Industry Update: the Future of eClosing and RON

Join industry experts for an in-depth discussion on the future of eClosing and how hybrid and RON closings benefit lenders and borrowers.

DOJ v. NAR and the ethics of real estate commissions

Today’s HousingWire Daily features the first-ever episode of Houses in Motion. We discuss the Department of Justice’s recent move to withdraw from a settlement agreement with the NAR.

Hopes for generational investment in housing fade in DC

Despite a Democratic majority, the likelihood of a massive investment in housing via a $3.5 trillion social infrastructure package appears slim these days. HW+ Premium Content

Road to the one-click mortgage

This white paper will outline how leveraging a credential-based data provider can save money for lenders, reduce friction for borrowers, speed time to close, and overall bring lenders one step closer to a one-click mortgage.

Real EstateMortgage

Home price appreciation shows first signs of slowing down

What does this mean for senior home equity?

For the first time in almost four years, home prices have decreased for three consecutive months. While aggregate senior home equity has consistently risen in the last several years, will its growth taper off as appreciation slows?

The latest NRMLA/RISK SPAN Reverse Mortgage Market Index revealed that senior home equity reached $6.8 trillion in the first quarter of 2018. The RMMI also reached an all-time high in Q1, climbing to 244.73 thanks to an estimated $182 billion increase in home values.

Since the index started, it has tracked a consistent increase in senior home equity. But now that home price growth is appearing to slow, will that change?

"Equity gains by homeowners in recent years have been substantial as home prices have been rising quickly in response to strong homebuyer demand and little inventory for sale," said, Mark Fleming, chief economist at First American. "As home price appreciation begins to slow, homeowner equity, the largest source of wealth for most middle class American households, will grow more slowly."

But Fleming said the appreciation slowdown is unlikely to have a significant impact, as this source of wealth is just so massive.

"An actual decline in wealth is much less likely, and it’s just a matter of time before the wealth of senior homeowners exceeds $7 trillion," he said.

Multiple indices show that home prices are beginning to slow. In 32 states and 33 of the 50 largest markets, home price gains slowed down from March to May. Furthermore, May saw its lowest appreciation in the last four years, which is surprising as it’s typically one of the strongest months of the year for home price gains, according to Black Knight’s Mortgage Monitor.

What’s slowing it down? Goldman Sachs suggests that higher mortgage rates and tax reform are the culprits.

A recent report from Freddie Mac stated mortgage rates reached their fourth-highest level of 2018, and S&P Dow Jones Indices and CoreLogic indicated rates are growing at least twice the rate of inflation.

Earlier this year, President Donald Trump announced he would implement various trade tariffs internationally, some of which have affected the housing industry. Particularly, lumber taxes have increased the overall cost of homebuilding. Consequently, in order to balance costs, homebuilders are passing those fees to home buyers. 

The rate of appreciation continues to slow down as homebuyers struggle to afford homes. But senior home equity has maintained steady growth over the years, and while this could begin to slow a little as home price appreciation fumbles, it doesn't detract from the fact that seniors have nearly $7 trillion in tappable equity.

Most Popular Articles

Are we back to a normal housing market?

Favorable demographics should keep the housing market ticking. But watch for home prices escalating out of control and rates moving up sharply, writes columnist Logan Mohtashami. HW+ Premium Content

Jul 26, 2021 By

Latest Articles

Why is Ginnie Mae attacking nonbanks?

David Stevens writes: A 250% risk weighting applied to Ginnie Mae MSRs would instantly devalue the entire existing global balance sheet.

Jul 28, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please