Debates & Housing Problems

Week 2! Hope everyone is having a fantastic week this week and is gearing up for fall weather around the corner. This week’s edition is tackling another major issue taking over headlines, the presidential election… but more specifically diving into each candidate’s housing policies.

This week’s newsletter is only 600 words, a 2.4-minute read

Housing ranks highly on Presidential agendas

Housing issues throughout the US have drawn federal attention and sparked plans & proposals from the Presidential candidates. At the debates this week it was mentioned 4 different times, all by Vice President Harris.

Vice President Harris made news recently with her housing plan proposal which she reiterated in the debates, aiming to build 3 million new homes and crack down on algorithms that could be inflating rent prices. She also proposed a $25,000 aid to first-time homebuyers for down payment assistance, a $40 billion dollar fund for innovative housing construction, and to repurpose some federal land for affordable housing.

Former President Trump has been quieter on housing plans but his agenda calls for slashing mortgage rates to help with affordability and promoting home ownership, cutting regulations, and opening some federal land for development. He also touts his Opportunity Zone program launched back in 2017.

These policies could have rippling effects for the next decade.

Mortgage Rates

Speaking of Mortgage Rates - Rocket Mortgage plans to double its purchase market share by 2027

On Tuesday, Rocket Companies (the umbrella company of Rocket Mortgage) hosted its first Investor Day event where it unveiled bold plans to double its purchase market share from 4%-8% and increase its refinance market share from 12% to 20%. link

Currently ranking as the 3rd largest lender in the country, Rocket Mortgage plans to utilize its multichannel reach, origination & servicing flywheel, technology platform, and leverage AI to scale its operations efficiently.

$1.5 trillion dollars of Real Estate debt is up for maturity

By the end of next year, there is over 1.5 trillion dollars of debt due which would normally not be an issue, but about a quarter of it may be hard to refinance.

The recent high interest rates increased funding costs, devaluing properties. Lower-value properties make it harder for landlords to borrow as much, forcing them to finance with equity to make the difference.

Multifamily/Apartment buildings make up 40% of this maturing debt. Many landlords in this space are looking for refinance as most of them purchased properties with 3-year floating-rate loans around Covid and the hike in rates since then has eaten up their rent income.

Insurance is impacting profitability

More and more property insurance companies are pulling back or raising rates in key markets to combat the rise in claims causing a hit to their profitability. Now, property managers & landlords are struggling to find coverage or maintain profitability. link 

Industrial and multifamily properties have been a winning asset since the pandemic but with this hit to their profitability, some analysts are bearish on the continued success of these areas.

Areas with an increased rate of disasters/environmental hazards are prime markets affected by this shift.

Residential Housing Update

With the downtick in mortgage rates, the average monthly payments have seen a slight reduction since last year. This is the biggest downtick since May 2020 when housing markets struggled before the Covid boom. Monthly payments would be lower if it weren’t for the increasingly high housing sales prices.

The northeast was the majority contributor to home price increases due to its high sale-to-list price ratio meaning that homes are selling for more than they are listed. Meanwhile, the southeast leads the lowest in sale-to-list ratio.

Which categories have been most impacted by Inflation?

That’s all for today’s edition, please continue to share this newsletter with friends, family, and colleagues to help us continue to grow. Your support is greatly appreciated!

Copy and paste this link to share:

The information provided in this newsletter is for informational and educational purposes only and does not constitute financial, investment, or real estate advice. The content is based on the opinions and research of the authors and may not reflect the most current market conditions or developments. The analysis of properties is done without consideration of each platform’s fees. Always conduct your own research and consult with a qualified financial advisor or real estate professional before making any investment decisions. The authors and publishers of this newsletter disclaim any responsibility for decisions made based on the information contained herein.