Markets are hard to read, and none more so than housing. This difficulty is partly because housing can be highly place-based in its relationship to value. As housing is a global need, place-based variables can heavily tint any attempt at analysis.
For example, "As of 2020, Hong Kong SAR was the most expensive city for housing property, with the average residential property costing more than US$1.25 million," according to the Statista report Global housing market - Statistics & Facts.
As that report goes on to point out, "Since the outbreak of the coronavirus (COVID-19) pandemic, housing markets all around the world have been booming."
In November of last year, The New York Times quoted Moody's Analytics Chief Economist Mark Zandi saying, "Mortgage rates are sky high, prices are sky high, and there's no inventory."
In the U.S., in particular, the wide range of different urban and rural settings means that there's only so much insight that one can draw from nationwide generalizations. Nonetheless, the scant data such analysis provides seems to indicate that demand remains strong, driving higher prices.
According to the recent Forbes Magazine article Housing Market Predictions For 2023: Are Home Prices Finally Becoming Affordable?, "The median existing-home sales price was up 1.3% to US$359,000 in January compared to a year ago, according to the National Association of Realtors (NAR)."
In November of last year, The New York Times quoted Moody's Analytics Chief Economist Mark Zandi saying, "Mortgage rates are sky high, prices are sky high, and there's no inventory. This may be the worst time in my living history for the home buyer — it just doesn't make sense."
That same article goes on to explain that "between soaring prices and rising rates, the typical home buyer in October paid 77% more on their loan, per month, than they would have last year," noting that "Home contract signings fell for the fourth straight month in September, down 31%, compared with September 2021."
Tightening Supply
More recently, February's raw statistics from the U.S. Census Bureau illustrated that "sales of new single‐family houses in February 2023 were at a seasonally adjusted annual rate of 640,000," with January's median sale price hovering around US$427,500, only some US$50k lower than the average sales price of US$474,400.
The seasonally‐adjusted estimate of new houses for sale at the end of January was 439,000, representing a supply of just 7.9 months at the current sales rate.
As early as January of 2022, The Harvard Gazette reported that "the U.S. housing market is tight and expensive and shows no signs of easing."
"Existing home sales hit a 15-year high in 2021, with 6.12 million sold, a jump of 8.5%, according to the National Association of Realtors," the article explains, going on to note that "Median sales price climbed 15.8% in the period."
Big Buyers
Narrow supply concerns are also being inflamed by a greater concentration of housing ownership in the hands of major conglomerates instead of mom-and-pop landlords.
In April of last year, The New York Times reported, "In cities like Charlotte, [the corporate ownership] trend is exacerbating the shortage of houses for sale, driving up prices and putting homeownership out of reach for many first-time buyers."
As early as January of 2022, The Harvard Gazette reported that "the U.S. housing market is tight and expensive and shows no signs of easing."
"About 2.5 million households shopping for a first home will be shut out of the market this year, estimates Nadia Evangelou, senior economist with the National Association of Realtors," the article explains. "The more that investors buy up entire communities and turn them into rental communities — people don't have a choice anymore."
And while most new home sales now occur for far north of US$400,000, "More than 93% of homes purchased by corporations as of May 2021 were bought for under US$300,000. Many of them were in predominantly Black neighborhoods." This clear price disparity is instrumental in locking many regular wage earners out of the home-buying market, even with extensive loans.
According to a January 2022 article in The Guardian, "The private equity company Blackstone, the world's largest institutional landlord, manages about US$730 billion in funds globally, of which US$230 billion was allocated to real estate in September 2021." With numbers like that, it's easy to see why average Americans — with a personal savings rate of only 4.6% — can't compete. Rocket Companies Inc. (RKT:NYSE) United Wholesale Mortgage (UWMC:NYSE) Wells Fargo & Co. (WFC:NYSE)Loan Depot Inc. (LDI:NYSE) JPMorgan Chase & Co (JPM:NYSE)
Mortgage Companies
In addition to the market issues already mentioned, homebuyers and other borrowers are currently dealing with generationally-high interest rates across much of the Western world, including Canada, the UK, and the U.S. The most visible example of this credit squeeze was the spectacular implosion of alternate lender Silicon Valley Bank, which essentially collapsed on Friday, March 10 — the second-largest U.S. bank ever to do so.
As variable-rate mortgages become unsustainable for current borrowers and lenders limit the number of new loans they originate, consumer capacity to compete with large institutions for a share of dwindling housing stocks is further eroded.
That being said, many mortgage lenders continue to do quite well. According to the most recent public figures from 2021, the top five U.S. lenders were handling almost a trillion dollars in loans at the mid-point of the pandemic.
The top five companies are:
- Rocket Mortgage
- United Shore Financial Services
- Wells Fargo
- Loan Depot
- JP Morgan Chase
Rocket Mortgage, also known as Rocket Companies Inc. (RKT:NYSE), is, by far, the largest lender in the field, holding over a third of that total — some US$40 billion dollars worth of loans — in its portfolio.
Market Watch reports Rocket as having a market cap of US$18.1 billion. It has 124.86 million shares outstanding, with 108.27 million in the public float. It trades in the 52-week range between US$5.97 and US$11.38.
It was followed closely by United Wholesale Mortgage (UWMC:NYSE), a subsidiary of United Shore Financial Services, with US$227 billion worth of loan business.
According to Market Watch, United Wholesale has a market cap of US$8.52 billion.
It has 93.1 million outstanding shares, with 84.45 million in the public float. It trades in the 52-week range between US$2.84 and US$5.47.
Closing out the top five were Wells Fargo & Co. (WFC:NYSE) (US$159 billion), Loan Depot Inc. (LDI:NYSE) (US$137 billion), and JPMorgan Chase & Co (JPM:NYSE) (US$134 billion.)
Wells Fargo has a market cap of US$156.69 billion, according to Market Watch. It has 3.79 billion outstanding shares, all of which are in the public float.
The company trades in the 52-week range between US$35.25 and US$49.49.
Market Watch has Loan Depot's market cap listed as US$$530.14 million. It has 74.73 million outstanding shares. 53.54 million of these shares are in the public float.
The company trades in the 52-week range between US$1.2500 and US$3.5815.
JPMorgan Chase as a market cap of US$411.57 billion, according to Market Watch.
It was 2.94 billion shares outstanding, with 2.91 billion in the public float.
The company trades in the 52-week range between US$101.28 and US$144.34.
You can view analyst coverage for these companies by clicking "Analysts, Newsletter Writers, & More" in the data boxes above.
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