HOUSINGNEWS REPORT
RECESSION FEARS RISING: HOW HOUSING WILL HOLD UP
“Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year.”
DAREN BLOMQUIST SVP, ATTOM DATA SOLUTIONS
delinquent, either more than 90 days delinquent or in the foreclosure process were originated before 2008.” Today the impact of legacy loans is declining with every sale and refinance. “Localized foreclosure flare-ups in the first half of 2018 can no longer be blamed on legacy distress left over from the last housing bubble given that nearly half of all active foreclosures are now tied to loans originated in 2009 or later and given that the average time to foreclose plummeted in the first two quarters of the year,” said Blomquist with ATTOM Data Solutions. “Instead these local foreclosure increases are typically the result of more recent distress triggers in those markets.” Inventory & New Construction The real brake on lower prices is simply that demand is outstripping supply by a wide margin. This is true not just in hot metro areas but also in smaller communities. As one example, according to Zillow, July home values
in Pensacola’s 32503 ZIP code were up 18.1 percent year-over-year.
prices are still rising at double the pace of income growth.”
The country has a significant inventory shortage, a lack of homes for sale. This shortage is a bulwark against lower prices. In many markets it’s not enough to be financially qualified, you also need to be swift and pre-approved; otherwise you’ll miss prime buying opportunities. The home building industry would surely like to sell more units but there’s no possibility of a meaningful expansion that will offset the inventory shortage. As of June we produced an additional 50,000 single-family houses when compared with a year earlier, not nearly enough to meet demand in a nation with more than 325 million people. “Unfortunately,” said Freddie Mac Chief Economist Sam Khater in July, “don’t expect much relief from the tight inventory conditions plaguing many markets. As seen again last month, new home construction is not picking up to meet demand, and as a result, home
Going forward, the construction industry faces several major hurdles which limit growth: First, there is a substantial price premium for new homes which detracts from their marketability. According to ATTOM, the median new home sales price reached $312,000 in the second quarter versus $254,900 for existing homes, a huge differential. Second, lumber costs are soaring as a result of our trade war with Canada, adding about $9,000 to the cost of a new home, according to the National Association of Homebuilders (NAHB). Third, labor shortages make major growth impossible. The NAHB estimated in May that 243,000 construction jobs were unfilled. A big part of the construction industry’s labor problems reflect the immigration debate.
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AUG 2018 | ATTOM DATA SOLUTIONS
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