The Potential Impact of Zillow's 1% Down Payment Program | 1-Minute Market Update w/ Martin Perdomo

Are you tired of watching home prices skyrocket while your chances of owning a home dwindle? Buckle up because we're about to reveal how Zillow is shaking things up with a revolutionary 1% down payment loan program! Amidst rising property prices, declining new listings, and a persistent affordability crisis, the real estate market is undoubtedly confronting significant challenges. But don’t worry, we’ve got you covered on this week's Real Estate Market Update, diving fearlessly into these deep waters, dissecting the recent market data, and uncovering the rays of hope in the midst of the storm.

Let's talk about Zillow’s game-changing initiative, designed to assist buyers grappling with affordability. Imagine only having to pay as little as 1% towards a down payment! That's right, with Zillow Home Loans contributing an extra 2%. Currently, this exciting program is only available in Arizona, but we're hopeful this strategy will spark nationwide expansion and aid potential buyers across the country. We also touch on the latest market trends giving you the comprehensive understanding you need in the rapidly evolving real estate industry. So, why wait? Tune in, soak up the knowledge and join the conversation. Don't miss out on this week's informative episode that dares to brave the storm and illuminate the path ahead.

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Transcript

Speaker 0: 0:28

Zillow is rolling out the 1% down payment loan program, but can it solve the affordability crisis? Find out more in this week's Real Estate Market Update. But before that, here's this week's housing market data, courtesy of Redfin. Mortgage purchase applications during the week ending August 25 increased 2% from a week earlier. Seasonally adjusted Purchase applications were down 27% from a year earlier. Wow, google searches for homes for sale were down 9% from a month earlier during the week ending August 25 and down 19% from a year earlier.

Speaker 0: 1:09

Medium home sales price was $379,975, up 4.8% from a year earlier. That's the biggest increase since October. The medium asking price for newly listed halls was $383,706, up 3.7% from a year earlier. That's the biggest increase since November. The monthly mortgage payment on a median asking price hit a record of $2,649 at a 7.23% mortgage interest rate, the average for the week ending August 24.

Speaker 0: 1:49

Pending home sales were down 14.4% year over year, continuing a 15 month plus streak of double digit declines. This is really concerning guys, that pending home sales just keeps going down, going down, going down now for 15 months straight. This is going to cost a real problem in the marketplace. I don't care how low inventory is. At this pace this will soften prices. It does not matter. This is fundamental. New listings of homes for sale fell 10.4% year over year. Active listings dropped 18.7% from a year earlier the biggest drop since February of 2020 to 40.8% of halls that went under contract had an accepted offer within the first two weeks on the market. Homes that sold were on the market for a median of 29 days, that's up 28 days from a year earlier. 34.1% of homes sold above their final list price, down slightly, 36% from a year earlier, and reported by CNN business.

Speaker 0: 3:00

For buyers facing affordability challenges getting into a home of their own, zillow home loans is rolling out a new option a 1% down payment. This is interesting. Through the program, an eligible buyer pays as little as 1% towards a down payment. Zillow home loan pays an additional 2%, bringing the total down payment to 3%, which is typically the minimum payment required for conventional home loan. Alternatively, buyers can put down 3% with Zillow's 2%, bringing the total down payment to 5%. But there's a caveat here the 2% is paid through closing costs and not as a payment to the borrower. Currently, the program is only available to buyers in Arizona, according to Zillow, with plans to expand.

Speaker 0: 3:49

And here's the thing I got with this. I like it. I like what they're doing. But Zillow, show the rest of the country some love, especially the east coast. You tend to start programs like this, like when they did their iBuy and program, they were doing it on the west coast and they weren't messing with a lot of states on the east coast and they don't show us much love here on the east coast. That's too bad for you guys.

Speaker 0: 4:07

To qualify for Zillow's low down payment option, borrowers must be your first time home buyers, complete an education course on home ownership and intend to occupy the property as their primary single family resident, and the company said. In addition, the borrower must have a minimum qualifying FICO credit score of 620, earn income below 80% of the medium income where the property is located. Any additional underwriter requirement as applicable. And so interesting program. I mean really cool that Zillow is doing this for new homeowners. They got to figure out a way to spark things up.

Speaker 0: 4:45

I think that in the future, in the near future, we're going to see some innovative programs start financing program. I'm going to start coming out with lower down payment. There's going to be some creative. Some lenders are going to get really creative. I think I believe in the capital markets and capitalism, that in order to make deals work and to spark real estate back up, lenders are going to create new programs to get buyers back out and to make deals work. And this has been your weekly business day market update. I'll see you guys next week. Peace.