Volume 165 | December 15, 2023

Guardian Asset Management

Weekly Newsletter

Guardian endeavors to provide you with the latest in housing, industry and market news from Washington D.C. and around the country. It is our goal as your industry partner to be informative, relative and topical.

Fed Reserve rate decision - mortgage industry reacts

It’s been a while since there’s been much to cheer about in the mortgage industry. Yet the decision by the Federal Reserve to leave rates at their current level of 5.25% to 5.5% sent waves of optimism across the landscape.

While the Fed doesn’t set mortgage rates directly, its decisions play a key role on their movement. The Fed’s hands-off stance at its latest meeting on Wednesday comes after 11 rate hikes from early 2022 to mid-2023 as it seeks to bring inflation down to 2%.

Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, said the development bodes well for the mortgage industry and housing market in general.

Ill Prepared and Living in a Flood Zone

In a new Perspectives Blog post by Fannie Mae authors Saif Amin, Fannie Mae’s Senior Director of Climate Impact Strategy, and Li-Ning Huang, Principal of Market Research, climate change presents both immediate and long-term challenges to everyone involved in Real Estate, including renters. 

As the frequency and intensity of weather-related events increases, Fannie Mae is working to advance equitable and sustainable access to homeownership and quality, affordable rental housing, and working to further their knowledge on climate change response and the affect it has on the homeowners and renters they serve. 

What 2024 Holds for the Housing Market

The National Association of Realtors (NAR) has released their fifth annual year-end research report entitled Real Estate Forecast Summit: The Year Ahead, containing a number of predictions on the upcoming year based on available data, buyer/seller sentiments, and commentary from Lawrence Yun, the NAR’s Chief Economist. 

First and foremost, the NAR is predicting that existing-home sales will rise 13.5% next year from the 4.1 million sales in 2023 (estimated) and increase to 4.71 million in 2024. 

The NAR also names Austin, Texas as the “market to watch” for the year and further predicts that median home prices will increase a slight 0.9% year-over-year. 

"Metro markets in southern states will likely outperform others due to faster job increases, while markets in the Midwest will experience gains from being in the most affordable region,” said NAR’s Chief Economist Lawrence Yun.  

Falling Mortgage Rates Breathe New Life Into Housing Market as listings, Pending Sales and Price Growth Hit Highest Level in Roughly a Year

New listings and pending home sales both climbed to the highest level in roughly a year in November as buyers and sellers got tired of waiting on the sidelines and mortgage rates ticked down. Home prices also jumped, posting the biggest year-over-year increase since late 2022.

New listings rose 1.3% month over month to the highest level since October 2022 on a seasonally adjusted basis, and increased 0.1% from a year earlier—a small gain, but the first in a year and a half. Active listings, or the total supply of homes for sale, grew 3.9% month over month—the biggest increase since July 2022 (though they fell 7.9% from a year earlier).

Housing Market Positivity Anticipated

Amid Challenges In 2024

The outlook for the housing market in 2024 is cautiously optimistic. Lower borrowing costs are expected to boost buyer interest next year, though the market still faces uncertainty. After a significant downturn, sales of existing homes are anticipated to rebound in 2024, but only after a challenging 2023. This year, sales are projected to fall 18% below 2022 levels, marking the worst performance in over a decade, according to the National Association of Realtors.

At NAR's virtual Real Estate Forecast Summit, Chief Economist Lawrence Yun and other experts predicted a brighter future for real estate. Mortgage rates, which recently peaked near 8%, are now declining. NAR forecasts a 6.3% average for the 30-year fixed-rate mortgage in 2024, while Realtor.com® predicts 6.5%. This decrease should enhance housing affordability, encouraging more buyers to enter the market. According to NAR, a rate around 6.6% allows an average American family to afford a median-priced home without spending over 30% of their income on housing.

1 in 4,300 Homes at Risk of Foreclosure

ATTOM Data, a real estate data and research company, has released its latest U.S. Foreclosure Market Report covering the month of November 2023 which revealed there were a total of 32,120 properties with some sort of foreclosure filing against them, up 5 % year-over-year, but down 7% on the short term from the prior month. 

“While we’ve observed a modest decrease in U.S. foreclosure activity most likely due to seasonal factors, it’s essential to note that these fluctuations are a part of the cyclical nature of the market,” said Rob Barber, CEO at ATTOM. “As we look ahead to 2024, we anticipate a potential uptick in foreclosure activity as various economic factors evolve and market dynamics shift.” 

Nationwide one in every 4,347 housing units had a foreclosure filing in November 2023. States with the highest foreclosure rates were in: Delaware (one in every 2,393 housing units with a foreclosure filing); Maryland (one in every 2,537); Ohio (one in every 2,656); South Carolina (one in every 2,771); and New Jersey (one in every 2,834). 

The Federal Housing Administration has released a final version of proposed measures aimed at improving reverse mortgage servicing, including new incentives.

The FHA is implementing some changes for its Home Equity Conversion Mortgage program immediately, with others becoming effective March 25, 2024.

The new incentives and other measures, such as giving servicers the option to use verbal verifications in annual occupancy checks, are aimed at counteracting strains from rate volatility that have been hurdles to broader industry involvement in this market.

The lending downturn has spurred more traditional players to originate or broker reverse mortgages but the pool of companies that handle servicing operations has been more limited.