Real Estate Market Commentary - May 2014
by Peter L. Zachary, MAI, MRICS
The Washington Post website "Wonkblog" has an article online on May 28, 2014 entitled, "Freddie Mac: Many of the nation's housing markets are stalling". It states:
"The bad news keeps piling up on the housing front, this time with glum statistics from mortgage giant Freddie Mac, which declared Wednesday that many of the nation's housing markets are stalling.
The third installment of Freddie's "Multi-Market Market Index" (or MiMi), which sizes up homebuying activity and other factors, found that only 10 states and the District of Columbia fall in the "stable" range, as do four of the 50 metro areas included in the index - San Antonio, New Orleans, Austin and Houston.
The outlook for the rest of the housing market looks bleak. "Less than half of the housing markets MiMi covers are showing an improving trend, whereas at this time last year more than 90 percent of these same markets were headed in the right direction," Frank Nothaft, Freddie's chief economist, said in a statement.
The index draws from various data sources, including Freddie's own business with more than 2,000 mortgage lenders across the country, to assess the health of the single-family housing market. The company said it benchmarks a market's performance against that market's historical norm, taking into account home purchase applications, employment, mortgage delinquencies and other factors.
It then averages the weighted indicators to pull together a composite value, with a score of zero indicating a stable market. Based on the index, Freddie labels a market "weak" when its value falls below a negative 2 or "elevated" when it ranks above 2. It does not factor in cash-only sales, which make up roughly 40 percent of home sales today, or loans that do not meet Freddie Mac criteria.
The national value of the index stood at -3.06 points in March, with a three-month flat trend in housing activity. Freddie crunched numbers going back to 2001, and found that the all-time low was -4.49 in November 2010, during the depths of the housing crisis.
North Dakota was the highest-ranked "stable" state, with Wyoming, the District of Columbia, Alaska and Louisiana among the top of the list of 10 states that are considered to be in balance.”
More to come next month. Read previous Real Estate & Housing Market News.
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