According to the latest CoreLogic Loan Performance Insights Report, 4.3% of mortgages were in some stage of delinquency in March, 2018. This figure is not only down one percentage point from a year ago, it is also at the lowest level since March, 2007. March’s foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process) came in at 0.6%, down from 0.8% one year ago. CoreLogic points out that the foreclosure rate is back to the pre-crisis level of 0.6%.
BY BRAD BECKETT ON JUNE 13, 2018
It kind of sounds oxymoronic, but a law passed in California back in 2016 to ease the housing crisis just might be showing some fruit. According to a recent story on Bloomberg, California’s legislature passed a law two years ago that allows owners of single-family properties to build guest apartments, which are referred to as accessory dwelling units (ADUs). Basically, they’re granny flats, guest houses or apartments over the garage. They have to be in residential areas and meet setback and height requirements. Interestingly, cities cannot outlaw them nor can they force homeowners to go through the local planning commission. However Bloomberg does ponder whether “cities will resist the temptation to excessively control how homeowners use the space.” It is California after all.
“…House flippers are starting to see adding accessory units as a way to increase value enough to make investing in larger houses in particular pay off…”
You don’t need to watch Tarek & Christina to know that it’s what you put into that flip that maximizes your ROI (return on investment). Along those lines, the folks over at Keeping Current Matters looked at data from HGTV to come up with the top 4 renovations to maximize your flip’s ROI. Number 1? Give that bathroom an upgrade and laugh all the way to the bank! Happy Friday!!
A recent study by lendingtree ranked the top 10 cities in America with the most non-owner-occupied loan originations. They suggest that the lack of inventory in market is being exacerbated by a “lock-in” effect where current owners are dissuaded from selling and moving as their new home would be at a higher interest rate. In addition, they say non-occupant buyers are crowding-out homebuyers by making a market more competitive and forcing prices higher. Indeed…
“Our study looks at the share of mortgages made for non-owner occupied properties to gauge their impact on inventory. Non-owner occupied properties are either vacation homes, investment properties or second homes. Many such properties are often bought for cash, however, which means our mortgage focused-study likely understates the effect on the market.”
For over 5 years the National Association of Realtors has issued their annual Home Buyers and Sellers Generational Trends Report. This report provides insights into differences and similarities across generations of home buyers and sellers. It’s good data…these are your customers! Happy Friday!!!
“One consistent finding for the last several years of reports has been that buyers 37 years and younger (Millennials/Gen Yers) is the largest share of home buyers at 36 percent. Sixty-five percent of these buyers were also first-time home buyers. The largest cohort in America is growing up and becoming more traditional in their buying habits.”
The NAHB reports that industry experts have become concerned about the affordability of rental housing in America, and how difficult it has become to address the problem through new construction. To that end, the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC) conducted joint research to find out how much government regulation (red tape) adds to the cost of building new multifamily housing. The results show that over 90% of multifamily developers typically incur hard costs of paying fees to local jurisdictions – such as applying for zoning approval and when local governments authorize construction. However;
“…government regulation can impose costs in other ways as well. Over 90 percent of multifamily developers also incur costs of delays caused by sometimes lengthy approval processes, development standards that go beyond what would ordinarily be done, changes to building codes over the past decade, and OSHA requirements…The bottom line is that regulation imposed by all levels of government (whether local, state or federal) accounts for 32.1 percent of the cost of an average multifamily development.”
By now, almost Americans are aware of the growing amount of student debt many folks are carrying. In fact, according to a report from LendingTree, the total U.S. student loan debt reached $1.5 trillion earlier this year, up around $600 billion 10 years ago. They also cite data from the Pew Research Center revealing that 37% of adults under 30 have at least some student debt. No doubt about it, all this debt has a big impact on whether someone is able to buy a home or chooses to rent.
“Incurring student debt isn’t necessarily a bad thing, and the return on investment — for those who leave school with degrees that are valued in the marketplace — is generally well worth it. The biggest problems tend to arise when people take on debt to attend programs they don’t complete or aren’t properly accredited or are generally unethical.”
A new study from 24/7 Wall Street identified what they say are the 50 worst cities in America to live in. To come up with their list they looked at data on 551 U.S. cities with a population greater than 65k. Then, they looked at a whole range of quality of life variables that included schools, local economy, job market, public safety and even its climate. They said that cities that perform well on these measures are more likely to attract new residents while those that don’t tend to drive residents away. Oh, and their number one worst city; Detroit. That’s brilliant…you be the judge.
“Quality of life in an American city often depends on the neighborhood one lives in, as abject poverty and crime can be found just blocks away from prosperity. Still, as much as a city can be judged on the whole, some cities face widespread problems that detract from their residents’ overall quality of life.”
The professional association Counselors of Real Estate (CRE) recently issued their annual Top Ten Issues Affecting Real Estate for 2018-2019. In a break with previous years, their new list separates issues by current and long-term concerns. Topping their list of current concerns was “Interest Rates and the Economy” while long term they view “Infrastructure” as a major issue. Indeed…their entire list is worth a strategic look.
“Leading the list of current issues is Interest Rates and The Economy. As interest rates rise, the commercial and residential real estate markets are already experiencing changes – decreasing demand for commercial property, and higher home mortgage rates. Rate increases also limit value appreciation for commercial real estate and make housing less affordable…”
Longer-term, however, Infrastructure – and the lack of serious effort by the U.S. to address its condition and much-needed revitalization – leads the list of broader and emerging issues affecting real estate. Roads, bridges, airports, water and sewer lines, electricity, even public transit…are rapidly deteriorating…”
Top 5 right now:
- Interest Rates and The Economy
- Politics and Political Uncertainty
- Housing affordability
- Generational Change and Demographic
- E-commerce, and Logistics
Top 5 going forward:
- Disruptive Technology
- Natural Disasters and Climate Change
- Energy and Water
Leave it to Realtor.com to identify the few places in America where prices are actually going down. In fact, there are only 27 of the country’s 350 metros that saw price drops. They do, however, point out that in each of these areas there was some sort of legitimate reason for the decline – whether it was from overbuilding, mass job losses, natural disasters, you name it. To come up with their top-10 list, Realtor.com compared two years of median list prices in the 350 largest metros areas over the 12-month periods of May 2016 to April 2017 and May 2017 to April 2018. With that data in hand, they ranked the areas with the largest price cuts.
“We are in a full-fledged housing boom, and home prices are skyrocketing. At a national level it is blue skies with no real big clouds on the horizon,” says Daren Blomquist, a senior vice president at the real estate information firm ATTOM Data Solutions. “But an act of God can stall a region’s housing market, something you can’t predict well: mudslides, wildfires, hurricanes…”
Their top ten metros here home prices are falling are:
- Santa Barbara, CA
- Pottsville, PA
- Napa, CA
- Austin, TX
- Beckley, WV
- College Station, TX
- Corpus Christie, TX
- Anchorage, AK
- Houma, LA
- Bismarck, ND