In February, home prices saw the strongest annual gains on record, which, when combined with a sharp rise in mortgage rates, made it the most difficult to buy a home in fifteen years!
The report from Black Knight shows that home prices rose again in February, even as interest rates kept rising. This is despite the fact that home prices rose 19.6% from a year ago, even though interest rates kept going up.
Top 10 markets for annual home price appreciation
- Tampa, Florida (33.2 percent)
- Austin, Texas (33.0 percent)
- Raleigh, North Carolina (32.8 percent)
- Phoenix, Arizona, (32.0 percent)
- Nashville, Tennessee (31.5 percent)
- Jacksonville, Florida (29.5 percent)
- Orlando, Florida (28.6 percent)
- Las Vegas, Nevada (28.6 percent)
- Miami, Florida (27.9 percent)
- San Diego, California (27.3 percent)
Tampa, Jacksonville, Orlando, and Miami were all in Florida, where four of the top 10 fastest-growing cities were. But Black Knight said that the affordability crisis is worse in western coastal markets. People in Los Angeles, San Jose, San Diego, and San Francisco now have to pay more than half of the median income each month to pay for an average-priced home (50.9 percent). From 1995 to 2003, U.S. home buyers only had to spend 25.1 percent of the average income on mortgage payments for the average-priced home. That’s now 29.1% for the whole country in March.
National payment-to-income ratio
The company called Black Knight said that 82 of the 100 largest U.S. markets are now less affordable than their long-term benchmarks, up from just six at first. When payment-to-income ratios rise above 21%, that usually helps to slow down the housing market, but it’s not always true.
It’s still growing, even though it’s the most affordable in 15 years, Black Knight said. Researchers at the Federal Reserve Bank of Dallas said last week that rising home prices may have caused investors to be “fearful of missing out,” which may have led to a price correction.
Distressed properties haven’t filled the gap in the inventory.
Some experts had thought that many people who put their homes on the market would sell them.
Black Knight says that so far, about 925,000 of the 8.1 million homeowners who were in forbearance have put their homes on the market, which is a lot. During the pandemic, that led to 40,000 sales a month. But those sales haven’t filled the inventory gap, and they’ve been going down in recent months.
Once forbearance programs were over and mortgage payments were put on hold, people who had their mortgage payments put on hold might put their homes up for sale.
About 744,000 loans were still in forbearance as of March 22. Another 404,000 homeowners who had their forbearance programs end were delinquent on their loans and looking into “loss mitigation” options with their lenders, like mortgage modifications, to avoid foreclosure.
Some 272,000 people, most of whom were already behind on their payments before the pandemic, are still behind on their payments even though they’ve tried both forbearance and loss mitigation.
In the last month, 74,000 more homeowners have been put into foreclosure, which is 6% more than a month ago. The number of foreclosure starts fell to 25,000, which is below the level before the housing crisis.
Mortgage delinquencies rose by 1.8 percent in February, but the national rate of delinquency stayed close to pre-pandemic levels, even though the rate of delinquency rose. People have expectations of taking advantage of this potential Distressed market, however the data and the value of real estate far overrides any delinquency rates that could plague the market!