Newsletter – Page 123

Housing Supply Shortage Intensifies, Driving Prices Up 18%

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Homes sell at their fastest pace on record with nearly half off-market within one week The median home-sale price increased 18% year over year to $344,625—an all-time high—according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Below are other key housing market takeaways for more than 400 U.S. metro areas during the 4-week period ending April 18. Note that at this time last year, pandemic stay-at-home orders halted homebuying and selling, which makes year-over-year comparisons unreliable for select housing metrics. As such, Redfin has broken this analysis into two sections: metrics that are acceptable to compare to the same period in 2020, and metrics for which it makes more sense to compare to the same period in 2019. Metrics to compare to 2020: Asking prices reached an all-time high of $356,175. Homes that sold during the period were on the market for a median of 21 days, the shortest time on market since 2012. This was 16 days fewer than the same period in 2020. 45% of homes sold for more than their list price, an all-time high. This was 18 percentage points higher than the same period a year earlier. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased 2.3 percentage points year over year to an all-time high of 101.0%, meaning the average home sold for 1% more than its asking price. 58% of homes that went under contract had an accepted offer within the first two weeks on the market. This was a new all-time high (Redfin’s data for this measure goes back to 2012). 46% of homes that went under contract had an accepted offer within one week of hitting the market, an all-time high. Metrics to compare to 2019: Pending home sales were up 23% from the same period in 2019. New listings of homes for sale were down 10% from the same period in 2019. Active listings (the number of homes listed for sale at any point during the period) fell 47% from the same period in 2019 to a new all-time low. Mortgage purchase applications increased 6% week over week (seasonally adjusted). For the week ending April 22, 30-year mortgage rates fell to 2.97%, the lowest level since the week ending February 25. “There has been an ongoing debate at Redfin about whether fear of coronavirus infection was keeping homeowners from selling. With a third of American adults now fully vaccinated and still hardly any homes being listed for sale, we’re close to settling that debate,” said Redfin Chief Economist Daryl Fairweather. “Homeowners are staying put because if they move and buy another home they will face a very competitive housing market as buyers, and they don’t need to sell to take advantage of record low mortgage rates. They can just refinance their current home. On top of that, builders are struggling to construct new homes given an ongoing lumber shortage. Without more homeowners listing, buyers are scrambling to compete for the limited number of homes on the market, which continues to drive prices up to new heights.” To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/housing-market-update-home-prices-up-18-pct/ About RedfinRedfin (www.redfin.com) is a technology-powered real estate broker, instant home-buyer (iBuyer), lender, title insurer, and renovations company. We sell homes for more money and charge half the fee. We also run the country’s #1 real-estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can take an instant cash offer from Redfin or have our renovations crew fix up their home to sell for top dollar. Since launching in 2006, we’ve saved customers nearly $1 billion in commissions. We serve more than 95 markets across the U.S. and Canada and employ over 4,100 people. For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email press@redfin.com. To view Redfin’s press center, click here.

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ATTOM Data Solutions, curator of the nation’s premier property database, released its first-quarter 2021 Special Coronavirus Report spotlighting county-level housing markets around the United States that are more or less vulnerable to the impact of the Coronavirus pandemic that continues to impact the U.S. economy. The report shows that states along the East Coast, as well as Illinois, were most at risk in the first quarter of 2021 – with clusters in the New York City, Chicago and southern Florida areas – while the West continued to face less risk. The report reveals that Florida, Illinois, New Jersey, Connecticut and North Carolina had 33 of the 50 counties most vulnerable to the economic impact of the pandemic in the first quarter of 2021. They included seven suburban counties in the Chicago metropolitan area, four near New York City, five in southern Florida and two around Hartford, CT. The only three western counties in the top 50 during the first quarter of 2021 were in northern California, while the only southern state outside of the East Coast with more than two counties in that group was Louisiana. First-quarter trends generally continued those found in 2020, but with smaller concentrations around several major metropolitan areas. The number of counties among the top 50 most at-risk was down in the New York, NY; Philadelphia, PA and Washington, D.C. metro areas. Markets were considered more or less at risk based on the percentage of homes facing possible foreclosure, the portion with mortgage balances that exceeded the estimated property value and the percentage of average local wages required to pay for major home ownership expenses. The conclusions are drawn from an analysis of the most recent home affordability, equity and foreclosure reports prepared by ATTOM. Rankings were based on a combination of those three categories in 552 counties around the United States with sufficient data to analyze in the first quarter of 2021. Counties were ranked in each category, from lowest to highest, with the overall conclusion based on a combination of the three ranks. (See below for the full methodology.) The findings follow one of the housing market’s strongest years in the past decade, when the median single-family home price rose more than 10 percent across much of the nation. They also come at a time of increased financial optimism, with retail sales up in 2021, new unemployment claims down and a second round of federal government stimulus money coursing through the economy. But the pandemic remains a threat to the economy as new virus variants emerge, and additional clusters of new cases crop up in various parts of the country. “Clearly, the housing market continues to surge, and things are looking up, more and more, for the U.S. economy in 2021, after a year of major setbacks in many sectors. But the pandemic still looms large and may pose a threat to the progress made so far, and by extension could affect home sales and prices,” said Todd Teta, chief product officer with ATTOM Data Solutions. “Our analysis suggests that even as the market remains hot, pockets of the East Coast, Midwest and South are at higher risk from potential damage connected to the pandemic. We will stay on top of this as the crucial months ahead should reveal whether the country can leave this crisis behind.” Most vulnerable counties clustered around New York City, Chicago and southern Florida Seventeen of the 50 U.S. counties most vulnerable in the first quarter of 2021 to housing market troubles connected to the pandemic (from among the 552 counties with enough data to be included in the report) were in the areas around New York, NY, and Chicago, IL, as well in southern Florida. They included seven in the Chicago metro area (De Kalb, Du Page, Kane, Kendall, Lake, McHenry and Will counties) and four in the New York City metro area (Essex, Middlesex, Ocean and Sussex counties in New Jersey). The five in southern Florida were Charlotte County (Punta Gorda), Highlands County (Sebring), Indian River (Vero Beach), Manatee County (Bradenton) and Saint Lucie County (Port St. Lucie). Florida also had another six counties in the top 50 spread across the state: Bay County (Panama City), Clay County (Jacksonville), Escambia County (Pensacola), Flagler County (Daytona Beach), Lake County (Orlando) and Osceola County (Orlando). New Jersey also had another two in the top 50, Atlantic County (Atlantic City) and Cumberland County (Vineland), and Illinois had one more, Tazewell County (Peoria). In addition, Louisiana had five counties in the top 50 during the first quarter – Saint Tammany and Tangipahoa parishes, both north of New Orleans, plus Ascension and Livingston parishes, both outside Baton Rouge, and Caddo Parish (Shreveport). The only western counties among the top 50 most at risk from problems connected to the Coronavirus outbreak in the first quarter of 2021 were Butte County (Chico), CA; Humboldt County (Eureka), CA and Shasta County (Redding), CA. Higher levels of unaffordable housing, underwater mortgages and foreclosure activity in most-at-risk counties Major home ownership costs (mortgage payments, property taxes and insurance) consumed more than 30 percent of average local wages in 25 of the 50 counties that were most vulnerable to market problems connected to the virus pandemic in the first quarter of 2021. The highest percentages in those counties were in Beaufort County (Hilton Head), SC (43.6 percent of average wages needed for major ownership costs); Sussex County, NJ (40.6 percent); Manatee County (Bradenton), FL (39.9 percent); Kendall County, IL (outside Chicago) (39.7 percent) and Ocean County, NJ (New York City) (39.6 percent). At least 15 percent of mortgages were underwater in the fourth quarter of 2020 (the latest data available on owners owing more than their properties are worth) in 32 of the 50 most at-risk counties. Nationwide, 11.2 percent of mortgages fell into that category. Those with the highest underwater rates among the 50 most at-risk counties were Kankakee County, IL (outside Chicago) (38.4 percent of mortgages underwater); Escambia County (Pensacola), FL (31 percent); Caddo Parish (Shreveport), LA (27.7 percent);

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Nationwide, 31.5% of Redfin.com users looked to move to a different metro area in the first quarter, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. This is up from 30.3% in the fourth quarter of 2020 and 26% a year earlier, and the highest share since Redfin started tracking migration in 2017. The upswing in people moving from one area to another since the start of the pandemic is due partly to remote workers moving to relatively affordable areas in search of larger homes with more outdoor space. One consequence of pandemic-driven migration is that out-of-towners are driving up home prices and making it difficult for local residents to win bidding wars. Out-of-towners have significantly bigger budgets than locals in the most popular migration destinations The average housing budget for out-of-towners moving to Phoenix, the number-one migration destination for Redfin.com users in the first quarter, was $627,000, 23% higher than the $510,000 average budget for local buyers. In Austin, the next-most popular destination, out-of-towners had an average budget of $855,000, 32% higher than the average local budget. Next comes Las Vegas, where the average out-of-towner had a $582,000 budget, 16% higher than locals. “Remote work is here to stay for many Americans. The long-term cultural shift is disseminating money once concentrated on the coasts throughout the country,” said Redfin Chief Economist Daryl Fairweather. “Affluent remote workers are able to get more for their money by moving from job centers like the Bay Area to more affordable places like Phoenix and Las Vegas. But local residents looking to buy their first home are losing out because of the big budgets flowing into their hometowns. Many local buyers, particularly those who aren’t selling a home to fund their purchase, are being forced to compromise. They’re searching for smaller homes in farther-flung neighborhoods, or even dropping out of the search altogether.” Phoenix home-sale prices were up 20% year over year to $366,000 in March, and they were up 28.2% to $427,000 in Austin and 13.9% to $336,000 in Las Vegas. But even with significant increases, prices in those destinations are much lower than the places migrants are moving in from. In the San Francisco Bay Area, the top origin for people moving to Austin, the typical home sold for $1.43 million in March, and in Los Angeles, the top origin for people moving to Phoenix and Las Vegas, it was $774,000. “Not only are a lot of remote workers moving to Las Vegas, but many people are moving here and bringing their businesses with them, setting up shop in Nevada,” said local Redfin real estate agent Lori Garlick. “Inventory is so low that the market is frustrating for locals, first-time buyers and people who don’t have big down payments. Potential buyers are waiting in line to tour anything with a pool and a nice-sized lot. But if a buyer doesn’t have a budget big enough to pay over list price and throw in other incentives for the seller, like waiving the appraisal fee, they’re just not going to get the house.” The average housing budget for out-of-towners moving to Nashville in the first quarter was $719,000, 48% higher than the $485,000 average budget for local buyers, a bigger premium than any other metro. It’s followed by Atlanta, where out-of-towners have an average budget of $698,000, 33% higher than the average local budget. Atlanta, where 26% of Redfin.com users searching for homes in the first quarter were from out of town, was the fifth-most popular migration destination in the first quarter. Nashville, where 39% of Redfin.com users searching for homes in the first quarter were from out of town, is also a popular destination. Out-of-towners have bigger budgets than locals in 32 of the 35 cities included in Redfin’s budget analysis. San Francisco, San Jose and Fremont, CA (part of the Oakland metro) are the only cities where locals have higher budgets than migrants. That stands to reason, as the Bay Area has the highest median income in the country, which means locals are likely able to afford higher-priced homes than those moving in from other areas. Relatively affordable metros continue to pick up in popularity Dallas and Atlanta were the next-most popular destinations for people looking to move to a different area, meaning they—along with Phoenix, Austin, and Las Vegas—had the biggest net inflows of Redfin.com users in the first quarter. A net inflow is a measure of how many more Redfin.com home searchers looked to move into a metro than leave, out of a sample of 2 million users. Relatively affordable inland metros are typically the most sought-after for Redfin.com users looking to leave their home metro, a trend that has intensified with the pandemic. Net inflow of home searchers has increased significantly from a year ago in all of the top 10 migration destinations. Migrants are looking to move away from New York, the Bay Area and Los Angeles In terms of places people are looking to leave, New York, the Bay Area, Los Angeles, Washington, D.C., and Seattle top the list of places with the biggest net outflow in the first quarter. A net outflow is a measure of how many more Redfin.com home searchers looked to leave a metro than move in, out of a sample of 2 million users. Expensive coastal cities tend to be the places Redfin.com home searchers are looking to leave; in fact, the list of places with the biggest net outflow is the same as it was in the fourth quarter of last year. But as is the case with inflow to the most popular destinations, net outflow has shot up over the last year, more than doubling in seven of the top 10 places migrants are looking to leave. To read the full report, including charts, methodology and additional metro-level data on the budget differences between locals and out-of-towners, please visit: https://www.redfin.com/news/q1-2021-housing-migration-trends-budget

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Ongoing Supply-Demand Imbalance Shaping Housing Forecast as Mortgage Rates and Home Prices Tick Up Full-year 2021 real GDP growth expectations improved to 6.8 percent, including 9.1 percent annualized growth in the second quarter, due primarily to the continued easing of virus-related social restrictions and stimulus-driven consumer spending, according to the April 2021 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. Economic activity rebounded sharply following February’s weather-related pullback, and the acceleration is expected to continue through the second quarter before tapering in the second half of the year. Given the unprecedented nature of last year’s pandemic-induced slowdown, risks to this part of the forecasted recovery remain elevated. Uncertainties to the forecast include the extent of consumers’ willingness to tap into their accumulated savings and return to previously COVID-restricted activities; they also include well-publicized supply chain disruptions, the pace of inflation, and both monetary and fiscal policy uncertainty. While housing demand remains strong, the ESR Group revised its annual home sales forecast slightly downward due to continued supply constraints and a modestly higher outlook for mortgage rates. Even so, home sales and purchase mortgage originations in 2021 are expected to rise 6.2 percent and 14.5 percent, respectively, year over year. Additionally, given the continued supply-demand imbalance, home prices are forecast to rise 8.0 percent in 2021 – up from the previously forecast 4.2 percent – before decelerating to 2.9 percent annualized in 2022, as measured by the FHFA Home Price Index. “The ramp-up we’d previously forecast for the economy is underway, as evidenced by, among other measures, increasing airline passenger reservations and restaurant bookings,” said Doug Duncan, Senior Vice President and Chief Economist. “Vaccinations are continuing to roll out, and consumers appear to be increasingly looking toward post-pandemic life. While inflationary pressure is growing, our latest forecast update suggests that in the near-term interest rates will remain steady at borrower-friendly levels. In fact, despite the recent increases, mortgage rates remain near historical lows, which we expect will help maintain strong housing demand in 2021. Duncan added: “An above-average pace of renters converting to first-time homebuyers is continuing, with many migrating into the suburbs from denser urban areas. However, strong consumer demand for housing continues to hit up against a lack of supply, limiting sales and bolstering home prices, which we expect will further compound affordability concerns in the months ahead as homebuilders also wrestle with input supply restraints.” Visit the Economic & Strategic Research site at fanniemae.com to read the full April 2021 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.

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New Residential to combine NewRez and Caliber platforms into premier financial services company New Residential Investment Corp. (NYSE: NRZ; “New Residential” or the “Company”) announced that it has entered into a definitive agreement with an affiliate of Lone Star Funds (“Lone Star”) to acquire Caliber Home Loans, Inc. (“Caliber”). With this acquisition, New Residential intends to bring together the platforms of Caliber and NewRez LLC (“NewRez”), New Residential’s wholly owned mortgage originator and servicer. The transaction is intended to close as quickly as possible, subject to various approvals and customary closing conditions, and is targeted for the third quarter of 2021. “We believe this is a terrific acquisition for our Company,” said Michael Nierenberg, Chairman, Chief Executive Officer and President of New Residential. “Over the years, Caliber’s experienced team has built a differentiated purchase-focused originator with an impressive retail franchise and solid track record in customer retention. The combination of NewRez and Caliber’s platforms will create a premier financial services company with scale, talent, technologies and products to accelerate our mortgage company objectives and generate strong earnings for our shareholders. With this acquisition, we have significantly strengthened our capabilities to perform across interest rate environments.” “We are excited to be joining the New Residential family,” said Sanjiv Das, Chief Executive Officer of Caliber. “By combining platforms with NewRez, we will join another industry pioneer that has complementary strengths and is committed to delivering the dream of homeownership. Our combination of strategies will allow us to accelerate our leading position in purchase lending, grow our digital direct to consumer and broker initiatives, and further propel our retail franchise. As we leverage our digitization investments, we will make the entire mortgage process faster, easier and more efficient. We are thrilled to have the opportunity to deepen our customer relationships, expand our customer reach and provide more industry-leading products and options to our customers.” “This transaction is yet another important milestone for NewRez as we continue to expand our business, grow our customer reach and provide more options to support our homeowners and clients,” said Baron Silverstein, President of NewRez. “Combining with Caliber’s platform emphasizes our commitment to positioning our business for long-term success while continuing to deliver significant value for our customers, our partners and our employees.” Transaction Details Under the terms of the agreement, which were unanimously approved by New Residential’s board of directors, New Residential will pay a cash consideration of $1.675 billion, or approximately 1.0x expected tangible book value at closing1, to acquire Caliber. ABOUT NEW RESIDENTIAL New Residential is a leading provider of capital and services to the mortgage and financial services industry. The Company’s mission is to generate attractive risk-adjusted returns in all interest rate environments through a portfolio of investments and operating businesses. New Residential has built a diversified, hard-to-replicate portfolio with high-quality investment strategies that have generated returns across different interest rate environments over time. New Residential’s portfolio is composed of mortgage servicing related assets (including investments in operating entities consisting of servicing, origination, and affiliated businesses), residential securities (and associated called rights) and loans, and consumer loans. New Residential’s investments in operating entities include its mortgage origination and servicing subsidiary, NewRez, and its special servicing division, Shellpoint Mortgage Servicing, as well as investments in affiliated businesses that provide services that are complementary to the origination and servicing businesses and other portfolios of mortgage related assets. Since inception in 2013, New Residential has a proven track record of performance, growing and protecting the value of its assets while generating attractive risk-adjusted returns and delivering over $3.6 billion in dividends to shareholders. New Residential is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. New Residential is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm, and headquartered in New York City. ABOUT NEWREZ NewRez is a leading nationwide mortgage lender and servicer. As a lender, NewRez focuses on offering a breadth of industry-leading products, supported by a loan process that blends both human interaction and the benefits of technology into an unparalleled customer experience. Founded in 2008 and licensed to lend in 50 states, NewRez is headquartered in Fort Washington, Pennsylvania and operates multiple lending channels, including Direct to Consumer, Joint Venture, Wholesale and Correspondent. The servicing business operates through NewRez Servicing, the performing loan servicing division, Shellpoint Mortgage Servicing, the special servicing division. NewRez also has several affiliates that perform various services in the mortgage and real estate industries. These include Avenue 365 Lender Services, LLC, a title agency, and eStreet Appraisal Management LLC, an appraisal management company. NewRez is member of the New Residential family. ABOUT CALIBER Caliber is a proven leader in the U.S. mortgage market with a diversified, customer-centric, purchase-focused platform with headquarters in Coppell, Texas. Caliber is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for FHA, VA and the USDA. Caliber carries multiple servicer ratings from Standard & Poor’s, Moody’s, Fitch and DBRS.

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Sprout Mortgage, the innovative force in non-QM residential lending, announced the appointment of a new Chief Information Officer, effective immediately. Henry Santos is the new Executive Vice President and Chief Information officer. “I’m excited about Henry joining our team of senior leaders to advance our mission of continued technological innovation and strengthen our position as the preeminent provider of non-QM residential lending nationwide,” said Michael Strauss, CEO of Sprout Mortgage. “Sprout is fortunate to have a person with Henry’s skill, proven track record, and history of innovation among its leaders.” “The addition of Henry to Sprout’s executive team shows that we are attracting highly experienced leaders who will continue to drive the firm to exceed its goals,” said Shea Pallante, President of Sprout Mortgage. “I look forward to working with the entire Sprout team to extend our commitment to innovation and high-quality client experience by investing in technology that allows our brand to attain sustainable, competitive market advantages,” said Mr. Santos. About Henry Santos EVP, Chief Information Officer Henry is responsible for the strategy, execution, and performance of the Sprout enterprise technology ecosystem. He leads the firm’s efforts to transform the Sprout Mortgage brand into a digital, highly automated experience that leverages data and advanced computer engineering solutions. Henry is focused on bringing modern technology and subject matter expertise into closer cooperation, particularly to reduce the rising cost of origination and distribution. Prior to joining Sprout, Henry served as the Global Director of Housing Finance and Real Estate Services at Infosys. Previous experience includes head of Housing Finance and Lending Solutions at IBM, and roles at Fidelity National Information Systems, Capco, and Accenture — all in global leadership positions driving customized solutions for lenders and participants in the lending ecosystem. Henry has a Bachelor of Arts degree from Columbia University and a Master’s in Human Development from Harvard University. About Sprout Mortgage Sprout Mortgage is a leading nationwide non-QM lender whose innovative products, powerful technology, and precision underwriting provide tailored lending solutions for residential real estate investors, self-employed borrowers, and those with recent credit events. Sprout provides modern lending solutions to help a broad range of consumers and the brokers and lenders who serve them. For more information, visit https://www.sproutmortgage.com or call 844-664-6100.