July 2022 – Page 4

Black Knight: Signs of Cooling in Nation’s Least Affordable Markets as Inventory Levels Improve

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-Home price growth slowed in 97 of the 100 largest U.S. housing markets in May, with the national annual appreciation rate pulling back by more than a full percentage point from the month prior -While the slowdown to 19.3% from a revised 20.4% in April marks the largest single-month deceleration since 2006, prices were still up 1.5% month over month – nearly twice the historical average for May -Markets experiencing the strongest cooling in home price growth are those with comparatively poor affordability levels and low inventory deficits -Housing is now the least affordable it has been since the mid-1980s, when sharp Fed hikes led to double-digit mortgage rates and a greater than 50% payment-to-income (P-to-I) ratio –Tightening affordability then was almost entirely interest rate-driven – with income growth largely keeping up with home prices -Today’s 36.2% ratio is a result of both rising interest rates as well as soaring home values largely driven by historically low inventory levels -Even though May saw the largest jump in housing inventory in the past five years as pending listings begin to normalize and existing listings sit longer on the market, for-sale inventory remains at a 60% deficit The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. This month’s report looks at recent cooling in the annual rate of home price appreciation and the intertwined impacts of both affordability and inventory on those trends. According to Black Knight Data & Analytics President Ben Graboske, May marked the second consecutive month of cooling at the national level. “The annual home price growth rate fell by more than a full percentage point in May, the largest monthly decline at the national level since 2006,” said Graboske. “However, even with growth slowing in 97 of the top 100 U.S. markets, overall home prices still rose 1.5% from April – nearly twice the historical average for the month of May. And while any talk of home values and 2006 might set off alarm bells for some, the truth is that price gains would need to see deceleration at this rate for more than 12 months just to get us back to a ‘normal’ 3-5% annual growth rate. That said, the pace of deceleration could very well increase in the coming months, as we’ve already begun to see in select markets such as Austin, Boise and Phoenix. “The record-low listing inventory that had been driving these price gains nationwide has also begun to improve, albeit slightly. Indeed, even with an increase in active listings of 107,000 in May – nearly double the traditional seasonal rise for the month – we are still 60% below the number of active listings we would normally see at this time of year. All major markets are still facing inventory deficits, but some have seen their shortages shrink much faster than others. Among these are some of the hottest housing markets in recent years: San Francisco, San Jose and Seattle. Unsurprisingly, these are also among the markets seeing the strongest levels of cooling so far this year, with annual home price growth rates in each down more than three percentage points in recent months.” As mortgage interest rates continue their upward climb, this month’s Mortgage Monitor also examines the resulting further deterioration in home affordability. With 30-year rates hovering close to 6% and home prices up nearly 11% since the start of 2022, home affordability is at its worst point since the mid-1980s – when sharp Fed hikes led to high double-digit mortgage rates that resulted in a greater than 50% payment-to-income ratio. The affordability challenge back then was almost entirely driven by the interest rate environment, while incomes largely kept up with home price growth. Today’s falling affordability is due in equal measure to rising rates and soaring home values largely driven by historically low inventory levels. The average home price is now more than six times the median household income, the largest multiple on record since the early 1970s. As of mid-June 2022, it takes 36.2% of the median household income to make the mortgage payment on the average- priced home purchase, well above the 34.1% post-1980s peak in July 2006. To review the full report, visit: https://www.blackknightinc.com/data-reports/ About Black KnightBlack Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

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Acquisition strengthens leading nationwide Appraisal Management Company’s footprint in Northeast Opteon, a leading international provider of valuation, advisory, and property services, has announced its acquisition of Northeastern Appraisal Associates Residential (NEA), a Buffalo, New York-based appraisal management company (AMC) and staff appraisal firm. This partnership expands Opteon’s presence in the Northeast, strengthening its nationwide service offerings and faster turn times in the fourth largest US real estate market. Northeastern Appraisal Associates Residential has been delivering high-quality appraisal reports to the New York community since its inception in 1972. NEA has top-tier staff and panel appraisers throughout the New York region, servicing some of the nation’s top mortgage lenders and originators. The partnership will also provide great new benefits for current NEA clients, such as extended business hours, a multi-level 200-point QC process, and coverage in all 50 states with 13,000+ panel and 250+ staff appraisers. “We have always focused on providing high-quality appraisals to our clients. With the market rapidly changing in recent years, we must remain at the forefront of change to continue providing such excellent service. Partnering with Opteon guarantees we are able to provide our clients with an industry-leading experience,” said Salvatore Vacanti, Vice President of Operations for NEA. Salvatore will continue to lead the appraisal team as Operations Manager of New York, while working with the AMC division to seamlessly integrate with our clients. “Northeastern Appraisal Associates Residential has always strived to innovate and lead within the industry. We do so by keeping the appraiser at the center of everything we do. The Opteon vision of empowering appraisers through technology aligns with our goals, and we’re excited to bring this partnership to our clients,” added Robert Vacanti, President of NEA. Robert will be joining the Growth and Expansion team with Opteon USA to help grow national clients. Founded in Australia in 2005, Opteon developed innovative technology that dramatically decreased turn times and revision rates. In Australia and New Zealand, Opteon delivers the majority of appraisal reports within 2 days, with less than a 1% rework rate. By partnering with world-class appraisal firms like NEA, Opteon aims to bring this technology to the United States. “Our technology works hand-in-hand with appraisers. By equipping exceptional staff appraisers with our technology, Opteon streamlines the appraisal process. Northeastern Appraisal Associates Residential is comprised of an incredible team that will be able to implement our technology across the Northeastern US,” said Chris Knight, Group CEO of Opteon. Opteon has experienced substantial growth since the company’s expansion into the US in 2019 and is one of the fastest-growing nationwide appraisal firms. This is the fourth acquisition Opteon has made in the last 12 months. Through these strategic acquisitions, Opteon has built a robust national Staff Appraiser model, allowing Opteon to utilize innovative technology to deliver drastically shorter turn times across the US. Together, Opteon’s family of brands is bringing innovation and an elevated level of service to the industry. About Opteon Opteon is an international provider of valuation, advisory, and property services through innovative software solutions. With the company’s expansion into the US in 2019, Opteon has invested heavily in its technology to reduce turn times, increase quality, and minimize human error without eliminating human expertise. Opteon’s US sector is one of the fastest-growing nationwide appraisal firms and consists of more than 400 employees. Opteon was founded in 2005 and is recognized as the largest independent valuation and property services firm in Australia and New Zealand. CONTACT: Courtney Ray, EVP, Marketing & Communications, 248.255.2022, Courtney.ray@opteonusa.com

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A record-high share of home sellers are dropping their prices after this month’s historic mortgage-rate hike put a damper on homebuyer activity More and more, home sellers are ceding to the mounting pressure on affordability posed by this month’s rapid mortgage-rate hike, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The median asking price of newly-listed homes for sale is down 1.5% from the all-time high it reached in the spring, and a record-high share of sellers dropped their asking price during the four-week period ending June 26. Pending sales continued to fall, posting their largest decline since May 2020, but there are signs that early-stage homebuyer demand is starting to level off. “Data on home-tours, offers and mortgage purchase applications suggest that homebuyers have noticed the shift in power and are no longer leaving the market in droves,” said Redfin chief economist Daryl Fairweather. “Buyers coming back will provide support to the housing market, but between now and the end of year I think the power will continue to shift towards buyers, resulting in mild price declines from month to month.” “Homebuyers are worried about interest rates, having to go back to the office, getting laid off, and wondering if they can get a better deal by waiting out the market,” said Redfin Seattle-area real estate agent Caroline Loudenback. “On the other side, sellers are adjusting to this new reality and learning that sometimes there’s not much they can do to increase buyer interest. Sometimes price isn’t even the reason a home is sitting on the market without selling—some more remote areas that were super popular during the pandemic are now being overlooked as buyers reconsider long commutes with high gas prices. It’s a tricky market and you have to pay close attention to your local sales and listings to understand what’s happening.” Leading indicators of homebuying activity: For the week ending June 30, 30-year mortgage rates fell slightly to 5.7%. Fewer people searched for “homes for sale” on Google—searches during the week ending June 25 were down 7% from a year earlier. The seasonally-adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was down 15% year over year during the week ending June 26, but up 7 points from the previous week. Touring activity as of June 26 fell 3% from the start of the year, compared to a 24% increase at this time last year, according to home tour technology company ShowingTime. Mortgage purchase applications were down 24% from a year earlier, while the seasonally-adjusted index was up 0.1% week over week during the week ending June 17. Key housing market takeaways for 400+ U.S. metro areas: Unless otherwise noted, this data covers the four-week period ending June 26. Redfin’s weekly housing market data goes back through 2015. The median home sale price was up 14% year over year to a record $399,249. The median asking price of newly listed homes increased 15% year over year to $405,547, but was down 1.5% from the all-time high set during the four-week period ending May 22. The monthly mortgage payment on the median asking price home increased to $2,459 at the current 5.7% mortgage rate, but is down slightly from the peak of $2,494 during the four-week period ending June 12. This was up 45% from $1,694 a year earlier, when mortgage rates were 2.98%. Pending home sales were down 13% year over year, the largest decline since May 2020. New listings of homes for sale were down 7% from a year earlier. Active listings (the number of homes listed for sale at any point during the period) fell 8% year over year—the smallest decline since March 2020. 46% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 49% a year earlier. 32% of homes that went under contract had an accepted offer within one week of hitting the market, down from 36% a year earlier. Homes that sold were on the market for a median of 17 days, down from 18 days a year earlier and up slightly from the record low of 15 days set in May and early June. 54% of homes sold above list price, up from 53% a year earlier. This measure peaked in mid-May and has declined 2.5 points since then. Last year it peaked in mid-July. On average, 6.5% of homes for sale each week had a price drop, a record high as far back as the data goes, through the beginning of 2015. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, declined to 102.2%. In other words, the average home sold for 2.2% above its asking price. This was up from 102.1% a year earlier. To view the full report, including charts and methodology, please visit:https://www.redfin.com/news/housing-market-update-asking-prices-decline/

Vulnerable Housing Markets

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Certain Markets Will Be More Susceptible to Declines in 2022 By ATTOM Staff ATTOM, a leading curator of real estate data nationwide for land and property data, released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, unemployment and other measures in the first quarter of 2022. The report shows that New Jersey, Illinois, and inland California had the highest concentrations of the most at-risk markets in the first quarter of 2022 — with the biggest clusters in the New York City and Chicago areas. Most southern states were less exposed. The first-quarter 2022 patterns — based on home affordability, underwater mortgages, foreclosures and unemployment — revealed that New Jersey, Illinois and California had 34 of the 50 counties most vulnerable to the potential declines. The 50 most at-risk included eight counties in the Chicago metropolitan area, six near New York City and 10 sprinkled throughout northern, central and southern California. Elsewhere, the rest of the top 50 counties were scattered mainly along the East Coast and in the Midwest. They included three each in the Cleveland, OH, and Philadelphia, PA, metropolitan areas, plus two of Delaware’s three counties. At the other end of the risk spectrum, the South had the highest concentration of markets considered least vulnerable to falling housing markets. “While the housing market has been exceptionally strong over the past few years, that doesn’t mean there aren’t areas of potential vulnerability if economic conditions continue to weaken,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “Housing markets with poor affordability and relatively high rates of unemployment, under-water loans, and foreclosure activity could be at risk if we enter a recession or even face a more modest downturn.” Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes and local unemployment rates. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 586 counties around the United States with sufficient data to analyze in the first quarter of 2022. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks. The wide disparities in risks come at a time when the U.S. housing market remains relatively strong but shows signs that a decade-long boom may be easing. Home prices have climbed more than 15% in most of the country over the past year, with new highs hit in about half the nation, boosting homeowner equity to record levels. But as interest rates on 30-year mortgages rates have climbed to 6%, worsening affordability for prospective homebuyers, home sales have declined every month in 2022, and home price appreciation is showing signs of retreating rapidly. “The housing market has been one of the strongest components of the U.S. economy since the onset of the COVID-19 pandemic,” Sharga noted. “But Federal Reserve actions aimed at bringing inflation down from its 41-year high are having an immediate impact on home affordability, sales, and pricing. Whether the Fed can execute a relatively soft landing, or inadvertently steers the economy into a recession will determine the fate of the housing market over the next 12-18 months.” Amid that backdrop, the national median home value rose up just 3% from late-2021 through early-2022, seller profits are starting to dip and home affordability is inching downward. Lender foreclosures against delinquent mortgages also are up.

Overcoming Obstacles

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From Prom Dresses to Real Estate By Brittney Fairweather My career started out quite differently than most. For one, I was a teenager. Second, I wasn’t exactly seeking a lifetime career. I had been asked to the prom and I was thrilled. I had the exact dress picked out that I wanted. However, dresses cost money — more than most 14-year-olds have from an allowance. I had to earn some money, and fast. To earn that money, I approached a local gym owner, Trixy Castro, about running their “kids club” that provided childcare while patrons worked out. Unfortunately, that gym did not offer childcare. When Trixy saw the discouraged look on my face as I sulked toward to door, she said that if I wanted a job, I could jump on the phones and help sell gym memberships. She handed me a phone and the yellow pages, and I got immediately to work. Not only was I able to buy the prom dress I was after, but I made a life-long friend and colleague. I have worked for Trixy for more than 15 years now, and her willingness to give me that first opportunity to prove myself has made all the difference in how I approach challenges, personally and professionally. An Unlikely Career Path with an Unlikely (and Hugely Talented) Team After taking on sales at the gym, I began working with Trixy across different small business ventures throughout high school and during college. I attended college in Southern California, but went right back to work with Trixie after graduation. This time, I was working in my first real estate role. I was the receptionist at Rightway Financial Group (I got the job after completing my very first professional interview in a blazer I borrowed from my mom), but reception was not where I wanted to stay. I set out to expand my understanding of the industry and began to study for my real estate license. Every day, I would stay late to teach myself the ins and outs of loan processing. By 2007, it was becoming evident to all of us that a market shift was imminent. We shifted our business model away from conventional loans toward more investor-oriented styles. Where the market was heading, it was imperative to build a firm with its own capital or we would not survive the economic downturn on the horizon. First, we made short-term loans to investors who needed to access funds quickly in order to compete in buying homes at auction. Then, in 2008, we launched our first mortgage fund, Genesis, offering a product that met the needs of local real estate investors while keeping our core underwriting standards intact. Soon, making risk-averse loans to bankable clients who simply could not wait for the archaic lending system took over our conventional mortgage platform. There was such strong demand, we knew we had to duplicate the idea elsewhere, and with hard workdays and nights, our team pulled together and exceeded everything we believed we were capable of. Just one year after Genesis launched, a valued team-member, father figure, and mentor passed away without warning. Suddenly, we were a young, exclusively female team operating in an industry that was notoriously unreceptive to female entrepreneurs. It was a struggle to be taken seriously, but we leaned on mentors, clients, and vendors to vouch for our credibility and overcame many obstacles that could have overwhelmed our business. We eventually started Genesis Auctions to supply discounted inventory from banks and servicers to investors. Evolution at Lightning Speed By this time, my personal life was changing and evolving as well. In 2010, I had a son and was pregnant again, with my daughter, while working around the clock to build a business. I felt like I was running as fast as I could to keep our business ahead of the curve and secure our position as a key player in the space. Those were challenging, sometimes brutal years, but they taught me perseverance and grit. I grew both personally and professionally, and so did the business. The success of Genesis Auctions led to the 2015 acquisition of Hudson & Marshall, LLC, a leading real estate auction platform. In 2016, I moved to Philadelphia to expand Genesis into Northeastern markets, including New York and D.C. We sold Genesis Auctions to Fidelity National Title in 2017, and, in 2018, we sold Genesis Capital to Goldman Sachs. After the sale of Genesis, I dedicated some time to learning about the mechanics of long-term rentals, wholesaling, and purchasing land for development. By 2019, I was back working with Trixy and the team as a consultant on investment deals. We worked with builders all over California and, in the midst of the COVID-19 pandemic, it became very clear we needed a lending company once again. Thus, in the summer of 2021, Aureus Finance Group, a complete debt partner across all facets of residential and multifamily real estate development, was born. Good Chances Pay Off Over and Over Again Through the years, I have had two more children, lost more loved ones, and settled with our family on the East Coast far from where I grew up, all while pushing ahead and climbing over hurdles simply based on gender stereotypes. Over those ten years working alongside Trixy and the team, I had the incredible experience of creating and building high-demand entities and was a part of so many pivotal moments within the real estate and finance verticals to date. But these moments would not have been possible had I not been that teenaged girl looking for a way to buy her prom dress, or if Trixy had not taken a chance on that young girl. SIDEBAR Brittney Fairweather’s Tips for Building a Stellar Team The biggest piece of advice I can offer to new entrepreneurs is to build a team with which you can walk through fire. Hereare a few tips for accomplishing this: » Find at least one person (hopefully more)