HOT or NOT December/January: What’s trending in housing right now

Overall loan quality is deteriorating; Millennials are buying homes

Hot or Not1. Millennial Homeownership

The homeownership rate increased only just slightly in the third quarter, driven primarily by a jump in first-time homebuyers. This increase came as more Millennials opted out of renting and entered into the homeownership market. Homeownership among those under age 35 increased from 35.6% in the third quarter 2017 and 36.5% in the second quarter 2017 to 36.8% in the third quarter 2018, the quarterly homeownership and vacancy report from the U.S. Census Bureau showed.

2. JPMorgan Chase Expansion Plans

For nearly six years, the U.S. secretly stunted the growth of JPMorgan. The OCC placed restrictions on expansions for the big bank for violating banking regs, but now that the Trump administration loosened restrictions on financial institutions, JPMorgan is back and can proceed with its expansion plans. Those with knowledge of the matter described the ban as “one of the more extreme ways they exerted their control behind the scenes.” And now that the pressure is off, JPMorgan can go ahead with its growth plans.

3. Short-term Rentals

Expedia Group, the online travel giant that includes, trivago, Orbitz, Travelocity and Hotwire, also has two of the biggest names in short-term rentals under its umbrella: HomeAway and VRBO. Now, Expedia wants to work with the multifamily industry to make it easier to use units as short-term rentals. Expedia announced that it is acquiring Pillow, a San Francisco-based startup that helps apartment owners work with their long-term residents to turn their occupied units into short-term rentals, and ApartmentJet, a software company that enables multifamily property owners to turn units into guest suites.

Hot or Not1. Credit Risk

Moody’s Investors Service released a report citing deterioration in overall loan quality in the mortgage lending market. The analysts think the problem might get worse before it gets better. “Further weakening would heighten the risk of performance deterioration, a credit negative for certain financial institutions and residential mortgage-backed securities,” the report, led by Senior Analyst Jody Shenn, states. The report explains that although the U.S. economy is strengthening, mortgages today appear more likely to face a stressed environment within only a few years.

2. CFPB LO Pay Rules

Almost 250 senior executives at some of the nation’s largest mortgage companies want the government to make changes to the rules surrounding how they’re allowed to pay their loan originators. The group of mortgage execs sent a letter to the Consumer Financial Protection Bureau, calling on the bureau to change its Loan Originator Compensation rule. The executives write that changes to the LO Comp rule should be the CFPB’s “top priority.” The group also stated that making changes to the LO Comp rule will “help consumers and reduce regulatory burden.”

3. Ellie Mae Earnings

While Ellie Mae's third-quarter earnings results were positive, it was significantly lower than Wall Street’s expectations, and could even signal a slow-down ahead for the U.S. economy and the mortgage market. The company’s revenue increased 15% in the third quarter to $123 million. This was below the expected $128 million. But despite the miss, Ellie Mae CEO Jonathan Corr said he was proud the company showed growth in the challenging mortgage environment. The company decreased its revenue expectations for the year from $116 to $113 million, down from the projected $128 million.

3d rendering of a row of luxury townhouses along a street

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