Month: December 2019

Liked 2019’s mortgage rates? 2020 will be lower

The year that’s passing was marked by the Fed’s refusal to bend to the president’s will

The year that’s winding down will be remembered, in the real estate world, for its mortgage rates that persistently and unexpectedly declined.

While rates aren’t going to plunge another percentage point – November’s average rate for a 30-year fixed mortgage was 3.7%, compared with 4.87% in the year-ago month, according to Freddie Mac data – they’re going to set some new lows, Fannie Mae said in a forecast.

The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973. It compares with 3.9% in 2019 and 4.5% in 2018, according to Fannie Mae. The current record was set in 2016 when the annual average fell to 3.65%.

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Top 10 U.S. Counties with Highest Foreclosure Rates in November 2019

Just off the heels of ATTOM Data Solutions’ November 2019 U.S. Foreclosure Activity analysis released this week, which reveals the top states and metros with the highest foreclosure rates, this advance #FiguresFriday post dives deeper into the data to disclose where foreclosures are the most concentrated at the county level.

There were 49,898 U.S. properties with foreclosure filings in November 2019, down 10 percent from October 2019 and down 6 percent from a year ago, according to the latest ATTOM Data Solutions U.S. Foreclosure Activity Report.

The report noted that at the national level, one in every 2,713 U.S. properties had a foreclosure filing in November 2019. At the state level, those with the highest foreclosure rates in November were Delaware (one in every 1,112 housing units); New Jersey (one in every 1,278 housing units); Maryland (one in every 1,476 housing units); Illinois (one in every 1,535 housing units); and Florida (one in every 1,607 housing units).

Also included in the report, among the 220 metro areas with at least 200,000 people, those with the highest foreclosure rates in November were Buffalo, NY (one in every 798 housing units); Atlantic City, NJ (one in every 968 housing units); Columbia, SC (one in every 1,082 housing units); and Fayetteville, NC (one in every 1,134 housing units); and Trenton, NJ (on in every 1,146 housing units).

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Here’s what will happen in multifamily real estate in 2020

What will renters see next year?

After a strong year in multifamily housing, expect an even stronger one in 2020, according to RealPage Chief Economist Greg Willett.

In an interview with HousingWire, Willett said the apartment market is in great shape, and even the luxury market will see competition in 2020.

Occupancy rates were as high as 96.3% this year, a figure Willett said is well above the long-term norm.

And much of the new properties set to hit the market next year will be of the higher-end variety. According to Willett, about 75% to 80% of 2020’s additions will command luxury product rents, leading to increased competition in that market segment.

“Increasing completions point to a competitive leasing environment for luxury product in 2020. About 550,000 market-rate apartments are under construction right now. Approximately 366,000 of them are scheduled to finish in 2020,” Willett said. “That targeted delivery volume jumps sharply from 2019 completions of around 279,000 units.”

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Two-Thirds of Renters Make Sacrifices to Afford Rent

Entertainment spending is the most common sacrifice, but some cancel health services or eliminate insurance.

According to Zillow data, the U.S. median rent consumes 27.8% of the median income—close to the 30% point, where rent is considered unaffordable, and 32%, above which homelessness can rapidly increase.

In the 2019 Zillow Consumer Trends report, 26% of renters say that affording their rent is difficult or very difficult. Most renters—66%—make at least one sacrifice in order to afford rent. Nationally, the most common sacrifice is entertainment spending, with 38% of renters reporting spending less on entertainment. However, some make more serious sacrifices—9% will postpone or cancel health services, while 12% will reduce or eliminate downpayment savings.

Sacrifices aside, renters are financially strapped enough that only 51% say they could accommodate a $1,000 expense, compared to 80% of homeowners. Older renters are less likely to say they could afford such an expense: Only 38% of boomer and silent generation renters, compared to 60% of Gen Z and 54% of millennial renters.

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Top 5 mistakes real estate pros are making on social media

Here’s how you fix them

As I sit down to write this, the Festivus episode of Seinfeld is fresh in my mind. It’s an American classic!

(Millennials, put down the avocado toast and kombucha and go watch it if you haven’t seen it).

A quick refresher for those who somehow haven’t seen the episode since the ’90s: The alternative holiday, Festivus, couldn’t begin without a proper “Airing of Grievances.” In the spirit of the holiday season, this list of the top five mistakes agents and lenders make on social media feels a little like the Airing of Grievances. But so be it!

I know you were hoping for yet another super original listicle. A top-five listicle at that! But hey, it’s a good one. So let’s begin with our Airing of Social Media Grievances.

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Seven CRE Economists Offer Their Predictions for 2020

We asked seven economists and researchers about their 2020 predictions for the U.S. commercial real estate market.

As we get ready to greet another year, NREI asked seven industry economists and researchers about their predictions for 2020. For the most part, they expect the U.S. commercial real estate market to remain stable, bolstered by strong employment, positive consumer sentiment and low interest rates. But some experts we interviewed caution against political headwinds and a potential global slowdown.

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How America’s Second-Tier Cities Can Catch the Superstars: Noah Smith

The Internet may be making it easier for residents of second-tier cities to enjoy big city lifestyles.

(Bloomberg Opinion)—For the past three decades, one of the central stories in the U.S. economy has been the rise of superstar cities. As the country has shifted from manufacturing to services, high-value knowledge industries such as technology, finance and pharmaceuticals have become more important.

These industries tend to cluster because skilled workers, entrepreneurs, big companies and funding sources all want to be in the same area. As a result, these industries have concentrated in cities such as San Francisco, Los Angeles and New York, which have had enormous economic booms and skyrocketing rents while many other areas of the country are left to wither.

So how can the places that missed out ever compete with a San Francisco or a New York? Some had hoped that remote work would ride to the rescue. Thanks to the internet, engineers or traders or project managers might be able to live in Akron, Ohio, while working for a company based on one of the coasts. But while technology is allowing more Americans to work outside of the office, so far this hasn’t been enough to overcome the need to be close to where the action is. Even as online communication improved by leaps and bounds, superstar cities just kept getting more dominant.

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When it comes to their home, Millennials are picky

This is what they had to say

For the generation that is waiting the longest to buy a home, they appear to be the pickiest too.

According to a new data set from the National Association of Home Builders, Millennials care just as much (if not more) about what they want in a house rather than what they need.

And even though Millennials carry loads of student debt, they still want to live out the American Dream in a home, whether it’s rented or not.

The NAHB asked recent and prospective homebuyers about the features they want in a home and a community. Homebuyers were asked to rank more than 175 features in a home on a four-tiered scale of do not want, indifferent, desirable, and essential/must have.

The most popular specialty room, other than a bedroom, bathroom or kitchen, is the laundry room, with 50% saying it’s an essential while 36% said it’s more desirable.

On the bottom of the necessity list is breakfast nook and sunroom. Of those surveyed, 19% said both were an essential and 39% it’s just a desirable.

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Chinese Investment in U.S. Commercial Real Estate Is Plunging

Chinese investors put 76 percent less money into U.S. CRE year-to-date through September than in 2018.

(Bloomberg)—Chinese investment in U.S. commercial property is plunging as restrictions on capital leaving the country and geopolitical tensions weigh on real estate deals.

Chinese investors put $1.4 billion into U.S. commercial real estate in the 12 months through September, a 76% plunge from a year earlier, according to a report from Real Capital Analytics. Investment from Hong Kong was also down in the period.

(Bloomberg)—Chinese investment in U.S. commercial property is plunging as restrictions on capital leaving the country and geopolitical tensions weigh on real estate deals.

Chinese investors put $1.4 billion into U.S. commercial real estate in the 12 months through September, a 76% plunge from a year earlier, according to a report from Real Capital Analytics. Investment from Hong Kong was also down in the period.

Money Moves

“Chinese investors have become net sellers as authorities in China have restricted speculative outbound investment,” Jim Costello, senior vice president at Real Capital Analytics, wrote in the report.

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The median age of homebuyers is now 47. How did that happen?

Median age of homebuyers has risen 8 years in the last decade

Despite recent data that younger generations are beginning to buy houses, on the whole, those same generations are waiting far longer than their parents did to buy their first house.

There are various reasons for that delay, including a dramatic increase in student loan debt and a general shifting of attitudes towards the traditional homebuyer cycle. Put simply, people are waiting longer to marry, have kids, and buy houses.

But just how much longer are people waiting to a buy house than they used to? Quite a long time, as it turns out.

As more members of the younger generation are postponing homeownership and homes are becoming multi-generational, the median age of U.S. homebuyers is now 47.

That figure has gone up eight years in just the last decade.

According to Realtor.com, the median age has increased by eight years since the financial crisis. But the trend goes back further than that.

A new report from Deutsche Bank Research shows that the median age of homebuyers in 1981 was 31. Since then, it’s gone up 16 years and now sits at 47.

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