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Rent just jumped to an all-time high

We’ve known that the rent may be too damn high for quite a while now, but a new report shows that rent has never been this high before.

Newly released data from RentCafé and Yardi Matrix shows that nationwide rents just hit an all-time high in June, crossing the $1,400 threshold for the first time ever.

According to the apartment market report, the national average rent for apartments was $1,405 in June, an increase of 2.9% from the same time period last year and an increase of 0.9% from the month of May.

In terms of dollar amount, apartment renters now must fork over $40 more per month than they did one year ago.

Nationwide average rent June 2018

(Click to enlarge. Image courtesy of RentCafé and Yardi Matrix.)

According to the report, rent increases occurred in nearly all of the nation’s largest cities. Per the report, rents rose in 88% of the nation’s largest 250 cities in June when compared to last year. Rents remained the same in 10% of the top 250 cities and dropped in just 2% of them.

From the report:

None of the rental mega-markets of the country escaped steep rent increases this month. Orlando took 1st place by proportional increase as well as dollar-value, where renters now pay 8.4% or $107 more compared to last June. Tampa, Phoenix and Las Vegas apartments also cost 6-7% more than a year ago. Las Vegas has also reached the $1,000 milestone since last year, same as Jacksonville and San Antonio.

One area hit hard by a June rent increase was Manhattan, which has long been the most expensive rental market in the country.

According to the report, apartment rents in Manhattan have actually been dropping, stagnating, or very sluggishly growing over the last few months.

But that all changed in June, when rent rose to an average of $4,116, an increase of 1.5% or $60 per month, representing the largest increase in a year.

Additionally, the report showed that the rent increase hit all unit types relatively equally.

Again from the report:

With renting gaining popularity among families, two- and three-bedroom units were the main drivers of rent growth so far in 2018. June’s increases, however, were almost perfectly balanced among unit types as the demand for studio and one-bedroom units caught up and even outpaced the two-bedroom segment. Three-bedroom homes cost 0.8% more compared to a month prior, $1,714. Two-bed units have seen a somewhat bigger month-over-month increase (although they lagged behind the other categories in yearly comparison), 0.9% to $1,489. Meanwhile, one-bedroom apartments and studios have seen their rents rise by a full percent, to $1,271 and $1,239, respectively.

Doug Ressler, director of business intelligence at Yardi Matrix, believes that the increases are driven by increasing demand for rental housing for a myriad number of reasons.

“Generational and demographic changes, shifting employment opportunities, policy and economic influences are impacting the housing market and turning homebuyers into renters nationally,” Ressler said. “Student loan debt, smaller household sizes, larger down payments requirements, rising interest rates, are also contributing to this change.”

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ADP: Employment increases 177,000 in June

As unemployment rates fall, the labor market is expected to reach full employment, according to the ADP and Moody’s Analytics National Employment Report.

The National Employment Report indicates that private sector employment increased 177, 000 jobs from May to June.

This is below the U.S. Bureau of Labor Statistics latest Employment Situation Summary report, which indicated that as jobs increased in May to 223,000 new jobs, the unemployment rate fell to 3.8%. However, ADP excepts the employment rate to continue to rise.

The chart below demonstrates a moderately steady rate of increase since 2013:

ADP 2018

 (Source: ADP, Moody’s Analytics)

Although increases in job growth are important for the market, Moody’s Chief Economist of Analytics Mark Zandi believes that finding proper workers will be a large hindrance.

“Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Zandi said. “These labor shortages will only intensify across all industries and company sizes.”

The report indicates that construction jobs increased once again, and overall the goods-producing sector is predicted to increase by 29,000 jobs.

Below is a breakdown of job segments that saw increases or decreases in employment between May and June:

Natural resources and mining: Increase 5,000

Construction: Increase 13,000

Manufacturing: Increase 12,000

The service-providing sector is predicted to increase by 148,000 jobs, including:

Trade, transportation and utilities: Increase 24,000

Information: Decrease 2,000

Financial activities: Increase 7,000

Professional and business: Increase 33,000

Education and health: Increase 46,000

Leisure and hospitality: Increase 33,000

Other services: Increase 7,000

“The labor market continues to march towards full employment,” Vice President and Co-Head of ADP Research Institute Ahu Yildirmaz said. “Healthcare led job growth once again and trade rebounded nicely.”

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Core Logic: Mortgage rates average a 7-year high

Home prices continued to climb in May, according to the latest Home Price Index report from CoreLogica global property information, analytics and data-enabled solutions provider.

Home prices increased 7.1% nationally from May 2017 to May 2018, and increased 1.1% from the prior month, according to the report.

The chart below shows that home prices have increased moderately since 2013.

CoreLogic- July 4th

(Source CoreLogic)

“The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute for entry-level homes. During the first quarter, we found that about 50% of all existing homeowners had a mortgage rate of 3.75% or less,” CoreLogic Chief Economist Frank Nothaft said. “May’s mortgage rates averaged a seven-year high of 4.6%, with an increasing number of homeowners keeping the low-rate loans they currently have, rather than sell and buy another home that would carry a higher interest rate.” 

An analysis of home values in the country’s 100 largest metropolitan areas based on housing stock indicates 40% of metropolitan areas had an overvalued housing market as of May 2018, CoreLogic reported.

Another 26% of the top 100 metropolitan areas were undervalued, while 34% were at value. When looking at only the top 50 markets, 52% were overvalued, 14% were undervalued and 34% were at-value.

Several states posted double-digit increases in their 12-month price growth, including Utah at 12.9%, Washington at 12.8%, Nevada at 12.4% and Idaho at 11.2%.

The national home-price index is projected to increase by 5.1% from May 2018 to May 2019, according to the CoreLogic HPI Forecast.

The forecast is an econometric model that projects calculations from analyzing state-level forecasts, which are measured by the number of owner-occupied households for each state.

 As of May, the report indicates that despite financial obstacles, there is a strong demand for homeownership.

“The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and purchase a home,” CoreLogic President and CEO Frank Martell said. “Even in the most expensive markets, we found four times as many renters looking to buy than homeowners willing to sell. Until more supply becomes available, we will continue to see soaring prices in cities such as Denver, San Francisco and Seattle.”

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KB Home promotes Rob McGibney to Southwest regional president

KB Home promoted Rob McGibney to regional president of the Southwest.

“Rob McGibney is a strong leader who has done a tremendous job in every position he has held here at KB Home,” KB Home Matt Mandino Executive Vice President and CEO said in a statement.

McGibney has been with KB since 2000 when he joined as a financial analyst, rising to the position of president in the Las Vegas division by 2010. He was then appointed the regional general manager of Arizona in 2016. McGibney is a current board member of the Home Builders Association of Central Arizona and formerly served as president of the Southern Nevada Home Builders Association.

Rob McGibney, KB Home regional president of the Southwest

In his new role, McGibney will oversee the KB’s local teams and operations across Arizona and Nevada including land acquisitions, land development, home construction, customer service, purchasing, sales and marketing.

“As president of our Las Vegas division and most recently as regional general manager for our Phoenix and Tucson operations, Rob helped drive our continued success in the region. I am confident that he will continue to excel in his expanded role,” Mandino said.

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Civil rights groups bring shocking housing discrimination lawsuit against Bank of America

Civil rights groups are coming together to bring a lawsuit against Bank of America and Safeguard Properties Management for alleged fair housing violations.

The National Fair Housing Alliance, a group of 19 fair housing organizations and two homeowners from Maryland filed a lawsuit Wednesday against the two companies. According to the lawsuit, the defendants intentionally failed to provide routine exterior maintenance and marketing for Bank of America-owned homes in African American and Latino neighborhoods across 37 metro areas.

This was then compared with mostly white neighborhoods, where the bank allegedly consistently maintained its homes.

The claims the civil rights groups make about some of these homes is nothing short of shocking. The groups say they found evidence of wildly overgrown grass and weeds, unsecured doors and windows, damaged steps and handrails, accumulated trash and debris, unsecured pools, graffiti and even dead animals decaying in the yards.

housing discrimination

By contrast, the lawsuit alleges that in predominantly white working- and middle-class neighborhoods, homes are far more likely to have the lawns mowed and edged regularly, invasive weeds and vines removed, windows and doors secured or repaired, debris and trash removed, leaves raked and graffiti erased from the property.

Bank of America took possession of these homes after it foreclosed on the properties and became the owner of record. As owner of these homes, the bank is responsible for routine exterior maintenance on all of its properties.

NFHA claims it first made Bank of America aware of these problems back in 2009, and even offered recommendations for improvement. However, no such improvements were made, according to the alliance.

“Bank of America should have taken meaningful steps toward fixing these problems after being put on notice, but failed to do so,” said Caroline Peattie, executive director of Fair Housing Advocates of Northern California, one of the fair housing groups filing the lawsuit. “For example, Bank of America boarded windows in communities of color rather than installing clear boarding or fixing the windows.”housing discrimination

“Boarded windows carry a stigma and imply the neighborhood is not safe or desirable,” Peattie said. “Bank of America must be held accountable for failing to maintain its foreclosure inventory. In California, Bank of America has played a major part in changing single-family, owner-occupied neighborhoods into rental communities, as large investors buy bank-owned homes in quantity and drag property values down in the process.”

Two homeowners from Maryland joined the federal discrimination lawsuit and revealed their experiences living next to these Bank of America-owned homes. The homeowners, Wanda Onafuwa and Chevelle Bushnell, described scenes such as rat infestations, devaluation of their properties due to the appearance of the next-door housing discriminationhomes and even squatters over the course of several months.

Onafuwa has owned her home in Baltimore for 23 years while Bushnell has owned her home in District Heights for 28 years, and both claim they never had these problems before Bank of America and Safeguard allegedly failed to secure and maintain the properties.

“Bank of America and Safeguard’s deplorable and intentional inaction left innocent homeowners exposed to numerous health hazards and personal risks,” NFHA President and CEO Lisa Rice said. “No one should have to live like this due to Bank of America’s failure to maintain its own properties.”

“NFHA and the co-plaintiffs filed this lawsuit to make sure that these discriminatory practices come to an end and that perpetrators like Bank of America are held responsible for their unjust policies and practices,” Rice said.housing discrimination

An investigation conducted by NFHA on 1,600 homes showed that 45% of the bank’s properties in communities of color had 10 or more maintenance or marketing deficiencies, compared with just 11% of the bank’s homes in predominantly white neighborhoods.

About 64% of the bank’s homes in communities of color had trash or debris visible on the property, compared with 31% in predominantly white neighborhoods. About 37% of homes in color communities had unsecure or broken doors compared with just 16% in white neighborhoods. Finally, 49.6% of properties had damaged, boarded or housing discriminationunsecured windows in color communities, compared with 23.5% under the same conditions in white neighborhoods.

“Bank of America and Safeguard’s intentional failure to correct their discriminatory treatment in African American and Latino neighborhoods — the same communities hardest hit by the foreclosure crisis — is systemic racism,” Rice said. “The purposeful neglect of bank-owned homes in communities of color devalues the properties and the lives of the families in the neighborhoods around them.”

“The health and safety hazards created by these blighted bank-owned homes negatively affect the residents, especially the children, living nearby,” she said. “We have asked Bank of America and Safeguard to provide the same standard of routine exterior maintenance and marketing for all of its bank-owned homes, regardless of the age, value or racial composition of the neighborhood in which they are located.”

Here’s what Safeguard had to say about the accusations:

Safeguard has yet to be served with the complaint. Safeguard neither condones nor tolerates acts of discrimination or business practices that would unfairly target or neglect certain neighborhoods based on location and demographics. Safeguard remains disappointed by the National Fair Housing Alliance’s continued attack on Safeguard with ill-conceived and disingenuous allegations of an extremely serious nature, and we will again vigorously defend against any and all of NFHA’s allegations. Safeguard has a proven track record of working with our clients, communities, and civic leaders throughout the country to combat blight brought on by the housing crisis. We host national conventions with the primary purpose of collecting and reinforcing the behavior and guidelines that prevent neighborhood deterioration, and we participate in industry and investor feedback panels where the focus is to build best practices to protect and preserve the houses that make up these communities. Our primary focus is to protect our clients’ assets from decay, perform services in a consistent, transparent and high-quality manner, and ensure that the communities we serve are protected.

And Bank of America claimed previous reports from NFHA held flaws in their methodology including faulting the bank for properties other entities were responsible for maintaining, or declining to consider properties under repair.

“The allegations are without merit,” the bank told HousingWire. “We apply uniform practices to the management and marketing of vacant bank-owned properties across the U.S., regardless of their location.”

“Bank of America is committed to ensuring bank-owned properties are maintained in a quality manner, and to supporting the stabilization and revitalization of our neighborhoods,” the statement continued. “We monitor and review our vendors’ practices and procedures to ensure they are aligned with the bank’s policies.”

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Joe Cartellone joins BBVA Compass as director of mortgage banking and home equity

BBVA Compass appointed Joe Cartellone as its director of mortgage banking and home equity.

“His innovative mindset, coupled with his proven success in building and growing high-performance mortgage strategies, will be a strong addition to the bank and our valued clients. He is committed to not only the bank’s success, but also our clients’ success in buying their own homes,” BBVA Compass Head of Retail Banking Çagrı Süzer said in a statement.

BBVA Compass Director Joe Cartellone

In his new role, Cartellone will head BBVA Compass’ mortgage and home equity business across the U.S., including mortgage and home equity originations, servicing, secondary marketing and portfolio management.

Cartellone has been in the industry for more than 20 years, and prior to joining BBVA he served as the head of SMB Direct Merchant Services at First Data Corporation and as the mortgage banking retail channel executive for JPMorgan Chase. He was also on TeleCheck Services board, on the Financial Services Roundtable Executive Housing Policy Council, in the Mortgage Bankers Association of America and the National Association of Realtors.

“BBVA Compass is excited to welcome an experienced and ambitious banking professional in Joe Cartellone to our team,” Süzer said.

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FHFA: Home prices rise slowly

Home prices increased slightly in April, rising only 1% from March, according to the latest monthly House Price Index from the Federal Housing Finance Agency.

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

Capital Economics says this the second consecutive month of small monthly gains, and although inventory levels have remained at record lows, house price growth is being contained by subdued active housing demand. As interest rates continue to rise and mortgage lending stays tight, there will be a continual slowdown in annual price growth.

Monthly, across the nine census divisions, home price changes from March to April 2018 ranged from – 0.5% in the West South Central division to an increase of 0.6% in the East North Central division. Changes were all positive year over year, ranging from 4.6% in the West South Central division to 8.9% in the Mountain division.

The chart below compares 12-month price changes to the prior year:

FHA: June 21

(Source: FHFA)

Here are the states in each of the divisions:

West South Central: Oklahoma, Arkansas, Texas, Louisiana

East North Central: Michigan, Wisconsin, Illinois, Indiana, Ohio

Mountain: Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico

According to Capital Economics, low inventory will support prices for the rest of 2018. But the company says a sellers’ market will prevent rapid price growth, and it expects house prices to end 2018 around 5%.

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Realogy appoints Katrina Helmkam as Cartus CEO

Realogy Holdings Corp. recently announced the appointment of Katrina Helmkamp as chief executive officer of Cartus Corporation. Helmkamp will report directly to Realogy Chief Executive Officer and President Ryan Schneider.

“Katrina Helmkamp is an experienced CEO who has built her career leading companies through transformations,” Schneider said. “She has led global teams, knows how to build and launch new products, and understands the evolving technology and data landscape.”

Helmkamp has more than 27 years of leadership experience in business strategy, operations, product development, technology and innovation across multiple sector. Helmkamp is also a member of the board of directors for publicly traded IDEX Corporation.Katrina Helmkamp

Helmkamp will be responsible for improving Cartus’ performance, while leading  technology and process transformation, according to Schneider.

Prior to Realogy, she was the CEO of Lenox Corporation, CEO of SVP Worldwide, senior vice president at Whirlpool Corporation, served as president of Terminix and was a partner for six years at The Boston Consulting Group.

“I am excited to join Realogy as CEO of Cartus. I look forward to helping the Company fully leverage its technology and data scale, and to lead a technology and process transformation that will better support Cartus’ client and customer expectations for speed, digital delivery and efficiency,” Helmkamp said.It’s a tremendous opportunity to work with the Cartus team, and with Ryan Schneider and the Realogy leadership team, as we focus on driving business results.”

Looking for the next great opportunity? Visit HousingJobs, the most comprehensive mortgage finance jobs database — powered by your friends at HousingWire.

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How much are government regulations costing multifamily developers? Hint: A lot

Despite the Trump administration’s ongoing regulatory rollback, government regulations still make up more than 30% of the cost of multifamily building, according to a newly released study from the National Association of Home Builders and the National Multifamily Housing Council.

According to the report, 90% of multifamily developers incur costs from delays caused by long approval processes, stringent construction requirements, building code changes and OSHA requirements.

These costs come from various governmental sources and range from zoning requests and affordable housing requirements to community fees such as utility hook up and impact fees.

The report breaks down costs by type, rate of occurrence and average cost in the chart below.

Incidence and typical magnitude of regulatory costs

(Click to enlarge. Courtesy of NAHB and NHMC)

According to the report, building code changes over the last decade are the biggest inflator of prices. These costs represent 7.2% of the cost in 98% of developments.

The second highest cost is out of the ordinary development requirements, representing 6.3% of the budget for 95% of projects. The bulk of these costs come from energy-efficiency requirements. The NMHC and NAHB point to manufacturers pushing for additional regulations that would benefit their product lines as one of the reasons they resist some of the proposed changes to the International Energy Conservation Code.

NAHB representatives have criticized federal agencies for supporting certain code changes that removed flexibility and limited builders’ options, saying that they are driving up costs without improving energy efficiency to the benefit of certain product manufacturers.

The total cost of regulations on multifamily developments comes out an average of 32.1%, with the low end of the spectrum of regulatory expenses representing 21.7% of costs and the high end representing 42.6% of the costs (see chart below).

Government regulation as a share of multifamily development costs

(Click to enlarge. Courtesy of NAHB and NHMC)

Though not against regulation on the whole, NAHB and NHMC feel that the heavy regulatory costs are exacerbating the affordability issue and advocate an assessment of what is necessary to regulate and what is not.

From the report:

When the cost of multifamily development rises, it unavoidably translates to higher rents and reduced affordability of rental housing. Multifamily developers can not secure financing to build their projects unless they can demonstrate to lenders that the rents will be sufficient to cover costs and pay off the loans. The purpose of this article is not to argue that all regulation is bad and should be eliminated, but to raise awareness of how much regulation currently exists, how much it costs, and to encourage governments to do a thorough job of considering the implications for housing affordability when proposing and implementing new directives. 

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Bob Hope’s California estate sells for $15 million

Comedian legend Bob Hope’s iconic estate has been sold by Craig Strong, executive director of the estates division at Pacific Union International.

Bob and Dolores Hope Estate located in Toluca Lake, California sold for $15 million. Although there were higher offers from developers, it was important to both Strong and Hope’s family that the ultimate buyer wished to preserve the residence, limiting any future development on the rest of the property.

Bob and Hope Dolores

(Courtesy of Strong Realtor)

“As a resident of Toluca Lake, along with my wife Tara and our two children, I have become a strong advocate for the area, which just so happens to be one of the most coveted neighborhoods in all of Los Angeles,” Strong said. “This, with the opportunity to be involved in a historic sale and work with a buyer whose intention is to preserve the main residence and minimize the impact of any further development, is a win-win for the local community.”

The 15,000-square-foot English traditional-style residence was originally built in 1939 by architect Richard Finkelhor. The home includes an outdoor swimming pool, golf course, an array of outdoor spaces on both levels, a formal rose garden, a large guest house and many other luxurious facets.

As requested by Dolores Hope’s will, all proceeds from the sale will go directly to Bob and Dolores Hope’s Foundation.