Improving Mortgage Performance equals Best MiMi in 15 Months

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The Multi-Indicator Market Index (MiMi) produced by Freddie
Mac’s Office of the Chief Economist shows that the U.S. housing market is
within the outer range of being considered stable.  The national value of the index improved by
0.59 percent
from September to October and has gained 1.54 percent over the
last three months. The MiMi in October stood at 81.9.

On a year-over-year basis, the national
MiMi value has improved +6.31 percent. Since its all-time low in October 2010, it
has rebounded by 38 percent, but remains significantly off its high of
121.7. Two additional
states-New York and Kansas-entered their outer range of stable housing
activity, as did three more metro areas: New York, New York; Minneapolis,
Minnesota and Palm Bay, Florida.

Freddie Mac Deputy Chief Economist Len
Kiefer said, “The strong annual change of 6.31 percent is the best
improvement we’ve seen in the MiMi on a year-over-year basis since July 2014.
While strong home purchase applications and rising home values in some markets
are contributing to this improvement, its largely more of a reflection of
mortgage delinquencies
continuing to decline at a steady pace, especially in
those hardest hit markets, and a better employment picture overall. 

“States in the West are still seeing
some of the strongest housing activity and among those Utah really stands out.
Not only do many of the state’s local housing markets such as Salt Lake City,
Provo and Ogden have strong buyer demand but they’re also still largely
affordable for the typical family looking for a median priced home. This is due
to the state’s robust economy and better than average job creation.”

MiMi monitors and measures the
stability of housing markets in each of the states and in the top 100 metro
markets by combining proprietary Freddie Mac data with current local market
data to assess where each single-family housing market is relative to its own
long-term stable range.  Freddie Mac
looks at home purchase applications, payment-to-income ratios (changes in home
purchasing power based on house prices, mortgage rates and household income),
proportion of on-time mortgage payments in each market, and the local
employment picture to create a composite MiMi value for each market. MiMi also
indicates how each market is trending, whether it is moving closer to, or
further away from its stable range. A market can fall outside its stable range
by being too weak to generate enough demand for a well-balanced housing market
or by overheating to an unsustainable level of activity.

Thirty-two of the 50 states plus the
District of Columbia are now considered to be in a stable range for housing
activity.  The top ranked jurisdictions
are the District of Columbia (101.1), North Dakota (95.3), Montana (95.1),
Hawaii (94.1) and Utah (92).  At the same
time in 2014 21 states and the District of Columbia were in the stable range.

Twenty-nine of the top 100 metro areas
were considered stable in October 2014; that number has now increased to 53
with Fresno (101.9), Austin (96.5), Honolulu (95.5), Salt Lake City (95.2) and
Los Angeles the five top-ranked.  

The five most improved states over the
last month were New York, New Jersey, Florida, Nevada, and Oregon, each
improving more than 1.25 percent.  On an
annual basis the leaders were Florida (+14.47%), Oregon (+12.2%), Colorado
(+11.97%), Washington (+11.69 %) and Nevada (+11.13%).

The most improved metro areas from
September to October were Allentown, Tampa, Cleveland, and Palm Bay, Florida
all of which showed improvement ranging from 1.91 to 1.99 percent, and Las
Vegas, up 1.69 percent.  On a
year-over-year basis, the most improving metro areas were Orlando, (+17.94%),
Tampa, (+16.94%), Cape Coral, (+16.60%), Denver, (+15.21%) and Palm Bay, (+14.78).

 

 

In October, 43 of the 50 states and 89
of the top 100 metros were showing an improving three-month trend compared to a
year earlier when 36 states and 70 of the top 100 metro areas were doing so.  

Kiefer continued, “We do expect
homebuyer affordability to decrease in the coming year, but we don’t expect
tighter monetary policy to generate a spike in longer-term interest rates in
the foreseeable future. The Fed has committed publicly to measured increases in
short-term rates. While mortgage rates will rise modestly, they will still
remain at historically low levels. Combined with stronger job and income
growth, the net result may be strong growth in household formation,
construction, and home sales.”

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