Every Monday Amber Kovarik and I spend 15 minutes discussing what happened this week in real estate, lending, and the economy.
In August, 35% of homes closed over asking price. Phoenix metro area closed sales are up nearly 19% year over year. The median sales price is $325,000, up 16% year over year. Healthy appreciation is 3% annually.
National median sales price increased by 11% year over year. Tight inventory and high demand continue to push prices up. Only San Francisco and NYC have seen significant inventory increases as residents now have more affordable options outside of these cities. (Redfin)
This map shows the year over year decrease in available inventory. (NAR)
- Mortgages in forbearance dropped to 7.01% last week from 7.16% putting roughly 3.5 million homeowners in forbearance plans. (MBA)
- 9.48% of the forbearance exits were due to permanent loan modifications. (MBA)
- It is believed that roughly 25% of borrowers in forbearance are current on their payments.
- August unemployment rate is 8.4%.
- Continuing unemployment decreased by 916,000 down to 12,628,000. (US Department of Labor)
- The leisure and hospitality sector (which tend to be renters) August unemployment rate was 21.3% while the financial activities sector August unemployment rate was 4.2% (essentially full employment) another illustration as to why real estate remains strong. (US Department of Labor)
Real Estate News:
- The National Association of Home Builders/Wells Fargo Housing Market Index hit 83 this month, a record high for the 35-year-old index. There is a looming shadow though, lumber prices have increased 170% since April and the raging west coast wildfires are putting lumber stocks at risk. (CNBC)
- From February to July the number of young adults, aged 18-29, living with their parents has increased from 47% to 52% or 26.6 million, the first time this number has been above 50%. Closed college campuses and the higher unemployment rates for younger people are the leading causes. (US Census Bureau & Pew Research)
After the rise and fall of iBuyer marketshare, from roughly 0.6%, nationally, in January to 0.1% in July. These companies are scrambling to reinvent themselves. Even Phoenix, where Opendoor launched in 2014, saw the marketshare drop from 6% in January to 1.4% in July.
After a few days of rumored talks, on Tuesday, Opendoor announced it is going public. In order to avoid pre-IPO scrutiny, which took down WeWork, Opendoor merged with Social Capital II, a special purpose acquisition company or SPAC, also knows as a blank-check company. Since Social Capital II is already publicly traded Opendoor will not have to explain to Walls Street why they want to go public but still have never turned a profit. Social Capital’s business is solely for taking companies public and has no other business. (Bloomberg)
Despite an impressive $4.7 billion in revenue in 2019, Opendoor had a net loss of $327 million, up from the $192 million in net losses in 2018. The merger gives Opendoor a valuation of $4.8 billion and a likely infusion of $1 billion in capital.
Amber discussed ways to leverage lending to help your buyers win offers. Options include a Recast, put down minimum of 5% for new loan and lock in the interest rate. When the current property sells, borrower may apply additional funds to new loan and reconfigure the payment, keeping the rates the same. Recast allows borrowers to purchase without a sale contingency.
Other strategies include offering over asking, negotiating difference based on likelihood that it won’t appraise. Create a strategy for an aggressive offer with a local loan officer who understands the nuances of the local market.
Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.