5%
$250,000
2.3%
0%
$200,000
-1.8%
-3.1%
-5%
$150,000
$248,000
-6.3%
$235,000
$225,000
$219,500
$218,000
$220,000
$206,000
$190,000
$190,319
$180,000
$163,000
-10%
$100,000
$160,000
$160,000
$150,000
-12.7%
TODD TETA
-14.4%
-15%
$50,000
-20%
$ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
DISTRESSED SALES DROP TO 11-YEAR LOW
TOTAL DISTRESSED SALES
DISTRESSED SALES SHARE OF TOTAL SALES
of inflation. ATTOM Data Solutions reported that median home prices for 2018 reached $248,000, up 5.5 percent from last year. The 2018 price increase represented the 7th consecutive annual home price appreciation. The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index reported a 5.2 per- cent annual gain in November 2018. As cash prices rise, borrowers who face financial difficulties are in- creasingly able to sell their homes, fully repay their loans, and avoid foreclosure. Rising prices make it possible for borrowers to avoid damning financial dings while inves- tors are fully repaid. (Alternatively, inflation erodes buying power and that’s an investor concern.) The protective benefits associat- ed with rising prices can be readily seen with foreclosure numbers.
1,400,000
45%
40%
38.7%
38.6%
1,200,000
36.9%
35%
32.8%
1,000,000
30%
29.3%
24.7%
800,000
25%
21.0%
17.8%
20%
600,000
15.5%
15%
14.0%
12.5%
400,000
12.4%
7.8%
10%
6.6%
200,000
5%
ATTOM Data Solutions reported that foreclosure filings for 2018 — default notices, scheduled
auctions and bank repossessions — were down 8 percent from 2017 and reduced 78 percent from the
- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
0%
8 think realty housing news report
april 2019 9
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