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Real Estate Investors Find Growth Opportunities in a Contracting Market

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Purchases increased by 49% in the Midwest and 24% in the West Q/Q from New Western’s 150,000+ investors New Western, the largest national private real estate investment marketplace, announced its continued momentum from 2022 into Q1 2023, including a double digit surge in growth over the last quarter. Powered by New Western, local independent investors found opportunities in the midst of a tumultuous housing market. While iBuyers and institutional buyers have been struggling and exiting the market, down 80 percent from Q4 2021 to Q4 2022, New Western has seen steady growth and a rise in activity among its 150,000+ investors. From Q4 2022 to Q1 2023, New Western saw significant increases in over a dozen markets, including: On average, investor-bought homes in these markets sold for 36% below median home prices in the same market based on February 2023 data from Redfin and New Western. Other notable markets that grew from both Q4 2022 to Q1 2023 and Q1 2022 to Q1 2023 include Houston, Chicago and Dallas, Texas. “Our non-traditional approach to residential real estate investing allows us to roll with the same punches that have knocked out bigger players,” says Kurt Carlton, co-founder and president of New Western. “The U.S. housing market is experiencing a supply shortage. In fact, the gap between family formation and single family homes totals as high as six-and-a-half million by some accounts from 2012 to 2022. As our investor purchases rise, independent flippers are not only making a profit but also putting a much needed category of homes back into inventory. The Midwest and West are attractive growth markets and we’re excited to see this momentum continue throughout the year. “ New Western operates a marketplace that supplies properties to the largest segment of independent investors in the nation, who own 82% of the investment market share, and have the local expertise needed to flourish. The two regions that grew the most in Q1 2023 from Q4 2022 were the Midwest with an increase of 49 percent in investor purchases and the West with 24 percent growth. New Western has also identified the Southeast and Midwest regions as areas for expansion and opportunity for residential real estate investors in 2023, especially as both saw an increase in investor purchases in Q1 2023, the South grew by 16% from Q4 2022 to Q1 2023. Earlier this year, New Western opened two new offices, one in Virginia Beach, Va. and another in St. Louis, Mo. bringing the company up to 52 offices nationwide. This has compounded on New Western’s 2022 growth when it launched 15 new offices, and hired 60 additional people per month, leading to a 64 percent growth in corporate employee hires. For more information about New Western, please visit https://www.newwestern.com. About New Western New Western is a real estate investment marketplace that makes investing more accessible for more people. Operating in most major cities, our marketplace connects more than 150,000 local investors looking to rehab houses with sellers. As the largest private source of investment properties in the nation, we buy a home every 13 minutes. New Western delivers new opportunity for all—a fresh start for sellers, exclusive inventory for investors, and in doing so, creates housing that is more affordable for buyers. For more information, visit www.newwestern.com. SOURCE New Western Author admin View all posts

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Single-family rental veteran will architect solutions to address needs and challenges of today’s commercial and residential clients Lessen, the premier tech-enabled, end-to-end solution for outsourced real estate property services, continues to enhance its leadership team by appointing Justin Iannacone as chief process & innovation officer. “This is an exciting time at Lessen and having the right executive team in place is essential as we continue to build on our momentum,” said Jay McKee, CEO of Lessen. “Justin has a long track record of operationalizing innovative ideas that solve complex logistical problems, and his experience and expertise will be of enormous value as we continue to transform the business, innovate and enhance Lessen’s value proposition of simplifying property services and distributed facilities management in the commercial and residential real estate sectors.” Iannacone will partner with our customers and senior leadership team to optimize our business from a strategic, financial and operational standpoint that addresses the needs and challenges of today’s commercial and residential clients. He will focus on improving how Lessen goes to market, scales in the marketplace, services clients and manages strategic partnerships with our vendors and suppliers to enhance our property services. As a former executive and co-founder of Colony American Homes, Iannacone oversaw all aspects of maintenance and construction across the U.S. for one of the largest single-family residential REITs in the country. Iannacone was responsible for building and scaling the construction platform, which included oversight of thousands of renovations, turns and maintenance work orders annually. While at Colony American Homes, he identified and led the integration and rollout of a strategic partnership with SMS Assist (acquired by Lessen in January), becoming the first institutional single-family rental owner to leverage the tech-enabled maintenance solution in the industry. In addition, Iannacone led several other industry-leading initiatives, including development of a proprietary scoping and estimation tool, and one of the first mass deployments of smart home technology across over 30,000 homes. “As a co-founder of Colony American Homes over a decade ago, I have a long history in the single-family rental industry and a deep passion for building and growing real estate platforms,” said Iannacone. “I’m thrilled to rejoin forces with Jay to help Lessen continue its journey of being the premier industry leader of tech-enabled property service solutions. I believe in the power of intuitive technology to drive process efficiencies and cost savings while enhancing the customer experience along the way.” Iannacone added, “Having worked alongside Jay and many of the Lessen and SMS Assist executives over the last 10 years, I’m honored to have the opportunity to take on such an exciting role focused on continuous improvement and driving operational excellence.” About Lessen Lessen, together with SMS Assist, is the world class, tech-enabled, end-to-end property service provider transforming how commercial and residential real estate services are delivered and managed at scale. Our technology platform provides data-driven insights that unlock key growth opportunities for the entire real estate ecosystem—including investors, owners, managers, and service providers. Lessen enables local field managers to deploy and oversee a network of vetted, qualified vendors acting as one unit across distributed property portfolios—serving a national footprint of more than 1 million properties and completing more than 2.5 million work orders annually across an expanding range of services. Lessen, Inc. is a venture-backed, privately held company with offices in Scottsdale and Chicago. To learn more, visit Lessen.com. Author admin View all posts

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15% more borrowers purchased mortgage points in 2022 than 2021, and continue to do so as interest rates hover around 6% Interest rates remain high and home buyers are looking for ways to save money, including buying mortgage points. A recent analysis of data from the Home Mortgage Disclosure Act (HMDA) by Zillow Home Loans finds nearly 45% of conventional primary home borrowers opted to purchase mortgage points in 2022 as a way to reduce their monthly payment. The historically low interest rates of 2019–2021 saw far fewer buyers opting for points — 29.6% in 2021, 28.4% in 2020 and 27.3% in 2019. And borrowers who opted for a cash-out refinance loan (on a conventional loan for a primary home) bought even more points in 2022 — 57.8% of these borrowers purchased points (compared with 48.4% in 2021, 44.2% in 2020 and 41.3 in 2019). Mortgage points, also known as discount points, are an option for buyers to pay an upfront fee to buy down the interest rate on a loan. The term “points” is a common way of referring to a percentage of your loan amount. When buyers choose to purchase mortgage discount points, they are essentially pre-paying interest up front in exchange for a lower rate and monthly payment. While buying points is more common now, it’s most often used by borrowers who make less than their area’s median income (between 30% and 50% of their area’s median income) and are most concerned about monthly payments. Those who make less than 30% of an area’s median income purchased the most points overall for homes in the bottom price tier. Regardless of income level, borrowers were more likely to purchase points for homes in the top and middle price tiers, than for homes in the bottom price tier. This could be because the impact of lowering interest rates is greater on more expensive mortgages. Reducing interest rates doesn’t come for free, and buyers need to determine if paying up front to reduce the fee in favor of lower monthly payments is worth it. Generally, mortgage applicants need to pay 1% of the loan amount to cut the interest rate by 0.25%. A break-even calculator can help buyers determine if paying more now to buy points could save them money in the long run. “Buying points can be a great option to improve monthly affordability — there are many different mortgage products, including buying points and the 2/1 buydown buyers can explore,” said Erika Kerry, loan officer at Zillow Home Loans. “These options are good examples of why it is so important to work with a knowledgeable loan officer. The loan officer should be a partner in the buying process, helping explain options so buyers can make an educated decision.” Affordability remains a top concern for home shoppers. A recent Zillow analysis found that nationally, home values are about 25% above where they would need to be for affordability to return to historical norms. These challenges should not be confused with a lack of desire to purchase a home. For those who can afford to buy now, they should find less competition than the buying frenzy of years past. This means buyers are more likely to get into the right house, as opposed to the only house they can find, which is important considering the majority of homeowners are in their home for about 15 years. SOURCE Zillow Home Loans Author admin View all posts

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S&P Dow Jones Indices (S&P DJI) released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released for February 2023 show a modest increase in our national composites, although eight of the 20 major metro markets reported lower prices. More than 27 years of history are available for the data series and can be accessed in full by going to www.spglobal.com/spdji/en/index-family/indicators/sp-corelogic-case-shiller. YEAR-OVER-YEAR The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 2.0% annual gain in February, down from 3.7% in the previous month. The 10-City Composite annual increase came in at 0.4%, down from 2.5% in the previous month. The 20-City Composite posted a 0.4% year-over-year gain, down from 2.6% in the previous month. Miami, Tampa, and Atlanta again reported the highest year-over-year gains among the 20 cities in February. The order remained the same with Miami leading the way with a 10.8% year-over-year price increase, followed by Tampa in second with a 7.7% increase, and Atlanta in third with a 6.6% increase. All 20 cities reported lower prices in the year ending February 2023 versus the year ending January 2023. MONTH-OVER-MONTH Before seasonal adjustment, the U.S. National Index posted a 0.2% month-over-month increase in February, while the 10-City and 20-City Composites posted increases of 0.3% and 0.2%, respectively. After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.2%, while both the 10-City and 20-City Composites posted increases of 0.1%. ANALYSIS “Home price trends moderated in February 2023,” says Craig J. Lazzara, Managing Director at S&P DJI. “The National Composite, which had declined for seven consecutive months, rose a modest 0.2% in February, and now stands 4.9% below its June 2022 peak. Our 10- and 20-City Composites performed similarly, with February gains of 0.3% and 0.2%; these Composites are currently 6.0% and 6.6% below their respective peaks. On a trailing 12-month basis, the National Composite is only 2.0% above its level in February 2022; the 10- and 20-City Composites are both up 0.4% on a year-over-year basis. “The moderation we observed nationally is also apparent at a more granular level. Before seasonal adjustment, prices rose in 12 cities in February (versus in only one in January). Seasonally adjusted data showed nine cities with rising prices in February (versus five in January). With or without seasonal adjustment, most cities’ February results showed improvement relative to their January counterparts. “February’s results were most interesting because of their stark regional differences. Miami’s 10.8% year-over-year gain made it the best-performing city for the seventh consecutive month. Tampa (+7.7%) and Atlanta (+6.6%) continued in second and third place, with Charlotte (+6.0%) close behind. Results were different in the Pacific and Mountain time zones. Last month, four West Coast cities (San Francisco, Seattle, San Diego, and Portland) were in negative year-over-year territory. In February they were joined by four of their western neighbors, as Las Vegas (-2.6%), Phoenix (-2.1%), Los Angeles (-1.3%), and Denver (-1.2%) all tipped into negative territory. It’s unsurprising that the Southeast (+7.8%) remains the country’s strongest region, while the West (-4.2%) continues as the weakest. “The results released today pre-date the disruptions in the commercial banking industry which began in early March. Although forecasts are mixed, so far the Federal Reserve seems focused on its inflation-reduction targets, which suggests that interest rates may remain elevated, at least in the near-term. Mortgage financing and the prospect of economic weakness are therefore likely to remain a headwind for housing prices for at least the next several months.” For more information about S&P Dow Jones Indices, please visit www.spglobal.com/spdji. ABOUT S&P DOW JONES INDICES S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than products based on indices from any other provider in the world. Since Charles Dow invented the first index in 1884, S&P DJI has been innovating and developing indices across the spectrum of asset classes helping to define the way investors measure and trade the markets. S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spglobal.com/spdji. Author admin View all posts

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Black Knight, Inc. reports the following “first look” at March 2023 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market. Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 2.92%Month-over-month change: -15.23%Year-over-year change: -13.23% Total U.S. foreclosure pre-sale inventory rate: 0.46%Month-over-month change: -0.21%Year-over-year change: 13.24% Total U.S. foreclosure starts: 32,000Month-over-month change: 9.03%Year-over-year change: -5.69% Monthly prepayment rate (SMM): 0.50%Month-over-month change: 44.42%Year-over-year change: -61.41% Foreclosure sales: 7,500Month-over-month change: 4.59%Year-over-year change: 24.64% Number of properties that are 30 or more days past due, but not in foreclosure: 1,539,000Month-over-month change: -272,000Year-over-year change: -209,000 Number of properties that are 90 or more days past due, but not in foreclosure: 511,000Month-over-month change: -51,000Year-over-year change: -331,000 Number of properties in foreclosure pre-sale inventory: 240,000Month-over-month change: 0Year-over-year change: 31,000 Number of properties that are 30 or more days past due or in foreclosure: 1,779,000Month-over-month change: -272,000Year-over-year change: -178,000 Top 5 States by Non-Current* Percentage Mississippi: 7.05 % Louisiana: 6.61 % Alabama: 5.13 % West Virginia: 4.55 % Pennsylvania: 4.53 % Bottom 5 States by Non-Current* Percentage California: 2.03 % Montana: 1.95 % Idaho: 1.86 % Washington: 1.83 % Colorado: 1.80 % Top 5 States by 90+ Days Delinquent Percentage Mississippi: 2.36 % Louisiana: 1.98 % Alabama: 1.62 % Arkansas: 1.43 % Georgia: 1.30 % Top 5 States by 12-Month Change in Non-Current* Percentage Alaska: -28.18 % Vermont: -24.48 % Connecticut: -21.67 % New Jersey: -18.90 % New York: -18.77 % Bottom 5 States by 12-Month Change in Non-Current* Percentage Idaho: -0.60 % South Dakota: -0.93 % Florida: -4.01 % Michigan: -4.66 % Utah: -5.17 % *Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state. For more detailed view of this month’s “first look” data, please visit the Black Knight newsroom. The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by detailed charts and graphs that reflect trend and point-in-time observations. The Mortgage Monitor report will be available online at https://www.blackknightinc.com/data-reports/ by May 1, 2023. For more information about gaining access to Black Knight’s loan-level database, please send an email to Mortgage.Monitor@bkfs.com. Author admin View all posts

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Investors are selling at a loss as elevated mortgage rates curtail homebuyer demand. Roughly one of every seven (13.5%) U.S. homes sold by an investor in March sold for less than the investor bought it for, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s comparable with February’s 14.5% rate—the highest since 2016. It’s also nearly triple the share of a year earlier and compares with a record low of 2.8% in May. By comparison, 4.8% of overall U.S. homes that sold in March sold at a loss. This is according to a Redfin analysis of county records and MLS data across 40 of the most populous U.S. metropolitan areas. Redfin defines an investor as any institution or business that purchases residential real estate, including both large companies and mom-and-pop investors. While most housing investors still reaped gains, those gains have shrunk. The typical investor who sold a home in March sold it for 45.9% more ($145,714) than the price they paid, down from 55.3% ($173,458) a year earlier and a pandemic peak of 67.9% ($199,274) in June 2022. It’s important to note that gains don’t necessarily equal profits. Just because an investor sold a home for $145,000 more than they paid doesn’t mean they’re making money because they may have spent more than that on renovating the property. “Home flippers aren’t reaping the gains they used to,” said Phoenix Redfin agent Van Welborn. “I recently showed one of my buyers a three-bedroom single-family home in Glendale that was listed by an investor. My client ultimately found another house they liked better, and the investor ended up losing about $20,000. The investor bought the home for $450,000 and sold it for $480,000, but put $50,000 of work into it. The house also sold below the $550,000 list price after sitting on the market for almost four months.” Investors Are Losing Money as Mortgage Rates Rise, Homebuyer Demand Drops Investors are making less money selling homes—and losing money in some cases—because the housing market has slowed dramatically in response to rising mortgage rates. The average 30-year-fixed mortgage rate is 6.39%, down from the 20-year high of 7.08% in the fall, but up from 5.11% a year ago and a record low of 2.65% during the height of the pandemic in January 2021. Higher mortgage payments have eaten into investor profits, and sent the typical homebuyer’s monthly payment up nearly $300 from a year ago, which has slowed homebuying demand and pushed down sale prices. As a result, the share of investor-owned homes selling at a loss has increased. While many investors buy homes in cash, they’re still sensitive to high interest rates because they often take out loans to get that cash. “You might wonder why investors don’t just wait to sell until the housing market bounces back. Many long-term investors who rent their properties out are doing that, but many flippers—especially those who bought recently—can’t afford to,” said Redfin Senior Economist Sheharyar Bokhari. “Holding onto homes that aren’t producing income can be expensive because the owner is on the hook for property taxes, along with operating costs and monthly mortgage payments in some cases. Many short-term investors are also opting to sell because they know prices may have more room to fall and want to cut their losses.” Roughly one in five (20.8%) homes sold by flippers in March sold at a loss, higher than the 13.5% share for investors overall. For the purposes of this analysis, Redfin defines a flipper as an investor that bought a home and resold it within nine months. Investors who rent out their properties are also seeing their returns shrink in some areas. The median U.S. asking rent fell 0.4% year over year in March—the first annual drop in three years—and 13 major metros saw larger declines. Owners of short-term rentals are getting hit as well. The Airbnb market is oversaturated with supply, and authorities are imposing tougher restrictions on hosts, driving some to sell, Redfin agents said. Overall, investor activity has fallen significantly from the height of the pandemic, when record-low mortgage rates and soaring homebuyer demand drove up investor purchases. Redfin recently reported that investor purchases declined a record 46% year over year in the fourth quarter. Investors Are Most Likely to Sell at a Loss in Phoenix, Las Vegas In Phoenix, 30.7% of homes sold by investors in March sold at a loss—the highest share of the 40 metros Redfin analyzed and more than double the national rate. Next came Las Vegas (28%), Jacksonville, FL (20.9%), Sacramento, CA (20.2%) and Charlotte, NC (17.4%). The markets where investors are most likely to lose money are the places where home purchases—by investors and individual house hunters alike—soared during the pandemic. Many of those markets are also on the list of housing markets that are now cooling fastest. Pandemic boomtowns are seeing home prices and sales fall relatively quickly because housing costs surged to unsustainable levels during the pandemic, pricing out many house hunters, and elevated mortgage rates then added fuel to the fire. Redfin agents say that small, individual investors are often the ones offloading their properties now, while many large investment companies are waiting on the sidelines for the market to improve. “Most of the investors I see selling now are mom-and-pop investors,” said Las Vegas Redfin real estate agent Shay Stein. “They’re selling because their long-term tenants are moving out, they want to put their money elsewhere, or they just want to get out because they have heartburn from 2008. The best time to sell would’ve been late 2021 or early 2022, but many of them are thinking that the next best time is now because the economy and home prices could slow further.” While a lot of large investors are holding onto their properties, iBuyers (instant buyers) are the exception, according to Stein. Many iBuying companies, including RedfinNow, ceased or slowed operations in the last two years and have been offloading inventory. That’s likely part of