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By Joseph E. Seagle, Esq.● Jul 22, 2022 Smart Brevity® count: 3 mins... 852 words

Good 😎 day to you! I’ll be on a 🌅 staycation next week. One of the perks of living in a world-class tourist destination is that you’re only a short drive away from a fabulous resort. What we’re seeing: In addition to a lot of cash closings, subject-to closings, and properties in foreclosure, we’re seeing an uptick in buyers with cold feet, canceling contracts early in the closing process. Also, it’s common for properties to not appraise for the sales price, and borrowers are finding it harder to qualify for loans at higher interest rates. In addition to adjustable rate mortgages, we’re also seeing a lot more second mortgages, grants, and downpayment assistance loans coupled with first mortgage loans.

1. Big thing: Existing home sales fall for 5th straight month NAR reported on Wednesday that existing home sales fell another 5.4% between May and June to 5.12 million. They were expecting 5.36 million sales. The housing market reflects the effects of higher mortgage interest rates and unemployment numbers. Typically June is a hot month for real estate sales. This is the lowest number of sales since June 2020 when COVID-19 lockdowns were still in effect in most of the country, and it’s 14.2% lower than the same time last year. The flip-side: Housing supply increased from 2.6 months to 3 months, creeping up toward the 6-month supply that indicates that housing supply and demand are “balanced.” But a 4-month supply is considered to be “normal.” So supply is still not sufficient for demand, preventing prices from plummeting.  By the numbers: Cash closings were 25% of all transactions (and reflected in the types of closings we’re seeing). Mortgage demand has fallen to a 22-year low. Homes sold to first-time homebuyers hit 30%, up from 27% the month before (again, same as we’re seeing).  New housing starts dropped 2% from May to June, its lowest level since September 2021, also missing estimates.  May numbers were revised for the better. Housing starts dropped only 11.9% instead of the 14.4% reported last month.  Meanwhile, apartment starts rose by 15% (!) and the median existing-home price increased 13.4% since last year.  The bottom line: We still need more housing. Rents are holding steady or rising as tenants struggle to buy, so it’s no surprise that multifamily construction is booming. Meanwhile, interest rate increases are hindering builders and buyers alike but making no dent in median price increases. The trick for the Fed: cool it, but don’t freeze it.

2. Foreclosure lawyers getting busy Foreclosure starts increased 219% in the first six months of this year with the highest increases in Illinois, New Jersey and Ohio. This sounds worse than it is, reflecting numbers that are still 1% lower than they were prior to the pandemic.  Pandemic-era moratoriums are being lifted, so we’re seeing a return to normal rates of foreclosure. Foreclosure law firms have been on the sidelines, with files queued in their databases as mortgage servicers, being pressured by regulators, tried to work out defaults with borrowers.  Now, as the restraints are lifted, they can start the foreclosure process in full.  Yes, but: Overall foreclosure activity is still below historic averages. We’re expected to be back to normal levels in early 2023. What we're seeing: Investors who focus on foreclosures and short sales are starting to burn up our phones and inboxes with questions about potential transactions. Real Estate Wenston DeSue is a realtor, organizational consultant, design, construct, build expert and developmental networker.  Real estate is the business of exchange and affects every person on the planet.  Real estate on all levels represents resources, access and ultimately, power.  Knowledge is power…