As President Trump will present his State of the Union address to the Senate this evening, what is the State of the Housing Industry? With home prices that show no signs of decreasing, changes in leadership at the Consumer Finance Protection Bureau (CFPB), continued reforms in the GSE sector, and new initiatives at the Bureau of Housing and Urban Development (HUD), 2017 was an eventful year. Here’s an overview of the opportunities and challenges faced by the industry during the past year.
Industry Reform in the Cards?
Despite regulation expanding with the new HDMA guidelines that took effect in January 2018, the trend seems to be veering away from “regulation through enforcement,” making lenders more hopeful of a positive dialogue with CFPB, according to a report by analytics firm STRATMOR. The industry is closely following the latest changes in leadership at the CFPB and the nominations for the Federal Housing Administration (FHA) to gauge the administration’s stance on easing regulations.
Meanwhile, the GSEs have shown growth, with first-time homebuyer share of GSE purchase loans recording the highest level in recent history at 48.1 percent in April and 46.4 percent in October 2017, according to a report by the Urban Institute.
The FHA has continued its focus on first-time homebuyers, with its first-time homebuyer share at 81.9 percent in October 2017.
Robust Growth of the Housing Market
The S&P CoreLogic Case-Shiller Indices showed year-over-year increases of 5 percent or more for 16 straight months. This trend was also reflected on many other indices, including the First American Real House Price Index analyzing the November 2017 data, which showed that homes were 5 percent more expensive compared to the same period a year before.
Existing home sales increased 1.1 percent to 5.51 million sales, surpassing the 5.45 million recorded in 2016. This market the highest existing home sales since 2006, according to a report published by the National Association of Realtors (NAR).
Impact of Changes in Immigration Law on Housing
Changes in the immigration law, a key area of interest for all those who will be watching the State of the Union address on Tuesday, is likely to also affect the housing industry. According to a study by WalletHub on the economic impact of foreign-born populations on the 50 states and the District of Columbia, New York would be most impacted by the administration’s proposed changes, followed by California and New Jersey—all of which have a sizeable immigrant population. The overall economic impact is likely to affect housing too.