Gateway First Bank makes two key hires

Gateway First Bank made back-to-back announcements this week regarding two key hires. On Tuesday, the bank welcomed Joell Maddox as director of treasury services. The following day, Gateway announced that Thomas Ramm joined as chief investment officer. 

“This is a critical hire for us,” Gateway Chairman and CEO Stephen Curry said at the time of Ramm’s hire. “Thomas is a deeply experienced capital markets executive. His insights and leadership skills will enable us to navigate growth of our core businesses and rapidly changing markets.” 

Upon the announcement of Maddox’s hire, Curry said, “It is key we bring onto the Gateway First Bank team an accomplished leader in Treasury Management to help launch our products and services to best serve our client relationships and grow new ones.”

“Joell has had a very accomplished career in the financial institutions’ industry working with correspondent banks, and I look forward to her being a part of the successful culture and growth with Gateway First Bank,” he added.

Maddox joins Gateway with more than 30 years of experience in the financial industry, both in mortgage and correspondent banking. She has served in senior leadership positions with Origin Bank, IndyMac Bank and Wells Fargo.

Most recently, Maddox was vice president of treasury management sales at Origin Bank. In her new role, she will be responsible for managing relationships with correspondent banks, title companies and commercial customers that are using treasury management services.

In his new role as chief investment officer, Ramm will be responsible for all capital markets and investment-related activities, including the development and execution of investment strategies, secondary marketing, hedging activities and capital markets strategies with GSEs.

According to the company, Ramm is also charged with developing and managing relationships with Wall Street broker-dealers and fixed income investors.

Before joining Gateway, Ramm served as executive vice president of capital markets at Stearns Lending. He was also vice president of capital markets at MetLife Bank and senior vice president of interest rate risk management at First Tennessee Bank and First Horizon Home Loans.

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Adios coast: Nearly all the top markets are inland

Migration away from expensive coastal cities is set to continue in 2020. Strong economies, more jobs and available inventory are expected to drive more people to inland cities in 2020, realtor.com says.

More specifically, there are 10 markets that realtor.com predicts will be the top housing markets for 2020, and nearly all of them are inland.

This year’s trend list proved that homebuyers relocated from expensive coastal cities to more affordable inland areas.

According to this year’s report, nine out of 10 cities on the list are located away from the coast, whereas last year there were four coastal cities on the list. Throughout this year, homeowners fled coastal cities for multiple reasons.

The cities that made the list retain sufficient inventory, more specifically at an entry-level price point. What attracts buyers – young ones especially – is affordable homes.

The median asking price for the top 10 cities combined was $292,000. Beyond that, seven cities on the list were priced below the U.S. median of $312,000.

Realtor.com said that the price gains in these markets outpaced the similar-sized markets, which saw a 4.3% year over year increase. The median closing price in the top 10 combined sits at $213,000, with seven of the 10 markets also below the U.S. median of $259,000.

Active listings in the following cities decreased 11% year over year.

Add all that up and you have 10 markets that look to be very desirable over the next 12 months.

Here are the top 10 markets to move to in 2020:

  1. Boise, Idaho
  2. McAllen-Edinburg-Mission, Texas
  3. Tucson, Arizona
  4. Chattanooga, Tennessee
  5. Columbia, South Carolina
  6. Rochester, New York
  7. Colorado Springs, Colorado
  8. Winston-Salem, North Carolina
  9. Charleston-North Charleston, South Carolina
  10. Memphis, Tennessee

Boise notably leaped from the No. 8 spot last year to No. 1 this year.

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Deal to scrap tariff hikes a win for the housing market, economists say

The Trump administration has reached a deal to scrap tariff hikes on Chinese goods set to take effect on Sunday and slash some existing duties in half, according to CNBC. That’s a positive for the housing market, according to economists.

It comes with a caveat, though. A similar announcement in October of a “Phase 1” deal was nixed later by China, though not before it caused a U.S. stock market rally and three days of positive headlines.

If this latest agreement holds, it would cancel the hikes scheduled for Sunday and cut existing tariffs in half on $360 billion in Chinese products, according to CNBC.

“Resolving some of these trade disputes would be good for U.S. economic growth and good for the overall housing sector,” National Association of Home Builders Chief Economist Robert Dietz told HousingWire in an interview.

Tariffs have a direct impact on housing by boosting the cost of materials, he said. Many of the ingredients that go into a home, such as drywall, nails, kitchen countertops and asphalt roof shingles, are imported from China.

And, no, China is not paying the tariffs, Dietz said. The tariffs are collected by U.S. Customs agents from importers when goods enter the country.

But there’s a secondary housing impact as well, Dietz said.

“The indirect effects of tariffs are seen in regional economies that are weaker due to the reduction in exports, a reduction in manufacturing activity and slower income growth,” Dietz said. “We looked at U.S. counties with economies connected to manufacturing, and found they were really hurting in terms of single-family construction and multi-family development.”

Tariffs make new homes more expensive and restrict supply by making it more difficult for homebuilders to do business, according to Lawrence Yun, chief economist of the National Association of Realtors.

“The demand side of housing is very good right now because of the lower mortgage rates and a strong jobs market,” Yun said in an interview. “It’s the supply side and affordability issues that are restraining the market, and material costs are an important part of that.”

The biggest boost a deal would provide, if the announcement holds, is a degree of certainty for the economy, said Dean Baker, a senior economist with the Center for Economic and Policy Research in Washington, D.C.

“The biggest issue with tariffs is just the uncertainty around it, which makes it difficult for businesses to know if they should make investments,” Baker said in an interview. “Trump seems to like the idea he’s playing a reality TV show host – `tune in and you’ll find out if I raise tariffs’ – but the economy hates uncertainty.”

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Renters paid $4.5 trillion in rent in the last 10 years

Landlords have had a very lucrative decade.

During the 2010s, U.S. renters paid about $4.5 trillion in rent, according to Zillow. That’s more than the 2018 GDP of the world’s fourth-largest economy, Germany.

In 2019 alone, renters paid out $512 billion in rent.

The total amount of rent paid in 2019 is also higher than the entire 2018 GDP of Thailand, which was $505 billion, and a little less than Argentina’s $518 billion.

The renters who spent the most, to no surprise, were located in New York, at $56.6 billion. Los Angeles renters paid the second-highest amount in rent, $39.2 billion, while San Francisco renters were the third-highest, at $16.4 billion.

Those three markets are where the cost of living is the highest, and where there is a lack of affordable housing.

The total amount of rent paid in 2019 was 2.9% higher than in 2018, with 43.6 million people renting across the U.S.

Phoenix saw the fastest growth in rent over the past year, up 7.5% this year compared to 2018. Las Vegas had a 5.6% increase while Charlotte had a 5.5% increase. These cities ranked the top three in terms of yearly rental appreciation.

Cincinnati rounded out the bottom list, with $2.5 billion paid in rent in 2019.

In 2019, multifamily housing alone had record-breaking numbers in terms of occupancy. More people, younger generations specifically, are opting to rent instead of own because mortgages are harder to attain, despite lower interest rates.

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Borrowers gained nearly $457 billion in home equity in the last year

Homeowner equity continued to increase in the third quarter of the year, according to the Q3 2019 home equity analysis from CoreLogic, a property information, analytics and data-enabled solutions provider.

Homeowners with a mortgage – about 64% of all homeowners – saw their equity increase by 5.1%, a total of nearly $457 billion, since the third quarter of last year.

This means the average homeowner gained about $5,300 in equity in the last year.

Of all the nation’s housing markets, homeowners in Idaho experienced the largest gain in home equity. In this state, homeowners gained an average of $25,800.

This was followed by Wyoming, where homeowners gained an average of $24,000 and Utah, where homeowners gained an average of $21,000.

Across the country, the total number of mortgaged residential properties with negative equity decreased by 4% from the second quarter to 2 million homes or 3.7% of all mortgaged properties. This is a decline of 10% from 2.2 million homes in the third quarter of last year.

Frank Martell, CoreLogic’s president, and CEO said negative equity, which has fallen significantly throughout 2018, continues to decline thanks to the housing market’s rising home price appreciation.

“The negative equity share continues to decline thanks to rising home prices across the nation,” said Frank Martell, president, and CEO of CoreLogic. “According to the latest HPI report, home prices increased an average of 3.5% year over year in October 2019.”

According to CoreLogic, the value of negative equity in the U.S. at the end of the third quarter totaled approximately $301 billion. This is down $2.4 billion from $303.4 billion in the second quarter.

“Ten years ago, during the depths of the Great Recession, more than 11 million homeowners had negative equity or 25% of mortgaged homes,” said Frank Nothaft, CoreLogic’s chief economist. “After more than eight years of rising home prices and employment growth, underwater owners have been slashed to just 2 million, or less than 4% of mortgaged homes.” 

This chart shows the equity growth of the nation’s largest housing markets:

Courtesy of CoreLogic

NOTE: The CoreLogic HPI is based on public record, servicing and securities real-estate databases and incorporates more than 40 years of repeat-sales transactions for analyzing home price trends.

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Capital City Bank acquiring majority interest in BrandMortgage

BrandMortgage, a mortgage lender that operates in the Southeast, will soon have a new majority owner and a new name after the company agreed to sell majority interest to Capital City Bank.

The mortgage lender, which operates in Alabama, Georgia, Florida, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and Washington D.C., reached an agreement this week to sell to Capital City.

Under the terms of the agreement, Capital City will acquire 51% of BrandMortgage. Upon completion of the deal, the company will offer loans under the name Capital City Home Loans.

According to the companies, BrandMortgage operates 21 mortgage production offices in the above-mentioned states, which will be added into the Capital City fold upon the deal’s completion.

Capital City, which was founded in 1895 and is headquartered in Tallahassee, Florida, provides banking services in 26 counties in Florida, Georgia and Alabama.

In a release, the companies state that uniting Capital City Bank’s 57 full-service banking offices with BrandMortgage’s 21 locations will “expand the availability of mortgage services throughout the Southeast.”

The details provided by the companies indicate that Capital City is seeking to expand its mortgage business, as BrandMortgage’s originations significantly exceed its own.

According to the companies, if the deal had been completed in 2019, the mortgage volume of the combined company would have been approximately triple Capital City’s historical level of originations.

“We are pleased to welcome the BrandMortgage team to the Capital City Bank family,” said William Smith, Capital City Bank Group chairman, president, and CEO.

“We believe this transaction leverages our strengths as an established and profitable financial institution with a 125-year community banking tradition and BrandMortgage’s as an innovator and pacesetter in the mortgage lending industry, which will deliver enhanced value to our clients in both existing and new markets,” Smith added.

BrandMortgage is headquartered in Lawrenceville, Georgia and is led by CEO and Managing Partner Greg Shumate, and President and Managing Partner Alex Koutouzis,

Under the terms of the deal, Shumate will be elected as an officer of Capital City Bank, and BrandMortgage will continue to operate independently from its headquarters under the leadership of Shumate and Koutouzis.

“Joining with an established financial institution like Capital City Bank, with their strong brand reputation and capital position, makes sense for a number of reasons,” Shumate said.

“Not only do our companies share a vision and value system that prioritizes the client relationship and aims to deliver extraordinary service experiences, we also have deep roots in our respective communities to build upon as our partnership grows,” Shumate added. “Together we will leverage each other’s strengths to accelerate growth and capitalize on market opportunities that benefit our clients, communities and shareowners.”

The companies expect the deal to close in the first quarter of 2020. Financial terms of the deal were not disclosed.

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Most lenders expect to keep making big money on mortgages

Recent data from the Mortgage Bankers Association revealed that lenders are now making more money per loan than they’ve made in almost seven years.

And a new report from Fannie Mae suggests that most lenders believe they’ll keep making that much money per loan for the foreseeable future.

Fannie Mae this week released its Mortgage Lender Sentiment Survey for the fourth quarter, which asks senior executives at its lending institution customers to assess their views and outlook for the mortgage market.

According to the survey, more than 70% of the surveyed lending executives believe their mortgage profits will either stay at the highs they’re at now or actually increase over the next few months.

The survey results show that 44% of lenders believe their profit margins will remain about the same compared to the prior quarter, while 27% believe profits will rise.

Conversely, 28% of the surveyed companies believe profit margins will fall.

But even if they do, profits could still end up being well above where they’ve been for most of the last few years due to several factors working in lenders’ favor right now.

According to Fannie Mae, “strong consumer demand, particularly among purchase mortgages, continues to buoy lenders’ overall expected profitability, even as they expect refinance demand to soften amid a more stable interest rate environment.”

Per the MBA report, independent mortgage banks and mortgage subsidiaries of chartered banks reaped a profit of $1,924 on each mortgage they originated in the third quarter of 2019.

That’s up from a reported gain per loan of $1,675 in the second quarter and significantly above where it was in the fourth quarter of last year, when lenders were actually losing $200 on each loan.

What a difference a year, and low interest rates, can make.

According to the report, lenders have seen increases in both purchase and refinance mortgage demand, driving the increase in profit margins.

The survey results showed that on purchase mortgages, the net share of lenders reporting growth in demand over the last three months, as well as the net share of lenders that expect more growth in the next three months, remained positive and reached the highest readings for any fourth quarter in the survey’s history.

On refis, the net share of lenders reporting grown in demand over the last three months continued the upward trend that began in Q1 2019 and reached new survey highs (since Q1 2014).

And most expect that trend to continue, even as refis may fall back some next year.

“Mortgage lenders’ profit margin outlook remains steady following gains in the first three quarters of 2019,” said Fannie Mae Senior Vice President and Chief Economist Doug Duncan.

“Credit standard trends also continue to hold steady amid the largely unchanged profitability outlook. Lower interest rates, which drove the refinance boom, have been the engine driving mortgage demand growth this year,” Duncan continued. “Lenders’ purchase and refinance demand expectations align with our own forecast: With interest rates stabilizing in 2020, we expect a decline in refinance activity and slightly higher purchase activity.”

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Freddie Mac: Mortgage rates inch forward to 3.73%

This week, the average U.S. fixed rate for a 30-year mortgage came in at 3.73%. Although this rate is an increase from last week’s percentage, it’s still more than a percentage point below the 4.63% of the year-earlier week, according to the Freddie Mac Primary Mortgage Market Survey.

“Since early September, when mortgage rates posted the year low of 3.49%, rates have moved up to 3.73% this week, said Sam Khater, Freddie Mac’s Chief Economist. “Often, while higher mortgage rates are deleterious, improved economic sentiment is the reason that these higher rates have not impacted mortgage demand so far.”

The 15-year FRM averaged 3.73% this week, rising from last week’s 3.14%. This time last year, the 15-year FRM came in at 4.07%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.36%, sliding from last week’s rate of 3.39%. Last year, the 5-year ARM was significantly higher at 4.04%.

“With Federal Reserve policy on cruise control and the economy continuing to grow at a steady pace, mortgage rates have stabilized as the market searches for direction,” Khater said. “The risk of an economic downturn has receded and, combined with the very strong job market, it should lead to a slightly higher rate environment.”

The image below highlights this week’s changes:

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Here are the cities where iBuyers are taking hold

It comes as no surprise that iBuying began to dominate the housing market this year.

With companies like Opendoor, Zillow and Redfin, homebuyers and sellers were no longer limited to the traditional method when they decided to buy and sell their homes.

And according to a recent interview with the “iBuyer whisperer,” home sellers aren’t actually losing much money when they sell to an iBuyer (companies that buy houses directly from sellers, make repairs, then sell the houses back into the market).

But just how much of an impact are those iBuyers having on the market itself?

According to a new report from Redfin, iBuyers purchased 3.1% of homes sold during the third quarter of 2019 in 18 markets, up from 1.6% last year.

The markets where iBuyers purchased the most homes were in Raleigh, where iBuyers bough 6.8% of the homes; Phoenix, where iBuyers bought 5.1% of the homes; Atlanta, where iBuyers bought 4.4% of the homes, and Charlotte, where iBuyers bought 4.3% of the homes.

These figures are based on home sales in Q3 made through Opendoor, Zillow, Offerpad and RedfinNow.

“iBuyers are concentrating their efforts in southern markets where both home sales and prices are poised for strong growth,” said Redfin Chief Economist Daryl Fairweather.

“We think that iBuyers are likely to accelerate home sales in these markets,” Fairweather added. “Homeowners who may have been reluctant to sell because they didn’t want to deal with the hassle may be persuaded by the convenience of an iBuyer sale.”

The share of homes purchased by iBuyers rose the most in Houston. There, 3.8% of homes were purchased by iBuyers in Q3, up from only 0.1% in the same time period 2018.

According to Redfin, iBuyers are most active where the homes are priced at or below the national median of $313,200. Those will sell quicker to iBuyers than more expensive homes.

Homes sold by iBuyers in the third quarter stayed on the market for a median of 28 days, down from 74 days a year prior, Redfin said.

The report also found that the median price of homes sold by iBuyers fell in 17 of the 18 markets in Q3. The lone market that the median iBuyer sale price didn’t change in was Phoenix.

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Realtors expect these to be the 10 hottest housing markets for the next 3-5 years

On the whole, the nation’s housing prices continued to rise throughout this year and are expected to continue to do so into the foreseeable future.

But, according to the National Association of Realtors, there are a handful of markets that are expected to rise above the rest over the next half-decade or so in terms of performance.

NAR’s economists analyzed the nation’s various markets, comparing various factors and determined which 10 housing markets will be the nation’s hottest over the next three to five years.

To determine the top 10 housing markets that will be the hottest, NAR considered domestic migration, housing affordability for new residents, consistent job growth relative to the national average, population age structure, attractiveness for retirees, and home price appreciation, along with other variables.

According to NAR Chief Economist Lawrence Yun, the top 10 markets are expected to outperform the rest of the nation in a number of those areas.

“Some markets are clearly positioned for exceptional longer-term performance due to their relative housing affordability combined with solid local economic expansion,” Yun said. “Drawing new residents from other states will also further stimulate housing demand in these markets, but this will create upward price pressures as well, especially if demand is not met by increasing supply.”

Without further adieu, here are the 10 markets that NAR expects to the hottest in the nation in the next three to five years. In alphabetical order, the markets are:

  • Charleston, South Carolina
  • Charlotte, North Carolina
  • Colorado Springs, Colorado
  • Columbus, Ohio
  • Dallas-Fort Worth, Texas
  • Fort Collins, Colorado
  • Las Vegas, Nevada
  • Ogden, Utah
  • Raleigh-Durham-Chapel Hill, North Carolina
  • Tampa-St. Petersburg, Florida

According to NAR, strong job growth is helping to drive up home prices in these markets, with payroll employment rising approximately 2.5% annually in the last three years, higher than the national rate of 1.6%.

Ogden, Las Vegas, Dallas, and Raleigh, all had job growth of nearly 3% in the last three years.

Beyond that, these markets are attracting more new residents than others. More specifically, people are moving to these markets at higher rates than the average of the 100 largest U.S. metro areas.

Click to enlarge. Image courtesy of NAR

In Colorado Springs, recent movers make up 21% of the total population, followed by Fort Collins at 17% and Las Vegas at 16%.

The new residents aren’t limited to one particular age bracket or generation either.

According to NAR, 11% of the people who moved to Tampa were 65 years and older, while 54% of recent movers to Durham were between the ages of 18 and 34.

And those new residents look to be a potential boon to the housing market in those metro areas.

According to NAR’s analysis, about half of recent movers who are renting in these 10 markets can afford to buy a home in their respective markets when compared to the nation’s 100 largest metro areas.

That should lead to increases in homeownership rates in these markets due to the market’s relative affordability.

“Potential buyers in these 10 markets will find conditions especially favorable to purchase a home going into the next decade,” said NAR President Vince Malta. “The dream of owning a home appears even more attainable for those who move to or are currently living in these markets.”

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