Redfin: Buying demand up 25% from before COVID-19
Being stuck at home may make folks antsy to get up and move. According to Redfin, seasonally adjusted homebuying demand for the week of June 1-7 was 25% higher than in January and February, marking the eighth straight week of rising demand, despite the pandemic and unfazed by protests.
Redfin reported mortgage purchase applications were up 7% year-over-year in the last week of May and almost doubled, increasing 13%, in the first week of June.
Redfin agents from Seattle to Los Angeles to Philadelphia “have been surprised that protests didn’t deter more buyers,” the report notes. Low rates and more recently, easing credit, motivate homebuyers, driving demand up, according to Sarah Martin, a Redfin mortgage advisor in Washington, D.C. “Credit has pretty much loosened up except for self-employed borrowers,” she states.
Also, even though inventory constrains persist there are signs of improvement as more sellers have started to come back to the market. While new listings fell to 21% below last year’s level during the week of May 25-31, last week’s new listings increased to 15% below last year’s level. This suggests continued recovery, according to the Redfin report.
Sellers finally are responding to increased demand, said Seattle Redfin Agent David Palmer, who expects to see double-digit listings in the month of June and July. “Those people who were looking to get top dollar and wanted to wait to list until they could get the most buyer attention, they can definitely get that now.”
For the week of June 1-7, year-over-year, asking prices were up 9.9%, compared to 7.9% the week before, and 3.9% in January and February, while sales prices increased 3.1% compared to 1.3% in May, while offers from late March and April were still closing.
Prices will continue to rise until supply catches up with demand, but other indicators remain positive. Redfin predicts that the flexibility to work remotely, combined with low interest rates, will lead to higher levels of home ownership in the U.S., which have mostly been declining since 2004.
With interest rates so low, Redfin agents report many people want to buy, go somewhere else. Relocating buyers are pursuing the suburbs for more space, or smaller, more affordable cities. Some agents say the big migration is beginning to happen as more people are moving to the interior of the country or retiring and moving south, Redfin said. In April and May of 2020, 27% of Redfin.com users searched outside their metropolitan area, compared to 25% in April and May of 2019.
Eastern Union’s new multifamily fee structure creates massive demand
Commercial real estate brokerage firm, Eastern Union has established a new group that offers fee adjusted pricing for refinancing multifamily properties backed by Government Sponsored Enterprises (GSEs). Demand quickly exceeded capacity, the company said in a statement, leading to the hiring of 75 brokers.
Furthermore, the New York-based national brokerage said it anticipates additional staff expansions at “satellite offices in states across the country” where commercial real estate markets are appealing.
Eastern Union closes $5 billion in real estate transactions annually serving property owners and investors, according to the company website. In 2019, the Mortgage Bankers Association ranked Eastern Union the second-most-active broker nationwide acting as an origination intermediary for loans backed by Fannie Mae or Freddie Mac.
“The new fee structure has quickly attracted a substantial flow of incoming business, and we’re hiring to keep up with demand,” said Ira Zlotowitz, Eastern Union founder and president.
To be eligible for the new rate, transactions must meet or exceed a $15,000-fee threshold.
Eastern Union reset its fee for refinancing multifamily properties backed by the GSEs to one quarter-point. In addition to resetting fees for refinancing loans, the newly created Multi-Family Group is leveraging a competitive, half-point fee for acquisition loans that extends to Commercial Mortgage Backed Securities of multi-family transactions.
The quarter-point fee is exclusively available through Eastern Union brokers who are members of the Multi-Family Group led by Michael Muller and Marc Tropp.
Muller and Tropp are top high-yield producers who together close several hundred deals annually “across a full range of property types and deal structure in markets around the country,” the company said. Muller has been a broker in the New York City-area over the past 19 years, while Tropp is Eastern Union’s number-one broker in the Mid-Atlantic regional market for the last 16 years.
“The pandemic has ushered in a new era in our sector,” said Zlotowitz. “We’ve responded by redefining pricing standards that had persevered for decades.”
Veteran investor starts new RE fund for CA market
Experienced real estate investor and fund manager John W. Simonse recently launched The North Star Capital Fund LLC to provide construction, remodel, and other business purpose loans primarily in the Bay Area and other select cities throughout California. He teamed up with experienced managers Mark Hanf and Mathias Coordes of Pacific Private Money, Inc. Together the three have “over 100 years of experience in real estate,” according to a press release. Simonse did not disclose how much he has invested in the Concord, Calif., based fund, or any other financial details. (The company’s website currently is under construction.)
According to Simonse, demand for this type of a lending fund is extremely high due to a severe housing shortage in California where new housing has not kept up with job growth and “the state needs to build approximately 3.5 million new housing units by 2025 to catch up.”
He expects the residential real estate market in California will remain strong as limited inventory and lack of construction will continue to fuel demand. In addition, Simonse says, now in their 30’s, Millennials are interested in homeownership, starting a family and taking advantage of mortgage interest rates now on the lower end of “the historically desirable 5.0%.”
The new fund aims to bring in new partners who wish to invest in trust deeds in California. Simonse said his goal is to return 10% a year to The North Star Capital Fund investors.
He asserts that a real estate lender’s investment in a private money loan fund secured by a deed of trust is one of the safest forms of security available, because the investor has multiple deeds securing the investment. Choosing a private money investment fund, however, can be a challenge. Fund management experience, proven results and skin in the game are the three most important criteria to keep in mind, he said.
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.