December 2021 – Page 3

Home Flipping Profit Margins Drop Again Across U.S. in Third Quarter of 2021 Even as Flipping Activity Keeps Rising

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Nationwide Home-Flipping Rate Rises for Second Straight Quarter; Raw Profits on Home Flips Also Increase to Near-Record Levels in Third Quarter; But Typical Profit Margins on Flips Decline Again, to Lowest Point in More Than 10 Years ATTOM, curator of the nation’s premier property database, released its third-quarter 2021 U.S. Home Flipping Report showing that 94,766 single-family houses and condominiums in the United States were flipped in the third quarter. Those transactions represented 5.7 percent of all home sales in the third quarter of 2021, or one in 18 transactions, a figure that was up for the second quarter in a row after a year of declines. The latest total marked an increase from 5.1 percent, or one in every 20 home sales in the nation, during the second quarter of 2021, and from 5.2 percent, or, or one in 19 sales, in the third quarter of last year. But the report also shows that typical raw profits remained below where they were a year ago and, more importantly, profit margins dipped to their lowest point since early 2011. Among all flips nationwide, the gross profit on typical transactions (the difference between the median sales price and the median paid by investors) stood at $68,847 in the third quarter of 2021. While that was up 2.7 percent from $67,008 in the second quarter of 2021, it was 1.6 percent less than the $70,000 level recorded in the third quarter of 2020. Profit margins, meanwhile went down for the fourth quarter in a row, as the typical gross-flipping profit of $68,847 in the third quarter of 2021 translated into just a 32.3 percent return on investment compared to the original acquisition price. The national gross-flipping ROI was down from 33.2 percent in the second quarter of 2021 and from 43.8 percent a year earlier, to its lowest point since the first quarter of 2011. The decrease in the typical profit margin from the third quarter of last year to the same period this year was the largest annual drop since early in 2009, when the housing market was crashing from the effects of the Great Recession. Profit margins declined in the third quarter of 2021 as prices on flipped homes continued to rise more slowly than they did when investors originally bought their properties. Specifically, the median price of homes flipped in the third quarter of 2021 shot up to another all-time high of $281,847. That was up 4.8 percent from $269,000 in the second quarter of 2021 and 22.5 percent from $230,000 a year earlier. The annual increase stood out as the largest for flipped properties since 2005 while the quarterly gain was the second biggest since 2015. But the latest resale price run-ups again failed to surpass increases that investors were absorbing – 5.4 percent quarterly and 33.1 percent annually – when they bought the homes that were sold in the third quarter of this year. That gap – prices rising less on resale than on purchase – led to profit margins dropping again. The price surges on both sides of flipping deals came as the decade-long housing-market boom in the United States continued throughout the nation during the third quarter of 2021. Prices kept spiking as a glut of buyers largely unscathed by the Coronavirus pandemic continued chasing an already tight supply of homes. Buyers have flooded the market since the pandemic hit early in 2020, drawn in large part by 30-year home-mortgage rates that dipped below 3 percent and a desire among many to escape virus-prone areas and get space for developing work-at-home lifestyles. “Home flipping produced another round of competing trends in the third quarter of this year as more investors got in on the action but got less out of it,” said Todd Teta, chief product officer at ATTOM. “It’s clear that declining fortunes weren’t enough to repel investors amid a typical scenario of 32 percent profits before expenses on deals that usually take an average of five months to complete. We will see over the coming months whether the amount they can make on these quick turnarounds will still be enough to keep luring them into the home-flipping business or start pushing them elsewhere.” Home flipping rates up in three-quarters of local markets Home flips as a portion of all home sales increased from the second quarter of 2021 to the third quarter of 2021 in 142 of the 195 metropolitan statistical areas analyzed in the report (73 percent). While rates commonly rose by less than one percent across the country, they reached levels that generally reflected percentages seen throughout most of the past decade. (Metro areas were included if they had a population of 200,000 or more and at least 50 home flips in the third quarter of 2021.) Among those metro areas, the largest flipping rates during the third quarter of 2021 were in Ogden, UT (flips comprised 9.5 percent of all home sales); Phoenix, AZ (9.5 percent); Salisbury, MD (9.3 percent); Salt Lake City, UT (9.3 percent) and Laredo, TX (9.2 percent). Aside from Phoenix and Salt Lake City, the highest flipping rates during the third quarter of 2021 in 53 metro areas with a population of 1 million or more were in Memphis, TN (9 percent); Oklahoma City, OK (8.8 percent) and Austin, TX (8.5 percent). The smallest home-flipping rates in the third quarter were in Honolulu, HI (0.8 percent); Portland, OR (2.5 percent); Rochester, NY (2.5 percent); Manchester, NH (2.7 percent) and Santa Rosa, CA (2.7 percent). Typical home flipping returns decrease in half of markets The median $281,847 resale price of homes flipped nationwide in the third quarter of 2021 generated a gross flipping profit of $68,847 above the median investor purchase price of $213,000. That resulted in a 32.3 percent profit margin. Profit margins dipped from the second quarter of 2021 to the third quarter of 2021 in 92 of the 195 metro areas with enough data to analyze (47 percent). The biggest declines came in Fargo, ND

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Part of speech: adjective Origin: Middle English, 13th century Meaning: Neat and smart in appearance. Examples of Trig in a sentence “Sandra had a sharp, trig wardrobe that commanded respect.” “All the attendees at the conference were required to be kept trig.” About Trig This word comes from Middle English, meaning “trusty, nimble.” It is of Scandinavian origin and akin to the Old Norse “tryggr” and Old English “trēowe,” both meaning “faithful.” Did you Know? When people hear “trig,” they might have flashbacks to high-school math class. The noun “trig,” short for “trigonometry,” is a more common usage than the adjective version, which means neat and smart in appearance.

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ServiceLink, a respected leader providing tech-enabled services for all phases of the home lending lifecycle, is pleased to welcome four new hires in the fourth quarter to its originations division. Each will be responsible for driving client growth strategy for originations products. Please read on for more information. Raeann Keyser joins ServiceLink as inside sales representative. Before ServiceLink, Keyser worked as a licensed real estate agent with Keyser Williams Realty, Inc. and coordinated off-site COVID-19 testing in the Tampa Bay region for Dascena. Earlier in her career, she worked for Hewlett Packard Company as an account executive servicing large Fortune 500 companies throughout the U.S. Keyser is a graduate of Georgia Southern University and resides in Tampa, Florida. Janet M. Schaal joins ServiceLink as national sales executive. Schaal brings more than 20 years of experience in business development and sales within the financial services technology industry, with a specific focus on digital solutions. Throughout her career, she has successfully represented products in various lending industries including consumer, commercial and mortgage. Schaal has a strong focus on consultative selling and building relationships with banks and credit unions. She is a graduate of Caldwell University and resides in the Kansas City Metropolitan Area. Paul Francoeur joins ServiceLink as national sales executive. Francoeur has been in the title and escrow business since 2015, working on the data and technology side in addition to serving as a title insurance and escrow representative selling direct to agents and lenders. He is a licensed title agent in the state of California. Earlier in his career, he spent time in software development and health care technology. Francoeur is a graduate of the University of San Diego and resides in the Los Angeles Metropolitan Area. Allison Malzone joins ServiceLink as national sales executive. Throughout her 20+ year career, Malzone’s varied experiences working within the title services, residential real estate and commercial lending spaces have helped to shape her well-rounded approach to driving positive client and borrower outcomes. Before ServiceLink, Malzone spent time at Stewart Title, Fidelity Families, TCF Bank and PHH Mortgage to name a few. She is a graduate of the Echols International Travel & Hotel School and resides in Chicago, Illinois.

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High building costs to weigh on faster gains US housing starts are forecast to increase 1.0% per year in unit terms through 2025, according to Housing: United States, a report recently released by Freedonia Focus Reports. Builders will benefit from strengthening consumer finances and rising levels of employment, which will support demand for housing and new starts. Population growth and household creation will also support gains. Furthermore, increases in the number of individuals working from home as a result of the pandemic is spurring demand for nicer and larger homes with space for an office. Many of these individuals will continue to work from home or in a hybrid environment over the forecast period, supporting and perpetuating its use as justification for moving. However, further housing start gains will be constrained by high real estate values, intensifying building codes and fees that add to labor and material costs, and economic uncertainty due to the COVID-19 pandemic. The cost of raw materials will also impact housing construction costs. For instance, the price of both untreated and pressure-treated softwood lumber reached record highs in 2020 – almost double the level in 2010 – due to surging demand and a shortage of available product. Many mills – in anticipation of declining demand due to the COVID-19 pandemic – ceased operations or reduced output. However, lumber demand surged as people undertook home improvement projects during the pandemic, fueling demand for lumber and other building materials. As the supply-demand dynamic moderates, prices will return to levels more similar to those seen historically. However, capacity expansions planned by US lumber mills will not be fully operational for a year or two, which will contribute to continued elevation of softwood lumber prices through 2025. These and other key insights are featured in Housing: United States. This report forecasts to 2021 and 2025 US housing starts, housing stock in units, and housing completions, and average floor space per new and existing units in square feet. Each measure is segmented by housing type in terms of: single-unit conventional multiple-unit conventional manufactured In addition, housing starts and the housing stock, as well as existing home sales, are segmented by region as follows: South Midwest West Northeast Furthermore, spending on residential building construction in nominal US dollars is forecast to 2021 and 2025 and is segmented by type as follows: single-unit multiple-unit improvements To illustrate historical trends, housing starts, the housing stock, housing completions, existing home sales, average floor space, residential building construction expenditures, the median price of new single-unit conventional homes, interest rates, and the various segments are provided in annual series from 2010 to 2020. The definition of housing starts differs by type of building. A housing start for a conventional building is counted on the date foundation work begins. For manufactured housing, the date of placement represents a housing start. Modular and precut varieties are not considered manufactured homes; they are conventional homes. As defined by the US Census Bureau, expenditures represent architectural and engineering costs; labor, material, and overhead costs; interest and taxes paid during construction; and contractors’ profits. Improvements include additions, alterations, and major replacements (e.g., heating systems) to existing structures, but exclude maintenance and repairs. This report includes the results of a proprietary national online consumer survey of US adults (age 18+). This Freedonia Focus Reports National Survey has a sample size of approximately 2,000, screened for response quality, and representative of the US population on the demographic measures of age, gender, geographic region, race/ethnicity, household income, and the presence/absence of children in the household. More information about the report is available at:https://www.freedoniafocusreports.com/Housing-United-States-FF60024/?progid=91541 About Freedonia Focus ReportsEach month, The Freedonia Group – a division of MarketResearch.com – publishes over 20 new or updated Freedonia Focus Reports, providing fresh, unbiased analysis on a wide variety of markets and industries. Published in 20-30 pages, Focus Report coverage ranges from raw materials to finished manufactured goods and related services such as freight and construction. Additional Building Products reports can be purchased at Freedonia Focus Reports or MarketResearch.com.

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Two words, with two letters’ difference: “among” and “amongst.” But is there really a difference between them in meaning and usage? The short answer is, NO. Both “among” and “amongst” are prepositions used to describe something in the midst of, in the company of, surrounded by, or in association with. For example, “I know that contract is somewhere among this mess.” Or “Mary had one suitor in mind amongst the many clamoring for her attention.” Does It Matter? You can use “among” and “amongst” interchangeably, so why do both exist? The big difference is their age. “Among” comes from the Old English word “ongemang,” which combines the words for “in” and “mingling.” “Amongst,” despite its dated sound to modern American ears, is actually a newer term popularized as Middle English took over. “Amongst” appeared with other words such as “against.” Historical Fiction Generally speaking, it’s a matter of preference, but one particular use case for “amongst” would be in writing historical fiction. Given the word’s popularity during the Middle Ages, it may feel more at home when spoken by a character using other traditional lingo. An International Audience “Amongst” is more popular in England, Canada, and Australia. While Americans will understand “amongst,” it sounds out of place and old-fashioned within the American dialect. “Among” is the preferred choice when writing for an American audience, or for daily content such as news articles, reports, or business communication. What About “Between”? While there may not be much of a difference with “among” and “amongst,” there is a contrast compared to fellow preposition “between.” “Among” and “amongst” describe a collective grouping, such as: “The roses bloomed brightly among(st) a sea of green.” You should use “between” only when highlighting a one-to-one relationship, as in: “The newspaper was wedged between the two passengers on the train.”

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New York-based real estate private equity firm actively expanding South Florida origination footprint Flatiron Realty Capital, a tech-enabled real estate portfolio lender, announced the Company has allocated substantial capital toward business development efforts and Southeast geographic expansion initiatives in 2022. Rapidly spiking inflation and associated interest rate uncertainty has presented significant challenges for many mortgage originators. As a privately funded lender with institutional partnerships within the securitization markets and nontraditional access to capital, Flatiron Realty Capital is poised to navigate impending market dynamics. With a demonstrated track record of success amidst market volatility, a full suite of proprietary product offerings, and industry-leading application to fund turn times, Flatiron is well-positioned to expand the Company’s geographic footprint. Flatiron plans to accelerate its growth trajectory in 2022 and is actively seeking expansion opportunities in the Southeast geographic region, with a specific focus in the South Florida market. Given recent demographic trends within the Southeast region, coupled with the COVID-19 crisis environment and resulting shifts toward increased remote work flexibility, the South Florida market has experienced a significant influx of residents in need of housing. Additionally, record high Home Price Appreciation (HPA) levels observed in recent months continue to place pressure on entry-level homebuyers. This confluence of external market factors has created opportunity for real estate investors and the long-term SFR (Single Family Rental) market according to Flatiron. “The demographics within the South Florida market present opportunity for real estate investors across the entire lending spectrum – from affordable housing rental opportunities to renovation of high-end, luxury properties,” said Robert Talas, Co-founder & Principal of Flatiron. “In today’s market, we are seeing greater rental opportunity as HPA levels push entry-level buyers out of the market. Separately, many working professionals previously residing in urban areas are leveraging the ability to work remotely and migrating to suburban communities with Florida presenting a premier option given accessibility, relative affordability, and general quality of life. In recent months, Flatiron has also assisted several foreign nationals exhibiting increased interest in seeking real estate investment opportunities in the Southeast region.” Flatiron Realty Capital recently established a physical presence in the South Florida market, opening a local office that features a high-touch, high-tech customer experience. Flatiron provides customized service offerings and portfolio lending products with loan amounts ranging from $100K to $15M in order to meet the widespread needs of real estate investors in the Southeast market. “Given current housing inventory levels and competition in the market, it becomes exponentially more critical that real estate investors partner with credible lenders featuring an expansive product set, knowledge of the local market, and consistent speed of service,” said Robert Talas. “In 2021, Flatiron Realty Capital experienced record highs in both purchase and refinance volume while maintaining expeditious turn times and high quality of service. In the year ahead, we remain committed to delivering upon our value proposition and helping real estate investors achieve their goals by extending Flatiron’s institutional capabilities to mortgage sales professionals and third-party originators alike.” Flatiron’s fully integrated real estate lending platform offers alternative sources of retail and third-party originated financing opportunities to accredited borrowers and real estate professionals. For more information, visit flatironrealtycapital.com. ABOUT FLATIRON REALTY CAPITALFounded in 2018, Flatiron is a privately funded real estate portfolio lender specializing in bridge, rehabilitation, ground-up construction, and land financing, in addition to 30-year rental investment products. Prior to founding Flatiron, the firm’s three principals have personally funded over $600M in real estate transactions and originated approximately $2 billion in loan volume. PRESS CONTACTFlatiron Realty Capitalcontact@flatironrealtycapital.com