Real Estate and Mortgage Market News and Updates

Last updated 11/06/20

Continue to Hit Record Lows

If you thought couldn’t go any lower? Think again. For the 12th time this year the average 30-year mortgage hit a new record low at 2.78%. have consistently been below 3% for several weeks now. [1]

As a result, there has been a tangible uptick in activity amongst homeowners. The surge of new applications can also be attributed to the fact that and Freddie Mac’s adverse market refinance fee goes into effect December 1st and will apply to all refinance loan request above $125,000. [2]

According to Black Knight, mortgage origination is showing no signs of slowing down. They estimate the refinances will eclipse refinances for the previous quarter by roughly 25%. [3]

What Does the Presidential Election Mean For Housing?

There is general uncertainty as to the fate of the U.S. housing market as ambiguity regarding the presidential election lingers.

For almost two years now the overarching goal of the Federal Housing Finance Agency (FHFA) was to end the and Freddie Mac conservatorship. 

In fact, the agency has issued a strategic plan that lays out steps that need to be completed over the next three years to prepare for this transition. [4] However, this plan may or may not go into motion depending on who holds the presidential office.

But the presidency may also have other large implications for the housing market as a whole. One of the biggest areas of focus is new tax policies that could impact the cost of homeownership. This could be beneficial for some, such as new first-time homebuyers. [5]

Other implications include a shift toward new regulations and consumer protections.


The incumbent, during his tenure, helped soften agency power and regulation as a whole, with enforcement activity down by 80% at the end of 2019 compared to peak activity in 2015. [6] It’s possible that additional changes are in the future to soften regulation industry-wide.

However, the most important consensus amongst economists is that regardless of who wins the presidential election, interest rates are expected to remain at relatively historic lows for the foreseeable future. With this volume is forecasted to remain high. 

The only downside that many experts predict to be an escalated issue is the lack of inventory nationwide. According to Realtor.com, “national inventory has declined by almost 38.3% over the last year.” [8]

Homeowners Have Gained $2 Trillion Since the Pandemic Began

While COVID-19 has caused several adverse effects to the nation on both micro and macroeconomic levels, homeowners across the nation are seeing a silver lining. Since the first major impacts of the pandemic occurred in February 2020, home values have increased by over 6.7%. [7] This has helped fuel and mortgage markets as homeowners have been able to access new available equity.

While this sensation can have consequences in terms of widening the wealth inequality throughout the United States, overall it has helped millions of Americans who are homeowners.

Some of the biggest swings are in major metro areas where there is a major exodus to suburban areas and neighborhoods. As wealthier residents who can afford higher home prices remain, existing residents that are currently renting and being priced out of the market. A surge in residents working from home has only exacerbated this trend.

But, be that as it may, home values continue to rise in these key areas. According to Redfin, some of the largest spikes in home value within U.S. metro areas have been found in Milwaukee, Charlotte, Austin, Sacramento, Detroit, Seattle, Phoenix, and Pittsburgh. [7]

Existing Homes Still Selling at Record Speeds

Despite the lack of inveontry, consumer demand for homeownership remains especially high. Sales trends continue to be strong through October as the typical home spent 13 day less on the market compared to the same 2019. [8]

On average, nationwide homes spend roughly 45 days on the market. Northeastern, southern, and midwestern properties saw the largest decrease of DOM over the last year. [8]

This trend seems to be consistent with recent mortgage activity, with overall mortgage applications having incrementally increased by 3.8% from the prior week, resulting in year-over-year gains of 25% and 88% respectively. [9] Purchasing gains in particular have continued for several consecutive weeks.

New listings are also up 9% from earlier in the year and 45% of homes that went under contract had an accepted offer within the first two weeks. [10] If can continue to remain low (which is the general consensus) then that should help maintain the momentum seen for existing home sales year-to-date. 

Sources

[1] Roha, A. (2020, November 05). drop to another historic low at 2.78%. Retrieved November 6, 2020, from https://www.housingwire.com/articles/mortgage-rates-drop-to-another-historic-low-at-2-78/#:~:text=The average U.S. mortgage rate,survey’s near 50-year history.

[2] Federal Housing Finance Agency. (2020, August 25). Adverse Market Refinance Fee Implementation now December 1 [Press release]. Retrieved November 6, 2020, from https://www.fhfa.gov/Media/PublicAffairs/Pages/Adverse-Market-Refinance-Fee-Implementation-Now-December-1.aspx

[3] Black Knight. (2020, September). Mortgage Monitor September 2020 (Rep.). Retrieved November 6, 2020, from Black Knight website: https://www.blackknightinc.com/wp-content/uploads/2020/10/BKI_MM_Sept2020_Report.pdf

[4] What would a Trump win mean for housing? (2020, November 05). Retrieved November 6, 2020, from https://www.housingwire.com/articles/what-would-a-trump-win-mean-for-housing/?utm_campaign=Newsletter – Daily Download&utm_medium=email&_hsmi=99071987&_hsenc=p2ANqtz-8aoo3XFAKdha96xEp5FUxXalj6xNYdNMnIszwK3p55SoTrVkMh7u5o9BzKAPk3deTV-j4RURm4b6EnHDgmkMHbTWhWgqfglmHbkVv7QjjlI5baJdA&utm_content=99071987&utm_source=hs_email

[5] Kleimann, J., & Glaze, T. (2020, November 04). What a Biden victory would mean for housing. Retrieved November 6, 2020, from https://www.housingwire.com/articles/what-a-biden-victory-would-mean-for-the-mortgage-industry/?utm_campaign=Newsletter – Daily Download&utm_medium=email&_hsmi=99071987&_hsenc=p2ANqtz-_yPJ8_vabA6Y6r4t5B1uYL1OKJAGndgtM8jAMh8-wLXfKfialvyvd6QnPmwiGxYKqiGK4dpmT-g9RVWtqvxj4dsI_7TZ_RdTnf_dO2K0shZYwsVZQ&utm_content=99071987&utm_source=hs_email

[6] Consumer Financial Protection Bureau. (2019, March 11). CFPB Law Enforcement Plummets Under Trump Administration [Press release]. Retrieved November 6, 2020, from https://consumerfed.org/press_release/16137/

[7] Katz, L. (2020, October 30). Homeowners Have Gained $2 Trillion During the Coronavirus Pandemic. Retrieved November 6, 2020, from https://www.redfin.com/news/real-estate-home-value-gain-coronavirus-pandemic/

[8] Speianu, S., Hale, D., & Ratiu, G. (2020, November 05). October 2020 Monthly Housing Market Trends Report: Homes Sell Even Faster While Buyers Pay Summer Prices. Retrieved November 6, 2020, from https://www.realtor.com/research/tag/housing-market/

[9] Murali, L. (2020, November 04). Six Months of Year-over-Year Gains for Purchase Mortgages. Retrieved November 6, 2020, from https://eyeonhousing.org/2020/11/six-months-of-year-over-year-gains-for-purchase-mortgages/

[10] Ellis, T. (2020, November 04). Housing Market Update: Home Prices Up 15%, Year-to-Date Sales On Par with 2019. Retrieved November 6, 2020, from https://www.redfin.com/news/housing-market-update-pre-election/

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