February data from CoreLogic covering U.S. housing and mortgage trends shows home sales are down, prices fell rapidly in 2010, and the refinance market is weak due to lack of equity.
Total estimated home sales in 2010 were 3.6 million units, down from 4.1 million units in 2009. (CoreLogic notes this estimate is different from the National Association of Realtors’ data, which indicates sales fell only 5% in 2010.)
Average home prices fell 5.1% in November from the previous year’s November price index, and the discount in price for distressed sales rose to 37% in 2010, up from 26% in 2008 and 30% in 2009, according to CoreLogic.
The report shows 16 months of visible inventory in November, at the highest level since February 2009, compared with “normal” levels of six to seven months of inventory.
In terms of mortgage applications and negative home equity, the refi share of applications was above 70% in December, with more than 50% of outstanding mortgages having rates that are 100 basis points above current rates, thus leading to refinancing. For purchase mortgages, weak demand and tight credit have led to a leveling off for loans. The rate is not expected to increase substantially in 2011, according to CoreLogic.
For owner-occupied purchase originations and loan to value ratios, the two most popular purchase mortgage segments, the 75-85% LTV group and the 95-100% LTV proportion, diverged in terms of growth (see chart above). The 75-85% group fell from 45% of originations in 2005 to the mid teens by 2010. Contrary to that trend, the 95-100% LTV group, which usually receives FHA financing, nearly doubled in proportion, from 12% in 2005 to more than 46% in 2010.
See the full CoreLogic report.
Written by Elizabeth Ecker