Newsday LLC / Contributor/Getty Images
Fannie Mae reported that the single-family serious crime rate decreased 0.54% in July.
The latest reading is down from the pre-pandemic low of 0.65% and the lowest rate since 2002.
Housing expert Bill McBride cited the data as a reason not to expect massive home price declines.
According to some of the latest mortgage delinquency data, the affordable housing market doesn’t look like it’ll see a massive drop in prices in the near future.
In July, the rate for single-family mortgages that were considered “severely delinquent”—defined as being 90 days or more late in payments or already in foreclosure—at 0.56%, according to Freddie Mac. The month-to-month rate was unchanged. However from July 2022 the rate was reduced to 0.73% per annum.
For Fannie Mae, the other government-backed mortgage finance giant, delinquencies fell from 0.54% in July to 0.55% in June.
In Monday’s edition of his newsletter Calculated Risk, veteran real estate expert Bill McBride pointed out that this is the lowest rate since before the 2008 housing crisis, as well as well below the pre-pandemic low of 0.60%.
McBride wrote, “Freddie’s serious crime rate peaked at 4.20% in February 2010 after the housing bubble and 3.17% in August 2020 during the pandemic.”
Single Family Serious Crime Rate Calculated Risk
A decline in serious crimes indicates lower foreclosure rates, which in turn indicate stable prices. Homes sold in foreclosure are often priced lower, as the lenders aim to get their money back. The dynamism was on display in 2008, when a wave of bank foreclosures dragged down the US housing market, and prices fell as much as 20% in some parts of the country.
It’s also worth noting that the figures for Fannie Mae and Freddie Mac are highly representative of the US mortgage market as a whole, since the majority of mortgages – 65% by the Fed’s calculations – are packaged in mortgage-backed securities issued by the Federal Reserve. two agencies.
Here’s what the crime numbers say, in McBride’s words:
“Since lending standards are solid and most homeowners have sufficient equity, there won’t be a huge wave of single-family foreclosures this cycle. This means we won’t see a massive drop in prices after the housing bubble.”
McBride, whom Business Insider has referred to in the past as the “inventor of the economics blogosphere,” publishes regular housing market updates ranging from trend pieces to more detailed data, such as delinquency rates or multifamily starts.
Read the original article on Business Insider