After three straight months of declining reverse mortgage volume, June produced some much-needed relief in the form of a 3.4% bump in endorsements. But while the industry still has a long way to go in its efforts to recoup the lost ground of recent monthly declines, certain markets have been experiencing considerable growth at the local level during the first half of 2016.
Gains in Home Equity Conversion Mortgage endorsements among eight of the top-10 regions tracked by Reverse Market Insight (RMI) helped lift June’s volume to 3,771 loans, up from the dismal 3,646 loans reported in May.
With June’s numbers now in the books, this brings the industry-wide total of HECM endorsements to 24,664 units through the first six months of 2016. Compared to this same period last year, current year-to-date (YTD) volume is 13.2% lower than the 28,399 total endorsements that were reported during the first half of 2015.
On a YTD basis, most regions are feeling the sting of lagging volumes. All but three areas are reporting less HECM endorsements through June than they did at this time last year. It is perhaps not surprising that these growth-reporting regions are home to the local markets seeing the biggest upticks in their 2016 production year-over-year.
The Northwest/Alaska sits at the forefront of endorsement growth through the first half of 2016. With 1,400 loans through June, the region’s YTD volume is 19.1% higher than the comparable period last year.
Much of the region’s growth derived from its two largest markets, Seattle and Portland, which reported 615 and 499 units through June, representing year-over-year increases of 24.5% and 32.4%, respectively. Boise, Ida., also chipped in for the region’s growth with 186 units, signifying an 8.1% gain over last year.
Double-digit growth was also evident in the adjacent Rocky Mountain region, whose 1,562 units through June climbed 11.2% higher than the 1,405 units the region reported last year. The year-over-year momentum continued for the region, as last year’s YTD total was 9% above its 2014 levels.
Like the Northwest, the Rocky Mountain’s largest metro, Denver, propelled the region’s growth with 900 HECM endorsements in the first half of 2016, representing a 27.1% increase year-over-year. Meanwhile, all other metros in the region reported annual declines, except for Fargo, N.D., whose 30 units are 50% higher than its January-June production in 2015.
Western markets have traditionally been a bastion of HECM endorsement production, particularly in California, which comprises the largest share of HECM volume than any other state. In Fiscal Year 2015, the state accounted for 17.58% of Department of Housing and Urban Development’s HECM portfolio. The next largest share belonged to Texas, which comprised 10.34% of the HUD’s HECM portfolio.
Through the first half of 2016, the Pacific/Hawaii region—where 6 of the region’s total 11 markets are located in California—produced 6,945 total HECM endorsements. This volume, which represents a 3.8% year-over-year increase from 2015, accounts for 28.2% of the industry’s total endorsements that have been reported in the first half of the year.
Middle and smaller markets fuled the region’s growth, notably in Sacramento, Calif.; Fresno, Calif.; and Reno, Nev., which produced endorsement volumes that were 34%, 16.5% and 33.7% higher than what they were one year ago. At the same time, the largest markets, Los Angeles and Santa Ana, reported small year-over-year declines of 2.3% and 0.9% respectively.
To see how other markets performed during the first half of 2016, view the RMI data.
Written by Jason Oliva