Newsletter – Page 126

COVID Cash Kicks Off New Policy Era for CRE

by Paul Fiorilla
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Besides providing a short-term boost to the commercial real estate segments most affected by the pandemic, the $1.9 trillion COVID-19 relief package signed into law by President Joe Biden promises to be a taste of the type of progressive policymaking Democrats will implement while they control Congress. The American Rescue Plan funds a wish list of programs sought by the industry, including nearly $40 billion of aid for rental housing, $25 billion to prop up the restaurant industry, and nearly $200 billion for state and local governments to assist small businesses, tourism and hospitality. That’s in addition to the elements of the bill – including stimulus payments to individuals and extended unemployment aid – that will help families pay rent and spend on consumer goods, providing an economic shot in the arm. The bill also signals a change in policy with Democrats in control over the legislative agenda for the first time in more than a decade. Although they have a razor-thin legislative majority, limited by the Senate filibuster and lockstep opposition of Republicans, Democrats have an ambitious agenda. Now that the relief package has been passed, Democrats are likely to move on to immigration, climate change, and infrastructure, where some bipartisan support may exist. Given the political reality as long as the Senate filibuster remains in effect and the scope of President Joe Biden’s agenda, big-ticket spending items such as infrastructure, aid for affordable housing and tax reform may have to wait until the fall. The stakes for the industry will become more complicated then. Handing out aid in COVID-19 relief is popular, but there is less agreement about the benefit to changing the tax code or implementing new environmental regulations. Commercial real estate industry has a wish list of legislative priorities that includes a mix of program funding and regulatory relief. As new outlays have been scarce in recent years, the industry’s success in Washington has mostly come via tax and regulatory issues. However, COVID-19 has transformed the policy dynamics. With the economy down more than 9 million jobs from its peak, and demand for relief for struggling families, concerns about the deficit have taken a back seat to getting the economy back on track and making whole businesses that have closed and workers who lost jobs through no fault of their own. Housing, Retail Among the Beneficiaries The American Rescue Plan has a mix of indirect and targeted measures that should prove beneficial to commercial real estate. Indirectly, provisions such as the $1,400 payments to individuals earning less than $75,000 and couples earning less than $150,000, $300 a week in extra unemployment assistance through September 6, and the enhanced child tax credit should “put money in consumers’ pockets and help pay rent,” said Justin Ailes, managing director of government relations for the CRE Finance Council. The bill also contains provisions that will have a more direct impact on commercial real estate. In particular, the bill funds a range of programs sought by the multifamily industry. Those include $21.6 billion in rental assistance payments to be disbursed through the Treasury Department’s Emergency Rental Assistance Program (ERAP), $5 billion in housing vouchers that can be used for rental assistance, $5 billion for homelessness assistance, $750 million for rental assistance for tribal, native, and Hawaiian populations, $100 million for rural rental assistance. Other housing-related provisions include $4.5 billion for utility payment assistance and $120 million for counseling and fair housing. “Of the three (relief bills passed by Congress since the start of the pandemic), this is the most helpful to the industry,” said Mike Flood, a senior vice president of commercial/multifamily policy at the Mortgage Bankers Association. “We’re hopeful that, combined with the last bill, that will be enough to keep people in their houses and apartments and keep their refrigerators full until we get to the new normal.” All that funding comes on top of the $25 billion in rental aid passed in in December in the Consolidated Appropriations Act. While not covering every item on the multifamily industry’s wish list, industry advocates are “excited” at the amount of money targeting housing, said Cindy Chetti, senior vice president for government affairs at the National Multifamily Housing Council. “For the federal government to commit this kind of money to housing issues is unprecedented,” Chetti said. The federal aid should go a long way to making apartment owners whole. Tenants are behind on rent payments by as much as $70 billion, but they have largely been able to stay in place because of eviction moratoriums in various federal, state, and local jurisdictions. The rental assistance will enable property owners to collect unpaid rents and help pay mortgages and other bills. It remains to be seen how efficient the distribution of funds will be – the funds will be distributed to states and cities to be disbursed – but the infusion of cash will be a shot in the arm for the multifamily industry. Retail property owners will be helped by the $25 billion in grants targeted at restaurants that have been forced to close or scale back operations due to COVID-19. As of February, food service employment remained down by 2 million, or 16.3% less than it was at before the pandemic, according to the Bureau of Labor Statistics (BLS). The aid will help restaurants to pay rent and retain workers. The allocation of $350 billion for state and local governments – whose workforces have shrunk by 1.4 million (7.0 percent) year-over-year through February, per the BLS – is another area that will help boost commercial real estate. In addition to helping governments to avoid more layoffs, the relief package earmarks $195 billion toward helping governments assist households and small businesses, improve water and broadband infrastructure, and help mitigate the impact of lost travel and hospitality spending. Big Policy Goals Ahead Beyond the immediate stimulus to the economy, the ARP signals that Democrats will “go big” on policy goals to the extent they can with a one-vote margin in the

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ATTOM Data Solutions, licensor of the nation’s most comprehensive foreclosure data and parent company to RealtyTrac (www.realtytrac.com), a foreclosure listings portal, today released its February 2021 U.S. Foreclosure Market Report, which shows there were a total of 11,281 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — up 16 percent from a month ago but down 77 percent from a year ago. “Extensions to the Federal Government’s foreclosure moratorium and CARES Act mortgage forbearance program continue to keep foreclosure activity historically low,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “These government actions, and the efforts of lenders and mortgage servicing companies, have helped millions of homeowners avoid foreclosure during a year-long global pandemic and a recession that resulted in 22 million lost jobs.” Highest foreclosure rates in Utah, Delaware, and FloridaNationwide one in every 12,182 housing units had a foreclosure filing in February 2021. States with the highest foreclosure rates were Utah (one in every 3,883 housing units with a foreclosure filing); Delaware (one in every 5,219 housing units); Florida (one in every 6,232 housing units); Illinois (one in every 6,336 housing units); and Louisiana (one in every 7,923 housing units). Among the 220 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in February 2021 were Provo, UT (one in every 787 housing units with a foreclosure filing); Shreveport, LA (one in every 1,951 housing units); Lake Havasu, AZ (one in every 2,247 housing units); Cleveland, OH (one in every 3,943 housing units); and Florence, SC (one in every 3,980 housing units). Those metropolitan areas with a population greater than 1 million, with the worst foreclosure rates in February 2021 including Cleveland, OH were: Jacksonville, FL (one in every 5,707 housing units); Riverside, CA (one in every 6,478 housing units); Birmingham, AL (one in every 6,532 housing units); and St. Louis, MO (one in every 6,651 housing units). Foreclosure starts increase monthly in 29 states nationwideLenders started the foreclosure process on 5,999 U.S. properties in February 2021, up 15 percent from last month but down 78 percent from a year ago. “The government’s moratorium bans foreclosures on government-backed loans for homeowners, and borrowers in the forbearance program are also protected from foreclosure actions,” Sharga noted. “But loans on commercial properties, investment properties, and properties that are vacant and abandoned do not always have the same protections. This could be why we’re seeing a slight increase in foreclosure starts despite the government programs.” States that had at least 100 foreclosure starts in February 2021 and saw the greatest monthly increase in foreclosure starts included: Utah (up 230 percent); North Carolina (up 73 percent); Michigan (up 60 percent); Georgia (up 58 percent); and Mississippi (up 54 percent). In looking more granular, those counties that had the greatest number of foreclosure starts in February 2021 included: Los Angeles County, CA (234 foreclosure starts); Utah County, UT (224 foreclosure starts); Cook County, IL (154 foreclosure starts); Harris County, TX (97 foreclosure starts); and Riverside County, CA (74 foreclosure starts). Foreclosure completion numbers increase 8 percent from last monthLenders repossessed 1,545 U.S. properties through completed foreclosures (REOs) in February 2021, up 8 percent from last month but still down 85 percent from last year. Counter to the national trend, those states that saw a decline in completed foreclosures from last month, included: Indiana (down 75 percent); Colorado (down 75 percent); South Dakota (down 67 percent); Utah (down 67 percent); and Alabama (down 56 percent). Those major metropolitan statistical areas (MSAs) with a population greater than 1 million that saw the greatest number of REOs in February 2021 included: Chicago, IL (111 REOs); St. Louis, MO (54 REOs); New York, NY (36 REOs); Atlanta, GA (35 REOs); and Los Angeles, CA (33 REOs).

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The nation’s top iBuying companies purchased 3,505 homes in the fourth quarter of 2020, down 48% from a year earlier, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That represents 0.3% of homes that sold across the 418 U.S. metropolitan areas tracked by Redfin in the fourth quarter, down from 0.8% a year earlier but up slightly from 0.2% in the third quarter of 2020. Redfin analyzed MLS and public records data on home purchases and sales made by the most well-known national iBuyers, including RedfinNow (Redfin’s iBuying business), Opendoor, Zillow and Offerpad for the report. The fourth quarter is the most recent period for which iBuyer data is available. The term “iBuyer” (short for instant buyer) is used to describe real estate companies that purchase houses from homeowners in quick cash transactions by using algorithms to evaluate a property’s worth based on comparable market data. Real estate firms including Redfin, Zillow and Opendoor put iBuying on hold at the onset of the coronavirus pandemic amid substantial economic uncertainty. These companies resumed their iBuying businesses in May and June as housing demand began to rebound thanks to record-low mortgage rates and a wave of relocations made possible by remote work. Still, business remains slower than usual, in part because the housing market is so hot. With homebuyer demand through the roof, many sellers figure they can offload their homes without having to share the profits. Plus, an intense shortage of homes for sale means there aren’t as many properties for iBuyers to purchase in the first place. “We’re being very aggressive when it comes to buying homes right now—it’s all gas, no brakes,” said Myron Curry, a senior investment specialist at RedfinNow in the Los Angeles area. “The primary reason iBuyer home purchases remain lower than normal is the lack of homes for sale, but the inventory situation is improving each quarter as we get further away from the worst of the pandemic. People are becoming more comfortable selling their homes as a larger share of the population gets vaccinated.” Phoenix Kept Its Crown as the Metro With the Highest iBuyer Market ShareIn Phoenix, iBuyers purchased 2.1% of the homes that sold during the fourth quarter—the largest market share for the third quarter in a row. Next came Raleigh, NC at 1.9%, and Atlanta at 1.6%. Charlotte, NC and San Antonio, TX rounded out the top five, both at 1.5%. Each of these markets saw an increase in market share from the prior quarter, but a decrease from the prior year. iBuyers Purchased Less Expensive Homes Than the Typical HomebuyeriBuyers bought homes for a median of $284,450 in the fourth quarter. By comparison, the median purchase price for the typical American homebuyer was $318,300. In every top iBuyer market Redfin analyzed where the data was available, iBuying companies purchased homes for less than the metro-area median. iBuyers Sold Homes In 14 Days—A Record PaceNationally, the typical iBuyer-owned home found a buyer after being listed on the market for 14 days—the quickest pace since at least 2015, when Redfin began recording iBuyer data. That’s down from 42 days a year earlier and a revised 17 days in the third quarter. By comparison, the typical non-iBuyer home spent 30 days on the market, down from 46 days a year earlier and 33 days in the third quarter. “Most homes that RedfinNow puts on the market in Los Angeles are selling within the first week and getting multiple offers,” Curry said. “This lightning-fast market has been fueled by a shortage of homes for sale and surging demand due to low mortgage rates. Our properties are also renovated and move-in ready, which means the process typically moves quickly.” In a majority of the top 27 iBuying markets, iBuyers sold their inventory faster than the typical homeowner, with the largest margins in Austin, TX (29 days faster), Riverside, CA (28 days faster) and Raleigh (27 days faster). Minneapolis, Tampa, FL and San Diego were the only metros where iBuyers took longer to sell homes. To read the full report complete with graphs and metro-level data, please visit: https://www.redfin.com/news/ibuyer-real-estate-q4-2020

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Nationwide Title Clearing was presented with a Gold and three Silver Stevie® Awards in the Sales Representative of the year, Senior Sales Executive of the Year, National Sales Team of the Year and Customer Service Department of the Year categories in the 2021, 15th annual Stevie Awards for Sales & Customer Service. The Stevie Awards for Sales & Customer Service are the world’s top honors for customer service, contact center, business development and sales professionals. The Stevie Awards organizes eight of the world’s leading business awards programs, also including the prestigious American Business Awards® and International Business Awards®. Winners will be recognized during a virtual awards ceremony on April 14. More than 2,300 nominations from organizations of all sizes and in virtually every industry, in 51 nations, were considered in this year’s competition. Winners were determined by the average scores of more than 160 professionals worldwide on nine specialized judging committees. “In the toughest working environment in memory for most organizations, 2021 Stevie Award winners still found ways to innovate, grow sales, please their customers, and secure new business,” said Stevie Awards president Maggie Gallagher. “The judges have recognized and rewarded this, and we join them in applauding this year’s winners for their continued success. We look forward to recognizing them on April 14.” The Stevie Awards Sales Representative of the Year Gold award winner for 2021 is NTC’s Jeremy Pomerantz, Vice President of Business Development. Jeremy is known as a subject matter expert in the industry and his success lies within his ability to communicate, consult and advise top executives at the nation’s largest mortgage servicers and investors to bring about a true trusted partnership with them. Through his hands-on approach, he has won new business and clients, increased lines of business from existing clients, and restructured contracts to benefit all parties. Out of a team of 5 sales executives, Jeremy’s figures represent 60% of all of NTC’s revenue. NTC’s Chief Revenue Officer, Danny Byrnes, accepted the Silver Award for Senior Sales Executive of the year. Steering both the Sales and Marketing departments of NTC, Byrnes successfully exceeded the annual quota as early as October and ended the year 47% over 2019 with 90+ million in revenue generated. Under Byrnes’ leadership, NTC has established a team of dedicated experts that has led to nothing short of a meteoric rise in sales and continues to maintain a consistent growth rate. “Danny has managed to outperform industry peers by contributing a 47% increase in revenue year on year. His talent and energy for growing and nurturing Nationwide as a company has been recognized with a promotion in the midst of a pandemic which is a testament to his tenacity. Well done,” a Stevie Award Judge commented on NTC’s Senior Sales Executive of the Year Award. NTC’s sales team accepted the Silver Award for National Sales Team. This elite group of sales experts, comprised of industry veterans Debbie Lastoria, Meaghan Hunter, Lindsey Trebian, Charles Runyon and Jeremy Pomerantz, have successfully established the company as a critical vendor to 25 of the top 30 entities in the financial industry. By closing six to seven major accounts per sales professional per year, NTC was able to offer a customized package of services that accomplished unprecedented growth year over year for the past 10 years. NTC’s client services team received the Silver Award as Customer Service Department of the Year. Run by VP Sales and Client Relations, Charles Runyon and Director Client Services, Terry Mundon the client services team at NTC consists of four National Account Executives and 15 Client Service Representatives. Client Services oversaw and managed a 200% increase in the production and management of documents over previous periods. As a result of the mortgage refinance boom in 2020 the team successfully coped with the sudden influx of client demand. “Winning such prestigious awards is a perfect acknowledgment for the hard work that my teams put in day after day, I am very proud of them” said NTC’s Chief Revenue Officer, Danny Byrnes. “Knocking on the door of $100 mil with such a small team and maintaining client satisfaction during this pandemic is a testament to their abilities”. About Nationwide Title Clearing Nationwide Title Clearing, Inc. (NTC) is a privately-owned leading research and document-processing service provider to the residential mortgage industry. NTC services the nation’s top mortgage lenders, servicers, investors and custodians. NTC has won the Tampa Bay Times Top 100 Workplace Designation five times in its history and been listed among the top 200 companies in Tampa Bay twice. For more information, visit the company’s website at www.nwtc.com About The Stevie Awards Stevie Awards are conferred in eight programs: the Asia-Pacific Stevie Awards, the German Stevie Awards, the Middle East & North Africa Stevie Awards, The American Business Awards®, The International Business Awards®, the Stevie Awards for Great Employers, the Stevie Awards for Women in Business, and the Stevie Awards for Sales & Customer Service. Stevie Awards competitions receive more than 12,000 entries each year from organizations in more than 70 nations. Honoring organizations of all types and sizes and the people behind them, the Stevies recognize outstanding performances in the workplace worldwide. Learn more about the Stevie Awards at http://www.StevieAwards.com. Media Contact: Kristen Rumberger (727)243-4409 Kristen@sevenmarketingpr.com

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People who bought homes in primarily Black neighborhoods in 2019 gained a median $59,000 in home equity last year, compared with $50,000 for people who bought homes in primarily white neighborhoods, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Equity grew more for people who bought homes in primarily Asian and Hispanic neighborhoods—by $79,000 and $67,000, respectively. For the purposes of this report, a neighborhood is considered primarily one race or another if more than 50% of the owner-occupied households are Black, Hispanic, Asian or white, as identified in the U.S. Census Bureau’s American Community Survey. We calculated home-equity gains throughout 2020 for each neighborhood type for homeowners who purchased a home anytime during 2019, using January 2021 Redfin Estimates as a proxy for current market value. The terms “Black homeowner,” “white homeowner,” etc. are used throughout this report to refer to a person who bought a home in a neighborhood of primarily one race or another in 2019. While Black homeowners gained more wealth through home equity than white homeowners last year, the trend is a reversal from the previous decade, when homeowners of color saw their home values and home equity recover more slowly from the Great Recession. People who bought homes in primarily Black neighborhoods in 2019 currently have a median of $89,000 in home equity, the smallest amount of the four races included in this analysis. That’s compared with $257,000 for Asian homeowners, $113,000 for white homeowners and $102,000 for Hispanic homeowners. Black homeowners started with much lower equity—a median of $30,000 in 2019—than their Asian ($178,000) and white ($63,000) counterparts, and slightly less than the typical Hispanic homeowner ($35,000). The difference in equity in 2019 was primarily driven by the fact that Black homebuyers made smaller down payments than buyers of other races, due to lower home prices and putting down a smaller percentage of the sale price. Even though Black homeowners still have less equity than white homeowners, the home-equity gap between Black and white Americans is narrowing. That’s largely because significant gains in home values, which increase equity above initial down payments, fueled equity gains from 2019 to January 2021 for homeowners of all races. The typical homeowner in a primarily white neighborhood had $33,000 more home equity than the typical homeowner in a primarily Black neighborhood in 2019, a gap that had shrunk to $24,000 by January 2021. Homeowners in Black neighborhoods experienced a nearly 200% home-equity increase in 2020, a huge increase that’s mostly due to low equity pre-pandemic Black homeowners nationwide who bought their homes in 2019 saw a 197% increase in home equity last year, a bigger percentage increase than the other races. Home equity increased 191% for Hispanic homeowners, 79% for white homeowners and 44% for Asian homeowners. Black homeowners starting out with lower equity than the other races is a key reason for the larger percentage jump. Black Americans are least likely to be homeowners. The homeownership rate for Black families was 44.1% in the fourth quarter of 2020, the most recent time period for which data is available. That’s steady from 44% in the fourth quarter of 2019, but it had been on the rise before the pandemic, with a jump up from the 42.9% rate in the fourth quarter of 2018. The current homeownership rate for white families is significantly higher than it is for Black families: 74.5% in the fourth quarter of 2020, up slightly from 73.7% a year earlier. The homeownership rate for Asian families increased from 57.6% to 59.5% over the same time period, and it went from 48.1% to 49.1% for Hispanic families. “Black homeowners benefited from 2020’s hot housing market, and the trend is continuing into this year as Americans remain intensely interested in relocating and buying homes and home values continue to rise,” said Redfin Chief Economist Daryl Fairweather. “But less than half of Black Americans own the home they live in, so most of the Black community didn’t benefit from the enormous wealth homeowners have gained in the past year. Especially compared with the three-quarters of white Americans who own their homes, the total benefit for Black families across the country is relatively small. With higher unemployment rates and less overall wealth, Black families were not as likely as white families to buy homes even when prices were comparatively low.” “Now that prices are so high and the pandemic has contributed to high unemployment, especially for Black workers, it’s even more difficult for people who don’t already own homes to break into the housing market,” Fairweather continued. “There is a major need and a big opportunity for policymakers to enact programs like down-payment assistance and zoning reform to help narrow the homeownership gap and enable more Black families to build wealth through home equity.” Black homeowners in Chicago, Newark and Washington, D.C. have seen enormous home-equity gains, mostly because equity was so low pre-pandemic People who bought homes in primarily Black neighborhoods in Chicago in 2019 experienced the biggest percentage equity gain of the metro areas included in this analysis, with a 750% increase from 2019 to January 2021. The increase is so big partly because median home equity was just $8,000 in 2019, compared with $68,000 in January 2021. Next come Newark and Washington, D.C., which also saw huge percentage increases for Black homeowners from 2019 to January 2021: 626% and 425%, respectively. Median home equity went from $19,000 to $138,000 in Newark, and $16,000 to $84,000 in Washington, D.C. All of the metros included in this analysis experienced home-equity gains for Black homeowners—and homeowners of all other races—over that time period. The typical Black homeowner in Jacksonville gained 62% in equity from 2019 to January 2021, the smallest percentage gain of any metro included in this analysis, from $45,000 to $73,000. To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/home-equity-by-race-black-homeowners/

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REI INK and RCN Capital would like to invite you to our “A Year In Review” virtual webinar. In 2020 we hosted multiple webinars covering a broad range of topics moderated by Jeff Tesch, the CEO of RCN Capital. Joining Jeff at each webinar were leaders in the real estate industry sharing their expertise on navigating the COVID crisis. On March 15th, Jeff Tesch will be moderating three separate panels from 1:00 to 3:00 EST. First Session: 1:00 – 1:40 Property Management Path Forward What process changes have you developed to help maneuver through COVID? How has technology helped you adapt to the new surroundings? What have you decided to keep doing path forward? Are you prepared for potential eviction services, should you need them? Where was your silver lining? Hear from industry experts what opportunities for evolution have helped them weather the storm! Panelists Nickie Badalamenti-Kalas, President – Five Brothers Asset Management Solutions James Barrett, Co-Founder & CEO – Tenant Turner Greg Rand, Chief Strategy Officer – Renters Warehouse Second Session: 1:40 – 2:20 Funding Strategies to Help Build Your Portfolio Hear what financing is available for Buy & Hold, Fix & Flip and Build to Rent. What opportunities lie ahead to bolster your portfolio? What should you consider with your funding strategies? Learn from industry experts what post-Covid strategies are best in class! Panelists Steven Katz, Chief Investment Officer & EVP – Arbor Realty Trust Nathan Long, President – Quest Trust Jennifer McGuinness, Founder – Mortgage Venture Partners Charles Sells, CEO – PIP Group Third Session: 2:20 – 3:00 Services and Strategies What due diligence can help guarantee a good acquisition? Where can you source assets for your portfolio? How can Auction, MLS, Foreclosure and Off-Market assets impact your bottom line? Learn how to engage new strategies to expand your portfolio! Panelists Ryan Hennessy, CEO – Keystone Asset Management David Hicks, CEO – HomeVestors Rick Sharga, EVP – RealtyTrac Rebecca Smith, VP – Radian Real Estate Management Join us Monday, March 15 to hear these industry leaders discuss their perspectives on 2020 and their strategies for 2021. Please click the button below to register for this FREE webinar.