Although 2017 was a difficult year for some coastal communities, mortgage delinquencies continue to decline as the economy ramps up.
Although hurricanes devastated properties in Florida, the Panhandle and south Texas, a thriving national economy continues to buoy American homeownership, according to a CoreLogic Loan Performance Insights Report.
Mortgage Delinquencies Decline Despite Severe Weather
“Last year’s hurricanes continue to have an effect on loan performance in affected markets, showing up in statewide data. Serious delinquency rates in February were 50 percent higher than in August 2017 in Texas, and nearly double in Florida, even though the wind and flood damage was primarily in coastal markets,” Frank Nothaft, chief economist for CoreLogic, reportedly stated in a press release.
While the catastrophes such as hurricanes Irma and Harvey profoundly impacted coastal communities and put an onerous drag on delinquency rates, national numbers continue to trend in a positive fashion.
During February of 2018, only about 4.8 percent of U.S. mortgages entered some stage of delinquency. That was a surprising 0.2 decline from the previous year. In turn, foreclosure inventory rates declined from 0.8 to 0.6 percent and foreclosure inventory has enjoyed its lowest levels in approximately 10 years.
“At the same time, our CoreLogic U.S. Home Price Index showed a 6.4 percent increase in home-price appreciation for the 12 months, which ended in February 2018. These factors bode well for the fortunes of both homeowners and mortgage servicers,” economist Nothaft reportedly stated.
GDP Points To Economic Uptick
One of the driving forces behind a thriving real estate market is the growth or slippage of the Gross Domestic Product (GDP).
According to data released by the Bureau of Economic Analysis, the country appears to be on a economic tear with the 2017 and early 2018 numbers far outpacing 2016. The quarterly reports over the last 12 months showed the GDP topping 3 percent twice, 2.9 once and we’re waiting for definitive markers for first-quarter 2018, but they appear strong.
It’s reasonably safe to say that economic prosperity generally has a positive effect on homeownership because it often reflects growing corporate profits, potentially rising wages, job security and low unemployment.
The unemployment rate has widely been reported as hitting 17-year lows and African-American and Hispanic unemployment are said to be at historic lows. While these measures may not have a direct and discernable correlation to everyday people being able to afford their mortgages, they do point to overall economic prosperity. Couple these economic trends with expected federal tax savings and foreclosure rates could continue to drop.
Although no one can make assurances about the future of the economy, these are positive indicators for people thinking about purchasing a home.