Housing affordability rates are still dropping and are staying at 60-year lows, prices are declining, yet borrowers are still having trouble obtaining loans due to tight underwriting and credit standards.
The 15-year fixed rate hit an all-time record low of 3.13%, and the 30-year fixed-rate was at 3.88% for the week ending March 8. Last year at this time, the two rates average 4.15% and 4.88% respectively.
“With these historically low rates and declining house prices, the typical family had more than double the income needed to purchase a median-priced home in January,” said Frank Nothaft, VP and chief economist for Freddie Mac.
According to Fitch Ratings’ latest quarterly market update, home prices are still overvalued across most of the country, despite the pre-mentioned affordability conditions. Fitch’s Sustainable Home Price model (SHP) shows that residential property values should drop an additional 9.1% nationwide. Last quarter, the model showed a decline of 13.1%.
Yet one of the biggest issues with housing market, according to Fitch, is the market’s inventory, despite improved affordability and declining prices. The agency says a key factor underlying this trend is the still tight underwriting and qualification standards, with access to credit still largely limited to borrowers with meaningful equity or sizable down payments.
Unsettling in addition to the continued decline in prices is recent unemployment statistics. According to data released Thursday (March 8) by the U.S. Department of Labor first time claims for unemployment insurance rose by 8,000 in the week ended March 2, which is the third straight weekly increase and the longest since July 2010. Continuing claims increased 10,000 to hit 3,416,000, which was the second straight weekly increase.
Asset Valuation and Marketing has been providing the highest quality valuation products and services since 1995. Our products and services include residential BPOs, property inspection reports, small balance commercial valuations, and automated valuation models.