Housing Market

 Economist: Rising Rates May Bring

 Balance to Housing Market

 

    SANTA ANA, Calif. - (BUSINESS WIRE) - 2/23/2022 - First American Financial Corporation (NYSE: FAF), a major global provider of title insurance, settlement services and risk solutions for real estate transactions, recently released the December 2021 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.

Chief Economist Analysis: Real House Prices Up 21.7 Percent Year Over Year

    “In December 2021, the Real House Price Index (RHPI) increased 21.7 percent compared with December 2020, the highest annual growth rate since 2014. The record increase was driven by rising mortgage rates and rapid nominal house price appreciation, which make up two of the three drivers of the RHPI,” First American Chief Economics Mark Fleming said. “The 30-year, fixed-rate mortgage and the unadjusted house price index increased by 0.4 percentage points and 21.4 percent respectively.

    “Even though household income increased 5 percent since December 2020 and boosted consumer house-buying power, it was not enough to offset the impact of higher mortgage rates and rising nominal prices on affordability. In the near term, affordability is likely to wane further, as mortgage rates are expected to continue to rise and the pace of house price appreciation exceeds gains in household income. How buyers and sellers react to higher rates may help the housing market regain some balance.”

Existing Homeowners Locked In?

    “When mortgage rates fall, a potential home buyer can buy the same amount of home for a lower monthly payment or buy more home for the same monthly payment. The 40-year tailwind of declining mortgage rates has allowed homeowners to buy a home at one mortgage rate and then later sell and move into a more expensive home when rates are lower,” Fleming said. “This long-run decline in mortgage rates has encouraged existing homeowners to move out and move up.

    “Faster house price appreciation, modestly rising mortgage rates and record low levels of homes for sale have been the economic dynamics dominating the housing market during the second half 2021. While existing homeowners have historically high levels of equity and may feel wealthier because of it, many have also secured historically low fixed-rate mortgages. There is a financial ‘lock-in’ effect that increases as mortgage rates rise and as the size of a mortgage increases. Rising mortgage rates increase the monthly cost of borrowing the same amount that a homeowner owes on their existing mortgage. The higher the prevailing market mortgage rate is relative to the homeowner’s existing mortgage rate, the stronger the lock-in effect. Why move out and move down?

    “Additionally, the record low level of houses for sale makes it difficult to find a better, more attractive house to buy, so sellers – who are also prospective buyers – don’t sell for fear of not finding something to buy. The good news is that builders have been breaking ground on more new homes, which may alleviate some of the supply crunch and encourage existing buyers to move.

    “Nonetheless, buying a home is often prompted by lifestyle decisions more so than financial considerations. Despite the financial lock-in, homeowners will still make the decision to move based on lifestyle changes, such as needing more space to accommodate a growing family or relocating for a new job or other reason.”

The Housing Market Will Adjust

    “Homeowners may feel rate-locked into their homes, but first-time home buyers have no such financial lock. Yet, first-time home buyers must also contend with the record low supply of homes in a declining affordability environment. But what goes up, must eventually moderate,” Fleming said. “Rising rates may be a housing market headwind in 2022, but as some buyers pull back from the market due to affordability and supply constraints and as new construction adds more supply, house prices will moderate, resulting in a more balanced housing market.”

December 2021 Real House Price Index Highlights

• Real house prices increased 1.9 percent between November 2021 and December 2021.

• Real house prices increased 21.7 percent between December 2020 and December 2021.

• Consumer house-buying power, how much one can buy based on changes in income and interest rates, increased 0.04 percent between November 2021 and December 2021, and decreased 0.2 percent year over year.

• Median household income has increased 5.2 percent since December 2020 and 69.3 percent since January 2000.

• Real house prices are 4.8 percent less expensive than in January 2000.

• While unadjusted house prices are now 44.5 percent above the housing boom peak in 2006, real, house-buying power-adjusted house prices remain 33.2 percent below their 2006 housing boom peak.

December 2021 Real House Price State Highlights

• The five states with the greatest year-over-year increase in the RHPI are: Arizona (+34.3 percent), Florida (+32.0), South Carolina (+29.4 percent), Connecticut (+28.6 percent), and Georgia (+28.4),

• There were no states with a year-over-year decrease in the RHPI.

December 2021 Real House Price Local Market Highlights

• Among the Core Based Statistical Areas (CBSAs) tracked by First American, the five markets with the greatest year-over-year increase in the RHPI are: Phoenix (+36.3 percent), Charlotte, N.C. (+36.0), Tampa, Fla. (+32.9 percent), Raleigh, N.C. (+31.5 percent), and Atlanta (+31.5 percent).

• Among the Core Based Statistical Areas (CBSAs) tracked by First American, there were no markets with a year-over-year decrease in the RHPI.

Next Release

    The next release of the First American Real House Price Index will take place the week of March 28, 2022 for January 2022 data.

Sources

• First American Data & Analytics

• Freddie Mac

• Census Bureau

Methodology

    The methodology statement for the First American Real House Price Index is available at http://www.firstam.com/economics/real-house-price-index.

Elections and Politics

Ohio Election Official: 

Politics are Political; 

Election Administration is Not

By Mary Schuermann Kuhlman, Producer
Public News Service

    (PNS) - 2/10/2022 - Since Election Day 2020, the integrity and accuracy of the vote has been the subject of speculation across the country, with local boards of elections often caught in the crosshairs.

    Here in Ohio, election officials seem to have avoided much of the controversy. With far-right groups and supporters of former President Donald Trump still questioning the 2020 results, several red states have moved to give legislatures more power over elections instead of secretaries of state, and penalize election workers for technical mistakes.

    Aaron Sellers, public information officer for the Franklin County Board of Elections, said while politics are political, elections administration in Ohio is not.

    "Everything we do here is done in bipartisan teams," Sellers emphasized. "For example, when the voting-location person brings back the supplies on election night, if that person is a Republican, there's a Democrat ride-along person that comes along with them, or vice versa."

More than half of voters in a recent Quinnipiac poll said they do not believe there was widespread voter fraud in the 2020 presidential election. Ohio's postelection audits revealed an accuracy rate of 99.98% in 2020 and 99.99% in 2021, based on data from counties utilizing a percentage-based audit.

    While other states scrambled to develop a plan for voting in 2020 due to COVID, Sellers pointed out Ohio was ahead of the curve. Critics argued mail-in voting is more susceptible to fraud, but he explained there are multiple verification processes before the ballot is even mailed out.

    "And when it is returned, there's additional measures that we go through before we put that in the pile to count," Sellers added. "It's verification signatures, the last four digits of their 'soc,' (Social Security number) their driver's license number, whatever they're providing, those things are checked on the front end and the back end before those ballots are counted."

    With Ohio's legislative and congressional district maps still not set in stone, Sellers noted boards of election are in a holding pattern when it comes to preparations for the May 3 primary.

    "We're just as anxious as I'm sure our elected officials are to get this resolved," Sellers emphasized. "Elections officials, we take an oath to do this, and when it's scheduled we'll do what we need to do like we did in 2020 because of COVID."

    Wednesday, Republican Senate President Matt Huffman suggested keeping the May 3 primary for statewide and local elections, and holding a second for statehouse and congressional seats. There are concerns about the cost for two primaries, as well as the possibility of lower turnout.

    Support for this reporting was provided by The Carnegie Corporation of New York. Story credit: Public News Service, 2/10/2022, Mary Schuermann, Producer

Politics and Culture

Faith Group: IA Leaders 

Need to Stomp Out Extremism

By Mike Moen, Producer

Public News Service

 

Iowans take on extremism. (Adobe Stock)

    (PNS) - 2/4/2022 - Iowa policymakers are debating a number of politically divisive issues, and as the legislative process plays out, they are being urged to avoid rhetoric faith leaders argue intertwines with extremism.

    This week, the Interfaith Alliance of Iowa sent a letter to the governor and state lawmakers asking them to be better role models, suggesting language stoking extremism will harm democracy. The letter cited recent incidents the group said intersect with divineness seen around the state.

    Rep. Ras Smith, D-Waterloo, spoke at a news conference, saying through his experience as a Black person, it's nothing new, but he added it does not mean recent events should be overlooked.

    "These attacks aren't just to cause fear, but some individuals have the intent to follow through," Smith cautioned.

    Smith noted he has received threatening emails and was part of a recent Zoom meeting infiltrated by agitators who displayed racist images and language. The letter was signed by more than 500 people and noted educators have been harassed when addressing diversity issues. It coincides with legislative efforts to limit certain curriculum and materials in schools, with sponsors arguing the need for transparency in the classroom.

    Rev. Meg Wagner, missioner for congregational development, communications, and reconciliation for the Episcopal Diocese of Iowa, said as these incidents and debates escalate, they are likely to embolden people who feel the need to spread hate and fear.

    "We cannot allow these things to be normalized, and we see them all as interconnected," Wagner asserted. "We're calling on our lawmakers and all Iowans to do better and to be better."

    Among the requests detailed in the letter is a call for lawmakers and residents to seek out verified facts and to not promote misinformation. The signees also said dismantling racism should involve open dialogue about U.S. history and how certain events have impacted communities of color over time.

    Support for this reporting was provided by The Carnegie Corporation of New York. Story credit: Public News Service, 2/4/2022, Mike Moen producer