Property Taxes, Insurance Costs Squeeze Homeowners

By ERIN FLYNN JAY Rising property taxes and insurance costs are putting pressure on homeowners across the country. Last week, Newsweek reported that polling conducted for them by Redfield & Wilton Strategies found that property taxes and/or insurance costs have risen for most homeowners within the past year. The poll found that 65% of Americans saw increased property taxes, while 69% paid more for home insurance. They surveyed 1,500 eligible voters on May 1, according to the report. In April, ATTOM released its property tax analysis for 89.4 million U.S. single-family homes, which showed that $363.3 billion in property taxes were levied in 2023, up 6.9% from $339.8 billion in 2022. The increase was almost double the 3.6% growth rate…

Home Flippers Hit Hard By Interest Rates, Inflation

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…

Could Portable Mortgages Thaw A Frozen Housing Market?

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…

Flippers And Rental Owners Have Different Attitudes About Investment Potential

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…

Renters Feel Bad About Their Finances, But It’s Cheaper Than Owning

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…

Will Profits Continue To Drop For Sellers?

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…

Year In Review: Highs And Lows Of 2023

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…

How Will AI Change The Mortgage Market In 2024?

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…

Did Student Loan Debt Calculations Fuel A Housing Bubble That’s Ready To Burst?

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…

How The Housing Market Is Affected By Inflation

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…