The Housing Scene by Lew Sichelman

Odd Lots: Neighbors, Ceilings, Showings

Shortly before my wife and I returned home from a few weeks at the ocean last summer, a small EF-1 tornado touched down about 100 yards from our house. No damage was done to our home, but a rather large tree fell across the driveway. By the time we got home, though, two of our neighbors had taken it upon themselves to cut the tree into usable firewood.

Needless to say, we have good neighbors. And as it turns out, many of us do.

“Neighbors in America tend to like and care for each other,” says Improvenet, a contractor-matching service, after recently polling 2,500 people. “Many spend time socializing, and most are quick to offer a helping hand.”

More than two-thirds of those surveyed have gotten to know their neighbors better during the pandemic. Almost that many have made an effort to be more friendly than usual, and nearly 7 in 10 say they appreciate their neighbors more than ever. Amen.

Beyond socializing, the survey found that we are eager to help one another. During the pandemic, 67% have offered aid of some sort to their neighbors, and 62% say they’ve received the same in return.

Some observers are agog about the rise in the conforming loans limits for this year -- now a staggering $822,375 in high-cost markets and $548,000 everywhere else.

That means that with a 20% down payment, someone in one of many coastal markets can buy a million-dollar house with a conforming loan.

The conforming loan ceiling is the maximum mortgage amount that can be acquired from primary lenders by the two government-sponsored enterprises, Fannie Mae and Freddie Mac. The GSEs then place those loans into securities that are sold to investors worldwide.

The process not only helps keep money flowing into the mortgage market, but also allows homebuyers to borrow at slightly lower rates than those whose loans are not sold to Fannie and Freddie. And the loan limit is adjusted on an annual basis.

Some say the new limits are way too high, especially when Fannie and Freddie’s mission is to support middle-market transactions. But according to a new report from their government regulator (the GSEs are still in conservatorship as a result of the 2008 housing debacle), only a relative handful of borrowers took advantage of the 2019 increase, when the ceilings were raised to $726,525 in expensive places and $484,350 elsewhere.

Back then, says the Federal Housing Finance Agency, only 142,000 borrowers took out GSE-backed loans above the 2018 ceiling. That’s just 3.4% of the more than 4 million mortgages acquired by the GSEs.

Still, the typical borrower who secured a mortgage above the previous limit reported an income of $182,000. That’s twice the income of those whose income was below the 2018 ceiling. The median value of the houses they financed was $646,000, also twice the typical value of other borrowers.

Pending home sales are considering a leading indicator in the housing market. But showings may be even a better harbinger of things to come.

Pending sales are houses that are under contract but have yet to close. But showings indicate that would-be buyers are still out there, hunting for just the right place.

Just as not all contracts close, not all showings lead to contracts. But the fact that people are house-hunting in the face of colder weather and a pandemic that just won’t go away means the market remains strong. And according to ShowingTime, a management technology provider, year-over-year activity surged in October.

“House-hunting remained steady as we head into winter, subverting all the usual trends,” said ShowingTime President Michael Lane. “Seeing markets throughout the country record twice as many showings per listing compared to the same time last year suggests pent-up demand hasn’t fully played out yet.”

Fewer people are exiting forbearance programs offered by their lenders, according to the Mortgage Bankers Association. Worse, though, more people who had left relief programs are back in line, seeking help for a second time.

According to MBA’s latest estimate, 2.8 million borrowers are in forbearance plans. Of those, about 20% are in the initial stage, while some 78% are in an extension. The remaining 2% have returned for a second helping.

The good news: “Only” 5.5% of all borrowers are in a forbearance program.

In 1963, Rear Admiral (Ret.) Thomas Lynch played football for the Naval Academy alongside Roger Staubach, who went on to play for the Dallas Cowboys and was enshrined in both the college and professional football halls of fame before going into the commercial real estate business.

Like Staubach, Lynch is now in the real estate game: He’s the executive chairman of NewDay USA, one of the country’s largest mortgage lenders and perhaps the largest one dealing solely with veterans and active-duty servicemen and women.

By the way, Navy was ranked second in the country in ‘63, and played No. 1 Texas for the national championship. (The Middies lost, 28-6.)