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In our latest real estate tech entrepreneur interview, we’re speaking with Sergii Starostin from Outpost Club.

Who are you, and what do you do?

My name is Sergii Starostin, and I’m the co-founder and CEO of Outpost Club, a Brooklyn-based network of coliving houses throughout New York, New Jersey and San Francisco. We provide flexible, affordable, all-inclusive housing to people looking to join strong communities in high-demand urban areas.

We started Outpost in 2016 after having been frustrated with our own experiences moving to New York City. It can be so difficult to move anywhere new, especially a large urban area, if you don’t have a pre-existing network of support, and it gets even more difficult if you’re looking for somewhere flexible while maintaining quality and affordability.

In the three years since, we’ve grown into a bi-coastal operation and one of the largest coliving companies in New York City, all out of a desire to overcome one of the major challenges that keeps people from taking advantage of the opportunities that urban areas offer: simply being able to rent, live and thrive somewhere new.

The three prongs of our approach to coliving are flexibility, affordability and community. A college student moving to San Francisco for a summer internship can’t sign a year-long lease, for example, and a freelancer on a temporary project doesn’t want to pay for an expensive Airbnb. But in addition to the extreme demands of the real estate market in places like New York and San Francisco, we know from experience that networking and forming lasting friendships when you’re new to a community can be emotionally draining.

That’s why we have that third prong — community — so we can focus on allowing our members to lead fulfilling lives wherever they live, rather than just surviving. We think about community from start to finish: from the layout of a new home and how we design it to the events and networking we offer our members and the tools to stay in touch we offer former members.

What problem does your product/service solve?

Finding a nice place to live for a decent price is notoriously difficult in both New York and San Francisco, and from a landlord’s point of view, it can also be difficult to weed out potentially unreliable tenants.

Our services solve problems for both landlords and renters. We make better use of cities’ existing housing through master leases, giving landlords the peace of mind that comes with having responsible tenants guaranteed for years to come, at a lower cost to them overall.

For our members, we’ve taken the headache out of moving to and renting in large cities by developing a process by which we can screen potential members without requiring extensive documentation, exorbitant fees or background checks, and once they move in, they don’t have to worry about furnishing their apartment, setting up and paying for utilities, deep cleaning and maintenance or feeling lonely in a new city.

What are you most excited about right now?

I’ve been very excited to see the concept of coliving gain more acceptance over the past few years. We still have a lot of work to do when it comes to educating people about coliving, but we’re far ahead of where we were when we started Outpost in 2016. Coliving is the future of urban areas — I colive, myself — and it’s great to see so many new companies opening and spreading the word.

On a more personal note, I’m excited about how much Outpost has grown in 2019. We’re fortunate to have been able to nearly triple our membership from the start of the year, and we still have a few months to see how we’ll head into 2020.

What’s next for you?

We’re going to continue to expand to other urban areas where we feel our model can make a difference in how people live and rent, as well as explore funding options so we can expand even further. Since most of our nearly 400 members are in New York City or Jersey City, we’d like to expand our footprint in San Francisco, where we currently have four houses out of our 26 overall.

What’s a cause you’re passionate about and why?

I’m very passionate about education — that’s a cause I truly love to help push forward. I do work with Burning Man Ukraine to support young Ukrainian burners and artists by buying their art, helping with events, assisting with travel and the like. It’s important to me that everyone who wants to opportunity to learn, grow, explore the world and broaden their minds have the chance to do so, so I want to help wherever I can. I also help with a charity that assists people who need medical procedures in Ukraine.

Thanks to Sergii for sharing his story. If you’d like to connect, find him on LinkedIn here.

We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).

Source: geekestateblog.com

Apache is functioning normally

Even with a 6-basis-point drop in the average for the 30-year fixed mortgage, new borrowers are still dealing with rates well above 7%, Freddie Mac said.

The Freddie Mac Primary Mortgage Market Survey reported the 30-year FRM at 7.12% as of Sept. 7, versus 7.18% one week ago and 5.89% for the same period in 2022.

Recent rate movements in reaction to the U.S. economy is a good news-bad news situation.

“The economy remains buoyant, which is encouraging for consumers,” Freddie Mac Chief Economist Sam Khater said in a press release. “Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”

The 15-year FRM also declined versus the prior week, but by only 3 basis points, to 6.52. For the same week last year, the 15-year FRM was at 5.16%.

Rates declined even though in the past week, the benchmark 10-year Treasury shot up from a high of 4.08% on Aug. 31 to 4.28% mid-morning on Sept. 7. A simple explanation for the divergence in movements is that it is being taken account of by the abnormally high spreads between mortgages and Treasurys.

Using the Freddie Mac data, the current 284 basis point spread still has plenty of room to run before retreating to a more upper end range of 200 basis points.

Meanwhile, the 30-year FRM rates as reported through Zillow’s rate tracker do reflect the week-to-week gain in the 10-year Treasury. It rose 19 basis points as of Thursday morning to 7.11% from last week’s average of 6.92%.

Strong growth in the services sector as well as last week’s inflation news caused this rise in rates.

“Prices and economic activity in the service sector — which comprises about three-quarters of overall GDP — increased by more than expected in August, helping to push bond yields and mortgage rates higher,” said Orphe Divounguy, senior macroeconomist at Zillow Home Loans in a Wednesday evening statement.

Meanwhile, the Personal Consumption Expenditures Index, while meeting expectations, still indicated that the move into disinflation was stalling.

“Given constraints on labor supply, rising demand for services has been a concern for the Federal Reserve, and this week’s reports will likely renew concerns that the battle to bring down inflation may not be over,” Divounguy said. “As a result, traders are adjusting to the fact that monetary policy could remain in restrictive territory for much longer.”

While many are expecting the Federal Open Market Committee not to raise short-term rates at its next meeting, sentiment exists supporting future increases.

Source: nationalmortgagenews.com

Apache is functioning normally

A slight cooling in mortgage rates wasn’t enough to keep mortgage applications from sinking to a 28-year low.

Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.12% as of Sept. 7, down from last week’s 7.18%. By contrast, the 30-year fixed-rate mortgage was at 5.89% a year ago at this time.

“The economy remains buoyant, which is encouraging for consumers,” said Sam Khater, Freddie Mac’s chief economist. “Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”

Other indices showed higher mortgage rates this week.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.20% on Wednesday, compared to 7.07% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.33%, up from 7.06% the previous week.

Rates should continue to come down from their peaks, as the inflation and the jobs market are cooling, said Bright MLS Chief Economist Lisa Sturtevant.

However, high home prices and growing affordability challenges are the two factors weighing on prospective home buyers, said Sturtevant. She expects a market contraction this fall in the housing sector. 

MBA President and CEO Bob Broeksmit is of the same opinion:

“The housing market appears to be stuck heading into autumn, with sales activity likely to stay stagnant until housing inventory increases and mortgage rates decline to more affordable levels,” he said in a statement. 

In many markets, renting has become more affordable than owning

The balance between renting and owning in many markets has shifted toward renting as more new apartment construction comes online, noted Sturtevant. Moreover, declining rent prices will likely help move inflation back toward its target in the months ahead, added Realtor.com Chief Economist Danielle Hale.

“Looking ahead, the economy is nearing an inflection point, and mortgage rate volatility may continue until it is clear that the economic landing has actually occurred and we are not seeing a touch-and-go on growth that could reignite inflation,” said Hale.

Source: housingwire.com

Apache is functioning normally

After looking at listings online, a prospective homebuyer typically reaches out to a real estate agent who then gives them a list of recommended lenders and LOs. But three multibillion-dollar class action antitrust lawsuits looming over the real estate industry may soon reshape how buyers interact with agents.

Some of the nation’s largest real estate brokerages, including Keller Williams, RE/MAX, HomeServices of America as well as the National Association of Realtors, are facing three class action lawsuits (NAR is only named as a defendant in two lawsuits) that could result in the industry paying out tens of billions in damages. Anywhere Real Estate just settled two of the cases for a total of $83.5 million, which suggests major changes could be on the horizon. 

The three class action suits Moehrl, Sitzer/Burnett, and Nosalek, named after their lead plaintiffs, take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a Realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR, however, contends that the current commission structure, which has been in place for over 100 years, actually benefits consumers.

“The buyers want the listing brokers to pay their buyer representative so they can have the most money invested in their down payment and get the best loan terms and rates possible,” Katie Johnson, NAR’s chief legal officer, said. “Sellers want their listing broker to pay the buyer broker’s compensation because it will result in the most buyers being able to afford their house.”

At a time when affordability is constraining first-time buyers from entering the market and interest rates are still expected to climb, “it’s going to do nothing but hurt the potential buyer,” argued Michael Borodinsky, a vice president and branch manager at Caliber Home Loans.

“You’ve got current economic conditions that are not opportunistic for a homebuyer right now, inflation is still out there and it’s all constraining buyers’ ability to spend. So, if you take that, you add that to where mortgage rates are, which are currently at 20 year highs, you add that to the fact that as of today, there is a still a very, very big problem with housing inventory, which has put prices artificially higher than they probably should be in terms of valuation, the buyers are just going to be saddled with more pain”

It will be months or years until the final verdict in the three lawsuits comes out, but there will be clear winners and losers from the outcome, loan officers and housing industry experts said in interviews with HousingWire. If the traditional practice of sellers paying for both sides of the agents ends, housing agencies will have to weigh in to determine ways for buyers to finance their agents’ comp, LOs noted. 

Reshaping the home selling and buying process

Although Johnson anticipates a lengthy appeals process with all of these lawsuits, round one of the fight is quickly approaching. Sitzer/Burnett is scheduled to head to trial in mid-October and Moehrl is expected to head to court in the first half of 2024 with Nosalek most likely following shortly thereafter.

When the day comes that a final verdict is reached, Steve Murray, the co-founder of RealTrends Consulting sees three possible outcomes.  

“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said.

“The second thing that could happen, is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.

In light of Anywhere’s recent settlement, Murray believes the other defendants may also consider settling the suits. 

But Ken Trepeta, the president of RESPRO, is holding off on making any predictions. It might depend on the terms spelled out in the settlement agreement, which still aren’t public yet, he said. 

“If they are settling this and it goes away and they don’t admit wrongdoing and there is no requirement to change policies,” he said. Potential damages in the Sitzer/Burnett suit are anticipated to be up to $4 billion, while damages in the Moehrl suit could reach up to $40 billion.

(An attorney for the plaintiffs in the Moehrl case said Anywhere will be making significant changes to its policies, but did not offer specifics.)

For its part, NAR says it is not giving up the fight.

“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged and we are confident we will prevail in proving the lawfulness of the rules under attack. Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communications, wrote in an email to HousingWire.

If buyer brokers and agents are no longer involved in most real estate transactions, as Murray suggests is a possibility, LOs and lenders who rely on agent referrals for transactions could have a smaller target group to focus on.  

“There will likely be fewer Realtors, the sales volume will be handled by fewer Realtors. But if you’re an originator, that simply means that your target group is now smaller,” said Brian Hale, CEO of Mortgage Advisory Partners. “If you’re not dealing with the top producing agents or teams in the industry, you may find that your client has gone away.”

Loan officers may increasingly place more importance on reaching consumers directly especially when a buyer takes initiative in the homebuying process rather than relying on agents. 

“If there isn’t a buyer’s agent involved – who’s just going to oversee step-by-step – I think consumers are going to take a little bit of that control back because they’re not willing to pay an agent for that level of hand holding and walking them through. So, they’ll reach out and they’ll find the companies that are publicly known as consumer-direct lenders,” said Mike Roberts, the co-founder of City Creek Mortgage. 

TV, billboard and radio ads are traditional ways to reach consumers directly in hopes that borrowers will think of the lender when it’s time to buy a home, Roberts explained. 

As industry players have begun preparing for a variety of potential outcomes in these lawsuits, some agents say they have seen lenders work to develop their consumer-facing marketing.

“I have seen some of the top loan officers go much more direct to the consumers,” said Gretchen Pearson, the broker-owner of Berkshire Hathaway HomeServices Drysdale Properties. “One of the top loan officers in the nation has set up webinars that he does four times a week and he is building up his own pipeline.”

Finding a way for buyers to finance their agents’ commissions is one of the critical issues that loan officers raise should the traditional practice of sellers paying for both agents’ commissions goes away.

The government-sponsored enterprises (GSEs) including Fannie Mae and Freddie Mac as well as the Federal Housing Administration (FHA) would likely have to weigh in, loan officers said. 

“I think that’s the most important thing so that these buyers don’t get impacted negatively by their inability to have sufficient funds for a down payment,” Borodinsky said. “Because otherwise it’s going to sort of end the whole concept of  how we define closing costs, because now we’ve got to add that in as almost as another tax or a fee.”

If Fannie Mae and Freddie Mac were to count the buyer’s agent fee as a seller contribution, listing agents would have more power in the homebuying and selling process, Roberts noted.

“I think listing agents are going to win. Agents who know how to get listings are going to win because buyers are gonna go straight to the listing agent and ask the listing agent to write a contract to present to the seller,” Roberts said.

Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development didn’t respond to HousingWire’s questions about whether they would come up with a mechanism to help buyers finance agent commissions. 

“There is a potential of buyers having to directly pay buyer brokers and that could impact the lending side, and I know they are aware, but I am not aware of them taking any action,” Johnson said. “And maybe that is intentional because there might not be an immediate need for action.”

HousingWire reached out to the top 10 mortgage originators to comment on the impact commission lawsuit results could have on the mortgage industry. Wells Fargo, Pennymac, U.S. Bank Home Mortgage and Planet Home Lending declined to comment. Others didn’t respond.

Plenty of buyers still want a personal advisor

Although buyer’s agency commission may disappear or greatly slowdown, Murray believes the relationship between real estate agents and LOs will remain integral to the transaction.

“If buyer brokers agency goes away, I am not sure that the habit of referrals will go away or change too much,” Murray said. “Buyers will still rely on an agent, whether it is a listing agent or their own buyer broker to get a recommendation on mortgage companies.” 

A significant number of consumers want a trusted advisor, Patrick Lamb, CEO of On Q Financial, said.

“They want somebody who knows the market, they want somebody who is advocating for them, and who is going to coordinate and go, drive around town and look at all these houses and do all the legwork. There’s some value in that,” Lamb explained.

A conclusion to these three lawsuits is not expected to come for several years. Industry experts believe there will be multiple appeals, giving real estate brokerages and lenders time to consider their options.

“I think it’s a tangential benefit. Whatever ruling likely comes out of this, you can’t change the world in 24 hours. It’ll take time for this to evolve through, there will likely be challenges, there could be appeals. You don’t know how all this goes,” Hale said. 

What is certain is that many current LOs would have to reconsider how they get referrals and leads if the environment changes, he explained. And not all would fare well.

“[Only] a minority of LOs are very savvy and very smart about how they pursue referrals. If many of the current LOs in our industry don’t change the way they’re searching for referrals and/or leads in this kind of an environment, they have a high likelihood of becoming extinct.” 

Source: housingwire.com

Apache is functioning normally

Despite the economic headwinds, the title industry remains strong, according to Fitch Ratings’ title industry September 2023 Peer Review.

According to Fitch, the Big Four title companies, Stewart, First American, Fidelity and Old Republic, accounted for approximately 82% of all the title premiums written during the first quarter of the year. Fidelity recorded the largest market share at 29%, followed by First American at 26%, Old Republic at 16% and Stewart at 11%.

However, Fitch noted on Tuesday that premiums were down 37% year-over-year for the first half of 2023. Fitch attributed this decrease to macroeconomic headwinds, including rising mortgage rates and housing affordability challenges brought about by low inventory, which have greatly diminished origination volumes. The firm said it expects these headwinds to persist for the next 12 to 18 months, with refinance volumes remaining depressed. But, Fitch noted that it anticipates purchase order volumes will rebound slightly in 2024 thanks to the persistent high levels of housing demand.

In addition, Fitch said it “expects profitability to remain somewhat depressed as rates should remain elevated,” but it noted that the strength of home prices and a potential uptick in commercial order flow could result in better than anticipated results.

With premium volume down, title companies have cut expenses, resulting in the aggregate title operating margin for the Big Four rising 3% quarter-over-quarter in the second quarter of 2023. Fitch said it expects margins to continue to improve through the end of the year.

Overall, the industry’s aggregate 2022 risk-adjusted capital ratio (RAC) dropped to 168%, due to declines in statutory surplus and Fitch’s estimated statutory reserve redundancy.  The 168% RAC score meets Fitch’s guidelines for the “A” rating category and the organization said it remains in support of the outstanding ratings. Fitch also noted that it does not anticipate further material declines this year.

Of the three national title underwriters Fitch rates, Stewart has the lowest company profile rating at an “A-,” while both Fidelity and First American hold “A” ratings.

Source: housingwire.com

Apache is functioning normally

Anywhere Real Estate’s settlement agreement in two class action antitrust lawsuits dealing with buyer broker compensation raises important questions about the future of buyer’s agency and how other defendants are viewing the fast approaching trials.

Top of mind, of course, is what exactly the settlement agreements include, besides an agreement by Anywhere to pay a total of $83.5 million in damages for both the Moehrl and Sitzer/Burnett suits.

Steve Berman, the managing partner and co-founder of Hagens Berman Sobol Shapiro LLP, which represents the plaintiffs in the Moehrl suit, said the “settlement includes significant changes to Anywhere’s practices relating to the conduct that we have challenged.” However, the exact terms of the settlement won’t be known until the plaintiffs file a motion to approve the settlement agreement. Anywhere declined to comment on the exact terms of the agreement.

Meanwhile, Steve Murray, the co-founder of RealTrends Consulting, said he believes the changes Anywhere proposed to make could mark the end of buyer broker compensation as we know it.

“As far as cooperation and compensation, that is now pretty much over,” Murray said. “The biggest combined brokerage company in the country in terms of all their brands, just said, ‘We’re out. We are not going to defend this case anymore,’ so that will definitely lead to changes.”

Murray sees three possible outcomes for the lawsuits.

“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said. “The second thing that could happen is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.

In preparation for these outcomes, Berkshire Hathaway HomeServices Drysdale Properties broker-owner Gretchen Pearson said she has been working with her agents to implement buyer’s agency agreements.

“If an agent files a buyer’s agency agreement for me, the broker, to review, the work flows just aren’t there in our document management system,” Pearson said. “The software we use isn’t built that way.” Therefore, it won’t just impact agents, but technology systems, she added.

While the lawsuits’ potential impact on buyer’s agency and buyer broker compensation is the largest question looming, Murray also wonders how the settlement agreement will impact Anywhere’s many franchise owners.

“Will the plaintiffs now just go and start suing individual Coldwell Banker franchises?” he posited.

When asked how the agreement would impact its affiliates, Anywhere highlighted a line from their initial statement.

 “Anywhere has taken the first important step toward a resolution that not only releases the company but also our affiliated agents and franchisees,” the company said.

Murray said he believes this could be the start of more settlements to come from the other defendants in the suit.

“They are all going to be running for settlements now,” Murray said. “I think this is a floodgate moment for sure.”

Ken Trepeta, the president of RESPRO, is holding off on making any predictions, suggesting it might depend on the terms spelled out in the settlement agreement.

“If they are settling this and it goes away and they don’t admit wrongdoing and there is no requirement to change policies,” he said. Damages in the Sitzer/Burnett suit are anticipated to be up to $4 billion, while damages in the Moehrl suit are expected to reach up to $40 billion.

The National Association of Realtors, a defendant in both lawsuits, says it is not giving up the fight.

“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged and we are confident we will prevail in proving the lawfulness of the rules under attack. Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communications, wrote in an email to HousingWire.

The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having many buyer brokers participating in that local marketplace, NAR noted. 

For buyers, the NAR argues these marketplaces save them the burden of extra costs at closing, allowing them to get professional representation and make homeownership possible for more people. 

Keller Williams, RE/MAX, and HomeServices of America, the lawsuits’ three other defendants, declined to comment.

The Sitzer/Burnett lawsuit is scheduled to head to trial on October 16, 2023, while a trial date for the Moehrl lawsuit has yet to be set, but it is expected to take place in early 2024.

Originally filed in 2019, the Moehrl and Sitzer/Burnett lawsuits take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR contends that the current commission structure, which has been in place for over 100 years, actually helps consumers.

Source: housingwire.com

Apache is functioning normally

Lately, there’s been a lot of talk about a lack of affordability, even a potential housing bubble.

And it comes as no surprise, given the massive shock of a near-tripling of mortgage rates over just a year and a half.

The 30-year fixed could be had in the low 3s, maybe even high 2s back in early 2022, and today is closer to 7%.

At the same time, home prices haven’t come down, despite a slowing rate of appreciation.

Together, this has brought the housing market to its knees and pushed many prospective buyers onto the sidelines. But those who sell are still reaping massive profits.

Home Buying Is the Least Affordable Since 1984

Remember those 1980s mortgage rates that were in the double-digits? Well, today’s mortgage rates are nowhere close.

However, due to sky-high home prices and elevated interest rates, home buying is the least affordable it has been since 1984.

That’s right, it hasn’t been this bad in about 40 years, which illustrates just how challenging this housing market has become.

Per Black Knight, it now requires 38.3% of the median household income to make a monthly mortgage payment on an average-priced home.

Using Freddie Mac’s 7.23% average for a conforming 30-year fixed mortgage as of August 24th, the monthly principal and interest payment climbed to $2,423.

And this assumes the buyer comes in with a 20% down payment, when in reality many borrowers can only muster 3-5%.

To the point of it being a bubble, it would take some heavy lifting to bring affordability back to its 25-year average.

We’re talking some combination of a ~27% decline in home prices, a 4%+ reduction in 30-year mortgage rates, or a whopping 60% increase in median household.

Which of those three do you think are likeliest to transpire? Probably none of them barring another massive housing crash.

But a combination of the first two is reasonable, whether it’s a 10% drop in home prices and a 2% drop in mortgage rates. Or some other combination.

It’s unclear if wages are going to see much improvement from here on out, certainly nowhere close to 60%.

For perspective, the 30-year fixed averaged about 13.2% the last time housing affordability was this bad.

This tells you home price growth has far outpaced wage growth, essentially demanding low interest rates bridge the gap.

Despite this, home sellers are racking up massive gains, thanks to double-digit home price appreciation over the past several years.

The Few Home Sellers Out There Are Raking in Big Profits

Redfin reported today that 97% of home sellers sold for a profit during the three months ending July 31st.

And the typical property that sold went for a whopping 78.4% more than the seller paid, or $203,232.

While there is a severe lack of affordability in today’s housing market, there seems to be an even bigger shortage of homes to purchase.

As such, home prices remain on the up and up, allowing the few sellers out there to take in a tidy profit.

The majority of sellers purchased their homes well before property values skyrocketed, making it pretty easy to snag a six-figure gain.

San Jose leads the nation in median capital gain at a staggering $755,000. It’s also 108.6% higher than what the seller paid.

San Francisco isn’t far behind at $625,500 and 70.5%, respectively, followed by Anaheim at $470,000 and 88.7%.

Even Detroit, which ranked last in terms of dollar gains of the 50 metros analyzed saw a median $80,500 capital gain.

If we consider percentage gains, Fort Lauderdale topped the list with a 122.2% cap gain, followed by San Jose and Miami.

Some Home Sellers Are Losing Money, Especially in San Francisco

While most sellers are making out like bandits, Redfin did note that some home sellers are parting with their properties at a loss.

This is especially true in San Francisco, which has struggled with falling property values and tech layoffs.

San Francisco’s median home sale price fell a record 13.3% year-over-year from April 2022 to April 2023, more than triple the nationwide decline of 4.2% at that time.

But as of July, prices were down just 4.3% year-over-year, somewhat closer to the national gain of 1.6%.

This might explain why 12% of home sellers in San Francisco sold for a loss during the three months ending July 31st.

Put another way, one of every eight homes that sold during this period went for less than what the seller paid.

And the typical seller sold for about $100,000 less than what they paid, tying New York for the largest median loss in dollars.

Nationwide, the typical homeowner who sold for a loss only sold for $35,538 less than what they paid.

Other major metros that had a high percentage of sellers taking a loss included Detroit (6.9%), Chicago (6.5%), New York (5.9%), and Cleveland (5.8%).

One Redfin Premier agent said some condos in the Bay Area are selling below 2018/2019 purchase prices because commuting into downtown San Francisco is no longer “a thing anymore.”

Meanwhile, an agent in Boise said some clients will need to sell at a $100,000 loss as they move back to Seattle because work-from-home (WFH) has ended and they bought the properties recently.

But the price point on such transactions is generally above $750,000, which probably isn’t your typical home in that part of Idaho.

And as you can see from the chart above, very few homes are selling for below what the seller originally paid.

So before we get excited about another short sale wave, as seen in the early 2000s, we may want to temper our expectations.

Of course, market conditions can change fast. For example, a year ago only 0.2% of Austin homes sold at a loss versus 3% in the same period this year.

Austin had the lowest share of home sales at a loss of the top 50 metros. Not so anymore.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Working as a paramedic is a rewarding career path for many. Though the job is often about more than just the money, it is possible for paramedics to earn a living. The median annual wage for paramedics is $46,770, according to the U.S. Bureau of Labor Statistics (BLS).

Keep reading for insights into a paramedic’s salary.

What Is a Paramedic?

A paramedic provides emergency medical services to individuals when they’re injured or sick. They may also be responsible for transporting people to the hospital, where they can receive further medical treatment. Because medical emergencies can happen any time of day, paramedics often work nights, holidays, and weekends. Many work 40 hours a week, if not more.

To become a paramedic, you usually must meet certain postsecondary educational requirements, which can vary by state.

How Much Is a Paramedic’s Starting Salary?

How much does a paramedic make a year? While the median annual salary for paramedics is $46,770, entry-level salaries may be lower. As with most jobs, a paramedic’s pay rate should become more competitive as they progress in their career.
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What Is the Average Salary for a Paramedic?

If you’re considering going into emergency medical services — and thinking about the long shifts that are often involved — you may be wondering how much a paramedic makes an hour.

According to BLS data, paramedics earn a median hourly rate of $17.76. But how much they actually earn depends on how many hours they work, how experienced they are, and where they live.

In fact, salaries can differ greatly by state. For example, the annual mean wage of a paramedic in California is $71,470. In Alabama, it’s $37,820.

It’s understandable that some paramedics earn more based on where they live, as the cost of living can vary a lot by state. At the very least, paramedics can expect to earn the minimum wage.

The following table breaks down the mean annual wage for paramedics by state.

Median Paramedic Salary by State for 2022
State Annual Mean Wage
Alabama $37,820
Alaska $53,930
Arizona $48,610
Arkansas $45,100
California $71,470
Colorado $55,410
Connecticut $64,590
Delaware $62,040
District of Columbia $64,260
Florida $51,520
Georgia $46,350
Hawaii N/A
Idaho $61,880
Illinois $57,420
Indiana $49,610
Iowa $48,470
Kansas $45,780
Kentucky $42,850
Louisiana $49,120
Maine $50,130
Maryland $62,310
Massachusetts $63,320
Michigan $46,630
Minnesota $63,090
Mississippi $43,670
Missouri $46,670
Montana $53,800
Nebraska $48,950
Nevada $57,770
New Hampshire $58,620
New Jersey $76,500
New Mexico $49,340
New York $61,530
North Carolina $44,550
North Dakota $49,860
Ohio $46,790
Oklahoma $45,740
Oregon $60,930
Pennsylvania $52,850
Rhode Island $46,440
South Carolina $47,280
South Dakota $45,870
Tennessee $49,610
Texas $50,730
Utah $54,660
Vermont $48,910
Virginia $51,300
Washington $90,980
West Virginia $44,290
Wisconsin $50,030
Wyoming $50,570

Source: BLS

Recommended: Salary vs. Hourly Pay: How Their Pros and Cons Compare

Paramedic Benefits & Job Considerations

Alongside earning a paycheck, paramedics may also receive valuable benefits such as:

•   Healthcare, dental, and vision insurance

•   Paid time off

•   Sick leave

•   Retirement plans

Pros and Cons of a Paramedic Salary

If someone is debating whether or not to pursue a career path as a paramedic, they’ll want to consider both the advantages and disadvantages of the job.

Pros

•   Potential career growth. It is anticipated paramedic jobs will grow by 7 percent by 2031, and there will be around 20,000 new openings for paramedics and EMTs every year over the next decade.

•   Fulfillment. Helping people for a living and saving lives can be very fulfilling ways to spend a career.

Cons

•   Physically demanding. Working as a paramedic can require a lot of lifting, bending, and kneeling, which can take a physical toll.

•   Dangerous. Working with the sick can expose you to diseases and viruses and potentially increase your risk of injuries.

•   Hectic work schedule. Not only are paramedics expected to work odd hours, their time on the job can be very busy and stressful, with life-or-death stakes. Shifts can also be long and last up to 24 hours. This may also not be a great job for introverts, as working as a paramedic requires interacting a lot with patients and teammates.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

Pursuing a career as a paramedic requires a secondary education, a lot of hard work, and the ability to work odd hours. The role can be very stressful, as the stakes are quite high when delivering emergency medical services. However, with a median annual salary of $46,770, working as a paramedic can also be a reliable and rewarding way to earn a living. What’s more, you may find that as your career progresses, your earning potential will grow as well.

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FAQ

What are the highest-paid paramedics?

Exactly how much money does a paramedic make? That depends on how much experience the paramedic has, among other factors. The highest 10 percent of top-earning paramedics earn more than $47,580.

Can a paramedic make six figures?

It is unlikely a paramedic will earn a salary of $100,000 or more, but is not impossible. Typically, the highest-paid paramedics work in general medical and surgical hospitals, and they earn a median annual salary of $47,000.

What is the lowest-paid paramedic?

On the low end, paramedics can earn less than $23,620. However, they can expect their salary to rise as they gain years of working experience.

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Source: sofi.com

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A cash-out refinancing loan is treated differently by the IRS than a traditional mortgage. Although you receive a lump sum of cash, cash-out refinancing is considered a form of debt restructuring, and you do not pay taxes on the cash you receive.

With cash-out refinancing, you cash out a percentage of the equity that you have accrued in your home and replace your existing mortgage with one with a higher principal. You can use the cash for any reason, such as consolidating debt, paying for home renovations, or unexpected medical expenses.

Here’s what you should know about cash-out refinancing and the tax implications.

How Cash-Out Refinancing Works

When you refinance your mortgage, you cash out equity. Equity is the difference between your current mortgage balance and the value of your home today. Let’s say your home is worth $300,000 and the balance on your mortgage is $150,000, you have $150,000 in home equity.

A lender typically requires you to keep at least 20% of the value of your home in equity. In the above case, you would leave $60,000 in equity and have $90,000 to cash out. Your mortgage lender would also charge around 1% in closing costs.

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The Tax Implications of Mortgage Refinancing

A cash-out refinancing loan is treated differently by the IRS than a traditional home loan because it is considered a form of debt restructuring. You do not pay tax on the money you receive in cash, and you might also be able to deduct some of the interest you pay on that cash from your taxes.

Here’s a closer look at the tax implications of a cash-out refinancing loan.

Is a Cash-Out Refinance Taxable?

Because the IRS considers a cash-out refinance to be a form of debt restructuring, the cash you receive is considered a loan, not income, and is not taxed. In addition, you could receive additional tax benefits depending on how you spend the money you receive.

If you use the cash to increase the value of your home, such as putting on a new addition or replacing your heating or cooling system, you can claim the interest that you pay on the loan as a tax deduction.

Before you do this, however, consult a tax professional to make sure that the work qualifies. Simple repairs like painting or general maintenance do not qualify for tax deductions. You will also have to keep meticulous records and save receipts documenting what you spend so that you can prove your case when you file your taxes.

Requirements for Interest Deductions on a Cash-Out Refinance

Capital improvements to a property that increase its value will qualify for an interest deduction. Examples could include a new addition, a security system, or a new swimming pool. General maintenance and repairs will not qualify, nor can you deduct the interest you pay on the loan if you spend the money on a vacation, medical bills, or credit card debt.

How to Make a Cash-Out Refinance Tax-Deductible

Below is a list of home improvements that qualify for the interest deduction.

Qualifying Home Improvements

•   Renovating or adding on an addition, such as a garage or a bedroom

•   Putting in a swimming pool

•   New fencing

•   New roof

•   New heating or cooling system

•   Installing efficient windows

•   Installing a home security system

Improving your property’s value means you can also save money if you sell your home. Capital home improvements count toward the total amount you spent on the property and can potentially lessen your capital gains tax liability when you sell your home.

Deductions for Adding a Home Office

Adding a home office to your home is a capital improvement that qualifies for the interest deduction on a cash-out refinancing loan. There are also additional potential tax benefits to adding a home office for small businesses or the self-employed.

How Home Offices Can Impact Your Taxes

You can deduct the interest on your cash-out refinancing loan if you use the money to add a home office, because it will increase the value of your home and is considered a capital improvement. If you are a business owner or self-employed, you could also qualify for the home office deduction on your federal taxes.

The home office deduction is a benefit that allows you to claim a percentage of what you pay on your loan as a business expense. You must use the designated office space for business purposes only, and it cannot be used as a spare bedroom or family space or it will not qualify. Also, your home office must be the primary place where you conduct business.

Recommended: What to Know Before You Deduct Your Home Office

Tax Implications of a Cash-Out Refinance for Rental Property

Rental income is considered personal income by the IRS. If you use the capital from a cash-out refinance to improve or repair a rental property, the expenses are tax-deductible. Also, interest, closing costs, and insurance paid on a rental property can be deducted from your income as business expenses.

What Are the Limitations for Interest Deduction with a Cash-Out Refinance?

For the 2022 tax year, single filers and married couples filing jointly could deduct mortgage interest up to $750,000. Married taxpayers who file separately could deduct up to $375,000 each. (The limit is higher for debts incurred prior to December 16, 2017: $1 million or $500,000 each for married couples filing separately.)

Can You Deduct Your Mortgage Points?

Mortgage points, also known as discount points, are fees you pay a lender upfront so that you can pay a lower interest rate on your loan. One point is equal to 1% of your mortgage loan. With a cash-out refinance, you cannot deduct the money you paid for points in the year you refinanced until after 2025. But you can spread out the cost throughout the loan. That means if you accumulate $2,500 worth of mortgage points on a 15-year refinance, you can deduct around $166 per year throughout the loan.

Risks of a Cash-Out Refinance

Cash-out refinancing is a risk. You are taking on a larger loan than your original home mortgage, which means that your monthly mortgage payment will increase unless interest rates are lower than when you applied for your current mortgage. If your payments are higher and you can’t keep up with them, you could be at greater risk of foreclosure.

Alternatives to a Cash-Out Refinance

Two financing alternatives that also use equity in your home are a home equity loan or a home equity line of credit (HELOC).

A home equity loan is a second mortgage for a fixed amount that you repay over a set period while keeping your original loan. The payments include interest and principal, just like a traditional mortgage, but the interest rate may be higher than a primary mortgage. This is because the primary lender is paid first in the event of foreclosure, so the secondary lender takes on more risk.

A home equity line of credit (HELOC) is also a second mortgage but with a revolving balance. That means you can borrow a certain amount, pay it back, and then borrow again. As with a credit card, your payments are based on how much you use from the line of credit, not on the available credit amount. If you don’t need to borrow a large sum, this might be a cheaper option than cash-out refinancing because a HELOC tends to have a lower interest rate.

Recommended: Home Equity Loans vs HELOCs vs Home Improvement Loans

The Takeaway

Cash-out refinancing is a way to access the equity in your home and use it to pay for expenses, though it does mean taking on increased debt. The cash from this type of mortgage refinancing can be used any way you like, such as to pay for home renovations, college, or unexpected medical expenses.

When you opt for cash-out refinancing, your original mortgage is replaced by a larger mortgage. If interest rates are lower than when you took out your original mortgage, your monthly payments may go down, but it will take you longer to pay off the loan. Depending on how much cash you need, you can also consider a HELOC or a home equity loan to obtain the money you need.

Turn your home equity into cash with a cash-out refi. Pay down high-interest debt, or increase your home’s value with a remodel. Get your rate in a matter of minutes, without affecting your credit score.*

Our Mortgage Loan Officers are ready to guide you through the cash-out refinance process step by step.

FAQ

Is cash-out refinance tax-deductible?

Some of the interest you pay on a cash-out refinancing loan might be tax deductible if you use the money to make capital improvements on your home and you keep meticulous documentation to prove it. It’s best to consult with a tax professional to make sure the improvements you do on your home qualify for the deduction.

Do you pay taxes on a cash-out refinance?

No. The funds you receive from cash-out refinancing are not subject to tax because the IRS considers refinancing a form of debt restructuring, and the money isn’t categorized as income.

How do I report a cash-out refinance on my tax return?

You don’t need to report the cash you receive from a cash-out refi as income, so the refi would only show up if you record the interest you are paying on the new mortgage on an itemized return.

What are the tax implications of a cash-out refinance on a rental property?

Rental income is taxed as personal income by the IRS. The good news is that if cash from a refinancing is used to improve or repair a rental property, the expenses are tax-deductible. Also, closing costs, interest, and insurance paid on a rental property may also be deductible from your income as business expenses.

How does the timing of a cash-out refinance affect my taxes?

As long as you meet the requirements for capital improvements, you can deduct the interest paid on your refinanced loan every year that you make payments throughout the life of your refinance loan. So, if you refinance your mortgage to a 15-year term, you must spread your deductions over the 15 years. However, you can only deduct the interest you pay each year, and the amount of interest paid will become less as the loan matures and you pay more toward the principal.

Photo credit: iStock/Jun

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Source: sofi.com