- InGeniusly Speaking
- Posts
- Homeowners: The In-Crowd
Homeowners: The In-Crowd
By Jeff Walton & Kelly Guest
Kelly Guest
August 12, 2024
August 12, 2024
The dog days of summer officially ended yesterday, but the real estate segment is still hounded by unresolved lawsuits as the August 17th deadline approaches to implement practice changes. HW is keeping tabs on plaintiff and defendant motion haggling in the Batton 2 commission lawsuit, as well as Howard Hanna’s attempts to dismiss the suit altogether or move it to a different court.
While potential home buyers and the agents who would like to represent them have challenges ahead, homeowners are sitting in the proverbial cat bird seat: ICE's August Mortgage Monitor Report says mortgage debt in the U.S. reached $13.5T in June, and tappable equity is up 4% over Q1 and 9.2% y-o-y at $11.5T. ICE also notes that 3 out of 5 mortgage holders have at least $100K in tappable equity, and 4.6M have at least $500K. ATTOM Data reported last week that 49.2% of mortgaged residential properties in the United States were considered equity-rich in the second quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than half of their estimated market values. Meanwhile, the number of seriously underwater homes in the U.S. declined to 2.4% during the second quarter, or just 1 in 42.
CHATTER
UWM Holdings reports net income of $76.3M for Q2 2024, including $115M decline in fair value of MSRs.
RE/MAX released Q2 earnings and operating highlights: Total Revenue decreased 4.8% to $78.5 million, U.S. and Canada combined agent count decreased 4.4% to 78,599 agents, total open Motto Mortgage franchises increased 2.6% to 241 offices.
ZILLOW GROUP reported revenue of $575M for Q2, up 13% y-o-y, and their mortgage division had a 125% y-o-y increase in purchase volume ($756M) and a 42% y-o-y increase in mortgage revenue.
MOVE posted a 2% y-o-y loss in real estate revenue, which make up 80% of the company’s total revenues.
GUILD reported a 65% q-o-q increase in origination volume for Q2, jumping from $2.7B to $4.5B.
loanDepot highlights Q2 revenue of $265 million as higher origination and servicing revenues partially offset negative net change in fair value of servicing rights, and adjusted revenue of $278 million.
Angel Oak Mortgage REIT reported Q2 2024 net interest income of $9.5 million, an increase of 47% versus Q2 2023.
AG Mortgage Investment Trust $6.9B investment portfolio in Q2, compared to $6.2B in Q1.
BIG DEAL: CMG Financial Founder Christopher George strikes deal to acquire Greenwoods State Bank – not long after matching funds raised by CMG leadership for MBA’s Open Doors Foundation.
GETTING BETTER: Better.com lost $9M less in Q2 than it did in Q1 ($42M), saw a 41% increase in revenue ($31M), and increased funded loan volume by 45%.
MOVING & SHAKING
“O” to “E”: Jeremy Wacksman switched seats in Zillow’s C-suite, moving from chief operating officer to CEO. He was also promoted to the board of directors.
LOWER convinced Dustin Owen to leave Waterstone after 16 years to become divisional sales leader and SVP of Growth.
NMN TRACKS TECH LEADERS: Truist, TAB Bank and WF have CIO leadership changes.
LendingPoint appointed Shawn Stone as CEO and board member.
CHLA Founder and former Platinum Home Mortgage CEO Bill Giambrone passed away August 5.
MARKET/INDUSTRY
NAR PRACTICE CHANGES TAKE EFFECT 8-17!
The types of compensation available for buyer brokers would continue to take multiple forms, including but not limited to:
Fixed-fee commission paid directly by consumers
Concession from the seller
Portion of the listing broker’s compensation
Compensation would continue to be negotiable and should always be negotiated between agents and the consumers they represent
MORTGAGE RATES DECREASE TO LOWEST LEVEL IN OVER A YEAR: Freddie 8-8-24
Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing. The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move. Additionally, this drop in rates is already providing some existing homeowners the opportunity to refinance, with the refinance share of market mortgage applications reaching nearly 42%, the highest since March 2022.
MORTGAGE APPLICATIONS INCREASED 6.9% FROM ONE WEEK EARLIER: MBA SURVEY FOR THE WEEK ENDING 8-2-24
The Market Composite Index increased 6.9% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6% compared with the previous week.
The Refinance Index increased 16% from the previous week and was 59% higher than the same week one year ago.
The seasonally adjusted Purchase Index increased 1% from one week earlier. The unadjusted Purchase Index increased 0.3% compared with the previous week and was 11%lower than the same week one year ago.
CREDIT AVAILABILITY CREEPS UP: MBA’s Mortgage Credit Availability Index (MCAI)
The MCAI rose by 3.3% to 98.1 in July. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
Conventional MCAI increased 6.4%
Government MCAI decreased by 0.1%
Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 9.3 percent, and the Conforming MCAI rose by 0.7 percent.
“Overall credit availability grew to its highest level since October 2023, driven by increased conventional loan offerings such as ARMs and cash-out refinance loans,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
JOBS REPORT COMMENTARY BY MBA’s FRATANTONI
“Job growth was weak across the board, with small gains or losses across the economy. Not only did the headline unemployment rate increase, but the broader U-6 measure showed an even bigger increase, highlighting that more people are struggling in this job market.
“Construction employment showed a small gain, as builders continue to work to add to housing supply given the ongoing shortage.
The Federal Reserve kept the federal funds target unchanged at its July meeting but hinted at a cut in September. The weakness in this report including the slower rate of wage growth and the higher unemployment rate certainly support such a cut, but the next inflation report needs to confirm that price growth is also slowing.
“The market is moving ahead of the Fed, bringing down longer-term rates including those for mortgages, which should lead to both more home purchases and a pickup in refinance activity.”
A GEM FROM 1ST AM COLLEAGUE: “July’s top line numbers, which came in below consensus expectations and included the highest unemployment rate since 2021, are likely going to intensify fears that a rate cut in September is too little, too late.” First American Deputy Chief Economist Odeta Kushi.
HOME PRICES HIT 149TH CONSECUTIVE MONTH OF GAINS: CoreLogic's August HPI
BUT… The continued decline in the pace of appreciation can be linked to elevated mortgage rates. Although the Federal Reserve Board is anticipated to cut rates in September, high interest rates continue to affect affordability, and several markets in the South continue to see inventory increases that are pulling prices below last year’s numbers.
OPPORTUNITY ZONES PERFORMED: ATTOM Data
Median prices of single-family homes and condos increased from Q1 to Q2 2024 in 1,932 (61%) of the Opportunity Zones around the U.S. with sufficient data to analyze, while staying the same or decreasing in 39%. Measured annually, medians remained up from the second quarter of 2023 to the same period this year in 2,140 (62%) of those zones.
Opportunity Zones did even better than the rest of the nation when comparing price changes to shifts in the national median home price. Median values in 45% of Opportunity Zones went up from the first to the second quarter of this year by more than the 9% annual gain nationwide. The same was true in slightly less – 41% – of local housing markets outside the zones. (A similar pattern emerged when comparing shifts in prices annually.)
RECEDING RATE: U.S. Homeownership Rate Down Y-O-Y in Q2
The homeownership rate of 65.6% was not statistically different from the rate in the second quarter 2023 (65.9%) and virtually the same as the rate in the first quarter 2024 (65.6%).
DEBT DETAILS: TransUnion Q224 Credit Insights Report (CIIR)
Unsecured personal personal loan balances grew 6% y-o-y, and bank card balances grew 4.8% YoY led by subprime at 12.3% growth. On the mortgage side, TU says mortgage originations saw the y-o-y growth in Q124 for the first time in three years. Subprime loans were up 15.7% y-o-y, and super prime grew by 12.1%. With credit card balances at all-time highs, the credit reporting agency uses its best corp-speak, saying "Consumers across the board continue to engage with a wide range of credit products [ ] to serve to bridge the financial gaps that may exist in many household budgets."
EYE-POPPING ANGLE: REDFIN SAYS US HOUSING MARKET IS WORTH $50T
There are now eight trillion-dollar metros, up from four a year ago, with Anaheim, CA, Washington, DC, Chicago and Phoenix joining the list of places where the total value of homes tops $1 trillion.
Two New Jersey metros within commuting distance of New York saw the fastest growth in aggregate home value, while Sun Belt metros grew more slowly.
The total value of homes owned by millennials grew by more than 20% as the Silent Generation’s home value fell for the fifth consecutive quarter.
Majority Asian neighborhoods experienced the largest spike in total home value, rising 9% to $1.4 trillion.