Opinion: A National Homeownership Month Scorecard

By SCOTT OLSON June is National Homeownership Month. So the Community Home Lenders of America (CHLA) has called on Congress to begin debate and ultimately enact a Mortgage Interest Credit (MIC) when it considers tax legislation next year to extend expiring provisions from the 2017 Tax Cut and Jobs Act (TCJA). The 2017 TCJA raised the standard deduction and capped state and local tax (SALT) deductions at $10,000. In turn, this significantly reduced the value of the mortgage interest deduction (MID). The Joint Committee on Taxation has estimated that the annual tax benefits of the MID are just $31.0 billion in 2024 – down from $63.6 billion in 2017 (and extrapolating, close to $100 billion in today’s dollars). If Congress…

It’s The ‘Year Of The Head Fake’ In America’s Housing Market

Photo courtesy of NAREE. By KIMBERLEY HAAS Economists tracking the housing market say it’s still a game of wait and see as mortgage rates and other affordability factors weigh heavily on potential buyers and sellers. Lawrence Yun, chief economist at the National Association of Realtors, said he thought the housing market would recover this year, but that has been delayed. “I think part of the reason is the Federal Reserve indicated publicly in December of last year three or four rate cuts, expect three or four rate cuts in 2024. Now, delay, delay, delay, with the possibility of only one rate cut so mortgage rates remaining elevated may be one of the reasons why home sales are yet to recover,”…

Economist Patrick Gourley Talks About Prices, Rates, And The Realtors Settlement

Photo Credit: University of New Haven As the spring selling season continues, there are growing concerns about the state of the housing market. Mortgage rates remain high, inventory is low, and a new Gallup poll shows 76% of Americans they surveyed think it’s a bad time to buy a home. Writer Nicole Murray spoke with Patrick Gourley, an associate professor of economics at the University of New Haven in West Haven, Connecticut. He explained how the government’s response to the Covid pandemic helped create this problem, said that mortgage rates are unlikely to go down anytime soon, and talked about what the National Association of Realtors settlement means for the industry. You can listen to the conversation here: Murray: Let’s…

Pending Sales Improved In March But Show No Signs Of “Breakout”

Pending home sales improved in March but low inventory remains a challenge to affordability. NAR’s Pending Home Sales Index rose by 3.4% month-over-month to a reading of 78.2 last month. An index of 100 is equal to the level of contract activity in 2001. Year-over-year, they were up a modest 0.1%, with the Midwest and West seeing improvement. “March’s Pending Home Sales Index – at 78.2 – marks the best performance in a year, but it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” said NAR Chief Economist Lawrence Yun. “Meaningful gains will only occur with declining mortgage rates and rising inventory.” Month-over-month sales rose in all regions but the Midwest, which…

Are You Ready To Sell Your House And Move To A Retirement Community?

By CHUCK GREEN As Baby Boomers age, they are making tough decisions about their living arrangements. Familiar with every creak in their home’s floorboards and often a friendly face for neighbors, they are coming to grips with the fact that moving on from the place where they raised their kids might be the right thing for them to do. According to the 2024 Home Buyers and Sellers Generational Trends report by the National Association of Realtors, Baby Boomers accounted for 45% of sellers in 2023. “Baby Boomers continue to dominate the home-selling market as they make pivotal decisions regarding their retirement living situations, whether it’s right-sizing or moving closer to loved ones,” Jessica Lautz, NAR deputy chief economist and vice…

Homebuyer Credit Scores Hit Multi-Year High

Average homebuyer credit scores soared to their highest point since 2018 in March, according to Optimal Blue’s March 2024 Originations Market Report. The average score hit 737, an all-time high in Optimal Blue’s data, which dates back to January 2018. Scores for FHA borrowers also hit 6-year highs, clocking in at 677 in February and 676 in March. VA and conforming loan scores soared to highs not seen since 2021. “Driven by rising interest rates and home prices, we’re witnessing the highest average homebuyer credit scores in years,” said Brennan O’Connell, director of data solutions at Optimal Blue.  “This unprecedented level of creditworthiness among purchasers is largely a result of the affordability issues borrowers face in today’s housing market, with…

Real Estate Professionals React To NAR’s $418 Million Settlement

By NICOLE MURRAY People who make their living helping homebuyers and sellers have spent the last two weeks figuring out what the $418 million settlement deal announced by the National Association of Realtors means for them and their clients. If approved by a judge, under the settlement buyers will be expected to enter into written compensation agreements with their real estate agents starting in mid-July. Sellers may pay a buyer’s agent commission as part of the negotiation process. They can also opt to pay just their agent. This represents a departure from the current model, where sellers typically pay for their agent, as well as the buyer’s agent, through cooperative compensation. The Mortgage Note spoke with real estate industry professionals…

How Cities Can Help Increase Black American Homeownership

By ERIN FLYNN JAY Homeownership rates for Black Americans are lagging and leaders in some cities are taking action to turn that around. According to a report released by the National Association of Realtors last month, minority groups saw increased homeownership rates in 2022. While Asian and Hispanic homeownership rates registered all-time highs at 63.3% and 51.1%, the Black homeownership rate was 44.1%. The homeownership rate for white Americans was at 72.3% in 2022. Jessica Lautz, NAR deputy chief economist and vice president of research, said in a statement that the impacts of overall housing affordability affect minority buyers more than white buyers. Minority buyers often pay more of their monthly income in rent, making it harder to save for…

NAR Settlement Poses Challenge For VA Buyers

Huge changes to Realtors’ commission structures may disadvantage VA buyers, at least in the short term. A $418 million settlement announced by the National Association of Realtors last week is set to have sweeping implications for the housing industry in general. If approved by a federal judge, it would undo NAR’s commission structure, which is typically between 5.5% and 6% and split between buyer’s and seller’s agents. Under the terms of the settlement, moving forward sellers will be expected to negotiate with real estate professionals, and buyers will have to enter into agreements with, and pay for, their own realtors. For some buyers, this may translate into a cheaper overall experience, depending on what is negotiated for as part of…

National Association Of Realtors Reaches $418M Deal That Changes Compensation

The National Association of Realtors has agreed to pay $418 million to settle broker commission claims brought on behalf of home sellers. Under the terms of the agreement, NAR continues to deny any wrongdoing in connection with the Multiple Listing Service cooperative compensation model rule. They will pay the multi-million sum over the course of approximately four years, according to a press release. Although cooperative compensation remains a choice for consumers when buying or selling a home, NAR has agreed to put into place a new rule prohibiting offers of broker compensation on the MLS. Instead, sellers will be expected to negotiate with real estate professionals. MLS participants working with buyers will be required to enter into written agreements with…