July 2024 – Page 5

ICE Mortgage Monitor: As Market Gradually Shifts to Higher Rates, Latest Data Identifies Possible Refinance Tipping Point

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Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, released its July 2024 ICE Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets. This month’s Mortgage Monitor looks into the dynamics behind the changing makeup of the active mortgage market, which is gradually shifting toward higher average rates. As Andy Walden, ICE’s Vice President of Research and Analysis notes, the overall market remains heavily skewed toward lower-rate mortgages, but that is changing. “As of May, 24% of homeowners with mortgages now have a current interest rate of 5% or higher,” said Walden. “As recently as two years ago an astonishing nine of every 10 mortgage holders were below that threshold. “All in, there are 5.8M fewer sub-5% mortgages in the market today than there were at this time in 2022. This has been a slow-moving change, as borrowers with lower rates have sold their homes or, to a smaller degree, refinanced to withdraw equity. The entire market is acutely aware of how elevated rates have been constraining origination volumes. But seen from another angle, the same dynamic is also serving to gradually enlarge the population of folks with high-rate mortgages, who are actively waiting for the moment a refinance makes sense. This would benefit both a growing number of homeowners and lenders.” As noted in the report, 4M first lien mortgages originated since 2022 have 30-year rates above 6.5%, with 1.9M having rates of 7% or higher. On average, there are ~240K active mortgages in each 1/8th of a percentage point bracket in the 7-7.625% range; however, there’s a noticeable spike of 690K loans with rates just below 7%. Walden explains: “The concentration of active loans just below 7% has more to do with borrower psychology than concrete savings. There’s clearly something appealing in today’s market for a homeowner to see a 6-handle in front of their mortgage rate. From a rate/term refinance lending perspective, this group is worth watching as they represent a potential tipping point for a return to more meaningful, albeit historically modest, refi volumes.” For now, refi volumes remain at a fraction of historical levels. That said, we have seen some notable shifts in who is taking out refis in today’s market. Consider, for example, the recent rise in VA market share, from less than 10% of rate/term refis a year ago to more than 30% in recent weeks, according to ICE origination data. The rise in VA refinance share seems to be due, in large part, to streamline refinances. Some veterans, especially those who had taken out mortgages within the past year, availed themselves of the streamlined refinancing program to lower their interest rate by more than a full percentage point, for an average savings of $230 per month among April originations, according to a before-and-after analysis of ICE McDash +Property data. That makes sense, considering the ICE U.S. VA 30-Year fixed rate mortgage index is down nearly a full percentage point from its peak in late October, with the average rate offering among such loans notably below that of FHA and conforming mortgage counterparts. VA refinances also helped improve the servicing retention rate in Q1 to its highest level in 18 months, with retention of FHA and VA refinances tripling from 15% in Q4 to 46% in Q1. Those lower payments come at a cost, however, as the average borrower increased their loan balance to buy down their rate and/or finance closing costs. The quick turn also resulted in unusually high prepay speeds, which can negatively impact investors in VA loan backed securities. The recent activity among VA loans supports the findings of the recently released 2024 ICE Borrower Insights Survey, which showed that finding the lowest mortgage rate trumped all other concerns when choosing a lender, with a 20-point delta between that and the next most frequent choice. But, while borrowers want the lowest rate, they typically don’t consider many options. In fact, 84% of borrowers surveyed considered only one (36%) or two (48%) options before selecting a lender. This, as well as the successful proactive retention of FHA/VA borrowers in Q1, shows how important it is for lenders to stay attuned to their borrowers’ needs and make first contact when a beneficial refi opportunity arises. Much more information on these and other topics can be found in this month’s Mortgage Monitor. Source: Intercontinental Exchange

Offerpad

by Carole VanSickle Ellis
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Providing Investors with “Certainty & Control” By Carole VanSickle Ellis When Offerpad founder, CEO, and chairman Brian Bair founded Offerpad nine years ago, he did so with a clear goal of control. Bair was not seeking authority for himself, however. He wanted to establish a platform where buyers and sellers could take control of their own transactions and, in his words, “make the real estate experience much easier, take the friction out of it, and give buyers and sellers certainty and control.” Before founding Offerpad, Bair had spent decades in retail real estate, successfully blending traditional transactions with a personalized “concierge approach” in which he listed and facilitated the sale of properties in addition to offering complimentary landscaping, basic handyman services, and even pool services. This “white glove” approach to sales created a positive selling experience and a compelling reason for buyers to take a closer look at Bair’s properties. Also at that time, he was acquiring large volumes of single-family properties at auction to renovate and sell. “I was entrenched in real estate from all different aspects,” Bair recalled, adding, “Two things happened during that time: I saw the value of the cash offer, and I also saw the value of providing a seller with more control over their closing date. For us, providing that control has always been key.” Once Bair identified the allure of a controlled closing date, he leveraged that element of his business to stand out from the crowd of emerging single-family buyers. “One of the biggest challenges we faced in those early days was trying to communicate with homeowners and homebuyers that we are in real estate as a service. We are looking more for people who value their time, certainty, and control than for people in distressed situations. We are very proud of that,” he said. “Growing Up” as Real Estate Started to Change In 2015, when Offerpad formally opened its doors, Bair’s prized element of consumer control was only just entering the mainstream in a variety of sectors. For example, Uber, founded in 2009, was in a period of massive growth; Carvana and DoorDash were both still in their nascent phases, and Bitcoin was valued at roughly $400 and had recently debuted on internet marketplaces that enabled owners to trade it from their iPhones. It was the perfect time for an innovative real estate platform to make its mark on the market as well. “People were just starting to sell (and buy) most of the other elements of their lives on their smartphones, and I felt strongly that they would just want more and more of that control,” Bair recalled. “That became our mission, and that is why we are really as much of a logistics company as we are a tech company or real estate company today. We learned as we grew in those early days that deals should be treated like math problems and every day should be treated like it matters.” Eventually, the company became so effective at problem-solving it expanded into a full-scale renovation operation and, recently, into a partnership format with other real estate investors. Bobby Triplett, senior vice president of renovations at Offerpad, said the company handles hundreds of its own renovations each month in addition to renovating properties for investors, REIT funds, SFR funds, and other third-party partners. “We renovate every property, whether it is one of ours or an independent investor’s property, as if it were our own,” Triplett explained. “That means every one of our partners gets our buying power, our vendor loyalty, our boots-on-the-ground expertise, and our front-of-line access to the things needed for large-scale renovations.” Investors working with Offerpad also gain access to local teams that can assist with writing out scope of work on projects and access insights and resources not available to most individual investors. Triplett noted that Offerpad works with investors on all scales, from a client in Jacksonville working on three homes a month through Offerpad to institutional investors purchasing hundreds of homes in a variety of markets each month. “Our goal is to help investors free up their energy while still ending up with a superior product when we are done,” Triplett said. “We operate in a lot of markets, and we believe that investors who partner alongside us can save themselves a significant amount of money, headaches, and time by working with us in those markets. We believe we are the cure-all to the hang-ups most investors face in the renovation world.” Boots on the Ground in Every Active Market When you operate in more than two dozen markets around the country and handle more than 400 projects in most quarters, you know from experience that every single market is different. “The key to handling those differences is to do the best and most suitable renovations and repairs in every market, and the key to that lies in having local experts equipped to handle any situation,” said Triplett. “Every market has its own idiosyncrasies, that is for sure,” said Triplett. He continued, “In Florida, for example, everything is hurricane-regulated, whereas in the Carolinas and Georgia, most houses have crawl spaces, which you will not usually find in Florida. When you are doing renovations in the Midwest, you will encounter old basements more often than in other regions, and certain soils around the country can create serious foundation issues.” The list of geographic peccadillos goes on and on, but Triplett says Offerpad has the answer to dealing with the unique demands of renovating real estate in any market. “We hire local experts,” he explained. “The renovation director in Atlanta is, of course, from Atlanta, and our renovation directors in Indianapolis and Ohio are Midwest guys. Instead of going the one-size-fits-all route, we hire local experts who will make smarter decisions on the homes in their area and will be better stewards of our resources than someone who is not familiar with the market.” Triplett described the Offerpad process of determining what renovations will be needed

Savannah, Georgia

by Carole VanSickle Ellis
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The “Hostess City of the South” Continues to Heat Up in 2024 By Carole VanSickle Ellis Long before it was known for its beautiful square gardens, rich history, and the largest and fastest-growing container terminal in the United States, Savannah, Georgia, was known as the capital of the Royal Colony of Georgia. As the oldest city in the state of Georgia today (although no longer its capital), Savannah holds a unique place in the state’s housing market and broader economy thanks to a thriving film industry, a burgeoning tech and manufacturing community, one of the largest ports in the country, and a highly attractive housing market that continues to heat up as 2024 continues. In fact, some analysts believe the entire metro area will become “unaffordable” by 2029 as home values continue to rise in the area. According to a study conducted by GOBankingRates and published in May of this year, Savannah is “outpacing the national average for growth” with home values a year ago of just over $312,000 and expected one-year growth of nearly 9%. The analysts conducting the study projected that by 2029, median home values in Savannah could exceed $511,000, roughly $6,000 more than the U.S. median projected home value for the same time period. By 2033, they wrote, home values could be nearly $712,000 in the area. This growth trend has been in place for a while, now. In late 2023, Urbanize analyst Josh Green observed, “Savannah has bucked a national trend that has seen new housing permits dip by 17.5% vs. the same time period last year,” adding, “Savannah’s total of 2,090 new housing permits in the first six months [of this year] pointed to…a resilient local economy.” Green cited a “booming jobs market, growing port-related industries, and record tourism” as primary drivers for the Savannah market. The Allure of Savannah Real Estate Remains Strong As the population in Savannah and the surrounding metro area (Savannah is the seat of Chatham County, and the Savannah MSA includes Chatham, Bryan, and Effingham Counties) continues to climb, fix-and-flip investors continue to find opportunities in Savannah and the surrounding region. According to data from ATTOM Data Solutions, in 2023, Savannah, Georgia home flips surged in average ROI, rising from 14.3% to 56.8%. New single-family construction appears poised to continue the trend, also, with 7.5% more permits for single-family units issued in 2023 than in 2022. As demand stubbornly rises, Chatham County inventory has responded with slightly lower listing prices (median list price was 4% lower in April 2024 than a year prior) and slightly increased listing volumes (the county’s 764 active listings in April represented a 78.9% increase over the year prior). An increasing number of homebuyers appear unwilling to compromise when it comes to single-family living despite still-low volumes of available inventory, although local developers seem to be counting on eventual capitulation in favor of larger and modern multifamily options. According to data from the U.S. Census Building Permit Survey, applications for small multifamily residences (2-4 units) fell over the course of the past year by nearly 91%, while applications for larger 5+ unit buildings rose by just over 63%. “It seems that Savannah is leaning toward larger housing complexes,” observed Point2 researchers in light of the data. “[This] could be a sign that smaller multifamily residences are going out of style.” In the Savannah luxury market, however, nothing is going out of style yet. Top-tier homes in the area were selling for 137% more in May 2024 than they were the year prior. “In many areas, [luxury] prices came back down or plateaued [when pandemic-related remote work ended], but in some cities, luxury price growth has continued unabated,” wrote Realtor.com data journalist Evan Wyloge. Realtor.com senior economic analyst Hannah Jones observed cities that have retained price growth in the high-end space in the wake of the pandemic often are “strong retiree destinations” or have historically been areas where buyers could obtain “relatively more affordable, wide-open spaces.” She also noted regions like Savannah hold their appeal thanks to “sunny, warm climates and the lifestyle those attributes allow,” concluding, “Even as some markets have seen luxury prices stabilize, these cities continue to attract affluent buyers.” Savannah’s “Southern luxury vibe, with big, old trees and historic homes,” is the perfect fit for this trend and continues to attract out-of-state buyers seeking affordability and a pleasant location. During the pandemic and in the two years following, California alone contributed nearly 26,000 people to Georgia’s population as homeowners sought the relative affordability of the southeast. The Savannah Economic Development Authority (SEDA) reacted quickly to this trend, establishing the Savannah Technology Workforce Incentive (STWI), a program that reimburses individual moving expenses for tech workers moving to the area. Local planners at SEDA viewed the incentive program as a growth move designed to create a workforce that would attract tech employers in the coming years. “If the next tech company wants to move here and hire 30 people, we want to have people already here who can do the job,” explained Jen Bonnet, who oversaw the program at the time. Incoming Employers Could Change the Face of the City’s Housing Market Savannah’s concerted effort to bring in qualified potential employees for high-value employers in lucrative industries like technology appears to be paying off. As of May 2024, global startup funding and support company F65 was tracking 26 promising tech companies and startups in the Savannah area, including patent developer Team RGE, medical prescribing platform MedView Systems, and 3D development gaming and film studio Tupelo Labs. The region also welcomed the Hyundai Metaplant, a multibillion-dollar electric vehicle plant projected to bring in 8,100 jobs over the next five years and create roughly $1 billion worth of investment from suppliers. This is the second electric vehicle plant to commit to making its home in the state and the first in the Savannah area. Although Rivian, the first EV manufacturer to commit to Georgia with plans to build a plant closer to Atlanta, has currently

Enhancing Lending Solutions

by Sam Kaddah, NPLA
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New Integrations in Liquid Logics Platform By Sam Kaddah In the fast-paced world of private lending, efficiency, security, and reliability are paramount. Private lenders need robust tools to streamline their processes and mitigate risks. Borrowers seek a seamless experience, while investors demand transparency and security. Liquid Logics, a leader in lending solutions, is excited to announce two powerful integrations into our platform: construction fund control and risk management analytics and background screening services. These new features are set to revolutionize the loan origination process, bringing enhanced security, reliability, and efficiency to private lenders, borrowers, and investors alike. Construction Fund Control: Ensuring Financial Oversight and Transparency One of the most significant challenges in construction lending is managing the disbursement of funds. Ensuring that funds are used appropriately and that construction projects stay on track is critical to minimizing risk. The integration of construction fund control into the Liquid Logics platform addresses these challenges head-on. With construction fund control, private lenders can maintain meticulous oversight of how funds are allocated and used throughout the construction process. This crucial functionality provides detailed tracking of each disbursement, ensuring that funds are released only when specific project milestones are met. This level of oversight helps to prevent misappropriation of funds and ensures that projects are completed on time and within budget. Increased transparency and accountability benefit both borrowers and investors. Borrowers can see precisely when and why funds are released, fostering trust and collaboration between lenders and borrowers. Investors, on the other hand, gain confidence knowing that their investments are managed responsibly and that projects are progressing as planned. This transparency is crucial for maintaining investor trust and encouraging future investments. Risk Management Analytics: Proactively Identifying and Mitigating Risks Risk management is a cornerstone of successful lending. Identifying potential risks before they become issues can save lenders significant time and money. Risk management analytics equips lenders with powerful tools to assess and mitigate risks effectively. Risk management analytics leverages advanced algorithms and data analytics to evaluate potential risks associated with each loan application. By analyzing a wide range of factors, including borrower creditworthiness, project feasibility, and market conditions, lenders have a comprehensive risk profile for each loan. This proactive approach enables lenders to make informed decisions and take preventive measures to mitigate identified risks. Once a loan is approved, continuous monitoring is essential to ensure that emerging risks are identified and addressed promptly. The risk management analytics integration offers real-time monitoring of loan performance and market conditions. Lenders receive alerts and insights into any changes that could impact the loan, allowing them to take swift action to mitigate risks. This dynamic risk management approach helps protect lenders’ interests and ensures the long-term success of their lending portfolios. Background Screening Services: Enhancing Security and Reliability Trust is the foundation of any lending relationship. Ensuring that borrowers and other stakeholders are trustworthy and reliable is crucial for maintaining the integrity of the lending process. Background screening services provide lenders with the tools they need to conduct thorough due diligence. The background screening services integration enables lenders to perform comprehensive background checks on borrowers, co-signers, and other key stakeholders. These checks include criminal history, credit reports, employment verification, and more. Through thorough due diligence, lenders can identify potential red flags and make more informed lending decisions. In addition to verifying the reliability of borrowers, background screening services play a crucial role in fraud prevention. By cross-referencing information and identifying discrepancies, the platform helps to uncover potential fraud schemes before they impact the lending process. This enhanced security measure protects lenders from fraudulent activities and ensures that only trustworthy borrowers receive funding. Streamlined Processes and Improved Efficiency The integration of construction fund control, risk management analytics, and background screening services enhances security and reliability and significantly improves the efficiency of the loan origination process. All new features seamlessly integrate into the existing Liquid Logics platform, providing a unified and user-friendly experience. Lenders can access construction fund control, risk management analytics, and background screening services, streamlining their workflows and reducing the time and effort required to manage loans. Automation is a critical component of the new integrations. The platform automates many of the tasks associated with fund control, risk assessment, and background screening, reducing the burden on lenders and speeding up the loan origination process. By automating routine tasks, lenders can focus on more strategic activities, such as building relationships with borrowers and investors and growing their lending portfolios. A New Era in Lending Solutions The integration of construction fund control, risk management analytics, and background screening services into the Liquid Logics platform marks a significant milestone in the evolution of lending solutions. These new features bring unparalleled security, reliability, and efficiency to the loan origination process, benefiting private lenders, borrowers, and investors alike. Private lenders can now enjoy enhanced financial oversight, proactive risk management, and comprehensive background checks, all within a single, user-friendly platform. Borrowers benefit from increased transparency and trust, while investors gain confidence in the responsible management of their investments. At Liquid Logics, we are committed to providing innovative solutions that address the evolving needs of the private lending industry. The new integrations are a testament to our dedication to enhancing the lending experience for all stakeholders. Contact us today to learn more about how these powerful new features can transform your lending operations and drive success in the competitive world of private lending. Staying true to our mission and dedication to continue to be the industry leader addressing the ever-evolving needs of the private lending industry, Liquid Logics is releasing a suite of tools and key integrations. Our clients are now able to perform real-time live background checks, asset, and account statement balances, draws, and fund controls through AI, as well as KYC, OFAC, and identity verifications. As the industry’s needs evolve, you can rest assured that Liquid Logics tools will keep up with your needs. SIDEBAR Liquid Logics is a Founding Member of the National Private Lenders Association. Join us for the NPLA Conference

Navigating the Digital Landscape

by Christopher Link
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Selling Real Estate in the 21st Century By Christopher Link In the ever-evolving world of real estate, the digital revolution has transformed how properties are marketed, bought, and sold. The advent of online platforms, virtual tours, and digital marketing strategies has reshaped the real estate landscape, making it more accessible and efficient for buyers and sellers alike. This article explores the key elements of selling real estate in a digital environment and provides insights on how to leverage technology to maximize success. The Digital Transformation The digital transformation in real estate began with the rise of online listings and property websites. Platforms like Zillow, Realtor.com, and Redfin revolutionized the way buyers searched for homes, providing detailed information and images of properties at the click of a button. This shift has empowered buyers to take control of their home search, often narrowing down their options before ever stepping foot in a property. For sellers, this means that the first impression of a property is no longer made at an open house or during a showing but online. High-quality photos, detailed descriptions, and virtual tours are now essential components of a successful listing. A well-crafted online presence can attract a larger pool of potential buyers and increase the chances of a quick sale. Creating an effective online listing is an art and a science. It begins with high-quality photos. Professional photography is a worthwhile investment, as images are often the first thing a potential buyer notices. Photos should be well-lit, high-resolution, and showcase the property’s best features. Including a virtual tour can further enhance a listing, allowing buyers to explore the home in detail from the comfort of their own homes. Virtual tours can be created using 360-degree photography or video walkthroughs and are particularly valuable for out-of-town buyers or those with busy schedules. A compelling description is also crucial. This should highlight the unique selling points of the property, such as recent renovations, desirable neighborhood features, or energy-efficient appliances. It is important to be honest and transparent while also presenting the property in the best possible light. Including a detailed floor plan can help buyers understand the layout and flow of the home. Social media has become a powerful tool for real estate marketing. Platforms like Facebook, Instagram, and LinkedIn allow agents and sellers to reach a broader audience and engage with potential buyers in a more personal way. Facebook, for instance, offers targeted advertising options that enable agents to reach specific demographics based on location, age, interests, and more. Instagram’s visual focus is perfect for showcasing stunning property photos and virtual tours, while LinkedIn can be used to connect with other real estate professionals and potential high-end buyers. Engagement is key on social media. Regularly posting content, responding to comments, and interacting with followers can help build a strong online presence and foster trust with potential buyers. Hosting live virtual tours or Q&A sessions can also be an effective way to engage with your audience and provide real-time information about a property. Digital Marketing Strategies Beyond social media, there are several digital marketing strategies that can help sell real estate. Search engine optimization (SEO) is essential for ensuring that your listings appear at the top of search results. This involves using relevant keywords in your property descriptions and website content, as well as ensuring your site is mobile-friendly and loads quickly. Email marketing is another powerful tool. Building a list of potential buyers and regularly sending them updates on new listings, open houses, and market trends can keep your properties top of mind. Personalized emails that target specific buyer preferences are particularly effective. The Rise of Online Auctions Online auctions have emerged as a dynamic and increasingly popular method for selling real estate. Platforms such as RealtyBid.com allow properties to be sold to the highest bidder in a competitive and transparent environment. For sellers, online auctions can generate a sense of urgency and excitement, potentially leading to higher sale prices and quicker transactions. There are additional distinct advantages to online auctions, such as attracting buyers from across the globe, transparency, and efficiency. The process of selling real estate via an online auction starts with listing the property on an auction platform. The listing should include high-quality photos, a detailed description, and any pertinent information about the property. Sellers often set a reserve price to ensure the property will not be sold below a certain amount. Once the auction goes live, interested buyers can place bids within a specified timeframe. Throughout the auction, buyers can track the current highest bid and decide whether to place higher bids. At the end of the auction, the highest bid that meets or exceeds the reserve price wins. The winning bidder typically must put down a deposit and complete the purchase within a stipulated period, often 30 to 45 days. Here are some tips for success in online auctions: Prepare Thoroughly // Ensure your property listing is comprehensive and appealing. High-quality visuals and detailed descriptions can attract more serious bidders. Set a Realistic Reserve Price // Setting a reserve price too high can deter potential bidders, while setting it too low may undervalue your property. Promote Your Auction // Use digital marketing strategies, including social media and email marketing, to promote your auction. Engage with Potential Bidders // Be responsive to inquiries and provide additional information or virtual tours if requested. Engaging with interested buyers can increase their confidence and willingness to bid. The Role of Data Analytics Data analytics plays a crucial role in modern real estate marketing. By analyzing data on buyer behavior, market trends, and online engagement, agents can make informed decisions about how to market a property. Tools like Google Analytics and real estate-specific platforms provide insights into which listings are getting the most views, where those viewers are coming from, and what actions they are taking. This data can inform everything from the best times to post on social media to the most effective keywords for SEO. It can