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The Realtor Trojan Horse

This sounds like a document-processing center where trainees guide consumers through the paperwork and hope they don’t ask too many questions. Sound familiar? They are going to walk right in and take over while the industry stands by idly – and we’ll look up in a few years and wonder what happened, just like we did when they began.

Over the last several years, Zillow has been transitioning from a real estate search portal into a streamlined buying-and-selling entity that offers iBuying services through Zillow Offers, and mortgage, title and escrow services through Zillow Home Loans and Zillow Closing Services. Now, the company has taken a big step further by starting its own licensed brokerage: Zillow Homes.

Zillow Group’s Chief Industry Development Officer Errol Samuelson provided details about the new brokerage in a video:

According to Zillow, starting in January 2021, Zillow Offers customers in Atlanta, Phoenix and Tucson will be working directly with a licensed employee of Zillow Homes. In addition, any Zillow-owned homes in these three markets will be listed by Zillow Homes employees. Although the services will be limited to these three locations to start, the company says it plans to expand into additional markets later in 2021.

In the video, Samuelson emphasizes that Zillow Homes will not be recruiting agents from other companies, but instead will be licensing existing Zillow employees under the Zillow Homes entity.

“We’re excited to add another important link in the Zillow Offers transaction chain to offer our customers greater choice and convenience when considering a move,” said Jeremy Wacksman, president of Zillow, in a statement. “At Zillow, our mission is to give people the power to unlock life’s next chapter and we want to help them on their journey home through a range of services that meet their preferences—whether through Zillow Offers or through a trusted Zillow Premier Agent partner.”

Zillow Offers launched in 2018 and is now available in 25 markets. According to the company, Zillow Homes will be “the brokerage of record for Zillow Offers transactions.” The move also frees up the company from using “thousands of disparate data feeds,” allowing them instead to pull from “MLS Internet Data Exchange, or IDX feeds,” according to the video statement.

“We look forward to working more closely with our agents, industry and MLS partners to efficiently serve our mutual customers,” added Wacksman. “Together, we will push to keep the real estate industry moving forward, and adapt to changing consumer preferences and virtual technologies.”

Zillow says it has plans to join local real estate associations, as well as the National Association of REALTORS®. The company also says it will continue investing and expanding its Premier Agent business—through which buyers and sellers can get connected to Zillow Premier Agents—and added that it expects this to be the “preference of the majority of Zillow’s customers.”

https://rismedia.com/2020/09/23/from-portal-to-brokerage-zillow-takes-massive-next-step-into-all-in-one-real-estate-services/

More Waiting Until Spring, 2021

I wonder if the rest of America looks at the homes in the bottom half of this photo above and correctly guesses that they are selling in the mid-millions…..Excerpts from article linked at bottom (hat tip Ray!):

Would-be home sellers have numerous reasons for staying out of the market, say real-estate agents. Some are worried about potential virus exposure by letting strangers tour their homes. Others have canceled or delayed their plans to move due to the pandemic, or they are worried about finding a new home in a competitive market.

KC Hart has experienced the inventory shortage firsthand as a real-estate broker in Missoula, Mont., where demand is high from buyers moving from other states. He’s also contributed to the problem. Mr. Hart and his wife were planning to sell their house this summer after their youngest went to college, but they delayed their move because their son is staying at home this fall while taking classes locally.

“That’s one more house not on the market,” Mr. Hart said.

In some cases, sellers are waiting until the spring, traditionally the busiest home-selling season, said Quentin Dane, chief executive of Dash Realty Group in Raleigh, N.C.

“We hear this all the time: ‘They might get a vaccine for Covid coming at the end of the year, and the spring market is right around the corner,’” Mr. Dane said. “Sellers [are] saying, ‘If I don’t need to sell, why go through the risk of selling right now?’”

Another obstacle for sellers is the high demand for contractors, painters and other workers who can perform repairs or upgrades to houses to prepare them for sale, said Beth Traverso, managing broker at Re/Max Northwest Realtors. Once houses in her area of the Seattle suburbs go on the market, they are usually sold within days, she said.

Jeff and Jill Borgida wanted to sell their house in Bothell, Wash., this spring now that their children were grown. But with inventory so low, they struggled to find a new house in their area and budget that met their needs.

“We were getting nervous, because we were along a path to list our house and we’re not finding any really suitable options,” Mr. Borgida said. Finally, they widened their search parameters and found a house farther out than they had originally looked.

Link to WSJ Article

Eviction Moratoriums & Landlords

California is known for being a tenant-friendly state, and now the eviction moratoriums make it feel like it’s Free Rent For All!  It is particularly hard on the mom-and-pop landlords who live on their rental income and who are conflict-adverse, which puts them in a position where they just have to eat it.

Tenants are required to detail in writing why they can’t pay the rent, but is that all you can do?

From the AAOA:

While the recent CDC moratorium on evictions requires that tenants sign a declaration under penalty of perjury, detailing why they can’t keep up with rent payments and their efforts to seek assistance, the reality is that many tenants will still falsify their declarations. Even without tenant declarations, or with lawful reasons under the CDC mandate, many courts are refusing to enforce evictions across the board. What is a landlord to do?

Tenants who are taking advantage of CDC’s COVID mandate simply should not get a free pass. With credit reporting their account, they won’t. There is no moratorium on accurately reporting the state of a tenant’s account.

By credit-reporting tenant accounts, renters can’t put off the consequences of non-payment.

Where a tenant is truly impacted by COVID, and the landlord wants to work with that tenant, then the tenant can be reported positively. Where the tenant is taking advantage of the CDC mandate, the power is back in the hands of the landlord to let the Credit Bureaus know that the account holder is not living up to their financial obligation.

There are companies that will help landlords with reporting to credit bureaus:

Link to AAOA article

Mortgage Underwriting is Loosening

We know that the ultra-low mortgage rates and tight inventory have been driving the market wild.

But here’s an extra boost – the strict mortgage underwriting that began in April is being relaxed:

Credit Loosening: According to the NFCI credit index, a composite measure of credit conditions, credit tightened dramatically in mid-April to its most conservative level since 2009 due to the increased economic uncertainty driven by impacts from the pandemic. Since then, credit availability has loosened, even reaching pre-pandemic levels in August. This credit composite takes into consideration many different credit indicators, giving a comprehensive picture of credit conditions in the U.S. When lending standards are tight, fewer people can qualify for a mortgage to buy a home. Likewise, when standards are loose, more people can qualify for a mortgage and buy a home. Credit loosening in August compared with last month increased housing market potential by 266,640 potential home sales.

https://blog.firstam.com/economics/housing-market-potential-reaches-highest-level-since-2007

The graph above is somewhat misleading because they are only reflecting the month-over-month differences.  The improvement of ‘house-buying power’ due to low rates has already been in place for months now, so the increase from July isn’t that dramatic.

I’ve heard that the qualify-using-bank-statements mortgage is back, so that will add a few self-employed buyers who can’t qualify using their tax returns. More competition!

Doom?

After another weekend of multiple-offer situations where the listing agents made no attempt whatsoever to create a bidding war, and instead just shut down the showings, it’s hard to believe there is any downturn coming our way. When you can get a mortgage rate in the twos, the demand is unyielding.

But some authors still want you to believe that doom is around the corner – they should talk to realtors on the street!  An excerpt:

The price of low-tier housing in San Diego County skyrocketed after the latter half of 2012. 2015 experienced another price increase, due to the boost given by decreased mortgage rates throughout 2015 and 2016. Lower mortgage rates free up more of a buyer’s monthly mortgage payment to put towards a bigger principal. Thus, San Diego’s high home prices continued to find fuel from increased buyer purchasing power.

But in 2018, home price increases sharply declined in reaction to slowing sales and rising interest rates, which began in late-2017. Home prices have since turned back up, but today lack the fundamental support of home sales volume to continue.  The annual pace of increase is now just 5%, lower than in recent years when the annual rise averaged around 10%.

Accurate home price reports run about two months behind current events. Even when caught up, sticky prices tend to persist several months beyond the moment when home sales volume begins to slow. Starting in March 2020, economic volatility and shelter-in-place orders caused home sales volume to decline dramatically. However, historically low interest rates have provided a boost for buyer purchasing power, which has propped up home prices thus far.

Later in 2020, the impact of record job losses will see downward pressure on home prices. The overall home price trend for the next couple of years will be down, the result of job losses and plummeting sales volume. As during the 2008 recession, the drop in sales volume and prices will first be most volatile on the coast, before rippling outward to inland areas.

Link to Article

Sales and pricing should be directly connected to inventory.

When there is hardly anything to buy, sales may decline, but pricing would stay the same or go higher because only the quality homes would be selling.  A surge of homes-for-sale in 2021 would fuel the demand and energize the marketplace…..to a point.

There will be a fine line between frenzy and glut!

Get Good Help!

The Selling Season, 2020

It was on April 15th that I drew up the calendar above, and then I added the additional red box around June when it was becoming obvious by the end of May that the market was taking off.

June, July, and August were all dead-red-full-tilt-boogie, then we had a blip around Labor Day/heat stroke/schooling, and we’re back to a healthy-hot market. The green = good description (at the top of chart) is about right – but it could be red hot if we just had more inventory.

While we’re due for a cooling off, but the October market could be better than expected if sellers get the memo that there are buyers starved for quality homes to purchase.  I’m sticking with the November flurry right after election day too, figuring that realtors will want to get in one more sale before Christmas.

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