A Mortgage Market Update Plus A New Bipartisan Plan For Affordable Housing

Another Jam Packed Market Update!!

Mortgage rates climbed last week after oil moved up and inflation data hit the bond market, and we talk through why that matters for anyone trying to buy or lock. We also dig into a bipartisan housing bill that focuses on adding supply, from office-to-condo conversions to updates for FHA and USDA rural housing loans. 

• Rate increase driven by oil prices and inflation numbers hitting the 10-year Treasury 
• Expectation for rates to settle if inflation pressure eases 
• 21st Century ROAD to Housing Act moving to the House floor 
• Converting vacant office buildings into dense housing like condos 
• Modernizing FHA and USDA rural housing loans with updated limits and guidelines 
• Rural eligibility based on outdated population metrics and what could change 
• Restricting large companies from owning too many single family homes 

Call or text Nikki at 952-484-1584 to talk more about all the opportunity headed our way! Or email: Nikki@KevnikGroup.com. Find her on socials at MortgagesFromMNToAZ. 

Find me in my free Community for Women Real Estate agent:
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Transcript

SPEAKER_01 0:36

All right. It is a Monday, May 18th. And Nikki, what do you got for us this week?

Why Mortgage Rates Jumped

Bipartisan Housing Bill Hits House

FHA And USDA Loan Changes

Investors And Single Family Homes

SPEAKER_00 0:41

Morning, everyone. So last week we saw an increase in mortgage interest rates. I'm sure you heard that on the news across the board. That is actually, in fact, true. We did see an increase last week due to the oil prices increasing, et cetera, and the inflation numbers coming out, which were pretty devastating to the 10-year Treasury bond. Because of that, we're seeing interest rates higher sixes again, with anticipation that they will be coming back down here, you know, in the next week or so. With the oil prices still increased, it's kind of preventing them from coming down as much as we'd like. However, it should settle down from the inflation numbers here pretty quickly. I also want to talk about a bill that is going on to the House floor at the end of this week. It was a bipartisan bill called the 21st Century Road to Housing Act. Road stands for Renewing Opportunity in the American Dream. And it's a bipartisan bill that was passed in the Senate already, and it's going to the housing floor this week. And what it really concentrates on is ideas and opportunities to create more affordable housing. We had talked about this a couple months ago when it went to the Senate floor, and it was really specifically more in the specifics, it was talking about building homes and new builder opportunities and grants and things of that nature that can come in and help make that home less expensive. But one of the things I thought that was really interesting that they added to this bill that will be interesting to see is they're really starting to allow, they really want to allow abandoned or unfilled office spaces. So unfilled office buildings for people that, for buildings that have like either closed during COVID or remain vacant, that they want to be able to convert those to dense housing. So in other words, convert those office spaces to condos, which is a huge opportunity if you really think about it and you just drive around and see all the abandoned office spaces. It could be a really good opportunity for states, local governments, things like that to get federal funds to push those to the builders to be able to convert some of these office spaces into high density housing, especially in areas where there is a lot of office vacancy and the need for housing is really high. So I thought that was really kind of interesting. They're also modernizing what they're calling modernizing the HUD and USDA loans. So in other words, the FHA and rural housing loans, they're going to be doing what they call modernizing them, which basically means that they are going to be increasing the allowable limits for lending on those and kind of being a little bit more flexible in their guidelines as far as who can qualify and what they consider a rural house versus what they have now. Right now, it's just based on geography and population density to determine whether or not that home is rural. But a lot of people feel that those numbers that they're using as far from a population standpoint are really old, archaic numbers. So for example, if you are familiar with Minnesota, the town of Bell Plain would be a good example as to what could change with that rural housing. Bell Plain is out in a rural area, but does not meet the population requirements set forth by rural housing. Whereas with this new bill, that could be one particular place where it is still considered rural, but it meets, you know, the new population requirements. So we'll kind of keep an eye on that as well. Also, we talked about this already, restricting large companies from owning more than a certain number of single family homes. So they aren't going to be necessarily restricting them from owning condos, but restricting them from owning single family homes and then giving them a plan to where they have to sell off the homes that they do own by a certain time frame, too. So we're talking somewhere between two to five years. They'll have to sell off the portion of those homes to help flood the market with more available homes for buyers at what we consider affordable prices or reasonable prices because they're going to have to dump all those homes pretty quickly. So those are just some cool changes that are actually happening to help increase affordable housing. For me personally, I'm really happy to see that there's actual like action that is going to create more homes and not just saying, oh, let's temporarily lower interest rates or let's temporarily lower the cost of mortgage insurance or all these other things that are going to help. When in reality, if there's no homes, there's no place for people to buy. So while there still are implemented in place breaks for first-time home buyers under certain income limits, things of that nature, it's this just adds on to the availability of homes and hopefully will help drive the cost or keep the cost where it's at. Not to say that your home won't increase in equity or appreciate.

SPEAKER_01 5:24

Yeah. And you said it will go to the floor the end of this. Oh, the floor this week. Yeah.

SPEAKER_00 5:29

And it's actually gaining some media attention, which is really interesting. MBS, which is one of the, you know, I want to say one of the like big wigs into the mortgage industry, and who has an organization that comments on different legislation that's happening throughout the the country. They actually put out a statement yesterday, I believe it was, or no, what's today, Monday. So put out a statement on Friday stating their support for the bill and kind of what they're what they're looking forward to. So it would be some huge housing and changes coming in.

SPEAKER_01 6:00

That's yeah. Rule. Yeah, that and then the conversion of these, because they're everywhere, at least in the Minneapolis and suburbs around there, it's a lot. So I can see where that would be so helpful. And then as far as the corporations that own these dozens or hundreds of single family homes that they would have to sell in, you know, the next two to five years. Are there any areas that you see or know more of that to be concentrated in?

SPEAKER_00 6:29

Or is it Phoenix for sure? 100%. BlackRock owns a major portion of homes in Phoenix. The reason for that is because, you know, obviously the Arizona is a vacation destination. So them owning homes and being able to VRBO or them owning homes and being able to turn them in the real estate market has been um crucial to them. But yeah, um, I actually had one of a friend of mine actually worked for a company similar to BlackRock where it was his job to go around to different areas of the country and figure out where would be good pockets for them to purchase, you know, multiple homes, et cetera. So it's a really interesting, interesting job. But the other thing is, is what we have to understand is yes, although companies like that BlackRock own a lot of homes, we're talking less than 1% of the homes across the nation. So we're not, it's not like they're taking over, but it is like, man, we could use 1% of homes right now to be flooded into the market. So it's like it's kind of that balance between the two.

SPEAKER_01 7:22

Yeah, I'm glad you mentioned that because I know that sometimes it can be perceived differently, whereas big corporations are just coming in and taking up 30% or fit, you know, all that stuff. Overall, I mean they could be concentrated areas, but overall, uh, it's 1%, which yeah, that brought me to my next question. So thank you for that. That's good to put into perspective.

Phoenix TSMC Halo Vista Update

SPEAKER_00 7:45

Absolutely, yeah, absolutely put it into perspective. I also wanted to mention if you are a realtor in the Phoenix area, I will be doing a presentation today on TSMC, which is a semiconductor facility that they have been building in Phoenix in North Phoenix. They're on Fab number two, and they just announced a housing community called Halo Vista that is going to be supporting the TSMC workers. So I'm doing a presentation today on that in North Phoenix. If you go on my TikTok, you can see the first posting for that first video, and then I will be taking video of the presentation and then breaking it up and putting it, posting it on TikTok, and it'll be shareable. And obviously, you can stitch it and share it and be able to use that social media content for your own.

SPEAKER_01 8:27

Fantastic. And where do they find you?

SPEAKER_00 8:29

You can find me on TikTok at mortgage from MN to AZ and then also on Facebook and Instagram as well.

SPEAKER_01 8:36

Wonderful. And women out there, real estate agents, if you want to have a really good community free that has these Monday Market Update calls, or Survive to Thrive call and ebook, all things are free resources. You can check me out on the school community S-K-O-O-L, and it's R E Business Builder, real estate business builder. Love to see you in there. All right. Well, good luck today with your event. We'll look forward to hearing more about the bill and your event and everything next week. Until next time, go sell something.