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Mortgage Rates Surge Past 7.1% For First Time Since November; Some Buyers Back Off While Others Lower Budget

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Monthly housing payments hit a new record high this week as mortgage rates jumped, pricing out many homebuyers, especially those with limited budgets Housing payments hit a new high this week as mortgage rates jumped due to progress on a possible debt-ceiling deal. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Daily average rates hit 7.12% on May 25, reaching their highest level since November. The typical U.S. homebuyer’s monthly mortgage payment hit a record-high $2,614 at a 6.57% mortgage rate, the current weekly average. The rate increase dampened homebuying demand. Pending home sales dropped 17.4% nationwide from a year earlier during the four weeks ending May 21, the second-biggest dip since January (the biggest was a 17.5% decline in early April). Mortgage-purchase applications declined too, dropping 4% from the week before. Potential sellers continued backing off, with new listings of homes for sale dropping 24%, one of the biggest declines since May 2020. That’s because homeowners continue to hang onto their homes, locked in by comparatively low rates. Even though demand is down, it’s still outpacing supply as the new-listing drought has caused the total number of homes for sale to post an annual decline (-0.9% YoY) for the first time in nearly a year. Despite rates jumping past 7% and a lack of new listings, many early-stage homebuyers remain committed. Redfin’s Homebuyer Demand Index, which measures requests for tours and other services from Redfin agents, increased from a week earlier and is essentially flat (-1%) from a year earlier. Some of these house hunters are likely to continue moving forward, while others may wait for rates to decline before securing loans. We may see a burst of pent-up demand when and if rates dip again. “People may be wondering why rates are surging as we come up against a potential debt crisis. Right now, the way investors are reacting is the driving force. Mortgage rates have increased over the past two weeks because it looks more likely that the U.S. government will avoid hitting the debt ceiling,” said Redfin Economics Research Lead Chen Zhao. “That may seem counterintuitive, but optimism is driving rates up because an economic crisis would lead to the Fed lowering rates as they try to prevent a recession. Financial markets felt the risk of default was unusually high for the last month or so, which caused rates to stay lower than they otherwise would have been. Now that Democrats and Republicans have come to the negotiating table and are making some progress toward a deal, rates are going up.” Mortgage rates passing 7% have varying impacts on homebuyers: Some are priced out, others are unfazed In the Seattle area, different buyers are reacting differently to mortgage rates surpassing 7%. Redfin Premier agent Hal Bennett, who works with buyers and sellers in pricey eastside suburbs like Bellevue and Sammamish, said buyers are shying away this week as rates tick past the 7% mark. But Bliss Ong, a Redfin Premier agent who works mainly in the city of Seattle, says the 7% number doesn’t present the same psychological barrier for her buyers that it did back in fall 2022. “Rates hitting 7% is pushing some homebuyers entirely out of the market, especially those with lower budgets. But a lot of them are just pushing their price range down,” Ong said. “The 7% number isn’t scaring away buyers as much as it did back in the fall. The housing market is different now because buyers are used to rates in the 6% range, and some of them are even motivated to secure a loan now in case rates rise further.” Jacksonville, FL Redfin Premier agent Heather Kruayai reports that in her area, it’s the most expensive homes that are most popular in today’s market. “Affordable listings are getting stale, but expensive ones are selling quickly. That’s usually because those buyers can lessen the impact of high rates by making huge down payments or paying in all cash,” Kruayai said. “Other than cash buyers moving in from out of town, the only people buying and selling are the people who need to because they’re retiring or going through another major life change.” Leading indicators of homebuying activity: Key housing market takeaways for 400+ U.S. metro areas: Unless otherwise noted, this data covers the four-week period ending May 21. Redfin’s weekly housing market data goes back through 2015. For bullets that include metro-level breakdowns, Redfin analyzed the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy. To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-pending-sales-drop-mortgage-rates-pass-7

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ZOMBIE FORECLOSURES KEEP INCREASING BUT REMAIN A TINY PRESENCE AROUND MOST OF U.S.

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Count of Vacant Homes in Foreclosure Increases for Fifth Straight Quarter;Zombie Properties Comprise Largest Portion of All Homes Since Before COVID Pandemic;But Just One of Every 11,600 Residential Properties Nationwide Sits Empty in Foreclosure ATTOM, a leading curator of land, property, and real estate data, released its second-quarter 2023 Vacant Property and Zombie Foreclosure Report showing that 1.3 million (1,285,633) residential properties in the United States are vacant. That figure represents 1.3 percent, or one in 79 homes, across the nation. The report analyzes publicly recorded real estate data collected by ATTOM — including foreclosure, equity, and owner-occupancy status — matched against monthly updated vacancy data. Vacancy data is available for U.S. residential properties at Marketing Lists – Property & Homeowners Lists | ATTOM (attomdata.com). The report also reveals that 311,508 residential properties in the U.S. are in the process of foreclosure in the second quarter of this year, up 4.3 percent from the first quarter of 2023 and up 20.2 percent from the second quarter of 2022. A growing number of homeowners have faced possible foreclosure since a nationwide moratorium on lenders pursuing delinquent homeowners, imposed after the Coronavirus pandemic hit in early 2020, was lifted in the middle of 2021. Among those pre-foreclosure properties, 8,752 sit vacant as zombie foreclosures (pre-foreclosure properties abandoned by owners) in the second quarter of 2023. That figure is up 7.5 percent from the prior quarter and up 15.6 percent from a year ago. The count of zombie properties has grown in each of the last five quarters, dating back to early in 2022. Still, the number of zombie foreclosures remains historically low, with little impact on the nation’s total stock of 101.3 million residential properties. “Zombie foreclosures keep inching up as lenders pursue more delinquent homeowners in courts around the country. All indications are that the number of zombie properties will keep going up slowly, given that foreclosures are up,” said Rob Barber, chief executive officer for ATTOM. “But abandoned properties are still nothing more than a dot on the radar screen among the majority of neighborhoods. We are still a long way from the fallout after the Great Recession of the late 2000s, when this was a very real issue in many areas around the U.S.” The lack of zombie foreclosures throughout most of the country continues to stand out as one of the most significant effects of the U.S. housing market boom that more than doubled the national median home value from 2012 to 2022. Zombie foreclosures rise again but still pose no issues in most neighborhoods A total of 8,752 residential properties facing possible foreclosure have been vacated by their owners nationwide in the second quarter of 2023, up from 8,141 in the first quarter of 2023 and from 7,569 in the second quarter of 2022. The number of zombie properties has grown quarterly in 29 states and annually in 36. While most neighborhoods around the U.S. have little or no zombie foreclosures, the biggest increases from the first quarter of 2023 to the second quarter of 2023 in states with at least 50 zombie properties are in Texas (zombie properties up 47 percent, from 114 to 168), Ohio (up 26 percent, from 846 to 1,070), Oklahoma (up 22 percent, from 142 to 173), Georgia (up 22 percent, from 78 to 95) and Iowa (up 21 percent, from 227 to 274). The only quarterly decreases among states with at least 50 zombie foreclosures are in Michigan (zombie properties down 20 percent, from 74 to 59), South Carolina (down 2 percent, from 154 to 151), Pennsylvania (down 1 percent, from 404 to 401) and New York (down less than 1 percent, from 2,006 to 2,000). New York continues to have the highest ratio of zombie homes to all residential properties (one of every 2,140 homes), followed by Ohio (one in 3,615), Iowa (one in 4,480), Illinois (one in 4,687) and Florida (one in 5,926). Overall vacancy rates unchanged The vacancy rate for residential properties in the U.S. has remained the same in the second quarter of 2023 after dropping in the prior three quarters. It now stands at 1.27 percent (one in 79 properties), the same as in the first quarter of 2023, but still down from 1.31 percent in the second quarter of last year (one in 76). States with the biggest annual drops in the overall vacancy rate are Tennessee (down from 1.55 percent of all homes in the second quarter of 2022 to 1.02 percent in the second quarter of this year), Michigan (down from 2.14 percent to 1.88 percent), Georgia (down from 1.61 percent to 1.39 percent), Minnesota (down from 0.95 percent to 0.73 percent) and New Jersey (down from 0.53 percent to 0.36 percent). Other high-level findings from the second quarter of 2023: Media Contact:Christine Stricker949.748.8428christine.stricker@attomdata.com 

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Rent. Introduces Aerial View for RentMarketplace. Listings

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With the introduction of Google Maps Platform’s Aerial View, renters can now experience a captivating 3D cinematic perspective, offering a bird’s-eye view of a community Rent., a leading provider of integrated marketing solutions to the multi- and single-family rentals industry, announced a landmark enhancement to listings on its RentMarketplace. network of sites. Rent. has entered into an agreement with Google Maps Platform to be the first in the multifamily industry to provide renters with a cinematic bird’s-eye view of communities and their surrounding areas nationwide, utilizing Google’s innovative Aerial View product. At the center of the Rent. platform lies its RentMarketplace. solution, a network of sites with visits from over 50 million homeseekers every month. Understanding that these visitors are hungry for immersive experiences that vividly convey the experience of living in a rental community, Rent. is continuously seeking ways to evolve and enhance. Aerial View from Google Maps Platform provides cinematic views from above of landmarks, monuments and other points of interest, including apartment community buildings. Visitors to the Rent. network of sites can now launch the aerial view directly from the gallery on a property’s listing. “Working with Google Maps Platform on this integration fits perfectly with our ongoing mission to provide renters with the information and properties they need, as well as empowering owners and operators to showcase their portfolios in the most engaging way possible,” shared Nishant Phadnis, Chief Product Officer at Rent. “Over the last twelve months, we have been building a powerful platform designed around the evolving needs and behaviors of today’s renters, and we are excited to share this next innovation.” Rent. is a comprehensive technology platform focused on addressing the needs of modern multifamily marketers while connecting the right renter with the right property at the right time. This is just the latest in a series of enhancements to the RentMarketplace. listing experience, including features such as Places Nearby, Walk Score® and Transit Score®, and Profile Sync with Google Business Profile, providing increasingly rich insights into life at listed properties. Aerial View will also be coming soon to Apartment Guide listings and our mobile app experience. About Rent. Rent. is a two-sided marketing platform that simplifies the entire renter experience by matching the right property with the right renter, at the right time. Through the Rent. network of websites, and mobile apps, and partnerships, and now Realtor.com, Rent. clients can reach over 350 million site visits per month. In addition, Rent. services the property side of the market with scaled marketing solutions such as search engine marketing, lead nurturing through chatbots and client automation tools, and reputation management through ratings and reviews as well as social media monitoring and marketing. This, paired with advanced search filtering and an optimized consumer app and site experience, enables Rent. to offer renters an ideal home-finding experience. Rent. exists to help people find the perfect place. Rent. is operated by Rent Group Inc., a subsidiary of Redfin Corporation.

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Redfin Reports There Are Only Four Major U.S. Metro Areas Where It’s Cheaper to Buy a Home Than Rent

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Nationwide, the typical home costs an estimated 25% more per month to own than rent; However, buying is more affordable than renting in Detroit, Philadelphia, Cleveland and Houston. There are just four major U.S. metropolitan areas where it would be cheaper to buy than rent the typical home—that is, the typical home has an estimated monthly mortgage cost lower than its estimated monthly rental cost. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. In Detroit, the typical home is 24% less expensive to buy than rent—the largest discount in percentage terms among the 50 most populous metros. The median estimated monthly mortgage payment for Detroit homebuyers is $1,296, compared with an estimated monthly rent of $1,697. Next comes Philadelphia (7% ownership discount), followed by Cleveland (4% discount) and Houston (1% discount). On average, in the 50 most populous U.S. metros, the typical home costs 25% more to buy than rent, with an estimated monthly mortgage payment of $3,385 and an estimated rent of $2,715. Redfin estimated monthly housing payments using the Redfin Estimate of the homes’ value in March and a 6.5% mortgage interest rate—the average rate in March. We estimated monthly rents on those same homes using the Redfin Rental Estimate. “Buying a home often makes more financial sense than renting if you can afford a down payment and monthly mortgage because you’re building equity. When you own your home, your home pays you; when you rent, you and your home pay your landlord,” said Redfin Deputy Chief Economist Taylor Marr. “But buying isn’t a feasible option for everyone. Some people move around a lot, so renting might make more sense because they won’t be in their home long enough to build equity. Many others simply don’t have the money for a down payment—a situation that has become increasingly common due to rising mortgage rates and elevated home prices.” In Detroit, 80% of properties are cheaper to buy than rent—the highest share in the U.S. Next comes Philadelphia (59%), followed by Cleveland (57%) and Houston (52%). That compares with a nationwide share of 19%. Mortgage Rates Would Have to Fall Significantly for Owning to Become Cheaper Than Renting Across the U.S. Detroit, Philadelphia, Cleveland and Houston are outliers. For homebuying to become cheaper than renting in other parts of the country, mortgage rates would need to fall substantially. If the 30-year-fixed mortgage rate dropped to 5%, the median estimated monthly mortgage payment for homebuyers would be $2,993, or 10% higher than the $2,716 estimated monthly rent. That’s significantly lower than today’s 25% homeownership premium. If rates dipped to 4%, the estimated premium would shrink to 1%. And if they fell back down to 3%, it would actually be 7% cheaper to rent. Please note that these calculations use estimated home values from March and prices and rents could change significantly if mortgage rates fall. Mortgage rates will likely fall below 6% by the end of the year as the Federal Reserve makes progress in its fight against inflation, but they’re unlikely to return to 3% levels anytime soon, Marr said. A national survey by Fannie Mae found that 22% of consumers surveyed in April think mortgage rates will fall, up from 12% the prior month. “I wouldn’t encourage people to squeeze their budgets in order to buy a home when prices are falling and we’re teetering on a recession,” Marr said. “In the years leading up to the pandemic, it made sense for some homebuyers to break the rule that says not to spend more than 30% of your income on monthly housing costs, but these times are more risky, so it makes sense to be a little more conservative.” In the Bay Area, Buying a Home Is More Than Twice as Costly as Renting In San Jose, CA the typical home is 165% more expensive to buy than rent—the largest premium in percentage terms among the 50 most populous metros. The median estimated monthly mortgage payment for homebuyers is $11,049, compared with an estimated monthly rent of $4,176. Next comes San Francisco (139% ownership premium), Oakland, CA (99% premium), Anaheim, CA (91% premium) and Seattle (88% premium). In the aforementioned metros, 0% of homes are cheaper to buy than rent. In Pandemic Boomtowns, Virtually No Homes Are Cheaper to Buy Than Rent In Sacramento, CA, Las Vegas, Phoenix and Austin, TX—metros that not long ago were fairly affordable but exploded in popularity and price during the pandemic—there are also virtually no homes that are cheaper to buy than rent. In Sacramento and Las Vegas, less than 1% of homes are cheaper to buy than rent. In Phoenix, the share is 1%, and in Austin, it’s 5%. All four metropolitan areas ranked on Redfin’s list of most popular migration destinations during the pandemic. “Housing affordability is an issue in Las Vegas. During the pandemic homebuying boom, we had a lot of people moving in from high-priced coastal areas. That caused home prices to soar faster than wages, creating a disadvantage for locals looking to buy,” said local Redfin Premier real estate agent Shay Stein. “The good news is that because the market has slowed, sellers are willing to accept offers from buyers who use FHA loans and down-payment assistance programs, and some are even throwing in money to help with mortgage-rate buydowns. All of that was unheard of during the 2021 homebuying frenzy.” To view the full report, including charts, additional metro-level data, and methodology, please visit: https://www.redfin.com/news/rent-vs-own-2023

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OPPORTUNITY ZONE HOME PRICE TRENDS MIXED IN FIRST QUARTER 2023, MATCHING PATTERNS NATIONWIDE

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Median Home Values Decline in About Half of Zones Targeted for Economic Redevelopment;  Trends Mostly Match Broader Nationwide Market Slowdown;  But One Measure Shows Opportunity Zones Holding Up Slightly Better Than Other Local Markets ATTOM, a leading curator of land, property, and real estate data, released its first-quarter 2023 report analyzing qualified low-income Opportunity Zones targeted by Congress for economic redevelopment, in the Tax Cuts and Jobs Act of 2017. In this report, ATTOM looked at 3,587 zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the first quarter of 2023. The report found that median single-family home and condo prices stayed the same or decreased from the fourth quarter of 2022 to the first quarter of 2023 in 52 percent of Opportunity Zones around the country, where there was sufficient data and fell at least 3 percent in almost half. At the same time, though, they increased by at least that much in about 40 percent of those markets. Those mixed patterns largely matched trends in neighborhoods outside the zones, as a slowdown in the national housing market, which began during the second half of 2022, continued into 2023 after a decade of almost unceasing growth. By one key measure, Opportunity Zone markets even showed signs of holding up slightly better than other neighborhoods around the country during the first quarter of this year. Median prices in those areas were more often still higher compared to the point when the U.S. market began to flatten out last year. “Home-price trends inside Opportunity Zones keep following along with the broader national picture, as they have for the past couple of years,” said Rob Barber, chief executive officer for ATTOM. “Through boom times and weaker times, values inside the zones have gone up or down at about the same pace as the national market. They’re even doing a little better these days, depending on how you look at. The latest numbers provide a sign that areas targeted for the program’s tax breaks are resilient during a time when the broader market is no longer heading ever higher.” Opportunity Zones are defined in the Tax Act legislation as census tracts in or alongside low-income neighborhoods that meet various criteria for redevelopment in all 50 states, the District of Columbia and U.S. territories. Census tracts, as defined by the U.S. Census Bureau, cover areas that have 1,200 to 8,000 residents, with an average of about 4,000 people. As in the past, typical home values in Opportunity Zones continued to fall well below those in most other neighborhoods around the nation in the first quarter of 2023. Median first-quarter prices were less the U.S. median of $321,135 in 79 percent of Opportunity Zones. That was about the same portion as in earlier periods over the past year. In addition, median prices remained less than $200,000 in 55 percent of the zones analyzed during the first quarter of 2023. High-level findings from the report: Media Contact:Christine Stricker949.748.8428christine.stricker@attomdata.com 

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Redfin Reports Fewer Metros Are Seeing Home-Price Declines As Lack of Inventory Keeps Prices Afloat

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U.S. home prices are down 2.7%, the smallest decline in over a month, and prices are dropping in fewer metros The median U.S. home-sale price fell 2.7% during the four weeks ending May 14, the smallest decline in over a month. That’s according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Monthly mortgage payments hit a record high due to still-high prices and elevated mortgage rates. On a local level, home prices are declining in 28 of the 50 most populous U.S. metros, down from a high of 32 metros at the end of April. That’s a reflection of a mismatch between demand and supply propping up prices. Pending home sales are down 15% from a year earlier, but that’s much smaller than the 24% decline in new listings. Today’s elevated mortgage rates continue to discourage homeowners from selling; nearly all of them have a mortgage rate below 6%, while this week’s average 30-year rate was 6.39%. The dearth of new listings has drained inventory, with the total number of homes for sale dropping over the past two months, going against typical seasonal trends. The share of homes selling that are doing so within two weeks (48%) is also bucking seasonal trends, illustrating urgency from buyers who don’t have much to choose from. That share has steadily increased over the last two months, while it typically falls this time of year. “High mortgage rates continue to dictate the housing market. Although a lot of homebuyers have acclimated to rates in the 6% range and many are finding ways to lower their monthly payments, like using a 2-1 buydown, high rates are handcuffing potential sellers,” said Redfin Deputy Chief Economist Taylor Marr. “It’s hard to imagine a flood of new listings until rates come down at least into the 5s. For those who are selling now, the silver lining of giving up a low rate is that hardly anyone else is doing the same thing. That means buyers, who are hungry for new listings, will bite—and they don’t have much power to negotiate the price down.” Newly built homes could help alleviate the inventory shortage even if rates remain elevated, and there are signs more may be coming. U.S. homebuilder confidence rose for the fifth straight month in May, hitting its highest level in nearly a year, and permits for single-family homes rose to a seven-month high in April. Housing-market trends are playing out differently in different parts of the country, but agents in most metros are reporting that demand is outpacing supply. In Boise, ID, which had one of the hottest markets in the country during the pandemic, Redfin Premier agent Shauna Pendleton says today’s buyers are having a hard time finding homes because homeowners are sitting on 3% mortgage rates and aren’t moving unless they’re leaving the state. “I’m practically begging potential sellers to list, especially those in the more affordable price point because those are the homes buyers are hungry for,” Pendleton said. “Every listing I’ve had since January priced at under $400,000 has had multiple offers within a few days on the market. I listed a home at the end of April at $399,900 and we ended up with four offers by the fourth day; it ended up going for $10,000 over list price. I even listed one at $650,000 that got multiple offers and went pending in under 48 hours.” In Fort Lauderdale, FL, home prices are up 9% year over year, more than anywhere else in the U.S. except Milwaukee. Redfin team manager Andrea Duke said Fort Lauderdale prices are holding up well because South Florida is a popular destination. “There’s almost always demand for this area because people move here for the weather, and a lot of them pay in cash,” Duke said. “If a home is priced well and it’s in great shape, the seller will get multiple offers. But the market isn’t quite as hot as it was last year; most buyers are still including contingencies in their offers.” Leading indicators of homebuying activity: Key housing market takeaways for 400+ U.S. metro areas: Unless otherwise noted, this data covers the four-week period ending May 14. Redfin’s weekly housing market data goes back through 2015. For bullets that include metro-level breakdowns, Redfin analyzed the 50 most populous U.S. metros. Select metros may be excluded from time to time to ensure data accuracy. To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-fewer-metros-home-price-declines-low-inventory

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