December 6, 2021 10:30 a.m.
The housing market in America exploded last year. According to the carefully monitored S&P CoreLogic Case-Shiller US National Home Price NSA Index, home prices rose 19.5% in September compared to the same month last year. The August value was 19.8%. The city with the largest increase among the 20 subways the research follows was Phoenix at 33%.
What fueled the rise? Low mortgage rates are one reason. In recent years, a 30-year fixed-rate mortgage has often paid less than 3% interest. Another reason is that Americans have moved from expensive coastal cities like New York, Los Angeles, and San Francisco to less expensive inland cities. These are often referred to as having a better quality of life. In part, the ability to move around is due to the COVID-19 pandemic trend to work from home. People are no longer tied to the locations of the offices they used to travel to.
Ironically, the onslaught of people moving to smaller cities has pushed prices up in those places. Inventories have dwindled and there are fewer homes for buyers.
The mortgage picture has changed a lot in recent months. ATTOM, a major real estate research company, recently published a study entitled “US Mortgage Loans Fall At An Unusually Rapid Rate in Q3 2021”.
The study found that 3.59 million residential mortgages were issued in the third quarter. That was 8% less than in the same quarter last year. The report notes that “it was the first time in a year since at least 2000 that lending declined in both the second and third quarters, which is usually the busy buying season”.
The number of mortgage and refinancing purchases fell. Home equity credit lines increased. What does that mean? ATTOM researchers believe that the real estate boom is “cooling down”. If so, it would break a multi-year trend that began when the real estate market began its recovery from the Great Recession.
There has been a wide range of new home loan rates from city to city and state to state. ATTOM looked at two levels of market size. The first were those with a population greater than 200,000 and with at least 1,000 total loans in the third quarter. The other were cities with more than 1 million inhabitants.
Of all cities in the two population categories, Pittsburgh was the biggest drop in lending, down 53.2%.
Click here to learn about the most expensive cities to buy a home from.
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