Marco Santarelli, Author at Norada Real Estate Investments

Mortgage Rates Dropped in June & Experts Predict a Downward Trend

July 2, 2024 by Marco Santarelli

As the summer of 2024 unfolds, the mortgage landscape presents a mixed bag of opportunities and challenges for potential homebuyers and homeowners looking to refinance. The start of the season has brought with it a slight decline in mortgage rates, offering a glimmer of hope amidst a period of elevated rates.

Mortgage Rates Dropped in June: Experts Predict Downward Trend

According to recent data from Freddie Mac, the average 30-year fixed-rate mortgage has seen a decrease from 7.06% in the previous month to 6.92% in June. This reduction follows a surge that saw rates climb from 6.64% in January to over 7.2% in May.

This downward adjustment is attributed to a moderation in inflation data and a corresponding dip in the 10-year Treasury rate, which fell by 15 basis points from 4.52% in May to 4.37% in June.

Analysts from the National Association of Home Builders (NAHB) forecast a continued slight decline in 30-year mortgage rates to around 6.66% by the end of 2024, with a further decrease to just under 6% by the end of 2025 as inflation approaches the Federal Reserve's target.

However, it's important to remember that the Federal Reserve doesn't directly control mortgage rates. Instead, the Fed influences mortgage rates by setting the federal funds rate, which is the interest rate that banks charge each other for overnight loans. When the Fed raises the federal funds rate, it typically leads to higher interest rates across the board, including mortgage rates. Conversely, when the Fed lowers the federal funds rate, it can lead to lower mortgage rates.

The NAHB's forecast is based on the expectation that the Fed will continue to raise rates in the near term to combat inflation, but then ease off on the brakes later in 2024 and into 2025 as inflation shows signs of cooling down. This would allow mortgage rates to come down gradually.

Beyond the National Averages: Tailoring Your Strategy

While the national averages provide a general idea of mortgage rate trends, it's important to remember that your specific rate will depend on several factors, including your credit score, loan type, down payment amount, and location. For instance, borrowers with excellent credit scores may qualify for rates that are a full percentage point lower than the national average. Conversely, those with lower credit scores may see rates that are higher.

Considering Different Loan Options

Beyond the standard 30-year fixed-rate mortgage, a variety of loan options are available, each with its own advantages and disadvantages. FHA loans, for example, can be easier to qualify for with a lower down payment, but they often come with private mortgage insurance (PMI). VA loans are another option for veterans and active-duty military personnel, offering competitive rates and no down payment requirement. Understanding these different options and how they can be impacted by fluctuating rates is crucial for making an informed decision.

The Impact on Different Housing Markets

The effect of mortgage rate fluctuations can vary depending on the specific housing market. In hotter markets with high demand and low inventory, even a small increase in rates may not significantly slow down buyer activity. However, in more balanced or buyer's markets, a rise in rates can have a more pronounced effect, potentially leading to a decrease in buyer competition and an increase in available properties.

The Role of a Mortgage Broker

In this dynamic environment, working with a qualified mortgage broker can be invaluable. A good broker can shop around for the best rates from multiple lenders, taking into account your individual circumstances. They can also help you understand the different loan options available and choose the one that best suits your needs.

The current state of mortgage rates underscores the importance of staying informed and working with knowledgeable financial advisors to navigate the complexities of home financing. Whether you're a first-time homebuyer, looking to upgrade, or considering refinancing, understanding the trajectory of mortgage rates and the economic factors influencing them is crucial for making well-informed decisions.

As we look ahead, the potential for further rate declines provides a hopeful outlook for the housing market. However, it's essential to recognize that the market remains dynamic, and rates can fluctuate based on a myriad of economic indicators. Staying abreast of these changes and seeking expert advice can help you seize opportunities as they arise and mitigate the impact of higher rates on your home purchasing or refinancing plans.

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Is the US Economy Going to Crash: Economic Outlook

July 2, 2024 by Marco Santarelli

As we move through the year 2024, the state of the U.S. economy is a topic of concern for many. while the U.S. economy may be facing a period of slower growth in 2024, the current data and forecasts do not suggest an imminent crash. With various predictions and analyses circulating, it's essential to approach the subject with a balanced perspective, understanding the complexities and the multitude of factors that influence economic outcomes. Let's find out.

Economic Outlook: Is the Economy Going to Crash?

According to insights from J.P. Morgan, the U.S. economy is expected to experience a deceleration in growth, with real GDP growth forecasted to slow down to 0.7%. This slowdown is attributed to the effects of monetary policy and the fading post-pandemic tailwinds. However, this does not necessarily signal a crash but rather a “soft landing,” a period of slower growth following an economic expansion.

The Conference Board echoes a similar sentiment, suggesting that while the U.S. economy entered 2024 on strong footing, consumer spending growth is likely to cool, and overall GDP growth may slow to under 1% during the second and third quarters of the year. This forecast aligns with the Federal Reserve‘s projections, which anticipate a slowing of U.S. GDP growth to 1.4% in 2024.

Interpreting Economic Trends

It's important to note that a slowing economy does not equate to a crash. The term “economic crash” often refers to a sudden and significant decline in economic activity, typically marked by a steep fall in GDP, widespread unemployment, and a collapse in the financial market. The current forecasts do not predict such a scenario. Instead, they suggest a period of adjustment and moderation following the robust growth seen in previous years.

Consumer behavior is a critical component of the economy, and there are signs of stress, such as an increase in subprime auto and millennial credit card delinquencies. However, household balance sheets remain healthy, and tight labor markets continue to support employment and income levels, which could help sustain consumer spending growth, albeit at a lower rate.

In terms of fiscal policy, the federal deficit is expected to narrow, reflecting some degree of spending restraint. This could act as a slight headwind to economic growth, but it also indicates a move toward fiscal sustainability.

Business investment and residential investment are areas with varied expectations. While higher interest rates have dampened business investment, there is potential for improvement in 2024. Residential investment, on the other hand, may not see sustainable growth until interest rates begin to fall.

The labor market‘s resilience is a positive sign, with tightness largely due to a shrinking labor force as Baby Boomers retire. This suggests that businesses may be resistant to laying off workers, providing some stability in employment levels.

Inflation, a key concern for many, is expected to continue its moderating trajectory. The Federal Reserve projects core PCE inflation to decline to 2.4% in 2024, which would be a welcome relief for consumers and businesses alike.

Key Factors Influencing the U.S. Economy in the Future

Here are some of the key factors currently influencing the U.S. economy:

1. Monetary Policy and Interest Rates

The Federal Reserve‘s decisions on interest rates are pivotal. In 2024, the normalization of interest rates is expected to begin, with forecasts suggesting a shift from the higher rates seen in previous years. This normalization process will likely impact business investment and consumer spending patterns.

2. Consumer Behavior

Consumer spending is a significant component of GDP, and in 2024, it's anticipated to grow at a more subdued pace. Factors such as diminished excess savings, plateauing wage gains, and an uptick in subprime auto and millennial credit card delinquencies suggest emerging signs of stress. However, healthy household balance sheets and tight labor markets could help sustain positive growth in consumer spending.

3. Fiscal Policy

The federal deficit, which saw a notable increase in 2023, is expected to narrow in 2024, reflecting some degree of spending restraint. This could present a slight headwind to economic growth but also indicates a move towards fiscal sustainability.

4. Business and Residential Investment

Business investment is likely to be among the weaker links in the economy, affected by higher interest rates. However, there's potential for improvement in 2024. Residential investment may not see sustainable growth until interest rates begin to fall, which could influence the housing market and related industries.

5. Labor Market Dynamics

The labor market‘s resilience is a key factor, with tightness largely due to a shrinking labor force as Baby Boomers retire. This suggests that businesses may be resistant to laying off workers, providing some stability in employment levels.

6. Inflation Trends

Inflation has been a defining feature of the economy in recent years. In 2024, inflation is finally expected to return to the 2 percent target, which would be a significant influence on purchasing power and monetary policy.

7. Geopolitical Risks

Conflicts and tensions around the world can have a direct impact on the U.S. economy, affecting trade, commodity prices, and overall economic confidence. The resolution of these conflicts could either pose risks or offer relief to the economic outlook.

8. Affluent Consumer Influence

The spending patterns of affluent consumers are gaining influence, which could shape market trends and consumer goods industries. Their behavior often sets the tone for broader consumer confidence and spending.

9. Political Climate

With a highly anticipated presidential election in the U.S., the political climate is set to become more charged. Political decisions and policies can have immediate and long-term effects on economic growth, regulatory environments, and international relations.

10. Global Economic Conditions

The U.S. economy does not operate in isolation. Global economic conditions, including trade relationships, foreign policy, and international market dynamics, are integral to the U.S. economic outlook.

In conclusion, the current data and forecasts do not suggest a crash in the economy. It is a time of cautious optimism, with the understanding that economic conditions are subject to change based on a wide range of domestic and global factors. As always, it's crucial for individuals and businesses to stay informed and prepared for various economic scenarios.

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How to Pay Off a 30-Year Mortgage in 10 Years

July 2, 2024 by Marco Santarelli

Managing a mortgage can be the most strenuous aspect of homeownership, with many individuals feeling trapped by the burden of a 30-year term. However, a focused, strategic approach can significantly reduce this tenure, enabling homeowners to pay off their mortgage in as little as 10 years. Here’s a comprehensive guide on making that a reality.

How to Pay Off a 30-Year Mortgage in 10 Years

Understanding the Financial Commitment

Paying off a 30-year mortgage early requires commitment, financial discipline, and a clear understanding of your finances. Here’s why it is essential:

Interest Savings: Reducing the mortgage tenure can save you tens of thousands of dollars in interest payments.
Financial Freedom: Eliminating mortgage debt sooner gives you greater flexibility to invest in other life goals or tackle unexpected expenses.
Reduced Stress: Financial burdens are known stressors. Early mortgage payoff can provide peace of mind.

Strategies to Pay Off Your Mortgage Early

1. Increase Your Monthly Payments

Increasing your monthly payments is the most straightforward way to pay off your mortgage early. By consistently paying more than the required amount, you directly reduce your principal balance.

Example:

Loan Amount	Interest Rate	Original Term	Monthly Payment	Extra Monthly Payment	New Payoff Time	Total Interest Saved
$300,000	4%	30 Years	$1,432	+$500	~16 Years	$75,000

By adding an extra $500 to your monthly payment, you could pay off a $300,000 mortgage with a 4% interest rate in approximately 16 years instead of 30, saving around $75,000 in interest.

2. Make Bi-Weekly Payments

Switch to bi-weekly payments instead of monthly payments. This approach effectively makes 13 monthly payments per year instead of 12, helping reduce the principal more quickly.

Standard Monthly Payment: $1,432
Bi-Weekly Payment: $716 (paid every two weeks)
Total Payments: 26 bi-weekly payments/year (equivalent to 13 monthly payments)

Advantages of Bi-Weekly Payments:

Accelerates Principal Reduction: Each payment reduces the principal, which in turn reduces the amount of interest charged.
Pays More Without Feeling It: An extra month’s payment is spread out across the year, making it more manageable.
Reduces Loan Tenure: Could reduce a 30-year mortgage to approximately 25-26 years.

3. Refinance Your Mortgage

Refinancing at a lower interest rate or for a shorter term may reduce the total interest paid and shorten the mortgage period.

The Refinance Process:

Evaluate Current Mortgage Terms: Compare your current interest rate and term with potential refinance options.
Calculate Break-Even Point: Determine how long it will take to recoup the costs of refinancing via interest savings.
Proceed with Refinance: If the numbers align, apply for the new loan terms.

Example:

Current Loan	Refinance Rate	Current Payment	New Payment	New Term
$300,000	4%	$1,432	$2,129	15 Years

Refinancing from a 30-year mortgage at 4% to a 15-year loan can significantly increase monthly payments but will drastically reduce the amount paid in interest over the life of the loan.

4. Apply Lump Sum Payments

Whenever possible, make lump sum payments toward your principal. This can dramatically shorten your mortgage term and save on interest.

Income Tax Refunds: Allocate any tax refunds directly to your mortgage.
Bonuses and Windfalls: Utilize work bonuses, inheritances, or any significant windfalls in the same manner.

Example Impact of Lump Sum Payments:

If you receive a $10,000 bonus and apply it directly to your mortgage principal, the impact can be substantial:

Bonus Amount	Reduced Principal	Interest Saving	Reduction in Loan Term
$10,000	$10,000	$12,000	~1 Year

5. Reduce Living Expenses

Cutting back on unnecessary expenses can free up more money to put towards your mortgage. Here are some areas to consider:

Dining Out: Limit dining out and consider homemade meals.
Subscriptions: Cancel unused subscriptions or memberships.
Utilities: Implement energy-saving measures to reduce utility bills.

Example Savings:

Expense Category	Monthly Expense	Cut by	Monthly Savings	Annual Savings
Dining Out	$300	50%	$150	$1,800
Subscriptions	$100	60%	$60	$720
Utilities	$200	25%	$50	$600
Total	$600		$260	$3,120

These annual savings can be applied directly to the mortgage principal, providing a significant boost in paying off the mortgage quicker.

6. Utilize Mortgage Acceleration Programs

Many banks offer mortgage acceleration programs that automate the process of making additional payments or converting to a bi-weekly payment schedule. Here's how they work:

Automatic Payments: Set up an automated system to make extra payments directly from your bank account.
Account Sweeps: Funnel any excess funds from your checking or savings account at the end of each month towards your mortgage principal.

7. Consider Downsizing

Downsizing to a smaller home can substantially reduce your mortgage burden. Here are the steps:

Assess Your Needs: Determine if your current home size fits your lifestyle.
Research Property Market: Identify smaller properties in desirable locations within your budget.
Plan Your Move: Downsize to a home with a smaller mortgage, using the equity from your current home sale to pay down the new mortgage.

Conclusion

Paying off a 30-year mortgage in 10 years is a realistic goal if approached with diligence and strategy. By increasing your monthly payments, making bi-weekly payments, considering refinancing, applying lump-sum payments, reducing living expenses, utilizing mortgage acceleration programs, and potentially downsizing, you can achieve significant financial savings and freedom.

By taking these steps, homeowners not only benefit financially but also enjoy the psychological benefits of living mortgage-free much sooner. It’s essential, however, to carefully analyze and implement the method that best suits your personal financial situation.

(Note: Ensure to consult with a financial advisor for personalized advice based on your unique financial situation.)

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Detroit Overtakes Atlanta as Most Overvalued Housing Market

July 2, 2024 by Marco Santarelli

After more than a year of Atlanta dominating the list of most overvalued housing markets, Detroit is now the most overpriced market in the United States, according to researchers at Florida Atlantic University and Florida International University.

Detroit Overtakes Atlanta as Most Overvalued Housing Market

Detroit's Overvaluation

Homes in the Detroit metropolitan area are 40.79% overvalued compared to their long-term pricing trends, according to end of May data from the Top 100 U.S. Housing Markets. Meanwhile, housing premiums in Atlanta are 40.37% overvalued, bringing Atlanta in as the second most overvalued housing market in the country.

“Detroit’s rise as the most overvalued housing market in the country is likely due to new household formation,” said Ken H. Johnson, Ph.D., real estate economist in FAU’s College of Business. “While population growth is relatively stagnant in the area, people are starting to leave their current households to form new ones, placing pressure on a housing market that simply does not have enough units to support this new demand.”

Top 100 U.S. Housing Markets Analysis

The Top 100 U.S. Housing Markets, a part of FAU’s Real Estate Initiative, calculates how overvalued or undervalued the typical home is in the country’s 100 most populated metros using publicly available data from Zillow. Johnson and fellow researcher Eli Beracha, Ph.D., director of FIU’s Hollo School of Real Estate, examine the difference in actual average selling price in a city and the city’s statistically modeled average selling price to calculate a premium or a discount.

Currently, 98 cities in the study are selling at a premium, while only two, Honolulu and New Orleans, are transacting at a discount.

Future Trends in Detroit Housing Market

“Rents are still growing in Detroit, signaling that home prices are likely to continue to grow for the near future. Detroit, however, does not have the same factors of supply and demand as South Florida and other parts of the Sun Belt where the housing market is bolstered by rampant demand from newcomers and population growth to sustain their housing prices,” Johnson said. “Eventually, prices will return to their long-term trends, but how they get there is the open question – will prices crash as they did after the last housing cycle’s peak or will home prices flatten out and slowly work their way back to the area’s trend. It will be one of the two.”

Re-stabilization of Overpriced Markets

Some housing markets in the country that were once some of the most overpriced markets as measured by the Top 100 U.S. Housing Markets have already begun making their way back to their long-term pricing trends. One such market, Austin, has already started to re-stabilize: homes in the metropolitan area are presently 11.72% percent overvalued, compared to the market’s peak of 46.70% in June of 2022.

“Housing prices can and will re-stabilize. The only question is how local home prices will return to a given area’s long-term pricing trend,” Beracha said. “Will it be quickly with a precipitous fall in home prices extinguishing all worries of affordability? Or will prices flatten and slowly return to the area’s long-term trend sustaining equity values but creating considerable affordability problems?”

Insights and Goals of the Top 100 U.S. Housing Markets

Both researchers stress the goal of The Top 100 U.S. Housing Markets is to give insight into housing markets around the country and help buyers, sellers, real estate professionals, and policymakers make more informed real estate decisions.

“Ideally you want a housing market’s prices to remain close to its long-term pricing trend with only limited fluctuation around the trend. Unfortunately, the last two housing cycles have been typified by dramatic swings in prices above and below markets’ long-term pricing trend,” Beracha said. “As a result, we are continuously worried about either wealth loss from home price declines or prolonged periods of unaffordable housing.”

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Programs to Lower Mortgage Payments

July 2, 2024 by Marco Santarelli

If you are struggling to make your mortgage payments, there are several programs available to help you lower your monthly payment. These programs can help you save money and avoid foreclosure.

Programs to Lower Mortgage Payments

Government Programs

The federal government offers several programs to help homeowners lower their mortgage payments. These programs are available to homeowners who are experiencing financial hardship, such as a job loss or a medical emergency.

Home Affordable Refinance Program (HARP): HARP allows homeowners who are underwater on their mortgage to refinance into a new loan with a lower interest rate. According to Freddie Mac, over 1 million homeowners have refinanced through HARP. To be eligible for HARP, you must have a mortgage that is backed by Fannie Mae or Freddie Mac and you must be current on your mortgage payments. Learn more about HARP
Home Affordable Modification Program (HAMP): HAMP allows homeowners who are at risk of foreclosure to modify their mortgage terms. Modifications can include reducing the interest rate, extending the loan term, or forgiving a portion of the principal balance. Fannie Mae reports that over 1.8 million homeowners have received assistance through HAMP. To be eligible for HAMP, you must be experiencing financial hardship and you must have a mortgage that is backed by Fannie Mae or Freddie Mac. Learn more about HAMP

Non-Government Programs

In addition to government programs, there are also several non-government programs available to help homeowners lower their mortgage payments. These programs are typically offered by mortgage lenders and non-profit organizations.

Mortgage forbearance: Mortgage forbearance allows homeowners to temporarily stop making their mortgage payments. Forbearance is typically granted for a period of 3 to 6 months, but it can be extended in some cases. The Consumer Financial Protection Bureau recommends contacting your mortgage servicer as soon as possible if you are having trouble making your mortgage payments. Learn more about mortgage forbearance
Mortgage modification: Mortgage modification allows homeowners to change the terms of their mortgage. Modifications can include reducing the interest rate, extending the loan term, or forgiving a portion of the principal balance. The Federal Housing Finance Agency provides information on mortgage modification options for homeowners with Fannie Mae or Freddie Mac-backed mortgages. Learn more about mortgage modification

Other Options

In addition to the programs listed above, there are other options available to homeowners who are struggling to make their mortgage payments. These options include:

Payment assistance programs: Some government and non-profit organizations offer payment assistance programs to help homeowners catch up on their mortgage payments. Find a payment assistance program in your area
Debt consolidation: Debt consolidation can help you combine your multiple debts into a single loan with a lower interest rate. This can free up some of your monthly cash flow to help you make your mortgage payments. Learn more about debt consolidation
Selling your home: If you are unable to make your mortgage payments and you are not eligible for any assistance programs, you may need to consider selling your home. Get a free home valuation

How to Choose the Right Program to Lower Mortgage Payments

Understanding Your Options:

There are several approaches to reducing your mortgage burden. Each has its pros and cons, depending on your situation:

Refinancing: This involves replacing your current mortgage with a new one, ideally with a lower interest rate or a longer loan term. A lower rate reduces your monthly payment, while a longer term spreads the loan out, lowering the monthly payment but increasing the total interest paid.
Recasting: Similar to refinancing, but instead of a new loan, you recalculate the remaining payments based on the current loan balance and interest rate. This can significantly lower your monthly payment but doesn't change the total interest paid.
Loan Modification: If you're facing financial hardship, your lender may allow you to modify your loan terms. This could involve lowering the interest rate, extending the loan term, or even reducing the principal balance.
Reducing Mortgage Insurance (PMI): If your loan-to-value ratio (LTV) falls below a certain threshold (usually 80%), you may be able to cancel PMI, which reduces your monthly payment.
Lowering Property Taxes or Homeowners Insurance: While you don't directly control these costs, you can shop around for better rates or contest your property tax assessment to potentially lower your monthly housing payment.

Choosing the Right Program:

Consider these factors when deciding:

Financial Situation: Are you looking for short-term relief or a long-term solution? Can you afford the closing costs associated with refinancing?
Loan Details: What is your current interest rate? How much time is left on your loan?
Future Plans: Do you plan to stay in your home for a long time?

Getting Help:

A HUD-approved housing counselor can offer free guidance on your specific situation. They can explain the pros and cons of each option, help you navigate the application process, and ensure you choose the program that best suits your needs.

By understanding your options and seeking professional advice, you can make an informed decision and find the best program to lower your mortgage payments and achieve a more manageable housing cost.

Conclusion

If you are struggling to make your mortgage payments, there are several programs and options available to help you lower your monthly payment. It is important to weigh the benefits and risks of each option before making a decision. You should also speak with a housing counselor to get personalized advice about your options.

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Top Counties Where Investors Are Flipping Homes in 2024

July 1, 2024 by Marco Santarelli

According to ATTOM’s Q1 2024 U.S. Home Flipping Report, the first quarter of 2024 saw a significant surge in home flipping activity. During this period, 67,817 single-family homes and condominiums were flipped in the United States. This accounted for 8.7 percent, or roughly one in every twelve home sales, from January through March.

Rising Home Flipping Rates

ATTOM’s analysis revealed a rise in the proportion of flipped homes to 8.7 percent in Q1 2024, up from 7.7 percent in Q4 2023. This marks the second consecutive quarterly increase, although it remains below the 9.8 percent recorded in Q1 2023.

The steady increase highlights a robust market for home flippers, driven by various factors including favorable economic conditions, increased buyer demand, and improved access to capital for renovations.

Improved Investor Returns

As flipping rates increased, so did investor returns. In Q1 2024, home flippers earned an average gross profit of 30.2 percent before expenses on homes sold. This trend marks the third time in four quarters that profit margins have risen, reversing a six-year decline. The profitability of home flipping has been buoyed by rising home prices in many markets, which allow flippers to sell at higher prices relative to their purchase and renovation costs.

Profit Margins

The typical profit margin for home flips in Q1 2024, based on the difference between median purchase and resale prices, was about 25 percentage points below the 2016 peak.

Despite renovation, mortgage, and property tax costs potentially offsetting these gains, the margin was higher than in Q4 2023 and above the decade-low of 25 percent in Q1 2023. This resurgence in profit margins suggests that flippers are becoming more adept at managing costs and timing their sales to maximize returns.

Gross Profits

Gross profits on typical flips nationwide rose to $72,375, though still below the 2022 high of around $80,000. This figure is up from $65,000 in Q4 2023 and about $10,000 higher than the lowest point last year. The increase in gross profits reflects a combination of higher resale values and more efficient renovation processes, enabling flippers to capture a larger share of the market’s appreciation.

Regional Flipping Trends

In 134 out of 173 metropolitan statistical areas across the U.S., comprising 77.5 percent of areas analyzed with sufficient data, the proportion of home flips relative to total home sales increased from Q4 2023 to Q1 2024. Most decreases observed were marginal, generally less than two percentage points.

Metropolitan statistical areas included in the analysis had populations of 200,000 or more and recorded at least 50 home flips in Q1 2024. This widespread increase in flipping activity underscores the broad-based nature of the trend, affecting both large and small markets across the country.

County-Level Analysis

Home flips constituted at least 10 percent of all home sales in 284 counties across the U.S. in Q1 2024. This figure represents 31.5 percent of the 902 counties analyzed with a minimum of 10 flips, marking a notable increase from the 22.7 percent of counties in Q4 2023. The significant rise in the number of counties with high flipping rates indicates that the practice is becoming more prevalent and geographically diverse, offering opportunities for investors in a variety of locations.

Factors Driving High Flipping Rates

Several factors contribute to the high flipping rates observed in these top counties:

Economic Growth: Strong local economies with job growth and rising incomes support higher demand for housing, making it easier for flippers to sell renovated homes quickly and profitably.
Housing Supply Constraints: In markets with limited housing supply, buyers are more willing to pay a premium for move-in-ready homes, benefiting flippers who can deliver quality renovations.
Renovation Expertise: Investors in these counties often have extensive experience and networks, allowing them to manage renovation projects efficiently and cost-effectively.
Financing Availability: Access to affordable financing for both purchases and renovations enables more investors to participate in flipping, increasing overall activity.

Top 10 Counties with Highest Home Flipping Rates

In this deep dive into ATTOM’s latest U.S. Home Flipping Report, we uncover the top 10 counties with the highest home flipping rates in Q1 2024. Among counties with 10 or more home flips in the first quarter, the highest flipping rates were observed in:

Cobb County, GA: 23.5 percent
Hickman County, TN: 20.3 percent
Houston County, GA: 20.1 percent
Clayton County, GA: 19.6 percent
Douglas County, GA: 19.5 percent
Hopewell City County, VA: 19.0 percent
Bibb County, GA: 18.6 percent
Botetourt County, VA: 18.1 percent
Loudon County, TN: 17.3 percent
Alamance County, NC: 17.2 percent

Cobb County, GA

Cobb County, GA, leads the nation with a flipping rate of 23.5 percent. The county's proximity to Atlanta, combined with its strong local economy and growing population, makes it an attractive market for home flippers. Investors benefit from high demand and rising home prices, allowing for substantial profit margins.

Hickman County, TN

In Hickman County, TN, the flipping rate reached 20.3 percent. The rural charm and affordable property prices attract investors looking to capitalize on the county's growing appeal to new residents seeking a quieter lifestyle away from urban centers.

Houston County, GA

Houston County, GA, saw a flipping rate of 20.1 percent. The county's robust job market, driven by the presence of Robins Air Force Base, provides a steady stream of potential homebuyers, making it a favorable environment for flippers.

Clayton County, GA

Clayton County, GA, recorded a flipping rate of 19.6 percent. The county's affordability and proximity to Atlanta contribute to its high flipping rate, as investors target first-time homebuyers and those seeking more affordable housing options.

Douglas County, GA

In Douglas County, GA, the flipping rate was 19.5 percent. The county's strategic location along major highways and its economic growth make it a hotspot for investors looking to flip homes for profit.

Hopewell City County, VA

Hopewell City County, VA, achieved a flipping rate of 19.0 percent. The county's historical charm and redevelopment efforts attract investors aiming to revitalize older properties and sell them at a premium.

Bibb County, GA

Bibb County, GA, with a flipping rate of 18.6 percent, benefits from the economic activities in Macon, the county seat. The local economy, bolstered by healthcare, education, and manufacturing sectors, supports strong housing demand.

Botetourt County, VA

Botetourt County, VA, had a flipping rate of 18.1 percent. The county's scenic beauty and outdoor recreational opportunities attract both homebuyers and investors looking to capitalize on its growing desirability.

Loudon County, TN

In Loudon County, TN, the flipping rate was 17.3 percent. The county's proximity to Knoxville and its lakeside attractions make it an appealing market for flippers aiming to meet the demand for vacation and second homes.

Alamance County, NC

Alamance County, NC, rounded out the top 10 with a flipping rate of 17.2 percent. The county's location between Raleigh and Greensboro, along with its economic growth, makes it an attractive market for investors seeking profitable opportunities.

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Mortgage Rates Dip to 6.86%, But Housing Market Remains Stagnant

June 28, 2024 by Marco Santarelli

Recent data from Freddie Mac offers a glimmer of hope for potential homebuyers, with the average 30-year fixed mortgage rate dropping to 6.86% – the lowest level in nearly three months. However, despite this decrease, the housing market continues to exhibit a wait-and-see attitude, remaining largely stagnant for several months.

Mortgage Rates Dip to 6.86%, But Housing Market Seeks Equilibrium

Experts point towards a clear holding pattern in the housing market, with significant movement potentially delayed until 2026 or beyond. This sentiment is echoed by a Gallup poll revealing a historically low 21% of consumers expressing confidence in the current time to buy a house. This lack of confidence highlights a significant shift compared to the hot housing market witnessed during the pandemic.

Beyond just confidence, affordability concerns are also playing a role, with the impact varying across regions. While the slight decrease in mortgage rates offers some relief, the overall impact on housing market metrics remains muted. Danielle Hale, Chief Economist at Realtor.com®, observes stable pricing alongside an increase in listings and slightly longer selling times.

This trend suggests a buyer's market is taking shape, where patient buyers may find opportunities to secure favorable deals. However, affordability challenges persist, particularly for first-time homebuyers, as historically high home prices remain a barrier to entry. The situation is further complicated by geographic disparity.

Certain regions, particularly those that experienced explosive growth during the pandemic, may see a more pronounced correction in prices as buyer demand wanes.

Inventory Rebalancing: A Double-Edged Sword with Regional Nuances

The median home price has shown surprising resilience year-over-year, despite affordability challenges. Interestingly, there's been a surge in smaller home listings, potentially catering to first-time buyers and those downsizing.

Housing stock has also seen a notable increase, with new listings up 7.4% compared to last year. This marks the 33rd consecutive week of growth in available homes, potentially indicating a shift towards a more balanced market.

However, despite the rise in listings, active inventory levels remain below pre-pandemic norms. This limited availability continues to influence market dynamics, particularly in certain regions. Many potential sellers are hesitant to list their properties due to the fear of trading their current low-interest mortgages for the higher rates prevalent today. This seller hesitancy contributes to a slower turnover in the market, further dampening overall activity.

Navigating Uncertainty: The Federal Reserve, Economic Indicators, and Long-Term Considerations

The Federal Reserve's cautious approach towards interest rate cuts, coupled with potential economic shifts, will likely play a key role in shaping future mortgage rate movements. As buyers wait for more favorable conditions, sellers are adjusting to an environment with increased inventory and longer listing times. This suggests a buyer-friendly market with evolving dynamics.

Market responses to economic indicators, such as inflation trends and Federal Reserve policies, will be crucial in determining future mortgage rate scenarios. The uncertainty surrounding these factors underscores the cautious optimism among market participants. Both buyers and sellers are carefully weighing their options as they navigate a period of economic transition.

Looking beyond the immediate future, it's important to consider long-term demographic trends that may influence housing demand. Factors such as millennials entering prime homebuying years and the aging population's need for senior housing could influence future market dynamics.

A Cautiously Optimistic Landscape: Opportunities and Challenges with an Eye on Long-Term Planning

While mortgage rates have reached a recent low, the housing market continues to face headwinds. This necessitates close monitoring of market developments for both prospective buyers and sellers. Shifts in economic conditions and consumer sentiment could significantly alter the current landscape.

Overall, the near-term outlook suggests a cautiously optimistic market environment. Potential buying opportunities may arise amidst ongoing market adjustments, particularly for those who can afford to enter the market at current rates. However, careful consideration of affordability and long-term financial goals remains paramount. Buyers should also factor in potential carrying costs beyond the mortgage payment, such as property taxes and maintenance.

For those considering selling their homes, navigating the current market may require patience and strategic pricing. Understanding the evolving buyer pool and adapting listing strategies accordingly will be crucial for success. The coming months will likely see a continued period of adjustment as the housing market seeks a new equilibrium. By staying informed about market trends and consulting with financial professionals, both buyers and sellers can make informed decisions in this evolving landscape.

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2024’s Housing Market Where Homes Are Selling Below Asking Price

June 28, 2024 by Marco Santarelli

Forget bidding wars! The housing market cools down in 2024. Homes selling below asking price for the 1st time since 2020. Is it a buyer's market now? Well, the typical U.S. home sold during the four weeks ending June 23 for 0.3% less than its asking price.

According to Redfin, this marks a significant change as it is the first time homes have sold under the list price at this time of year since the onset of the pandemic in 2020. Last year, the typical home sold for exactly its asking price, and two years ago, homes were selling for approximately 2% above their list price.

Housing Market Trends – June 2024

Sale Price Dynamics

During this period, just under one-third (32.3%) of U.S. homes sold over their asking price. This is the lowest share for late spring since 2020 and represents a decrease from 36% a year earlier. Additionally, nearly 7% of home sellers reduced their asking price, marking the highest level since November 2022, up from 4.7% a year ago.

Supply and Demand Imbalance

The likelihood of homes selling below asking price is increasing due to a supply-demand imbalance. New listings have increased by 8.2% year over year nationwide, while pending home sales have decreased by 4.3%, the largest decline in four months. A significant portion of the inventory is growing stale, with over 60% of homes listed for at least a month without going under contract.

Buyer Hesitation

Buyers are hesitating due to high housing costs. The median home-sale price has risen by 4.9% year over year, reaching an all-time high of $397,250. While mortgage rates have decreased slightly from May’s six-month high, the weekly average remains near 7%. The typical homebuyer’s monthly payment is approximately $2,785, just about $50 below the record high.

Impact of Weather

Record-breaking heat has also contributed to buyer reluctance. Joe Hunt, a Redfin manager in Phoenix, noted that some clients have avoided home viewings due to the extreme heat. However, he believes lower mortgage rates would likely counteract this effect.

Future Market Trends

Buyers may soon see some relief in costs. The increasing likelihood of homes selling below asking price, coupled with a high number of sellers dropping their prices, suggests that sale-price growth might slow down. Additionally, if inflation continues to cool, mortgage rates could decrease further.

Advice for Buyers and Sellers

Redfin agents recommend that both buyers and sellers remain realistic about prices. Sellers should avoid overpricing their homes, while buyers should understand that they may have room to negotiate, particularly if a home has been on the market without much activity for a few weeks.

Marije Kruythoff, a Los Angeles Redfin Premier agent, emphasized the importance of considering the specific property and its location. She explained that the most sought-after properties are either move-in ready or complete fixer-uppers. Homes that are somewhat nice but not fully updated tend to stay on the market longer. Sellers of these homes might benefit from making cosmetic repairs before listing, a service offered through Redfin Concierge Service. On the other hand, buyers encountering such listings should consider negotiating.

Leading Housing Market Indicators

Mortgage Rates

As of June 26, the daily average 30-year fixed mortgage rate stands at 7.06%. This rate has increased from a 3-month low of 6.97% a week earlier, but it is down from a 5-month high of 7.52% six weeks ago. Year over year, the rate is up from 6.91% according to Mortgage News Daily. The weekly average 30-year fixed mortgage rate, ending June 20, was 6.87%, the lowest level since the week ending April 4, up from 6.67% a year ago as reported by Freddie Mac.

Mortgage-Purchase Applications

Seasonally adjusted mortgage-purchase applications have increased by 1% from a week earlier as of the week ending June 21. However, they are down 13% year over year, based on data from the Mortgage Bankers Association.

Redfin Homebuyer Demand Index

The Redfin Homebuyer Demand Index, a measure of requests for tours and other homebuying services from Redfin agents, has risen by 5% from a month earlier as of the week ending June 23. Despite this increase, the index is down 14% compared to the previous year.

Touring Activity

Touring activity, as recorded by ShowingTime, has increased by 27% from the start of the year as of June 23. At this time last year, touring activity was also up by 15% from the beginning of 2023.

Google Searches for “Home for Sale”

Google searches for “home for sale” have remained unchanged from a month earlier as of June 24 but are down 15% year over year.

Key Housing-Market Trends – Four Weeks Ending June 23, 2024

Redfin’s national metrics, based on data from over 400 U.S. metro areas, provide valuable insights into the housing market trends for the four weeks ending June 23, 2024.

Median Sale Price

The median sale price reached an all-time high of $397,250, representing a 4.9% year-over-year increase. This is the biggest increase since March.

Median Asking Price

The median asking price was $414,975, up 6.1% year-over-year. This is the largest increase since October 2022.

Median Monthly Mortgage Payment

At a 6.87% mortgage rate, the median monthly mortgage payment is $2,785, up 7.5% from last year but $54 below the all-time high set during the four weeks ending April 28.

Pending Sales

Pending sales dropped to 85,246, a 4.3% decrease, marking the biggest decline in four months.

New Listings

New listings increased to 100,545, up 8.2%, which is the largest increase in two months.

Active Listings

Active listings rose to 953,300, an increase of 16.9% year-over-year.

Months of Supply

The months of supply increased by 0.6 points to 3.3. A supply of 4 to 5 months is considered balanced, with a lower number indicating seller’s market conditions.

Share of Homes Off Market in Two Weeks

The share of homes that went off the market within two weeks decreased to 41.4%, down from 46% last year.

Median Days on Market

The median days on market increased by 4 days to 31 days.

Share of Homes Sold Above List Price

The share of homes sold above list price decreased to 32.3%, down from 36% last year.

Share of Homes with a Price Drop

The share of homes with a price drop increased by 2 points to 6.7%, the highest level since November 2022.

Average Sale-to-List Price Ratio

The average sale-to-list price ratio decreased by 0.3 points to 99.7%.

Summary:

The housing market in June 2024 presents a complex picture for both buyers and sellers. While the median sale price has reached a record high, other indicators suggest a potential cooling of the market. Increasing supply and the rising share of homes selling below asking price may provide some relief for buyers, while sellers must adjust expectations and consider strategic pricing and home improvements.

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Housing Crisis Worsens as Costs Surge for Homeowners and Renters

June 28, 2024 by Marco Santarelli

In a time when housing affordability is already a pressing issue, both homeowners and renters are feeling the financial strain as housing costs continue to rise. Elevated home prices, climbing interest rates, and increasing insurance and tax costs are putting potential homebuyers at a disadvantage. Simultaneously, renters are grappling with soaring rents, resulting in record levels of cost burdens. Let's break down the recent report from Harvard University’s Joint Center for Housing Studies.

Housing Crisis Worsens in the US

Homeowners Face Rising Costs

According to the S&P CoreLogic Case-Shiller US National Home Price Index, home prices reached a new high in early 2024, continuing an upward trend that saw a 6.4 percent annual increase in February. This spike follows a 5.6 percent rise in 2023, bringing the index up 47 percent since early 2020. The increase in home prices has been particularly pronounced in the Northeast and Midwest, with more subdued growth in the South and West.

The implications of these price increases are significant. Many potential homebuyers have been priced out of the market, with higher interest rates compounding the challenge. The average 30-year mortgage rate is hovering around 7 percent, substantially higher than the rates many current homeowners enjoy.

This rate disparity creates a “lock-in” effect, discouraging existing homeowners from selling and further limiting the supply of homes on the market. As a result, the inventory of homes for sale remains critically low, with just 1.1 million homes available in March 2024, down from 1.7 million in March 2019. This represents only 3.2 months of supply, even with a reduced sales rate.

In addition to rising home prices, homeowners are also facing higher insurance premiums and property taxes. Between May 2022 and May 2023, home insurance premiums increased by an average of 21 percent, according to Policygenius. Property taxes have also been on the rise, further adding to the financial burden for homeowners. These increased costs are pushing more homeowners into cost-burdened status, where they spend more than 30 percent of their income on housing and utilities.

Renters Struggle with Escalating Rents

While rent growth has slowed to just 0.2 percent year-over-year in early 2024, rents have surged by 26 percent nationwide since early 2020. This has led to a significant increase in the number of cost-burdened renters, with 22.4 million households spending more than 30 percent of their income on rent and utilities in 2022. Of these, 12.1 million are severely cost-burdened, spending over half their income on housing.

The rental market has seen some cooling due to an influx of new multifamily rental units. Multifamily completions rose by 22 percent to 449,900 units in 2023, the highest annual level in over three decades.

This increase in supply has led to a slight rise in vacancy rates, which reached 5.9 percent in early 2024, more than double the record low of 2.5 percent in early 2022. However, the cooling effect on rents has been modest, and the overall affordability crisis remains severe.

Cost burdens are particularly severe for low-income renters, with 83 percent of those earning less than $30,000 annually facing significant financial strain. Racial disparities also persist, with higher cost-burden rates among Black, Hispanic, and multiracial renter households compared to their white and Asian counterparts.

More than half of Black (57 percent), Hispanic (54 percent), and multiracial (50 percent) renter households were cost-burdened in 2022. For the lowest-income renters, the median residual income—the amount left after paying for housing and utilities—is just $310 per month, barely enough to cover other basic needs.

New Construction and Market Dynamics

Despite the rising costs, single-family home construction is accelerating, and a surge of new multifamily rental units is helping to slightly cool the rental market. In 2023, multifamily completions rose by 22 percent, reaching the highest annual level in over three decades. However, the high cost of construction and financing challenges are expected to slow the pace of new unit additions.

Multifamily construction starts have plummeted from an annualized rate of 531,000 units in the first half of 2023 to just 343,000 units in the first quarter of 2024.

This decline is due to a combination of rising construction costs, higher financing costs, and tighter credit conditions. As a result, while the number of units under construction remains near record highs, the pace of new additions to the rental market is expected to slow in the coming years.

Demographic Trends and Household Growth

Despite high housing costs, household growth remained robust through last year. The nation gained 1.7 million households between 2022 and 2023, according to the Housing Vacancy Survey. Though lower than the previous year’s 1.9 million new households, this is still a significant uptick from the 1.1 million annual pace averaged in the 2010s.

This growth is driven largely by Gen Zers (born 1995—2009) benefiting from the healthy labor market and millennials (born 1980—1994) who got a late start on forming their own households because of the Great Recession. Additionally, the large population of baby boomers is increasing the number of older households.

Another major contributor to robust household growth is ballooning immigration, which peaked at 3.3 million in 2023 according to the Congressional Budget Office, after averaging 919,000 annually in the 2010s. The majority of this increase is asylum seekers facing challenges that will slow their housing trajectories. But household growth may remain strong for some time, as this population will eventually form households.

Challenges Ahead and Call to Action

As household growth continues and the housing market struggles to keep up, the urgency to address the affordability crisis becomes ever more pressing. The inadequate housing safety net, the record number of people experiencing homelessness, and the growing threat of climate change are challenges that require immediate and coordinated action.

Policymakers, developers, and community organizations must collaborate to create sustainable solutions. Expanding affordable housing options, providing support for cost-burdened households, and investing in resilient infrastructure are critical steps toward mitigating the housing crisis. Additionally, addressing racial disparities in housing and ensuring equitable access to safe and affordable homes must be prioritized.

The housing affordability crisis is a complex issue that demands a multifaceted approach. With concerted efforts from all stakeholders, it is possible to create a housing market that is fair, inclusive, and sustainable for all.

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Housing Market Retains Strong Growth: Gen Z and Millennials Lead

June 28, 2024 by Marco Santarelli

The housing market remains a significant driver of the economy, and despite challenges such as rising unaffordability, the demand for housing continues to grow. This growth is primarily fueled by the younger generations, particularly Gen Z and millennials.

These groups are forming new households at a remarkable rate, influencing the housing market's dynamics. According to the Harvard University’s Joint Center for Housing Studies, young adults, alongside the baby boomers, are pivotal in sustaining housing demand.

Housing Demand Remains Robust Due to Gen Z and Millennials

Household Formation and Growth

Despite increasing unaffordability, household growth has remained elevated. The Housing Vacancy Survey reported that 1.7 million new households were added in 2023, slightly down from the 1.9 million households formed in 2022. These numbers are significantly higher than the average of 1.1 million households added annually over the previous decade. By the end of 2023, there were 130.3 million households in the United States, with 85.9 million homeowners and 44.5 million renters.

Gen Z and Millennials Leading the Way

The bulk of recent household growth is among Gen Z (born 1995–2009) and millennials (born 1980–1994). As they enter their peak household formation years, these generations are significantly influencing the housing market. From 2017 to 2022, Gen Z formed 8.1 million households, mostly renter households. Millennials, on the other hand, added 6.9 million new households, with most becoming homeowners.

Influence of Gen X and Baby Boomers

While Gen X (born 1965–1979) added a more modest 1.1 million households during the same period, baby boomers (born 1946–1964) saw a decline, losing 850,000 households largely due to mortality. However, baby boomers remain influential in the housing market, accounting for 32 percent of all householders and 38 percent of all homeowner households. Despite the decline, the number of households headed by adults aged 65 and over increased by 16 percent over the past five years.

Demographic Shifts and Diversity

The demographic composition of new households is changing, with younger generations being more racially diverse. Among Gen Z and millennial households, 56 percent are white, 19 percent Hispanic, 13 percent Black, 6 percent Asian, and 6 percent multiracial or another race. In contrast, 72 percent of baby boomer householders are white. This diversity is further enhanced by immigration, which surged in 2023, significantly contributing to household growth. Immigrants play a vital role in sustaining housing demand, especially as natural population growth slows.

Economic Disparities

Despite rising wages, economic disparities persist, affecting housing affordability. While some benefit from substantial home equity gains, others struggle with low wealth, income, and high housing costs. This economic divide highlights the varying experiences within the housing market, even as overall demand remains strong.

Conclusion

The growth in housing demand, driven by Gen Z and millennials, is shaping the future of the real estate market. These younger generations, along with the enduring influence of baby boomers, ensure a dynamic and evolving housing landscape. As the market adapts to these demographic shifts and economic challenges, understanding the factors driving demand is crucial for stakeholders in the housing industry.

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