Should Fannie and Freddie Leave Conservatorship?

Recently much has been written about the fate of the Federal Housing Finance Agency (FHFA) and its role as conservator over Fannie Mae and Freddie Mac. Since 2009 the FHFA has been both Fannie and Freddie’s regulator and has overseen the direction of both organizations. During that time, the FHFA has ensured that the primary function of both Fannie and Freddie is not profit maximation, but instead facilitation of the secondary mortgage market. The FHFA has set portfolio retention limits, set volume caps for lenders and determined guarantee fees, among other things. Under the oversight of the FHFA, both government-sponsored entities (GSE’s) repaid their debts and once again became profitable. Additionally, both organizations have lowered their respective risk portfolios. In light of a 2021 Supreme Court decision in Collins v. Yellen and the advent of a second Trump presidency, there is some renewed rhetoric around the two GSE’s leaving conservatorship and the oversight of the FHFA.

The Party City Liquidation: Lessons from the Retail Market

2024 ended with surprising news—Party City filed for bankruptcy for the second time in under 2 years. This time, however, it was liquidating. On December 21, 2024, Party City filed for Chapter 11 bankruptcy, looking to liquidate its assets. This happened after the company sent home all of its employees nationwide on December 10, 2024 and closed its corporate headquarters in New Jersey to everyone but executives on December 11, 2024. The resultant liquidation plan seeks to close all Party City locations by this February.

Onto 2025, What Have We Learned?

2025 is in full swing and despite a busy holiday season and our chief editor undergoing a very bad case of the flu, The Real Estate Think Tank continues in full swing as it embraces the beginning of the New Year. With all that said, 2024 has been another year of improvement and growth here at TRET and this time of the year causes us to reflect on some of its highlights.

TRET the Podcast: Market Report 12/19/24

30 Days of TRET content continues with our first ever standalone market report.

TRET Market Report 12/19/24

How Much Knowledge and Skills Do You Need to Prosper In Real Estate

Real Estate is often maligned for having a high barrier to entry. This complaint typically refers to the relatively larger amount of capital that it takes to traditionally purchase a property when compared to other types of investments. It is undeniable that a fifteen to twenty-five percent downpayment can be a substantial amount of money. Especially when the median house price in the United State of America is $386,000, according to Redfin.com. Even considering the 3.5% downpayment requirement of an FHA mortgage, which cannot be used to purchase investment property, it is clearly much more costly to purchase a residential property than it is to purchase stock, bonds, or some other form of investment. The numbers are even greater for commercial property.

Why Can't Anyone Afford A House?

Another Summer has given way to the crisp winds of Autumn. As the cooler temperatures and falling leaves begin to turn ones mind toward the importance of having a warm place to stay in the upcoming months, it would be prudent to look at how housing affordability has become a true concern for most people in the United States. In a very informative, yet eye-opening article, EconoFact discusses how the vast majority of household are spending well over 30% of the their income on housing. This figure includes both homeowners and renters.

The recently decline in housing unaffordability is concerning for a number of reasons. One of the primary concerns around this current economic trend is the financial stress that higher housing costs place on households. Considering further the inflationary pressures of the past five years and it appears that most American households may be squeezed into an impossible position.

What Will Each of the Candidates Do For the Real Estate Market If They Are Elected President?

The 2024 presidential election is coming up in four months and on July 21, 2024, President Joe Biden formally announced that he was withdrawing from the presidential race. This left the Democratic party with a decision which was ultimately made July 30^th, when they name Vice President Kamala Harris as their endorsed candidate for president. With both candidates for president unequivocally named, let’s look at what both Donald Trump and Kamala Harris might do to or for the real estate market if elected as president.

The Origin of the 6% Commission Standard

The recent National Association of Realtors (NAR) Settlement is in the process of changing how many real estate brokers and salespeople conduct business. The terms of the settlement all but abolish cooperative compensation amongst brokers. Although this may not be a substantial change for markets in which every buyer offers through a Buyer's Broker and every seller is automatically represented by a Seller’s Broker, the effects will be greatly felt in other markets. Some of the larger real estate markets have developed complex systems of agency that will now be simplified by one premise--in a residential real estate transaction, a buyer will now have to pay a Buyer’s Broker and seller will have to pay a Seller’s Broker.

Shrinkflation In the Real Estate Market

Inflation has been a reality for the past couple of years. As a result, many companies have decided to respond to the rise in prices and the weakening of the dollar by shrinking the size of their products without reducing their price. This practice has been given the name “Shrinkflation,” which is  defined as “the practice of reducing a product's amount or volume per unit while continuing to offer it at the same price.” Shrinkflation started to become apparent during the pandemic, but was so craftily employed that many doubted that it was even happening. Now, however, it is well acknowledged that just about everything is smaller, but more expensive. Shrinkflation has so integrated itself in today's reality that it has made its way into the real estate market.

The Mortgage Solution and the Refinance Trap: Why the Lender Always Wins with a Mortgage

Mortgage rates have been news for some time now. Coverage about mortgages has recently turned toward news of a potential rate decrease. This potential drop is such a relief to everyone in the real estate market that even President Joe Biden mentioned it in his most recent State of the Union address. Although the reference was a political move and this blog is not political, the President's attempts to use the activity in the real estate market to further his agenda is yet another reminder of the influence that mortgage rates hold on this country.

2023 Recap (No Clever Title This Time)

Yet another year has come and gone for TRET and it’s time for our annual wrap up. Let’s start with this blog. This year started for us with a focus on individual wealth generation through real estate. This noble goal dominated the blog for the first couple of months of the year and was continued in an expert fashion by this year’s guest writer—Sharon Wagner. All of our residential real estate articles have had a wealth generation theme and we will continue to honor this commitment to wealth generation going forward.

There’s No Place Like Home For the Holidays: A Look At The Multifamily Market

Thanksgiving has passed and the holiday season has officially begun, so it is only natural that TRET finishes its real estate asset class series with a look at home—multifamily properties. Also, for those who consider the holidays a time to get away, we’ll also take a look at the state of hospitality properties, as well.

Industrial Real Estate: A Normal Market for a Somewhat Normal Time

Recently coming off the effects of nearly two years of rising interest rates by the Federal Reserve, the real estate market has been in a state of constant change for the past 18 months. As this blog has extensively discussed, real estate is very dependent on interest rates, as they influence property loans, cap rates and ultimately, property prices. Despite the recent period of adjustment, the economy seem to show signs of normalization, with mortgage rates, consumer loan rates and even treasury rates settling at levels much higher than those of the previous two years. By all indicators, it seems like our economy and we seem headed for a soft landing. No market has internalized the current state of the economy more than the Industrial Real Estate market.

Unlocking Retirement Wealth: A Senior’s Blueprint to House Flipping Success

By Sharon Wagner

Please enjoy this article from guest author, Sharon Wagner. TRET will return next month with another article continuing its series on property types.

Navigating the world of house flipping can be an exciting and profitable journey for seniors who are seeking an active and rewarding retirement. While the venture promises lucrative gains, it also calls for strategic planning, unwavering dedication, and tactical execution.

The following are indispensable guidelines aimed at assisting mature adults in carving out a successful career in the house-flipping arena, while also enjoying a balanced lifestyle. The Real Estate Think Tank explores these crucial facets in detail.

Is the American Office Market Dead?

There was a time in the not too distant past when I considered office properties “the best of all worlds.” They offered the flexibility to create leases that were in between the detailed relationships established by industrial and retail properties and the more straight-forward residential lease. Rental calculations were relatively simple—base rent plus utilities and any tenant improvement allowances. Occasionally, common area improvements or maintenance factored into the equation. The property was typically used from 7 am until 7 pm, so utilities were relatively low and predictable. Wear and tear on the property was much less than any other real estate property class.

The necessity of office space was at one point unquestioned and tenants were readily available. Space considerations were for the most part limited to whether the location was large enough and had enough amenities or services to meet the tenants needs. Leases were easy to enter, easy to renew and easy to understand. For owners, office properties offered many of the benefits of owning a commercial property with fewer of the complexities that come with other property types.

The End of Summer

Stephon Martin

August is coming to a close and although Summer isn’t officially over until September 23^rd, the end of August has an unofficial feel of transition. School will soon have begun for all children in the United States and the country will attempt to push forward out of the shadow of COVID-19. Some areas will forge ahead more successfully than others, but an attempt will be made by all. The beginning of September means that the holiday season is just around the corner. With the impending change of the season, how will the real estate market be affected?

Press ‘Home’ — Selling Properties With Smart Tech

 

Please enjoy this article from guest author Suzie Wilson  of  Happierhome.net

There are many advantages to home automation: ease of use, better accessibility, and let’s face it — there’s something cool about a fireplace that starts up when you clap. What you may not have foreseen, however, are the benefits that technology provides when selling a property.

The Role of Tech

 In almost all areas of life, it’s clear that the pandemic has increased our reliance on tech. This is no less true in the housing market, where the need to actually step inside a property has been somewhat reduced by the use of 3D walkthroughs, video-chat tours, virtual open houses, and Zoom realtor consultations. This is good news for prospective sellers as, in the wake of COVID, housing sales have bounced back to levels unseen since pre-2008. If you are looking to sell your property, physical limitations need not slow you down.

Foreclosures and the Moratorium

Stephon Martin

The Biden administration has extended the COVID-19 moratorium on foreclosures to July 31, 2021. Totally avoiding the policy and ideological discussions that could be had about such a decision, one thing is apparent—the additional month extension will increase the backlog of foreclosure and eviction cases that courts around the country will face once this moratorium has ended. Absent any legislative changes, the implementation of creative government programs mitigating distressed loans or both, foreclosure filings, executed foreclosure judgments and foreclosure-related evictions are all set to see an uptick over the next year.

An increase in residential foreclosures and evictions is certainly bad news for affected homeowners and tenants, who will have to find new living arrangements, undergo costly moves in short timeframes, uproot their lifestyles and, in some instances, face long term financial effects. Increasing foreclosures will also serve as a market correction in the real estate market, which is currently driven by inventory scarcity. Amidst the market change and its social implications, many real estate investors can be left wondering which strategy to employ. The answer is simple—any or all of them.

The End of 2020: Now What?

2020 has been a life-changing year for everyone, literally everyone. From the global pandemic, to the fluctuating economy, not to mention the seismic shift in the perception of "going to work," it is safe to say that the world is different place than it was 12 months ago. Now what?

Every year Bloomberg Business Week puts out its "Bloomberg 50"--a list of 50 individuals that have made their mark during the prior year. Although this year's list contains a number of impressive men and women who were able to quickly mobilize and make moving, positive contributions during this tumultuous year, it is notable that not one member of this list was mentioned for contributions to the real estate market. In fact, there are many executives on the list that are touted for reducing the size and/or the footprint of their companies, which in many instances includes real estate divestment. Furthermore, Blackrock, a private equity that is well know for its real estate investments, has made the list, not for real estate, but for its renegotiation of national debts in South America.

Lesson From the Pandemic For Residential Landlords

The effects of Covid-19 on the residential rental market are apparent—many jurisdictions have enacted rent freezes, landlord/tenant courts have been shut down and moratorium on evictions and foreclosures have been set. Moreover, the accompanying downturn in the economy has left many without the ability to pay rent on time, if at all.

Considered rationally, the need for all of the social safety nets put in place for renters is obvious. The only way to truly survive a global disaster is to band together and implement a series of solutions. Radical measures had to be taken to mitigate the global pandemic. “We’re all in this together,” is not just a motto, it’s a reality. As a society, we are tasked with taking care of our most vulnerable populations, because the repercussions of not doing so are far more expensive than the costs of their protection. In this instance in particular, increased homelessness and/or a wave of relocations due to a rise in home displacement would only serve to exacerbate infection rates around the nation. That said, here are some clear lessons that residential landlords can learn in the wake of this global event.