CoreLogic Predicts A Drop in Home Price in 2021

CoreLogic, a company that provides consumer, financial and property data analytics and services to business and government, forecast a downturn in home prices in 2021. Even though COVID-19 has not affected the current housing market, the company suggests a dip this summer because of the negative impact the coronavirus has had on the economy as a whole.  

June 2020 saw a rise in home prices annually 4.9% and 1% month-over-month. According to CoreLogic’s Home Price Index, June 2020 saw the highest growth rate for the month of June since 2013. Part of this growth stemmed from the respective year-ago price growth rate of 3.6%. The Home Price Index has been on the up ever since bottoming out in March 2011.

Their prediction for June 2021 is a decrease by 1% in home prices. CoreLogic feels their prediction is relatively strong because of the housing market’s reliability on entertainment, tourism and hospitality. They forecast Las Vegas to have an 11.3% drop in home prices by June 2021.

“Home price appreciation continues at a solid pace reflecting fundamental strength in demand drivers and limited for-sale inventory,” Frank Martell, president and CEO of CoreLogic, said in a press release. “As we move forward, we expect these price increases to moderate over the next twelve months. Given the economic outlook, housing remains a bright spot for the foreseeable future.”

So far, this has the housing market has not seen a dip in prices. The record-low mortgage rates and buyer demand has fueled the current market. Surprisingly, homes are very affordable even though there has been a steady price growth.

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St. Tammany Parish's Future Looks Bright Even Among the Pandemic

St. Tammany Parish Development District hired Chris Masingill in May 2018 to be the CEO of St. Tammany Corp. St. Tammany Corp. was developed to create partnerships and opportunities to help the parish prosper. The company is the lead economic development organization in St. Tammany Parish.    

When Masingill began his position as CEO, St. Tammany was on an uphill path with a great local economy, many prospects and partnerships in the works that could bring the parish additional jobs and the parish’s performance was well above standards. Today, the parish’s prosperity has taken a hit by the stay-at-home orders and social distancing guidelines the novel coronavirus has brought on.

Masingill is being proactive and has a plan in place to hopefully return to pre-pandemic levels of prosperity and keep on a positive track for the future. Masingill is focusing on what can be done in the future to best ensure the parish remains a place of choice to work, live and play for decades to come.

St. Tammany’s unemployment rate dramatically rose in 2020 because of COVID-19. During the height of COVID-19, 50,000 St. Tammany residents sought unemployment benefits. Many of the parish’s industry sectors were hit very hard. Those that were hit the hardest were hospitality, tourism and restaurants. The Ceo explains that the parish’s revenue has been reduced but some of it is slowly returning. The parish might not see as much motel/hotel sales tax nowadays but taxes from grocery stores and hardware stores have spiked.

Masingill reports that there are some companies that are busier than ever because of the change in spending habits due to the novel coronavirus. In St. Tammany, the logistics, transportation, warehousing and distribution sectors have boomed. The parish has thrived in this industry because of its geographic positioning and the talented workforce it has living among it. Masingill believes this shift is because the global supply chain has changed. “Even with the vaccine coming online and the economy getting energy behind it, there’s little doubt that some things about the way we do business have fundamentally changed forever,” he relays.

People are currently hiring and job postings for the month of November 2020 were at 7,000 unique postings. St. Tammany residents are still spending money and there is a rebound in consumer confidence but the recovery will be slow. We should understand that there will be ups and downs to the long-term recovery. “There is no quick fix. We’re talking several more months, and some people predict several years, before we see the same level of economic activity we saw in 2019,” Masingill states.

St. Tammany is very lucky that it is home of some of the most educated people in the area. It is reported that 40% of the residence in St. Tammany hold a college degree. Masingill wants to focus on keeping its residence local to work and not go out of the parish for employment.

It is in the perfect location and the parish has access to things people want. The parish is in the top 10% of the most populous counties/parishes in the United States. Masingill continues to keep the area in the top 10% and believes that quality of life is just as important as sustainable growth, job creation and business development. “You want a nimble and resilient community. If you have that, you can rebound that much more quickly when things like a pandemic happens, when a hurricane happens.”

Overall Masingill feels that balance will be the success of St. Tammany’s robust economy. “There’s a balance. (You have to be in the middle.) That’s the sustainable and smart approach. We want our kids and grandkids to either stay here or have a place to come back to where they can reap the benefits and enjoyment of a place where they can have access to the things they want. That’s educational opportunities, job growth and expansion, a place to enjoy all the things our community has to offer,” says Masingill.

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Home Values Will Keep Rising Into 2021

 As with everything supply and demand also impacts the housing economy. In today’s economy, there is still uncertainty because of the pandemic. As we reach the end of 2020, home prices are still on the rise and are predicted to keep on the same path into the new year.

The current housing market is lacking still in inventory. The high demand for housing combined with the

lack of inventory is pushing home prices up. Bidding wars are becoming the norm and homebuyers are willing to pay the hefty price tag in today’s real estate market.

According to housing experts, the new year will continue to see home prices rising due to the continued lack of home inventory on the market. Showtime, which tracks the average number of buyer showings on residential properties, reported that buyer showings are up 61.9% this fall compared to the fall of 2019.

“Since the beginning of the COVID pandemic in March, nearly 400,000 fewer homes have been listed compared to last year, leaving a gaping hole in the U.S. housing inventory,” according to ShowingTime.

If you are in the market to purchase a home, reach out to a Realtor. A Realtor will be able to help you navigate the current face-paced housing market.

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Home Loans On The Increase For Six Consecutive Weeks

As the pandemic stay-at-home orders are now being lifted around the United States, more and more people are looking to purchase a home. The mortgage rates have now dropped even more since the pandemic hit at the beginning of 2020.

The 10-year Treasury yield has consistently lead the mortgage rates but this has not been the case since the coronavirus has produced an economic downturn. The unpredictable economy has fueled

unpredictable mortgage rates. On a good note, the parallel between mortgage rates and bond yields is improving.

“Financial volatility has notably decreased in recent weeks, resulting in steady improvements in the stock market, and more predictable — albeit modest — movements in bond markets,” Zillow ZG, 1.50% economist Matthew Speakman said. “The eased strains in financial markets have also resulted in mortgage rates remaining fairly flat in the last couple of weeks and are generally calmer following the turmoil experienced in the early days of the coronavirus outbreak.”

The end of May has shown “the lowest level since Freddie Mac began tracking this data starting in 1971.” Freddie Mac reported the week ending May 28 the average 30-year fixed-rate was 3.15%, a drop of nine basis points from the week before. This will make the third report in a row that has shown historical low-interest rates. The 15-year fixed-rate also dropped to 2.62% which was a drop in eight basis points.

Homebuyers are ready to buy and are looking to purchase a home in the next several months. According to the Mortgage Bankers Association, the amount of mortgage applications has been on the rise making the volume of purchase loans up 54% from early spring. This is a great time to purchase a home and sales should see a rebound from the pandemic.

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The Nation’s Housing Market To Boost 2020 Economy

Good news for the new year in the nation’s economy sector. According to CNN Business, the housing market is thriving and will continue to thrive into the new year boosting the economy in 2020.

Although the housing market is just a small factor in the boost, it still is important for the economy as a whole. Purchasing a home is one of the most important and largest purchase decisions one can

make. Consumer spending makes up approximately two-thirds of US economic growth.

“The housing market is probably going to be a modest tailwind to the economy,” David Berson, chief economist at Nationwide, told CNN Business.

Catalyst for the boost in the housing market stems from low mortgage rates, a strong labor market with rages that are rising and low unemployment rates.

Mortgage rates  are at a three-year low and home loans are very affordable. The Federal Reserve says it will keep rates on hold for the time being which stands at about 3.96% to 4.01%.

The central bank cut interest rates three times in 2019. The cut makes the adjustable-rate mortgages cheaper according to Lawrence Yun, chief economist at the National Association of Realtors.

The US Labor Department reports the 21st straight month that the unemployment rates have been at or below 4%.

They also reported that wages are up 3.1% over the last year. On average, annual wages have increased 3% or greater every month since the summer of 2018. Unemployment is down near a 50-year low.

The National Association of Home Builders and Wells Fargo reported a 20-year high this December in the Housing Market index. In fact, the Housing Market Index did not even reach this high pre -2008 mortgage crisis.

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End of September Seeing Lowered Rates

The year is coming to an end and we have now seen the second cut in rates in 2019. The Federal Reserve announced that there will be a reduction in the key, short-term federal funds rate by 25 basis points to a top rate of 2%. The cut stems from a set of increases enacted in 2018.

Another big move on the Fed’s part was a reduction in the interest rate it pays on bank reserves. This move came in hopes to improve the ability of the Fed to target the federal funds rate in markets.

Concerns in the future economy has the Fed’s leadership in disagreement and their hold on the interest rate it pays on bank reserves in a weaker state. Fed regional presidents, members of the FOMC, had a disagreement that was the highest number since the year 2014. Three of the Fed regional presidents voted no for the change in in the rate. Two opposing it altogether and one urging a 50 basis point reduction.

Even with a few concerns the Fed’s still believe the labor market is strong and the economy is still rising at a “moderate” rate. This fares the same in the home building industry. Household spending is still going strong.

The action of reversing the high cycles of 2018 has been a positive in the decline in rates this year. This has been a net positive for what the future holds for the housing demand and home construction. This comes off the 10-year low for housing affordability that occurred last Fall.

The National Home Builders Association forecast there will be another cut before year end.

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A Fair Pay Raise for St. Tammany Parish Employees

The economy is on the mend but still has a way to go.  Many people are seeing a pay raise but there are those who still have yet to see one since the up rise in the economy.  St. Tammany Public Works employees are hoping for a pay raise for 2019.

This hope stems from a proposal given by Councilman Richard Tanner during a recent public hearing. Tanner proposed a 2 percent raise to employees that work in the Public Works department. It

would cost the department approximately $273,000 for the 2 percent pay increase minus the department director. He sees the raise is justified because the department has its own funding source.  This source stems from a dedicated sales and property taxes. Many others agreed during the public hearing on the proposed 2019 operating and capital budgets that the employees should be given a raise.

“Public Works does a fabulous job and it would be my pleasure to vote for this,’’ said Councilman Jerry Binder.

Pat Brister, St. Tammany Parish President, feels that giving raises to one department and not the others “is incorrect and wrong.”

“Everybody in this parish works just as hard as Public Works,’’ Brister told the council.
Brister voiced there is very little wiggle room in the Parish Budget.  The proposed sale tax increase was a no go with voters last election. The two sales taxes that were denied would have brought in $22 million dollars annually. The current budget that Brister will be presenting totals to $99 million and will be adopted by December 31, 2018.

Conventional Mortgages for New Homes Increase for the 5th Month in a Row

When the bottom dropped out of the real estate market, the biggest indicator that the economy was in trouble was that home owners and new home buyers found themselves paying more for their home than what it was worth.  One of the biggest indicators that the housing economy has been in recovery has been the increase in house pricing regionally nationwide.  These home prices went up steadily during the end of 2013 and 2014, so much so, that investors were concerned that they would cause a housing bubble and throw the entire economy back into a Recession.  Once again, though, supply and demand allowed for free market commerce to dictate the real estate market, and prices started to stabilize in the 1st quarter of 2015.

For the 5th month in a row, conventional mortgages for new homes have increased to an all-time high of $352,500 in June, and this is also a record for the average loan amount which has not yet so far been above $350,000 after the Recession.  In addition to the average amount of a loan going up, home prices also increased in June to $462,100 from $447,600 which is a 3% increase.  Also a record-breaking statistic, this is the first time that new home prices have been above $460,000 since the Recession as well.

Even though the average initial fees and charges on loans decreased by 3 basis points to 1.08%, the effetive interest rate on conventional mortgages went up to 3.98%.  Home buyers and people interested in refinancing their homes have been “spoiled” with the phenomenally low interest rates over the past 5 years, but an average overall interest rate in the 4% range is still a historically low rate and will probably not be seen again for quite some time.  The Fed was set to increase interest rates in September, but this is not a guaranteed move and has been in limbo for over a year.  Interest rates are still low, credit is easing allowing higher borrowing amounts for conventional mortgages, and Ron Lee Homes is building new, custom homes in St. Tammany Parish for interested home buyers.  Contact Us today to help you start building the home of your dreams.  Call 985-626-7619 or e-mail Info@RonLeeHomes.com.

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