The MarketPulse - CoreLogic

The MarketPulse

January 2020

Volume 9, Issue 1

January 2020

Data as of November 2019

(unless otherwise stated)

Housing Statistics

December 2019

HPI? YOY Chg

HPI YOY Chg XD

NegEq Share (Q3 2019)

3 .7% 3 .2%

3 .7%

The MarketPulse

Table of Contents

New Home Sales: Up Most in Southern and Western Metros with Big Population Gains . . . . . . . . . . . . . . . 3 Expiration of the CFPB's Qualified Mortgage (QM) GSE Patch ? Part IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Expiration of the CFPB's Qualified Mortgage (QM) GSE Patch ? Part V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Magnitude 6 .4 Earthquake Strikes Puerto Rico . . . . . . . . . . . 10 In The News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Charts & Graphs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

10 Largest CBSA ? Loan Performance Insights Report October 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Overview of Loan Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Home Price Index State-Level Detail -- Combined Single Family Including Distressed. . . . . . . . . . . . . . . . . . . . . 13 Home Price Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 CoreLogic HPI? Market Condition Overview . . . . . . . . . . . . . . . . . . . . . . 15

November 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 November 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

News Media Contact

Todd Taylor newsmedia@

619-938-6829 (office)

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New Home Sales: Up Most in Southern and Western Metros with Big Population Gains

Dallas and Houston Metros had Largest Number of New Home Sales Last Year

Dr. Frank Nothaft Executive, Chief Economist, Office of the Chief Economist Frank Nothaft holds the title executive, chief economist for CoreLogic. He leads the Office of the Chief Economist and is responsible for analysis, commentary and forecasting trends in global real estate, insurance and mortgage markets.

New homes are in big demand in markets with a fastgrowing population. The states with the largest annual increase in population during 2019 were Texas (367,000 more residents) and Florida (233,000 increase). States with smaller populations may not have net increases as large but can have rapid percentage gains. Nevada and

Idaho had annual population growth of more than 1.7%

in 2019, the fastest growth rate among U.S. states.1

We examined CoreLogic's public records and found annual new home sales were largest or had increased the most in places that had large population gains. (Exhibit 1)

The two metropolitan areas with the largest number of new home sales were Dallas and Houston, with more than 30,000 annual sales. Six of the ten metros with the largest number of new sales were in Texas and Florida, the two states that have seen the largest population gains.

Further, the places that had the largest percentage increase in annual new home sales were all mid-sized metros located in the South and West. (Exhibit 2) Of metros with more than a 15% annual increase in sales,

Continued on page 4

Figure 1. New-Home Sales Highest in the South Annual Number of New Home Sales (October 2018 to September 2019)

0

8,000

16,000

24,000

32,000

Dallas TX

Houston TX

Atlanta GA

Phoenix AZ

Austin TX

Orlando FL

Tampa FL

Charlotte NC

San Antonio TX

Washington DC

Source: CoreLogic, new homes sold October 2018 through September 2019 by Metropolitan Statistical Area (label reflects primary city of MSA).

Figure 2. South & West Lead New-Home Growth Highest Growth New-Home Metros

0%

10%

20%

30%

Port St. Lucie FL

Warner Robins GA

Ocala FL

Metros with: affordable homes, high employment, or Warm weather

Have had the highest

growth in new-home

sales over the last year

The Villages FL Sebastian FL Deltona FL Salem OR Huntsville AL Lakeland FL

Midland TX

Pensacola FL

Coeur d'Alene ID

Chattanooga TN

Greenville SC

Source: CoreLogic, percent change in number of new-home sales Oct 2018 to Sep 2019 vs . Oct 2017 to Sep 2018, for MSAs averaging at least 50 new-home sales per month in the 12-month period ending Sep 2018 .

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New Home Sales continued from page 3

Figure 3. Mortgage Financing for New Home Buyers

All New Home Sales Other 1%

VA 12%

FHA 17%

Jumbo 6%

Conventional Conforming

64%

100% 80% 60% 40% 20% 0%

Financing by New Home Sales Price Jumbo

Conventional Conforming FHA

VA

Other

Sales Price Source: CoreLogic public records, new home settlements October 2018 ? September 2019 (number of mortgages)

more than one-half were located in Texas and Florida. These places had lower housing costs than in high-cost markets and had a collective unemployment rate that was two-tenths of a percentage point lower than the U.S. rate.2 Many were also located in the sunbelt, and attractive to retirees looking for a lower-cost place to live.

To finance their new-home purchase, nearly two-thirds of buyers obtained a conventional conforming loan, although the financing varied greatly by home price. (Exhibit 3) For prices at or below $250,000, one-half of buyers used a conventional conforming loan and the other half a federal government program. For homes priced above $1 million nearly all loans were conventional, with more than 80% jumbo in size.

With family incomes expected to rise and mortgage rates to remain low through 2020, household growth and the need for additional home construction will continue. Metros in the South and West will likely continue to lead the nation in new home sales.

1 U .S . Census Bureau, Population Division, Table 3 . Estimates of Resident Population Change for the United States, Regions, States, and Puerto Rico and Region and State Rankings: July 1, 2018 to July 1, 2019 (NST-EST2019-03) at .census .gov/data/tables/ time-series/demo/popest/2010s-national-total .html

2 U .S . Bureau of Labor Statistics, seasonally adjusted data for October 2019 . The U .S . unemployment rate was 3 .6%; the unemployment rate for the metros listed in Exhibit 2 averaged 3 .4% .

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Expiration of the CFPB's Qualified Mortgage (QM) GSE Patch ? Part IV

Insights on balancing risks (loan delinquency) and benefits (mortgage credit access) in the QM Safe Harbor, following expiration of the GSE Patch

Archana Pradhan Economist Archana Pradhan is an economist for CoreLogic in the Office of the Chief Economist and is responsible for analyzing housing and mortgage markets trends.

Pete Carroll Executive, Public Policy & Industry Relations Pete Carroll is executive, Public Policy & Industry Relations with CoreLogic. In this role, Pete directly oversees industry and public-sector engagement programs, drives enterprise strategic initiatives for CoreLogic, and expands opportunities for the company's thought leadership, insights, brand awareness, and solutions expertise within Washington, DC and across the Federal Housing Agencies and other stakeholders.

This blog is a continuation of Parts I?III of our blog series: Expiration of the CFPB's Qualified Mortgage "GSE Patch." As we introduced in Part I, mortgage loans tend to fall into one of the following compliance categories:

QM Safe Harbor loans are foundational mortgage products (e.g., 5/1 ARM and 30-year fixed) that are generally considered to have sustainable borrower repayment features.

QM Rebuttable Presumption loans generally have higher Annual Percentage Rates (APRs) than Safe Harbor loans and require extra steps by lenders to ensure borrower repayment sustainability.

Non-QM loans are more complex mortgage loans, such as negatively amortizing mortgages.

These categories matter to mortgage borrowers as they bear on the balance between borrower repayment sustainability and mortgage credit access, since QM Safe Harbor loans have objectively composed the predominant share of annual mortgage lending volume.1

This blog will offer insights on balancing risks (loan delinquency) and benefits (mortgage credit access) in the QM Safe Harbor, following expiration of the GSE Patch. Our evidence base consists of merged CoreLogic LoanLevel Market Analytics (LLMA) data with Home Mortgage Disclosure Act (HMDA) data. We then created a cohort of home-purchase loans using 2010?2017 loan vintages.2

As noted in Part I, Conventional loans3 are deemed QM Safe Harbor if they have an APR less than the Average Prime Offer Rate (APOR) plus 1.5%. APOR is a weekly market index of the average Conventional loan APRs offered by a selection of lenders across several mortgage

products. Notably, FHA has a different definition for QM Safe Harbor, which is an APR less than the APOR plus (roughly) 2%.4 The difference between a loan's APR and the APOR is referred to as the "rate spread."

Figure 1 demonstrates that, across key loan delinquency measures (a proxy for borrower repayment sustainability), loan delinquency increased as rate spread increased. The percentage of loans that have ever been 60 days late in the below 1.5% rate spread category was 1.4% as compared to roughly 4.1% or higher for the 1.5% and above rate spread categories.5 Part V of our blog series will seek to validate this loan delinquency pattern using 2018 LLMA data merged with HMDA data, which allows for more granularity when analyzing the below 1.5% rate spread category.

Notably, Figure 1 also demonstrates that there was little distinction in loan delinquency between the 1.5% ?1.74%

Continued on page 6

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