The housing market is facing a three-pronged challenge as mortgage demand slows, affordability declines, and rising home prices outpace wage growth. First, mortgage lenders have reported a significant decline in refinancing applications in recent weeks. Refinancing applications had been an important source of lending activity and mortgage originations, as refinancing borrowers demand shorter terms on their home loans and generate more total mortgage volume than purchases.
Second, recent data from the National Association of Realtors confirms that affordability shrank this fall. Increases in home prices that outpaced wage growth have caused the affordability metric to decline for two consecutive months. This trend may continue in 2020 due to low inventory of houses and tight labor markets, resulting in a competitive bidding process where buyers could struggle to purchase homes.
Third, there is a total inventory shortage as more new homes are not being built. The number of new homes on the market is at a level not seen in decades, resulting in limited options for buyers in many areas. This is a contributing factor to the fast-rising home prices that are not being offset by increased wages. As a result, many potential buyers are being excluded from the real estate market and are unable to purchase the homes they need.
Finally, secondary effects of the housing market challenge can already be seen. Rent prices have increased as vacancies decline and housing authorities struggle to meet the demand for affordable housing. This is forcing struggling families to enter the rental market where they are forced to pay higher prices than they could have been able to afford if they were in the home buying market instead. To alleviate some of the pressure of the current housing market, policy makers will need to focus on measures that can increase supply and make affordability accessible.
You can read this full article at: https://www.housingwire.com/articles/the-housing-market-faces-a-three-pronged-challenge/(subscription required)
Note Servicing Center provides professional, fully compliant loan servicing for private mortgage investors so they can avoid the aggravation of servicing their own loans and just relax and get paid. Contact us today for more information.
Share This Story, Choose Your Platform!
Related Posts
Disclaimer
The information provided in this article is for general educational and informational purposes only and does not constitute legal, financial, investment, tax, or professional advice. Note Servicing Center, Inc. is a licensed loan servicer and does not provide legal counsel, investment recommendations, or financial planning services. Reading this content does not create an attorney-client, fiduciary, or advisory relationship of any kind.
Nothing in this article constitutes an offer to sell, a solicitation of an offer to buy, or a recommendation regarding any security, promissory note, mortgage note, fractional interest, or other investment product. Any references to notes, yields, returns, or investment structures are illustrative and educational only. Past performance is not indicative of future results, and all investments involve risk, including the potential loss of principal.
Note investing, real estate transactions, and lending activities are subject to federal, state, and local laws that vary by jurisdiction and change over time. Before making any decision based on the information in this article, you should consult with a qualified attorney, licensed financial advisor, certified public accountant, or other appropriate professional who can evaluate your specific circumstances.
While we make reasonable efforts to ensure the accuracy of the information presented, Note Servicing Center, Inc. makes no warranties or representations regarding the completeness, accuracy, or current applicability of any content. We disclaim all liability for actions taken or not taken in reliance on this article.