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…

Bringing Families Together: Could ADUs Help Millennials Get The Housing They Need?

By ERIN FLYNN JAY and KIMBERLEY HAAS A recent report from Redfin shows that Baby Boomers with empty nests own double the amount of large homes compared to Millennials with kids. So what if Grandma and Grandpa moved into an accessory dwelling unit and the three generations lived together so everyone could have some space? According to the report, Millennials with kids own 14% of the nation’s large homes, which are defined as having three or more bedrooms. Baby Boomers living by themselves or with one other person own 28% of these properties. Partially to blame is affordability. 2023 was the least affordable year for homebuying on record, with median-priced homes costing about $410,000, according to Redfin. Additionally, 54% of…

Foreclosures Up, Trending Back To Pre-Pandemic Levels

By ERIN FLYNN JAY Foreclosure numbers are up by double-digit numbers and industry leaders say they will continue to rise this year. Earlier this month, ATTOM, a curator of land, property, and real estate data, released its Year-End 2023 U.S. Foreclosure Market Report, which shows foreclosure filings — default notices, scheduled auctions, and bank repossessions — were reported on 357,062 U.S. properties in 2023, up 10% from 2022 and 136% from 2021. CEO Rob Barber told The Mortgage Note several elements may be contributing to the rise in foreclosures. “Key among them is the increase in interest rates, especially for adjustable-rate mortgages, leading to higher monthly payments for homeowners. Additionally, escalating unemployment rates are a concern,” Barber said. Barber said…

Direction Of Commercial Real Estate Market Unclear, But There Is A Glimmer Of Hope

By ERIN FLYNN JAY and KIMBERLEY HAAS As business models continue to change in the post-Covid economy, some market experts are predicting a commercial real estate crash while others are saying there could be a revival in investment opportunities. Desmond Lachman, an American Enterprise Institute senior fellow, recently wrote that high vacancy rates have already caused commercial property prices to decline. At the same time, property owners need to roll over around $500 billion in maturing loans at higher interest rates. Lachman said this spells trouble for the banking sector in general and the regional banks in particular. He predicted commercial real estate troubles could lead to the failure of 385 regional banks. “With as much as 18% of their…

Legislation To Ban Hedge Funds From Owning Homes Finds Support

By ERIN FLYNN JAY A bicameral bill that would force hedge funds out of the single-family home market is supported by some industry leaders. Last month, U.S. Sen. Jeff Merkley (D-OR) and U.S. Rep. Adam Smith (D-WA) introduced the End Hedge Fund Control of American Homes Act of 2023. If passed, it would force hedge funds to sell at least 10% of the total number of single-family homes they currently own to homebuyers every year for a 10-year period. After a 10-year full phase-out, all hedge funds will be completely banned from owning any single-family homes. In a YouTube video, Merkley said rents are sky-high and families can’t afford to buy a home in their chosen community. “Hedge funds and…

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…

Opportunity Zones: The Pros And Cons For Housing

By ERIN FLYNN JAY In some urban centers like New York City, Los Angeles, and Miami, Opportunity Zones have led to substantial investments including the revitalization of neighborhoods. These zones attracted developers and investors due to the tax benefits, resulting in new housing developments, commercial spaces, and infrastructure improvements. However, concerns have arisen about the displacement of existing residents and whether the benefits truly reach the communities that need them most. And while these zones have found success in urban settings, many rural regions have struggled to attract significant investment. Limited infrastructure, a smaller workforce, and higher perceived risks have made it challenging to draw investors to rural areas. That hurts the low-income neighborhoods Opportunity Zones are meant to strengthen.…