2024 – Page 15

Expert Panel Predicts Home Price Growth Will Decelerate in 2024 and 2025

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Panel Also Shares Thoughts on Most Impactful Potential Policy Reforms to Boost Housing Supply Following home price growth of 6.0% in 2023, a panel of housing experts forecasts annual national home price growth of 4.7% in 2024 and 3.1% in 2025, according to the Q3 2024 Fannie Mae (OTCQB: FNMA) Home Price Expectations Survey (HPES), produced in partnership with Pulsenomics, LLC. The HPES polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price percentage changes in each of the coming five calendar years, as measured by the Fannie Mae Home Price Index (FNM-HPI). The panel’s latest estimates of national home price growth are higher than last quarter’s expectations of 4.3% for 2024 but lower than the previous quarter’s expectations of 3.2% for 2025. This quarter, the ESR Group also surveyed panelists on the impact of potential zoning and permitting reforms at state and local levels to increase construction of new homes and, thereby, the supply of homes available to buyers and renters. While most panelists believe that reforms implemented to date are likely to have a positive effect on new construction within the next five years, they were generally split on whether that effect would be “moderate” or “insignificant.” A plurality of panelists suggested that hastening the construction permitting process would have the greatest positive impact on housing supply if broadly enacted, following by expanding zoning for multifamily housing developments and enabling more “missing middle” or “light touch density” housing construction. However, 63% of panelists are “not confident at all” that the initiatives they think would be most effective will be enacted widely within the next five years. Complete results of the Q3 2024 HPES can be found here. “Recent measures of home price growth, including our own, have continued to come in stronger than previously expected, as reflected by the 100-plus HPES panelists who, on average, once again modestly upgraded their home price outlook for 2024,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. “Strong home price appreciation has persisted despite purchase affordability remaining stretched for the vast majority of consumers, a dynamic that is still primarily a function of inadequate supply. Our panelists overwhelmingly agreed that there is a fundamental lack of housing in the United States relative to underlying demographic factors – and, on average, believe the nation to be short approximately 2.8 million homes. We’ve previously estimated the shortfall to be more than 4 million. The panelists also shared that they think speeding up construction permitting processes, increasing density around transit corridors, and allowing more ‘missing middle’-type housing are the local and state policy reforms likeliest to increase housing production. However, most remain apprehensive about the near-term prospects of these sorts of reforms being enacted broadly enough to have a meaningful effect on supply and housing affordability.” Terry Loebs, founder of Pulsenomics, added: “Despite robust home value growth in the first half of 2024, our panelists anticipate a slowdown in price appreciation for the remainder of the year and beyond. While lower interest rates could incentivize some homeowners to sell, the deep-rooted housing supply and affordability crises will likely persist, even with a more accommodative monetary policy.” To receive e-mail updates regarding future HPES updates and other economic and housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here. SOURCE Fannie Mae

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New York City and Chicago Areas Remain Vulnerable to Housing Issues Despite Strong Overall Markets; South Region Faces Less Exposure While West Has More ATTOM, a leading curator of land, property, and real estate data, released a Special Housing Risk Report spotlighting county-level housing markets around the United States that are more or less vulnerable to declines, based on home affordability, underwater mortgages and other measures in the second quarter of 2024. The report shows that California, New Jersey and Illinois once again had the highest concentrations of the most-at-risk markets in the country, with some of the biggest clusters in the New York City and Chicago areas, as well as inland California. Less-vulnerable markets remained spread mainly throughout the South, along with parts of the Midwest. The second-quarter patterns – derived from gaps in home affordability, underwater mortgages, foreclosures and unemployment – revealed that nearly half of the counties around the U.S. considered most exposed to potential drop-offs were in California, New Jersey and Illinois. As with earlier periods over the past few years, those concentrations dominated the list of areas more at risk of downturns. County-level housing markets on that list included seven in around New York City, five in the Chicago metro area and 12 in areas of California mostly away from the Pacific coast. The rest were scattered largely around the South as well as other parts of the Midwest and Northeast. At the other end of the risk spectrum, close to half the markets considered least likely to decline fell in Virginia, Wisconsin and Tennessee. They included four in the Washington, DC, area and three each in the Richmond, VA, and Nashville, TN, metro areas. “The housing market boom continues to gain momentum, thanks to another Springtime boost. However, some markets show signs of potential instability, which suggests a mixed level of risk, particularly in certain regions that repeatedly show signs of concern,” said Rob Barber, CEO of ATTOM. “While these observations don’t indicate immediate red flags or warning signs of an impending downturn, they do highlight areas of relative risk. With the housing market still facing challenges, it’s crucial to closely monitor regions where key indicators suggest a higher likelihood of issues.” Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded estimated property values, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes and local unemployment rates. The conclusions were drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Unemployment rates came from federal government data. Rankings were based on a combination of those four categories in 589 counties around the United States with sufficient data to analyze in the second quarter of 2024. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the four ranks. Significant gaps in risk continued in different parts of the U.S. during the second quarter of 2024 as key housing market metrics have gotten either better or worse this year. Those measures included home prices, equity and affordability. Vulnerable housing markets still clustered around Chicago, New York City and inland California The metropolitan areas around New York, NY, and Chicago, IL, as well as broad stretches of California, had 24 of the 51 U.S. counties considered most vulnerable in the second quarter of 2024 to housing market troubles. The counties were among 589 around the nation with enough data to analyze. (The report includes 51 counties at either end of the risk spectrum, instead of the usual 50 that have been included in prior reports, because of ties in rankings.) The most at-risk counties included three in New York City (Kings County, which covers Brooklyn, Richmond County, which covers Staten Island, and Bronx County) and four in the New York City suburbs (Essex, Passaic, Sussex and Union counties, all in New Jersey). It also included Cook, Kendall, McHenry and Will counties in Illinois and Lake County in Indiana. Another 12 were in California: Butte County (Chico), Humboldt County (Eureka), Solano County (outside Sacramento) and Shasta County (Redding) in the northern part of the state, plus Kern County (Bakersfield), Kings County (outside Fresno), Madera County (outside Fresno), Merced County, San Joaquin County (Stockton) and Stanislaus County (Modesto) in central California. Two others, Riverside and San Bernardino counties, were in southern California. At-risk counties have worse levels of affordability, underwater mortgages, foreclosures and unemployment Major home-ownership costs (mortgage payments, property taxes and insurance) on median-priced single-family homes were considered seriously unaffordable in 33 of the 51 counties deemed most vulnerable to market drop-offs in the second quarter of 2024. That means those expenses consumed at least 43 percent of average local wages. Nationwide, major expenses on typical homes sold in the second quarter required 35.1 percent of average local wages. The highest percentages in the most at-risk markets were in Kings County (Brooklyn), NY (111.8 percent of average local wages needed for major ownership costs); Riverside County, CA (74.4 percent); Washington County (St. George), UT (70.4 percent); Richmond County (Stated Island), NY (66.8 percent) and Passaic County, NY (outside New York City) (65.3 percent). At least 5 percent of residential mortgages were underwater in the second quarter of 2024 in 34 of the 51 most-at-risk counties. Nationwide, 5.1 percent of mortgages fell into that category, with homeowners owing more on their mortgages than the estimated value of their properties. Those with the highest underwater rates among the 51 most at-risk counties were Tangipahoa Parish, LA (east of Baton Rouge) (26.1 percent underwater); Peoria County, IL (16.3 percent); Lake County (Gary), IN (13.2 percent); Orleans Parish (New Orleans), LA (13.1 percent) and Montgomery County (Dayton), OH (10.9 percent). More than one of every 1,000 residential properties faced a foreclosure action in the second quarter of 2024 in 39 of the 51 most vulnerable counties. Nationwide, one in 1,575 homes were in that

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A Seller’s Market Environment Continues to be Evident in the Housing Market, but Neutralization is on the Horizon with Inventory Levels Continuing to Rise Presumed September Interest Rate Cuts Is Anticipated to Free Buyers and Sellers from Previous Holding Patterns HouseCanary, Inc. (“HouseCanary”), a national brokerage known for its innovation and accuracy of real estate information, released its August Market Pulse Report, finding that inventory remains low from a historical perspective, however, it is now at the highest level since Covid. HouseCanary previously reported that inventory levels were gradually approaching pre-Covid levels, and this sentiment remained unchanged in August as total inventory increased 28.7% from the same period last year. Additionally, contract volume in August 2024 across all price tiers increased compared to August 2023, suggesting a steadier housing market and evidence of demand from potential homebuyers, further demonstrating a seller’s market. Jeremy Sicklick, Co-Founder and Chief Executive Officer of HouseCanary, commented: “The past couple of years have seen a housing shortage nationwide. However, consistent with what we have seen throughout this summer, there have been signs pointing to normalization in the housing market since the pandemic when looking at inventory levels, pricing and contract volumes from a multiyear perspective. Notably, total inventory is up 28.7% from the same period in 2023, and up 9.3% from 2022, indicating improvements in the pool of available properties and an eventual neutralization of the housing market. As we forecast for the back half of the year, we can expect the Fed to begin cutting interest rates at the next FOMC meeting after Powell’s remarks in Jackson Hole. If realized, we can anticipate increased contract volume during the fall season, should demand from prospective buyers remain persistent. Buyers and Sellers who have been sidelined from the market could just about be ready to get back in the game.” Key Takeaways: Source: HouseCanary

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Residential Loans Surge 23 Percent Quarterly, Climbing Back to Levels from a Year Earlier; Purchase, Refinance and Home-Equity Lending All Increase; Despite Shift, Lending Activity Still Off Nearly Two-Thirds from 2021 Peak ATTOM, a leading curator of land, property, and real estate data, released its second-quarter 2024 U.S. Residential Property Mortgage Origination Report, which shows that 1.62 million mortgages secured by residential property (1 to 4 units) were issued in the United States during the second quarter, representing a 23.2 percent increase over the prior three-month period. The spike still left total residential lending activity down 1.6 percent from the second quarter of 2023 and 61.2 percent from a high point hit in 2021. But it marked the first gain in a year and boosted the number of residential loans back up close to the level from a year earlier. The rebound came amid a strong Spring home-buying season and mortgage interest rates that dipped downward after months of increases. The increase in overall lending resulted from improvements across all major categories of residential loans, especially for home buying. Purchase-loan activity jumped 32.7 percent quarterly, to about 783,000, refinance deals rose by 10.3 percent, to about 546,000, and home-equity credit lines shot up 26.5 percent, to about 286,000. Measured monetarily, lenders issued nearly $533 billion worth of residential mortgages in the second quarter of 2024. That was up 27.6 percent from the first quarter of 2024 and 1.1 percent from the second quarter of last year. The varying increases among different loan types boosted the share of residential mortgages for home purchases, while reducing the proportion of refinancing loans. Purchase loans remained the most common form of mortgages around the U.S. in early 2024, comprising almost half of all mortgages, followed by refinance packages and home-equity lending. “The mortgage industry got one of its biggest boosts in years during the second quarter, supported by a combination of the usual Springtime home-buyer demand coupled with more attractive mortgage rates,” said Rob Barber, CEO at ATTOM. “However, a cautionary note is warranted, as we shouldn’t read too much into one great quarter. A similar trend occurred last Spring, with lending dropping off significantly later in the year. But with interest rates settling down and projections for more cuts from the Federal Reserve over the coming months, it wouldn’t be surprising if business increased even more for lenders over the rest of 2024, or at least didn’t drop significantly.” Total lending recovers losses over the past year but remains well below peaksBanks and other lenders issued a total of 1,615,281 residential mortgages in the second quarter of 2024, up from 1,311,377 in first quarter of 2024. The latest total was still down slightly from 1,642,100 in the second quarter of 2023 and remained far behind a recent high point of 4,167,656 hit in the first quarter of 2021. But the recent gain mostly reversed three straight quarters of declines. A total of $532.7 billion was lent to home owners and buyers in the second quarter of this year. That was up from $417.4 billion in the prior quarter and from $526.8 billion in the second quarter of 2023, although still less than half the recent peak of $1.3 trillion in 2021. Overall lending activity followed a similar pattern at the metropolitan area level. The total rose from the first quarter to the second quarter of this year in 201, or 98 percent, of the 205 metropolitan statistical areas around the U.S. that had a population of 200,000 or more and at least 1,000 total residential mortgages issued from April through June of 2024. But it remained down from the second quarter of 2023 in 118, or 58 percent, of the metro areas analyzed. The largest quarterly increases were in Boulder, CO (total lending up 106.5 percent from the first quarter of 2024 to the second quarter of 2024); Honolulu, HI (up 100.2 percent); Appleton, WI (up 63.1 percent); Sioux Falls, SD (up 56.8 percent) and Champaign, IL (up 54.7 percent). Aside from Honolulu, metro areas with a population of least 1 million that had the biggest increases in total loans from the first to the second quarter of 2024 were San Jose, CA (up 46 percent); Minneapolis MN (up 44.3 percent); Indianapolis, IN (up 42.3 percent) and Boston, MA (up 35.4 percent). The only metro areas with enough data to analyze where lending went down quarterly were Pensacola, FL (down 19.8 percent); Buffalo, NY (down 16.1 percent); Atlantic City, NJ (down 2.4 percent) and Springfield, IL (down 1.7 percent) Measured annually, the largest declines in total lending among metro areas with a population of at least 1 million were in San Antonio, TX (total lending down 19.1 percent from the second quarter of 2023 to the second quarter of 2024); St. Louis, MO (down 14.9 percent); Austin, TX (down 13.9 percent); Dallas, TX (down 11.5 percent) and Buffalo, NY (down 11 percent). Purchase mortgages, also up quarterly but slightly down annually, remain top loan typeThe second-quarter purchase-loan total of 782,937 was up from 590,058 in the first quarter of 2024 while the $311 billion dollar volume of purchase loans was 39.2 percent higher than the $223.4 billion first-quarter level. But the total was off 7 percent from 841,984 a year earlier and remained 50 percent lower than a high point hit in the Spring of 2021. The dollar amount was still off by 2.2 percent from $318.1 billion in the second quarter of last year and 42 percent beneath the 2021 peak. Residential purchase-mortgage originations increased quarterly in 98 percent of the 205 metro areas in the report, while remaining down annually in 74 percent of those markets. The largest quarterly increases were in Wichita, KS (purchase loans up 183.5 percent from the first quarter of 2024 to the second quarter of 2024); Boulder, CO (up 148.8 percent); Honolulu, HI (up 143.5 percent); Indianapolis, IN (up 86.8 percent) and Fort Wayne, IN (up 82.8 percent). Aside from Honolulu and Indianapolis, the biggest quarterly increases in metro areas with a population of at least 1 million in the second quarter of 2024 came in San Jose, CA (up 68.5 percent); Boston, MA (up 65.9 percent) and Minneapolis, MN (up 60 percent). The top annual decreases in purchase lending in metro areas with a population of at least 1 million were in San Antonio, TX (down 32 percent from the second quarter of 2023 to the second quarter of 2024); Dallas, TX (down 24

ZVN Properties

by Carole VanSickle Ellis
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A Network of Consummate Professionals By Carole VanSickle Ellis When Deanna Alfredo, senior vice president of the ZVN Properties Inc.’s Single-Family Rental (SFR) division, thinks about how the company is evolving with the times and the industry, she can sum up one of the biggest changes with one word: email. The ubiquitous electronic mail communications upon which most of the world has relied for several decades when it comes to communicating quickly as easily about both professional and personal matters is, Alfredo notes, transitioning off centerstage in the SFR space, and it is doing so much more rapidly than many vendors, contractors, and even investors realize. ZVN, however, is ahead of the curve thanks to the company’s dedication to clear and effective communication with both clients and contractors in order to, as the company itself describes it, “provide high-quality service and accurate, on-time results [while] minimizing customer costs.” The advent of the service portal on the client side of the equation has not come without complications on the service side of SFR, Alfredo noted. Today, nearly every SFR provider has its own unique, customized portal designed with the needs of that company’s specific residents and investors in mind. As a result, contractors and other real estate-related service providers may flounder as they navigate a vast array of automated and AI-powered systems. This tough terrain, Alfredo said, is where ZVN really shines. “Nearly all of our clients have technology and portals in place today that require us to go into their systems [vs. the client using a ZVN-developed option] to submit results, photos, and invoices,” Alfredo explained. “That is a very different landscape from even just a few years ago, when most parties in the industry were still relying on email. It has made things very difficult for a lot of service providers, but for us, that is just part of the growth and maturation process of the industry.” Bryan Lysikowski, CEO and co-founder of ZVN, agreed, saying ZVN’s ability to navigate client portals and platforms rather than requiring clients to enter into a standardized ZVN option is one of the things that makes the company stand out in the field. “If you want to survive and thrive in today’s marketplace, you must be heavily technology-enabled,” Lysikowski said. “We are managing a network of professionals all leveraging elements including artificial intelligence, cost estimation tools, and many other technologies, so our clients can rely on us to communicate the status of any asset and also to react quickly to changes in the property.” Unafraid & Unintimidated by Technology in Any Industry ZVN combines cutting-edge technology from multiple industries and sectors in order to gain the best reaction times and results possible for their clients, even if that means diving into industries that might appear to have little to do with real estate on the surface. For example, when temperatures skyrocketed in Texas earlier this year, ZVN leveraged meteorological data and forecasting information in order to prepare for action despite the events occurring over a holiday weekend. “We leverage technology that tells us what regions are likely to be hit by storms or weather events, including extreme temperatures,” Alfredo explained. “We can see these things at a ZIP code level and be prepared to respond.” In the case of extremely high temperatures in Texas, ZVN reached out to their vendor management team, which Alfredo described as “robust,” and challenged the team to contact all ZVN AC vendors in the potentially affected areas in order to assemble a list of at least three names per service region that would be willing to operate on a 24-hour rotation of availability over the long weekend. When units failed under the pressure of the sky-high temperatures, ZVN clients were able to provide fast, effective maintenance to residents who desperately needed access to cooler temperatures. “We went into that weekend knowing that if things went wrong (and they did for many residents), our partnerships with clients, vendors, and residents would effectively get us all through that,” Alfredo said. “We went in with a ‘crystal ball,’ but it took planning and communication to make sure we were all on the same page.” Lysikowski added each client file has a comprehensive asset list indicating where properties are located and what types of events might affect them. “When things like tornadoes happen, we get a ZIP-code level indicator that we can run through a portfolio to let us know what areas are likely affected by the event. This enables us to provide a fast and accurate response. Such a response might include emergency inspections for properties in the affected ZIP codes to check on residents or visual checks on vacant properties,” he said. “A lot of these potential issues are particularly hard on the elderly and families with children, so we make it a policy to always treat these issues with a sense of urgency,” Alfredo concluded. A History of Evolution & Customized Customer Service When Lysikowski founded ZVN just over 20 years ago, he did so in response to the “wild west” element of asset management preceding and during the housing crisis of the mid-2000s. ZVN started out in default services, striving to create order from the chaos that ensued as high volumes of properties plummeted into REO status and, eventually, institutional ownership. “It has been a very interesting journey over the last 20 years,” Lysikowski said. “No matter what area of real estate field services you are in — fixing properties, maintaining them, cutting the grass, etc. — there has been a parallel growth of the SFR industry and that service genre as all the volume hit [the sector].” He described a burgeoning need for services like ZVN, which considers itself a “one-stop-shop” for real estate services, and the emerging demand for centralized, professional, technology-savvy companies to manage services on a national level. “When we entered the industry, there was not a lot of regulation surrounding what we did,” he noted. “Fast-forward 18 years, and you had all