National Association of Home Builders say seven out of ten households in today’s market cannot afford a median-priced home.

Family home

Why Some Owners Are Staying Put

New affordability estimates reveal why there are so few houses for sale: owners who wish to sell may not afford to buy another home even if they could locate one.

As per the National Association of Home Builders, approximately seven out of ten households in today’s market cannot afford a median-priced home. Under typical underwriting criteria, the earnings of 87.5 million families are insufficient to qualify for loans. Worse, for every $1,000 above the average rent, 118,000 more households are priced out, one of the main reasons so many people remain put. Of course, it’s more complicated than simply selling one home and purchasing another. For starters, there’s the expense of selling, which can chip into the earnings you’d intended to put toward your future home. The process of purchasing a home is also not inexpensive. Then there’s the enormous expense of relocation. And if you’re caught between two transactions — selling your old house and buying a new one — you can find yourself with two mortgage payments for a while.

Fed Still Likely To Raise Interest Rates Despite Strong February Jobs Report

Despite market turmoil caused by the situation in Ukraine, more Americans returned to work in February, exceeding economic projections. The Bureau of Labor Statistics reported on Friday that US employers added 678,000 jobs in February, making it “the greatest year of job growth in American history,” according to President Joe Biden. It is important to remember that the record growth came on the heels of the pandemic, which devastated the employment sector. The unemployment rate fell to 3.8 percent from 4 percent in January, and the number of unemployed people fell to 6.3 million.

According to Mortgage Bankers Association chief economist Mike Fratantoni, the February jobs report is unlikely to delay the Federal Reserve‘s intentions to raise interest rates at its March meeting. Before Russia invaded Ukraine, Fed Chairman Jerome Powell stated that the Fed planned to raise rates at its meeting in two weeks. However, for the time being, Powell said they would “proceed carefully along the lines of that plan,” adding that at the March 15-16 meeting, he will propose and support a quarter-percentage-point hike.

Black Knight: Homeowners Tap Equity at 16-Year High

According to Black Knight of Jacksonville, Fla., lenders generated a record 4.4 trillion in 2021, including $1.7 trillion in purchase loans. In addition, while refinances dropped 34% to $2.7 trillion last year, homeowners drew a record $275 billion in equity and $1.2 trillion in cash-out refinances, the highest since 2005 and only 1% short of a record high, according to the company’s monthly Mortgage Monitor.

The research noted that homeowners tapped $80 billion in equity in the fourth quarter alone, the highest quarterly volume in 15 years. In addition, the studies found that, despite total retention reaching an eight-year high in the fourth quarter, cash-out retention is eight percentage points lower than rate/term refi’s, notwithstanding the market’s transition to equity-centric lending. Borrowers who switched lenders received rates that were just five basis points lower on average than those who stayed with their current lender, demonstrating that, while pricing is important, it is not the primary factor in customer retention.

Next week’s potential market-moving reports are:

  • Monday, March 14th – No Report
  • Tuesday, March 15th – Producer Price Index
  • Wednesday, March 16th – NAHB Home Builders’ Index, FOMC Fed Funds Rate
  • Thursday, March 17th – Initial Jobless Claims, Continuing Jobless Claims, Housing Starts
  • Friday, March 18th – Existing Home Sales

As your mortgage and real estate professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends. I welcome the opportunity to serve you in any way I possibly can. Please feel free to reach me at (800) 216-1047.

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