🔎 Zillow's surprising prediction for homebuyers

Plus: CFPB addresses mortgage trigger leads

December 04, 2023

Good morning. This is Mortgage Nuggets, where we serve up mortgage news like a master barista—strong and to the point. Let's jump into what we're serving up today!

Disclaimer: Average mortgage rates as of Dec 01, 2023. © MND's Daily Rate Index.

1. Zillow predicts a 'breather year' for homebuyers

On Thursday, Zillow released its predictions for the housing market in 2024. Here’s what they think will happen:

  1. More homes will hit the market as homeowners accept that mortgage rates aren’t falling any time soon.

  2. Home buying costs will level off, giving hopeful buyers a better opportunity to enter the market.

  3. The new starter home will be a single-family rental.

  4. More markets will follow New York City’s lead with rental demand surging near downtowns.

  5. Traditional home buyers will compete with home flippers for homes that need a little TLC.

  6. Artificial intelligence will enhance the home search experience.

2. Monthly mortgage payments on a 5-week decline

The average mortgage payment has declined for the fifth week in a row, according to Redfin analysis.

The typical homebuyer’s monthly mortgage payment was $2,575 during the four weeks ending November 26, down $164 from a peak of $2,739 in October but up 13% year over year.

The bottom line: Monthly payments are falling from their peak because mortgage rates are falling from their peak.

3. Catch up quick

💬 Check out CEO Dave Krichmar in Housing Wire. Conforming, FHA loan limits rose for 2024, but who benefits? (HousingWire)

📈 Housing inventory typically declines in November—but this year it rose. (ResiClub)

🏠 Pending home sales declined 1.5% in October. (Axios)

🌆 These are the world's most expensive cities to live in right now. (Bloomberg)

📌 What individual Fed policymakers are saying about interest rates. (Interactive)

🤑 It’s an age-old question: can money buy happiness? The answer is “yes” for 6 in 10 Americans. For millennials, the share was highest at 72%. (Empower)

4. CFPB addresses mortgage trigger leads

CFPB Director Rohit Chopra testified before the U.S. Senate Committee on Banking, addressing the confusion caused by mortgage trigger leads.

Trigger leads, sold by credit bureaus, alert third parties when a consumer seeks a mortgage, often leading to consumer confusion and privacy concerns.

Chopra acknowledged the complexity of the issue, noting the misconception that initial lenders share this information, and expressed willingness to explore solutions despite the bureau's limited authority.

“Because the credit reporting company is really making that information available. You know, you raise the issue of [the Fair Credit Reporting Act (FCRA)] and data on credit reports. We have a lot more of these companies collecting sensitive information, not just what loan you apply for.”

Trigger lead data can include location information, Chopra said, which has privacy considerations for consumers.

“That data is increasingly being weaponized,” he said. “And so, we’re looking at all of these data issues, and figuring out how to make sure we’re protecting the public.”

5. Where zoning drives up prices the most

Zoning significantly influences housing costs. Strict zoning in cities like San Francisco and Los Angeles greatly increases the price of land.

For instance, from 2013 to 2018, zoning and related restrictions added approximately $410,000 to the cost of a quarter-acre lot in San Francisco, $199,000 in Los Angeles, $175,000 in Seattle, and $152,000 in greater New York.

In contrast, in cities with more relaxed zoning laws like Phoenix, Atlanta, and Dallas, these costs were markedly lower at $22,000, $15,000, and $2,000 respectively.

Not coincidentally, perhaps, many such Sun Belt metros have produced floods of new housing.

☀️ See you on Wednesday!

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