December 2022 – REI INK

MAKE YOUR MONEY WORK FOR YOU: THE POWER OF COMPOUNDING

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Charlie Calise of Calise Partners and Imaginuity has decades of experience in data, analytics, and advertising and he’s on Uncontested Investing to talk about real estate investing, marketing and advertising, the economy, and so much more. Listen now to learn more about Charlie, his journey in business, and what he has learned through his years as a marketing and advertising expert and real estate investor! Quotables “What we’re in is a marathon and not a sprint, so take a long view. I’m making investment decisions today for great grandchildren 50 years from now that I’ll never know.” “Don’t stop at the headline, read the copy. Right now, what you’re dealing with is “the market is crashing” and so forth – the market’s not crashing, it’s correcting, but if you stop at the headline, you’ll be riddled with fear.” “If you think you’re going to keep one house this year, keep two. If you think you’re going to keep one this month, keep two. If you think you’re going to keep five this quarter, keep six.” “Here’s the thing that I learned – when you talk about 10x-ing, that first 10x is the hardest.” “I’ve watched small entrepreneurs wash out day after day because they didn’t have a solid business plan that’s going to make them money.” “Being an entrepreneur is not for the faint of heart. Work hard, it’ll get you through every short fall that you’ve got.”

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Sales of luxury U.S. homes fell 38.1% year over year during the three months ending Nov. 30, 2022, the biggest decline on record, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That outpaced the record 31.4% decline in sales of non-luxury homes. Redfin’s data goes back to 2012. The luxury market and the overall housing market have lost momentum this year due to many of the same factors: inflation, relatively high interest rates, a sagging stock market and recession fears. But the high-end market has slowed at a sharper clip for a handful of reasons, including: Expensive coastal markets led the decline in high-end home sales. In Nassau County, NY (Long Island), luxury-home sales plummeted 65.6% year over year during the three months ending Nov. 30, the largest decline among the most populous U.S. metropolitan areas. Next came four California metros: San Diego (-60.4%), San Jose (-58.7%), Riverside (-55.6%) and Anaheim (-55.5%). These markets are prohibitively expensive for most buyers even when the economy is thriving, so it’s not surprising more buyers would back off during a downturn. There are early signs that overall homebuyer demand is starting to creep back as interest rates decline, which may ultimately cause the decline in luxury sales to ease. Mortgage applications and Redfin’s Homebuyer Demand Index—a measure of requests for tours and other buying services—have both been on the rise, and Redfin real estate agents say they’re seeing more buyers move off of the sidelines. “There has been a small shift in the market that’s not fully showing up in the data yet. With mortgage rates falling, a lot of house hunters see this as their moment to come back and compete,” said Seattle Redfin agent Shoshana Godwin. “Many of my buyers are taking out jumbo loans—mortgages typically used for purchases of high-end homes. While some data shows jumbo mortgage rates above 6%, some of my buyers are getting rates in the low 5% range.” Luxury-Home Supply Rises Most in Six Years The number of luxury U.S. homes for sale rose 5.2% year over year to roughly 163,000 during the three months ending Nov. 30, the largest increase since 2016. By comparison, the supply of non-luxury homes declined 5.7% to about 552,000. The large decline in luxury home sales is contributing to the rise in supply, but new listings are also a factor. New listings of luxury homes fell just 2.9% year over year during the three months ending Nov. 30, compared with a 19.8% drop in listings of non-luxury homes. Home-Price Growth Slows Across the Board Home-price growth has slowed across the housing market due to ebbing demand. Prices of both luxury and non-luxury homes rose 10% year over year during the three months ending Nov. 30, compared with 17% growth one year earlier. The median sale price was $1.1 million for luxury homes and $325,000 for non-luxury homes. Metro-Level Highlights: Three Months Ending Nov. 30, 2022 To view the full report, including charts and more metro-level data, please visit: https://www.redfin.com/news/luxury-home-sales-november-2022/

Clayton® & Next Step® Unveil White Paper That Shows Off-Site Built Homes Appreciate as Well as Site-Built Homes

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Clayton, a national builder of attainable housing, and Next Step, a national nonprofit housing organization, have released an educational white paper highlighting the wealth-building benefits of off-site built housing: Off-Site Built Homes Proven To Appreciate In Value – Providing Equity Building Opportunities & Reshaping Today’s Housing Market. As home buyers navigate a market with low affordable housing inventory, off-site built housing continues to represent a smart and attainable homeownership solution. Off-site built homes, also known as manufactured, modular or CrossMod® homes, are constructed inside a climate-controlled home building facility and finished on-site, allowing for a quicker, more efficient building process. These homes are uniquely positioned to bridge the affordability gap for entry-level and middle-tier housing and are more affordable for both developers and buyers. When placed on a property with a permanent foundation, these homes have the ability to build wealth over time like site-built homes. The white paper incorporates statistics from a growing body of research showing off-site built homes regularly appreciate similar to site-built homes, including: CrossMod homes, the newest category of off-site built housing, present a new evolution for the off-site built home industry. These homes blend off-site construction and on-site features such as drywall interiors, porches and garages to produce an affordable home that can be financed and appraised alongside site-built homes. “We know many people are getting priced out of today’s housing market. At Clayton, we strive to open doors for more people by bringing homeownership within reach,” said Kevin Clayton, CEO of Clayton. “Owning a home provides individuals and families with more than a place to live – it’s an opportunity to build wealth over the years while earning more value for money spent.” “Homeownership has been an essential part of the blueprint for wealth building in this country for decades, but current home prices aren’t reflective of what most people can afford,” said Stacey Epperson, President and CEO of Next Step. “If we want to address the homeownership gap for individuals and families, particularly for those living in historically underserved communities, we need to embrace the efficiency, quality, and affordability offered by off-site built homes.” This is the second educational paper published in partnership with Next Step and Clayton that highlights off-site built housing as a solution to the affordable housing crisis. You can read the full white paper here: Off-Site Built Homes Proven To Appreciate In Value – Providing Equity Building Opportunities & Reshaping Today’s Housing Market.

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Black Knight, Inc. reports the following “first look” at November 2022 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market. Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.01%Month-over-month change: 3.46%Year-over-year change: -16.18% Total U.S. foreclosure pre-sale inventory rate: 0.37%Month-over-month change: 5.29%Year-over-year change: 46.60% Total U.S. foreclosure starts: 23,400Month-over-month change: 19.39%Year-over-year change: 532.43% Monthly prepayment rate (SMM): 0.40%Month-over-month change: -15.57%Year-over-year change: -77.26% Foreclosure sales as % of 90+: 0.55%Month-over-month change: -6.73%Year-over-year change: 109.66% Number of properties that are 30 or more days past due, but not in foreclosure: 1,612,000Month-over-month change: 55,000Year-over-year change: -294,000 Number of properties that are 90 or more days past due, but not in foreclosure: 550,000Month-over-month change: -1,000Year-over-year change: -476,000 Number of properties in foreclosure pre-sale inventory: 196,000Month-over-month change: 10,000Year-over-year change: 64,000 Number of properties that are 30 or more days past due or in foreclosure: 1,808,000Month-over-month change: 65,000Year-over-year change: -231,000 Top 5 States by Non-Current* Percentage Mississippi: 6.70 % Louisiana: 6.08 % Oklahoma: 5.03 % Alabama: 4.76 % West Virginia: 4.66 % Bottom 5 States by Non-Current* Percentage Oregon: 2.06 % Colorado: 1.98 % California: 1.90 % Idaho: 1.79 % Washington: 1.69 % Top 5 States by 90+ Days Delinquent Percentage Mississippi: 2.32 % Louisiana: 1.90 % Alabama: 1.62 % Arkansas: 1.53 % Oklahoma: 1.50 % Top 5 States by 6-Month Change in Non-Current* Percentage Alaska: -20.97 % Hawaii: -8.34 % New York: -6.90 % New Hampshire: 1.28 % Maine: 3.04 % Bottom 5 States by 6-Month Change in Non-Current* Percentage Florida: 24.63 % Arizona: 21.03 % Wyoming: 16.96 % Iowa: 15.97 % South Dakota: 15.58 % *Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state. Notes: For a more detailed view of this month’s “first look” data, please visit the Black Knight newsroom. Please note that Black Knight does not release an edition of the Mortgage Monitor report over the holidays and will return to its normal publishing schedule the first week of February 2023. For more information about gaining access to Black Knight’s loan-level database, please send an email to Mortgage.Monitor@bkfs.com. For more information on Black Knight, please visit www.blackknightinc.com.

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The Nation’s longest home price boom has ended after a run-up lasting 10½ years. Nationally, prices have declined 3.1% from the peak in June, according to data from the American Enterprise Institute’s (AEI) Housing Center. While all 60 largest metros have begun experiencing year-on-year price declines, San Jose, Seattle, and San Francisco have led the way with declines of 15.5%, 13.4%, and 12.7% from their respective peaks. November’s Year-on-Year HPA was 6.7%, down from 8.5% a month ago, a YoY peak of 18.3% in March 2022 and 16.7% a year ago. Based on Optimal Blue rate lock data, YoY HPA is projected to decline further to 5% in December 2022 and 3% in January. YoY HPA varied significantly among the 60 largest metros. It ranged from 2.6% and 5.8% in San Francisco and San Jose to 17.8% and 15.0% in Miami and North Port. Historically, HPA in the low price tier outpaced HPA in the upper price tiers. This trend continues to hold true. Although home prices were down across all four price tiers, the high end and low end of the market were hit differently. In November, high price tier was down 4.6% from its peak in May 2022, while low price tier was down 3.1% from its peak in July. November’s months’ supply & active listings both increased above seasonal trends, but remain at historically low levels. Months’ supply stood at 2.5 months in November 2022, down from 3.0 months in November 2019, but up from 2.1 months in October 2022, and 0.9 months in May 2022. The months’ supply for the high price tier came in at 6.2 months in November 2022, helping the price weakness for this tier. The AEI Housing Center provides the most advanced and timely information on home prices available. Measures of home price appreciation like the Case Shiller index have months of lag, meaning the most recent numbers are for September. The Housing Center has published data for November, and with Optimal Blue rate lock data is able to accurately project December 2022 and January 2023 as well. Link to National Home Price Appreciation (HPA) Index – November 2022 SOURCE: AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH

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FHA loans are also making a comeback as a slowdown in homebuyer competition makes winning a home easier for bidders with lower down payments Roughly one-third (31.9%) of U.S. home purchases were paid for with all cash in October, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s up from 29.9% a year earlier and the highest share since 2014. The share of home purchases using all cash shot up in the beginning of 2021 after reaching a record low of 20.1% in April 2020 and has remained elevated. But the factors encouraging buyers to pay in cash are different in the current slow housing market than they were during the pandemic homebuying frenzy. “Today’s affluent homebuyers are motivated to pay in cash because the surge in mortgage rates makes them want to avoid loans—and the high monthly interest payments that come with them—altogether. Mortgage rates have declined in recent weeks but are still hovering above 6%,” said Redfin Economics Research Lead Chen Zhao. “During the pandemic housing boom, buyers were incentivized to pay in cash because of lowrates, which drove up competition and made all-cash offers an effective bargaining chip for those who could afford them.” All-cash purchases most prevalent in Florida; least prevalent in the Bay Area All-cash home purchases increased in 29 of the 39 metros in Redfin’s analysis from October 2021 to October 2022. They increased most in Riverside, CA, where they rose to 38% of all home sales from 19.2%. It’s followed by Cleveland (47%, up from 32%), Cincinnati (43.9%, up from 29.6%), Montgomery County, PA (31.2%, up from 22.7%) and Philadelphia (37.1%, up from 29.4%). All-cash purchases were most common in Florida in October. Jacksonville, where roughly half (49.7%) of homes were bought in cash in October, comes first, followed by West Palm Beach (48.6%). Next come a pair of Ohio metros: Cleveland and Cincinnati, which are also on the list of places where cash purchases rose most. They’re followed by Atlanta, at 41.3%. Expensive West Coast metros dominate the list of places with the lowest share of all cash-purchases. They’re least common in the Bay Area: Just 14.3% of home purchases in San Jose and 16.5% in Oakland were made in cash. Next come Seattle (19%), Los Angeles (19.2%) and Newark, NJ (20%). FHA loans bounce back, hitting highest share in nearly two years Roughly one in seven (14.6%) mortgaged home sales used an FHA loan, the highest share in nearly two years. That’s up from 13.1% a year earlier and a record low of 10.4% in April. Overall, conventional loans are the most common type for homebuyers, making up 78.5% of all home sales that used a mortgage in October. That’s down from 80.5% a year earlier but largely in line with where the share has stood since mid-2020. FHA loans, which typically allow for lower down payments, have ticked up in popularity in response to the slowdown in housing-market competition. They were less common at the height of the pandemic buying boom, when sellers were receiving multiple offers and would often choose the one with strongest financing. “I’m working with several FHA buyers,” said Cleveland Redfin agent Jerry Quade. “They’re back in the market after bowing out for the last two years, hoping to secure a relatively low-priced home with no competing offers and a high likelihood that the seller will accept their loan type.” The share of mortgaged sales using VA loans, which also have lower qualification thresholds for borrowers, rose to 6.9% in October, the highest share in over two years. That’s up slightly from 6.4% a year earlier and up from the record low of 5.5% set in mid-2021. To read the full report, including charts, methodology and additional metro-level data, visit: https://www.redfin.com/news/all-cash-home-purchases-fha-loans-october-2022/ For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.