Co-living startup Bungalow raises $47 million, including investment from Alex Rodriguez

Real estate startup
Bungalow
launched last year, offering a unique solution for finding
affordable housing in some of the nation’s largest and most expensive housing
markets.

At the time, the company launched with $14 million in funding. Now, more than a year later, the company has raised more than three times that much, and one of its new investors is a name that will grab some headlines.

Included among the investors in Bungalow’s $47 million
Series B funding round is A-Rod Corp.,
the investment firm founded and led by former MLB star Alex Rodriguez.

According to Bungalow, A-Rod Corp. acted as a “strategic”
investor in its Series B round along with CAA
Ventures
, the early-stage venture capital arm of top entertainment and
sports agency Creative Arts Agency.

Leading the investment was Founders Fund, led by General Partner Keith Rabois. Founders Fund
previously invested in the company, also taking part in its Series A funding round
last year.

Also participating in the Series B funding round was Coatue, let by partner Matt Mazzeo,
along with the company’s previous investors, including Khosla Ventures, Atomic VC,
Cherubic Ventures, and Wing Ventures.

Bungalow offers co-living, but instead of co-living in an apartment
building, Bungalow renters co-live in a house. The company pairs “early career
professionals who need a home in booming cities” with homeowners who own the
“existing, outdated housing supply” to solve a problem for both.

The company takes older homes and “repurposes and
redecorates” them for what today’s renters want. The company then vets and
matches renters together to serve as housemates in the fully rented-out house.

Last year, the company soft-launched in New York City, the
San Francisco Bay Area, Los Angeles, and Seattle, before expanding to Portland,
Washington, D.C., and San Diego.

Bungalow is also now available in Chicago, Philadelphia, and
Boston.

According to the company, Bungalow has now served more than
3,200 residents and 730 homes in 10 markets.

The company states that it is on track to scale the business
to more than 12,000 residents by the end of 2020 and plans roll out new tech
capabilities as it expands to “three new major metro areas” in 2020.

“We are grateful to all the incredible people — from
residents to homeowners to our business partners — who have believed in our
mission and we’re thrilled to help thousands more residents find great homes
and even better roommates as we grow,” the company said in a blog post
announcing the capital raise.

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BuildFax: New construction, remodeling see increased activity

Last month, a BuildFax report stated that the housing construction slowdown may be easing up. Based on both single-family housing authorizations and remodel activity from September to October, it appears that this forecast held up. 

At the time of the October report, BuildFax’s COO, Jonathan Kanarek, stated, “If housing continues showing the promise of growth, or even a leveling off, this activity has the potential to stimulate the larger economy.”

A month later, the company reports growth. According to the BuildFax’s report released on Monday, single-family housing authorizations increased by 0.24% from September to October 2019. This marked a 2.33%  increase year over year – the first year-over-year bump since September of 2018. 

“Last November, housing activity experienced the first instance of blanket declines since 2011, when the economy was still recovering from the 2008 recession,” said Jonathan Kanarek, managing director of Buildfax. “Almost a year following November’s declines, we’re now seeing blanket increases.”

“In light of the recent upswing in housing activity, it’s likely the 2019 housing slide was a stabilization of a white-hot market,” he said. “This is, of course, further bolstered by a strengthening economy that recently experienced interest rate cuts, steady wage growth, and a reversion in the yield curve.”

The blanket increase Kanarek noted also applies to activity within the existing housing supply. BuildFax refers to existing housing maintenance as “a gauge of consumer confidence.” Since the beginning of September, the company has been reporting increases in that index. The trend continues as existing maintenance volume and spending gained 6.08% and 12.67% year over year, respectively. According to BuildFax, maintenance activity has now increased for more than a full quarter.

“Additionally, remodel volume and spend—a subset of maintenance that includes renovations, additions, and alterations—increased 6.83% and 9.18%, respectively,” the report states. ”Year-over-year remodeling activity has started to outpace maintenance activity, increasing at a faster rate since June. This suggests homeowner project size and scope have likely been higher over the past few months.”

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California’s median home price jumps 6% to $605,280

The median price for a single-family home in California jumped 6% in October from a year earlier.

The state’s median home price was $605,280, more than double the U.S. median, according to the California Association of Realtors. California home sales rose 1.9% compared with October 2018.

“The latest surge in home prices is the consequence of an ongoing mismatch between supply and demand,” said CAR Chief Economist Leslie Appleton-Young. “While low interest rates will reduce borrowing costs for buyers and temporarily alleviate affordability concerns at the micro level, without an increase in housing supply – including new housing construction for sale or rent – fundamental issues remain at the macro level, which will worsen the affordability crisis down the road.”

The supply of homes for sale, measured as the amount of time it would take to sell off existing stock, shrank to three months from 3.6 months in both September 2019 and October 2018.

The cheapest area of the state saw the biggest jump in home prices. The Central Valley, an inland swath that runs about 450 miles from Bakersfield to Redding, had a median price of $345,000 in October, a jump of 7.8% from a year earlier, according to CAR data. Sales rose 7.1% in the same period.

The San Francisco Bay area, the most expensive region, had a median price of $940,000, a drop of 2% from a year ago. Sales rose 1.4% in the same period.

In the Los Angeles metro area, the median price was $545,000, up 5.6% from a year earlier, and sales gained 6.2%.

The Inland Empire, east of Los Angeles, had a median price of $380,000, up 5.8% from a year ago, and sales were up 6%, the CAR report said.

The Central Coast, stretching from Los Angeles to San Francisco, had a median price of $675,000, up 0.8% from a year earlier, and sales were up 3.9%, CAR said.

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Housing in these cities may become unaffordable by 2028

House prices are still on the rise, and as we approach a new decade, there are a handful of housing markets where home prices could be unaffordable before that upcoming decade ends.

GOBankingRates conducted a study where it found 16 cities across the nation that are projected to experience significant jumps in home value that would take their average home value from under the national median to above the national median.

To determine this, GOBankingRates used Zillow’s one-year forecast to project the growth in home values in each city over the next 10 years.

From there, the study identified the places where that change would move the average home value from under the national median, which is currently just above $230,000 and is growing by 2.8% each year, to beyond the median at some point in the next 10 years.

But the study cautions that its approach has “some caveats,” namely projecting 10 years into the future based on a single year’s growth rate could “ultimately paint an unfair picture in markets where the current rate is an anomaly.”

The study also notes that Zillow’s estimated home values “don’t necessarily reflect” the list prices or sale prices in each market.

With those caveats stated, according to the study, Charlotte, North Carolina is expected to become unaffordable sooner rather than later. It is projected to be unaffordable as soon as 2020, with home values climbing from $230,300 now to $239,780.42 next year.

That would beat the projected median home value price of $237,514.20.

Spokane, Washington and St. Petersburg, Florida are also projected to become unaffordable by 2020, with median home prices reaching $238,380.21 and $238,336.99 respectively.

Overall, home prices are expected to continue rising nationwide.

Last month, CoreLogic Chief Economist Frank Nothaft told HousingWire that since mortgage rates are lowering, home prices probably will increase 5.8% through August 2020.

Four Texas towns also make the list of cities where home prices may become unaffordable.

The Dallas/Fort Worth suburb of Irving, Texas is projected to become unaffordable by 2021, with its median home price reaching $246,457, a nearly $3,000 difference from 2019 values of $223,700.

The report says that because it’s nestled between Dallas and Fort Worth, it leads to competitive rising home values.

Grand Prairie, Texas is another DFW suburb that’s also projected to see rising home prices, reaching unaffordability by 2023.

Its projected home value is $263,209.76, while the 2019 home value is just $214,900. Meanwhile, Dallas is expected to reach unaffordability by 2024, with projected home values worth $266,476.06. Currently, median home values in Dallas are $213,400.

Beyond that, Arlington, Texas is soon going to become home to more than just the stadium where the Dallas Cowboys play. Its median 2019 home values stand at $212,300, and projected to get to $283,446.59 by 2026.

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LenderClose adds two more to sales team

Fintech startup company LenderClose announced Monday that it expanded within its sales team.

Dylan Sawyer

This is another of the many additions the HW Tech100 winner has made to its team this year.

Dustin Halma

According to the company, Dylan Sawyer and Dustin Halma were brought on as sales development representatives, as the eleventh and twelfth members of the sales executive team.

Sawyer joined LenderClose from Wells Fargo, where he served as a home mortgage consultant.

Before joining LenderClose, Halma was a sales specialist at Van Wall Equipment, among other sales roles.

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America’s priciest real estate markets

The tech-titan community of Atherton, California, is the most expensive zip code in the nation for homes, according to a report by PropertyShark.

The zip code – in case anyone was thinking of naming a TV show after it – is 94027 and the median price is $7.05 million, according to the report. Famous residents of the town, population 7,200, include Eric Schmidt, Google‘s executive chairman, and Meg Whitman, the former HP CEO who now is CEO of video startup Quibi.

The No. 2 zip code is Sagaponack, New York, where the median price is $4.3 million, according to PropertyShark. It’s the Hamptons town where junk bond billionaire Ira Rennert built his 29-bedroom summer house with a 100-car garage.

The No. 3 zip code is located in Santa Monica, California, and No. 4 is in the nearby town of Beverly Hills. The median price in the oceanfront Santa Monica’s 90402 zip code is $4.15 million and in Beverly Hills’ 90210 it’s $4.08 million, according to the report. In the 1990s, there was a teen drama TV series named “Beverly Hills, 90210,” and a spin-off that premiered in 2008 named “90210.”

The No. 5 zip code, 02199, is located in Boston’s tony Back Bay neighborhood, where the median price is $3.67 million, the report said.

New York’s 10007 zip code, in the Tribeca neighborhood, is the nation’s No. 6 zip code, with a median price of $3.9 million. It’s where celebrities like Taylor Swift live next door to young Wall Street bankers.

No. 7 is 94301 in Palo Alto, California, about four miles from the No. 1 zip code in Atherton. The Palo Alto median is $3.52 million, according to PropertyShark.

No. 8 is 10013, another New York neighborhood in lower Manhattan on the edge of Tribeca. The median is $3.51 million, PropertyShark said.

No. 9 is 94022 in Los Altos, California, where the median is $3.45 million, and No. 10 is 94957 in Ross, California, about 18 miles north of San Francisco. The median in the Ross zip code is $3.35 million, PropertyShark said.

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HousingWire’s Tech100 is back and better than ever

Nominations for HousingWire’s Tech100 award opened in early November, but with one major change this year.

Do you marvel at how forward-thinking your company is? Is
your company revolutionizing the housing industry? Creating tomorrow’s systems,
instead of simply improving the systems of yesterday?

Then this is your award.

Or…awards. This year, there are actually two different
options.

We are proud to introduce the HW Tech100 Mortgage and HW Tech100 Real Estate – HousingWire’s opportunity to highlight 200 technology solutions driving innovation for their respective industries.

We’re basically increasing your chances to win while also recognizing
the companies revolutionizing the housing industry from both the real estate
and mortgage fronts.

So what if you have technology that can be used for both industries?
Then nominate for both! You could win two Tech100 awards this year.

This change comes as we continue to improve and innovate our
Tech100 program. Last year, for the first time ever, nominees were reviewed by
an advisory committee, made up of some of the best minds in the housing
industry. This committee then advised HousingWire’s internal award review board
of potential finalists before the winners are selected.

This peer-review process made an already great award even
better, ensuring that our winners really were the top of the industry.

And this year’s awards will be even better as we recognize
the best companies in both real estate and mortgage.

Still have questions? We have answers.

Nominate your company here before the special early bird pricing ends (also implemented just last year) on November 30, 2019. All nominations will close on December 20, 2019. So don’t miss your chance to be featured in the 2020 March issue of HousingWire which focuses on the digital mortgage.

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Fannie Mae: Housing to help fuel economic growth in 2020

Housing could fuel economic growth for the first part of
2020, a new economic outlook from Fannie
Mae
shows.

Fannie Mae upgraded its economic outlook to a gross domestic
product growth of 1.9% in 2020, according to its latest commentary from the
Economic and Strategic Research Group. This is due to expected easing trade
tensions, stimulative fiscal policies and continued consumer spending

This year, the third quarter added to GDP growth for the
first time in more than 1.5 years, Fannie Mae’s data shows. And this growth is
expected to continue into the second quarter of 2020.

Fannie Mae explained housing should also continue to function as a positive contributor to growth in the near term, as indicated by both new and existing single-family home sales advancing in the third quarter, as well as pending home sales, permits, and starts. However, persistent supply and affordability constraints continue to hold back household formation, inhibiting housing market activity.

“As we forecasted, housing supported the larger economy in
the third quarter, and we expect it to continue to play a productive role
through the first half of 2020,” said Doug Duncan, Fannie Mae senior vice
president and chief economist. “Positive contributions from single-family
housing construction, home improvements, and brokers fees pushed residential
fixed investment growth to a robust 5.1% annualized pace this past quarter, and
we forecast continued but moderating strength as construction activity and home
sales growth continue at a slower pace.”

“With mortgage rates normalizing, we expect a decline in
refinance activity in 2020, with the refinance share of originations dropping
from a projected 37% in 2019 to 31%,” Duncan said. “Of course, the housing
market as a whole remains constrained by the persistent supply and
affordability issues, which is particularly unfortunate given the current
strength of consumer demand for reasonably priced homes.”

Housing is contributing to growth, but consumer spending is
expected to remain the primary driver of economic growth for the forecast
horizon, and business fixed investment will benefit as additional corporate
expenditures work to meet consumer demand.

“Even as global uncertainties mount, we continue to expect the domestic economy to produce solid, if not spectacular, growth,” Duncan said. “A stronger-than-expected third quarter contributed to the downward revision to our fourth-quarter forecast, as some of the previously expected weakness in trade and inventories appears likely to have been pushed back into this quarter. Still, consumer spending is likely to continue driving the expansion forward, and with the passage of the budget act and a reprieve in trade tensions we’ve revised upward our forecast for full-year 2020 growth.”

But risks still remain on the horizon. For example, trade
talks between the U.S. and China continue to pose negative risks to economic
growth. And because of this uncertainty, Fannie Mae predicts we could see one
last rate cut from the Federal Reserve
in early 2029 before pausing for the rest of the year.

“We also continue to expect the Fed to cut interest rates
only one more time in the foreseeable future, in early 2020, as a hedge against
the sizeable downside risks and to counteract muted inflation,” Duncan said.

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U.S. homebuilder confidence weakens in November

The nation’s low-interest rates and strong job market weren’t enough to maintain homebuilder confidence in November as the National Association of Home Builders and Wells Fargo said sentiment fell 1 point to 70 points in this month’s Housing Market Index.

Despite the decline, the November reading now marks the second-highest level in 2019 and is 10 points above the year-ago month.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said.  “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”

The index measuring current sales conditions fell to 76 points, while buyer traffic slid to 53 points and sales expectations over the next six months rose to 77.

The three-month moving averages for
regional HMI scores show the Northeast increased to 62 points, the South grew
to 74 points, the West climbed to 81 points and the Midwest held steady at
58 points.

Although all regions improved during
the month, NAHB Chief Economist Robert Dietz notes
homebuilders across the country continue to struggle with affordability.

“We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” said Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

NOTE: The NAHB/Wells Fargo Housing
Market Index gauges builder opinions of single-family home sales and
expectations, asking for a rating of good, fair or poor. Builders are also
asked to rate prospective buyer traffic from very low to very high. The scores
are used to calculate a seasonally adjusted index with a rating of 50 or over
indicating positive sentiment.

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Congressional vote on “de facto QM Patch” postponed

The House Financial Services Committee postponed a vote on H.R. 2445 on Wednesday, a bill that would fix the so-called QM Patch that’s set to expire in early 2021.

“We see postponement as disappointing as ensuring lenders can rely on GSE underwriting systems is key to keeping credit box from shrinking,” Cowen Washington Research Group said in a note to clients on Friday.

The bill, which may be considered at a future date, gives originators the option of either relying on Appendix Q in the Qualified Mortgage rule to determine a borrower’s debt-to-income ratio or on standards set by the Federal Housing Finance Agency.

“This did not get a vote though we believe it is still likely to come up for consideration later this year or early next year,” Cowen said in the note. “There is simply no reason why this bill should run into partisan opposition and every reason why consumer groups and business groups should support it.”

The Qualified Mortgage rule issued in the wake of the financial crisis has pages of limits, known as Appendix Q, on when income can count and when it must be excluded, Cowen said. It also details which debts count and which are excluded.

“Our view has long been that if forced to rely solely on Appendix Q that lenders would shrink the credit box for fear that small errors could result in mortgages losing QM status,” Cowen said. “This is why we described the bill as a de facto extension of the QM Patch.”

The QM Patch, which expires in January 2021, permits loans with debt-to-income ratios above 43% to get QM protections such as the “safe harbor” provision that makes it harder for lenders to be sued.

“We continue to believe that giving originators the ability to rely on the automated underwriting systems rather than having to interpret Appendix Q is critical for credit availability,” Cowen said. “Appendix Q is complex with many pages on when income counts and when it does not count.

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