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US Mortgage Rates Drop Below 7% for the first time in over a month

The average 30-year fixed mortgage rate has fallen below 7% for the first time since early April, hitting 6.94% from 7.02% a week prior, according to Freddie Mac. This marks the third consecutive week of declining rates, which have hovered around 7% for over a month. A separate measure tracking daily rate movement showed fluctuations between 7% and 7.20% over the last seven days, settling at 7.17% on Thursday, according to Mortgage News Daily. Despite the spring homebuying season typically being the most active time for the housing market, this year has seen a slowdown. Elevated mortgage rates, high home prices, and low inventory continue to challenge homebuyers. Sales of previously owned homes slid in April as supply remained scarce. “It’s very hard to have incredible volume when the rates are high, and the inventory is relatively low to historic measures,” Corey Burr, founder of The Burr Group, a real estate agency in Washington D.C., told Yahoo Finance. Homebuyers Remain on Sidelines Despite pent-up demand for homes, buyers are hesitant to enter the market even after this week’s rate dip. According to the Mortgage Bankers Association (MBA), the volume of purchase mortgage applications fell by 1% this week from last. Mortgage applications are 11% lower than the same week a year ago. However, refinance activity jumped 7% weekly and 21% from a year ago. “Purchase activity continues to lag despite this recent decline in rates … as potential buyers still face limited for-sale inventory and high list prices,” said Joel Kan, MBA’s deputy chief economist. At the current average rate, a homebuyer would pay almost $1,600 monthly on a $300,000 home with a 20% down payment, according to the Yahoo Finance mortgage calculator. Existing Home Sales Slump Existing home sales retreated 1.9% month-over-month in April, according to the National Association of Realtors (NAR), during what’s normally the busiest season. The total housing inventory at the end of April was 1.21 million units, which despite increasing by 9% monthly and 16% annually, stands at just 3.5 months of supply. A six-month supply is considered a balanced market. By comparison, pre-COVID months had around 1.9 million homes for sale. “We are in a new terrain, new territory as to how the lock-in effect or impact will restrain home sales,” said Lawrence Yun, chief economist at the NAR. The average rate on a 30-year mortgage dropped to 6.74% from 6.88% last week, according to Freddie Mac. A year ago, the rate averaged 6.60%. Borrowing costs on 15-year fixed-rate mortgages also fell this week, with the average rate dropping to 6.16% from 6.22% last week. A year ago, it averaged 5.90%, Freddie Mac reported. Future Rate Expectations “Despite the recent dip, mortgage rates remain high as the market contends with the pressure of sticky inflation,” said Sam Khater, Freddie Mac’s chief economist. “In this environment, there is a good possibility that rates will stay higher for a longer period of time.” The Fed has signaled that it will likely cut its key interest rate this year, once it sees more evidence that inflation is falling sustainably back to its 2% target. The Fed’s main interest rate is at its highest level since 2001. Economists expect that mortgage rates will ease further this year, though most forecasts have the average rate on a 30-year mortgage going no lower than 6% by the end of the year. However, this is unlikely to happen until the Fed begins cutting its short-term interest rate, which Wall Street largely bets won’t happen until June, according to data from CME Group. Despite the choppy trajectory in mortgage rates this year, the average rate on a 30-year home loan is still down from the 23-year high of 7.79% reached in late October. “Rates are much lower than they were last fall when they hovered near 8%,” said Lisa Sturtevant, chief economist at Bright MLS. “Any downward trend in rates later this spring will bring more buyers and sellers into the market.” The decline in rates since their peak last fall has helped lower monthly mortgage payments, providing more financial breathing room for homebuyers facing rising prices and a shortage of homes for sale. Lower rates helped lift sales of previously occupied U.S. homes by 3.1% in January compared to the previous month, marking the strongest sales pace since August. However, the average rate on a 30-year mortgage remains well above where it was just two years ago at 4.16%. This large gap between rates now and then has limited the number of previously occupied homes on the market by discouraging homeowners who locked in rock-bottom rates from selling. If you would liek more information on our US properties please email invest@globalinvestmentsincorporated.com

$10 million HUD boost for popular Cleveland Neighbourhood

The ongoing Woodhill Homes development project in the Buckeye-Woodhill neighbourhood, a six-phase, six-year $250 million development project by Cuyahoga Metropolitan Housing Authority (CMHA), the City of Cleveland, and Boston-based The Community Builders (TCB)—just received a post-COVID boost through a $10 million HUD Choice Neighborhood Supplemental Funding Grant. Earlier this month, HUD awarded additional funds to 16 current Choice Neighborhoods Implementation grantees throughout the country, including Buckeye-Woodhill. The additional funds are meant to address the pandemic-related disruptions and will be used on current construction projects for new, high-quality housing. “It allows us to be able to continue to move the project forward,” says CMHA CEO Jeffrey K. Patterson. “The pandemic created a lot of additional costs to the project. This allows us to have the opportunity to try to close some of those gaps and be able to keep things moving forward. We’re really excited about HUD’s efforts to try to support housing authorities with this additional funding.” Patterson says the additional costs were “across the board,” from labor to materials. “I think what’s good is that HUD said, ‘we understand that some of these things have changed. Here are some resources to keep those projects moving forward.’ I think that that is just great.” The Woodhill Homes Choice Transformation Plan first received a $350,000 Choice Neighbourhood Planning Grant in March 2018; then CMHA was awarded a $35 million HUD Choice Neighborhoods Implementation Grant to execute the transformation plan. In May 2021; and Marous Brothers Construction broke ground on the first phase last July at East 93rd Street and Buckeye Road. The $46.4 million phase one of the project will create 120 apartments, 42 one-bedroom, 62 two-bedroom, and 16 three-bedroom units, with 90 units reserved for current Woodhill residents, 18 units for residents earning under 60% Area Median Income (AMI), and 12 units for residents earning under 80% AMI. Other features include a fitness centre, a community room, outdoor picnic area, and playground for a total of 4,520 square feet of community space. Jeff Beam, regional vice president of The Community Builders, which works with the mission to build and sustain strong communities where people can thrive, says he is committed to a stronger Woodhill neighbourhood, where people have accessible and affordable housing options. “We have one-third of the units under construction, and another phase in the planning stages,” Beam says. “Relocation is always challenging, but we’ve developed good relationships. There’s been a tremendous amount of partnership collaboration and trust building.” Additionally, Beam stresses that the Woodhill project is a Buckeye-Woodhill community project. “It’s not our vision, it’s the community’s vision,” he says. “We’re just serving in the technical capacity to get the project done.” Patterson agrees that the project is moving along well, and that phase one should be completed by the first quarter of 2024. He says phase two at East 112th Street and Woodland Avenue broke ground in January. “You’ll begin to see the fences put up around the construction site and they actually are starting to be able to turn some dirt and get some things going on out there,” he says. “So, those are exciting things and [we] are going to create some really good housing opportunities for the folks in that Buckeye-Woodland community, as well as the current residents at Woodhill who get the first opportunity to return to the site.” The original Woodhill Homes was built in 1939 and was one of the first public housing developments in Cleveland, and is one of the oldest in the country. Both Beam and Patterson credit the work of Cleveland City Council president Blaine A. Griffin in his work to make the Woodhill Homes project a reality. Griffin adds that this project can be a positive catalytic change for Buckeye-Woodhill. “We have the potential to change the trajectory of the neighbourhood in a big way,” he says. We’re getting rid of one of the islands of poverty and attracting all these working families and middle-income families to the area. We’re working to stabilise and support the people who are here and attract the middle class with families back to the neighbourhood.” With the increase of new build homes in the area, this can bring economic growth and job opportunities to a community. Demand for properties grow and consequently produces higher property values which is good news for investors. If you would like more information or wish for a call regarding the latest properties Global Investments can offer in this location then please email us today at : invest@globalinvestmentsincorporated.

America’s Housing Crisis: Insights from NLIHC’s Latest Report

The National Low Income Housing Coalition (NLIHC) has just released its annual report, “The Gap: A Shortage of Affordable Homes,” revealing a dire situation regarding the availability of affordable rental housing in the United States. Every year, the NLIHC’s report delves into the accessibility of affordable rental homes for extremely low-income families and individuals nationwide, as well as in each state and metropolitan area. This year’s findings paint a troubling picture: a staggering shortage of 7.3 million affordable and available rental homes confronts the nation’s lowest-income renters. The report highlights that this shortage forces nearly three-quarters of renters with extremely low incomes into severe cost burdens, wherein they spend more than half of their income on rent. Shockingly, these severely cost-burdened renters make up almost 70% of all renters facing such financial strain across the U.S. Diane Yentel, President and CEO of NLIHC, underscores the persistent housing instability faced by millions of the most vulnerable households, despite economic stability and rent trends. Yentel stresses that while effective solutions exist to combat housing insecurity and homelessness, the crucial missing element is political will. She calls on Congress to urgently enact robust legislation to ensure universal rental assistance, foster the construction and preservation of affordable homes, implement eviction prevention measures, and bolster renter protections. The report’s data reveals that the shortage is widespread, affecting every state and the District of Columbia. Even states with fewer shortages still struggle significantly. For example, Nevada, Arizona, California, Alaska, Florida, and Texas—all among the hardest-hit states—have fewer than three affordable rental homes available for every 10 extremely low-income renters. Nevada, in particular, has fewer than two such homes available for every 10 renters. Even states with comparatively fewer shortages have fewer than six rental homes affordable and available for every 10 extremely low-income renters. The report’s conclusion is stark: the private market fails to adequately serve renters with extremely low incomes, and current funding for housing assistance is grossly inadequate. It emphasizes the urgent need for sustained investments in deeply income-targeted programs like the national Housing Trust Fund, Housing Choice Vouchers, and public housing. As the nation faces this systemic housing crisis, the NLIHC’s report serves as a wake-up call. It urges policymakers to prioritize affordable housing initiatives and take bold action to ensure housing stability for all Americans, especially those with the lowest incomes. In light of these findings, it is imperative for Congress and stakeholders at all levels to respond proactively and decisively to address America’s housing crisis. If you would like more information on our US rental properties please email invest@globalinvestmentsincorporated.com

UK Social Housing Shortage

The current state of social housing in the UK is facing a severe shortage, as highlighted by Shelter, an organization dedicated to addressing homelessness and inadequate housing. Despite the recent enactment of the Social Housing (Regulation) Act, Shelter emphasizes the urgent need for additional government action. While this legislation represents progress in safeguarding tenants’ rights, it alone cannot address the housing crisis. Shelter underscores the necessity for increased investment in social housing to alleviate the plight of over a million households languishing on waiting lists and the staggering 100,000 households currently homeless. The organization provides a comprehensive overview of the issue, citing alarming statistics and outlining proposed solutions. The shortage of social housing is glaring, with demand far outstripping supply. Over one million households are awaiting social homes, while the previous year witnessed the sale or demolition of 29,000 social homes, with less than 7,000 new ones constructed. This trend has led to a significant decline in social housing availability over the past four decades, with 1.4 million fewer households accommodated compared to 1980. Consequently, many individuals and families are forced into the private rented sector, exacerbating housing affordability issues. The situation is exacerbated by a decline in social housebuilding, reaching its lowest levels in decades, and a concurrent surge in private house prices. The escalating housing emergency underscores the need for affordable housing options. However, social housing delivery has faltered since the 1980s, resulting in a significant shortfall. While the government mandates a portion of new builds to be designated as Affordable Housing (AH), this approach falls short in addressing the dire need for social housing. The definition of ‘affordable housing’ encompasses various forms, including social rented housing, affordable rent, subsidized homeownership, starter homes, discounted market sale housing, and shared ownership. Despite successive governments setting ambitious targets for new home construction, these goals consistently go unmet, leaving the UK facing a shortfall of approximately 1.5 million homes. Moreover, the reliance on developer contributions to deliver affordable homes has proven insufficient, with social housing levels dwindling. The government’s strategy of entrusting social housing delivery to profit-driven developers has failed to yield adequate results, further exacerbating the housing deficit. Because of inadequate social housing provision, the number of individuals residing in overcrowded homes and temporary accommodations has surged. Despite a temporary flattening of waiting lists for social housing since 2012, this trend is attributed to councils purging waiting lists due to the scarcity of available homes. Shelter advocates for the construction of at least 90,000 social homes annually to address the housing crisis and ensure everyone has access to safe and secure housing. Meanwhile, entities like Global Investments offer alternative solutions by providing investors with opportunities to invest in homes rented to housing associations, catering to individuals unable to afford homeownership or market rents. In conclusion, addressing the social housing shortage in the UK requires concerted efforts from both the government and private sector to increase investment, promote construction, and ensure affordable housing options for all citizens. Here at Global Investments, we see the need for Social Housing that’s why we work with our developers and investors to provide investment opportunities that in turn fill a very small part of the gap required. Contact our social housing team if your interested in investing, receiving 9% pa net returns and want to help this important sector.