Housing Prices Up by Year, Down by Month

 By Kerry Smith

Sept.’s S&P CoreLogic Case-Shiller 20-city price index found a year-to-year increase of 10.4%, but Miami (up 24.6%) and Tampa (up 23.8%) led the nation.

NEW YORK – Dinged by rapidly increasing mortgage rates, home prices continue to show strong growth year-to-year but declines in month-to-month comparisons. In the S&P CoreLogic Case-Shiller Indices (S&P DJI) for September, home price gains declined across the United States.

Year-over-year

The Index covers nine U.S. census divisions, and overall reported a 10.6% year-to-year gain in September, a decline from the 12.9% reported in August. The Index’s 10-City Composite came in at 9.7%, down from 12.1% in the previous month; its 20-City Composite posted 10.4% year-over-year, down from 13.1% the previous month.

However, slowing price increases aren’t as notable in Florida, and two of the nine areas tracked in the U.S., the South and the Southeast, continued to outpace the rest of the nation.

Miami, Tampa and Charlotte reported the highest year-over-year gains among the 20 cities in September. Miami led the way with a 24.6% year-over-year price increase, followed by Tampa in second with a 23.8% increase. Charlotte came in a somewhat distant third with a 17.8% increase.

Still, all 20 cities – including Miami and Tampa – reported lower price increases in September 2022 than they did in August.

“As the Federal Reserve continues to move interest rates higher, mortgage financing continues to be more expensive and housing becomes less affordable. Given the continuing prospects for a challenging macroeconomic environment, home prices may well continue to weaken,” says Craig J. Lazzara, managing director at S&P DJI.

Month-over-month

Before seasonal adjustment, the U.S. National Index posted a -1.0% month-over-month decrease in September, while the 10-City and 20-City Composites posted decreases of -1.4% and -1.5%, respectively.

After seasonal adjustment, the U.S. National Index posted a month-over-month decrease of -0.8%, and the 10-City and 20-City Composites both posted decreases of -1.2%.

In September, all 20 cities reported declines before and after seasonal adjustments.

“As has been the case for the past several months, our September 2022 report reflects short -term declines and medium-term deceleration in housing prices across the U.S.,” says Lazzara. “For all three composites, year-over-year gains, while still well above their historical medians, peaked roughly six months ago and have decelerated since then.

“The three best-performing cities in August repeated their performance in September. On a year-over- year basis, Miami (+24.6%) edged Tampa (+23.8%) for the top spot, with Charlotte (+17.8%) beating Atlanta (+17.1%) for third place. The Southeast (+20.8%) and South (+19.9%) were the strongest regions by far, with gains more than double those of the Northeast, Midwest, and West.”

© 2022 Florida Realtors®

Florida Rent on Rise as Other Big Metros Slow

 By Sam Sachs

The numbers in rental studies vary but consistently show continuing increases in much of Fla., as rents stabilize or fall in larger U.S. metros in some other states.

TAMPA, Fla. – While some big markets are seeing rent prices finally start to decline, the same can’t be said for Florida. Real estate company Redfin reported 11 major metro areas had rent prices drop, including Atlanta, Minneapolis, and Austin.

For Florida’s big cities, like Tampa, Orlando, Jacksonville, and Miami, prices are still on the rise. Of the Florida cities in the Redfin report, Miami had the largest increase year-to-year, with rent prices increased 8.5%. The national average was 7.8%, according to Redfin.

Tampa, according to Redfin, had a nearly 3% increase, while Orlando was 2.2% and Jacksonville was 1.7% higher compared to October 2021. An economist for Redfin said the slowdown of rent increases was due to economic uncertainty.

“Economic uncertainty is prompting many renters to stay put, and persistent inflation is shrinking renter budgets. That’s causing rent growth to cool,” Redfin Deputy Chief Economist Taylor Marr said. “There are signs that inflation is starting to ease, but it will likely be a while before renters see meaningful relief given that rents are still up more than wages.”

Other rental reports show some areas are affected differently than others. A similar data report on Florida rent costs by ApartmentList said statewide, prices rose 5.9% in the past year. The most expensive city to rent from in the state is currently Pembroke Pines, where the median monthly cost for a two-bedroom apartment is reportedly $2,256.

In Tampa, ApartmentList said the costs were at $1,785 for a two-bedroom rental, while the national average was $1,348. National rent increases averaged 5.7%, according to their data, slightly slower than in Florida.

“Throughout the past year, rent increases have been occurring not just in the city of Tampa, but across the entire state,” ApartmentList reported. “Of the largest 10 cities that we have data for in Florida, nine of them have seen prices rise.”

The rental company said Tampa’s increase was 3.6% compared to 2021, slightly higher than Redfin’s data. Price jumps were bigger in St. Petersburg, where ApartmentList said monthly costs had risen 4.4%.

Brandon and Wesley Chapel both saw price decreases, 0.8% lower and 6.3% lower, respectively. However, Plant City rent costs went up 3.3% in the past year, according to the same data.

© 2022 WKRG, Nexstar Broadcasting, Inc. All rights reserved.

Real Estate Slowdown Impacts Lots of Businesses

 By Amber Bonefont

Every home sale impacts title companies, mortgage lenders, inspectors, appraisers and local businesses – like furniture stores and remodelers.

FORT LAUDERDALE, Fla. – Businesses tied to the real estate industry say they’ve started to feel the effects of the housing market slowing down in South Florida.

Feeling the brunt of a declining market are mortgage lenders, inspectors, appraisers, real estate agents and remodeling companies, among the list of businesses.

“It’s a ghost town,” says Bruce Gubnitsky, the owner of BG Appraising and Consulting, of the “steady decline” in business. Gubnitsky says he has noticed the steep decrease in the number of requests he’s been getting for new jobs. During the height of the housing market, he was getting about 15 requests for appraisals a week – and now it’s down to about five a month, he said.

The housing market is a large driver of the economy, and one sale alone can trigger multiple transactions and deals with other businesses, studies have shown. In 2021 alone, the housing market accounted for 24% of Florida gross state product, according to the National Association of Realtors. But companies have reported about a 50% decline in business compared to last year, and levels that were lower than a normal year like 2018.

“We’re already starting to see this: We are going to see a contraction in agent force, we are going to see a contraction in collateral businesses such as mortgage lending, inspectors, and appraisers,“ said Ken H. Johnson, a real estate economist with Florida Atlantic University. “There is going to be fewer of all these collateral businesses, and I believe that most everyone’s income will go down, especially if they are tied to transaction-level income.”

The start of the business slowdown

Gubnitsky isn’t alone in seeing a decline in business.

The mortgage industry overall is seeing at least a 40% to 50% decline in business for purchase applications for a mortgage, and at least an 85% decline in refinance options when compared to last year, noted mortgage lender Bobby Fountain, with Cross Country Mortgage.

He estimates that he would put it at about 25% lower than a normal year.

“Overall, it’s lower revenue,” he said. “And you have some people who jumped in the business when it was booming for a quick dollar, but now that it’s hard they start to leave.”

Some businesses across the country have already begun the process of layoffs in light of a contracting market. Redfin, a residential real estate brokerage, reportedly laid off about 13% of staff as it believes that the slowing of the housing market will continue into 2023, and various mortgage brokers have laid off staff.

Other businesses also are being hit. Construction and remodeling companies report that they are seeing fewer clients than they were a year ago, and home inspectors are getting fewer orders as well.

Sam Dorvil, managing member at Custom Homes Building and Remodeling, said he has seen about a 50% to 60% decline compared to last year, a decline that has been happening since the beginning of the year.

“I am seeing now smaller projects from the standpoint that people are being a little bit more careful,” he said. “They still have immediate needs, but the consumer just wants to hold onto their money.”

The housing market’s impact

Purchasing a home also triggers more spending, in various industries, according to an analysis of the National Association of Home Builders.

In the first year of closing on a home, the typical buyer of a new single-family home will usually spend about $9,250 more than a non-moving homeowner. As well, the buyer of an existing family home spends about $5,240 more than a non-moving owner.

The total economic impact of a home sale in Florida was about $112,500 per sale, or about the equivalent of two jobs.

“Whenever there is a home sale, both the buyer and seller bring in several businesses with the transactions,” said Patty DaSilva, broker with Green Realty Properties in Cooper City. “There’s the title companies, the inspectors, the appraisers, the real estate attorney, etc. That doesn’t even take into account the secondary items, like remodeling and painting.”

Home sales have plummeted in South Florida, in part due to rising mortgage rates that have doubled since the beginning of the year and prices that don’t seem slow due to a shortage of homes. According to the latest numbers from the Broward, Palm Beaches and St. Lucie Realtors, closed sales declined by about 20% in Palm Beach County and 30% in Broward and Miami-Dade counties.

“Those things that are tied to the variable cost of a home, the downturn [in price] does hurt, but it’s a drop in the bucket compared to the number of transactions,” said Johnson.

Future of the real estate economy

It’s hard to quantify how long the economic impacts will last and how large they will be. It could be six months before things start to level off, or it could be a year or two before it starts to normalize.

But for the most part, local businesses say they are able to weather what happens. Some may have to spend less on certain extracurriculars, but some noted it is the natural evolution of the housing cycle.

“This is the third or fourth time that I have seen this happen,” said Adam Zipper, with Strock & Cohen, Zipper Law Group. “It’s the ebb and flow of the business. We had a few years of unsustainable increases and now we are seeing unsustainable decreases.”

© 2022 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

Low Mortgage Rates Led to a Home Seller’s ‘Strike’

 By Jeff Ostrowski

NAHB’s economist calls it “mortgage lock-in effect.” Homeowners with a rate of 3% or less refuse to list their home even if they have a yen to move or upsize.

NEW YORK – The sharp rise in mortgage rates in 2022 has hampered housing affordability and led to fewer home sales. Aside from those obvious bits of fallout, the run-up in rates has also delivered a surprise: Many homeowners are choosing not to sell because they don’t want to give up the super-low rates they locked in during 2020 and 2021.

In the depths of the pandemic, many homeowners refinanced into mortgages with rates of 3% or less. Now that rates are around 7%, many are deciding to simply stay put.

“Sellers are on strike,” says Mark Fleming, chief economist at title insurer First American.

Reflecting that storyline, the number of existing homes for sale in the U.S. dwindled to 1.11 million in September, down from 1.14 million in August and 1.16 million in July, according to the National Association of Realtors (NAR).

Homeowners choose not to put their homes on the market for a variety of reasons. Some are worried about finding another home at an agreeable price, or they’re concerned about the economic outlook. Fannie Mae’s Home Purchase Sentiment Index fell in September, its seventh consecutive monthly decline, as soaring mortgage rates crimp affordability.

Giving up a record-low rate doesn’t appeal to many homeowners, either. Based on a 30-year repayment schedule, a borrower who took out a $400,000 loan last year at 3% is paying $1,686 a month. Borrowing the same amount at a 7% rate pushes the payment to $2,661 – a jump of $975 a month, or 58%.

That has led to what Robert Dietz, chief economist of the National Association of Home Builders, calls the “mortgage lock-in effect.”

“If you’ve got a mortgage rate of 2 or 3%, you’re not likely to give up that note,” says Dietz.

Some 85% of U.S. homeowners with mortgages have an interest rate of less than 5%, according to Redfin, which found that in Atlanta, Chicago, Los Angeles and Washington, D.C., homeowners with a rate below 3.5% were 7.6% less likely to put their homes up for sale in August than those with a rate above 3.5%.

The lack of homes for sale helps to prop up prices, but this new mindset is playing into a sharp slowdown in activity. Existing-home sales fell again in September, the eighth month in a row of declining sales volumes, according to NAR.

While home values have cooled in recent months, they still remain near record highs. In theory, an equity-rich homeowner could sell and apply the gains to a down payment on a new place, thereby reducing the monthly mortgage payment.

All that equity isn’t doing much to boost the pace of home sales, however, which have been dropping steadily during 2022. While there are homeowners who need to sell because of job changes, divorce, death or other circumstances, for now, those who don’t are opting not to.

“With rates sitting above 6.5% for three weeks and no indication they’ll come down before the end of the year, people are only buying and selling homes if they need to,” says Chen Zhao, economist at Redfin.

The average rate on 30-year mortgages rose to 6.92% last week, according to Bankrate’s national survey of large lenders, the highest reading since 2006. A year ago, the benchmark 30-year fixed-rate mortgage was 3.22%.

The steep move has mostly been driven by the Federal Reserve. At the beginning of the pandemic, the Fed slashed rates to zero to stimulate the economy, and mortgage rates responded by plunging to record lows.

The next phase of the economy, however, saw the highest levels of inflation in four decades. The Fed responded by waging war, and its third consecutive rate hike of three-quarters of a percentage point in September created upward pressure on mortgage rates.

The Fed doesn’t directly control fixed mortgage rates; the most relevant metric is the 10-year Treasury yield, which also has moved higher.

With inflation still high and the Fed poised to keep boosting rates, higher mortgage rates seem likely.

“Inflation remains hot so interest rates will need to go higher,” says Greg McBride, Bankrate’s chief financial analyst. “With the 10-year Treasury yield moving over 4%, mortgage rates are along for the ride and moving to 20-year highs.”

Many homeowners are coping with rising rates in part by staying in their homes. Others are swallowing higher rates and tapping home equity for renovations and other uses. This strategy allows you to keep the rock-bottom rate on your primary mortgage. You’ll pay a higher interest rate with a home equity loan or line of credit, but for now, it might make more sense to go this route and leave your 3% first mortgage rate untouched.

© 2022 Bankrate.com. Distributed by Tribune Content Agency, LLC.; © Copyright 2022 Pasadena Star-News

NAR: Sept. Pending Home Sales Drop 10.2%

 By Kerry Smith

It’s the fourth decline in as many months, and the impact affects all regions of the U.S. Year-over-year, pending transactions slid by 31.0%.

WASHINGTON – Pending home sales trailed off for the fourth consecutive month in September, according to the National Association of Realtors® (NAR). All four major regions recorded month-over-month and year-over-year declines in transactions.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slumped 10.2% to 79.5 in September. Year-over-year, pending transactions slid by 31.0%. An index of 100 is equal to the level of contract activity in 2001.

“Persistent inflation has proven quite harmful to the housing market,” says NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers.”

Yun noted that new home listings are down compared to one year ago since many homeowners are unwilling to give up the rock-bottom, 3% mortgage rates that they locked in prior to this year.

“The new normal for mortgage rates could be around 7% for a while,” Yun adds. “On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago – a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”

Regional breakdown: The Northeast PHSI descended 16.2% from last month to 64.2, a decline of 30.1% from September 2021. The Midwest index retracted 8.8% to 80.7 in September, down 26.7% year-to-year.

The South PHSI faded 8.1% to 97.0 in September, a drop of 30.0% from the prior year. The West index slipped by 11.7% in September to 62.7, down 38.7% year-to-year.

© 2022 Florida Realtors®

Most Florida homeowners have significant equity

 By Kerry Smith

Most Florida homeowners have significant equity. Many own their home outright, and of those with a mortgage, 62.8% owe lenders less than 50% of market value.

ORLANDO, Fla. – While home price increases have slowed, they have not stopped. According to ATTOM’s third-quarter report, 62.8% of Florida homeowners with a mortgage have at least 50% equity in the property – a number that does not include the roughly 35.2% of homeowners who don’t have a mortgage.

Nationwide, the percentage of equity-rich homeowners is a weaker 48.5%. That’s up from 48.1% in the second quarter of 2022 and 39.5% year-to-year. The latest increase lagged other recent quarters, but it’s still a gain.

“Even though home price appreciation has slowed down dramatically in recent months, homeowners have continued to build equity,” says Rick Sharga, executive vice president of market intelligence at ATTOM. “And it appears that many of those homeowners have decided to stay where they are rather than purchase a new home and are beginning to tap into that equity, as the number of home equity lines of credit (HELOCs) issued in the second quarter of 2022 rose by 43%” year-to-year.

The report also found that 2.9% of mortgaged homes, one in 35, was seriously underwater in the third quarter of 2022. A home is considered seriously underwater if its combined estimated balance of loans is at least 25% more than the property’s estimated market value. Still, that 2.9% is the same as the quarter before and down from 3.4% year-to-year.

Florida, however, has even fewer seriously underwater properties and lags only two other states. Vermont has the fewest seriously underwater owners (0.9%), followed by Rhode Island (1.1%) and Florida (1.2%), which is also the same in Washington and New Hampshire.

Overall, 94.3% of U.S. homeowners with a mortgage had at least some equity in the third quarter compared to 92.9% a year earlier and 87.7% in the third quarter of 2020 – and that’s in addition to those who have paid off their mortgages.

Florida mentions in ATTOM’s 3Q report

• Equity-rich states: The West had the highest levels of equity-rich properties around the U.S. – six of the top 10. The top 5 include: Vermont (75.9% of mortgaged homes), Idaho (65.8%), Arizona (63.4%), Florida (62.8%) and Utah (62%).

• Equity-rich metros: The West and South dominated this list with all but one metro in the top 25. Of the five cities that top the list, three are in Florida: Austin, Texas (71.6% equity-rich); Sarasota-Bradenton (71.6%); San Jose, California (70.6%); Fort Myers (68.5%) and Tampa (68.3%). The leader in the Northeast region again was Portland, ME (63%) while the top metro in the Midwest continued to be Grand Rapids, MI (51.9%).

• Equity-rich counties: Of counties with populations of at least 500,000, the highest equity-rich rates were Travis County (Austin), Texas (74.1% equity-rich); Pinellas County (Tampa) (72.6%); Santa Clara County (San Jose), California (71.5%); San Mateo County, California (outside San Francisco) (69.6%) and Williamson County, Texas (outside Austin) (69.6%).

• Equity-rich zip codes: 46% of U.S. counties had zip codes in which at least half the homeowners with a mortgage were equity rich, and 32 of the top 50 were in Florida and Texas. The top five include: 83333 in Hailey, Idaho (87.7% of mortgaged properties were equity-rich); 02539 in Edgartown, Massachusetts (86.9%); 34108 in Naples (85.2%); 02568 in Vineyard Haven, Massachusetts (84.9%) and 34102 in Naples (84.9%).

 Homebuyers hoping for a wave of foreclosures similar to the housing crisis and Great Recession seem to be out of luck. According to ATTOM, the “vast majority of homeowners facing foreclosure have at least some equity.”

Foreclosures

Only about 227,100 U.S. homeowners were facing possible foreclosure in 3Q (0.4%) of the 58.1 million outstanding mortgages in the U.S. And of those 227,100 owners facing foreclosure, about 208,700 (92%) had at least some equity in their homes.

“One of the reasons we don’t believe there will be another huge wave of foreclosures is that the overwhelming majority of financially-distressed homeowners do have positive equity,” Sharga says. “If these borrowers can’t leverage the equity to refinance their current mortgage, they at least have the option of selling the property rather than losing their equity to a foreclosure auction.”

Sharga says Great Recession-era homeowners did not have that option since a large number were underwater on their mortgages.

© 2022 Florida Realtors®

First-time Buyers Back Despite Challenges

 They now make up 45% of all homebuyers, up from 37% last year, even as affordability issues persist. Repeat buyers may have pulled back due to rising interest rates.

CHARLOTTE, N.C. – First-time home buyers have returned to the housing market, and those who can afford a home are finding success after years of setbacks. The share of buyers purchasing a home for the first time has rebounded to pre-pandemic levels.

First-time buyers now represent 45% of all buyers, up from 37% of buyers surveyed last year, according to Zillow’s 2022 Consumer Housing Trends Report. If they can overcome affordability challenges, first-time buyers could be well positioned to continue increasing their share in today’s shifting market, with more options and time to decide on the right home.

The share of first-time buyers plummeted during the pandemic amid rapidly rising home values and tough competition, even with high demand coming from the large millennial generation. Zillow research found younger, likely first-time shoppers were losing out to older, repeat buyers who were able to tap the equity in their existing homes and use cash to make a stronger offer. A Zillow survey found younger buyers were more likely to report losing to an all-cash buyer at least once, as was the case for 45% of Gen Z and 38% of millennial buyers, compared to 30% of all buyers.

“First-time buyers now appear to be making relative gains as high mortgage interest rates disproportionately encourage current homeowners to stay put,” said Zillow population scientist Manny Garcia. “The flow of homes into the market is slowing, suggesting homeowners are likely comparing their current low mortgage rate to today’s rates and deciding not to move. While rising mortgage rates are hurting affordability for all buyers, first-time buyers may be less deterred by higher rates because they’re comparing a monthly mortgage payment to what they’re paying in rent.”

First-time buyers are making up a larger share of a smaller pie. Newly pending home sales were down 29% in August, compared to a year prior, as buyers struggle to keep up with higher home prices and interest rates. Home values remain 14.1% higher than last year, even after two consecutive month-over-month declines. When combined with rising mortgage interest rates, the typical monthly payment on a home is nearly 60% higher today than it was a year ago.

Recent Zillow research finds those affordability challenges have driven up demand for the lowest-priced homes in each market. While there are fewer buyers overall, first-time buyers may find more competition for starter homes.

The silver lining is that today’s much-needed market rebalancing has the potential to especially benefit first-time buyers, who have the flexibility to shop without trying to time the purchase of their new home with the sale of an existing home. Listings typically lingered 16 days on the market in August before going under contract, compared to eight days in June, meaning buyers have twice as much time to decide on a home compared to this time last year.

First-time buyers may also have more bargaining power as a growing number of sellers drop their prices. The share of listings with a price cut grew to roughly 28% in August, according to Zillow’s latest monthly market report.

As the market changes, aspiring first-time buyers may need to change their approach. These five tips are a good starting point:

• Understand what’s affordable. As mortgage interest rates fluctuate, aspiring buyers can start with a mortgage calculator to understand what they can realistically afford on a monthly basis. Take into account some of the hidden costs of homeownership, such as property tax, insurance and HOA dues, which can add up to more than $750 per month. But it’s always best to leave some wiggle room in the budget for unexpected maintenance projects and emergency repairs. First-time shoppers should also explore down payment assistance programs they may qualify for.

• Finance first. First-time buyers can gain a competitive edge by getting pre-approved for a mortgage. A Zillow survey finds 86% of sellers prefer a buyer who has been pre-approved, as opposed to pre-qualified, for a mortgage. This financial check gives sellers more certainty that a buyer will close on time, and it allows buyers to make a stronger, faster offer the minute the right home hits the market. Buyers can start the pre-approval process online. Don’t hesitate to try, try, try again. Nearly half of all first-time buyers (47%) are denied a mortgage at least once before ultimately getting approved.

• Hire the right agent. An experienced agent will have a finger on the pulse of their local market and know all the changes happening in it, and they can help buyers make strategic decisions to win. They’ll know when to come in with an offer under list price or when to expect a bidding war. Buyers should plan on interviewing their top candidates and asking the right questions.

• Shop smarter with tech. New real estate technology can help first-time buyers make faster, smarter decisions. Virtual 3D Home tours and interactive floor plans give shoppers a more authentic experience of a home, allowing them to quickly narrow down their options and tour fewer homes in person.

• Keep the contingencies. With less competition, first-time buyers should have the leverage to include important contingencies in their offers that could potentially save them a lot of money in the long run. An inspection contingency can identify major structural, mechanical or safety issues that could be extremely costly to repair and cause buyer’s remorse. A financing or appraisal contingency will ensure a buyer can walk away with their earnest money if a home fails to be appraised for the offer price or if their financing falls through.

Copyright © 2022 BridgeTower Media and © 2022, The Mecklenburg Times (Charlotte, NC). All rights reserved.

Institutional Investors Selling Single-Family Homes

 By Margaret Jackson

Profit margins have dropped a bit overall and by larger amounts in some markets. Lakeland-Winter Haven and Jacksonville are near the top for U.S. investor sales.

NEW YORK – As housing prices tumble across the country, institutional investors that had snapped up properties during a pandemic-induced increase in rental rates are now unloading their properties.

Nationally, profit margins on median-priced single-family homes and condo sales across the U.S. decreased from 57.6% in the second quarter to 54.6% in the third quarter as home prices declined for the first time in nearly three years, according to ATTOM’s recently released 2022 U.S. Home Sales Report.

Meanwhile, Redfin reported earlier this year that the average monthly rent in the United States surpassed $2,000 for the first time in May, rising 15% year over year to a record high of $2,002.

ATTOM found that institutional investors nationwide accounted for 6.7% – 1 in every 15 single-family home purchases – in the third quarter. That’s up from 6.4% in all of 2022 but down from 8.4% in the third quarter of last year.

The states with the largest percentage of sales to institutional investors in the third quarter were:

• Arizona, 14.3%
• Georgia, 12.7%
• Tennessee, 10.7%
• Nevada, 10.6%
• North Carolina, 10.2%

States with the lowest percentage of sales to institutional investors in the third quarter were:

• Hawaii, 1.9%
• Rhode Island, 2.1%
• Maine, 2.1%
• New Hampshire, 2.3%
• Louisiana, 2.5%

While some institutional investors were buying homes in the third quarter, others were shedding properties. Metropolitan areas with a population of 200,000 or more and 50 or more home sales in the third quarter that saw the greatest share of institutional investors selling properties included:

• Metro Memphis, including Tennessee, Mississippi and Arkansas, 19.7%
• Jacksonville, Florida., 18.3%
• Macon, Georgia, 17.6%
• Atlanta-Sandy Springs-Roswell, Georgia, 16.8%
• Metro Clarksville, including Tennessee and Kentucky, 16.7%
• Charlotte-Concord-Gastonia in North Carolina and South Carolina, 16.4%
• Lakeland-Winter Haven, Florida, 15.8%
• Phoenix-Mesa-Scottsdale, Arizona, 15.4%
• Indianapolis-Carmel-Anderson, Indiana, 15.1%

Among the factors contributing to the national home affordability problem are institutional investors and private companies buying for-sale and for-rent units to rent or flip to sell for higher prices, making first-time homeownership more challenging and limiting the ability to build wealth.

Institutional investors are attracted to single-family rentals and build-to-rent communities as skyrocketing housing prices fuel strong demand for rental property. Institutional investors increased capital investments in the sector to $45 billion in 2021, according to John Burns Real Estate Consulting.

Rent growth expanded 14.7% for single-family rentals year-over-year in November 2021, according to Yardi Matrix. And the national average occupancy increased to 95% by the third quarter, according to Arbor Realty Trust.

Real estate crowdfunding platform ArborCrowd expects more institutional investment into single-family and build-to-rent properties because investors have a high demand for resilient assets and have more ways to enter the space, including acquiring existing portfolios, aggregating scattered sites and building ground-up, fully amenitized communities.

© 2020 Benzinga.com - Benzinga does not provide investment advice. All rights reserved.

FinCEN Renewed for 6 Months, Cities Added

 By Kerry Smith

The order to name actual corporation owners if buying real estate in South Florida (Miami-Dade, Broward, Palm Beach) and other metros was extended to April 24, 2023.

WASHINGTON – The Financial Crimes Enforcement Network (FinCEN) announced another renewal and expansion of its Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in non-financed purchases of residential real estate.

In Florida, the order directly impacts three counties, Miami-Dade, Broward and Palm Beach. The order includes information on how it impacts cash real estate transactions.

“Renewing the GTOs will further assist in tracking illicit funds and other criminal or illicit activity, as well as inform FinCEN’s future regulatory efforts in this sector,” the U.S. Department of the Treasury said in a statement announcing the extension.

In addition to cities and counties already covered by the regulation, FinCEN expanded the geographic coverage to two more Texas counties that include the cities of Houston and Laredo.

U.S. metros under the FinCEN GTO order

• Texas counties: Bexar, Tarrant, Dallas, Harris, Montgomery, Webb
• Florida counties: Miami-Dade, Broward, Palm Beach;
• Boroughs of Brooklyn, Queens, Bronx, Staten Island, Manhattan in New York City
• California counties: San Diego, Los Angeles, San Francisco, San Mateo, Santa Clara
• Hawaii counties: Hawaii, Maui, Kauai, Honolulu or the City of Honolulu
• Nevada County: Clark
• Washington County: King
• Massachusetts counties: Suffolk, Middlesex
• Illinois County: Cook
• Maryland counties: Montgomery, Anne Arundel, Prince George’s, Howard
• Virginia counties: Arlington, Fairfax, or the cities of Alexandria, Falls Church or Fairfax
• Connecticut County: Fairfield
• The District of Columbia

© 2022 Florida Realtors®