Weekly Economic Update
Economic News:
FHA Adds Application Supplement
The provisions of the ML must be implemented for mortgage applications dated on or after August 28, 2023.
The Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2023-13, Supplemental Consumer Information Form. The Supplemental Consumer Information Form (SCIF) contains information about the borrower’s language preference, if any, and any homeownership education and housing counseling the borrower may have received. This ML requires lenders to provide prospective forward mortgage borrowers with the SCIF at the time of application, and to submit this information to FHA as part of the lender’s required loan application data submissions. Borrowers may elect to provide their lenders with no information, some information or all the information requested in the SCIF. FHA is adopting the SCIF in recognition of the nation’s growing diverse population and the importance of understanding a borrower’s language preference, as well as mortgage literacy that may have been obtained through housing counseling. For FHA, collecting this information will enable a better aggregate view of language preferences for the borrowers it serves, which in turn will influence its own outreach and education strategies. For lenders, this information can influence their considerations for borrower outreach services they may choose to offer now or in the future. Lenders will be able to use the information collected in the SCIF to identify possible language barriers to help them better understand the borrower’s needs during the homebuying process. The provisions of the ML must be implemented for mortgage applications dated on or after August 28, 2023. (Source: FHA)
Fannie Still Expects Recession
A recession will likely begin in the fourth quarter of this year or the first quarter of 2024.
The recent data is mixed enough to create a “muddled picture” of the U.S. economy, but a recession “remains the most likely outcome". Fannie Mae’s Economic and Strategic Research (ESR) Group released its forecasts for the economy and the housing market, stating that while inflation has moderated, it still believes “continued robustness in the labor market risks an entrenchment of some core inflationary pressures.” The commentary continued, “Lessons learned from the inflationary era of the 1970-80s, a time when price pressures eased and then quickly reaccelerated, lead the ESR Group to expect that the Fed will maintain its restrictive monetary policy stance until it is abundantly clear that inflation pressures from the labor market have eased.” The group added, however, that “based on the timing of data releases, that evidence is unlikely to appear until a recession is already unavoidable, making the question of a downturn more a matter of ‘when’ than ‘if.’” According to its revised economic forecast, a recession will likely begin in the fourth quarter of this year or the first quarter of 2024. The Federal Reserve announced in June it was pausing its rate hikes as it tries to bring annual inflation down to its goal of 2%. Fed Chairman Jerome Powell, however, told Congress soon afterwards that interest rates will have to be increased again to curb economic growth and control inflation. The ESR Group said in its commentary that the housing market’s struggles continue to be caused by the lack of existing homes for sale, a trend that did not improve during the spring homebuying season. “This has supported a return to home price growth in recent months and continued to boost new home construction,” the group said. While the ESR Group said it continues to expect housing starts to weaken in coming quarters, that is predicated on the business cycle turning. “ “Core inflation remains sticky, having not fallen as rapidly as other price measures, creating upside risk to the fed funds rate, as noted in the Federal Reserve's Summary of Economic Projections, and making it likely in our view that it maintains a restrictive posture for longer than most market participants initially anticipated,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist, Fannie Mae. Duncan added that the housing market's performance is “a testimony to the strength of demographic-related demand in the face of Baby Boomers aging in place and Gen-Xers locking in historically low rates, both of which have helped keep housing supply at historically low levels.” (Source: Fannie Mae)
Real Estate News:
All Under One Roof
48.8% of households that were surveyed said home affordability and saving money were their main concern when choosing where and how to live.
The number of Americans living with multiple generations under one roof has quadrupled, according to the Pew Research Center. More than 59 million people live in multigenerational households, or homes that include two or more adult generations. Whether it's parents and adult children or a "skipped generation" consisting of grandparents and their grandchildren, these homes offer a unique dynamic that can be both rewarding and challenging. When asked about the familial makeup of the people in their home, respondents said parents and adult children were the most common familial roles represented. While many family members may take on the responsibility of multiple familial roles, everyone plays an important part in living communally. Of those surveyed, 60.9% identified their primary role as a parent or parental figure, and 35.6% identified as an adult child. Just 3.5% of those surveyed identified their main role as a grandparent or grandparental figure.
On average, multigenerational homes consist of about four people. Often, as many as four generations live together in one home. Many individuals surveyed have been living in multigenerational homes for a significant portion of their lives, with 31.7% of respondents reporting a lifelong experience in this type of living situation. It’s evident that multigenerational living is not limited to any particular age group but encompasses individuals from various stages of adulthood. Some 48.8% said home affordability and saving money were their main concern when choosing where and how to live. Roughly 31.2 % of those surveyed said they wanted to spend more time with family and an estimated 27.9% said providing care for older family members was a significant factor. Of the 48.8% who said financial reasons were the main reason for multigenerational living, housing costs were the predominant concern. Interestingly, only 5.2% of those surveyed cited reduced cost of older adult care as a primary factor and just 2.5% cited childcare as their main motivation (7.7% in total).