We all know that housing data from 2020 provides a skewed benchmark for comparisons, especially when it comes to volume. If 2020 was a comp property, it would be the house in your neighborhood that caught fire and almost burned to the ground. But then a GoFundMe campaign caught the attention of a YouTube influencer who rehabbed it into the next location for The Bachelorette.
Not very useful.
Data from 2019 provides a better baseline and looking at those numbers, 2021 is shaping up to be a great year for originations. That's according to the forecast from the American Enterprise Institute, which created an algorithm with Optimal Blue rate lock data to track weekly volume. Some insights from their recentHousing Finance Report:
Purchase volume for week 26 (starting about June 26) was 36% above the same week in 2019 and at about the same level as in 2020.
Some of that volume seems to be from sales of second homes, which are down from last year but still above the 2019 level.
The volume of investor loans and loans to non-U.S. citizens are up over 2019 and 2020.
That demand is on top of the built-in demographics of Millennials reaching peak home-buying age, combined with mortgage rates that are still historically low. The upshot, according to AEI, is that "without additional inventory or higher mortgage rates to cool down HPA growth, we expect HPA rates to remain at double digit levels throughout 2021 and into 2022."
That's in contrast to some reports saying buyers are pulling back. In fact, for the mortgage industry, going with the Bachelorette analogy, that extra demand is like getting the group date rose at the cocktail party.
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The average 30-year fixed-rate mortgage fell eight basis points from the week prior to 2.9%, according to data released Thursday by Freddie Mac's PMMS. According to Sam Khater, Freddie Mac's chief economist, last week's dip followed the concurrent drop in U.S. Treasury yields earlier this week.
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