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WORD OF THE DAY: Outlier

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Part of speech: Noun Origin: English; 17th century Definitions: A person or thing considered atypical within its class or category; a location or feature positioned far away from other, related locations or features; a statistical value that’s distinctly different in value from other values in the sample. Examples of Outlier in a sentence “Suri got an A on the exam, but she was definitely an outlier.” “The island was an outlier from the others in the area, several miles from the rest.” About Outlier The reasons for the existence of certain outliers can be surprising and difficult to trace. For example, journalist Malcolm Gladwell found that the vast majority of Canadian ice hockey players who made it to the pro level were born in the first few months of the year. Why? Because when they’re children, their age-based leagues make them the oldest in their group– and the biggest. This results in more attention and support from coaches. Did you Know? Outlier was originally used to describe stone that was mined from a quarry but not used.

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Buyers Gaining Time and Options as Competition Eases

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Affordability challenges mount as market rebalancing accelerates, especially in expensive markets Monthly payments on a typical mortgage are more than 75% higher than they were in June 2019. Less-expensive metros are seeing the smallest declines in sales. Typical U.S. rents have surpassed $2,000 a month for the first time, but growth is easing. Home shoppers are finding more options to choose from, more time to make decisions and even price cuts in some areas, according to Zillow’s® latest market report. That’s largely because intensifying affordability challenges are thinning competition from a crowded field and giving newfound leverage to those who remain.   “Those who can weather this storm of rising costs are having an otherwise less stressful buying experience compared to the pandemic-fueled rush on real estate in 2021. They have more options to tour, more time to find the right house, and are less likely to face a bidding war,” said Jeff Tucker, senior economist at Zillow. “But despite this initial move toward rebalancing, the market is still less buyer-friendly than the pre-pandemic norm in most of the country. Home seekers who are priced out today are eagerly anticipating drops in prices or mortgage rates so they can step back into the ring.”  Home values recede in the most expensive metrosAnnual home value appreciation eased for the third consecutive month in June, stepping down to 19.8% from a record high of 20.9% in April. But it still towers over the 4.6% year-over-year growth recorded in June 2019. The typical U.S. home value now stands at $354,165 and comes with a monthly mortgage payment that is more than 75% higher than in June 2019.  Home values declined slightly from May to June in San Jose, Seattle, San Francisco and San Diego — all among the five most expensive metros — as well as in Austin, where home values have grown the most throughout the pandemic. Annual appreciation is still robust in these metros — from 15.4% in San Francisco to 25.2% in Austin.  Less competition means more options and time to decideInventory has risen steadily over the past few months, bringing an annual deficit of 30.4% in January down to 9.1% in June. But the total pandemic hole is far from being filled. Inventory is still down 46% since June 2019.  Extremely expensive metros and those with the largest run-up in prices over the course of the pandemic — San Francisco, Austin, Phoenix and Seattle — have inventory levels closest to where they were in 2019. This indicates competition in these areas is easing up more quickly than the national average. Median time on the market has ticked up, meaning buyers have slightly more time to shop, compare and evaluate options. Listings that go pending are typically doing so in seven days, which means competitively priced homes are still selling at a rapid clip.  The share of homes with a price cut is rising across the U.S. as well, and at 14.8% is at the highest level since November 2019. Salt Lake City (24.1%), Sacramento (21.7%) and Phoenix (20.4%) are seeing the highest shares of price cuts.   High costs driving sales pullbackA lack of affordable options is driving the slowdown. Of the 15 major metros that saw the largest month-over-month drops in listings that went under contract, 12 are among the nation’s 15 most expensive places to buy. The fastest drops in newly pending sales from May to June are taking place in San Jose (-24.3%), Seattle (-23.9%) and Salt Lake City (-20.8%).  Conversely, of the 15 major metros with the smallest monthly pullback in sales, 10 are among the 15 least-expensive large cities.  Rent growth eases Typical U.S. rents rose 0.8% from May and are now $2,007 per month, crossing the $2,000 threshold for the first time. Annual rent growth has eased steadily from a record-high 17.2% in February to 14.8% in June. Rents are up 24.6%, nearly $400 per month, since June 2019. “A rapid run-up in rents that peaked in February was likely a one-time event, driven by a return to cities and people moving out of shared apartments or their parents’ house. We’re expecting rent growth to ease back down over the next several months as vacancy rates rise above historic lows,” said Tucker. “One factor that could slow the return to normal is the high cost of buying a home, which will encourage many renters to renew their lease instead.”

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Americans Least Willing to Give Up Dining Out, Streaming TV and Vacation to Save Money as 82% say Inflation is Impacting Spending

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New Survey Examines Impact on Spending and Home Emergency Preparedness While the impact of inflation on Americans’ budgets has been widely covered this year, a new survey conducted by HomeServe dug into the specifics of how Americans have adjusted their spending habits due to higher prices on everything from groceries and gas to entertainment and education. An overwhelming 82% said that inflation is impacting their household budget. When asked what area of their budget is being most impacted, the top three were groceries, gas and utilities. Respondents are also putting off purchases due to inflationary pressures, with home furniture and household items (52%), vacation (47%) and a new or used car (37%) topping the list. To determine what spending Americans most prioritize, the survey asked respondents what things, despite higher prices, would they be least willing to give up. Dining out topped the list (49%), followed by streaming TV (47%) and vacation (45%). Fido and fitness might suffer, though, because the two things they were most willing to give up included regular pet grooming (16%) followed by club/golf/pool membership (18%). When it comes to having the funds to cover a home repair emergency, over one-third (36%) of homeowners said they have $500 or less – or even no money – set aside to pay for a repair. Almost 15% have absolutely nothing set aside, putting these individuals in a vulnerable position when the inevitable home repair emergency arises. These numbers are consistent with previous State of the Home surveys conducted by HomeServe. The percentage of homeowners with no money set aside was 13% in both Summer 2021 and Fall 2020 editions and was 17% in May 2020 and October 2019. While Americans are seeing higher prices across the board, one thing that remains the same is that home repair emergencies are an unfortunate reality, especially during the pandemic with people spending more time in their homes. In all, 50% of respondents said they had an emergency repair in the past two years that they’ve had to hire a contractor to complete. And consistent with the findings from past State of the Home Surveys, HVAC emergencies topped the list with 28% of respondents saying this important home system needed to be repaired or replaced over the past 12 months. To learn more about the survey, visit https://www.homeserve.com/en-us/media/americans-least-willing-to-give-up-dining-out-streaming-tv-and-vacation-to-save-money/. This survey was conducted June 3-6, 2022, by HomeServe, using SurveyMonkey Audience. HomeServe’s survey received 1,699 responses from adults in the U.S. age 18 and older, of which 1,500 were homeowners. The sample of respondents was balanced by gender and region. For more on the SurveyMonkey Audience panel, please visit: https://www.surveymonkey.com/market-research/data-quality/. About HomeServe HomeServe USA Corp. (HomeServe) is a customer-focused company that enables utilities and municipalities to educate, protect and advocate for their customers who are faced with home repair emergencies. Serving more than 4.8 million customers across the US and Canada and working through over 1,100 leading municipal and utility partners, HomeServe protects homeowners against the expense and inconvenience of plumbing, electrical, HVAC and other home repair emergencies.

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WORD OF THE DAY: Charrette

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[shə-RET] Part of speech: noun Origin: Old French, 15th century Definition: A meeting in which all stakeholders in a project attempt to resolve conflicts and map solutions. Examples of Charrette in a sentence “After attending the charette on the plans for the park, residents were enthusiastic about the fundraising.” “A charrette on the redesign of city hall brought together the city’s architects, community leaders, and residents.”

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REI Nation Reports Increases in Key Metrics for the Company and its Single-Family Rental Investors  

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REI Nation, one of the largest turnkey real estate investment companies in the U.S., announced its half-year 2022 single-family rental performance metrics. During the first half of the year, the company paid its single-family rental investors more than $42 million in net rental income, a year-over-year increase of 19%. By year-end 2022, REI Nation expects its net rental income payments to top $80 million, a year-over-year increase of 9.9%.  Rent rates, which currently average $1,500 per month, increased for 98% of REI Nation-managed lease renewals with an average increase of 6% across the company’s 14-market footprint. In high-demand markets, such as Dallas, average rent rates increased by as much as 8% or 9%. The average cost of a single-family rental among REI Nation investors is currently $228,000 compared to July of 2021 when the average cost was $190,000. To date in 2022, the company has completed 495 renovations to existing single-family rentals, with an additional 234 homes in the process of renovation. REI Nation continues its push into new-build rental construction which is gaining in popularity across the country to combat historically low housing inventory. As of June 30, 2022, the company has completed or is in the process of completing 97 newly constructed homes in REI Nation markets, adding to the 38 new homes the company built in 2021.  Vacancy rates for the company remain historically low at less than 2% across all markets which is lower than the industry average, and on-time rental collection averages more than 96%. REI Nation reported its average length of stay for half-year 2022 of more than seven years, which it has maintained for six straight years and which is significantly higher than typical industry standards of three to four years.   Among its investor clients, less than 20% are all-cash buyers, and more than 80% use some form of leverage or lending.    “Even though the rental investment market is seeing an overall slowdown due to rising interest rates and continued downward pressure from low housing inventory, our investors are seeing gains in rental income and continued high average resident stays,” said REI Nation Partner Chris Clothier. “That speaks to our model of high-quality renovations coupled with property management that puts residents first which, in turn, provides our property investors with stable, passive income over the long haul. The rental market continues to increase, and that puts our investors in a great place to build long-term wealth with a high-performing rental property portfolio.”    REI Nation works with property owners from across the globe who invest in single-family rental properties as a passive income stream, with the majority of owners investing in remote properties located away from where they live. The company has properties available for investment in Memphis, Dallas-Fort Worth, Houston, San Antonio, Huntsville, Birmingham, Tuscaloosa, Oklahoma City, Tulsa, Little Rock and St. Louis. Its property management division, Premier Property Management Group, operates in these 11 markets as well as in three additional cities: Nashville, Austin, and Jackson, Tennessee. About REI Nation REI Nation is one of the largest turnkey real estate investment companies in the U.S. with more than 7,400 properties under management, 3,414 property owners, and $1.45 billion in residential rental property assets under management. The company provides individual real estate investors with end-to-end, turnkey solutions, including finding potential rental properties, analyzing ROI and revenue potential, managing required renovations, securing and vetting residents, and providing ongoing property management services through its Premier Property Management Group. REI Nation publishes The Grind, a free subscriber-based platform and podcast offering tips and tactics designed for investors and entrepreneurs who want to increase their success in business and real estate. Memphis-based REI Nation, formerly Memphis Invest, was founded in 2003 and is privately held. More information can be found at reination.com.  

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Home Sales Are Getting Canceled at the Highest Rate Since the Start of the Pandemic

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Some homebuyers are backing out of deals as a slowing housing market gives them more room to negotiate. Nationwide, roughly 60,000 home-purchase agreements fell through in June, equal to 14.9% of homes that went under contract that month, according to the latest analysis from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s the highest percentage since March and April 2020, when the housing market all but ground to a halt due to the onset of the coronavirus pandemic. It compares with 12.7% a month earlier and 11.2% a year earlier. “The slowdown in housing-market competition is giving homebuyers room to negotiate, which is one reason more of them are backing out of deals,” said Redfin Deputy Chief Economist Taylor Marr. “Buyers are increasingly keeping rather than waiving inspection and appraisal contingencies. That gives them the flexibility to call the deal off if issues arise during the homebuying process.” Marr continued: “Rising mortgage rates are also forcing some buyers to cancel home purchases. If rates were at 5% when you made an offer but reached 5.8% by the time the deal was set to close, you may no longer be able to afford that home or you may no longer qualify for a loan.” The housing market has cooled in recent weeks as the Federal Reserve has boosted interest rates in an effort to quell inflation. That has given house hunters more freedom to seek concessions from sellers, but higher rates also make housing less affordable. Buyers did get a reprieve this past week, when the average 30-year fixed mortgage rate fell to 5.3% in the largest one-week drop since 2008. “When mortgage rates shot up to almost 6% in June, we saw a number of buyers back out of deals,” said Lindsay Garcia, a Redfin real estate agent in Miami. “Some had to bow out because they could no longer get a loan due to the jump in rates. Buyers are also more skittish than usual due to economic uncertainty.” Redfin’s analysis is based on multiple listing service data going back through 2017. Please note that homes that fell out of contract during a given month didn’t necessarily go under contract the same month. For example, a home that fell out of contract in June could have gone under contract in May. This report, along with additional housing market data, is available at: https://www.redfin.com/news/home-purchases-fall-through-2022.

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