Record number of renters believe renting is more affordable than owning


A recent report from CoreLogic showed that home prices increased 4% year over year in December, and projected the U.S. price index will rise by 5.2% by December 2020.

As home prices continue to rise nationally, it’s little wonder that Freddie Mac’s latest “Profile of Today’s Renter and Owner” found that the majority of current renters believe renting is more affordable than owning.

However, the percentage of renters who hold that belief has increased dramatically in the past year.

A whopping 84% of renters said they believe renting is more affordable than owning – an all-time high for the survey. For comparison, this number is up 17 percentage points from February 2018.

The survey also found that affordability issues affect the average renter more than a homeowner. Freddie Mac said there are 42% of renters who paid more than a third of their household income on rent.

This is compared to only 24% of homeowners who spend that amount on mortgage payments.

But there is good news for renters looking to own. Given current low interest rates, 40% of renters said they plan to purchase a home.

“The housing market is strong and, based on our survey, the low mortgage rate environment may inspire both renters and owners to make an educated move this spring,” said David Brickman, Freddie Mac CEO. “While Baby Boomers tend to be satisfied with their current housing situation, younger generations are still struggling to determine whether to rent or purchase a home, largely due to lack of supply and affordability constraints.”

And that lack of supply stretches beyond single-family housing. Last year saw record-high occupancy rates in multifamily housing with a shortage of supply. Naturally, this drove rent growth. Many of the renters surveyed by Freddie Mac voiced their worry in this area.

Almost 70% of renters said they are growing more concerned about their rent going up in the next 12 months, while 68% are concerned about not being able to afford their larger expenses. Even so, according to the majority surveyed, renting is still the more affordable option.



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Why you should fire your difficult client


Sometimes the best client is the one you never work with. 

It’s a lesson my mentor taught me years ago when I first started out as a real estate agent. At the time, I had no clue what it meant. I even thought he was crazy. Why would you ever not work with a client who wanted to buy or sell with you? That’s business! That’s money! Why would any sane person ever turn that down? 

Dustin-Brohm
Dustin Brohm, Columnist

I’ll tell you why. 

Have you ever had a nightmare client? A buyer or seller who is just unreasonably demanding, undermines every recommendation you make, fights you at every turn and who makes you dread checking your phone whenever a new call comes in? 

You know the ones. They refuse to take your advice and rely on your expertise and experience, even though that’s what they hired you for. Or the ones who are downright nasty, petty and awful.

If you’ve been a real estate agent long enough, you most certainly have had a nightmare client. We all have. And if you’re new to the business, don’t feel left out. Your very own nightmare client is coming!

All it takes is working with one nightmare client before you know deep down in your soul that you don’t ever want another one. Usually, you say, “it wasn’t worth it.” You’re right! You can earn a commission by helping someone that you enjoy helping. So then why the hell would you get yourself stuck in another scenario like that with an impossible client? 

What if I told you that you don’t ever need to work with a nightmare client ever again? That it’s actually a choice you can make. 

See here’s the thing: If you are miserable in the agent-client relationship, you’re not giving them the level of service and energy that they deserve.

Sometimes letting your client go is not just good for you, but it’s good for them. If they treat you horribly or undermine you every chance they get, then they obviously don’t trust you or believe in you. But each client deserves to have an agent who they do believe in, who they do trust.

By releasing a client from their agency relationship with you (if that’s even a thing in your state) you’re getting that negative energy out of your life. You are freeing up your time to work with more great clients. We all only have 24 hours in a day, so choose how you use it, and who you spend it with.

In these situations, it’s better to just fire the client and send them on their merry way.

As an agent, you have an obligation to do what is best for that client. And if you are not able to service their needs to the level that they expect, then isn’t it better to send them on their way to find an agent who’s a better fit?

In some situations, you may even be able to negotiate a referral fee by finding them a better agent for their needs and personality.

Now if it’s one of those clients that are just plain nasty, do the right thing, and don’t even try to refer them to another agent. Why would you put that horrible situation on another agent’s shoulders?

No matter what story you tell them upfront, as soon as they understand why you let the client go, the other agent will end up hating you and resenting you, as they should.

As my very first mentor as a real estate agent taught me, sometimes the best client is the one you never work with. If you’re feeling abused by a client, and they’re obviously not happy or satisfied, then be big enough to sever ties and let them go find someone else.



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These markets will see dramatic multifamily supply hikes this year


Just a few weeks ago, RealPage revealed that the multifamily residential market will see the most starts it has seen in nearly 30 years in 2020.

Out of the nation’s 50 largest apartment markets, all but six will have more units completed this year than the last, RealPage said.

The most drastic supply hike is predicted to be in Los Angeles. In 2020, there are an expected 17,600 units coming in the City of Angels, the largest supply it has seen in more than 20 years. It’s also about double the average from the past decade.

This supply is much needed, as occupancy rates in Los Angeles have been at 96% for the past five years. Despite this, rent growth in Los Angeles has fallen to its lowest point since the start of this economic cycle, in 2019.

Washington, D.C. will gain 16,000 units in 2020, about 7,800 more than in 2019. Occupancies are at 96%, while rent growth has been below 2% for the past five years.

Houston is also expected to see over 16,000 new apartments in 2020, about 8,500 more units than last year. RealPage said that kind of bump is not surprising for a metro like Houston, which is experiencing rapid population growth. However, due to recent hurricanes and volatile oil prices, the market ended the year with a quarter of net move-outs that brought occupancy down to 93.6%.

Phoenix, Seattle and Fort Lauderdale, Florida are projected to see supply increase by about 4,000 units this year, with Phoenix and Fort Lauderdale both reaching a two-decade peak, RealPage said.

Seattle, meanwhile, is seeing a 20-year high, with 12,700 units set to be completed this year. San Jose, San Francisco and Oakland, California, will also all see significant increases in supply.



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Realogy unveils new CRM and app for agents


Realogy, the largest owner of U.S. real estate brokerages, this week unveiled a new suite of tools for its agents it’s calling a “productivity hub.”

It includes a customer relationship management (CRM) program as well as an app that allows agents to instant message with customers.

Other features still in development that will be included in the productivity hub in the future include a transaction management program, a lead management tool and a program for analytics and reporting data, Realogy said in a statement.

“It’s all about making agents productive, deepening agents’ relationships with existing clients and expand their network with new clients,” Dave Gordon, Realogy’s chief technology officer, said in an interview with HousingWire. “These tools enable them to do that, making them more productive and more efficient.”

Realogy is the owner of NRT, the nation’s largest brokerage measured by two key metrics: the total dollar volume of transactions and the number of real estate agents. In addition to NRT, Realogy brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Corcoran, ERA, Sotheby’s International Realty.

In July, Realogy announced a partnership with Amazon, the world’s largest retailer, to match homebuyers with real estate agents through a program called TurnKey.

Potential buyers will be able to go through their Amazon account, click on TurnKey, put in details about the size, price and location of the home they want to buy, and then be matched with one of Realogy’s agents.

In return, customers get up to $5,000 of Amazon products and assistance called a “Move-In Benefit,” which includes help with chores and product installation through a division of the retailer called Amazon Home Services.



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RealPage continues growing, set to acquire Modern Message


Real estate tech company RealPage announced this week that it will be acquiring multifamily real estate engagement solution Modern Message.

The platform’s flagship product, Community Rewards, builds engagement through a fully mobile UI that is “motivating, rewarding, fun and interactive” for property residents, the company said.

“Modern Message provides a unique boost to our already powerful resident engagement platform,” said Jon Pastor, senior vice president of consumer solutions at RealPage.

“The two solutions joined together to enable our clients to give residents a rich rewards experience, boost ancillary revenue, resident loyalty and reputation scores, and see greater adoption of their RealPage solutions,” Pastor added. “In short, we will be able to offer clients and residents the full potential of a resident portal.”

This is an effort to reach greater resident loyalty and referrals, boosting property reputation and value in the long run.

The acquisition will go hand-in-hand with RealPage’s ActiveBuilding resident portal platform, which offers payments, resident communication and monetization of multifamily properties, the company said.

RealPage says it plans to combine the two platforms and create a renter engagement solution with significant benefits.

“This is a great time to become part of the RealPage team,” said John Hinckley, o-founder of Modern Message. “ActiveBuilding will be the perfect gateway to deliver Modern Message’s resident engagement programs to a broader industry audience while maximizing results. We are also looking forward to exploring new opportunities that may arise from the combined platform. It’s beyond exciting.”

This comes about a month after RealPage acquired real estate property management solution provider Buildium.

RealPage said it plans to retain Modern Message’s employees. The completion of the acquisition remains subject to certain standard closing conditions, which RealPage anticipates will be satisfied shortly, according to the release.

Financial terms of the deal were not disclosed.



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NYC real estate data firm Actovia salvages competitor CrediFi from the scrap heap


Just a few weeks ago, it looked like CrediFi, a commercial real estate data and analytics provider that had raised nearly $30 million in funding over the last five years, was mere days from shutting down.

Now, it looks like the company has been saved from the chopping block, at least in some form, by one of its competitors no less.

Actovia, which bills itself as “New York City region’s leading provider of commercial real estate intelligence and data,” announced this week that it has purchased CrediFi as part of an effort to expand beyond the NYC area.

“The acquisition of CrediFi, which was launched in 2014, enhances Actovia’s already-powerful information-gathering capabilities and greatly broadens the geographical scope of its operations,” the company said in a release.

As CrediFi was nearing its end days, the company sent a letter sent to clients and subscribers, with CrediFi CEO Ely Razin stating that the company is shutting down its data platform “over the coming days.”

Razin’s admission came in an email to clients offering them a chance to “get great data at close-out prices,” with the email simultaneously confirming the company’s fate and offering clients one last chance to buy the company’s data offerings.

Financial terms of the deal with Actovia were not disclosed, but the deal begs the question of whether Actovia bought CrediFi’s data and its platform at “close-out prices” or not.

As for Actovia, the company views the deal as a chance to expand beyond New York City real estate.

“Actovia’s acquisition of CrediFi helps fulfill our strategy of expanding our regional offerings to a national scale,” said Actovia Founder and CEO Jonathan Ingber. “Our broadened capabilities now significantly extend the market leadership of Actovia’s analytics-enabled solution – and empower us to deliver greater value to banks and clients.”

According to Ingber, Actovia chose to merge CrediFi into its new parent company. But for now, CrediFi, which had been based in Tel Aviv, Israel, will “effectively function” as Actovia’s “sister company.”

Ingber said the deal “stands as a natural next step in quickly scaling Actovia,” adding that the deal brings together “Actovia’s strengths in the small-business and mid-market spheres with CrediFi’s strengths in serving larger enterprises.”



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RE/MAX: The December housing market broke records


By one measure, December 2019 was the strongest close to the year of any year in the last decade.

RE/MAX released its National Housing Report for December 2019 last week, which revealed that the month posted a record finish to a year and the decade.

December finished with a year-over-year increase in home sales of 13.5% in the 54 metros it covers. This is the highest increase of any month in 2019, the report said.

It’s also the highest for the month of December since 2009.

And as sales increased, inventory fell. According to RE/MAX’s report, December saw a 14.5% year-over-year decline in inventory.

Consequently, there was a significant drop in the months supply of inventory. According to the report, there was only 3.3 months of available inventory on the market as of December 2019, compared to 4.8 months in December 2018.

“It was good to see the year-over-year spike in December home sales, indicating robust homebuyer interest,” said Adam Contos, CEO of RE/MAX.

“The strong December capped a solid second half of 2019, with year-over-year sales increases in four of the final six months,” Contos added. “The gains were largely attributable to low interest rates and high demand, and with those factors still in place, we expect sales to continue at a solid pace into the first part of this year.”

Interestingly, housing inventory grew year over year in the first six months of 2019, but shrank for the last six months of 2019, the report said.

The median sale price of a home was $266,000 in December, 11.1% higher than in December 2018. It also represented the highest year-over-year increase for any month of 2019.

Leaders of the year-over-year sales percentage increase were Birmingham, Alabama, up 34.3%; Burlington, Vermont, up 26.7% and Los Angeles, up 26.2%.

Average days on the market remained near the same level as the previous year, with days on the market in December 2019 for 54.

That’s up five days from November’s average but down one day from December 2018’s average.

The metro with the lowest days on the market were Omaha, Nebraska at 24. Homes in Des Moines, Iowa spent the most time on the market, at 110 days.



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Can these mortgage startups change the world, or will Zillow and Opendoor take it all?


Venture capital-backed home lending startups fill key first-time homebuyer, cash-out and investor niches. But will they really change the world, or just be niches? It’s a little of both. Let’s take a look.  

Startups Love Giant Mortgage Stats

Like all venture capitalist pitches, fintech and proptech startup pitches begin with total addressable market (TAM). 

Julian Hebron, Columnist

Why? Because mortgage and housing TAM is super sexy to entrepreneurs hunting for an opportunity as the economic cycle matures. 

The U.S. housing market is worth $30.7 trillion, of which $11 trillion is loans on the homes and $19.7 trillion is equity owned by homeowners. And there are about 6 million homes sold and $1.6 trillion in first mortgages made each year.

If we get just 2% mortgage market share within our three-year plan, that’s $32 billion in fundings!

Laughable, I know. But this is how some startups rationalize. 

In reality, it’s way harder than it looks to fund even $5 billion. It gets exponentially harder when you go above $10 billion, and then again for $20 billion.

Then if you almost double that again, you’re in the nation’s top 10 mortgage lenders, all of which took one to three decades to build organically and through mergers and acquisitions.

Startups Must Be Worth $5 to 10 Billion & Change The World 

Most lenders aren’t giants, and this clashes with today’s aggressive VC quest for unicorns, which are private companies worth $1 billion or more. 

The most vocal of unicorn-or-bust VCs is the indomitable Keith Rabois of Founders Fund. He’s Harvard, Stanford, PayPal Mafia, and has served as an investor and executive at LinkedIn, Square, Yelp, YouTube, Yammer, Palantir, Lyft, Airbnb, Eventbrite, Quora and more (as you’ll see below).

With that record, he’s hard to ignore when he browbeats his winner-take-all unicorn vision into you, which is: 

Your startup must change an industry or the world and be worth $10 billion or more. Maybe it can be worth as little as $5 billion, but below that, you haven’t changed either. 

This ethos has led to a record 199 U.S. unicorns today, up from an already high 117 just two years ago according to CB Insights and PwC.

Which VC-Backed Mortgage Models Work Best? 

So which VC-backed home lending models work right now? Are they unicorns in the making? 

  • Non-owner-occupied models put a fintech spin on hard money, helping investors buy, fix and flip homes. Relevant product, some good brands, but a niche that doesn’t change the industry.
  • Rent-to-own models keep popping up but it’s very capital-intensive to buy the homes and fund scale marketing. And nine-figure valuations given to firms focused on limited geographies don’t pencil. I’m open to being proven wrong here, but this also looks like a niche. 
  • Shared appreciation models are the most consumer-relevant so far. To summarize all the math, these companies give homebuyers up to half of their down payment with no interest or loan payments in exchange for about one-third of the home’s appreciation later on.

Unison and Andreesen Horowitz-backed Point are the two leading players, but Unison is the OG. They were founded as FirstRex in 2004 and rebranded to Unison in 2016.  

Capital markets participants understand how Unison fits within the traditional mortgage mix, and they’re entrenched with lender salesforces, which helps control consumer-direct marketing spend. 

Which VC-Backed Housing Models Will Change The World?

Shared appreciation is relevant stuff for the right consumer profiles, but not the stuff of world-changing unicorns. 

Happy to eat those words later, but I stand by them now for two reasons:  

  • Niches matter. I disagree with Rabois that companies must be unicorns to change lives. Also maturing unicorns will need great niche companies to buy.
  • Shared appreciation is smarter than a reverse mortgage for cash out as the home-owning population ages. Maybe still a niche, but a great one. 

Niches won’t change our housing finance world, but let’s bring it home with a VC-backed model that might. 

One-Stop-Shop Homeownership Will Indeed Change The World

Now back to Rabois for what may be his magnum opus: Opendoor, the pioneer of the instant-buyer (iBuyer) model. 

Now worth roughly $4 billion, Opendoor is on it’s way to becoming a one-stop-shop for home buying, owning and selling. 

The company he co-founded is making home buying and selling like trading your car.

It’s not just about mortgage or real estate fees, it’s monetizing the whole homeownership lifecycle. Despite the monetization complexity, the story plays by offering a one-stop-shop experience consumers demand. 

Opendoor is a key reason Zillow pivoted last year to go “down funnel” from providing leads to buying, selling, and financing homes themselves. 

Zillow currently has a market cap of $9.8 billion, and is telling Wall Street it intends to grow revenue from $1.3 billion now to $20 billion in the next four years.  

Mortgage Scale Unproven For Opendoor & Zillow 

Skeptics say tech unicorns differ from mortgage and housing plays because mortgage and housing touch the real world. 

Other real world-touching unicorns have struggled, most notably WeWork in commercial real estate. And like commercial, housing goes way beyond software and apps. There are humans involved at every step. 

So far, Opendoor (and Zillow) are proving resourceful with ground teams to fix up the homes they buy, and agents to help consumers. Scaling mortgage remains unproven for both firms. 

But my joke for Opendoor here in San Francisco is that it’s Goldman Sachs West – because of it’s highly sophisticated capital markets team. Between that and having such an aggressive and connected co-founder, they might just show us the future of housing finance.

We will see. In the meantime, the consumer wins as the one-stop-shop vision takes shape.



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