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Housing Prices Heat Up in Smaller Cities

The next hot housing markets, believe it or not, are cities like Wilmington, Delaware.

Smaller, inland cities like Wilmington, Philadelphia and Atlanta lead a handful of metro areas where supply is shrinking, leaving more homes to go under contract within days, and for above-list price than a year ago, according to Redfin.

"Competition in Wilmington has become fierce and often buyers have to offer over asking and compete against three to six other offers," said Claryssa McEnany, agent at Redfin. "Too many sellers are staying put. Buyers are motivated and want to move now but there just aren't enough homes available."

To identify the markets that are still heating up, Redfin ranked the top-25 metro areas with populations of at least 500,000 people, according to three indicators of a competitive seller's market:

  • Decreased inventory of homes for sale.
  • Increases in the share of homes going under contract within two weeks of their market debut.
  • Increases in the share of homes selling for more than their list price.

Housing markets that are heating up the most (See Chart Below)

Metro Area YoY percent change in Inventory Off Market in 2 Weeks YoY percentage point change in Off Market in 2 Weeks Sold Above List YoY percentage point change in Sold Above List Median Sale Price YoY percent change in Median Sale Price
Wilmington, Del. -24.5% 25.0% +6.4 pts 22.1% +4.5 pts $219,900 +4.8%
Philadelphia, -22.9% 21.4% +2.4 pts 21.2% +3.0 pts $195,000 +8.3%
Atlanta -19.7% 28.8% +4.1 pts 21.1% +1.0 pts $235,000 +7.3%
Rochester, N.Y. -16.2% 36.4% +5.4 pts 36.6% +8.2 pts $141,050 +4.5%
Greensboro, N.C. -15.6% 11.3% +2.7 pts 23.2% +5.8 pts $166,000 +7.8%
Akron, Ohio -12.5% 15.9% +1.3 pts 22.4% +2.9 pts $143,500 +10.3%
Richmond, Va. -8.8% 39.8% +1.7 pts 29.2% +1.9 pts $235,000 +2.2%
Buffalo, N.Y. -8.3% 38.6% +4.9 pts 39.8% +2.1 pts $159,000 +8.5%

Contrast the numbers above with markets like Seattle, San Jose and Portland, where inventory has been increasing by double digits, and the shares of homes going under contract quickly is shrinking. Homes in the metro areas that are heating up are also considerably less expensive than not only the hot coastal markets, but also the national median price of about $300,000.

Plus, except for Atlanta and Philadelphia, all of the heating-up metro areas are smaller, with populations under 2 million. Atlanta is also a top migration destination, moving up from No. 5 among long-distance Redfin.com user searches in the third quarter of 2017 to No. 2 in the third quarter this year.

"Competition in Wilmington has become fierce and often buyers have to offer over asking and compete against three to six other offers," said Claryssa McEnany, agent at Redfin. "Too many sellers are staying put. Buyers are motivated and want to move now but there just aren't enough homes available."

To identify the markets that are still heating up, Redfin ranked the top-25 metro areas with populations of at least 500,000 people, according to three indicators of a competitive seller's market:

  • Decreased inventory of homes for sale.
  • Increases in the share of homes going under contract within two weeks of their market debut.
  • Increases in the share of homes selling for more than their list price.

Chart below shows the housing markets that are heating up the most

Metro Area YoY percent change in Inventory Off Market in 2 Weeks YoY percentage point change in Off Market in 2 Weeks Sold Above List YoY percentage point change in Sold Above List Median Sale Price YoY percent change in Median Sale Price
Wilmington, DE -24.5% 25.0% +6.4 pts 22.1% +4.5 pts $219,900 +4.8%
Philadelphia, PA -22.9% 21.4% +2.4 pts 21.2% +3.0 pts $195,000 +8.3%
Atlanta, GA -19.7% 28.8% +4.1 pts 21.1% +1.0 pts $235,000 +7.3%
Rochester, NY -16.2% 36.4% +5.4 pts 36.6% +8.2 pts $141,050 +4.5%
Greensboro, NC -15.6% 11.3% +2.7 pts 23.2% +5.8 pts $166,000 +7.8%
Akron, OH -12.5% 15.9% +1.3 pts 22.4% +2.9 pts $143,500 +10.3%
Richmond, VA -8.8% 39.8% +1.7 pts 29.2% +1.9 pts $235,000 +2.2%
Buffalo, NY -8.3% 38.6% +4.9 pts 39.8% +2.1 pts $159,000 +8.5%

Contrast the numbers above with markets like Seattle, San Jose and Portland, where inventory has been increasing by double digits, and the shares of homes going under contract quickly is shrinking. Homes in the metro areas that are heating up are also considerably less expensive than not only the hot coastal markets, but also the national median price of about $300,000.

Plus, except for Atlanta and Philadelphia, all of the heating-up metro areas are smaller, with populations under 2 million. Atlanta is also a top migration destination, moving up from No. 5 among long-distance Redfin.com user searches in the third quarter of 2017 to No. 2 in the third quarter this year.

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AFR To Pay Agent Fees on VA Loans

American Financial Resources beginning on Veterans Day will pay agent fees for brokers and correspondents on VA loan submissions.

The Department of Veterans Affairs generally requires originators to pay an annual fee of $100 per third-party originator for each entity that sponsors their origination. AFR will now pay this fee on behalf of its brokers and correspondents on AFR-related VA loans.

"VA loans are appealing to eligible veterans and their qualified spouses because they offer many benefits to help past and present military personnel purchase or refinance a home," said Bill Packer, COO for AFR. "Covering the VA agent fees is another way for us to help our partners succeed, and in this case, as they help our nation's heroes truly come home.

"All of us at AFR consider it a privilege to assist eligible veterans and their families as they explore home financing options," said Packer. "Originators should focus on educating veterans and their families of the benefits available to them, and ensuring they obtain the best possible financing package, without worrying about an agent fee interfering with the process."

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Home Equity At Historic Levels

The value of homeowner equity has hit historic levels.

Almost 14.5 million properties were equity rich in the third quarter, an increase of 433,000 compared with the same period a year ago, the highest the statistic has been since the data first began being collected in the fourth quarter of 2013, according to the Q3 2018 U.S. Home Equity & Underwater Report from Attom Data Solutions.

A property is considered equity rich when the combined estimated amount of loans secured by the property was 50 percent, or less of the estimated market value of the property.

The 14.5 million equity rich properties in the third quarter represented 25.7 percent of all properties with a mortgage. That’s up from 24.9 percent in the previous quarter, though down from 26.4 percent in Q3 2017.

In addition, more than 4.9 million properties were considered seriously underwater. A property is seriously underwater when the combined estimated balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value. They decreased to 8.8 percent share of seriously, down from 9.3 percent in the previous quarter, but an increase from 8.7 percent in in the same period a year earlier.

“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity rich homeowners. Markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”

Highest seriously Underwater States

States with the highest share of seriously underwater properties were Louisiana (21.3 percent); Mississippi (16.2 percent); Iowa (15.5 percent); Arkansas (15.3 percent); and Illinois (15.1 percent).

Among 98 metropolitan statistical areas analyzed in the report, those with the highest share of seriously underwater properties were Baton Rouge, Louisiana (20.7 percent); Youngstown, Ohio (18.7 percent); New Orleans (18.6 percent); Scranton, Pennsylvania (18.3 percent); and Toledo, Ohio (17.7 percent).

Underforming  Zip Codes

Among 7,290 zip codes with at least 2,500 properties with mortgages, there were 26 zip codes where more than half of all properties with a mortgage were seriously underwater, including zip codes in the Detroit, Milwaukee, Saint Louis, Atlantic City and Cleveland metropolitan statistical areas.

The top five zip codes with the highest share of seriously underwater properties were 08611 in Trenton, New Jersey (71.0 percent seriously underwater); 63137 in Saint Louis, Missouri (66.5 percent); 60426 in Harvey, Illinois (64.2 percent); 38106 in Memphis, Tennessee (60.7 percent); and 44105 in Cleveland, Ohio (59.2 percent).

Top Performing States, MSAs

States with the highest share of equity rich properties were California (42.5 percent); Hawaii (39.4 percent); Washington (35.3 percent); New York (34.9 percent); and Oregon (33.6 percent).

Among 98 metropolitan statistical areas analyzed in the report, those with the highest share of equity rich properties were San Jose (73.9 percent); San Francisco (59.8 percent); Los Angeles (47.6 percent); Seattle (41.2 percent); and Honolulu (40.8 percent).

Outperforming Zip Codes

Among 7,290 zip codes with at least 2,500 properties with mortgages, there were 417 zip codes where more than half of all properties with a mortgage were equity rich.

The top five zip codes with the highest share of equity rich properties were all in the California Bay area: 94087 in Sunnyvale (87.1 percent equity rich); 94085 in Sunnyvale (86.7 percent equity rich); 94086 in Sunnyvale (86.7 percent equity rich); 94063 in Redwood City (85.9 percent equity rich); and 95130 in San Jose (85.7 percent equity rich).

 

 

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