In case you didn’t know 2020 was a good year to be a homeowner.

The latest Home Equity report from CoreLogic shows over a trillion dollars in equity gained by U.S. homeowners over the last year.

– Homeowners with mortgages saw their equity increase by a total of nearly $1.5 trillion since the fourth quarter of 2019.  This is a 16.2% increase.

– To put it in real dollars, the average homeowner gained approximately $26,300 in equity during the past year.

Not surprisingly, the total number of homes underwater decreased to 1.5 million homes (less than 3% of all mortgaged properties).  This is a 21% drop from Q4 2019.

Frank Martell, President and CEO of CoreLogic, said in a statement, “This growing bank of personal wealth that homeownership affords was noticed by many but in particular for first-time buyers who want a piece of the cake. As a result, we may see more of those currently renting start to enter the market in the near future.”

Rates showed no signs of stopping as they moved upward for the 4th week in a row according to Freddie Mac.

– 30-YR FIXED: Averaged 3.05% with an average 0.6 point.  This is up from 3.02% last week but is still down from a year ago when it averaged 3.36%.

– 15-YR FIXED: Averaged 2.38 % with an average 0.6 point.  This is up from 2.34% last week but is still down from a year ago when it averaged 2.77%

Sam Khater, Freddie Mac’s Chief Economist, said in a statement, “Homebuyer demand is strong and, for homeowners who have not refinanced but are looking to do so, they have not yet lost the opportunity.”

He’s correct, but that window is rapidly closing.  The Mortgage Bankers Association reported on Wednesday that mortgage applications fell slightly from last week.  This decrease was lead by a drop-off in refi activity.

• MBA reported that refi applications, “decreased 5 percent from the previous week and was 43 percent lower than the same week one year ago.”

When the economy is hot two things always spike: gas prices and mortgage rates.  With projections of 6-7% GDP growth don’t expect rates to fall anytime soon.

Jobless claims saw a solid drop from the previous week providing hope for observers that our economy is finally on the mend.

– Seasonally adjusted initial claims were 712,000, a decrease of 42,000 from the previous week’s revised level.

– The 4-week moving average was 759,000, a decrease of 34,000 from the previous week’s revised average.

Employers added 379,000 jobs according to February’s jobs report but the unemployment rate is still above 6% meaning more than 4 million people aren’t working who were last February.

“Oh no.  Here we go again!” – Everyone who only read the headline

Orla McCaffrey over at The Wall Street Journal writes that cash-out refinancings in 2020 hit their highest level since the financial crisis.

– How Much?  Homeowners across the country, “cashed out $152.7 billion in home equity last year, a 42% increase from 2019 and the most since 2007, according to mortgage-finance giant Freddie Mac.”

– Why was this popular?  Two reasons 1) Mortgage rates on a 30-YR fixed fell below 3% for the first time and 2) “The median existing-home price rose to about $310,000 in December, an increase of almost 13% from December 2019”

Why this is different from 2008?  Two reasons 1) “The median credit score of new refis last year approached 800, near the top of the scoring range” and 2) “90% of borrowers who refinanced chose to extract cash. Last year, about one-third of refinancers chose the cash-out option”

It should also be noted that one of the big problems leading up to the housing crash was people using cash-out refis to spur more purchasing.  Some were buying car and boats.  Others were buying more real estate.  The difference in 2020, many seemed to be cashing out to reduce or pay off debts

Read More @ WSJ

☕️ Happy Thursday! We are 6 Days from St. Patrick’s Day & 24 Days from Easter

📈 Stock futures advanced this morning, indicating that shares of giant technology companies would push higher at the opening bell as investors awaited a fresh reading on the labor market. (Wall Street Journal)

☀️ Sunrise Stories: 

Signs Of A Bubble?  Homeowners cashed out $152.7 billion in home equity last year, a 42% increase from 2019 and the most since 2007 (Wall Street Journal)

As vaccine production and inoculations ramp up, a growing number of U.S. states are allowing ever more people to get vaccinated (New York Times)

President Biden to offer hopes for a return to normalcy in first prime-time speech (Washington Post)

This is just nuts!  A new housing study from the Urban Institute finds that one of the ways to deal with housing affordability is to build more houses… (WTOP)

 My mind has been blown! It’s almost like supply and demand influences price or something.