Investment opportunities in multifamily housing lost some steam in Q4 2021, with the Freddie Mac Multifamily Apartment Investment Market Index (AIMI) falling by 4.8% from Q3 and 2.4% year-over-year. AIMI analyzes multifamily rental income growth, property price growth, and mortgage rates to measure multifamily market investment conditions. A decline such as this indicates that attractive investment opportunities are becoming more difficult to find. The report suggests that record multifamily price appreciation and rising mortgage rates offset net operating incomes (NOI), despite “unprecedented” income growth for multifamily investors. Property prices grew by 19.6% YOY, while NOI grew by only 17.7%. “The year-over-year AIMI decline shows us that it may be more difficult now to find attractive multifamily investment opportunities in some…
Average monthly asking rent in the U.S. leaped to new heights in February, up 15% year-over-year to a record high of $1,901, though mortgage growth outpaced it yet again, according to Redfin. Rent growth saw its largest annual increase since Redfin began tracking rental data in February 2019. Mortgage payments rose 31% YOY to $1,716, also the biggest increase recorded by Redfin. Mortgage payment increases outpaced rent increases in 44 of the 50 largest U.S. metros. “The cost of housing is going up for homebuyers and renters, but it’s going up more quickly for homebuyers,” said Redfin Chief Economist Daryl Fairweather. “That’s because mortgage rates have increased sharply, and will likely continue to do so. When the cost of homeownership…
Existing-home sales fell in February as rising interest rates and inflation continue to put pressure on consumers, according to the National Association of Realtors. Sales fell to a seasonally adjusted rate of 6.02 million, down 7.2% from January and 2.4% year-over-year. The inventory of unsold existing homes rose slightly to 87,000, or 1.7 months of supply at the current sales pace. Each of the four major U.S. regions saw sales fall on a month-over-month basis in February. Sales activity year-over-year was also down overall, though the South experienced an increase while the remaining three regions reported drops in transactions. The median existing-home sales price increased to $357,300, up 15% YOY and the 120th straight month of annual price increases. It’s…
Mortgage rates broke 4% for the first time since May 2019, Freddie Mac reported Thursday. Freddie’s Primary Mortgage Market Survey (PMMS) found that the 30-year fixed-rate mortgage (FRM) averaged 4.16%. A year ago at this time, the 30-year FRM averaged 3.09%. “The 30-year fixed-rate mortgage exceeded four percent for the first time since May of 2019,” said Sam Khater, Freddie Mac’s Chief Economist. “The Federal Reserve raising short-term rates and signaling further increases means mortgage rates should continue to rise over the course of the year. While home purchase demand has moderated, it remains competitive due to low existing inventory, suggesting high house price pressures will continue during the spring homebuying season.” The Federal Reserve raised interest rates by a…
After dropping to a post-pandemic low, forbearance rose by 8,000 last week (1%), according to Black Knight’s blog, Vision. Forborne loans held by portfolios and PSLs drove the week with an increase of 9,000 (3.9%). It was slightly offset by FHA/VA loans in forbearance falling by 1,000 (-0.3%). GSE plans remained unchanged. Black Knight calls this a “familiar pattern,” in which the middle of the month brings an uptick in plans. They’ll even out next week. Notably, both new plan starts and restarts fell, with starts hitting their lowest weekly total since Thanksgiving. Plan volume is down 41,000 (-5%) month-over-month. The increase this week comes on the heels of a major drop in plans last week, so rates remain historically…
Russia’s invasion of Ukraine is rippling through the U.S. economy, according to March commentary from Fannie Mae’s Economic and Strategic Research (ESR) Group. The ESR Group predicts full-year 2022 real GDP growth of 2.3%, down from last month’s projected 2.8%. The group also increased its predictions about the 30-year fixed mortgage, bumping its forecast up to 3.8% in 2022 and 3.9% in 2023. Total home sales are now expected to drop 4.1% in 2022, compared to a 2.4% decline predicted last month. Home purchase loan volume should hold up but refinance activity is expected to plunge to only a third of originations. This should come as no surprise to mortgage professionals who are already seeing huge declines in refi activity.…
Mortgage loan application volume fell 1.2% last week, the Mortgage Bankers Association’s (MBA) weekly survey shows. The adjusted Market Composite Index, a measure of mortgage loan application volume, dropped 1.2%. The adjusted purchase index fell 1%, while the unadjusted purchase index fell 2% and was 8% lower YOY. The refinance index fell 3% and was down 49% YOY. Refinances made up 48.4% of total applications. Rising mortgage rates continue to impact application activity. Rates reached 4.27% last week, their highest since May 2019, and are adding to investor uncertainty. They’re also having an outsized impact on refis, which declined for both conventional and government loans. Refinances bounced up last week due to a brief drop in rates, though it was…
Single-family rents rose by 12.6% YOY in January to another record high, with Miami leading U.S. cities in rent growth. CoreLogic’s Single-Family Rent Index (SFRI) found that rent growth exploded in January. The increase is especially shocking compared to January 2021’s mere 3.9% annual increase. “Single-family rent growth extended its record-breaking price growth streak to 10 consecutive months in January,” said Molly Boesel, principal economist at CoreLogic. “Rents increased across the country, and the gains were highest in the Sun Belt, which also had strong population growth last year.” All metro areas analyzed by CoreLogic saw annual growth, with Sun Belt cities leading the pack. Miami once again had the highest YOY growth at 38.6%. In January 2021, Miami rents…
Demand for vacation homes has cooled down after skyrocketing to near-record levels in January, Redfin reported. February saw second home demand reach its lowest level since May 2020 as mortgage rates continued climbing, only 35% above pre-pandemic levels. Rates declined for a few weeks due to uncertainty surrounding Russia’s invasion of Ukraine, but started inching up again last week, reaching 3.85%. While demand is still significantly elevated from two years ago, it’s nothing compared to January’s 87% increase. February was also the first month where primary residence demand beat out vacation home demand since the pandemic began, though only by 1%. “Rising mortgage rates, combined with rising home prices, are hitting the second-home market much harder than the primary-home market,”…
Homebuyers who offered all cash won more bidding wars in 2021, making it the most effective strategy to beat out other buyers, according to a new Redfin report. Waiving the financing contingency and conducting a pre-inspection also increased potential buyers’ chances when facing off with other bidders, making them 31% and 25% more likely to win, respectively. Escalation clauses and waiving inspection contingencies are frequently seen strategies, but because they’re so common they’re also ineffective. They also do not benefit one buyer over their competition. Redfin also suggests offering more than asking price and waiving the appraisal contingency to set buyers apart from the crowd, as many can’t afford to pay all cash. Buyers planning to offer over asking may…
