This Week in Real Estate: July 16, 2018

According to a report by data and analytics provider Black Knight Inc. This Week in Real Estate, tappable equity now totals $5.8 trillion nationwide, the highest volume ever recorded. Tappable equity is the share of equity that a borrower can borrow before reaching a maximum combined loan-to-value ratio of 80 percent. Below are a few highlights from the second week of July that influence our business:

* Tappable Equity Skyrockets, But HELOC Loans Decline. The tappable equity held by homeowners increased by $820 billion dollars over the 12 months that ended in March, $380 billion in the first quarter of 2018 alone. Those numbers equate to 16.5 percent growth year-over-year, and 7 percent for the quarter. Equity growth is generally highest in the first and second quarters of the year, but the first quarter growth this year was up 30 percent from the same quarter in 2017. It was the highest single-quarter increase recorded by Black Knight since it began keeping records in 2005. Tappable equity is the share of equity that a homeowner can borrow before reaching a maximum combined loan-to-value (CLTV) ratio of 80 percent.  That equity now totals $5.8 trillion nationwide, the highest volume ever recorded and 16 percent higher than at the mid-2006 peak. The majority – nearly 80 percent – of the tappable equity nationwide is held by borrowers with mortgage rates under the current prevailing rates of around 4.5 percent and 60 percent have rates under 4 percent. The average mortgage holder gained $14,700 in tappable equity over the past year and has $113,900 in total available equity to borrow against.
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* 362,275 U.S. Properties with Foreclosure Filings in First Six Months of 2018, Down 15% From a Year AgoAttom Data Solutions released Thursday its Midyear 2018 U.S. Foreclosure Market Report, which shows a total of 362,275 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – in the first six months of 2018, down 15 percent from the same period a year ago and down 78 percent from a peak of 1,654,634 in the first six months of 2010. Counter to the national trend, 26 of the 219 metropolitan statistical areas analyzed in the report (12 percent) posted a year-over-year increase in foreclosure activity in the first six months of 2018. A total of 188,843 U.S. properties had a foreclosure filing in Q2 2018, down 1 percent from the previous quarter and down 14 percent from a year ago. The second quarter of 2018 was the seventh consecutive quarter in which U.S. foreclosure activity was below the pre-recession average of 278,912 properties with foreclosure filings per quarter in 2006 and 2007.
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* Time Needed to Build a Single-Family Home in 2017. The 2017 Survey of Construction (SOC) from the Census Bureau shows that the average completion time of a single-family house is around 7.5 months, which usually includes almost a month from authorization to start and another 6.5 months to finish the construction. The average completion time in 2017 was the same as it was in 2016, but it was longer than the time needed in 2015 (7 months). The time from authorization to completion varies across the nation and depends on the geographic location, metropolitan status, and whether the house is built for sale or custom-built. According to the 2017 SOC, it takes anywhere from less than a month to 77 months to build a single-family home from obtaining a permit to completion. Among all the single-family houses completed in 2017, houses built for sale took the shortest time, 6.9 months from obtaining building permits to completion, while houses built by owners required the longest time, 12.3 months. Homes built by hired contractors normally needed around 9 months. A large proportion of single-family homes built for sale and custom homes built by contractors on owners’ land began construction within the same month after obtaining building authorizations. However, custom homes built by owners serving as general contractors had a one-month lag between obtaining permits and construction start in 2017. The average time from authorization to completion also varies across divisions. The division with the longest time was New England (10.4 months), followed by the Middle Atlantic (10.3 months), East South Central (9.4 months), East North Central (8.2 months) and Pacific (8.5 months) in 2017. The average waiting period from permit to construction start varies from the shortest time of 17 days in the Mountain division to the longest one of 39 days in Pacific.
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Have a productive week.


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