What We're Reading
T3 Insight Monthly Digest Readings
- Article available on NPR
The trifecta of inflation, rising interest rates and low inventory makes for a unique real estate market for many buyers. This short NPR story provides insight into the nuance of these three conflating factors in the market.
- Article available on Inman
Greater Alabama MLS is participating in a program offered by Atlanta-based First MLS in which FMLS offers MLSs the ability to enter a data-share agreement and also leverage the sharing of tech tools and more. FMLS’s partnership program represents how some MLSs are finding unique ways to partner with other MLSs in innovative ways to broaden their scope, economies of scale and resources.
- Article available on Mortgage News Daily
Mortgage interest rates jumped to above 6 percent in mid-June, the highest rate in several years and an indication that that steady period of low mortgage interest rates look to be coming to an end. Low interest rates have been one key factor driving demand to very high levels as buyers raced to take advantage of record low rates. This period of rate-driven demand appears like it’s coming to an end.
- Article available on Marketwatch
Homebuyer surveys, falling mortgage applications and dropping new-home sales, provide data that reveals how the market is shifting. The diversity of data points outlined in this article, indicate that the real estate market is likely heading for a sustained shift. The depth, duration and other details of the shift, however, are still unclear.
- Article available on Census
Housing starts rose 14.6 percent in April from a year ago, according to U.S. Census Bureau data. This marks a continuing trend of increased starts, which measured approximately 1.2 million in April 2017 and in April 2022 came in at just above 1.7 million. Increased construction is one key element for relieving the country’s yearslong inventory shortage. If this increase sustains, and turns into more housing units, the industry’s supply-demand curve will become more balanced.
- Article available on NAR
The median existing-home price was $391,200 in April, up 14.8 percent from April 2021, marking 122 consecutive months of annual home price increases, the longest on record, according to NAR’s recent existing home sales report. April home sales, however, dropped 2.4 percent in April from March, and 5.9 percent from the previous year, a slowdown NAR attributes to increasing interest rates. The market remains in flux, however, as listed homes still sell quickly, with April average days on market standing at 17 days, the same as March and April 2021.
- Article available on New York Times
A trend of local communities pushing for slow growth and burdensome building and development protocols – known as the Not In My Backyard (NIMBY) movement – has played a significant role in the way many towns and cities manage growth and how, where and how much it costs for homebuilders to build homes. This article provides a deep first-person reported view of the NIMBY perspective, which provides insight into the passions behind the movement, and how it may evolve.
- Article available on Redfin
In the four weeks through May 29, over a fifth of sellers dropped their list price, a 2022 high and the highest percentage in any four-week period since October 2019, according to Redfin data. While the supply-demand curve is shifting slightly more in favor of buyers, buyers are contending with rising interest rates and, still, a relative dearth of homes for sale.
- Article available on Fortune
After great demand and supply-chain issues pushed lumber prices very high since the pandemic emerged, the last few months have seen prices drop, according to Nasdaq data. In January, lumber prices reached a height of $1,329 per thousand board feet but had fallen by over 50 percent in late May. The increased price of building materials due to imbalanced supply-demand metric of homes has been one big factor in stymying building, a critical relief valve in increasing the nation’s housing inventory.
- Article available on CNBC
Citing a slowing economy, Redfin and Compass announced layoffs of approximately 8 percent and 10 percent, respectively. In addition, Compass announced the closing of eight offices and plans to shutter Modus, the title company the firm acquired in 2020. Many real estate companies are reading the inflation and rising interest rate tea leaves, and preparing their businesses for a cooler real estate market. These types of changes at public companies such as Redfin and Compass provide a window into the kinds of adjustments many real estate companies are now faced with.
- Article available on Inman
NAR raised its special assessment fee for members from $35 to $45 for 2023. The special assessment, which began in 1999, goes to fund NAR’s consumer ad campaign and was last increased in 2009. NAR expects the assessment to bring in $66.15 million. The NAR board voted to keep the association’s base annual dues at $150.
- Article available on PR Newswire
The nation’s largest real estate holding company, Realogy Holdings Corp., which includes the brokerage, franchise and ancillary business wings, is rebranding to Anywhere Real Estate with implementation occurring by end of the second quarter. Realogy CEO Ryan Schneider said the rebrand reflects the company’s consumer-focused, agent-led approach, and accompanied the expression of bold vision for Realogy at the company’s May 12 special investor presentation.
- Article available on New York Post
The Canadian Real Estate Association reported that the average price of Canadian homes stood at $646,809, nearly twice the U.S. median home price in March of $375,000. Both Canadian and U.S. average home prices have jumped approximately 30 percent from 2020. Inflation, a yearslong supply-demand imbalance and low interest rates have fueled high price appreciation over the last several years. With recent mortgage rate increases, the market is already shifting.
- Article available on S&P Case-Schiller
Home prices jumped 19.8 percent in February from the year before, according to the S&P CoreLogic Case-Shiller National Home Price Index. That increase is the third-highest in the index’s 35-year history. With interest rates rising, we may be approaching a peak in home price appreciation.
- Article available on The New York Times
The New York Times chronicles two recent efforts by smaller developers in New York state to bypass local historic preservation commissions, which, in many areas, serve as a key time and cost impediment to new construction. As the 2022 Swanepoel Trends Report outlined, new construction remains one of the key relief valves to creating a more balanced market and local regulations, like those offered by historic preservation commissions, add costs and delays to these projects. This article provides an example of how these issues are being navigated on the ground.
- Article available on Inman
A federal lawsuit that challenges the Buyer Broker Commission Rule – in which NAR MLS rules require listing brokers to offer compensation to buyer brokers – has been certified as class-action by a judge. Defendants include NAR, Realogy, Keller Williams Realty and HomeServices and America. Brought in 2019, the suit affects Missouri homes sold through four MLSs from April 29, 2014 through the present. The four rules at issue include: • NAR’s so-called Buyer Broker Commission Rule, noted above. • NAR’s Code of Ethics that requires Realtors to offer compensation to cooperating Realtors • NAR’s statue that prohibits buyer agents negotiating commissions when making an offer • NAR’s statute that prohibits buyer agents negotiating commissions after an offer is made. Another, larger federal lawsuit in Illinois, challenging some of the same key items above is still active as well, and could become class-action, too. This outstanding suit, the certification, along with continued U.S. Department of Justice and U.S. Federal Trade Commission scrutiny, suggest the commission protocol the industry has followed for decades, in which sellers pay both sides of the commission, may change in the near future.
- Article available on Bloomberg
Black Knight, a public software company that provides popular MLS software Paragon, is in the process of being acquired for $13.1 billion. The buyer, Intercontinental Exchange Inc., the owner of the New York Stock Exchanges, purchased a similar mortgage software provider Ellie Mae in 2020 for $11 billion. Real estate technology and data is becoming bigger business. This acquisition represents more consolidation and the push for economies of scale and new opportunities it opens up.
- Article available on Inman
Frederick Townes, former chief operating officer of real estate marketing platform Placester, has been named CEO of Remine, the real estate software provider that a consortium of four MLSs banded together to purchase in late 2021. Remine represents an increasing effort by MLSs to take their tech needs and future into their own hands. Read our related T3 Insight article from February, “With deepening collaborations, MSLs embark on new era,” here.
- Article available on NBC News
Some homeowners are beginning to push back on bulk investor-owned homes in their communities based on an experience of a lack of upkeep and lax tenant screening. Homeownership breeds many benefits to communities – it encourages more ownership of local areas, greater care of homes themselves, brings equity and wealth to families. Investors who own large portfolios of single-family homes can hamper some of these benefits.
- Article available on Mortgage Bankers Association
Mortgage rates on 30-year fixed-rate mortgages rose to above 5.3 percent in late April, their highest level in over decade, according to a recent Mortgage Bankers Association survey. Rising rates are having an effect on the real estate market in locations throughout the U.S., cooling a bit of the long-standing buyer frenzy and moving the long-standing supply-demand imbalance to something more balanced.
- Article available on HousingWire
Homebuyers are expressing notable pessimism about the trajectory of homebuying, according to the March release of Fannie Mae’s Home Purchase Sentiment Index. Seventy-three percent of respondents indicated that it’s a bad time to buy, setting a record low for the index, which is over a decade old.
- Article available on Inman
After an Oregon law went into effect on January 1 that forces listing agents to reject love letters from buyers, neighbor Washington has considered the same. A similar bill has stalled in the state legislature, but advocates are saying they’ll try again. Advocates for these bills say that buyer love letters – in which buyers write personal notes to sellers that accompany their offers – can contribute to fair housing violations as it opens up transactions to sellers choosing offers, in part, based on biases, whether conscious or unconscious.
- Article available on Redfin
The percentage of U.S. homes with a value of over $1 million measured at 8.2 percent in February, according to a recent Redfin analysis. That’s almost double the rate of 4.8 percent in February 2020, before the pandemic. Home values have skyrocketed in recent years. Time will tell how much is due to inflation and low interest rates and how much of the appreciation is due to true increases in value.
- Article available on NAR
2022 is starting out on the same low-inventory track it has been on over the last several years with the number of existing-home sales dropping in February from the month before and from a year ago. With increasing interest rates and price increases, homebuyer challenges rise.
- Article available on Zillow
A Zillow study found that in 25 of 38 major metros, home value growth outpaced median salaries. In 11 of the metros analyzed, the average home value rose by over $100,000. San Jose led the way with an average home in the city gaining a value of $229,277 in 2021. Overall, the Zillow study shows that the average U.S. home saw an appreciation of $52,667. Real estate been a sustaining economic boon for many Americans over the difficult couple of last years. Homeowners and sellers have seen big gains. With interest rates rising, increases of this size are unlikely in the foreseeable future.
- Article available on NPR
Rates on 30-year fixed-rate mortgages hit 5.05 percent in early April, crossing the 5 percent threshold months, or even years, ahead of some experts’ expectations of rate jumps this year. The U.S. Federal Reserve has been raising rates in an effort curb inflation. Agents in some markets are reporting buyers shifting to a more conservative tack when offering on houses – practicing more price discipline and not going over asking price as often. This could be the first move to the market becoming more balanced.
- Article available on April 2022
In an effort to tame a runaway housing market, Canada is banning foreigners (students, foreign workers or foreigners who are permanent residents) from buying homes in the country for two years. Canadian home prices have risen by over 50 percent in the last two years, which is spurting the move. The Canadian government is also looking to address the high demand by streamlining new-home permitting and to allow under-40 potential homebuyers to save for down payments tax-free in a new financial vehicle. The Canadian Real Estate Association, for its part, is looking to change the practice of buyers who make offers not seeing the offers of other buyers by publishing offers on listings in real time on its listing website realtor.ca. These are interesting moves for a government to take to address housing shortage and affordability issues running rampant.
- Article available on The New York Times
With interest rates low, and some urbanites feeling the squeeze in their expensive rentals, some chose to purchase second homes in nearby rural, much more affordable locations to use as getaways – even while remaining renters of their primary home. No doubt, real estate agents have countless stories from the wild market of the last two years that tell just how overheated homebuyer demand had gotten. This trend chronicled by the New York Times reveals one of the many that have played out in the last few years, pushing home prices to all-time highs and inventory to record lows.
- Article available on Redfin
The average time homeowners owned their home dipped to 13.2 years in 2021, down from 13.5 years in 2022, according to a Redfin analysis of county records. This is the first year-over-year dip since 2012 (10.1-year tenure) the first year presented in the Redfin study. The pandemic undoubtedly spurred migration in the country. Homeowner tenure in 2022 will reveal if the trend continues.
- Article available on CNBC
Real estate sales in the metaverse – the digital realm that major tech companies are working to establish and monetize. Projected sales in 2022 are for nearly $1 billion. The metaverse remains far out, but with major tech companies such as Facebook investing millions into the arena, it’s too soon to dismiss, as strange as it appears now.
- Article available on The News & Observer
A federal judge has suspended Oregon’s ban on homebuyers providing letters to sellers that accompany their offers. The state had banned the letters as it posited that they could help contribute, unknowingly or not, to Fair Housing violations as they could tip off sellers to characteristics of buyers that could support biases. Other jurisdictions throughout the country have considered similar bans. Indeed NAR, itself, has stated these homebuyer notes could lead to Fair Housing violations. While a preliminary injunction has been issued, this issue is far from settled.
- Article available on Yahoo Finance
Utah-based Homie, which operates an alternative finance (AltFin) real estate model in which it looks to streamline real estate transactions with innovative finance options for consumers, laid off a third of its staff in February. Estimates put the number of staff let go at approximately 100. The AltFin landscape, as T3 Sixty investigated thoroughly in the 2022 Swanepoel Trend Report chapter, “The Real Estate Financing Revolution,” is a fast-moving one. Companies are testing and innovating new ways for consumers to finance homes using a variety of new tactics. Many have yet to prove out, and companies such as Homie – and, most notably Zillow Group with its iBuying shutdown last year – are having to pivot as they find their way forward.
- Article available on S&P CoreLogic Case-Shiller National Home Price Index
National home prices rose to $278,630 in 2021, an 18.9 percent jump over 2020 prices, according to the S&P CoreLogic Case-Shiller National Home Price Index. That’s the largest year-over-year increase in the index’s 34-year history. Inflation, years of huge demand and scarce inventory are swirling to create a dynamic housing market in 2022.
- Article available on Redfin
In January, 70 percent of the offers Redfin agents wrote experienced bidding wars. That’s the highest percentage since the national brokerage began tracking the stat in April 2020. In addition, Redfin data shows that in the four weeks through February 13, 57 percent of homes that went under contract did so within two weeks of listing. The housing market remains blazing hot as the spring selling season just begins to kick off. Mortgage rates will likely balance the market more than in the past two years, but time will tell exactly how much.
- Article available on Inman
A pair of Black California homeowners sued an appraisal company alleging violations of the Fair Housing statutes when another appraisal company valued their home for approximately $500,000 when all indications of race were removed from the home. The DOJ rejected the appraisal firm’s motion to dismiss. Housing discrimination has played a big role in how communities have been shaped. Lawsuits like this one and an increased awareness of the discrimination still present in the industry will hopefully create a more equitable housing landscape.
- Article available on Bankrate
Interest rates on 30-year fixed-rate mortgages rose past the 4 percent threshold in late February, the first time they rose above that amount in over two years. With inflation running rampant in the U.S. economy and the economy at large giving off healthy signals, mortgage rates are rising again after reaching all-time lows in 2021. This could signal a begin to a more balanced supply-demand market after years of severe low inventory.
- Article available on Inman
The lockbox service provider SentriLock, owned by NAR, has sued rival Supra, alleging theft of technology. Lockboxes and the technology that supports them are a key, compelling part of the MLS and local Realtor association industry. These companies often obtain exclusive agreements with MLSs and/or the local Realtor associations that operate them, which can create downstream challenges for users. This suit may shed some light on this important industry tech.
- Article available on New York Times
NAR membership swelled to 1.6 million members in 2021, the highest for any year in the association’s over-100-year history. The ranks swelled by over 156,000 in just 2021 alone. With a blazing housing market, great price appreciation and the pandemic shifting the job market, many professionals turned their eyes to a real estate career and saw the appeal. While the industry is riding high right now, the ranks will shrink again when the market cools. Indeed, they make shrink further than in years past as a maturing industry demands more from agents than ever before.
- Article available on Inman
A case against Houlihan Lawrence has been granted class-action status by a New York state court. The lawsuit alleges that the brokerage incentivized agents who facilitated deals in which the brokerage served on both the listing and sales side. The brokerage says it plans to appeal the ruling. Dual agency has faced a test in the courts in several cases throughout the years. As this one appears to get traction, it may renew the conversation, and debate, about the merits of dual agency in the industry.
- Article available on Redfin
Redfin reports that the average buyer agent commission rate dropped to 2.63 percent in November 2021, down from 2.69 percent in 2020 and 2.75 percent in 2017. In a strong sellers’ market, as has existed over the last couple of years, it makes sense for buyers’ agent commissions to drop as homes are easier to sell with many more buyers than available homes. However, as the industry begins making buyer agent commission information more widely available, this could mark a trend that holds even when the market shifts.