By Mike Bodeen · 24 April 2023
With two exceptions, our local market is in “full-on recovery mode – a Seller’s market. In data we’ve obtained from the Cromford Report, virtually every residential sales category comparing to last month has been in favor of Sellers.
For example: Compared to March 22, 2023, we see:
Available home supply is significantly lower
Residential listings under contract are higher
Sales are up sharply, but still low by normal standards
Dollar volume is up
Days on market are coming down
Average and median pricing is up
listing success rate is up
homes are closing at a higher percentage of their final list price
the CMI (Cromford Market Index) is up
The two seller market exceptions are Sales per year (down 3%) and Monthly appreciation per SqFt. Last month our monthly market appreciation was off 4.6%. This month it’s off 5.5%. Both of these exceptions will be changing, but they, per Cromford, take longer to adjust.
You’ll note that we’re comparing current numbers to last month, not last year, which if we were, we would be looking much better for buyers.
Unfortunately for our buyers, the market is not going to be kind to them. Time is no longer their ally.
Bad Mortgage Loan Policy Emerges
As our Snapshot readers are well aware, we seldom, if ever, venture into the divisive world of politics – for obvious reasons. It’s a lose-lose! On the other hand, governmental issues/policies come up, related to real estate, that are just flat wrong, and this new rule about to go into effect, is one of those.
Excerpt From Wall Street Journal editorial (4.23.2023), entitled, “Upside Down Mortgage Policy.”
Income redistribution is an abiding value of the Biden Administration, and now it wants to spread that to mortgage lending. A new rule will raise mortgage fees for borrowers with good credit to subsidize higher-risk borrowers.
Under the rule, which goes into effect May 1, home buyers with a good credit score over 680 will pay about $40 more each month on a $400,000 loan, and upward depending on the size of the loan. Those who make down payments of 20% on their homes will pay the highest fees. Those payments will then be used to subsidize higher-risk borrowers through lower fees.
This is the socialization of risk, and it flies against every rational economic model, while encouraging housing market dysfunction and putting taxpayers at risk for higher default rates. The 20% down payment is a financial discipline that encourages buyers to seek homes they can afford, and it gives buyers skin in the borrowing game. No one wants to default on a mortgage when they could lose tens or hundreds of thousands of dollars in equity they’ve built up in their homes…
The link below finishes the story, though you may have to read it as a “guest.” If not, google this title and many very recent articles will emerge – all declaring the same thing.
https://www.wsj.com/articles/upside-down-mortgage-policy-212fd736
Market data referenced in this article comes from The Cromford Report.