Real estate investors see better conditions than last year, optimistic about next six months

 

Investors encouraged despite difficult market circumstances, according to new RCN Capital survey

Even with a maelstrom of trying circumstances in the residential market of late, real estate investors are optimistic about the months ahead, according to the Fall 2023 Investor Sentiment Survey from RCN Capital.

Seventy-two percent of investors polled by RCN and market intelligence firm CJ Patrick Company said that market conditions for investing are actually the same or better than they were one year ago. Three-quarters of respondents indicated that they believe conditions will either remain stable or improve over the next six months.

Investor views on the current landscape is decidedly rosier compared to the spring iteration of the survey. Forty-nine percent of the latest survey’s participants said conditions are better than they were a year ago, compared to just 30% in the spring.

“Despite higher home prices, higher financing costs and limited inventory, real estate investors continue to express optimism about market opportunities today and in the months ahead,” said RCN Capital CEO Jeffrey Tesch. “Investors continue to play an important role in the housing market – according to a recent report from CoreLogic, more than one in four home sales is to an investor, and we continue to see interest from both rental property buyers and fix-and-flip investors in our business.

“Interestingly, fix-and-flip investors seem much more optimistic about future opportunities – 50% of them believe that conditions will improve over the next six months compared to just 24% of rental property investors,” said Rick Sharga, CEO of CJ Patrick Company. “That may be an indication that flipping activity has bottomed out, but may also be a reflection of current challenges in the rental market, with rates continuing to decline even as more rental inventory comes online.”

Enhanced optimism, however, doesn’t necessarily mean investors are playing looser with their funds. RCN’s survey suggests that investors still plan on being judicious with their capital, with just 22% planning to buy more properties than they did one year ago. Thirty-nine percent plan to buy the same number, with another 39% saying they will buy fewer properties than they did this time last year.

High capital costs were the largest current obstacle identified by investors; nearly 76% of respondents cited them as a hurdle to the investing market. Lack of inventory, at more than 42%, was mentioned by the second largest share of investors, followed by competition from institutional investors at 33%, competition from consumer homebuyers at 29%, difficulty securing a loan at 22%, and supply chain delays at 22%.

By Arnie Aurellano

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They’re Back!!!

 

They’re BACK!!! Remember those preapprovals that made a choice to stop looking for houses until the rates dropped and home prices went down? Guess what? THEY’RE BACK!!!

Each week as rates have continued higher and as inventory of available homes remains tight, those who believed the “experts” on social media, that rates and home prices were soon to fall. Well guess what? People are discovering that it was a bad move to sit and wait.

Think about those who didn’t want to buy when rates moved past 4%; I bet they wish they had a 4% mortgage now! Maybe some held on until rates went past 5%; I bet they would love that 5% rate in their new home right now! Remember those just a few short weeks ago who were distraught when thinking about a mortgage rate above 6%? I bet they would be thrilled to lock in that 6% rate if you put it in front of them now. 

How long can people afford to try and wait for things to come back to where they believe they should be? Have some now be priced out of EVER getting a home, because between price appreciation and higher rates, they can’t qualify or save enough money to get into that home. Sad but true, waiting can be devastating; especially because they could have easily bought, and then refinanced if rates went lower. But will they ever go low enough to make it worth the wait?

Historically, rates on a 30-year fixed loan have been between 2.5% and 18.5%. The average in that span is about 7.75%. While I don’t believe we will see 18.5% again; I also don’t believe we will ever see 2.5% again. While we would all prefer to have lower rates; sometimes sacrificing average for the hope of excellent, can leave you in a very poor position! That is why I am seeing more and more of those people who move into “waiting mode”, realize that they needed to get into “buy mode”, and to do it quickly, before they lost any more ground! Have you called all your past preapprovals that went to the sidelines and had a conversation about what the cost of waiting has been? Maybe that’s a call you should be making?

WRITTEN BY MICHAEL WHITE

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Buying a Home With Bad Credit: Can You Do It? Should You?

 

Only people with the very best credit will qualify to buy a home. Wait—that’s old-school thinking. Today, plenty of people buy homes with scores that are not in the good range (700 or up).

But, poor credit is still one of the top reasons people fail to buy a home—or even try—because they simply assume they won’t qualify. Knowing the ins and out of credit requirements, and a few tricks for improving your credit, could possibly mean the difference between staying in a rental and owning a home of your own. 

What score is required?

This varies depending on the lender and the type of loan, but 580 is today’s magic number. That’s the minimum credit score that is typically required for an FHA loan, although scores can go as low as 500 with a higher down payment. 

How does your score affect your mortgage rate?

In general, the lower the score, the higher the rate. “A low credit score can make it less likely that you would qualify for the most affordable rates and could even lead to rejection of your mortgage application,” Bruce McClary, spokesman for the National Foundation for Credit Counseling, told BankRate. “It’s still possible to be approved with a low credit score, but you may have to add a co-signer or reduce the overall amount you plan to borrow.”

Are there easy ways to raise your credit?

The first thing you want to do once you see your credit report is check for errors. A collection account that was paid off long ago or that’s not even yours could be dragging your score down. “You might have errors on your credit report. If so, they could potentially hurt your credit score,” said Norton LifeLock. “You can get a free copy credit of your credit report every 12 months from each credit reporting company. How? Go to AnnualCreditReport.com. You want to make sure your information is accurate and up to date.” 

Experian Boost is a newer service that allows you to raise your FICO score by getting “credit” for making timely phone and utility payments. According to Experian, the average user raised their score by 13 points, which could be enough to get you over the hump.

Should you spend some time working on your credit before you buy a home?

This is a personal choice. If you can get your score up quickly over a couple of months and the difference will help you qualify, then yes. Your lender should be able to review your credit report and tell you where to concentrate for the biggest and quickest improvement. Then again, if raising your score a few points won’t make a big difference in your rate and you’re ready to roll, you might not have much incentive to wait. 

Keep in mind that the savings over time with a lower rate can be huge. “Even a half-point in interest can make a big difference in your monthly mortgage payment and how much you pay over the life of the loan,” said BankRate. “For example, the difference between a 3.5 percent rate and a 4 percent rate on a $200,000 mortgage is $56 per month. That’s a difference of $20,427 over a 30-year mortgage term.”

What is the best loan for low credit scores?

The aforementioned FHA loan is often the choice of buyers with low credit scores and/or minimal down payments funds. Their criteria is among the most lenient, but you will pay for that leniency. 

“You may be able to qualify for an FHA loan with a minimum credit score of 580 and a 3.5% down payment,” said Business Insider. “However, not all lenders will approve you, as some have higher credit score requirements. Taking out an FHA loan does mean that you'll need to pay mortgage insurance, also known as a mortgage insurance premium, throughout the lifetime of your mortgage. Currently, the mortgage insurance premium on an FHA loan is 1.75% upfront, then 0.7 to 0.85% annually.” 

WRITTEN BY JAYMI NACIRI

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5 Utility Energy-Saving Myths

 

Everyone is looking to conserve energy because it’s both good for the planet and helps save money on utility bills. And while there are an abundance of ways to cut back on usage, there are also many myths out there widely believed to be saving energy when, in fact, they're not. Below, we debunk common myths and explain alternate ways that are actually effective in cutting energy usage and costs.

Myth #1: Switching electronics on and off uses more energy than leaving them on

It’s a common misconception that if you’re only going to be away from electronics for a short amount of time, it’s more energy-friendly to leave them on rather than continuously flipping the switch on and off. This theory is not true as turning devices on and off neither reduces their lifespan nor prompts any significant power surge that increases energy consumption. Instead of leaving these devices on when you’ll be away, even for a short amount of time, always turn them off as this is a more effective method of saving energy.Myth #2: Homes need to breathe to be energy efficient, so don’t overuse insulation.

This is another myth that does not hold any actual merit. Leaving out insulation does nothing but waste energy, as it allows artificial heating and cooling efforts to slip through the cracks, making these systems work harder to control your home’s temperature. Allowing your home to “breathe” will also allow for spores, odors, and unwanted moisture to enter your space. You should instead make your home as insulated and airtight as possible to save energy and make your heating and cooling systems efficient.

Myth #2: Leaky faucets are nothing to worry about

This myth couldn’t be further from the truth. A leaky faucet that drips two drops each second will waste up to 200 gallons of water in a month. If the leaking faucet supplies hot water, this will drive up your energy bills and consumption levels quickly. With that being said, fix a leaky faucet as soon as you notice it to avoid wasting energy and water. Leaky garden hoses should also be taken care of as they will have the same effect.

Myth #3: Appliances and devices don't use energy when they aren’t in use

Unfortunately, this is a myth that shouldn’t be ignored. Because most of our appliances and devices are built for the ultimate ease of use, they have built-in standby power settings that allow them to still use power even when they're not on. This results in devices using energy virtually all the time, driving up your utility bills. To stop this from happening, plug devices into power strips that can be switched off to diminish their electrical access when they aren’t in use.

Myth #4: Wood stoves are too much work to be energy efficient

Wood stoves are a popular way to alternatively heat your home during the winter. However, they're regarded as labor intensive. While this may have once been true, it’s no longer the case. Modern wood stoves are not only easier to use, but they're highly energy efficient and offer high-quality performance. They burn wood thoroughly and leave behind little waste, which cuts down on the time you need to spend supplying the stove with wood and cleaning it. This also helps to keep your chimney cleaner. These factors, combined with the fact that they provide ample heat, make wood stoves a worthy investment, especially in areas with long and cold winters.

Myth #5: Closing heating and cooling vents in unused rooms saves energy

While this myth does seem to make logical sense, it’s actually untrue. Regardless of whether or not vents are open, your heating and cooling systems will produce the air required to fill the ductwork systems of your home. Closing vents will merely redirect the air into other rooms and increases the air pressure of the system, which actually forces it to work harder. Closing vents has the opposite desired effect, which means that you should simply leave them open when your temperature control systems are going.

Saving energy in your home can clearly be tricky, but don’t be fooled by these commonly believed myths. Do your research and gain a true understanding of what actually cuts usage and costs prior to taking up any practices that are geared towards increasing energy efficiency.

Written by Sara LeDuc 

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Free Weekly Credit Reports Are Now Available Permanently

 

Americans will permanently have access to free weekly online credit reports from the three major credit reporting agencies, the companies announced Monday.

Before the pandemic, you were only entitled to get a free copy of your credit report once per year from each of the credit bureaus — Experian, Equifax and TransUnion. Spacing out those three requests, you could view an official credit report at most once every four months.

But in April 2020, the credit bureaus announced weekly access to free online credit reports, citing the fact that many people were missing credit card, utilities and rent payments due to high unemployment early in the COVID-19 crisis. Now, that pandemic policy is permanent.

Why the credit bureaus are changing their policy

When it was first announced, the free weekly credit reports policy was set to end in April 2021. The date for its expiration was pushed back repeatedly, most recently to the end of 2023, until it was finally made indefinite on Monday.

In their announcement, executives from Equifax, Experian and TransUnion said they are “reinforcing their commitment to the financial health of U.S. consumers” with this move. The idea is that with the ability to access credit reports more regularly, Americans can keep better track of what’s going on with their credit.

Credit reports typically contain information about your accounts, including loans and credit cards. You can see your balances, your payment history and your credit limits, as well as past addresses, employers, phone numbers and credit inquiries.

Accessing your credit report can be helpful when you’re trying to understand your odds of approval for loans. You should also scan your report every once in a while to ensure everything is accurate. If you see errors, it could be an indication of identity theft or inaccurate credit reporting.

How to get a free credit report

To pull your credit report, you can use the government website AnnualCreditReport.com. The process should take less than 10 minutes, but you will have to enter some information including your address, Social Security number, phone number and date of birth.

You can either request one credit report, or you can get all three at once by checking multiple boxes. In total, you're now eligible for over 150 free credit reports a year. (As part of a settlement in connection with its massive 2017 data breach, Equifax also offers people up to six additional free credit reports per year through 2027.)

Keep in mind that your credit report does not show your credit score, so you’ll need to follow a different set of steps if you’re hoping to check your credit score alongside your report.

By: Pete Grieve

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NAR Predicts Several U.S. Housing Market Outcomes

The National Association of Realtors Chief Economist Lawrence Yun issued the following statement this week on the State of the U.S. Housing Market in 2023.

Yun starts his market predictions by saying, "The current problem related to the housing market is limited supply. Even before the onset of the pandemic, in 2019, there was a shortage of approximately 4-to-5 million housing units in America. That came about due to population and job growth that outpaced new-home construction. Then, the shortage worsened during the first year of the COVID-19 real estate boom as many desired to take advantage of the historically low interest rates. The shortage intensified when mortgage rates shot up due to homeowners who have been unwilling to list and give away their locked-in low rates."

Yun continues, "One future scenario is some calming in the economy and inflation. That will lead to modestly lower mortgage rates and more buyers will come to the market. Hopefully, homebuilders will ramp up production and we'll continue to see the repurposing of empty commercial buildings into residential units. Home prices are not crashing in this scenario. Home price growth will depend on whether homebuilders can bring sufficient supply to the market.'

"Another scenario is if we experience an economic recession when jobs are being cut. Those who lose jobs may be forced to sell their homes. Moreover, those uncertain about their jobs will not have the confidence to buy a home. However, a recession means much lower interest rates. And those with stable jobs - around 70% to 80% of workers - will want to take advantage of low interest rates.'

"This scenario may cause home prices to rise faster, especially if some wealthy people decide to reallocate investments from the stock market to real estate. We will not have a repeat of the 2008-2012 housing market crash. There are no risky subprime mortgages that could implode nor the combination of a massive oversupply and overproduction of homes," concludes Yun.

By WPJ Staff

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