Home sales in 2024 have been well below historic norms. Higher prices, higher mortgage rates and limited inventory are making for a slow market among buyers and sellers alike.

Real estate investors tend to be more insulated from these dynamics, particularly from mortgage rates, as they are more likely to buy properties with cash. But even investors have purchased fewer homes this year.

According to data from CoreLogic, investor purchases have tracked closely with consumer home sales, and the share of home sales attributable to investors is down as well.

“Real estate is now a relatively less attractive asset to a lot of investors,” said Thomas Malone, an economist with CoreLogic. “Price growth is slowing down so there’s less flippers in the market. That’s a harder business model to maintain when prices aren’t going up quickly. Same with the iBuyers. They’ve dropped out a lot.”

This is a notable change from the years immediately after the COVID-19 pandemic, when investor purchases of single-family homes exploded along with owner-occupied purchases. Investor purchases at the national level peaked in June 2021 at 148,670.

But in September 2024 — CoreLogic’s most recent data — the number of investor purchases sat at 75,442, which is marginally higher than the post-pandemic low point but down 22.5% compared to September 2023.

Geographically, the share of homes bought by investors is down in every state in the country except in Oregon — where the share of investor purchases is up by a negligible 0.2% — and in South Dakota (3.4%), a state with a small population where a relatively few number of sales can swing the investor share.

At the metro level, Texas is seeing the most activity by investors. Between January and June of this year, Dallas (31,140) and Houston (25,820) had the most investor purchases, and San Antonio (10,163) and Austin (7,879) were both among the top 20 U.S. markets.

Among these top 20 markets, Los Angeles (41.5%); Atlanta (35.9%); Riverside, California (34%); Las Vegas (32.1%); and Seattle (30.5%) had the highest share of investor purchases. The national share in September was 25.3%.

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Grella filed a complaint against Kortas and his wife, Edna Montijo, in Maricopa County (Arizona) on March 19.

In total, Grella claims he discovered over $1.5 million worth of “secret, unauthorized” aircraft purchases and jet hangar lease payments – “and all of which Kortas purchased for himself or his wholly owned entities.” 

The document claims breach of the operating agreement, breach of fiduciary duties, unjust enrichment, and conversion, among others allegations. It says Kortas’s “misconduct also supports his removal from the company as a member.”

Grella is asking for attorney fees and punitive damages. He also claims that Kortas converted NEXA funds and made unauthorized credit card purchases, which “have reduced Kortas’ membership percentage interest to below Grella’s membership percentage interest, such that Grella is now the majority owner of Nexa.”  

The lawsuit states that Kortas had 50.5% of the company and Grella had a 49.5% share. 

NEXA’s businesses

America’s largest mortgage brokerage, NEXA originated $6.29 billion in mortgage loans in 2023, according to Kortas. As of Monday, the company had 2,391 sponsored mortgage loan officers, per the Nationwide Multistate Licensing System (NMLS). 

Grella told HousingWire that the mortgage business is profitable despite a challenging market. But that’s not the case for the aviation business. NEXA’s affiliated companies include AXEN Mortgage, a non-delegated correspondent shop, as well as a charter flight business – the latter of which was the source of disagreement between the partners.  

The venture started in February 2022 when Kortas “persuaded” Grella to purchase two jets for NEXA’s corporate use and business purposes, per the lawsuit. The jets would be used to fly executives around the country as needed. However, there were also tax benefits to depreciating those assets, which would justify the investment. Another jet acquisition was made one month later. 

Then, according to the lawsuit, in late 2022, Kortas “convinced” Grella to acquire an FAA-licensed charter company called Fly Dreams, LLC. The justification was that it would help charter the third jet and “dry-lease it, which would help defray NEXA’s aircraft expenses.” 

“After NEXA closed on the purchase of Fly Dreams in early 2023, due to regulatory hurdles that Kortas had failed to flag or explain, NEXA was unable to charter the new jet with Fly Dreams,” the lawsuit states. 

After that, specifically in 2023, Grella said Kortas tried to convince him to purchase an airplane flight school due to a pilot shortage (which he ended up doing independently), invest in an aircraft hangar, and purchase another jet. 

Grella refused and claimed he faced retaliation, with Kortas treating him as an employee rather than a partner, depriving him of the use of the jets, and ceasing the payment of wage for both of them despite NEXA having millions in retained earnings.

Regarding the $24 million airplane-hangar leasehold, the lawsuit that “Grella informed the seller of the truth of Kortas’ inability to bind Nexa.” Then, through his legal counsel, Kortas “asserted that the aviation business is a legitimate business of Nexa and “Grella had consented to some aviation related purchases.” Therefore, according to Kortas, he was authorized to make the purchase on Nexa’s behalf without Grella’s consent, per the lawsuit.

The split

According to Grella, his “abrupt” termination occurred on March 20, after months of frustration related to what he calls a “serious breach of NEXA’s operating agreement, which requires profits to be distributed equally and for both partners to consent to activities not directly related to NEXA’s mortgage brokerage purposes.”

The lawsuit states that Kortas controls the company, bank accounts, and profit distributions. However, the operating agreement says that if the company engages in any other activity that is unrelated to the purpose of mortgage brokerage, it “requires unanimous member consent.”

“But after Kortas developed an aviation hobby, he began spending millions of dollars of company money for his own aircraft, without Grella’s consent, and, in many cases, without his knowledge,” the document states. 

Grella, who started the business with Kortas in 2017 after leaving Equity Prime Mortgage, was responsible for handling the operations, including managing relationships with partners and lenders, overseeing production and supporting loan officers and the management team. 

Kortas announced during a weekly Town Hall on Tuesday that Grella had been terminated. This means he will not be involved in the company’s daily operations or strategic decisions for the growth of the business. However, he remains a partner until the conclusion of a buyout negotiation. 

According to Kortas, the buyout depends on NEXA’s appraisal. Despite his sadness at hearing what he called Grella’s “harmful rhetoric,” Grella appears to be motivated more by his unhappiness with the terms of his agreed-upon buyout than by concerns he claims to have about the related airplane business, Kortas added.

“Of course, Mr. Grella’s ongoing interference with NEXA’s business relationships and expectancies, which appears to be a blatant effort to pressure NEXA into relenting on those contractual rights that Mr. Grella is actually upset about, are doing nothing but causing the type of harm… harm that is irreparable in nature … that Mr. Grella professes to be taking issue with.”

“NEXA will not be bullied or blackmailed into foregoing its legal rights by a former employee who had himself already agreed to no longer be an owner of NEXA.”

Mortgage applications for new homes surged in January as a lack of existing homes continued to fuel the demand for new construction.

Mortgage applications for new home purchases rose 19.1% in January on a year-over-year basis, the 12th consecutive month with an annual increase. Applications were up 38% from the previous month, according to the Mortgage Bankers Association (MBA) Builder Application Survey for January. 

According to MBA estimates, new single-family home sales were at a seasonally adjusted annual rate of 700,000 units in January, the highest pace since October 2023. The pace was up 16.9% from December’s rate of 599,000 units. 

“Applications for new home purchases were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. 

In January, conventional loans accounted for 64.5% of loan applications for new homes. Federal Housing Administration (FHA) loans accounted for 24.8% of applications, U.S. Department of Veteran Affairs (VA) loans took a 10.3% share and U.S. Department of Agriculture (USDA) loans accounted for 0.4%. 

The average loan size for new homes decreased to $401,282 in January, down from $405,368 in December.

Homebuilders are feeling optimistic about the spring buying season. Homebuilder confidence shot up to a five-month high in February, according to the National Association of Home Builders’ most recent survey. 

MBA’s survey tracks new home mortgage application volume from mortgage subsidiaries of homebuilders across the country. 

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