MORTGAGE DEMAND DOWN. The demand for mortgages slipped 0.6 percent during the week of 12 October, the fourth week in a row that fewer applications were filed, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index.
Applications to purchase a new home were off 2 percent; applications to refinance rose 0.2 percent, which is 74 percent higher than a year previous.
Applications to refinance claimed 66.1 percent of the entire mortgage market for the week, up 0.5 percent year on year.
“Despite the uptick in rates, refinance activity held steady, with FHA refinance applications posting a 17.6% increase, helping to offset declines in the other loan types,” said Joel Kan, MBA’s associate VP of Economic and Industry Forecasting.
Purchase demand is down nearly 7 percent compared with four weeks ago.
The volume of applications remains 26 percent higher than a year ago, although the volume of applications to purchase is 2 less percent less than four weeks ago.
The decline may be attributable to the record-low availability of houses, especially for inexpensive homes, and those that come on the market are snapped up, sometimes within hours.
Low interest rates, which also set records recently, make it easier for a wider range of buyers to qualify for loans.
The average 30-year, fixed-rate contract fetched 3.02 percent interest last week, compared with 3.0 percent the previous week; average points rose from 0.32 to 0.36 for loans with a 20-percent down payment.
The interest rate was a full point higher a year ago.
TREND FORECAST: To again artificially boost the sagging economy, as the “Greatest Depression” worsens, we forecast the Fed lower rates into negative territory next year. In turn, as interest rates fall, so, too, will the dollar, thus pushing up precious metal and Bitcoin prices as investors seek safe-haven assets.
HOMES SALES JUMP. SO DO PRICES. Sales of existing homes rose 9.4 percent in September, year on year. The gain was more than analysts had expected and translates to an annualized jump of 20.9 percent.
Sales in the Northeast rose 16.2 percent, 7.1 percent in the Midwest, 8.5 percent in the South, and 9.6 percent in the West.
Higher sales drove down the inventory of houses available to buy to 1.47 million at the end of September, a 19.2-percent drop from a year earlier. The number represents a 2.7-month supply, according to the National Association of Realtors, the tightest supply since the association began tracking the number in 1982.
The median home price in September was $311,800, 14.8 percent more than a year previous and an all-time high when adjusted for inflation.
The median price was highest in the West at $470,800, up 17.1 percent from September 2019. The cheapest homes were in the Midwest, where the median price of $243,100 was 14.8 percent higher than a year earlier.
Inexpensive homes are the scarcest and are the focus of rising prices, the association noted. More expensive homes are more abundant, which skews the median sale price higher.
“Americans are splurging on spending for housing,” said Lawrence Yun, the realtor association’s chief economist. “Home prices are simply rising too fast.”
The market is also boosted by mortgage rates that fell to record lows in September.
Sales of newly-built homes soared 43 percent in September, year on year.
TREND FORECAST: With downward pressure on interest rates, for the near future, residential real estate prices in select areas will continue to rise. However, when equity markets crash, the residential housing market will decline.
NEW YORK CITY APARTMENT SLUMP. The median rent for a NYC apartment has fallen below 2019’s prices in Manhattan, Brooklyn, and Queens, the first time a decade that rents in all three boroughs have declined year on year, according to real estate firm StreetEasy.
The asking rent in Manhattan has fallen below $3,000 a month for the first time since 2011, the company said.
The number of apartments listed for rent in the city during the third quarter increased to 72,267, a gain of 69.8 percent over the second quarter and 30,000 more than the same time last year, StreetEasy noted.
Landlords also are cutting rents an average of 9.1 percent in Manhattan, more than double the typical discounts offered last year.
“Landlords across the city, but particularly in Manhattan, have to be willing to face some really hard hits if they want to fill their units,” said StreetEasy economist Nancy Wu in announcing the figures. They are being forced to cut the location premium out of their asking price in order to compete with larger and more affordable apartments in the outer boroughs.
TREND FORECAST: We had forecast the NYC apartment slump in the Trends Journal when the COVID War was launched in March.
As winter sets in, the apartment slump will deepen in New York, Chicago, Boston, San Francisco, and other densely populated, over-built cities where large demographics are leaving to escape high prices, rising crime, and the coronavirus.
BROOKLYN HOUSING MARKET REVIVES. Home sales in the New York City borough of Brooklyn are on the rise as urbanites flee Manhattan for cheaper, more spacious digs across the East River.
After falling 42 percent early in the shutdown, the number of new-home contract signings in Brooklyn has exceeded year-earlier figures in July, August, and September, according to real estate firm Douglas Elliman.
Contract signings in September were up 21 percent year on year, the firm noted, and homes listed for sale in the borough were 11 percent higher than a year previous.
Sales surged 157 percent in the third quarter compared to the second as the shutdown eased and people were able to visit listed houses and flats.
Brooklyn homes are selling at or near their asking prices, while Manhattan’s are consistently selling at discounts, according to Urban Digs Analytics.
The median third-quarter Brooklyn sale price was $689,000, a 3-percent bump from the same period in 2019.
“The attractions to Brooklyn are more space” and “outdoor space is much more available… in a price range that’s really attractive,” Noemi Bitterman with Compass Realty told the Wall Street Journal.
TREND FORECAST: As prices drop in select areas, sales will only moderately rise. With unemployment remaining high and the “Greatest Depression” worsening, there will far greater supply than demand of apartments in big cities.
