A report from the Wall Street Journal. “Fair Isaac Corp., creator of FICO scores, will soon start scoring consumers with rising debt levels and those who fall behind on loan payments more harshly. The changes are an about-face from recent years, when FICO and credit-reporting companies made changes that helped increase scores for some consumers. Lenders in recent years had asked the credit-reporting and scoring companies to help them find more borrowers. But lenders are also trying to balance the need to expand loan volume with a rising concern about the longevity of the economic recovery and whether credit scores are making some consumers appear more creditworthy than they are.”
“‘There are some lenders that see there are problems on the horizon in terms of consumer performance or uncertainty [about] how long this [recovery] is going to go,’ said David Shellenberger, vice president of scores and predictive analytics at FICO. ‘We definitely are finding pockets of greater risk.’”
The Greater Baton Rouge Business Report in Louisiana. “The Baton Rouge metro area saw a 43% uptick in foreclosure starts last year, the largest spike recorded among the nation’s largest metro areas, according to data released last week. Local mortgage dealers say the rise in foreclosure starts is a reflection of job losses and a struggling local economy. It’s yet to be seen whether 2019 will be an anomaly or the start of a bad trend.”
“Last week’s reports show Baton Rouge was one of five metros with populations near 1 million that saw a double-digit percent increase in foreclosure starts from last year, reporting a 43% spike in lenders starting the foreclosure process. The second-highest spike was in Atlanta at 25%; followed by Salt Lake City, (17%); Orlando, Florida (16%); and Portland, Oregon (16%). As a whole, Louisiana was among 14 states seeing a year-over-year increase in foreclosure starts at 11%, trailing Rhode Island (54%); Mississippi (39%); Georgia (24%); and Arkansas (14%).”
“Zillow listed nearly 560 homes under foreclosure or pre-foreclosure in East Baton Rouge Parish this week. Twenty-five of those are in full foreclosure, while the remaining fall under pre-foreclosure, which includes properties with scheduled foreclosure auctions. In cases where homeowners have high debt-to-income ratios, low savings, or made low down payments through federal programs like the FHA or rural development program, when that first roadblock hits, like a job loss, mortgage payments are one of the first things to go, says Assurance Finance CEO Kenny Hodges.”
From Mansion Global on New York. “The luxury residential market in The Hamptons closed out a lackluster decade in terms of pricing. In the final quarter of last year, 223 luxury homes, which accounted for 10% of the overall market in the area, sold for an average price of $6.2 million. The number of sales was 7.2% higher compared to a decade ago, while average prices declined 7% from the same time 10 years ago, according to the Douglas Elliman report.”
“A flood of spec homes and ultra-luxurious homes on the market also contributed to a downturn in pricing, according to the report. Compared to 2010, the listing inventory in the fourth quarter of 2019 increased 108% to 552 luxury homes. Buyers typically negotiated a 18% discount compared to a 11% discount in 2010. Although the luxury market in the Hamptons has been steadily slowing down since the peak in 2014 and 2015, the decline accelerated over the last year. Compared to the fourth quarter of 2018, the median sales price decreased 17.4%, while the number of sales dropped 12.9%, according to the report.”
From Curbed Boston in Massachusetts. “December surges in sales and prices don’t mean that the Boston-area housing market has stopped shifting in favor of buyers, according to a new report from the Greater Boston Association of Realtors and the Warren Group. On the contrary, if anything, the activity might represent a last hurrah for the housing-market boom in the region. Besides, the surges were due more to overall economic conditions and to another surge—that of new listings.”
“‘Home values have stabilized over the past year throughout much of the metropolitan area, especially in the mid-level and luxury markets, where the number of buyers and multi-offer situations has been on the decline,’ Jason Gell, president of the realtors association said. ‘As the market slowly becomes more balanced, buyers rather than sellers are dictating price.’”
From Mansion Global on California. “Los Angeles’s luxury new-build condos logged a robust fourth quarter of 2019, as the city’s residences embraced vertical living and the hefty discounts that developers offered, according to Douglas Elliman. Underpinning demand are greater levels of discount as developers use financial incentives to tempt buyers. The typical discount on a luxury new condo from final list price to sale price was a substantial 17.9% in the fourth quarter. During the same period in 2018, the figure stood at just 2.3%.”
“Across the existing luxury condo market, the market was similar, though the numbers were not as pronounced. Transactions rose 11.9% annually in the fourth quarter and prices jumped 12.5% in the same time. Typical discounts though, stood at just 5.2%. The high-end single-family home market was the odd one out in the fourth quarter. Despite a 13.6% increase in sales, prices failed to follow suit and dipped 3.5% at the end of 2019 to $9.6 million. Inventory meanwhile, rose 13.6%.”