Mortgage Applications Point to Higher Priced Homes
A response to a recent RealtyCheck blog on home prices included the following:
"Someone needs to explain to Ms. Olick what these "price declines" really represent because they most assuredly do not measure how much home values have changed. They simply measure the statistical midpoint for all home sales. So in an economy where people are buying smaller homes that number moves down. That doesn't mean that every house lost that % value."
Thanks, but no explanation necessary, as I believe I covered that a while back (Home Sales Split by Price). But I would like to elaborate a bit on this theme, as we’re starting to see some changes mortgage applications; specifically the average loan amount is rising, which might suggest a turnaround in pricing, due to a change in the type of homes being bought.
The average size of a mortgage purchase application increased 9 percent from December to the end of March, from $214,500 to $233,300 in March, according to the Mortgage Bankers Association. “That points to underlying improvement in borrowers’ appetite for mortgage credit,” notes Paul Diggle of Capital Economics.
Just yesterday analysts at Goldman Sachs said both Toll Brothers and Pulte Homes should benefit from more positive sentiment among high end buyers. Their survey showed 63 percent of respondents expect home prices to be either stable or rise, but 83 percent of respondents with an annual income above $120,000 expect home prices to be either stable or rise. That’s up from 75 percent six months ago.
If in fact the higher end buyers start getting back into the market, or at least the move-up buyers, that will shift the volume to a higher price range and consequently the median price, which gets all that national attention. 72 percent of home sales in February were of homes priced less than $250,000, according to the National Association of Realtors.
Of course, as I always say, all real estate is local, as are all home prices, and let us not forget that.