Category Archives: Real Estate

Million shares in single family rental operator

The initial public offering for Blackstone Group’s single-family rental operator, Invitation Homes, is one step closer to reality, as the company disclosed the terms of its initial public offering on Monday.

Per a filing with the Securities and Exchange Commission, Invitation Homes will offer 77 million shares in its IPO, with an estimated share price of between $18 and $21 per share.

According to a report from Renaissance Capital, a manager of IPO-focused ETFs, Invitation Homes’ IPO will raise approximately $1.5 billion.

Additionally, at the midpoint of the expected price range, Invitation Homes would have a fully diluted market value of $5.9 billion and an enterprise value of $11.8 billion, Renaissance Capital said in its report.

While Invitation Homes is offering up 77 million shares, Blackstone will still be the company’s majority owner once the IPO is concluded.

According to the company’s SEC filing, the IPO will cover 25.49% of the shares in Invitation Homes, while the company’s previous owners will retain 74.51% of the company’s shares.

Another interesting piece of Invitation Homes IPO is the fact that its doing so with the backing of Fannie Mae, as noted in the Wall Street Journal.

From the WSJ report:

Fannie Mae has agreed to backstop up to $1 billion in debt from the country’s largest owner of single-family rental homes, the first time the government-sponsored entity has agreed to guarantee the debt of an institutional owner of single-family houses.

Fannie Mae’s involvement is a sign that it believes homeownership will remain out of reach for many Americans and that Wall Street’s housing wager will be become a long-term business, not just an opportunistic trade made after the foreclosure crisis.

The support represents a shift from about four years ago, when Fannie’s regulator blocked another government-sponsored entity from backing bulk buyers of foreclosed homes. Fannie’s support will likely make it cheaper for buyers like Blackstone to add homes in the future.

As the company’s prospectus notes, Invitation Homes has significantly grown since its founding in 2012.

Invitation Homes now has more than 48,000 homes in its portfolio, making it the largest single-family rental operator in the U.S.

The company has properties in 13 markets, including Atlanta, Phoenix, Seattle, and Tampa.

New app for real estate agents

For real estate agents who are constantly on the go, finding the time to make it to the office to look up details on a property can be a liability. One company created an app that could change that.

CoreLogic, a global property information, analytics and data-enabled solutions provider, launched its RealQuest app that provides real estate and mortgage professionals access to detailed property information, transaction history and neighborhood sales data.

The app gives users access to CoreLogic’s database and search engine which covers 3,100 counties and 99.9% of all U.S. property records. The app is available through iOS (iPhone)devices.

Here are the activities the app allows users to perform:

  • Search by property address, owner name or map
  • Identify all properties associated with an owner
  • Check foreclosure status
  • Validate property value
  • Confirm property ownership
  • Research property transaction history
  • Compare nearby sales

“Purchase originations are being forecasted to reach more than $1 trillion this year, with one in three new mortgages expected to be made to Millennials,” said Shaleen Khatod, CoreLogic senior vice president of Data Solutions.

“Given the growth of Millennial household formation and their technology preferences, it’s critical for mortgage professionals, real estate agents, appraisers and investors to have cutting-edge, on-the-go technology that gives them a competitive edge,” Khatod said. “With the RealQuest App, they can access national property, owner and mortgage data and insights that will help them seize more opportunities whenever and wherever they are.”

The app is an extension of CoreLogic’s desktop version, which also includes building permit reports to validate home improvements and Homeowners Association Reports to provide detailed HOA information.

Murder of Texas real estate agent

Back in 2006, Chanthakoummane was sentenced to death after stabbing a Dallas real estate agent to death. He stabbed the agent, Sarah Anne Walker, in the face and neck in a model home in what his defense attorney called a robbery gone-wrong.

But went wrong is an understatement. A medical examiner testified at Chanthakoummane’s trial that Walker was beaten, bitten and stabbed, according to an article by Tom Steele for The Dallas Morning News. Of her 33 stab wounds, 10 were deemed fatal wounds. The jewelry she had been wearing was stolen.

The murder occurred on July 8, 2006, and Chanthakoummane was received on death row on October 18, 2007.

Now, 10 years later, he will face lethal injection. But what has he done with his life the past decade? Alex Hannaford wrote an article titled Letters from Death Row: Books Behind Bars for the Texas Observer. In it, he questions death-row inmates about their taste in books.

Chanthakoummane wrote a letter to Hannaford answering his questions and stating that most of the books he wanted to read have been censored by the TDCJ Director’s Review Committee—the body tasked with hearing appeals related to rejected correspondence and publications.

From the article:

Chanthakoummane wrote that he “will likely receive 60 – 70% of my magazine subscriptions,” and said that among the titles periodically censored were GQ, Vogue and Popular Mechanics. He wrote that censorship was “limited to a handful of reasons, which are conservative in their nature.”

Chanthakoummane also claimed that publications and periodicals “targeting African Americans are more closely and often censored [including] King, Jet [and] Diva magazines … it’s blatant racism / sexism at the root of censorship.”

However, TDCJ Spokesman Jason Clark clarified that publications are rejected because of sexually explicit images, the break-down or manufacture of weapons, depictions of drugs, alcohol and information deemed a security threat.

After being convicted of murder, Chanthakoummane even tried to file in the court of appeals, however he was unsuccessful. Here was the United States Court of Appeals for the Fifth Circuit’s response:

Petitioner now seeks a COA to appeal the district court’s dismissal of his federal petition on two grounds: (1) his trial counsel was ineffective for failing to sufficiently investigate, develop, and present mitigating evidence and (2) his trial counsel was ineffective for failing to challenge whether the murder was United States Court of Appeals Fifth Circuit committed during the commission of a robbery. After careful consideration of his arguments and the record, we deny his application for a COA.

Best year in a decade existing home sales

Existing home sales closed out 2016 as the best year in a decade, despite the decrease in December’s sales, according to the new report from the National Association of Realtors.

Existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, finished 2016 at 5.45 million sales, the highest level since 2006.

But, there are problems still.

December struggled with affordability and low levels of supply, bringing down its existing home sales by 2.8% to a seasonally adjusted rate of 5.49 million, down from an upwardly revised 5.65 million in November. This is still an increase of 0.7% from last year.

“After beating expectations in September, October and November, reality finally caught up with existing homes sales in December,” Zillow Chief Economist Svenja Gudell said. “This monthly drop cancelled out any momentum sales had picked up – making the annual gain just shy of 1%.”

“Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” NAR Chief Economist Lawrence Yun said. “However, higher mortgage rates and home prices combined with record low inventory levels stunted sales in much of the country in December.”

“While a lack of listings and fast rising home prices was a headwind all year, the surge in rates since early November ultimately caught some prospective buyers off guard and dimmed their appetite or ability to buy a home as 2016 came to an end,” Yun said.

The median existing home price increased for all housing types in December to $232,200, up 4% from December 2015. This marks the 58th consecutive month of year-over-year gains.

“Importantly, and despite the slip in sales, the inventory of homes for sale fell to the lowest level in the 17 years for which data is available,” Nationwide Chief Economist David Berson said. “Looking at just single-family sales, the inventory of home for sale dropped to the second lowest level in the nearly 34 years for which data is available.”

In addition to working at insurance and financial services companie Nationwide, Berson previously served as Fannie Mae’s chief economist, where he worked for more than 20 years.

“This low level of inventories has two significant impacts: It reduces the number of sales as there are fewer homes to be purchased and it pushes up re-sale prices, with the median sales price of existing homes sold up by 5.5% in 2016 – the fifth consecutive year in which prices rose by more than 5%,” Berson said.

Total housing inventory dropped 10.8% in December to 1.65 million existing homes available for sale, the lowest level since NAR began tracking housing supply in 1999. Inventory decreased 6.3% from last year and has fallen for 19 consecutive months to a 3.6-month supply at the current sales pace.

Build apartment data giant with acquisition of Axiometrics

RealPage, a provider of software and data analytics to the real estate industry, is growing its operation and seeking to create an apartment data giant with a pair of deals.

RealPage announced Wednesday that it agreed to acquire “substantially all of the assets” of Axiometrics, a provider of apartment market data, for approximately $75 million.

RealPage said that upon completion of the deal, Axiometrics will be folded into MPF Research, a division of RealPage.

Additionally, RealPage announced that it entered into a “long-term” deal with Real Capital Analytics, a provider of multifamily sales transaction data and analytics.

The company said it expects the deals to create the “most-referenced apartment data analytics solution” in the country.

“Combining data from Axiometrics, MPF Research and RCA with the data analytics power of RealPage, which is based on tens of millions of real time lease transactions, will create a unique market intelligence platform,” RealPage said.

RealPage also said that the deals will “significantly increase transparency of transactions in the $150 billion market for multifamily property sales transactions by providing the most accurate market fundamentals, forecasts and asset-level granularity.”

The Axiometrics deal is not yet completed. According to RealPage, the deal is still subject to “certain standard conditions,” and is expected to close in February of this year.

Per data provided by RealPage, Axiometrics’ 2016 revenue is forecasted to be approximately $13.8 million, which would show growth of 27% compared to 2015.

RealPage said that it expects the acquisition of Axiometrics to represent a valuation of approximately 8 times EBITDA once the company is fully integrated by early 2018.

“The acquisition of Axiometrics furthers our goal to become the definitive source for accurate data intelligence regarding the acquisition, operation and disposition of every market-rate apartment in the U.S.,” said Steve Winn, chairman and CEO of RealPage.

Ron Johnsey, the CEO of Axiometrics, called the deal a “big win” for the company’s clients and for the multifamily rental housing industry.

“By combining with RealPage, we will vastly expand our data coverage and forecasting capabilities and thereby increase the value we offer to all constituents in the apartment housing industry,” Johnsey said.

Murder of Abilene real estate agent

Weeks passed since Abilene, Texas, real estate agent Tom Niblo was shot and killed in his home, but police have yet to make an arrest.

A newly released search warrant gives more information on the case, and further confirms police’ suspicions of Niblo’s brother-in-law Luke Sweetser, according to an article by Brooke Crum for Abilene Reporter.

However, police released Sweetser, who was arrested on charges of theft of a firearm, from jail Friday after a bond reduction from $400,000 to $75,000.

The morning of the shooting, Niblo’s wife, Cheryl Niblo, got out of bed to go to the bathroom, the search warrant affidavit states. During that time, she heard several shots and she escaped the house unharmed.

From the article:

“The investigation did not reveal evidence of why or how Cheryl McKissack Niblo removed herself from the bedroom at the exact time that Thomas Niblo was shot to death,” the search warrant affidavit states.

The warrant gives more details on the motive that Sweetser could have for wanting to shoot Niblo, according to the article. The family allegedly fought about the execution of a will after the death of Niblo’s father, which named Niblo and his mother executors of the will.

Sweetser’s wife, Niblo’s sister, was specifically excluded in the will, according to an articleby Erica Garner for Big Country Homepage.

What it means for housing

The economy showed many encouraging signs after the election of now-President Donald Trump such as an increase in the stock market and a jump in consumer confidence, however Fannie Mae still holds a conservative growth projection for 2017.

Fannie Mae projected economic growth of 2%, according to the company’s Economic and Strategic Research Group’s January 2017 Economic and Housing Outlook.

“Policy changes under the new Administration – in its nature, sequencing, and magnitude – will determine the direction of economic growth in 2017,” Fannie Mae Chief Economist Doug Duncan said. “Incoming data suggest improving consumer spending, diminished labor market slack, and advancements in wages, but until we can more clearly read the political tea leaves, it’s difficult to say whether this late-cycle expansion will continue into its eighth year.”

Now that the inauguration of Trump is complete, and the First Family moves into the White House, changes to policy should quickly become clear.

“Thus our theme for the year: Will Policy Changes Extend the Expansion?” Duncan said. “If stimulus policy is enacted, it would likely add to growth but could also be offset by potential tightened trade policy given the already historically strong dollar.”

The report explains that improved consumer spending in the third quarter drove an upwards revision from its prior forecast. It explained that a friendly labor market and rising household wealth should continue to support consumers.

Fannie Mae also pointed out that government spending and inventory investment will add to growth in 2017. Mortgage rates should rise gradually throughout the year, reaching 4.3% by the fourth quarter. However, there is still a risk that rates will rise faster and higher than the forecast, the report states. In that case, the report insists that the impact on housing could be offset by strengthened income growth.

“We expect housing to remain resilient and continue its recovery in 2017, with affordability standing out as the industry’s greatest obstacle, particularly for first-time homeowners,” Duncan said. “Demographic factors, however, are positive.”

“Our research shows that older Millennials have begun to buy homes and close the homeownership attainment gap with their predecessors,” he concluded.

Slowdown in home affordability

The gross domestic product report for the fourth quarter may forecast a slowdown in this part of the housing market going into 2017.

The advanced estimate for GDP showed an increase of 1.9% in the fourth quarter, a slowdown from the third quarter’s increase of 3.5%.

One expert explained that the slowdown in income growth portrayed in the report could worsen the growing home affordability problem in the housing market, and even lock some potential homeowners out of the market.

“Going forward, it’s unlikely that housing will be much of a drag on growth, but Q4 data showed a slowdown in wage and salary growth that could certainly impact housing affordability, particularly as interest rates keep rising,” Zillow Chief Economist Svenja Gudell said. “While there were certainly bright spots in the report, economic growth was slower than expected to close out 2016.”

However, Gudell did explain there were bright spots in the report for housing.

She explained that the increase was direction related to new home sales, a trend that did not continue through the end of the year.

“Residential investment went from a drag on the economy in prior quarters to a big boost in Q4, largely because of strong new home sales in October and November,” Gudell said. “But as we saw earlier this week, new home sales did not continue this momentum in December, and it will be important to see how this data changes as more accurate data is incorporated and further estimates of growth are published.”

And Gudell isn’t the only expert that’s optimistic about the increased spending in residential construction.

“On the positive side, consumers did their part with a near 3% growth in spending and residential construction and modeling spending rose by a solid 10%,” said Lawrence Yun, National Association of Realtors chief economist. “Business spending, after being stuck near zero for a while, kicked higher by 4%.”

In fact, despite the slowdown, Yun remains optimistic about the future of the economy.

“Looking ahead, as long as the real estate sector continues to expand, the economy should avoid a recession,” he said. “Should the animal spirit revive in the business community, a stronger 3% GDP growth should be attainable.”

The mortgage business

There’s about to be a new player in the mortgage space, one that boasts it can be a true digital “one-stop shop” for homebuyers, taking them all the way from finding a real estate agent to finding a house and getting a mortgage.

And while others claim they can do the same thing, this one brings a well-known name and built-in digital experience.

That’s right; Redfin is getting into the mortgage lending business.

The company announced this week that it is launching Redfin Mortgage, adding a mortgage-lending operation into Redfin’s existing digital-focused real estate brokerage and title businesses.

The company says its “ultimate goal” is to have is an “entirely digital process, with better service, a faster closing and lower fees.”

According to Redfin, the company will start originating loans in the first half of 2017 in a select number of markets.

Initially, Redfin Mortgage will operate only in Texas, in the Austin, Dallas, Houston and San Antonio markets.

“Redfin Mortgage will put the customer first through a combination of technology and personal service,” said Redfin CEO Glenn Kelman. “This approach to mortgage is the same that has made us successful serving more than 75,000 customers buying and selling homes.”

Kelman also provided some details on how the company’s new mortgage business will work.

“We’ll meet customers through digital channels to lower customer acquisition costs,” Kelman said.

“We’ll hire our own mortgage advisers with incentives that reward service, not just sales, so customers get advice they can trust,” he continued. “We’ll track every aspect of the closing in a single system used by mortgage advisers, real estate agents, title experts and the customer so everyone works together on an on-time closing.”

In its announcement, Redfin said that it is hiring Jason Bateman, formerly the executive vice president of mortgage operations at BBVA Compass, to lead its mortgage operation.

Bateman, who brings more than 15 years of experience to the position, will run Redfin’s new mortgage business out of a new office in Dallas. Redfin’s software engineers in Seattle will also assist in the building and running of the digital portion of the mortgage business.

Bateman said that the abilty to have all aspects of the home-buying operation under one roof will make it much easier for all parties involved.

Drop in home sales is business as usual

December’s new home sales came in a full 10% lower than November, however, experts aren’t worried.

One expert who served as the CEO for Fannie Mae for more than 20 years explained that it’s not unusual to see volatility in winter months.

“Home sales are often volatile in the winter months, as weather matters a lot, and December’s decline is probably mostly a result of this volatility rather than a drop in the underlying fundamentals for housing demand, despite the rise in mortgage rates,” Nationwide Chief Economist David Berson said.

As another expert puts it, taking the long view is a more accurate picture of where the market is.

“New home sales is a notoriously volatile number, so don’t read too much into it,” Brent Nyitray, iServe Residential Lending director of capital markets, said in an email to clients. “The three-month moving average has been pretty steady for the past six months.”

In fact, many experts were more focused on the year as a whole, which showed a 12% increase in new home sales over 2015.

“New home sales in 2016 were the best in nine years, reflecting a combination of solid demand from homebuyers and new homebuilding that has reached post-recession highs,” Trulia Chief Economist Ralph McLaughlin said.

OwnAmerica Founder and CEO Greg Rand explained that month-over-month sales are irrelevant, and that what really matters is the annual comparisons.

Rand explained in an interview with HousingWire that the 12% increase is a positive sign for the industry. “That’s of course what I see in the field, and I think it’s really good news.”

What about the year ahead? Experts explain all signs point to another year of increases.

“We expect 2017 to bring both headwinds and tailwinds for new home sales,” McLaughlin said. “Homebuyers are facing headwinds from higher mortgage rates and uncertainty about tax policy, but low existing inventory, near full employment, and rising wages are tailwinds that will continue to push new home sales higher in the year ahead.”