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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 52 July 2024 E X P E R T I N S I G H T S magnets for vandalism and safety hazards. By addressing vacant properties proactively, we can prevent these negative outcomes and help maintain the vibran- cy and safety of local communities. Q: What is the biggest impact on the shortage of homes for sale right now? Cullen: Interest rates are by far the biggest factor. Many borrowers have exceptionally low pandemic-era rates in place. If they decide to upgrade to a more expensive home, they are suddenly faced with the prospect of significantly higher rates, which could essentially double their existing mortgage payments. As a result, many homeowners are putting their move-up plans on hold. Another factor is the general un- certainty in the market. Today's higher mortgage rates mean that home sellers either have to sacrifice size or quality if they want to keep roughly the same payment. Many are expecting interest rates will drop at some point in the fu- ture, so they have adopted a wait-and-see approach, hoping for a more favorable financial landscape that will make upgrading more affordable. This sort of collective hesitancy further exacerbates the shortage of available homes. A third factor is a decrease in new residential construction, which was exac- erbated by COVID-19 and the disruption to supply chains. This has led to short- ages in building materials and delays in construction projects, which have not only slowed the pace of new home com- pletions but also escalated construction costs. This is restraining the availability of new housing supply as well. Q: What other impact did COVID-19 have on housing supply? Cullen: Prior to the pandemic, it was standard practice for employees to move when they got a new job in another city, which naturally led to homes being sold and added to the market. But because remote work has increased, many employees now have the flexibility to work from anywhere, so they no longer need to relocate for new job opportunities. And because the United States is also experiencing a labor shortage, employers are not in a position to require employees to move, either. In fact, many companies have already reduced their office footprint during the past several years. All these factors combined mean that housing inventory is not being refreshed at the same rate as it normally did pre-COVID-19, contributing to the current tightness in the housing market. Q: What can be done to ease the national home inventory shortage? Cullen: Addressing the inventory shortage is a big challenge. But one thing that will help is adjusting bank regulations to encourage the foreclosure processing of vacant properties. Again, these properties are often vacant due to various life events like a death or a divorce—the homeowners have already relinquished their keys and moved on. By transitioning these properties into for-sale inventory, we could see a notable easing of the current inventory squeeze nationwide. At SingleSource, we are deeply com- mitted to this effort. Since our founding, we have helped bring $4 billion in resi- dential properties to market, including vacant properties. In fact, supporting the health and vitality of local communities by turning vacant homes around quickly and efficiently is one of the most re- warding aspects of our work. Ultimately, solving the inventory challenge of today will require a collective effort from the entire industry. … because remote work has increased, many employees now have the flexibility to work from anywhere, so they no longer need to relocate for new job opportunities." —Brian Cullen, CEO and Co-Founder, SingleSource