Update on Housing and Mortgage Markets Lynn M. Fisher Resident - - PowerPoint PPT Presentation

AEI.org/housing |

Lynn M. Fisher

Resident Scholar and Center Co-director

Lynn.Fisher@aei.org

MEREDA Spring Conference - May 7, 2019

Update on Housing and Mortgage Markets

May 2019

2

Home Sales Slowed in 2018

Source: AEI Housing Center, www.AEI.org/housing

100,000 150,000 200,000 250,000 300,000 350,000 400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

US Agency Purchase Originations

2013 2014 2015 2016 2017 2018 2019 200 400 600 800 1,000 1,200 1,400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Maine Agency Purchase Originations

2013 2014 2015 2016 2017 2018 2019

3

Home Sales Slowed in 2018

Source: AEI Housing Center, www.AEI.org/housing

100,000 150,000 200,000 250,000 300,000 350,000 400,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

US Agency Purchase Originations

2013 2014 2015 2016 2017 2018 2019 200 400 600 800 1,000 1,200 1,400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Maine Agency Purchase Originations

2013 2014 2015 2016 2017 2018 2019

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But Prices Still Rising for All But Highest Priced Homes

Preliminary results for March 2019 Source: AEI Housing Center, www.AEI.org/housing.

90 100 110 120 130 140 150 160

Home Price Appreciation by Price Tier

Low Low-Med Med-High High

Index: Jan-2012 = 100

5

Seeking to Overcome Affordability Problems, First-time Buyers (FTBs) Are Taking on More Risk

Note: Data are for primary owner-occupied agency purchase loans. Source: AEI Housing Center, www.AEI.org/housing.

8% 10% 12% 14% 16% 18% 8% 10% 12% 14% 16% 18% Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb-18

Mortgage Risk Index

First-time buyers Repeat buyers

Higher Mortgage Risk Index for FTBs primarily driven by:

• lower credit scores,
• lower levels of down

payment,

• higher debt-to-income

ratios, or

• a combination of the

above

Stressed default rate

6

Single Family Starts Lagging

Source: Census, Shiller (2015), BLS

• 20.0
• 15.0
• 10.0
• 5.0

0.0 5.0 10.0 15.0 200 400 600 800 1000 1200 1400 1600 1800 2000

Single Family Housing Starts and Real House Prices

SF Housing Starts (thous. of units, SA, left axis) Real House Prices (% chng from year ago, right axis)

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1% 5% 9% 5% 1% 3% 8% 4% 2% 5% 9% 4% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%

Maine New Construction Share of All Sales

2013 2015 2018 2013 2015 2018 2013 2015 2018 2013 2015 2018

Low 42%* Low-Med 34%* Med-High 24%* All

*Share of institutionally financed sales in 2018 by tier. The high price tier only represents 1% of ME home sales and is omitted.

New Homes Tend to be Higher Priced

Source: AEI Housing Center, www.AEI.org/housing.

About half the rate observed for the US overall

8

Modest Maine Household Growth

Source: Presenter’s calculations using IPUMS-CPS, University of Minnesota, www.ipums.org.

• 15000
• 10000
• 5000

5000 10000 15000 20000 25000 30000

18-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+

Change in Number of Households, by Age, 2008-2018

White Black Asian Other Hispanic

Age

9

Maine Employment Growth Lagging US

Source: BEA and presenter’s calculations

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