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Home Prices Started the Year Out Right

When it came to home prices, both January and February demonstrated their strongest single-month growth rates since 2005, according to the latest Mortgage Monitor Report from Black Knight, Inc., released Monday. Nationally, home prices rose 1.24 percent in the first couple of months of 2018, with Western states, in particular, showcasing high rates of appreciation. However, Black Knight notes that approximately 40 percent of markets are demonstrating noticeable deceleration in home price appreciation.

Black Knight reports that “98 of the largest markets and 97 percent of 916 observed Core Based Statistical Areas (CBSAs) have all had annual increases” in home prices during the first two months of the year.  

“At the national level, home prices rose 1.24 percent since the start of 2018, with both January and February having their strongest respective single-month growth rates in 13 years,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “As of the end of February, home prices had risen 6.65 percent from a year ago, a metric that continues to increase. The rate of appreciation has accelerated by 42 basis points over the past six months and by 72 basis points over the past 12 months. This acceleration, combined with a nearly 40 basis point increase in the prevailing 30-year fixed interest rate during that same time frame, is creating a tighter affordability climate. We have now seen monthly increases in the national median home price for 27 of the past 28 months, and annual gains for 70 consecutive months.”

San Jose, California, and Las Vegas, Nevada, lead the pack when it comes to home price appreciation. Black Knight reports that San Jose’s median home price for the observed months hit $1.17 million, up $226,000 from the median price recorded a year ago.

“To put that in perspective,” Graboske said, “more than half of the nation’s 100 largest markets have median home prices below this $226,000 annual growth in San Jose’s median home price.”

While San Jose topped the charts, other Western markets also experienced significant increases in home prices. All 11 markets that posted annual home price appreciation of 10 percent or more were located in the West.

Shifts in loan performance during the month of March were largely positive. Black Knight calculated a 13.2 percent drop in mortgage loan delinquencies, and every state experienced a double-digit decline in its delinquency rate over the month of March. However, this sizable decline is not all that surprising compared to historical data.

“March is typically the calendar-year low for delinquencies as borrowers utilize tax refunds and/or bonus payouts to get back on track financially,” according to Black Knight. The report points out that the average March decline in the national delinquency rate since the turn of the century is just under 11 percent.

The national delinquency rate as of March is 3.73 percent. The highest delinquency rates were recorded in Mississippi, Louisiana, Florida, Alabama, and West Virginia. The lowest delinquency rates were recorded in North Dakota, Minnesota, Washington, Oregon, and Colorado.

While delinquencies were down in March, foreclosure starts were up 12 percent over the month with 70 percent of the increase concentrated in areas impacted by hurricanes.

Active foreclosures were down in hurricane-impacted markets, with a 7 percent decline in Texas and a 23 percent decline in Florida over the year in March. However, it may be too early to celebrate.

The market impact of the hurricanes has been “relatively muted as a result of ongoing forbearance programs,” according to Black Knight, and “it will be a number of months before the true foreclosure impact from these storms is revealed.”

Black Knight’s Mortgage Monitor also detected a major decline in the number of homeowners for whom a refinance might be beneficial. The number of potential refinance borrowers is down 46 percent since the start of this year, falling by 2 million borrowers.

Among borrowers with mortgage loans originated within the past five years—a pool of 28 million homeowners—only 45,000 “have 75 basis points of interest rate incentive to refinance while also meeting broad-based eligibility requirements,” according to Black Knight.

You can read the full Black Knight report by clicking here.

 

About Author: Krista Franks Brock

Krista Franks Brock is a writer and editor who has covered the mortgage banking and default servicing industries since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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