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California Takes a New Look at Rent Control

In just a week, California voters will vote on a ballot initiative that could expand rent control to single-family homes. Proposition 10, a pro-tenant action, would repeal a state law called the Costa-Hawkins Act. If passed, it would enable cities to once again implement rent control policies restricting landlords’ ability to raise rents; something California cities haven’t been able to do since the act was passed in 1995. The stakes are high and the ballot battle is intense. Landlords and the rental housing industry see it as a threat. Tenants see it as a blessing given the high cost of single-family rentals in cities such as Los Angeles, Sacramento and San Francisco. The rental industry ar

Price Cuts in Chicago Reverse Slide in New Home Sales

Sales of newly built homes in the Chicago area were ahead of last year's total at the end of the third quarter. The modest gain can be attributed to builders lowering their prices. Builders sold 3,154 new homes in the first nine months of 2018, compared to 3,062 in the first three quarters of 2017. The median price of new homes that sold dropped below $350,000 in the second and third quarters of the year, for the first time since mid-2006. "That's from builders trying to gain some momentum," said Erik Doersching, executive vice president at Tracy Cross. The price cuts come at a great time. The tally for the 3rd quarter, 1,006 sales, was up more than 34% from a year before, but it's an increa

Pretium Partners is in The Mood to Sell Big

Pretium Partners, the third-largest U.S. owner of single-family rental homes, is working with Morgan Stanley to explore the viability of selling most of the company’s homes. All told, Pretium could sell as many as 20,000 homes valued at as much as $5 billion. Currently, Pretium owns more than 26,000 rental homes in 15 markets. Even a partial sale would make it the largest transaction in the industry since Invitation Homes Inc. and Starwood Waypoint Homes merged in 2017. Not that Pretium has lost faith in the SFR market. Nothing could be further from the truth. The company, among other major players, is just looking to cash in on potential gains as their funds approach maturity. Pretium is st

Mortgage Applications Drop as Interest Rates Rise

Higher interest rates are stalling the homebuying market and the number of mortgage applications is decreasing. According to CNBC, mortgage volume is lower than it was two weeks ago for refinances and purchases. Mortgage applications are essentially flat compared to a year ago. Demand is strong, but affordability has weakened considerably as interest rates rise. Consequently, the monthly payment on the average home is now 15% higher than it was a year ago, For homeowners who’d like to refinance, the number of loan applications were 32% fewer than a year ago when mortgage interest rates were a full percentage point lower. Fewer and fewer borrowers are now able to benefit from a refinance beca

Midsize SFR Investors Long for the Days of Lending Pilot Program

. The single-family rental industry can be very good for the big players and the small players, but not very good for the guys in the middle. Some mid-tier investors find themselves unable to get competitive financing because of the Federal Housing Finance Agency’s (FHFA) decision in August to end two pilot programs that made access to capital easier. Mid-level SFR investors, those who own between a few dozen and few hundred homes, are feeling the squeeze. “There’s certainly a little hole in the market,” says Hubert Hultgren, co-founder of Golden Pacific Capital, a Kansas City, Mo.-based firm that owns 225 SFR homes in the region and was a recipient of a Freddie-backed SFR pilot loan. Privat

Good News for Homebuilders as Lumber Prices Fall

Timber!!!! 2018 has not been a great year for U.S. homebuilders. A severe labor shortage combined with other challenges has eaten into their profits. However, some good news has arrived. The price of lumber has decreased for the past three months because of a 5% rise in supply. Low unemployment and a softening housing market in many regions of the country, should increase demand for new homes. But 2019, as we are seeing now towards the end of 2018, may see a downturn as interest rates rise. Robert Dietz, Chief Economist at the National Association of Home Builders says that “favorable economic conditions and demographic tailwinds should continue to support demand, but housing affordability h

Housing Market Falters Despite Strong Economic Numbers

Yes, it’s a tough housing market out there. According to the National Association of Realtors, the first nine months of 2018 saw a 2.1% decrease in home sales. “Definitely, there is a shift in the market,” says Lawrence Yun, chief economist of the National Association of Realtors (NAR). “Buyer activity appears to be softening. Buyers have more chances.” As mortgage rates rise and the supply of homes dwindles, the housing market is becoming less favorable for sellers. The realtors group reports a 3.4 percent sales drop in September from the previous month to the lowest level since November 2015. Even pricy Western markets such as Denver, San Francisco, and Seattle are feeling the pinch as the

Chicago Real Estate Gets a Big “Meh”

Despite a pretty solid economic outlook, Chicago is floundering when it comes to the real estate market. That’s according to the 2018 “Emerging Trends in Real Estate” survey. The survey ranked Chicago 49th out of the 79 biggest real estate markets, a drop of seven places from 2017. Chicago lags far behind more popular “hot” markets such as Dallas, Denver, and Nashville. Meh. Property values in the Windy City either remained flat or decreased a bit and the city’s fiscal woes seem to be scaring investors away. But not all the news is bleak. Chicago scored quite well in comparison to other Midwestern cities in the survey. The area ranked fifth, with an average rating of 3.67, among 13 Midwest m

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