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Housing Market Activity Lost Steam in January as Mortgage Rates Stopped Falling and Prices Kept Rising

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Redfin reports new listings dropped for the first time since June and pending sales growth slowed; Stagnating mortgage rates and the biggest home-price jump in over a year caused the market to lose momentum New listings dropped 1.2% month over month on a seasonally adjusted basis, the first decline since June, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. They were up 2.7% from a year earlier, but that marks a deceleration from December’s 4.2% gain. Active listings (the total number of homes for sale) fell 0.3% from a month earlier on a seasonally adjusted basis—the first decline in six months—and were down 4.4% year over year. Pending home sales also lost momentum in January, rising 1.1% from a month earlier on a seasonally adjusted basis—a marked slowdown from December’s 5.1% jump. Still, pending sales were at the highest level since September 2022 and rose 8.8% from a year earlier. Stagnant mortgage rates are the main culprit that took the gas off the housing market pedal last month. They started and ended January at 6.6%—unexciting news after buyers and sellers at the end of last year watched rates drop the most since 2008. Homeowners are hesitant to sell because a majority of them still have mortgage rates below current levels, and selling often means taking on a higher rate. “A lot of my customers are paying close attention to what the Federal Reserve says. Buyers and sellers came off the sidelines in December when the Fed signaled it would lower interest rates three times in the next year, but now some are getting cold feet because the Fed indicated that rate cuts may come later than expected,” said Hal Bennett, a Redfin Premier real estate agent in Bellevue, WA. “Inflation and geopolitical conflicts are also scaring some buyers. April, at the absolutely earliest, is when I think things could take off.” Brutally cold temperatures across the country last month, along with rising housing costs, also likely contributed to the slight cooldown in market activity. Home Prices Posted the Biggest Increase in 16 Months The median U.S. home sale price climbed 5.2% year over year to $402,343 in January, the biggest jump since September 2022. Prices were little changed from a month earlier (-0.01%). Please note that home price data is not seasonally adjusted, which is why Redfin focuses on year-over-year changes for this metric. America’s enduring shortage of homes for sale is the primary driver of price growth; both new listings and active listings remained far below pre-pandemic levels in January. January 2024 Highlights: United States   January 2024 Month-Over-MonthChange Year-Over-YearChange Median sale price $402,343 0.0% 5.2% Pending sales, seasonally adjusted 430,809 1.1% 8.8% Homes sold, seasonally adjusted 392,446 -0.2% -1.0% New listings, seasonally adjusted 510,057 -1.2% 2.7% All homes for sale, seasonally adjusted (active listings) 1,554,413 -0.3% -4.4% Months of supply 3.1 0.5 -0.3 Median days on market 49 6 -3 Share of for-sale homes with a price drop 16.9% 2.9 ppts 0.2 ppts Share of homes sold above final list price 23.9% -1.7 ppts 2.7 ppts Average sale-to-final-list-price ratio 98.4% -0.2 ppts 0.5 ppts Pending sales that fell out of contract, as % of overall pending sales 14.2% -1.5 ppts 0.9 ppts Average 30-year fixed mortgage rate 6.64% -0.18 ppts 0.37 ppts Metro-Level Highlights: January 2024 To view the full report, including charts, please visit:https://www.redfin.com/news/housing-market-tracker-january-2024

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OPPORTUNITY ZONE HOUSING MARKETS STILL TRACKING ALONG WITH BROADER U.S. HOUSING MARKET

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Median Home Values Decrease During Fourth Quarter of 2023 in Just Over Half of Opportunity Zones Targeted for Economic Redevelopment Around U.S.;  Price-Decline Trends Inside Zones Again Follow Closely With National Market Patterns ATTOM, a leading curator of land, property, and real estate data, released its fourth-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 3,667 zones around the United States with sufficient data to analyze, meaning they had at least five home sales in the fourth quarter of 2023. The report found that median single-family home and condo prices dropped from the third quarter of 2023 to the fourth quarter of 2023 in 52 percent of Opportunity Zones around the country with sufficient data to analyze, declining by more than 3 percent in close to half. Those downturns, in and around low-income neighborhoods where the federal government offers tax breaks to spur economic revival, tracked closely with nationwide price trends as a decade-long boom in the U.S. housing market showed signs of slowing down. The latest trends also continued a long-term pattern of home values inside Opportunity Zones moving alongside broader nationwide gains and losses for at least the last three years. That marked an ongoing sign of economic tides rising or falling inside some of the country’s most distressed communities along with other markets around the country. Opportunity Zones even showed signs again of doing slightly better than other neighborhoods around the country during the fourth quarter of last year. For example, while prices generally decreased, a slightly larger portion of Opportunity Zones saw significant price increases in the fourth quarter compared to other locations around the U.S. “The fourth quarter of last year certainly wasn’t a great one for Opportunity Zone home values, with more losses than gains. But within the bigger picture, those areas keep riding national coattails, whether home values are going up or whether they are going down. Nothing jumped out as much worse than what happened throughout the nation,” said Rob Barber, CEO for ATTOM. “This has clearly become an extended story as the zones continue to attract home-buyer interest in a very tight housing market. More broadly, it also shows the kind of economic strength inside Opportunity Zones that the legislation is designed to use as a springboard to attract investors.” 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. Amid the economic limitations of Opportunity Zones, typical home values in most of those neighborhoods continued to fall well below those in other markets around the nation during the fourth quarter of 2023. Median fourth-quarter sales prices were less than the U.S. median sales price of $333,000 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 under $200,000 in 51 percent of the zones during the fourth quarter of 2023. Considerable price volatility also remained in place inside Opportunity Zones, with median values either dropping or increasing by at least 5 percent in almost three-quarters of those locations from the third quarter of 2023 to the fourth quarter. That again likely reflected the small number of sales in many zones. High-level findings from the report: Media Contact:Jennifer von Pohlmann949.412.3897jennifer.vonpohlmann@attomdata.com  SOURCE ATTOM

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Digital Fraud in the Real Estate Industry

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Property Shield Helps to Remove Fraudulent Account In today’s digital age, the real estate sector is not immune to the sophisticated schemes that have emerged alongside technological advancements. One notable example was the exposure of a fraudulent Instagram account named ‘1timepaymenthomes.’ This account falsely promised the ability to rent a home through a single payment, misleading individuals into believing they could bypass the conventional, legal routes to renting a home. The scam encouraged illegal squatting, highlighting the complexity and danger of digital fraud in today’s real estate market. Responding to this emerging threat, Property Shield took significant steps to address and mitigate the impact of such fraudulent activities. By leveraging a connection within Meta and through the concerted efforts of a network of over 50 Instagram accounts, the ‘1timepaymenthomes’ account was identified and reported. This collaborative effort helped lead to the account’s swift removal, occurring within 18 hours of the publication of Channel 2’s investigative article highlighting the scam. This instance serves as a critical reminder of the importance of vigilance and the potential for technology and collaboration to counteract digital fraud effectively. The incident involving ‘1timepaymenthomes’ underscores the ongoing challenges and risks posed by digital fraud in the real estate industry. It emphasizes the need for constant vigilance and the importance of deploying advanced technological solutions to identify and combat fraudulent activities online. As the real estate market continues to navigate the complexities of the digital landscape, the role of technology and collaborative efforts in ensuring the security and integrity of online transactions becomes increasingly paramount.

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U.S. FORECLOSURE ACTIVITY SEES NOTABLE INCREASE IN JANUARY 2024

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Completed Foreclosures (REOs) Increase Monthly in 19 States;  Foreclosure Starts Up Monthly and Annually Nationwide ATTOM, a leading curator of land, property, and real estate data, released its January 2024 U.S. Foreclosure Market Report, which shows there were a total of 33,270 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions – up 5 percent from a year ago, and up 10 percent from the prior month. “We observed a slight uptick in foreclosure filings, which may be partially attributed to the typical post-holiday progression of filings through the legal system,” said Rob Barber, CEO at ATTOM. “However, other external factors may be at play such as escalating interest rates, inflation, employment shifts and other market dynamics. We remain vigilant in monitoring these trends to understand their full impact on foreclosure activity.” Foreclosure completion numbers increase monthly in 19 statesLenders repossessed 3,954 U.S. properties through completed foreclosures (REOs) in January 2024, up 1 percent from a year ago and up 13 percent from last month – the first month over month increase in completed foreclosures since July 2023. States that had at least 50 or more REOs and that saw the greatest monthly increase in January 2024 included: Michigan (up 200 percent); Minnesota (up 47 percent); California (up 43 percent); Pennsylvania (up 36 percent); and Missouri (up 34 percent). Among the 224 metropolitan statistical areas with a population of at least 200,000, that saw the greatest number of REOs included: Detroit, MI (609 REOs); Chicago, IL (194 REOs); New York, NY (163 REOs); Philadelphia, PA (107 REOs); and San Francisco, CA (107 REOs). Highest foreclosure rates in Delaware, Nevada, and IndianaNationwide one in every 4,236 housing units had a foreclosure filing in January 2024. States with the highest foreclosure rates were Delaware (one in every 2,269 housing units with a foreclosure filing); Nevada (one in every 2,272 housing units); Indiana (one in every 2,499 housing units); Maryland (one in every 2,588 housing units); and New Jersey (one in every 2,647 housing units). Those major metropolitan statistical areas (MSAs) with a population greater than 200,000, with the highest foreclosure rates in January 2024 were Spartanburg, SC (one in every 1,579 housing units with a foreclosure filing); Columbia, SC (one in every 1,651 housing units); Cleveland, OH (one in every 1,742 housing units); Detroit, MI (one in every 1,799 housing units); and Las Vegas, NV (one in every 1,923 housing units). Other than Cleveland, Detroit and Las Vegas, among the metropolitan areas with a population greater than 1 million, those with the worst foreclosure rates in January 2024 included: Riverside, CA (one in every 1,944 housing units); and Indianapolis, IN (one in every 2,235 housing units). Foreclosure starts increase monthly and annuallyLenders started the foreclosure process on 21,770 U.S. properties in January 2024, up 6 percent from last month and up 5 percent from a year ago. Those states that saw the greatest number of foreclosures starts in January 2024 included: California (2,719 foreclosure starts); Texas (2,613 foreclosure starts); Florida (2,330 foreclosure starts); New York (1,341 foreclosure starts); and Illinois (913 foreclosure starts). Among those major metropolitan statistical areas with a population of at least 200,000, those with the greatest number of foreclosure starts in January 2024, included: New York, NY (1,470 foreclosure starts); Houston, TX (1,015 foreclosure starts); Los Angeles, CA (817 foreclosure starts); Miami, FL (804 foreclosure starts); and Chicago, IL (763 foreclosure starts). Media Contact:Jennifer von Pohlmann949-412-3897Jennifer.vonpohlmann@attomdata.com SOURCE ATTOM

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COST OF HOME REPAIRS INCREASES BY 5.5% FROM Q4 2022

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Price increases slowing nationally after surging due to supply chain disruption and increased demand during COVID-19 pandemic The cost of home repairs and remodeling in the fourth quarter of 2023 continued to increase, rising by 0.54% from the prior quarter and just over 5.5% from the fourth quarter of 2022 according to the Q4 2023 Verisk Remodel Index. Costs set new highs for the past decade, rising over 65% from the first quarter of 2013. The Verisk Remodel Index tracks costs on 31 different categories of home repair, comprising over 10,000 line items ranging from appliances to windows. Data are compiled monthly in over 430 local market areas across the country. “Repair costs continue to rise, but the rate of increase appears to be slowing down,” said Greg Pyne, VP, Pricing for Verisk Property Estimating Solutions. “At an annual increase of 5.5%, this is the slowest pace of cost increases since the second quarter of 2020, when prices rose by 4.8% from the prior year. Since then, due to the impact the COVID-19 pandemic had on supply chains, product demand, and labor shortages, annual cost increases haven’t been lower than 6.1%. But since peaking at 12.3% in the fourth quarter of 2021, the rate of price increases has gradually been slowing down, and will probably continue to do so for the foreseeable future.” Costs rose in all but one of the 31 categories included in the report, both quarterly and annually. The exception was the cost of framing and rough carpentry, one of the biggest costs for builders and remodelers, which was down by about 0.75% from the previous quarter, but still up by 1.5% from a year earlier. Pyne noted that while all other categories showed rising prices, many of the increases were minimal, often less than 1%. “It may be worth noting that remodeling cost increases appear to be largely in synch with rising home prices,” added Pyne. “The most recent Case-Shiller Index said that home prices rose by about 5.1% compared to the prior year, and the Freddie Mac Home Price Index reported a 6.6% increase during the same time period.” New England Region Shows Highest Quarterly Increase; East North Central and Mountain States Have Highest Annual Gains All regions again experienced cost increases both quarterly and annually, but unlike the numbers cited in the Q3 2023 Verisk Remodel Index, all of the regions reported quarterly increases of less than 1%. The New England Region saw costs rise by 0.74% compared to the second quarter. The East North Central Region (6.57%) and Mountain Region (6.3%) had the highest rate of annual cost increases. The Mountain Region continued to have the highest overall cost increases over the ten-year span covered by the index, rising 70 points since the beginning of 2013. The South Atlantic Region had the lowest quarterly (0.41%) and annual (5.1%) cost increases. The West South Central Region also had a 5.1% annual increase, and has risen the least (59.47 points) since the beginning of the tracking period.   Q2-Q3 2023 Q3-Q4 2023 Q4 2022-2023 East North Central 1.5% 0.51% 6.57% East South Central 1.6% 0.49% 5.2% Mid-Atlantic 1.9% 0.61% 5.7% Mountain 1.8% 0.59% 6.3% New England 1.5% 0.74% 6.1% Pacific 1.9% 0.53% 5.5% South Atlantic 1.5% 0.41% 5.1% West North Central 1.7% 0.48% 5.3% West South Central 1.4% 0.61% 5.1% Northeastern States Have Both the Highest and Lowest Rates of Increase New Hampshire had the highest quarterly rate of increase in the country at 1.58%, the only state to surpass a one percent increase for the reporting period. Arkansas (0.99%), Colorado (0.96%) and Connecticut (0.94%) barely missed that threshold. Other states with relatively high rates of quarterly increases included Wyoming (0.84%), New York (0.85%), Arizona (0.72%), Hawaii (0.69%), Indiana (0.63%), and Maine (0.61%). Rhode Island had the lowest rate of cost increases at 0.22%, followed by West Virginia (0.27%), Washington DC (0.33%), New Mexico (0.33%), Florida (0.35%), Wisconsin (0.37%), Utah (0.39%), South Carolina (0.39%), Maryland (0.41%) and North Dakota (0.42%). Contact:       Rick Sharga                         CJ Patrick Company                         (949) 322-4583                         rick.sharga@cjpatrick.com

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U.S. Asking Rents Flatten After Pandemic Rollercoaster Ride

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Rents haven’t fluctuated much over the past year, rising 1% in January–a far cry from double-digit growth during the pandemic. The median U.S. asking rent rose 1.1% year over year to $1,964 in January, the largest annual increase since March 2023, and was unchanged from a month earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. While rents ticked up from a year earlier, the bigger picture is that rent growth is leveling off after surging during the pandemic and then rapidly slowing from mid-2022 to mid-2023. Year-over-year rent growth has hovered between -2.1% and +2.4% for the past year, a much narrower range than the prior year, when rent growth was as low as 4.8% and as high as 17.7%. Asking rents have flattened because the pandemic moving frenzy is over and landlords are grappling with vacancies due to a jump in apartment supply. The rental vacancy rate was 6.6% in the fourth quarter, tied with the prior quarter for the highest level since early 2021. Vacancies have climbed due to a building boom in recent years. The number of recently completed apartments is near its highest level in more than 30 years, and the number under construction is just shy of its record high. Redfin Chief Economist Daryl Fairweather expects apartment completions to peak in 2024. While rents have cooled, they haven’t yet posted significant declines. That’s likely because high mortgage rates continue to fuel rental demand, and because some landlords are offering one-time concessions like a free month’s rent or reduced parking costs to attract renters without having to lower asking rents on paper. Home prices are rising much faster than rents, which is also fueling rental demand and motivating renters to stay put instead of entering the housing market. “There’s not a huge incentive for renters to buy right now. Asking rents are stable, and while mortgage rates have dipped in recent months, they haven’t fallen enough to make the financial equation of homebuying feasible for many people,” Fairweather said. “If you’re a renter who’s interested in buying but isn’t in a rush, there’s not much downside to waiting for mortgage rates to fall and your savings to grow.” Buying may make sense for people who can afford a large down payment and plan to stay put for at least five years, Fairweather said. Putting 20% down helps offset the cost of elevated mortgage rates and removes the cost of private mortgage insurance, and some may prefer to buy now before competition inevitably heats up when mortgage rates fall further. Of course, many Americans can’t afford a 20% down payment, though some do qualify for down payment assistance. Rents Climb Fastest in the Midwest and Northeast The median asking rent in the Midwest increased 4.6% year over year to a record $1,437 in January. Rents also rose in the Northeast (2.3% to $2,427) and the West (0.6% to $2,358). In the South, rents were unchanged at $1,637. The Midwest was the only region where rents hit a record high. “Rent prices in Chicago are still out of control,” said local Redfin Premier real estate agent Dan Close. “A lot of the buyers I’m working with are people who have been pressured out of renting–if you’re paying an arm and a leg for rent, why not try to buy and build some equity? We’ll likely see this trend intensify in the spring and summer, when the vast majority of leases end.” Rents are likely holding up best in the Midwest and Northeast because those regions haven’t been building as much as the South and West, meaning landlords aren’t under as much pressure to fill openings. To view the full report, including charts and methodology, please visit:https://www.redfin.com/news/redfin-rental-report-january-2024

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