All-cash home purchases soar amid high rates

Plus: Upper East developer found guilty of mortgage fraud

April 10, 2024

Good morning. This is Mortgage Nuggets, where we sort through mortgage news like it's a clearance sale – only the best bargains for your brain.

Today’s newsletter is 777 words, a 3-minute read.

Disclaimer: Average mortgage rates as of Apr 09, 2024. © MND's Daily Rate Index.

1. Upper East developer found guilty of mortgage fraud

Real estate developer Penny Bradley was convicted by a New York jury of forging signatures on loan documents and stealing money from investors that was supposed to go toward the restoration of an Upper East Side townhouse.

Manhattan D.A. Alvin Bragg alleged Bradley used the forged signatures to obtain a $11.5 million loan for a 7,400 square-foot townhouse at 46 East 82nd Street. The D.A. also alleged she stole about $500,000 from an investor on a second townhouse renovation.

“Penny Bradley not only stole more than $750,000 from investors, she forged their signatures to obtain an $11.5 million loan in an attempt to cover up the theft,” said District Attorney Bragg in a statement.

2. All-cash home purchases soar amid high rates

The surge in mortgage rates over the past two years has coincided with a notable trend in the real estate market: All-cash buyers are becoming a larger share of home sales.

Data from Parcl Labs, a residential real estate analytics firm, reveals that all-cash buyers made up 33.5% of home sales in Q4 2023, up from 23.8% in Q4 2021. This uptick occurred even as the overall home buying rate has dropped to its lowest since 1995, highlighting the growing influence of all-cash transactions.

Percentage of home purchases made in 'all cash' by quarter. Aggregate data for the 100 largest U.S. housing markets tracked by Parcl Labs

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3. Catch up quick

🏘️ Some homeowners can't bear to let go of low mortgage rates, even when they move. (Investopedia)

💼 Investors pushing for fatter yields on mortgage-backed securities may undercut easing mortgage rates. (The Roanoke Times)

😬 A survey found that 50% of Gen Z teens have taken financial advice from social media influencers, per fintech firm Greenlight. (Survey)

😂 Won (or lost) your March Madness bets? Don’t forget to report them on your taxes. (CNN)

4. Fannie Mae transfers $709m of mortgage credit risk to private insurers and reinsurers

Fannie Mae has executed two new Credit Insurance Risk Transfer (CIRT) transactions transferring $709 million of mortgage credit risk to private insurers and reinsurers.

Rob Schaefer, Vice President, Capital Markets, Fannie Mae, commented, “We appreciate the support of the 25 insurers and reinsurers that committed to write coverage on these deals.”

The two transactions are CIRT 2024-L2 and CIRT 2024-H1. The covered loan pool for CIRT 2024-L2 consisting of approximately 30,000 single-family mortgage loans with an outstanding unpaid principal balance (UPB) of approximately $9.9 billion.

5. Report: Metropolitan areas most at risk for pricing corrections

Researchers from Florida Atlantic University and Florida International University highlight a growing risk of housing price corrections in the Sun Belt, with 12 out of the 15 most overpriced markets located in this region.

The analysis points to Atlanta leading the overpriced list at 41.72%, followed by Detroit, 40.20 percent; Cape Coral, 40.18 percent; Tampa, 38.38 percent; Palm Bay, 37.90 percent; Las Vegas, 37.78 percent; Knoxville, Tennessee, 37.72 percent; Lakeland, 36.51 percent; Orlando, 36.19 percent; Charlotte, North Carolina, 35.86 percent.

“Home prices have become so out of line from their long-term trends that the risk of correction is rising,” said Ken H. Johnson, Ph.D., real estate economist with FAU’s College of Business. “While it’s unlikely prices will plummet dramatically, price performance could go flat for the future, or homes prices could see a slight decline even.”

To compare housing premiums in any metropolitan area, click here.

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