multiple listing service

Apache is functioning normally

California Regional Multiple Listing Service (CRMLS) has announced the full release of its REcenterhub dashboard across its three MLS systems: CRMLS Matrix, CRMLS Paragon, and Flexmls. After being available as part of the REcenterhub ecosystem since 2022, it has now become the default dashboard for CRMLS’ user base of more than 110,000 real estate professionals.

Developed internally by CRMLS, the REcenterhub dashboard introduces a range of new features designed to streamline productivity for real estate professionals. The dashboard presents a modernized user interface and offers customization options for both users and associations. It provides industry information such as market data trends and news articles, while enhancing interactivity for user convenience.

Art Carter, CEO of CRMLS, expressed confidence in the transition to the new dashboard. “We are confident that fully transitioning to this new dashboard, custom-built by CRMLS, is a major step towards modernizing how users interact with their MLS. It’s an incredibly beneficial tool that’s easy-to-learn and more powerful than previous dashboards.”

Carter also emphasized the advantages of keeping product development in-house, as it grants CRMLS greater flexibility to address user needs compared to relying on third-party vendors.

The REcenterhub ecosystem aims to enhance efficiency and provide essential resources to all users, including Association of Realtors (AORs), brokers and agents. In addition to the training portal already available, future iterations of REcenterhub will incorporate compliance, customer care and regional market analytics portals.

This content was generated using AI and was edited by HousingWire’s editors.

Source: housingwire.com

Apache is functioning normally

The largest institutional single-family rental (SFR) operator in the country, Invitation Homes, is in the hot seat over its alleged failure to comply with building-permit requirements for rental properties it owns in California.

Another larger player in the space, Progress Residential, recently postponed a securitization transaction due to difficult market conditions. And yet another big force in the market, FirstKey Homes, is pulling collateral out of a 2021 securitization deal.

These developments—and more—can be seen as cracks in the armor of a housing-industry sector that rose out of the ashes of the Great Recession and grew to become a thriving alternative for individuals locked out the home-purchase market by rapidly rising prices.

The market stresses facing the SFR sector now include decelerating rents, a rising cost of capital and a shortage of homes available to purchase — which has slowed property acquisitions and related securitization deals that help market players regenerate capital.

David Petrosinelli, a New York-based senior trader with InspereX, a tech-driven underwriter and distributor of securities that operates multiple trading desks around the country, said he expects the securitization market for institutional SFR players to “approximate a more normal market by summertime.”

“But the caveat, of course, is that all bets are off if there’s a more meaningful contraction in lending [in the wake of recent bank failures and other economic factors] because then you’re in serious trouble,” Petrosinelli added.

Inviting an SFR lawsuit

Invitation Homes earlier this year failed to convince a judge to dismiss a pending whistleblower lawsuit filed against the company in federal court in San Diego that alleges it made improvements at scores of properties in California without first securing required building permits. 

The lawsuit claims further that the company “ignored permitting laws to avoid fees and increased taxes as well as to get renovated homes on the rental market as soon as possible.” The whistleblower litigation, known as a qui tam action — which allows private parties to sue on behalf of the United States — was filed under seal in state court in California in 2020 and moved last year to federal court — where the judge’s ruling denying dismissal of the case was handed down in January of this year.

The lawsuit is filed as a false-claims action on behalf of some 18 California cities by an entity called Blackbird Special Projects LLC, which discovered the alleged violations based on its examination of public records using artificial intelligence software. If successful in the litigation, Blackbird stands to get a cut of any recoveries for the local governments.

“To support these assertions, [Blackbird] used proprietary software to scour different rental listing websites such as Zillow.com and [Invitation Home’s] website to identify homes owned by defendant,” pleadings in federal court state. “[Blackbird] then used its proprietary ‘lookback’ technology to access pre-renovation images of the homes from a multiple listing service and compare them with post-renovation images from the rental advertisements.”

Invitation Homes declined to comment on specific allegations raised in the lawsuit, but a company spokesman did say the “allegations are without merit, and we intend to vigorously defend the company.”

“Invitation Homes is currently the largest owner of single-family, rental homes in the United States, with most of its homes located in California, Florida, Georgia, Texas and other Sun Belt states,” the federal lawsuit states. “In California, as of December 31, 2019, defendant [Invitation Homes] owned 12,461 single-family homes in over 100 cities. 

“… By its failure to pay or remit inspection, permit fees, penalties and interest, Invitation Homes has defrauded cities and counties in California millions of dollars.”

By “renovating thousands of homes” absent obtaining building permits, pleadings in the case allege, Invitation Homes was able to “avoid revaluations that would have happened if permits were obtained, thus evading increased property taxes on improved properties.”

The Invitation Homes’ case is being watched closely by some players in the secondary market, where large SFR operators like Invitation Homes raise funds through securitization deals backed by their rental properties.

“The reason this matters is they [Invitation Homes] make representations and warranties into their securitization trusts that all work improvements are permitted,” explained Ben Hunsaker, a portfolio manager focused on securitized credit for California-based Beach Point Capital Management. “So, there are points where they may have to refinance securitization debt if this [litigation] goes sideways for them with unsecured corporate debt, and they go from 1% or 2% cost of capital to 7% or 8% cost of capital, and they also have to worry about their ratings then.”

Invitation Homes (IH) spent about $25,000 on renovations per home for its California SFR portfolio, pleadings in the lawsuit state. 

“The vast majority of IH’s renovations required permits — including for demolishing and constructing sections of single-family homes, installing and demolishing pools, and significantly altering the electrical work— but permits were not obtained,” court pleadings allege. “Once the single-family homes were renovated without the required permits, IH rented them to tenants who were unaware of the unpermitted and potentially unsafe renovations.”

The federal judge now overseeing the case earlier this year denied a motion lodged by Invitation Homes seeking to have the case dismissed. As part of that ruling, the judge made clear that he wasn’t going to entertain any arguments by the defendant seeking to shift blame to contractors for failing to secure the building permits.

The judge states in his ruling, essentially, that even if independent contractors are responsible for the alleged failure to obtain building permits, that fact alone doesn’t absolve Invitation Homes of the responsibility to “do the investigating itself” to ensure permits were issued.

Industrywide turbulence

The lawsuit against Invitation Homes is not the only dark cloud hanging over the institutional SFR sector.

The securitization market for institutional SFR companies, which collectively represent some 5% of an SFR market composed of some 17 million properties, is currently in the doldrums. That’s largely due to a lack of housing available to purchase, and consequently a lack of new assets to securitize, according to market expert L.D. Salmanson.

Salmanson is CEO of Cherre, a data-integration and insights platform that works with major players in the real estate market, including insurers, asset managers, lenders and SFR operators. The company serves as a data warehouse and deep analytics platform that integrates client data with other public and private data sources to create powerful market assessment and forecasting tools.

“First of all, there’s been a massive slowdown in the purchase rate for the large [SFR] players,” Salmanson said. “What’s been causing the slowdown is not the [flat to decelerating] rental prices, although that is affecting it.

“Rather, it’s that there are a lot less people selling because they’re not getting the [higher] prices that they’re looking for [as home prices decelerate]. But that’s temporary. That’s not going to last.”

Last year, there were a total of 15 securitization deals involving large institutional SFR players valued in total at $10.3 billion, according to data tracked by Kroll Bond Rating Agency (KBRA). This year, so far, there has been one offering, a $343 million securitization deal by Progress Residential (Progress 2023-SFR1) that closed in late February, KBRA data show.

Yet even Progress, which has a portfolio of some 83,000 SFR properties, appears to be caught up in the SFR securitization stagnation. Hunsaker said one major SFR player a few weeks ago postponed a securitization deal, pulling it off the market prior to pricing due to market conditions. 

That player, according to industry sources, was Pretium Partners-backed Progress Residential, and the deal was Progress 2023-SFR2.

Hunsaker added that another potential drag on the institutional SFR market is the fact that some single-family rental (SFR) operators are backed by investment firms that also invest in the commercial real estate market, which he said also is facing stiff headwinds now — particularly in the office and multifamily sectors. 

For example, Bridge Investment Group Holdings early last year acquired Gorelick Brothers Capital’s estimated 2,700 SFR-property portfolio spread across 14 markets concentrated in the Sunbelt and Midwest. Bridge’s portfolio also includes investments in office and multifamily properties. 

Likewise, SFR operator FirstKey Homes, with a portfolio of some 45,000 SFR properties under management, is an affiliate of Cerberus Capital Management, a global investment firm with approximately $60 billion in assets across credit, private equity as well as residential and commercial real estate interests. 

KBRA reported last month that FirstKey Homes exercised a so-called “excess collateral release” [ECR] feature for a securitization deal dubbed FirstKey Homes 2021-SFR1. It was the first such ECR exercised across the 12 KBRA-rated securitization deals to date that have included such a provision.

“In connection with the subject transaction … the issuer requested release [via the ECR] of 729 properties from the collateral pool of 9,218 properties,” KBRA’s report notes. “Post release, the remaining 8,489 properties will collateralize the same debt of $2.06 billion [due to increased home values]. 

“…The analysis indicated that the [exercise of the] ECR, in and of itself, would not result in a downgrade.”

Hunsaker said for many SFR operators facing uncertainty now, the solution is to stop buying new properties if they believe their cost of capital is rising too much — absent home prices dropping enough in the future to make the numbers work. 

“I think most of these [SFR operators] are capitalized for longer-term [property] holding incentives [and] … I don’t think these structures are set up to be forced sellers,” Hunsaker said.

He added that healthy home-price appreciation to date made it possible for FirstKey Homes to release the excess collateral from the 2021 securitization deal.

“But they weren’t releasing that excess collateral to sell the houses,” he stressed. “They’re releasing that excess collateral to put it on their balance sheet and reduce the amount of encumbered debt they have.”

FirstKey Homes does not share financial details about its operations for competitive reasons, a company spokesman said when asked to comment on the ECR transaction. 

“What’s vital to remember is that across the SFR sector, investors are still active, albeit a bit more selective, with the belief SFR provides durable cash flows and stable occupancies,” the FirstKey spokesman added. “Additionally, with household formations significantly outpacing the decades-long low housing supply, it bodes well for continued strong demand for the high-quality single-family rental homes we provide our family of residents.”

Source: housingwire.com

Apache is functioning normally

Watch about Zillow…your Zestimate now has company.

Today, Redfin announced the availability of the so-called “Redfin Estimate,” which is the online real estate brokerage’s answer to the Zestimate.

Similar to the Zestimate, the Redfin Estimate is an automated home-value estimate that is displayed on home listing pages throughout Redfin, both those for sale and those off the market.

When viewing homes on Redfin, it will be listed next to the last-sold price for homes not on the market and below the list price for those currently on the market.

Redfin Estimate Has Lowest Error Rate

  • The Redfin Estimate is apparently more accurate
  • Or at least yields a lower error rate relative to its competitors
  • Thanks to the large amount of data that backs it up
  • So you might find that the estimated value is more on point

Redfin claims its new home value estimate has the lowest published error rate of any of its competitors because it’s driven by more data.

That error rate is 1.96% for homes that are currently for sale and 6.23% for off-market homes.

In other words, the Redfin Estimate will be within 1.96% of the actual sales price half of the time for a listed home and within 6.23% of the eventual sales price of non-listed homes.

It’s more accurate for homes that are listed because more data is available on such homes.

And while it might be the lowest, it can still be way off, as their own error rates above clearly show.

The Redfin Estimate factors in more than 500 data points about the property, the neighborhood, and the real estate market to come up with the end result.

Additionally, because Redfin has 100% access to Multiple Listing Services (MLSs), it can dig a little deeper into the property and determine things like if the property is located on a busy street, or if it has a water view.

This, combined with “today’s best cloud technology,” gives users a better home estimate, though still no substitute for a proper home appraisal.

Redfin Estimate Shows You Comps

  • The estimate will show you the comparable sales used
  • So you can determine if the price they came up with makes sense
  • If the homes they used don’t seem like good matches
  • You can adjust the price in your head either up or down depending on whether you feel the comps they used were too good/bad

While the estimates are still fishy at best, based on my own searches, they do provide the comps used to come up with the estimate, which is nice.

At the top of any property page on Redfin that contains a Redfin Estimate (more than 40 million homes in 35 markets), you can click on the newly added Redfin Estimate tab.

It will take you to a page dedicated to the property’s estimated value that displays six comparable properties that sold nearby recently.

This will give you real insight into how they actually come up with your home’s value. However, I’ve seen some outliers in the comps so it’s still powered by a machine susceptible to making mistakes.

In other words, take the estimates with a grain of salt as you would other automated estimates. If you have concerns about their estimate, there’s also a link to a feedback form below the comps.

The comps are apparently chosen using a blend of proximity, similarity, and how recently they sold.

Redfin Estimates are updated daily for homes that are currently listed for sale, and weekly for off-market properties.

Changes will likely be more frequent in fast-paced markets where new comp sales are generated more quickly.

Don’t See a Redfin Estimate?

  • It’s possible you won’t have a Redfin Estimate
  • Assuming your property lacks recent sales comps
  • Or is too unique to properly appraise
  • Real estate agents can also remove it if/when they list a property to avoid any disputes

In some cases, you may not see a Redfin Estimate on the property page. This could be due to limited data for the property in question, or if the city itself isn’t covered.

For example, if not enough similar properties sold next to yours in the past year, an estimate might not be generated.

Perhaps more interesting is the fact that Redfin agents can remove Redfin Estimates for properties on the market at the owner’s request.

So if an owner doesn’t want the public to see it, maybe it’s lower than they’d like, they can opt out of displaying valuations for the home.

The agent simply deselects the “Allow Automated Valuations” option within the Multiple Listing Service.

The Redfin Estimate recently went live in Dallas, Detroit, and Minneapolis.

Is It Accurate?

  • Like most of these automated valuation tools
  • Your results may vary (widely)
  • In some cases the price might be spot on
  • But it others it could be far off, with listed homes generally more accurate

Now the million-dollar question. Is the Redfin Estimate accurate?

While they say they have the lowest published error rate, they also admit that, “there will always be estimates for individual homes that are not accurate.”

I took the new tool for a spin and compared it to Zestimates for the same properties.

What I found in my initial testing was that the Redfin Estimate was sometimes higher and sometimes lower than Zillow’s Zestimate.

And often by a significant amount; we’re talking more than $100,000 on a sub-million dollar home. In fact, I couldn’t find any properties that had similar estimated values between the two websites.

If anything, this might just lead to more confusion from both prospective home buyers and home sellers. But what can you do.

My guess is home sellers will point to whichever estimate is higher, while home buyers will point out the lower estimate. Fun times ensue.

My Experience with the Redfin Estimate

  • I think they still have a lot of work to do
  • To make it more consistent across like properties
  • Overall it’s the probably the best free estimate around because it’s the most up-to-date
  • But not everyone will be satisfied due to disparity among very similar homes

Now that it has been around for a while, I figured I’d check back in to let you know my thoughts. In general, Redfin Estimates tend to be higher than Zestimates, at least in my personal experience.

This could have to do with the fact that Redfin data seems to be more up-to-date. But I’ve also come across some pretty glaring disparities, especially for condos in the same complex with the near-exact same square footage.

That doesn’t sit well with me, and really doesn’t make any sense. I actually reached out to Redfin about this issue and aside from a boilerplate response about them being “just estimates” and based on a number of factors, was told that if you list your home, their system will update to display the new listing information and the Redfin Estimate will automatically update, typically within a day.

I don’t know if that means some sort of special data refresh, but as I noted above, Redfin Estimates are updated daily for currently listed properties, and weekly for off-market properties.

Anyway, it appears that in some cases homes sold recently have higher Redfin Estimates, or perhaps “more updated” ones than homes that haven’t sold in years. This seems like a pretty big discrepancy or algorithmic problem that may need to be resolved in the future.

For me, the estimate shouldn’t depend on when it was last sold. That should have zero bearing.

Update: An updated version of the Redfin Estimate released on October 2st, 2016 is apparently 9.7% more accurate for on-market homes and 7.8% more accurate for off-market homes compared to the original version.

Homes for sale will be within 1.8% of their expected sales price half of the time, while off-market homes will be within 6.28% of the sales price (if listed) half the time.

For some reason, they seem to have more trouble with off-market homes…

Source: thetruthaboutmortgage.com

Apache is functioning normally

Mortgage watchers expect rates to trend down by the end of the year. Will that long-awaited decline begin this month?

May mortgage rate predictions

Mortgage rates are likely to remain volatile this month. While most forecasters call for them to ease below 6 percent later this year, that prediction assumes the Federal Reserve’s war on inflation will continue to bear fruit.

“It’s hard to know exactly where rates will go because there are a lot of mixed signals in the economy,” says Lisa Sturtevant, chief economist at Bright MLS, a multiple listing service operating in the Mid-Atlantic.

The first market-moving event on the calendar comes May 3, when the Fed unveils its latest position on interest rates. Many expect a 0.25 percentage point increase, following an identical boost at the central bank’s March 22 meeting.

While the Fed doesn’t dictate mortgage rates, the central bank’s policies ripple through the mortgage market. Since early 2022, mortgage rates have been driven by inflation — and by how aggressively the Fed has responded to rein it in.

If the Fed looks to be moving to the sidelines after an early May rate hike and we continue to see moderating inflation pressures, mortgage rates could slide back to the low 6s.
— Greg McBride, Bankrate Chief Financial Analyst

Many view the central bank’s actions as the clearest indicator of the direction of mortgage rates.

“It all depends on the Fed,” says Doug Duncan, chief economist at mortgage giant Fannie Mae.

“If the Fed looks to be moving to the sidelines after an early May rate hike and we continue to see moderating inflation pressures, mortgage rates could slide back to the low 6s, a level not seen since September,” says Greg McBride, chief financial analyst for Bankrate.

The Mortgage Bankers Association predicts rates will fall to 5.5 percent by the end of 2023 as the economy weakens. The group revised its forecast upward a bit — it previously expected rates to fall to 5.3 percent.

Meanwhile, Fannie Mae’s Duncan expects rates to be in the “high 5s” by the end of 2023. He bases that forecast on the assumption the central bank won’t cut rates in 2023.

What’s driving mortgage rates this month

Mortgage rates bounced around in April, frustrating homebuyers who hoped to make a deal during the spring selling season.

The 30-year fixed rate climbed from 6.32 percent the week of April 5 to 6.61 percent the week of April 19, according to Bankrate’s national survey of lenders. Then they retreated to 6.48 percent in Bankrate’s April 26 survey.

Rates fell in part because the banking industry’s woes were back in the headlines. In late April, fresh concerns about the financial sector spurred a flight to safety by investors. As a result, 10-year Treasury yields dipped. The 10-year Treasury is the benchmark most closely tied to 30-year mortgage rates.

The new worries echoed the March banking crisis, although not as loudly. Mortgage rates fell sharply after Silicon Valley Bank and Signature Bank failed, March 10 and March 12, respectively.

Inflation, too, has been a hallmark of the U.S. economy’s strong rebound from the pandemic recession of 2020. Nearly everyone expected the economy to fall into a recession in late 2022 or early 2023, but that hasn’t happened, at least not yet.

“With first-quarter GDP numbers showing a slowing economy, recession fears have been boosted, which could mean that we will see mortgage rates edge lower in the months ahead,” says Sturtevant. “Mortgage rates typically fall during recessionary periods.”

Political bickering — in the form of a partisan standoff over the federal budget — could also affect mortgage rates.

“The debt ceiling is the ultimate wild card, and markets will get very nervous very fast as the deadline approaches,” says McBride.

Another factor to consider is the “the spread,” the gap between 10-year Treasury yields and 30-year mortgage rates. That margin has been unusually high for the past year or so.

“If that gap were to narrow, mortgage rates could decline,” says Sturtevant.

Mortgage rates and homebuying season

The spring homebuying season is officially underway, and these are nervous times for buyers. Home prices remain elevated, and mortgage rates have fluctuated day to day.

“Even if rates do come down, we’re not going to see the sub-3 percent rates we had during the pandemic,” says Sturtevant, “and the decline in rates is not going to solve the housing affordability challenge which has gotten persistently worse, particularly for first-time homebuyers. In markets with extremely low inventory, lower rates could actually exacerbate the housing affordability crunch if they bring more prospective buyers into an already competitive market.”

Source: bankrate.com

Apache is functioning normally

Apache is functioning normally

Real estate professionals are increasingly opting for virtual house tours to show off their listings as the coronavirus outbreak continues to cause fear in the U.S.

The
move comes as Leonard Steinberg, chief evangelist and corporate
broker at Compass, called for a two-week moratorium on in-person home
showings. Meanwhile, Redfin’s CEO Glenn Kelman has said his
brokerage is canceling all open houses on its listings and limiting
in-person showings to no more than two clients at a time.

Virtual
tours are however proving to be a useful alternative to in-person
viewings, and more agents are turning to them. Some prefer to use
video call software such as FaceTime to walk buyers through their
properties.

“As a virtual tour provider in Washington, D.C., we are seeing an uptick in demand for video and more elaborate virtual tours so homeowners don’t need to have an open house,” Roman Caprano at Sky Blue Media told realtor.com. “In our market, homes sell in days, so any agents typically only invest in photos, but now they are purchasing more content.”

New
York City-based Ideal Properties Group last week launched a virtual
listing viewer called Showing on Demand.

Elsewhere,
the Washington Association of Realtors has announced that the
Northwest Multiple Listing Service has “made the difficult decision
to temporarily disable the public and broker open house feature in
the Matrix system,” its CEO Steve Francks said in a statement.

“Until
at least March 31, brokers will not be able to input, search, or view
public or broker open house information in Matrix,” he added. “Open
house information will not be available for display on member public
websites (IDX and VOW sites). NWMLS will separately contact all
listing brokers who have a scheduled open house to let them know it
has been removed from Matrix.”

Virtual tours used to be the domain of larger and more expensive homes when they first started becoming common, but Keller Williams salesperson David Kong told the New York Post that he’s now offering them to a much wider group of clients. While virtual tours can’t fully replace in-person showings, they do help prospective buyers to evaluate a property better when they can’t visit it physically.

“For
those that are concerned about the virus, this allows them to make a
more informed decision about the property and whether to get out and
go see it,” said Wes Jones, a managing broker with Keller Williams
in Bellevue, Washington, a Seattle suburb

Redfin
has also started posting interactive 3D scans of all of its listings,
so buyers can view them without any health risk. The service also
enables buyers to schedule a video chat tour with the listing agent
for homes sold by other brokerage. Redfin’s agents will discuss the
features of the home as they walk through it, and will respond to any
requests to pan the camera or zoom in on specific details.

As
for in-person home tours, Redfin has issued guidance to its
customers, asking them not to shake hands and practice “social
distancing”, which means staying at least six foot apart from
anyone else present during the tour.

“The reality is real estate is a contact sport,” said Cara Ameer, a real estate professional in California, to realtor.com. “And that means exposing yourself to a lot of potential germs from shaking hands, interacting at open houses, and touching all sorts of doorknobs and light switches multiple times a day. I think we need to adopt a new normal of practices during this period of time.”

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
Latest posts by Mike Wheatley (see all)

Source: realtybiznews.com

Apache is functioning normally

Apache is functioning normally

Government models say Phoenix’s groundwater supply is drying up. Homebuyers will have to pay the price to fix it.

The Arizona Department of Water Resources announced June 2 that the state will no longer authorize developers to build outside municipal water sources with a supply of only groundwater. Developers and real estate agents alike say this will hike up already high home prices.

“We’ll have significant supply issues post this announcement,” Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Arizona, said. “And that will significantly impact affordability.”

Phoenix is one of Arizona’s five Active Management Areas, regions regulated by the 1980 Arizona Groundwater Management Code. In AMAs, developers of subdivisions must have a 100-year Assured Water Supply, which means their water source can meet the area’s anticipated water needs for 100 years.

There are two ways to get an AWS. Developers can either get a commitment of water service from a designated provider — a municipal water supplier approved by the ADWR — or they can get a certificate of AWS from the department itself.

Developers building on the outskirts of Phoenix where designated providers don’t reach must now use the second option. The wells they would previously tap in that area no longer hold a sufficient supply of water to meet the 100-year test based on ADWR modeling.

The ADWR’s Phoenix AMA groundwater availability model predicted 4.86 million acre-feet of unmet demand for groundwater supplies over the next 100 years. One acre-foot of water supplies three Phoenix homes with water for a year, ADWR says. The department hopes to alleviate this strain by prohibiting new groundwater-based AWS certificates.

But there are 80,000 undeveloped lots already approved with the certificates according to Kamps. They’re not impacted by the decision, so that development will continue as normal. Trouble begins, though, when builders run out of these lots. Until they find an alternative water source, they can only build within the reach of designated providers. 

“Essentially, we have a growth boundary,” Kamps said. “The land opportunity in those designated providers is finite — it will eventually end.”

Maricopa County, which includes Phoenix and its suburbs, has grown by 19% from 2010 to 2022 according to U.S. census data. The median residential home price has increased 240% over that time, from $135,000 in 2010 to $459,000 this year, according to the Arizona Regional Multiple Listing Service. Prices have been on a steep incline since the start of 2020, when the median price was $300,000. In just two years, it rose by 53%.

Sheryl Bowden, president-elect of the Phoenix Board of Realtors, said the local market was already struggling with high interest rates and low inventory. Maricopa County had a housing shortfall of 44,181 units in 2022, Common Sense Institute Arizona says.

“You have people that aren’t selling properties because they don’t know where they’re going to go,” she said.

The average 30-year fixed mortgage rate was 6.67% on June 22 according to the The Fannie Mae Primary Mortgage Market Survey. Bowden pointed to relatively high rates, up from 5.81% in the same week last year, as a reason for the shortage: homebuyers are “not going to sell their 3% mortgage on the existing house to go out and get a 7 or 7.5% mortgage,” she said. 

Mortgage rates hit a historic low of 2.65% in January 2021. Bowden thinks homeowners are waiting for rates to reach similar levels again before they sell.

“I don’t know if that’s ever going to be sustainable,” she said. “People need to get comfortable knowing that these rates that we’re having are, if you go back historically, they’re not that bad.”

Bowden and Kamps both said the announcement would disproportionately affect development in quickly growing Phoenix suburbs like Buckeye, which has doubled in population since 2010, and Queen Creek, which has almost tripled. 

“The designated providers are much more expensive to build in,” Kamps said. “Buckeye specifically is one of the most affordable markets in the Phoenix metro area. And if you take the opportunity to go build in those communities, that’s going to impact affordability.”

Both communities are searching for alternatives to groundwater so developers can keep building. 

Queen Creek’s water resource director, Paul Gardner, said his town has been acquiring renewable water sources to supplement current and future groundwater pumping for years now: “We decided as a community that we had grown so large that we could control our own destiny,” he said.

Gardner said treated wastewater, called recovered treated effluent, makes up 20% of the town’s water portfolio. In the future, it’ll make up 35%.

Developing renewable supplies will increase housing prices in Queen Creek. How much, Gardner said, depends on which supply the city marries each future developer with. Garder said it might mean $5,000 or even $10,000 more per house.

“The cost will be the cost,” he said.

The city of Buckeye also assured residents their water future is secure, listing several changes they’ve made to their water management process. They called the ADWR’s announcement a “reactionary response to an exaggerated issue,” criticizing the GMA as outdated.

Kamps also called for changes to the GMA, since it only impacts subdivisions, developments of six lots or more. Other developments, like commercial and apartment buildings, don’t have to obtain an AWS before building.

Arizona Governor Katie Hobbs created the Governor’s Water Policy Council on Jan. 9 to do just that. The council’s first meeting was May 17. Kamps is an appointed member of the council.

If the GMA is not updated, Kamps said, “in the future, we won’t make any decisions based on efficiency. We’ll make decisions based on where the water is.”

Source: nationalmortgagenews.com

Apache is functioning normally

This guest post from Nick Rothacher, the self-taught economist, is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.

Six months ago, my wife and I sold our two-bedroom, two-bath condo located in the heart of downtown Salt Lake City. We saved close to five thousand dollars and sold the property without much stress, frustration, or wasted time. Here’s how we did it.

Starting Early

Life changes fast, and when my wife started applying to graduate schools across the country, we knew we needed to be flexible with our housing situation. We started talking about selling our condo over a year in advance of when we would be moving. This extra time was invaluable because we weren’t stressed about reducing our price in order to make a quick sale. When you sell real estate in a depressed market, time is your friend.

Exploring Options

Initially, we tried selling the condo “For Sale By Owner”. The primary benefit of selling For Sale By Owner is to avoid the commissions and fees paid to real estate agents. We took digital photographs, created our own fliers to market the property, and started advertising on free sites like Craigslist and local online classifieds. Unfortunately, nothing seemed to work.

After three weeks with few prospects, we escalated our marketing attack. From my yearlong stint as a real estate agent, I learned that many buyers (especially Baby Boomers) prefer to use a real estate agent to help them purchase a property.

We needed to get our property listed on the MLS (the Multiple Listing Service). We paid a local discount brokerage $175 to list the property. This service is considered a “discount” or “flat-fee” brokerage and the fee covers the following services:

  • Property is listed within 24 hours
  • Six month listing period
  • Property is advertised on multiple websites
  • Six photo listing

But in order to really market the property, we needed to go beyond the services listed. My wife and I took the initiative and did the following:

  • Adapted our flier to direct people to the MLS listing.
  • Used our own pictures that highlighted all parts of the property — inside and out.
  • Provided property tours to folks that called to schedule a walkthrough.
  • Held two open houses and advertised with yard signs, the MLS listing, Craigslist, and other online media.
  • Communicated regularly with our broker to update the MLS listing.

After another three weeks had passed, we received a low offer. We submitted a counteroffer with a price closer to our listing price and it was accepted! Property sold. Many dollars saved.

Crunch the Numbers Yourself

Conduct a simple cost-benefit analysis to see if an agent is really worth it. Typically, you pay 6% of the sales price to have an agent list your house, which is divided 50/50 between the buyer’s agent and the seller’s agent.

What this means is that the remaining 94% of what an agent can get for me better be worth more than 100% of what I can get for myself!

I listed my property at $165k, which means I would have paid 3% to the buyer’s agent ($4,950) and another 3% to the seller’s agent (another $4,950), for a combined cost to me of $9,900.

But because I used a discount broker, I paid $4,950 to the buyer’s agent and only $175 for the seller’s (our) agent.

Total savings = $4,775.

The Death of the Real Estate Agent?

Did you know there are over a million real estate professionals currently affiliated with the National Association of Realtors? (And that’s down from 1.2 million at the peak of the housing boom in 2006.) I’m bound to upset a majority of them with what I say next, but my sole intention is to educate GRS readers.

There has to be value to justify hiring a real estate agent. If my wife and I believed that a full-service real estate agent would have provided $4,950 worth of services in the following areas, then we would have hired someone to:

  • help with paperwork
  • help with advertising
  • help with knowledge in a variety of areas
  • help provide access to the property
  • help to sell the property more quickly
  • help fix the cosmetic changes to help the home sell
  • help us to understand current market conditions and the value of comparable homes in the area

Thanks to the internet, most of these services are no longer as valuable as they once were. Every one of the topics listed above can be found with the help of an online search engine. The buyer/seller can learn about all of these topics in a matter of minutes.

In our case, it just didn’t make sense to hire a real estate agent to list our home. We live in a busy metropolitan area and we knew our buyer audience was large. We ended up selling to some parents that wanted an investment and a safe place for their two daughters in college.

The Future of Real Estate Agents

The internet continues to change the way we access information about real estate. For buyers and sellers, this is a positive change that can save us money, but for real estate sales agents and brokers, it presents new challenges to the profession.

As the quality of information on the internet improves, many of the “gatekeepers” and the “knowledge holders” will be unable to keep their expertise out of the hands of the general public. I’m not saying that doctors, lawyers, and other professionals will no longer be valuable. But believe me, getting your real estate license is not exactly the equivalent as going to law school or med school.

Don’t Believe Me?

Look around. Agents are posting properties on Craigslist and free classifieds because that’s where buyers are looking. I definitely don’t need an agent to post pictures on Craigslist — I can do that myself.

The MLS is the last stronghold that real estate agents cling to because their livelihood depends on it. But don’t be surprised when someone develops a database that is fully accessible to the public, making the MLS obsolete.

My last complaint about real estate agents is that they get paid based on the market price of your home. From the graphic above, you can see that the values of homes in the U.S. have increased (look at the red line) tenfold from 1975-2005.

Did the amount of work increase tenfold? Did it become ten times harder to sell a home? No and No. This 6% “tax” really hurts Americans because on average, people sell their home every 5-7 years. If you want to read more about the negative effect this has on the economy and how full-service brokers are working hard to eliminate discount brokers, here is a great article.

So next time you buy or sell a property: explore your options, educate yourself, and save money!

Source: getrichslowly.org

Apache is functioning normally

In the days before Los Angeles’ “mansion tax” took effect, the luxury market moved at hyperspeed.

Prices were slashed, escrows were rushed and million-dollar deals were closed as panicked sellers offered exotic cars and lucrative bonuses to anyone willing to buy their properties by the end of March. It was a manic, desperate attempt at avoiding Measure ULA, a new transfer tax that levies a 4% charge on all residential and commercial real estate sales in the city above $5 million and a 5.5% charge on sales above $10 million.

On April 1, everything froze.

Sellers, now faced with paying the tax if they sold, yanked their properties off the market. Discounted prices, which were valid only if the deal was done by March, shot back up. The luxury goodies were off the table. Bye bye, Bentley.

A market slowdown was expected, but the night-and-day difference between March and April sales was unprecedented.

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In March, when the luxury market reached the peak of its frenzy, there were 126 home and condo sales above $5 million in the city of L.A., according to the Multiple Listing Service.

This Brentwood mansion sold days before Measure ULA took effect, avoiding a tax bill of $891,000 that would’ve gone toward housing and homelessness efforts.

(Noel Kleinman)

In April, once Measure ULA took effect, there were two.

One sold in Brentwood for $5.7 million, and the other traded hands in Venice for $7.5 million. Together, they raised $528,000 for the city to use for affordable housing and homelessness prevention programs. So far, that’s it.

The slowdown makes sense. Sellers were economically incentivized to close deals before they would have to pay the tax, so most of the sales that were going to close already closed. L.A.’s luxury market won’t remain frozen forever, and deals will eventually pick back up, especially once the courts rule on two lawsuits arguing that the tax is unconstitutional. Many sellers are holding off listing while they wait for a clear ruling one way or the other.

But for a city grappling with a housing crisis, funding is needed as quickly as possible, and early signs indicate that the once-lofty projections for how much Measure ULA would raise might be much, much lower — especially for the first few months.

When Measure ULA was on the ballot in November, proponents estimated it would generate roughly $900 million a year, based on real estate sales data from 2021 to 2022.

In March, a report from the City Administrative Office lowered that number significantly, projecting $672 million in revenue from July 2023 to June 2024. The projection was a response to a real estate market that slowed dramatically because of rising interest rates.

Then in April, Mayor Karen Bass unveiled her first budget proposal, a $13.1-billion plan that included $1.3 billion to address homelessness. However, the budget projected only $150 million in revenue from Measure ULA.

The city is walking a tightrope. It needs to spend as much as possible to address housing and homelessness, but if the courts decide the measure is unconstitutional, the city will have to pay back all the money it generated from the tax. An L.A. County judge recently consolidated the two lawsuits challenging the measure into a single case, but the timeline for a ruling is unclear.

In this legal limbo, the city had to choose a budget number big enough to make an impact but small enough to pay back if necessary. The planners landed on $150 million because they felt confident that the city could make that back through federal reimbursements from organizations.

“The $150-million number takes into account the risk of losing litigation, but it’s also reflective of the urgency of the housing and homelessness situation,” said Greg Good, a senior advisor on policy and external affairs for the Los Angeles Housing Department. “This is an amount we feel comfortable that we could refund, if necessary.”

The ULA money can be spent only as it comes in, meaning that the city won’t be able to use the $150 million until the tax generates $150 million, Good said.

If luxury sales stay at the pace they are right now, that may take awhile.

“We anticipated the market slowing down. It’s logical economic behavior,” Good said. “But it’s still real estate in L.A. Eventually, transactions will get back to normal.”

Sellers are sitting on the sidelines in hopes that the tax will be overturned. The Howard Jarvis Taxpayers Assn., one of the groups filing a lawsuit against the tax, published a page on its website with instructions on how to file for a refund if the suit is successful.

“Sellers are taking their properties off the market, and there are some developers who won’t buy anything in the city,” said Compass agent Sally Forster Jones. “There’s hope that it gets overturned.”

Jones handled one of the final sales before Measure ULA took effect, helping a client sell a 1930s mansion in Brentwood for $16.2 million. Because it sold before the deadline, the seller saved $891,000.

The commercial market has cooled as well, said Oron Maher of Maher Commercial Realty. He said that most sellers listing properties post-ULA will be the ones that have no choice.

“These are mom-and-pop owners of real estate. People going through death, divorce, partnership dissolutions or retirement who are forced to sell as soon as possible,” Maher said. “If you don’t need to sell in ULA, you won’t. This will be a tax on people already experiencing difficult situations.”

In the last days of March, Maher closed the sale of a 16,000-square-foot apartment building on behalf of an elderly client who chose taking a lesser price over paying the tax. At $11 million, the sale price was $1.5 million less than the asking price, but it avoided a tax bill of $605,000.

This 16,000-square-foot apartment building sold for $11 million on March 31.

(Mano Handian / Lights Camera Location)

Maher said that over the last month negotiations have become a game of hot potato, with sellers and buyers both asking the other to cover the tax.

“Buyers are saying it’s a seller’s tax, but sellers are saying they can’t sell unless the buyer can raise the price,” he said. “It’s all leading to less transactions.”

Even if the measure is upheld in court, there’s a chance sellers will find ways to skirt the tax. Shortly after the measure passed, The Times reported that wealthy sellers were already eyeing ways to avoid paying, such as breaking properties into pieces and selling them separately.

Legal resource outlet JD Supra recently published an article headlined “Nine Ideas to Avoid the Effect of Measure ULA.” Its suggestions include selling stakes in the entity that owns a property rather than the property itself, selling a house and the land it occupies separately, or taking the broker’s fee out of the sale price to get it under the tax thresholds.

City officials, meanwhile, are beefing up staff to help manage and administer the tax. The Los Angeles Housing Department is requesting six new hires to help launch ULA spending effectively, and the City Council confirmed 15 people to sit on the Citizens Oversight Committee, a volunteer group that will supervise spending and make program recommendations.

Among those named to the committee were Steve Diaz, deputy director of the L.A. Community Action Network; Deepika Sharma, a professor at USC‘s Gould School of Law; and Alan Greenlee, executive director of the Southern California Assn. of Nonprofit Housing, who worked on the United to House L.A. coalition that drafted the measure.

The group will convene for the first time in early May.

“I’m excited about the prospect of ULA,” Greenlee said. “It creates considerable and ongoing resources that the city can use not only to protect low-income residents so they can stay in their homes, but also creates certainty that there will be resources available for developers to build affordable housing.”

Good said both groups will play a crucial role — should the measure survive litigation.

“We’re in an extraordinary dual crisis with housing security and homelessness, and this measure was passed by nearly 60% of voters,” Good said. “This is a genuine opportunity to move the needle, and we’re hopeful and committed to seeing it through.”

Source: latimes.com

Apache is functioning normally

Paying off existing debt is the top near-term priority for Gen Z college students, along with having financial freedom, goals which set them up for future home ownership, a study conducted for FinLocker, which provides a financial fitness app, found.

More than 27% declared that their financial goal for the next two-to-five years is paying off student loans, auto loans and credit cards. Meanwhile, 10% said it was a goal for the next five-to-10 years.

Financial freedom is the short-term goal for 24.5% and a longer term aspiration for 27.8% of respondents.

But the top goal in the five-to-10-year range is home ownership, with 29.6% of respondents prioritizing that. However, a significant share has this as their short-term objective, at 9.4%, the study found. The mortgage and real estate industries should find this last point encouraging, the report accompanying the survey said.

Among those Gen Zers planning to buy a home, 43.5% are looking to act between the ages of 28 and 32. The next largest cohort, 36.1%, expects to buy between the ages of 23 and 27.

Just under 14% said they were planning to become homeowners between 33 and 37.

Mortgage lenders need to figure out how to engage these Gen Z borrowers. In general, these firms reach out to potential customers using “high-cost lagging indicators,” such as trigger leads from credit report pulls and multiple listing service searches, FinLocker said.

“However, as the survey validates, a more equitable opportunity exists to engage a consumer: connecting at the top of the marketing funnel through social media,” the report noted. A recent report from National Mortgage News’ parent company Arizent also noted the importance of having a mobile strategy to reach this group.

Friends and family was the top source respondents said they learned about finance from, at 41%, but social media was second at 15.8%.

“The recent rise of ‘finfluencers’ exemplifies how social media has become a financial education source for millions of young people,” the report stated. “As 40% of Gen Z need to ‘trust’ the source of their financial advice, this is an opportunity for mortgage professionals to establish themselves as trusted resources by creating short and long videos on the topics Gen Z want to learn more about.”

When asked how they would determine if they were ready to purchase a home, 63.5% said when they had significant savings for a down payment. This was down over 5 percentage points from 73.9% reported in a similar FinLocker study conducted in 2022.

Only 4.6% said they’d be ready to buy when they had a good credit score, down from 11.9% in the 2022 survey.

On the other hand, nearly one-quarter of the 2023 respondents, 24.1% said it would be when I have a family versus 12% the prior year.

Among the barriers they feel exist to achieving all of their financial goals, other priorities were cited by nearly 32%. Next was a lack of financial education at 19.4%; uncertainty about how to create a financial plan also came in at 19.4%.

Unable to save enough money was the response of 14.8%, while 10.2% declared they had no barriers.

FinLocker partnered with the students in the American Marketing Association group at the University of Southern California to conduct the survey over a three-week period in April.

The survey featured answers from 171 respondents, with 83.5% being between the ages of 18 and 22; 10% between 0 and 17; 4.6% between 23 and 30 and 1.8% between 31 and 40. The U.S. Census Bureau uses 1997 as the start year for this generation, making the oldest members approximately 25 to 26 years old.

By gender, 62% said they were female, 35% male, 2% non-binary and 2% preferred not to say.

Source: nationalmortgagenews.com