The Accunet Mortgage Show (6/14/20) Episode

On this week’s radio show, Brain and David take a look at America’s attitude toward buying a home, mortgage rate updates, and examples of how quickly the world is changing in 2020.

This week’s highlights:

• Mortgage rates reached an all-time low last week
• Fannie Mae released their May 2020 Home Purchase Sentiment Index, giving insight on how everyday Americans feel about buying a home
• People are buying vacation homes at the speed of light. Surprising? Not exactly.

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Analysis & Insight: May 2020 Fannie Mae Home Purchase Sentiment Index

Last week, Fannie Mae released their Home Purchase Sentiment Index covering the month of May. This index gives insight on how everyday Americans feel about mortgage rates, buying a home and selling a home, regardless of what the data says.

This survey is made up of 6 questions asked during a live telephone survey of 1,000 Americans, aged 18 and up. Here’s what we found:

Question 1: Is now a good time to buy a home, or a bad time to buy a home?

Answers:

• 52% Good
• 39% Bad
• 9% Unknown

Accunet’s answer: Good

With mortgage rates at an all-time low, there has never been a better time to buy a home!

Question 2: Is now a good time to sell a home, or a bad time to sell a home?

Answers:

• 32% Good
• 62% Bad
• 6% Unknown

Accunet’s answer: Good

Demand is high, meaning your home is ripe for selling.

Question 3: Will home prices go up or down in the next 12 months?

Answers:

• 35% Down
• 26% Up
• 30% Stay the same
• 9% Unknown

Accunet’s answer: Up

We predict home prices to go up over the next year.

Question 4: Will mortgage rates increase or decrease in the next 12 months?

Answers:

• 25% Down
• 25% Up
• 43% Stay the same

Accunet’s answer: Up

Mortgages are low—meaning a year from now, they’re likely to be higher.

Based on the respondents’ answers, we know that homebuying sentiment is way, way down. In fact, the last time it was this low was in March of 2012, which was a low point for home values.

Despite the generally negative outlook on the housing market, all our data suggests that there has almost never been a better time to buy, sell or refinance a home.

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Why are so many people buying vacation homes?

Last week, Brian was talking to one of the leading Lake Country real estate brokers, and he was surprised to learn that, in Waukesha County, expensive lake properties are flying off the shelves. (By expensive, we mean in the $750,000 – $1,500,000 range. Not exactly pocket change.) Despite everything going on economically, politically and socially, more and more people are flocking to expensive areas.

Why? Well, the answer is more straightforward than you think.

Due to quarantine, not many people are back in the office. In fact, not many people know if they will go back to the office. These people no longer need to go downtown to get to work, opening up their commute requirements. So, the appeal of Lake Country is that they can go downtown for work if needed, but they can also spend the majority of their time at their new vacation home. They could even turn it into a retirement home!

Self-employed mortgages during COVID-19

Under the new normal, nothing stays the same for long. This goes doubly for the mortgage world.

Brian recently got a text from a doctor who wants to write an offer on a home and needed a jumbo mortgage loan in order to do so. Normally, you’d think, “Doctors? That’s a slam dunk. They’re flush with cash,” right? Well, it not that simple.

This doctor doesn’t work for a big conglomerate. Instead, she’s a part-owner of a medical practice that charges $75/month to be a member, and $25/month per visit. (Not a bad business model, we think.) Because she’s self-employed, she needs to prove income stability. Normally, that would mean submitting all income data for the last few years. And, until recently, you were allowed to ignore 2020 income in that report. Not anymore.

Now, you need to submit income data month-by-month for 2020, with the goal being to find a stable “bottom” of your income.

We shared this with the doctor, and she’s working on getting us her income information—but the moral of the story is that the world is changing viciously fast in the COVID-19 economy.