Housing Improving but Seemingly never Recovered

The topline news while accurate is also growing monotonous:  housing market continues to improve.  Freddie Mac added another chapter to the seeminglyrnendless tale today with its updated Multi-Indicator Market Index or MiMi.  The index measures where national, state, andrnthe top 100 metropolitan housing markets stand relative to each one’s own stablernrange of housing activity and whether it is trending toward or further awayrnfrom that point.  </p

The national MiMi improved by 1.33 percent from May to Junernand shows a three-month change of +2.26 percent and 5.41 percentrnyear-over-year.  The MiMi value at thernend of June was 80.3, up 35 percent from its low point in October 2010 but significantlyrnbelow its high of 121.7.</p

The MiMi shows the U.S. housing market continuing to slowlyrnstabilize with two more states, Arkansas and Tennessee entering their outer rangernof stable housing activity, thus joining 18 other states and the District of Columbia.  The District tops the list with a MiMi of 101.7rnfollowed by North Dakota, Montana, Hawaii, California and Utah.   Omaha,rnScranton, Chattanooga, and Madison, Wisconsin raised the number of metropolitanrnareas in stable range to 46 with Fresno, Austin, Honolulu, Salt Lake City, andrnLos Angeles in the top five, None of their MiMi readings have yet reached 100.</p

In June, 45 of the 50 states and 95 ofrnthe 100 metros were showing an improving three month trend. The same time lastrnyear, 33 of the 50 states plus the District of Columbia, and 80 of the top 100rnmetro areas were showing an improving three-month trend.  </p

Freddie Mac Deputy Chief Economist LenrnKiefer said “Housing markets are the strongest they’ve been in years withrnthe National MiMi above 80 for the first time since 2008. Nationally, all MiMirnindicators are heading in the right direction. Robust homebuyer demand hasrnput total home sales on pace for the best year since 2007 and look for thatrntrend to continue as the MiMi purchase applications indicator remains on thernupswing. The West has been especially strong, with many markets postingrndouble-digit growth in their MiMi purchase applications indicator compared to arnyear ago. </p

“While home prices are still 7rnpercent below peak values nationally, price indices in many markets are atrnall-time highs and current low interest rates are helping to support homebuyerrnaffordability,” Kiefer said.  “Mortgagerndelinquencies are coming down rapidly, but are still high in many markets.rnThose markets hardest hit by the Great Recession, including many in Florida,rnare rebounding but they still need to improve to get delinquencies back in linernwith their benchmark historic averages. The key driver of all this recovery hasrnbeen solid job growth, with 96 out of 100 metros and all states within range ofrntheir benchmark historic average unemployment rate.”</p

MiMi combines proprietary Freddie Macrndata with current local market data to assess where each single-family housingrnmarket is relative to its own long-term stable range by looking at homernpurchase applications, payment-to-income ratios (changes in home purchasingrnpower based on house prices, mortgage rates and household income), proportionrnof on-time mortgage payments in each market, and the local employment picture.rnThe four indicators are combined to create a composite MiMi value for eachrnmarket. A market can fall outside its stable range by being too weak torngenerate enough demand for a well-balanced housing market or by overheating tornan unsustainable level of activity.

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