October 2022 – Page 5

HOMEOWNERSHIP STILL UNAFFORDABLE ACROSS MOST OF U.S. BUT DECLINING HOME PRICES MAY PROVIDE RELIEF FOR HOMEBUYERS

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Major Home-Ownership Costs Require 30 Percent of Average National Wage in Third Quarter of 2022; But Portion of Wages Needed for Home Ownership Dips as Home Prices Decrease Quarterly, to $340,000; Historic Affordability Remains Worse Than Average Almost Everywhere Across Nation ATTOM, a leading curator of real estate data nationwide for land and property data, released its third-quarter 2022 U.S. Home Affordability Report showing that median-priced single-family homes and condos remain less affordable in the third quarter of 2022 compared to historical averages in 99 percent of counties across the nation with enough data to analyze. That continues to be far above the 69 percent of counties that were historically less affordable in the third quarter of 2021 and marked yet another high point reached during the country’s 11-year housing market boom. However, the report also shows some potential relief for homebuyers as the portion of average wages nationwide required for median major home-ownership expenses has dipped slightly from 30.9 percent in the second quarter of the year to 30 percent in the third quarter. “Homeownership remains largely unaffordable for the majority of homebuyers in the majority of markets across the country,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While home prices have declined a bit quarter-over-quarter, they’re still higher than they were a year ago, and interest rates have essentially doubled. Many prospective homebuyers simply can’t afford the home they hoped to buy, and in many cases no longer qualify for the mortgage they’d need.” The third-quarter figure does remain above the 28 percent ceiling lenders generally like to see when issuing a mortgage. It also is well above the 23.4 percent level from a year ago. But the current decline in the portion of wages needed to afford the typical home nationwide marks the first quarterly improvement in almost two years and comes as the median national single-family home price has taken a rare third-quarter fall. The latest median value of $340,000 is down 3 percent from the second quarter of 2022 – the first Spring-to-Summer decline since 2008. The report determined affordability for average wage earners by calculating the amount of income needed to meet major monthly home ownership expenses — including mortgage, property taxes and insurance — on a median-priced single-family home, assuming a 20 percent down payment and a 28 percent maximum “front-end” debt-to-income ratio. That required income was then compared to annualized average weekly wage data from the Bureau of Labor Statistics (see full methodology below). Compared to historical levels, median home prices in 574 of the 581 counties analyzed in the third quarter of 2022 are less affordable than in the past. The latest number is up from 568 of the same group of counties in the second quarter of 2022, 398 in the third quarter of 2021 and just 284, or less than half, two years ago. The increase has continued as the median national home price – despite dipping quarterly – is still up 10 percent over the past year, while average annual wages across the country have grown just 6 percent. Affording a home remains slightly out of reach but may begin to get easier for average workers amid a time if significant headwinds stall or even reverse a boom in prices that dates back to 2012. Some recent measures point to the market’s ongoing strength: prices are still historically high, home-seller profits have surpassed 50 percent and homeowner equity keeps rising across the country. That has happened as homebuyers continue chasing an extremely small supply of properties for sale. Elevated demand has helped push the national median home price up over the past year faster than the pace of wage growth. But home sales are down as mortgage rates have steadily climbed this year from just above 3 percent to near 6 percent for a 30-year loan, driving up expenses for buyers. Higher interest rates, growing inflation, elevated fuel costs and a declining stock market all strain the finances of prospective homebuyers, and threaten to stall or reverse a nearly unrelenting rise in home values that began when the market started recovering in 2012 from Great Recession of the late 2000s. View Q3 2022 U.S. Home Affordability Heat Map Amid those mixed trends, major home-ownership expenses on typical homes are still unaffordable to average local wage earners during the third quarter of 2022 in 400, or 69 percent, of the 581 counties in the report, based on the 28-percent guideline. Counties with the largest populations that are unaffordable in the third quarter are Los Angeles County, CA; Maricopa County (Phoenix), AZ; San Diego County, CA; Orange County, CA (outside Los Angeles) and Kings County (Brooklyn), NY. Home prices still up at least 10 percent annually in slight majority of country but dip quarterly in close to halfMedian single-family home and condo prices in the third quarter of 2022 are up by at least 10 percent over the third quarter of 2021 in 302, or 52 percent, of the 581 counties included in the report. However, typical values have dropped from the second to the third quarter in 230, or 40 percent, of those counties, which has contributed to the nationwide decrease. Data was analyzed for counties with a population of at least 100,000 and at least 50 single-family home and condo sales in the third quarter of 2022. “Home price appreciation has slowed dramatically in most markets – and there are even price corrections in some areas – as home sales have declined significantly over the past few months,” Sharga added. “But mortgage rates have risen more rapidly and dramatically than they have in several decades, and as a result a monthly mortgage payment today is 35-45 percent higher than a year ago, making affordability too much of a challenge for many would-be buyers.” Among the 48 counties in the report with a population of at least 1 million, the biggest year-over-year gains in median sales prices during the third quarter of 2022 are in St. Louis County, MO (up 37 percent); Collin County (Plano), TX (up 25 percent); Hillsborough County (Tampa), FL (up 24 percent); Palm Beach

Fannie Mae Announces Priscilla Almodovar as Chief Executive Officer

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Financial services veteran brings more than 30 years of finance, real estate, and community development expertise and a strong commitment to affordable housing. Fannie Mae announced that it has appointed Priscilla Almodovar as Chief Executive Officer (CEO) and member of the Board of Directors, effective December 5, 2022. Almodovar will succeed David C. Benson, who has served as Interim CEO and a member of the Board of Directors since May 2022. After her arrival, Benson will continue in his role as President. Almodovar brings more than 30 years of experience in finance, real estate, and community development across a number of institutions and organizations. Since 2019, she has served as President and CEO of Enterprise Community Partners, a national organization focused on increasing the supply of affordable housing, advancing racial equity, and supporting residents and communities. “On behalf of the Board of Directors, we are excited to welcome Priscilla Almodovar as our next CEO,” said Michael J. Heid, Chairman of Fannie Mae’s Board of Directors. “Priscilla’s vast experience in large, complex businesses and her commitment to affordable housing makes her an ideal choice to further Fannie Mae’s mission to facilitate equitable and sustainable access to homeownership and quality affordable rental housing across America. I also want to express the Board’s deep appreciation to Dave Benson for his invaluable service as Interim CEO since May. We are fortunate to have a leader of Dave’s character, skill, and commitment to the company and will benefit from his continued leadership as President, as a critical member of the Management Committee, and a key partner and advisor to the Board of Directors.” Prior to her role as President and CEO of Enterprise Community Partners, Almodovar worked for nearly a decade at JPMorgan Chase and led two of the firm’s national real estate businesses; most recently, as Managing Director, Co-Head of Real Estate Banking where she served national and regional real estate developers, investors, owners, and investment funds. Earlier in her career, she was President and CEO at New York State Housing Finance Agency, State of New York Mortgage Agency, and Affordable Housing Corporation. She started her career at White & Case LLP, where she was named an equity partner. “It’s an honor to join Fannie Mae and lead the company as it carries out its vital role in the housing finance market and works to help ensure that equitable, affordable housing is available to people in communities across the country,” said Priscilla Almodovar. “I look forward to working with the Board, Management, and my new colleagues at Fannie Mae to continue this important work, which has benefited so many people over the company’s more than 80-year history.” Almodovar is a Board member of Realty Income (NYSE: O). She is often featured in the media and has been named to Fortune’s “50 Most Powerful Latinas” and Hispanic Business’ “100 Most Influential Hispanics.” She earned her bachelor’s degree from Hofstra University and her Juris Doctor from Columbia University School of Law. About Fannie MaeFannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

Home Flipping Dips Across U.S.

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Raw Profits on Home Flips Jump to New High By ATTOM Staff ATTOM, a leading curator of real estate data nationwide for land and property data, released its second-quarter 2022 U.S. Home Flipping Report showing that 115,198 single-family houses and condominiums in the United States were flipped in the second quarter. Those transactions represented 8.2% of all home sales in the second quarter of 2022, or one in 12 transactions. The latest portion was down from 9.7%, or one in every 10 home sales, in the nation during the first quarter of 2022, but still up from 5.3%, or one in 19 sales, in the second quarter of last year. Despite the decline, the home-flipping rate during the second quarter of this year still stood at the third-highest level since 2000, below the high point registered in the first quarter of 2022. “The second quarter was another strong showing for fix-and-flip investors. The total number of properties flipped was the second-highest total we’ve recorded in the past 22 years, and the median sales price of a flipped property — $328,000 — was the highest ever,” said Rick Sharga, executive vice president of market intelligence for ATTOM. “The big question is whether the fix-and-flip market will begin to lose steam as overall home sales have declined dramatically over the past few months, and the cost of financing has virtually doubled over the past year.” Typical profit margins, meanwhile, rose during the second quarter of this year after six straight periods when they had fallen or virtually stayed the same. The typical gross-flipping profit of $73,700 in the second quarter of 2022 translated into a 29% return on investment compared to the original acquisition price. While that remained down from 33% a year earlier —w and far below the peak of 53.1% this century, which hit in 2016 — the latest margin was up from 25.8% in the first quarter of 2022. Profit margins improved in the second quarter of 2022 as median resale prices trends on flipped homes improved compared to what was happening when investors were buying homes. Specifically, in the second quarter of 2022, the typical resale price on flipped homes reached another all-time high of $328,000. That was up slightly from $327,000 in the first quarter of 2022 and 21.5% from $270,000 a year earlier. The quarterly gain, while tiny, was better than the 2% decline in prices that investors were seeing when they originally bought their properties. The price-change gap between buying and selling resulted in profit margins going up from the first to the second quarter of 2022. Home flipping rates drop in 80% of local markets Home flips as a portion of all home sales decreased from the first quarter of 2022 to the second quarter of 2022 in 161 of the 202 metropolitan statistical areas around the U.S. analyzed for this report (80%). Rates mostly were down by less than percentages points. Among those metros, the largest flipping rates during the second quarter of 2022 were in: » Tucson, AZ (flips comprised 14.5% of all home sales) » Phoenix, AZ (14.1%) » Jacksonville, FL (13.8%) » Atlanta, GA (13.6%) » Gainesville, GA (13.5%) Aside from Tucson, Phoenix, Jacksonville and Atlanta, three other metro areas with a population of more than 1 million ranked in the top 10 for highest flipping rates in the second quarter. They were: » Charlotte, NC (13.1%) » Tampa, FL (12.2%) » San Antonio, TX (11.9%) The smallest home-flipping rates among metro areas analyzed in the second quarter were in: » Honolulu, HI (1.7%) » Hilo, HI (3.1%) » Wichita, KS (3.5%) » Bremerton, WA (4%) » Seattle, WA (4.3%) “Fix-and-flip activity is mirroring overall housing market trends, with much of the activity, and the highest returns largely coming from the West and Southeast,” Sharga noted. “In fact, even though the highest gross profits came from the most expensive states, 14 of the 18 states where flips accounted for a higher percentage of overall home sales than the national average were in the South, Southeast, and Western states.

Breaking the Status Quo

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From Dreams of Baseball to Leaving the Insurance Industry Better Than He Found It Shawn Woedl’s journey to becoming the President and CEO of National Real Estate Insurance Group (NREIG) has been guided by one saying by Rear Admiral Grace Hopper: “The most dangerous phrase in the language is, ‘We’ve always done it this way.’” Woedl took this same approach when entering the insurance industry many years ago. NREIG provides insurance solutions for nearly every type of investment property. The company had humble beginnings in an Ohio basement office in 2008. Woedl and Tim Norris, the founder of NREIG, had initially built the business by speaking at different Real Estate Investment Association (REIA) groups across Ohio. The company has grown to over 140,000 locations across all 50 states, with over 20,000 investors enrolled in their programs. Woedl’s “all or nothing” approach has helped him achieve great success in the insurance industry. Although, when he was young, he had his sights set elsewhere. Woedl spent his youth dedicated to baseball; it was all he ever thought he would do. He had huge dreams of making it to “the show,” but it wasn’t in the cards for him. As he put it, “I did things the hard way, but I’m better off for it.” While driving one night in high school, he was struck by a drunk driver who ran a red light. He sustained significant damage to his right shoulder, requiring surgery and extensive rehabilitation. Although he experienced constant pain in his shoulder, Woedl was committed to rebuilding his swing. He signed to play baseball at DePauw University, a Division III school in Greencastle, Indiana. “But like many other times in my life where I chose the hard way,” he joked, “I decided that having all of my college paid for was too easy, and I left DePauw.” After fumbling around for a few months, he enrolled at a junior college in an attempt to save his dream of making it to the major leagues. Unfortunately, he had missed too much time during rehab to catch up. It was time he came up with a plan B. Finding a new dream A few years later, after finishing a shift at JCPenney (one of three jobs at the time), he ran into an acquaintance at Best Buy loading several high-ticket electronics into his $100,000 SUV. “So, of course, I asked him what he was doing,” said Woedl. “We met up a couple of days later, and he explained that he owned a few insurance agencies and offered me a job.” The agencies were mainly comprised of home and auto accounts, an area Woedl had very little interest in, but commercial real estate immediately stuck out to him. The two started an independent agency focused primarily on large apartment complexes. With a $10,000 investment and a list of apartment owners and property management companies across the country, “I started smiling and dialing, and that was the beginning of my career,” said Woedl. “I’ll admit that in the beginning I was in it for the money,” said Woedl. “But that didn’t last long.” He recalled one of his first encounters with an investor who is still a client to this day: “He nearly got destroyed on a property claim because his insurance agent at the time did not explain to him the limitations of his coverage and how it would affect him following a loss. I watched as he only recovered about $28,000 from what should have been $250,000 because of all the things he got dinged for. He was under-insured, he had coinsurance, and his deductibles were too high. I thought to myself, ‘What the hell is going on?’ “ Woedl began having every new client send over their existing policy so he could do a line-by-line comparison. If the client’s needs were not being adequately addressed, Woedl would point out where he could set them up with better coverage. Though he spent three to four hours on each policy, reading these contracts is how Woedl taught himself about insurance policies and how to identify trap doors that could harm his clients. He strongly believed that the industry had to change. “The more I read into some of these insurance policies, the more disgusted I was at the state of affairs in the industry. I developed a passion for insurance that I never expected, and it set the stage for me to move into the insurance program space.” As time passed, Woedl gained traction in the insurance industry. Instead of just brokering one-off deals, he began building programs. “This was where the revelation really started to hit me, and I realized how impactful my profession could be. I learned how to build programs for the benefit of investor clients, and a whole world opened.” By this time, Woedl had joined up with Tim Norris, the founder of NREIG, who had also discovered this real estate investor niche in the market. The two realized that many insurance carriers were hesitant to work with investor clients for two main reasons. “Insurance is a transfer of risk. Insurance companies are trying to minimize risk. And as for investors, there is plenty of risk to account for,” Woedl explained. For example, a tenant is more likely to burn down a rental property than the owner. A vacant building is more likely to be vandalized than one that is occupied. And a property under construction is more likely to have accidents. The second major factor — a lot of time for little money. “Here’s how it works. Investors will buy a property that is occupied. Two months later, the tenant will move out, and the investor needs to renovate it. And that means a policy will have to be canceled and replaced by a whole new policy, which brings a slew of paperwork for little money,” explained Woedl. He recognized that an investor’s insurance needs are just as unique and challenging as the properties they hold. It

Business Analyst to Business Owner

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Finding a New Passion and Success in Real Estate Adom Rosengarten enjoyed a lucrative career as a corporate executive in the world of finance before becoming a HomeVestors® of America, Inc. independent business owner in March 2018. Armed with an undergraduate degree in Math and Economics from the State University of New York–Geneseo in 1999, Rosengarten began his career working in consulting before attending the University of North Carolina–Chapel Hill where he earned his MBA in Finance. At UNC, he also met his future wife, Megan, who was studying Marketing. Upon graduation and after a one-year stint with IBM, Rosengarten’s corporate career began to accelerate. For twelve years, he worked at Standard & Poor Ratings (S&P) beginning as an analyst of financial institutions and later managing other analysts of the leisure and hospitality industries. Rosengarten then moved into the Public Finance Group division of S&P. While at S&P, Rosengarten was in a position, due to his access to insider information, where he was not allowed to actively invest in the stock market without a great deal of scrutiny. He and his wife were interested in increasing their passive income, so they decided to invest in real estate instead. The Beginning of a Career in Real Estate They bought their first investment property in 2009, one they still own and collect rent on today. Due to this initial success, Rosengarten decided to buy more investment properties each time he received an annual bonus. Now, getting very serious about becoming an entrepreneur, Rosengarten began the research and due diligence on buying a franchise. According to Rosengarten, “I learned a lot about franchises during my time at S&P. Established franchises have the benefit of name recognition and solid procedures and systems already in place.” During his research he discovered HomeVestors. The Beginnings Rosengarten bought his HomeVestors franchise in March of 2018, attracted by, in part, the strong funding relationships available to assist with the buying and rehabbing of investment properties. His company, Hedgerow Properties LLC, focuses on the Lower Hudson Valley Region, which encompasses four counties in New York and two in Connecticut. The first year started off slowly but then the business began to grow significantly. He bought his first property against the advice of his Development Agent (DA) and lost money but learned from the experience. Rosengarten has benefitted from the HomeVestors system, his mentors, and his coaches — in his second year, 2019, he bought five times as many homes than he did in 2018. The Present Situation and Market Rosengarten experienced exponential growth in 2020 and 2021 and forecasts 2022 as being just as productive. In 2018 and 2019, Hedgerow Properties focused primarily on fix-and-flips. Today, the focus is on wholesaling and “wholetailing,” a mix of wholesale and retail. “The regulatory requirements in New York and Connecticut are complex and help to create some barriers to entry for competition,” explained Rosengarten. “Additionally, it takes a lot of capital to enter and be successful in these markets. However, it’s worth it to weather those challenges because you can make more money per deal.” Rosengarten currently has three employees — a coordinator, buyer and project manager. Says Rosengarten, “As the business has grown, having a strong team has been crucial to our success. I rely on my team, and I could not do business without them.” “You have the opportunity to be the light at the end of the tunnel for people in a dark part of their lives, or just ready to move on to a new beginning. It truly has been one of the most rewarding experiences of my life to be able to help with that transition.” Homevestors What exactly does it mean to be a HomeVestors® business owner? Owning a real estate business is life changing and naturally comes with risks! When you become a HomeVestors business owner, you get immediate access to motivated seller leads, financing resources for qualifying purchases and repairs, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own venture with a focus toward your individual business goals. If you are interested in a franchise, call 855-454-4518, email Sales@homevestorsfranchise.com or visit www.homevestorsfranchise.com. Each franchise office is independently owned and operated.

Seven Rental Features to Reduce Vacancies

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Create an Experience Your Tenants will Love By Kori Covrigaru Highlights • SFR tenants stay over double the amount of time that multi-family renters stay. • 3D tours and digital leasing processes remove the friction of finding a new rental home. • Properties with family-friendly features like good school districts and pet amenities have more appeal. Single-family rentals (SFR) have less turnover and more demand than multi-family homes. SFR tenants typically stay in their rental for 5-6 years instead of two years for the average multi-family tenant. But the key factor in ensuring tenants stay longer is creating an experience they love. In this round-up, we have discovered the top seven features SFR tenants want in their rental. 1. Add 3D Walking Tours According to Poplar, people prefer proactive listings that allow them to virtually tour your property. It takes a lot of time to schedule walkthroughs, travel to multiple properties, and make a decision. Being able to save time when searching for a home is important, so make it easy for prospective tenants to understand the layout and condition of your property without having to tour in person. 2. Pet-friendly Design Choices SFR renters are pet people, so make sure your rental is pet friendly. Allowing pets is not enough. You also need to ensure your home is ready for tenants with pets. They want fenced-in yards, custom pet nooks, and storage space for leashes, pet food, or litter boxes. 3. Include Parking Tenants do not want to have to deal with lugging groceries from three blocks away. Make sure you have parking options for tenants. This is usually easy enough in suburban environments, but some homes do not have driveways or garages. If that is the case, arrange a permanent spot for tenants nearby, so they do not need to worry about street sweeping day or an unexpected snowfall. 4. Invest in Great Schools When you are renting single-family homes, your tenant is likely a family. So, choose to expand your SFR portfolio into good school districts. This gives families who might not be able to buy into the school district a way to get their kids better educational opportunities. These tenants are extra motivated to find a home they can stay in long-term so their kids can stay within their school, so turnover will be fairly low. 5. Smart Home Automation Tenants want smart home automation for convenience and sustainability. They want to adjust their thermostat, get dishwasher status updates, and open the front door from their phone. Adding smart home automation like a Nest thermostat, smart appliances, and a keyless entry option are all big wins for tenants. 6. In-community Property Managers According to Jeff Pintar, President of Pintar Investment, single-family rental tenants stay for 5-6 years, on average. Pintar said, “Residents with a better experience want to stay longer.” He says that residents want a community, not just a house. So, hire a property manager who is active in the local community. They could be the coach of the youth baseball team or on the PTA. Pintar says, “The personal relationship is really powerful.” 7. Streamlined Leasing Process Develop an optimized leasing system that makes it easy for tenants to choose your property. The system should accommodate for quickly responding to inquiries, scheduling tours, and allowing them to sign the lease online. How can PlanOmatic help you create a positive tenant experience? Start your tenant-landlord relationship on the right foot with informative listings. PlanOmatic provides rental photography, 3D walkthrough tours, and floor plans all within one appointment. You get your assets within 48 hours, so you can market your vacancy fast. Find out how PlanOmatic can help you reduce your listing’s time on the market.