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…

Experts Weigh In: When Mortgage Rates Drop, Will Home Prices Surge?

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…

Spring Is Here: What To Expect This Season

By CHUCK GREEN As the traditional spring homebuying season begins, a lack of inventory, high interest rates, and economic uncertainty due to banking troubles have dominated the news. So what can people expect? Rick Sharga, president and CEO of CJ Patrick Company in California, told The Mortgage Note that it’s “unlikely to be a banner period for home sales. Extremely low inventory of homes for sale coupled with poor affordability are likely to keep sales activity fairly weak, even though seasonal trends usually see sales and prices increase during the spring and summer months.” Although the second quarter is typically the peak season for home sales, that has been disrupted in recent years, noted Sharga. “This seasonal trend didn’t happen…