A full decade after U.S. housing markets were crushed by the so-called Great Recession, which led to a major crisis that saw thousands of homes foreclosed upon, things have improved drastically since then. Home values have risen to record highs in many markets, well above pre-recession levels, and foreclosures have fallen to historic lows.
Lawrence Yun, chief economist of the National Association of Realtors, said that lending and regulatory reforms have also helped to prevent a new housing bubble from forming, in spite of concerns from other experts.
“Over the past 10 years, prudent policy reforms and consumer protections have strengthened lending standards and eliminated loose credit, as evidenced by the higher-than-normal credit scores of those who are able to obtain a mortgage and near record-low defaults and foreclosures, which contributed to the last recession,” Yun said. “Today, even as mortgage rates begin to increase and home sales decline in some markets, the most significant challenges facing the housing market stem from insufficient inventory and accompanying unsustainable home price increases.”
But even though inventory continues to be a problem, Yun says that overheating markets are likely to slow down soon. He said that many of the fastest growing markets are seeing prices rise due to insufficient supply rather than strong buyer demand. He added that markets such as Denver and Seattle are already showing signs of slowing down, but said that any fall in home sales is probably going to be connected to supply shortages and price increases.
“The answer is to encourage builders to increase supply, and there is a good probability for solid home sales growth once the supply issue is addressed,” Yun insisted. “Additional inventory will also help contain rapid home price growth and open up the market to prospective home buyers who are consequently—and increasingly—being priced out. In the end, slower price growth is healthier price growth.”
According to Yun, new construction grew by 7.2 percent year-over-year in July, but that’s still not enough to address the inventory shortages. One problem is that builders are struggling with costs, he said.
““Rising material costs and labor shortages do not help builders to be excited about business,” Yun said. “But the lumber tariff is a pure, unforced policy error that raises costs and limits job creation and more home building.”
Yun also thinks existing home sales will fall by around 1 percent to 5.46 million this year. However, he says home value appreciation should remain strong in most markets, rising by about 5 percent on average. Overall home sales should also grow in 2019 due to an increase in supply and moderate price growth, Yun said. he forecasts that existing home sales will rise by 2 percent in 2019, and home prices will rise by 3.5 percent.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
In our latest real estate tech entrepreneur interview, we’re speaking with Jonas Bordo from Dwellsy.
Who are you and what do you do?
I’m Jonas Bordo and I’m the CEO and Co-Founder of Dwellsy, a free rental listing site where owners and property managers can get high quality leads for free and where renters can find a rental and make it home.
What problem does your product/service solve?
In recent years while I was leading central operations for Essex Property Trust, I saw it get more and more difficult for renters to find rentals as fraud on Craigslist exploded. At the same time, the pay-to-play ILS platforms consolidated and raised prices aggressively, causing their rental inventories to shrink and marketing costs to grow rapidly for multifamily and single-family owners and operators. All the while lead quality floundered.
Before Dwellsy launched, those owners and operators had no easy, free path to publicize their listings and get high-quality leads, and renters had no obvious tool to access a broad range of different rental options. Dwellsy fills that gap as a completely free listing service (free to list, and no charges for leads or leases) that makes it easy for renters to find their next home.
What are you most excited about right now?
Against the backdrop of the COVID 19 pandemic, I’m feeling very fortunate that Dwellsy is in a position to help America’s 110 million renters and more than 10 million owners and property managers.
For property managers, we’re a free tool to drive high-quality leads and lower their cost of marketing – much needed at this time. And for renters, we offer an incredibly broad and growing inventory, great search tools and true organic search – which will make any search for a new rental home or apartment more successful.
What’s next for you?
We had a huge year in 2019 – launched the business, built an amazing core team, went live with our initial product and started finding renters great homes and apartments.
2020 is going to be about broadening and deepening our reach and enhancing our product. We have almost 8 million units and a quarter of the NMHC Top 50 Property Managers listing with us today and we aim to increase that substantially. We have just started to welcome consumers to our platform this year, and we anticipate that growth in consumer traffic – and delivery of free leads to property managers – will continue to grow at a rapid rate this year.
We will also launch our first few paid products — for renters to help them conduct more effective searches and to help small mom & pop landlords list properties more effectively.
Of course, we will continue to offer the same free, high quality leads to owners & managers – that will not change.
What’s a cause you’re passionate about and why?
It’s hard to name just one, but top of mind today is the Housing Industry Foundation, which has done amazing work here in the Bay Area supporting renters in times of crisis over the years. They are all the more necessary now, given how many renters are struggling with affordability today.
Thanks to Jonas for sharing his story. If you’d like to connect, find him on LinkedIn here.
We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).
Bungalow, a new residential real estate platform, recently launched, announcing it has secured $64M in funding: a $14M Series A led by Khosla Ventures, Atomic VC, Founders Fund, Cherubic Ventures, and Wing Ventures, alongside a $50M debt facility.
Over the past several decades the price of rent has dramatically decoupled from income while student loan balances have reached record highs, putting new strains on early career professionals. Not only is housing this group’s largest expense, but the rental experience remains outdated. Though many early career professionals aren’t looking to live alone, finding roommates on traditional ad platforms is fraught with financial and personal risks. Plus, the existing housing stock is dominated by studios and one bedrooms built when most early career professionals lived with spouses.
“My co-founder and I felt the pain of renting in a new city. It was hard to find a great home and even harder to build a supportive community away from friends and family,” said Andrew Collins, co-founder and CEO of Bungalow. “We founded Bungalow to give early career professionals the ability to live in a beautiful and affordable home, in the neighborhood they want, and with a great community surrounding them.”
Bungalow utilizes existing housing supply by signing long-term leases with homeowners, and offers beautiful, multi-bedroom homes in some of the most desirable neighborhoods in cities throughout the U.S. Bungalow expertly matches potential roommates, provides furnished common areas, and takes care of utilities including WiFi and monthly cleaning services. The company also hosts monthly events for its residents, creating an instant community for those new to a city or who are looking to expand their social circle. This two-sided platform significantly reduces the friction of the rental process for both residents searching for a home and homeowners looking for a source of income without taking on the responsibilities of a landlord.
“One major challenge of today’s residential real estate market is the lack of desirable and accessible rental options for young people in urban areas, a problem that will become more pervasive in years to come,” said Keith Rabois, managing director at Khosla Ventures. “Bungalow is taking a full-stack approach that uniquely addresses the rapidly evolving needs of both renters and homeowners, while creating economic value by more effectively utilizing housing inventory.”
Bungalow has been quietly operating for the last year and a half after its founding in early 2017. Since beginning operations, the company has quickly scaled to hundreds of properties and over 750 residents across five urban areas including: the Bay Area, Los Angeles, New York, San Diego, and Seattle. Today, the company is announcing two new markets to its platform: Portland and Washington, D.C. Bungalow is currently on track to be in 12 major U.S. metro markets by the end of 2018 with plans for global expansion in 2019.
“Bungalow is taking on the $650 billion rental market for early career professionals and it may prove to be a bigger total market size than travel and taxis,” said Jack Abraham, founder and managing partner at Atomic. “By leveraging the existing housing stock and connecting demand with compelling long-term leases, Bungalow is poised to continue its growth to the rest of the country and around the globe.”
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
The chasm runs the full length of the condominium complex, from the shuttered tennis court to the shuttered pool. Measuring more than 500 feet long and 20 feet wide, the gash divides the complex in two, its weed-choked perimeter cordoned off with chain-link fencing. A grimy trickle of water oozes along the chasm’s concrete floor a dozen feet below, like some ugly open wound that just won’t heal.
Welcome to Coyote Village, a 70-unit condo complex in suburban La Habra whose residents have been living out a homeowner’s nightmare. Over the last four years, portions of the tree-lined greenbelt that once shaded the complex have violently collapsed into a concrete maw below. That’s because, unbeknownst to most residents, the greenbelt wasn’t built on solid earth. Running beneath it is a cavernous flood channel that decades ago was sealed with a concrete lid then topped with mounds of soil and landscaped with pine trees.
The first collapse of the concealed lid came in January 2019, when a section of the greenbelt near the tennis court caved in, exposing the flood channel below. The second implosion came in March, when heavy winter rains saturated the greenbelt and the concrete lid couldn’t handle the weight of the soggy soil and towering pines. This time, the collapse took out a huge swath of the greenbelt near the community pool.
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Most residents were shocked to learn that their complex was built on top of a private canal that plugs into Orange County’s larger Imperial Channel, which routes storm water out of La Habra, Brea and Fullerton. It stood as the only covered private channel in the county’s 380-mile public storm drain system.
And that “private” designation is where the residents’ encountered another chasm, in the form of a years-long legal battle.
After the 2019 collapse, the county did some cleanup work at the site and provided security fencing around the exposed portion of the channel. Following the March 15 collapse, La Habra brought in construction crews to excavate the channel, which at that point was clogged with dirt, tree limbs and concrete that the city worried would create a damming effect in the broader drainage system during future storms.
But the city’s work stopped there.
La Habra officials have argued since the first collapse that the channel belongs to the complex. And worse, that the channel’s concrete lid had been improperly covered with a breadth of landscaping that violated what had been approved in the city permitting process. According to the city, the homeowners association that represents Coyote Village is responsible for repairing and rebuilding the channel.
The Coyote Village Homeowners Assn. has challenged that stance in a running legal battle, started in 2020, contending the channel is integral to a larger public system and was damaged by public use without just compensation. It has sued the city, the county and the county flood control district, among others, for relief.
“While the conduit runs through the HOA property, the water is public,” said John Peterson, an attorney representing the homeowners group. “The public needs to share in the responsibilities.”
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State Sen. Josh Newman, a Democrat whose district encompasses La Habra, tried to broker a solution last summer and was able to secure $8.5 million in state funding to repair the flood channel. “The residents were wholly unprepared and financially unequipped to deal with this,” Newman said. “I was happy to secure those funds.”
But a year later, that money remains unspent.
La Habra initially questioned the propriety of expenditure, asking the state Atty. General’s Office if the allocation could be considered an improper gift of public funds. The state’s Legislative Counsel determined it was not. In the months since, the city and homeowners association have haggled over who would run the major construction project, with the HOA concerned it does not have the expertise and city officials reluctant to take charge of repairs on a canal they consider private property.
Residents have watched in a mix of frustration and resignation as the saga has unfolded.
Jan Duncan, an HOA board member, said she put her Coyote Village loft on the market in June and received six offers the first week. Then came questions about the flood channel and why it hasn’t been fixed in four years. In short order, every offer was rescinded.
“I cannot give buyers anything in writing to guarantee that this is going to be resolved,” she said. “Without that, they’re uncomfortable. I can’t blame them.”
Justin Marinello is among the parents in the complex who worry about the safety risk the exposed channel poses for children. His condo looks out on the gritty channel and his 4-year-old son had a front-row view of the city’s excavation work after the March collapse.
“My son enjoyed watching the construction because he likes giant Tonka toys playing with dirt,” Marinello said. “But it would be nice to be able to open the door up and just have some grass for him to run on.”
On the other side of the chasm, Lizeth Ruiz knew about the exposed channel when she moved to her condo in 2019 but figured it would be quickly repaired. Instead, she finds herself fending off mosquitoes that breed in the canal’s dingy water. “Now, I keep everything closed and have to be more mindful about wearing pants instead of shorts,” Ruiz said, holding her newborn baby tight.
As the summer heat soars, the concrete channel is lined with dry weeds that rise taller than the 6-foot safety fencing. The channel itself is defaced with graffiti. Residents continue to pay $390 in monthly homeowners fees even though the channel’s collapse has sidelined amenities like the tennis court and pool.
It marks a wrenching chapter in the life of a property with an eccentric history.
In mid-century La Habra, a ranch owner flooded a portion of the area to create a lake and islet, deemed “Monkey Island,” where he let feral monkeys roam free. He also eyed the land for a track that would host ostrich races. At the time, ostrich farms were a popular tourist attraction in Orange County.
Later, the lake was drained and La Habra city leaders opted to go a development direction they considered more forward-thinking, erecting a shopping plaza and post office on the site.
In 1978, developer Loren Hendrix proposed an adjacent 70-unit condominium complex, when such communities were still novel in Orange County as an affordable alternative to single-family homes. Without yards to maintain, he envisioned residents being able to stroll along a landscaped creek — a dressed-up version of the flood control channel that crossed the property — as a key selling point.
But Hendrix faced stiff questions from city staff about how he planned to protect children from hazards posed by the channel-turned-creek. Archival records show the county flood control district rejected Hendrix’s creek design. The district recommended design changes Hendrix considered too costly. Instead, the complex would host an enclosed flood channel masked with landscaping.
La Habra City Council members approved the development in April 1979 on the condition that Hendrix’s design be approved by the city’s chief building inspector and the county flood control district. A year later, the building inspector wrote that the complex was “substantially in compliance” with applicable codes. It’s not clear in county records whether the flood control district ever approved the design.
In any case, the condo development and greenbelt were built. And for 40 years, storm runoff flowed through the underground channel unbeknownst to most residents until the 2019 collapse.
La Habra city officials say the cave-ins are more about what was built on top of the channel than what lies below.
Deputy City Atty. Gary Kranker contends that at the time of the 2019 collapse the soil piled above the channel ran 9 feet deep — 6 feet more than the greenbelt design approved by the city — and that the pine trees that by then stood 80 feet tall contributed to the channel lid’s failure.
“It’s the obligation of the individual constructing the channel, or in this case, the channel roof, to make sure it was done properly,” he said. “Based upon the calculations that we have, it would have been done properly had it only had 3 feet of soil.”
And he faults the homeowners association for failing to take aggressive action to alleviate the risks between the first cave-in and the implosion in March. “To be quite candid, [they] did not do anything to try and alleviate this condition,” he said. “They could have hired someone to remove the soil, one wheelbarrow at a time.”
Last year, the homeowners association sued Hendrix, the complex developer, for fraud. The complaint alleged that he concealed the channel and any maintenance responsibilities from the association so he could sell condos “more quickly and at higher prices.” Peterson, the association’s attorney, said a settlement agreement compels Hendrix to find the insurance policies that covered the development and assign the rights over to the association.
Hendrix did not respond to requests for comment through his attorney.
Last week, representatives for the city and homeowners association said they were closing in on an agreement for moving forward with repairs that would free up the $8.5 million in state funding. Once a resolution is reached, the canal’s reconstruction is expected to take at least a year.
Roma Damo, who has lived at Coyote Village for 35 years, doesn’t see much light at the end of the tunnel — or flood channel, in her case.
“I’m seriously thinking about renting this condo out and getting myself an apartment,” said Damo, 88, eyeing the degraded channel outside her condo windows. “I don’t want to spend the rest of my life here looking at this.”
Another reason sellers are staying put is because they bought recently; a record 60% of mortgage holders have lived in their home for four years or less, further contributing to the supply shortage
SEATTLE–(BUSINESS WIRE)–
(NASDAQ: RDFN) — More than nine of every 10 (91.8%) U.S. homeowners with mortgages have an interest rate below 6%, according to a new report from Redfin (www.redfin.com), the technology-powered real estate brokerage. That’s down just slightly from the record high of 92.9% hit in mid-2022.
That means well over92% of homeowners with mortgages have mortgage rates below the current weekly average of 6.71%, which is near the highest level in over 20 years. Homeowners holding onto their comparatively low mortgage rates is the main reason for today’s major shortage of new listings. Here’s the full breakdown of where today’s homeowners fall on the mortgage-rate spectrum:
Below 6%: 91.8% of U.S. mortgaged homeowners have a rate below 6%, down from a record high of 92.9% in the second quarter of 2022.
Below 5%: 82.4% have a rate below 5%. That’s down from a peak of 85.7% in the first quarter of 2022.
Below 4%: 62% have a rate below 4%, also down from a record high (65.3%) hit in the first quarter of 2022.
Below 3%: 23.5% an interest rate below 3%, near the highest share on record. The highest was 24.6% in the first quarter of 2022.
Many would-be sellers are staying put rather than listing their home to avoid taking on a much higher mortgage rate when they purchase their next house. This “lock in” effect has pushed inventory down to record lows this spring. New listings of homes for sale and the total number of listings have both dropped to their lowest level on record for this time of year, which is fueling homebuyer competition in some markets and preventing home prices from falling further even amid tepid demand.
Even though the share of homeowners with mortgage rates below 5% or 6% has come down slightly because more people have bought homes with today’s elevated rates, it’s still true that nearly every homeowner would take on a higher mortgage rate if they moved. That’s making most people who don’t need to move stay put, which means it’s slim pickings for buyers. Pending home sales are down about 17% from a year ago.
“High mortgage rates are a double whammy because they’re discouraging both buyers and sellers–and they’re discouraging sellers so much that even the buyers who are out there are having trouble finding a place to buy,” said Redfin Deputy Chief Economist Taylor Marr. “The lock-in effect is unlikely to go away in the near future. Mortgage rates probably won’t drop below 6% before the end of the year, and most homeowners wouldn’t be motivated to sell unless rates dropped further. Some of them simply don’t want to take on a 6%-plus mortgage rate and some can’t afford to.”
Just over one-quarter (27%) of U.S. homeowners who are considering listing their home in the next year would feel more urgency to sell if rates dropped to 5% or below. That’s according to a Redfin survey conducted by Qualtrics in early June. Roughly half (49%) would feel more urgency if rates were to drop to 4% or below, and the share increases to 78% if they were to drop to 3% or below—a situation that is highly unlikely any time in the near future.
“The only people selling right now are the ones who need to,” said Atlanta Redfin Premier agent Jasmine Harris. “The last three potential sellers I’ve met are people who are moving out of the country. I’m also working with someone who’s moving out of town for a new job and another person who needs a smaller home for health reasons. So there are some homes coming on the market, but not nearly as many as there would be if rates weren’t so high. In more typical times, we’d also have people selling simply because they wanted to move to a different neighborhood or wanted a bigger home and/or one with different features.”
The typical monthly mortgage payment has increased $1,000 over the last three years as rates have risen from record lows and home prices have increased
The typical homebuyer purchasing today’s median-priced U.S. home (roughly $380,000) at the current average 6.7% mortgage rate would take on a monthly payment of roughly $2,600, a record high. That’s up more than $300 from a year ago and up more than $1,000 from three years ago, using the median sale price and average mortgage rates from those time periods.
Nearly everyone has a mortgage rate below the one they would get if they bought a home today, but the difference in monthly payments varies depending on each individual situation. A mortgage holder in the 3% to 4% range is more likely to feel handcuffed to their home than someone in the 5% to 6% range, for instance.
A record share of mortgage holders have lived in their home for 4 years or less, further holding back supply
More than half of (59.7%) homeowners with mortgages have lived in their home for four years or less, a record high and up from 47.3% during the fourth quarter of 2019, just before the pandemic began.
The portion of people who haven’t lived in their home long has shot up because so many people purchased homes during the pandemic, motivated by record-low mortgage rates and remote work. That means that even if rates were to drop significantly, it may not lead to a flood of new listings. Many people are likely to stay put simply because they moved recently and aren’t in a hurry to move again.
To read the full report, including charts and methodology, please visit: https://www.redfin.com/news/high-mortgage-rates-lock-in-homeowners-2023
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country’s #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we’ve saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin’s press release distribution list, email [email protected]. To view Redfin’s press center, click here.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230614277242/en/
The four-day workweek is the latest buzzy workplace trend, with experiments and surveys touting improved employee morale, retention and productivity.
In one study of 41 businesses across the U.S. and Canada — the majority with 25 or fewer employees — 40% of employees surveyed said they were less stressed after trying out a shorter workweek. In addition, 60% of employees reported a better work-life balance and 32% said they were less likely to quit, according to a July 2023 report by 4 Day Week Global, a nonprofit that promotes shorter workweeks.
ThredUp has seen this play out in-house over the past two years. The online clothing reseller shifted to a four-day week for corporate employees in 2021. Voluntary turnover among that group dropped 55% compared with 2019, and hiring got a boost. Most new hires cited the company’s shorter week as a deciding factor in employment, Natalie Breece, chief people and diversity officer at ThredUp, said by email.
Can a shorter workweek do the same for your business? The short answer: It depends.
“You can’t implement something like this if the underlying culture doesn’t support and nurture trust in your employees,” says Janet Lenaghan, dean of the Frank G. Zarb School of Business at Hofstra University.
For a four-day workweek to work, you need a culture that empowers employees and values results rather than face time, she says.
Planning, training and execution are also key for a successful transition to a shorter workweek.
Adjust priorities, offer training
Asking employees to squeeze five work days into four doesn’t come without adjustments.
Business leaders must assess workload, objectives and success metrics. They also need to invest in tools to streamline or automate tasks, such as accounting reports or other administrative responsibilities, so employees can better prioritize their time. Lenaghan advises leaders to “focus on tasks that drive bottom-line results.”
Large-scale pilots by 4 Day Week Global, which have taken place globally, include two months of workshops, coaching and mentoring. Companies that participate in trial runs also get ongoing support.
Before ThredUp initiated its four-day workweek, it held training sessions on topics such as “how to lead an efficient meeting, when to cancel or remove yourself from meetings, and how to efficiently communicate with employees,” Breece said.
Managers and owners must also be encouraging and set a good example, which involves refraining from sending emails or expecting employees to work on days off.
Start with a test run
A pilot program is a lower-stakes way to try out a shorter workweek and work out any kinks before making it a permanent policy.
Poll Everywhere, a technology company that develops live survey and feedback tools, dipped its toe into a shorter workweek by implementing “Summer Fridays” in 2022. The eight-week trial had bumps, including company holidays that squeezed the already shorter weeks into three days.
“Some of the problems we saw with execution and missed deadlines might have had as much to do with how the logistics were set up as with the idea of working four days a week,” says Rob Graham, CEO of Poll Everywhere.
The company revived “Summer Fridays” in 2023 with some tweaks and additional training based on employee feedback and data analysis.
“We restructured the schedule so that holidays are now considered the designated day off for that particular week,” Graham says. Managers also received special training to help improve communication and efficiency despite fewer meetings.
Tailor it to your company
Some companies can operate Monday through Thursday without impacting customers or the business. Others need some level of staffing five-to-seven days a week.
Poll Everywhere opted for a staggered schedule for specific teams, where some employees had Friday off while others chose a different day.
At ThredUp, its 273 corporate salaried employees work Monday through Thursday. In contrast, employees in the clothing reseller’s distribution centers work from three to five days a week, depending on their shift.
Expect bumps in the road
No significant business change is without its challenges. Try to anticipate these and be proactive in finding solutions when possible. And recognize that some bumps may just be the new cost of doing business.
Busy times, such as the push to finish a big project or wrapping up end-of-quarter financial reporting, will always be hectic. And it takes some effort to get back into work mode after a long weekend, Breece said.
“But these challenges aren’t unique to a four-day work week,” she said.
In recent years, the largely exclusive world of investing has been blown wide open by the rise of fintech platforms. These support brand new ways for retail investors to participate in the buying and selling of stocks on global markets. Accelerated by the conditions presented by the Covid-19 pandemic, the retail investor boom has been supported by the emergence of passive trading.
The accessibility of Wall Street today may be hard to fathom. This is especially true when looking back a little more than a decade to the costs and hurdles that retail investors had to overcome to simply buy their favorite stocks. As recently as 2009, brokerages were charging anywhere from $9.99 to $19.95 per transaction for the buying and selling of stocks online.
‘Zero-commission’ trading was one of the early revolutionary changes brought by emerging fintech firms as more investing platforms like Robinhood began to enter the market in the months prior to the Covid-19 pandemic.
Although controversial, zero-commission trading generally works on a payment-for-order-flow (PFOF) model. Brokerages receive payments from market makers in return for the flow of customer stock purchases and sales being run exclusively through their firm. This enables investment platforms to make their money without customers having to cough up directly. However, it also means that chosen market makers may not be required to charge the most competitive price for stocks.
As the Covid-19 pandemic heavily impacted the lives of individuals all around the world, the implementation of lockdown measures coupled with the arrival of government stimulus packages saw more retail investors taking to the stock market in a bid to buy into recovering stocks. The data above shows that investors had been quick to take on technology stocks, with a net investment flow of $40 billion arriving in the sector by early 2022.
Investors are now having to adapt to the age of the ‘new normal’ today. This means that there may be less time available to conduct the required research to discover new prospects, fintechs are actively working to take initiative in making key investing decisions for customers.
Thanks largely to the rise of fintech, it’s never been easier, or more cost-effective, to invest passively. In some cases, it’s not even necessary to make any investment decisions whatsoever. Let’s take a deeper look at how fintechs have turned retail investing passive.
The Rise of the Robo-Advisor
The past decade has belonged to the robo-advisor. Built on a foundation of artificial intelligence, these automated investment services are generally low-cost, and it’s extremely easy for users to get started with very little money. Many platforms even offer spare change ‘roundup’ investment options.
Robo-advisors have enjoyed a rise in popularity that’s been strong even in the years prior to the Covid-19 pandemic. Between 2017 and 2019, the volume of money under management through robo-advisors tripled from around $240 billion to $980 billion, according to Statista data. Furthermore, the industry has been forecast to reach a value of $2 trillion by the end of 2022.
The beauty of this automated approach to investments is that it enables fintech platforms to do all of the work, in a very literal sense. Roundup platforms like Moneybox has become renowned for its approach to spare change investing, whereby users specify the amount of money they wish to invest each month, whether they would like to have their spare change from bank card purchases automatically rounded up and invested, and the level of risk they would like to take on through their ISAs, and the app will take care of the rest.
This enables users to build a sizable nest egg for their specific goals without having to do anything at all – besides occasionally logging into their account to refresh their bank card permissions.
Passive Portfolios via Copy Trading
Although copy trading is nothing new, fintech platforms have helped to make them far more accessible and customizable to boot.
Whilst many stock trading platforms now offer some form of copy trading capabilities, the leading brokerage to offer the feature is eToro.
Through eToro, it’s possible for traders to view the platform’s leading traders over a given period of time, and choose their favorites to essentially trace, trade by trade.
All trades are proportional to the amount of money that a user is willing to invest, and in eToro’s case, it’s possible to copy up to 100 traders at a time – provided a minimum of $200 is invested per trader.
Furthermore, it’s also possible to copy stop losses when trading to ensure that there’s some form of protection against portfolios suffering a downturn.
There’s sufficient evidence that copy trading can work as an option for investors who may lack the time necessary to make informed market decisions. According to eToro’s statistics, the platform’s 50 most copied traders made an average yearly profit of 30.4% in 2021.
Although the Covid-19 pandemic has subsided to the extent where many of the retail investors of 2020 have found that their free time has become more limited, the rise of passive investing has ensured that nobody needs to slow their trading activity. With fintech platforms offering a varied range of passive investment options, it’s possible to maintain a strong portfolio long into the future.
Studying abroad offers a unique opportunity to expand your cultural horizons, build valuable skills and prepare for the global workforce. More than 300,000 U.S. students study abroad each year, according to the State Department.
There isn’t one way to study abroad in college: Programs can vary by cost, length, level of cultural immersion and more. So you’ll have to do some research to see which is a good fit for your academic, personal and financial goals.
Follow these steps to tailor your study abroad experience.
Research study abroad programs (early!)
Begin researching study abroad options at least four to 12 months before when you’d like to start your program. This gives you time to apply for a passport, meet with an advisor and make a financial plan to pay for studying and living outside the U.S. Make sure to keep track of application requirements and deadlines as you do your research.
Students often study abroad during their sophomore or junior year of college, but there are exceptions. For example, some incoming students at New York University can apply to spend their entire first year of college at international campuses in England, Spain or Italy. Studying abroad earlier in your college career could mean more academic flexibility, since you won’t be scrambling to fulfill major requirements yet.
If you’re a high school student set on studying abroad in the future, consider applying to colleges that have robust programs. For example, Vermont’s Middlebury College offers 90 programs in more than 40 countries — and over half of its junior class studies abroad. And Pennsylvania State University has more than 300 programs across 50 countries.
Choose the right program for you
Whether it’s a summer language course in Beijing or a full semester of engineering classes in Sydney, taking classes in another country offers a wide range of experiences. The costs of studying abroad can vary widely, too, but you can use scholarships, grants and federal and private student loans for some programs.
With hundreds of options available, determine your top priorities to help narrow down the list. Start by defining your personal goals. Then, look at factors like program administration, academics, location, language of instruction and how your credits will transfer to your home institution.
Your college’s study abroad office — sometimes also called “education abroad,” “global education” or “international studies” — is a valuable resource. Study abroad advisors can help identify programs that align with your goals and academic requirements and guide you throughout the application and enrollment process.
Here are a few of the most common types of study abroad programs.
Exchange programs
Your home university may partner with an institution abroad and offer a student exchange program. Participating students usually pay their typical tuition and fees to their home university while studying abroad — which could be an in-state student rate — and enjoy much of the same financial aid they normally do, like federal student loans.
Exchange programs offer high levels of cultural immersion, since students take classes alongside full-time students at the partner university. Students can also expect support and guidance from their home and partner universities, since they’ve already established a relationship.
Faculty-led study abroad
Professors at your home university may lead study abroad trips. These programs usually last a few weeks, and take place during a school break. Instruction is typically similar to what you’d receive in the U.S. and the program may include prearranged travel. The price can vary depending on program lengths, location and more. Because these faculty-led programs often occur outside of the academic calendar, they typically cost extra on top of regular semester tuition. Financial aid may apply.
You’ll likely study alongside students from your home university, which may limit cultural immersion. Faculty-led programs could work for those who’ve never traveled abroad or want a shorter-term program in a specific academic area.
Direct enrollment at a foreign university
U.S. students may enroll directly at a foreign university for a period of time and still receive course credit at their home university. Students pay international tuition rates directly to the foreign school. This route may be more or less expensive than a prearranged exchange program, depending on the tuition you’re paying at your home university and what you’ll pay abroad. It also requires more research to determine if you’re eligible to enroll and receive academic credit.
This may be a good choice if you’re not interested in any of the options offered by your home college, if you aim to live and study among foreign students only or if you want a high level of independence.
Third-party study abroad programs
Third-party study abroad providers like Academic Programs International (API), Council on International Educational Exchange (CIEE) and DIS offer a variety of study abroad programs. These are good options if you’re looking to study alongside international students from different schools and countries, or if you want a unique experience not offered by other programs. The costs of these programs vary widely, but they tend to be more expensive.
On average, semesters abroad arranged by a third-party provider were $8,718 to $17,933 in 2019, according to research from study abroad program database GoAbroad.
Check with your home university’s study abroad office for a list of preapproved third-party providers and programs to ensure your credits will transfer.
Internships, research and volunteering
Studying abroad doesn’t always require studying. Some programs are designed around research, internship or volunteer opportunities. Sometimes, these types of study abroad programs can help you earn academic credit toward your degree. You may also enroll in related classes abroad while participating.
With this route, you’ll be immersed in the workplace and community of your country of study. Despite working, you may still need to pay for the program, in addition to flights and housing. Program costs can vary.
Apply
Once you’ve found a few study abroad programs that look compelling and you understand the costs, you’ll need to start the application process. This will look different depending on the program, but many applications include similar components: letters of recommendation, transcripts, personal essays and language requirements when applicable.
Just like the research process, it’s important to start your application early. Get organized and reach out to professors for letters of recommendation, if necessary, well before the deadline. You may also need to meet with an advisor at your school’s study abroad office.
Make your application stand out by demonstrating clear academic objectives, personal interest in the program and a strong transcript.
Secure funding
For costs you can’t cover upfront, prioritize aid you don’t need to pay back, like scholarships.
Private student loans can fill any funding gaps, but they should be a last resort. They don’t have the same protections and perks as federal loans.
Work-study and the need-based Pell Grant cannot be used for study abroad. However, the State Department’s competitive Benjamin A. Gilman International Scholarship Program is designed to help Pell recipients pay for international study. The top award is $5,000. Check out the full list of study abroad scholarships offered by the U.S. government and foreign governments on the State Department’s USA StudyAbroad website.
Plan your logistics
The logistics of moving to another country can be daunting, even when you have a study abroad coordinator helping you through the process. Note these important factors as you plan.
Passports and student visas
Keep track of relevant student visa requirements and deadlines. Depending on your country of study, visa processing can take from a few days to months. You may need to move quickly after getting accepted to a program.
You’ll likely need a U.S. passport in hand before applying for a visa. If you don’t have one already, plan for processing times of at least three months.
Housing
Housing is also important to consider before hopping on your international flight. Some programs will arrange an apartment, dorm or homestay on your behalf, while others will leave finding housing up to you — which can be difficult to do in advance.
Consider what matters most to you when deciding on housing. Living with a host family may offer you higher levels of cultural and language immersion, but a dorm or apartment could mean more flexibility and independence.
Study abroad budgets
Prepare a spending plan and budget to cover the day-to-day costs of your life abroad. This may include personal travel, emergency funds, international banking fees and other expenses outside of your typical student lifestyle. Consider applying to scholarships intended for study abroad that could help out with these types of expenses.
For some students, a study abroad credit card may help them avoid high transaction fees while earning travel points to cover flights and other expenses. But be wise with your spending. Not paying off the balance each month can lead to ballooning debt.
[CORRECTION: The story has been updated from an earlier version. The MBA announced $3.39 trillion in mortgage originations, and not $3.9 trillion.]
The Mortgage Bankers Association on Tuesday released revised estimates for the third and fourth quarter of 2020 and predicted record purchase volume for 2021. Although the MBA expects decreased refinancings in 2021 and a decline in overall origination to around $2.56 trillion, that would still be the second-highest origination total in the last 15 years.
The rebounding economy is likely to mean higher mortgage rates, with the MBA forecasting 2.9% by the end of 2020, rising to 3.3% by Q4 2021.
The MBA is forecasting a rise in purchase originations to $1.59 trillion, which would break the previous record of $1.51 trillion set in 2005. However, the MBA sees refinances decreasing to $971 billion.
“The housing market has seen a meaningful rebound since the onset of the pandemic,” said Mike Fratantoni, MBA chief economist. “Record-low mortgage rates have led to a surge in borrower demand for refinances and home purchases.”
For 2020, the MBA is estimating $3.39 trillion in mortgage originations – the highest since 2003 and a 50% increase from 2019.
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That includes an expected 91.5% jump in refinance originations to $1.97 trillion – also the highest since 2003 – and a forecasted 16% rise in purchase originations to $1.42 trillion, the highest since 2005.
Back in October, the MBA estimated total mortgage originations of $3.175 for 2020.
The median price of new homes in 3Q20 was reported at $330,600. That is expected to rise to $339,000 in 4Q20. However, existing-home price averages are expected to drop again in 4Q20, from $297,200 to $294,900. This continues the downward trend from 2Q20, when existing home price averages were at $309,200.
Other 2021 expectations from MBA include a growth rate of 3%, an unemployment rate of 5% by the end of the year, and an increasing 10-year treasury yield to 1.4% by Q4.
The regulator of Fannie Mae and Freddie Mac improperly amended stock purchase agreements in 2012 when it allowed the U.S. Treasury to sweep up the companies’ net profits, a jury in Washington, D.C. found Monday.
The jury awarded shareholders of the government sponsored enterprises a total of $612.4 million in damages.
Fannie Mae will pay junior preferred shareholders $299.4 million and Freddie will pay $281.8 million. The jury also issued $31.4 million to owners of Freddie’s common shares.
The surprising verdict in Berkley v. FHFA comes after the case was dismissed in October due to a hung jury.
Related cases, like Collins v. Yellen, which typically argued that the FHFA had no right to allow Treasury to sweep up the GSEs’ profits, have also been dismissed, mostly on technicalities or that shareholders had no standing.
The plaintiff’s argument in Berkley v. FHFA is that the FHFA violated the contractual rights of shareholders when it gave away all their dividends in perpetuity.
The case stems from the restructuring of the agencies in 2008. A group of GSE investors alleged that the government knew the GSEs would turn a huge profit after a $100 billion bailout from the Treasury in 2008.
An agreement between FHFA and the Treasury Department promised the investors compensation in the form of stock, dividends tied to the amount of money invested in the companies and priority over other shareholders in recouping their investment.
But that agreement was modified in 2012, to require Fannie Mae and Freddie Mac to pay dividends to the Treasury pegged to the companies’ net worth. The arrangement essentially washed out private investors’ ownership interests in the GSEs. Investors cried foul.
“By August 2012, FHFA and Treasury knew that the Companies were on the verge of generating huge profits,” the plaintiffs argued in the suit.
In 2018, the Fifth Circuit Court of Appeals ruled that the FHFA was within its statutory authority when it enacted the “net worth sweep” of the GSEs’ dividends, but found that the FHFA was not constitutionally structured. In 2019, the Fifth Circuit Court of Appeals reversed its ruling on the “net worth sweep” and remanded the case back to the district court. The Supreme Court last year dealt a blow to shareholders in Collins v. Yellen when it ruled the FHFA did not exceed its authority under federal law.
The victory in Berkley v. FHFA is sweet for shareholders, notably in that it’s their first one since the beginning of conservatorship, said David Stevens, a former Federal Housing Administration commissioner and Mortgage Bankers Association president.
“Whether this sets the tone for a new direction for the conservatorship is yet to be seen,” Stevens said. “But without question, a political leadership that oversees these two companies in Washington will be likely focusing on options ahead. While the jury awarded less than what was asked for by the plaintiffs, it is without question victory for the shareholder interest. What happens next will be interesting.”
Most observers expect the FHFA to appeal the decision.