March Residential Market Review: Courtesy of Har.com. Please click on the logo to learn more.

HOUSTON HOMEBUYERS DEFY RISING INTEREST RATES AND LIMITED INVENTORY, BOOSTING MARCH SALES

HOUSTON — (April 13, 2022) —Undaunted by rising mortgage interest rates and a record low supply of homes across Greater Houston, consumers kept the local real estate market in positive territory in March. While new listings are entering the market each week, buyer demand has consistently outpaced that supply, and multiple offers on homes continues to push pricing into record territory, solidly positioning Houston as a sellers’ market. According to the Houston Association of Realtors’ (HAR) March 2022 Market Update, single-family home sales increased 4.1 percent with 9,693 units sold compared to 9,309 in March of 2021. On a year-to-date basis, the market is running 10.8 percent ahead of last year’s record pace. The rental market is also strong as consumers that find themselves unable to purchase a home for the time being are instead opting to lease. Homes priced between $500,000 and $1 million led the way in sales for the month, registering a 36.1 percent year-over-year gain. The $250,000 to $500,000 housing segment came in second place, climbing 24.0 percent. That was followed by the luxury market – consisting of homes priced at $1 million and above – which increased 16.0 percent. A continued shortage of available homes below $250,000 has left consumers no choice but to shop for higher-priced homes or to lease. It remains to be seen if mortgage rates, which topped 5 percent last week for the first time in years, will slow the pace of homebuying in April. After reaching record prices in February, buyers pushed pricing to even higher levels in March. The average price of a single-family home rose 11.4 percent to $410,923 while the median price jumped 15.5 percent to $335,000. This marks the first time that pricing for a single-family home in Houston has surpassed $400,000. “We are experiencing unprecedented market conditions in Houston with a frenetic pace of homebuying despite limited inventory, rising prices and steadily climbing interest rates,” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene. “This is taking place amid a backdrop of continued supply chain problems and rising prices for everything from gasoline to groceries, which only adds to consumer pressures. We expect to see buyers start to pull back a bit until conditions stabilize, if indeed they do.”

April Commercial Real Estate Highlights: Courtesy of BISNOW. Please click on the logo to learn more.

HoustonOffice April 2022 – Texas Offers A Sneak Peek Of What Return To The Office Might Look Like

With cases of the omicron variant on a downswing and mask mandates lifting, companies that delayed bringing workers back to the office for two long years are starting to bite the bullet. And nowhere has been more successful in bringing employees back to their desks than the Lone Star State, where major cities in the Texas Triangle — Austin, Dallas and Houston — lead the nation in office returnees, offering some lessons learned and a look into the crystal ball about how things might shake out for the rest of the country. The short version: Things will likely level out at a 55%-65% return rate and only on some days, the claim the office must be a more appealing place than home is not hype, and friendly design and culture will be more than buzzwords going forward. Unsplash/Tina Whitherspoon “Because Texas has been ahead of the game, we can look to the Texas numbers as an early indicator of where things will plateau out, because that’s the biggest question that everyone’s asking,” said Julie Whelan, global head of occupier thought leadership at CBRE, noting bare majorities back in the office were likely. Most major American metros now hover at around 40% of workers back in the office, according to the latest data available from keycard entry company Kastle Systems. That’s a huge upswing from most of the pandemic when percentages were in the twenties and low thirties. But it’s in stark contrast to Texas norms. As of March 14, Houston recorded 52.4% of its workers back in the office. Dallas had seen at least 50.7% return to at least a hybrid schedule and Austin set the bar at 58.3%, the highest percentage in the nation. That’s put the state far ahead of the curve in terms of what the post-pandemic workplace might look like. In the coming months, CRE companies expect other cities to track with Texas-level return to work figures of 50% to 60%. The new normal of hybrid work means experts don’t believe employers will see 100% back in the office again soon, if ever. For that reason, Kastle Systems Chairman Mark Ein thinks companies need to decide on their strategy going forward and put a stake in the ground on culture. If new variants rear up, he said, adjustments instead of mandates are needed; rather than shooing workers out of the office completely when a variant spikes, he said, a company might just require masks again.

A 2022 global CBRE survey stated that most companies were planning on going back to the office this year, and Whelan told Bisnow that might be as soon as in the next month. CBRE’s survey covered 207 companies total, with 69 in the U.S. Of the U.S. companies, almost half expected to return to the office this year, though most planned to incorporate hybrid work. About 26% were already in the office, while 12% had no time frame established and 10% had allowed employees to choose their return date. Six percent had some other plan in mind. More than 40% of Americans in major metros are back in the office, but far more are eating in restaurants and attending crowded events. If Texas is a guide, that could soon change. Brooke Armstrong, president of advisory services in Dallas at CBRE. “I have not met a landlord that doesn’t understand that [amenities] are a requirement at this point. I’m sure they’re out there, but it seems to be broadly embraced that that’s the way of the future,” she said. “You’re either going to keep up with the times, or you’re going to have a very difficult time leasing your space.” But for Class-B buildings and under, landlords will have to either revamp the buildings to amenitize the space, or fall behind to those employers willing to pay for a space with a restaurant and fitness center. As the scale of power tips more in workers’ favor amid the Great Resignation, employers, especially those ahead of the game in Texas, are realizing they will have to get more feedback from employees on how they want to work. Contact Lane Gillespie at lane.gillespie@bisnow.com

April Mortgage News & Education: Courtesy of Housing Wire. Please click on the logo to learn more.

April 4, 2022 FHA unveils 40-year loan modification option – FHA’s COVID-19 loss mitigation options may soon include a 40-year loan modification option. The Federal Housing Administration (FHA) is moving to expand its COVID-19 loss mitigation “waterfall” by introducing a 40-year loan modification option and is asking the mortgage industry for input. The proposed rule, published by the Department of Housing and Urban Development late last week, would change repayment provisions for FHA borrowers, allowing lenders to recast a borrower’s total unpaid loan for an additional 120 months. HUD said that this option could prevent “several thousand borrowers a year from foreclosure.” By prolonging the length of the recast mortgage from 360 months to 480 months, borrowers will have more sustainable monthly payments, the department said. The proposed rule noted that a lower monthly payment will help bring a borrower’s mortgage current, prevent imminent re-default, and of course, help borrowers retain their home. The proposed rule will specifically be beneficial for FHA borrowers who recently exited government-mandated forbearance but are struggling to make their mortgage payments because of COVID-19 related financial hardships. Alongside of benefitting borrowers, the rule would also reduce losses to FHA’s Mutual Mortgage Insurance Fund as fewer properties would be sold at a loss in foreclosure or out of FHA’s real estate owned inventory, HUD said. A recent report published by the FHA revealed that as of December 2021, 7.28% of FHA loans were seriously delinquent, down from a seasonally adjusted high of 12.04% in March 2021. However, the rate is still elevated compared to pre-pandemic times. What will servicing look like in 2022? Communication, borrower education and training of consumer-facing staff are all critical elements to ensure your servicing operation is properly prepared to help borrowers as they exit forbearance plans. Presented by: Selene Finance

HUD added that borrowers who opt for a 40-year loan modification would be subject to slower equity accumulation and additional interest payments, but that the positive outcome of a borrower being able to retain their home should outweigh any negatives. If implemented, the rule will align the FHA with other government entities, such as Fannie Mae, Freddie Mac, and the United States Department of Agriculture, which already provide a 40-year loan modification term option. Comments from the mortgage industry are due by May 31. FHA’s 40-year loan modification option has been in the works for quite some time. In June 2021, Ginnie Mae announced that it was set to introduce a 40-year mortgage term for its issuers, but that the terms and extent of use of the new pool type would be ultimately determined by the FHA. Three months later, the FHA posted a draft mortgage letter proposing a 40-year loan modification combined with a partial claim. However, industry stakeholders, including the Housing Policy Council and the Mortgage Bankers Association, sought more time to adjust to the change. HPC and the MBA asked the FHA to delay the implementing of the new term until the first quarter of 2022. They also asked the government agency for a 90-day window to start offering the loan modification. “The demand on servicers to implement a wide array of policy changes over the last several months has been challenging and we expect this to continue well into the first quarter of 2022,” they said in a letter to FHA. In early February, Julienne Joseph, deputy assistant secretary in the Office of Single-Family Housing for FHA, said that the government agency is “almost there” and “getting warmer” in offering the option to borrowers. “Of course, we feel time is of the essence, especially because the national emergency has been extended,” she said at the MBA’s Servicing Solutions Conference & Expo 2022 in Orlando, Florida. On Feb. 18, President Biden extended the national emergency declaration for the COVID-19 pandemic beyond March 1. By Maria Volkova