By ERIN FLYNN JAY
Home flipping activity is down across the nation as people who work in the industry see reduced returns on investments due to high interest rates and inflation.
Last month, ATTOM released its 2023 U.S. Home Flipping Report, which showed that 308,922 single-family homes and condos in the United States were flipped last year. That was down 29.3% from 436,807 in 2022 and is the largest annual drop since 2008.
The report further revealed that as the number of homes flipped by investors declined, so did flips as a portion of all home sales, from 8.6% in 2022 to 8.1% percent last year.
Rob Barber, ATTOM’s CEO, said high interest rates and inflation have elevated costs for…
By ERIN FLYNN JAY
The concept of mortgage porting, or transferring the terms of an existing loan over to a new property, has gained popularity as Americans locked into low interest rates try to figure out ways to navigate the current housing market.
It is estimated that trading up to a 25% more expensive home would more than double the average mortgage holder’s monthly payment at current interest rates. Even moving to a similarly-priced home in the same neighborhood would increase principal and interest payments by 40%.
Advocates for portable mortgages say if homeowners could keep their current interest rates, they would be more likely to sell their homes and buy a new one. That, in turn, would help unfreeze…
By ERIN FLYNN JAY
When it comes to investment properties, both fix-and-flip investors and rental property owners stand to make money this year, but their outlooks are vastly different.
According to the Winter 2023 Investor Sentiment Survey from RCN Capital, conducted by market intelligence firm CJ Patrick Company, 50% of flippers felt things were better today than last year, and 51% expected things to improve over the next six months.
In comparison, only 20% of rental property owners felt conditions were better today, and 22% expected things to improve over the next six months.
Overall, after jumping from 30% to 39% in the Fall Survey, investor optimism was basically flat with 40% of the respondents saying the environment for investing…
By ERIN FLYNN JAY
Compared to homeowners, renters feel bad about their finances, but in most of the country renting is the more affordable option right now.
A recent Axios Vibes survey by The Harris Poll shows that homeowners are nearly twice as likely to say they are getting ahead financially when compared to renters. 57% of renters and 29% of homeowners described their financial situation as “poor.”
According to Emily Peck, a markets correspondent at Axios, part of the problem is that the median asking rent in the U.S. is up 40% from the first quarter of 2020. With average hourly earnings rising only 20% during the same time period, wages did not keep up with costs.
Homeowners were…
By ERIN FLYNN JAY
Gross profits and profit margins remained near record levels for sellers last year but they decreased for the first time since 2011 in what could be seen as a sign of a cooling housing market.
ATTOM released its Year-End 2023 U.S. Home Sales Report on Jan. 24, which shows that home sellers made a $121,000 profit on the typical sale in 2023, generating a 56.5% return on investment.
Compare that to 2022, when the gross profit on median-priced single-family homes was $122,600 and the profit margin was 59.8%.
This drop in profits happened as the median nationwide home price rose at the smallest annual pace in more than a decade, according to ATTOM.
So is this…
By ERIN FLYNN JAY
As 2023 comes to a close, industry leaders say there were some highs, but leaving this year behind won’t be a problem for many mortgage professionals.
ATTOM CEO Rob Barber said in the spring, as the peak homebuying season heated up, lenders nationwide enjoyed their first quarterly increase in mortgage activity after eight consecutive declines dating back to early 2021.
“The second-quarter rebound was huge as total loans shot up 22%. The spike was powered by across-the-board, double-digit gains in purchase, refinance, and home-equity credit line deals,” said Barber.
But the turnaround was quick lived, he said, as the numbers went back down in the third quarter, with overall activity decreasing by 3%. Only refinance lending…
By ERIN FLYNN JAY
As artificial intelligence plays an increasingly important role in the mortgage business, industry leaders are figuring out ways to harness its power to revolutionize homebuying.
Dan Weisman, director of innovation strategy at the National Association of Realtors, said AI brings enhanced automation, efficiency, and transparency to the process. People who can effectively use it have the chance to dominate the landscape in 2024.
“With artificial intelligence rapidly entering our lives faster than most could imagine, the industry has opportunities to improve analyzing market trends, assessing credit risk, and ensuring regulatory compliance, which will lead to a more tailored lending experience,” Weisman said in a recent interview with The Mortgage Note.
For example, JPMorgan Chase is developing…
By ERIN FLYNN JAY
Mortgage loans have some risks, as do student loans. But the two don’t add up to a toxic combination that threatens to cause a price crash in the housing market, and trillions of dollars of damages for taxpayers to clean up.
A recent WSJ opinion piece by Allysia Finley claims taxpayers are standing behind trillions of dollars in risky mortgages due to the way that student loan debt is calculated during the mortgage process.
In “The Student-Debt Bubble Fueled a Housing Bubble,” Finley blamed student loan repayment plans, saying monthly payments are capped at 10% of discretionary income.
“Many student borrowers consequently aren’t paying down their debt, but it isn’t counted against them when they attempt…
By ERIN FLYNN JAY
Inflation has affected the housing market as higher costs of living puts more stress on the average person’s finances.
The average American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics.
“High inflation of the past 2+ years has done lots of economic damage,” Mark Zandi, chief economist at Moody’s Analytics, wrote in a post on X, the platform formerly known as Twitter.
Rick Sharga, President & CEO of CJ Patrick Company, said among other things, inflation makes it harder for renters to save money for a down payment, and as home prices tend to go up over time, the amount of…
By ERIN FLYNN JAY
It is being speculated that once interest rates drop, a number of buyers will jump into the housing market, causing another surge in prices. We spoke to some industry leaders to get their take.
Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, said this is true.
“Buyers who were priced out of the housing market with rates at nearly 7% will be able to purchase. Due to limited housing inventory, the housing market may see a rebound in multiple offers, which will put upward demand on housing prices,” said Lautz.
She said a significant portion of homes are already selling at above the asking price.
“Currently, there are…
