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Thursday we got the new jobless claims and continuing claims numbers, and Friday we got the BLS Jobs Report for the month of August. The initial jobless claims and continuing claims number are always important, but they will serve to lay the foundation of the BLS Jobs Report that can really move the markets.

For the past several FED meetings, the governors have pointed to the steady decline in initial claims and the growth of jobs in the market to show that the economy is still too robust to stop raising interest rates. Despite the fact that the BLS just released an important report stating that from April of 2022 to March of 2023, they have overstated the number of jobs by more than 300,000 jobs! That’s not a small number. In fact, when put into real terms, that is a miss of more than 9% on a monthly basis. When you add into the numbers that ADP numbers have been wildly out of touch with reality to the point that people are now almost completely ignoring them, it makes you wonder that with all the actual technology we have at our disposal, how are these “season adjustments” “phone surveys” and the “birth/death model” need to be looked into and either improved or replaced. NOBODY but the FED really believes the numbers!

Please watch the reports today and on Friday. They both can move the markets, but if the BLS numbers show a weaking in the job market and softer wage pressure, we could see big improvements in the bond market. Strong numbers and we could see rates go higher quickly as it will give the FED ammunition for yet more rate hikes!

On the brighter side, purchase activity is strong despite 7% rates as many are understanding its about the Monthly VALUE of the payment, and not the rate! We also need to focus on our accountant list so we cam make our calls next week and start connecting with those filing those tax returns for the clients who have extensions! It will be a busy few days before an opportunity packed Labor Day weekend!

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Posted On Monday, 04 September 2023 00:00 Written by

Redfin reports that investor market share is down to 16% after hitting an all-time high of 20% in the first quarter of 2022

Investor home purchases fell 45% from a year earlier in the second quarter, outpacing the 31% drop in overall home sales, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s the biggest decline since 2008 with the exception of the quarter before, when they dropped 48%. The decline comes as this year’s relatively cool housing and rental markets makes investing in homes less attractive than it was during the pandemic-driven homebuying frenzy of 2021 and early 2022.

The drop in purchases has brought the total number of homes bought by investors below pre-pandemic levels. Real estate investors bought roughly 50,000 homes in the second quarter, the fewest of any second quarter in seven years, with the exception of the start of the pandemic. The data in this report is from 39 of the most populous U.S. metro areas.

This marks a retreat from a boom in investor activity during the pandemic, which was driven by record-low mortgage rates and huge homebuying and rental demand, creating opportunities for investors to make a lot of money.

“Offers from hedge funds have dried up; I haven’t received an offer from one in a long time, except unrealistically low offers,” said Las Vegas Redfin Premier agent Shay Stein. “From mid-2020 until early 2022 when interest rates started going up, hedge funds bought up a ton of properties and immediately turned them into rentals, pricing out local buyers. Now a big portion of our homes are owned by investors, but they’re not adding to their portfolios.”

Investor purchases declined 65% year over year in Las Vegas, Jacksonville, FL and Phoenix, the biggest drops of the metros in this analysis. Investors are pulling back quickly from the Sun Belt and Florida largely because those places had an even bigger boom in homebuying demand than the rest of the country in 2021 and early 2022, and now they’re cooling fast.

In dollar terms, the drop in investor purchases is almost as big. Investors bought a total of $36.4 billion worth of homes in the second quarter, down 42% from a year earlier. That’s still above pre-pandemic levels, but dropping closer to it: Investors bought a total of $34 billion in the second quarter of 2018, and a total of $31.9 billion in the second quarter of 2019.

In terms of market share, investors bought 15.6% of homes that were sold in the U.S. during the second quarter, down from 19.7% a year earlier and a record high of 20.4% in the beginning of 2022.

Limited inventory, limited demand deter investors even more than individual buyers

The outsized drop in purchases by investors helps explain why their market share is coming down: Investors backed off from the housing market faster than individual homebuyers in the second quarter.

Stubbornly high home prices and mortgage rates, limited inventory and widespread economic uncertainty have dampened housing demand and suppressed overall home sales. Those factors are an even bigger deterrent for investors, because they’re in it purely for the potential to make money by flipping homes or renting them out. When housing demand is down, investors are less motivated.

Additionally, investors themselves were deterred by high home prices and high interest rates. Roughly 7 of every 10 (71%) investor purchases were made in cash in the second quarter–down from 75% a year earlier—but they’re still impacted by high interest rates because they often use other types of loans to cover expenses.

“Moving forward, the investors who do come back may be more focused on scooping up rental properties than flipping homes,” said Redfin Senior Economist Sheharyar Bokhari. “All signs point to the rental market remaining relatively strong. Home prices and mortgage rates are high enough to motivate would-be first-time homebuyers to continue renting. The typical U.S. asking rent remains quite high, just $16 shy of its all-time high, so investors who are landlords stand to earn money. Investor purchases of rental properties could be limited by some of them building new properties to rent out, though.”

“Home flippers may be slower to come back,” Bokhari continued. “That’s mainly because mortgage rates are unlikely to decline significantly in the short term, which will keep homebuying demand relatively low and discourage flippers. Plus, investors have lower-risk places to park their money right now than real estate, with high yields in the bond market.”

Even if investors’ market share does pick back up, their purchase volume is likely to remain low. Like other buyers, they’re limited by a severe lack of listings, with homeowners locked in by relatively low mortgage rates.

Investors’ share of new listings is falling–but those who are selling are seeing big gains

Homes owned by investors are making up a smaller share of new listings on the market. Investors owned 8% of new listings in March, down slightly from 9% a year earlier and down from a peak of 13% at the end of 2021. Investors listed 36% fewer homes than a year earlier, compared with a 24% drop in overall new listings. March is the most recent month for which this data is available.

Most investors who are still flipping homes are making money. The typical home flipper who sold a home in June sold for 61% ($188,448) more than their initial purchase price. Though that’s a substantial gain, it’s down from a 69% ($199,946) premium a year earlier. “Flipper” refers to an investor who sold a home within nine months of buying it.

Just 3% of homes sold by flippers sold at a loss in June, down from a peak of 29% in September 2022 and roughly on par with 4% a year earlier.

Investors most commonly buy low-priced homes

Investors bought 23% of low-priced homes that sold in the second quarter, down from 25% a year earlier but still much higher than investors’ market share for more expensive homes. They bought 11% of mid-priced homes, down from 19% a year earlier, and 14% of high-priced homes, down from 16% a year earlier.

Investors are attracted to low-priced homes for the same reason as other homebuyers: They cost less, which is especially attractive when home prices and interest and mortgage rates remain elevated. Investors who are buying homes to flip and re-sell are doing so in hopes that they can buy low and sell higher. Small homes—those with 1,400 square feet or less—made up 39.2% of investor purchases in the second quarter, the highest share of any second quarter on record and down just slightly from the record high of 40.6% in the first quarter of 2023.

In that same vein, low-priced homes make up a substantial piece of investors’ homebuying pie. Low-priced homes made up 46% of investor purchases in the second quarter, up from 39% a year earlier. High-priced homes made up 31% of investor purchases, up from 29% a year earlier.

Single-family homes represent nearly 7 in 10 investor purchases

Single-family homes made up 68% of investor purchases in the second quarter. That’s down from 73% a year earlier, but still the lion’s share of purchases by real estate investors. The decline is partly due to a lack of single-family homes for sale.

Next come condos, which made up 20% of investor purchases, up from 16% a year earlier and the highest share since 2018. Townhouses made up 7% of purchases, followed by multi-family properties, which accounted for 5%.

But in terms of market share, investors have the highest when it comes to multi-family properties. Real estate investors purchased 31% of multi-family properties that sold in the second quarter, just shy of 32% a year earlier. Investors make up a relatively high share of multi-family purchases because those buildings are typically expensive and used as rental properties.

Investors purchased 15% of single-family homes, down from 20% a year earlier. Investors bought roughly one out of every six condos and townhouses that sold, on par with last year.

To view the full report, including charts, methodology and metro-level data, please visit: https://www.redfin.com/news/investor-home-purchases-drop-Q2-2023

Posted On Saturday, 02 September 2023 06:21 Written by
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Posted On Thursday, 31 August 2023 16:06 Written by

Pending home sales increased 0.9% in July – rising for the second consecutive month – according to the National Association of Realtors®. The Northeast and Midwest posted monthly losses, while sales in the South and West grew. All four U.S. regions saw year-over-year declines in transactions.

The Pending Home Sales Index (PHSI)* – a forward-looking indicator of home sales based on contract signings – rose 0.9% to 77.6 in July. Year over year, pending transactions fell by 14.0%. An index of 100 is equal to the level of contract activity in 2001.

“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple home buying offers,” said NAR Chief Economist Lawrence Yun. “Jobs are being added and, thereby, enlarging the pool of prospective home buyers. However, rising mortgage rates and limited inventory have temporarily hindered the possibility of buying for many.”

Pending Home Sales Regional Breakdown

The Northeast PHSI shrank 5.8% from last month to 63.2, a decrease of 20.2% from July 2022. The Midwest index fell 0.4% to 77.5 in July, down 16.0% from one year ago.

The South PHSI lifted 2.0% to 95.3 in July, declining 10.9% from the prior year. The West index improved 6.2% in July to 61.3, dropping 12.8% from July 2022.

“Interestingly, the West region experienced a meaningful price decline in the past year and buyers are quickly returning as a result,” Yun added.

Posted On Wednesday, 30 August 2023 07:02 Written by
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