November 2023 – Page 4

U.S. Asking Rents Remained Sluggish in October Amid Rising Vacancy Rate

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Asking rents were little changed from a year earlier for the seventh-straight month as an increase in new units hitting the market drove up vacancies, making it harder for landlords to raise prices. The median U.S. asking rent in October was $1,978, little changed (-0.3%) from a year earlier, but down 3.7% from the $2,054 record high set in August 2022. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. It fell 1.6% from a month earlier, which is typical for this time of year. October marked the seventh straight month in which the median asking rent was little changed from a year earlier. The rental market has flattened out following a rollercoaster ride during the past two years; rent growth skyrocketed during the pandemic as housing demand surged, and then rapidly slowed last year as inflation and economic uncertainty intensified. “Rents in Phoenix have pulled back,” said local Redfin Premier real estate agent Heather Mahmood-Corley. “During the pandemic, you’d see five people applying for the same unit, and you’re not seeing that anymore. Rentals are sitting on the market for longer. Landlords are willing to work with tenants on lease terms and concessions because consumers are just more skittish these days. A lot of folks are staying where they are instead of moving because there’s so much uncertainty in the economy and in the world.” The rental market has cooled in part because there’s a lot of new inventory, which means landlords are grappling with rising vacancies and have less leverage to raise rents. That’s the reverse of what’s happening in the for-sale housing market, where prices are rising due to an inventory shortage. Listings in the for-sale market have plunged because surging mortgage rates have prompted many homeowners to stay put, as moving would mean trading in their low rate for a much higher one. The jump in supply isn’t the only factor that has caused rents to flatten; slowing household formation has also contributed—along with rising affordability challenges driven by the pandemic surge in rents, which rendered apartments in some areas unaffordable for many renters. Still, there has been enough rental demand to prevent rents from declining significantly. That’s partly because high mortgage rates and low for-sale inventory are keeping many would-be homebuyers in the rental market. The median asking rent in October remained 20.8% higher than it was in October 2019, before the pandemic. Rental Vacancies Rise as More Units Come on the Market—But Building Slowdown Could Bolster Rents The rental vacancy rate hit 6.6% in the third quarter—the most recent period for which data is available—the highest level since the first quarter of 2021. By comparison, the homeowner vacancy rate was 0.8%—the second lowest level in records dating back to 1956 (the lowest was in the prior quarter). Rental vacancies are on the rise because renters have an increasing number of options to choose from. The number of completed apartments in the U.S. rose 4.9% year over year in the third quarter to a seasonally adjusted annual rate of 1.2 million, one of the highest levels of the last three decades. Completions did fall from the prior quarter, when they hit 1.4 million, the highest level in over 35 years. But the number of apartment buildings on which construction has started plunged 26.5% year over year in the third quarter to a seasonally adjusted annual rate of 1.2 million. That’s the biggest drop since 2010 and the lowest level since 2020. Building starts are a leading indicator of what’s happening in the housing market, whereas building completions are a lagging indicator. The slowdown in apartment construction could ultimately bolster rent prices. Building has slowed due to rising interest rates, sluggish rent growth and possibly overbuilding in some areas. Rents Fall Most in the West, Rise Most in the Midwest The median asking rent in the West fell 1.5% to $2,392, and in the South was little changed, down 0.2% to $1,642. Meanwhile, asking rents grew 4.1% to $1,430 in the Midwest and rose 3% to $2,463 in the Northeast. Rents are climbing fastest in the most affordable region and falling fastest in one of the least affordable, which makes sense at a time when housing affordability is becoming a problem for more American families. Research shows that a near-record share of house hunters are leaving their metro when they move, many in search of a more affordable place to live. Another reason the rental market has softened substantially in the West and South is that those markets saw outsized growth during the pandemic. Rents skyrocketed as people flooded into Sun Belt cities including Phoenix, Miami and Dallas. But once the rental boom in those regions cooled, prices had relatively more room to fall. Apartment construction in the Sun Belt has also been especially robust, contributing to the cooldown in rents. While rents in the West and South have been cooling, these regions’ rental markets have started to stabilize in recent months as the impact of the pandemic price boom moves further into the rearview mirror. To view the full report, including charts and methodology, please visit:https://www.redfin.com/news/redfin-rental-report-october-2023

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SingleSource’s appraisal modernization and data collection solutions help lenders reduce cycle times and increase efficiency. SingleSource Property Solutions, a leading provider of property services supporting the U.S. housing industry, announced it now offers data collection suites and a proprietary mobile app, SingleVue™ for the Fannie Mae Value Acceptance + Property Data Initiative. By utilizing SingleSource’s data collection solutions as part of the GSE’s appraisal waiver initiative, lenders can achieve shorter loan cycle times, lower consumer costs, and an improved borrower experience. “Historically, one of the most time-consuming parts of the loan process has been scheduling the appraisal,” said Matt Stepanovich, vice president of appraisal modernization and QC at SingleSource. “During the last refi boom, some appraisers were scheduling inspections as far as four to six weeks out, which was slowing down the entire loan transaction. As a Fannie Mae partner, SingleSource can utilize a larger pool of trained data collectors, so that property inspections can now take place in a matter of days, not weeks.” SingleSource has been providing valuation services nationwide since 2000 and nationwide field services and inspection services since 2006. “Over the years, we have built a tremendous panel of experienced vendors to support our wide range of service offerings,” said Ed Austin, COO at SingleSource. “This has allowed us to really hit the ground running on Fannie Mae’s new program, since we already had the people and resources in place.” SingleSource’s products are supported by SingleVue™, the company’s new proprietary mobile application that offers a simple, user-friendly interface for quickly gathering the details and digital layout of a property. SingleVue™ features key tools from SingleSource’s leading-edge mobile data collection partnerships, including digital scans for producing floor plans. These options give SingleSource clients the best technology currently available in the valuations industry, all in one location. “We are proud to be one of a few service providers in the program that offer a full suite of mortgage services, including valuations, title and closing, inspections, field services, asset management, and document management solutions,” said Austin. “For over 20 years, we have been supporting lenders and servicers across the entire loan cycle. As appraisal modernization continues to move forward, we are excited that our innovative offerings are being used to help transform the mortgage industry.” About SingleSourceSingleSource is a leading provider of property services supporting the U.S. housing industry. Founded in 2000, the company offers nationwide solutions in valuations, title & settlement, property preservation, REO asset management, and document management. SingleSource supports a broad cross-section of clients in the financial services industry including servicers, originators, banks, credit unions, investment banks, and hedge funds. The company has completed more than 5 million home valuations, facilitated over $4 billion in REO sales, and currently supports 40,000 closings a year and 250,000 field services units a year. The company stands apart for its superior experienced staff, sophisticated technology, and vibrant corporate culture that fosters diverse ideas during all market cycles. SingleSource is based Canonsburg, Pennsylvania, near Pittsburgh. For more information visit www.singlesourceproperty.com.

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Housing Market Frustrations Continue, Too, with Survey-Record 85% of Consumers Saying It’s a ‘Bad Time’ to Buy a Home The Fannie Mae Home Purchase Sentiment Index® (HPSI) remained largely flat in October, as consumer frustration toward housing unaffordability and an economy battling inflation continue to depress overall sentiment. Despite improvement in the share of consumers expressing greater job security and improved household income, 78% of respondents believe the economy is on the “wrong track,” up 7 percentage points from last month, with the vast majority once again pointing at inflation as the top reason for that belief. This month, a survey-record 85% of consumers indicated that it’s a “bad time” to buy a home, with most respondents citing high home prices and high mortgage rates as the primary reasons. By comparison, only 37% believe it’s a “bad time” to sell a home. Overall, the full index is up 8.2 points from its all-time low last year. “Consumers expressed even greater pessimism toward the larger economy this month, in addition to their ongoing frustration with the housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Via our October National Housing Survey®, 78% of respondents told us the economy is on the ‘wrong track’ – up from 71% last month – and they overwhelmingly cited inflation as the primary reason why. Across all income groups, inflation has consistently driven the ‘wrong track’ belief since the end of last year, suggesting consumers are fed up with the high prices of many goods and services. Although the labor market is strong and wages have risen in the past year, consumers may believe that their purchasing power has not kept up with prices, as 69% of consumers say their incomes are ‘about the same’ compared to the previous year. We expect this tightness in household finances, along with high home prices and elevated mortgage rates, to prolong the affordability challenges facing many would-be homebuyers.” Home Purchase Sentiment Index – Component Highlights Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased in October by 0.4 points to 64.9. The HPSI is up 8.2 points compared to the same time last year. Read the full research report for additional information. SOURCE Fannie Mae

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Buyers Continue to Grapple with Low Affordability Driven by Seven Straight Weeks of Mortgage Rate Increases Inflation Levels Sit Above Targets as Further Rate Hikes Remain a Possibility New Listing Volume Continues to Lag Contract Volume, Putting Further Downward Pressure on Inventory HouseCanary, Inc. (“HouseCanary”), a national brokerage known for its real estate valuation accuracy, released its October Market Pulse report, showing market activity in terms of net new listing volume remains sharply down year-over-year, with net new listings placed on the market down 14.9% compared to October 2022. Marking the seventh consecutive week increase, mortgage rates continued to rise in October as the Federal Reserve worked towards curbing inflation. As a result, low housing market activity persisted, aligning with the trend we’ve seen throughout 2023. Historically low inventory has exacerbated the situation, driven by listing volume lagging far behind contract volume. It is also worth noting that total available inventory has likely reached its peak for the year, with that peak being the lowest observed since 2020, potentially leading to further price increases in 2024. With market activity at a near standstill and rates expected to remain elevated for the foreseeable future, potential buyers will likely continue to favor the rental market. Jeremy Sicklick, Co-founder and Chief Executive Officer of HouseCanary, commented: “In October, the housing market continued to face low activity, following persistent rate hikes and low inventory. Compared to 2022, our data shows a decrease of 14.9% in net new listing volume and a 3.1% decrease in contract volume, putting further pressure on inventory. Interest rate shock is having the biggest impact on net new listing volume, as potential buyers continue to grapple with uncertain market conditions and turn towards the rental market. With inflation rates still sitting above the Federal Reserve’s stated target of 2%, there is a possibility of rates reaching 8% or more, putting would-be buyers under further pressure.” Key Takeaways:

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Equity-Rich Portion of Mortgaged Homes Slips at Fastest Pace in At Least Four Years;But Seriously Underwater Level of Mortgages Improves;Overall Equity for Homeowners Holds Steady ATTOM, a leading curator of land, property, and real estate data, released its third-quarter 2023 U.S. Home Equity & Underwater Report, which shows that 47.4 percent of mortgaged residential properties in the United States were considered equity-rich in the third quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. The portion of mortgaged homes that was equity-rich in the third quarter of 2023 decreased from 49.2 percent in the second quarter of 2023 – the largest quarterly decline since at least 2019. The latest figure also was down from 48.5 percent in the third quarter of 2022. Those declines happened despite home values rebounding recently from a fallback that had lasted from the middle of last year to the early part of this year. But while equity-rich levels dropped in the third quarter, the report also shows that the portion of mortgaged homes that were seriously underwater in the U.S. continued to improve. Just 2.5 percent of all residential mortgages, or one in 40, were considered seriously underwater in the third quarter of 2023. That meant they had a combined estimated balance of loans secured by the property of at least 25 percent more than the property’s estimated market value. The seriously underwater level dropped from one in 36 homes in the second quarter and from one in 35 in the third quarter of 2022, to the lowest point in at least four years. “By all measures, homeowner equity around the country remained strong during the third quarter as millions of households kept benefitting from the nation’s extended runup in home values. At the same, though, we saw an unusual downturn at the equity-rich end of the spectrum,” said Rob Barber, chief executive officer for ATTOM. “That could have just been a temporary blip. It also could have reflected an increase in long-time owners who had lots of equity built up selling their homes, or perhaps borrowing against their rising wealth and slipping out of equity rich territory. The fourth quarter data should say more about whether residential equity in the U.S. has indeed topped out.” The mixed equity patterns came as the U.S. housing market continued recovering from the downturn that had threatened to end the decade-long run of price and equity growth. The median nationwide single-family home price rose 11 percent over the second and third quarters of this year following an 8 percent drop from mid-2022 to early 2023. Values went back up as the job market remained strong, with the national unemployment rate below 4 percent, and consumer-price inflation was down to less than half the level of a year earlier. A strong investment market also put more money in the hands of potential buyers. An ongoing tight supply of homes put additional upward pressure on prices along with a temporary lull in a two-year rise in home mortgage rates. The potential for more uneven equity trends remains in place as mortgage rates rise toward 8 percent for a 30-year loan and the housing market heads into its annual slow season, which usually leads to smaller price increases or even small declines. Equity-rich share of mortgages drops in almost 30 statesThe portion of mortgages that were equity-rich went down in 29 of the 50 U.S. states from the second quarter of 2023 to the third quarter of 2023, commonly by one to four percentage points. The biggest declines came in the South region, led by South Carolina (portion of mortgages homes considered equity-rich decreased from 50 percent in the second quarter of 2023 to 43.7 percent in the third quarter of 2023), Florida (down from 60.4 percent to 54.4 percent), Kentucky (down from 42.1 percent to 37.1 percent), California (down from 63.3 percent to 58.5 percent) and Oklahoma (down from 36.5 percent to 32.5 percent). At the other end of the scale, equity-rich levels rose in 21 states from the second quarter to the third quarter of this year, with the largest improvements concentrated in the Northeast region. The biggest increases were in South Dakota (up from 46.4 percent to 49.9 percent), Maine (up from 56 percent to 59.3 percent), Connecticut (up from 38.6 percent to 41.5 percent), New Jersey (up from 43 percent to 45.9 percent) and New Hampshire (up from 56.6 percent to 59.4 percent). Seriously-underwater mortgage levels improve in most statesThe portion of mortgaged homes considered seriously underwater dropped, and remained historically low, during the third quarter of 2023 in 43 states. The biggest decreases were clustered in the Midwest and the Northeast, a region that has some of the nation’s higher levels of seriously underwater mortgages. The improvements were led by Indiana (share of mortgaged homes that were seriously underwater down from 8.1 percent in the second quarter of 2023 to 2.6 percent in the third quarter of 2023), Hawaii (down from 3.6 percent to 1.6 percent), South Dakota (down from 4 percent to 2.6 percent), Missouri (down from 4.8 percent to 3.9 percent) and Maine (down from 2.7 percent to 1.9 percent). States where the percentage of seriously underwater homes increased the most from the second to the third quarter of this year were led by Wyoming (up from 3 percent to 5.9 percent), Mississippi (up from 5.8 percent to 7.4 percent), California (up from 1.1 percent to 1.6 percent), Idaho (up from 2.4 percent to 2.7 percent) and Louisiana (up from 10.5 percent to 10.8 percent). Highest levels of equity-rich homeowners in Northeast and WestThe 10 states with the highest levels of equity-rich mortgaged properties around the U.S. during the third quarter of 2023 were in the Northeast and West regions. Those with the largest portions were Vermont (79.8 percent of mortgaged homes were equity-rich), New Hampshire (59.4 percent), Maine (59.3 percent), Montana (59.1 percent) and California (58.5 percent). Nine of the 10 states with the lowest percentages of equity-rich properties during the third quarter of 2023 were in the Midwest and South. The smallest portions were in Louisiana (19.7 percent of mortgaged homes were equity-rich), Illinois (29.8 percent), Alaska (29.8 percent), West Virginia (30.5 percent) and North Dakota (30.7 percent). Among 107 metropolitan statistical areas around the nation with a population of

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First of its kind marketplace connects investors with 15 lenders in over 40 markets across the United States Sherman Bridge, a private money lender for investors purchasing distressed single-family residential real estate, has launched a new, first of its kind online marketplace to efficiently connect lenders with investors. The marketplace will help investors streamline the financing process, connecting them with 15 different proven and vetted lenders who offer competitive loan options in a matter of minutes. The marketplace first launched in all major cities in North Carolina, as well as Philadelphia, Tampa, St. Petersburg, Fla., and Greenville, S.C. with operations now in over 40 markets across the U.S. Launched in 2009, the company began offering private loans for fix-and-flip and fix-and-rent investors looking to purchase value-add single-family properties. Since then, the company has expanded upon its “traditional” direct lending business by launching an innovative marketplace to efficiently offer investors the most competitive and diverse lending programs in the industry. Since launching its marketplace, Sherman Bridge is off to a fast start with nearly 2,100 closed loans representing over $450 million in total volume. “Amidst the persistent inventory shortages plaguing the housing market, it’s imperative for investors to secure rapid capital through reliable lenders in order to refurbish homes and expedite their return to the market,” expressed Kurt Carlton, Co-Founder and President of New Western. “Leveraging a platform like Sherman Bridge, which provides a free and seamless loan comparison experience, stands out as a remarkable resource, enabling investors to efficiently obtain the swift, trustworthy funding essential for acquiring their next property.” Private money is often used by investors looking for short-term loans quickly without too many hoops to jump through. At Sherman Bridge, investors can shop and move from one lender to another using just one application. If one lender isn’t the perfect fit for a loan, investors can easily pivot to another of the platform’s 15 lenders – most of which would already be familiar with the opportunity (having learned about it through the secure Lender Portal) – to keep things on track. Platform lenders offer loans with interest rates that vary from 10-12% plus and points that range from 1-3 points. “Despite market conditions, investors remain optimistic about the housing market and the investment opportunities available,” said Jason Hutton, SVP of Operations at Sherman Bridge. “Our marketplace makes the overall lending process more seamless and efficient for these investors as they continue to play a crucial role in the market. With a variety of programs and capital sources at competitive rates for short-term investor loans, Sherman Bridge is the easiest way for investors to finance and refinance their properties.” Sherman Bridge is a partner and lending marketplace for investors, and is affiliated with New Western, the largest national private source of residential investment properties. New Western’s own marketplace is used by over 150,000 independent investors, and the company continues to buy and sell a property every 13 minutes. The independent investors who rely on marketplaces like Sherman Bridge for financing, and New Western for properties, represent the largest segment of the market, representing 82% of the investment real estate market share. With Sherman Bridge, New Western investors can experience a seamless process from purchasing to financing to closing on a property. For more information on Sherman Bridge, visit us at https://shermanbridge.com/. About Sherman BridgeIn 2009 Sherman Bridge Lending began offering private money loans for flippers and landlords looking to purchase value-add single-family residential real estate. This hands-on background allowed the team to pioneer the development of a variety of loan products for real estate investors. In early 2022, the company rebranded to “Sherman Bridge” and used its experience to become a lending marketplace with proven and vetted lenders who offer competitive financing options. About New WesternNew Western is a real estate investment marketplace that makes investing more accessible for more people. Operating in most major cities, our marketplace connects more than 150,000 local investors looking to rehab houses with sellers. As the largest private source of investment properties in the nation, we buy a home every 13 minutes. New Western delivers new opportunity for all—a fresh start for sellers, exclusive inventory for investors, and in doing so, creates housing that is more affordable for buyers. New Western was honored with a Glassdoor Employees’ Choice Award in the U.S. small and medium company category, recognizing the Best Places to Work in 2023. CONTACT: Abigail Anello, aanello@5wpr.com SOURCE New Western