CoreLogic’s Selma Hepp’s Forecast for the 2024 Housing Market

Mike Simonson here. Thanks for joining me today. Welcome to the Top of Mind podcast. For almost four years now, we've been sharing our latest market data. Every week in our weekly Altos research video series with the Top of Mind podcast, we are looking to add context to the discussion about what's happening in the market from leaders in the industry. Every week, Altos research tracks every home for sale in the country. We track all the pricing, all the supply and demand, all the changes in that data and we make it available to you before you see it in the traditional channels. People desperately need to know what's happening in the housing market right now. The market was frozen solid then it turned around a little bit last year. Then the fourth quarter was kind of crazy again this year, but the landscape is changing again now after the new year.

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And if you need to communicate about this market to your clients, go to altos research.com and just book a free consult with our team. We'll review your local market and how you can use market data in your business. Alright, let's get to the show. I have a great guest today, a returning guest. Selma is the chief economist for CoreLogic, the largest provider of advanced property and ownership and analytics and data enabled services in real estate. Selma leads the economics team, which is responsible for analyzing, interpreting, forecasting, housing and economic trends in real estate, mortgage and insurance. Selma has had senior roles at PAC Union, Trulia, the California Association of Realtors, the National Association, and was also a special research assistant at hud. She's obviously in the media commenting on housing frequently, and she notably received the Housing Wire Women of Influence Award in 2022. Selma is one of the top experts on what's happening in the housing economy right now. CoreLogic has remarkable data to build on and so we're going to talk about what CoreLogic knows. We're going to talk about 2024. We're going to talk about all of the signals we know right now and see what we can learn about the housing market. So Selma, welcome back to the show.

Thanks Mike. Thanks so much for having me back.

So most of our listeners know CoreLogic, but why don't you give us, for those who don't either know and you and your journey, give us a little bit, I gave a little bit of your your street cred, but give us a little bit of your background so we know what we're talking about here.

Sure. So I've spent the last, I want to say it's coming on four years at CoreLogic. One interesting thing in my career, I started the good CoreLogic on March 17th, 2020, which was the shutdown day. So ever since I started CoreLogic, the housing market has been on a roller coaster ride, so very interesting perspective to gain from that. But before CoreLogic, I was with PAC Union, as you mentioned, I was with PAC Union for four years, so I spent a lot of time arming realtors, real estate agents, brokers, and also MLS executives with sort of trends in the housing market to help them inform their clients and learn, have talking points with their clients and what is happening in the housing, what was happening in the housing market at the time the PAC Union was later bought by Compass, so more people probably know about Compass maybe than PAC Union.

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Then before that I was a chief economist at Trulia. Trulia is more consumer oriented group, so we were trying to inform consumers on the benefits and advantages or hurdles in home ownership. And then before that I was with the California Association of Realtors and National Association of Realtors. So I've spent a lot of times with realtors and trying to understand their point of view and going into at hud, I was actually at the time also working on my dissertation. Actually my dissertation came out of my work that I did at HUD and I was at University of Maryland at the time. There was a program called Smart Growth program and so we sort of tried to look at land use practices to ensure that growth is sustainable and does not lead to sprawl and traffic congestion and everything else that results from sprawl. But it seems as though we are today back to the same questions, which is people moving out to more exurban areas, more rural areas. So I feel like I've done a 360 circle here in terms of the questions we look at about the overall built environment and I was a real estate agent myself for a couple of years. That was in Florida in 2004, so it was super interesting time to be in the housing market as you recall everything that was happening. The movie, what was that movie? The Big Short? Yes. I mean I felt like I lived through that experience. Oh yeah, yeah. So that's a little bit about me.

That's a great story and actually provides a lot of context and I guess I don't remember you saying before that March 17th, 2020 was your start day with CoreLogic, but man, what a momentous day for housing and for understanding the real estate market. And it's funny because we started this, the video series, not the podcast, but doing weekly videos on the national data at that exact same time because I assumed and everybody assumed that the housing market was going to crash, the shutdown was going to crash and we were, so we three weeks in and I was like, guys, people are buying houses. It was three weeks of crash before recovery started. And so that moment is really a powerful, I think communication about the reason that we're doing this conversation now. There are things to pay attention to in the data that surprise us and so I am very much looking forward to talking about what you're surprised about and what you're looking for this year. And interestingly on the land use and your dissertation and the smart growth approach, that's obviously, as you point out, momentous changes during the pandemic, we broad demographic and migration pattern changes and maybe later on we have time, we'll circle back to it and talk about if there are things that we can see now 2024 that changing again. But let's start with 2023, so it's not January, 2024. Let's look back for a minute. What surprised you about the year and what didn't surprise you?

Well, I'd say that the year was full of surprises and I think what surprised me the most, and I guess what caught everybody by surprise was the interest rate height increase. I think going into 2023, if you recall, mortgage rates peaking in November of 2022 and then starting, I mean the situation is almost exactly the same today. It peaked at the end of year, it started coming down and we had so much momentum going into 2023 and then the banking crisis happened. And not that that was the reason for what happened subsequently to mortgage rates, but it did, mortgage rates did end up going much higher and so it really locked. And so as a result of that, the lock-in effect that we ended up seeing in terms of supply was also I think something we were not necessarily planning for overall. When you think about what the forecasts were for 2023 was for home sales and activity to return to some level of normalcy after those rollercoaster years of 2020 to 2022. But in fact, we ended up finding new bottoms over and over again, not so much for home prices, which was another surprise. We didn't think that home prices were going to remain as steady or in some markets rebound as much as they did. So we ended up, we CoreLogic got a lot of heated the beginning of the year for our forecast for home prices, but actually our forecast turned out to be pretty solid just given everything else that happening and how everything else in the market played out, I

Think. What was your forecast at the beginning of 2023 for home prices? Was it a positive year? It seemed to,

Yeah, it was a positive year. I think it was very low rate overall, maybe two or 3% increase in home prices, but it was positive, whereas a lot of folks were forecasting declines in home prices

Declines. And so what went into that forecast that made you say up year, even if it's two or 3%, which is basically exactly where prices landed. So what went into that forecast? Well,

I think one important thing was inventories. We saw inventories, if you remember at the end of 2022, inventories basically collapsed. There was nothing, everything, well, in many markets it collapsed and then we knew we were sort of dar the new home construction, and I think the other thing we saw is a lot of people were employed. When people are employed, they spend money, they can buy homes and the rate of unemployment at that point was still flirting below 4%. I want to say that's when it hit three point. We were like 3.6, if I'm remembering now, it seems like it's so long ago, I can't even remember where unemployment was, but people were employed and everybody who wanted in a sense got a better job. When you looked at the number of people that transitioned into new jobs, I think more than half of working population got a new job during the pandemic, and so that really helped with consumer purchase power.

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So that was another thing. Yeah, I mean overall I think the fundamentals were strong. I think what we were worried about was the impact of mortgage rates on affordability, which, and the other thing is too, I think what I keep talking about tale of two markets throughout this year because that's really what it was. We had enough inventory for some folks who had a lot of income and a lot of cash, not so much for those folks who were income constrained and so some could buy, the others couldn't buy. And so that's an unfortunate reality of today's housing market.

That's amazing. Okay, so going into 2023, the forecast was for a two or 3% home price increase for the year and by the altos data home prices increased like 2.6% for the year. That is exactly where. And so using things like inventory and employment and those things that came into that. So that's useful. And at that time that was a pretty strong call because most people were calling for a down year in prices and some were calling for a big down year in prices. Given that you are so good at forecasting, tell me about your 2024 forecast.

I give all the credit to the team at CoreLogic. I am just the messenger. But yeah, so for our forecast for 2024, we do have another couple to 3% increase in home prices in our data. Actually home price was a little bit stronger for 2023. It ended up at about 4% on average, but I think that's just a matter of how do you weigh data, which markets you weigh more than others. That's always the difference between different home price indices, some slowing in a sense because not 4%, but a 3% increase in home prices. So we do see that. I do think it's going to vary again by market. So when we say home prices are strong, they weren't strong everywhere. Some markets are still resetting or have yet to really reset from the declines that we've seen at the end of 2022. I'm thinking specifically of Austin and for example, Boise, some Idaho markets, there's still, I think that was they overshot

The biggest pandemic boom markets.

Yeah, so we do have some resetting going on in some markets, but what was interesting to me so far or coming into the end of this year into 2024 is some of the markets, some of the newcomers in terms of home price appreciation like New England markets. I started talking about my dissertation and at the time I was interested in repopulation of urban centers and which were urban growth areas and we saw a lot of people leaving particularly then the Rust Belt, but also New England regions and now we see people coming back to those regions. And so I think that's an interesting development and so we are seeing a lot of home appreciation in those markets too. Then there are markets that had seen resets, but maybe undershot in terms of resets and now are rebalancing again. And like SoCal for example, or Phoenix, Las Vegas. I mean there are surprise markets to me too, but we have seen a lot of appreciation there. So we were thinking that will continue just maybe not at the same pace, but Midwest markets too. Affordability being one reason. The other is there's a lot of investment going on in those markets, chips Act and ira, a lot of manufacturing reshoring and things like that, bringing a lot of jobs. So expected appreciation there as well.

Yeah, Phoenix and Las Vegas, you mentioned those were both much more resilient this year than I expected where Austin was not and obviously did not find the bottom yet, but Vegas did and Vegas is usually the highest volatility market, highest on the upside and fastest on the downside. Do you have any sense about why that was, why Vegas and Phoenix maybe found a floor where Austin didn't?

Right. I think those are continued to be high population growth markets. The other thing is we looked at income of people moving into those markets and differential between their income and income of local residents. And we found that in Phoenix and Vegas, for example, incoming residents or incoming home buyers have as much as 50 to 60% higher incomes. And in an environment where you have constrained inventory that can really put pressure on home prices. So I think that one of the main reasons, Vegas for example, I think also became more diversified economically as a market. It was mostly leisure and hospitality. I think now we see many more industries in that market and California and West Coast is known to be moving out of the more expensive markets, and that's one market that gains outbound from people moving out of California and Washington and Oregon. It's affordable, it's got a lot of new construction, it's got a lot of these type of jobs that it's easy to transfer skills from one to the other. They're not highly specialized markets where Austin I think is very high tech and we've seen some weaknesses in high tech sectors. So hence sort of impact on the housing market. That's just my theory. I don't know.

I really like that the inbound income differential I think is really notable for especially Vegas and it was actually notable in Austin during the pandemic, but with the tech correction, Austin, Austin obviously feels it more. That's a great explanation. I appreciate that very much. In the Midwest, have you paid any attention to Indianapolis?

Not specifically to Indianapolis, but generally the Midwest region? Yes. So there are other parts of Midwest that have done really, really well over the last year or so. Yeah,

And inventory is still at pandemic lows and prices are marching up and those kind of things seem pretty impactful. I've noticed, I was having a conversation about Indianapolis recently about was a strong year, but is right now Indianapolis and our data is topping the price reductions data, meaning Indianapolis is showing some weaknesses in the housing market. And I was curious if I'm looking for signals of why I think Indianapolis benefited from, as you pointed out, the chips act and the inflation reduction act and there's a lot of investment happening and so there was some good growth there, but it was interesting watching the cycle. So I'm just looking for signals here.

Yeah, no, that's a good point. I think what's in many markets that are, and we have a lot of inventory constrained markets, you have an issue with price discovery when you have such a constrained market. So prices tend to overshoot and every metro has sort of their income limit because in Indianapolis it's not going to be a metro where you have a lot of high income earners or your high income earners moving into that area. So there's almost like a ceiling. And so when you reach that ceiling for affordability, you'll see more price corrections

For sure. And maybe that's exactly right. They're feeling the affordability acutely in that moment there. Okay, cool. Well that's super interesting when we talk about the other things. So we talked about the CoreLogic projection of two to 3% home price gains for the year. What other things for 2024 are you forecasting or should we pay attention, big takeaways that we should pay attention to?

Yeah, I think that home sales forecast, it's a moving target because mortgage rates have come down. And so I'll say that the home sales forecast is very contingent on what happens with inventories. Some folks believe that inventories are going to rebound more than others. And honestly, I've been thinking a lot about this because I was fully convinced that you won't get people moving if they have a 3% mortgage rates, even if current mortgage rates come down to six or 5.8, but maybe you would. And the other thing is a lot of baby boomers have own free and clear, so they're not dependent on that lockin, they're not locked in. So I don't know. So I've been struggling with this idea of what happens with inventory. I mean obviously we've seen some stabilization in terms of the drop off that we see at the end of the year in terms of new listings, we haven't seen as much of a drop off, so that's encouraging.

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So we may end up in fact seeing more home sales in 2024, just over the last couple of weeks. I have been thinking about that. But nevertheless, so the other thing that we do expect is more refi. Obviously there's been quite a bit of buildup and refi potential over the last year and a half with mortgage rates being as high as they were. I think we have over 2 million loans that were originated over six and a half percent. So whatever the breaking point for people is, so mortgages come to five handle, you have potential building up there. So we do see quite a bit on increase in refis versus just overall purchase origination. So our overall origination forecast for next year is about 12% increase. And again, a lot of it coming from refis, we're in the soft landing camp. I think nothing at this point is telling us that there is a recession, imminent recession ahead, but there's always things to worry about. We are, economists always worry about everything, so we worry. And there's concerns about commercial real estate, there's concerns about still the banking sector, but all of these in a sense dissipate as we get mortgage rates moving lower or it's to some extent dissipate. So I do think mortgage rates will continue declining, probably reach below 6% by the end of this year if there is no surprises. I am concerned about the geopolitical situation right now, which could have impact on inflation.

Those are terrific. Let me ask you about a couple of them. Mortgage originations, 12% increase this year is what you're forecasting, and that is both an increase in the number of sales as well as an increase in refis? Correct. So number of home sales you think is maybe about eight or 10% more and a couple percent of refis. How do you look at home sales specifically for the year?

So in terms of origination, mortgage origination, we see an increase of 2% coming from or purchase originations increasing 2%, and then refis increasing 60%. Wow.

So only a 2% increase in home sales, mortgage origination for home sales.

Right. But as I mentioned, I'm reevaluating that at this point.

I see. So I see, because as you pointed out, it looks like we have some easing of the inventory crisis and therefore we would have some easing of the sales volume, like we're in an inventory a supply constrained market. Right,

Right.

Okay, great. Well, I think you and I are well aligned on that measuring in the last six weeks, inventory climbing relative to last year, each week, each week a little more relative to last year. And so I think we are at about four and a half percent more homes on the market now as we start 2024 than we did the year before. So that's four and a half percent more that can sell. And that's been growing, so it's been growing gently, but I think as you were saying, it's like fewer and fewer people, they are in their lock-in mindset, and so that's starting to ease out and having a few more people list their homes.

Well, the other thing about purchases too is we've seen an increase in cash purchases that share has been on the rise, and it really jumped at the end of last year to almost like, I want to say 38%, so there could be more sales. It's just we're talking about purchase mortgage originations, right? There could be more from cash purchases,

Right, for sure. Cash purchases still on the increase. That's That's really interesting to hear you say because we don't track mortgages. I don't track mortgages at Altos, but thinking about, we can see the inventory climbing and we can watch the new pendings each week. The new contracts getting signed is climbing inching up along with the inventory. In fact, in the New Year's Week data, which is as we're recording this, the most recent data I have, we had 20% more new contracts than a year ago, same week a year ago, 20%. At most of the year we were 10, 20, 30% fewer transactions. And so now we're starting on the other side. So that'll be interesting to see. You'll have to let me know if you revise your 2% increase up because if 2% increases goes to, I think we're probably at about a 10% year in terms of new purchases and we get the refi, that's a significant rebound for the mortgage business this year. Then let's talk about a broader economy. Now, of course we have, as you say, there's always things to be worried about. I think, let's start there. Tell me what you're worried about.

Well, I am worried about the geopolitical situation right now. I think it's scary what's going on, and I think the prospect of the conflict spreading, that's really scary. Anyway, that one keeps me actually, that's keep me up at night. But the other things, well, I guess that's the main one. The other things obviously is the election coming and I do worry about our rhetoric, political rhetoric and just how does that impact. So we also, again, now have this looming dead ceiling situation, and so that actually does have potentially impact on mortgage rates. It does have impact on interest rates, so just lack of constructive conversation and how that fits into the economy overall. That worries me as well.

Yeah. So let's talk about the election. People have been asking me lately, what is my take on the election sort of direct impact on the housing market? And I think the underlying assumption is often that the politicians aren't going to let the economy go into a recession because it's an election year, and therefore they're going to save anything that might go wrong. I have opinions on it, but I'm curious how you answer that question. What do you think? Is there an impact that we can expect from an election year on housing?

Right. Well, let me put it this way. So there's differences in how the two different potential different administration look at homeownership versus renter. And so the current administration has done a lot to incentivize to improve supply issues, particularly for home ownership, for owner occupied homes. And so they've been doing a lot to try to spur up supply and also to ensure affordability and so on and so forth. On the flip side, when you think about previous or potentially next, the other side of the story is that that administration is more, the policies are more favorable towards rentership and investor incentives. So that can impact impact just basically access to homeownership access to credit as well. So those could be some of the differences. The other is taxes as well. If you recall, salt state and local tax deduction caps and also the mortgage interest deduction cap had an impact on these. They tend to be more blue states, but on these more expensive markets. And so we've seen as a result of that, some migration, for example, out of California because these deduction caps do have an impact on middle income tax bill. So that could play out in some way as well. But yeah, I mean I think those are the two main things I tend to look at.

Yeah, do we see anything in the pipeline? Like the salt tax was a big deal and that really interestingly hit the middle income taxpayer in that sense. And is there anything on the horizon or on your radar for this year? The debt ceiling I think is an important one. Anything other those or any of the policy changes that you've heard talked about that you think we should be paying attention to?

Well, the one that I've been asked about is the one on about the hedge funds buying real estate rental properties. That's sort of been discussed for the last few years. And one thing, so I don't know how far that will go, but I think different administration may have different takes on that, for example. So that could have an impact, but I am concerned that the supply, we need more supply. So whatever we do to incentivize that supply, it would be helpful. It just would be for more healthier housing market. So hedge funds, that would be what happens with that. There were some talks about doing some tax incentives for small investors like mom and pop investors that own two three properties, and how do we incentivize them to give up some of that inventory towards more ownership inventory. There's a lot of other things. Manufactured housing is now been a big topic too, so to what extent we have credit mechanisms in place for people to purchase such housing because before, and I think Fannie Mae now has a program that helps people finance it with a 30 year fixed mortgage. So all the ways in which we can promote affordable home ownership and sustainable home ownership,

Those are great. And let me ask you, so the hedge fund policy is really fascinating and actually compared to the individual investors, it's something like 94% of investment properties in the US are owned by the individuals, but of course the hedge fund landlord is about as ready-made villain as you can make for central casting. And so they get, of course, get a lot of the attention. What is your opinion on the incentive? So in particular, incentivizing individual investors to unload some of their properties and turn it back into resale inventory. Do you think that's smart? Do you think it could be effective? Do you think it's crazy? What do you think about that?

Well, what I would say is that we should maybe put our efforts into building more as opposed to, I mean, it's just moving around same inventory, and our issue is not, some people want to rent and are perfectly fine in their financial situation and such where they're better off renting. So I think we should focus much more on new building more and removing barriers to new construction. And it's funny because it's not an issue everywhere in the country. Some markets have plenty of new construction, but some markets just can't get out of their own way.

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So I think that's more important to me than how do we shift around who owns a property. The other thing about the hedge funds, we've done a lot of analysis already. We have investor, quarter investor report. Large institutional investors tend to own in handful of markets because they need economies of scale to make this all work. And I just was reading a Wall Street Journal article on how they're actually building their own communities or they're investing in construction of new communities. That's all good. We need new homes. So yeah, I would just say that let's just widen the type and size of homes and where we build.

Great. I love that. I think we talk about hedge fund owners and individual owners and tax and things, and it's like we just need to build some houses. I appreciate that very much. Are there other insights in the quarterly investor report that takeaways that we are notable? Obviously we've got concentration places like Tampa and Suburban Atlanta and some of those places that have a lot of concentration. What other things should we know about real estate investors from that data?

So we break down the investors by size. So we have small, medium, large in mega would we call, and actually the predominant activities among small and medium investors, that's three to 10 and over 10 to, I want to say a hundred properties, but let's focus on these three to 10 because even when we look at that distribution of three to 10, which is a small investor, majority are in that three very, very small. And in these markets where we are very, very constrained in terms of inventory like California markets, that's where we see a lot of small investors, mom and pop investors. So that's an interesting takeaway. The other thing is we looked at is IBU activity, but that's an old story at this point because it's proven to be very difficult to forecast individual home prices. So IBU have not been very active or have not been active at all basically since the middle of last two years ago.

Great. In fact, we will, before we're done and in the show notes, we'll make sure we have your contact information. In fact, I'd love to see that report. I don't think I've seen that one, the quarterly one. So the investor report is really, really be useful there. Okay. Are there trends that you think are currently underemphasized in the media or that the headlines have wrong right now? I'm always interested in if we have actual data, and here's what I keep hearing. Is there anything like that that jumps out to you?

Well, I will say that if anything, everything feels like it's overemphasized in the media, particularly the bad, bad always feeds the bad news always sort of stands on top. And I would say throughout this whole year, I felt like the sentiment was when this other shoe, everybody was waiting for the other shoe to drop, recession is right around the corner and home prices are just about to fall off the cliff. So that's been the sort of sentiment that sometimes I get from media. And so the other thing is this disconnect that we have in terms of consumer sentiment and what's actually happening in the economy and consumers are so unhappy. But on the other side, our economic growth has been incredible, particularly more recently in the second part of last year. And so you ask yourself what's the issue? And I think people are maybe tired of, well, we came out of recession, sorry, we came out of a pandemic and then we went into this inflation spiral and it felt that you were just sort of, everybody was out to get you everywhere you went, whether that's your contractor because you had to fix something in your house or there was milk or egg prices.

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And I think people are angry because of that, but that's not a true reflection of our economy because we are really, our unemployment is historical lows. People are making more money, real incomes are growing. So there's so many positives out there, but that never sort of surfaces in the media.

Yeah. Do you have the impact of that or do you see implications of that? So we have this disconnect of the economy that we're measuring and people's interpretation of the economy. Are we seeing that translate into behavior or,

Well, I mean, I think it's going to impact the elections, which has a huge repercussions. But the other thing is I think people are also very, well, they're negative on the housing market. If you look at the granted, I mean there are a lot of things that are not good about the housing market, but it's just, if you look at survey after survey, people increasingly think it's a really bad time to buy. I, is it really, I don't know if you are in for a long-term, if you have means if you are, what is it ready, willing, and able, and you can find a home. I don't see that as being as bad, I guess, as

The broad sentiment says. Yeah. And it's funny how a bad time to buy, what does that mean? Well, it's a bad time to buy because inventory's low and I don't have a good selection. I have cash, I have the need, but I don't have selection. That's a different kind of bad time to buy than I expect. Home prices to tank is a different kind of thing, or it's bad because mortgage rates were dramatically lower two years ago. And so I always wonder what that means. Are they saying, well, it's bad for everybody else. I have a great deal, but it's bad for everybody else. So I'm not sure what bad time to buy is, but it is notable that how many people think it's a bad time to buy homes.

They still get questions from friends and acquaintances. When are home prices going to fall? I'm ready. I'm going to buy when home prices fall.

Yes. Right. It's like the assumption is they must fall.

They must fall.

Yeah. My response to that is the crisis is what if they don't? Now what are we really going to worry about? How do we interpret what happens next? That's really great. Okay. I've got just a couple more bigger picture questions for you. Are there stuff you're doing at CoreLogic products or research or your investor reports or whatever that people should be paying attention to right now? Are there cool things happening that we should have top of mind for us?

Yeah. Yeah. I mean, we are always doing a lot of innovative stuff. I think that's my favorite thing about CoreLogic is that because of the depth of the data that we have, we're able to develop so many new solutions and insights. But one thing, like last year we released a climate risk analytics platform that leverages all of this 360 view of a home with overlay with climate data and sort of gives you your risk profile. And it's turned out that people are paying more attention to that right now. So thinking ahead, sort of like, well, how is that going to play out in terms of geographic distribution of population and home ownership and things like that. But the other thing is AI and machine learning obviously has been a big word of 2023, and we've invested in a lot of data analytics to provide valuable insights.

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So we have a lot of predictive analytics that use these type of models. We have a VM, obviously we have a risk management platform that also uses machine learning, fraud detection. It also incorporates AI and ml. So geospatial analysis for example, that's a big one. And that really fits well into this risk and proximity to risk proximity to new development. We have a new growth development model. So basically we're trying to identify new growth regions in the country by looking at various data sources that we have. The cool thing at CoreLogic is we, each property basically has a unique identifier through which you can link all various disparate data sources about that property into one profile. So that's what I mean by 360 views. So that's enabled us to develop a really cool, innovative solutions that everybody industry basically is looking at.

Yeah, okay. Those are really neat. That's really neat stuff. The climate risk analytics, I think, potentially is obviously growing in importance. And one place we see this is in insurance costs in California, of course, Florida, but also places like Texas. And we can see those really kicking in. And do you have any take on insurance costs and maybe in the impact on the market or things like that, climate risk and the impact on the market? Are we starting to measure things?

Yeah. Yeah. So I mean, the question of rising insurance costs has been, I think the top question of 2023 that I got. And it's very hard to measure it because it's, well, there's no publicly available data out there and well anyways, the data itself, the actual insurance premium as a data more on a smaller geography is very hard to come by. So you have some state level data and things like that. The other thing is as a fraction of overall mortgage expense, it's not that high unless you live in this very hazard prone areas. It's not really, if you're sort of in the well anywhere where you don't have wildfires or hurricanes, it's a fraction of a cost. So I dunno, maybe $1,500 a year is an average premium at the moment, and that's up from 1200 couple years ago. But if you are in wildfire area, like Napa for example, and I'm thinking specifically Napa, I just came from napa, I spent Christmas there and talked to a lot of friends there about their housing market.

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And basically it's frozen because you cannot get insurance and obviously you can't get insurance, you can't get a mortgage. So basically only people with cash can buy and who are willing to take the risk and self-insure or pay astronomical amounts for that insurance. So what does that mean long-term for these type of markets? But we did some analysis in CoreLogic about mitigation, ways of mitigating this and adaptive modifications to home. And if you protect your house in a way, if you put fire resistant roof or there's so many things you can do, and I don't even know to name them all, but basically if you do some of these things, it can help tremendously. And basically what we saw in our data that homes that did do those upgrades, that had relatively less increase in delinquency when a hazard happened. So the delinquency rate was lower and they recovered faster following a disaster. So I think we'll see a lot of that happening where maybe local governments will be investing in those type of modifications.

Yeah, interesting. Yes, for sure. Okay. And I think it's a big deal and we may have to spend more time on insurance costs. And I did a podcast with a company who does the wildfire analytics and by property level, interesting level stuff. And I know that the climate risk platform that you guys are doing is really playing into that very strongly. I think big deal for places like California. I've been California, I'm in a house, you can't get insurance on the house that I'm sitting in right now, have to use a state backup plan. And that was, I bought this one eight years ago. So Okay. Selma, it's been terrific. Thank you so much for your view on 2024, our review of 2023, all of the things that we get to see with the CoreLogic data and where should people reach out to you? You mentioned the investor report, but where should they follow you on LinkedIn? Yeah,

I'm most active on LinkedIn. I sort of, there's too many platforms, but I do do LinkedIn. I find it to be most useful. So that's where I post a lot of our research on our CoreLogic website. We have Intelligence page, part of the page where we post a lot of, not just Office of Chief Economist, but all the groups in CoreLogic poster research. So I would highly recommend folks checking that out as well.

Great. Perfect. We'll make sure there are links for that for in the notes, everybody and everyone, thank you so much. This is the top of Mind podcast, Selma Hupp, thank you for joining us. Everyone, if you find that you enjoy the podcast, I appreciate a review, a bunch of stars on wherever you get your podcast. That really helps other people find the podcast. So thank you for those in advance and we'll be back again in a week or two with another episode of the Top of Mind podcast. Alright, thanks everybody.