With so many changes in the world, it is difficult to keep up with the movement and trends in the industry! How are single family homes sales trending? Why are rental returns dropping? Who are first time buyers and what is their average age? When will the foreclosure backlog start working through the courts? Read more for a quick summary of these trends that will directly affect your real estate investment!
INTRODUCTION
We try to attend conferences, review market updates and then summarize our findings for you in an easy-to-read abridged format. Recently, we attended a meeting with industry experts and heard a great update by Joe Varnadore, a seasoned Note and Real Estate professional with over 20 years of experience. As part of this article, we incorporate some of his findings and add further comments based on our experience.
The overall outlook for the market is mixed. Many prospective homebuyers continue to be priced out of the housing market and available credit is near record lows. Landlords are struggling with increased expenses and decreasing margins. Several major markets are projected to experience negative growth. At the same time, the overall foreclosure rates are rising with a huge backlog. A bright spot for the industry is the strong growth by the Hispanic market as compared to the overall market.
UPDATE- HOMEBUYERS
Conventional bank lending requirements continue to tighten, preventing a growing number of prospective homebuyers from qualifying for traditional mortgages. As a result, first-time homebuyers are experiencing historically low levels of access to conventional financing.
Based on this data from the National association of Realtors, the first-time buyer is down by 50% since 2007. The impact of affordability has resulted in an age increase for the first-time homebuyer, which is now averaging 40 years old.
Today, only 21% of the first-time homebuyers can secure a conventional bank loan.
While the news is not good for home buyers, owner financing and the secondary market note industry can help meet this consumer demand by providing more seller financed Notes. For landlords, this environment creates an opportunity to convert rental properties into owner-financed sales, generating income while helping more buyers achieve homeownership.
UPDATE-RENTALS
Over the past several years, landlords have experienced declining net income due to inflation-driven increases in maintenance and repair costs, as well as higher property taxes and insurance premiums. Unfortunately, rental growth is not expected to provide significant relief in 2026. While a small number of markets may experience moderate growth, most rental markets are projected to see little to no growth, with some facing rental rate declines.
The Single-Family rental returns have declined nationwide across most markets. Data from ATTOM showing that rental yields are down in 54.8% of the counties analyzed. The findings were based on 341 counties with sufficient data available for comparison between 2025 and 2026. The decline was attributed primarily to rising operating costs, including property taxes, insurance, repairs, and maintenance expenses.
UPDATE-FORECLOSURES
Foreclosure activity is trending upward as lenders work through delinquent loans that have remained unresolved since the COVID-19 pandemic. In March, lenders initiated 21% more new foreclosures than during the same month a year earlier.
The five states with the highest foreclosure rates in March were South Carolina, Indiana, Florida, Illinois, and New Jersey.
Currently, approximately 911,000 loans are considered severely delinquent, with an average delinquency period of 1,692 days (about 4.5 years). In total, more than 2 million single-family home loans are delinquent.
As these long-standing delinquencies continue to age, banks are increasing foreclosure actions to address the backlog of distressed loans.
UPDATE-HISPANIC MARKET GROWTH
An overview of the Hispanic market highlighted key statistics demonstrating the community’s significant and ongoing growth. Hispanic households now account for 35% of total homeownership growth. The presentation noted the community’s strong influence on both the supply and demand sides of the housing market, representing approximately 30% of the construction labor force (supply) and 70% of projected future homebuyer growth (demand).
Despite challenges such as a conventional mortgage denial rate of 24.5% and home prices increasing by 47% since 2020, the Hispanic market continues to show strong and consistent growth. Additionally, the Latino market was reported to have a GDP of $4.1 trillion, which would rank as the world’s fifth-largest economy if it were considered a standalone country.
SUMMARY
As you can see there is a lot going on in the real estate industry, both good and bad! It is important to understand what is going on in the market so you will be able to adjust to changing market trends. This ability to adjust is critical for your continual investment growth.
Looking at the trends, there is significant opportunity for more seller financed Notes. With buyers having difficulty getting credit, a seller financed Note is a perfect solution to help out both the buyer and you the seller finance Note owner. Another positive for the Note industry is the declining rate of returns in the rental market. By converting to Notes, you will be able to double your return with 90% less effort!
We hope you enjoyed this industry update and hope it has helped you to understand where the market is going!
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