In June, 1,587 homes changed hands in the region, a notable drop from the 1,923 sales in June 2019, the year before the pandemic. Sales volume is still higher for the first six months of 2024 compared to the same period of 2023 but barely, by less than 1 percent. 

“What’s happening is if somebody can’t sell their house in Ohio, they can’t move to Charleston,” Hodson said. “There’s been a heavy, heavy movement from the Northeast, the West, but as those markets take a hit (so does Charleston).”

As a result, home sale contingencies — where a would-be buyer can walk away from a sale if they can’t sell their home by a certain date — are rising, he added.

While some can’t move, other potential sellers are unwilling give up their low-interest mortgages in the 3 percent range that they locked in during and before the pandemic, said Tara Bittl, an agent with Realty One Group Coastal in Mount Pleasant. 

“We used to say people moved every five to seven years; now we’re trending closer to 11 because of that interest rate change,” she said.

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The lack of movement contributed to the local inventory level rising for the fifth month in a row to 3,813 properties, which is still considered low. A balanced market would have about 7,000 listings.

Bittl said the reduced inventory has a number of impacts, from bidding wars in certain areas to casual buyers putting their moving plans on hold.

Without genuine motivation, they really need their “heart to swoon” to commit in this market and there aren’t enough options out there right now, she said.

The Federal Reserve has yet to take action that would ease mortgage rates, which are making it more expensive for buyers to borrow at a time when real estate prices and home insurance premiums also are rising. 

The average 30-year-fixed mortgage rate sits at 6.95 percent and 15-year FMRs are 6.25 percent as of July 3, per Freddie Mac.

Median home prices in the Charleston area continued to rise in last month, increasing 4 percent to $425,000 and up 57 percent since mid-2019. Insurance runs about $3,400 on average in South Carolina, according to the National Association of Realtors.

“You have to consider the cost of everything, not just the interest rates,” said Stacy Smith, broker in charge of Smith Spencer Real Estate in Charleston. “A young person buying a home is now totally pushed and it’s daunting.”

Turnkey homes are selling quickly at every price point, she added.

Homes where sellers want top-of-the-market prices for even what they consider minimal work are sitting, pushing the average days on market in June to 35 days, up 25 percent year over year, according to the June sales report.

Homebuyers want houses they don’t have to fix up, Smith said. Borrowing money to replace a roof or refurbish floors comes at a higher cost, too.

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Source: postandcourier.com

Apache is functioning normally

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

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.

“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

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%.

• • •

Source: adn.com

Apache is functioning normally

As expected, Federal Reserve Chairman Jerome Powell did not set a timeline for lowering interest rates during his semiannual monetary policy report to Congress on Tuesday morning when participants complained about the effects of a tightening monetary policy in the housing market. 

Powell indicated that Fed officials are not there yet, but suggested a better balance of inflation and employment in the U.S. economy. Most monetary policy watchers – about 70% – project a reduction in rates for the Fed meeting in September, according to the CME Fedwatch Tool. 

Powell said during the congressional hearing that reducing the federal funds rate target range will be appropriate once Fed officials have gained greater confidence that inflation is moving sustainably toward the 2% target. 

Incoming data for the first quarter of this year did not support such greater confidence, he said. One caveat: “The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2%.”

Regarding the labor market, Powell said that the U.S. economy has a “strong labor market” but not an “overheated labor market,” which “appears” to be back in balance and is not a source of broad inflationary pressures now. 

“If we loosen policy too late or too little, we could hurt economic activity. If we loosen policy too much or too soon, then we can undermine the progress on inflation. So, we’re very much balancing those two risks,” Powell added. 

Affordability challenges 

High housing costs and mortgage rates were mentioned several times during the congressional hearing, with members saying these are concerns of their constituents at the moment. 

“Keeping rates too high for too long threatens workers’ paychecks while keeping other costs high – particularly housing,” said Senator Sherrod Brown (D-OH), the chairman of the Senate Banking, Housing and Urban Affairs Committee. “It is no surprise that since the Fed began raising rates, the amount of income families need to qualify for a mortgage has nearly doubled.”

Brown added that higher interest rates make the housing supply shortage “worse, not better.” According to him, the U.S. needs more housing construction, but higher rates lead to the opposite and “particularly make it harder for multifamily construction to work financially.” 

Powell agreed that the COVID-19 pandemic created new distortions in the housing market, and the Fed’s tighter policy is affecting the housing sector. 

“But I would also say the best thing we can do for housing is to succeed in getting inflation down to 2% on a sustainable basis so that rates can come down so that the housing market can get back to what was the pre-pandemic normal, which is still a housing shortage,” Powell added.  

Basel III Endgame rules 

The Basel III rules (aka the Basel endgame) were criticized by participants during the congressional hearing. They significantly increase bank capital requirements and, if implemented, affect the mortgage industry.

Ranking Member Tim Scott (R-S.C.) said the proposal is an example of “overregulation” that would “cost millions of Americans their chance to own a home.” It would “force more money to the sidelines of the greatest economy on the planet and out of the hands of first-time homebuyers,” he added. 

“We need transparency in your rulemaking process, as this enormous proposal lacks any form of clear justification…  That’s why I believe that it is absolutely necessary to have a complete re-proposal of Basel III Endgame.” 

Powell, however, said that over the last several months, the Fed has held a series of discussions with the other bank regulatory agencies – the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) – about potential changes to the original proposal. 

“I’m pleased to say that we’ve made quite a bit of progress on those and are very close to agreeing on the substance of those changes. And I can’t really be specific because nothing is agreed until everything is agreed,” Powell said.

According to Powell, it has been a practice to put a revised proposal out for comment when there are broad and material changes for some period, probably 60 days. The expectation is to have final recommendations at the beginning part of next year.

In reaction, the Mortgage Bankers Association (MBA) president and CEO, Bob Broeksmit, said in a statement that the association agrees “wholeheartedly with Fed Chair Powell’s comments that it is ‘essential’ to re-propose the flawed Basel III Endgame proposal.”

According to Broeksmit, “certain provisions of the proposal would harm the U.S. economy, diminish mortgage credit availability – especially for low- and moderate-income homebuyers – and have detrimental impacts to the broader single-family housing and commercial real estate finance markets.”

Broksmit called on the Fed, FDIC and the OCC “to scrap this proposal and conduct a rigorous quantitative analysis – with ample time for stakeholder feedback – before the re-proposal of any new capital framework.”

Source: housingwire.com

Apache is functioning normally

Social Media Compliance, Client Retention; Freddie/Fannie Changes; Square Footage Stats

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Social Media Compliance, Client Retention; Freddie/Fannie Changes; Square Footage Stats

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Mon, Jul 8 2024, 11:48 AM

During a recent password audit, it was found that a blonde was using the following password: “MickeyMinniePlutoHueyLouieDeweyDonaldGoofySacramento”. When asked why such a long password, she said she was told that it had to be at least 8 characters long and include at least one capital. What’s today? It’s “change every password you have” day. Money is the focus of a lot of evil activity on the internet (look at credit union Patelco), but what about useful, constructive monetary activities? Location, location, location. What new home buyers get for their money varies by region. The median price and square footage of new single-family homes sold in 2023, according to the Census Bureau, was $760,700 and 2,430 square feet in the Northeast, $396,300 and 2,172 square feet in the Midwest, $388,800 and 2,335 square feet in the South, and $536,200 and 2,170 square feet in the West. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with Candor’s Mark Hinshaw on expectation versus reality when it comes to AI in the mortgage industry.)

Lender and Broker Software, Services, and Products

With high interest rates keeping more people in their homes, new revenue opportunities will come from places that don’t fit the typical servicer playbook. ICE has identified four key areas where technology can help set servicers up for success in today’s low-movement housing market. Explore how you can retain customers, capitalize on your existing portfolio, and streamline your back office in ICE’s complimentary new white paper, Technology helps servicers find opportunities in unusual places.

ActiveComply is excited to be part of the Mortgage Bankers Association’s RegTech Demo Day event on Thursday, July 11th at 12:00pm ET. Register to see the latest technologies, services, and insights from leading technology providers in the industry. This session is specifically for compliance professionals, legal counsel, and risk officers, among others. See high-level overviews of vendor technology that may provide value to your organization and help you succeed in an increasingly complex and competitive environment. See how ActiveComply identifies other language advertising as part of your LEP initiatives, consumer complaints on social media, & brand reputation concerns current events and political movements (just in time for an election year). Don’t miss these power-hour sessions designed to help decision-makers clarify the rapidly changing mortgage tech ecosystem. This event, normally priced at $399.00, is free to MBA members. Register today!

Winning Agent Business: The lender’s guide to building a strong referral network updated for 2024. The new rules mandated by the NAR settlement go into effect August 17th. That means agents are more incentivized than ever to show their clients value—and they’re actively looking to partner with top-tier lenders in their market. Want to take advantage and grow your referral business? Maxwell just updated its Winning Agent Business eBook with new tips straight from agents to help you better network to create a strong funnel of referral leads. Download your free copy to learn qualities agents value in their lending partners, networking dos and don’ts, ways to become a go-to lender, and more.

Agency News and Updates

Freddie Mac published the company’s annual Sustainability Report, which provides details about the company’s 2023 sustainability strategy, activities and performance. The report also includes the company’s Sustainability Accounting Standards Board (SASB) Index and Metrics for the years 2021-2023, as well as a Taskforce on Climate-Related Financial Disclosures (TCFD) Index.

Many families are looking into properties with ADUs for multi-generational living to offset rising housing expenses. Others are seeking a balance between caregiving for aging parents and providing a space for privacy and independence. Whatever the reason, ADUs have been on the rise. Many borrowers are looking to purchase or refinance homes with these units or build one on their existing property. Approximately one quarter of borrowers and homeowners that show interest in ADUs are caregivers or anticipate being a caregiver. Learn more about the benefits Freddie Mac offers for financing ADUs.

In recognition of National Homeownership Month, Freddie Mac is encouraging borrowers to benefit from CreditSmart® Homebuyer U, a free course within Freddie Mac’s CreditSmart ® suite of educational resources. It’s designed to empower them with skills and knowledge.

Freddie Mac updated Stable Monthly Income FAQ for Employed Income Calculation with a new question (Q5) concerning calculating the income average for fluctuating hourly earnings and/or additional employed earnings (e.g., bonus, overtime, tips) if there is an occurrence that prevented the borrower from working and/or earning full income for a period of time.

Freddie Mac Single-Family Seller/Servicer Guide (Guide) Bulletin 2024-9 announces updates pertaining to rental income requirements to provide additional flexibility. Shared amenities requirements for residential projects. Aligning the Guide with treatment of documentation provided, but was not required, in Freddie Mac’s quality control review.

Fannie Mae is continuing its work with Freddie Mac to create standardized subordinate documents, publishing documents for Ohio, New Jersey, and Pennsylvania. Learn about efforts to expand access to down payment assistance.

Fannie Mae issued a Request for Proposal (RFP) to evaluate qualified interested industry participants for potential inclusion in its Title Acceptance pilot and other suppliers that have viable solutions to reduce borrowers’ closing costs. Vendors can respond to the RFP in ProcureOne. The RFP market interest period closes on July 26, 2024.

Fannie Mae posted the June Appraiser Quality Monitoring (AQM) list to Fannie Mae Connect™. The monthly list will also be available on the AQM page through July 30, 2024, when Fannie Mae Connect will be required for viewing.

FHFA published updated aggregate statistics from the National Mortgage Database (NMDB®) and launched the NMDB Aggregate Statistics Dashboard, a new data visualization tool for the NMDB Outstanding Residential Mortgage Statistics. The release describes outstanding residential mortgage debt at the end of the first quarter of 2024. FHFA Releases Data Visualization Dashboard for NMDB Outstanding Residential Mortgage Statistics has been posted.

Capital Markets

There was plenty of economic data released over last week’s holiday-shortened week. The U.S. economy is based on jobs and housing, and last week it was jobs’ turn to be center stage. The focus was on employment stats for June which saw nonfarm payrolls increase by 206k in June. Despite the increase, the previous two months were revised down by a combined 111k which brought the average increase over the second quarter to 176k per month. The unemployment rate rose from 3.96 percent to 4.05, the first time above 4 percent since January 2022. Labor force participation also increased slightly.

As the labor market continues to become more balanced the upwards pressure on wages has eased and average hourly earnings were down 0.2 percentage points on a year-over-year basis to 3.9 percent. The other major data out last week was the Institute of Supply Management indices which both came in below economists’ expectations. The Personal Consumption Expenditure deflator eased to 2.6 percent over the last twelve months in May as well. Sustained easing of inflation as well as a looser job market bode well for a potential rate cut in September. Following last week’s data, the odds of a cut in September are nearly three-in-four.

This week’s economic calendar includes some Treasury auctions of notable duration (3-year, 10-year, 30-year), May Wholesale Inventories, CPI and PPI, as well as preliminary July University of Michigan Consumer Sentiment. The only data point on today’s calendar is May Consumer Credit, due out this afternoon. We begin the 5-day work week with Agency MBS prices little changed from Friday, the 10-year yielding 4.29 after closing Friday at 4.27 percent, and the 2-year at 4.62.

Jobs

Seeking growth capital, equity, debt, or strategic alternatives? An IMB consultant with 34 years of executive management experience in the mortgage space is available to support your efforts! E-mail industry veteran Steve Landes for more information on helping you grow your business.

Top Producing Loan Officer Alex Rayner Partners with Service First Mortgage to Launch Haymaker Home Loan! Alex Rayner has partnered with Service First Mortgage to launch Haymaker Home Loans, a company dedicated to supporting top producers. “This collaboration provides access to cutting-edge technology, products and services, ensuring loan officers thrive in a competitive industry,” Rayner said. Earning an MBA from the University of Houston, Alex is dedicated to providing exceptional service. His industry acumen and skill with client relations set him apart. For loan officers looking to start their own mortgage company, Rayner advises exploring options with Service First Mortgage. “Starting a mortgage company from scratch is a daunting task,” Rayner said. “By partnering with Service First Mortgage, you gain immediate access to essential resources, advanced technology, and a support team. This allows you to focus on what you do best, e.g., originating loans and serving clients, without the overhead and operational challenges of building a company from the ground up.” Inquiries should be directed to James Wallace!

“ACC Mortgage is coming off its 2nd best month in its 25-year history. 2024 is shaping up to be our best year ever! How many mortgage companies can claim that? Are you planning for your next 25 years? ACC is seeking four (4) well-qualified Account Executives or a team that is looking for support, pricing, culture and stability. ACC makes Non-QM easy. Recent articles discuss ACC’s vision. For example, ACC’s Senko talks non-QM outlook! Send a resume for confidential interview.“

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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New Home Construction Slows as Mortgage Rates Remain High

Home building in May fell to its slowest pace in four years despite a supply shortage. That trend could put even greater strain on buyers.

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Housing starts declined in May on both single-family and multifamily dwellings.Credit…Kim Raff for The New York Times

June 20, 2024

Construction of new homes in the United States dropped below expectations in May as builders pull back on new residential projects largely in response to high interest rates, reinforcing concerns about stubbornly high housing prices.

Government data released on Thursday showed that new-home construction, or housing starts, fell 5.5 percent last month to an annualized rate of 1.28 million, a sign of more cracks in the already shaky housing market. Slower construction of both single-family and multifamily homes contributed to the overall drop. Building permits dipped 3.8 percent, pointing to less future construction.

This downturn in home building comes as the average rate on 30-year mortgages, the nation’s most popular home loan, has reached highs not seen in decades, though the rate dipped slightly this week to 6.87 percent, Freddie Mac reported on Thursday.

The magnitude of the decrease in construction last month underscores that high interest rates are both weakening housing demand and raising costs for builders — two dynamics that are ultimately contributing to builders’ reluctance to start projects. Home builder sentiment dropped in May to its lowest level this year before falling even further this month, suggesting relatively tepid home construction data in the coming months, Daniel Vielhaber, an economist at Nationwide, said in a statement.

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Source: nytimes.com