20 Feb, 2020
There were 60,085 U.S. properties with foreclosure filings in January 2020, up 13 percent from December 2019 and up 7 percent from a year ago. Nationally, one in every 2,270 U.S. properties received a foreclosure filing during the month of January. Counter to the national trend, 16 states posted month-over-month decreases in foreclosure activity in January 2020. Including Iowa (down 44 percent); Oregon (down 28 percent); Nevada (down 28 percent); Louisiana (down 24 percent); and Washington (down 20 percent). ATTOM’s Foreclosure Market Trend Reports offer a detailed look at foreclosure data. Lenders started the foreclosure process for the first time on 26,858 property owners in January 2020, down less than 1 percent from the previous month but down 9 percent from a year ago. Counter to the national trend, 19 states posted year-over-year increases in foreclosure starts, including California (up 27 percent); Tennessee (up 21 percent); Georgia (up 14 percent); Illinois (up 9 percent); and Ohio (up 3 percent). Also, counter to the national trend, 75 of 220 metro areas analyzed posted year-over-year increases in foreclosure starts, including San Antonio, Texas (up 66 percent); Los Angeles, California (up 63 percent); Riverside, California (up 22 percent); Nashville, Tennessee (up 19 percent); and Chicago, Illinois (up 14 percent). States with the worst foreclosure rates in January 2020 were New Jersey (one in every 1,046 housing units); Delaware (one in every 1,098 housing units); Illinois (one in every 1,139 housing units); Maryland (one in every 1,507 housing units); and Ohio (one in every 1,517 housing units). Among 220 metropolitan statistical areas with at least 200,000 people, those with the worst foreclosure rates in August were Atlantic City, New Jersey (one in every 703 housing units); Rockford, Illinois (one in every 726 housing units); Peoria, Illinois (one in every 952 housing units); Fayetteville, North Carolina (one in every 957 housing units); and Trenton, New Jersey (one in every 984 housing units). Among 53 metro areas with at least 1 million people, those with the highest foreclosure rates in January were Chicago, Illinois (one in every 1,027 housing units); Cleveland, Ohio (one in every 1,029 housing units); Philadelphia, Pennsylvania (one in every 1,072 housing units); Jacksonville, Florida (one in every 1,144 housing units); and Riverside, California (one in every 1,189 housing units). Lenders repossessed 20,759 U.S. properties in January 2020 (REO), up 49 percent from the previous month and up 70 percent from a year ago, following the holiday season. Counter to the national trend, those metropolitan areas with a population greater than 200K that saw a month-over-month decrease included Cleveland, Ohio (down 40 percent); San Antonio, Texas (down 28 percent); Las Vegas, Nevada (down 27 percent); Dallas, Texas (down 26 percent); and Atlanta, Georgia (down 24 percent). Tesla roars above $900 as solar sales light up prospects Telsa shares zoomed back above $900 on Wednesday after a Wall Street analyst awarded the stock one of its highest price targets yet. The Palo Alto, California-based company's odds of success in the battery and solar-power industry prompted the investment bank Piper Sandler to set a 12-month price forecast of $928. “After logging 53,448 miles and surviving four Minnesota winters (with no noticeable range degradation), we are convinced that Tesla's automotive products offer a superior ownership experience,” analyst Alexander Potter wrote while raising his price target from $729. “If history is any indication, we'll eventually be saying something similar about generating and storing our own solar power.” While batteries and solar power amounted to just 6 percent of Tesla’s sales in 2019, management has said its revenue will eventually rival that of the automotive business. Potter says it’s “tough to ignore” the size of the addressable market for Tesla’s integrated solar roof, which is about $165 billion a year. The market’s size increases by another $70 billion per year when taking into account the cost of two Powerwalls, the company's home batteries, for each new solar roof. Wednesday’s gains have stretched Tesla’s year-to-date growth to more than 105 percent, putting extreme pressure on short-sellers, or traders betting that shares would fall. MBA - mortgage applications decrease Mortgage applications decreased 6.4 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending February 14, 2020. The Market Composite Index, a measure of mortgage loan application volume, decreased 6.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The Refinance Index decreased 8 percent from the previous week and was 165 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 10 percent higher than the same week one year ago. "Treasury yields moved slightly higher last week, despite uncertainty surrounding the economic impact from the spread of the coronavirus. The 30-year fixed mortgage increased five basis points to 3.77 percent as a result, causing refinance applications - driven by a 11 percent drop in applications for conventional refinances - to fall," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with an 8 percent decline, the refinance index was still at its third highest reading so far this year. Government refinance activity, which tends to lag movements in the conventional market, bucked the overall trend, as VA loan refinances jumped 23 percent." Added Kan, "Purchase applications fell 3 percent last week, as there continues to be some pullback after a strong January. Activity was still 10 percent higher than a year ago, but too few options - especially at the lower portion of the market - are slowing some would-be buyers." The refinance share of mortgage activity decreased to 63.2 percent of total applications from 65.5 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4 percent of total applications. The FHA share of total applications decreased to 9.5 percent from 9.7 percent the week prior. The VA share of total applications increased to 12.1 percent from 10.1 percent the week prior. The USDA share of total applications remained unchanged from 0.4 percent the week prior. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.77 percent from 3.72 percent, with points remaining unchanged at 0.28 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) increased to 3.79 percent from 3.75 percent, with points increasing to 0.19 from 0.17 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.86 percent from 3.84 percent, with points decreasing to 0.24 from 0.26 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.22 percent from 3.20 percent, with points decreasing to 0.26 from 0.27 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. The average contract interest rate for 5/1 ARMs increased to 3.23 percent from 3.21 percent, with points increasing to 0.21 from 0.13 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week. Judge tosses Huawei lawsuit against US government ban U.S. District Judge Amos L. Mazzant dismissed a Huawei lawsuit that challenged a congressional defense bill banning federal agencies and contractors from buying products from the Chinese telecom giant. Huawei claimed that the ban was overbroad, that its due process rights were violated and that Congress was motivated by an intent to punish it and another Chinese telecom company, ZTE. At issue is the 2019 National Defense Authorization Act, which was signed into law by President Trump in 2018. Mazzant disagreed with Huawei's claims in a Tuesday order. "What Huawei pejoratively labels as Congress unconstitutionally adjudicating facts is better characterized as a thorough congressional investigation into a potential threat against the nation’s cybersecurity," the judge wrote. "Congress's investigation led to the passing of a defense-appropriations bill as a prophylactic response to that threat." Huawei may appeal the decision in the New Orleans federal appeals court. NAHB - housing production shows solid start to 2020 Total housing starts decreased 3.6% in January from an upwardly revised December reading to a seasonally adjusted annual rate of 1.57 million units, according to a report from the U.S. Housing and Urban Development and Commerce Department. Meanwhile, overall permits surged to a 13-year high. The January reading of 1.57 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts decreased 5.9% to a 1.01 million seasonally adjusted annual rate. The multifamily sector, which includes apartment buildings and condos, increased 0.7% to a 557,000 pace. “The housing recovery continues, as single-family housing starts have surpassed one million for the second consecutive month and multifamily production has been running above 500,000 for the same period,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Meanwhile, builder confidence remains solid as demand continues to pick up.” “While the solid pace for residential construction continues, favorable weather conditions may have accelerated production in the winter months,” said Nanayakkara-Skillington, NAHB’s Assistant Vice President of Forecasting and Analysis. “At the same time, the growth in permits is a harbinger that that market will continue to move forward in the coming months, even as builders grapple with supply-side issues like excessive regulations, labor shortages and rising material costs.” Regionally in January, combined single- and multifamily housing production increased 31.9% in the Northeast and 1.2% in the West. Starts fell 25.9% in the Midwest and 5.4% in the South. Overall permits, which are a harbinger of future housing production, increased 9.2% to a 1.55 million unit annualized rate in January. This is the highest level since March 2007. Single-family permits increased 6.4% to a 987,000 rate while multifamily permits increased 14.6% to a 564,000 pace. Looking at regional permit data, permits are 34.6% higher in the Northeast, 8.2% higher in the Midwest, 8.0% higher in the South and 3.1% higher in the West. 'Severe' blue-collar worker shortage to worsen as baby boomers retire Blue-collar industries like manufacturing and construction are facing a "severe" worker shortage that will only get worse as young people fail to fill positions vacated by retiring baby boomers. That's according to an 85-page report by the nonprofit business research group Conference Board, which blamed a "perfect storm" of longterm trends. Young people, the authors say, are turning to college for white-collar job opportunities rather than trade school or apprenticeship opportunities in agriculture, mining, manufacturing, construction and transportation. At the same time, many baby boomers, who make up much of the blue-collar labor market, have reached retirement or are on their way to retirement. "While a lot has been written about the overall tightness of the labor market, much less has been written about severe labor shortages of blue-collar and manual services workers --- the exact opposite of the trends in recent decades," Gad Levanon, vice president of labor markets at The Conference Board, said. "This shortage is no coincidence but a result of several long-run demographic and educational trends that converge in a perfect storm like fashion, and that could make these shortages even more severe in the coming decades," Levanon said. "These shortages are a much more immediate and important problem than the risk of massive unemployment due to robots taking our jobs at some point in the future." The labor force participation rates for men ages 25 to 34 have seen a significant downturn since 1995, shows the study, which surveyed more than 200 human resources executives. Demand for blue-collar workers continues to grow, in part because of a slowdown in labor productivity, according to the Conference Board. The number of U.S. citizens who qualify as disabled between the working ages of 25 and 64 has also reached a record high. The heaviest concentrations of disability appear along the Rust Belt and the industrial South, the study found. Additionally, young men are leaving the blue-collar workforce for white-collar opportunities after college. As a result, the number of blue-collar workers in the U.S. directly correlates with the number of people who hold a bachelor's degree. The participation of 16-24-year-old men who work blue-collar jobs that require little experience or education has dropped by about 10 percent since 1995, the study showed. This is seen as a positive trend by societal standards because it means more young people are getting a higher education, despite the fact that blue-collar jobs often hold the promise of high wages and steady work due to increasing demand. Nearly a quarter of young men without a college degree, however, still live at home with their parents, the study noted. "I think there is some stigma associated with manual labor," Levanon said. "The American dream and the entire education system is geared towards completing a four-year college. Also, the significant improvement in the labor market outlook for blue-collar workers is not common knowledge yet. I would argue that you still hear and read more about how robots will steal many of our jobs than you hear about labor shortages." As men leave blue-collar industries, more and more women aged 25 to 54 are joining the labor force --- but not enough to make a significant difference in these industries, the study found. Potentially increasing costs and quality of blue-collar services is now more of a concern than it was in the past because employers are more willing to hire candidates that are not qualified for the job or have been out of the labor market for years, according to the study. "Without a concerted effort by companies and governments, the nation’s overall standard of living will decline, along with profits in blue-collar-heavy industries such as transportation, warehousing and manufacturing," The Conference Board said in a press release Tuesday. NAR - housing starts, February 19, 2020 The following is NAR Chief Economist Lawrence Yun’s reaction to the release from the U.S. Commerce Department on new home construction: “The latest month’s decline in housing starts is nothing to be concerned about. This housing data is quite jumpy. What is important is the trend line, which is clearly on an upward path. Higher housing permit issuances are also a positive indicator for even greater production in the months ahead. Housing starts of 1.57 million units (annualized rate) in January following 1.63 million in December marks the only two months in over a decade where activity has been above the historical average of 1.5 million a year. More construction will mean more housing inventory for consumers in the later months of this year. Spring months could still be quite tough for buyers, since it takes time to convert housing starts into actual housing completions. As trade-up buyers move into these new completed homes in the near future, their existing homes will be released onto the market.” MBA - January new home purchase mortgage applications increased 35.3 percent The Mortgage Bankers Association (MBA) Builder Application Survey (BAS) data for January 2020 shows mortgage applications for new home purchases increased 35.3 percent compared from a year ago. Compared to December 2019, applications increased by 40 percent. This change does not include any adjustment for typical seasonal patterns. MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 865,000 units in January 2020, based on data from the BAS. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors. "New home applications and sales activity surged in January. This was a continuation of the end of 2019, which saw strong residential construction and increased purchase applications activity," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Even with some global and domestic economic uncertainty, builders have ramped up production in recent months to meet increased homebuyer demand." Added Kan, "MBA estimates that January new home sales increased 25 percent over the month to a sales pace of 865,000 units, while the average loan size increased to $346,000 - both record highs since the survey began in 2012." The seasonally adjusted estimate for January is an increase of 25.5 percent from the December pace of 689,000 units. On an unadjusted basis, MBA estimates that there were 66,000 new home sales in January 2020, an increase of 37.5 percent from 48,000 new home sales in December. By product type, conventional loans composed 69.5 percent of loan applications, FHA loans composed 17.8 percent, RHS/USDA loans composed 0.8 percent and VA loans composed 12 percent. The average loan size of new homes increased from $338,625 in December to $346,140 in January. NAHB - builder confidence remains solid in February Builder confidence in the market for newly-built single-family homes edged one point lower to 74 in February, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released today. The last three monthly readings mark the highest sentiment levels since December 2017. “Steady job growth, rising wages and low interest rates are fueling demand but builders are still grappling with increasing construction and development costs,” said NAHB Chairman Dean Mon. “At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a dearth of lots are hindering the production of affordable housing in local communities across the nation,” said NAHB Chief Economist Robert Dietz. “And while lower mortgage rates have improved housing affordability in recent months, accelerating price growth due to limited inventory may offset some of that effect.” Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The HMI index gauging current sales conditions fell one point to 80, the component measuring sales expectations in the next six months was one point lower at 79 and the gauge charting traffic of prospective buyers also decreased one point to 57. Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 63, the Midwest increased one point to 67 and the South moved two points higher to 78. The West fell one point to 83.