RE/MAX: Home sales turn around despite inventory constraints
Home sales haven’t just bounced back; in June, they throttled back. The RE/MAX LLC National Housing Report for June 2020 shows home sales posted a near-record 37% gain over sales in May, even though the Months Supply of Inventory (MSI), dropped below the two months level for the first time in the report’s 12-year history.
The 12-year average for May-to-June sales increases is 8.4%. The 37% increase in sales of all residential property types from May to June was the third-highest month-over-month turnaround in the report’s history, the global real estate company said.
Overall, U.S. home sales returned to near historic seasonal levels, but were 6.9% lower than in June 2019, which was the third-highest sales month of 2019.
“June home sales snapped back in a major way,” said Adam Contos, CEO of RE/MAX Holdings, the parent of RE/MAX LLC. “With historically low interest rates, stabilizing unemployment and increased mobility tied to working remotely, buyer demand remains high in most areas of the country,” and led to positives in several key indicators such as mortgage applications.
All 53 metros in the report posted gains compared to May 2020, and one third surpassed June 2019. June results “were far different” from May and April, which appear to reflect the widespread stay-at-home mandates in many states, the report notes.
“The biggest challenge continues to be lack of inventory, and over time we may see some gains around people wanting a different living environment after spending so much time at home this year,” said Contos. “There’s also some potential in the idea that with changing workplace dynamics, underused commercial spaces could be transformed into residential properties. Creative solutions like that may provide some relief for inventory constraints as well as affordability issues.”
Inventory fell 27.9% year over year, reducing the MSI to 1.9, down from 2.7 months in May – bringing the number of homes for sale to “low levels not seen consistently since early 2018.”
The median of all 53 metro Median Sales Prices in June was $275,000 up 0.8% from May 2020. It also increased 1.9% from June 2019, or the lowest year-over-year price increase of any month since December 2018 when prices fell 0.4%. The highest year-over-year increases were in Miami, FL 11.1% and Indianapolis, IN 10.0%.
Days on market of all metro areas – or the number of days between when a home is first listed and a sales contract is signed – averaged 45, the same as the previous June and down one day from the average in May 2020.
The Months Supply of Inventory (MSI) is a key metric based on the contention that a six months supply represents a market balanced equally between buyers and sellers.
In June 2020, none of the 53 metro areas surveyed reported a MSI at or over six, which typically qualifies as a buyer’s market.
Quicken Loans & Amrock offer first RON eClosing in NC
RON has arrived in North Carolina. The nation’s largest mortgage lender, Quicken Loans and electronic loan closing (eClosing) fintech, Amrock announced they completed the first Remote Online Notarization (RON) mortgage closing in North Carolina – following the passage of the Emergency Video Notarization law.
The spread of COVID-19 highlighted the need for mortgage lending automation including notarizations. The state’s new emergency response law enables consumers and notaries in North Carolina to complete secure RON eClosings that are accepted by all parties in the mortgage transaction, the lender noted in a statement.
Currently, 26 states have legislation permitting RON eClosings, but only 17 states actively conduct them today, according to Quicken Loans. The remaining states “have enacted emergency legislation or executive orders providing temporary authorizations allowing notaries to perform electronic closings of some sort,” including North Carolina.
Introducing the technology in North Carolina was a priority for Rocket Mortgage, said Jay Farner, CEO of Quicken Loans. “We continue our mission to have RON adopted in all 50 states.”
In 2019, Quicken Loans became the first mortgage lender to offer eClosings in all 50 states – while Amrock, a national provider of title insurance, property valuations and settlement services, has completed 85% of all eNotes in the U.S. in 2020, according to the statement.
The partnership offers qualifying consumers nationwide a fully digitized Quicken Loans and Amrock loan closing if individual state legislation allows it.
“We are focused on innovations that remove pain points from mortgage transactions and make the process easier for the end client,” said Amrock’s CEO Brian Hughes, who saluted the efforts of North Carolina Secretary of State Elaine F. Marshall “to move the mortgage closing experience online and enable clients and closing agents to quickly, securely and safely work together.”
Secretary Marshall reportedly is an active advocate for eClosings, which “bring the state’s business practices into the 21st century,” by creating an environment suitable for fast and secure home buying experiences for consumers, notaries and lenders alike.
eClosings have never been more important than in the face of this global pandemic, she said. The temporary Emergency Video Notarization law ensures “vital real estate and business transactions could move forward, while also considering the health and safety of all involved. I commend Quicken Loans and Amrock for taking this major step forward here in North Carolina.”
North Carolina’s first RON eClosing client is a Quicken Loans employee living in Asheville.
CRE lenders turn to real-time AI tech
COVID-19 is causing a domino chain effect within the commercial real estate (CRE) industry. Once tenants seek rent reductions, or even stop paying rent, CRE property owner borrowers request loan modifications or forbearances. What may start with a few renters than expands to lenders, investors and asset managers looking to assess property and loan risk data in 2020 and beyond.
Responding to this market of growing demand for accurate, real-time information lenders and others in the CRE chain need to evaluate and monitor asset performance, SpaceQuant has introduced a fully automated asset management system (AMS) powered by Artificial Intelligence (AI) technology that can process millions of property and portfolio data-points.
The interactive platform features a robust big-data infrastructure. In addition, SpaceQuant developed automated technology that analyzes property financial documents, regardless of their format, the fintech said, making it easy to review scanned images, pdf files, excel, and other document types. The software processes property financial data, such as rent rolls and investment processing, in real-time.
Several lenders and servicers already are leveraging the technology, according to SpaceQuant, including JLL, Pacific Life Insurance, Waterfall Asset Management and Hudson Advisors.
“As our commercial mortgage servicing portfolio continues to grow, we needed to find a platform to support that growth, without necessarily increasing our analyst group,” said Fernando Salazar, Director of Asset Management at JLL, a global company that buys, builds, rents and invests in various types of CRE assets. JLL used the platform to achieve that goal, he said, in addition to reducing the time required “to spread a property financial statement.”
Kim Nguyen, an executive at Pacific Life Insurance, which services $23 billion in CRE assets, said the platform’s automation and accuracy allows his team “to focus on more productive, higher-level work, and get the results much faster.”
For commercial mortgage backed security asset managers who use the SpaceQuant portal, to get access to detailed property data in real-time means access to portfolio risk data “three months before” the traditional sources, the fintech said. Which is especially critical today, since the volume of non-performing assets may increase in coming months.
Amilda is a journalist and branding consultant interested in how entrepreneurs turn brilliant ideas into products and services that advance business acumen and improve people’s lives in unprecedented ways. She has covered mortgage finance for over 15 years.