El Paso Investors Club

As a recent post on LendingTree points out, while the retirement stage of life is something most Americans plan for, many just aren’t financially prepared. In fact, one common obstacle to a sound retirement is simply debt. To that end, LendingTree calculated the median non-mortgage debt balances for retirement-aged people in the 50 largest U.S. metros, and then calculated the average distribution of that debt.  Among their findings were that the average of median debt for retirement-age borrowers was $20,643 and the average credit score was 701.  Indeed…

“Debt is even more burdensome when it’s carried over into retirement. Paying for the usual ongoing expenses on a fixed income can be a stretch, and adding debt payments on top of that can push retirees’ budgets to the breaking point.”

Click here to read the full story at LendingTree.com

The American Bankers Association recently released their top 10 real estate finance policy issues to watch in 2019.  Briefly, they are:

1. Ability to repay
2. HMDA (Home Mortgage Disclosure Act ) reforms
3. Fair lending
4. Appraisal thresholds
5. ADC construction opportunities
6. Mortgage servicing regulations
7. Accounting standards and mortgage lending
8. Reforming the GSEs
9. Flood insurance
10. Digital developments and fintech

“The real estate finance business has been steering through continuous change for a full decade. The 2008 housing meltdown precipitated a set of policy changes that sparked legal, procedural and structural transformations throughout the market. Even commercial real estate lending, largely immune from heavy regulatory scrutiny, is being affected. As we look towards the coming year, we see continued movement and even more reforms…”

Click here to read the full story at the Banking Journal.

The IRS recently announced that it was reopening a program that is key to home lending after the mortgage industry said its closure during the partial government shutdown might force lenders to delay or even scrap loan closings.  According to the Wall Street Journal (as posted on Realtor.com) The Mortgage Bankers Association and other industry trade groups had complained to the Treasury Department that the program’s closure as part of the shutdown could harm consumers seeking to obtain a loan.

“Though the program closed because it was funded through the normal appropriations process, the administration determined it could fund it instead through the user fees the IRS charges each time it verifies a borrower’s income. Industry officials said the fees are about $2.00 per request….Reviving the program allowed some 400 IRS clerks to return to work, according to an IRS spokesman.”

Click here to read the full story on Realtor.com.

In 2019, most real estate investors will want to stay away from the cities with soaring prices, where they’re more likely to end up holding the bag than to strike it rich, this is according to Local Market Monitor’s Ingo Winzer in a recent essay on Forbes.com.  If the name sounds familiar, each month we hear from Winzer in his National Economic Outlook where he shares his thoughts on developments taking place in the U.S. economy.

“You can never know when a real estate bubble will burst – I happen to think it won’t happen in 2019 – but in places like San Francisco, Seattle, Miami and Denver, caution is now the order of the day. If you own property in these spots and plan to sell, don’t wait until the market has peaked. And if you’re looking for a good place to put your money, you should consider instead the 20 markets I’m listing here.”

Click here to read the full story at Forbes.com.

We have had several interesting posts about Opportunity Zones and their game-changing potential for areas all across the country.  Put simply an Opportunity Zone is an economically-distressed community where new investments, under certain conditions, are eligible for preferential tax treatment.  They were created by Tax Cuts and Jobs Act in December, 2017.   Today’s infographic from Heffler, Radetich & Saitta calls them  a new avenue for community investment that looks to spark economic recovery in targeted areas of the country, taking aim at $6.5 trillion in unrealized capital gains estimated to be in the market.  Indeed, so now you know…..Happy Friday!!!!

Hat tip to Heffler, Radetich & Saitta.

According to data recently illustrated by the National Association of Realtors, the price of a typical home was $235,000 in Q3 of 2018. They used data from the FHFA and American Community Survey (ACS) to calculate a median home value for 3,119 counties and county-equivalents across the United States.  Interestingly, their estimates show that 87% of counties had a lower median home value than the national level. Indeed…no go dive in.

Click on the above map to make it interactive

Click here to read the full story at the National Association of Realtors.

If you’re a regular reader of our posts then you’ll know we run stories about “flipping” fairly often.  Along those lines,  a recent article on Realtor.com pointed out some interesting characteristics about the current market for flipping houses.  With the slowdown in housing market now taking place, they caution that falling home prices can eat into the ROI (return on investment) for flipping houses – even as the actual work is being performed!  So, they put pen to paper to find out where home flipping is up (and down), all across America.   They found that markets with the biggest drop in flips are areas where prices are slowing down, such as larger coastal cities where costs got ahead of what buyers can afford.  And, interestingly, the places where flips are up tend to be the smaller, more affordable areas that are getting an influx of new residents.  Indeed…

Millennials “want to move into a home that requires minimal work,” says Charles Tassell, chief operating officer at National Real Estate Investors Association. “A house that has already been rehabbed or flipped [and is priced lower than new construction]is really what they are looking for.”

Click here to read the full story on Realtor.com.

A new white paper from Freddie Mac says SFRs are the largest source of rental housing in America and they’re playing an important role in rural areas where they account for two-thirds of the rental housing stock. However, Freddie Mac says that the secondary market for SFR home loans is limited.  In addition, they point out that of the 43 million renter households ̶ in America today,  35.5 million live in urban and suburban markets and 7.5 million in rural markets.  Freddie Mac produced the white paper under their Duty to Serve plan, which aims to expand affordability and address America’s most persistent housing problems.

“Across the United States today there are nearly 43 million renter households ̶ 35.5 million live in urban and suburban markets and 7.5 million in rural markets. Typically, rental housing is thought of as apartments: high-rise and mid-rise buildings downtown, garden apartments out in the suburbs and federally subsidized housing around the country.  Indeed, over 18 million renter households live in multifamily buildings like that. But where do the other 25 million renter households live? The answer, for an overwhelming majority, is in single-family rental (SFR) homes.”

Some key findings:

• The SFR market is the single largest segment of the rental market by valuation and households served
• The overwhelming majority of SFRs are owned and operated by individuals or very small investors
• There is a slow-growing middle-tier investor market with further potential for growth
• Large-scale institutional investors are a new entry into the market, but are limited to a select few firms that own approximately 1 percent of SFRs
• Apart from these select few institutional investors with access to the capital markets, there are limited secondary market opportunities for SFR loans with middle-tier investors that would provide liquidity and stability, and there is not a uniform set of terms and credit standards for loans on SFRs
• Freddie Mac’s pilot included both middle-tier investors and affordable homes in select large-investor portfolios and demonstrated how a secondary market infrastructure focused on SFRs affordable at 80 percent of the area median income (AMI) could be created and operated, particularly for middle-tier investors

Click here to read the full report at Freddie Mac.

According to the latest The CoreLogic Loan Performance Insights Report the serious delinquency rate for September 2018 fell to 1.5%, representing a 0.4 percentage point decline compared with September, 2017. CoreLogic says declining unemployment rates and rising home prices were partly responsible for this decline.  The serious delinquency rates for Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), and conventional loans were 3.7, 1.9 and 1.1 percent, respectively.  The serious delinquency rate dropped significantly for all loan types in September 2018 compared with September, 2017, representing an 11-year low.

“A closer look reveals that today’s delinquency rates are influenced by older loans. The bulk of conventional loans that were seriously delinquent were originated between 2003 and 2009…About 67 percent of the conventional loans that were seriously delinquent in September 2018 were originated between 2003 and 2009 compared to just 23 percent of seriously delinquent conventional loans originated between 2010 and 2018.”

Click here to read the full report at CoreLogic.com.

Water heaters…those potential time-bombs in that flip you just bought or an aging old trustworthy friend in your basement.  However, if you ever need to replace one, what kind do you replace it with?  And, depending the age, they can consume an inordinate amount of energy!  So which one is best for your property?  The folks at The Home Depot put together this handy graphic to help comprehend and discover the best solution for your situation…..Happy Friday!!!

Hat Tip to The Home Depot.