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Bated Breath
By Jeff Walton & Kelly Guest
November 4, 2024
"Take my hand, we'll make it I swear…" The industry seemed to be channeling Bon Jovi with the decisively upbeat vibe at MBA's annual convention - even though great news has been in short supply. The Mortgage Bankers Associationdid roll out its 2025 forecast, predicting a half-trillion more in production, a +/- 28% increase from what's expected to be a pretty anemic grand total for 2024. A politically charged environment and a tepid soup of economic indicators has all eyes on Tuesday.
Going Steady: Real estate commissions seem to be level (so far) since industry-wide changes were implemented two months ago. Redfin said "It’s too soon to say if the [ ] trend since August is a departure from the long-term trend of falling commissions;” but their analysis released 10-31 found that buyer’s agent commissions for closed home sales in October were 2.34% compared to 2.35% in August. Data journalist Mark Worley's piece also said, "Commissions for homes listed under $500,000 have risen slightly since August, while commissions for homes listed above $500,000 have fallen slightly" during the same timeframe.
CHATTER
Snapped: CA Dept. of Financial Protection and Innovation revokes LoanSnap's license to operate not long after Connecticut did the same. CA said LoanSnap failed to renew its surety bond.
Ready to Refi: TransUnion says 4 out of 5 recent home buyers say their mortgage payments are straining their finances and are looking to refinance their mortgage payments in the next 12 months.
Earnings, Acquisitions & Departures - Oh My! NerdWallet reported last week that “In Q3, we exceeded our expectations for revenue and non-GAAP operating income." The company statement went on to say, "…we continued to invest in our strategy of becoming a Trusted Financial Ecosystem with our acquisition of Next Door Lending, a mortgage brokerage." The same release announced the impending departure of CFO Lauren St. Clair in March 2025.
Settlement Suspense: HousingWire reporter Brooklee Han diligently follows the twists, turns, additions, amendments, and objections of the NAR (Un) Settlement, as the date for the hearing for final approval that changed real estate practices draws near. Even though a judge approved 9 settlements in Gibson and Umpa Suits, attorneys and others are weighing in with multiple objections, further tangling the path to settlement for Home Services of America and other non-Realtor MLSs. Also enter plaintiff Hao Zhe Wang, who is representing himself in a suit he filed in New York earlier this year. Among other things, Wang claims "the settlement is racially discriminatory, which he attributes to racial minorities being less likely to inherit homes and having to pay more in buyer broker fees than in listing broker fees."
More Legal Wrangling For UWM: Okavage group filed an appeal to a FL judge's dismissal, and the wholesaler filed motions aimed at dismissal and to strike class allegations.
Freddie Mac reports net income of $3.1B for Q324, up from $2.77B in Q2 and from $2.69B in Q323.
Fannie Mae reported $4B in net income for Q324, net worth reaching $90.5B as of 9-30-24. Fannie says net income was down $440M between Q2 and Q3, "primarily driven by a decrease in fair value gains and a decrease in benefit for credit losses.”
RE/MAX reported decreased YoY revenue of 3.4% to $78.5 million, and a 3.3% decrease in the number of Motto Mortgage offices.
Annaly Capital Management Q3 earnings: "Annaly delivered a 4.9% economic return in the third quarter and 10.5% economic return for the first nine months of the year, demonstrating the power of our diversified housing finance portfolio." David Finkelstein, Chief Executive Officer and Chief Investment Officer.
Shutters for warehouse opps at Independent Bank opened the door for Drey Roberts to join Primus Bank as President of its new Warehouse Lending Division.
MARKET/INDUSTRY
UP, but don't worry? Mortgage Rates Increase for 5th Consecutive Week: Freddie 10-31-24
Increasing for the fifth consecutive week, mortgage rates reached their highest level since the beginning of August. With several potential inflection points happening over the next week, including the jobs report, the 2024 election, and the Federal Reserve interest rate decision, we can expect mortgage rates to remain volatile. Although uncertainty will remain, it does appear mortgage rates are cresting, and are not expected to reach the highs seen earlier this year.
Inflation still at 2.7%, only 12K jobs created, employment steady at 4.1%: In the latest Master the Markets segment, Bill Bodnar hints that the Fed may give us a 25bps cut later this week, but what happens Tuesday adds another major question mark.
Mortgage Applications Decreased 0.1% From One Week Earlier: MBA's Weekly Survey for the week ending 10-25-24.
Awful Anniversary: It was the week ending 10-26-23 that mortgage rates peaked at 7.79% according to Freddie Mac's Primary Mortgage Market Survey. This year, we observe the pernicious pinnacle with a report from Redfin published 10-29-24 that says, "A homebuyer on a $3,000 monthly budget has lost $33,250 in purchasing power over the last six weeks. [ ]That buyer still has $17,000 more purchasing power than they would have had in April." Thank goodness for small favors.
S&P CoreLogic Case-Shiller August 2024 Home Price Index shows a superficial dip in prices, but moderate gain when seasonally adjusted. "Home price growth is beginning to show signs of strain, recording the slowest annual gain since mortgage rates peaked in 2023. Regionally, all markets continue to remain positive, barely." - Brian Luke CFA, Head of Commodities, Real & Digital Assets - S&P Dow Jones Indices
Pending Home Sales Reach Highest Level Since March: NAR PHSI up 7.4% in September
Compared to one month ago, pending sales climbed in all four major U.S. regions, led by the West:
Year-over-year, pending transactions ascended 2.6%. An index of 100 is equal to the level of contract activity in 2001.
“Contract signings rose across all regions of the country as buyers took advantage of the combination of lower mortgage rates in late summer and more inventory choices,” said NAR Chief Economist Lawrence Yun. “Further gains are expected if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady.”
Great Talking Points: First American Financial's Chief Economist Mark Fleming wrote about affordability improvement and brought it around to a strong case for buying versus renting. He notes in his 10-29 piece, "Even homeowners who bought at the height of the housing boom in 2006 have gained $169,000 in equity, while renters over that same time period cumulatively lost $229,000 in wealth." His feature line is a good one to motivate people to do the work to become homeowners - even in challenging times: “When your home, in the long run, pays you, it makes more sense to buy than to rent,” Fleming wrote.
Extra Credit: Highlights from VantageScore's September CreditGauge
Credit delinquencies increased broadly
Percentage of consumers with new loans declined
Credit account balances hit new high
Stalled Zombies: ATTOM Data's Q424 Vacant Property and Zombie Foreclosure Report
1.4M (1,355,909) residential properties in the United States are vacant. That figure represents 1.3%, or one in 77 homes, across the nation – virtually the same as in third quarter and up just slightly from a year ago.