Selma Hepp is Executive, Research & Insights, and an Economist at CoreLogic. In this interview, the noted real estate expert providers her latest insights on trends in home sales, home listings, and home prices. She explains how 97% of outstanding mortgage borrowers have a rate below 6%, while more than 80% have a rate under 4% -- and how that has led many potential sellers to just stay put or rent out their homes rather than list them. Selma believes we’d need to see rates drop a full percentage point to the low-to-mid-5% range to help unlock the market.
The housing market isn’t as cohesive as you’d think. In some areas of the US, home prices are still rising, with buyers ready to bid well over asking price. In other markets, many so-called “boomtowns” of just a year or so ago are seeing bleak buyer performance as home prices fall off a cliff and buyers refuse to bid on such radioactive real estate. We’re in a real estate market of winners and losers, but which areas are which?
Dave Meyer, VP of Data and Analytics at BiggerPockets, took a comprehensive look at nearly three hundred housing markets to see which were rising, which were falling, and why the difference between the two is so intense. As mortgage rates rise, a lack of inventory holds buyers hostage. Without homes on the market, strong demand is still fighting over low supply. But some areas of the US have better buying opportunities than others.
If you want to invest in real estate or purchase your first primary residence, heed Dave’s warning. DON’T catch a falling knife in this economy. Know your market well, project where it’s headed, and buy DEEP whenever possible. More on that in this video!
00:00 The Q2 Housing Market Update 01:44 Where Are All the Houses? 05:12 Sellers Stay Put 06:55 Cities Seeing Massive Days on Market 09:23 Home Prices Grow Slowly 11:50 Bidding Wars Are Back 13:19 Should You Offer Under Asking?
With housing affordability at an all-time low, supply is going to have to come from baby boomers, who are less sensitive to mortgage rates or don't have a mortgage at all.
The namesake nephew of bloodthirsty Boston mobster James “Whitey” Bulger worked closely with Hunter Biden in his Chinese business ventures, according to emails reviewed by The Post.
Homepoint struggled from relatively-weak capital position, a high cost structure and chronic problems with underwriting and technology, former workers said.
At New Era Real Estate, the goal is to continue disrupting the GTA and Ontario real estate industry with its flat fee and full-service commission model.
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❎ I am not a CPA, attorney, insurance, contractor, lender, or financial advisor. The content in these videos shall not be construed as tax, legal, insurance, construction, engineering, health & safety, electrical, financial advice, or other and may be outdated or inaccurate; it is your responsibility to verify all information yourself. This is a YouTube video for entertainment purposes ONLY ❎
Many are ready to move but don’t want to lose the low-rate mortgages they locked in a few years ago, crimping the supply of homes and keeping prices high.
Zillow’s latest earnings reveal growth in its core Premier Agent business after nine months of decline – the longest in the company’s history – a promising result of Zillow’s new strategy.
Why it matters: The next iteration of Zillow revolves around a back to basics strategy of generating more leads and monetizing those leads through an integrated consumer experience (a super app).
But a change in financial reporting will make it more difficult to track the various components of the business on its journey to building that super app.
Zillow’s Premier Agent revenue increased during the first quarter of the year, breaking a nine-month losing streak – the longest consistent revenue decline in the company’s recent history.
Premier Agent revenue was up 8 percent from Q4 2022 (but still down 16 percent from the heady days of early 2022, when the market was at its peak).
Comparatively, Zillow had a strong quarter – its Premier Agent business outperformed the market year-over-year and quarter-over-quarter.
Compared to the same period last year, overall transactions in the market were down 26 percent, compared to a 16 percent decline in Premier Agent revenue.
And compared to last quarter, market transactions were down 14 percent while Zillow managed to grow its Premier Agent revenue 8 percent – a noteworthy achievement!
Zillow’s ability to outperform the market comes down to two activities: capturing a higher percentage of leads in the market, and generating more revenue per lead.
Zillow’s stated goal is to double its share of customer transactions from 3 to 6 percent by the end of 2025.
ShowingTime and Flex are both designed to engage more consumers and increase conversion rates, resulting in more leads and more revenue per lead.
Zillow Home Loans is another source of revenue growth, and the company continues to invest in it.
The segment saw an increase in revenue during the latest quarter, but the change in financial reporting means we’ll no longer be able to see profitability for the segment – after six years of losses and two years of me writing about those losses.
Losses aside, Zillow continues to invest in its mortgage business and is hiring more mortgage loan officers (MLOs) to handle an increase in volume.
This is a good reminder that mortgage is very much a people business and not a scalable technology business.
The bottom line: Zillow’s path forward is dependent on its ability to capture more leads, further monetize those leads, and attach ancillary services like mortgage – a super app leading to super revenue.
But Zillow’s change in financial reporting will make it more difficult to track, with any degree of granularity, which pieces of the puzzle are working well and which are struggling.
Still, the numbers (while they last) don’t lie – the company’s recent performance relative to the market underscores the powerful position Zillow occupies at the top of the consumer funnel and its ability to affect change for consumers, agents, and the entire industry.
Mehvish Ayub of State Street Global Advisors says "that catalyst could occur in the next six months with all of the risk events that we have on the horizon."
Opendoor is rapidly recalibrating its business to a new environment: operating expenses have been cut in half while purchase volumes are down to levels not seen since the pandemic.
Why it matters: A sustainable future for Opendoor revolves around tight cost control and operational efficiency, reducing customer acquisition costs through partnerships, and finding the right balance between offer quality and purchase volumes.
Opendoor’s monthly purchases have dropped eightfold, to levels not seen since the early days pandemic.
The company has gone from purchasing 160 homes per day in June 2022 to purchasing less than 20 homes per day during the first three months of 2023.
Opendoor is purchasing fewer homes by choice – and doing so by offering less competitive offers to homeowners (offer quality).
This creates a greater “spread” and improves Opendoor’s ability to resell the homes for more on the open market, giving it a buffer against future market uncertainty – and exposure to profitable upside.
For example, in the Zillow + Opendoor seller options marketplace, Opendoor’s cash offer is usually considerably lower than Zillow’s estimated market value.
This quarter, Opendoor invented a helpful new financial metric, Adjusted Operating Expenses, which excludes variable costs related to selling a property: broker commissions, holding costs, and transfer fees and taxes.
What it reveals is Opendoor’s fixed operating expenses, a helpful measure when thinking about cost control, expense management, and operational efficiency.
The net result is clarity around Opendoor’s recent cost-cutting: fixed operating expenses are down $100 million, or 50 percent, from Q2 2022, driven through a reduction in advertising spend, layoffs, and other cost-cutting measures.
Opendoor invested $200 million in advertising during 2022, including a significant shift to brand marketing (Opendoor’s marketing team visited my class this semester).
But in a shifting environment, Opendoor has slashed its advertising spend by half during the first quarter of 2023 compared to the same time last year.
A side effect of this shift is skyrocketing customer acquisition cost (CAC), as measured by total advertising spend divided by the number of homes purchased in a period.
Compared to 2022, Opendoor’s CAC has tripled to $16k during the first quarter of 2023 – a very unsustainable number in the long term, but one reflective of sustained brand marketing coupled with markedly fewer purchases.
The bottom line: With $1.3 billion in cash, Opendoor has the time and space to retreat, regroup, and realign the business to not only stem its losses, but position itself for future growth.
The evidence shows that Opendoor is making significant changes to become a more efficient operation.
Just cutting expenses at the current purchase volumes is not a sustainable strategy – but it is an important first step as the company reorients for the future.
As I mentioned above, it was great to welcome Opendoor's marketing team to my University class this semester to talk about the shift to -- and power of -- brand marketing. A very engaging discussion. And just one of many great sessions and speakers this semester! Mike Del Prete
An economic downturn can be a scary time for investors. As consumers spend less, company profits are reduced which can spell trouble for the stock market. If you're planning to stay investe
During my 2023 Insights webinar, I spoke about AI, ChatGPT, and real estate. In this 10 minute clip, I cover the latest news from the space, breaking out the signal from the noise, Zillow and Real Brokerage's AI releases, various use cases, AI for consumers vs. agents, and who might win in the space.
I hope you find it contextually helpful when navigating the change, the hype, and the uncertainty swirling around AI. Enjoy!
HomeVestors of America, the self-proclaimed “largest homebuyer in the U.S.,” trains its nearly 1,150 franchisees to zero in on homeowners’ desperation.
With the first quarter of 2023 behind us, we can say that we saw a combination of rising mortgage interest rates, declining home sales, along with a decrease in sold listings—and that, despite ongoing inventory issues in the past, we saw a 33% increase year over year.
TEMPE, ARIZ. — Institutional Property Advisors (IPA) has arranged the sale of and financing for The Gallery, an 88-unit apartment community in Tempe. Living Well Homes sold the property to RSN Property Group for $20.3 million. The Gallery is a two-story, 13-building property built in 1972 on...
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