Much of the news in January was about the devastating Los Angeles County wildfires, which affected more than 20,000 properties. Mortgage rates also headed back up, which put a damper on housing activity at the end of 2024, though some buyers are using buydowns to lower their mortgage costs. A strong U.S. economy and job market are helping most borrowers make their mortgage payments on time, but the share of delinquent borrowers edged up at the end of 2024. Let’s look at where the current landscape stands.
The ZIP codes in the vicinity of the Los Angeles fires encompassed 180,000 homes that had a total value of $350 billion, according to CoreLogic’s ModelX AVM. About 55% of homes in the area have a mortgage with a combined debt of $50 billion for $300 billion in equity. Individually, the average equity a borrower has in the area is $1.1 million. CoreLogic estimates that insured property damages from the fires could reach up to $45 billion.
The average value of a property inside the boundaries of the Los Angeles fires is $2.5 million. Only half of the borrowers inside the fire boundaries have a mortgage, and those that do have an average loan-tto-value ratio of 30, below the national average of 42. The properties in the boundaries of the Palisades Fire are far more valuable, with a median value of $3.3 million versus $1.2 million in the Eaton Fire boundaries. Furthermore, only 40% of Palisades Fire homes have a mortgage, compared with 63% in the Eaton, meaning that affected Eaton Fire residents are more likely to face financial hardship.
The share of mortgages in delinquency (30 days-past-due or more) increased to 3.2% in November 2024, the highest rate since February 2022. The delinquency rate was a bit higher than in November 2023 (2.9%), and while the share of mortgages six months or more past due decreased, those in earlier stages of delinquency increased. The foreclosure rate dropped back to 0.2% after sitting briefly at 0.3% in September and October.
The increase in the mortgage delinquency rates was felt across the country, with nearly 80% of metro areas posting increases in overall delinquencies and 35% of metropolitan areas showing an increase in serious delinquencies (90 days past due or more). Among states, Florida, Georgia and North Carolina had the highest percentage point increases in their delinquency rates from November 2023 to November 2024. Among metros, the largest increases were in Asheville, North Carolina (up by 3.7 percentage points), Augusta-Richmond County, Georgia-South Carolina (up by 2.6 percentage points) and Tampa-St. Petersburg-Clearwater, Florida (up by 2.2 percentage points). Increases in delinquency rates often follow natural disasters and usually drop back to the pre-disaster level after time. Also, while the mortgages on homes in disaster areas may be showing as delinquent, they may also be part of a forbearance program.
Mortgage rate buydown activity increased in 2024. The share of loans with buydown points increased to 3.1% in 2024 from 2.2% in 2023, with activity peaking in December 2023. States with higher share of new home sales, such as Texas and Nevada, often see higher buydown activity.
Gen Z — the youngest pool of buyers — is entering the housing market. The Gen Z share of home-purchase applications accounted for 13% in 2024, a three-percentage point increase from 2023. Gen Z represents a higher proportion of homebuyers in Midwestern markets and a lower proportion in more expensive coastal areas. Many Gen Z homebuyers are single, but about 45% of the applicants had co-applicants in 2024. These co-buyers may include friends involved in co-living arrangements or parents who are co-signing.
Mortgage rate buydown activity increased in 2024. The share of loans with buydown points increased to 3.1% in 2024 from 2.2% in 2023, with activity peaking in December 2023. States with higher share of new home sales, such as Texas and Nevada, often see higher buydown activity.
Mortgage buydown points are particularly popular in certain Western states: Figure 1 illustrates the share of home purchase loans with buydown points by state. A higher proportion of mortgage buydown activity is observed in Colorado (10.5%), Utah (9.3%), Hawaii (8.5%), Arizona (8.3%) and Idaho (7.4%).
The active inventory of existing homes for sale took a sharp seasonal downturn, closing the year 2% below 2023 in December after performing well above 2023 for most of the year: The number of new weekly listings also took a typical seasonal downturn, trending 10% below 2023 in December. While the slowdown in new listings follows seasonal declines, the early-year pickup in new listings offered some hope for better supply conditions.
Despite mortgage rates creeping back up since September, pending home sales still outperformed 2023 to close out December. Pending sales were 11% higher than in 2023. As a result, monthly sales have seen an increase and closed out December 4% above 2023, despite rising interest rates at the end of the year.
Median list and closed home prices continued their longtime upward trend nationally: The national median list price closed out the year up 10% higher than 2023 in December and closed prices were up by 11%.
Written by: Economy Team