Chicago’s REO Property Landscape: Challenges and Opportunities
Current Trends in REO Properties Across California
Florida’s Real Estate Market: From Foreclosure to Opportunity
Georgia’s Urban Foreclosure Crisis and Its Aftermath
Michigan’s Path to Recovery: The Role of REO Properties in Revitalizing Cities
Navigating New Jersey’s Complex Foreclosure Process
Nevada’s Housing Market Recovery and the Role of REO Properties
Opportunities in Arizona’s REO Property Market
Strategies for Investing in North Carolina’s REO Properties
The Impact of Economic Challenges on Ohio’s REO Market
CHICAGO
CALIFORNIA
FLORIDA
GEORGIA
MICHIGAN
NEW JERSEY
NEVADA
ARIZONA
NORTH CAROLINA
OHIO
PRESS RELEASE
Press Release | May 3, 2024
Employment Growth Slows as Labor Market Normalizes after Hot Q1
Press Release | May 7, 2024
Housing Sentiment Again Shows Signs of Plateauing
Press Release | May 17, 2024
Inflation Slows from Q1 Pace but Remains Elevated as Retail Sales Slump in April
Press Release | May 21, 2024
Higher Rate Environment Projected to Dampen Housing Activity Through 2024
Press Release | May 23, 2024
Existing and New Home Sales Retreat in April as Interest Rates
Weigh on Demand
Press Release | May 31, 2024
Pending Home Sales Pull Back Sharply as Economic Data Slows Amid Still-Sticky Inflation
Press Release | June 28, 2024
Consumption Growth Shows Signs of Slowing Despite Easing Inflation, as New and Pending Sales Decline in May
Press Release | June 21, 2024
Retail Sales Signal Slowing Consumption as Existing Sales and Housing Starts Soften
Press Release Partnership with The Power Is Now Media
REOBroker.com Announces Strategic Media Expansion and Partnership with The Power Is Now
Press Release | July 8, 2024
Housing Sentiment Rebounds, Returns to Likely Plateau
ABOUT REOBROKER
REObroker.com is a nationally recognized network of experienced default brokers. Our goal is to provided our asset managers with the best agents available, assisting them in the management and disposition of their assets, from cradle to grave. Each day we are on our exclusive chat line sharing best industry practices and offering suggestions and solutions to challenges we face. Many of our members are experts in their fields and they offer webinars and training to their fellow brokers.
All applicants are carefully screened. To be considered for REOBroker.com membership, brokers are required to have experience in listing and selling REO and short sale Properties. They must submit verifiable references from Asset Managers. Each broker’s background is checked thoroughly, as our standards only allow respected and ethical brokers to participate.
Brokers in our network are accustomed to working with banks and investorson a daily basis, and therefore carry themselves in a professional manner, ensuring timely sales of their listings and lighter workloads for asset managers, with minimal liability. In our world, it is important that brokers thoroughly understand the local real estate law, such as 18-day notices for personal property and the delicateness of handling cash for keys. They must be familiar with the need for accurate BPOs,the protocol for submitting bids, offers, changes to contracts and invoicing and all other facets of REO.
Generally only one broker is allowed per marketing area in order to maintain our high association standards and confidentiality.
Our web site is designed to help you locate a professional REO broker anywhere within the United States. If you don’t find what you’re looking for, email us. We’ll find one for you within 24 hours.
Thank you for considering REObroker.com.
PUBLISHERS NOTE
Welcome to the inaugural edition of REOBroker.com Magazine! As we embark on this exciting journey, we celebrate a remarkable milestone in our organization’s storied history. For 30 years, REOBroker.com has stood as a beacon of excellence and reliability in the default services industry, providing unparalleled expertise and support to asset managers, servicing companies, and financial institutions across the nation.
Founded with the vision of creating a network of highly skilled REO and short sale brokers, REOBroker.com has grown into a nationally recognized trade group, renowned for its dedication to maintaining the highest standards of professionalism and integrity. Our members, each with an average of over twelve years of experience, are prescreened and vetted to ensure they meet our rigorous criteria. This meticulous selection process guarantees that our clients receive the best service possible, reducing liability and marketing time for asset managers [oai_citation:1,Home](https://www.reobroker. com/) [oai_citation:2,About REObroker](https://www.reobroker.com/about).
This magazine is a testament to the expertise and dedication of our members, showcasing the breadth of their skills and the depth of their commitment to excellence. It is designed to be a valuable resource for those we serve, providing insights, updates, and best practices from the front lines of the default services industry. Each page highlights the remarkable achievements of our agents and brokers, demonstrating why REOBroker.com remains the trusted choice for asset management and real estate disposition.
As we look back on three decades of distinguished service, we also look forward to the future with optimism and resolve. The real estate landscape is ever-changing, and REOBroker.com is committed to evolving alongside it, continuously enhancing our services and expanding our network to meet the needs of our clients.
Thank you for being part of this journey. Together, we will continue to set the standard for excellence in the default services industry. Welcome to the first edition of REOBroker. com Magazine – a celebration of our legacy and a glimpse into our bright future.
Sincerely,
Brandy Nelson and Mike Samborn Publishers, REOBroker.com Magazine
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Residential: From single-family homes to high-rise apartments.
Commercial: Office spaces, retail outlets, and more.
Industrial: Warehouses, factories, and other industrial properties.
Multi-Family: Duplexes, triplexes, and larger apartment complexes.
Land: Raw land, development sites, and agricultural plots.
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Broker Price Opinions: Accurate property valuations.
Occupancy Verifications: Ensure properties are occupied as expected.
Door Knock/Postings: Direct outreach and postings for property management.
Property Management: Property management services for all property types.
Property Preservation: Preservation arrangements
Eviction Services: Coordinating legal evictions and securing the property post-eviction.
Inspection Services: Regular inspections are done to ensure properties are well-maintained and to identify any issues early.
PRESS RELEASE
HOUSING SENTIMENT REBOUNDS, RETURNS TO LIKELY PLATEAU
July 8, 2024
Consumers Slightly More Optimistic about Homebuying and Home-Selling Conditions, But Affordability Pessimism Persists
WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) increased 3.2 points in June to 72.6, rebounding from last month’s dip and returning the index nearer the plateau it set earlier this year. This month, 19% of consumers indicated that it’s a good time to buy a home, up from 14% in May, which represented a new survey low. The share believing it’s a good time to sell also increased, rising from 64% to 66%. Greater shares of consumers also indicated belief that home prices and mortgage rates would rise over the next 12 months. Among the household finance components, the percentage of consumers expressing a sense of job security jumped to 79%, an increase of 4 percentage points compared to May. The full index is up 6.6 points year over year.
“Affordability concerns remain the primary driver of consumer housing sentiment, even as the topline findings from our monthly survey showed a modest uptick in optimism on both homebuying and home-selling conditions,” said Mark Palim, Fannie Mae Vice President and Deputy Chief Economist. “If mortgage rates decline through the end of the year, as we currently forecast, we do think home sales activity will pick up, but progress on that front is likely to be slow due to the ongoing imbalance between supply and demand. A significant majority of consumers continue to tell us that it’s a ‘bad time’ to buy a home, and they’re also telling us that they expect both home prices and mortgage rates to move higher over the next 12 months. Taken together, in our view, this leaves little upside to overall sentiment until meaningful progress is made on affordability – most likely in the form of either lower rates or improved supply. Of course, the flip side to a difficult purchase market is an advantageous sales market, and respondents also maintained their position that it’s a generally good time to sell, pointing to high home prices as the primary reason.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) increased 3.2 points in June to 72.6. The HPSI is up 6.6 points compared to the same time last year. Read the full research report for additional information.
Good/Bad Time to Buy:
The percentage of respondents who say it is a good time to buy a home increased from 14% to 19%, while the percentage who say it is a bad time to buy decreased from 86% to 81%. As
a result, the net share of those who say it is a good time to buy increased 9 percentage points month over month.
Good/Bad Time to Sell:
The percentage of respondents who say it is a good time to sell a home increased from 64% to 66%, while the percentage who say it’s a bad time to sell decreased from 35% to 33%. As a result, the net share of those who say it is a good time to sell increased 4 percentage points month over month.
Home Price Expectations:
The percentage of respondents who say home prices will go up in the next 12 months increased from 42% to 45%, while the percentage who say home prices will go down decreased from 18% to 17%. The share who think home prices will stay the same decreased from 40% to 36%. As a result, the net share of those who say home prices will go up in the next 12 months increased 3 percentage points month over month.
Mortgage Rate Expectations:
The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 25% to 24%, while the percentage who expect mortgage rates to go up increased from 31% to 33%. The share who think mortgage rates will stay the same remained unchanged at 42%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 2 percentage points month over month.
Job Loss Concern:
The percentage of respondents who say they are not concerned about losing their job in the next 12 months increased from 75% to 79%, while the percentage who say they are concerned decreased from 24% to 20%. As a result, the net share of those who say they are not concerned about losing their job increased 8 percentage points month over month.
Household Income:
The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 20% to 16%, while the percentage who say their household income is significantly lower decreased from 12% to 10%. The percentage who say their household income is about the same increased from 67% to 72%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points month over month.
About Fannie Mae’s Home Purchase Sentiment Index
The Home Purchase Sentiment Index® (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are
higher than they were a year earlier.
Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to support the housing market. The June 2024 National Housing Survey was conducted between June 1, 2024 and June 18, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was conducted exclusively through AmeriSpeak®, NORC at the University of Chicago’s probability-based panel, in coordination with Fannie Mae and PSB Insights. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.
Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.
To receive e-mail updates with other housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.
About the ESR Group
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.
Virginia - Mclean|Loudoun and surrounding area of DC
Arkansas -
Colorado - Jefferson and
Hawaii - Oahu
Idaho - Nampa
Iowa - Sioux city
Wisconsin - Sauk|Dane Columbia counties |Baraboo and Rhinelander
West Virginia - Charles Town
Chicago’s REO Property Landscape: Challenges and Opportunities
Navigating the real estate market in Chicago can be as complex as the city’s rich history. Among the various facets of this market, Real Estate Owned (REO) properties present unique challenges and opportunities. These properties, often foreclosures that have reverted to the lender, highlight significant social and economic issues while also offering potential investment opportunities. In this blog, we’ll explore the urban real estate market in Chicago, delve into the social and economic implications of high REO property rates, and gain insights from local real estate agents and investors.
THE URBAN REAL ESTATE MARKET IN CHICAGO
Chicago’s real estate market is a bustling and dynamic environment, characterized by its diverse neighborhoods and architectural marvels. However, the presence of REO properties is a persistent issue that impacts various sectors of the community. Here’s a closer look at some key aspects:
NEIGHBORHOOD IMPACT:
Certain neighborhoods, particularly those on the South and West sides, have higher concentrations of REO properties. This can lead to declining property values, increased crime rates, and a reduced sense of community.
MARKET FLUCTUATIONS:
The number of REO properties can significantly influence market conditions. High rates of REO properties often signal underlying economic distress and can lead to broader market instability.
INVESTMENT POTENTIAL:
Despite their challenges, REO properties can offer significant investment potential for savvy buyers willing to invest time and resources into rehabilitation.
SOCIAL AND ECONOMIC IMPLICATIONS OF HIGH REO PROPERTY RATES
The prevalence of REO properties in Chicago is more than just a real estate issue; it has profound social and economic implications. Let’s break down these impacts:
SOCIAL IMPLICATIONS
COMMUNITY DECLINE:
High concentrations of REO properties often lead to neglected neighborhoods, reduced social cohesion, and increased crime rates.
DISPLACEMENT AND HOUSING INSECURITY:
Former homeowners who lose their properties face significant hardship, including displacement and long-term housing insecurity.
ECONOMIC IMPLICATIONS
PROPERTY VALUE DEPRECIATION:
Surrounding properties can suffer from depreciating values due to the presence of neglected REO homes, impacting homeowners’
MUNICIPAL
FINANCIAL STRAIN:
Local governments often bear the financial burden of managing and maintaining these properties, diverting resources from other critical areas.
BARRIERS TO HOMEOWNERSHIP:
The prevalence of REO properties can create barriers for potential homeowners, particularly in economically distressed areas where these properties are most common.
PERSPECTIVES FROM LOCAL REAL ESTATE AGENTS AND INVESTORS
To gain a comprehensive understanding of Chicago’s REO property landscape, it’s essential to consider the perspectives of those on the front lines: local real estate agents and investors. Their insights shed light on both the challenges and opportunities presented by these properties.
REAL ESTATE AGENTS
MARKET INSIGHTS:
Local agents emphasize the importance of understanding the nuances of the REO market. They often highlight the need for thorough research and due diligence when dealing with these properties.
COMMUNITY INVOLVEMENT:
Agents frequently advocate for community involvement and support initiatives aimed at revitalizing neighborhoods impacted by high REO rates. They see potential in transforming these properties into viable homes for new buyers.
CHALLENGES IN TRANSACTIONS:
Agents often face hurdles such as prolonged closing times and complex negotiations with lenders, which can deter potential buyers. Investors
INVESTMENT STRATEGIES:
Experienced investors recognize the potential for high returns on REO properties. They focus on strategic rehabilitation and resale, often targeting first-time homebuyers or renters.
Risk Management: Investors stress the importance of risk management, advising thorough inspections and realistic budgeting for repairs and renovations.
Community Benefits: Some investors are driven by a commitment to community improvement, seeing their work as a way to contribute positively to the local economy and housing market.
OPPORTUNITIES IN CHICAGO’S REO MARKET
Despite the challenges, the REO property market in Chicago offers several opportunities:
AFFORDABLE ENTRY POINTS:
For new investors or homeowners, REO properties can provide more affordable entry points into the market.
COMMUNITY REVITALIZATION:
Investing in REO properties can be a catalyst for community revitalization, improving overall neighborhood conditions and property values.
DIVERSE INVESTMENT OPTIONS:
The variety of REO properties available—from single-family homes to multi-unit buildings—allows for diverse investment strategies tailored to different market conditions and personal goals.
CONCLUSION
Chicago’s REO property landscape is a complex yet intriguing segment of the real estate market, presenting both significant challenges and promising opportunities. By understanding the social and economic implications and leveraging insights from local experts, potential investors, and homeowners can navigate this market more effectively. Whether you’re looking to invest or simply want to understand more about the urban real estate dynamics in Chicago, recognizing the potential of REO properties is essential. As the city continues to evolve, so too will the opportunities within its real estate market, promising a future where challenges are met with innovative solutions.
If you’re looking to navigate the complexities of Chicago’s REO property market and uncover unique investment opportunities, REO Brokers is here to guide you every step of the way. With our expertise in handling REO transactions and a commitment to community revitalization, we help you transform challenges into rewarding investments. Visit our website at https://www.reobrokers.com to learn more about how we can assist you in your real estate journey and turn potential into profit.
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PRESS RELEASE
PENDING HOME SALES PULL BACK SHARPLY AS ECONOMIC DATA SLOWS AMID STILL-STICKY INFLATION
May 31, 2024
Key Takeaways:
Gross domestic product (GDP), adjusted for inflation, increased at a 1.3 percent seasonally adjusted annualized rate (SAAR) in Q1 2024, a downgrade of three-tenths compared to the advance estimate, according to the Bureau of Economic Analysis (BEA). The downward revision primarily reflects lower consumption (2.0 percent) compared to what was previously reported (2.5 percent), particularly in the consumption of goods, which outright contracted. Gross Domestic Income (GDI), a measure that is theoretically equivalent to GDP but can differ due to measurement error, increased at a 1.5 percent annualized rate in Q1, a slowdown from a downwardly revised 3.6 percent rate in Q4.
Personal income, adjusted for inflation, was flat in April, according to the BEA. Real disposable personal income declined 0.1 percent, leaving it essentially unchanged since January. Real personal consumption expenditures (PCE) declined 0.1 percent amid a 0.4 percent pullback in goods spending; real services spending inched up 0.1 percent. The saving rate was flat at 3.6 percent. The PCE price index increased 0.3 percent for the third consecutive month, though before rounding the figure was a bit softer than prior months (0.26 percent vs. 0.34 percent). Core PCE rose 0.2 percent, a slowdown compared to first quarter data. Compared to a year ago, headline and core PCE prices were up 2.7 percent and 2.8 percent, respectively.
The Conference Board Consumer Confidence Index increased 4.5 points to 102.0 in May after falling 5.6 points in April. Confidence in the present situation was up 2.5 points to 143.1 while the index for consumer expectations increased 5.8 points to 74.6, a three-month high.
The National Association of REALTORS® Pending Home Sales Index, which record contract signings of existing homes and typically leads closed sales by one to two months, declined 7.7 percent to 72.3 in April.
The FHFA Purchase-Only House Price Index increased a seasonally adjusted 0.1 percent in March after a 1.2 percent jump in February. Compared to a year ago, prices rose 6.8 percent on a nonseasonally adjusted basis, a slowdown of three-tenths compared to February.
The downward revision to consumption in the first quarter will likely flow through to a downward revision to our second quarter consumption, and thus GDP, forecast. This is especially true given the pullback in April consumption and a small downward revision to March’s data. Our fundamental view that growth is likely to slow as the year progresses is unchanged and is in part supported by the now-weaker Q1 and April spending data. On the inflation front, price pressures remain above target, though April’s report was a bit better than first quarter inflation data. Given that other data releases have suggested economic growth is indeed slowing in line with our forecast, we continue to believe that a Federal Reserve rate cut in September remains the most likely scenario.
The sharp fall in the pending home sales index presents some downside risk to our second quarter existing home sales forecast, which already calls for a small decline in sales compared to Q1. Still, we continue to believe existing home sales are near their “floor” and are unlikely to fall much below their current levels before beginning a slow recovery in the second half of the year.
REOBROKER.COM ANNOUNCES STRATEGIC MEDIA EXPANSION AND PARTNERSHIP WITH THE POWER IS NOW
Indio, CA – REOBroker.com, a national leader in REO and Short Sale brokerage, is excited to unveil its ambitious media expansion, REOBroker.com Media, set to launch in May 2024. This bold initiative aims to transform REOBroker.com into a full-fledged media company, offering a comprehensive suite of media products including a Podcast, TV Show, Magazine, Webinars, and Online Events. This expansion is specifically designed to support real estate agents in the default services space, enhancing their visibility to asset managers, banks, and servicers nationwide.
In a complementary move, REOBroker.com is thrilled to announce its partnership with The Power Is Now Media, an established media entity with nearly 15 years of experience in real estate and housing media. This partnership is poised to leverage The Power Is Now's extensive audience and industry connections to amplify further REOBroker.com’s and its agents' reach within the real estate and default services sectors.
A Dual-Faceted Strategy for Unprecedented Industry Support and Visibility
REOBroker.com Media Launch:
This venture represents REOBroker.com’s commitment to providing unparalleled support for its agents. The initiative is a first-of-its-kind in the default services industry, offering agents innovative tools and platforms to showcase their expertise, listings, and success stories. REOBroker.com Media is designed to empower agents with the knowledge, visibility, and networking opportunities needed to excel in the competitive real estate landscape.
Partnership with The Power Is Now Media:
Through this strategic collaboration, REOBroker.com and its agents will tap into The Power Is Now’s established audience and industry connections. This partnership underscores a shared commitment to enriching the real estate community with valuable insights, resources, and opportunities, facilitating an environment where agents and their services receive the recognition and exposure they deserve.
Brandy Nelson, Managing Director of REOBroker.com, expressed her enthusiasm for the initiative: "With the launch of REOBroker.com Media and our partnership with The Power Is Now, we are poised to redefine the support framework for real estate professionals in the default services space. This dual-faceted strategy will catapult our agents and their services into the national spotlight, providing them with the recognition and opportunities they need to thrive."
Eric Lawrence Frazier, MBA, President and CEO of The Power Is Now Media, shared his vision for the partnership: "We are honored to align with REOBroker.com in this transformative endeavor.
Together, we will leverage our collective strengths to foster a vibrant community of empowered real estate professionals equipped with the tools, knowledge, and platform to excel."
Stay tuned for further announcements as REOBroker.com and The Power Is Now Media embark on this exciting journey to elevate the real estate industry standard for media engagement and professional support.
About REOBroker.com
REOBroker.com is a premier national trade group of specialized REO and Short Sale brokers dedicated to connecting asset managers with the nation's top real estate professionals. With a rigorous selection process, REOBroker.com ensures its members embody the industry's highest standards of expertise and integrity.
About The Power Is Now Media
The Power Is Now Media has been a leading voice in real estate and housing media for nearly 15 years, delivering impactful content and resources to the real estate community. With a focus on innovation, education, and empowerment, The Power Is Now Media continues to shape the future of real estate media.
For more information, please contact:
Brandy Nelson, Managing Director, REOBroker.com
Email: info@reobroker.com
Eric Lawrence Frazier, MBA, President and CEO, The Power Is Now Media
Email: eric.frazier@thepowerisnow.com
Current Trends in REO Properties Across California
In recent years, California’s real estate market has witnessed significant changes, especially in the realm of REO (Real Estate Owned) properties. These properties, which are typically acquired by lenders through foreclosure, offer a unique perspective on the state’s housing market dynamics. Let’s explore the current trends in REO properties across California, examining the factors influencing their prevalence and identifying the areas most affected.
UNDERSTANDING REO PROPERTIES
WHAT ARE REO PROPERTIES?
REO properties are homes that have reverted to the lender after an unsuccessful foreclosure auction. These properties often become part of a bank’s or lender’s inventory and are usually sold to recover the unpaid loan balance. Understanding REO properties is crucial for buyers, investors, and industry professionals as they provide insights into the health of the real
RECENT TRENDS IN REO PROPERTIES IN CALIFORNIA
INCREASE IN REO PROPERTIES
Over the past few years, there has been a noticeable uptick in the number of REO properties in California. This trend can be attributed to various factors, including economic downturns, rising unemployment rates, and fluctuations in the housing market. As more homeowners face financial difficulties, the number of foreclosures increases, leading to a higher inventory of REO properties.
estate market.
ECONOMIC FACTORS AND HOUSING MARKET FLUCTUATIONS
Economic instability plays a significant role in the rise of REO properties. Factors such as job losses, reduced income, and higher living costs can push homeowners into foreclosure. Additionally, market fluctuations, such as a sudden drop in property values, can leave homeowners owing more on their mortgages than their homes are worth, prompting them to abandon their properties.
IMPACT OF THE COVID-19 PANDEMIC
The COVID-19 pandemic has further exacerbated the situation. The economic fallout from the pandemic has led to widespread job losses and financial hardships, resulting in an increased number of foreclosures. As the moratoriums on foreclosures and evictions lift, the number of REO properties is expected to rise even further.
KEY AREAS WITH HIGH RATES OF REO PROPERTIES
SOUTHERN CALIFORNIA
Southern California, particularly Los Angeles and San Bernardino counties, has seen some of the highest rates of REO properties. These areas, known for their high property values and living costs, have been significantly impacted by economic downturns. The high cost of living, coupled with job losses during the pandemic, has led to an increase in foreclosures and REO properties.
CENTRAL VALLEY
The Central Valley region, including cities like Fresno and Stockton, has also experienced a surge in REO properties. This area, which has a mix of urban and rural communities, has been
hit hard by economic instability. The agricultural sector, a major employer in the region, faced significant challenges during the pandemic, contributing to the rise in foreclosures.
NORTHERN CALIFORNIA
In Northern California, areas such as Sacramento and the surrounding counties have reported higher rates of REO properties. The tech industry’s volatility, coupled with high living costs, has put a strain on many homeowners, leading to an increase in foreclosures. Despite being a hub for economic activity, the region has not been immune to the broader economic challenges facing the state.
FACTORS INFLUENCING REO PROPERTY TRENDS
ECONOMIC CONDITIONS
The overall economic health of the state plays a critical role in the trends observed in REO properties. Economic downturns, such as recessions or periods of high unemployment, typically lead to an increase in foreclosures. Conversely, economic growth and stability can reduce the number of REO properties.
HOUSING MARKET DYNAMICS
The dynamics of the housing market, including supply and demand, interest rates, and property values, significantly impact the prevalence of REO properties. High demand and rising property values can reduce the number of foreclosures, while a market slump can lead to an increase in REO properties.
GOVERNMENT POLICIES AND INTERVENTIONS
Government policies, such as foreclosure moratoriums and homeowner assistance programs, can also influence the number of REO properties. During the pandemic, various policies were implemented to help homeowners avoid
foreclosure, but as these policies expire, a potential increase in REO properties is anticipated.
CONCLUSION
In conclusion, California’s real estate market continues to evolve, with REO properties serving as a key indicator of broader economic and housing market trends. Understanding the current trends in REO properties across the state, including the factors influencing their prevalence and the areas most affected, is crucial for buyers, investors, and industry professionals. As we navigate the postpandemic economic recovery, monitoring these trends will provide valuable insights into the future of California’s housing market.
If you’re interested in exploring REO properties in California or need expert guidance on navigating the current real estate market, REO Broker is here to help. Visit our website at reobroker.com to learn more about our services and browse our latest listings. Whether you’re a buyer, investor, or industry professional, REO Broker provides the expertise and resources you need to make informed decisions in today’s dynamic market. Don’t miss out on the opportunities REO properties can offer—connect with us today!
New boost
PRESS RELEASE
CONSUMPTION GROWTH SHOWS SIGNS OF SLOWING DESPITE EASING INFLATION, AS NEW AND PENDING SALES DECLINE IN MAY
June 28, 2024
Key Takeaways:
Gross domestic product (GDP), adjusted for inflation, increased at a 1.4 percent seasonally adjusted annualized rate (SAAR) in Q1 2024 in the third and final estimate, an upgrade of onetenth compared to the prior estimate, according to the Bureau of Economic Analysis (BEA). The upgrade reflects upward revisions to net trade, business fixed investment, and government spending. However, real personal consumption expenditures were again revised downward by five-tenths to a 1.5 percent annualized growth rate, a full percentage point lower than originally reported.
Personal income, adjusted for inflation, jumped 0.5 percent in May, according to the Bureau of Economic Analysis. Real disposable personal income was also up 0.5 percent. Real personal consumption expenditures (PCE) rose 0.3 percent after contracting in April. The saving rate rose two-tenths to 3.9 percent, still low by historical standards. The PCE price index was flat over the month and increased 2.6 percent compared to a year ago. Core PCE prices increased just 0.1 percent over the month and 2.6 percent compared to a year ago, the slowest annual rate since March 2021.
The Conference Board Consumer Confidence Index declined 0.9 points to 100.4 in June. Confidence in the present situation rose 0.7 points to 141.5, while expectations for the future declined 1.9 points to 73.0.
The National Association of REALTORS® Pending Home Sales Index, which records contract signings of existing homes and typically leads closed sales by one to two months, declined 2.1 percent to 70.8 in May. This follows a 7.7 percent decline in April.
New single-family home sales declined 11.3 percent to a SAAR of 619,000 in May, a six-month low, according to the Census Bureau. However, April new home sales were revised upward by more than 10 percent, and March’s figure was also revised upward. The number of new homes available for sale rose 1.5 percent to 481,000, remaining at the highest level since the Great Financial Crisis. The months’ supply jumped by 1.2 to 9.3, the highest level since October 2022. The FHFA Purchase-Only House Price Index increased a seasonally adjusted 0.2 percent in April. Compared to a year ago, home prices rose 6.4 percent, a deceleration of four-tenths from March, and the second consecutive month of slowing home price growth on an annual basis.
Forecast Impact:
First quarter GDP growth was revised upward slightly but the more important story is another large downward revision to personal consumption expenditures. We have long noted that recent strength in personal consumption had not been supported by real income growth, and we therefore expected that the consumer would eventually need to retrench to a more normal saving rate. While May income and spending data was more encouraging, downward revisions to prior months means we are likely to revise downward our second quarter consumption forecast. On the inflation front, core PCE, the Fed’s preferred inflation gauge, was a bit below our expectations. While we believe the Fed will likely need several months of reports like this one before being confident that inflation is sustainably returning to target, as of this writing, market pricing has shifted closer to two cuts this year rather than one.
The sharp decline in new home sales in May is better than it looks on its face given the large upward revision to April’s data; in fact, the average of new sales in April and May is modestly above our second quarter forecast. Still, inventories of new homes available for sale remain high, suggesting demand has likely softened. While we note that the new home sales data is volatile, we think the current momentum is probably downward, posing some risk to our intermediate-term forecast. Additionally, another decline in the pending home sales index suggests that existing home sales may have a bit further to fall in the next one to two months, especially given a relatively flat reading for sales in May when the pending home sales index fell more than 7 percent in April. Still, we continue to believe existing sales are near their floor already, and we expect a slow recovery in existing sales starting in the second half of 2024 as mortgage rates ease somewhat.
RETAIL SALES SIGNAL SLOWING CONSUMPTION AS EXISTING SALES AND HOUSING STARTS SOFTEN
June 21, 2024
Key Takeaways:
Retail sales and food services rose 0.1 percent in May but were revised downward in April, according to the Census Bureau. Gains in sales at motor vehicle and parts dealers (+0.8 percent), sporting goods, hobby, book and music stores (+2.8 percent) and nonstore retailers (+0.8 percent), helped offset declines in sales in building materials, garden equipment, and supply dealers (-0.8 percent), restaurants and bars (-0.4 precent) and a price-related 2.2 percent decline in gas station sales. Control group retail sales (excluding food service, auto, building supplies, and gas station sales) rose 0.4 percent but were downwardly revised in April.
Industrial production, a gauge of output in the manufacturing, utility, and mining sectors, rose 0.8 percent in May, according to the Federal Reserve Board. Manufacturing activity rose 0.8 percent to the highest output level in a year. Mining output rose 0.3 percent, while utilities output was up 1.7 percent.
Existing home sales declined 0.7 percent to a seasonally adjusted annualized rate (SAAR) of 4.11 million in May, according to the National Association of REALTORS® (NAR). The number of homes available for sale climbed 6.7 percent to 1.28 million, the highest level since August 2022. The slow sales rate combined with increased inventory pushed the months’ supply up two-tenths to 3.7, the highest level since the onset of the pandemic. The NAR’s measure of the median sales price of existing homes rose 5.8 percent compared to a year ago.
Housing starts declined 5.5 percent to a SAAR of 1.28 million in May, the slowest pace since the onset of the pandemic, according to the Census Bureau. Single-family starts declined 5.2 percent to a SAAR of 982,000, the slowest pace in 7 months, while multifamily starts declined 6.6 percent to a SAAR of 295,000. Single-family permits continued their downward trend for the fourth consecutive month, falling 2.9 percent to a SAAR of 949,000. Multifamily permits were down 5.6 percent to a SAAR of 437,000.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index declined 2 points to 43 in June, the lowest level since December. The index for sales in the present declined 3 points to 48, while the index for sales in the next six months was down 4 points to 47. The index for the foot traffic of prospective buyers declined 2 points to 28.
Forecast Impact:
Retail sales came in weaker than we had expected, especially when considering the downward revision to April’s data. This adds to evidence that previous consumer resilience is softening, which may lead to a downward revision to our near-term consumption forecast. The industrial production report was more positive with the strong gain in manufacturing output, but given evidence of both slowing consumption growth and other surveys suggesting weak manufacturing activity, we doubt the strength in May will be sustained.
Existing sales in May were near our second quarter forecast. While affordability continues to weigh on demand, the only-modest decline in sales, despite a general rise in mortgage rates over the corresponding contract signing period, suggests that existing sales are near their “floor.” With mortgage rates moving back under 7 percent in recent weeks, we expect some improvement in the sales rate in the second half of the year. Single-family starts were somewhat below our Q2 expectations but in line with our broader forecast for some slowing in new construction, as the pace of new home sales has softened in recent months. Given the continued decline in permits along with the lowest homebuilder confidence reading this year, we are likely to downgrade our near-term single-family starts forecast. We also expect multifamily construction to remain modest for the foreseeable future, as rent growth in many of the larger markets is soft and construction financing relatively tight.
Florida’s Real Estate Market: From Foreclosure to Opportunity
The Florida real estate market has experienced significant fluctuations over the past few decades, particularly during the housing crisis that led to a surge in foreclosures. However, the state’s resilient market has turned these challenges into opportunities, especially for savvy investors. This blog will delve into the historical impact of the housing crisis on Florida’s foreclosure rates, the current state of Real Estate Owned (REO) properties, and inspiring turnaround stories of REO properties.
THE HOUSING CRISIS AND FLORIDA’S FORECLOSURE
RATES
The housing crisis of the late 2000s had a profound and lasting impact on Florida, one of the hardest-hit states in the nation. The burst of the housing bubble led to a dramatic increase in foreclosures, with thousands of homeowners unable to meet their mortgage obligations. This
period saw an influx of properties entering the foreclosure process, overwhelming the market and causing home values to plummet.
INITIAL IMPACT:
During the housing crisis, Florida’s foreclosure rates skyrocketed. Many homeowners faced financial hardships, leading to an inability to keep up with mortgage payments. As a result, thousands of homes entered foreclosure, creating a surplus of distressed properties on the market. Neighborhoods were dotted with vacant homes, leading to a decline in property values and overall market stability.
MARKET SATURATION:
The rapid increase in foreclosures led to market saturation. With an abundance of foreclosed properties available, the supply far exceeded the demand, driving down home prices even further. Many of these homes remained unsold for extended periods, contributing to a prolonged
period of economic stagnation in the real estate sector.
ECONOMIC RIPPLE EFFECTS:
The foreclosure crisis had widespread economic implications. Local businesses suffered as consumer spending declined, property tax revenues dropped, and municipalities struggled to maintain public services. Communities faced increased crime rates and declining neighborhood aesthetics due to vacant and neglected properties.
CURRENT STATE OF REO PROPERTIES AND INVESTMENT OPPORTUNITIES IN
FLORIDA
MARKET TRENDS
Florida’s REO property market has seen significant fluctuations influenced by broader economic conditions, natural disasters, and shifting demographics. Here are some key trends:
DECREASING FORECLOSURE RATES:
According to data from ATTOM Data Solutions, Florida’s foreclosure rate has been on a downward trend since the peak of the housing crisis in 2008. However, recent economic uncertainties, including the impacts of the COVID-19 pandemic, have led to an uptick in foreclosures, increasing the inventory of REO properties.
REGIONAL VARIATIONS:
The concentration of REO properties varies significantly across the state. Urban centers such as Miami, Tampa, and Orlando tend to have higher inventories due to their larger populations and more volatile housing markets. Conversely, rural areas see fewer REO properties but offer unique investment opportunities due to lower competition
PRICE TRENDS:
The median price of REO properties in Florida remains below the market average for traditional homes. This price differential provides an attractive entry point for investors. According to Zillow, the median price of REO properties in Florida is approximately 15-20% lower than that of non-REO homes.
INVESTMENT OPPORTUNITIES
HIGH-POTENTIAL REGIONS
MIAMI-DADE
COUNTY:
Known for its vibrant real estate market, MiamiDade offers numerous REO opportunities, particularly in neighborhoods undergoing gentrification. Areas like Little Havana and Overtown present opportunities for investors looking to capitalize on revitalization efforts. Tampa Bay Area: Tampa’s economic growth, driven by the tech sector and a surge in population, has made it a hotspot for real estate investment. Neighborhoods such as Ybor City and Seminole Heights are rich with REO properties, ideal for both renovation and rental investments.
ORLANDO:
With its booming tourism industry and growing population, Orlando remains a lucrative market for REO properties. Areas near the downtown core and in developing suburbs like Lake Nona offer substantial investment potential. Jacksonville: As one of the fastest-growing cities in Florida, Jacksonville’s diverse economy and expanding real estate market make it a prime location for REO investments. Neighborhoods such as Riverside and Springfield have seen increased REO activity, providing opportunities for substantial returns.
PRACTICAL ADVICE FOR INVESTORS
CONDUCT THOROUGH RESEARCH:
Understanding local market conditions is crucial. Investors should analyze recent sales data, neighborhood trends, and the condition of individual properties to make informed decisions. Tools like the Multiple Listing Service (MLS) and public records can provide valuable insights.
INSPECT THE PROPERTY:
REO properties are typically sold “as-is,” meaning that any repairs or issues become the buyer’s responsibility. Hiring a professional inspector to assess the property’s condition can prevent unforeseen expenses.
UNDERSTAND FINANCING OPTIONS:
Financing REO properties can differ from traditional purchases. Investors should explore special financing options offered by lenders for REO properties. Pre-approval for a mortgage can also strengthen an investor’s position when negotiating with lenders.
WORK WITH REAL ESTATE PROFESSIONALS:
Navigating the REO market can be complex. Partnering with real estate agents who specialize in REO transactions can provide access to unlisted properties and expert guidance throughout the buying process.
PREPARE FOR COMPETITION:
The Florida real estate market is competitive, especially in high-demand areas. Investors should be ready to act quickly, have a clear investment strategy, and be flexible with negotiations.
CONCLUSION
Florida’s real estate market has demonstrated remarkable resilience, transforming the challenges of foreclosure into opportunities for growth and revitalization. REO properties, initially a symbol of the housing crisis, have become valuable assets for investors and catalysts for community improvement. By analyzing the historical impact of the housing crisis, examining the current state of REO properties, and highlighting successful turnaround stories, it is clear that Florida’s real estate market continues to offer promising prospects for those willing to invest in its future. As the market evolves, these opportunities will only expand, making now an ideal time to explore the potential of REO investments in the Sunshine State
If you’re looking to capitalize on the unique opportunities presented by Florida’s REO properties, REO Brokers is your trusted partner in navigating this lucrative market. Our expertise in identifying and transforming distressed properties into valuable assets ensures that you can achieve significant returns on your investments. Visit REO Brokers today to explore our comprehensive listings and start turning foreclosure challenges into profitable ventures. Don’t miss out on the chance to make impactful investments with the guidance of experienced professionals.
PRESS RELEASE
HOUSING SENTIMENT AGAIN SHOWS SIGNS OF PLATEAUING
May 7, 2024
HPSI Flat in April as Consumers Continue to Adjust to Higher Rate Environment
WASHINGTON, DC – The Fannie Mae (FNMA/OTCQB) Home Purchase Sentiment Index® (HPSI) was unchanged in April at 71.9 and is showing signs of once again plateauing as consumers continue to adjust to the higher interest rate and home price environment. This month, 67% of consumers indicated that it’s a good time to sell a home, while 20% said it’s a good time to buy a home. These two indicators are up 10 percentage points and 3 percentage points, respectively, since the end of 2023, despite mortgage rates having moved steadily upward. Additionally, the share of respondents who expect mortgage rates to go down over the next 12 months fell to 26%. The full index is up 5.1 points year over year.
“The HPSI, unchanged this month, may have hit another plateau as consumers maintain their ‘wait and see’ approach to the housing market,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “Overall, housing sentiment increased from November through February, driven largely by consumer belief that mortgage rates would move lower. However, recent data showing stickier-than-expected inflation, rising mortgage rates, and continued home price appreciation appear to have given consumers pause regarding the market’s direction. While only 20% of consumers think it’s a good time to buy a home, 67% think it’s a good time to sell one, a share that’s moved steadily upward since the start of the year. We think consumers’ generally improved sense of home-selling conditions bodes well for listings and housing activity, particularly for the segment of the population who may need to move for lifestyle reasons and have already begun adjusting their financial expectations to the current mortgage rate and price environment. However, for potential homebuyers in less of a rush to transact, ongoing affordability challenges may continue to keep many of them on the sidelines – one reason why we expect home sales to tick up only gradually over the course of the year.”
Home Purchase Sentiment Index – Component Highlights
Fannie Mae’s Home Purchase Sentiment Index (HPSI) remained unchanged in April at 71.9. The HPSI is up 5.1 points compared to the same time last year. Read the full research report for additional information.
Good/Bad Time to Buy: The percentage of respondents who say it is a good time to buy a home decreased from 21% to 20%, while the percentage who say it is a bad time to buy remained unchanged at 79%. As a result, the net share of those who say it is a good time to buy decreased 1 percentage point month over month.
Good/Bad Time to Sell: The percentage of respondents who say it is a good time to sell a home increased from 66% to 67%, while the percentage who say it’s a bad time to sell decreased from 34% to 32%. As a result, the net share of those who say it is a good time to sell increased 3 percentage points month over month.
Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months increased from 40% to 42%, while the percentage who say home prices will go down decreased from 20% to 18%. The share who think home prices will stay the same increased from 38% to 39%. As a result, the net share of those who say home prices will go up in the next 12 months increased 3 percentage points over month.
Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 29% to 26%, while the percentage who expect mortgage rates to go up decreased from 34% to 33%. The share who think mortgage rates will stay the same increased from 36% to 40%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 1 percentage point month over month.
Job Loss Concern: The percentage of respondents who say they are not concerned about losing their job in the next 12 months decreased from 77% to 76%, while the percentage who say they are concerned remained unchanged at 23%. As a result, the net share of those who say they are not concerned about losing their job decreased 2 percentage points month over month.
Household Income: The percentage of respondents who say their household income is significantly higher than it was 12 months ago decreased from 19% to 17%, while the percentage who say their household income is significantly lower remained unchanged at 12%. The percentage who say their household income is about the same increased from 68% to 70%. As a result, the net share of those who say their household income is significantly higher than it was 12 months ago decreased 2 percentage points month over month.
About Fannie Mae’s Home Purchase Sentiment Index
The Home Purchase Sentiment Index® (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey® (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.
About Fannie Mae’s National Housing Survey
The National Housing Survey (NHS) is a monthly attitudinal survey, launched in 2010, which polls the adult general population of the United States to assess their attitudes toward owning and renting a home, purchase and rental prices, household finances, and overall confidence in the economy. Each respondent is asked more than 100 questions, making the NHS one of the
most detailed attitudinal longitudinal surveys of its kind, to track attitudinal shifts, six of which are used to construct the HPSI (findings are compared with the same survey conducted monthly beginning June 2010). For more information, please see the Technical Notes.
Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to support the housing market. The April 2024 National Housing Survey was conducted between April 1, 2024 and April 18, 2024. Most of the data collection occurred during the first two weeks of this period. The latest NHS was conducted exclusively through AmeriSpeak®, NORC at the University of Chicago’s probability-based panel, on behalf of PSB Insights and in coordination with Fannie Mae. Calculations are made using unrounded and weighted respondent level data to help ensure precision in NHS results from wave to wave. As a result, minor differences in calculated data (summarized results, net calculations, etc.) of up to 1 percentage point may occur due to rounding.
Detailed HPSI & NHS Findings
For detailed findings from the Home Purchase Sentiment Index and National Housing Survey, as well as a brief HPSI overview and detailed white paper, technical notes on the NHS methodology, and questions asked of respondents associated with each monthly indicator, please visit the Surveys page on fanniemae.com. Also available on the site are in-depth special topic studies, which provide a detailed assessment of combined data results from three monthly studies of NHS results.
To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.
About the ESR Group
Fannie Mae’s Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.
Georgia’s Urban Foreclosure Crisis and Its Aftermath
In the heart of Georgia, the foreclosure crisis of the late 2000s left an indelible mark on urban communities, particularly in vibrant cities like Atlanta. Streets once bustling with life saw homes abandoned and neighborhoods transformed. This crisis didn’t just impact homeowners; it rippled through the entire housing market and reshaped community dynamics. In this blog, we will explore the origins of the crisis, its enduring effects, and the collective efforts of communities striving to recover and rebuild. Join us as we uncover the lessons learned and the path forward for Georgia’s urban centers.
UNDERSTANDING THE FORECLOSURE CRISIS IN GEORGIA’S METROPOLITAN AREAS
The foreclosure crisis that gripped Georgia’s urban centers was a result of multiple factors converging. High-risk lending practices, economic downturns, and job losses led to an alarming
number of homeowners being unable to meet their mortgage obligations. Cities like Atlanta saw neighborhoods hit hard, with rows of vacant, foreclosed homes becoming a common sight.
FACTORS CONTRIBUTING TO THE CRISIS
HIGH-RISK LENDING PRACTICES:
During the housing boom, lenders offered mortgages with terms that many borrowers could not sustain long-term. Subprime mortgages, often given to individuals with less-than-perfect credit scores, featured adjustable interest rates. These rates were initially low but increased significantly after a few years, making monthly payments unaffordable for many homeowners.
ECONOMIC DOWNTURN:
The financial crisis of 2008, triggered by the collapse of the housing market, resulted in significant job losses and decreased household
incomes. This economic downturn made it difficult for many to keep up with mortgage payments, leading to a surge in foreclosures.
UNEMPLOYMENT:
Rising unemployment rates during and after the recession meant that more families faced financial instability. Without a steady income, meeting mortgage obligations became a struggle, contributing to the increase in foreclosures.
LONG-TERM EFFECTS ON THE HOUSING MARKET
The aftermath of the foreclosure crisis has had lasting repercussions on Georgia’s housing market.
DECREASED PROPERTY VALUES
The influx of foreclosed homes led to a surplus in housing supply, which drove down property values. Homes that were once valuable assets became financial burdens as their market values plummeted. This depreciation affected not just those who faced foreclosure but also other homeowners whose property values dropped as a result.
IMPACT ON HOMEOWNERSHIP RATES
Many former homeowners, unable to recover from financial setbacks, turned to renting, causing a shift in the homeownership landscape. This shift has had broader economic implications, affecting wealth accumulation and community stability. Renting, while providing immediate housing, does not offer the same long-term financial benefits as homeownership, such as property appreciation and equity building.
NEIGHBORHOOD BLIGHT
Foreclosed properties, often left abandoned, contributed to urban blight. These vacant homes
deteriorated without regular upkeep, leading to increased crime rates and reduced property values in affected neighborhoods. The presence of boarded-up homes and overgrown lawns can deter investment and new residents, perpetuating a cycle of decline.
COMMUNITY EFFORTS TO ADDRESS HOUSING STABILITY AND RECOVERY
In response to the foreclosure crisis, various community initiatives have been launched to stabilize the housing market and assist affected families.
NONPROFIT ORGANIZATIONS AND HOUSING ASSISTANCE
Nonprofits have played a crucial role in offering financial counseling, foreclosure prevention programs, and assistance with home repairs. Organizations like Habitat for Humanity have been instrumental in rebuilding communities, providing affordable housing solutions, and ensuring families can remain in their homes. Financial literacy programs educate homeowners on budgeting, saving, and managing mortgage payments, aiming to prevent future foreclosures.
GOVERNMENT PROGRAMS AND LEGISLATION
Federal and state governments have implemented several programs to aid homeowners in distress. The Home Affordable Modification Program (HAMP) and the Hardest Hit Fund are examples of initiatives designed to reduce mortgage payments and help families avoid foreclosure. HAMP, for instance, worked by modifying loans to make them more affordable, often through interest rate reductions or term extensions.
At the state level, Georgia enacted legislation to regulate lending practices and prevent future
crises. Measures included stricter scrutiny of mortgage applications and limitations on the types of loans that could be offered to high-risk borrowers. These laws aimed to create a more stable and transparent lending environment.
COMMUNITY DEVELOPMENT INITIATIVES
Local governments and community groups have focused on revitalizing neighborhoods affected by foreclosures. Efforts include repurposing vacant properties, promoting homeownership through education and grants, and fostering community engagement to ensure long-term stability. For example, some cities have launched programs to convert abandoned properties into community centers or affordable housing units.
CONCLUSION
Georgia’s urban foreclosure crisis serves as a stark reminder of the vulnerabilities within our housing market and the profound effects of economic instability. Through collaborative efforts and sustained support, communities have made significant strides toward recovery. However, ongoing vigilance and proactive measures are necessary to ensure long-term stability and prevent future crises. By learning from the past and investing in the future, Georgia’s metropolitan areas can emerge stronger and more resilient.
The road ahead is challenging, but with continued dedication and innovation, we can build a more stable and equitable housing market for all.
As Georgia’s urban communities continue to rebuild and recover from the foreclosure crisis, REO Brokers is dedicated to supporting homeowners, investors, and neighborhoods in this journey. Our expertise in REO properties and commitment to community revitalization can help you navigate the complexities of the housing market and seize opportunities for growth and stability. Visit our website at https://www.reobrokers.com to discover how we can assist you in turning challenges into success stories, ensuring a brighter future for Georgia’s urban centers. New boost
Michigan’s Path to Recovery: The Role of
REO Properties in Revitalizing
Cities
Michigan’s journey to recovery has been marked by numerous challenges and triumphs, particularly in its urban areas. One of the most intriguing aspects of this recovery is the use of Real Estate Owned (REO) properties to breathe new life into struggling cities. REO properties, often remnants of foreclosures, present both opportunities and hurdles for revitalization efforts. This blog delves into how these properties are being repurposed, showcases successful redevelopment projects, and examines the challenges faced by local governments and investors in this endeavor.
THE ROLE OF REO PROPERTIES IN URBAN REVITALIZATION
REO properties, left vacant after foreclosure, have long been seen as blights on communities. However, they also represent a unique opportunity for urban revitalization. In Michigan,
cities like Detroit, Flint, and Grand Rapids have been using these properties to kickstart their recovery processes. The state has implemented various programs and initiatives to turn these vacant homes into assets that contribute to neighborhood revitalization.
CASE STUDIES OF SUCCESSFUL REDEVELOPMENT PROJECTS
DETROIT: FROM VACANT TO VIBRANT
Detroit, once the symbol of urban decay, has made significant strides in its recovery. One notable project is the Detroit Land Bank Authority’s initiative, which focuses on acquiring and repurposing REO properties. By selling these homes at low prices to individuals and developers committed to renovating them, the program has transformed numerous neighborhoods. A prime example is the Boston-Edison Historic District, where abandoned homes have been renovated
and sold to new homeowners, significantly improving the area’s appearance and safety.
FLINT: OVERCOMING ADVERSITY
Flint’s water crisis brought global attention to the city’s struggles, but it also spurred innovative recovery efforts. The Genesee County Land Bank Authority has played a crucial role in Flint’s revitalization by focusing on REO properties. They have implemented community engagement strategies to ensure that redevelopment aligns with residents’ needs. Projects such as the renovation of the Oak Business Center, which turned a derelict property into a thriving business hub, illustrate the potential of REO properties to foster economic growth and community renewal.
GRAND RAPIDS: BUILDING A BETTER FUTURE
In Grand Rapids, the approach to utilizing REO properties has been multifaceted. The city has collaborated with non-profits and private investors to redevelop these properties into affordable housing and community spaces. One successful project is the transformation of the old Butterworth Landfill site into a mixeduse development featuring affordable housing, retail spaces, and parks. This project not only addressed housing shortages but also created jobs and boosted the local economy.
CHALLENGES IN REVITALIZING REO PROPERTIES
While the potential of REO properties is vast, several challenges can impede progress.
1. FUNDING AND INVESTMENT
One of the most significant obstacles is securing sufficient funding for redevelopment projects. Local governments often struggle with budget constraints, making it difficult to finance largescale initiatives. Additionally, attracting private investors can be challenging due to the perceived risks associated with investing in distressed
properties and neighborhoods.
2. BUREAUCRATIC HURDLES
Navigating the complex web of regulations and bureaucratic processes can also be a major challenge. Redevelopment projects often require coordination between multiple government agencies, each with its own set of rules and requirements. This can lead to delays and increased costs, deterring potential investors and developers.
3. COMMUNITY RESISTANCE
Community resistance is another critical issue. Residents may be wary of redevelopment projects, fearing gentrification and displacement. Effective community engagement and transparent communication are essential to gaining public support and ensuring that redevelopment benefits existing residents.
OVERCOMING THE CHALLENGES
Despite these challenges, several strategies have proven effective in overcoming obstacles and facilitating the successful redevelopment of REO properties.
1. PUBLIC-PRIVATE PARTNERSHIPS
Collaborative efforts between public entities and private investors have been key to many successful projects. These partnerships leverage the strengths of both sectors, combining public oversight and support with private investment and innovation.
2. COMMUNITY INVOLVEMENT
Engaging the community early and often is crucial. This involves not only informing residents about plans but also actively involving them in decision-making processes. Community input can help ensure that projects meet local needs and gain broader support.
3. INNOVATIVE FINANCING
Creative financing solutions, such as tax incentives, grants, and low-interest loans, can make redevelopment more attractive to investors. These financial tools can help bridge funding gaps and mitigate the risks associated with redeveloping distressed properties.
CONCLUSION
Michigan’s path to recovery is a testament to the power of innovative solutions and collaborative efforts. By repurposing REO properties, the state has turned potential liabilities into assets that drive urban revitalization. While challenges remain, the successes in cities like Detroit, Flint, and Grand Rapids highlight the transformative potential of these initiatives. As Michigan continues to rebuild and rejuvenate its urban areas, the lessons learned from these projects will be invaluable in guiding future efforts and ensuring sustainable, inclusive growth.
Urban revitalization is a complex, ongoing process, but the progress made in Michigan demonstrates that with the right strategies and community involvement, even the most distressed properties can become cornerstones of recovery and growth.
If you’re looking to invest in Michigan’s revitalizing urban areas and tap into the potential of REO properties, REO Brokers is your trusted partner. With a deep understanding of the local market and a commitment to community renewal, we can help you navigate the complexities of redeveloping distressed properties. Visit our website at https://www.reobrokers.com to learn more about our services and discover how we can assist you in transforming Michigan’s REO properties into thriving community assets.
New boost
PRESS RELEASE
HIGHER RATE ENVIRONMENT PROJECTED TO DAMPEN HOUSING ACTIVITY THROUGH 2024
May 21, 2024
WASHINGTON, DC – Housing activity is expected to slow modestly compared to previous projections, if the broad upward movement in mortgage rates since the start of the year is sustained, according to the May 2024 commentary from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group. However, the ESR Group notes upside risk to its latest forecasts for housing starts, single-family mortgage originations, and home sales activity, particularly if upcoming data releases lead market participants to believe that the Federal Reserve is closer to easing monetary policy, which would likely push mortgage rates downward.
The ESR Group forecasts overall economic growth to slow and mortgage rates to end the year near 7 percent. As a result, they expect a slight slowdown in housing activity through 2024 compared to their previous forecast. However, with active home sale listings now up approximately 30 percent compared to a year ago, the ESR Group believes sizable declines in home sales are unlikely and continues to forecast a modest upward drift in existing home sales over the forecast horizon, particularly compared to the historically low sales levels of the previous two years.
The ESR Group’s full-year 2024 real GDP outlook is unchanged at 1.8 percent, as underlying growth in the first quarter remained solid but still appears on track to slow as the year progresses. Household income growth has not kept pace with strong consumer spending and personal outlays on debt interest remain high, suggesting to the ESR Group that the higher interest rate environment will eventually weigh on future consumption. Combined with potential softening in payroll employment growth, the ESR Group expects inflation to decelerate through 2024 but remain sticky enough in the near term to prevent a Federal Reserve rate hike until September.
“The question our economics team is asked most frequently by industry participants remains where we think mortgage rates are headed,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “For now, we see rates remaining closer to 7 percent through the end of the year – before trending downward in 2025 – but note potential downside to that forecast given recent actual movements in rates. Our consumer survey suggests that households who are paying attention to the housing market continue to take a wait-and-see approach. This is consistent with our latest housing forecast, which does not foresee a dramatic change in activity until affordability improves. Given ongoing supply constraints and recent indications that the labor market may be weakening, a downward movement in mortgage rates appears to be the likeliest lever to achieve an improvement in affordability.”
Navigating New Jersey’s Complex Foreclosure Process
Facing foreclosure or navigating the foreclosure market in New Jersey can be a daunting experience due to the state’s intricate legal procedures. For homeowners, understanding the steps involved can offer clarity and options, while investors can find opportunities if they grasp the complexities of the process. This comprehensive guide will delve into the detailed legal and procedural aspects of foreclosures in New Jersey, the impact on the Real Estate Owned (REO) property market, and provide essential tips for investors.
UNDERSTANDING NEW JERSEY’S FORECLOSURE LAWS
New Jersey’s foreclosure process is judicial, which means it requires court intervention and follows a series of detailed steps. Here’s a thorough breakdown:
DEFAULT:
When a homeowner misses mortgage payments, the loan enters default. Typically, lenders will send a notice of default after 90 days of missed payments. This is the first warning that foreclosure proceedings may begin if the default is not corrected.
NOTICE OF INTENT TO FORECLOSE:
After the default notice, lenders must send a Notice of Intent to Foreclose, which gives the homeowner 30 days to remedy the default. This is a crucial period where homeowners can still negotiate with the lender or seek financial assistance to avoid further legal action.
PRE-FORECLOSURE STAGE
FORECLOSURE FILING
COMPLAINT:
If the homeowner does not resolve the default within the specified period, the lender files a foreclosure complaint in court. This official action marks the beginning of the judicial process.
SUMMONS AND COMPLAINT SERVICE:
The homeowner is then served with a summons and a copy of the foreclosure complaint. This is formal notification that a foreclosure lawsuit has been filed against them.
HOMEOWNER’S RESPONSE:
Upon receiving the summons and complaint, the homeowner has 35 days to file a response with the court. If the homeowner fails to respond, the court may issue a default judgment in favor of the lender, allowing the foreclosure to proceed uncontested.
COURT PROCEEDINGS
CASE MANAGEMENT CONFERENCE:
The court schedules a conference to manage the progression of the case. During this conference, timelines are set, and the judge may encourage both parties to reach a settlement
JUDGMENT:
If the court rules in favor of the lender, it issues a judgment of foreclosure. This judgment affirms that the lender is entitled to repossess the property due to the homeowner’s failure to meet mortgage obligations.
SHERIFF’S SALE
WRIT OF EXECUTION:
Following the judgment, the lender obtains a writ of execution. This legal document authorizes the sheriff to proceed with selling the property at a public auction.
SALE NOTICE:
The sheriff must post a notice of sale, which is advertised for at least four weeks before the auction. This notice provides details about the property and the terms of the sale.
AUCTION:
The property is auctioned at a sheriff’s sale, where it is sold to the highest bidder. The proceeds from the sale are used to pay off the mortgage debt. If the sale price is higher than the mortgage debt, any surplus is returned to the homeowner. Conversely, if the sale price is lower, the lender may seek a deficiency judgment for the remaining balance.
POST-SALE PROCESS
DEFICIENCY JUDGMENT:
In cases where the auction sale does not cover the full mortgage debt, the lender can pursue a deficiency judgment against the homeowner to recover the remaining amount.
EVICTION:
If the homeowner remains in the property after it has been sold at auction, the new owner must initiate eviction proceedings through the court to take possession of the property.
IMPACT ON THE REO PROPERTY MARKET
The foreclosure process has significant implications for New Jersey’s REO property market. Here’s how:
INVENTORY INCREASE:
The lengthy foreclosure proceedings result in an accumulation of REO properties as lenders repossess more homes. This increase in inventory can have several effects on the real estate market.
MARKET SATURATION:
A high number of REO properties can saturate the market, potentially driving down overall
property values. This situation can make it more difficult for sellers to get fair prices for their properties.
INVESTMENT OPPORTUNITIES:
Investors often see REO properties as opportunities due to their typically lower prices and the potential for significant returns after renovation and resale. However, these opportunities come with their own set of challenges.
COMMUNITY IMPACT:
An influx of foreclosed and REO properties can have a detrimental effect on neighborhoods, leading to increased vacancies, reduced property values, and sometimes, higher crime rates. This can create a cycle that is difficult to break without community and governmental intervention.
TIPS FOR INVESTORS NAVIGATING THE FORECLOSURE PROCESS
Investing in foreclosed properties can be profitable, but it requires a clear understanding of the foreclosure landscape and strategic planning. Here are some detailed tips for investors:
RESEARCH THOROUGHLY
Property History: Investigate the history of the property, including previous ownership, any liens or encumbrances, and the reasons for foreclosure. This can reveal potential legal issues or financial burdens that come with the property. Condition Assessment: Conduct a thorough inspection to understand the property’s condition. This will help you estimate the costs of necessary repairs and renovations.
HIRE PROFESSIONALS
REAL ESTATE ATTORNEY:
Engage a real estate attorney who specializes in foreclosures. They can provide invaluable legal advice, help you navigate the complex procedures, and ensure all legal documents are
correctly filed.
REAL ESTATE AGENT:
Work with a real estate agent experienced in REO properties. They can assist in finding suitable properties, provide market insights, and help negotiate favorable terms.
ATTEND SHERIFF’S SALES
PREPARATION:
Before attending a sheriff’s sale, secure financing and be prepared to make immediate payments if you win the bid. Know your maximum bid amount to avoid overpaying.
BIDDING STRATEGY:
Understand the auction process and develop a strategy. Observing a few auctions beforehand can be helpful to get a feel for how they operate.
UNDERSTAND THE RISKS
LEGAL CHALLENGES:
Be aware that some foreclosures can be contested by the previous owner, which can delay or complicate the process. Ensure you understand these risks and have strategies to mitigate them.
EVICTION COSTS:
If the property is occupied, you will need to budget for potential eviction costs and the time it will take to secure possession.
PLAN FOR RENOVATIONS
BUDGETING:
Allocate sufficient funds for repairs and improvements. Focus on renovations that will significantly enhance the property’s value, such as kitchen and bathroom upgrades, structural repairs, and modernizing outdated systems.
CONTRACTORS:
Hire reliable contractors and manage renovation projects closely to stay within budget and timeline.
STAY INFORMED
LEGAL UPDATES:
Keep up-to-date with changes in New Jersey’s foreclosure laws and regulations. Legal modifications can impact the foreclosure process and your investment strategy.
MARKET TRENDS:
Monitor real estate market trends to make informed decisions about when and where to invest. Local real estate investment groups can be valuable resources for networking and information.
CONCLUSION
Navigating New Jersey’s foreclosure process requires a deep understanding of its legal and procedural complexities. For investors, the REO property market presents substantial opportunities, but also significant challenges that necessitate careful planning and professional guidance. By staying informed, conducting thorough research, and employing strategic investment practices, both homeowners and investors can effectively manage the foreclosure landscape in New Jersey, turning potential pitfalls into profitable ventures. Knowledge and preparation are your best tools in this intricate process, ensuring you make informed decisions and achieve your real estate goals.
Navigating the foreclosure process in New Jersey can be challenging, but REOBroker.com is here to help. With our expertise in REO properties and a deep understanding of the local market, we provide the guidance and resources you need to make informed decisions. Whether you’re a homeowner seeking options or an investor looking for opportunities, we offer tailored solutions to meet your needs. Visit our website at https://www.reobrokers.com to learn more about our services and how we can assist you in successfully navigating New Jersey’s foreclosure landscape.
Nevada’s Housing Market Recovery and the Role of REO Properties
Nevada’s real estate market has seen a significant turnaround since the dark days of the housing bubble and recession. This recovery has not only revitalized the state’s economy but also reshaped its housing landscape. A key element in this resurgence has been the role of Real Estate Owned (REO) properties. These properties, once emblematic of the market’s collapse, are now pivotal in driving growth and offering opportunities for both investors and homebuyers. Let’s explore how Nevada has navigated its housing market recovery and the impact of REO properties.
NEVADA’S HOUSING MARKET RECOVERY
THE AFTERMATH OF THE HOUSING BUBBLE
The 2008 financial crisis hit Nevada particularly hard, leading to one of the highest foreclosure rates in the country. Home values plummeted, and many homeowners found themselves underwater, owing more on their mortgages than their homes were worth. This period of turmoil left a lasting mark on the state’s real estate market, with a significant number of properties ending up in foreclosure.
STEPS TOWARDS RECOVERY
Nevada’s recovery from the housing crisis has been gradual but steady. Several factors have contributed to this turnaround:
ECONOMIC DIVERSIFICATION:
Nevada has worked to diversify its economy beyond tourism and gaming. The growth of sectors like technology, healthcare, and manufacturing has created jobs and attracted new residents, bolstering the housing market.
INVESTMENT IN INFRASTRUCTURE:
Significant investments in infrastructure projects have improved connectivity and livability in key areas. These projects include transportation upgrades and the development of new residential and commercial spaces.
GOVERNMENT PROGRAMS:
Federal and state programs aimed at reducing foreclosures and stabilizing home prices have also played a crucial role. Initiatives such as the Home Affordable Modification Program (HAMP) and the Nevada Hardest Hit Fund provided relief to struggling homeowners.
CURRENT MARKET TRENDS
The Nevada housing market today is characterized by rising home prices, increased demand, and a shrinking inventory of available homes. Cities like Las Vegas and Reno have seen substantial appreciation in home values, driven by population growth and economic development. However, affordability remains a concern, with median home prices outpacing income growth in many areas.
THE ROLE OF REO PROPERTIES
WHAT ARE REO PROPERTIES?
Real estate-owned (REO) properties are homes that have reverted to the lender, typically a bank, after an unsuccessful foreclosure auction. These properties are often sold at a discount, making them attractive to investors and homebuyers looking for bargains.
CONTRIBUTION TO THE HOUSING MARKET
REO properties have played a significant role in Nevada’s housing market recovery in several ways:
AFFORDABLE HOUSING OPTIONS:
REO properties often come at a lower price point compared to traditional homes. This has provided an affordable entry point for first-time homebuyers and investors, helping to increase homeownership rates and stimulate the market.
MARKET STABILIZATION:
By purchasing and rehabilitating REO properties, investors and homebuyers have helped to stabilize neighborhoods that were previously struggling with high foreclosure rates. This has led to improved property values and overall community revitalization.
INCREASED INVENTORY:
During the height of the housing crisis, the market was flooded with foreclosed properties, leading to an oversupply. As these REO properties have been purchased and reintroduced to the market,
the supply and demand balance has improved, contributing to price stabilization.
INVESTMENT OPPORTUNITIES:
REO properties have attracted both local and out-of-state investors looking for profitable opportunities. The rehabilitation and resale of these properties have generated economic activity, creating jobs and contributing to the state’s economic recovery.
GOVERNMENT AND NON-PROFIT INVOLVEMENT:
Various government programs and non-profit organizations have focused on acquiring REO properties for affordable housing initiatives. These efforts have provided housing for low-income families and contributed to the overall health of the housing market.
CONCLUSION
Nevada’s journey from the depths of the housing crisis to its current market strength is a testament to resilience and strategic growth. REO properties have been a critical component of this recovery, providing affordable housing options and investment opportunities that have revitalized communities. As Nevada continues to evolve, the lessons learned from its housing market recovery will undoubtedly shape its future, offering hope and insight for other regions facing similar challenges. Whether you’re a prospective homebuyer, investor, or simply interested in the real estate market, understanding the dynamics of REO properties and their role in Nevada’s recovery is essential. Here’s to continued growth and stability in the Silver State’s housing market!
Our expertise in navigating the complexities of REO transactions can help you find affordable homes or profitable investments, contributing to your success and the revitalization of communities. Visit our website at https://www. reobrokers.com to learn more about how we can assist you in making the most of Nevada’s real estate opportunities. Let’s work together to turn challenges into growth and stability in the Silver State’s housing market!
BRANDY NELSON
PRESS RELEASE
INFLATION SLOWS FROM Q1 PACE BUT REMAINS ELEVATED AS RETAIL SALES SLUMP IN APRIL
May 17, 2024
Key Takeaways:
The Consumer Price Index (CPI) rose 0.3 percent in April, a deceleration compared to the prior two months, according to the Bureau of Labor Statistics (BLS). Compared to a year ago, prices were up 3.4 percent, a deceleration of one-tenth. Prices for food were flat over the month, while energy prices were up 1.1 percent due to a 2.8 percent increase in gasoline prices. Excluding food and energy, core CPI increased 0.3 percent over the month and 3.6 percent compared to a year ago, the slowest annual rate in three years. Core goods prices outright declined over the month, while core services inflation was up 0.4 percent, a deceleration compared to the monthly gains in the first quarter of the year. Rent and owners’ equivalent rent (OER) prices also increased 0.4 percent.
The Producer Price Index (PPI) increased 0.5 percent in April but followed a downward revision to March’s data, which now shows a 0.1 percent decline rather than the previously reported 0.2 percent increase, according to the BLS. Compared to a year ago, the PPI was up 2.2 percent. Excluding food, energy, and trade services, core PPI increased 0.4 percent over the month and 3.1 percent compared to a year ago.
Retail sales and food services were flat in April, according to the Census Bureau. Strong gains in sales at clothing and accessory stores (+1.6 percent) and a price-related 3.1 percent jump in gas station sales were offset by weak sales in non-store retailers (-1.2 percent) and motor vehicle and parts dealers (-0.8 percent). Restaurant and bar sales increased 0.2 percent. Control group retail sales (excluding auto, building supplies, and gas station sales) declined 0.3 percent and were revised downward modestly in March.
Industrial production, a gauge of output in the manufacturing, utility, and mining sectors, was flat in April, according to the Federal Reserve Board. Manufacturing activity declined 0.3 percent and was revised downward in the prior month. Mining output declined 0.7 percent and utilities output jumped 2.9 percent.
The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 1.2 points to 89.7 in April, its first increase since December. On net, negative 12 percent of firms expect their real sales to be higher in the next six months, an improvement of 6 percentage points. A net 25 percent of firms reported raising average selling prices, a decline of 3 percentage points. At a net 22 percent, inflation remained the most reported “most important” problem, though this was down 3 percentage points compared to March.
Housing starts increased 5.7 percent to a seasonally adjusted annualized rate (SAAR) of 1.36 million in April, according to the Census Bureau. Single-family starts were down a modest 0.4 percent to a SAAR of 1.03 million, while multifamily starts rebounded 30.6 percent (following a 38.8 percent
decline the month prior) to a SAAR of 329,000. Single-family permits fell 0.8 percent to a SAAR of 976,000, their third consecutive monthly decline, while multifamily permits declined 7.4 percent.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index declined 6 points to 45 in May, its lowest level since January. The index for sales in the present declined 6 points to 51, while the index for sales over the next six months was down 9 points to 51. The index for the foot traffic of prospective buyers declined 4 points to 30.
Forecast Impact:
The April CPI report was in line with our expectations and is encouraging compared to the data received in the first quarter, though it’s clear that some underlying inflation remains sticky. Core services, for example, remained at a pace that is faster than what would be consistent with the Fed’s 2 percent inflation target but did slow to a 0.4 percent month-over-month gain from 0.5 percent in February and March and 0.7 percent in January. Additionally, the PPI report on its face looked to show accelerating inflationary pressures but under the hood was far more encouraging given the downward revisions to March’s data. We continue to expect inflation will drift downward as the year progresses but will remain sticky enough to prevent rate cuts before September.
Control group retail sales, which feed directly into the Bureau of Economic Analysis’s estimates for personal consumption, were weak in April. However, with Easter landing in March this year instead of April, and major spring sales also shifting forward a month, we think seasonal quirks may be understating this data somewhat. Still, this report presents some downside risk to our assumption that consumption growth will remain strong in Q2 due in part to better base effects from the first quarter.
The modest pullback in single-family starts was in line with our forecast. While the limited number of existing homes available for sale remains broadly supportive of new home construction and sales in the intermediate to long term, starts have outpaced new home sales in recent months. As such, we expect some near-term softening in starts in response to the relatively weaker sales pace, which would also align with the drop in home builder confidence in May.
Arizona’s real estate market has always been a hotbed of opportunity, and the REO (Real Estate Owned) sector is no exception. For those looking to invest in properties with high potential returns, understanding the REO landscape in Arizona is crucial. This blog examines the current state of the REO market, highlights areas ripe for investment, and provides practical advice for purchasing REO properties. Whether you’re a seasoned investor or a first-time buyer, this guide will equip you with the knowledge you need to make informed decisions.
CURRENT STATE OF THE REO MARKET IN ARIZONA
The REO market in Arizona has experienced significant shifts in recent years. REO properties are those that have failed to sell at foreclosure auctions and are subsequently owned by lenders. These properties can offer substantial discounts, making them attractive to investors. However, the market dynamics have evolved, with fluctuating inventory levels and varying demand across different regions.
MARKET TRENDS:
In recent years, Arizona’s REO inventory has seen periods of both decline and resurgence. Economic factors, including employment rates and housing demand, play a significant role in these trends. Currently, the market is witnessing a gradual increase in REO listings as economic uncertainties and mortgage delinquencies rise. This increase is driven by factors such as economic downturns, job losses, and changes in the housing market. Understanding these trends helps investors anticipate future opportunities and challenges in the REO market.
REGIONAL VARIATIONS:
Not all parts of Arizona are equal when it comes to REO opportunities. Urban areas like Phoenix and Tucson often have higher inventories compared to rural regions. This disparity is due to the higher concentration of foreclosures in metropolitan areas where housing markets are more volatile. For example, Phoenix, being the largest city in the state, has a dynamic real estate market that is more susceptible to economic fluctuations, leading to a higher number of foreclosures and subsequently REO properties.
HIGH POTENTIAL INVESTMENT AREAS
Identifying regions with the highest potential for investment is key to capitalizing on Arizona’s REO market. Here are some areas worth considering:
PHOENIX METROPOLITAN AREA:
As the largest city in Arizona, Phoenix offers a plethora of REO opportunities. The city has a diverse economy, a growing population, and a robust real estate market. Neighborhoods like Maryvale and South Phoenix are particularly noted for their REO listings. These areas have seen higher foreclosure rates, leading to a larger inventory of REO properties. Investors can find properties at lower prices, which can yield significant returns after renovation and resale or rental.
TUCSON:
Tucson, another major city, also presents significant REO investment opportunities. With its relatively affordable housing market and steady demand for rental properties, Tucson is an attractive option for investors. The city’s economic stability, driven by sectors like education, defense, and healthcare, ensures a consistent demand for housing, making REO properties a viable investment.
MESA:
Located in the East Valley of the Phoenix Metropolitan Area, Mesa is known for its familyfriendly communities and excellent schools. The city has seen an increase in REO properties, especially in areas undergoing redevelopment. Mesa’s growth and redevelopment projects create opportunities for investors to buy properties at lower prices and benefit from the area’s increasing property values.
FLAGSTAFF:
For those interested in a more unique investment, Flagstaff offers opportunities in a cooler climate and a market driven by tourism and education (thanks to Northern Arizona University). The demand for student housing and tourist accommodations makes REO properties in Flagstaff a potentially profitable investment.
ADVICE FOR PURCHASING REO PROPERTIES IN ARIZONA
Investing in REO properties can be lucrative, but it requires careful planning and due diligence. Here are some tips to help you navigate the process:
CONDUCT THOROUGH RESEARCH:
Before purchasing an REO property, it’s essential to understand the local market conditions. Research recent sales data, neighborhood trends, and the property’s history. This information will help you determine if the property is a sound investment. Look at comparable sales in the area, the property’s previous sale price, and any factors that might affect its future value, such as planned developments or changes in
INSPECT THE PROPERTY:
Many REO properties are sold “as-is,” meaning the lender will not make repairs or improvements before the sale. It’s crucial to conduct a thorough inspection to identify any potential issues. Hiring a professional home inspector can uncover hidden problems that might affect the property’s value. Common issues in REO properties include structural damage, outdated electrical systems, plumbing issues, and neglected maintenance.
UNDERSTAND FINANCING OPTIONS:
Financing an REO property can differ from a traditional home purchase. Some lenders may offer special financing options for REO properties, so it’s worth exploring these opportunities. Additionally, having a pre-approval letter can strengthen your position when negotiating with the lender. Be aware that some REO properties may qualify for renovation loans, which can help cover the costs of necessary repairs and improvements.
WORK WITH A REAL ESTATE PROFESSION AL:
Navigating the REO market can be complex, so enlisting the help of a real estate agent with experience in REO transactions is beneficial. They can provide valuable insights, help you find suitable properties, and guide you through the buying process. An experienced agent will also have access to listings that may not be widely advertised, giving you a competitive edge.
PREPARE FOR COMPETITION:
The REO market can be competitive, especially in high-demand areas. Be prepared to act quickly when you find a property that meets your criteria. Having a clear strategy and being ready to make an offer promptly can give you an edge over other buyers. It’s also important to be flexible and open to negotiation, as lenders may be willing to accept lower offers to quickly offload their REO inventory.
CONCLUSION
Arizona’s REO property market offers a wealth of opportunities for savvy investors. By understanding the current market conditions, identifying high-potential areas, and following best practices for purchasing REO properties, you can maximize your investment returns. Whether you’re looking to expand your real estate portfolio or find a new home at a discounted price, the Arizona REO market has something to offer. Stay informed, do your research, and take advantage of the unique opportunities this market presents. Happy investing!
If you’re ready to take advantage of Arizona’s dynamic REO property market, REO Brokers is here to help you succeed. With our extensive experience and deep understanding of REO transactions, we can guide you through every step of the investment process, ensuring you find the best opportunities for high returns. Visit our website at https://www.reobrokers.com to explore our services and discover how we can assist you in making informed, profitable decisions in Arizona’s REO market. Let’s work together to turn potential into success!
PRESS RELEASE
EXISTING AND NEW HOME SALES RETREAT IN APRIL AS INTEREST RATES WEIGH ON DEMAND
May 23, 2024
Key Takeaways:
Existing home sales declined 1.9 percent to a seasonally adjusted annualized rate (SAAR) of 4.14 million, according to the National Association of REALTORS® (NAR). The number of homes available on the market jumped 9.0 percent to 1.21 million, the highest level since October 2022. The months’ supply rose three-tenths to 3.5, while the NAR’s measure of the median sales price of existing homes sold rose 5.7 percent compared to a year ago.
New single-family home sales declined 4.7 percent to a SAAR of 634,000 in April following a downward revision to March’s data, according to the Census Bureau. The months’ supply rose six-tenths to 9.1, the highest level since November 2022. The number of new homes available for sale increased 2.1 percent to 480,000, the highest level since January 2008.
The minutes from the Federal Open Market Committee (FOMC) April 30 - May 1 meeting showed officials are likely to maintain a higher-for-longer policy stance, noting “the disinflation process would likely take longer than previously thought.” In addition, “various participants mentioned a willingness to tighten policy further.” With regard to balance sheet runoff, “almost all” participants supported reducing the cap on the runoff of Treasury securities, with “a few” participants saying they would have supported keeping the current cap or reducing the cap by less than the $35 billion per month that was decided upon.
Forecast Impact:
The decline in existing home sales was in line with our second quarter forecast. The climb in mortgage rates from mid-March through early May is likely to continue to affect sales later in the quarter, though we believe further downside risk is limited because existing home sales are already near their “floor.” The increase in homes available for sale remains supportive of our forecast for a gradual drift upward in home sales activity in the second half 2024 and beyond. New home sales were a bit below our expectations, though, and will likely lead to a downward revision to our near-term forecast. However, with new sales relatively soft and the months’ supply rising, we view this report as consistent with our forecast for a near-term pullback in single-family starts. Looking forward, we continue to expect growth in both new home sales and single-family starts in the second half of the year as the inventory of existing homes for sale, though rising, remains below pre-pandemic levels.
The minutes from the FOMC continue to highlight a likely ‘higher-for-longer’ policy stance, barring a significant deterioration in labor market conditions. While we continue to forecast two rate cuts this year, with the first occurring in September, risks remain weighted toward less easing.
Strategies for Investing in North Carolina’s REO Properties
Investing in real estate can be a lucrative endeavor, especially in North Carolina, where REO (Real Estate Owned) properties present unique opportunities. These properties, typically foreclosed homes now owned by banks or lenders, offer potential buyers the chance to acquire assets below market value. To navigate this market successfully, investors need to understand the economic factors influencing REO rates and adopt effective strategies while being mindful of potential pitfalls. Let’s explore a comprehensive guide to investing in North
Carolina’s REO properties.
UNDERSTANDING NORTH CAROLINA’S REO MARKET
ECONOMIC FACTORS DRIVING REO RATES
North Carolina’s real estate market has seen fluctuations influenced by various economic factors. A significant driver of REO rates is the state’s economic health. Economic downturns,
job losses, and high unemployment rates can lead to increased foreclosures. Additionally, fluctuations in the housing market, such as declining home values or a surplus of housing inventory, can contribute to higher REO rates. Understanding these factors is crucial for investors to anticipate market trends and make informed decisions.
SUCCESSFUL INVESTMENT STRATEGIES
1. THOROUGH MARKET RESEARCH
Before diving into the REO market, investors should conduct comprehensive research. This involves analyzing current market conditions, identifying areas with high foreclosure rates, and understanding the local economy. Resources such as real estate websites, local government data, and financial news can provide valuable insights. By staying informed, investors can pinpoint the most promising opportunities.
2. BUILDING A RELIABLE NETWORK
Networking is vital in real estate investing. Establishing connections with local real estate agents, brokers, and other investors can provide access to exclusive REO listings and insider information. Additionally, forming relationships with contractors and property managers can help with property inspections, renovations, and ongoing maintenance.
3. FINANCING AND BUDGETING
Securing financing is a critical step in REO investing. Investors should explore various financing options, including traditional mortgages, hard money loans, and private lenders. It’s also essential to have a well-planned budget that covers the purchase price, renovation costs, and any unexpected expenses. Proper financial planning can prevent overextending and ensure a smoother investment process.
4.
PROPERTY INSPECTION AND DUE
DILIGENCE
REO properties are often sold “as-is,” meaning they may require significant repairs. Conducting a thorough property inspection is crucial to identify potential issues and estimate renovation costs. Investors should also perform due diligence, including title searches and checking for any outstanding liens or legal issues. This step can prevent costly surprises down the line.
5. EFFECTIVE NEGOTIATION TACTICS
Negotiating with banks and lenders can be different from dealing with individual sellers. Investors should be prepared to present a strong case for their offer, backed by market research and a clear plan for the property. Patience and persistence are key, as banks may take time to review and respond to offers.
Potential Pitfalls to Avoid
1. UNDERESTIMATING RENOVATION COSTS
One common mistake investors make is underestimating the cost and time required for renovations. A detailed inspection and realistic budget are essential to avoid this pitfall. Working with experienced contractors and getting multiple quotes can also help in accurately estimating renovation expenses.
2. IGNORING MARKET CONDITIONS
Investors should be mindful of the broader market conditions. Buying an REO property in a declining market can result in longer holding periods and lower returns. Staying updated on market trends and economic indicators can help investors time their purchases more effectively.
3. OVERLEVERAGING
Using too much debt to finance REO investments can be risky, especially in a volatile market. Investors should aim to balance leveraging
with their ability to cover expenses during periods of vacancy or slow sales. Having a solid financial cushion can mitigate the risks associated with overleveraging.
CONCLUSION
Investing in North Carolina’s REO properties can be a rewarding venture with the right strategies and knowledge. By conducting thorough research, building a reliable network, securing proper financing, and performing due diligence, investors can navigate the REO market successfully. Additionally, being aware of potential pitfalls and market conditions can help in making informed decisions. With careful planning and execution, investors can capitalize on the opportunities presented by North Carolina’s REO properties, turning challenges into profitable outcomes.
Embarking on the journey of REO property investment in North Carolina requires dedication, knowledge, and a strategic approach. By following the guidelines outlined in this blog, investors can position themselves for success in this dynamic market, reaping the benefits of well-informed and calculated investment decisions.
If you’re ready to take advantage of the unique opportunities in North Carolina’s REO property market, REO Brokers is here to assist you every step of the way. With our expert knowledge and comprehensive services, we can help you navigate the complexities of REO investments and maximize your returns. Visit our website at https://www.reobrokers.com to learn more about how we can support your real estate investment journey and help you turn challenges into profitable outcomes. Let’s work together to make your investment goals a reality!
PRESS RELEASE
EMPLOYMENT GROWTH SLOWS AS LABOR MARKET NORMALIZES AFTER HOT Q1
May 3, 2024
Key Takeaways:
The Federal Open Market Committee (FOMC) held the federal funds rate at its current target range of 5.25-5.5 percent at its April 30-May 1 meeting. The committee announced that beginning in June, the Fed will slow the pace of decline of its securities holdings by reducing the cap on Treasury securities from $60 billion to $25 billion. The MBS cap of $35 billion was unchanged, though the actual runoff has been closer to $15 billion per month. Both the prepared statement and Chair Powell noted a “lack of further progress” toward the 2-percent inflation objective in the first quarter.
Nonfarm payroll employment increased by 175,000 in April, a slowdown from the upwardly revised 315,000 jobs added in March. Job gains were strongest in health care, social assistance, and transportation and warehousing. The unemployment rate ticked up one-tenth to 3.9 percent. Wage growth looks to have normalized, with a 0.2 percent gain over the month, bringing the year-over-year comparison to 3.9 percent.
The Job Openings and Labor Turnover Survey (JOLTS) declined by 325,000 to 8.5 million in March, the lowest level in three years but still above the 2019 average of 7.5 million, according to the Bureau of Labor Statistics (BLS). The quits rate declined one-tenth to 2.1 percent, the lowest level since January 2018, excluding the initial 1pandemic shock. Layoffs and discharges eased to 1.5 million after hitting 1.7 million the month prior.
Nonfarm business productivity increased at a 0.3 percent annualized rate in Q1 2024, a sharp slowdown from the 3.5 percent annualized growth rate the quarter prior, according to the BLS. Still, compared to a year ago, productivity was up 2.9 percent, the best year-over-year comparison since in three years. Unit labor costs rose at an annualized rate of 4.7 percent but, compared to a year ago, slowed to just a 1.8 percent gain.
The Employment Cost Index (ECI), a measure of labor compensation, increased 1.2 percent in Q1 2024, an acceleration of three-tenths compared to the prior quarter. Compared to a year ago, the ECI was up 4.2 percent, unchanged from the fourth quarter.
The Institute for Supply Management (ISM) Manufacturing Index slipped back into contractionary territory with a 1.1-point decline to 49.2 in April. Both the new orders and production indices were down, falling 2.3 points to 49.1 and 3.3 points to 51.3, respectively. The not-seasonally adjusted prices paid index rose 5.1 points to 60.9, its highest level since June 2022, likely reflecting higher oil prices.
The Conference Board Consumer Confidence Index dropped 6.1 points to 97.0 in April, its lowest level since July 2022. Confidence in the present situation declined 3.9 points to 142.9, while expectations for the future were down 7.6 points to 66.4.
Light vehicle sales increased 2.8 percent to a seasonally adjusted annualized rate (SAAR) of 16.0 million in April, the best sales pace since December, according to Autodata. The FHFA Purchase-Only House Price Index increased a seasonally adjusted 1.2 percent in February, the largest monthly increase since April 2022. Compard to a year ago, home prices were up 7.0 percent, an acceleration of six-tenths compared to January and the fastest annual growth rate since November 2022.
Forecast Impact:
Employment growth was in line with our Q2 expectations. With wages increasing at a rate that would be consistent with 2-percent inflation if sustained, we view this report as a sign that the labor market is normalizing. Job growth was strong enough to keep pace with population growth and to continue to spur consumption without being so strong that it stokes further inflationary pressures. Looking back to Q1, the ECI came in a bit hotter than expected, consistent with other data showing that inflation picked up a bit to begin 2024. This was offset somewhat by robust productivity growth, though, which pushed unit labor costs down to a level that would be consistent with 2-percent inflation. Productivity is difficult to both measure and forecast, but we view the decline in job openings and another tick down in the quits rate to be consistent with easing wage growth during the year. As such, we continue to expect a gradual, albeit slow, return to 2-percent inflation over time, which is supported by the April jobs report.
From a monetary policy perspective, Chair Powell said that a rate hike was “unlikely” and that the current focus of the committee is on how long to leave the policy rate restrictive. Current market pricing still has between 1 and 2 cuts this year, in line with our current forecast. Other indicators this week, including the ISM manufacturing index and consumer confidence, were also consistent with slowing economic growth in line with our forecast.
The Impact of Economic Challenges on Ohio’s REO Market
Economic instability significantly impacts the real estate market; Ohio is no exception. With various financial challenges, Ohio has experienced elevated foreclosure and Real Estate Owned (REO) rates. This blog delves into the economic factors contributing to these trends, identifies the regions most affected, and highlights the initiatives undertaken by the government and communities to mitigate foreclosures.
ECONOMIC FACTORS LEADING TO HIGH FORECLOSURE AND REO RATES IN OHIO
Understanding the economic factors behind Ohio’s high foreclosure and REO rates requires a detailed look at several key elements.
1. UNEMPLOYMENT AND JOB MARKET INSTABILITY
Ohio has historically relied on manufacturing and industrial jobs, sectors that have seen significant declines over the past few decades. The closure of factories and the reduction in manufacturing jobs have led to high unemployment rates. People who lose their jobs struggle to meet their mortgage payments, resulting in higher foreclosure rates. Additionally, the gig economy and part-time work, which offer less financial stability, have also contributed to job market instability.
2. DECLINING PROPERTY VALUES
Declining property values create negative equity, where homeowners owe more on their mortgages than their homes are worth. This situation, often referred to as being “underwater” on a mortgage, discourages homeowners from keeping up with payments, especially if they believe their investment in the property is no longer viable.
In Ohio, several regions have experienced significant drops in property values, exacerbating the foreclosure crisis.
3. ECONOMIC RECESSION AND RECOVERY PATTERNS
The Great Recession of 2008 had a severe impact on Ohio’s economy, leading to widespread job losses and financial hardships. The recovery from this recession has been slow, particularly in regions heavily dependent on manufacturing. The slow economic recovery has prolonged financial instability for many homeowners, leading to sustained high foreclosure rates even years after the recession officially ended.
4. RISING INTEREST RATES
Mortgage rates significantly affect homeowners’ ability to afford their payments. Adjustable-rate mortgages (ARMs), which were popular before the housing crisis, have become a burden for many as interest rates have risen. Homeowners with ARMs have seen their monthly payments increase, often beyond their financial capacity, leading to higher foreclosure rates. Regions in Ohio Most Affected by High Foreclosure and REO Rates
Certain regions in Ohio have been disproportionately affected by high foreclosure and REO rates. Understanding these areas provides insight into the localized impacts of economic challenges.
1. CLEVELAND AND SURROUNDING AREAS
Cleveland has experienced some of the highest foreclosure rates in Ohio. The decline of the manufacturing industry, coupled with high unemployment and poverty rates, has severely impacted the housing market. Suburban areas around Cleveland, such as Cuyahoga County, have also been affected by high REO activity.
2. TOLEDO
Toledo’s economic struggles mirror those of Cleveland. The decline in industrial jobs, particularly in the automotive sector, has led to significant economic hardship. High
unemployment rates have resulted in numerous foreclosures and REO properties throughout the city and its suburbs.
3. YOUNGSTOWN
Youngstown has faced long-term economic challenges, including population decline and industrial job losses. These factors have contributed to a high number of vacant and foreclosed properties. Efforts to revitalize the area have been slow, and the housing market remains troubled.
4. DAYTON
Dayton’s economy has been hit hard by the decline in the automotive and aerospace industries. Job losses in these sectors have led to financial instability for many residents, resulting in increased foreclosures and REO properties. The city’s housing market continues to struggle with high vacancy rates and declining property values.
GOVERNMENT AND COMMUNITY INITIATIVES TO REDUCE FORECLOSURES
In response to the high foreclosure and REO rates, various government and community initiatives have been implemented to provide relief and support to affected homeowners.
1. OHIO HARDEST HIT FUND
The Ohio Hardest Hit Fund is a federal program designed to assist homeowners facing foreclosure due to unemployment or underemployment. The program offers financial aid to cover mortgage payments, helping to prevent foreclosures. It provides temporary relief to homeowners while they seek new employment or recover financially.
2. FORECLOSURE PREVENTION COUNSELING
Nonprofit organizations and community groups across Ohio offer foreclosure prevention counseling services. These services include financial education, budgeting assistance, and
negotiation help with lenders. Counselors work with homeowners to develop strategies to avoid foreclosure, such as loan modifications or refinancing options.
3. NEIGHBORHOOD STABILIZATION PROGRAMS
These programs aim to revitalize neighborhoods that have been hit hard by foreclosures. Funded by federal and state grants, they focus on acquiring, rehabilitating, and reselling foreclosed properties. The goal is to stabilize property values and reduce the number of vacant homes, which can attract crime and further depress property values.
4. STATE AND LOCAL GOVERNMENT INITIATIVES
State and local governments in Ohio have implemented various initiatives to address the economic root causes of foreclosures. These include job creation programs, economic development projects, and incentives for businesses to invest in struggling areas. By improving the overall economic health of a region, these initiatives aim to reduce long-term foreclosure rates.
CONCLUSION
Economic challenges have had a profound impact on Ohio’s real estate market, leading to high foreclosure and REO rates. By understanding the economic factors, identifying the most affected regions, and recognizing the initiatives aimed at mitigating these issues, we can better address the problem. Continued efforts from government and community organizations are essential in stabilizing the real estate market and reducing the number of foreclosures in Ohio. As we look to the future, it is crucial to support homeowners and work towards revitalizing affected communities.
If you’re seeking expert guidance in navigating Ohio’s challenging real estate market, particularly with REO properties, REO Brokers is here to help. Our dedicated team has the knowledge and experience to assist you in finding and acquiring valuable REO properties while supporting community revitalization efforts. Visit our website at https://www.reobrokers.com to learn more about our services and how we can help you turn opportunities into success in Ohio’s real estate landscape. Let’s work together to build a brighter future for Ohio’s communities.
