Industry Data

Home Prices in Nearly Half of Opportunity Zones Increase

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Median prices again rose year-over-year in two thirds of Opportunity Zones. That’s according to ATTOM Data Solutions’ third special report analyzing qualified Opportunity Zones established by Congress in the Tax Cuts and Jobs act of 2017. The report, released in late February, examined about 3,700 zones with sufficient sales data to analyze, meaning they had at least five home sales in each quarter from 2005 through the fourth quarter of 2019. The report found that about half the zones included in the report, where there was sufficient sales data, saw median home prices rise more than the national increase of 9.4% from the fourth quarter of 2018 to the fourth quarter of 2019. The report also shows that 78% percent of the zones had median home prices in the fourth quarter of 2019 that were less than the national median of $257,000.That’s almost the same percentage as in the third quarter of 2019. About 48% of the zones had median prices of less than $150,000. Among the report’s major findings for zones with sufficient data to analyze: Median prices rose from the fourth quarter of 2018 to the fourth quarter of 2019 in 66% of the Opportunity Zones. In 34% of zones, they declined or stayed the same. Median prices in 47% of Opportunity Zones rose year-over-year more than values increased nationally. The national increase from the fourth quarter of 2018 to the fourth quarter of 2019 was 9.4%. In 20 states, year-over-year median price increases in at least half the Opportunity Zones beat the national 9.4% figure. Those with the most such zones were Pennsylvania, North Carolina, Arizona, Ohio and New Jersey. Among the Opportunity Zones with sufficient data to analyze, California had the most, with 465, followed by Florida (332), Texas (234), Pennsylvania (166) and North Carolina (165). Of the zones analyzed, 1,776 (48%) had a median price of less than $150,000 in the fourth quarter of 2019, and 594 (16%) had medians ranging from $150,000 to $199,999. Another 529 (14%) ranged from $200,000 up to the national median price of $257,000, while 817 (22%) were more than $257,000. In metropolitan statistical areas with sufficient sales data to analyze, 84% of Opportunity Zones had median fourth quarter sales prices that were less than the median values for the surrounding MSAs. Among those, 25% had median sales prices that were less than half the figure for the MSAs. At the same time, 16% of the zones had median sales prices that were equal to or above the median sales price of the broader MSAs. The Midwest continued to have the highest rate of Opportunity Zone tracts with a median home price of less than $150,000 (73%), followed by the South (58%), the Northeast (51%) and the West (12%). States with the highest percentage of census tracts meeting Opportunity Zone requirements included Wyoming (17%), Mississippi (15%), Alabama (13%), North Dakota (12%) and New Mexico (12%). Washington, D.C., was also among the leaders (14%). Nationwide, 10% of all tracts qualify.

U.S. Homeowners Four Times as Likely to be Equity-Rich Than Seriously Underwater

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ATTOM Data Solutions reports that in the fourth quarter of 2019, equity-rich properties comprised 27% of all mortgaged homes. The highest equity levels were in the San Francisco Bay area. According to ATTOM’s fourth-quarter 2019 U.S. Home Equity & Underwater Report, released in early February, 14.5 million residential properties in the U. S. were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50% or less of their estimated market value. The count of equity-rich properties in the fourth quarter of 2019 represented 26.7%, or about one in four, of the 54.5 million mortgaged homes in the U.S. That percentage was unchanged from the third quarter of 2019. The report also shows that just 3.5 million, or one in 16, mortgaged homes in the fourth quarter of 2019 were considered seriously underwater, with a combined estimated balance of loans secured by the property at least 25% more than the property’s estimated market value. That figure represented 6.4% of all U.S. properties with a mortgage, down slightly from 6.5% in the previous quarter. The top 10 states with the highest share of equity-rich properties in fourth quarter 2019 were all in the Northeast and West regions, led by California (42.8% equity-rich), Vermont (39.2%), Hawaii (38.8%), Washington (35.4%) and New York (35.1%). States with the lowest percentage of equity-rich properties were Louisiana (13.6% equity-rich),Oklahoma (14.9%), Illinois (15.3%), Arkansas (16.3%) and Alabama (16.5%).

Apartment Market Growth in 2019

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Apartments.com and CoStar Group looked at rental markets in the U.S. with more than 50,000 units and have compiled the hottest markets of 2019 according to number of new units, highest rent levels and rent growths, and decreases in vacancies. With 19,522 apartment units built in 2019, Dallas-Fort Worth, Texas, leads the nation with the highest number of new units. For renters looking for a new home in Dallas, there are nearly 28,000 places to live available on Apartments.com currently. The average market rent was $1,191 a month, growing about 2.3% last year. According to Apartments.com, the average apartment rent in Dallas is $969 for a studio, $961 for one bedroom, $1,436 for two bedrooms, and $1,652 for three bedrooms. Following behind Dallas-Fort Worth is New York City with 17,075 new units, Washington, D.C. with 12,852, Chicago with 10,012 and Denver with 9,547. San Francisco had the highest recorded market rent level of 2019 in the nation. In the past year, apartment rent in San Francisco increased by 1.8%, with the market rent level now averaging at $3,110. There are more than 4,000 apartments available on Apartments.com for renters searching for a new home in San Francisco. Renters should be prepared to pay an average rent of $2,381 for a studio, $3,018 for one bedroom, $4,128 for two bedrooms, and $4,893 for three bedrooms. After San Francisco, New York CIty has the next highest rent level of $2,833, followed by $2,770 in San Jose, California, $2,525 in San Rafael, California and $2,314 in Boston, Massachusetts In 2019, Phoenix saw a 6.8% increase in market rent growth—the largest increase in the nation. Phoenix apartment rents average $828 for a studio, $975 for one bedroom, $1,139 for two bedrooms and $1,457 for three bedrooms. Other markets that saw great market rent growth in 2019 include Tucson, Arizona, with a 5.7% increase; Albuquerque, New Mexico, 5.1% increase; Las Vegas, Nevada, 4.6% increase; and Raleigh, North Carolina, 4.6% increase. Charleston, South Carolina, saw the largest vacancy decrease of 300 basis points in 2019. The vacancy rate moved from 12.2% at the end of 2018 to 9.1% at the end of 2019. The top five markets that saw the largest vacancy percentage decreases include Charleston, South Carolina; Baton Rouge, Louisiana; El Paso, Texas; Madison, Wisconsin; and Grand Rapids, Michigan.

U.S. Foreclosure Activity Drops to 15-Year Low

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ATTOM Data Solutions’ Year-End 2019 U.S. Foreclosure Market Report shows foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on 493,066 U.S. properties in 2019, down 21% from 2018 and down 83% from a peak of nearly 2.9 million in 2010 to the lowest level since tracking began in 2005. Those 493,066 properties with foreclosure filings in 2019 represented 0.36% of all U.S. housing units, down from 0.47% in 2018 and down from a peak of 2.23% in 2010. ATTOM’s year-end foreclosure report provides a unique count of properties with a foreclosure filing during the year based on publicly recorded and published foreclosure filings collected in more than 2,200 counties nationwide, with address-level data on nearly 25 million foreclosure filings historically, also available for license or customized reporting. The report also includes new data for December 2019, when there were 53,279 U.S. properties with foreclosure filings, up 7% from the previous month and up 2% from a year ago.

Average U.S. Home Seller Profits Hit New High

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ATTOM Data Solutions’ Year-End 2019 U.S. Home Sales Report shows that home sellers nationwide in 2019 realized a home price gain of $65,500 on the typical sale, up from $58,100 last year and up from $50,027 two years ago. The latest profit figure, based on median purchase and resale prices, marked the highest level in the U.S. since 2006. That $65,500 typical home seller profit represented a 34% return on investment compared to the original purchase price, up from 31.4% last year and up from 27.4% in 2017, to the highest average home-seller ROI since 2006. Both raw profits and ROI have improved nationwide for eight straight years. However, last year’s gain in ROI—up less than three percentage points—was the smallest since 2011. Among 220 metropolitan statistical areas with a population greater than 200,000 and sufficient historical sales data, those in western states continued to reap the highest returns on investments, with concentrations on or near the West coast. Metro areas with the highest home seller ROIs were in San Jose, California (82.8%); San Francisco, California (72.8%); Seattle, Washington (65.6%); Merced, California (63.2%) and Salem, Oregon (62.1%). The top four in 2019 were the same areas that topped the list in 2018. The U.S. median home price increased 6.2% in 2019, hitting an all-time high of $258,000. The annual home-price appreciation in 2019 topped the 4.5% rise in 2018 compared to 2017 but was down from the 7.1% increase in 2017 compared to 2016. Among 134 metropolitan statistical areas with a population of 200,000 or more and sufficient home price data, those with the biggest year-over-year increases in median home prices were South Bend, Indiana (up 18.4%); Boise City, Idaho (up 12.6%); Spokane, Washington (up 10.9%); Atlantic City, New Jersey (up 10.6%) and Salt Lake City, Utah (up 9.6%). Nationwide, all-cash purchases accounted for 25.3% of single-family home and condo sales in 2019, the lowest level since 2007. The latest figure was down from 27% in 2018 and 27.7% in 2017, and well off the 38.4% peaks in 2011 and 2012. However, this is still well above the pre-recession average of 18.7% between 2000 and 2007. Distressed home sales—including bank-owned (REO) sales, third-party foreclosure auction sales and short sales—accounted for 11.5% of all U.S. single-family home and condo sales in 2019, down from 12.4% in 2018 and from a peak of 38.8% in 2011. The latest figure marked the lowest point since 2006. Institutional investors nationwide accounted for 2.9% of all single-family home and condo sales in 2019, down from 3% in 2018 to the lowest point since 2015. Nationwide, buyers using Federal Housing Administration loans accounted for 11.9% of all single-family home and condo purchases in 2019, up from 10.6% in 2018. The increase marked the first rise since 2015. Among 197 metropolitan statistical areas with a population of at least 200,000 and sufficient FHA-buyer data, the top four with the highest share of purchases made with FHA loans were in Texas. Those with the highest levels of FHA buyers in 2019 were McAllen, Texas (30.4% of sales); El Paso, Texas (26%); Amarillo, Texas (24.4%); Beaumont-Port Arthur, Texas (23.7%) and Visalia, California (23.5%). The four Texas metros were the same that led the list in 2018.

Home Flipping Activity Drops, Returns Remain Near Seven-Year Low

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In the third quarter of 2019, overall home flips dropped 12.9% over the previous quarter and were down 6.8% from a year ago, according to ATTOM Data Solutions’ third-quarter 2019 U.S. Home Flipping Report. Home flipping rates were down in 78% of the local markets (115 of 147) analyzed in the report. This decline came after an unusually active flipping market in the spring. The declines stood out as the largest quarterly and annual drops since the third quarter of 2014. The homes flipped in the third quarter represented 5.4% of all home sales during the quarter. That level was down from 6% percent of all home sales in second quarter 2019, but up slightly from 5.2% a year ago. Homes flipped during the reporting period typically generated a gross profit of $64,900, an increase of 1.8% from the second quarter and 3.5% from a year ago. Still, that gross flipping profit translated into a 40.6% return on investment compared to the original acquisition price, which marked a decrease from the 41.1% gross flipping ROI in the second quarter. The latest returns on home flips stood at the second-lowest point since 2011, barely above the 40% ROI from the first quarter of this year. “After a springtime selling binge earlier this year, the home-flipping business settled way down over the summer amid a continuing scenario of languishing profits,” said Todd Teta, chief product officer at ATTOM Data Solutions. “The retreat back to more normal levels of sales comes amid broader market forces that are making it harder and harder for investors to complete the kinds of deals they were getting as recently as last year. Those forces are keeping profits way down from post-Recession highs and show no signs of easing.” Maksim Stavinsky, co-founder and COO of Roc Capital, noted that borrowers’ declining profits on flips are leading to much greater interest in renting out renovated properties instead of flipping them. “We have been seeing a decline in projected and realized profits for borrowers on projects, despite the fact that borrower financing costs have been meaningfully coming down,” said Stavinsky. “This has led to much greater interest and activity in our rental programs. We expect these trends to continue.” While home flips purchased with financing continued to drop in the third quarter, those bought with cash climbed, up from 56.3% in the second quarter and 54% a year ago. Eight markets bucked the trend, however, and had third quarter 2019 gross ROI flipping margins of at least 100%. Those markets included Pittsburgh, Pennsylvania (132.6%); Scranton, Pennsylvania (122.5%); Flint, Michigan (111.2%); Cleveland, Ohio (109.8%) and Hickory-Lenoir-Morganton, North Carolina (109.7%). Homes flipped in the third quarter of 2019 were sold for a median price of $224,900, with a gross flipping profit of $64,900 above the median purchase price of $160,000. That profit figure was up from a gross flipping profit of $63,750 in the previous quarter and up $62,700 in the third quarter of 2018. But with prices rising on investor-purchased homes, the median 40.6% return on investment was down from the post-Recession peak of 52.1% in the second and third quarters of 2016. The average time to flip nationwide in the third quarter was 177 days.