Requests for purchase loans were down 1 percent week over week and 15 percent from a year ago, according to the latest Mortgage Bankers Association survey.
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Homebuyer demand for purchase loans faltered last week as mortgage rates touched new 2024 highs, spurring more borrowers to opt for adjustable-rate loans, according to a weekly survey of lenders by the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey showed requests for purchase loans were down by a seasonally adjusted 1 percent last week when compared to the week before, and off 15 percent from a year ago. Applications to refinance were down 6 percent week over week, but up 3 percent from a year ago.
Joel Kan
“Mortgage rates continued to move higher last week, reaching their highest levels since late 2023 and putting a damper on applications activity,” MBA Deputy Chief Economist Joel Kan said in a statement. “The 30-year fixed rate increased for the third consecutive week to 7.24 percent, the highest since November 2023.”
Kan said purchase applications declined as would-be homebuyers hit pause due to strained affordability and low supply. Adjustable-rate mortgages (ARMs) accounted for 7.6 percent of loan applications, up from 6.4 percent in February, “consistent with the upward trend in rates, as buyers look to reduce their potential monthly payments.”
Mortgage rates retreat from 2024 highs
Data tracked by Optimal Blue shows borrowers were locking in rates on 30-year fixed-rate mortgages Tuesday at an average rate of 7.16 percent Tuesday.
That’s up 66 basis points from a 2024 low of 6.50 percent registered on Feb. 1, but down from a 2024 high of 7.21 percent seen on April 16 and last year’s high of 7.83 percent, registered on Oct. 25.
Mortgage rates have surged in April as incoming economic data shows inflation remains well above the Federal Reserve’s target of 2 percent.
Consumer Price Index (CPI) data released on April 10 showed prices rising by 3.5 percent in March from a year ago, up from 3.2 percent annual growth in February.
The CPI report was followed by an April 15 data release showing surprisingly strong growth in retail and food services sales in March.
MBA and Fannie Mae economists now agree that mortgage rates will come down only gradually this year and next as Fed policymakers wait for more evidence that they’re winning their war on inflation.
For the week ending April 19, the MBA reported average rates for the following types of loans:
For 30-year fixed-rate conforming mortgages (loan balances of $766,550 or less), rates averaged 7.24 percent, up from 7.13 percent the week before. With points increasing to 0.66 from 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, the effective rate also increased.
Rates for 30-year fixed-rate jumbo mortgages (loan balances greater than $766,550) averaged 7.45 percent, up from 7.40 percent the week before. With points increasing to 0.56 from 0.46 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
For 30-year fixed-rate FHA mortgages, rates averaged 7.01 percent, up from 6.90 percent the week before. Although points decreased to 0.94 from 0.99 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
Rates for 15-year fixed-rate mortgages averaged 6.75 percent, up from 6.64 percent the week before. With points unchanged at 0.64 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
For 5/1 adjustable-rate mortgages (ARMs), rates averaged 6.64 percent, up from 6.52 percent the week before. With points increasing to 0.87 from 0.60 (including the origination fee) for 80 percent LTV loans, the effective rate also increased.
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Home prices are showing surprising strength in the face of the Fed’s “higher for longer” interest rate strategy, but home price appreciation is expected to cool this year and next even as mortgage rates come down, according to two closely watched forecasts.
Economists at Fannie Mae and the Mortgage Bankers Association (MBA) are now in agreement that mortgage rates will come down only gradually this year and next as Federal Reserve policymakers wait for more evidence that they’re winning their war on inflation.
In a March 21 forecast, MBA economists had predicted rates on 30-year fixed-rate mortgages would drop to 6.1 percent by the end of this year, and average 5.6 percent in Q4 2024. The latest MBA forecast, issued April 18, envisions rates at 6.4 percent by Q4 2024 and 5.9 percent during Q4 2025.
In a forecast released Tuesday, Fannie Mae economists said they see rates on 30-year fixed-rate loans dropping to 6.4 percent by the end of this year and to 6 percent during the second half of next year.
Fannie Mae economists are slightly more optimistic about the pace of 2025 rate declines than they were in March when they didn’t expect rates to hit 6 percent until Q4.
Hamilton Fout
“While we still expect economic growth and inflation to moderate going forward — and, thus, for mortgage rates to drift downward — interest rates existing in a ‘higher for longer’ state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers,” Fannie Mae Vice President Hamilton Fout said in a statement.
But Fannie Mae forecasters also note that their mortgage rate projections were put together earlier this month. Since then, rates have climbed on hot consumer price index (CPI) and labor reports.
The Fed’s continued struggles to tame inflation mean there’s “upside risk” to Fannie Mae’s baseline mortgage rate forecast, economists at the mortgage giant said in commentary accompanying their latest forecast. In other words, rates could stay higher than projected.
Financial markets no longer expect that the Federal Reserve will start cutting short-term interest rates in June, and the prospects for three 2024 rate cuts as projected by Fed policymakers in December and March are also in doubt.
“We now expect just two 25-basis point rate cuts to the fed funds rate this year, with the first occurring in September,” Fannie Mae economists said. “Of course, there remains the possibility that there will be no rate cuts in 2024, but that is not our base case forecast.”
Analysts at UBS Group AG also expect the Fed to cut rates twice this year, but see an outside chance that instead of cutting rates, the Fed might have to raise them next year — a move that might send mortgage rates soaring above 8 percent, they warned.
While elevated mortgage rates have dented home sales, national home prices have continued to rise, in part, because many existing homeowners are feeling locked in to the low rate on their existing mortgage and have been reluctant to sell.
The lack of inventory in many markets has made homebuyers more willing to pay higher asking prices. The double-digit home price appreciation seen during the pandemic cooled in 2022 and the first half of 2023, only to rebound in the second half of the year as inventories remained scarce.
Economists expect home prices will continue to rise, but that the pace of home price appreciation will slow as more listings come on the market.
“Despite continued high mortgage rates, an increasing share of homeowners appear to be acclimating to the higher mortgage rate environment or deciding they can no longer put off the listing of their homes,” Fannie Mae economists said. New listings are expected to come onto the market faster than sales pick up, “which should help gradually thaw housing inventory and contribute to decelerating home price growth.”
Fannie Mae economists believe home price appreciation is poised to decelerate from 7.4 percent during Q1 2024 to 4.8 percent by the end of this year and to 1.5 percent by Q4 2025.
When forecasters at the mortgage giant last updated their home price appreciation forecast in January, they were expecting home prices to decelerate more drastically — to 3.2 percent by the end of 2024 and to just 0.3 percent in Q4 2025.
MBA economists concur that home price appreciation will cool this year, but remain above 3 percent in 2025.
Fannie Mae economists expect growth in new listings will help generate a “modest” 4.3 percent increase in 2024 sales of existing homes, to 4.266 million, followed by a more significant 10 percent bump in 2025 sales to 4.691 million.
Economists at the mortgage giant are projecting similar growth in new home sales, which are forecast to rise by 4 percent in 2024 to 693,000 homes and by 12.8 percent in 2025 to 782,000 homes.
Rising home sales, prices could boost mortgage lending
With home sales and home prices both expected to rise, Fannie Mae expects 2024 mortgage originations to grow by 23 percent, to $1.818 trillion, followed by 25 percent growth in 2025, to $2.261 trillion.
“We have revised upward our expectation for both purchase and refinance mortgage origination volumes this month, due in particular to our more optimistic home price growth expectation and somewhat lower mortgage rate path, along with an upgraded expectation for home sales,” Fannie Mae economists said.
Mortgage refinancing volume is forecast to grow by 67 percent this year to $415 billion and 58 percent in 2025 to $657 billion.
But mortgage lenders will still be counting on homebuyers for most of their business, with purchase loan originations expected to climb by 23 percent this year to $1.398 trillion and by 25 percent in 2025 to $1.604 trillion.
“It should be noted, however, that given the upside risk to mortgage rates in our forecast, we see downside risk to our originations outlook,” Fannie Mae economists said.
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Shopping online has its advantages, but when a specific question comes up about the ecosystem surrounding a private island outside of Fiji, nothing beats being able to ask an expert about the island in question.
That’s where a new showroom in San Francisco’s Jackson Square comes in: Private Islands Worldwide, which made its debut in the city last week, will assist the upper echelons of society in buying the private island, yacht, floating villa and even helicopter of their dreams, The San Francisco Standard reported.
The firms behind the new shop are both German-based: shipbuilder Meyer Floating Solutions, helmed by head of sales and design Lars Kruse, and real estate firm Vladi Private Islands, owned and managed by Farhad Vladi (which also has locations in Canada and New Zealand).
Offerings vary widely, with private islands available for as little as $250,000 or for tens of millions, depending on a number of factors, including location, acreage, existing development, etc. The shop’s motto? “Peace, privacy & perfection,” providing some of the world’s most secretive and discerning individuals spotless, secluded places in which to bask in their wealth.
Given that the inventory of private islands is finite, finding offerings for clients is no doubt a bit of a challenge, but Vladi suggested that’s part of what makes them so special.
“The emotional links to islands are very strong,” Vladi told The San Francisco Standard. “The difficulty in the island business is to get islands on the market, because whoever has an island doesn’t want to give it away again.”
The broker said that someone will ultimately relinquish one of those precious islands for one of a number of reasons that real estate agents will be familiar with: death, debt and divorce.
Meanwhile, when it comes to Meyer’s custom-made yachts (no two are alike), the massive vessels can easily command several hundred million.
“If you’re talking about a 150-meter yacht, it starts at something around $370 million,” Kruse told The Standard. “But that’s, let’s say, a starting price.”
The firm’s helicopters, artworks and smaller vessels typically go for about another $100 million, he added.
The company does not publicly list prices for its floating villas, but those can be expected to run for a pretty penny as well. The structures are manufactured in Turku, Finland, and can range in size from about 1,400 square meters to 10,000 square meters.
The floating villas are often used as companions to superyachts and are supposed to be relatively environmentally friendly. The structures moor offshore, avoiding harming shoreline ecosystems, and they use hydrogen fuel cells to generate cleaner, more efficient energy.
In terms of where his clients originate from, Kruse only gave information in generalities, saying there’s “a certain market” from Europe, “a big market” in the Middle East and “a small market” in the United States. Presumably, a fair portion of that U.S. demand is in San Francisco, given that’s where the team has decided to set up shop.
Although a floating villa sounds like a nice, remote getaway for an oligarch or billionaire, Kruse said many of the firm’s clients are commercial and typically use the villas as investment properties or hotels.
Although demand remains for luxuries like private islands and yachts, San Francisco’s housing market is in turmoil. The market never quite recovered following the COVID-19 pandemic when tech hubs were hit hard by an exodus from cities. But in the last year, prices have continued to plunge, and once-coveted properties are seeing price cuts and selling at a loss.
In fact, nearly 20 percent of San Francisco homeowners are selling their property at a loss, more than four times the national share, and almost equal to the highest level seen in the last 11 years, according to a recent Redfin analysis.
Case in point, a penthouse at the San Francisco Four Seasons Residential that was first listed in November 2020 for $9.9 million is now asking only $3.75 million. Meanwhile, a home overlooking the Golden Gate Bridge, which was listed for the first time in over three decades last March for $12.8 million, only recently sold for the highly reduced price of $7.85 million, according to Zillow.
The city’s office vacancies also hit an all-time high during the first quarter of 2024, at 36.7 percent, according to CBRE. In recent years, major retailers also announced their departure from the city, including Macy’s, which announced the impending closure of its flagship store in Union Square, and Nordstrom, which last year announced the closure of two of its locations in the city. One of those locations had been at the San Francisco Centre mall, which had reportedly become a congregating area for a number of the city’s unhoused and drug users.
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Two years after taking the helm, California Association of Realtors CEO John Sebree has stepped down from his post. His resignation went into effect immediately, with C.A.R. subsidiary Real Estate Business Services (REBS) CEO Debra Ferrier taking over as interim CEO as the Association launches a nationwide search for a new leader.
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Two years after taking the helm, California Association of Realtors CEO John Sebree has stepped down from his post. His resignation went into effect immediately, with C.A.R. subsidiary Real Estate Business Services (REBS) CEO Debra Ferrier taking over as interim CEO as the Association launches a nationwide search for a new leader.
Melanie Barker | Credit: LinkedIn
“On behalf of C.A.R.’s leadership team and the Board of Directors, I’d like to thank John for his contributions and service as CEO and State Secretary for our organization. We wish him well in his future endeavors,” C.A.R. President Melanie Barker said in a written statement on Saturday.
Before his tenure at C.A.R., Sebree served as the CEO of Missouri Realtors and the senior vice president of public policy of Florida Realtors. He also spent 13 years with the National Association of Realtors’ Government Affairs division as a senior legislative representative, drawing on his two years of experience as a staffer for the U.S. House of Representatives Committee on Banking, Finance and Urban Affairs to advocate for Realtor-friendly public policies in eight states.
His deep political and Association experience was the deciding factor in Sebree’s appointment to C.A.R., according to previous statements by Singer and then-president Otto Catrina.
“John brings experience, inspiration and a forward-thinking perspective that will position C.A.R. membership for success in an always evolving environment,” Singer told Inman in 2022. “I have great confidence in John’s and our leadership team’s abilities to guide the organization forward and be staunch advocates for C.A.R.’s policy positions.”
John Sebree
During Sebree’s term, Californians for Homeownership, a nonprofit sponsored by C.A.R., secured several policy wins aimed at improving affordability and housing options for Californians. The Association also pushed for bills raising capital gains exclusions, increasing funding for down payment assistance programs, and protecting homeowners’ access to proper insurance coverage as insurers began leaving the state amid several banner wildfire years.
Sebree didn’t provide a statement about his departure, which was, according to C.A.R.’s announcement, due to his desire “to pursue other opportunities.”
His social media accounts have been flooded with comments, which include a litany of well-wishes and a few pleas for details about his next steps.
“I’ll say to you what I said to some other folks this year, You’re a hell of a leader guy,” LGBTQ+ Real Estate Alliance founder and CEO Ryan Weyandt said on Facebook. “I am proud to be friends with you, I am proud to be professional colleagues with you, and I am proud to recommend you for any damn role good enough to have you.”
C.A.R. restricted commenting on their Facebook and X (formerly known as Twitter) posts announcing Sebree’s departure and introducing Ferrier as the interim CEO.
A screenshot of C.A.R.’s Facebook post.
Debra Ferrier | Credit: LinkedIn
As for what’s next for C.A.R., Ferrier said she’s excited to serve as interim CEO after 37 years with the Association as a vice president and assistant general counsel, general counsel and CEO of subsidiary Real Estate Business Services (REBS).
Ferrier is stepping into the interim seat during a time of great change for the industry, including news that the judge presiding over Sitzer | Burnett has given preliminary approval for NAR’s buyer-broker commission lawsuit settlement terms, which include paying $418 million in damages and sweeping changes to buyer-broker commission negotiations and representation agreements.
The final approval hearing will happen in November; however, industry leaders still expect changes to NAR’s participation rule to happen this summer.
“It is both humbling and exciting to be asked to step in and lead an organization I’ve been a part of for so many years,” Ferrier said in a written statement. “I look forward to working with our leadership team, the Board, and the staff at C.A.R. in the months ahead during what is a very challenging time in our industry.”
“I am confident that, together, we will navigate through the current environment and be even better positioned for the opportunities that lie ahead for our members, the industry and our organization,” she added.
This article was shared here with permission from Mike DelPrete for Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Between 2021 and 2023, the CEOs of real estate’s largest public companies had highly varied upside from the sale of company stock — ranging from $145 million to $0 — while their companies had massive financial gains and losses.
Why it matters: Executive compensation through stock sales is a worthwhile datapoint to consider when thinking about a CEO’s optimism about the future of their business — and how they are incentivized to lead that business.
And in reality, that compensation appears to be very loosely based on a company’s actual financial performance, if at all.
Dig deeper: Between 2021 and 2023 Opendoor experienced significant financial losses, with a combined net loss of $2.3 billion and an Adjusted EBITDA loss of $737 million — typically the most favorable financial metric (closely approximating cash flow).
During that time, Opendoor’s CEO sold $145 million in company stock through dozens of transactions — $112 million during the first two years (as CEO) and $32 million in 2023 (as president of marketplace) before leaving the company in January 2024.
Between the first sale in 2021 and the last sale in 2023, Opendoor’s stock declined 83 percent.
During the same three years, Zillow had a combined net loss of $787 million but a positive Adjusted EBITDA of $1.1 billion — significant cash flow.
The CEO of Zillow sold $86 million of company stock in March 2021, when Zillow’s stock price was near an all-time high.
Zillow’s stock has dropped about 58 percent since then, but there have been no subsequent stock sales.
The other publicly listed companies round out the list, revealing several interesting outliers – including CEOs that have sold no stock.
The CEO of Redfin, which was unprofitable, sold $19 million in company stock — and also purchased $300,000 of stock in late 2023, while the CEO of eXp Realty, which was profitable, sold $71 million in company stock.
Interestingly, the CEOs of Compass (unprofitable) and Anywhere (profitable) have not sold any company stock during this same period of time.
It’s hard to ignore the outliers.
The CEO of Opendoor, the most unprofitable company in the peer group, made the most from stock sales.
While the CEO of Compass, which went public about the same time as Opendoor, and the CEO of Anywhere, which was the most profitable, sold no stock.
The bottom line: There’s a before and after not included in this analysis: under what conditions a CEO was granted stock, why they decided to sell, and what they did with the money.
The focus here is the specific financial upside realized by the CEO — compensation for doing a job — how it compares to a peer set of CEOs, and how it relates to actual company performance.
The results are inconsistent and reveal a massive variance — more than I expected — and in that white space is an opportunity to learn more about incentives and intentions.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.
Agent optimism over future buyer pipelines fell from 44 percent before the deal to 27 percent afterward — one of the starkest monthly shifts in sentiment that Intel has recorded in the last year.
This report is available exclusively to subscribers of Inman Intel, the data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Not much has changed. Nothing will ever be the same.
Agents say they are coming to terms with these conflicting realities as they face a depressed market that has seemed to barely budge alongside new policies that many believe could hurt their prospects of courting buyers in the future.
The National Association of Realtors settlement appears to have prompted an immediate downward shift in agent optimism toward their buyer pipelines, according to responses to the Inman Intel Index survey shortly after the deal became public in March.
Agents expressing optimism that their buyer pipelines would recover in the next 12 months plummeted from 44 percent in February to 27 percent in March.
Meanwhile, pessimistic attitudes toward future buyer pipelines spiked from 15 percent in February to 28 percent after the NAR deal was announced.
This represents one of the starkest monthly shifts in sentiment that Intel has recorded in nearly a year of surveying real estate professionals.
Read the full breakdown below.
Sea of change
Prior to NAR’s big news, agent attitudes toward future buyer conditions had become largely positive.
The market downturn in transactions appeared to have bottomed out in the eyes of agents. And by this time next year, far more expected things to get better than worse.
But in the chart below, we can see just how quickly that sentiment started to reverse after the NAR announcement in mid-March.
Chart by Daniel Houston
Above we can see that agent optimism toward their future buyer pipelines — represented in blue — swelled through the winter into early spring of this year.
Then, a sudden reversal occurred following NAR’s announcement in March, with orange-shaded pessimism creeping further into the picture.
From an agent’s perspective, this represents merely one slice of the business outlook: the buyer side, looking 12 months out from today.
Agents remain more optimistic about their listing pipelines in the year to come. Compared to the disruption to their buyer pipeline expectations, agents seem to think their prospect of attracting seller clients will be less hobbled by the new NAR rules.
Thirty-eight percent of agents told Intel in March that they expect their seller pipelines to be heavier or substantially heavier this time next year, down from 45 percent who said the same in February.
Unlike with buyers, where the drop in optimism coincides with a rise in pessimistic responses, more agents think the new rules and market conditions a year from now will leave their seller pipelines “about the same” as they are today.
The size of the group expecting little change in seller pipelines rose by 7 percentage points, while the pessimistic cohort of attitudes toward future seller pipelines remained about the same size month over month.
What’s more, this stabilizing outlook for seller pipelines mirrors more closely the trajectory of client pipelines in recent months — on both the seller and buyer sides.
Conditions on the ground
The analysis above reflects agent attitudes toward the future — specifically what agents expect to happen over the next 12 months.
But Intel also asked agents what conditions look like today, compared to what they remember from this time last year.
In that sense, the legal developments of the past year have yet to take a toll on pipelines, at least compared to last year’s disappointing market of the early spring.
Agents who expressed that their listing pipelines were either heavier or substantially heavier today than at this time last year dropped from 27 percent in February to 24 percent in March.
The share of agents who said their listing pipelines were “about the same” year over year jumped from 26 percent in February to 36 percent in March.
This also means fewer agents reported an actual decline in their listing pipelines over the past 12 months.
Perhaps more interesting is on the buyer side, where future outlooks have worsened even as actual pipeline conditions may be finding their footing.
Sixteen percent of agents told Intel in March that their buyer pipelines were either heavier or substantially heavier than at the same time last year, a decline from the 20 percent who said the same thing the month before.
But the share of agents reporting clearly worse conditions on the buyer side year over year was also in decline — dipping from 49 percent in February to 47 percent in March.
The takeaway on the buyer side? As with listings, the winnowing of clear directional observations from both extremes contributed to a rise in agents reporting buyer pipelines were “about the same” as this time last year.
Overall, the survey paints a picture of a housing market where conditions on the ground remain roughly stable for agents — even as the NAR news leaves many in the industry wondering for now where their future buyers will come from.
Methodology notes: This month’s Inman Intel Index survey was conducted March 20-April 1, 2024. The entire Inman reader community was invited to participate, and Intel received 1,009 responses. Respondents for this survey were directed to the SurveyMonkey platform, where they self-identified their profiles within the residential real estate market. Respondents were limited to one response per device, but there was no limitation to IP addresses. Once a profile (residential real estate agent, mortgage broker/banker, corporate executive/investor/proptech, or other) was selected, respondents answered a unique set of questions for that specific profile. Because the survey did not request demographic information for age, gender or geography, there was no data weighting. This survey will be conducted monthly, with both recurring and unique questions for each profile type.
Between 2021 and 2023, the CEOs of real estate’s largest public companies had highly varied upside from the sale of company stock — ranging from $145 million to $0 — while their companies had massive financial gains and losses.
During the same three years, Zillow had a combined net loss of $787 million but a positive Adjusted EBITDA of $1.1 billion — significant cash flow.
The other publicly listed companies round out the list, revealing several interesting outliers – including CEOs that have sold no stock.
