2022 – Page 2 – REI INK

Florida’s Housing Market: Inventory, Median Prices Higher in November

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Florida’s housing market reported more inventory (active listings) and higher median prices in November compared to a year ago, though inflation and interest rates above 6% continued to influence buyer demand, according to Florida Realtors®‘ latest housing data. Closed sales of single-family homes statewide last month totaled 17,009, down 38.2% year-over-year, while existing condo-townhouse sales totaled 7,084, down 38.9% from November 2021, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Closed sales may occur from 30- to 90-plus days after sales contracts are written. According to Florida Realtors Chief Economist Dr. Brad O’Connor, Freddie Mac’s weekly national mortgage market survey showed the average 30-year fixed mortgage rate rose above 6% in mid-September and crested at about 7% in late October, where it remained for the next three weeks. Since then, it has fallen somewhat in response but remains above 6% – a rate level not seen since late 2008. “The effect of these higher rates on homebuyer demand throughout the U.S. this fall was not a positive one,” he said. “Here in Florida, we could already see that conditions were worsening in response to the rise in rates above 6% in October’s housing market data. Based on those figures, it’s not surprising that the newly released November figures for closed sales from Florida Realtors exhibit similar declines – and we should probably expect similar declines in closed sales in December, as well, given that rates were at their recent peak near 7% for much of November, when many of the homes scheduled to close in December were going under contract. “This is reflected in the year-over-year changes in new pending sales reported for November: a decline of 36.8% for single-family homes, and 42.1% drop for townhouses and condos.” In the wake of these higher interest rates, the rate of price growth for Florida’s home sales continued to slow but remained above the long-term trend, O’Connor noted. In November, the statewide median sales price for single-family existing homes was $400,000, up 9.6% from the previous year; for condo-townhouse units, it was $307,000, up 12.3% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less. “In many local markets across the state, we’re starting to see more for-sale inventory, which gives previously frustrated buyers more opportunities,” said 2022 Florida Realtors® President Christina Pappas, vice president of the Keyes Family of Companies in Miami. “Homes in Florida continue to go under contract quickly, though the time to contract continues to increase: The median time to contract for single-family existing homes last month was 29 days compared to 11 days during the same month a year ago. The median time to contract for existing condo-townhouse units was 27 days compared to 15 days in November 2021.” Statewide inventory was higher last month than a year ago for both existing single-family homes, increasing by 105.2%, and for condo-townhouse units, up 47.4%. The supply of single-family existing homes increased to a 2.8-months’ supply while existing condo-townhouse properties were at a 2.7-months’ supply in November. To see the full statewide housing activity reports, go to the Florida Realtors Newsroom at http://floridarealtors.org/newsroom and look under Latest Releases or download the November 2022 data report PDFs under Market Data at: http://floridarealtors.org/newsroom/market-data. Florida Realtors® serves as the voice for real estate in Florida. It provides programs, services, continuing education, research and legislative representation to its more than 225,000 members in 51 boards/associations. Florida Realtors® Newsroom website is available at http://floridarealtors.org/newsroom. SOURCE Florida Realtors

How to Fast Track your Financial Success with Casey Quinn

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As Co-Founder and CEO of CityLife Realty Group, a real estate investment company located in Pittsburgh, Pennsylvania, Casey Quinn is not your average real estate investor. In his chat with host Tim Herriage, shares the strategies and methods that fast-tracked his financial success in real estate investing. He emphasizes the value of having a team and highlights the importance of chasing happiness, whatever that may mean for each individual in the organization. Learn the basic principles and values that Casey instills in his approach and the culture he builds for his organization. There’s a lot to learn from Casey and his way of managing, investing, and planning for the future. Tune in to learn all about it. — Watch the episode here Listen to the podcast here How to Fast Track your Financial Success with Casey Quinn Welcome back to the show. Thank you so much for stopping by. I’m here with one of the most impressive people I’ve met in 2022, Casey Quinn. Casey, thanks for stopping by. I’m looking forward to it. The first thing up is the BLUF, the Bottom Line Up Front. A lot is changing in this market. You got up to two minutes. What are the most important things you see in the market? These are things you think people should be doing and things should be avoided at the most important part of the day. What I’m paying attention to the most is what’s happening in the rates and how they affect me in my business and the local markets that I invest in. I’m from Pittsburgh, Pennsylvania and I invest in Pittsburgh. We’re a small-to-middle market. We’re not national. Therefore, how are the rates climbing impacting our business? We’re BRRRR model investors. These rates directly impact how we’re able to borrow on the refinance end of our investments. That directly affects our debt service coverage ratio and how we can get our money back out of our deals. Number two, for home buyers, it’s affecting the local market and what they can pay. What is their purchasing power and how is that changing the markets and their ability to buy? In our market, locally in Pittsburgh, we have properties sitting on the market for months when before, the last couple of years, they haven’t been. What opportunities is that creating for us to go out and buy? There are negatives and positives to everything that’s going on. When the rates are climbing, how is that directly impacting your business? Number two, what I’m paying the most attention to is what’s happening within my network. The people that I’m paying attention to, the people that I’m following and the education that I’m getting in this market, what are they saying? What are they doing? How am I then taking that information and applying it back to my business? Some of it could be good. Some of it could be bad. We have to be able to think through, fantastically process that information and apply it directly to what we’re doing. As I look through the winter, values are still a very important part of the BRRRR model. You got to get an appraisal. There’s a loan-to-value on the back end. I won’t say, “If we,” because you and I talk about this all the time. Markets are different. If a market has another 5% slide and you were buying at $75,000 and you needed a refi at $75,000, you have to plan for that. For our business, with the rates doing what they’re doing, the property values have not come down enough that the BRRRR model’s making sense for us. We still are paying a heavier price but with what we’re paying on a monthly basis, we can’t afford the back end to get out of those. We’ve had to shift our model. We were doing 10, 12 or 15 deals on a monthly basis in the BRRRR for the past couple of years. We’re averaging about one a month. It’s been a tremendous change in our business. Let’s talk about your business. Why don’t you take a minute and tell everybody a little bit about yourself? A few years ago, I was fired from my job. I had zero real estate experience at the time. I didn’t know what I was about to do in my future. I went into this real estate business and found my partner. We built a $70 million portfolio in the past couple of years. We didn’t start with any money so we had a BRRRR model. We are working with folks, like you, on the hard money front end, borrowing and understanding, “We’ve got to do whatever it takes.” It didn’t matter what the price of that was. We started a BRRRR model investment and built our portfolio. We built a $17 million-a-year revenue company off of that. How many rental units is that? It’s about 520 doors. It’s about 225 properties. That is our mixture. It’s about 160 single-family homes. At about a year and a half in, we realized we could BRRRR. We could value-add properties at the multifamily level, whether it be duplexes or triplexes. They’re not necessarily multifamily. We got into more of the commercial multifamily space. We have 5 up to our largest, which is 43. There is less competition there ultimately in that mid-market. It’s a lot cheaper. You come out here to Dallas or anywhere else and the prices are different. The management of that many units with only four years of true experience has got to be super hard. We certainly had our growing pains when it comes to its management of it. In my previous background in Corporate America, I wanted to take a business approach. To me, it was, “How do we create operational companies’ enterprise value off of the real estate that we’re buying?” With that, we took the approach on the management side. We were like, “Let’s run a management

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Recent homebuyers in certain places, like Sacramento and Phoenix, are at higher risk of falling underwater on their mortgage, while Florida homeowners are at even lower risk Only 3.4% of U.S. homeowners who bought in the last two years would be underwater on their mortgage if home values were to fall 4% by the end of 2023, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. The typical home bought over the last two years will have gained $27,000 in value, even with prices falling 4% next year as Redfin economists predict. Prices would need to fall by double digits in 2023—a highly unlikely scenario—for the typical pandemic home purchase to lose value. If home prices fall 8% in 2023—more than the expected drop—still just 6.3% of new homeowners would be underwater. Prices would need to fall about 12% for the share of underwater homeowners to reach double digits. Homeowners who bought from January 2021 through September 2022 are likely to have low fixed mortgage payments and good enough credit to meet tight lending standards. And even though they haven’t owned their home for long, those new homeowners are likely to have already earned plentiful equity because prices skyrocketed so much during the pandemic and because they were likely to have made big down payments. That’s especially true for those who bought in 2021, when mortgage rates sat near record-low 3% levels all year and home prices had yet to peak. Someone who bought a $400,000 home with a 3% rate would have a monthly payment just under $2,000; for the sake of comparison, the monthly payment would be $2,500 with a 6% rate. Homeowners who bought before 2021 are even less likely to sink underwater with next year’s anticipated price declines, partly because they have built up more equity and partly because many of them refinanced when rates were at an all-time low. A foreclosure crisis is unlikely—but middle-class homeowners may lose a substantial chunk of wealth with declining home values “Even with anticipated price declines, next year’s housing downturn won’t come anywhere close to the foreclosure crisis we saw during the Great Recession in most parts of the country,” said Redfin Senior Economist Sheharyar Bokhari. “Recent homebuyers have enough equity—both because they’re likely to have made relatively large down payments with a low rate and because values rose so much so fast—that most aren’t at risk of owing more than their house is worth. Even if a homeowner is at risk of falling behind on their mortgage payments next year—say they lose their job and inflation has claimed a big chunk of their savings—having equity means they could sell instead of face foreclosure. It’s also worth noting that not many Americans are expected to lose jobs next year, as even if the U.S. does enter a recession it’s expected to be mild.” Even though a foreclosure crisis is highly unlikely, middle-class homeowners do stand to lose a substantial chunk of their wealth if home values fall, as a big share of their assets tend to be in real estate. The typical American earning the median income holds about 38% of their wealth in real estate, versus about 27% to 30% for higher earners. The share of wealth held in real estate has also increased more during the pandemic for middle-class homeowners than higher earners, rising about 4 percentage points for middle-class households and 2 to 3 percentage points for higher earners. But the loss would be temporary and only on paper for homeowners who don’t sell soon, as home values are likely to increase once rates come down and the economy recovers. Homeowners in popular pandemic destinations and expensive West Coast cities are at higher risk of falling underwater Some parts of the U.S., including pandemic boomtowns and tech hot spots, are at higher risk of homeowners falling underwater. Just over 9% of recent Sacramento homebuyers would be underwater with a 4% price drop, the highest share of the metros in Redfin’s analysis. “Home prices have dropped quickly and substantially after skyrocketing during the pandemic. It has been a shock to the system for homeowners and sellers, though they’re getting used to the new reality,” said Sacramento Redfin agent Alison Williams. “In a way, a correction like this was inevitable; prices can’t keep going up by double digits forever. And the silver lining is that people who have been hoping to buy their first home but were priced out may be able to enter the market when prices—and hopefully rates—come down next year.” The typical Sacramento home bought in the last two years would lose roughly $17,000 in value with a 4% price decline next year, one of just five metros in Redfin’s analysis where homes would lose value at that size drop. The others are all tech towns, mostly in the Bay Area: San Francisco, San Jose, Oakland and Seattle. It’s also worth noting that prices in pandemic boomtowns and tech towns are likely to fall more than the national average, which means a higher share of homeowners would fall underwater. With an 8% decline, 14.4% of new Sacramento homeowners would be underwater. In terms of risk of falling underwater, after Sacramento comes Phoenix, where 7.3% of recent buyers would fall underwater with a 4% price decline. Next come Virginia Beach (7.3%), Oakland (6.6%) and Seattle (6.4%). Phoenix homeowners are at relatively high risk of falling underwater for similar reasons as those in Sacramento: They’re both among the top 10 destinations for relocating homebuyers, a major factor in prices shooting up about 30% in both metros from January 2021 to their May 2022 peak. They’re two of just a few metros where prices have started falling year over year. Homeowners in many parts of Florida are even less likely to fall underwater Florida homeowners are least likely to fall underwater on their mortgage payments. With a 4% home-price drop in 2023, less than 0.5% ofhomeowners who bought in the last two years in Miami,

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Affordability remains the biggest challenge facing home buyers today, but this small step forward is a welcome sight After months of watching the cost of a new mortgage rise higher and higher, home buyers finally saw some relief in November. A combination of declining home values and lower mortgage rates brought the monthly mortgage payment on a typical U.S. home down by about $100, according to the latest Zillow® Market Report. Still, monthly mortgage costs are up $720, or 66.1%, over the past year. U.S. home values are easing down as affordability challenges vex potential buyers. The typical U.S. home is worth $357,733, 0.2% less than in October and down 0.5% from a peak in June. Higher mortgage rates shoulder much of the responsibility for today’s chilled market. By the same token, mortgage rates falling in November brought monthly costs down for the first time since July, and for only the second time in the past 19 months. While it’s unlikely affordability will significantly improve anytime soon, November’s news is a positive sign that affordability may at least stabilize in 2023, helping households budget and plan for housing decisions in the months and years ahead. “The housing market entered a deep freeze this November as buyers paused their purchasing plans, likely till after New Year’s in many cases,” said Zillow senior economist Jeff Tucker. “The two big questions are whether mortgage rates will continue to decline, and whether that will be enough to bring buyers back in time for the spring selling season. In the meantime, those on the prowl for a house will benefit from motivated sellers, unusual bargains and a welcome lack of competition.” While national home value declines from peak levels have been minimal, some markets have seen significant changes. The largest declines from peak are in the most expensive markets — San Jose (-10.6%) and San Francisco (-9.5%) — as well as Western markets that saw the largest pandemic-era appreciation: Austin (-10.4%), Phoenix (-8.1%) and Las Vegas (-8%). Of the 14 major markets in which home values are still growing, almost all are less expensive than the national average and are located in the inland South or Midwest and Great Lakes regions. Relative affordability in the latter two areas is one reason Zillow economists expect them to host the healthiest housing markets in 2023. But the slight drop in mortgage costs isn’t reinvigorating the market yet. Between the annual winter doldrums and serious affordability concerns, activity in the market was as slow as it’s been since the outbreak of the pandemic; both sales and new listings of existing homes continued to fall in November. The number of listings that went pending in November fell by 16.5% from October and is down 38% compared to last November. New listings — the flow of existing homes onto the market from sellers — are also anemic, sitting 25.4% lower than last year. Many homeowners who might like to sell their home are being deterred by the higher borrowing cost they’d need to pay on their next home’s mortgage. Beyond the slight decline in mortgage costs, reduced activity and competition in the market brought a bit more good news to those still on the hunt for a house or those who are considering jumping in. Total inventory is up 7% year over year, by far the largest increase since at least the start of 2018. Listings’ median time on market before going pending is now 22 days — twice as long as last November and a far cry from the trough of six days in March and April. Renters received relief, as well. U.S. rents fell 0.4% from October to November, the largest one-month decline in the seven-year history of the Zillow Observed Rent Index. This comes on top of a 0.1% decline in October, and decisively closes the door on a period of nearly two years of above-average monthly rent increases that began in November 2020. SOURCE Zillow CONTACT: Mark Stayton, Zillow, press@zillow.com

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Nationwide Home-Flipping Rate Drops for Second Straight Quarter; Typical Profit Margins on Flips Hit Lowest Point in 13 Years; Gross Profits on Home Flips Plummet at Fastest Pace Since 2009 ATTOM, a leading curator of real estate data nationwide for land and property data, released its third-quarter 2022 U.S. Home Flipping Report showing that 92,422 single-family houses and condominiums in the United States were flipped in the third quarter. Those transactions represented 7.5 percent of all home sales in the third quarter of 2022, or one in 13 transactions. The latest portion was down from 8.2 percent, or one in every 12 home sales in the nation during the second quarter of 2022. But it was still up from 5.9 percent, or one in 17 sales, in the third quarter of last year. Despite the decline, the home-flipping rate during the third quarter of this year still stood at the third-highest level in the past decade, below the high point of 9.7 percent registered in the first quarter of 2022. “This is a classic good news/bad news report for fix-and-flip investors,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While flipping activity in the third quarter was among the highest on record, gross profits and profit margins declined significantly, reflecting the overall pricing weakness in today’s housing market.” The report shows that as home selling by investors decreased, typical gross profits on those deals also dropped in the third quarter, hitting their lowest point in almost three years. With the national housing-market boom stalling, gross flipping profits declined in the third quarter as well at the fastest quarterly pace since 2009. More importantly, profit margins on flips also fell precipitously during the third quarter of 2022, to a point not seen in 13 years. Among all flips nationwide, the gross profit on typical transactions (the difference between the median purchase price paid by investors and the median resale price) decreased to $62,000 in the third quarter of 2022. That was down 18.4 percent from $76,000 in the second quarter of 2022 and down 11.4 percent from $70,000 in the third quarter of 2021. The latest profit figure stood at the lowest point since the fourth quarter of 2019, while the quarterly rate of decline marked the worst since early 2009. Typical profit margins, meanwhile, sank during the third quarter of this year after rising in the prior two quarters. The typical gross-flipping profit of $62,000 in the third quarter of 2022 translated into a 25 percent return on investment compared to the original acquisition price. That was down from 30.2 percent in the second quarter of 2022 and from 31.8 percent a year earlier. The typical third-quarter return on investment slumped to the lowest point since 2009 and was less than half the peak over the past decade of 53.1 percent in late 2016. So large was the fall in the third-quarter that typical returns were less than 25 percent in nearly half the metropolitan areas around the nation with enough data to analyze, compared to just a third of them earlier in 2022. Profit margins worsened in the third quarter of 2022 as median resale prices on flipped homes declined faster than they had previously when investors were buying homes. Specifically, in the third quarter of 2022, the typical resale price on flipped homes declined to $310,000. That was down 5.5 percent from $328,000 in the second quarter of 2022, although still up 6.9 percent from $290,000 a year earlier. The quarterly drop-off in median resale values was worse than the 1.6 percent decline in prices that recent home flippers were commonly seeing when they originally bought their properties. The price-change gap between buying and selling resulted in profit margins going down from the second to the third quarter of 2022. The third-quarter woes for home flippers added to the growing list of signals that the nation’s decade-long housing market boom is over – or has at least stalled – after nearly tripling home values and sending profits and equity soaring. “It’s apparent that fix-and-flip investors aren’t immune to the shifting conditions in the housing market,” Sharga noted. “With demand from buyers weakening, prices trending down over the past few months, and financing rates significantly higher than they were at the beginning of the year, flippers face a much more difficult environment today, and probably will in 2023 as well.” Home flipping rates drop in two-thirds of local markets Home flips as a portion of all home sales decreased from the second to the third quarter of 2022 in 132 of the 194 metropolitan statistical areas around the U.S. analyzed for this report (68 percent). Where rates declined, they mostly decreased by less than two percentages points. (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 2022.) Among those metros, the largest flipping rates during the third quarter of 2022 were in Phoenix, AZ (flips comprised 13.7 percent of all home sales); Spartanburg, SC (13.3 percent); Atlanta, GA (12.9 percent); Winston-Salem, NC (12.7 percent) and Gainesville, GA (12.6 percent). Aside from Phoenix and Atlanta, the largest flipping rates among metro areas with a population of more than 1 million were in Memphis, TN (12.1 percent); Jacksonville, FL (11.8 percent) and Tucson, AZ (11.4 percent). The smallest home-flipping rates among metro areas analyzed in the third quarter were in Honolulu, HI (1.6 percent); Davenport, IA (3.7 percent); Rochester, NY (4 percent); Ann Arbor, MI (4 percent) and Bridgeport, CT (4 percent). Typical home flipping returns decline quarterly in four of every five metro areas The median $310,000 resale price of homes flipped nationwide in the third quarter of 2022 generated a gross flipping profit of $62,000 above the median investor purchase price of $248,000. That resulted in a typical 25 percent profit margin. Typical home flips generated less than a 25 percent profit in 91 of the 194 metros with

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More than two-thirds of prospective buyers with pets say they’d buy a home specifically because of features that cater toward their pet From adding “catios” to foregoing a home that’s not pet-friendly, many homeowners and buyers are prioritizing their furry friends when making pivotal real estate decisions. According to a new survey conducted by Realtor.com® and HarrisX among 3,001 U.S. adults, 82% of Americans with pets who are planning to buy a home within the next year consider their pets’ needs just as important, if not more so, than their own needs or those of their family. More than three-quarters (77%) of U.S. homeowners have a pet at home, and 79% of pet owners say they factored their pet in when choosing which home or apartment to live in. Pet owners looking to buy a house this year are prioritizing their pets even more, with 91% saying they’ll be a factor in their decision. “People love their pets. And they’re prioritizing the needs of these furry members of their families when choosing a home to rent or buy,” said Clare Trapasso, executive editor at Realtor.com®. “Having an animal-accessible home is more important to many pet owners than extra square footage or a shorter commute to work.” Buyers are saying, “No Pet, No Deal.”Many prospective homebuyers have decided to abandon their buying process completely if they do not find a home to accommodate their pets. Pets take priority over extra space, a short commute, and more.Some homebuyers are willing to adjust their search – and give up sought-after amenities – in order to prioritize their pets. Homeowners making “purr-fect” spaces with catios, dog doors and fenced-in yards.In some cases, homeowners have decided to take measures into their own hands by adding pet-friendly features, such as patios, dog doors and fenced-in yards, to their space. Anyone looking for a pet-friendly rental can check out the “pets” filter on realtor.com/rentals which can help you search for homes that will accept furry family members. Media Contactpress@realtor.com SOURCE Realtor.com