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How will coronavirus impact the global real estate economy?

The novel coronavirus (COVID-19) continues to reshape the way our world is interconnected, from how we conduct business to how we live our lives.

As we grapple with these changing times, COVID-19: Housing Market Updates will explore topics involving the intersection of the coronavirus pandemic and the economy, housing market and risk. In the housing analysis tab, economists and risk experts will share insights on the evolving situation while key interviews and press can be found in the media coverage tab.

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Discover the challenges and opportunities in these unprecedented times from CoreLogic economists and risk experts.

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Stay updated on recent reporting with our experts as they navigate the implications for the housing economy.

Latest Analysis

April 6, 2020 | 5:44AM PT

Maiclaire Bolton Smith, Senior Leader of Research and Content Strategy at CoreLogic sits down with CoreLogic Principal of Industry Solutions Tom Larsen to discuss the financial and operational impacts posted by the COVID-19 global pandemic to the property insurance market.

Maiclaire: My name is Maiclaire Bolton Smith and I am the Senior Leader of Research and Content Strategy with CoreLogic. Today, I’m joined by Tom Larsen, Principal Industry Solutions to discuss the property insurance market, looking at the financial and operational impacts posted by the COVID-19 global pandemic. Tom, thank you for joining me. Can you comment on the threat this pandemic poses to insurers?

Tom: Thank you Maiclaire. The onset of the COVID-19 pandemic is forcing many of us to reconsider how our industry interacts with its customers and how our industry will emerge from the other side of this virus.

When we think of the immediate impacts of COVID-19 on the insurance industry, we think of increased loss exposure. And the increased loss exposure to the industry is primarily from business interruption, event cancellation and accident and health lines. CoreLogic strongly supports the property insurance markets and these are exposed primarily to potential commercial business interruption losses.

Originally posted on April 1, 2020 | 4:52PM ET

Bin He, Sr. Leader, Science & Analytics 

There is a widespread expectation that the U.S. as well as the whole world have entered or will be in recession amid the coronavirus pandemic. Goldman Sachs and JPMorgan forecast a more than 20% US GDP contraction for next quarter[1]. The International Monetary Fund declared a global recession[2] . In this blog, the impact of the past five recessions on regional housing markets is examined and sheds some light on what may occur during this coming recession.

April 1, 2020 | 6:21AM PT

Tom Larsen, Principal, Industry Solutions

As our society addresses the effects of the COVID-19 pandemic with quarantines, shelter-in-place rules and business disruptions, a rational next step is to look for sources of funds to cover the expenses and revenue shortfalls that businesses may have.

Business interruption insurance is designed to cover a loss of income incurred by an organization due to a slowdown or suspension of operations at its premises. Business interruption insurance endorsements may also include extra expenses needed to operate and contingent business interruption where a location is impaired due to damage.

In general, commercial property insurance policies are not triggered unless there is physical damage at an insured location, and it is not clearly established that the COVID-19 pandemic represents physical damage to properties. A communication of the American Property Casualty Insurance Association (APCIA) notes, “Many standard event cancellation, business interruption, and travel insurance policies do not include coverage for communicable diseases such as COVID-19. Although, some businesses have purchased broader protections through specialized coverage.” If the interpretation of current policy wordings remains consistent, then most businesses do not have insurance coverage for the impacts of COVID-19.

March 30, 2020 | 8:36AM ET

Molly Boesel, Principal, Economist

According to the Freddie Mac Primary Mortgage Market Survey, the four-week moving average on the 30-year mortgage was 3.45% through March 26, 2020. With the trend of declining interest rates that began in early 2020, CoreLogic is able to monitor the share of consumer held mortgage debt that may be able to refinance and potentially save on the mortgage payments. CoreLogic tracks the current interest rates on outstanding mortgages in TrueStandings Servicing, a servicer-contributed database.

Rate Drop

The accompanying chart shows the cumulative share of outstanding debt by its interest rate for mortgages with 30-year terms. As the chart suggests, 50% of outstanding debt has an interest rate of more than 4%, while 24% has an interest rate greater than 4.5%. Those shares equate to about $2.5 trillion to $5.3 trillion in outstanding debt that would likely be “in the money” to refinance.

Because a refinance isn’t free, borrowers that want to save money on their payments would need to have mortgage loans with rates above the currently offered mortgage rates. However, depending on other closing/refinance costs, there is still a significant portion of the outstanding debt well above the rate where borrowers would be “in the money” to refinance. Mortgage industry processing capacity has contracted and could extend the duration of a refinance wave if mortgage rates remain low.

March 27, 2020 | 7:24AM ET

Frank Nothaft, Chief Economist

To observe effects of COVID-19 on mortgage demand, we used CoreLogic Loan Application data through March 13, 2020 and compared the recent trend with the 2019 and 2018 trends. The charts show a two-week moving average of the number of home-loan applications, relative to the first two weeks of January for each year (that is, we create an index of application volume, with the first two weeks of January set equal to 100).  Data for 2019 and 2018 were similar and were averaged together.  

Figure  1:  Purchase Applications Dip In First Half Of March Compared With Prior Years

Figure 1 shows home-purchase loan applications and Figure 2 shows refinance applications. Two dates are highlighted on each chart:  February 29 recorded the first death in the U.S. from COVID-19 and announcement of travel restrictions to Italy and South Korea; on March 13 President Trump declared a national emergency.[1]

Figure 2:  Refinance Applications Jumped As Mortgage Rates Dropped

For home-purchase applications, the volume of activity picked up significantly after 2020 began, and during the first two months of the year was 3% above the same period in 2019.  Activity slowed during the first two weeks of March and was running below the pace in 2019.  Through March 13, purchase applications for 2020 year-to-date totaled about the same as during the same period in 2019.

Refinance applications rose this year as mortgage rates fell.  Volume soared as interest rates on fixed-rate loans reached new lows in early March.  During the first two weeks of March, applications were about double the level at the beginning of January and were more than four times the volume during the first two weeks of March 2019.

We will continue to monitor the performance of the housing market in light of COVID-19 using high-frequency and current data.

March 25, 2020 | 9:25AM ET

Maiclaire Bolton Smith, Senior Leader of Research and Content Strategy at CoreLogic sits down with CoreLogic Chief Economist Frank Nothaft to discuss some initial insights into the impact of this global pandemic on the U.S. housing economy.

Maiclaire: Things are changing so quickly. I know it’s difficult to say, but are there any early indicators that show a shift in the housing and mortgage market?

Frank: While March month-end data will be more telling, data for the week ending March 22nd suggests that home-purchase mortgage applications, availability of homes for sale, and the number of home-purchase contracts signed are all showing weakness due to COVID-19, particularly given that this is typically the ramp up to the spring home-buying season. Rental applications among prospective tenants also appear to have dipped as many households are required to ‘shelter in place’.

Forbes: Coronavirus Casts A Dark Cloud Over The Outlook For The Spring Home Buying Season

The U.S. housing market got off to a bright start this year, but as the coronavirus crisis grips the country, dark clouds are hovering over the spring home buying season. And home sales will likely be much lower than had previously been expected. 

Frank Nothaft, chief economist for data analytics firm CoreLogic, said home price appreciation was in a prime economic growth state prior to the pandemic with low mortgage rates, rising family income and a lean inventory of homes for sale to kick off the year’s quick growth.

Read the Full Article

CoreLogic Analysis in the News

The housing market is in uncharted waters as COVID-19 continues to upset every aspect of the industry, from see-sawing mortgage rates to canceled open houses due to social distancing rules.

There is no point in denying reality, which has become clear with frightening speed: The U.S. and global economies have gone from fairly robust stability to free fall. There is hope that public health measures may succeed in halting the virus, the downward slide may be arrested — and normal activity may be restored — within a relatively short period. Meanwhile, however, the watchword of public and private institutions in financial matters must be forbearance.

San Diego County's home market started 2020 with prices rising more than any other West Coast market and much of the nation.

Prices in the San Diego metropolitan area had risen 5.1% in a year, as of January, the S&P CoreLogic Case-Shiller Indices reported Tuesday.

The lowest mortgage rates on record are colliding with the prospect of an economic downturn prompted by the coronavirus outbreak, setting the stage for an unpredictable spring selling season in the housing market.

Just-released foreclosure numbers are likely to be the calm before the storm.

The latest foreclosure and mortgage delinquency data for February shows the lowest volume of forced home sales in decades. But that was before millions of Americans were thrown out of work and rising levels of illness from the pandemic made it harder for borrowers to make their payments.

Frank Nothaft

Frank Nothaft

Executive, Chief Economist, Office of the Chief Economist

Frank Nothaft holds the title executive, chief economist for CoreLogic. He leads the Office of the Chief Economist and is responsible for analysis, commentary and forecasting trends in global real estate, insurance and mortgage markets.

Before joining CoreLogic Frank served in a variety of leadership positions with increasing responsibility at Freddie Mac. Most recently, he was vice president and chief economist responsible for forecasts, research and analysis of the macro economy, housing and mortgage markets. Prior to Freddie Mac, Frank was an economist with the Board of Governors of the Federal Reserve System, where he served in the mortgage and consumer finance section and as assistant to Governor Henry C. Wallich.

Molly Boesel

Molly Boesel

Principal, Economist, Office of the Chief Economist

Molly Boesel holds the title principal, economist for CoreLogic in the Office of the Chief Economist and is responsible for analyzing and forecasting housing and mortgage market trends.

She has more than 20 years of experience of expertise in mortgage market analysis, model development and risk analysis in the housing finance industry. Molly previously worked at both Fannie Mae and Freddie Mac. While at Fannie Mae she provided Fannie Mae’s official monthly forecast for the economy, housing market, and mortgage market stocks and flows, and provided analyses on trends in the mortgage market, including characteristics of borrowers, homeowners, and mortgage products.

Tom Larsen

Tom Larsen

Principal, Content Strategy, Insurance Solutions

Tom Larsen is a content strategy principal for CoreLogic Insurance and Spatial Solutions. In this role, Tom is responsible for subject matter expertise and thought leadership focused around driving revenue growth and profitability goals via the identification of new solution areas and continuous white space capture.

Tom joined the CoreLogic team in 2013 with the acquisition of EQECAT, Inc., a catastrophe risk management organization where he held the title of Senior Vice President and Chief Product Architect. Tom has experience in natural catastrophe modeling for the insurance and reinsurance industries, and government dating back to 1989. He has written articles for numerous trade publications, participated on various industry panels; as well undertaken speaking engagements on the topic of the financial impacts of natural catastrophes.

Tom earned a Masters of Engineering in Structural Mechanics from the University of California, Berkeley, and a B.S. in Civil Engineering from Stanford University.

Selma Hepp

Selma Hepp

Executive, Research & Insights and Deputy Chief Economist, Office of the Chief Economist

Selma Hepp holds the title executive, research & insights and deputy chief economist for CoreLogic. She is responsible for analyzing, interpreting and forecasting economic trends in real estate, mortgage and insurance.

Prior to joining CoreLogic, Hepp was chief economist and vice president of Business Intelligence for Pacific Union International, Inc. Hepp joined Pacific Union in 2016 to oversee the vital economic and technology intelligence to drive the expanding brokerage’s success. Additionally, she authored Pacific Union’s Economic Straight Talk columns, a series of reports that analyze current economic trends to clarify real estate investing. Hepp was previously chief economist for Trulia, senior economist for the California Association of Realtors, and economist for the National Association of Realtors.

She earned her Master of Arts in Economics from the State University of New York, Buffalo and a Ph.D. from the University of Maryland.

Stuart Pratt

Stuart Pratt

Executive, Global Head of Public Policy & Industry Relations

Stuart Pratt leads the company’s public policy and business unit engagements with US and foreign governments. He also oversees the company’s liaison and research programs with think tanks, consumer groups, and trade associations. Reporting to the CEO, Pratt advises him on enterprise-wide reputational, policy and risk issues. As a member of the company’s Executive Committee he contributes to the company’s design and execution of its strategic and annual business plans. Previously Pratt served as president and CEO of the Consumer Data Industry Association (CDIA). He currently serves on the Board of Directors of the Housing Policy Council and the CDIA.

Pete Carroll

Pete Carroll

Executive, Public Policy & Industry Relations

Pete Carroll is executive, Public Policy& Industry Relations with CoreLogic. In this role, Pete directly oversees industry and public-sector engagement programs, drives enterprise strategic initiatives for CoreLogic, and expands opportunities for the company’s thought leadership, insights, brand awareness, and solutions expertise within Washington, DC and across the Federal Housing Agencies and other stakeholders.

Prior to joining CoreLogic, Carroll was executive vice president of Quicken Loans where he led the development and discussion of Quicken’s positions on a broad spectrum of policy issues. Earlier, he was senior vice president, Capital Markets, at Wells Fargo and was the assistant director, Office of Mortgage Markets, at the Consumer Financial Protection Bureau (CFPB).

He holds a bachelor’s degree in international relations from Connecticut College. Currently, he serves on the Mortgage Bankers Association’s (MBA) Mortgage Industry Standards Maintenance Organization (MISMO).

Maiclaire Bolton Smith

Maiclaire Bolton Smith

Senior Leader, Research & Content Strategy

Maiclaire Bolton Smith is a seismologist and holds the title of Senior Leader, Research & Content Strategy for CoreLogic.

Prior to her time at CoreLogic, Maiclaire held previous positions at RMS, Emergency Management British Columbia, the International Seismological Centre and the Geological Survey of Canada. Maiclaire joined CoreLogic in March of 2013 and leads Thought Leadership for the Insurance and Spatial Solutions division of CoreLogic. She also leads the team specializing in catastrophic event response, providing timely and key insights to the market about the impact of natural disasters on the housing economy.

Maiclaire earned a M.S. in Geophysics, specializing in earthquake seismology from the University of Victoria, and a B.S. in Geophysics from Western University. Maiclaire is based in Oakland, Calif.

Shu Chen

Shu Chen

Sr. Professional, Economist, Office of the Chief Economist

Shu Chen holds the title senior professional, economist for the CoreLogic information solutions group. In this role, she is part of the Office of the Chief Economist working with senior economists to provide insights for the Home Price Index, Single-Family Rent Index and she regularly performs analysis of the home value equity report.

About CoreLogic

CoreLogic (NYSE: CLGX), the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services and technologies, CoreLogic enables real estate professionals, financial institutions, insurance carriers, government agencies and other housing market participants to help millions of people find, acquire and protect their homes.

Practical Solutions for Real Estate Services

The past several weeks have been a period of unprecedented uncertainty for you, your families, our industry, our nation and the entire world. The COVID-19 outbreak has left no corner of our immediate and wider world untouched. Day by day, we are facing and adjusting to new facts and circumstances.

Uncertainty and change will be with us for some time. While some economic impacts are clear, more are coming to light each day as new data is revealed. As a result of this pandemic, the ways we work and collaborate force us to be creative in how we service our clients,  accelerating virtual and automated processes across the business landscape. Whether you are a bank, lender, insurer, agent or anything in between, our goal is to enable you to continue to support you so that in turn you can continue to support your clients.