Welcome to the Pocket List, investors.

Here’s what we’re getting into today…

• Assumable mortgages are having a moment

• Inventory is increasing

• A deep dive into multi-class asset deals

• Your FREE pocket listing

Plus, a whole lot more.

Let’s make some money today, shall we?

First, let’s check in on mortgages…

What’s driving rates this week?

• Jerome Powell told the House Financial Services Committee on Wednesday that the Fed “does not expect that it will be appropriate to reduce the target range.” Translation? Interest rates will stay higher for the foreseeable future.

THE LEAD

Let’s recap what you might have missed this week…

Unicorn mortgages

There is a perfect storm brewing. Assumable mortgages (i.e. a buyer “takes over” the seller’s current mortgage) are becoming more popular than shiplap in a flip. With nearly 30% of mortgages in the US locked in below 3%, the extra hoops you might have to jump through could be worth it.

But… Only certain types of mortgages can be assumed. Like VA, FHA, and USDA (Hint: narrow your search to near military bases). Traditional loans typically don’t qualify.

Data suggests that about 6% of homes for sale have mortgages that are eligible for assumption. Yet, only about 0.4% of listings advertise the assumption as a perk.

👀 Mr. Pocket Listing is keeping an eye on… The gap between properties with assumable mortgages and the amount of listings that advertise the assumablity provides an opportunity. Do your research.

One big problem… Lenders don’t want you to assume loans. That’s because they make a lot less money on the transaction. And it can be more work on their end. Conventional loans can earn a lender upwards of 7% of a home’s purchase price. Meanwhile, assumable mortgage fees are capped at $300 for VA loans and $900 for FHA.

💭 Mr. Pocket Listing says… Legally, lenders can’t ignore your request for an assumable loan. But they can make it as hard as (legally) possible for you to get a deal done. It’s important to know your rights. It might be worth working with an expert in this type of mortgage.

NEED TO KNOW

The other real estate investing news you need to know…

Property virgins

Mortgage applications rose slightly last week despite rates holding near 7%.

• Who drove the increase? First-time homebuyers. It appears that first-timers are tired of waiting around. FHA loans outpaced other loan applications.

💭 Mr. Pocket Listing says… Rates might drop in the back half of the year, but it appears first-time home buyers believe that will be offset by the higher demand.

Inventory story

According to Realtor.com, the number of homes on the market was up 14.8% in February 2024 vs. February 2023. That’s the largest inventory in 3 years.

• Good news… They aren’t picked over properties, either. Brand new listings were up double digits in February vs. last year.

• Even better news… The increase in inventory has helped moderate home price growth.

👀 Mr. Pocket Listing is keeping an eye on… In all likelihood, we can expect prices to increase as we enter spring and move further into 2024. Prices tend to climb as we get into the warmer months and through the Fall, until slowing late in the year.

What else Mr. Pocket Listing is reading…

• Warren Buffett Is Getting Dragged Into the Real-Estate Commissions Litigation (WSJ)

• New Listings Post Biggest Uptick In Nearly 3 Years, But Buyers Show Restraint as Rates Rise (Realty Times)

• An Airbnb cofounder's new startup wants to drop factory-made tiny homes into California backyards — see inside its $324,000, two-bedroom unit (Business Insider)

• Single-Family Construction Spending Continues to Rise (Eye on Housing)

• The US housing market is slowly thawing, but 91% of homes are still overvalued, Fitch says (Business Insider)

Mr. Pocket Listing’s favorite property of the week (a guy can dream, can’t he?)…

HARD MONEY

Making money can be hard. Let’s become better investors…

• Multi-asset-class deals are often opportunities where you can find a lot of alpha [Full Deal Breakdown] (The Real Estate God on Twitter/X)

• What Will the Housing Market Look Like Once Mortgage Interest Rates Drop? Here’s What Homebuyers Can Expect (Realtor.com)

• New Bill in Congress Targets Real Estate Investors—Here’s Why This Could Be a Big Problem (BiggerPockets)

• It could be years before real-estate agents lower their fees, if ever. For now, here are 2 ways to save when selling a home. (MarketWatch)

SOCIAL STUDIES

Before we go, one last gift from Mr. Pocket Listing…

If you’re enjoying the Pocket List, make sure to share it with your friends and fellow investors. Send them here.

One last thing…