CoreLogic released its April MarketPulse report on April 15. The global provider of property information and analytics issues the report as a comprehensive look at the prevailing trends impacting the housing industry every month.
In the April report, CoreLogic economists, led by Chief Economist Mark Fleming, analyzed the rise in U.S. construction employment, discussed the possibility of a housing short-sale cliff and debated whether rising rates and regained equity will incent home equity loan demand.
The report found that as borrowers regain their equity, and interest rates continue to increase over the next few years, the incentive to stay in one’s existing home and finance home improvements though home equity lines of credit will likely increase relative to purchasing a new home or refinancing with cash out. This is good news for the home improvement industry and mortgage lenders who focus on home equity lending, the analysts said, as both will benefit from the resurgent consumer demand.
The April MarketPulse also contends that, although home price appreciation and other factors have contributed to the decline in short sales, the expiration of the Mortgage Forgiveness Debt Relief Act could be having an impact. Since the act expired on Dec. 31, 2013, CoreLogic data shows that borrowers are likely thinking twice about pursuing a short sale without the tax exemption.
Additionally, the report found that, relative to the past couple years, the home construction industry is improving. According to a Bureau of Labor Statistics (BLS) report released in early March, nationwide construction employment increased 2.6 percent year over year in February and has been increasing on a year-over-year basis since June 2011. Although these year-over-year increases look tepid, they are strong when compared to the period of double-digit decreases in construction employment from January 2009 to March 2010.