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Updated: 52 min 12 sec ago

Contract Settlement Issues: Financing and Appraisals are Major Issues

Tue, 11/17/2015 - 08:04

In reporting on their last contract that went into settlement or was terminated over the period July-September 2015, REALTORS® reported that 64 percent of contracts were settled on time, 30 percent had delayed settlement, and six percent were terminated, according to the September 2015 REALTORS® Confidence Index Survey Report.

Of all contracts settled/terminated, financing, appraisal, and home inspection issues were the major problems: 18 percent had financing issues, 11 percent had appraisal issues, and 11 percent had home inspection issues.

Among contracts that had a delayed settlement (30 percent), 42 percent of contracts that were delayed had financing issues.

Among contracts that were terminated (six percent), home inspection and financing issues were the major causes, with 28 percent of contracts experiencing both these issues.

REALTORS® have expressed concern about the possible delays in closing arising from the new TILA and RESPA integrated disclosure regulations that took effect on October 3, 2015. About 92 percent of respondents reported taking measures to be ready for the implementation of the new disclosure regulations (that took effect on October 3, 2015) such as attending seminars, coordinating with lenders, advising clients, and revising model contracts in line with the new TILA-RESPA guidelines.

2015 Home Buying Trend: Purchasing Larger Homes

Mon, 11/16/2015 - 10:01

Home buyer demographics change slightly from year to year due to macroeconomic forces from the health of the economy to inflation to the global trade on oil prices. The National Association of REALTORS® recently released its 2015 Profile of Home Buyers and Sellers report and there are some interesting new trends emerging this year.

One of the most fascinating is that in almost every region of the United States, we saw buyers trading up and buying bigger homes than last year. According to the new report, 42 percent of all buyers traded up in the size of their home, up from 40 percent in 2014. In the 2014 report, buyers reported that they were looking for homes similar in size at 31 percent compared to 29 percent in 2015. Regionally, the percentage of buyers looking for larger homes increased across the board.

One reason for this shift in purchasing power is that people finally have more equity from selling their previous homes in order to buy a bigger one. Since the housing downturn in 2010, many homes were worth less than their mortgages. Over the last several years, home prices have been rising. In 2014, 17 percent reported waiting or stalling to sell their home, which dropped to 13 percent in 2015. Sellers also reported that they sold their homes for a median of $40,000 more than they purchased it, up from $30,100 in 2014. The most common reason for selling a home in 2015 was that the home was too small at 16 percent.

The typical seller in 2015 was 54 years old (same as last year) and the median household income was $104,000, up from $96,700 in 2014. Buyers aged 35 to 44 years, or Generation X, was the second largest age group to purchase homes last year at 20 percent, behind Millennials 34 years or young where 28 percent purchased homes. We can speculate that Generation X-ers probably had a child in the last few years and wanted a bigger home to expand their family. Finally, we see the trend where repeat buyers have been able to sell their homes at a higher price in order to trade up and purchase larger homes.

 

Rising New Construction Adds Pressure on Vacancies in REALTORS® CRE Markets in Q3.2015

Fri, 11/13/2015 - 13:45

Commercial fundamentals in REALTORS® markets continued gaining strength during the third quarter of 2015. Based on NAR’s Commercial Real Estate Market Trends report leasing advanced, followed by higher rents.

However, accelerating commercial construction in smaller markets prompted an increase in vacancy rates, which ranged from a low of 7.4 percent for apartments to a high of 17.5 percent for hotel properties. With rising new supply, apartments experienced availability increases, as the national average rose from 6.1 percent in the third quarter of 2014 to 7.4 percent in the third quarter of this year.

Office vacancies increased 30 basis points to 16.0 percent compared with a year ago.  Industrial availability witnessed a yearly increase of 160 basis points—to 11.5 percent. Retail vacancies declined 80 basis points on a yearly basis, to 13.0 percent.

Lease concessions declined 4.5 percent. Tenant improvement (TI) allowances averaged $30 per square foot per year nationally.

Members indicated that the following areas presented the greatest opportunities:

-          Redevelopment/Repositioning

-          Industrial

-          New Development/Construction

-          Apartments/Multifamily

-          Land

-          Retail

-          Capital Availability/Interest Rates

-          International Investors

-          Small Business

-          Office

-          Regional/Local Growth

-          Agriculture

-          Distressed Properties

-          Senior Housing

-          NNN Properties

 

To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.

 

Sales to First-Time Buyers: 29 Percent of Sales in September 2015

Fri, 11/13/2015 - 06:57

The share of first-time home buyers has remained essentially unchanged for the last five years. First-time home buyers accounted for 29 percent of existing home sales in September 2015, according to the September 2015 REALTORS® Confidence Index Survey Report.12 REALTOR® respondents reported that tight inventory, increasingly unaffordable prices, weak income, and credit profiles that fail to meet tighter underwriting standards are conditions that continue to work against first-time home buyers.

Buyers age 34 and under, which are typically first-time buyers, accounted for 28 percent of sales reported by the respondents. Nearly half of buyers were in the 35 to 55-year old age group.Slightly more than half of all reported buyers lived in their own homes before making their recent home purchase. These include trade-up or trade-down buyers as well as those who are purchasing a second home or one for investment purpose. Prior renters, many of whom are first-time buyers, accounted for 35 percent of sales, essentially unchanged compared to past months.

12 First-time buyers accounted for about 33 percent of all home buyers based on data from NAR’s 2014 Profile of Home Buyers and Sellers (HBS). The HBS is a survey of primary residence home buyers and does not capture investor purchases but does cover both existing and new home sales. The RCI Survey is a survey of REALTORS® about their transactions and captures purchases for investment purposes and second homes for existing homes.

TRID: A Business Opportunity?

Thu, 11/12/2015 - 09:55

On October 3rd the new closing process and documents known as Know Before You Owe or “TRID” was implemented. These changes could make it harder for lenders to complete closings on time. But they might also present an opportunity for REALTORS® to add value from a Lenders’ perspective and to cement relationships.

When asked what changes REALTORS® could make to help reduce issues under the new Know Before You Owe (TRID) rules, the most frequently cited change was to council buyers on making all changes to their loan earlier in the process. Second was to urge the borrower to provide all documentation sooner. Factors that REALTORS® have the most control over, pre-closing walk-through inspections and providing the sales contract earlier, were the least useful.

A significant share of consumers chooses their REALTOR® based on lender referral. Marshaling your client through what is expected in this new lending environment could aid lenders and pay dividends down the road.

 

REALTORS® Reported Strong Demand But Weak Supply in September 2015

Wed, 11/11/2015 - 12:58

Local conditions vary, but the number of REALTOR® respondents who reported “strong” buyer traffic outnumbered those who reported “weak” traffic in September 2015, according to the September 2015 REALTORS® Confidence Index Survey Report.[1] The REALTORS® Buyer Traffic Index registered at 53 (60 in August 2015; 44 in September 2014). Buyer traffic was stronger compared to a year ago, but was slower after the strong spring and summer months, as is typically the case.

Inventory remained tight, with more respondents reporting “weak” than “strong” traffic from prospective sellers. The REALTORS® Seller Traffic Index dipped to 41 (45 in August 2015 and 39 in September 2014). While the construction of new privately owned housing units has been improving, reaching 1.2 million units in the second quarter of 2015, roughly 40 percent of recent new construction has been multifamily structures which are typically for rental occupancy. Historically, multifamily structures accounted for only 20 percent of new construction, so the availability of single-units for purchase among recently constructed properties is lower than was historically normal. REALTORS® reported low inventory of properties in the lower price range and for those that are move-in ready.

[1] Respondents were asked “How do you rate the past month’s traffic in the neighborhood(s) or area(s) where you make most of your sales?” for Prospective Buyers and Prospective Sellers.

Veterans Day: Active Military and Veteran Home Buyers

Wed, 11/11/2015 - 10:18

Today we honor those who have served, and those who are actively serving in the military. Looking at data from the recently released 2015 Profile of Home Buyers and Sellers, we can see home buying trends among active military and veteran home buyers.

  • Recent home buyers who were active military or veterans made up 21 percent of all recent home buyers. 28 percent were first-time home buyers.

  • The median age among active military and veteran home buyers was 48 years old. Active military buyers were typically 34 years old, and veteran buyers were 61 years old.
  • Seventy-eight percent of buyers were married couples, nine percent single males, and 6 percent single females.
  • The most commonly purchased home type was a single-family home at 86 percent, five percent purchased townhomes, and two percent purchased apartments or condos.
  • Prior to purchasing, 50 percent of buyers rented an apartment or house.
  • The main reason for their recent purchase was the desire to own a home of their own, 26 percent. Twenty-one percent purchased because of a job related relocation or move.

  • Forty-one percent of recent buyers found virtual home tours to be very useful during the home search process.
  • When searching for their home 85 percent of active military and veteran home buyers bought their home through a real estate agent or broker.

For more information on active military and veteran home buyers view the Veterans Day infographic, and highlights from the 2015 Profile of Home Buyers and Sellers.

In What States Did Properties Sell Quickly in July-September 2015?

Tue, 11/10/2015 - 15:33

In the monthly REALTORS® Confidence Index Survey, NAR asks REALTORS® “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?” The map below shows the median days on market respondents indicated for their sales from July-September 2015, according to the September 2015 REALTORS® Confidence Index Survey Report.[1]

Properties typically sold within a month in California, Utah, Colorado, South Dakota, Nebraska, Texas, and the District of Columbia. In Vermont, properties were typically on the market for longer than 90 days when sold. All real estate is local. State-level data is provided for REALTORS® who may want to compare local markets against the state and national summary

[1] The median days on market is the value such that half of properties stayed in the market below the median days and half of properties stayed on the market above the median days.

 

Cap Rates Compress in REALTORS® Commercial Markets During Q3.2015

Tue, 11/10/2015 - 13:12

Commercial real estate transactions span the price spectrum, but tend to be measured and reported based on size. While the majority of buildings (81 percent) are relatively small (SCRE), with the bulk of commercial space (71 percent) concentrated in larger buildings (LCRE), larger buildings account for the majority of sales. CRE deals at the higher end—$2.5 million and above—comprise a large share of investment sales, with transaction data readily available from several sources, including Real Capital Analytics (RCA).

Data for smaller transactions—$2.5 million and below—many of which are handled by REALTORS®, are less widely available. NAR’s Commercial Real Estate Market Trends gathers market information for SCRE properties and transactions.

Based on the latest NAR report on REALTORS® CRE markets, capitalization rates averaged 7.9 percent across all property types, a 26 basis point decline on a yearly basis. Apartments posted the lowest cap rate, at 6.7 percent, followed by retail properties with average cap rates at 7.7 percent. Office and industrial spaces posted identical cap rates of 7.8 percent. Hotel transactions reported the highest comparative cap rates—8.8 percent.

Investors in SCRE markets have been attracted by the yield premiums. Capitalization rates for transactions in LCRE markets averaged 6.9 percent in the third quarter, based on RCA reports. Transactions of office properties in CBD markets recorded the lowest cap rates, at 5.3 percent, followed by apartment, at 5.8 percent. Retail and industrial properties also posted sub-7.0 percent cap rates, while hotel transactions averaged cap rates of 8.2 percent in the third quarter.

The interest rate on 10-year Treasury Notes—a standard measure of risk-free investments—averaged 2.2 percent during the third quarter of 2015, higher than the second quarter. Based on the prevailing rates, the spread between cap rates and 10-year Treasury Notes ranged from 470 basis points in LCRE market to 573 basis points in SCRE markets. The spread denotes that CRE investors are continue to enjoy healthy returns in the rebounding markets.

To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.

 

Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think

Mon, 11/09/2015 - 15:48

Some homeowners opt to sell their residence without a real estate agent to get around paying a commission and make more of the profit. Forty-eight percent of people who sell without a real estate agent think that if they sell themselves, they’ll end up doing a little extra work in exchange for not paying a commission or closing fee. According to the research, however, what they actually get is a lot of time spent hustling to make the sale and a final selling price that is less than what the market can bear.

Do you have a lot of extra time to market your home and do all the work to meet and greet properly? Are you versed in local trends on the housing market and know the latest regulations for closing a sale? Do you have a list of potential buyers ready to view your home? Eighty-nine percent of all homes sold in 2015 were sold with the assistance of an experienced real estate professional, according to the 2015 Home Buyers and Sellers Profile. Most leave it to the professionals, yet there is still a small group of people who prefer to do it themselves. Eight percent of home sellers chose to list themselves, known as For-Sale-By-Owners (FSBO) home sales. That number has steadily declined since 2004 where only 82 percent of all home sales were agent-assisted and 14 percent of homes were listed FSBO. FSBO sales are currently at an all-time low since data collection began in 1981.

Let’s break it down further. Thirty-eight percent of all FSBOs—that’s only three percent of the total home sales in 2015—were homes sold to people where the buyer knew the seller selling to a friend, neighbor, or family member. However, 62 percent of FSBO home sales—five percent of total homes sold—were sold by the owner to someone they didn’t know. According to the 2015 Home Buyers and Sellers Profile report, sellers cited creating yard sings, listing their homes online on multiple websites, spreading the news through word of mouth, putting out classified ads, displaying on social media, hosting an open house, and registering with the Multiple Listing Service (MLS) database. That’s a lot of work just on marketing and finding potential buyers.

The time it takes to sell a home on the market was roughly the same for FSBOs and for agent-assisted homes, the median time listed was four weeks for both groups. A third of all homes were sold in less than two weeks last year. Most FSBO homes sales were located in a resort area (16 percent), rural area (15 percent), or a small town (13 percent). Seventy-five percent of FSBO sales were detached single-family homes. Ten percent were mobile or manufactured homes. FSBOs typically had lower incomes than those who worked with an agent. The median income of FSBOs was $84,000 and for those who sold through an agent was $105,600. Those who sell themselves have the perception that they have less money to pay for assistance when selling their home and opt to go it alone.

As it turns out, FSBO make less money on their home sales than buyers who work with a real estate agent. According to the report, the median selling price for all FSBO homes was $210,000 last year. When the buyer knew the seller in FSBO sales, the number plunges to the median selling price of $151,900. For homes sold with the assistance of an agent, the median selling price was $249,000 ̶ almost $40,000 more for the typical home sale. According to NAR’s 2015 Member Profile, sixty-nine percent of all real estate agents get paid by a percentage commission split between two agents representing the buyer and seller.

Talk to an agent and find out what they suggest for the commission and then do the math yourself. The closing price for the agent-assisted seller is likely going to be way above an FSBO. In reality, homes sold by the owner make less money overall. Based on these closing numbers, why not save yourself time and make more money by working with a real estate agent that is excited to sell your home?

 

FHA Lending Likely to Tighten Modestly

Mon, 11/09/2015 - 10:41

Lenders who responded to the 3rd Quarter Survey of Mortgage Originators indicated that proposed changes by the FHA may cause them to tighten their credit standards modestly. While this change is unfortunate, it would be a mild reversion to what is already a tight credit environment. These changes are not likely to affect the FHA’s profitability, nor will it impact the market as demand is currently strong relative to supply, but it does limit opportunities for first-time, boomerang, and credit impaired homebuyers.

In September, the Federal Housing Administration (FHA) proposed an update to its certification policy. Under current policy lenders must certify that the loans they send for FHA for insurance comply with all standards set forth by the FHA. However, in recent years the FHA has forced some lenders to indemnify the FHA of losses on some loans, while the Department of Justice has pursued lawsuits against lenders under the False Claims Act for discrepancies between what lenders certified and what was actually produced. Lenders have been looking for more clarity from the certification policy as to what errors will trigger a lawsuit or indemnification as well as more variation in the degree of punishment relative to the infraction. To protect themselves, lenders have raised their minimum credit scores to ameliorate potential defaults and to avoid gaining the attention of the FHA and DOJ.

More than half (60.0 percent) of respondents indicated that the new proposal would not have an impact on their lending. 10.0 percent of the lenders in the survey indicated that they would raise their minimum credit requirement, while an additional 20 percent indicated that at least some of their investors had raised their requirements for purchasing loans. Of those raising their minimum credit score, 71.4 percent indicated that the new minimum would be 640, while the remaining 28.6 percent would set the floor at 620.

This reading may give some false comfort as many lenders did not follow the example of Wells Fargo and other lenders who lowered their credit standards in the spring of 2014. Thus, this move suggests a modest reversion toward the same overlays that have dominated the market place for several years. Despite this setback, the FHA’s finances will continue to improve due to advantageous pricing and limited risk on its book of business.

Real Estate Agents: Still Primary Source for Homes

Fri, 11/06/2015 - 15:25

We have been mistakenly focused on the wrong thing about the home search process. It is true, we are in a digital age and when Millennials as first-time buyers begin their home search for the first time, without knowing anything about how to buy a home, they go online as the first step. New NAR data from the 2015 Profile of Home Buyers and Sellers shows that the first step in the buying process is to look online – 42 percent of buyers started here and 13 percent of buyers looked online for information about the home buying process in the effort to educate themselves. Only 14 percent contact a real estate agent right out of the gate.

We also know from the research that the majority of buyers work with a real estate agent to close on a home, nine in 10 buyers signed with the help of an agent in fact. We dug a little further to inquire about the role of the real estate agent in the entire process. Here are some quick facts in response to questions from our survey:

When we factor in the real estate agent’s use of digital technology, their share in introducing buyers to the home they eventually purchased is the overwhelming factor for buyers at 42 percent of the sources. Buyers found their homes 34 percent of the time from a variety of online sources and 17 percent of the time from either from someone they knew or in person.

For buyers that looked online for properties, they visited 10 homes over the course of 10 weeks before they purchased. For buyers that went straight to a real estate agent and did not look online, they visited five homes over only five weeks before they made their purchase. The numbers indicate that working with an agent can save a buyer time and effort. Ninety-one percent said they were satisfied with the home buying process.

Latest Employment Report (October 2015)

Fri, 11/06/2015 - 10:23
  • Big numbers on employment with a whopping 271,000 net new job creation in October. Over the past 12 months the tally comes to an impressive 2.8 million net new jobs. Real estate can therefore expect further expansion.
  • Even better news: wages are breaking higher. The average hourly earnings rose by 2.5 percent over the past 12 months to $25.20, which is the best gain in seven years. Given that rents and home prices are rising faster than income, more gain in income is needed to help on the affordability front. Wages in the construction rose by 2.6 percent to $27.54 per hour.
  • Even though construction jobs pay more, only 5,000 jobs were created in the construction of residential homes and related general contractor work. Today there are a total of 2.5 million working in the residential construction area, which is about one million below the peak employment in the sector a decade ago. Homebuilders constantly mention the worker shortage in hindering the building of more homes.
  • The unemployment rate remained at 5.0 percent, which is reflecting good conditions. But the opposite side of the coin – the employment rate – measuring what percentage of people have jobs still remains low and stuck at 59 percent. Therefore, it is a mix bag still on employment conditions.
  • As to REALTORS®, the overall membership figures have been rising at around 6 percent from one year ago. Some states are experiencing a faster gain such as in Florida, Utah, and South Carolina where the local job market and the local housing market has been doing well. Though the median income is slightly under $50,000 per year, one should keep in mind that the median is derived from 23 percent of members earning $100,000 or more per year and 19 percent of members earning less than $10,000 per year.

 

 

Properties Typically Sold Within 49 Days in September 2015

Thu, 11/05/2015 - 15:10

Properties that closed in September 2015 were typically on the market for a shorter time compared to a year ago, staying on the market only 49 days (47 days in August 2015; 56 days in September 2014), according to the September 2015 REALTORS® Confidence Index survey report .11 Days on market usually increase after the spring and summer months due to the seasonal slowing down in demand. Respondents reported that it typically took another 41 days to close the sale.

Short sales were on the market for the longest time at 135 days, while foreclosed properties generally stayed on the market for 57 days. Non-distressed properties were typically on the market for 48 days.

Properties that stay on the market for longer are more likely to sell at a discount. The chart below show the price discount or premium from the listing price for properties that sold from January-September 2015 based on a survey of REALTORS®. Only three percent of properties that sold within one month were sold for a discount of 12 percent or more from the listing price. Meanwhile, 37 percent of properties that sold after sitting for 12 months or more on the market were discounted by 12 percent or more.

11 Respondents were asked “For the last house that you closed in the past month, how long was it on the market from listing time to the time the seller accepted the buyer’s offer?” The median is the number of days at which half of the properties stayed on the market.

Sales in REALTORS® Commercial Markets Rise During Q3.2015

Thu, 11/05/2015 - 10:28

Commercial real estate space is heavily concentrated in large buildings, but large buildings are a relatively small number of the overall stock of commercial buildings. In terms of inventory, commercial real estate markets are bifurcated, with the majority of buildings (81 percent) being relatively small (SCRE), while the bulk of commercial space (71 percent) is concentrated in larger buildings (LCRE). The bifurcation continues along transaction volumes as well, with deals at the higher end—$2.5 million and above—comprising a large share of investment sales, while transactions at the lower end make up a smaller piece of the pie.

Data are readily available for transactions in excess of $2.5 million from several sources, including Real Capital Analytics (RCA). However, in general, data for smaller transactions—many of which are handled by REALTORS®—are less widely available. NAR’s Commercial Real Estate Market Trends gathers market information for SCRE properties and transactions, mostly valued below $2.5 million.

Commercial real estate sales volume in LCRE markets posted a 3 percent year-over-year increase, totaling $115 billion during the third quarter of 2015, based on RCA data. The pace of deals has been declining steadily during 2015, with each successive quarter posting smaller year-over-year increases.

In SCRE markets sales advanced, with REALTORS® reporting rising investment volume.  Sales of commercial properties during the second quarter rose 7.0 percent on a year-over-year basis.

Prices in LCRE markets rose by 14.2 percent during the third quarter of this year, based on RCA’s Commercial Property Price Index. The advance was driven by strong appreciation in prices of apartment and CBD office properties, both of which have exceeded their prior 2007 peaks.

Price growth moderated in SCRE markets during the third quarter of 2015, with properties trading at 3.8 percent higher average prices compared with the same period in 2014.  The average transaction price decreased from $2.0 million in the second quarter 2015 to $1.9 million in the third quarter 2015.

To access the latest Commercial Real Estate Market Trends report, visit: http://www.realtor.org/research-and-statistics/commercial-real-estate-market-survey.

Applications for Purchase Mortgages

Wed, 11/04/2015 - 15:37
  • Applications for purchase mortgages eased 0.6 percent for the week ending October 23rd after a 3.1 percent decline in the prior week, but the 4-week moving average remains strong. A boom and bust pattern developed around the implementation of the new TILA RESPA Integrated Documentation (TRID) closing documents and process also known as the Know Before You Owe rule on October 3rd.

  • Subsequent to the implementation, purchase applications have fluctuated, but the 4-week moving average, a means of smoothing this weekly volatility, is still 15.4% stronger than a year earlier, though it slipped 8.3% from a week earlier as the strong post-TRID jump cycled out of this measure.
  • Conventional applications rose 0.8 percent relative to last week, while government applications slipped 3.8 percent.
  • The average contract rate on a 30-year fixed inched 3 basis points higher to 4.01 percent. Though slightly up from last week, it is well below the 4.17 percent average rate at the same time in 2014.  That difference is a savings of more than $220 a year on a $200,000 mortgage.

 

Latest State-Level Employment (September 2015)

Wed, 11/04/2015 - 10:47
  • Utah continues to hold the lead in job creation in the latest data. Idaho and South Carolina are catching up and narrowing the gap. At the opposite end, any state with an exposure to energy production is getting slammed. North Dakota and West Virginia have measurably fewer jobs now compared to one year ago.
  • It should be no surprise that the states with faster job growth are generally the ones with better real estate performance. Home sales and commercial leasing activity roll along with jobs.
  • The one-year change provides a good picture of the momentum: better/worse and accelerating/decelerating. It is nonetheless worth noting a longer term trend as well. North Dakota is the worst performer for jobs in the past 12 months but it is the best performer over the past 15 years. Michigan is ranked #11 over the past 12 months but it is the worst performer over the past 15 years.
  • Another worthy point in the latest job data is the importance of diversification of the local economy. Dallas, used to the most popular TV show many years back with the sleazy oil tycoon J.R. Ewing. Today, Dallas is no longer strictly oil and is creating jobs in insurance, auto parts, and many other industries. Houston by contrast is more oil dependent and the job creations look to be halting in the near future.
  • As an aside Utah has been in the lead from the beginning of the year. Governor Gary Herbert, a former REALTOR® and a former president of Salt Lake Board of REALTORS® has said his background in real estate has helped formulate right policies for the state economy. It could be his policies or other random economic forces at work. But one unique thing about Utah is that it is dead last in spending on education at only $6,500 per pupil compared to $10,700 U.S. average. Many studies on early childhood education emphasize reading books by parents and the number of vocabulary words exposure as significant determinants of kid’s later educational success. Evidently, there must be a lot of reading going on at home in Utah.

Demand Continues to Outstrip Supply in Many States in September 2015

Tue, 11/03/2015 - 15:37

REALTORS® continue to report that buyer demand is outpacing supply in many states, according to the September 2015 REALTORS® Confidence Index survey report. An index above 50 suggests more respondents reporting “strong” than “weak” conditions.

In most states, the number of respondents who reported “strong” buyer traffic outnumbered those who reported “weak” buyer traffic, measured by the REALTORS® Buyer Traffic Index. States with the strongest buyer traffic were Washington, Oregon, and Wyoming. Supply conditions, measured by the REALTORS® Seller Traffic Index, remained broadly “weak” in many states, except in Montana, Wyoming, North Dakota, South Dakota, Texas, Alabama, and Maine.

REALTOR® University Speaker Series

Tue, 11/03/2015 - 11:21

Don’t miss this week’s REALTOR® University session on ‘Dynamic Scoring’ presented by Thomas A. Barthold on Friday, November 6th.

The REALTOR® University Speaker Series is a platform for noted economists, demographers, and social scientists to share views on real estate and economic topics of interest to REALTORS® and others involved with residential and commercial real estate and related professions.

This week’s speaker is Thomas A. Barthold, chief of staff for the Joint Committee on Taxation, who will discuss Dynamic Scoring: Methodology, Issues, and Implications on Tax Legislation on Friday, November 6th. Registration for the luncheon presentation is requested and can be completed here.

Presentations, including this week’s, are generally held at the National Association of Realtors® Washington, DC office at 12:00 p.m. ET. These presentations are open to the public and a light lunch is available.

A complimentary webinar session is available to guests who cannot attend in-person. Register here for the webinar on Dynamic Scoring.

Attendees will find information on a diverse selection of real estate topics. These sessions can appeal to a variety of audiences:

  • REALTOR® University students enhancing their capabilities
  • State and local associations for staff or member training
  • Brokerages providing education to participating staff
  • University classes on real estate
  • Members of the general public

Videos from past Realtor® University Speaker Series events are available here and written summaries of the events can be found on the Economists’ Outlook blog here.

We hope that you will attend in person or engage with us online using the hashtag #RULectures. Upcoming Realtor® University Speaker Series events can be found here.

Modest Improvements to Lending in the 3rd Quarter

Mon, 11/02/2015 - 15:29

NAR research continues to monitor access to credit and other issues affecting the ability of homebuyers to finance their purchase. In the 3rd Quarter Survey of Mortgage Originators, lenders were queried about recent production trends and expectations for the future. Survey participants were also queried about their preparation for the Know Before You Owe (a.k.a. TRID) changes to the closing process, the FHA’s proposed changes to its certification policy, and the CFPB’s expansion of the small lender exemption to the Ability to Repay (ATR) rule. Access to credit has expanded in the conventional space, while volume in the rebuttable presumption space has improved, but access remains tight in the non-QM space and clouds are forming on the horizon.

Highlights of the Survey:

  • The non-QM share of originations shrank again to just 0.3 percent of production in the 3rd quarter, while the rebuttable presumption share expanded to 6.7 percent.
  • Both the share of lenders offering and willingness to extend non-QM and rebuttable presumption loans eased, while willingness to extend plateaued at a high level for prime loans.
  • Investor demand slipped sharply in the 3rd quarter with more lenders indicating a “wait and see” strategy with respect to investor takeout.
  • Over the next six months, respondents expect access to credit for non-QM and rebuttable loans to moderate.  However, investor demand for all loan categories is expected to rise over this same time frame.
  • Only 20.0 percent of respondents indicated full confidence in their own preparations for TRID after implementation in October and 75.0 percent were recommending longer lock periods for their clients.
  • 40.0 percent of respondents indicated some reluctance to offer pre-approval letters.
  • In response to the FHA’s proposed certification policy, 30.0 percent of lenders plan to raise their minimum credit standards, with 71.4 percent of that group targeting a 640 minimum score.
  • Finally, none of the respondents in this survey either benefit from or were willing to take advantage of the CFPB’s expansion of the small lender exemption under the qualified mortgage (QM) rule.

 

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