“The second-quarter profit report offers a mixed bag of plusses and minuses that added up to an overall picture of not much change for sellers,” ATTOM chief Rob Barber said in the report. “Prices jumped back upward, which was great news for owners. So did raw profits. Profit margins also remained historically elevated.” However, Barber … [Read more…]
A low credit score may not keep you from getting all types of loans. In fact, some lenders provide loans specifically for people with bad credit. These can include personal loans for bad credit, “buy now, pay later” plans and cash advances from mobile apps.
Here are several types of loans for bad credit (a score below 630), why they’re worth considering and their potential risks.
Personal loans for bad credit
Some online lenders tailor personal loans to borrowers with low credit scores. Bad-credit personal loans can be $1,000 to $50,000, come as a lump sum and are repaid in equal installments over about one to five years.
Why they work: Reputable personal loan lenders cap annual percentage rates at 36%, which is the highest rate consumer advocates say affordable loans can have. They can be large enough to cover expensive home repairs and are typically funded within a few days of approval, making them a viable emergency financing option.
Possible risks: Having bad credit means you’ll qualify for an APR near the top of a lender’s range. Although other bad-credit borrowing options have higher rates, a 20% or 25% APR on a $5,000 loan is still expensive.
Family loans
It may be difficult to ask a friend or family member to lend you money, but it may also be the easiest and least expensive financing option. You can draw up a formal family loan agreement that includes what the funds will be used for and how they’ll be repaid.
Why they work: A friend or family member is unlikely to have a minimum credit score requirement or charge interest, as many other lenders do.
Possible risks: Mixing relationships and money can be dicey, and a loan gone awry may cause conflict.
Small bank and credit union loans
Some banks and credit unions offer small loans of a few thousand dollars or less to customers. Major national banks like U.S. Bank, Bank of America and Wells Fargo offer small-dollar loans, and some credit unions offer payday alternative loans or similar products.
These loans cost less in interest than most other types of bad-credit loans, have repayment terms of a few months, and lenders may look beyond your credit score to qualify you.
Why they work: Because small bank and credit union loans have low rates and long repayment terms, they’re more affordable than small-dollar high-interest loans offered by some online lenders.
Possible risks: Small bank loans and some payday alternative loans are only offered to existing customers. Though your credit score may not be the only — or even a major — factor a lender considers for these types of loans, it may carry some weight on the application.
Buy now, pay later loans
Buy now, pay later apps allow shoppers to split up a large purchase into smaller payments at checkout. The popular pay-in-four plans require a shopper to pay 25% of the cost upfront and cover the rest of the purchase in three biweekly installments. BNPL apps usually don’t do a hard credit check to approve customers.
Why they work: A BNPL plan can reduce the stress of a necessary, urgent expense like a mattress or laptop. Because the pay-in-four plans are interest-free, BNPL can be a no-cost financing option.
Possible risks: Most major retailers, including some grocery stores, offer this type of payment plan, which can make it easy to rely on them for everyday expenses. Frequent BNPL use can lead to overspending and cause people to lose track of upcoming payments. Some apps report payments to the credit bureaus, so missed payments can hurt your score.
Cash advance apps
A cash advance app is a mobile app that provides a small advance — often $500 or less — on your next paycheck. These apps use transaction history from a connected bank account to determine whether you qualify for an advance and how large it should be. There is no credit check, so your score isn’t a factor. The app takes repayment on your next payday.
Why they work: Loan apps can provide an advance within a few days after you request it, or instantly for a fee. Advances can be large enough to cover a modest vet bill or auto repair, or to bridge a brief income gap.
Possible risks: Cash advance app fees — including fast-funding fees and requested tips — coupled with short repayment terms make them difficult for some borrowers to repay without foregoing other necessary expenses or borrowing again shortly after.
Payday loans
Payday loans are small loans with high fees that are repaid quickly after you borrow. You can get a payday loan online or in person and the lender typically requires a post-dated check or access to your checking account to withdraw funds on your next payday.
Why they work: Payday loans are fast and easy to get. Lenders don’t check your credit or report payments to the credit bureaus.
Possible risks: These costly loans are difficult to repay in a short period, so borrowers often end up borrowing again to pay off the original loan or cover regular expenses. Because payday loan borrowers frequently end up in a debt cycle, these loans should be a last resort in a true emergency.
🤓Nerdy Tip
Car title loans and pawn loans are similar to payday loans. They frequently have triple-digit interest rates and short repayment terms, but they require a valuable item as collateral — your vehicle in the case of car title loans, or a personal item for pawn loans. Though these are both fast-cash options for bad-credit borrowers, they’re difficult to repay on time, and failure to pay them means losing the item you provided as collateral. NerdWallet recommends avoiding these loans if possible.
Nonborrowing options for bad credit
Payment plans: If you’re struggling to make a mortgage, utility or doctor bill payment, consider asking to set up a payment plan. Many creditors have hardship plans available for those experiencing financial difficulties, as do many utility companies and physicians’ offices. Request a payment plan before going into debt to cover bills.
Other ways to make money: If you have the luxury of time, consider ways to make quick cash. Options include selling clothes, delivering food, taking online surveys or listing a room on Airbnb.
Get help from the government: Some government programs can help with utility bills and groceries, child care and a down payment on a home.
Local financial assistance programs: A local charity, nonprofit or food bank may help cover some of your financial burden while you focus on a pressing expense. Search NerdWallet’s database of financial assistance programs for local organizations that offer relief.
“A national secondary market for construction financing could allow lenders, like state housing finance agencies and banks, to provide the investment capital needed to get multifamily housing projects built and keys in families’ hands.”
This is the conclusion of a new report published by the Center for Public Enterprise, a nonprofit organization that promotes the expansion of public sector projects.
Such lenders, the report states, could underwrite mezzanine construction loans under the assumption that a national housing construction fund would have the ability to buy these loans on the secondary market. This could make the overall cost to entry — which is already low — more digestible.
“The size of the investments needed to get typical multifamily housing projects moving is small: mezzanine loans covering less than 20% of project costs could bring average costs of capital down significantly, allowing shovels to get into the ground,” the report reads.
Due to the well-documented issues facing housing supply across the U.S., and coupled with high home prices and persistently high interest rates, multifamily housing starts have slowed despite low vacancy rates nationwide. But when demand comes back, new housing that “should have been built has not been, starting another price cycle,” the report explained.
Establishing a national housing construction fund has the potential to reduce burdens on builders and lenders caused by higher rates. It could also potentially create “an economic environment where housing production achieves a degree of insulation from the business cycle factors that are not indicative of housing demand,” the report said. This could lead to a situation where housing production becomes “smoother and more stable across time.”
Since policy proposals tailored to the needs of housing construction haven’t materialized to any meaningful degree, stakeholders are reliant on monetary policy — a “broadsword, not a scalpel” when it comes to the interests of the housing industry. Price pressures are addressed primarily by making it more difficult to conduct business operations as opposed to addressing the root issues specific to a particular industry.
“If monetary policy is successful in reducing demand — often by inducing a recession — then eventually, interest rates normalize and, theoretically, demand comes back,” the report states. “And herein lies the problem: housing stock, particularly multifamily housing, takes time to build — far more time than it takes to produce most other goods and services Americans use on a daily basis.
“When the economy comes back, the new units which should have been available for a resurgent consumer market are not available because construction did not occur during the trough of the cycle.”
These actions also serve to teach builders that should there be a monetary policy instrument used to impact the economy, it will also likely be bad for them, leading to a pullback in construction activity in preparation for a policy change. This necessitates federal tools that can help to more precisely alleviate these burdens on housing construction, the report suggests.
“National housing researchers, including Freddie Mac, estimate that the housing supply shortfall across the country is between 1 million and 5 million homes. There are many policy levers that must be pulled to get there,” the report reads.
“A financing lever with the ability to partially insulate housing investment from the volatility of the business cycle has been, until now, a missing piece among the array of tools and interventions. We hope that a housing construction fund, as outlined here, can fill that gap.”
The gap between home appraisals and sale prices is rising.
That’s according to a new report from Corporate Settlement Solutions (CSS), which analyzed 10 states on the East Coast and Midwest for the share of properties that were appraised for more than the sale price, in addition to the average value over appraisal.
CSS’s analysis concluded that during the first half of 2024, 51% of sales in these states had appraised values that were higher than the sale price. That’s the largest share since the beginning of the COVID-19 pandemic in March 2020.
In 2020, 42% of properties were appraised for more than the sale price. This share was 42% in 2021, 46% in 2022 and 50% in 2023. The average percentage value of an over-appraised property in 2024 so far is 8.9%.
Properties were considered accurately appraised if these values fell within $2,500 of the sale price. Across the 10 states studied, slightly more than 40% of transactions met this definition.
Importantly for buyers and sellers who are striking deals, the percentage of properties sold this year for more than the appraised value is just 8.4%. The average percentage value of under-appraisal is 7.3%. These deals are relatively rare and can be jeopardized if terms have to be renegotiated due to an appraisal that comes in lower than the agreed-upon sale price.
“The growing gap between home appraisals and actual sale prices underscores the challenges of providing accurate valuations in a rapidly appreciating market with limited inventory,” CSS CEO Ashley Jelinek said in a statement.
“The big question is how long will this continue given that many housing economists are suggesting that home appreciation is normalizing and, in some markets, even decreasing. It is inflection points like the one we may be approaching that emphasize the importance of accurate, market-centric valuations.”
The states that CSS analyzed are Florida, Kentucky, Michigan, North Carolina, New Jersey, New York, Ohio, South Carolina, Virginia and West Virginia.
New York had the lowest percentage of over-appraised properties at 33.6%, and the percentage value of over-appraisals was a miniscule 4.6%. This suggests that New York has the most accurate appraisals of the 10 states analyzed. But New York also has the highest share of properties with an appraisal value below the sale price (14%).
Kentucky had the highest percentage of over-appraised properties at a whopping 72.7%, but the percentage value of over-appraisal was a modest 9.7%, just above the average for the 10 states analyzed. The average under-appraised value in Kentucky was 4.9%
North Carolina had the highest percentage value of over-appraisal at a somewhat shocking 33.3%, and 58.7% of properties in the state were over-appraised. Virginia‘s share of over-appraised properties over was 68.6%, while the average percentage value of over-appraisal there was 10.7%. Virginia’s share of properties sold for more than appraised value was the lowest of the 10 states at 2.9%.
The latest annual report from The Counselors of Real Estate highlights 10 major issues expected to impact the housing industry in 2024, but developers are painfully familiar with at least two of them: labor shortages and skyrocketing capital costs.
Today’s market conditions help illustrate the case for green, factory building as an effective solution for developers, especially for those who’ve put projects on hold due to rising interest rates and dried up investor pools. Transitioning to factory building from on-site construction reduces building costs by 20% and significantly improves delivery time; and by using green materials, developers can open up new financing options that, together, turn project economics right-side-up.
Addressing a dwindling workforce and increased labor costs
The United States construction industry is facing an extreme labor shortage, falling short of roughly 650,000 workers needed to drive the completion of critical residential and infrastructure projects across the country. The root cause of this shortage is multifaceted – but is largely driven by an aging work population and a lack of interest from young talent. The result is a sharp increase in labor costs, and longer construction times. U.S. developers spent an extra $30 billion to $40 billion in 2022, drastically impacting bottom lines and the ability to get new projects financed. And the problem is only getting worse.
Factory-built homes aren’t new but are severely under leveraged by developers for multi-family construction. For one, factory-based construction reduces labor costs by making work more efficient and tapping into labor pools that traditional construction can’t access. Traditional construction requires workers to move from house to house and project to project – and less time actually building. And the itinerant nature of the work makes it unattractive to a large part of the workforce.
Good factory builders, on the other hand, operate like car production lines, where the structure moves to the workers who are specialized and stationary. Those workers produce more per labor hour, which means less labor cost per square foot of structures built. And, because the work is done in one place and in more pleasant and controlled factory conditions, it is easier to attract talent, particularly people who might not usually consider construction as a profession, such as women and younger workers.
Time is also money. Factory building doesn’t just provide a developer with confidence in delivery timelines by avoiding inclement weather or scheduling delays; it can also cut build times and skilled labor hours by up to 50%. Shortening the build time means less project overhead, and less interest carry. Those are savings that go straight to a developer’s returns.
Green isn’t just the color of money – it’s the source of untapped funding
In addition to higher costs of development, projects are also sidelined because of reduced availability of bank financing, higher interest rates and investors unwilling to pick up the slack. Just a few years ago, a developer could borrow up to 80 percent of a project cost, but in today’s economic environment, only 50-60 percent of a project is likely to be financed – leaving a significant gap. Here, too, green factory building can be a solution. Energy efficient homes open the door to new and better financing options.
There are innovative factory-based builders who use materials and assembly methods that allow for significant energy savings that will endure for the life of the home or building. The energy efficiency of this type of construction makes it eligible for “green” financing. Green bonds, for example, are earmarked to raise money for climate and environmental projects, and they enable sustainably minded investors to fill the gap that traditional investors have left.
By reducing the total cost of a project with labor and materials savings and then adding better financing options, a developer can get back to delivering projects that meet financial objectives. For example, consider a project with a total cost of $50M. With traditional onsite construction and today’s capital costs, this project may only deliver an unattractive 15% IRR. But consider a scenario where factory-based construction allows a developer to reduce the total cost of the project by 10% or more and also access green financing to cover upwards of 30% – that same project could be delivering an IRR greater than 30%.
Given market conditions, it’s no surprise that multifamily construction starts are down substantially– but not for lack of demand: there’s an estimated deficit of 3.8M homes across the U.S. In other words, opportunity is knocking for developers who can structure economically viable projects. With the right factory-based, sustainable builder, it’s possible to get back to strong IRRs and sustainable profits.
Chris Anderson is the CEO of Vantem.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected]
Homes in Nunaka Valley neighborhood of East Anchorage. (Loren Holmes / ADN)
Last year in Anchorage, housing reached its least affordable level in the last 21 years — worse even than during the Great Recession more than a decade ago, according to new data from the Alaska Department of Labor and Workforce Development.
State economists reported a similar statewide trend in May. In 2023, housing in Alaska was at the least affordable level since 2006.
The cost of home ownership in Alaska has increased dramatically since 2018, according to data provided by Alaska Housing Finance Corp. The average mortgage payment — principal loan amount plus interest, but excluding property taxes, insurance and other costs — rose by 52% between 2018 and 2024.
Rents have soared in that same time period.
“The rental market has gone up by about 24% in terms of the pricing escalation across the state,” said Daniel Delfino, an economist and director of planning at Alaska Housing Finance Corp.
City officials have called the situation in Anchorage a housing crisis. They’ve pointed to a tangle of factors: the spike in housing costs, a low rental vacancy rate, a rising number of short-term vacation rentals, a decline in housing development, increasing building costs and a labor shortage, among others.
The new data sheds further light on the difficulties of renting or buying a home in Anchorage today.
It’s become a central issue in recent city policymaking and discourse. Mayor Suzanne LaFrance, sworn in on Monday, says housing is a top priority for her administration.
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The Assembly has aimed to spur more housing development with a series of changes made to city code over the last two years. Late last month, the Assembly voted to essentially eliminate single-family zoning in the Anchorage Bowl, by allowing duplexes to be built in areas that were previously zoned only for houses.
To Assembly Vice Chair Meg Zaletel, one of the sponsors of last week’s measure, a housing crisis means that people across the economic spectrum “can’t achieve appropriate housing, attainable housing that’s suitable to their needs,” she said.
“That’s renters who are stuck at the top of the rental market who can’t move into home ownership. That’s people needing to double or triple up in order to afford rent. That means there just aren’t enough housing units for the market to respond to the various circumstances and needs,” she said.
More expensive, fewer homes for sale
Downtown Anchorage, photographed from Fish Creek. (Loren Holmes / ADN)
The median rent in Anchorage increased by 7.8% since last year, rising from $1,275 to $1,375 in 2024, according to AHFC’s data. That doesn’t include the cost of utilities.
AHFC’s rental data comes from a yearly survey in March done by the state Department of Labor. It “runs the full gamut” of rental housing, from studios to four bedrooms and larger, and excludes rentals that have income restrictions, like those for affordable housing programs, Delfino said.
This year’s increase comes after Anchorage rents rose 14.2% in 2022 and jumped another 5% in 2023, according to state data.
The U.S. Department of Housing and Urban Development defines being “housing cost burdened” as spending more than 30% of a person or household’s monthly income on rent or mortgage payments and utilities.
Among economists, there isn’t a broadly used definition of a “housing crisis,” nor is there a defined level of ideal affordability, said Rob Kreiger, an economist with the Alaska Department of Labor and Workforce Development who authored the May report.
That’s because what may be affordable varies by the circumstances and income of an individual, he said.
But with Anchorage housing at its “least affordable level” in two decades, “I think right now, what we’re seeing is, it’s really prohibitive for first-time buyers to afford a home, and it’s really expensive to rent as well,” Kreiger said.
Statewide, “it’s more expensive, and there are fewer homes on the market,” Delfino said, adding that the reported number of homes sold and mortgage loans recorded has dropped “pretty significantly over the past couple of years.”
According to the National Association of Homebuilders’ chief economist, more than 86% of residents can’t afford the cost of a newly constructed home in Anchorage.
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State economists measure home purchase affordability with the Alaska Affordability Index, a calculation that uses the average mortgage payment and average monthly wages to determine how much income it takes to afford a home.
An average index of 1 would mean that average monthly wages are just enough for one person to afford the average monthly mortgage payment for an average priced home.
The state and Anchorage saw the lowest indexes — the most affordable housing — in 2020 and 2021. Mortgage interest rates dropped significantly during that time as the federal government took actions to stabilize the economy during the pandemic, Kreiger said.
But by 2023, Anchorage’s affordability index jumped to 1.8. That means to afford the average Anchorage home, it takes about two people working full time at the average wage.
The Anchorage-specific data only dates back to 2002, and housing last year was at its least-affordable level in that timespan.
In 2023, Alaska’s overall affordability index was 1.66, the highest since 2006. That dataset dates back to 1992.
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‘Alaska has a problem with keeping young people’
What the state data doesn’t show or quantify is how the rapid increases in housing costs are affecting everyday residents, Delfino and Kreiger said in separate interviews.
“Given that things have moved a lot, and so quickly recently, it’s that stuff underneath the data set that affects real people that I would say is probably really pressing when we talk about the affordability,” Delfino said.
Before passing the zoning measure, the Assembly last month heard an outpouring of testimony from Anchorage residents. Many described struggling to find homes to rent or buy, or told stories of loved ones moving away because housing here is scarce and expensive.
“Based on my experiences as a renter and as a young person in Anchorage, it is very difficult for young people to find adequate housing in Anchorage. If you have a pet — forget about it,” said Sean McDowell, a renter in South Addition. McDowell said he lost his previous housing because the owner turned it into an Airbnb for the summer.
“We all know that Alaska has a problem with keeping young people. If there’s nowhere to live for young people, if it’s difficult to find a long-term rental in Anchorage, young people are going to keep leaving,” McDowell said.
Sean McDowell testified before the Anchorage Assembly about the lack of affordable housing at a meeting in June . McDowell is a renter in the South Addition neighborhood, where he was photographed this week. (Anne Raup / ADN)
“To what extent is housing playing in people’s decision to leave or stay here? It’s hard to say,” Kreiger said.
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As homeownership becomes more expensive, the point in a person’s life when they switch from renting to buying a home moves further out, Kreiger said in his May report.
“That gap is wider and wider, so it’s harder and harder to make that transition. So we see people that, six years ago, would have become homeowners, staying in an increasingly tight renter market,” Delfino said.
And then there’s wages.
For some Alaskans, raises and regular cost of living pay increases have helped to defray the pressure of rapidly rising housing costs.
But for many residents, it’s unlikely wages will increase quickly enough in the near term to make up the difference, Kreiger said.
“When we’re looking at inflation that’s as recent as it is, how quickly everyone’s salaries have caught up to the increased cost of living, I think, drives how acutely people feel the affordability pinch,” Delfino said.
A worker in Alaska, paid at the state’s minimum wage, $11.73 an hour, needs to work 75 hours a week in order to afford a modest, one-bedroom apartment at the statewide fair market rent, according to the National Low Income Housing Coalition’s annual report.
A full-time worker in Anchorage needs to make at least $27.96 per hour to afford a two-bedroom at the fair market rent of $1,454. A person making minimum wage would need to work 96 hours to afford the same apartment, according to the report.
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Getting back to average
Homes in Anchorage’s Westpark development south of Ted Stevens Anchorage International Airport. (Loren Holmes / ADN)
Another factor in increased housing costs is how rapidly mortgage interest rates have risen. Interest rates are a “critical component” making housing less and less affordable, Kreiger said.
When rates dropped during the pandemic, “it brought a lot of competition and buyers to the market that wouldn’t have otherwise been able to participate,” Kreiger said.
The average sales price for a single-family home in Anchorage rose 26% between 2019 and 2023, from $389,477 to $490,596, according to state data.
“Because you had that big rush of buyers and all that competition, and you have on top of that, this limited amount of homes for sale and limited construction … that’s really what I think put prices up so high,” Krieger said.
Since then, the average interest rate for 30-year fixed-rate mortgages has seen an unprecedented rise, according to Kreiger’s May report.
The average rate in Alaska is 6.33% — the highest since 2006.
Not only is it more difficult for a first-time home buyer to purchase a place to live, but the high interest rates can keep people stuck in homes they’ve owned for a few years.
“When the costs go up, especially if you’re a person who locked in an interest rate at 2.5% and you’re looking at moving, it’s the question of, could you afford your own home if you had to buy it today?” Delfino said.
For many residents, the answer is likely no, he said.
It’s another impact that’s difficult to quantify.
“We know all these things are happening,” Kreiger said. “… We know that there’s people who are stuck, we just don’t know how many there are.”
Still, for many longer-term homeowners who’ve built up equity, the market has never been better, Kreiger said in his report.
Housing affordability is unlikely to change much in the near term, Kreiger said. Wages will rise over time, but not quickly. Home sales prices “may level off and may come down a bit,” but not significantly, he said.
Interest rates are the most realistic variable that could help drive the index back down, he said.
Barring another major event like the pandemic, the rate is “not going to come down to where it was,” Kreiger said. “And depending on how things go with inflation, it may not actually happen for quite some time, but eventually they will come back down and create more of a normal situation.”
Anchorage’s average affordability index between 2002 and 2023 is 1.47.
In order to get back to the average affordability, wages would need to increase 22.5%, or home sales prices would need to drop by 18.4% — or around $90,000.
If only the average interest rate for a mortgage changed, it would need to drop to 4.5%.
Americans with a financial advisor expect to retire two years earlier according to Northwestern Mutual’s Planning & Progress Study Ready to Retire: 75% of those who work with an advisor say they will be financially prepared for retirement versus 45% of people without an advisor Free from Anxiety: 64% of Americans with an advisor say … [Read more…]
The lock-in effect that has kept U.S. housing market activity subdued probably isn’t going away this year or next year or even the year after that.
It could hang over prospective buyers and sellers of existing homes for six to eight years before finally going away, Bank of America warned in a note on Monday, locking down the market into the next decade.
“The wide gap between current mortgage rates and effective mortgage rates means most homeowners are unwilling to move unless forced,” analysts said. “Moreover we do not expect current mortgage rates to fall much even if the Fed cuts as we anticipate.”
When borrowing costs were lower during the depths of the pandemic as the Federal Reserve slashed rates to near zero, homeowners rushed to refinance, leaving U.S. households with the lowest effective mortgage rate ever on records going back to 1977, according to BofA. It has ticked up about half a percentage point from its trough, but the effective rate was still at a low 3.8% in the first quarter.
As the Fed began hiking rates in 2022 to fight inflation, current mortgage rates went higher as well. Now there’s a big gap in rates.
Earlier this month, a Realtor.com report said more than half of outstanding mortgages have an effective rate of 4% or lower, and more than three-quarters have a rate of 5% or lower. Meanwhile, the current 30-year fixed rate is still hovering around 7%.
With homeowners unwilling to give up their low effective rates, the supply of existing homes has been tight and this year’s spring selling season has been muted.
Sales of existing homes hit a seasonally adjusted annual rate of 4.14 million in April of this year, barely budging in almost 18 months, BofA noted.
The bank sees that pace staying relatively flat in the coming years, projecting sales of 4.1 million for all of 2024, 4 million in 2025, and 4.2 million in 2026.
“The US housing market is stuck, and we are not convinced it will become unstuck anytime soon,” analysts wrote. “After a surge in housing activity during the pandemic, it has since retreated and stabilized.”
With supply still constrained and demand still elevated from the pandemic-induced shock, BofA expects home prices to jump 4.5% in 2024 and 5% in 2025, before finally cooling off with a 0.5% uptick in 2026. But prices could surge another 5% in 2026 if pandemic-related factors persist, analysts warned.
And don’t expect much help from newly constructed homes. The bank sees housing starts averaging a stable 1.4 million units in 2024, 2025, and 2026, with sales of new homes averaging 650,000 those years.
But others in the real estate sector think even a modest decline in mortgage rates could unlock a burst of housing market activity.
Earlier this month, Compass cofounder and CEO Robert Reffkin told CNBC that he would “feel good” about a 6.5% rate, “but the magic number is 5.9999.”
“That’d be marketing magic, and would tell the world that mortgage rates are at a level where they should go and grab a property,” he said.
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A new report by IDIQ®, a financial intelligence company, details top consumer credit concerns provided by mortgage, real estate, and lending professionals as well as borrowers themselves. The research included surveys of more than 100 mortgage and real estate professionals, more than 200 prospective borrowers, and a study of proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700.
The report, titled “The Modern Credit Challenge: Mortgage & Real Estate Professional & Consumer Research,” highlights credit health needs from IDIQ partners and consumer insights. The report also introduces a solution with IDIQ’s newly launched credit-building tool, CreditBuilderIQ®, based on the feedback provided.
Identifying the gap:
Non-prime credit files comprise more than 100 million consumers in the United States. This is a substantial market share of borrowers, and regardless of their credit profiles, their dreams of homeownership and favorable interest rates are obtainable – although increasingly challenging due to the interest rate environment, pinched consumer finances, and credit profile pressures. During the last decade there has seen a crop of fintech and analytics tools released to help consumers optimize rates and take control of their credit, but what are consumers saying?
The top-three identified concerns consumers have when it comes to their credit:
Not knowing how to strengthen their credit profile
Catching up on late payments
Having inaccuracies on their credit report
Eighty-two percent of those surveyed noted they want to learn more about how to improve their credit scores, and 59% said they plan to purchase a car or home in the next year. Despite an ever-increasing number of online tools, consumers still express a desire for more guidance.
Next, IDIQ analyzed proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700. Some highlights:
76% have at least two derogatory marks on their credit report
74% have non-optimal credit utilization
67% have a debt collection on their report
41% have less than five tradelines in their profile
Consumers have various types of reasons that are hindering their ability to qualify for a mortgage or a favorable rate, including lack of information and guidance, poor habits, poor credit utilization, derogatory and collection accounts, and more. Each borrower’s situation is unique and tackling each one optimally requires a personalized touch.
As the third area in our investigative journey, IDIQ surveyed industry partners, given their alignment in solving consumer credit challenges.
As IDIQ surveyed industry partners, ranging from mortgage professionals, real estate agents, and lenders, we found the following:
75% want to refer clients to DIY credit-building solutions
70% want the ability to track clients’ credit progress
50% wish current credit-building tools offered a consumer score plan and goals to improve scores
Tying it together:
A large percentage of borrowers are not qualifying for mortgages or optimal rates due to credit challenges. In today’s economy, these credit challenge are reaching historic highs. Despite new advances in analytics and credit offerings, consumers have not found a tool that effectively ties together various credit optimizing tools. At the same time, mortgage professionals and lenders are interested in transparent, effective, plan-based tools to help borrowers achieve the dream of home ownership.
IDIQ commissioned this report because our mortgage, real estate, and lending partners asked for a credit management tool to educate their own clients about establishing, building, and growing their credit. At the same time, we also identified trends among our consumers that indicated those who were educated about their credit profiles were able to take proactive steps to improve their credit scores.
Because mortgage, real estate, and lending professionals as well as consumers requested a platform that offers personalized credit-building tools, we created CreditBuilderIQ. The platform offers AI-driven interactive credit analysis; personalized score factors; credit reports and scores from all three major credit bureaus; tools to resolve credit report inaccuracies; utility reporting; rental reporting (coming soon); secured card and builder loan guidance; and for business partners, the ability to set score thresholds and receive score trigger alerts.
For more information or to download “The Modern Credit Challenge: Mortgage & Real Estate Professional & Consumer Research,” visit www.creditbuilderiq.com/new-report-modern-credit-challenge-consumers.
Bryan Sullivan is the Chief Operating and Financial Officer at IDIQ.
Surya Pochareddy is the Executive Vice President, Strategy at IDIQ.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: [email protected]
And with home prices rising more than double the pace of inflation since the 1960s, making the place you live look great is as important as ever, whether it’s a rental or your expensive dream abode.
Here are the 10 decor mistakes she hates to see in other people’s homes.
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Moreira said she always notices when a room has a rug that’s too small
“Select a rug as big as possible for the space, allowing it to anchor the furniture in the room,” Moreira said. “This will also make the space feel bigger and help with the acoustics.”
Your rug should also be flat enough that it fits under the gap of doors as they swing open and closed, she added.
Nightstands should never be way taller or shorter than the bed they’re next to
Your nigthstand shouldn’t be much lower or higher than your mattress.
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She also dislikes when nightstands are not the right size for the bed they’re anchoring
“The height of the nightstand should be within 2 inches from the top of your mattress,” Moreira told BI. “This allows for easier reach and looks more proportionate.”
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A blank ceiling is a missed opportunity
Always consider the ceiling when designing your space.
“Adding wallpaper or contrast paint to the ceiling allows you to add height, depth, and draw the eye up,” she said.
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The ceiling is also an opportunity to add another texture to the room.
By thinking of light fixtures only as functional, you’re missing out on decor opportunities
A lamp isn’t just a light source — it can also be a decorative element in your space.
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According to Moreira, thinking of light fixtures strictly as functional is a big mistake.
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“Light fixtures are a great way to add an artful element to a room,” she told BI. Choose fixtures that are sculptural, but also complement the architecture.
By hanging drapery hardware too low, you’re sabotaging your own space
Draperies should be at a height that allows them to just kiss the floor, the designer explained. This gives them a very custom look.
“The drapery rod should be hung as high up as possible, close to the ceiling,” Moreira said. “This adds height to the window.”
Repeating too many of the same wood tones can make the room look one-dimensional
It’s not ideal to buy furniture in matching wood tones when decorating a room, Moreira told BI.
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In fact, your furniture should never look like you purchased it all at once or that it’s part of one set.
“Consider staying within the same hue but playing with the tone or texture of the woods to add dimension and look curated,” the designer said.
A boring powder room is a missed opportunity to make a statement
A funky mirror can give a bathroom personality.
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“A powder room is a great place to get creative, take risks, and go bold,” she told BI. “Use wallpaper, paint the millwork, and/or the ceiling.”
Special details, like a really cool light fixture or an interesting mirror, can make a statement and be something that your guests will talk about.
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A space with warm and cool light temperatures will look busy
The designer hates to see warm- and cool-toned light bulbs within a single space.
“It’s important to make sure the color temperature of the light bulbs or architectural lights are all the same within the space,” Moreira said. “Otherwise, it will look like the lights were an afterthought and look very busy.”
Buying the wrong-sized furniture for a space can make it feel too empty or crowded
The scale of your furniture is so important. When shopping, she said, consider the floor space you’re working with as well as the architecture of the room.
“You should have good traffic flow within the space, but it should never feel like it’s missing a piece or feel empty,” Moreira told BI.
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Try to avoid completely matching metal finishes within a space
“Many people are very afraid of mixing metals and prefer all of the finishes to match exactly,” she said. “I always encourage my clients to mix metals.”
This allows the space to evolve over time and gives you more flexibility when introducing new items into the space.