Pending Home Sales Post 5th Straight Loss

January marked the fifth straight
month that the National Association of Realtors® (NAR) has reported a decline
in its Pending Home Sales Index (PHSI). The index, based on newly signed
contracts for the purchase of existing homes, was down 2.8 percent from its
December level.

The index in January was at
122.8 compared to 125.5 in December and has lost 10 points since August. Still,
pending sales were up 13 percent compared to a year earlier. This January’s
PHSI was, in fact, the highest for any January on record.  

Analysts had expected the index to be
flat but individual estimates by those polled by Econoday all overshot the
actual results. They covered a range from a 1.5 percent downturn to 0.5 percent
growth. The consensus was for zero change.

“Pending home sales fell in January
because there are simply not enough homes to match the demand on the market,”
said Lawrence Yun, NAR’s chief economist. “That said, there has been an
increase in permits and requests to build new homes.” Yun said that increase in
single-family permits has been consistent for eight months and is a good sign
that the supply and demand imbalance in the residential real estate market
could be easing as soon as mid-2021.

“There will also be a natural
seasonal upswing in inventory in spring and summer
after few new listings
during the winter months,” he said. “These trends, along with an anticipated
ramp-up in home construction will provide for much-needed supply.”

Following a week where January’s
existing-home sales increased, Yun noted that pending contracts are a great
early indicator for upcoming closed sales but stressed that the timing of the
relationship between existing-home sales and pending home sales may not be in

“The two measurements aren’t always
perfectly correlated due to varying amounts of time required to close a
contract,” Yun said. “This is because a number of fallouts can occur due to a
variety of factors, including a buyer not obtaining mortgage financing, a
problem with a home inspection, or an appraisal issue.”

He noted that the economy is showing
promising signs of improvement, and many millions of Americans are now receiving
a COVID-19 vaccination. Still, he cautioned that the better economic outlook,
rising inflation prospects and higher budget deficits will soon drive increases
in interest rates. “I don’t foresee mortgage rates jumping to an alarming
level,” he said, “but we should prepare for a rise of at least a decimal point
or two.”

Homie’s Denver Housing Market Update January 2021

With the start of a new year, we can’t help but look forward to watching how the market changes throughout 2021. So how did the Denver market start out the new year? We’ve got your update!

Data from ReColorado from January 1, 2021 to January 31, 2021.

Monthly Sales

It’s common for the volume of sales to shrink during the month of January, and this year has been no different. With a 38% decrease from December, January monthly sales landed at 3,164. This is a 6% decrease from January of the previous year.

Graph of Monthly Sales

Data retrieved from ReColorado.

New Listings

New listings also experienced a year-over-year decrease, landing at 4,285. While this is a 12% decrease from the previous year, it’s a 29.6% increase from the previous month.

Graph of List Prices

Data retrieved from ReColorado.

Sale Price

In contrast to new listings and monthly sales, sale prices saw a significant year-over-year increase. The average sale price for a Denver home in January was $550,165, a 16% increase from this time last year.

Sales Price

Data retrieved from ReColorado.

Days on Market (DOM)

Even though there were fewer sales in January than there were last January, those sales are happening at much faster speeds. The average number of days spent on the market for a Denver area home in January was 26, which is a 19-day decrease from last January.

Graph of Days on Market

Data retrieved from ReColorado.

Turn to a Homie

Whether you’re ready to buy or sell, Homie has experienced, local real estate agents who are ready to find you what you’re looking for. These agents understand all the ins and outs of the Denver market, and they’ll lend you their expertise while you buy or sell your home. Click to start selling or buying and to get in touch with your dedicated agent.

Learn more about Colorado Real Estate

How to Buy a Home in Denver
How to Sell a Home in Colorado
5 Tips to Help You Afford Your First Home

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Miami-Dade Total Home Sales Continue Surging in January 2021

Miami-Dade County total home sales posted a double-digit increase for the fifth consecutive month in January 2021 as pent-up demand and record-low mortgage rates continue fueling transactions, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

Miami-Dade County total home sales jumped 19.1% year-over-year in January 2021, from 1,857 to 2,211. Miami single-family home sales rose 9.1% year-over-year, from 887 to 968. Miami existing condo transactions increased 28.1% year-over-year, from 970 to 1,243.

“Double-digit home sale increases for five consecutive months speaks to the resiliency of the Miami real estate market, the global pent-up demand for South Florida properties, record-low mortgage rates, purchases from home buyers in tax-burdened states, the importance of the home as a hub in our daily lives and increased interest from international buyers,” MIAMI Chairman of the Board Jennifer Wollmann said.

Miami real estate accounted for 12,918 total home sales in the five-month stretch from September 2020 to January 2021. That is a 18.4% increase in the number of total transactions compared to the five-month stretch from September 2019 to January 2020.

Lack of inventory in certain price points is impacting sales, particularly for single-family homes. Increased housing starts and more sellers listing properties in 2021 should help alleviate the lack of supply.

Miami Luxury Condo Sales Surge 130.6% in January 2021
Miami single-family luxury ($1-million-and-up) transactions jumped 114.1% year-over-year to 167 sales in January 2021. Miami existing condo luxury ($1-million-and-up) sales increased 130.6% year-over-year to 113 transactions.

Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.

Miami single-family homes priced between $400K to $600K surged 51.5% year-over-year to 294 transactions in January 2021. Miami existing condo sales priced between $400K to $600K increased 64.5% to 153 transactions.

Record-low interest rates; a robust S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.

110 Consecutive Months of Price Appreciation in Miami
Strong demand coupled with limited supply continue to drive price appreciation in Miami-Dade.

Miami-Dade County single-family home prices increased 25.2% year-over-year in January 2021, increasing from $375,000 to $469,500. Miami single-family home prices have risen for 110 consecutive months, a streak of more than 9 years. Existing condo prices increased 14.3% year-over-year, from $245,000 to $280,000. Condo prices have increased or stayed even in 112 of the last 116 months.

Miami, where the median price is still comparable to 2007 figures, remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 93 square meters of prime property, according to Knight Frank’s 2019 The Wealth Report. Monaco (16 square meters), Hong Kong (22), New York (31), Los Angeles (36) and others offer significantly less prime land for $1 million.

Single-Family Home and Condo Dollar Volume Increases
Single-family home dollar volume increased 86.4% year-over-year, from $471.7 million to $879.2 million. Condo dollar volume increased 69.4% year-over-year, from $393.9 million to $667.1 million.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.74% in January, up from 2.68% in December. The average commitment rate across all of 2020 was 3.11%.

Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.

A better condo approval process is expected to increase sales. The guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR have championed, are expected to generate increased homeownership opportunities.

Miami Distressed Sales Stay Low, Reflecting Healthy Market
Only 1.8% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 5.9% in January 2020. In 2009, distressed sales comprised 70% of Miami sales.

Total Miami distressed sales decreased 64.5%, from 110 to 39.

Short sales and REOs accounted for 0.7% and 1.1% year-over-year, respectively, of total Miami sales in January 2021. Short sale transactions decreased 37.5% year-over-year while REOs decreased 72.1%.

Nationally, distressed sales represented less than 1% of sales in January 2021, down from 2% in January 2020.

Miami Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.8% in January 2021, up 1.3% from 95.6% last year. The median percent of original list price received for existing condominiums was 94.3%, up 1% from 93.4% last year.

The median number of days between listing and contract dates for Miami single-family home sales was 28 days, a 44% decrease from 50 days last year. The median number of days between the listing date and closing date for condos was 63 days, down 23.2% from 82 days.

The median time to sale for single-family homes was 80 days, a 18.4% decrease from 98 days last year. The median number of days to sale for condos was 111 days, a 9.8% decrease from 123 days.

National and State Statistics
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6% from December to a seasonally-adjusted annual rate of 6.69 million in January. Sales in total climbed year-over-year, up 23.7% from a year ago (5.41 million in January 2020).

In January, closed sales of single-family homes statewide totaled 21,587, up 18% year-over-year, while existing condo-townhouse sales totaled 9,608, up 24.6% over January 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Nationally, the median existing-home price for all housing types in January was $303,900, up 14.1% from January 2020 ($266,300), as prices increased in every region. January’s national price jump marks 107 straight months of year-over-year gains.

The statewide median sales price for single-family existing homes was $305,000, up 15.1% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $230,000, up 15% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Miami’s Cash Buyers Top National Figure
Miami cash transactions comprised 33.1% of January 2021 total closed sales, compared to 33.8% last year. The national figure for cash buyers is 19%.

Miami’s high percentage of cash sales reflects South Florida’s ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.

Condominiums comprise a large portion of Miami’s cash purchases as 43% of condo closings were made in cash in January 2021 compared to 20.4% of single-family home sales.

Seller’s Market for Single-Family Homes, Buyer’s Market for Condos
Inventory of single-family homes decreased 45.8% in January 2021 from 6,277 active listings last year to 3,401 last month. Condominium inventory decreased 15.4% to 12,608 from 14,902 listings during the same period in 2020.

Inventory of active listings has decreased the last 17 months for single-family homes.

Months supply of inventory for single-family homes decreased 44.6% to 3.1 months, which indicates a seller’s market. Inventory for existing condominiums decreased 9.6% to 11.3 months, which indicates a buyer’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Months supply of inventory is down since July 2019 for single-family, reflecting strong demand.

Total active listings at the end of January 2021 decreased 24.4% year-over-year, from 21,179 to 16,009. Active listings remain about 60% below 2008 levels when sales bottomed.

New listings of Miami single-family homes decreased 13.7% to 1,541 from 1,785. New listings of condominiums increased 1.3%, from 2,468 to 2,500.

Nationally, total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December’s supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.

To access January 2021 Miami-Dade Statistical Reports, visit


U.S. Existing Home Sales Rise in January as Buyers ‘Snatch Up’ Any New Listings

The numbers: U.S. existing home sales inched up 0.6% to a seasonally-adjusted annual rate of 6.69 million, the National Association of Realtors said Friday. Compared with a year ago, home sales were up 23.7%.

Economists polled by The Wall Street Journal had forecast that existing home sales would fall to a median rate of 6.66 million.

What happened: The median existing-home price rose to $303,900 in January, up 14.1% from a year ago.

The inventory of homes for sale fell to a record low 1.04 million units by the end of January. That’s a 25.7% decline year-over-year. The market had a 1.9-month supply of homes for sales. A 6-month supply is considered a sign of a balanced market.

The South and the Midwest showed an increase in sales in January.

Big picture: Sales have been moving sideways since setting a cycle high in October. Economists think that low mortgage rates will continue to boost housing demand in coming months. Buyers are also looking for more room and more remote locations in the wake of the pandemic.

What the NAR said: “Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market. Sales easily could have been even 20% higher if there had been more inventory and more choices,” said said Lawrence Yun, NAR’s chief economist.

What economists are saying? “In general, record low mortgage rates and families fleeing more crowded living situations are fueling demand for single family homes in spite of ongoing turmoil in the labor market and higher home prices. Indeed, this is one sector which is coming out of the crisis stronger than it went into it,” said Josh Shapiro, chief U.S. economist at MFR Inc.

Market reaction: U.S. stocks opened higher Friday with the S&P 500 index up 12.48 points in mid-day trading after declining in the past three trading sessions.


When Should You Start Looking for a House?

The short answer: Immediately. That is, if you want to buy a home at some point in the next year, or any time thereafter.

We’ll get into the specifics in a moment, but there’s really no sense in waiting if you want to own a home or condo because it’s always going to be a lengthy process.

Sure, once you find “the one” it might only take a month, or even less, to close escrow, thanks to new technologies that are making the actual transactional piece faster.

But the transaction is just one slice of the pie, and usually the fastest part. Personally, whenever I’ve looked for real estate, it’s been a long, long search. We’re talking many months if not a year or longer.

Consider All Aspects of the Process

home buying timeline

  • Decide you want to buy a home (might be a long or short process)
  • Determine if you’re able to (seek out mortgage pre-approval)
  • Might need additional time to save for down payment and/or improve credit
  • Start looking at listings (set saved searches and alerts)
  • Find a real estate agent to work with (can be early on or late in the process)
  • Attend open houses, tour properties, and find one you like
  • Make an offer the seller accepts
  • Conduct inspections
  • Secure financing and close your loan

It’ll Probably Take You Over a Year to Find a Home

If we count the time from when you begin house hunting until your home purchase loan ultimately funds, there’s a decent chance 365 days will have elapsed.

I’m talking the day you first set your filters on Zillow/Redfin until the time the mortgage lender congratulates you on being a homeowner with an oversized key.

Does this mean each and every day is going to be consumed with home shopping? No, not at all. In fact, there might be days or weeks at a time during that span when nothing is brewing.

Your desired market could lie dormant if no new listings appear that fit within your specific parameters.

Of course, this is technically part of the process too. Waiting. And keeping an eye on things even when nothing is happening.

The good news is this will give you more time to prepare as a homeowner, especially if you’re going to be a first-time home buyer.

First Make Sure You Qualify for Home Loan Financing

  • The mortgage should come before the house
  • Not the other way around as some may lead you to believe
  • Know you can actually obtain financing and at what price point
  • Then start looking at suitable properties to ensure you don’t waste your time or anyone else’s

I’ve written an entire post about this, but I’ll reiterate here again. It’s probably not a good idea to start searching for a home until you know you qualify for a mortgage, assuming you’re not paying cash.

You wouldn’t shop for a new car if you didn’t have a steady job and money in the bank, so why shop for an even larger purchase without knowing where you stand?

Fortunately, it’s pretty easy to get a mortgage pre-approval, and even easier to get pre-qualified, though the latter isn’t worth a whole lot.

Either way, make sure you do one of the two to at least get a ballpark estimate of what you can afford. And to determine if there are any red flags that need to be addressed early on.

Credit is usually a biggie, and one that can take months to resolve if there are any glaring issues. Or if you simply need time to up your credit scores for more favorable mortgage rate pricing.

Anyway, once you know how much house you can afford, and that you’re more or less eligible for a home loan, you can begin your property search.

Set Up Your Property Searches and Get Email Updates

  • Only after you know you can obtain a home loan
  • Should you begin searching for properties in your price range
  • Companies like Zillow and Redfin are handy and offer nearly real-time updates
  • They allow you to set alerts and receive instant or daily emails when new properties hit the market

One of the best ways to search for a property these days is via Zillow or Redfin. Assuming they cover your particular metro, pretty much every house, condo, and townhome will be listed.

You’ll have a ton of key information at your fingertips, including listing price, days on market, number of bedrooms and bathrooms, square footage, sales history, recent comparable sales, and most importantly, pictures!

Most home sellers throw up 20-50 photos or more, so you can do most of your home shopping from the comfort of your own abode before even thinking about a tour.

The good thing about these sites is you can set up filters and saved searches, then elect to receive targeted emails daily or instantly.

So the minute something new pops up, you’ll receive an alert. Or you can wait and get all new listings for that day in one shot.

Assuming you followed step one and got pre-approved for a mortgage, while simultaneously getting all your ducks in a row otherwise, you’ll be ready to pounce at a moment’s notice.

And these days, with the real estate market so hot, you might not get a chance to hesitate (see my 2021 home buying tips for more on that).

However, for most folks, the search process will take over a year, so there’s not necessarily a big rush.

Tip: If it’s a pocket listing or for some reason not on the MLS, the property may not show up on these websites. But this is less likely and even then, it may not be what you’re looking for or readily available.

Select an Experienced Real Estate Agent

  • Most home buyers will use a real estate agent to get the job done despite there being other options
  • You can choose to work with one early on in the discovery process
  • Or do the pre-qualifying and home shopping on your own before selecting one
  • Then you can have them come in just for the negotiation and paperwork when you find a house you like

Another thing you’ll need to take care of along the way is choosing a real estate agent to work with, that is, if you don’t go it alone.

Most home buyers work with agents, so there’s a good chance you will too. Add this selection process onto your home search timeline.

It can happen while you’re looking at prospective homes, or once you’ve already found one. You might know an agent and just tell them to be ready for you once you find your ideal home.

Or you might want some more hand-holding and seek out an agent without delay, who hopefully will get you organized and prepped immediately to avoid any missteps.

I like the idea of doing some stuff on your own first without any input from interested parties so you can explore and figure things out without bias.

But everyone is different and may not have the time, patience, or ability to do so.

Anyway, an agent can send you updates when new listings hit the market as well and basically be a more hands-on guide if you want/need it.

They can take part immediately or enter the conversation at a later date. It’s really up to you on how they fit in.

Tip: You can fly solo and once you find a home you like, use the listing agent as your buying agent to perhaps give you a leg up on the competition. Just be sure they have your best interests in mind too.

There Are Plenty of Houses in the…

  • It’s easy to fall in love with a house at first sight
  • And experience major FOMO along the way
  • But you’ll probably see 10+ properties in person
  • Before finding the right one (so try to temper your emotions)

I think we all have a tendency to fall in love with the homes we see in person, especially as first-timers, but it’s important to physically visit multiple properties to gain perspective.

These days you can see 50+ photos of a property before committing to a tour. So if you’ve made it that far there’s a good chance you’re into it.

Sure, you can arrive at the property in question and be completely underwhelmed, but if do like what you see, it might be hard to walk away.

And even harder not to imagine yourself living there. And decorating it exactly how you wish.

The best line I can think of here is that there are plenty more fish in the sea. Don’t get caught up on that first property, or any property in particular.

Aside from potentially overpaying, often times, you’ll look back and be grateful that you didn’t buy that one house, or you’ll be glad you got outbid by another buyer, etc.

You might get lucky and find that right house in a week, but chances are you won’t. Or it might just feel like the right one until you dig deeper and see more of what’s out there.

Tip: Per the National Association of Realtors, buyers see an average of 10 homes before making an offer. So prepare yourself mentally.

Okay, So How Long Does It Take to Buy a House?

  • The average time it takes to find a house might be 4-6 months
  • But it depends when we actually start the clock
  • Many buyers dip their toes for a while before getting more serious
  • We also have to factor in the many steps including financial prep, selecting an agent, house hunting, and loan closing

While results will vary, maybe tremendously, most industry experts say it’ll take anywhere from four to six months to buy a house, if not longer.

Thing is, it depends when the clock starts ticking. Do we start counting when you first open the Redfin or Zillow app, or do we start counting once you’ve met with a real estate agent?

These days, prospective buyers do a lot on their own before making contact with anyone. Or making it known that they’re even in the market to buy.

They may go through their own little discovery period where they weigh the pros and cons of homeownership, potentially for months.

As noted, it’s advisable to get in touch with a bank, lender, or mortgage broker just to know you qualify for a mortgage. Technically, this could count as the start of the home buying process.

The real estate agent part can be put off until you get more serious about buying a home because of the technology available these days.

We no longer need to be driven around the neighborhood by a friendly real estate agent in their Mercedes-Benz.

So really, the agent can come in during the late stages and help you close the deal, maybe only working with you for a month or so with the offer, paperwork, inspections, and loan closing.

But chances are they’ll come in earlier and send you listings or be on the lookout for properties that might make sense.

Then we have to take into account the home loan process, which can take anywhere from 30-45 days or longer.

If we round that up to two months and add a couple months of looking, we’re already around four months.

But the odds of finding your dream home in two months might be quite low if you’re a picky buyer, which you should be in most cases.

In reality, you could be looking for six months before you find something you like, then once you submit an offer and get your mortgage, it’s seven or eight months.

Factor in the time you were thinking about buying a home for a few months before that, the general financial preparation (saving for a down payment, getting credit in order, etc.), and the pre-approval piece, and you’re at a year in many cases.

To summarize, it going to take a while, and that’s totally okay. It’s not a process that should be rushed.

In fact, the more time that goes by, the more knowledgeable you should become. And you can mentally prepare for homeownership at the same time. That’s a good thing.

Read more: When should I buy a house?


U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends

December 7, 2020 December 22, 2020 by Daryl Fairweather

Updated on December 22nd, 2020

Investors and first-time homebuyers will quickly buy up an impending wave of foreclosures from homeowners saddled with debt during the pandemic 

More than 3.3. million of U.S. homeowners will be on the hook for delinquent payments when mortgage forbearance ends. While some of those homeowners who are overleveraged or unaware of their options will contribute to a wave of foreclosures, most will be able to work with their lenders to either refinance their mortgage or sell to cash in on rising home values. American homeowners have gained $2 trillion dollars in home equity since the beginning of the pandemic alone, thanks to double-digit price growth driven by soaring homebuyer demand as the supply of homes for sale fell to historic lows. And an impending wave of foreclosed homes will only make a small dent in the inventory drought. First-time homebuyers and investors will likely quickly buy up any foreclosed homes, leaving the larger housing market unimpacted. While this is good news for the housing market and economy, it highlights a growing inequality between Americans who have suffered deeply during the pandemic recession and Americans who have been largely unaffected or have even become wealthier.

At the peak of the foreclosure crisis in 2010, the national average loan-to-value ratio was 94%,  meaning the average homeowner owed her lender nearly as much (94%) as the value of her home. As a result, many financially stressed homeowners couldn’t even afford to sell their home after paying agent fees of 6% and closing costs, so they often ended up in foreclosure. Currently the average loan-to-value ratio, among metros that report data, is 70%, meaning that the average homeowner has built 10% additional equity beyond an initial 20% down payment. 

Currently the metro with the highest loan-to-value ratio is Virginia Beach at 86.2%, but that is likely due to the high volume of low-downpayment mortgages for local veterans. But because military employment has been unaffected by the pandemic, just 0.3%  of homeowners say they are somewhat likely or very likely to be in foreclosure in the next two months, according to the Census Household Pulse Survey (see table below for data on each metro). The metro with the next highest loan-to-value is St. Louis at 78.1%, which is low enough that most homeowners could refinance their mortgage or sell to pay off delinquent mortgage payments. This explains why only 1.8% of St. Louis feel they are somewhat likely or very likely to face foreclosure, even as 9.2% of homeowners are not current on their mortgage payments. 

Las Vegas has the highest unemployment rate at 14.8%, but Las Vegas homeowners have plenty of equity with an average loan-to-value ratio of 67.9%. As a result, many Las Vegas homeowners are tapping their home equity and downsizing. New listings are up 6.9% from last year, but for every seller there are buyers moving in, which has kept the housing market strong — home sales are up 9.3% from last year. 

“I’ve worked with some people who are downsizing, finding something that fits their new budget,” said Redfin Las Vegas Agent Marco Di Pasqualucci. “Many have lost a job and aren’t sure if or when it’s going to come back. The common plan for these people is to take the equity out of their current home and rent something very affordable for a while. For some people, it’s a move for survival.”

Homeowners in forbearance have options to avoid foreclosure

Atlanta has the highest share of homeowners reporting they feel they are very or somewhat likely to face foreclosure in the next two months at 3.8%, and the fourth highest share of homeowners behind on mortgage payments at 13.5%.

“There was a misunderstanding in Atlanta for what the different options are for people in forbearance,” said Atlanta Redfin agent Ronisha Carson. “People didn’t know they could refinance, do a prorated monthly payment or tack it on to the end of their loan.” 

“In my experience selling foreclosed properties, some people don’t take advantage of forbearance because they aren’t educated on what it entails,” said Redfin agent Gina Sapnar. “There are people who are in forbearance who don’t understand how repayment works. For some people payments are tacked on to the end of the loan, but for others it may be a large payment due immediately at the end of forbearance as a lump sum, which could be very tough for people to repay. Some homeowners are underwater because they took on more debt than they could handle. I know of a restaurant owner who took equity out of his home to pay his workers during the pandemic. There are people suffering who have depleted their entire life savings, are drowning in debt and they aren’t paying their mortgages. But even those people have options. The lenders are really trying to work with occupants and educate them on how to avoid the scarlet letter of a foreclosure.”

Fannie Mae and Freddie Mac will allow borrowers in forbearance to defer repayment until the time the home is sold or refinanced. With record-low mortgage rates, homeowners behind on payments could theoretically refinance their mortgage debt into monthly payments lower than before the pandemic began. And if a borrower is in severe debt she may still be able to do a short sale or take advantage of cash-for-keys, where borrowers get a one-time payment to vacate their home.

Homebuyers and investors will snatch up foreclosed homes because of the shortage of homes for sale 

Even if there is a wave of foreclosures, those foreclosed properties will have little impact on the overall housing market because there is a shortage of homes for sale — the total number of homes for sale is at a record low.

“There are investors just waiting to buy distressed properties,” continued Sapnar. “I have one investor constantly reaching out, they are even looking for off-market homes because once a distressed home hits the market it gets multiple offers.”

And it’s not just investors who could benefit from a surge in foreclosures. Fannie Mae’s First Look program renovates distressed homes and offers them first to buyers who will occupy the home.

“The First Look program is great for first-time homebuyers who don’t want to compete with investors,” continued Sapnar.

Percent of Homeowners Deferring Mortgage Payments by Metro

Metro Average Loan to Value (LTV) Average Home Value Appreciation (Annualized) New Listings YoY Growth Median Sale Price YoY Growth Unemployment Rate Pct Homeowners Very or Somewhat Likely to Foreclose in the next two months Pct Homeowners with Household Income Loss Pct Homeowners Not Current on Mortgage Payments
Virginia Beach, VA 86.2% 17.3% 23.2% 12.8% 7.1% 0.3% 32.6% 6.4%
St. Louis, MO 78.1% 7.0% -28.9% 14.1% 5.5% 1.8% 36.2% 9.2%
Baltimore, MD 77.7% 18.8% 22.0% 14.3% 6.5% 0.6% 33.8% 10.5%
Pittsburgh, PA 76.8% 13.2% -0.8% 17.6% 7.8% 0.6% 41.3% 3.9%
Oklahoma City, OK 75.9% 9.7% 0.6% 18.1% 4.9% 1.3% 38.8% 7.5%
Columbus, OH 75.8% 10.2% 4.9% 16.3% 7.5% 1.5% 41.8% 8.1%
Cincinnati, OH 74.8% 10.4% 17.3% 19.2% 6.9% 1.5% 41.8% 8.1%
Washington, DC 74.8% 17.6% 35.7% 11.6% 6.7% 0.4% 33.1% 9.5%
Cleveland, OH 74.4% 11.7% 5.9% 12.7% 9.9% 1.5% 41.8% 8.1%
Minneapolis, MN 74.3% 12.5% 18.2% 12.5% 5.9% 0.4% 38.0% 6.6%
Denver, CO 73.6% 14.4% 19.7% 12.2% 6.5% 0.8% 41.6% 6.0%
Chicago, IL 73.1% 17.1% 14.4% 14.4% 10.5% 3.0% 40.6% 13.6%
Portland, OR 72.9% 11.9% 29.8% 10.6% 7.7% 0.7% 38.0% 4.2%
Nashville, TN 72.3% 12.2% -7.7% 12.0% 5.9% 1.3% 43.8% 12.5%
Warren, MI 72.2% 15.0% 0.6% 12.4% 9.8% 0.7% 47.0% 8.4%
Charlotte, NC 71.8% 13.3% -21.0% 14.2% 7.0% 0.8% 34.8% 8.7%
Sacramento, CA 71.8% 13.5% 32.8% 17.1% 8.9% 1.7% 45.9% 9.6%
Philadelphia, PA 71.3% 20.6% 14.4% 19.7% 7.9% 1.1% 46.4% 10.0%
Riverside, CA 71.3% 20.2% 10.7% 14.0% 10.4% 1.5% 50.0% 11.1%
San Diego, CA 71.3% 19.6% 15.5% 11.9% 9.0% 1.7% 45.9% 9.6%
Montgomery County, PA 70.9% 19.1% 22.2% 15.9% 7.9% 0.6% 41.3% 3.9%
Detroit, MI 70.5% 17.5% -5.4% 14.3% 9.8% 1.5% 52.1% 12.0%
Oakland, CA 70.1% 13.6% 41.4% 9.8% 8.6% 1.7% 45.9% 9.6%
Jacksonville, FL 69.6% 16.0% 0.9% 10.0% 5.1% 2.0% 46.1% 8.6%
Seattle, WA 69.6% 13.1% 37.8% 13.4% 7.4% 0.7% 39.9% 8.7%
Newark, NJ 69.2% 17.3% 25.6% 23.5% 9.5% 2.2% 45.0% 13.3%
Orlando, FL 68.1% 11.9% 0.5% 10.5% 9.8% 2.0% 46.1% 8.6%
Los Angeles, CA 68.0% 18.0% 25.1% 14.0% 13.6% 2.7% 49.2% 13.4%
Las Vegas, NV 67.9% 14.0% 6.9% 9.3% 14.8% 2.9% 51.0% 10.8%
Providence, RI 67.7% 18.7% 14.6% 15.5% 10.0% 2.5% 41.2% 14.8%
Atlanta, GA 67.3% 16.0% -1.2% 16.3% 6.7% 3.8% 37.5% 13.5%
Tampa, FL 66.5% 14.1% 6.6% 14.9% 6.1% 2.0% 46.1% 8.6%
New York, NY 66.2% 14.4% 40.6% 10.0% 9.5% 0.9% 45.9% 9.4%
Milwaukee, WI 65.8% 11.7% 13.6% 11.4% 6.0% 0.6% 34.1% 6.3%
Phoenix, AZ 64.3% 22.0% 10.8% 17.3% 6.3% 3.4% 40.2% 9.2%
San Jose, CA 64.2% 10.0% 48.6% 15.7% 7.1% 1.7% 45.9% 9.6%
Anaheim, CA 62.5% 17.6% 28.9% 12.0% 13.6% 1.7% 45.9% 9.6%
Fort Lauderdale, FL 61.1% 15.1% -2.5% 11.5% 10.1% 2.0% 46.1% 8.6%
Miami, FL 60.8% 13.5% -10.0% 12.9% 10.1% 2.3% 47.5% 15.4%
San Francisco, CA 56.6% 4.5% 40.5% 0.0% 8.6% 0.4% 40.3% 5.0%
West Palm Beach, FL 53.5% 14.1% -2.8% 19.3% 10.1% 2.0% 46.1% 8.6%
Boston, MA 52.6% 12.6% 17.2% 13.4% 9.2% 2.1% 42.5% 8.9%
Nassau County, NY 40.4% 16.3% 20.6% 15.2% 9.5% 0.6% 44.6% 7.9%
Austin, TX n/a n/a 12.6% 13.2% 6.4% 2.3% 40.6% 11.3%
Dallas, TX n/a n/a 0.4% 12.4% 7.5% 1.7% 44.7% 11.3%
Fort Worth, TX n/a n/a -4.5% 9.6% 7.5% 2.3% 40.6% 11.3%
Houston, TX n/a n/a 13.6% 10.9% 9.6% 1.3% 45.9% 8.8%
Indianapolis, IN n/a n/a 2.4% 15.8% 6.0% 2.9% 39.0% 10.9%
Kansas City, MO n/a n/a -37.4% 15.2% 4.9% 1.8% 36.2% 9.2%
San Antonio, TX n/a n/a -5.8% 11.6% 7.8% 2.3% 40.6% 11.3%

Sources: “Share Homeowners with Deferred Mortgage Payments” and “Share Homeowners with Household Income Loss” is from the 10/12/2020 Census Household Pulse survey on homeowners with a mortgage, “Unemployment Rate” is from the September  BLS report, “Average Loan to Value” is from 2020 county records, “Average Home Value Appreciation (Annualized)” is calculated from the Redfin estimate and public records of sales in 2020, “Home Price Volatility (Annual)” is from FHFA HPI through Q2 of 2020 and is the standard deviation of annual appreciation, “New Listings YoY Growth” and “Median Sale Price YoY Growth” is from MLS and county records as of October 2020.


Home Buyers Have It Tough as Nation Faces Unprecedented Housing Shortage>

It’s no news to house hunters that the pickings are slim in today’s real estate market. While that has been true for several years, the pandemic has made the situation worse as virus-wary home sellers have pulled their properties off the market, resulting in sky-high prices and out-of-control bidding wars for the remaining stock.

Overall housing inventory plummeted 43% in January compared with the same month last year, according to a recent® report. New listings were down 23% year over year.

Median home prices soared 15.4% annually, to $346,000 in January, as a result of the shortage. That means buyers should gear up for battle—it’s going to be a very competitive spring home-buying season.

“It’s tough for buyers, particularly first-time buyers dealing with limited options and fast-rising prices,” says® Chief Economist Danielle Hale. “We’re looking at an all-time low number of homes for sale and record numbers of buyers trying to get into the market.”

There were 443,000 fewer homes up for grabs this year than last year, before COVID-19 hit the nation. And while builders have ramped up their pace of putting up new homes, that doesn’t seem to have made much of a dent yet. The hope is that once more people get vaccinated against the coronavirus, sellers will feel more comfortable listing their homes.

The threat of catching the virus from a potential buyer walking through and having to move in a pandemic has led many sellers to hold off.

Home prices rose the most in the Northeast, by 16.8%, followed by the West, at 12.3%, the Midwest, at 10.4%, and the South, at 8%.

In the nation’s 50 largest metropolitan areas, prices shot up the most in Austin, TX, by 30.2%. It was followed by Rochester, NY, by 25.9%, and Los Angeles, by 22.4%, in January.

“We’ve seen a lot of companies announce relocations to Austin,” says Hale. “It’s also benefiting from additional flexibility and remote work. It has a unique culture and this really vibrant tech scene making it an attractive place to live, and it’s got a really strong local economy.”

The only places to see big surges of inventory were in the two priciest metropolitan areas in the nation: Silicon Valley’s San Jose, CA, and San Francisco. The San Francisco Bay Area markets saw 24.8% and 14.4% annual increases in the number of homes for sale in January, respectively. That’s likely because many white-collar workers who can now telecommute from anywhere with a good internet connection have sought out cheaper parts of the country.

“Homes still sell very quickly, and it still is a very desirable market,” says Hale. “It’s an expensive area, and people have the flexibility to work remotely now and may be choosing to move away.”


Refi Demand Staying Strong Despite Rising Rates

The current Mortgage Monitor from
Black Knight looks at the recent small increases in mortgage rates and their
potential impact on home sales. The company says that Treasury yields have been
rising with the 10-year up nearly 0.25 percent just since the January 5 Georgia
senatorial runoff. While the spread between it and the 30-year mortgage rates
absorbed part of the increase
, mortgages did subsequently rise by about 1/8th
of a point. The January spike wasn’t an isolated event, the 10-year yield had
eased up 40 basis points over the last five months of 2020. “Should yields rise
further in coming months, they may begin to impact 30-year rates more directly,
although the Fed’s bond buying efforts are expected to insulate the mortgage
market to some degree,” the report says.

The 1/8th point growth of the
30-year rate doesn’t appear to have discouraged lending. Black Knight says rate
lock activity remains strong with those tied to refinancing rising 10 percent
during the first 15 days of January and are up 90 percent from the same period
in 2020. This would make the January activity one of the strongest periods
since the refinance boom kicked off early last year. Purchase rates locks also
remain strong with double digit gains year-over-year.

Rising rates and recent refinancing
activity has caused some moderation of refinancing incentive. The number of
homeowners able to qualify for and benefit from refinancing (saving at least 75
basis points on a new loan) declined to 16.7 million on January 14 from 18.7
million at the start of the year. Even so, the refinancing pool is still down
only 14 percent from its record high point in mid-December.
The average
refinancing candidate could still save $303 a month; an aggregate of $5.2
billion per month if everyone took advantage of the opportunity.

The supply of available homes for sale
continues to shrink. The number of listings is down 450,000 units or 40 percent
compared to last year. Black Knight says that even without considering the
slight downward trend in new listings in recent years, it appears that more
than 750,000 homeowners chose to forego listing their homes for sale (-16
percent) due to the pandemic. Most (470,000 missing listings) came in the
second quarter of 2020. By December new listings had caught up with those a
year earlier but even if listing volumes are normalizing, it will leave a significant
deficit unless buyer demand also moderates.

The low interest rates and even lower
supply of homes is continuing to put upward pressure on home prices. Black Knight
puts the annual rate of increase in December at an astonishing 15.7 percent,
caping a three-month run of growth exceeding 15 percent (October, 15.8 percent
and November, 16.2 percent.) The only other month that this has occurred was in
August 2005 with a 15.9 percent gain.

Black Knight updates the status of COVID-19
related forbearance plans each week, but the current Monitor takes a comprehensive
look at those plans, delinquencies, and foreclosures at the end of 2020.

The national delinquency rate fell 3.09
percent in December to 6.08 percent and serious delinquencies fell to 3.43 million
from 3.56 percent the previous month. The company says that nearly 40 percent
of the spike in delinquencies early in the pandemic has been reversed, however,
serious delinquencies (90 days or more) associated with the pandemic are down
only 11 percent. The number of loans rolling from current to 30 days past due
returned to pre-pandemic levels in July and continue to remain lower on an
annual basis. That, however, is not true of later stage delinquencies. The
number of loans transitioning from 30 to 60 days past due was up 34 percent
year-over-year in the 4th quarter and 60-to-90-day transitions are
more than double those in 2019. Ninety-day defaults rose by more than 250
percent to 2.6 million, the third largest default total on the record and the
largest since 2009.
With foreclosures down 67 percent from 2019 because of moratoriums,
the number of seriously delinquent borrowers increased by 400 percent to 2.15
million compared to December 2019.  

With the current steady but small improvement
in overall delinquencies, the national rate could remain elevated for another
17 months and it would take nearly five more years
for serious delinquencies to return to pre-pandemic levels. By the end of
March, there could be nearly 1.5-1.6 million excess seriously delinquent
mortgages in the market.

And March is important because, without
further government action, almost a quarter of all homeowners in forbearance
will hit their 12th month and final plan expiration. At that point,
Black Knight says, we could likely see an inflection point, with post
forbearance waterfalls helping to get borrowers back on track with a
combination of deferrals, repayment plans, and loan modifications.

Black Knight Data & Analytics
President Ben Graboske says, “When nearly a quarter of all forbearance plans
come to an end on March 31, at the current rate of improvement there would
still be approximately 1.5 million more such serious delinquencies than before
the pandemic. With that rate of improvement slowing in recent weeks, current
trends suggest more than 2.5 million homeowners would still in forbearance at
that point. While early in the pandemic roughly half of homeowners in
forbearance continued to make their monthly mortgage payments, that number has
steadily declined. Today, it’s about 12 percent, which suggests the people who
are taking the full forbearance period afforded to them
may well be
experiencing prolonged financial distress and face extended challenges as they
return to making payments.

“For the roughly 6.7 million
Americans who have been in COVID-19 related mortgage forbearance at some point
since the onset of the pandemic, the programs have represented an essential
lifeline,” said Graboske. “The vast majority of plans have a 12-month cap on
payment forbearance, though. And the various moratoriums which have kept foreclosure
actions at bay over the past 10 months may be lulling us into a false sense of
security about the scope of the post-forbearance problem we will need to
confront come the end of March. Last year saw the largest number of homeowners
– nearly 3.6 million – become 90 or more days past due since 2009, and as of
the end of December, 2.1 million remained so.

the past 30 days removals from plans have slowed to about one in four of removals
and extensions, well below the 40 percent average for the life of the program. Looking at example scenarios of active forbearance volumes
based on the best, worst and average improvement of the recovery period (June
2020 – January 2021), the rate of improvement to date, could mean there would 2.5
million to 2.8 million active forbearance plans remaining at the end of March.
That works out to more than 600K seriously delinquent mortgages that will move
into post-forbearance loss modification waterfalls as they work to get back to
current on their mortgages. Another 300K+ borrowers will reach the end of their
terms at the end of April. Of course, performance could be outside either the
high or low end of these estimates, but the trend has been toward the “high”

Of the 6.7 million homeowners who
were in forbearance plans at some point over the last 10 months, 1.8 million
were past due on their mortgages before the program started, the remainder were
current. There have been significant differences in the performance of the two
groups. Sixty-five percent of the 4.9 million who were current at the beginning
have left their plans and 59 percent are either performing or have paid their
mortgages in full. Only 2 percent are currently past due and in loss
mitigation. Of the pre-pandemic delinquent borrowers, only 45 percent have left
; 26 percent are reperforming and 6 percent have paid off their loans. Six
percent have left forbearance, remain delinquent, and at risk of foreclosure
when moratoriums expire.

The chart below shows that status of
all forbearances as of January 19, 2020.


Pending Home Sales Fall on the Month, but the Midwest Is Hit the Hardest

The numbers: The index of pending home sales dropped 0.3% in December, marking the fourth consecutive month of declines, the National Association of Realtors said Friday. The index measures real-estate transactions in which a contract is signed, but the sale had not yet closed.

Compared to 2019, pending sales were still up 21%, a sign of how strong the market is right now despite the recent weakness.

What happened: Pending sales didn’t fall across all regions, as was the case in November.

In fact, the Midwest was the only region to experience a decline, with a 3.6% drop. Pending sales were flat in the West and rose by 3.1% in the Northeast and 0.1% in the South.

The big picture: In the months to come, the story will be whether the number of listings of homes for sale will grow to meet demand.

“Pending home-sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” said Lawrence Yun, the National Association of Realtors’ chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”

It’s not clear precisely what has held sellers back from putting their homes on the market. But the problem could be a self-perpetuating one: Some buyers might be seeing the dearth of homes for sale and be reluctant to list their own for fear of not finding somewhere to move to.

What they’re saying: “Demand for existing homes remains strong but supply is likely restraining sales figures,” said Ruben Gonzalez, chief economist at Keller Williams. “We expect to see continued price acceleration in the near term as a result of record-low inventory levels that have persisted for several months now.”

Market reaction: The Dow Jones Industrial Average and S&P 500 both fell in Friday morning trades.