Volume 169 | January 12, 2024

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.

2023 Foreclosure Filings Top 2022, but Remain Below Pre-Pandemic Numbers

ATTOM, Irvine, Calif., released data on year-end 2023 foreclosures, finding that foreclosure filings were up 10% from 2022 and 136% from 2021. However, they were down 28% from pre-pandemic 2019.

Additionally, 2023’s numbers were 88% below the peak reached in 2010.

There were foreclosure filings–defined as default notices, scheduled auctions and bank repossessions–on 357,062 properties.

“Reflecting on 2023, we see the recent rise in foreclosure activity as a market correction rather than a cause for alarm. It signals a return to more traditional patterns after years of volatility,” said Rob Barber, CEO at ATTOM. “Our data suggests that while foreclosure activity may fluctuate, it’s unlikely to approach the highs seen in the last decade. Instead, we foresee a market that is more reflective of broader economic trends, with foreclosure filings becoming a more predictable aspect of the housing landscape. This shift offers a silver lining–the opportunity for investors, homeowners, and industry professionals to plan and strategize with greater confidence and insight.”

Buyers Looking Forward to Homeownership in 2024

Realtor.com unveiled the Best Markets for First-Time Homebuyers in 2024, showing that first-time homebuyers remain optimistic when it comes to buying a home this year, with 61% indicating that now is a good time to buy, per a recent Realtor.com survey.

But in such a volatile market, first-time homebuyers may find the best luck in some unexpected places, according to the report.

Realtor.com's 2024 Housing Forecast ranked 2,738 cities and places with a population of more than 5,000 that are located within the 100 largest metro areas.

Mortgage Payments Dip as Lock-In Effect Eases

As Americans settle into the New Year, what can they expect from the housing market?

According to a new report from Redfin, pending U.S. home sales posted their smallest year-over-year decline in two years (-3%) during the four weeks ending January 7.

Additionally, mortgage-purchase applications are up 3% from December, and Redfin’s Homebuyer Demand Index is up 5% from a month ago.

Redfin agents report that as the new year kicks off, more sellers are listing and more buyers are going on tours and applying for mortgages as rates remain in the mid-6% range, down from 8% in October. Buyers are motivated by lower mortgage payments—the median U.S. housing payment is down $327 (-12%) from October’s all-time high—and sellers are motivated by increased demand and the lock-in effect easing.

There are 9% more new listings than there were a year ago, and while the total number of listings is down 3% annually, that’s the smallest decline since June.

Home prices in Detroit are rising

even faster than in Miami

The price of a single family home rose faster in the Detroit area than any other large U.S. metro in the year through November, bringing Miami's 16-month run as the nation's fastest-appreciating market to an end.

Detroit posted the highest year-over-year home price increase among the nation's top 20 markets with a 9.2% gain, beating Miami's 8.3% rise, according to property data provider CoreLogic. Overall, U.S. home prices increased 5.4% in the year ending in November.

"Home price appreciation continued to push forward in November, despite the new highs in mortgage rates seen over the year," said Selma Hepp, chief economist for CoreLogic. "Markets where the prolonged inventory shortage has been exacerbated by the lack of new homes for sale recorded notable price gains over the course of 2023."

Homes in the three largest U.S. markets, the New York City, Los Angeles and Chicago metro areas, gained 7.2%, 4.3% and 6.3% respectively. Meanwhile, home prices in the San Francisco area are down 2.5%, the only major metro to see a decline. 

While home prices in Detroit are on the rise, the latest data available from Zillow show the average price of a single family home is about $239,000, making it the least expensive of the top 20 metro areas. Meanwhile in Miami, the average price of a similar home was $550,000, up almost 60% since the start of the pandemic.

Homeowners Stick With Low Mortgage Rates

'Lock-In Effect' keeps majority of homeowners with mortgage rates below 6%

A report from Redfin has revealed that 88.5% of homeowners with mortgages have interest rates below 6%, a drop from the record high of 92.8% in mid-2022. 

Despite the current weekly average rate of 6.66%, the majority of homeowners are holding onto their low rates, leading to a phenomenon known as the "lock-in effect." However, many homeowners are eventually forced to give up their low rates and sell their homes due to major life events, such as divorce, new jobs, or deaths in the family. Some are choosing to move to different homes or cities.

The lock-in effect has contributed to the shortage of homes for sale, as homeowners are reluctant to sell and lose their low rates. While listings have started to increase, this is partly due to homeowners who must move and others who are enticed by falling mortgage rates. The average 30-year mortgage rate of 6.66% is still higher than it was a year ago, leading to concerns about affordability for potential buyers.

Mortgage rates shifted slightly upwards, keeping rates steadily in the mid-six percent range but still drawing interest from homebuyers, according to Freddie Mac.

The average 30-year fixed-rate mortgage was 6.66% for the week ending Jan. 11, according to Freddie Mac's latest Primary Mortgage Market Survey. That's a slight increase from the previous week when it averaged 6.62%. A year ago, the 30-year fixed-rate mortgage averaged 6.33%. 

The average rate for a 15-year mortgage was 5.87%, down from 5.89% last week and up from 5.52% last year. 

Although mortgage rates increased, the general expectation is that they will stay below 7% this year. Home prices, on the other hand, show no signs of abating. Nationwide, home prices now stand 4.8% above their year-ago level, while the 10- and 20-city composite indices were up 5.7% and 4.9%, respectively, according to the latest S&P CoreLogic Case-Shiller Indices report.