April 2024 – Page 2

PROFITS FOR U.S. HOME SELLERS DECLINE AGAIN IN FIRST QUARTER OF 2024 AS PRICES FALL

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Profit Margins on Typical Home Sales Nationwide Decrease to 55 Percent; Returns Slip Downward as Median U.S. Home Price Slumps 4 percent ATTOM, a leading curator of land, property, and real estate data, released its first-quarter 2024 U.S. Home Sales Report, which shows that profit margins on median-priced single-family home and condo sales in the United States decreased to 55.3 percent in the first quarter – the smallest level in more than two years. The decline in typical profit margins, from 57.1 percent in the fourth quarter of 2023 and from 56.5 percent a year ago, came as the median nationwide home price went down quarterly by 4.3 percent, to $330,000. While prices often fall back during the slower Winter home-selling season each year, the latest decrease marked one of the largest quarterly declines over the past 10 years. At the same time, investment returns for sellers decreased for the second straight quarter after several increases last year, hitting the low point since mid-2021. Still, even as seller returns slipped, they remained higher than during most of the housing market boom that has continued throughout the nation over the past decade. The same was true in the early months of 2024 for the typical $120,500 gross profit on typical home sales across the country. “The latest price and profit numbers show notably downward trends, which raises new questions about whether the housing-market boom is indeed ebbing, or even ending, after so many years of improvement,” said Rob Barber, CEO for ATTOM. “But due caution is needed in looking at the first-quarter data and what the patterns mean. We saw a similar downward pattern from late 2022 into early 2023, and then the market surged. Plus, profits and profit margins still are very high by historical measures. Amid all that, the Spring buying season will be a huge barometer for whether the market still has steam in its engine.” The drop-off in prices and profits comes as a mix of powerful forces is putting both upward and downward pressure on the U.S. housing market. On the upside, historically low supplies of homes could push prices higher this Spring as buyers compete for a relatively small stock of properties for sale. The recent surge in the stock market also helps by providing more resources for down payments. At the same time, though, mortgage rates have crept back above 7 percent for a 30-year fixed loan and inflation remains near 4 percent. Those factors are pushing up ownership costs during a time when home affordability already is a stretch for average workers across the country, according to a separate ATTOM analysis. Profit margins decline quarterly and annually in more than half the countryTypical profit margins – the percent difference between median purchase and resale prices – decreased from the fourth quarter of 2023 to the first quarter of 2024 in 89 (66 percent) of the 134 metropolitan statistical areas around the U.S. with sufficient data to analyze. They also were down annually in 71, or 53 percent, of those metros. That happened as median first-quarter home prices declined more, or went up less, compared to changes that recent sellers were seeing when they originally bought their homes. Those trends, from the point of purchase to the point of resale, translated into lower profit margins in a majority of the country. Metro areas were included if they had sufficient data and at least 1,000 single-family home and condo sales in the first quarter of 2024. The biggest year-over-year decreases in typical profit margins came in the metro areas of Lake Havasu City, AZ (margin down from 102.4 percent in the first quarter of 2023 to 76.3 percent in the first quarter of 2024); Naples, FL (down from 88.4 percent to 62.9 percent); Hilo, HI (down from 82.3 percent to 57.8 percent); Crestview-Fort Walton Beach, FL (down from 68 percent to 47.3 percent) and Port St. Luce, FL (down from 92.8 percent to 72.3 percent). The biggest annual profit-margin decreases in metro areas with a population of at least 1 million in the first quarter of 2024 were in Honolulu, HI (return down from 57.2 percent to 41.3 percent); Birmingham, AL (down from 36.5 percent to 21.7 percent); Austin, TX (down from 49.3 percent to 37.5 percent); San Antonio, TX (down from 35 percent to 25.7 percent) and Salt Lake City, UT (down from 50.7 percent to 42.2 percent). Typical profit margins increased annually in 63 of the 134 metro areas analyzed (47 percent). The biggest annual improvements were in Peoria, IL (margin up from 32.6 percent in the first quarter of 2023 to 52.8 percent in the first quarter of 2024); Scranton, PA (up from 88.1 percent to 106.5 percent); Oxnard, CA (up from 55.1 percent to 71.2 percent); Rochester, NY (up from 50.4 percent to 65.2 percent) and San Jose, CA (up from 85.8 percent to 100 percent). Aside from Rochester and San Jose, the largest annual increases in profit margins among metro areas with a population of at least 1 million came in San Diego, CA (up from 65.3 percent to 73.8 percent); Tucson, AZ (up from 49.8 percent to 57.4 percent) and New York, NY (up from 55.7 percent to 62.7 percent). Prices down quarterly in most of nation although still up annuallyNationwide, the median price of single-family homes and condos declined quarterly to $330,000, down from $345,000 in the fourth quarter of 2023 (a record hit several times over the past two years). The typical home sale decreased quarterly in 112 (84 percent) of the 134 metro areas around the country with enough data to analyze, However, latest median prices remained 3.1 percent higher than the $320,000 level in the first quarter of 2023, rising annually in 103 of the metros reviewed (77 percent). Metro areas with the biggest decreases in median home prices from the fourth quarter of 2023 to the first quarter of 2024 were Pittsburgh, PA (down 11.5 percent); Flint, MI (down 10.7 percent); Memphis, TN (down 10.7 percent); Birmingham, AL (down 10.2 percent) and Montgomery, AL (down 9.7 percent). Aside from Pittsburgh, Memphis and Birmingham, the largest quarterly median-price decreases in metro areas with a population of at least 1 million were in St. Louis, MO (down 8.1 percent) and Indianapolis, IN (down 7.4 percent). Metro areas with a population of at least 1 million where the median home price remained up most from the first

Unlocking Financial Freedom through the Global Financial Training Program

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Erica Sarway is the Vice President of Marketing and Sales at Global Financial Training Program, a company dedicated to helping real estate investors achieve financial freedom through different programs and services. She is one of the most recognized women leaders in real estate and she is on the show with us today to help us better understand what it takes to achieve longevity in business and how you can achieve financial freedom the right way. Listen now to learn more about Global Financial Training Program, the services they offer, and how they’re helping real estate investors build better financial futures! Quotables “I think the most important thing for staying in business in that capacity is always staying fresh and seeing what’s around you. You can’t just sit back on your morals and say ‘hey, this is the way I’m doing it and it’s going to stay that way’.” “You need to stay current with what is going on in the world so that you don’t go stale, but you need to be doing many things.” “Confidence in what you’re doing and understanding what you’re doing are really the two keys of being successful.” Links Website: Global Financial Training Program https://www.globalfinancialtrainingpr… Website: RCN Capital https://www.rcncapital.com/podcast Website: REI INK https://rei-ink.com/

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Rise in New Home Listings Projected to Boost Sales Despite Recent Run-up in Mortgage Rates Stronger-than-expected economic and inflation data have pushed interest rates higher and financial markets to price in fewer Federal Reserve rate cuts this year, according to the April 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group. While higher mortgage rates present renewed headwinds to the expected recovery in home sales this year, as well as homebuyer affordability more generally, the ESR Group notes that new listings of homes available for sale have continued to rise. While the ESR Group is forecasting existing home sales to rise modestly over the course of the year, it expects the flow of new listings to outpace home sales, which should help gradually thaw housing inventory and contribute to decelerating home price growth. However, based on incoming home price data, which continue to come in strong, the ESR Group expects home prices to rise 4.8 percent in 2024, up 1.6 percentage points from last quarter’s projection, and then another 1.5 percent in 2025. While interest rate cuts appear to be on hold due to the recent mix of strong economic data and hot inflation reports, the ESR Group continues to forecast slowing employment and economic growth, as well as progress toward 2-percent inflation over its forecast horizon. However, recent data have caused a reassessment of the pace of decelerating inflation, and the ESR Group now expects the Consumer Price Index to end 2024 at a 3.1 percent annual rate, compared to the 2.5 percent previously projected. “Financial markets rapidly repriced their interest rate expectations following hotter-than-expected inflation reports and ongoing strong payroll employment gains,” said Hamilton Fout, Fannie Mae Vice President, Economic and Strategic Research. “While we still expect economic growth and inflation to moderate going forward – and, thus, for mortgage rates to drift downward – interest rates existing in a ‘higher for longer’ state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers. While we’ve recently seen evidence that some potential home sellers are becoming more acclimated to the higher mortgage rate environment and putting their homes on the market, the recent move upward in rates is yet another headwind to the recovery of home sales, and it intensifies longstanding affordability challenges for consumers.” Visit the Economic & Strategic Research site at fanniemae.com to read the full April 2024 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. SOURCE Fannie Mae

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ResiBuilt, a trailblazer in the Build-to-Rent sector for the past 5 years, has recently launched its strategic expansion into the ‘Build for Sale’ sector, while affirming its unwavering commitment to Build-to-Rent endeavors. This expansion marks a significant milestone for ResiBuilt as it diversifies its business verticals and adapts to evolving market dynamics. “We are excited to embark on this new chapter of growth and innovation,” said Andy Capps, CEO of ResiBuilt. “Our foray into the For Sale housing market is a natural progression for us, given our extensive experience and success in the Build-to-Rent sector. This expansion allows us to cater to a broader spectrum of consumer demand while continuing to deliver exceptional quality and value to our customers.” ResiBuilt has solidified its position as a leader in the Build-to-Rent segment through its exemplary track record, boasting: ResiBuilt addresses the critical housing supply shortage by providing consumers with both for sale and for rent options. This approach delivers the flexibility and accessibility essential for meeting diverse housing needs while effectively addressing market demands. “Our proven track record speaks volumes about our capabilities and dedication to excellence,” remarked Jay Byce, President of ResiBuilt. “We are equipped to evaluate all land positions as either for rent or for sale and believe this, along with our vertical integration, gives us a distinct competitive advantage. If you have land holdings or listings we invite you to connect with us.” Our Land Buy Box: ResiBuilt is actively seeking land listings and development opportunities across the Southeast region to fuel its expansion into the For Sale housing market. For partnership opportunities, contact acquisitions@resibuilt.com. About ResiBuilt:ResiBuilt is a top real estate developer, specializing in residential construction and management. With a focus on innovation, quality, and customer satisfaction, ResiBuilt has become a trailblazer in the housing industry, offering exceptional living experiences across the Southeast. For media inquiries, visit resibuilt.com/contact. SOURCE ResiBuilt

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Luxury sales are outperforming partly because elevated mortgage rates aren’t a deterrent for many luxury buyers, as a record 47% of luxury homes were bought in cash at the start of 2024 The median-priced U.S. luxury home sold for a record $1,225,000 in the first quarter, up 8.7% from a year earlier, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Prices of non-luxury homes rose at roughly half the pace; they were up 4.6% to a median of $345,000, also a record high. Redfin defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value. Luxury prices are rising largely because demand for high-end homes has held up better than demand for middle-of-the-road homes. Sales of luxury homes are on the upswing, partly because many high-end buyers are undeterred by high mortgage rates, with the share of luxury homes bought in cash sitting at record highs. New listings of luxury homes are soaring—but not enough to curb the price growth that comes with rising demand; the total supply of luxury homes is still far below pre-pandemic levels. “People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” said David Palmer, a Redfin Premier agent in the Seattle metro, where the median-priced luxury home sells for $2.7 million. “They’re ready to buy with more optimism and less apprehension. It’s a similar sentiment on the selling side: Prices continue to increase for high-end homes, so homeowners feel it’s a good time to cash in on their equity. Even though mortgage rates remain elevated and demand isn’t as high as it was during the pandemic, many homebuyers and sellers feel the worst of the housing downturn is behind us.” Luxury home sales rise for first time since 2021 as record share of affluent buyers pay cash Sales of luxury homes rose 2.1% year over year in the first quarter. Luxury sales started posting year-over-year increases in January for the first time since August 2021. Sales of non-luxury homes decreased 4.2% year over year. Non-luxury sales haven’t posted an increase since the end of 2021. Sales are growing for luxury homes and declining for non-luxury homes largely because so many affluent buyers are able to pay in cash, meaning today’s elevated mortgage rates don’t deter them from purchasing homes. Nearly half (46.8%) of luxury homes bought during the three months ending February 29 were purchased in cash. That’s the highest share in at least a decade and up from 44.1% a year earlier. The weekly average 30-year fixed mortgage rate has hovered between 6.6% and 7% since the beginning of 2024, more than double pandemic-era record lows. Elevated mortgage rates have driven down demand for the average American homebuyer, but rates are irrelevant to cash buyers. Supply of luxury homes for sale posts biggest year-over-year increase on record The total number of luxury homes for sale rose 12.6% from a year earlier in the first quarter, the biggest increase on record. That’s compared with a 2.9% decline in non-luxury inventory. New listings of luxury homes soared 18.5% from a year earlier in the first quarter, the second consecutive quarter of double-digit increases. That’s roughly seven times bigger than the 2.7% increase for non-luxury homes. Supply of luxury homes is shooting up for several reasons. One, the mortgage-rate lock-in effect has a lesser impact on luxury homeowners because they’re more apt to buy their next home in cash or be in a financial position to take on a higher rate. Two, owners of luxury homes, many of whom have a lot of equity, are putting their houses on the market to cash in while prices are at record highs. Three, luxury supply had a lot of room to grow, as it was sitting at low levels during the first quarter of 2023. It’s worth noting that while luxury inventory is on the rise, total supply and new listings are below typical pre-pandemic first-quarter levels. Relatively low inventory is one reason luxury prices are increasing. Metro-Level Luxury Highlights: Q1 2024 Redfin’s metro-level luxury data includes the 50 most populous U.S. metros. Some metros are removed from time to time, to ensure data accuracy. All changes noted below are year-over-year changes. 10 Most Expensive U.S. Home Sales: Q1 2024 To view the full report, including charts and a full metro-level breakdown, please visit: https://www.redfin.com/news/q1-2024-luxury-report/

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Preleasing continues to outpace all previous years, and rent growth remained strong in March Preleasing at Yardi 200 schools hit 67.7 percent in March, exceeding last year’s pace by 2.4 percent, while rent growth accelerated to six percent, according to the latest Yardi® Matrix National Student Housing Report. As of March, the average rent reached $895 per bedroom, marking an all-time high for the sector. A total of 41 universities had double-digit rent growth, while 21 markets had negative rent movement of negative one percent or less. The top 22 schools for rent growth had average preleasing rates at 74 percent and above-national-average enrollment growth rates at 2.6 percent. With data gathered from more than 1,500 properties at 187 schools, Yardi Matrix found that 46 universities had preleasing rates over 75 percent. A total of eight schools were more than 90 percent preleased, including Ole Miss (99.4 percent), Purdue (91.7 percent), Appalachian State (91.6 percent) and Kentucky (90.4 percent). “Rent growth had been high but trending down early in the leasing season. It picked up again in March as students returned from spring break. Rent growth in student housing is being driven by surging demand, particularly at the schools with the strongest recent enrollment growth, a clear indication of the countercyclical nature of the product type,” state Matrix analysts. The strong preleasing is backed by enrollment growth. Preliminary data points to an average jump of 0.7 percent in enrollment year-over-year, for the fall 2023 school year. Large, primary state schools in Power 5 conferences benefitted most from enrollment growth. Gain more insight in the new Yardi Matrix National Student Housing Report. Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, student housing, vacant land, industrial, office, retail and self storage property types. Email matrix@yardi.com, call 480-663-1149 or visit yardimatrix.com to learn more. About Yardi Celebrating its 40-year anniversary in 2024, Yardi® develops industry-leading software for all types and sizes of real estate companies across the world. With over 9,000 employees, Yardi is working with our clients to drive significant innovation in the real estate industry. For more information on how Yardi is Energized for Tomorrow, visit yardi.com. SOURCE Yardi