News Updates

Housing Costs Ease for Homeowners

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According to data released recently by the American Community Survey (ACS), the “burden” of housing costs has decreased for U.S. homeowners since the Great Recession peaked in 2008. The same is not true for renters—data show that burden to be stagnant. What is a “burdened” household? Those that spend at least 35% of their monthly income on housing costs, which can include mortgage, utilities, real estate taxes, property insurance and condominium or mobile home fees. In 2018 20.9% of homeowners with a mortgage were considered burdened—a decrease of approximately eight percentage points from a decade ago. In contrast, an estimated 40.6% of rental unit residents spent 35% or more of their monthly household income on rent and utility bills last year. Here are some additional highlights: In 2008, 43 metro areas reported that at least 40% of homeowners with a mortgage were burdened. There were none that fell in this category in 2018. In 2018, 53 metro areas reported that over 10% of homeowners without a mortgage were burdened, compared with 85 metro areas in 2008. The number of metro areas where more than 40% of renters were burdened in 2018 was 81, the same amount as a decade earlier. The ACS is an ongoing survey that publishes annual estimates on a range of housing, demographic, social and economic characteristics. ACS estimates from 2008 were based on data corrected after they were originally released. For more information, visit the U.S. Census Bureau.

Zombie Properties Slip Below 3 Percent of All Foreclosures Nationwide

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Today’s ATTOM Data Solutions’ fourth quarter Vacant Property and Zombie Foreclosure report reveals that more than 1.5 million U.S. single family homes and condos, representing 1.5 percent of all homes, were vacant in the fourth quarter of 2019. The report shows that during the fourth quarter of 2019, about 288,300 homes were in the process of foreclosure, with 8,535 (2.96%) sitting empty as “zombie” foreclosures. The percentage of zombie properties is down from 3.2% in third quarter 2019 and 4.7% in third quarter 2016. “The fourth quarter of 2019 was a repeat of the third quarter when it came to properties abandoned by owners facing foreclosure: the scourge continued to fade. One of the most visible signs of the housing market crash during the Great Recession keeps receding into the past,” said Todd Teta, chief product officer with ATTOM Data Solutions. “While pockets of zombie foreclosures remain, neighborhoods throughout the country are confronting fewer and fewer of the empty, decaying properties that were symbolic of the fallout from the housing market crash during the recession.” Here are some of the report’s highlights: A total of 8,535 properties facing possible foreclosure were vacated by their owners nationwide in the fourth quarter of 2019. Washington, D.C., continued to have the highest percentage of zombie foreclosures (10.5%). States where the zombie foreclosure rates were above the national rate of 2.9 percent included Kansas (7.9%), Oregon (7.9%), Montana (7.4%); Maine (6.7%) and New Mexico (5.8%). The lowest rates – all less than 1.2 percent – were in North Dakota, Arkansas, Idaho, Colorado and Delaware. New York had the highest actual number of zombie properties (2,266), followed by Florida (1,461), Illinois (892), Ohio (823) and New Jersey (398). Still, those numbers were lower than third quarter 2019. Among metropolitan areas with at least 100,000 residential properties, Peoria, Illinois, continued to have the highest percent of vacant foreclosures (zombies) at 13.5%, followed by Wichita, Kansas (10.2%); Lexington, Kentucky (9.8%); Syracuse, New York (9.3%) and Honolulu, Hawaii (8.6%). Among Zip codes with a population of 10,000 or more and least 1,000 vacant properties, the highest rates of zombie foreclosure properties were concentrated in the Midwest. Zip codes with the top percentages included the 48505 and 48504 Zip codes in the Flint, Michigan, metro area; the 46407 and 60426 Zip codes in the Chicago, Illinois, metro area; the 29928 Zip code in the Hilton Head, South Carolina, metro area; and the 46016 Zip code in the Indianapolis, Indiana metro area. The top zombie foreclosure rates in counties with at least 500 properties in foreclosure included Peoria County, Illinois (17.2%); Baltimore City/County, New York (11.5%); Broome County, New York (10.3%); Onondaga County, New York (9.7 %); and Cuyahoga County, Ohio (9.4%). The highest levels of vacant investor-owned homes were in Indiana (8.7%), Kansas (6.6%), Minnesota (6%), Ohio (5.9%) and Rhode Island (5.9%). The highest overall vacancy rates for all residential properties were in Tennessee (2.7%); Kansas (2.7%); Indiana (2.6%); Oklahoma (2.5%) and Mississippi (2.5%). The lowest were in New Hampshire (0.4%); Vermont (0.4%); Delaware (0.5%); Idaho (0.6%) and North Dakota (0.7%). The full report is available at https://www.attomdata.com/news/market-trends/q4-2019-vacancy-and-zombie-foreclosure-report.

Third Quarter Foreclosure Activity at Lowest Level Since 2005

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A mid-October report released by ATTOM Data Solutions shows a total of 143,105 U.S. properties with foreclosure filings in third quarter 2019. That’s down 6% from the second quarter and 19% from a year ago, marking the lowest level since the second quarter of 2005. U.S. foreclosure activity in the third quarter was 49 percent below the pre-recession average of 278,912 properties with foreclosure filings per quarter between first quarter 2006 and third quarter 2007—the 12th consecutive quarter in which U.S. foreclosure activity has registered below the pre-recession average. Still, Todd Teta, chief product officer at ATTOM Data Solutions, said: “This is not to say that everything in the latest foreclosure picture is rosy. Some states have seen their foreclosure rates increase this year, which could cause some concern. But overall, the foreclosure numbers reflect a market in which buyers can afford their homes and lenders remain careful in loaning to home buyers who have little chance of repaying.” During the third quarter, lenders began the foreclosure process on 78,394 U.S. properties, down 8% from the previous quarter and down 15% from a year ago. The 14 states posting year-over-year increases in foreclosure starts in third quarter 2019 included Montana (up 33%); Georgia (up 32%); Washington (up 16%); Louisiana (up 15%); and Michigan (up 12%). Several metropolitan statistical areas also countered the national trend. Of the 220 metropolitan statistical areas analyzed in the report, 66 posted a year-over-year increase in foreclosure starts in the third quarter. Those markets with at least 1 million people that posted year-over-year increases included Atlanta, Georgia (up 37%); Columbus, Ohio (up 27%); San Antonio, Texas (up 24%); Portland, Oregon (up 22%); and Tucson, Arizona (up 21%). The states with the highest foreclosure rates during the time period analyzed were Delaware, New Jersey, Maryland, Illinois and Florida. Among 220 metropolitan statistical areas analyzed in the report, those with the highest foreclosure rates in the third quarter were Atlantic City, New Jersey; Trenton, New Jersey; Rockford, Illinois; Fayetteville, North Carolina; and Peoria, Illinois. Lenders repossessed 34,432 U.S. properties through foreclosure (REO) in the third quarter. That’s up 6% from the second quarter but down 33% from a year ago. Properties foreclosed in the third quarter had been in the foreclosure process an average of 841 days, up from 716 days in the second quarter and up from 713 days during the same period a year ago. View the full report here.

Announcing . . .

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You’re Invited . . . To Receive Advance Access to New Listings REI INK magazine is excited to announce the launch of the REI Referral Network. Real estate investors and service providers are invited to join this membership platform to connect with real estate agents who are active in the investment space. For our inaugural launch, we are offering FREE memberships for the first 500 investors who enroll. Your complimentary membership is good through March 2020. There are associations that connect lenders with investors, but none that connect investors with real estate agents and brokers. Our network of real estate agents and brokers are well versed in the business of real estate and are fluent in the criteria investors use to analyze their asset acquisition and disposition strategies. As a member, among other benefits, you will learn how regional markets are performing, receive localized information that will help you expand your portfolio and have access to a database of Real Estate Professionals listed by state and by county to accurately align with your industry focus. We understand the investor arena and believe our referral network members will help you develop strategies to meet and exceed your ROI projections. We look forward to working with you and assisting in your ROI performance.

Mom-and-Pop Investors Fueling Foreclosure Auction Market

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According to the 2019 Buyer Insights Survey Report, released this week by Auction.com, more than half of foreclosure auction buyers are mom-and-pop investors who are purchasing between one and five properties a year. The survey found that 51 percent of foreclosure auction buyers plan to purchase fewer than five properties in 2019, and 22 percent plan to purchase more than 10 properties for the year. Only 2 percent of buyers said they plan to purchase more than 100 properties in 2019. “Foreclosure auctions are no longer dominated by larger investors able to navigate what was an opaque process of purchasing a property at the courthouse steps or from a hard-to-find REO asset manager,” said Jason Allnutt, Auction.com CEO. ”The majority of foreclosure and REO auction buyers are now smaller, mom-and-pop investors who are taking advantage of a much more accessible buying experience.” Among the report’s additional highlights: 73 percent are purchasing properties in the South region of the country, the highest share of any region. Other regions of the U.S. came in at Midwest (39%), Northeast (22%) and West (13%). 24 percent said their local housing market is overvalued, with a correction possible. 33 percent expect to see home price appreciation between 3 and 5 percent over the next 12 months. Novice investors were identified as the biggest competitive threat to buyers surveyed. Rehab-and-flip was the most popular investing strategy. 49 percent budget at least 20 percent of the property purchase price for rehab costs. The Auction.com 2019 Buyer Insights Survey Report is based on a survey sent to more than 4,700 buyers who had purchased at least three properties on the Auction.com platform. The survey was conducted between June 6 and June 20, 2019, with 197 buyers responding.

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Doorstead, an operations technology company, has raised $3.3 million in funding, according to an October 8 press release. The company has pioneered a new class of property management called “iRenting,” a model that provides landlords with a guaranteed rental income, regardless of occupancy, with rental offers within hours. Doorstead was co-founded by Ryan Waliany and Jennifer Bronzo. Waliany was previously a technology-operations expert at Uber. Bronzo is a tech entrepreneur who grew up managing properties for her family’s construction company. The founding team are all alumni of UC Berkeley and have built technology-operations products at Uber, engineered scalable systems at Doordash and Dropbox, and built forecasting models at Goldman Sachs. The company uses modern data science to model risk alongside operations technology that enables consistent high-quality service at scale. “Today, we are seeing the emergence of operations-technology companies like Uber, DoorDash and Opendoor with both operations and technology crafted into their DNA. At Doorstead, we believe that software cannot exist without the human component, and the operations cannot exist without software orchestrating the process,” said Doorstead CEO Waliany. Doorstead has met 100% of its guarantees, reduced vacancies by as much as 76% and helped owners earn up to 9% more in annual rental income, according to the release. Doorstead currently serves the San Francisco Bay Area. The company plans to expand into Sacramento and Los Angeles. The seed round was co-led by global investment firms M13 and Silicon Valley Data Capital with participation from the Venture Reality Fund and SOMA Capital.