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- “Underwater mortgages” hit strong milestone
“Underwater mortgages” hit strong milestone
Plus, tips for coping with the Sitzer fallout
Rinku Mathew
November 07, 2023
Normalcy in abnormal times
We know there is a lot of anxiety right now in our community. It’s been one week since the Sitzer verdict has come down, and we’re still waiting to see what exactly the judge rules and how things shake out.
We just want you to know that we are right there with you, watching and waiting for any developments. In the meantime, we will continue to discuss other news around our industry, and try to find some sense of normalcy in some very abnormal times.
- James and David
Luxury market is performing well
Source: Redfin
Luxury home prices rose 9% (YOY) to the highest third-quarter level on record, growing nearly three times faster than non-luxury prices. That’s according to Redfin’s latest report on home prices. Here are the key facts:
The median sale price of luxury U.S. homes rose to $1.1 million in Q3, while the median sale price of non luxury homes climbed 3.3% to $340,000. Both were at the highest level of any third quarter on record.
Luxury home sales declined 10.6% YOY in Q3, compared with a 17% drop in non-luxury sales.
43% of luxury home purchases were paid in cash, up from 35% last year
Housing supply is up 3% in the luxury market and down 21% in the non-luxury market
Our take
One of the biggest surprises in this report: housing supply in the luxury space is actually up. That’s completely unexpected, as many people have a quite dour attitude toward the market right now. But what’s not surprising — luxury home buyers paying cash to avoid paying high mortgage rates all together. In fact, more luxury home buyers are paying out of pocket now than they were last year. But that is clearly the advantage of having deep pockets.
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The hottest markets in the country
Myrtle Beach, SC: https://bit.ly/3MvTH5o
Despite mortgage rates reaching a recent 23-year high and above 7%, homes in the 20 hottest markets in September had no shortage of interest and offers. That’s according to Realtor.com’s latest report which listed the hottest markets based on the views per listing and how long properties remain for sale.
Here’s their list:
Manchester, NH
Rochester, NY
Portland, ME
Worcester, MA
Springfield, MA
Concord, NH
Oshkosh, WI
Columbus, OH
Rockford, IL
Monroe, MI
Our take
Understandably, most of the press has been focusing on markets in the Sunbelt states, but markets in the Northeast have been performing beyond expectations. This is why it’s so important to keep an eye on both local and national trends. Some markets will just continue to defy expectations and buck many commonly held assumptions.
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“Underwater mortgages” hit good milestone
Source: ATTOM
Just 2.5% of all residential mortgages were considered seriously underwater in Q3 2023, the lowest percentage point in at least 4 years. In other words, according to ATTOM, just 2.5% of home mortgages had a combined estimated balance of loans secured by the property of at least 25% more than the property’s estimated market value.
On a zip code basis, here are the markets that saw the greatest improvement in “underwater mortgages”:
Chicago, IL – 60636
St. Louis, MO – 63118
Harvey, IL – 60426
Detroit, MI – 48224
Lorain, OH – 44053
New Castle, IN – 47362
Westfield, IN – 46074
Muncie, IN - 47302
St. Louis, MO - 63111
Muncie, IN – 47303
Our take
These are the trends we like to see. A lot of people are feeling anxious about the housing market now, but some of that anxiety is based on vibes rather than hard stats. Use stats and reports like this to flip the script. Our job as agents is to separate fact from feelings, and this report shows that the situation in the housing market is nowhere near as dire as some would have us believe.
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Schematics
The news that just missed the cut
Phoenix, AZ: https://bit.ly/46PAKTf
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Foundation Plans
Advice from James and David to win the day
All of us in the industry are still waiting on the final decision by the judge in Sitzer/Burnett. Even before it comes down, though, here are some concrete steps you can take right now to ready yourself and to build your business in the post-Sitzer era.
Brand yourself to agents, not just clients – Remember that the real estate industry is collaborative. Clients can come and go, but your agent relationships will stick around. Branding yourself within your agent community is a perfect way to grow your network and find future deals. You must never let your pipeline go dry. Use every method you can to keep it flowing.
Protect yourself – Call your E&O insurance and get a better understanding of what it covers, and if additional insurance would help protect your business and cover any gaps.
Institute best practices – Contact your state governing association and MLS for specific guidance on contracts, agreements, and preferred language for consumer negotiations. Then, start using a preliminary net sheet on appointments to help clients understand the projected costs.
Take care of yourself – Invest in your health, self-care, and wellness. You cannot sustain a business if you are feeling anxious, depressed, burned out, and generally unhealthy. If you are placing yourself last and not making time to care for your body, spirit, and home life, things are going to continue to be chaos-driven.
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Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Mortgage News Daily
That’s a wrap on this edition of The Blueprint!
If you’re new to the Blueprint community, we want to hear what you think! How are you feeling after Sitzer? What’s your take on today’s stories and tips? Send us a note with your comments, questions, or suggestions.
Thanks for reading, and we’ll see you back here on Friday!
- James and David
