Housing-Insight-June-2021

Texas Housing Insight – June 2021 Summary

Total Texas housing sales fell 2.0 percent during the second quarter as inventories remained relatively low in June. Most of the quarterly decline can be attributed to the lack of existing homes priced less than $400,000, offsetting elevated luxury-home sales in the resale market and overall growth in new-home sales. Texas’ homeownership rate decreased amid reduced housing affordability. Overall, housing demand remained healthy but was hindered by depleted inventories, pushing median home-price growth into double-digit territory for the year. Supply-side indicators surged in response to the unprecedented low level of inventory and remained positive compared with year-ago levels.

Supply1

The Residential Construction Cycle (Coincident) Index, which measures current construction levels, elevated nationally and within Texas due to improved industry wages, employment, and construction values during June. Construction activity is expected to remain strong in coming months as indicated by the Texas Residential Construction Leading Index (RCLI), which rose to a record high amid elevated weighted building permits and housing starts as well as a decrease in the ten-year real Treasury bill yield. Although the RCLI indicated strong future activity, the trend flattened as growth rates in building permits and housing starts decelerated. Austin’s leading index reflected statewide fluctuations and similarly reached an all-time high. Houston and San Antonio’s indexes increased, despite issuing fewer building permits. The indexes in the North Texas metros flattened as weighted building permits and residential starts decreased.

According to Zonda, supply-side activity surged at the earliest stage of the construction cycle with a 21.0 percent quarterly increase in the number of new vacant developed lots (VDLs). Austin accounted for most of the gains as VDLs intended for homes selling for more than $400,000 doubled. Development also soared in San Antonio as activity heated up for lots targeted for homes priced between $300,000 and $399,000. New VDLs picked up for the second straight quarter in Dallas-Fort Worth (DFW) despite reduced investment in homes priced more than $500,000. Conversely, Houston’s lot development remained flat mainly due to depressed activity at the bottom of the price spectrum.   

Quarterly fluctuations in single-family construction permits reflected movements in VDLs, although the metric receded 6.1 percent on a monthly basis, flattening the trend after a year-long rise. Houston and DFW topped the national list at the metropolitan level and accounted for most of the state’s improvement, issuing 4,789 and 4,627 non-seasonally adjusted permits, respectively. In Central Texas, permits staggered in June but trended upward after strong quarterly growth. Austin issued 2,346 single-family permits, while San Antonio issued 1,270. Meanwhile, Texas’ multifamily sector registered a surge in issuance as investment shifted from duplexes, triplexes, and four-unit structures to five-or-more units. The multifamily metric remained up 13.5 percent year to date (YTD) relative to the same period last year.

Even as lumber price remained at historically elevated levels, total Texas housing starts increased after stalling during the first quarter. Zonda data revealed roughly 36,800 homes broke ground in the Texas Triangle in 2Q2021, pushing single-family housing starts up 7.2 percent on a quarterly basis amid strengthening economic conditions and robust housing demand. Housing starts in North Texas reached an all-time high, increasing 14.5 percent from last quarter. Activity increased in Houston and San Antonio for homes priced more than $300,000 but slowed in Austin for similarly priced homes.

Single-family private construction values fell from last month’s record high as the metric trended downward in all of Texas’ major metros except San Antonio. Values there normalized quarter over quarter (QOQ). Austin’s single-family construction contracted 1.6 percent.  Despite the downward trend, activity in Houston and DFW expanded 6.6 and 2.5 percent QOQ, respectively.

The number of homes added to Texas Multiple Listing Services ticked up in June after falling to historical lows.  Sales, however, declined as home prices continued to climb, nudging Texas’ months of inventory (MOI) up to just 1.3 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 remained hyper-constrained, dropping to 0.9 months. Meanwhile, the MOI for homes priced between $400,000 and $499,999, the price range at which inventory was at its most expansive, expanded to 2.1 months.

Supply in the major metros was even more constrained, although inventories expanded slightly. Austin’s MOI rose to half a month, while the metric in North Texas and San Antonio flattened to 1.0 and 1.2 months, respectively. Although Houston’s overall MOI was greater than the state average at 1.4 months, inventory for homes priced less than $300,000 slipped below 0.8 months. Depleted inventory is a major headwind to the continued health of Texas’ housing market.

Demand

Sales slowed in June amid ongoing inventory constraints, marking the fifth consecutive quarterly decline as total housing sales fell 2.0 percent QOQ. Activity for homes priced less than $400,000 offset quarterly growth of 11.5 percent in the luxury-home sector. Although the overall decrease occurred in all major metros, only San Antonio and Dallas posted quarterly contractions below the state average.

In contrast to decreased quarterly sales in the existing-home market, Zonda data revealed positive sales growth in three of the major metros’ new-home sectors. New-home sales in Austin, however, tumbled 14.9 percent to 4,936 sales, marking the second consecutive quarterly decline despite accelerated activity for homes priced more than $400,000. New-home sales in North Texas and Houston grew 5.2 and 3.9 percent QOQ, respectively, even as transactions diminished for homes priced less than $300,000. San Antonio’s metric climbed 2.2 percent QOQ.  

Amid recovering economic conditions and overall robust sales activity, Texas’ homeownership rate declined to 63.6 percent, 1.8 percentage points below the U.S. rate, per the U.S. Census Bureau’s Current Population Survey/Housing Vacancy Survey. Nationally, homeownership improved for white households but decreased for minority households and householders between the ages of 35 and 44 years. Metro-level homeownership rates exceeded the national average only in Austin and Houston, where they improved to 65.4 and 66.0 percent, respectively. The metric fell in North Texas and San Antonio to 61.5 and 57.2 percent, respectively. Homeownership rates may continue depressed in the coming months as COVID-19 foreclosure-protection policies expire.

Texas’ average days on market (DOM) continued to trend downward, reaching a record low of 30 days. The historically low DOM indicated robust housing demand as sales decreased because of limited supply. Austin’s DOM shed almost six weeks off its year-ago reading, plummeting to an average of 15 days, while homes in North Texas sold after an average of just 22 and 23 days in Fort Worth and Dallas, respectively. San Antonio and Houston’s metrics also registered steep declines but hovered closer to the statewide average, falling to 30 and 33 days, respectively. All of the major metros experienced record lows in their average DOM, corroborating strong housing demand.

Amid low expectations of additional fiscal and monetary stimulus, economic growth forecasts for the rest of the year cooled as the initial and strongest stage of recovery likely reached its peak, and inflation pressures are believed to be temporary. The ten-year U.S. Treasury bond yield decreased to 1.5 percent after hovering at pre-pandemic levels of 1.6 percent2 for three consecutive months, but the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked up to 2.98 percent. The median mortgage rate within Texas held steady in May3 at 3.2 and 3.0 percent for GSE and non-GSE loans, respectively, but, similar to the national headline metric, remained below year-ago levels. Texas home-purchase applications declined for the third consecutive month in June, falling 25.4 percent YTD, and refinance applications declined 31.8 percent over the same period. Lenders adding more requisites and the shrinking pool of households able to refinance are likely impacting refinance activity. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In May, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage dropped from 88.3 a year ago to 83.3. The debt-to-income ratio (DTI) declined from 37.2 to 34.9, while the median credit score jumped 17 points in the last year to 756. The LTV and DTI for GSE borrowers decreased from 87.3 and 36.0 last April to 84.9 and 35.2, respectively. Overall improved credit profiles reflect the fact that only the most qualified housing applicants are able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand.

Prices

The Texas median home price rose for the sixth consecutive month, accelerating 19.3 percent YOY to a record-breaking $298,013 in June. The ongoing compositional sales shift toward higher-priced homes contributed to a higher median price. The share of luxury-homes sold in Austin more than doubled to two-fifths compared with the same time last year, contributing to the 43.2 percent YOY surge in the median price ($465,900). The Dallas metric ($364,400) increased 22.0 percent, while annual price growth in Fort Worth ($305,100) shot up to 21.7 percent after 23.6 percent growth the previous month. Houston ($301,000) and San Antonio’s ($279,300) metrics elevated 19.4 and 15.7 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and corroborated substantial and unsustainable home-price appreciation as the index soared 13.3 percent YOY. The metric skyrocketed 36.0 percent in Austin, followed by North Texas with annual home-price appreciation at 16.7 and 15.3 percent in Dallas and Fort Worth, respectively. San Antonio posted a 12.9 percent annual hike, while Houston’s index registered double-digit growth for the first time since the series started in 2014, elevating 10.2 percent. Rapid price growth outpaced wage gains, adding additional pressure to housing affordability.

Single-Family Forecast

The Texas Real Estate Research Center updated its forecasts for 2021 and 2022 single-family housing sales (Table 1). Forecasts are subject to change due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to increase 5.5 percent in 2021. The housing market will continue to be characterized by strong demand with low inventories accompanied by strong price growth. Only sales in Houston and San Antonio are expected to exceed the state’s forecast, increasing 7.4 and 6.1 percent, respectively. Meanwhile, single-family sales in Austin and North Texas will likely normalize around 4.8 and 2.6 percent, respectively. Inventories of homes priced less than $300,000 will be especially low, affecting sales in that price range. Inventories should improve in the coming months as listings seem to have reached a trough and are rising, easing some of the price pressures.

Even with shortages of labor, appliances, lumber, and other construction materials driving up prices, new-home construction should register strong positive growth in 2021. The supply bottlenecks faced by homebuilders are anticipated to be resolved in the latter part of this year or next.

Economic growth and demographic trends, such as aging millennials and out-of-state migration, will help drive Texas housing demand in the remainder of 2021 and into 2022.

For 2022, expect the supply of homes for sale to increase and housing demand to remain relatively strong. This will help balance the market and slow home-price growth. Mortgage rates could be somewhat higher in 2022 than 2021 because of changes in the Fed’s monetary policy and because of inflationary pressures. If 2021’s high price growth is added to rising mortgage rates, demand should weaken in 2022. Affordability will continue to be an issue for buyers looking to purchase starter homes less than $300,000. In some regions, it will worsen as sharp increases in land, labor, and material costs make it difficult to build homes in that price range profitably.

Delinquencies and foreclosures will probably increase once forbearance ends in the fall of 2021. Both have been kept low due to government policies, but they are no longer seen as major issues facing the housing market because of the recovery in the labor market and government transfers benefiting households that in the past couldn’t make their mortgage payments on time. Also, given the lack of homes available for sale, the market could absorb an increased number of homes in delinquency or foreclosure. These homes could possibly be sold with a gain even before they enter into foreclosure. (For more information, see 2021 Mid-Year Texas Housing & Economic Outlook.)

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, the share of Texas homeowners behind on their mortgage payments increased to 6 percent in June (Table 2). The metric within Texas’ largest metropolitan areas, however, decreased below the statewide average to 5 percent in Houston and DFW. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months grew to 26 percent in June, higher than the national rate of 19 percent (Table 3). The proportion of delinquent individuals who were at risk of foreclosure declined in North Texas and Houston, falling to 19 and 13 percent, respectively. The Federal Housing Finance Agency’s foreclosure and REO eviction moratoria for properties owned by Fannie Mae and Freddie Mac (the Enterprises) was extended through September 30, 2021. The Centers for Disease Control and Prevention renewed its federal eviction moratorium through the third quarter (October 3, 2021). Continued stability in the housing market is essential to Texas’ economic recovery.

________________

1 All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

2 Bond and mortgage interest rates are non-seasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also non-seasonally adjusted.

3 The release of Texas mortgage rate data typically lags the Texas Housing Insight by one month.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (August 26, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

July 2021 Stats Blog Header

July 2021 DFW Area Real Estate Stats

July 2021 North Texas real estate stats are out and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

New listings are staying on par with where they were in July 2020, in Collin, Dallas, and Denton counties, down just slightly. However, in Rockwall and Tarrant listings are up an average of about 10%. The average sales prices across all five counties have risen to an average of about 20% above last years’ listing prices. The numbers don’t lie, the summertime market in North Texas is still hot!

For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at https://rttprod.wpengine.com/residential-resources/

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Real-Deal-New-Agent-Series-Blog

The Real Deal: A Class Series for New Real Estate Agents is Back!

We are so excited to be bringing back our series for new real estate agents called The Real Deal! You are not going to want to miss this information-packed series. The Real Deal new agent class series is a special group of classes specifically designed for agents who have been licensed less than one year, who are just starting out and building their businesses from the ground up. We will dive into five of the most important areas that new agents need to know about to help you establish your business and be a better REALTOR® to your clients.

Register now at republictitle.com/residential-education

This five part class series includes:

Mastering The Deal With Your MLS Subscription – In this class you will learn MLS basics including understanding the dashboard, the vital tools available to grow your business and tips to better help your clients.
Date & Time: Tuesday, August 17th @ 10:00 am on ZOOM
Instructor: Annette Carvalho-Jordan, VP/Technology Trainer for Republic Title

Making The Deal With Lenders – Dive in to the basics of lending such as pre-qualifications, loan estimates, the mortgage process and the Closing Disclosure (CD).
Date & Time: Tuesday, August 24th @ 10:00 am on ZOOM
Instructor: Shaun Neidigh, VP/Business Development at Republic Title

Writing The Deal – Contracts – We’ll cover the Contracts and Addenda you’ll need to submit each time you write an offer along with an overview of the digital tools you’ll need to write and send them.
Date & Time: Tuesday, August 31st @ 10:00 am on ZOOM
Instructors: Scott Rooker, VP/Residential Counsel for Republic Title

Winning More & More Deals – This class will cover lead generation, winning listing appointments, prospect and client follow-up and more.
Date & Time: Tuesday, September 7th @ 10:00 am on ZOOM
Instructor: Shaun Neidigh, VP/Business Development at Republic Title

Closing The Deal, The Title Process – The big day is here! In this class you will learn about the entire title process including title insurance, the title commitment and what to expect at closing.
Date & Time: Tuesday, September 14th @ 10:00 am on ZOOM
Instructor: Janet Allen, Sr. VP/Business Development at Republic Title

Register now at republictitle.com/residential-education

Home Seller Guide Digital Flipbook Version

Home Seller’s Guide

Home Seller’s Guide Digital Flipbook – Republic Title

We are excited to introduce our new Home Seller’s Guide that is available as a luxury printed booklet or as a digital download. Our Home Seller’s Guides have everything that you need to know for a smooth home selling process. Our Home Seller’s Guide includes information on:

  • Who is Republic Title and Why You Need Title Insurance
  • 7 Benefits of Using a REALTOR
  • Staging Your Home to Sell
  • Lingo You Should Know
  • Home Selling Road Map
  • Types of Closings
  • Avoiding Common Closing Delays
  • What to Expect on Closing Day
  • After Closing Reminders
  • Moving Checklists
  • Republic Title Locations

To view the digital version of the Home Seller’s Guide, visit our website. For a list of more Seller Resources, visit the Seller Resources page on our website. If you are interested in getting printed versions, please reach out to your business development representative.

 

Buying a home is the largest transaction most of us will make in our lives and Republic Title is proud to be the smart option for protecting your property rights.

 

Staging-your-Home-to-Sell

Staging Your Home to Sell

1. Clean like you mean it!
Spring cleaning has nothing on you when you’re getting ready for a showing! A clean home suggests to the Buyer that the current owner has taken good care of the property. If you don’t have the time or have already moved, consider hiring a cleaning service. When your home is on the market, it’s important to keep everything tidy and in “show ready” condition at all times as you never know when a potential Buyer may schedule a last minute tour.

2. Clear out the clutter.
Clutter takes up space and space is what sells. You want Buyers to focus on how great your space is, not how messy it looks. Banish that pile of shoes from the entry, that stack of mail on your dresser, and all the extra small countertop appliances from the kitchen, and other areas that collect clutter. By editing down to the basics, you will make your home look bigger.

3. Go neutral.
You may love a certain bold accent wall color but bold colors can distract from a room’s assets. Repaint your rooms in neutral tones like tans, grays, and whites that allow Buyers to focus on the spaces themselves, not the color of the walls.

4. Give each room a purpose.
If you have a spare room that has been serving several purposes (or has been collecting extra stuff ), now is the time to give it a purpose. Pick a use (office, guest room, crafts room) and stage the space to showcase that purpose.

5. Let there be light!
A home’s lighting can make a big impact on a potential Buyer’s first impression of the home. Brighten up your rooms by replacing the light bulbs with daylight bulbs, open up all the windows to let in natural light (make sure those windows are sparkling clean!), and add floor or table lamps to areas that are dim. A bright,
cheery room looks bigger and more inviting.

6. Focus on fresh.
Track down any odors in your home and eliminate them. Adding in a scented plug-in or air freshener can help. Just don’t overdo it. Scents can be overwhelming and that may turn off Buyers when they step in the house. The goal is a nice, neutral, and clean smell. Keeping a dryer sheet on a new air filter is a great way to do this too!

7. Get rid of personal items.
Buyers want to be able to see themselves in your home, so remove anything overly personal, like family photos, toys, kids’ artwork, and personal collections. Don’t overlook the bathroom – clear bathroom counters of personal items,
like toothbrushes, other hygiene items, and makeup.

8. Organize your closets.
Storage space is a huge selling point. If your closets are stuffed to the brim, Buyers will think you don’t have enough of it. Give your closet some breathing room by removing items you don’t need immediately from your closet and
store the rest in the garage, attic, or in a pod/storage. Then stage your closet with just the necessities.

9. Make an entrance.
If your home’s curb appeal makes a great first impression, potential Buyers will want to see inside. Small fixes can make a huge difference. Plant some colorful flowers in your flower beds, fix any peeling paint, and keep the walkway clear. Adding a row of potted plants along the walkway or a cheerful wreath to your front door can make a big difference. Also, keep your shrubs trimmed and grass mowed the whole time your house is on the market.

10. Finish any projects.
Walk through your home as if it is the first time and make a list of all of the small projects that need finishing. Is there a cabinet that doesn’t shut quite right? Are there scuffs that need to be removed from the wall? Paint that needs touching up? Keep an eye out for areas that could use some extra TLC, then repair as necessary. Not only does this make your place look nice, it shows potential Buyers that you’ve put effort into maintaining the property.

Click here for print version

8 Benefits of Using a Realtor

8 Benefits of using a REALTOR When Buying or Selling a Home

1. REALTORS® are experts in their local real estate market.
REALTORS® understand the area that they work in including market knowledge, utilities, zoning, school information, and the neighborhood background.

2. Real estate is a full-time job.
When selling, your REALTOR® will spend their time pre-qualifying potential Buyers, answering phone calls with questions, marketing your home, and scheduling and attending home showings. When buying, they will find homes that meet your criteria, spend time previewing homes to make sure they are a good fit for you, schedule and accompany you on showings, and write and submit offers. Hiring a REALTOR® is a smart choice for this reason alone. 

3. REALTORS® are professional negotiators.
There are many factors up for discussion in a real estate transaction and negotiating directly with the Buyer or Seller on the other side can be
difficult. A REALTOR® will both fight for your interests and keep the deal from falling part.

4. REALTORS® understand all the complex processes during a real estate transaction.
Buying and selling a home comes with a lot of paperwork. Your REALTOR® will draft contracts and addenda on your behalf and explain these documents to you. They are trained to know all of the important documents needed throughout the buying and selling process.

5. REALTORS® always have your back.
Your REALTOR® has your back whether you’re a Buyer or a Seller. A REALTOR® has a fiduciary responsibility to their clients and are legally obligated to act in their client’s best interest.

6. REALTORS® have access to a vast network of experienced industry professionals.
Through your REALTOR® you will have access to a vast network of experienced industry professionals including inspectors, home repair companies, and title companies like Republic Title. Instead of going it alone, they can connect you with their trusted network.

7. REALTORS® know what to look for when pricing homes to sell and viewing properties to buy.
REALTORS® know what to look for when viewing properties for sale. They are trained to notice things that the average person might not see like foundation issues or floor plans that don’t flow. When selling, your REALTOR® does research to learn about your home and the neighborhood to price it to sell all while getting you the most money possible.

8. When buying a home, a REALTOR® is FREE.
When you hire a REALTOR® to help you purchase a home, it doesn’t cost you anything. The Seller will be paying for all of the commission fees while you get a quality representative to help you during the process. 

Click here for print version

Stats Video June 2021 Thumbnail

June 2021 DFW Area Real Estate Stats

June 2021 North Texas real estate stats are out and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

New listings are almost exactly where they were in June 2020 and down an average of just 3% in all five counties. Interestingly, the number of sales are up in only Collin and Dallas counties and down an average of 8% in Denton, Rockwall and Tarrant counties. The average sales price has risen to an average of over 25% across all counties. As it’s been all summer long, it is a great time to be a seller in the North Texas real estate market, so now is the time to list if you’ve been on the fence.

For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at https://rttprod.wpengine.com/residential-resources/

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Housing-Insight-May-2021

Texas Housing Insight – May 2021 Summary

Total Texas housing sales increased 2 percent in May but continued to normalize from elevated levels the last few months of 2020. Single-family housing permits rose for the third consecutive month, although housing starts stumbled as lumber prices skyrocketed. Overall, sales were persistent despite rising costs and limited supply for homes priced less than $300,000, pushing sales activity toward higher-priced homes. Mortgage rates inched down after rising during the first quarter, but double-digit home-price appreciation chipped away at housing affordability. The unprecedented low level of inventory available for sale is the greatest challenge to Texas’ housing market. The state’s diverse and expanding economy, favorable business policies, and steady population growth, however, supported a favorable outlook.   

Supply*

The Residential Construction Cycle (Coincident) Index, which measures current construction levels, elevated nationally and within Texas due to improved industry wages, employment, and construction values during May. The Texas Residential Construction Leading Index, however, decelerated as building permits (weighted by market value) and residential starts decreased, and the ten-year real Treasury bill increased. Still, the overall upward trend indicated stable future activity. Houston and Austin reflected statewide fluctuations in weighted building permits and residential starts. Houston’s leading index declined, while Austin’s metric remained on an upward trajectory. The Dallas-Fort Worth (DFW) and San Antonio indexes also suggested steady construction in the coming months.

Single-family construction permits maintained steady growth of 4.8 percent in May, trending upward for more than a year. Houston topped the national list with 4,909 nonseasonally adjusted permits despite registering a seasonally adjusted decrease. DFW posted double-digit monthly growth to 4,880 permits. Meanwhile, Austin and San Antonio issued 2,283 and 1,383 permits, respectively. Texas’ multifamily sector registered a steep contraction as issuance shifted from five-or-more units to duplexes, triplexes, and four-unit structures. The metric, however, remained up 6.1 percent year to date (YTD) relative to the same period last year.

Despite strengthening economic conditions and ample housing demand, total Texas housing starts decreased 6.1 percent per capita as lumber prices skyrocketed 60 percent on a monthly basis to a record high. Similarly, single-family private construction values declined 8.7 percent in real terms as the metric trended downward in Texas’ major metros. San Antonio registered a steep plummet in values during May but was still the exception as values extended a yearlong upward trajectory due to strong growth at the beginning of the year.

Texas’ months of inventory (MOI) sank below 1.2 months for the first time in series history as sales activity picked up and the number of homes added to the Multiple Listings Service decreased. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping below 0.9 months. Even the MOI for luxury homes (homes priced more than $500,000), the price range at which inventory was least constrained, slid to two months.

Inventory in the major metros also declined during May. The supply situation in Austin was most critical with the MOI slipping to just 0.4 months. The metric in North Texas decreased to 0.9 and 1.0 months in Fort Worth and Dallas, respectively, while San Antonio inventory matched the statewide average. Houston’s MOI, although slightly greater than the other metros, ticked down to a record-low 1.4 months. The severe lack of inventory is unsustainable and is the main headwind to the health of Texas’ housing market.

Demand

Total housing sales increased 2 percent in May as mortgage rates inched down, stabilizing at its yearlong average. Most of the slowdown is attributed to declining activity for homes priced less than $300,000 due to dwindling inventories. On the other hand, the number of sales for homes priced more than $400,000 improved for the third straight month.

Housing sales also rose on the metropolitan level but extended a downward trend from peak activity a few months earlier. Similar fluctuations across the price spectrum resulted in total sales growth of 2.3 percent in both Austin and Dallas. In San Antonio and Houston, the metric elevated 1.9 and 1.8 percent, respectively. Fort Worth sales, however, flattened amid a severe drop in activity for homes priced less than $250,000. Moreover, the metric dropped 16 percent YTD compared with the statewide contraction of 7.1 percent.

Texas’ average days on market (DOM) fell to a record-breaking 34 days, confirming that demand for housing is still robust, and the YTD decrease in sales is more due to restricted inventory. Austin’s DOM shed more than five weeks off its year-ago reading, plummeting to 18 days, while the average home in North Texas sold after just 25 days in Fort Worth and 26 days in Dallas. San Antonio’s and Houston’s metrics also registered steep declines but hovered closer to the statewide average, falling to 35 and 36 days, respectively.  

Amid low expectations of additional fiscal and monetary stimulus, economic growth forecasts for the rest of the year cooled as the initial and strongest stage of recovery likely reached its peak, and inflation pressures are believed to be temporary. The ten-year U.S. Treasury bond yield stabilized at pre-pandemic levels of 1.6 percent** for the third consecutive month, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked down to 3.0 percent. The median mortgage rate within Texas increased in April*** to 3.0 and 3.2 percent for GSE and non-GSE loans, respectively, but, similar to the national headline metric, remained below year-ago levels. After mortgage rate hikes, Texas home-purchase applications declined for the second consecutive month in May, falling 22.1 percent YTD. Refinance applications improved on a monthly basis but were still down 28.8 percent over the same period. Lenders adding more requisites and the shrinking pool of households able to refinance is likely impacting refinance activity as well. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In April, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage dropped from 87.6 a year ago to 83.8. The debt-to-income ratio (DTI) declined from 36.9 to 34.4, while the median credit score jumped 18 points in the last year to 757. The LTV and DTI for GSE borrowers also decreased from 86.5 and 35.9 last April to 85.7 and 35.3, respectively. Overall improved credit profiles reflect the fact that only the most qualified housing applicants are able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand.

Prices

The ongoing shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the market supported home-price appreciation. The Texas median home price rose for the fifth consecutive month, accelerating 21.6 percent YOY to a record-breaking $292,100 in May. The share of luxury homes sold in Austin more than doubled to two-fifths compared with this time last year, contributing to the 42.1 percent YOY surge in the median price ($447,200). The Dallas metric ($361,900) increased 25.8 percent while annual price growth in Fort Worth ($298,300) shot up to 24.0 percent in May from 14.4 percent the previous month. Houston’s ($291,700) and San Antonio’s ($271,900) metrics elevated 20.6 and 16.1 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Texas’ index corroborated substantial and unsustainable home-price appreciation, soaring 14.8 percent YOY. The metric skyrocketed 38.4 percent in Austin, followed by North Texas with 18.2 and 16.2 percent home-price appreciation in Dallas and Fort Worth, respectively. San Antonio posted a 15.4 percent annual hike, while Houston’s index registered double-digit growth for the first time since the series started in 2014, elevating 11.4 percent. Increasing home prices pressure housing affordability, particularly in an environment of low wage growth.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to recover 2.9 percent in June after two consecutive monthly declines. The metric is estimated to rebound 5.3 and 5.2 percent in Austin and San Antonio, respectively, with more moderate increases of 3.0 percent in DFW and 2.2 percent in Houston. Sales through the first half of 2021 should surpass activity during 1H2020, but the rate of growth has decelerated. On the supply side, inventory should improve slightly, possibly reaching a trough, with the forecast predicting a rise in both active and new listings. Constrained inventory has curbed sales during the past few months.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, the share of homeowners behind on their mortgage payments flattened at 5 percent nationally and within Texas (Table 2). Houston reflected the statewide average, while the metric in DFW hovered higher at 6 percent. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months ticked down from 26 percent in April to 19 percent (Table 3). The proportion of delinquent individuals who were at risk of foreclosure also declined in North Texas, falling from 33 to 24 percent but increased five percentage points to 20 percent in Houston. Both the Federal Housing Finance Agency’s foreclosure and REO eviction moratoria for properties owned by Fannie Mae and Freddie Mac and the Centers for Disease Control and Prevention’s federal eviction moratorium were recently extended through July 31, 2021. The latter is not expected to be renewed again. Continued stability in the housing market is essential to Texas’ economic recovery.

________________

* All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

** Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

*** The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

To see the previous month’s report, click here. For the report from a year ago, click here

Previous reports available: 

2021: January, February, March, April , May, June

2020: January, February, March, April, May, June, July, August, September, October, November, December

2019: January, February, March, April, May, June, July, August, September, October, November, December

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (July 13, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

 

Evaults-&-Enotes

eVaults and eNotes

What does a vault have to do with an eClosing? Plenty. As eClosings become more common, fundamental elements of the mortgage process will change. For example, instead of a paper promissory note, you may have an eNote and eVault. The note is one of the key lender documents within a loan package that borrowers sign at closing. It’s the borrower’s written promise to repay the loan within the specified term. The note is also very important to investors who buy and sell them on the secondary market. The note plays an important part in a mortgage backed security. Think of an eNote as the electronic version of a paper note. The eNote gets electronically signed instead of wet signed at closing. You must be able to identify the original version of the eNote. Think of the electronic version as a PDF. There could be infinite versions of it floating around. How do investors know the version they are buying is the original?  To solve this, the mortgage industry got smart and did two things:

  1. They created the MERS eRegistry, the legal system of record for identifying the controller and location of the authoritative copy of the eNote.
  2. Created standards for how to store eNotes in something called an eVault.

eVaults are technology platforms that are built to support the handling, status, and storage of eNotes. They always have integrations to the MERS eRegistry and often have integrations to other eVaults and trading partners. The MERS eRegistry is the librarian of the eNote world. It tracks who controls each eNote and in which eVault it is stored. When a lender creates an eNote, they register it with the MERS eRegistry  which notifies the librarian of the controller and location of the eNote. If you are exposed to an eNote, now you know what a vault has to do with it.

For more information on eClosings, visit www.republictitle.com/evolve

Click here to go to our YouTube page to see more of our helpful videos. 

eVaults and eNotes

Backup-Offer-Blog-Header

Backup Offers

If you’re a buyer or a Realtor in this housing market, you surely understand the struggles of “winning” the bidding war that many homes for sale are garnering. But, don’t lose hope if you or your buyer doesn’t get the house on the first offer, there’s always the chance for the first offer to fall through and that’s where the backup offer comes in!

Janet Allen and Scott Rooker discuss some of the benefits for both Buyers and Sellers with submitting a backup offer, some common questions surrounding backup offers and even if you can submit a backup offer to a backup offer! Take a listen to their discussion on the topic and visit our YouTube page for even more helpful real estate videos. Click here for this and other videos.

Here’s a link to the Addendum mentioned in the video: https://www.trec.texas.gov/sites/defa…

For more information or to get in contact with your Business Development Representative at Republic Title visit: https://rttprod.wpengine.com/residen