Where sellers are doubling their money

“Rise Above the Ranks: Season 2” is underway!

As we send this, we are about to record the first episode for Season 2 of our podcast, Rise Above the Ranks. The first season was all about the basics and what we did to get to where we are today.

Season 2 is going to be a little bit different, and we cannot wait for everyone to hear it next Monday.

Until then, take a listen to our past episodes about door-knocking, open house tips, and pricing strategies, and be sure to check out the ones with our friends Mauricio Umansky and Jason Oppenheim. → Apple | Spotify | YouTube

- James and David

Housing market on the road to recovery

According to a recent Redfin report, the number of homes under contract rose by 2.5%, signaling a potential shift in the market. This is the first increase since May.

Here are other key takeaways from the report:

• Mortgage demand is up 28% from early November.

• The 30-year-fixed mortgage rate fell to 6.15% from its November peak of 7.08%, the largest 10-week decline since 2009.

• Pending home sales rose 3% in December, the first month-over-month increase in 14 months.

• Google searches for “homes for sale” were up about 40% from their November low during the week ending January.

Our take

There’s not much for us to add here except this is great news and consistent with what we are seeing in our day-to-day. It’s almost the end of the month, so review your quarterly goals, and make a plan of attack to get ahead for February if you were behind.

Where sellers made the most profits

The average home sale in 2022 yielded $112,000 profit and a 51.4% ROI compared to the original purchase price, the highest rate since at least 2008. This is according to ATTOM, which released its U.S. Home Sales Report for 2022, compiling data on profits and home ownership tenure for 157 major markets.

Here are other main takeaways from the report:

• Profits have risen for 11 straight years, with the median home price increasing 10% in 2022 to $330,000.

• The West and South regions had 14 of the 15 metro areas with the highest home sale ROIs last year.

• The cities with the highest ROI were Hilo, HI (100%), Lake Havasu-Kingman, AZ (88.4%), and Spokane, WA (86.2%).

Our take

This data is useful for us to share with homeowners who might be hesitant to sell. It’s the perfect summary of why owning a home is an unbelievable investment that can pay off right now. We’d use this when we door-knock or sit in open houses, especially if we work in one of the metros that had the highest ROIs last year.

Mortgage delinquencies dropping

Black Knight revealed their "first look" at December 2022's mortgage data, which showed that mortgage delinquencies were down 9% for the year. Foreclosure starts increased by 15% in December, but this was still well below pre-pandemic levels.

Here are the key takeaways:

• Serious delinquencies (90+ days past due) continued to improve nationally.

• States with the most delinquent mortgages were Mississippi (6.87%), Louisiana (6.33%), and Oklahoma (5.16%).

• States with the fewest delinquent mortgages were Oregon (2.10%), Colorado (1.96%), and California (1.91%).

Our take

This is good news all the way around. Whatever mild recession we might face later this year, it’s not going to be anything like 2008. It looks like people have adjusted to the economic conditions. There is less delinquency than a year ago, and that just means that we are working in a market where we can give people a better shot at achieving the dream of not just owning a home, but being able to comfortably hold onto it.

Schematics

The news that just missed the cut

• 5 cities where you can get a mansion for < $1,000,000

• AI home searching comes to the Zillow app

• The most ridiculous real estate pictures of last week

• With forbearance lifted, Blackstone is starting evictions

• Check out this positive GDP report

Foundation Plans

Advice from James and David to win the day

We've talked a lot about the affordability crisis over the past year, and even though the market is improving, there are still buyers who are worried about jumping in and buying a home. It's important to show these buyers how to make their mortgage more affordable. Mortgage rate buydowns are becoming a common way to ease the affordability crunch, especially as the market continues to rebalance.

Here are three FAQs about mortgage buydowns:

• What is a mortgage rate buydown? A buydown is a fee paid at closing that lowers a buyer's interest rate for their mortgage. This fee can either lower the mortgage rate for the life of the loan, or it can lower the interest rate for a fixed amount of time.

• How much do they cost? The cost to buy down mortgage rates depends on the size of the loan and how much the buyer wants to spend to buy the rate down. Buydowns are rated in terms of points, and each point paid is equivalent to 1% of the loan amount.

• Who can buy down a mortgage? Either party in a sale can buy down a mortgage rate. Buyers can ask sellers or builders for buydowns as concessions during a sale, or buyers themselves can bring cash to close and pay to buy down their mortgage rate.

Want to learn more about mortgage buydowns? Click to read the article.

Q&A

You ask, James and David answer!

We’ll be back next week with another answer to a real reader question. Submit yours here!

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

That’s all for this Tuesday’s edition of The Blueprint! Remember we’re a month into the new year, and it’s not too late to make adjustments so you can hit your Q1 goals!

Have a great week, and we’ll see you on Friday!

- James and David