We are getting new data on just how hot real estate prices are across the country. Ben Winck and Libertina Brandt of Business Insider open up this week with expert commentary on the state of housing prices, noting that despite elevating prices there is no sign of a bubble, and prices may continue to climb for the foreseeable future due to tight supply.
Elizabeth Schulze and Ellen Van de Mark of ABC News report that “low interest rates and remote work have supercharged demand from homebuyers over the past year. Real estate brokerage Redfin called March the “hottest month in housing market history,” with a record 43% of homes selling for more than their listing price. Nearly half of the homes that went under contract had an accepted offer within one week of hitting the market.”
ATTOM Data Solutions released their Q1 2020 U.S. Home Sales Report, showing typical homeowner profits across the country.
Source: ATTOM Data Solutions
“According to ATTOM’s latest home sales analysis, that typical home-sale profit in Q1 2021 represented a 34.2 percent ROI compared to the original purchase price. That figure was down from 37.1 percent in Q4 2020, but still higher than 30.8 percent in Q1 2020.”
Redfin reported this week on different real estate asset classes, and how high they’ve increased over the past year, with urban SFHs leading the charge.
Interestingly, urban condos are taking an upward trajectory as well, putting fresh questions to the urban exodus thesis many have been pushing since the beginning of the pandemic.
Aly J. Yale of Mortgage Reports reported that a new Consumer Financial Protection Bureau (CFPB) proposal could push the foreclosure ban into 2022. “The rule — which the CFPB says would benefit both underwater homeowners and mortgage servicers — would prohibit servicers from initiating the foreclosure process until after December 31 of this year. It would also allow for streamlined loan modifications to help post-forbearance homeowners get back on their feet.”
Kate Gibson of CBS News picks up on the story, noting that homeowners behind on their mortgages have doubled since last year, currently sitting at 6% of mortgages being delinquent. These are the highest levels since 2010. The CFPB deadline for comments on this proposal is May 10.
Christine Stricker of ATTOM Data Solutions comments on that data company’s Q1 and March 2021 U.S. Foreclosure Market Report, noting that “U.S. foreclosure activity increased 9 percent from Q4 2020 to Q1 2021, but is still down 78 percent from Q1 2020. According to the analysis, in the first quarter of 2021, there were a total of 33,699 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions.” The markets with the highest foreclosure rates include:
Source: ATTOM Data Solutions
Single-family homes (SFHs) are still an economic bright spot for the U.S. economy as well as investors both small and institutional. New Redfin data reveals the following:
- 1 in 4 SFHs for sale currently are new construction, a record high.
- That’s up from 20.4% a year earlier
- New housing starts jumped 20% month-over-month in March.
According to Redfin Lead Economist Taylor Marr:
“Building homes has become more attractive and profitable during the pandemic due to record-low mortgage rates and red-hot homebuyer demand…At the same time, many homeowners have opted to stay put and refinance or remodel their existing homes instead of selling them, allowing new-construction homes to take up a larger portion of the market.”
And, according to a separate Redfin report noted in an earlier section of this newsletter, “Prices of urban single-family homes are rising nearly 20% year over year, faster than any other type of home.”
Marr also comments on this new data:
“Now that Americans have had a year to consider what the pandemic and its aftermath mean for their lifestyles, we’re seeing a lasting preference for single-family homes—but rural and suburban settings are no longer as popular as they were at the start of the pandemic.”
It’s not difficult to see why the big players continue to move into the SFH market, as reported this week by Housing Wire. “Atlas Real Estate and DivcoWest declared last week that they will spend $1 billion “acquiring and renovating homes in high-growth states including Colorado, Arizona, Idaho, Nevada, and Utah,” according to a press release. The companies entered into a joint venture that puts $250 million of equity into single-family rental homes.”
But, not so fast says California lawmakers. Oscar Abello of Next City reports on SB 1079, a new law in California where “existing tenants of foreclosed properties have the chance to match any winning bids at foreclosure auctions.” This law also prohibits the bulk sale of foreclosed homes, a model preferred by banks and institutional investors.