DS News

33 » VISIT US ONLINE @ DSNEWS.COM HOMEBUYERS BECOMING MORE CYNICAL ABOUT ELECTION More than one-quarter of homebuyers believe that the 2016 presidential election, which is only four months away, will adversely affect the housing market, according to a survey conducted by Redfin. In a survey of 975 homebuyers in 36 states and Washington, D.C., 27 percent of respondents said they believe the outcome of November's election will have a negative impact on housing—an increase of 12 percentage points since the last such survey in February, according to Redfin. Housing has not exactly been at the forefront of issues during each candidates' campaign, though two out of the three remaining candidates have rolled out plans to increase the five-decade-low homeownership rate. e presumptive Republican nominee, Donald Trump, has not said anything about housing policy; the closest he has come to housing is saying that he would completely overhaul the Dodd-Frank Wall Street Reform Act if he is elected. Presumptive Democratic nominee Hillary Clinton, introduced a plan in February that involves a housing investment of $25 billion dollars and is dedicated to "lifting more families into sustainable homeownership and connecting housing to opportunity." Democratic candidate Bernie Sanders unveiled a plan in April that includes expanding affordable housing initiatives and significantly raising the minimum wage. "While homeowner anxiety over the election is clearly mounting, the likelihood of an immediate shock to the market is rather slim," said Redfin chief economist Nela Richardson. "It will take considerable time for our next commander in chief to implement policies that have any impact on housing. at said, the next president will inherit the lowest homeownership rate in 48 years and so far the voters have heard little to nothing about what the candidates will do to improve their chances of becoming homeowners. Candidates need to start discussing housing on the campaign trail now." According to Redfin, the 40 percent of survey respondents were millennials and 37 percent were first-time homebuyers. In addition to more homebuyers believing that the election results will negatively affect housing, the share of respondents who believe the election will have no effect on the housing market dropped significantly from the last survey in February (from 75 percent to 63 percent), indicating that more homebuyers believe the election will affect housing. Meanwhile, 1 percent of survey respondents said they will absolutely leave the country if the candidate they endorse is not elected president in November. Another 9 percent said they would either consider or seriously consider leaving the country. Approximately 28 percent of respondents said they believe that a candidate other than Trump, Clinton, or Sanders would better serve the housing market. Sanders had the edge among survey respondents as to which of the remaining three candidates would serve housing the best (26.5 percent endorsed Sanders). DELINQUENCIES SPIKE AMONG AMORTIZING HELOCS Second-lien home equity lines of credit (HELOCs) have experienced year-over-year delinquency rate increases in two of the past six months, the first such increases in nearly four years (since June 2012), according to data released by Black Knight Financial Services. With a few million more HELOCs set to amortize over the next couple of years, there will likely be plenty of refinancing opportunities as homeowners look for a way to handle the higher payments they are facing. According to the April 2016 Mortgage Monitor, the increases were largely driven by an 87 percent spike in the number of delinquencies among 2005-vintage HELOCs that began amortizing in 2015 at their 10-year end-of-draw period. Heading into 2015, the 2005-vintage HELOCs made up about 17 percent of all active HELOCs in the United States. "Due to the large volumes in the 2005 vintage, those delinquencies are more noticeably impacting overall year-over-year HELOC delinquency figures, whereas up until six months ago, improved performance of other vintages had been sufficient to mask delinquency rate increases of vintages experiencing draw period expirations," Black Knight reported. According to Black Knight, the trend of rising delinquencies among HELOCs is likely to continue in the next couple of years, since HELOCs with a 2006 vintage—totaling about 1.25 million—began amortizing this year and accounted for 17 percent of all active HELOCS. HELOCs with a 2007 vintage currently account for about 18 percent of all active HELOCs. e delinquency rates among 2006-vintage HELOCs already appears to be increasing, having crept up by 5 basis points over the first quarter of 2016, according to Black Knight. ere is a chance that HELOCs amortizing over the next year or two might take advantage of the low interest rate environment to refinance when they reach the expiration of their 10- year draw periods. e prepayment activity among 2006-vintage HELOCs has been higher in the last 12 months than what the 2005-vintage HELOCs have experienced, and the 2007-vintage HELOCs may similarly benefit from low interest rates, Black Knight reported. Some 2006-vintage HELOCs may have difficulty refinancing due to larger balances and higher negative equity rates, which equate to larger payment shocks. Over the past two years, approximately 30 percent of HELOCs reaching the end of their draw period were either paid off or refinanced. Whereas 2005-vintage HELOCs made up 17 percent of all active HELOCs at the beginning of 2015, that percentage shrank to 13 percent by the beginning of 2016. The number of consecutive months of year-over-year declines for the nation's foreclosure inventory as of April 2016. Source: CoreLogic STAT INSIGHT 54

• Cover