Value of U.S. Housing Market Hits Another All-Time High

Posted on October 29th, 2020

In the second quarter of 2020, the U.S. housing market hit an all-time high of $32.8 trillion, per The Federal Reserve’s Flow of Funds Report, as referenced in the latest Monthly Chartbook from the Urban Institute.

That was up from roughly $32.4 trillion in the first quarter of 2020, thanks to an increase in home equity from $21.1 trillion to $21.5 trillion.

Meanwhile, outstanding mortgage debt remained steady at $11.3 trillion, which tells us most borrowers are paying down existing mortgages and/or applying for rate and term refinances to lower monthly payments.

And that’s a good thing because it means most homeowners aren’t overleveraged like they were back in 2006, before the housing crisis ushered in the Great Recession.

Looking at it a different way, American homeowners have a collective loan-to-value ratio (LTV) of about 34%.

The Housing Market Appears to Be Healthy Despite Record Home Prices

value of housing market

  • U.S. property values continue to rise as mortgage debt keeps falling
  • American homeowners have a collective loan-to-value ratio (LTV) of about 34%
  • Mortgage debt is essentially unchanged from 2006 while home values have risen nearly $8 trillion
  • This means today’s homeowners are in good shape overall, but it’s harder for new buyers to enter the market

While one could always express caution when prices hit all-time highs, you’ve got to consider more than just the price.

More important is to look at housing affordability and the debt held by existing homeowners.

Fortunately, U.S. homeowners only carry a collective $11.3 trillion in mortgage debt, which appears to be flat or even lower than total housing debt back in 2006.

There are several reasons why today’s homeowners are carrying a lot less mortgage debt. For one, most haven’t tapped their equity.

Very few homeowners these days have applied for cash out refinances or pulled equity via home equity line of credit or home equity loan.

cash out share

Instead, they’ve been paying down their home loans each month, enjoying tailwinds propelled by record low mortgage rates.

Simply put, homeowners owe less and pay more in principal with each monthly payment, creating a housing market that is less leveraged.

This is a good thing for individual households and for the housing market as a whole because it means borrowers aren’t overextended, and have options if they’re unable to keep up with monthly payments.

A decade ago, mortgage payments often weren’t affordable because of so-called exploding ARMs that reset much higher after the borrower enjoyed an initial teaser rate.

And because they didn’t have any skin in the game, aka home equity, they couldn’t refinance to seek out payment relief.

That led to a flood of short sales and foreclosures, and eventually the creation of widespread loan modification programs such as HAMP and HARP.

Today, even if a homeowner falls behind due to COVID-19 or another setback, they could potentially sell for a tidy profit and move on.

This protects both that individual and their local housing market, which might otherwise suffer from declining property values due to the presence of distressed home sales.

In summary, this is why today’s housing market is very different than the one we experienced more than a decade ago, despite some economists seeing home prices in “bubble territory.”

But What About Housing Affordability Today?

  • Mortgage affordability has actually improved in recent years despite surging home prices
  • Existing homeowners typically spent 17.5% of household income on their monthly housing payments in September, down from 19.6% two years ago
  • Low mortgage rates are improving affordability, but rising down payments are hurting prospective buyers
  • Property values have grown at 2X rate of incomes over the past six years, and typical U.S. home now worth 3.08 times median homeowner household income

It’s great that existing homeowners are enjoying record low mortgage rates and equally affordable housing payments, but what about prospective home buyers?

Well, housing affordability has actually improved since 2018 due to the ultra-low mortgage rates available, per a new analysis from Zillow.

This is despite the fact that home values have grown at about double the rate of incomes over the past six years.

While households typically spent just 17.5% of income on monthly housing payments in September, down from 19.6% two years earlier, the typical U.S. property is now worth 3.08 times median homeowner household income, an all-time high per Zillow.

In other words, monthly payments are cheap for existing homeowners, but their properties are valued well above their incomes.

They remain affordable because many of these homeowners have small mortgage balances and super low mortgage rates.

But if these same folks were to buy their homes today, it might not work out, which brings us to those prospective buyers, or Gen Z home buyers.

Zillow noted that home values have increased a whopping 38.3% since September 2014, while homeowner incomes have gone up just 18.8% over the same period.

If a home buyer puts down 20% on a median-priced property they would have only needed about $36,600 at the start of 2014, or 6.4 months of income for a median homeowner household.

Today, they’d need a $52,000 down payment, which is 7.5 months of income for that 20% down payment to avoid PMI and obtain a more favorable interest rate.

Even worse for those still renting, Zillow expects home prices to rise a further 7% over the next year, which would increase that required down payment another $3,600 to about $55,600.

This is essentially going to steer more new home buyers into low down payment mortgages, such as FHA loans that only require 3.5% down, or Fannie Mae HomeReady and its mere 3% down requirement.

While it at least gives them an option, they’re going to have higher mortgage payments as a result, due to a larger loan amount, higher mortgage rate, and compulsory mortgage insurance.

Additionally, they’ll have very little skin in the game, which could present a problem if home prices take a turn for the worse, as they did a decade ago.

The good news is the bulk of homeowners are sitting pretty on mounds of equity, so assuming cash out refis don’t become the next big thing, the overall housing market should be relatively safe.

Could Existing Homeowners Afford to Buy Their Properties at Today’s Prices?

One last thing. We’ve basically got this weird situation where a lot of existing homeowners probably wouldn’t be able to afford their same properties if they were to purchase them today.

However, they’ve got a ton of home equity that is only growing each month thanks to regular payments of principal and rising home prices, meaning more money is essentially locked in their properties.

At the same time, it makes a move difficult because even a lateral purchase would be pricey from an affordability standpoint when you factor in stagnant incomes and higher property taxes.

Or the fact that some of these owners are retired or not making peak income.

In the end, it further exacerbates an already difficult situation in terms of housing inventory, which has been on the record low end of things for quite a while.

That just points to even higher home prices and lots of equity accrual, which buffers the housing market, but makes it increasingly difficult for new homeowners to get into the game.

Source: thetruthaboutmortgage.com

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Miami-Dade Total Home Sales Continue Surging in January 2021

Miami-Dade County total home sales posted a double-digit increase for the fifth consecutive month in January 2021 as pent-up demand and record-low mortgage rates continue fueling transactions, according to the MIAMI Association of Realtors (MIAMI) and the Multiple Listing Service (MLS) system.

Miami-Dade County total home sales jumped 19.1% year-over-year in January 2021, from 1,857 to 2,211. Miami single-family home sales rose 9.1% year-over-year, from 887 to 968. Miami existing condo transactions increased 28.1% year-over-year, from 970 to 1,243.

“Double-digit home sale increases for five consecutive months speaks to the resiliency of the Miami real estate market, the global pent-up demand for South Florida properties, record-low mortgage rates, purchases from home buyers in tax-burdened states, the importance of the home as a hub in our daily lives and increased interest from international buyers,” MIAMI Chairman of the Board Jennifer Wollmann said.

Miami real estate accounted for 12,918 total home sales in the five-month stretch from September 2020 to January 2021. That is a 18.4% increase in the number of total transactions compared to the five-month stretch from September 2019 to January 2020.

Lack of inventory in certain price points is impacting sales, particularly for single-family homes. Increased housing starts and more sellers listing properties in 2021 should help alleviate the lack of supply.

Miami Luxury Condo Sales Surge 130.6% in January 2021
Miami single-family luxury ($1-million-and-up) transactions jumped 114.1% year-over-year to 167 sales in January 2021. Miami existing condo luxury ($1-million-and-up) sales increased 130.6% year-over-year to 113 transactions.

Luxury months of supply continues to trend downward for all property types, month-over-month, and year-over-year.

Miami single-family homes priced between $400K to $600K surged 51.5% year-over-year to 294 transactions in January 2021. Miami existing condo sales priced between $400K to $600K increased 64.5% to 153 transactions.

Record-low interest rates; a robust S&P 500; the appeal of stable assets in a volatile economy; homebuyers leaving tax-burdened Northeastern states to purchase in Florida (no state income tax); and work-from-home and remote-learning policies have all combined to create a robust market for luxury single-family properties.

110 Consecutive Months of Price Appreciation in Miami
Strong demand coupled with limited supply continue to drive price appreciation in Miami-Dade.

Miami-Dade County single-family home prices increased 25.2% year-over-year in January 2021, increasing from $375,000 to $469,500. Miami single-family home prices have risen for 110 consecutive months, a streak of more than 9 years. Existing condo prices increased 14.3% year-over-year, from $245,000 to $280,000. Condo prices have increased or stayed even in 112 of the last 116 months.

Miami, where the median price is still comparable to 2007 figures, remains a bargain compared to other global cities. In Miami, $1 million can net homebuyers 93 square meters of prime property, according to Knight Frank’s 2019 The Wealth Report. Monaco (16 square meters), Hong Kong (22), New York (31), Los Angeles (36) and others offer significantly less prime land for $1 million.

Single-Family Home and Condo Dollar Volume Increases
Single-family home dollar volume increased 86.4% year-over-year, from $471.7 million to $879.2 million. Condo dollar volume increased 69.4% year-over-year, from $393.9 million to $667.1 million.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.74% in January, up from 2.68% in December. The average commitment rate across all of 2020 was 3.11%.

Lack of access to mortgage loans continues to inhibit further growth of the existing condominium market. Of the 9,307 condominium buildings in Miami-Dade and Broward counties, only 13 are approved for Federal Housing Administration loans, down from 29 last year, according to Florida Department of Business and Professional Regulation and FHA.

A better condo approval process is expected to increase sales. The guidance, which went into effect in October 2019, extends certifications from two years to three, allows for single-unit mortgage approvals, provides more flexibility with owner/occupancy ratios, and increases the allowable number of FHA loans in a single project. The changes, many of which MIAMI and NAR have championed, are expected to generate increased homeownership opportunities.

Miami Distressed Sales Stay Low, Reflecting Healthy Market
Only 1.8% of all closed residential sales in Miami were distressed last month, including REO (bank-owned properties) and short sales, compared to 5.9% in January 2020. In 2009, distressed sales comprised 70% of Miami sales.

Total Miami distressed sales decreased 64.5%, from 110 to 39.

Short sales and REOs accounted for 0.7% and 1.1% year-over-year, respectively, of total Miami sales in January 2021. Short sale transactions decreased 37.5% year-over-year while REOs decreased 72.1%.

Nationally, distressed sales represented less than 1% of sales in January 2021, down from 2% in January 2020.

Miami Real Estate Selling Close to List Price
The median percent of original list price received for single-family homes was 96.8% in January 2021, up 1.3% from 95.6% last year. The median percent of original list price received for existing condominiums was 94.3%, up 1% from 93.4% last year.

The median number of days between listing and contract dates for Miami single-family home sales was 28 days, a 44% decrease from 50 days last year. The median number of days between the listing date and closing date for condos was 63 days, down 23.2% from 82 days.

The median time to sale for single-family homes was 80 days, a 18.4% decrease from 98 days last year. The median number of days to sale for condos was 111 days, a 9.8% decrease from 123 days.

National and State Statistics
Nationally, total existing-home sales transactions completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.6% from December to a seasonally-adjusted annual rate of 6.69 million in January. Sales in total climbed year-over-year, up 23.7% from a year ago (5.41 million in January 2020).

In January, closed sales of single-family homes statewide totaled 21,587, up 18% year-over-year, while existing condo-townhouse sales totaled 9,608, up 24.6% over January 2020. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Nationally, the median existing-home price for all housing types in January was $303,900, up 14.1% from January 2020 ($266,300), as prices increased in every region. January’s national price jump marks 107 straight months of year-over-year gains.

The statewide median sales price for single-family existing homes was $305,000, up 15.1% from the previous year, according to data from Florida Realtors Research Department in partnership with local Realtor boards/associations. Last month’s statewide median price for condo-townhouse units was $230,000, up 15% over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Miami’s Cash Buyers Top National Figure
Miami cash transactions comprised 33.1% of January 2021 total closed sales, compared to 33.8% last year. The national figure for cash buyers is 19%.

Miami’s high percentage of cash sales reflects South Florida’s ability to attract a diverse number of international homebuyers, who tend to purchase properties in all cash.

Condominiums comprise a large portion of Miami’s cash purchases as 43% of condo closings were made in cash in January 2021 compared to 20.4% of single-family home sales.

Seller’s Market for Single-Family Homes, Buyer’s Market for Condos
Inventory of single-family homes decreased 45.8% in January 2021 from 6,277 active listings last year to 3,401 last month. Condominium inventory decreased 15.4% to 12,608 from 14,902 listings during the same period in 2020.

Inventory of active listings has decreased the last 17 months for single-family homes.

Months supply of inventory for single-family homes decreased 44.6% to 3.1 months, which indicates a seller’s market. Inventory for existing condominiums decreased 9.6% to 11.3 months, which indicates a buyer’s market. A balanced market between buyers and sellers offers between six- and nine-months supply.

Months supply of inventory is down since July 2019 for single-family, reflecting strong demand.

Total active listings at the end of January 2021 decreased 24.4% year-over-year, from 21,179 to 16,009. Active listings remain about 60% below 2008 levels when sales bottomed.

New listings of Miami single-family homes decreased 13.7% to 1,541 from 1,785. New listings of condominiums increased 1.3%, from 2,468 to 2,500.

Nationally, total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December’s supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.

To access January 2021 Miami-Dade Statistical Reports, visit http://www.SFMarketIntel.com

Source: realtybiznews.com

Fed sounds alarm on commercial real estate, business bankruptcy

The Federal Reserve warned of significant risks of business bankruptcies and steep drops in commercial real estate prices in a report published on Friday.

“Business leverage now stands near historical highs,” the central bank said in its semiannual Monetary Policy Report to Congress. “Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”

In part encouraged by government and Fed programs, businesses have taken on more debt over the past year as they’ve struggled to deal with the economic and financial fallout from COVID-19, including in some cases forced shutdowns.

Powell testimony

The Fed report, which provides lawmakers with an update on economic and financial developments and monetary policy, was published on the central bank’s website ahead of Chair Jerome Powell’s testimony before the Senate Banking Committee on Tuesday and the House Financial Services panel a day later.

In the report, the Fed voiced hopes of an end to the pandemic later this year, though it cautioned that pitfalls remained.

In particular, it said that commercial real estate prices “appear susceptible to sharp declines” from historically high levels. That could particularly prove to be the case if the level of distressed sales picks up or if the pandemic leads to longer-term declines in demand, it said.

Commercial real estate might be hit by a double-whammy after the pandemic, some economists say. An increase in people working from home could result in less demand for office space, while stepped-up online purchases could force more shutdowns of brick-and-mortar retailers and additional vacancies at shopping centers.

Source: nationalmortgagenews.com

Existing Home Sales Rise, But Inventories Hamper Results

Existing home sales started the 2021 with a small increase
from the December sale levels, the second consecutive monthly gain. The
National Association of Realtors® (NAR) said transactions that include pre-owned
single-family homes, townhomes, condominiums, and co-ops, increased 0.6 percent
in January to a seasonally adjusted annual rate of 6.69 million units compared
to 6.76 million in December. The month’s results are up 23.7 percent from the
annual rate
of 5.41 million sales in January 2020.

Existing home sales have increased in seven of the last
eight months, even though pending sales, generally considered a leading
indicator for the following one or two existing sales reports, have posted four
straight monthly losses.

Analysts surveyed by Econoday had expected a slight
pull-back in January’s sales. Their consensus was for annualized sales of 6.60
million units.

Sales of single-family homes were at a seasonally adjusted
annual rate of 5.93 million, a 0.2 percent gain from 5.92 million the previous
month and a 23.0 percent year-over-year increase. Condominium and co-op sales rose
4.1 percent from December to a rate of 760,000 units, 28.8 percent annual
growth.

Home sales continue to ascend in
the first month of the year
, as buyers quickly snatched up virtually every new
listing coming on the market,” said Lawrence Yun, NAR’s chief economist. “Sales
easily could have been even 20 percent higher if there had been more inventory
and more choices.”

The median existing-home price for
all housing types in January was $303,900, up 14.1 percent from a year ago when
the median was $266,300. It was the 107th straight month of annual gains.  The median existing single-family home price
was $308,300, 14.8 percent annual growth, and condos appreciated by 8.6 percent
to a median of $269,600.

Whereas much of the economy has
suffered due to COVID-19, the housing sector has been one of the few bright
spots
, according to Yun. “Home sales are continuing to play a part in propping
up the economy,” he said. “With additional stimulus likely to pass and several
vaccines now available, the housing outlook looks solid for this year.”

Yun says he expects more jobs to
return, which will spur homebuying in the coming months and predicts
existing-home sales will reach at least 6.5 million in 2021. This will be despite
an increase in mortgage interest rates due to the rising budget deficit and
higher inflation.

25.7 percent from the 1.40 million listings in January 2020. The unsold
inventory is estimated to be a 1.9-month supply at the current sales pace,
unchanged from December, but down from the 3.1-month supply a year earlier. Properties
typically remained on the market for 21 days, seasonally even with December,
but down from an estimated 43 days in January 2020. Seventy-one percent
of the homes sold in January 2021 were on the market for less than a month.

First-time buyers accounted
for one-third of January sales and individual
investors or second-home buyers purchased 15 percent of the homes sold during
the month. Nineteen percent of sales were all-cash.
Fewer than 1 percent of sales were distressed, that is foreclosure or short
sales.

Sales results for January were mixed
across the four major regions
, but all posted double-digit increases in both annual
sales and appreciation. Existing-home sales fell 2.2 percent in the Northeast
to an annual rate of 870,000 units, 24.3 more than a year ago. The median price
rose 15.8 percent to $361,400.

The Midwest saw sales inch up 1.9
percent to an annual rate of 1,570,000 in January, a 22.7 percent jump from a
year prior. The median price grew 14.7 percent to $227,800.

The month-over-month increase in
sales in the South was 3.2 percent to an annual rate of 2,940,000, up 25.1
percent on an annual basis. The median price increased 14.6 percent to $263,300.

Existing-home sales in the West fell
4.4 percent from December but increased 21.3 percent from a year earlier to a rate
of 1,310,000 units. The median price was $461,800, up 16.1 percent from January
2020.

Source: mortgagenewsdaily.com

Weiss Analytics launches AVM powered by geospatial AI

From thousands of feet above your home, a high-tech camera snaps pictures of your roof, the mess of debris in your yard, and that pool you hate cleaning. Pictures like these could cost – or save – you thousands of dollars when deals are about to close. It could also have big implications for appraisers, who are already nervous about the continued rise of automated valuation models.

With ValPro+, Cape Analytics and Weiss Analytics have created what they say is the first automated home valuation engine that uses geospatial imagery and artificial intelligence to integrate current home conditions – like a damaged roof or a pool – into valuations.

Cape Analytics’ AI system instantly extracts property condition from images, which is then run through Weiss’ valuation model, Raj Dosaj, Cape Analytics’ head of real estate, explained. The systems have condition data sets for 110 million buildings across the United States. Previously, an appraiser would need to make an in-person visit to note the condition of the property, Dosaj said.

The rise of AVMs over the years has waxed and waned based on the perceived risk of the product, but it’s caught fire over the last year with the COVID-19 pandemic and new initiatives by the Federal Housing Finance Agency. Condition data is the latest frontier, according to Cape and Weiss.

“One of the key missing ingredients which this now answers is, how do you know what the condition of the house is?” said Allan Weiss, head of Weiss Analytics and co-creator of the Case-Schiller Index. “Because most of the data is very out of date that you can get in computerized form – you can get assessor data, which could be a year more out of date, and does not tend to focus on condition of the house.”


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Cape Analytics and Weiss Analytics are primarily targeting real estate investors, real estate brokers and mortgage originators with the ValPro+ tool to help them identify undervalued purchase opportunities. The two companies claim their ValPro+ engine has shown a 7.7% improvement in PPE-10 predictions of on-market valuations. The model can also flag homes in distressed condition and will accurately predict they will sell at a 10% off-market discount, the companies said.

But the companies are especially interested in hooking loan traders, refinance and HELOC loan originators and iBuyers, who often want to bid on a home that isn’t on the market and doesn’t have an asking price. Overall, off-market houses sell for about 2.5% below their on-market peers, but Cape and Weiss say investors using their product achieved a median discount of 10% compared to their on-market peers.

Weiss wasn’t shy in saying the product represents a direct threat to appraisers and broker price opinions (BPOs), whom he says are both slow and expensive.

“There’s been a decades-long process by which the traditional appraisal has been, in some cases, augmented, in many cases, replaced by technology,” said Weiss. “And that’s been something that’s been going on since at least around the mid 1990s. Because of the cost of appraisals, and because of the delay that appraisals create and various transactions, they’re just not practical for all the ways that investors, lenders, and homeowners require in order to go about transacting the way they want to.”

Cape Analytics and Weiss Analytics said they spent about a year integrating the image data into the the home valuation models. Their model allows investors to get lists of all houses discounted below market value due to condition factors. The system also automatically scans real-time MLS listings and screens houses so bids are priced appropriately to maintain credibility with local agents.

“We now know if we have a house in South Florida, that has a pool and would otherwise be worth $600,000 versus a house that doesn’t have a pool, what that means in terms of the value of the house,” Weiss told HousingWire. “We didn’t know things like that before. We didn’t know what it meant if there was a lot of yard debris, or there was a lot of vegetation overgrowth or what it meant if the condition of the roof was very good versus very bad in a given market.”

Source: housingwire.com

What is Dash Cryptocurrency?

Cryptocurrency can sometimes be confusing to beginners because there are so many different cryptocurrency types with different purposes. Some cryptocurrencies are designed to act as fast digital cash, others as private digital cash, some as interest-bearing assets, others as cross-currency exchanges, and more. (Beginners can check out our comprehensive crypto guide for more details.)

Bitcoin is widely known as the premier cryptocurrency in large part because it was the first, yet altcoins such as Dash take existing intuitive technology and make other improvements upon it separately. Some of Bitcoin’s biggest flaws are precisely Dash’s strengths—including transaction speeds, fees, and privacy.

What is Dash?

Bitcoin fork, a split in the Bitcoin blockchain initiated by a group of Bitcoin miners with different views on certain network rules. Darkcoin was originally designed to uncompromisingly ensure user privacy and anonymity, as described in its 2014 whitepaper .

However, the next year the project was redesigned with other features in mind and rebranded as “Dash,” a mash-up of the phrase “digital cash.” As the name implies, the Dash coin is intended as a medium of exchange and has since shifted its primary focus to faster and less expensive transactions while maintaining its strong encryption properties. Since the 2015 rebranding, Dash has grown to become a popular altcoin for investors buying crypto and consistently ranks among the top 25 cryptocurrencies by market cap.

How Does Dash Work?

Similar to Ethereum’s ambitions, Dash uses a modification of the Proof of Stake algorithm known as X11. Proof of Stake is an alternative consensus mechanism to Bitcoin’s Proof of Work that replaces energy-intensive cryptocurrency miners with validators that verify transactions based on how many tokens they hold and stake on the network. In addition to confirming blocks, they also provide payment and privacy services on the network.

This model is viewed as less risky because it makes a potential network attack less rewarding than compensation for validating transactions which secure the network. Dash validators, or “Masternodes,” are full nodes that hold a minimum stake (or bond of collateral) of 1,000 DASH coins that perform network services and earn a return on their staked investment. Masternode services include private transactions (PrivateSend), Instant transactions (InstantSend), and the network’s governance and treasury systems. Dash’s model also addresses transaction scalability issues by reducing the amount of nodes required to approve a transaction to a manageable number.

Dash maintains a harmonious self-funding governance model by splitting block rewards between three critical stakeholders: Masternodes (45%), Miners (45%), and Treasury (10%). The first two are rewarded the bulk of block rewards for providing essential services and voting on development directions for the network, while the remaining 10% accrues to the Treasury to actually finance the voted-on future project developments.

What is Dash Used For?

Dash is intended to be used for daily transactions between peers. While Dash’s use is scattered, it is more concentrated in a few economically-distressed countries that are experimenting with cryptocurrencies.

Following the hyperinflation of the Venezuelan Bolivar, the South American country’s government passed an order instructing state-run agencies to accept any cryptocurrency for services. Dash has gained early momentum in the country after a series of popular conferences and educational efforts were made introducing crypto to the community as a replacement for devalued and unreliable local currency. Since then, acceptance of Dash in Venezuela has grown as thousands of merchants in the country, including Burger King, have enabled payments using Dash among other cryptos.

Dash adoption and use has spread in Latin America, also spurring bouts of growth in Brazil and interest from nearby Cabimas and Mexico, other countries with distressed economies and weak currencies. This comes as a result of local advocacy programs and merchant point-of-sale terminals integrating with Dash.

Is Dash Better than Bitcoin?

Some people prefer Dash for its fast speed, lower fees, and increased privacy. These properties give Dash technical advantages over Bitcoin’s current abilities as a medium of exchange.

Faster Speeds

One of the drawbacks to using a layer-one cryptocurrency network is that some network efficiency is sacrificed for decentralization. Many cryptocurrencies, like Bitcoin, still operate on the project’s original iteration which is designed for functionality now and scalability later. This affects the network’s speed, particularly the rate at which funds are transferred, confirmed, and received in recipients’ accounts. Bitcoin is the model for slow transaction times, sometimes taking hours for a transaction to be confirmed, especially during market congestion.

With Dash, most transactions are confirmed in seconds. As the name implies, Dash coins are meant to be used as a medium of exchange. Dash’s average block time is roughly two and a half minutes per transaction; nearly four times faster transactions than Bitcoin’s 10-minute block time. Dash users are free to send and receive transactions normally for a miniscule fee. Alternatively, Dash also instituted the InstantSend feature which allows masternodes to confirm transactions nearly instantly for an extra fee. With nearly instant transaction confirmations, Dash is among the fastest and most private cryptocurrency mediums of exchange, surpassing that of Bitcoin, Ethereum, Litecoin, and XRP.

There are other cryptocurrencies that also provide fast transaction confirmations like Dash, however only some of them lock down transactions after they are completed, thus disabling the same funds from being spent on two separate transactions. Networks that do not lock down confirmed transactions are technically vulnerable to a compromising phenomenon known as double spending. Double spending is a potential technical flaw in a digital currency network where the same single asset is spent more than once. InstantSend also solves the double spending issue by holding the amount of funds sent without having to wait for a block confirmation to officially confirm the transaction.

Lower Fees

In addition to faster block times, Dash transactions typically cost less than $0.01. Dash’s faster speeds and lower fees make it a far more efficient medium of exchange than cryptocurrencies like Bitcoin.

Privacy

One of the concerns with Bitcoin, according to privacy advocates, is its public ledger. All transactions and details on the Bitcoin blockchain such as sender, recipient, date, amount, and even previous Bitcoin addresses and transactions associated with each Bitcoin are publicly viewable by anyone and cannot be censored, modified, or deleted. While this creates a system of pseudo-honesty and transparency, users seeking privacy must look elsewhere.

Dash offers users a service known as “PrivateSend,” a layer of privacy and anonymity provided by Masternodes through a process known as automatic coinjoin mixing. Coinjoin mixing is a trustless privacy method that repackages multiple payments from multiple senders into a single transaction to obfuscate transaction details from outside parties.

Anonymizing Dash cryptocurrency transactions prevents them from being traced and users’ identities from being revealed, thus potentially providing an opportunity for users seeking to avoid paying taxes on crypto. Dash’s anonymizing privacy features are revered by users but scrutinized by regulators and centralized exchanges who must abide by strict cryptocurrency regulations.

Dash Crypto: Pros and Cons

When it comes to crypto, pros and cons can vary depending on what a user intends to do with the currency—whether interest-bearing assets or fast digital cash, for example.

Beyond the specific advantages Dash has over Bitcoin (outlined above), this cryptocurrency has pros and cons any potential user should be aware of.

Pros

•  Widely Accessible: Dash is available to buy or sell on most crypto exchanges in most countries with few exceptions. Being that Dash is a relatively larger-cap token, it is fairly ubiquitous—except for exchanges unfriendly to privacy-centric cryptocurrencies.
•  Efficient medium of exchange: Faster transaction speeds and cheaper fees make Dash a top-performing medium of exchange, especially when compared to wait times and fees experienced by users of marquee tokens like Bitcoin and Ethereum.
•  Private and anonymous: Darkcoin’s original privacy properties were maintained in Dash, autonomously obscuring transactions’ origins, senders, and other details by grouping transactions together to morph into a single new transaction with no similarities to the original senders.
•  Validators can stake DASH coins to earn passive block rewards: Validators, or nodes, attribute personally-owned DASH as part of the consensus mechanism to receive monetary compensation for providing crucial services to process transactions and secure the network.

Cons

•  Not as ubiquitous as mega-cap cryptos (e.g. Bitcoin, Ethereum): Whereas crypto is synonymous with Bitcoin and sometimes Ethereum, Dash doesn’t have the same caliber network effect and is not widely known by the average investor.
•  Masternodes are slightly more centralized than other cryptos: Owning and running a masternode requires staking 1,000 DASH, and there are currently more than 5,000 masternodes. However, it’s difficult to determine whether some people have multiple masternodes and thus centrally control a larger percentage of the network.
•  No academic or institution backing: Dash is entirely self-funded through its technical design and does not rely on nor receive support from prominent academics or institutions for advisement, technical support, or funding.
•  Strong competition (Bitcoin Cash, Litecoin, Monero, etc.): Currencies have been battling for the title of reserve currency for hundreds of years. The medium of exchange use case is saturated to say the least, and of the thousands of cryptocurrencies (and growing), Dash has to compete with other functional and efficient use cases with similar properties such as Bitcoin Cash, Litecoin, and others.

How Do You Invest in Dash?

6 things to know before investing in crypto.

The Takeaway

As cryptocurrency evolves, new projects are conceived and even spawn off of other projects in what’s known as a “fork.” One such fork is Dash, a 2015 offshoot of Bitcoin with many similarities but distinct improvements in critical areas that define money’s essence. Bitcoin historically dominates the crypto market share despite technical limitations, whereas projects like Dash have a smaller network effect and thus market cap despite superior real-world utility.

Regardless of your crypto project of choice, the vast number of cryptocurrency projects and tokens are showing a rapidly growing and maturing space that has already caused ripples in the investing world. As cryptocurrencies like Dash continue to become more mainstream, investors may look to capitalize on this new industry’s growth and adoption.

For investors looking to dip their toes in cryptocurrency investing without the responsibility of self-custodying their funds, SoFi Invest® helps beginners get started and learn along the way. Members can invest in Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic.

Find out how to invest in cryptocurrency with SoFi Invest.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Digital Assets—The Digital Assets platform is owned by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, http://www.sofi.com/legal.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.

SOIN21015

Source: sofi.com

U.S. Housing Market Will Withstand a Wave of Foreclosures When Forbearance Ends

December 7, 2020 December 22, 2020 by Daryl Fairweather

Updated on December 22nd, 2020

Investors and first-time homebuyers will quickly buy up an impending wave of foreclosures from homeowners saddled with debt during the pandemic 

More than 3.3. million of U.S. homeowners will be on the hook for delinquent payments when mortgage forbearance ends. While some of those homeowners who are overleveraged or unaware of their options will contribute to a wave of foreclosures, most will be able to work with their lenders to either refinance their mortgage or sell to cash in on rising home values. American homeowners have gained $2 trillion dollars in home equity since the beginning of the pandemic alone, thanks to double-digit price growth driven by soaring homebuyer demand as the supply of homes for sale fell to historic lows. And an impending wave of foreclosed homes will only make a small dent in the inventory drought. First-time homebuyers and investors will likely quickly buy up any foreclosed homes, leaving the larger housing market unimpacted. While this is good news for the housing market and economy, it highlights a growing inequality between Americans who have suffered deeply during the pandemic recession and Americans who have been largely unaffected or have even become wealthier.

At the peak of the foreclosure crisis in 2010, the national average loan-to-value ratio was 94%,  meaning the average homeowner owed her lender nearly as much (94%) as the value of her home. As a result, many financially stressed homeowners couldn’t even afford to sell their home after paying agent fees of 6% and closing costs, so they often ended up in foreclosure. Currently the average loan-to-value ratio, among metros that report data, is 70%, meaning that the average homeowner has built 10% additional equity beyond an initial 20% down payment. 

Currently the metro with the highest loan-to-value ratio is Virginia Beach at 86.2%, but that is likely due to the high volume of low-downpayment mortgages for local veterans. But because military employment has been unaffected by the pandemic, just 0.3%  of homeowners say they are somewhat likely or very likely to be in foreclosure in the next two months, according to the Census Household Pulse Survey (see table below for data on each metro). The metro with the next highest loan-to-value is St. Louis at 78.1%, which is low enough that most homeowners could refinance their mortgage or sell to pay off delinquent mortgage payments. This explains why only 1.8% of St. Louis feel they are somewhat likely or very likely to face foreclosure, even as 9.2% of homeowners are not current on their mortgage payments. 

Las Vegas has the highest unemployment rate at 14.8%, but Las Vegas homeowners have plenty of equity with an average loan-to-value ratio of 67.9%. As a result, many Las Vegas homeowners are tapping their home equity and downsizing. New listings are up 6.9% from last year, but for every seller there are buyers moving in, which has kept the housing market strong — home sales are up 9.3% from last year. 

“I’ve worked with some people who are downsizing, finding something that fits their new budget,” said Redfin Las Vegas Agent Marco Di Pasqualucci. “Many have lost a job and aren’t sure if or when it’s going to come back. The common plan for these people is to take the equity out of their current home and rent something very affordable for a while. For some people, it’s a move for survival.”

Homeowners in forbearance have options to avoid foreclosure

Atlanta has the highest share of homeowners reporting they feel they are very or somewhat likely to face foreclosure in the next two months at 3.8%, and the fourth highest share of homeowners behind on mortgage payments at 13.5%.

“There was a misunderstanding in Atlanta for what the different options are for people in forbearance,” said Atlanta Redfin agent Ronisha Carson. “People didn’t know they could refinance, do a prorated monthly payment or tack it on to the end of their loan.” 

“In my experience selling foreclosed properties, some people don’t take advantage of forbearance because they aren’t educated on what it entails,” said Redfin agent Gina Sapnar. “There are people who are in forbearance who don’t understand how repayment works. For some people payments are tacked on to the end of the loan, but for others it may be a large payment due immediately at the end of forbearance as a lump sum, which could be very tough for people to repay. Some homeowners are underwater because they took on more debt than they could handle. I know of a restaurant owner who took equity out of his home to pay his workers during the pandemic. There are people suffering who have depleted their entire life savings, are drowning in debt and they aren’t paying their mortgages. But even those people have options. The lenders are really trying to work with occupants and educate them on how to avoid the scarlet letter of a foreclosure.”

Fannie Mae and Freddie Mac will allow borrowers in forbearance to defer repayment until the time the home is sold or refinanced. With record-low mortgage rates, homeowners behind on payments could theoretically refinance their mortgage debt into monthly payments lower than before the pandemic began. And if a borrower is in severe debt she may still be able to do a short sale or take advantage of cash-for-keys, where borrowers get a one-time payment to vacate their home.

Homebuyers and investors will snatch up foreclosed homes because of the shortage of homes for sale 

Even if there is a wave of foreclosures, those foreclosed properties will have little impact on the overall housing market because there is a shortage of homes for sale — the total number of homes for sale is at a record low.

“There are investors just waiting to buy distressed properties,” continued Sapnar. “I have one investor constantly reaching out, they are even looking for off-market homes because once a distressed home hits the market it gets multiple offers.”

And it’s not just investors who could benefit from a surge in foreclosures. Fannie Mae’s First Look program renovates distressed homes and offers them first to buyers who will occupy the home.

“The First Look program is great for first-time homebuyers who don’t want to compete with investors,” continued Sapnar.

Percent of Homeowners Deferring Mortgage Payments by Metro

Metro Average Loan to Value (LTV) Average Home Value Appreciation (Annualized) New Listings YoY Growth Median Sale Price YoY Growth Unemployment Rate Pct Homeowners Very or Somewhat Likely to Foreclose in the next two months Pct Homeowners with Household Income Loss Pct Homeowners Not Current on Mortgage Payments
Virginia Beach, VA 86.2% 17.3% 23.2% 12.8% 7.1% 0.3% 32.6% 6.4%
St. Louis, MO 78.1% 7.0% -28.9% 14.1% 5.5% 1.8% 36.2% 9.2%
Baltimore, MD 77.7% 18.8% 22.0% 14.3% 6.5% 0.6% 33.8% 10.5%
Pittsburgh, PA 76.8% 13.2% -0.8% 17.6% 7.8% 0.6% 41.3% 3.9%
Oklahoma City, OK 75.9% 9.7% 0.6% 18.1% 4.9% 1.3% 38.8% 7.5%
Columbus, OH 75.8% 10.2% 4.9% 16.3% 7.5% 1.5% 41.8% 8.1%
Cincinnati, OH 74.8% 10.4% 17.3% 19.2% 6.9% 1.5% 41.8% 8.1%
Washington, DC 74.8% 17.6% 35.7% 11.6% 6.7% 0.4% 33.1% 9.5%
Cleveland, OH 74.4% 11.7% 5.9% 12.7% 9.9% 1.5% 41.8% 8.1%
Minneapolis, MN 74.3% 12.5% 18.2% 12.5% 5.9% 0.4% 38.0% 6.6%
Denver, CO 73.6% 14.4% 19.7% 12.2% 6.5% 0.8% 41.6% 6.0%
Chicago, IL 73.1% 17.1% 14.4% 14.4% 10.5% 3.0% 40.6% 13.6%
Portland, OR 72.9% 11.9% 29.8% 10.6% 7.7% 0.7% 38.0% 4.2%
Nashville, TN 72.3% 12.2% -7.7% 12.0% 5.9% 1.3% 43.8% 12.5%
Warren, MI 72.2% 15.0% 0.6% 12.4% 9.8% 0.7% 47.0% 8.4%
Charlotte, NC 71.8% 13.3% -21.0% 14.2% 7.0% 0.8% 34.8% 8.7%
Sacramento, CA 71.8% 13.5% 32.8% 17.1% 8.9% 1.7% 45.9% 9.6%
Philadelphia, PA 71.3% 20.6% 14.4% 19.7% 7.9% 1.1% 46.4% 10.0%
Riverside, CA 71.3% 20.2% 10.7% 14.0% 10.4% 1.5% 50.0% 11.1%
San Diego, CA 71.3% 19.6% 15.5% 11.9% 9.0% 1.7% 45.9% 9.6%
Montgomery County, PA 70.9% 19.1% 22.2% 15.9% 7.9% 0.6% 41.3% 3.9%
Detroit, MI 70.5% 17.5% -5.4% 14.3% 9.8% 1.5% 52.1% 12.0%
Oakland, CA 70.1% 13.6% 41.4% 9.8% 8.6% 1.7% 45.9% 9.6%
Jacksonville, FL 69.6% 16.0% 0.9% 10.0% 5.1% 2.0% 46.1% 8.6%
Seattle, WA 69.6% 13.1% 37.8% 13.4% 7.4% 0.7% 39.9% 8.7%
Newark, NJ 69.2% 17.3% 25.6% 23.5% 9.5% 2.2% 45.0% 13.3%
Orlando, FL 68.1% 11.9% 0.5% 10.5% 9.8% 2.0% 46.1% 8.6%
Los Angeles, CA 68.0% 18.0% 25.1% 14.0% 13.6% 2.7% 49.2% 13.4%
Las Vegas, NV 67.9% 14.0% 6.9% 9.3% 14.8% 2.9% 51.0% 10.8%
Providence, RI 67.7% 18.7% 14.6% 15.5% 10.0% 2.5% 41.2% 14.8%
Atlanta, GA 67.3% 16.0% -1.2% 16.3% 6.7% 3.8% 37.5% 13.5%
Tampa, FL 66.5% 14.1% 6.6% 14.9% 6.1% 2.0% 46.1% 8.6%
New York, NY 66.2% 14.4% 40.6% 10.0% 9.5% 0.9% 45.9% 9.4%
Milwaukee, WI 65.8% 11.7% 13.6% 11.4% 6.0% 0.6% 34.1% 6.3%
Phoenix, AZ 64.3% 22.0% 10.8% 17.3% 6.3% 3.4% 40.2% 9.2%
San Jose, CA 64.2% 10.0% 48.6% 15.7% 7.1% 1.7% 45.9% 9.6%
Anaheim, CA 62.5% 17.6% 28.9% 12.0% 13.6% 1.7% 45.9% 9.6%
Fort Lauderdale, FL 61.1% 15.1% -2.5% 11.5% 10.1% 2.0% 46.1% 8.6%
Miami, FL 60.8% 13.5% -10.0% 12.9% 10.1% 2.3% 47.5% 15.4%
San Francisco, CA 56.6% 4.5% 40.5% 0.0% 8.6% 0.4% 40.3% 5.0%
West Palm Beach, FL 53.5% 14.1% -2.8% 19.3% 10.1% 2.0% 46.1% 8.6%
Boston, MA 52.6% 12.6% 17.2% 13.4% 9.2% 2.1% 42.5% 8.9%
Nassau County, NY 40.4% 16.3% 20.6% 15.2% 9.5% 0.6% 44.6% 7.9%
Austin, TX n/a n/a 12.6% 13.2% 6.4% 2.3% 40.6% 11.3%
Dallas, TX n/a n/a 0.4% 12.4% 7.5% 1.7% 44.7% 11.3%
Fort Worth, TX n/a n/a -4.5% 9.6% 7.5% 2.3% 40.6% 11.3%
Houston, TX n/a n/a 13.6% 10.9% 9.6% 1.3% 45.9% 8.8%
Indianapolis, IN n/a n/a 2.4% 15.8% 6.0% 2.9% 39.0% 10.9%
Kansas City, MO n/a n/a -37.4% 15.2% 4.9% 1.8% 36.2% 9.2%
San Antonio, TX n/a n/a -5.8% 11.6% 7.8% 2.3% 40.6% 11.3%

Sources: “Share Homeowners with Deferred Mortgage Payments” and “Share Homeowners with Household Income Loss” is from the 10/12/2020 Census Household Pulse survey on homeowners with a mortgage, “Unemployment Rate” is from the September  BLS report, “Average Loan to Value” is from 2020 county records, “Average Home Value Appreciation (Annualized)” is calculated from the Redfin estimate and public records of sales in 2020, “Home Price Volatility (Annual)” is from FHFA HPI through Q2 of 2020 and is the standard deviation of annual appreciation, “New Listings YoY Growth” and “Median Sale Price YoY Growth” is from MLS and county records as of October 2020.

Source: redfin.com