In an effort to boost home loan lending to lower- and moderate-income borrowers, Fannie Mae has created a new program called “HomeReady.”
Fannie didn’t release all the details yet, but they expect to roll out the program later this year, integrating it with their automated underwriting system Desktop Underwriter (DU).
What we do know is that the program will automatically flag potential borrowers for inclusion in the program by utilizing the DU findings.
This means borrowers who would otherwise be denied a mortgage might actually qualify thanks to the expanded guidelines offered via HomeReady.
Additionally, lenders will be able to underwrite the loans with more certainty knowing that they won’t violate Fannie’s guidelines, potentially leading to costly buybacks.
HomeReady will eliminate or cap certain loan level pricing adjustments (LLPAs) such as those associated with credit score, LTV, and so on.
That should translate to a low mortgage rate for a traditionally higher-risk borrower, which should actually boost their chances of staying current on the loan.
That strange dilemma has always caught my attention and made me think – higher risk borrowers are charged higher interest rates, thereby creating costlier payments that are in essence more difficult to pay each month.
But you can’t have it any other way, unless there are programs like this around. Maybe that’s the point.
Anyway, in exchange for the lower rates, borrowers taking part in HomeReady will need to complete a mandatory online education course called Framework, which should prepare them for the home buying process and provide post-purchase support. It costs $75.
The course meets the standards of the National Industry Standards for Homeownership Education and Counseling and the HUD Housing Counseling Program.
HomeReady Allows Non-Borrower Household Income
Now onto some of the HomeReady Mortgage details that are noteworthy. For what Fannie calls the “first time,” a non-borrower household member’s income can be considered when determining the borrower’s DTI ratio.
This appears to be aimed at multi-generational and extended households that Fannie claims, “have incomes that are as stable or even more stable than other households at similar income levels.”
HomeReady will also allow income for non-occupant borrowers, such as parents of a borrower, to be used to supplement qualifying income.
The program is available to both first-time home buyers and repeat homeowners, and only requires a 3% down payment, an option now available to all Fannie Mae borrowers.
However, there are some income limits tied to this new program.
If the property is located in a designated low-income census tract, HomeReady will be available to borrowers at any income level.
Additionally, properties in high-minority census tracts or designated natural disaster areas will be eligible for HomeReady financing at or below 100% of area median income (AMI).
For properties that aren’t in these census tracts, HomeReady borrowers can only have an income at or below 80% of the AMI.
Fannie estimates that roughly half of census tracts nationally will be subject to the 100% AMI limit or have no income limit at all.
In any case, there are already maps posted on the Fannie Mae website that detail the income limits (or lack thereof) from state to state.
Additional details will be disclosed to lenders in coming weeks via a Selling Guide announcement, with Desktop Underwriter inclusion and loan deliveries expected in late 2015.
HomeReady Mortgage Program Highlights
[checklist]
Automated identification of HomeReady-eligible loans via DU
Risk-based pricing waived for borrowers with LTVs >80% and credit score >=680
LLPA cap of 150 basis points for loans outside the parameters above
3% minimum down payment for purchases
95% max LTV for limited cash-out refinances
No minimum borrower contribution (on 1-unit properties)
Cash on-hand acceptable as source of funds for down payment and/or closing costs
Income from non-borrower household member allows DTI ratio of 45-50%
Non-occupant borrowers also permitted
Reduced MI coverage requirement above 90% LTV
Homeownership education course mandatory
HomeReady loans can be bundled with standard loans in same MBS pools and whole loan commitments
The Palos Verdes Peninsula — a land of rolling hills, jagged cliffs and sweeping views of the city and ocean — boasts some of the most beautiful terrain in Southern California.
It’s also long proven to be some of the most dangerous.
For hundreds of thousands of years, the peninsula has been plagued by an ancient landslide complex that slowly reshapes the topography. The earth lurches and warps, sometimes slowly, sometimes rapidly, destroying homes and infrastructure along the way.
The latest damage was dealt to Rolling Hills Estates, where a major ground shift led to 12 homes being evacuated after a fissure snaked its way through the neighborhood. Foundations cracked, walls collapsed and some homes were visibly leaning as the hillside upon which they were perched slowly descended into a canyon.
Land movement is a stubborn, if periodic reality for much of California, particularly the coastal hills of the South Bay and Orange County.
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Laguna Beach, Laguna Niguel and San Clemente have dealt with destructive slides. In the 1920s, a handful of homes in San Pedro slid into the ocean, creating what’s now known as the Sunken City. A mile south of Rolling Hills Estates, the city of Rancho Palos Verdes is hatching plans to avoid a similar fate.
“This remains an active situation,” said Rolling Hills Estates Mayor Britt Huff at a city council meeting on Tuesday, adding that due to a break in a sewer main, five additional houses were ordered to evacuate earlier that day.
At the meeting, the council declared a state of emergency in order to access broader resources from state and federal agencies.
“No one expected this. Landslides don’t really happen in this area,” said resident Lisa Zhang.
A landslide-prone peninsula
The peninsula’s bout with landslides is well-documented in the geological record, stretching back millenniums but coming to a head 67 years ago when an L.A. County road crew accidentally reactivated an ancient slide complex while building an extension of Crenshaw Boulevard in Rancho Palos Verdes.
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The crew dug up and shifted thousands of tons of dirt, throwing things off balance enough to send the land in the Portuguese Bend into a super-slow-motion descent and activating a landslide.
That’s just one ancient landslide complex. According to El Hachemi Bouali, assistant professor of geosciences at Nevada State University who co-authored a report on the Portuguese Bend landslide complex, there are areas all across the peninsula at similar risk.
Due to precipitation and geology, the hills are uniquely susceptible to movement. Layers of clay — bentonite and montmorillonite, to be specific — are found beneath the ground, interspersed between layers of bedrock. When water absorbs into the earth, it expands and lubricates the clay until it’s slippery enough for the land to ride downward with the force of gravity. Even thick layers of bedrock will slip.
Water infiltrating the earth is the most common cause of landslides, according to Brian Collins, a research civil engineer with the U.S. Geological Survey. In California, these types of landslides are typically triggered during a big rainy season.
But there is another factor at play. The Palos Verdes Peninsula — like Laguna Beach and San Clemente — is packed with people. Those people have sprinklers, gutters, irrigation systems and leaky pipes that all add water to the earth.
Inland, an area as hilly and craggy as the Palos Verdes Peninsula might not be expected to house roughly 65,000 people. But anywhere with a view of the ocean, with secluded canyons to hike and ride horses in, will always be attractive — especially right next to L.A.’s flat sprawl.
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What caused the slide?
There’s no official diagnosis on what caused the landslide. According to city officials, a geologist will study the site and draw a conclusion from there, reviewing both the history of the area and any recent changes to the land.
But geologists and structural experts have suggested a few likely culprits: land grading, rainfall or something as simple as a broken pipe.
The townhomes destroyed in the landslide were built in the 1970s, and according to Kyle Tourje, a structural assessor with Alpha Structural, much of the land was graded and reshaped to make room for buildable lots starting in the 1950s.
So even though lots might be relatively flat, if land was moved in order to make it flat, the soil might not be as compact as it should be. When soil is looser, it’s more susceptible to water.
Tourje said the record rainfall of winter and spring didn’t help, but he thinks the slide was likely caused by a concentrated water source such as a broken pipe or sewer drain.
“On a big graded tract like this, one line that feeds one sink of one single house can affect the soil,” he said. “Next month, your water bill is extremely high. Next thing you know, your house is at the bottom of the canyon.”
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Tourje works on landslide damage every week but only comes across slides of this magnitude a few times per year.
“This is a total loss. These homes will have to be completely demolished,” he said.
Bouali, on the other hand, says unless a smoking gun appears, such as a burst pipe or a resident’s $1,500 water bill for June, he’s leaning toward rainfall as the primary culprit.
“My guess is that there has been a slow decrease of the slope’s resisting forces due to infiltration of precipitation into the clay layers,” Bouali said, adding that even though the rain fell in the spring, it might take until July for the water to flow through the layers of clay.
He points to California’s Landslide Susceptibility map, which shows almost the entire peninsula as highly susceptible. Given the area’s geological makeup, as well as the roughly 20-degree downward slope upon which the homes were perched, the landslide didn’t necessarily come as a surprise.
Since the ‘70s, regulations have become stricter with limits on how steep builders can grade lots and requirements for more subsurface drainage systems and more compact soil.
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But those measures might not help if the slippery layer is 60 feet underneath all the grading and maybe several strata of bedrock, according to Tony Lee, a local geologist who has worked in the area for 30 years.
Lee said most of his clients come from other areas of the peninsula where slides are more prevalent, but he’s already received multiple calls from homeowners in Rolling Hills Estates wanting to get their properties checked.
The allure of living in a landslide zone
Common sense might suggest that the land is uninhabitable — that building homes on terrain prone to landslides will inevitably lead to disaster.
But California is a beautiful place, and Californians love looking at it. It’s the same reason that hillside homes are perched on stilts in a region that deals with devastating earthquakes. The same reason buyers flock to the fire-prone hills of Malibu or the Western Sierra or cram beach houses onto the sand as ocean levels rise.
“I’ll be here until I can’t be here anymore. I’ll slide away with the land,” said Claudia Gutierrez, a longtime resident of Portuguese Bend, an area about a mile southeast of the slide site that has been dealing with landslide issues of its own.
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If the Rolling Hills Estates landslide is the hare, moving quickly and aggressively, then the Portuguese Bend landslide is the tortoise, with the land slowly shifting roughly eight feet per year for the last 15 years.
It has caused chaos in the community, with houses sliding across property lines and roads warping into roller coasters. But according to Gutierrez, that hasn’t kept people away.
“We had homes in the middle of the active landslide zone that sold for more than $2 million last year,” she said. “I’m amazed.”
For newcomers, the peninsula offers not only great views but stellar schools, cool coastal weather, larger lots and a more relaxed, rural feel compared to the bustling cities surrounding it. And for longtime residents, even though they’d be able to sell their houses, the peninsula has become home — even if that home is slowly slipping out from under them.
According to local real estate agents, the landslides have never been a major concern to residents of Rolling Hills Estates.
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“People think this was an isolated incident,” said Mingli Wang, a longtime real estate agent in the area. “People believe their homes are safe. They don’t think it’ll happen to them.”
She noted that during home sales in the city, sellers disclose natural hazards such as the area being high-risk for fires or a dormant earthquake zone. But landslides are not part of the disclosure.
Wang is a resident herself, and she’s not concerned about the community’s safety going forward.
Steve Watts of Vista Sotheby’s International Realty said that landslides are never part of the conversation during a sale in the city.
“If your house is hanging off the edge of a cliff, they’ll sometimes get a soil report to check how deep the bedrock is. But it’s very minor,” he said.
Watts said the gated neighborhood where the homes slid into the canyon might see a slow market in the short-term, but sales will be back to normal before long.
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Zillow puts the median home value in Rolling Hills Estates at $1.918 million, nearly double the $1.067-million mark set in 2015. Many homes in the city face Torrance, missing many of the ocean views featured elsewhere on the peninsula, but still fetch prices north of $5 million. The cheapest single-family home currently on the market is offered at $1.8 million.
When Bouali, the geologist, leads classroom discussions about hazardous areas, the conversation inevitably leads to the question, “Why do people even live there?”
He said it often comes down to the cost of moving. And Southern California has an additional factor: most of the region deals with some sort of natural disaster risk, whether it’s a landslide, flood, wildfire or earthquake. Pick your poison.
That said, he added that he wouldn’t personally live on the peninsula.
The mortgage deals keep coming, the latest being the new “U.S. Bank Access Home Loan,” which comes with up to $12,500 in down payment assistance and a lender credit up to $5,000.
This particular loan is geared toward home buyers in markets where the minority population is more than 50%.
However, borrowers do not need to be a first-time home buyers to qualify, though income limits do apply.
At the moment, it’s being piloted in select cities nationwide, including Las Vegas, Los Angeles, Little Rock, Milwaukee, and St. Louis.
Read on to learn more about this program, which allows FICO scores as low as 640.
How the U.S. Bank Access Home Loan Works
Between steep home prices and high mortgage rates, home buying has gotten expensive and out of reach for many.
To help alleviate that, Minneapolis, MN-based U.S. Bank has committed $100 million to the new Access Home Loan program over the next five years.
As stated, the goal of the loan is to increase access to homeownership for minority families.
It also aligns with the company’s initiative focused on advancing Black homeownership.
Specifically, this means residing in a market where the minority population is more than 50%, per census tract data.
Additionally, the borrower’s income must be equal to or below the HUD Area Median Income in the area where they wish to purchase a property.
However, it’s still possible to qualify for this loan if your earnings are above the median income, assuming the subject property is located in a low-to-moderate income census tract.
Beyond that, you don’t need to be a first-time home buyer to qualify, and the credits can be combined with other down payment assistance grants and programs.
Speaking of, you can get up to a whopping $12,500 in down payment assistance via the U.S. Bank Access Home Loan, along with up to $5k in lender credits.
You can receive down payment assistance of up to either $8,000 or 3% of the purchase price up to $12,500 – whichever is greater.
That puts the maximum purchase price at around $417,000 to get the full 3%.
Those lender credits can be used to offset your closing costs and/or buy down your interest rate.
And the minimum down payment is just 3%. This means you can purchase a home with very little down, and potentially snag a discounted mortgage rate in the process.
Note that there is a $1,000 minimum contribution from the borrower’s own funds, so you can’t show up completely empty-handed.
Perhaps most importantly, the assistance funds are deferred, but must be repaid.
They are due upon sale of the property, or if the first mortgage is refinanced or paid off.
So it appears you get an interest-free loan, as opposed to an actual grant that needn’t be repaid.
U.S. Bank Access Home Loan Fast Facts
Receive up to $12,500 in down payment assistance funds
And up to $5,000 via a lender credit (for closing costs, etc.)
Must buy in a majority-minority location where total population is greater than 50% minority
Income must be at/below median unless you purchase in a low-to-moderate income census tract
Minimum FICO score of 640 (680 if more than one-unit property)
Down payment as low as 3% (must contribute at least $1,000)
Max debt-to-income ratio (DTI) of 43%
Borrowers must complete a home buyer course
Mortgage insurance is covered by U.S. Bank
Can combine with other down payment assistance grants and programs
Where the U.S. Bank Access Home Loan Is Available
At the moment, the U.S. Bank Access Home Loan is being piloted in select markets throughout the country.
Those include Las Vegas, Little Rock, Milwaukee, Minneapolis, St. Louis, along with six California cities.
The California cities are Fresno, Los Angeles, Oakland, Riverside/San Bernardino, Sacramento, and San Diego.
Within these pilot markets, the minority population must be more than 50%, as determined by census tract data.
Assuming all goes well, U.S. Bank will likely roll out the program to additional markets that fit the criteria.
Is This a Good Deal?
Whenever programs like this surface, I include a section about whether they’re a good deal or not.
Ultimately, you have to look at the complete picture to determine if the U.S. Bank Access Home Loan beats other options.
That means, once you find out you’re even eligible, comparing the mortgage rate, closing costs, payment, APR, and service to other banks, mortgage lenders, and credit unions.
Also note that the down payment assistance offered via this program has to be paid back if and when you sell or pay off the loan.
This might differ from other grants and down payment assistance programs where it’s forgiven after a certain amount of time.
Of course, U.S. Bank is also throwing in up to $5,000 in lender credits, which don’t need to be paid back.
And they’re covering mortgage insurance costs, which can be pretty pricey when you put little down on a home purchase.
It appears they only offer a 30-year fixed loan option, which is somewhat restrictive, but probably would be the chosen option for the majority of borrowers anyway.
All in all, this seems like a pretty good deal if you’re already in the market to buy a home, and it’s located in one of the eligible areas.
From the outside, the rows of tile-roof houses in a new community in Menifee don’t look much different from those in other subdivisions cropping up in this fast-growing city in Riverside County. But on the inside, these all-electric homes are revolutionary, offering a glimpse of the zero-emission future we should be hurtling toward to fight climate change and adapt to its effects.
All the houses in the Durango and Oak Shade at Shadow Mountain communities, two adjacent KB Home subdivisions I visited in May for an opening event, were built without natural gas hookups or appliances. Each of the 219 homes comes with rooftop solar panels, heat pumps for heating and cooling, induction cooktops and other energy-efficient electric appliances, and a smart electrical panel that manages energy use. In the garage is a battery storage system that can power the home during an outage and in the evenings when the cost of electricity from the grid is higher.
They’ll also soon be connected to a shared community battery storage facility the size of a shipping container that’s a backbone of a system known as a microgrid. It will allow residents to disconnect from the electrical grid during an outage, and use the backup power to keep their lights on for a few days.
I expected these homes to come with a premium price tag, given their futuristic amenities. But they start around $520,000, and a 2,900-square foot, four-bedroom, two-bath Spanish-style home recently sold for about $590,000. Buyers aren’t paying extra for technology that would otherwise cost $30,000, according to the homebuilder, because the project was subsidized by a $6.65 million U.S. Department of Energy grant.
The homes have other energy efficiency features such as spray foam insulation under the roof to help cool the attic and the living space below. The houses are essentially “like a Yeti cooler,” as one official with SunPower, the company that provided their solar and battery-storage systems, told me. That’s life changing in this corner of Riverside County where summer days often exceed 100 degrees and utility bills climb painfully high.
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After spending a few hours checking out the homes’ energy-smart features and listening to company and government officials talk up their climate-friendliness and resilience, I was almost envious. The people moving into these houses are living in a world that, for now, remains a distant reality for most Californians for whom a fossil fuel-free home is still very much a pipe dream. And it highlighted how much work there is yet to do by state officials to ensure all Californians start to benefit from home electrification as that need becomes increasingly obvious in a world altered by climate change.
Underscoring that feeling for me was a remark by a California Energy Commission official in attendance, who noted that new construction accounts for less than 1% of the state’s housing stock in any given year.
California has 14 million homes and builds only about 110,000 new housing units a year. So even if all new homes are built with at least one electric heat pump, as the Energy Commission expects, that would account for only about 8% of all homes by 2030, 14% by 2040, and 20% by 2050. That’s not anywhere near fast enough to slash climate-warming emissions, which means that most of this transition will have to happen by replacing appliances in existing homes.
For now, California remains heavily dependent on fossil fuel in daily life, especially the methane gas that powers the majority of home appliances. For most of us, the transition to zero-emission electric living will be far more complicated, messy and slow than buying a new home.
The furnaces, stoves, clothes dryers and water heaters in our homes and businesses may not seem like big polluters individually, but they all add up to a lot. Buildings are one of the biggest emissions sources in California, responsible for about 25% of its climate pollution. But California still lacks the kind of straightforward zero-emission targets for buildings that it has already adopted for other major pollution sources like electricity generation and new cars.
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Because home appliances like furnaces and water heaters can last 15 years or longer, scaling up action over the next few years is critical if we are to get on a path to zero out greenhouse gas emissions by midcentury and avert catastrophic levels of climate change.
A recent report by Rewiring America, an electrification-focused nonprofit organization, found that to meet those climate targets the U.S. has to dramatically increase the pace of replacing fossil-fueled appliances and cars over the next three years. That would mean purchasing about 14 million more electric heat pumps, water heaters, stoves, rooftop solar systems and electric vehicles above what’s expected.
While California has some laudable goals, including Gov. Gavin Newsom’s target of installing 6 million heat pumps by 2030, state officials acknowledge that much greater numbers will be needed to put California on track to achieving a carbon-neutral economy by 2045.
State air quality regulators plan to end the sale of new gas-fueled furnaces and water heaters by 2030, and the Inflation Reduction Act and its array of consumer rebate and incentive programs should help bring down the cost of replacing them with electric heat pump models. But state leaders need to establish clear and ambitious targets for home electrification, while pursuing creative solutions such as establishing a neighborhood decarbonization programto retrofit entire low-income communities with electric appliances and infrastructure at the same time.
There are reasons for optimism, including the home construction industry’s embrace of electric technology. Heat pumps are doing particularly well, now accounting for more than 50% of the market in new construction.
But I’ve also encountered troubling stories that make me really concerned about the slow and uneven pace of change. I’ve heard from homeowners struggling to turn their houses all-electric and their travails through a thicket of contractor resistance, government red tape and other obstacles. I’ve spoken to community leaders who fear that low-income tenants and other disadvantaged groups will end up shouldering most of the burdens of electrification, like higher utility bills and rent increases landlords are likely to impose to pay for electrical upgrades. I’ve covered legal setbacks and fossil fuel industry resistance operations that are hindering the transition to healthier, gas-free homes.
At my family’s 1950s-era tract house, I want to replace the gas water heater, furnace, dryer and stove with heat pump and induction models as soon as we can afford to. But I know that will be a long, expensive journey with no shortage of complications — and electrical work.
For now, our entry point is a $100 countertop induction cooktop we’ve started to use instead of our gas burners. It boils water faster and doesn’t pollute the air, but draws so much electricity that we can’t turn on other kitchen appliances at the same time or it overloads the circuit.
Whether we rent or own or have a new or historic home, everyone should be able to live in an efficient, non-polluting and climate-ready dwelling even if it wasn’t purpose-built for an all-electric world like the new construction in Menifee. None of us should have to wait decades for that to be our reality too.
It appears the pesky down payment hurdle to homeownership is finally being swept aside.
This week, Fifth Third Bank out of Cincinnati, Ohio announced the availability of a mortgage with absolutely no down payment requirement.
Put simply, that means you no longer need to save up to buy a home, whether that’s actually a good thing or a bad thing.
This seems to have been borne out of necessity, not preference, especially as home prices reach new heights nationwide.
Fifth Third’s Down Payment Assistance Program
If you’re light on down payment money
You may want to check out Fifth Third’s DPA program
Which offers up to $3,600 in down payment assistance
Combined with Freddie Mac’s Home Possible Advantage mortgage to create a zero down home loan option
The so-called “Down Payment Assistance Program” from Fifth Third relies upon Freddie Mac’s Home Possible Advantage, which allows for loan-to-value ratios as high as 97%.
The remaining three percent of the home purchase price is covered by Fifth Third via down payment assistance.
Fifth Third will allow up to $3,600 in down payment assistance, meaning the property price can’t exceed $120,000.
That $3,600 doesn’t need to be paid back, and it can used toward the down payment or closing costs depending on product type.
So the loan program is clearly geared toward those with low or moderate income, not just anyone looking to forego the usual down payment requirement.
The property must also be located in the following states: MI, IN, IL, KY, TN, OH, WV, NC, GA, FL.
To qualify, the property must either be located in a Low Income Census Tract or the borrower must meet the low income limit threshold based on figures from the Federal Financial Institutions Examination Council (FFIEC) website.
Prospective home buyers can also utilize local and state housing programs to “take advantage of free money for their down payments.”
Fifth Third does note that the down payment assistance might be treated as taxable income and reported to the IRS, so keep that in mind when pursuing this type of loan.
You don’t need to be a first-time home buyer to take advantage of this program, and if it aligns with Freddie Mac’s guidelines, the minimum FICO score is just 620.
It turns out Fifth Third accepts credit scores as low as 600, which is pretty amazing when coupled with a no down payment loan program.
However, if you are a first-timer, you probably have to complete some form of homeowner education.
The property must be a single-unit, primary residence, though I believe both single-family homes and condos/townhouses qualify.
Loan options are probably restricted to fixed-rate offerings, with the 30-year fixed the most likely candidate for home buyers with limited means.
No Money in the Bank Might Not Be a Problem
Aside from not needing a down payment
You might be able to qualify without reverses as well
So having no money in the bank isn’t necessarily a roadblock here
You can also enjoy reduced mortgage insurance premiums
The Freddie Mac program doesn’t require asset reserves so qualifying homeowners may be able to purchase a home with absolutely no money in the bank.
Additionally, it comes with reduced mortgage insurance premiums, making monthly payments more affordable to those with limited income.
Fifth Third is the latest bank to offer a low or no-down payment mortgage option.
A couple weeks ago, Guaranteed Rate launched a 1% down mortgage that relies upon a forgivable grant as high as 7% of the purchase price.
Quicken Loans, the largest nonbank mortgage lender in the nation, also has a 1% down payment mortgage that isn’t widely publicized.
Interestingly, all of these new mortgages rely on conforming loan programs and noticeably snub government lending such as FHA, which fell out of favor recently after a number of lawsuits.
While it’s great to have another flexible mortgage option, keep in mind that it may be more difficult to get your offer accepted if you are putting little to nothing down.
Home sellers aren’t particularly keen on seemingly high-risk buyers because chances of lender fallout are higher.
Read more: 3 ways a low down payment raises your monthly mortgage payment.
But BTIG/Homesphere‘s latest survey from small- and mid-sized homebuilders casts a light shadow on this bright overview. The monthly BTIG Survey indicates that building activity among smaller homebuilders cooled slightly from April to May, though sentiment remains much higher than last year.
The survey solicits the perspective of approximately 75-125 small- and mid-sized tract homebuilders nationally about sales, customer traffic, and pricing trends (117 responses this month).
Sales and traffic trends were a mixed bag in May. After big jumps in sales trends since the winter slump, the number of builders reporting year-over-year growth was 34% in May, up from 31% in April 2023. Traffic was down slightly, with 30% of builders reporting higher community traffic year-over-year compared to 34% in April 2023. Both metrics are considerably better than May 2022. Meanwhile, 39% saw a drop in orders vs. 34% in April and 53% in May 2022.
“Our survey suggests new home demand momentum slowed in May. We had expected stronger results this month given easing comparisons and positive anecdotal public builder commentary…the May uptick in 30-year mortgage rates may have also impacted trends,” commented Carl Reichardt, an analyst at BTIG.
Sales and traffic relative to expectations weakened a bit as well, with 37% of respondents seeing sales as better than expected vs. 38% last month. Meanwhile 26% saw sales as worse than expected, vs. 20% last month. On traffic, 35% saw better-than-expected traffic, with 23% reporting worse-than-expected traffic (compared to 42% and 15%, respectively, last month).
Builder pricing activity remained mixed. One-third of builders reported raising either “most/all” or “some” base prices, up from 30% in April. And 19% of builders lowered “most/all” or “some” base prices compared to 17% in April. Per the survey, 27% of respondents reported increasing “most/all” or “some” incentives, versus 22% in April. Only 3% reported decreasing “most/all” or “some” incentives compared to 7% in April. No builder reported decreasing “most/all” incentives in May.
“We believe builders have likely kept a careful eye on prices and incentives as they tracked traffic and buyer interest during the key spring selling season (typically February through May),” Reichstadt wrote. “We believe this is likely particularly true for private builders with more focus on mid level price points as opposed to low-end, volume-oriented public builders, who we believe have generally been very aggressive on pricing/incentives.”
Growing up in Orange County in the late 1970s, KL DeHart often wandered the Westminster Mall with her mother, checking out the latest fashions and seeing what movies were playing.
As a teenager, she spent many weekends there with friends playing pinball and skeeball at the arcade and shopping for trendy Chemin De Fer jeans.
Now, the mall is pocked with empty storefronts. At the remaining businesses, employees eagerly jump to help the few customers passing through.
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What may rise in its place, if developers and city officials have their way, is a new kind of mall, one that will include lawns, walking trails and thousands of apartments.
“It was the hip place to be, and it’s really faded out, but it’s just sad to see it go,” said DeHart, a 55-year-old massage therapist who still lives near the mall, in the house she grew up in. She is among the residents worried that the new apartments will increase traffic while doing little to solve the region’s affordable housing crisis.
In Orange County, the San Fernando Valley and suburbs throughout America, the mall was a gathering spot where there were few other places to hang out. It was where kids stocked up on the latest fashions and roamed in packs after school, spawning the term “mall rat.”
The 1980s cult classic “Fast Times at Ridgemont High” began and ended at the mall where the teens worked. In the 1995 film “Clueless,” a Beverly Hills teen retreated to the mall, which she described as a “sanctuary,” after failing to persuade a teacher to boost her grade.
Now, teenagers text with their friends and make TikTok videos. Their parents are more likely to shop online than at a brick-and-mortar store.
At the same time, Orange County is desperate for housing, with rents and home prices escalating and state laws requiring cities to zone for new construction. In a region where there is little undeveloped land and neighbors are likely to push back at new housing, some see declining malls as ideal places to build.
The Westminster Mall is “probably one of the largest areas of developable space that still exists in our time in this area,” City Manager Christine Cordon told the City Council during a meeting last November.
Cordon remembers taking the bus to the mall decades ago to pick out CDs at Best Buy.
“You’re too young as a teenager to hang out in an actual nightclub, so back in the day, where would you go? The mall,” said Karen North, a USC professor who specializes in social media and psychology.
“It became this default place to go because it had something for everybody. You never knew who you were going to bump into, but you were always guaranteed there was something going on and there would be people around.”
As envisioned in a plan adopted by the City Council last year, the new mall would contain at least 600,000 square feet of retail space. It would include up to 3,000 residential units and up to 425 hotel rooms, surrounded by a park with 17 acres of green space.
Teenagers could still hang out there — it just wouldn’t be the echoey indoor turf that Alicia Silverstone claimed in “Clueless.”
Orange County is catching on to a trend that has already taken hold farther north in the Los Angeles area, led by developer Rick Caruso with his Americana at Brand and Palisades Village malls and residences.
“This is really our opportunity to create something that we can be absolutely proud of for the next generation to create those same fond memories that I have and that others have in a fashion that is consistent with what the times are now,” Cordon said.
Bill Shopoff said his company, which purchased the Macy’s store and the former Sears store in the Westminster Mall last year, hopes to draw people back with shops, a hotel, townhouses and apartments.
Upscale malls like South Coast Plaza are thriving because “they have entertainment, food, there’s a reason to go there,” said Shopoff, president and CEO of Shopoff Realty Investments. “I think we need to do that in Westminster to create a sense of something.”
As for who will rent or purchase the homes in his preliminary plan, Shopoff is counting on a modern type of suburban dweller — one who would rather walk to restaurants and other amenities than live in a single-family home with a yard.
Experts say that new laws, along with increased pressure from the state to build more homes, have convinced some local officials who might have been resistant to rezoning commercial properties in the past.
Roughly every eight years, California cities are assigned a certain number of new housing units they’re required to zone for. As part of the 2020 assessment, Orange County needs to make space for about 183,000 new units, shared among all its cities.
Last year, Gov. Gavin Newsom signed two pieces of legislation aimed at spurring housing development in corridors otherwise zoned for large retail and office buildings.
“Whether you want to call Orange County urban suburbia or suburban urbanism, it’s definitely shifting,” said Elizabeth Hansburg, co-founder and executive director of People for Housing Orange County. “We have an interesting mix of historic districts and tract housing of the ’40s, ’50s, ’60s and even the ’70s, but I don’t see us building like that again. It’s going to be interesting to see how families evolve in denser spaces.”
Elsewhere in Orange County, similar mall conversions are at various stages.
In Santa Ana, a 309-unit apartment complex is under construction on the parking lot of the Mainplace Mall, part of a larger project that will include more apartments, restaurants, courtyards and a music venue.
Simon Property Group has said it is open to adding residential zoning to its mall in Mission Viejo. In Brea, the company has proposed redeveloping 15.5 acres of the mall to include shops, a resort-style fitness center, apartments and a large central green space.
A proposal to redevelop the Village at Orange mall to include housing along with retail has run into stiff opposition. Residents are voicing concerns about tall residential buildings looming above nearby single-family homes.
In Westminster, DeHart said that she and her neighbors who live in tract homes adjacent to the malls are not “NIMBYs” — an acronym for “Not In My Backyard.”
“That’s not what this is,” she said. “We’re asking legitimate questions, and we’re not getting answers.”
In Laguna Hills, the mall is being repurposed along the lines of Caruso’s Los Angeles-area developments, with up to 1,500 apartments, an upscale hotel, commercial office space and 250,000 square feet of stores surrounding a large green space.
On a recent day, a chain-link fence wrapped with a blue tarp surrounded the partly demolished main building, with the “Laguna Hills Mall” lettering barely legible.
A sign affixed to the fence featured a rendering of the new homes, asserting that “a brighter future is coming soon.”
Residents have voiced concerns similar to those of DeHart and her neighbors — traffic, overcrowding. But Laguna Hills Mayor Janine Heft said a change is needed.
“There’s a lot of nostalgia for what the mall used to be,” Heft said. “What we didn’t want was a blight, and that’s really what we had. We had this mall that hadn’t been kept up in years.”
On a recent afternoon, most of the sprawling Westminster Mall was deserted. The only activity was at an indoor playground near JCPenney.
Corrie Essex watched her 5-month-old son playing on a blanket as rain pounded on the glass ceiling.
She grew up in the San Fernando Valley and recalls listing the Northridge Mall as one of her favorite places in an elementary school assignment. Her mother took her and her siblings there to get burgers and go to the movies — a relatively inexpensive way to keep four kids occupied.
“We’d go all the time,” said Essex, 30, who now lives in Huntington Beach. “It was fun. Now, I hate the mall. It’s just not the same. Nothing’s beautiful anymore.”
But on a rainy day like this one, it was a good place to take her son. And, noted her sister, 27-year-old Jessie Lane, there’s little danger of spending money — “it doesn’t have any bougie stores that we would want to buy anything from.”
Their mother, 57-year-old Rachel Lane, said she likes the idea of adding housing to malls.
But with the new outdoor designs, she wondered, “Where are we going to go when it rains?”
While a majority (67%) of Americans own a pet, not even half of them own pet insurance. When considering what percentage of pet owners have pet insurance, it is important to note that we aren’t just talking about dogs, but cats, mice, hamsters, chickens, and a wide range of other animals as well.
According to a 2021 industry report by the North American Pet Health Insurance Association (NAPHIA), there were over 3.45 million pets in the US that have pet insurance. This might seem significant, but if you consider that there are somewhere over 144.6 million people with pets, it means that only about 0.26% actually own pet insurance.
What’s Ahead:
Why are there so few pet insurance owners?
This is not because of a lack of pet insurance companies, though. There are countless pet insurance policies that offer accident and illness coverage for dogs, cats, horses, birds, and more. However, what makes most people stop is that people often think that they don’t need pet insurance. While it isn’t an essential service to you, it may actually save your pet’s life when the time comes!
In this article, we will look at how many people in the US have invested in a pet insurance policy for veterinary care and why the issue is so prevalent.
Why go for pet health insurance?
Before understanding the statistics, it is important that we look at why simple pet industry expenditures can end up saving your pet’s life. Whether you are a dog owner or cat owner, these pet industry expenditures may seem wasteful, but if the terrifying situation of money shortage for health coverage arises, it may mark the difference between receiving medical care and the loss of an animal’s life.
Avoiding tough decisions
You may have to make the tough decision of having to put your dearly beloved down when it starts to suffer. To stop your loved one’s suffering, instead of spending thousands of dollars, you may then have to go for economic euthanasia. This is the worst-case scenario that pet owners may have to face without pet health insurance plans.
Keeping your pet safe
This isn’t the only reason why you should go for insurance coverage, though. According to the Insurance Information Institute (III) and American Veterinary Medical Association (AMVA), the primary reason people invest in an insurance policy is to avoid uncertainty about their pet’s medical expenses. You get to keep your pet expenditures in check with insured cats, dogs, and other pets.
Pet ownership & insurance
The concept of a pet health insurance policy is like buying health insurance for yourself. It has several restrictions to keep in mind. In fact, if you choose an insurance provider poorly, there is a very good chance that the average annual premium may be higher for your pet than for yourself or even your homeowner’s insurance (yet another reason I always recommend Lemonade).
Looking at the costs
On average, veterinary care may vary between $140 to well over $2,000 during the first year alone! In severe cases, most pet owners may have to pay over $20,000 during a dog’s lifetime, while horse care can go as high as $500,000, on average. Here is a representation of the estimated medical costs that you may have to bear throughout your pet’s life.
Average Pet Care Costs
Service
Estimated Costs
Grooming
$50-$700 per year
Flea/tick control
$40-$250 per year
Spaying
$100-$250
Neutering
$50-$100
Dental services
$50-$300
Vaccinations
$10-$1,000
Allergy tests
$200-$450
Heartworm tests
$50-$100
Infections
$40-$250
Digestive problems
$200-$1,200
Skin masses/shedding
$100-$2,000
These costs are steadily rising as the number of pet owners increases and inflation in general, pet care costs are rising significantly over the years. In fact, 47% of pet owners report being in some sort of debt because of their pets. In times like these, pet owner’s insurance can play a major role in helping you manage your finances better.
Pets as family & rising percentage of pet insurance
The cost of vet visits is steadily on the rise. Along with the pet ownership increase during COVID-19, this has fueled growth in the pet insurance market. Many people now think of their pets as family members. This is because of the rise in the number of pet adoptions following the coronavirus lockdowns. Furthermore, because of this adoption, 85% of dog-owners and 76% of cat-owners consider their animals to be members of their families.
Increase in insurance plans
As a result, a record-breaking 3.45 million pet owners signed insurance policies for their pets in Q1 of 2021. This is the fifth consecutive year that the insurance rates have grown, but so has the pet insurance industry as a whole. Every year, the average costs against accident and illness coverage rise by ~24%.
Looking at the numbers
NAPHIA reports that almost 99.9% of insurance policies for pets are in North America, with an estimated 3.101 million pets being insured by 2020 and 3.453 million by 2021. Out of these:
5 million include dog insurance policies
53 million include cat insurance
The remaining is for birds, horses, exotic animals, and even insects (yes, there are insurance policies for insects as well).
Dog vs. Cat insurance policy
This shows that dog insurance is much more common compared to any other animal insurance. From 2019 to 2022, the average number of people and cost of insurance has increased by 22.5% for dogs and 17.1% for insured cats. Combined, this reflects a 19.8% increase in the number of pet insurance holders.
The monthly insurance premiums for pet insurance vary with respect to the pet type as well. For example, the average premium for a German Shepherd stands at $34.42 per month in the US (lowest premium), while for rarer breeds, the premium may go higher than $100. This is why the adoption of insurance premiums is still not as common.
Pet insurance policy by plan type
According to a report by GM Insights, more than 80% of dog owners go for accident and illness insurance plans, while the remaining go for accident-only plans. The former is a comprehensive coverage plan that covers almost all of the out-of-pocket expenses that you may have to make for pet care. These may include:
Diagnostic tests
Major and minor surgeries
Emergency care
Digestive issues
Urinary tract infections
Broken bones
Fight or bit wounds
Burns
Fever care
Major health issues
Euthanasia, and more.
In most cases, insurance plans do not cover grooming or hygiene-related issues.
Accident-only coverage
Accident-only coverage, on the other hand, only includes pet injuries. Of course, these plans are relatively more cost-effective than extensive plans. However, they are more common as well. In 2021, for example, accident-only plans accounted for 92% of all policies purchased (a decrease from 97% in 2020).
Global pet insurance market overview
In 2020, the pet insurance industry was valued at $4.5 billion. The market has grown considerably at a compounded annual growth rate (CAGR) of 14.3%. According to this forecast, the market is expected to reach $16.8 billion by the start of 2030 due to the rapid adoption of newer pet insurance plans for all sorts of animals.
Primary focus
While the primary focus of the industry still remains dogs, by volume, if we look at newer pet insurance policies being bought, you will find that the number of cat policies being issued is picking up pace. For cats, accident-only pet insurance is not as beneficial as accident and illness coverage.
This is because cats get into fewer accidents than dogs but tend to have an equal number, if not more, of health issues. By 2023, the percentage of pet owners having pet insurance is expected to be at least three times the number today.
A common question people ask when buying pet insurance is what is a pre-existing condition for pet insurance. Buying pet insurance is a lot like buying life, health, or car insurance for yourself. There are a number of considerations that insurance providers make to determine how much your insurance premiums will be. The more pre-existing conditions your car or you have, the higher premiums will be.
The same is true for pre-existing conditions for pet insurance. It isn’t uncommon for pet insurance providers to decline coverage for specific pre-existing conditions to a pet owner. The policy for pet health insurance usually varies between providers and explains what diagnoses, treatments, and conditions it covers – and which it doesn’t.
This article will take a closer look at what pre-existing conditions are for pet insurance, why they are important, and what your options are to keep your pet safe.
What’s Ahead:
What are pre-existing conditions for pet insurance?
According to insurance providers, the pre-existing condition includes any kind of health issues, major injuries, or adverse medical history reviews that your pet developed before you’re in the waiting period. If your pet has a pre-existing condition, it doesn’t mean that you won’t be able to obtain a pet insurance policy.
Instead, it may either mean higher premiums or that your plan won’t cover the costs of these pre-existing conditions. If there are incurable pre-existing conditions, the plan will take the costs that could directly relate to recovery because of said diseases when deciding on the premiums.
Since the idea of pet insurance is to reduce vet care costs, you should carefully consider how much insurance premiums you are willing to pay before the venture doesn’t remain cost-effective anymore. Some of the best pet insurance providers don’t take pets with pre-existing conditions for this very reason.
Common pre-existing conditions
Generally, if you look at what are pre-existing conditions for pet insurance for different providers, you may find at least the following conditions:
Diabetes
Cancer
Heart disease
Urinary tract infections
Hip dysplasia
Ear infections
Respiratory infections
Arthritis
Epilepsies
Severe allergies
Major injuries
Other incurable pre-existing medical conditions
There are two types of pre-existing conditions that a pet owner has to report.
Temporary pre-existing conditions
As per pet insurance companies, if your pet has a pre-existing condition that used to be present but has no impact on its activities or health in the present, it is considered a temporary pre-existing condition. These are pre-existing conditions that are not present anymore, such as a past respiratory infection or a broken bone.
Permanent pre-existing conditions
Pet owners need to report any condition that the pet may be facing at the time of starting the policy – and the waiting period. These could be life-long issues that may return at any time because of the changes in environmental conditions, diet, or more. A prime example of this include lung issues, diabetes, and more.
What happens if my pet has a pre-existing condition?
Generally, pet insurance plans cover almost every condition, provided it occurs after activating the policy. For example, if your pet develops cancer, diabetes, or a respiratory condition after you have acquired the policy, it will be covered.
If, however, there are pre-existing conditions when you are looking to obtain pet insurance, most pet insurance companies will not cover pre-existing conditions. However, it will not prevent you from getting an insurance policy. Insurance companies will either give you a plan with heightened premiums, or they may not cover costs associated with pre-existing conditions.
Determining pet’s pre-existing conditions
Almost every insurance company first looks at your pet’s medical record before accepting any case. The pet health insurance company first considers if there are any signs of any illnesses at the time of policy waiting periods. These illnesses would be considered pre-existing conditions. Pet insurance providers also consider the past vet bills to determine the type of care you choose, the pet’s condition in general, and any medical history reviews.
Determining factors
Your pet’s breed, gender, age, and pet parents’ health also play a crucial role in determining the premiums and identifying what the pet develops in the future. For example, pugs are known to develop hernias and cancers, while Siamese cats may often develop asthma. These aren’t classified as pre-existing conditions and will therefore be covered if the illness does not exist at the time of the policy.
It is important to note that you can plead your case with a different pet insurance plan. In many cases, even if they decline coverage for pre-existing conditions, pet insurance companies often have good relations with veterinary care providers. They can help you get on a veterinary discount plan if needed. These plans are particularly helpful if you have multiple pets with different medical conditions.
Pet insurance policies for pre-existing conditions
Recently, the question of what pre-existing conditions are for pet insurance has increased considerably. This is because most veterinarians are offering more technologically advanced techniques and medicine. As a result, the cost of surgery, hip dysplasia recovery, chemotherapy, and other services are getting more expensive – albeit more effective.
A review in numbers
Almost 69 million households (over 90.6 million families) in the US own at least one pet, with dogs being among the most common types of pets in the suburbs as well as in urban settings. The number of pet parents is also rapidly increasing as a result. Dogs are followed by cats and freshwater fish, with 45.3 million and 11.8 million owners, respectively.
According to surveys conducted by pet insurance providers, roughly 14.75% of households have more than one dog, and 13.01% are looking to buy in the near or far future. As the number of pets increases, so will the need for pet insurance.
What does this mean?
The increasing costs of veterinary care, more people becoming pet owners, the prevalence of curable pre-existing conditions, and the overall increase in the number of visits to pet care facilities mean a higher demand for pet insurance policies.
According to NAPHIA (North American Pet Health Insurance Association), the average annual insurance premium is increasing every year. In 2018, it was roughly $556 for dogs, which increased to $600 by 2020. According to the American Veterinary Medical Association (AVMA), the vet bills coverage and premiums vary with respect to the provider and how they cover pre-existing conditions.
Most common pre-existing condition claims
According to NAPHIA and AVMA, the most common disease in dogs, cats, goats, cows, birds, and hamsters include:
Urinary tract infections
Ear infections
Gastroenteritis
Diarrhea or constipation (associated with pain)
Skin conditions
Arthritis
Allergies
Heart disease
Constant vomiting
Eye infections and other conditions
Cancers
Geriatric conditions
Many of these conditions may qualify as pre-existing conditions, depending on the timing of when you choose to get your pet’s pet insurance coverage started.
Dealing with a pet’s pre-existing conditions
As mentioned above, the frequency of health problems in pets seems to be actively increasing. It is imperative that you find an insurance policy that meets your needs as quickly as possible. Many pet owners aren’t sure of when the best time is to get in touch with insurance companies to avoid declaring a pre-existing condition.
Remember, not only is waiting for an expensive and risky venture, but there is also a chance that you may have to pay fines if it was later revealed that you hid something from the providers. Many insurance companies don’t insure a pet’s pre-existing condition. As a pet owner, you have several options once rejected by one pet insurance company.
Try out other insurance providers.
Ask a veterinary care provider for discount plans.
Ask a veterinarian to request an insurance company because of your unique circumstances. This may include suggesting that the present issue is a temporary condition and that it shall not have such a major impact in the future.
It is important to note that human insurance companies such as car insurance providers or human medical or life insurance companies are not allowed to discriminate between clients based on their pre-existing conditions. As far as pets are concerned, though, there are no regulations suggesting that pet insurance companies can or cannot adopt such practices.
This means that insurance companies are at full liberty to discriminate between pets (and their owners) who have a pre-existing condition when it comes to offering them a piece of the pie.
Is the higher pet insurance policy premium worth it?
chance that if you plead your case, some organizations may be willing to give you a pet insurance policy. Pet Assure, for instance, offers pet insurance plans even if there are pre-existing conditions.
But is the higher cost worth it?
Generally, it is never a good idea to wait when it comes to health insurance plans – for yourself or your pet. You never know when you may need it. However, even if you are currently focused on treating disease(s) that may be considered pre-existing conditions (which won’t be covered by the pet insurance policy), coverage could still be worth the cost.
For example, a pug who has hip dysplasia (a pre-existing condition) can still develop respiratory infections, urinary infections, heart disease, or cancer. Getting your pug insured now would have been much more beneficial in this case than waiting for the pre-existing condition to go away.
Furthermore, routine care visits may also end up costing quite a lot. From antibiotics to vaccinations, antifungal medications, hospitalization, diagnostic checks, and more could be quite taxing and can add up fairly quickly.
There is no doubt that pet insurance can be the saving grace you need when unexpected costs start adding up. Even if there are pre-existing conditions that won’t be covered or a rise in premiums because of the condition, going for pet health insurance policies may help you tackle the future much more confidently. You always have the option to from different pet insurance companies to find one that is best suited to your needs and your pet’s medical conditions!
In 2019, one out of every 100 homes were purchased by an iBuyer, short for instant buyer, per a new report from real estate brokerage Redfin.
While it doesn’t sound like iBuying is catching on, consider the fact that the number is up nearly double from 0.6% in 2018.
And about 10 times higher than it was back in 2016, when virtually nobody sold their home via an iBuyer service.
Also recognize that iBuying at scale is a very novel concept, and a business that big household names have just recently got involved in.
Some of the larger names in the space include Offerpad, Opendoor, RedfinNow, and Zillow Offers.
Simply put, an iBuyer will purchase your home for a fee somewhat similar to what a real estate agent would charge, only to rehab it and list it weeks or months later to a new buyer.
The advantage is you don’t need to find an agent, list it, stage it, hold open houses, and deal with uncertainty from prospective buyers.
In essence, you can consider these iBuyers institutional home flippers.
If they streamline their operations enough to lower costs, they might grow even more popular and eventually displace thousands of real estate agents.
iBuying Most Common in Raleigh
While iBuyers still account for a tiny piece of the overall pie, they snagged a whopping 7.3% share of home sales in Raleigh, North Carolina last year.
That was nearly double the 3.9% share reported in 2018, a testament to both the viability of iBuying and the good fit cities like Raleigh present to such companies.
Per Redfin chief economist Daryl Fairweather, places like Raleigh are “iBuyer sweet spots” because they are affordable, have newer housing stock, and are easy to price because many of the homes reside in homogeneous tract neighborhoods.
Raleigh is also a city poised to see home price growth, another important detail iBuyers have to consider when looking to turn a profit.
Lastly, it has been a pilot city for many iBuyers, who aren’t live in all cities across the United States just yet.
Similarly hot was Phoenix, AZ, where iBuyers scooped up 5.9% of homes for sale, followed by Charlotte and Atlanta (tied at 5.2%), and Las Vegas (4.1%).
iBuyers had a market share of 3% or more in 11 markets nationally, and at least 1% share in 21 total markets.
Again, because iBuyers haven’t rolled out to all cities nationwide, the numbers are still a bit scattered and lopsided.
In terms of volume, iBuyers purchased the largest number of properties in Phoenix (5,200+), followed by Atlanta (4,300+) and Houston (2,100+).
iBuying Surged in Tucson During the Fourth Quarter
iBuyer market share saw its biggest year-over-year increase in Tucson, AZ, where the number rose from 3.1% of homes in the fourth quarter of 2019 from zero a year earlier.
Again, this may reflect companies moving into new markets, but it also shows how quickly they are gaining traction and beating out traditional agents.
The second biggest increase was in Denver, CO, where the iBuyer share rose to 2.7% from 0.4% the year before.
Despite growing popularity, iBuyer market share did fall year-over-year in select markets, including Las Vegas (-3.4%), Phoenix (-1.2%) and Orlando (-1.0%), compared to Q4 2018.
However, Orlando was the only metro area to see its share fall on an annual basis from 2018 to 2019, declining from 2.6% to 2.2%.
iBuyers Like to Buy Homes on the Cheap
As noted, iBuyers tend to be interested in mid-market homes that are easily bought and sold, but there’s still quite a range nationwide.
The most expensive markets in 2019 were Riverside, CA, Denver, CO, and Portland, OR, where these companies purchased homes at a median $391,000, $386,000, and $377,000, respectively.
The cheapest markets included Tucson, AZ, Jacksonville, FL, and Atlanta, GA, where the median was $201,000, $202,000, and $212,000, respectively.
Overall, iBuyers paid a median $269,000 for the homes they purchased, up three percent from 2018, but well below the national median of $306,000 in January.
In every housing market other than Riverside, CA and Orlando, FL, iBuyers paid below the metro-area median.
In terms of unloading the homes once purchased, iBuyers were able to sell homes 15 days faster in 2019 than they did a year earlier, this despite the typical home sale taking two days longer.
iBuyer-owned properties were listed on the market for a median 38 days in 2019, compared to 53 days in 2018.
Meanwhile, a non-iBuyer home spent a median 37 days on the market last year, compared to 35 in 2018.
If iBuyers get better at what they do, it might become a more practical solution for home sellers, assuming these companies pass the savings onto consumers.