The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) have settled on new energy-efficiency standards for the construction of new single-family and multifamily homes. This fulfills a requirement laid out in a 2007 law that directs the departments to adopt the most recently published energy-efficiency standards following reviews by the U.S. Department of Energy (DOE) and HUD itself.
The “Adoption of Energy Efficiency Standards for New Construction of HUD- and USDA-Financed Housing” was published on Friday in the Federal Register, and will go into effect on May 28.
The Energy Independence and Security Act of 2007, signed into law by President George W. Bush that December, featured a statutory requirement directing HUD and USDA to “jointly adopt the most recently published energy efficiency standards for single family and multifamily homes, subject to an energy efficiency determination by the [DOE] and a cost-benefit housing ‘affordability and availability’ test by HUD,” according to an announcement from the Federal Housing Administration (FHA).
A preliminary determination was published by HUD and USDA in May 2023, based on energy-efficiency standards developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the International Energy Conservation Code (IECC).
These standards will “lower energy costs for owners of newly-constructed homes, benefitting homeowners, FHA, and communities,” the announcement stated. “HUD expects this to be particularly beneficial for low-income and rural homeowners who typically face disproportionately high energy cost burdens.”
The implementation timeline varies based on the type and location of new construction. For FHA-sponsored single-family homes, new construction must comply with the 2021 IECC if building permit applications are submitted 18 months or later following the May 28 effective date.
For new construction in persistent rural poverty areas, as defined by the USDA Economic Research Service, compliance with the 2021 IECC will be required 24 months after the May 28 effective date. Within the next month, USDA will “publish a map of rural areas covered by this extension no later than 30 days after the effective date of this notice.”
FHA will also publish a mortgagee letter with additional implementation details for its single-family programs sometime prior to the May 28 effective date.
This announcement in the latest in a series of actions HUD has announced in pursuit of greater climate resiliency. On Thursday, HUD detailed a slew of actions and initiatives it has undertaken to bolster climate resiliency while supporting green housing initiatives that stem from Inflation Reduction Act funding. It also recently announced plans to combat the effects of extreme heat.
FaZe Clan co-owner and uber-successful Youtuber Brian Rafat Awadis, better known as FaZe Rug, is moving up in the world. Or rather, moving out.
Known for his engaging content that spans from pranks to heartfelt vlogs, the YouTube phenomenon — who has a massive following of over 25 million subscribers — set up residence in a ritzy $4.4 million mansion located in Poway, California, a suburb of San Diego.
The purchase came after a stressful time that saw the Youtuber move back in with his parents due to the pressures of his growing fame, seeking comfort during a challenging time.
Now in a much better mental space, the successful content creator is enjoying life in his lavish new digs, often sharing clips filmed inside his two-story mansion. He’s even given his fans a full tour of the sprawling abode, and his followers had nothing but words of support and admiration.
And if one of his hit videos got you wondering where FaZe Rug lives, we have the scoop on the YouTube creator’s impressive Cali home.
Purchased in 2022 for $4.4M
In January 2022, FaZe Rug shelled out $4.4 million for a luxurious estate in the private gated community of The Heritage in Poway, one of the most popular suburbs around San Diego.
Sitting on a 1.04-acre lot, the 6,714-square-foot home is not the only structure on the property. There’s also an attached guest house, a gazebo, and a private sports court, with a total of 10 parking spaces.
The purchase marked a significant upgrade from his previous living arrangements, signaling a fresh start for the content creator. Prior to this, Rug had opened up about the decision to move back in with his parents for a while due to the pressures of his growing fame.
Property specs & amenities
FaZe Rug’s mansion spans a total of 6,714 square feet, featuring seven bedrooms, six full bathrooms, and one half bathroom.
The property, built in 2017, boasts modern amenities and sophisticated architecture that includes Mediterranean and Spanish influences. Highlights of the home include two grand staircases, a fully equipped open-concept kitchen, and a family room that seamlessly transitions into a stunning outdoor living space.
Beyond the basics: Plenty of unique features
What sets FaZe Rug’s house apart are its many playful, unique features, fully displayed during the video tour the Youtuber recorded for his fans.
A wall made entirely of LEGO bricks not only dazzles but hides miniature-themed rooms, providing quirky surprises that echo Rug’s creative and fun-loving personality.
These rooms feature everything from a LEGO spaceship to a tiny treasure trove, making them a hit not just in person but also as fun spots during his video tours.
It has a grand double staircase
Entering Rug’s mansion, you’re greeted by a grand double staircase reminiscent of a scene straight out of “Dynasty.”
This opulent entryway, complete with a sparkling chandelier and modern, airy aesthetics, sets the stage for the rest of the home’s lavish elements. It’s this kind of dramatic flair that gives the house its soap opera-worthy feel — luxurious, inviting, and just a tad over the top.
“The best backyard in the entire world”
FaZe Rug’s mansion is not just impressive on the inside; the outdoor amenities turn his backyard into a true entertainment paradise, making it perfect for both relaxation and hosting epic gatherings — not to mention shooting wildly creative videos.
The centerpiece is a large swimming pool with an integrated spa, perfect for cooling off or enjoying a soak under the California sun. Surrounding this is a luxurious patio area equipped with comfortable seating and an outdoor fireplace, and there’s also a private sports court and a mini golf course complete with a sandpit.
The backyard — which FaZe calls “the best backyard in the entire world — also comes with a full-scale outdoor kitchen, a pizza oven, and multiple fire pits. With breathtaking views of the surrounding mountains as a backdrop, the backyard offers not just fun and games but also a peaceful escape.
Fans were swept away by FaZe Rug’s house
When FaZe Rug shared his new home with his YouTube audience, the reactions were overwhelmingly positive.
Fans praised not only the house’s beauty and FaZe Rug’s taste but also the inspirational aspect of his success. Comments ranged from excitement about future content filmed in the home to personal messages of congratulations, emphasizing how Rug’s journey has motivated others to pursue their dreams.
“Congrats Rug, you deserve this dream house can’t wait to see your future vids at this house you bloody legend love your vids you deserve this house more than anything,” one fan shared.
“This is what happens when you’re humble and filled with gratitude! Stay you always Rug!” another chimed in.
See also: Inside JoJo Siwa’s $3.5 Million Mediterranean-Style Mansion
Netizens who’ve been following FaZe’s content since he first started out have expressed joy for the content creator’s success: “I have literally watched you grow up thru YouTube, this is nuts! Your home is so beautiful!!!! Congratulations Rug, for anyone dreaming big, you will do it. If you’re thinking about it, Just do it! Don’t worry about what anyone thinks, just worry about you and the ones who support you Let’s get it”
The new house’s resemblance to his former digs didn’t go unnoticed
Other fans were quick to point out the house’s resemblance with FaZe Rug’s parents’ house:
“Can we just talk about how the layout of this house is so similar to his parents house?!!! Maybe that’s what makes it feel so homey. Congrats rug it’s well deserved” one fan noted, with another echoing his observation: “It feels homie because the entrance looks like your parents’ house haha. Congrats,” @therealwaseem said.
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A post-occupancy agreement, also known as a post-closing possession agreement, allows the seller to remain in the property they just sold to the buyer for a set period after closing. This can be a win-win for both parties in some situations, but it comes with major risks for the buyers. I have personally bought many houses with post-occupancy agreements and some worked out great while others ended in a costly eviction. A post-occupancy agreement may be needed in some cases but as a regular home buyer, I would be very careful ever accepting one.
Table of Contents
What is a post-occupancy agreement?
In a typical home sale transaction, the seller and buyer agree to a closing date and time, and possession of the home transfers when that closing takes place. The sellers bring the keys and hand them to the buyers if they are both at closing. Or the buyers can pick up the keys or their agent can give them the keys if both parties are not at the closing table (my preference).
In some cases, a seller may want extra time to move out after closing. They may be waiting for their new house to close, or for a house to be built, or they might just want more time to move. This sounds like a reasonable request for the seller but it can come with major risks for the buyer. This is why I try to avoid post-occupancy agreements if possible.
The video below was a nightmare after a post-occupancy agreement went bad:
What are the risks of a post-occupancy agreement?
Many people have heard the stories on the news of a seller who will not move out of their home are they sell. Almost all of these situations come from post-occupancy agreements. During a typical sale, the buyer does a walk-through of the home to make sure it is clean, all the seller’s stuff is moved out, and the property is in the same condition as when they put a contract on it (unless the contract says otherwise). If there is anything wrong, the buyer can delay or even not buy the home.
When the seller is still living in the home and the buyer closes on it (completes the purchase), they cannot make sure it is clean, all the seller’s stuff is gone, or the seller is out. Some sellers want the money that is in their home but want to stay! If the seller does not leave after a post-occupancy agreement, the buyer cannot simply kick them out, they must go to court and evict them.
An eviction can take months or even years in some states like New York.
Why do I agree to post-occupancy agreements?
I am a real estate investor who works hard to get the best deals I can. I buy a lot of distressed properties that need work and many sellers have unique situations. I also buy from many wholesalers who make deals with sellers that I must agree to. In a perfect world, I would never do a post-occupancy agreement but in some cases, it is a take-it-or-leave-it situation and the deal is good enough for me to take the risk.
I would estimate I have some kind of problem with 30 percent of the post-occupancy agreements I do. For me, it is not as big of a problem as it can be for inexperienced homeowners or people who need to move into the home. I also have a YouTube channel that helps me recoup some of my losses with the crazy situations that occur. I also know how to handle evictions, squatters, and other situations where someone not as experienced could be completely lost on what to do.
How should a post-occupancy agreement be structured
There are also risks with how post-occupancy agreements are structured. Some people just agree to let the seller stay and maybe pay a little rent. The problem with this is there is no motivation for them to move out. When we do a post-occupancy agreement we try to make it painful if the seller does not hold up to their obligations and move.
The post-occupancy agreement should always be in writing and money should be held back in escrow from the seller proceeds. I like to hold back at least $10,000 on houses below $400k and if they do not move by a certain date, I get that $10,000 as the buyer. That may seem like a lot but an eviction and a few months of house payments can eat through that very fast. If you are buying a more expensive home, I would hold back much more.
I have seen many agreements that can be wishy-washy and not work out for either party. Some will charge a per diem if the seller does not move like $200 a day. It can be confusing when they are officially out, and when the dates officially start and proving when they are out. I have seen some people create a lease with rent charged and a deposit. You have to be very careful with this as many states have laws on how much the deposit can be compared to rent, how a deposit is paid back or kept, and the rights of the tenant after the lease is started. It is usually easier to evict a seller who does not move than a tenant with a lease.
Another crazy situation:
Should you agree to a post-occupancy agreement?
If you are a regular home buyer looking for a place to move into, be very careful agreeing to a post-occupancy agreement. I would make sure you love that house and have no other options. If you do agree, make sure there is a large enough penalty to make it worthwhile to you if the seller does not move. You also need to make sure your insurance is set up correctly, there is an agreement for who pays for utilities and there is recourse if the house is damaged during the extra time the seller lives there. It also helps if you have a YouTube channel where you can post crazy stories if something goes bad.
Conclusion
I am okay doing post-occupancy agreements if everything is set up correctly and that is my only option. But even as an experienced investor, I try to avoid them if at all possible. If you happen to live in a state with long eviction timelines I would be really careful agreeing to any post-occupancy agreement.
Work doesn’t take a break when the cameras stop rolling.
Fresh off the heels of a hit new season of “Buying Beverly Hills“, the real estate power team at The Agency is bringing another showstopping property to the market, one with architectural pedigree, plenty of acreage, and a long history of celebrity owners — and guests.
Set in La Quinta, Calif., the estate once owned by game show legend Merv Griffin hit the market last week for a staggering $36 million, with The Agency’s Zac Goldsmith and Mauricio Umansky holding the listing.
This sprawling 39-acre property, nestled in the heart of California’s desert landscape, features a luxurious 5,409-square-foot main residence, a total of 13 bedrooms, 12 bathrooms, and several additional structures including guest pods (with vacation rental potential) and a gatehouse.
Renowned for its unique blend of Moroccan elegance and modern California style, the former Merv Griffin estate has been a sought-after party destination during the Coachella music festival, hosting celebrities like Post Malone, Katy Perry, and Jack Harlow.
And it boasts dazzling interiors inspired by Yves St. Laurent’s Marrakesh home. So let’s take a quick tour of this legendary celebrity home — before a buyer takes it off the market.
The estate’s grandeur
Spread across an extra generous 39 acres in the heart of La Quinta — a desert resort city in Riverside County, Calif. rightfully dubbed “the Gem of the Desert” — the property consists of seven different structures including a majestic 5,409-square-foot main residence.
Beyond its 13 bedrooms and 12 bathrooms, the former Merv Griffin estate has everything from a private lake to an orchard, equestrian facilities, and even comes with its own water supply.
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The main house
The main house alone is a sight to behold, flanked by four cozy 500-square-foot pods, a West Building, and a gatehouse, all enveloped in lush landscapes against a mountainous backdrop.
Moroccan-inspired architecture
The estate’s architecture is a love letter to Moroccan elegance, seamlessly fused with modern Californian flair. Its grandeur is matched by its design, which includes intricate chandeliers, hand-placed mosaic tiles, and circular guesthouses that add a unique touch to its layout.
See also: Bing Crosby’s Estate in Rancho Mirage — That Once Welcomed JFK and Marilyn Monroe
Designer interiors
The interiors, masterfully put together by renowned Los Angeles interior designer Waldo Fernandez, speak volumes of luxury and style. Taking inspiration from Yves St. Laurent’s iconic Marrakesh home, each room tells a story, blending Moroccan charm with a modern twist that’s as enchanting as it is welcoming.
Guest pods oozing charm
While there’s plenty to love about this idyllic desert escape, it’s the four guest pods that won us over. The charming little guest houses — which have solid vacation rental potential and have been listed on popular rental platforms alongside other structures on the property — each contain one queen-sized bed, an ensuite bathrooms with shower/bathtub combos, a gas fireplace, TV, and private entrances.
Outdoor amenities include a lake and orchards
Stepping outside, a whole series of outdoor amenities add to the appeal of the property. And they go beyond your regular pool and spa, found in most celebrity homes.
The 39-acre estate has a roughly 2.5-acre man-made lake, Lake Merveilleux, home to thriving populations of koi, bass, and turtles, an equestrian facility, and lush orchards of oranges, grapefruits, lemons, limes, pomegranates, and guavas — along with the iconic King Fig Tree, one of the largest in the Coachella Valley.
Post-Griffin era
After Merv Griffin passed away in 2007, the estate found its new owner in real estate investor Mark Majerovic, who bought it for a cool $7 million in 2013. Majerovic turned the estate into a sought-after venue for high-end vacation rentals, events, and, of course, unforgettable parties.
The ultimate party destination
Under Majerovic’s ownership, the estate embraced its new identity as party central, opening its doors to thousands of party-goers looking to experience the glitz and glamour of Hollywood in the heart of the desert.
A celeb hotspot during Coachella
A-listers like Post Malone, Katy Perry, and Jack Harlow, among others, have stayed here during the Coachella music festival, with the house playing host to a veritable who’s who of Hollywood and continuing its legacy as a landmark of high-profile entertainment.
See also: Inside Rod Stewart’s house in Beverly Park — a ritzy $74 million manor with its own soccer field
Home to a TV legend
Built by the late TV host in the 1980s, the property then became Merv Griffin’s longtime home. Griffin, most famous for hosting his talk show, The Merv Griffin Show, was a multifaceted American entertainment mogul best known for his work as a television host and the creator of two of the most famous game shows in American television history: Jeopardy! and Wheel of Fortune.
Beyond his on-screen presence, Griffin was also a successful businessman, with ventures extending into real estate and the hotel industry. And he made quite the profit from his La Quinta property, as the estate was far larger during his ownership.
The estate once spanned 240 acres
Originally spanning over 240 acres, the estate was pared down when Griffin sold off 200 acres for the Griffin Ranch community. Yet, the essence of the estate’s grandeur remains, with its 39-acre heart still beating strong.
Now listed for $36 million
After over a decade of work on the property, real estate investor Mark Majerovic is bringing the former Merv Griffin estate to market. Enlisting the help of top industry pros Zac Goldsmith and Mauricio Umansky (The Agency), the iconic La Quinta property is now on the market for $36 million, offering a rare opportunity to own a piece of luxury and entertainment history in the heart of California’s desert landscape.
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The Community Home Lenders of America (CHLA) this week submitted a letter to the Federal Housing Administration (FHA) that urges the agency to “provide comparable down payment treatment for FHA borrowers, regardless of whether or not the seller is willing to pay the home buyer broker commission,” according to an announcement by the organization.
The letter is being sent in response to a series of real estate commission lawsuits and the recent $418 million settlement by the National Association of Realtors (NAR), with the association also agreeing to abolish the “Participation Rule” requiring sell-side agents to make an offer of compensation to buyer brokers.
CHLA contends that the settlement is “likely to result in a shifting from the home seller to the home buyer of the financial responsibility to pay buyer Realtor commissions,” and cites three key concerns in its letter addressed to FHA Commissioner Julia Gordon.
The first is a contention that large swaths of first-time homebuyers, who already face major challenges to enter the housing market, will not be able to meet higher down payment thresholds necessary to pay the buyer’s agent commission when using FHA financing.
“We believe that FHA borrowers should not have to make a much higher down payment merely because the seller is (arbitrarily) unwilling to fund the buyer agent commission,” the letter stated.
The CHLA also raises concerns about preexisting biases that may impact borrowers using FHA financing, a bias they contend has been demonstrated in the past.
“Existing (and well documented) home seller biases against buyers with FHA loans will be exacerbated, because of concerns over the buyer’s ability to make higher down payments,” the letter stated.
The third highlighted concern stems from the potential for inflated sales prices based on commission impacts, with CHLA contending that sellers “may use their leverage over the higher down payment levels to extract a higher sales price in exchange for agreeing to pay the buyer agent commission.”
The letter provides a series of prototype loan scenarios that could spin out of the settlement, illustrating CHLA’s arguments. Among the scenarios is one that CHLA hopes will become standard practice, in which “every home seller will be willing to pay the buyer agent commission, as a courtesy and without extracting a higher price in exchange for doing so,” the letter stated. “However, we do not have confidence that this will be the case.”
FHA borrowers are particularly vulnerable to sellers who may try to leverage a higher sales price, since “paying cash for their agent’s commission may not be economically feasible [for FHA buyers],” the letter read. “Having spent several years building up cash reserves for the down payment, the homebuyer will thus have to wait a few years longer to accumulate the cash necessary to fund this amount.”
Late last month, FHA addressed a common question the agency had received from interested stakeholders, who asked how the proposed settlement agreement will affect the treatment of seller-paid buyer broker fees in transactions that use FHA-insured mortgage financing.
“Under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a manner of state and local law or custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met,” the agency said in an informational notice distributed to professionals via email and published online.
Editor’s note: An FHA statement on a different matter was erroneously included in a previous version of this article.
With a slick Insta post captioned, “black is beautiful from my skin to even stars in a jet black sky 🖤,” Trippie Redd, the hit machine, showed off his Florida mansion, and it’s as unapologetically bold as his music.
We talking about Michael Lamar White IV here, known to the beat-droppin world as Trippie Redd. The American rapper, singer, and songwriter ain’t just making waves — nah, he’s creating tsunamis with his tracks.
Since bursting into the scene in 2017 with his debut mixtape A Love Letter to You, Trippie has been serving us double platinum-certified singles like a gourmet chef. His studio albums, like Life’s a Trip and Pegasus soared to the top of the Billboard 200.
His artistic alchemy ain’t just in the studio; it spills over into his abode, as majestic and enigmatic as his anthems, recently unveiled on the rapper’s Instagram feed.
Drenched in the slickest shade from roof to floor, Trippie’s all-black Florida mansion is flipping the script on our vanilla home dreams.
The moment fans peeped at the majestic mansion dipped in the deepest of blacks, the comments section lit up like the Fourth of July:
“That AC bill gonna be twerkin’ harder than us at a Trippie concert!” one commenter said, hinting at the sizzling Florida heat and the year-round sun hitting the black exteriors from sunrise to sunset.
And they aren’t wrong! Imagine the digits on that electric bill that, as one commenter pointed out “could straight up pass for a mortgage payment in Cali!”
Another chimes in with, “Gives very much Adams family, I see the vision 😂,” catching the eerie but swanky aura. Yet another fan found similarities with another famous movie house, “Bro is living in Gru’s house,” referencing the famous Despicable Me character and his black house.
Machine Gun Kelly himself, the rap game’s own rocker — who now goes simply by MGK — slid into the comments, hailing Trippie as the “real dark knight” — yeah, Batman’s got nothin’ on this superstar.
And MGK likely knows what he’s talking about, as he and Trippie have been spending lots of time together preparing for the release of their joint album Genre:Sadboy which came out on March 29. So don’t go stepping on Trippie Redd’s toes.
But let’s break it down for real — Trippie’s been serving us hits since 2017 with his debut mixtape and hasn’t slowed down, not even to take a breath. From A Love Letter to You to Life’s a Trip, and soaring through the Billboard charts with bangers like Dark Knight Dummo and Topanga, the man’s been on a relentless roll.
So, it only makes sense his house hits as hard as his tracks, right?
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The National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) are asking federal housing officials to confirm their treatment of interested party contributions (IPCs) to home purchase transactions.
In a letter addressed to Federal Housing Finance Agency (FHFA) director Sandra Thompson, Fannie Mae CEO Priscilla Almodovar, Freddie Mac CEO Michael DeVito, and Federal Housing Administration (FHA) commissioner Julia Gordon on Wednesday, the NAR and MBA wrote that it was important for the agencies and government-sponsored enterprises (GSEs) to review NAR’s commission lawsuit settlement agreement.
They asked the federal officials to “provide guidance to market participants that will ensure these new arrangements will continue to be supported by” FHA and GSE underwriting standards.
At the moment, IPCs “include concessions from the seller to the buyer for items that are traditionally paid by the buyer such as loan closing costs or rate buy-downs,” but as buyer agents are customarily paid by the listing agent, their fees are excluded from caps on the IPCs.
Under existing FHA policy, for example, if sellers continue to pay buyer-side real estate agent commissions and fees as a matter of state or local laws or customs — and if the commissions and fees are reasonable in amount — these payments would not be treated as interested party contributions provided all other requirements are met.
Under the terms of NAR’s settlement agreement, the practice of cooperative compensation is still allowed, but it cannot be offered through a Multiple Listing Service (MLS). Sellers or buyers can pay the buyer’s agent’s fees.
“Consequently, once the settlement is in effect, we believe that FHA and GSE policy should continue to exclude seller or listing agent payment of buyer agents’ commission from IPCs,” the NAR and MBA wrote. “Confirming your policies and maintaining this practice will sustain the current flow of mortgage capital to home buyers without change or delay.”
The two trade organizations urge federal officials to provides this certainty now, as they feel it is needed “to prevent disruptions that may cost homebuyers and sellers money and potentially their home purchases.”
NAR also sent a letter to the U.S. Department of Veteran Affairs (VA) on Wednesday, urging it to revise policies that prohibit veterans from paying buyer broker commissions.
The current VA rule states that a borrower using a VA loan cannot pay fees or commissions to a real estate agent unless determined “by the Under Secretary for Benefits as appropriate for inclusion … as proper local variances.”
NAR told John Bell, the executive director of VA’s Loan Guaranty Service, that the current policy would put VA buyers at a disadvantage, as they would potentially be forced to forego professional representation.
This has kept single-family permits from falling and kept construction workers employed to build and finish the backlog of single-family homes in the pipeline.
We obviously can’t say that the apartment marketplace and permits are back to recession lows.
So, for now, homebuilders can still keep construction workers employed in the single-family housing market as they slowly work through the backlog of homes.
From Census: New Home Sales: Sales of new single‐family houses in February 2024 were at a seasonally adjusted annual rate of 662,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
As we can see below, new home sales aren’t booming. We are still at the level seen in the 1990s, so no record-breaking demand is happening here like we saw in the run-up to 2005, which took new home sales up to 1.4 million. However, slow and steady wins the race.
For sale inventory and months’ supply: The seasonally‐adjusted estimate of new houses for sale at the end of February was 463,000. This represents a supply of 8.4 months at the current sales rate.
Here’s my model for understanding the builders:
When supply is 4.3 months and below, this is an excellent market for builders.
When supply is 4.4-6.4 months, this is just an OK market for builders. They will build as long as new home sales are growing.
When supply is over 6.5 months, the builders will pause construction.
This housing cycle is unique due to the historic backlog of homes the builders still have, so they will be mindful to ensure they can sell those homes once they’re completed units. If the original contract buyer can’t buy now, they must ensure they can sell that new home to a new buyer. As you can imagine with 8.4 months of supply, don’t expect the builders to be building single-family homes in a big fashion. They will go nice and slow because they’re not the March of Dimes; they’re here to make money.
One of the things I like to do is break down the monthly supply data into subcategories. People sometimes believe that the monthly supply of new homes means live, completed homes ready to buy, but that isn’t the case. In this report:
1.5 months of the supply are homes completed and ready for sale — about 85,000 homes.
4.9 months of the supply are homes that are still under construction — about 272,000 homes
1.9 months of the supply are homes that haven’t been started yet — about 106,000 homes
As shown below, we only have 85,000 completed homes ready for sale.
This report had some minor positive revisions to the previous month, so to keep things simple, as long as mortgage rates don’t head toward 8%, new home sales have the backdrop to grow sales if rates are in the 6% range because they can buy down rates to a sub-6% level to move homes. It gets much more expensive for them to do this at 8%.
In addition, we can see the price reductions ticking up each week. They aren’t at a scary level, people are buying homes, but it’s notably softer on pricing than last year at this time.
Mortgage rates seem to have finally settled down. The Fed met last week and we escaped dramatic changes in the markets. I was worried that we might come out of that meeting with a spike in mortgage rates but that didn’t materialize so we got lucky.
I like to point out that consumers are more sensitive to changes in mortgage rates than to the absolute levels, and since rates are now basically unchanged for the month, just easing down from the early March peak of 7.2%, sellers and buyers are tip-toeing back into the market.
As a result, we continue to see the signals that home sales volume will grow this year and prices will be mostly flat. The price appreciation signals last year were stronger than they are now.
Housing inventory
The available inventory of unsold homes continued to climb last week.
There are now 513,000 single family homes unsold on the market.
That’s 1.1% more than last week and 24% more than a year ago.
Last year, inventory was still declining in March. Now it’s on the rise.
Inventory will cross over 2020 levels by July. We’ll finish the year with over 600,000 homes on the market unless rates reverse and fall quickly.
Three takeaways from the inventory data now:
1. Growing inventory this year means more sales can happen. More sellers means more sales will happen.
2. Year-over-year inventory growth points to weaker demand and is one of the signals that home prices won’t climb this year. We currently have 24% more homes on the market than a year ago.
3. The longer mortgage rates stay higher, the more inventory will grow closer to the old levels. If you’re a homebuyer and you’re waiting for mortgage rates to fall before you swoop in for a deal, recognize that even slightly lower rates will spur demand more than supply so inventory will start falling and selection and competition will be worse.
New listings
Each week this spring we’ve been tracking the new listings volume. Last week we saw just over 60,000 new listings added to the inventory with another 17,000 new listings / immediate sales. In total, new listings data is 14% more than last year. April is looking good for home sales growth.
A year with 5.5 to 6 million home sales would need probably 80,000 new listings of single family homes right now. And we have 60,000, so there simply aren’t enough homes for sale to hit the big sales numbers, but the lid is being lifted. We can see obvious growth.
Pendings
As supply increases, the rate of sales is starting to pick up compared to a year ago. We can measure home sales in real time by tracking all the homes that moved to contract pending status this week. These “pendings” aren’t yet sold. They’ll spend 30 or 40 days in contract and the sales will mostly close in April or May.
There were 67,000 new contracts for single family homes this week compared to only 62,000 in the same week last year. There were another 15,000 condos into contract. This annualizes to only 4.3 million home sales, without any seasonal adjustment. So obviously the rate of sales is still pretty slow, which makes sense given the high mortgage rates. But the sales rate is climbing. The rate of new contracts is 8% more than last year but still 15% fewer than March of 2022, when buyers were desperately trying to get their deals done as rates were rising.
It looks like April will see decent home sales growth over 2023 but won’t overtake 2022 sales volumes until after July of this year. July of 2022 was when supply and demand fell precipitously. If mortgage rates stay stabilized in the upper 6s, these trends look durable to me.
Home prices
Last week, all the current price measures actually had pretty healthy gains. When we look at all the homes on the market, the median price is now $439,000. That is up a fraction this week and just a little bit higher than last year. Home prices climb this time of year before peaking in June as the best inventory, the most new listings, and the best demand is in the market. This week’s price increase is right in the normal range for the end of March.
The price of new listings took a healthy jump this week, up 1% to $424,900. That’s nearly 4% higher than a year ago. It’s also to be expected that the price of new listings each week in the spring lurch higher. There is no signal of big home price changes in this leading indicator, but it’s nice that this move is up.
Four years ago in March 2022, we were at the start of the pandemic lockdown and we could see the price of the new listings drop very quickly. That price decline only last for three weeks though. And the price of the new listings was one of the important factors that showed us very quickly how there would be no housing crash as a result of the crisis.
The price of the homes going into contract across the country are holding up but also not accelerating. The median price of the new contracts this week was $389,900 — that’s up a fraction from last week and 4% more than a year ago. Home prices peaked in May of 2022 and didn’t surpass that during last year’s spring season. I expect we’ll hit new all-time highs for home prices in the next month or so, assuming these current trends hold.
Price reductions
Most of the signals in the data last week were pretty optimistic. If there is one factor to temper than optimism, it’s the price reductions. The percent of homes on the market with price cuts from their original list price ticked up to 31.4% this week. There are more homes on the market now that have felt the need to reduce asking price than there were a year ago. Last year’s market strength in Q1 and Q2 led to 5% home-price growth for the full year of 2023. We have less strength in pricing now than we did last year.
While price reductions are in the “normal” range, they are higher now than any March in many years. There are more sellers now who have reduced the asking prices on their homes than in any March in over a decade. This last decade was a very strong one for homebuyer demand, so we haven’t seen a “normal” market in a very long time.
This is a signal to pay attention to. It’s hard to see how home prices will grow nationally this year under these circumstances. We can see buyers in the market, but there is no signal of them pushing home prices higher. Sellers who over-price are being forced to reduce.
In March 2022, there were still very few overall homes with price reductions, but that was changing rapidly. The slope started to climb very quickly, especially in April and May of that year. The number peaked in November 2022 with 43% of the homes on the market needing price cuts. That November peak corresponded to home sales price declines four to six months later. That’s why this data is worth watching so closely: These price cuts tell us about demand now, which turns into sales several months down the road.
We can see homebuyers are very sensitive to mortgage rate moves. We can see the price reductions data adjust exactly in the moments that mortgage rates jump higher.
On the heels of the $418 million settlement recently announced by the National Association of Realtors(NAR), mortgage trade group Community Home Lenders of America (CHLA) has called on the U.S. Department of Veteran Affairs (VA) to expedite regulatory change that would allow veterans and active-duty service members to fund buyer’s broker commissions when purchasing a home with a VA mortgage.
In a letter submitted Monday to John Bell, executive director of VA’s Loan Guaranty Service, the CHLA took issue with how the existing regulatory requirements regarding VA mortgages could put veterans and active-duty personnel at an “unfair disadvantage” when buying a home.
NAR’s settlement, which could go into effect as early as July, will eliminate the long-standing “Participation Rule” that requires listing agents to make an offer of cooperative compensation to buyers’ agents. Under the current system, the buyer agent’s commission is baked into the price paid for a home. If the settlement is finalized in its current form, buyers may have to pay upfront flat fees to agents.
The current VA rule states that a borrower using a VA loan cannot pay fees or commissions to a real estate agent unless determined “by the Under Secretary for Benefits as appropriate for inclusion . . . as proper local variances, under current VA regulations.“
“We ask that VA adopt an appropriate administrative remedy to ensure that those who have courageously served this country are not financially discriminated against in their homeownership journey,” the letter reads.
The VA has been monitoring various cases involving real estate broker commissions, including the NAR case, an official told HousingWire.
“VA is working closely with the Department of Justice to determine any potential implications for Veteran borrowers and is committed to ensuring that Veterans are neither disadvantaged in the homebuying process nor overcharged,” the official said in an e-mailed response.
The official added that the VA recognizes that potential changes may be forthcoming in the industry as a result of the proposed NAR settlement.
“VA is actively engaged with the Department of Justice to review the potential implications and evaluate how VA can best ensure that VA’s home loan program remains an attractive option for Veterans in the homebuying process.”
In December, the CHLA sent a letter to regulators and administrators at the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD), the Department of Agriculture (USDA) and the VA warning that homebuyers who must pay broker commissions out of pocket could face further affordability challenges.
“First-time homebuyers, families with lower incomes, veterans, and minority homebuyers could be adversely affected in their ability to purchase a home because of obstacles and complications related to the need to fund the buyer’s broker commission,” the CHLA said.