April 2023 – Page 5

Endpoint Promotes Shawna Hernandez to Chief Operating Officer

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Endpoint, the digital title and settlement company on a mission to make the home closing process easy for all, announced it has promoted Shawna Hernandez to chief operating officer, a newly created role. As COO, Hernandez will lead the teams implementing Endpoint’s digital closing solutions and guide the company’s strategy to optimize and scale its operations. “Shawna has spent her career focused on improving the home closing experience, the final step in a consumer’s homeownership journey,” said Endpoint Chief Executive Officer Scott Martino. “Over the past three years, Shawna has been instrumental in Endpoint’s growth and progress toward delivering the first end-to-end digital closing platform. Her deep settlement industry expertise complements our digital transformation culture, helping us to unlock a home closing experience that combines best-in-class processes with people and technology in a meaningful way.” Hernandez brings more than 20 years of experience in all aspects of the settlement industry, most recently as senior vice president of operations at Endpoint. Since joining Endpoint in 2020, she has overseen the development of the company’s proprietary closing software that automates many of the tasks associated with the settlement process. Hernandez also led Endpoint’s shift to a centralized operations team, giving the company the capability to service transactions for proptech companies and investors on a national scale. “I’m honored to be named COO at Endpoint. We have such a talented and fantastic group of folks here at Endpoint, making it a joy to collaborate with great people and drive meaningful change in our industry,” said Hernandez. “I am thrilled about the opportunity and could not be more optimistic about the future.” Prior to joining Endpoint, Hernandez was on the founding team of a tech-enabled title and settlement company. Earlier in her career, she held senior operations roles at prominent title companies in Washington and began her career as an escrow closer. Hernandez earned her bachelor’s degree from Cal Poly Humboldt and is a member of Chief, an exclusive network for female executives. About Endpoint Endpoint is a digital title and settlement company built from the ground up to make closing real estate transactions easy for all. Founded in 2018 with a diverse group of tech and real estate veterans, Endpoint develops technology that streamlines the closing process for real estate agents, buyers and sellers, and empowers proptech companies and investors looking to scale their closing operations. Through the combination of people, process and technology, Endpoint delivers a closing experience that is simple, secure and consistent at scale. Backed by First American Financial Corporation, Endpoint has secured $220 million in funding and has operations across the U.S. To learn more and explore open career opportunities, visit www.endpoint.com. About First American First American Financial Corporation (NYSE: FAF) is a premier provider of title, settlement and risk solutions for real estate transactions. With its combination of financial strength and stability built over more than 130 years, innovative proprietary technologies, and unmatched data assets, the company is leading the digital transformation of its industry. First American also provides data products to the title industry and other third parties; valuation products and services; mortgage subservicing; home warranty products; banking, trust and wealth management services; and other related products and services. With total revenue of $7.6 billion in 2022, the company offers its products and services directly and through its agents throughout the United States and abroad. In 2022, First American was named one of the 100 Best Companies to Work For by Great Place to Work® and Fortune Magazine for the seventh consecutive year. More information about the company can be found at www.firstam.com.

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Portion of Average Wages Consumed by Major Home-Ownership Costs Ticks Down to 30 Percent; Affordability Improves as Nationwide Median Home Price Stays Flat; Historic Affordability Still Weak Throughout U.S. ATTOM, a leading curator of land, property, and real estate data, released its first-quarter 2023 U.S. Home Affordability Report showing that median-priced single-family homes and condos are less affordable in the first quarter of 2023 compared to historical averages in 94 percent of counties across the nation with enough data to analyze – far above the 62 percent of counties that were historically less affordable in the first quarter of 2022. However, the report also shows that buying conditions for house hunters may be improving as the portion of average wages nationwide required for typical major home-ownership expenses has fallen slightly to 30 percent this quarter. The latest percentage is still considered unaffordable by common lending standards, which call for a 28 percent debt- to-income ratio. It also remains well above the 25 percent level in the first quarter of 2022. But the portion has inched downward from 31 percent in the final months of last year. The mixed picture facing home buyers – prices that remain a financial stretch but are getting a bit more affordable – reflects a softening of the U.S. housing market combined with rising wages at a time when home-mortgage rates have stabilized following a year of increases. The nationwide median single-family home and condo price is up less than 1 percent from the fourth quarter of 2022 to the first quarter of 2023 – now sitting at $320,000 – while three quarters of local markets continue to see prices slip this year. Those trends have followed an 8 percent decrease in the nationwide median during the second half of 2022. The drop-off has come as rising interest rates, high consumer-price inflation and stock market declines have cut into what home seekers can afford or the resources they have for down payments. At the same time, wages have risen 6 percent nationwide over the past year, with increases continuing into the second half of 2022 in most of country. “The soaring housing market has finally come back down in much of the U.S., at least for now, while worker pay is growing. That’s produced some benefits for home seekers in the form of slightly better affordability, especially as lending rates have flattened out,” said Rob Barber, chief executive office for ATTOM. “Things certainly haven’t swung way back into friendly territory. Price drops and wage gains haven’t yet translated into equal improvements in affordability. And the trend could go back the other way if interest rates go up again, as expected. But the scenario is becoming more favorable for buyers.” With multiple uncertain economic forces at work, the market could continue sliding or turn back upward this Spring and Summer. That, along with the path of wages, will dictate whether home ownership continues to grow more affordable after a gradual path the other way over the past few years. ATTOM’s latest 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 and condo, 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. Compared to historical levels, median home prices in 537 of the 572 counties analyzed in the first quarter of 2023 are less affordable than in the past. The latest number is down from 565 of the same group of counties in the fourth quarter of 2022. But it remains far more than 356 in the first quarter of 2022 and just 91, or less than one-fifth, that were less affordable historically two years ago. Meanwhile, major home-ownership expenses on typical homes are considered unaffordable to average local wage earners during the first quarter of 2023 in 373, or about two-thirds, of the 572 counties in the report, based on the 28 percent guideline. Counties with the largest populations that are unaffordable in the first 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. The most populous of the 199 counties where major expenses on median-priced homes remain affordable for average local workers in the first quarter of 2023 are Cook County (Chicago), IL; Harris County (Houston), TX; Wayne County (Detroit), MI; Philadelphia County, PA, and Franklin County (Columbus), OH. Home prices up slightly nationwide, but down in three-quarters of local marketsThe recent slowdown in the U.S. housing market after 10 years of increases has flattened the national median single-family home and condo value, while pushing prices down in most counties so far this year. Nationwide, the median single-family home, and condo value of $320,000 in the first quarter of 2023 is virtually the same as the typical $318,000 price in the fourth quarter of 2022 and is up just 1.3 percent from $316,000 in the first quarter of last year. At the local level, median home prices in the first quarter of 2023 remain up from the first quarter of last year in 371, or 65 percent, of those counties. 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 first quarter of 2023. Among the 46 counties in the report with a population of at least 1 million, the biggest year-over-year increase in median sale prices during the first quarter of 2023 are in St. Louis County, MO (up 38 percent); Palm Beach County (West Palm Beach), FL (up 11 percent); Collin County (Plano), TX (up 10 percent); Franklin County (Columbus), OH (up 7 percent) and Miami-Dade County, FL (up 6 percent). Counties with a population of at least 1 million where median prices have dropped most from the first quarter of 2022 to the same period this year are Alameda County (Oakland), CA (down 16 percent); Santa Clara County (San Jose), CA (down 12 percent); Contra Costa County, CA (outside San Francisco) (down 12 percent); Philadelphia County, PA (down 11 percent) and King County (Seattle), WA

NPLA Announces 2023 Strategic Initiatives

by Carole VanSickle Ellis
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New Partnerships, Mentoring Programs & Events in 2023 and Beyond By Carole VanSickle Ellis The National Private Lenders Association (NPLA) hosted its seventh official membership meeting in Key Biscayne, Florida. The event, which was the best-attended in the association’s history, was also the site of a major change for the private-lending industry. NPLA founding member, executive director, and general counsel Jon Hornik announced during the association’s member meeting that Monday, March 27, 2023, would be the first National Private Lenders Conference, thereby repurposing the previous 21-year-old Pitbull Conference. “We are essential for this space,” Hornik said proudly. “The private lending industry is still in the fledgling period. We must define ourselves and our imaging. If we fail, we will become just another asset class that makes no sense and creates risk. If we succeed, we will all thrive.” Hornik said the NPLA has high hopes for the new venture, including attracting more institutional participants into the space, improving networking opportunities at the conference, and creating events and spaces that will foster the interactions and mindsets that will enable conference participants to collaborate and do deals together. Evolving for 2023 & Beyond Hornik said one of the most exciting things about the new Conference is its three pillars. “We are growing based on the foundation of the previous 20 years,” he explained. Now, our three pillars of networking, education, and entertainment will help us evolve even further.” Attendees at the event will see all three pillars in action already. Hornik noted that networking is of primary importance in the private lending industry despite a history of concerns that discussion and shared data could result in competitors gaining a competitive edge. The NPLA believes collaboration in the industry is the key to lasting growth and permanence. “Meaningful discussions between competitors create collaborations that create friendships,” he said. The education angle, already prioritized at Pitbull events, will remain a central part of theconference. “It is important to always educate each other,” Hornik observed. “Bring the best and the brightest together, as we have here, and you will leave smarter than you came.” When it comes to the third pillar, entertainment, Hornik noted that the best industry-related entertainment “crosses over” both educational and networking elements. He looked back fondly on his years attending the Pitbull Conference, noting, “Almost every meaningful relationship I have [in this space] came from the Pitbull Conference.” Hornik added, “Now, we are looking forward to the next 20 years.” If you are interested in becoming a member of NPLA, visit NPLAOnline.com. Learn more about the National Private Lenders Conference at NPLAConference.com Side Bar New Partnerships, New Opportunities The NPLA leadership spoke about their hopes for the future of the National Private Lenders Conference and NPLA membership. Amy Kame, NPLA’s managing director, noted that NPLA membership retention remains at nearly 100%, and 2023 has brought four new strategic partnerships forward to benefit NPLA members. John Burns Real Estate Consulting The firm will provide access to content, data, and reports in exchange for NPLA members’ participation in anonymous industry-specific surveys. This will include access to quarterly reports on the fix-and-flip space and single-family rental trends. REI INK magazine REI INK is a nationally published, monthly digital and print magazine serving full-time individual and institutional real estate investors and industry professionals. St. Jude Children’s Research Hospital This long-term partnership plays an integral role in NPLA’s dedication to charitable giving and community outreach. The association will host a charity poker tournament to benefit St. Jude at its June meeting in Atlantic City, New Jersey. NPLA Mentorship Program In 2023, NPLA will debut a mentorship program focused on connecting mentors and mentees for 12-month mentorships. .

A Home Like No Other

by Carole VanSickle Ellis
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The University of Maine’s Bio-Home Technology is Opening Doors in Affordable Housing By Carole VanSickle Ellis The oldest prefabricated home on record is the “Manning Portable Cottage,” which was created by British carpenter John Manning, who, in 1830, offered buyers the opportunity to commission house components that could be built in London, then shipped around the country or internationally and assembled upon receipt. The concept spread like wildfire due to the relatively inexpensive production process and the added benefit that the properties could be assembled by individuals with less training, on the whole, than would otherwise be needed for home construction. Kit houses gained popularity over the course of the century following Manning’s invention, and, during World War II, prefabricated homes for labor crews were invaluable in providing fast, effective shelters that could be both erected quickly and transported relatively easily. By the end of the war, public demand for this type of house was rampant and remains so today. However, like almost any other form of housing, prefabricated housing comes with some inherent issues that add costs — financial, time-based, environmental, and on resources — that can make even this dynamic housing option difficult for many residents to access. The multifaceted issue of cost of production is one that Habib Dagher, executive director of the Advanced Structures and Composites Center (ASCC) at the University of Maine, and his team hope to solve with a groundbreaking bio-based printing tool that could revolutionize the construction industry and affordable housing. An Innovative Application for Existing Technology Dagher and his team, which includes chief operating engineer in additive manufacturing at ASCC Evan Gilman, have spent nearly two decades working on projects in development of biobased materials suitable for additive manufacturing. Gilman explained that although additive manufacturing itself has been used in a variety of fields for years, the manner in which the ASCC scientists apply the principles in this field to everyday problems such as creating comfortable, affordable, long-term housing for the roughly 7 million Americans who do not currently have access to such habitations at this time is very new. Traditionally, Gilman explained, additive manufacturing with polymers has been used to create relatively small-scale objects rather than something big like a fully functional residence capable of housing multiple residents on a permanent basis. “The basic technology has existed for a long time, but we are pushing the boundaries of how large a format we can use with additive manufacturing,” Gilman said. “We are printing, layer by layer, the floors, the walls, and the roof all together in one complete shape.” Dagher added, “We are using a technology very similar to what is used on small 3D printers, but we are melting a polymer with wood fiber in it and depositing that bio-based material using a nozzle — and at a much faster rate than a small printer.” That speed is increasing all the time as the team continues to refine the process; by the end of the first prototype’s print run, the machinery was printing almost six times faster than the speed at which it had begun. “The other thing that makes this technology different — and the most important element — is that the materials are 100% bio-based and 100% recyclable,” Dagher said. “That means the entire house is recyclable.” Bio-based materials are products that mainly consist of one or more substances derived from living matter, also referred to as biomass. In the case of the ASCC home, the bio-based construction materials that are used to “print” the structures are primarily bio-resins and sustainably sourced wood fibers. Maine has a particularly accessible source for this material in its forest products industry, which creates a great deal of wood fiber and other wood byproducts that fit the bio-home bill perfectly. Historically, the state’s papermill industry has purchased and used large volumes of this “waste,” but the papermill industry has struggled in recent years and all but six of Maine’s paper mills were closed by the start of 2023. “There is an excess of wood fiber in the northeast that is currently looking for a home,” Gilman observed. If we can use those excess materials or residue to produce a home, it makes them useful again and creates a valuable structure like a house.” He added, “Housing is a good potential application for the technology because there is a big need. We have excess material available and a real need for housing.” Dagher noted that the bio-homes also function as “carbon storage and sequestration facilities” because they are made from trees that have captured carbon from the air and that are then converted into bio-based homes that retain that locked-in carbon. “This makes the entire process and product very unique because of its recyclability and environmental friendliness,” he said. Next Steps: Weathering the Storms, Literally In late 2022, Dagher and his team revealed the culmination of their bio-based printing project: the world’s first bio-based, 3D-printed home. The prototype boasts 600 square feet of living space and architectural features largely created from recycled and repurposed materials. In the future, Dagher noted, other elements like kitchen cabinets, could be printed along with much of the rest of the structure. Already, the sleek model is being compared to work by famous architect Frank Lloyd Wright, who also had a passion for affordable, visually attractive housing. Wright’s efforts in this arena were a valiant precursor to the Maine team’s bio-homes, but they, like most prefabricated options prior to the ASCC’s prototype, had one prevailing handicap that limited universal applicability to the problem of affordable housing: They were made of ready-cut pieces composed of traditional building materials that had to be transported to the building location and then assembled. Other creative minds have attempted to solve this problem by bringing 3D printers to the construction site and printing out concrete walls that may be topped with traditional roofs once assembled, but the process is still costly and not particularly efficient. By using bio-based materials, the entire structure

The Long and Short of Short-Term Rentals

by Jennifer Stoops
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Generate Income and Have a Place to Vacation By Jennifer Stoops Investing in real estate is becoming a very common strategy among those looking to build wealth and diversify their investment portfolio. Single family residential assets have long been the key target of real estate investing with multi-family assets coming in at a very close second. In more recent years, a new player has joined the real estate investing strategy, the short-term rental. With travel demands being higher than ever and more flexibility to work from home, the short-term market is red hot. The rise in work from home over the last few years has increased the number of people who would like to relocate, but previously could not due to work. This is also adding to the increased demand for short-term rentals as people are looking for temporary housing while they search for their new home. What is a Short-Term Rental? What classifies as a short-term rental? These are dwellings that are furnished and rented for short periods of time and considered to be for “transient” use. Accommodations such as corporate housing and vacation rentals are examples of short-term rentals and are often an alternative to the traditional hotel. The length of the rental agreements vary from an evening to days, weeks or multiple months, but are generally less than a six month (some consider less than twelve months short-term) period of time. Short-term rentals can be anything from single family homes, multi-family buildings, condos, townhomes, apartments, a cabin, a guest home, garage apartment or even a room or a portion of a dwelling. Short-term rentals have quickly become one of the most lucrative real estate investments you can buy. However, when compared to the traditional and more familiar long-term rental, short-term rentals may seem intimidating. There is a long list of benefits to owning short-term rentals. What are the Benefits of Short-Term Rentals? Short-term rental investments create higher earnings than their long-term rental cousins. A well marketed short-term rental in a desirable area will consistently outperform long-term rental revenue. Another benefit to owning short-term rentals is better maintenance of your asset. With frequent short stays, you have a much greater ability to become aware of any maintenance issues much sooner providing the opportunity to catch issues that may otherwise go unnoticed or unreported. Flexibility is another huge gain with this type of investment. You have complete control over the calendar of when you want to offer your rental and for how long. You also have the flexibility to adjust pricing of your rental as you see fit. Not only do short-term rental investments create a profitable monthly cash flow, but the asset will also continue to appreciate year after year. Like many real estate investments, the longer you hold onto a rental property, the more it will increase in value over time and the more your investment will be worth when you decide to sell. While there is never a guarantee, real estate is usually a good investment and generally withstands difficult economic times. Accessibility to building wealth much faster is another advantage to short-term rental investing. You can take out a loan to purchase a property and use borrowed money to generate more income. This strategy is immensely helpful for beginner investors. Learning how to leverage debt in a profitable way can prove very useful in building wealth at a much faster rate. One additional benefit, but certainly not the end of the list of advantages to investing in short-term rentals, is tax benefits. Real estate investing has a significant number of tax advantages, which make them a very appealing opportunity for wealth building and portfolio diversification. Some tax advantages include deductions for maintenance, marketing, management and depreciation. Factors to Consider There are some critical factors to consider before jumping into this type of investment. Choosing the best location to purchase this type of investment plays a critical role in its profitability. Also, consider hiring a professional management company. Unless you plan to make owning short-term rentals your full-time career, hiring a management company can save you money and certainly time. There is a significant amount of work involved in the management of short-term rentals such as maintaining the calendar, collecting deposits and fees, drawing up contracts, coordinating turns in between tenants (and doing so in a very quick period of time, often within hours of the previous tenant vacating) and maintaining working utilities. There is also maintenance coordination when things break, property preservation, being on call for emergencies or issues at the property, coordinating access to the property, potential evictions and so much more. Management companies also have relationships with local vendors, which will likely mean discounted rates for you. In summary, short-term rental investing is another great wealth building opportunity under the real estate investing umbrella. There are some key factors that can make or break how well and how often your property rents. Once you’ve selected your property, don’t forget to pay attention to ways you can maximize your asset. Check out other rental listings in the area to see how yours “stacks” up against the competition. Your rental listing is one of the most critical components to getting your property rented early and often and keeping the calendar full. Use professional photos, descriptive details about your property’s features, have modern and clean furnishings and keep the property clean and well-manicured on the outside (if you are responsible for landscaping and not provided by an HOA). Having a well-stocked inventory of kitchen essentials, bathroom essentials and linens are very important to the experience your renters will have. The location of your rental will also dictate what other small details you should consider providing. For example, if your property is near the beach, supplying things like beach chairs, beach towels, beach toys and a cooler will enhance the tenant’s experience. As an added bonus, owning a vacation rental gives you the ability to have a place on hand for your own vacation. An investment

The Single-Family Rental Home Industry Has Never Been More Important

by David Howard
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Sound Government Policies Are Needed to Create Favorable Market Conditions By David Howard As members of the National Rental Home Council (NRHC) prepare to gather in Nashville this month for the annual SFR Industry Leaders Conference, intensifying headwinds continue to swirl around the global economy. Rising interest rates, a weight on the housing market for the better part of the past year, have now started to curtail growth across a wider swath of the economy. Most concerning perhaps is the impact of higher rates on the stability of the banking sector, with a number of recent high-profile bank failures sparking concerns for the overall health of both U.S. and global financial markets. All of this is playing out amidst the backdrop of slowing economic growth that many forecasters claim is an indication of more difficult times ahead. Given the current landscape, the role of the rental housing market, and single-family rental housing in particular, has arguably never been more important than it is today. Demand for housing, even in a rising rate environment, remains solid, with both home price and rental rate appreciation showing positive growth. Admittedly, this growth is down from the historically high levels of the past year, but it remains positive nonetheless. Housing supply, on the other hand, continues to be a challenge. A recent report by Realtor.com showed the gap between new home construction and household formation increased to 6.5 million units between 2012 and 2022. The Supply and Demand Dilemma On its own, the mismatch between supply and demand would be enough of a challenge for anyone considering a home purchase. However, with interest rates on the rise, the cost to finance a home today adds another layer of complexity for consumers in the market for a potential home purchase. According to research from John Burns Real Estate Consulting, the average cost of a monthly payment to rent a single-family home is now $850 less than the cost to own a single-family home, the biggest difference in cost since the year 2000. All of this is a way of saying, America needs more housing, of all kinds — owner-occupied and rental. The most visible consequence of a housing market burdened by ongoing supply challenges is, quite simply, there are fewer options available to meet the needs of Americans in search of quality housing. More broadly, underproduction acts as a clear, and concerning, drag on homeownership and owner-occupied housing. However, supply shortages are felt throughout the housing ecosystem, impacting virtually every sector of the market, including single-family rental homes. The single-family rental home industry has historically accounted for approximately 40% of America’s rental housing market, providing access to quality, affordably priced housing for more than 16 million households in neighborhoods with proximity to schools, employment centers, and transportation corridors. Providers of single-family rental homes — large and small — play a critical role in offering families and individuals a greater range of housing options, at a time when it is most needed. According to Harvard University’s Joint Center for Housing Studies, the number of renter households increased by 870,000 during the COVID pandemic. The Joint Center’s report, America’s Rental Housing 2022, identified five reasons for the surge in rental housing: » Large number of millennials moving through their 20s and 30s: ages where renting is most common; » Rapid growth of older renters: baby boomers aging into their 60s and 70s; » Sharp rise in rentership between 2009 and 2019 for younger and middle-aged households: signaling delayed transitions to homeownership; » The growing popularity of renting among older households: contributing to increases in both the number and share of higher-income renters; » The increasing diversity of U.S. households: lifting demand for rental housing. While these factors were likely present before the COVID health crisis, there’s no question the pandemic contributed to a rise in demand for single-family rental homes. According to the NRHC/John Burns Real Estate Consulting Single-Family Rental Market Index (SFRMI) report from the third quarter of 2020, nearly 60% of new single-family rental home residents relocated from urban multifamily properties. With a greater share of the American workforce spending more time working from home, either permanently or part-time, the desire for extra space has also contributed to the demand for single-family rental homes, 65% of which contain three or more bedrooms (compared to just 11% of multifamily units). Finally, there is the great migration: in 2020, one in 10 Americans moved to a new market. Meeting the Challenge For these reasons, there is arguably a greater need for single-family rental housing in the U.S. than there has been in decades. However, data show ongoing housing supply pressure has challenged the ability of the single-family rental home market to meet that demand. An analysis of housing data from the Annual Social Economic Supplement of the Current Population Survey, published by the U.S. Census Bureau, reveals even though demand for single-family rental homes increased during the decade 2011–2021, the share of single-family rental homes within both the single-family and rental housing markets declined. To meet the need for single-family rental housing, NRHC members are investing in local staff, hiring local contractors and business partners, and bringing property management expertise to local markets all to ensure a positive experience for residents and families who choose a single-family rental home lifestyle. As evidence, in 2021 NRHC members invested nearly $2 billion in home renovations, upgrades, and other property-level operations while employing more than 8,000 local businesses and contractors in markets across the country. Additionally, many NRHC members support residents on their path toward homeownership by reporting on-time rent payments to credit agencies and providing access to financial literacy programs. The ongoing development and maturation of the single-family rental home industry is focused on providing a viable source of stabilized long-term rental housing responsive to the needs and lifestyle preferences of today’s housing consumer. To the extent that we are able to provide more housing, we are better positioned to meet those needs. Perhaps the most direct indication