Today's Headlines - Realty Times
Posted On Monday, 24 April 2023 11:47 Written by
Posted On Monday, 24 April 2023 08:44 Written by

The Mortgage Bankers Association said that purchase loan applications were down 10% last week. While I don’t contest that those are the numbers reported back to them, the numbers reporting back to me from my clients around the country, is that applications, along with contracts, and requests for preapprovals continues to climb. In some cases, dramatically!

Granted I have a much smaller sample size, companies and branches in Florida, Texas, Arizona, Washington. Indiana, and Colorado are my only contributors, however, ALL are showing growth in activity. So maybe it’s just a fluke, or maybe it’s too small a sample? Could be those are just really active areas, sure, but all I know is that people who are committed to working are seeing solid results!

Either way, there is business out there to be done and you need to get out and get in front of it. Even if that means you have to help create the opportunities along with your referral partners! Get out and engage the public! Covid is over! Winter is over! You have to pick your strategies, share them with people, and get out and make it happen!

This market ISN’T going to come and find you! You have to get out and make the case as to WHY now is the time to sell that house and buy the one they really want! Now is the time to convert renters into homeowners! Now is the time to talk about WHY they SHOULD move forward and not to stay put just HOPING that things will get better.

I don’t believe we will see rates back down to 2%. But if they do, you can refinance them. I don’t believe that there will be a housing bubble because we have far more families forming than homes being brought to market!

Now is the time to act and work your plan. That plan must include TALKING to people! They aren’t going to call you if they don’t know WHY they should!

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Posted On Monday, 24 April 2023 00:00 Written by
Posted On Monday, 24 April 2023 00:00 Written by

Redfin reports 30% of 25-year olds owned their home in 2022, higher than the 27% rate for Gen Xers when they were the same age

Nearly one-third (30%) of 25-year-olds owned their home in 2022, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s slightly higher than homeownership rates for millennials (28%) and Gen Xers (27%) when they were 25, and slightly lower than the rate for baby boomers (32%) when they were 25.

Some Gen Zers were able to take advantage of record-low mortgage rates in 2020 and 2021 to buy homes, putting the generation on a slightly better homeownership trajectory than their parents. But those who didn’t buy homes during that period may struggle to break into the market now that housing costs have shot up, and the economy is showing signs of slowing.

Gen Zers tracking along with their parents’ homeownership rate is counter to the common narrative that it’s more difficult for today’s 20-somethings to buy homes than in generations past. In fact, Gen Z homeowners spent the same portion of their income on housing in 2021 (the most recent year for which income data is available) as they did three decades earlier.

A 25-year-old’s median monthly mortgage payment was $1,013 in 2021, 16% of their $74,900 median income. That’s compared with a median $904 monthly payment for a 25-year-old in 1990, 16% of their $69,419 median income (adjusted for inflation). It’s worth noting that 25-year-olds buying a home now likely spend a higher portion of their income on monthly payments than those who bought in 2021, as mortgage rates have increased.

Young adults rode the rising tide of low mortgage rates and a strong job market to buy homes during the pandemic

Many Gen Zers took advantage of 3% mortgage rates to become homeowners in 2020 and 2021. The typical mortgage rate for homebuyers under 25 using a conventional loan was 3.3% in 2020 and 3.1% in 2021. They have also benefited from a strong job market and double-digit wage growth. For 16-24 year olds, wages rose 12% from a year earlier in January, roughly double the increase for the overall population. Young adults’ incomes have risen quickly largely thanks to the tight pandemic-era labor market.

“The rising tide lifted Gen Z homebuyers in 2020 and 2021; they were part of the pandemic-driven homebuying frenzy,” said Redfin Chief Economist Daryl Fairweather. “Record-low mortgage rates, remote work providing freedom to move somewhere more affordable and skyrocketing rental costs motivated some Gen Zers to break into the housing market. While the oldest of their generation had just graduated college when the pandemic started and hadn’t started building up their bank accounts, they had some financial advantages. The unemployment rate was near record lows in late 2021 and 2022, with pandemic-related labor shortages in industries that attract young workers like hospitality and retail prompting those employers to boost pay. Government stimulus payments, the pause on student loan repayments and the fact that many young adults lived with family during the lockdowns also helped Gen Zers save money.”

Younger homebuyers need less money than their older counterparts because they tend to buy cheaper homes with smaller down payments. That’s partly because people under 25 may be more flexible about home size and location than an older person who’s more likely to have children and places more value on proximity to certain schools and their office.

In 2022, the typical primary residence purchased by someone under 25 cost $235,000 and came with a $10,000 down payment (assuming a conventional loan). That’s compared to $355,000 ($30,000 down payment) for 25-34 year olds, and $405,000 ($50,000 down payment) for 45-54 year olds.

Gen Zers who don’t yet own homes face several obstacles and may fall behind. Low mortgage rates helped some Gen Zers buy homes with relatively low incomes over the last few years, but many are priced out now that rates are above 6% and home prices remain well above pre-pandemic levels.

Additionally, the Fed’s interest-rate hikes may cause a recession, which could set the generation back financially, and the average Gen Zer has even more student debt than millennials (although higher education may lead to higher-paying jobs). And the Gen Zers who can afford a home may not find one, with a limited supply of homes for sale.

Millennials, unlike Gen Zers, are tracking behind older generations’ homeownership rates

Sixty-two percent of 40-year-olds—some of the oldest millennials—owned their home in 2022. That’s compared with 69% of baby boomers when they were 40 and 64% of Gen Xers when they were 40.

Younger millennials are also behind. Just over two in five (43%) 30-year-olds owned their home in 2022, compared with roughly half of baby boomers (52%) and Gen Xers (49%) when they were 30.

“Millennials have been financially unlucky. Their parents had a more straightforward financial journey,” said Fairweather. “The oldest millennials entered the workforce during the 2001 recession. Then came the 2008 financial crisis, with many millennials in their first post-college job. It limited their earnings, overall wealth and ability to buy a home for many years afterward. Millennials started to gain homebuying momentum just before the pandemic, but they were once again dealt a bad hand with pandemic-related job losses in April 2020.”

Older Americans most likely to own their homes; young Americans least likely

Overall, 26% of adult Gen Zers own their home. That’s compared with 79% of baby boomers, the highest share of any generation, followed by Gen X (71%) and millennials (52%).

Millennials make up the biggest piece of the homebuying pie

Millennials, along with the oldest Gen Zers and youngest Gen Xers, made up the lion’s share of home purchasers last year. People aged 25 to 34 bought one in three (33%) of primary homes that sold in the U.S. last year, the highest share of any age group. They’re followed by 35-44 year olds, who bought 27% of them.

Gen Zers are players in the homebuying game, though their share is small. People under 25 bought just over one in 20 (6%) of homes that sold last year. This home-purchase data includes only homes to be used as a primary residence that were purchased with a mortgage; roughly 30% of homes were bought in cash last year.

Younger people move more often and buy more homes than older generations because their life stages beget moving. Roughly half of homeowners under 35 own their home for less than three years, versus 15% of 35-64 year olds and 7% of homeowners 65 and older.

People in their 20s and 30s are entering the workforce, moving to different parts of the country, settling into their careers and turning from renters into homeowners, events that often require or at least encourage a move. Many of them are also getting married and having children, which often prompts a move to a different neighborhood and/or a bigger house.

Gen Z homebuyers are most prevalent in affordable areas; millennials buy in tech hubs

People under the age of 25 bought roughly 9% of the primary homes that sold in Virginia Beach, VA last year, a bigger share than anywhere else in the country. Next come Cincinnati, OH (8.5%), Detroit, MI (7.9%), St. Louis, MO (7.5%) and Indianapolis, IN (7.1%).

Those places are all relatively affordable, making it easier for young homebuyers to break into the market. In each of those metros, the typical home bought by a Gen Zer sold for $255,000 or less in 2022.

Virginia Beach is home to one of the biggest military bases in the U.S., and nearly half of mortgaged home sales there use VA loans, which are available to service members and require very low or no down payments. The ability to put just a small amount down is advantageous for young buyers who haven’t built up a lot of savings.

The oldest Gen Zers and young millennials are buying big chunks of the housing stock in tech hubs. People aged 25-34 bought 41.4% of the primary homes that sold in Seattle last year, the highest share in the U.S. It’s followed by Philadelphia (40.6%), Pittsburgh (39.8%), San Jose, CA (39.7%) and Austin, TX (39.6%).

To view the full report, including charts and metro-level data, please visit: https://www.redfin.com/news/gen-z-millennial-homeownership-rate-home-purchases

Posted On Sunday, 23 April 2023 08:50 Written by
Posted On Friday, 21 April 2023 16:56

Investors are selling at a loss as elevated mortgage rates curtail homebuyer demand

Roughly one of every seven (13.5%) U.S. homes sold by an investor in March sold for less than the investor bought it for, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s comparable with February’s 14.5% rate—the highest since 2016. It’s also nearly triple the share of a year earlier and compares with a record low of 2.8% in May. By comparison, 4.8% of overall U.S. homes that sold in March sold at a loss.

This is according to a Redfin analysis of county records and MLS data across 40 of the most populous U.S. metropolitan areas. Redfin defines an investor as any institution or business that purchases residential real estate, including both large companies and mom-and-pop investors.

While most housing investors still reaped gains, those gains have shrunk. The typical investor who sold a home in March sold it for 45.9% more ($145,714) than the price they paid, down from 55.3% ($173,458) a year earlier and a pandemic peak of 67.9% ($199,274) in June 2022. It’s important to note that gains don’t necessarily equal profits. Just because an investor sold a home for $145,000 more than they paid doesn’t mean they’re making money because they may have spent more than that on renovating the property.

“Home flippers aren’t reaping the gains they used to,” said Phoenix Redfin agent Van Welborn. “I recently showed one of my buyers a three-bedroom single-family home in Glendale that was listed by an investor. My client ultimately found another house they liked better, and the investor ended up losing about $20,000. The investor bought the home for $450,000 and sold it for $480,000, but put $50,000 of work into it. The house also sold below the $550,000 list price after sitting on the market for almost four months.”

Investors Are Losing Money as Mortgage Rates Rise, Homebuyer Demand Drops

Investors are making less money selling homes—and losing money in some cases—because the housing market has slowed dramatically in response to rising mortgage rates.

The average 30-year-fixed mortgage rate is 6.39%, down from the 20-year high of 7.08% in the fall, but up from 5.11% a year ago and a record low of 2.65% during the height of the pandemic in January 2021. Higher mortgage payments have eaten into investor profits, and sent the typical homebuyer’s monthly payment up nearly $300 from a year ago, which has slowed homebuying demand and pushed down sale prices. As a result, the share of investor-owned homes selling at a loss has increased. While many investors buy homes in cash, they’re still sensitive to high interest rates because they often take out loans to get that cash.

“You might wonder why investors don’t just wait to sell until the housing market bounces back. Many long-term investors who rent their properties out are doing that, but many flippers—especially those who bought recently—can’t afford to,” said Redfin Senior Economist Sheharyar Bokhari. “Holding onto homes that aren’t producing income can be expensive because the owner is on the hook for property taxes, along with operating costs and monthly mortgage payments in some cases. Many short-term investors are also opting to sell because they know prices may have more room to fall and want to cut their losses.”

Roughly one in five (20.8%) homes sold by flippers in March sold at a loss, higher than the 13.5% share for investors overall. For the purposes of this analysis, Redfin defines a flipper as an investor that bought a home and resold it within nine months.

Investors who rent out their properties are also seeing their returns shrink in some areas. The median U.S. asking rent fell 0.4% year over year in March—the first annual drop in three years—and 13 major metros saw larger declines. Owners of short-term rentals are getting hit as well. The Airbnb market is oversaturated with supply, and authorities are imposing tougher restrictions on hosts, driving some to sell, Redfin agents said.

Overall, investor activity has fallen significantly from the height of the pandemic, when record-low mortgage rates and soaring homebuyer demand drove up investor purchases. Redfin recently reported that investor purchases declined a record 46% year over year in the fourth quarter.

Investors Are Most Likely to Sell at a Loss in Phoenix, Las Vegas

In Phoenix, 30.7% of homes sold by investors in March sold at a loss—the highest share of the 40 metros Redfin analyzed and more than double the national rate. Next came Las Vegas (28%), Jacksonville, FL (20.9%), Sacramento, CA (20.2%) and Charlotte, NC (17.4%).

The markets where investors are most likely to lose money are the places where home purchases—by investors and individual house hunters alike—soared during the pandemic. Many of those markets are also on the list of housing markets that are now cooling fastest. Pandemic boomtowns are seeing home prices and sales fall relatively quickly because housing costs surged to unsustainable levels during the pandemic, pricing out many house hunters, and elevated mortgage rates then added fuel to the fire.

Redfin agents say that small, individual investors are often the ones offloading their properties now, while many large investment companies are waiting on the sidelines for the market to improve.

“Most of the investors I see selling now are mom-and-pop investors,” said Las Vegas Redfin real estate agent Shay Stein. “They’re selling because their long-term tenants are moving out, they want to put their money elsewhere, or they just want to get out because they have heartburn from 2008. The best time to sell would’ve been late 2021 or early 2022, but many of them are thinking that the next best time is now because the economy and home prices could slow further.”

While a lot of large investors are holding onto their properties, iBuyers (instant buyers) are the exception, according to Stein. Many iBuying companies, including RedfinNow, ceased or slowed operations in the last two years and have been offloading inventory. That’s likely part of the reason that some markets where iBuyers had a large presence, including Phoenix, Charlotte and Las Vegas, have seen an uptick in the share of investor-owned homes selling at a loss.

“My colleague recently represented a couple that purchased an iBuyer home for $610,000, substantially below the $760,000 list price and the $708,200 price that the iBuyer paid for the home,” Stein said. “The appraisal also came in at $680,000, so the buyers walked away with $70,000 in equity. The house sat on the market for 166 days before selling.”

Investors are less likely to lose money in affordable areas and select South Florida markets, which have held up relatively well. In Virginia Beach, VA, 1.7% of homes sold by investors in March sold at a loss. It was followed by West Palm Beach, FL (2.4%), Miami (2.5%), Fort Lauderdale, FL (2.5%) and Warren, MI (2.6%). Affordable markets have seen housing demand fare relatively well because prices didn’t overheat as much during the pandemic, and the rise in mortgage rates doesn’t make as big of a dollar difference in monthly housing payments as it does in expensive areas.

Investors Own 10% of Homes for Sale, Higher Than Pre-Pandemic Levels

Investors owned 10.1% of new listings on the market as of December, the most recent month for which listing data is available. That’s down from a peak of 12.4% a year earlier, but higher than pre-pandemic levels.

To view the full report, including additional analysis, charts and metro-level data, please visit: https://www.redfin.com/news/investor-homes-sold-at-a-loss

Posted On Friday, 21 April 2023 05:37 Written by
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