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CFPB finalizes updates to “Know Before You Owe” Mortgage Disclosure

On July 7th, the CFPB announced the finalized updates to the “Know Before You Owe” Mortgage Disclosure rule. Their announcement states that the “changes will provide more clarity, and preserve protections for consumers.” According to CFPB Director Richard Cordray, “A mortgage is one of the largest financial decisions a consumer will ever make, and CFPB’s rules help ensure consumers have the easy-to-understand information they need before making a decision that will significantly impact their financial lives. Our updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process for lenders and consumers.”

The National Association of REALTORS®, states that “as advocated for by NAR, the final rule clarifies the ability to share the Closing Disclosure (CD) with third parties – a victory for real estate professionals nationwide.” Click here for more information.

Click here for the full press release from the CFPB.

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SOURCE:
https://www.consumerfinance.gov/about-us/newsroom/cfpb-finalizes-updates-know-you-owe-mortgage-disclosure/ 
https://www.nar.realtor/articles/cfpb-final-rule-clear-on-ability-to-share-cd
http://files.consumerfinance.gov/f/documents/201707_cfpb_Final-Rule_Amendments-to-Federal-Mortgage-Disclosure-Requirements_TILA.pdf

 

The housing shortage

At the National Association of Real Estate Editors Conference (NAREE) in Denver this month “The housing shortage: dealing with barren inventory” was presented. The panel presenting included Thomas O’Grady, Pro Teck Valuation Services; Aaron Terrazas, Zillow; and Javier Vivas, realtor.com. Here is a snapshot of what was covered.

According to the panel we have had 23 months of historic low home sales. With 200K fewer homes for sale, and 150K of the homes being in the mid- to low-tier. We are losing inventory at record pace and in a segment where we are seeing the most demand – in the entry-level buyer. The shortage is national, and in smaller square footage homes.

When looking at the inventory shortage, there are two factors to consider:

  1. Homes hitting the market are selling fast.
  2. There are not enough homes entering the market.

What’s causing the inventory shortage?

  1. New construction has lagged among existing home sales. Homebuilders are not building at the levels they were.
  2. Homeowners have negative equity in some markets.
  3. There is a shift of owner occupied stock to rented occupied stock with 6.3 million more renter-occupied.
  4. The power of psychology. There is a psychology of market for seller; they are holding on to homes to see what kind of gains they can get.

The homebuilder blame game

Homebuilders are getting a lot of the blame, particularly for affordable homes. 24% of all home building costs is put towards regulations – making it expensive for builders to build. And, there is a ack of labor and a high cost of acquiring land. Smaller builders are also having issues will accessing financing.

Housing trends:

It’s hard to move up in a rising market

People aren’t selling because they cannot replace what they have. Buying up is becoming out of people’s grasp in some markets. There is a fear that I can’t put my house in market because I won’t be able to find anything to buy. This is the inverse of what we had in the boom. Appreciation and run upon price is going to hit into affordability, and as always, people want to get a deal.

A rise in home equity

In appreciating markets where the homeowners have equity and a low interest rate, we are seeing homeowners tap into equity and make home improvements versus putting their homes on the market. 40% of home owners have more than 20% equity. And to further support this, people are staying in homes for 10 years which is an all-time high. This stat used to be only 6 years.

Homeowners in love with their loans Many homeowners are locked in by their super affordable mortgage rate. REALTORS® are starting to say that they have more people in love with their loan than with their home. Many homeowners do not want hassle with competitive market.

Investors are staying in the market

Investors propped up the market by buying homes in the crash. People thought they would sell them but they have been making so much money that they aren’t selling. Rental securitizations are bringing a lot of liquidation. We are seeing this more in urban areas.

Seasonal adjustment disorder

Spring buying season started in the winter this year. This is a very big trend this year. Spring home buying season started 3 weeks earlier based on online activity and market velocity. We typically see a spike in online activity in January. This year we saw a peak at the second week of January. This is important because we saw buyers earlier. 1 in 4 homes are selling in less than a month – typically the housing market hits that in March, but this year we hit it in January. And, some of this seasonal adjustment disorder is attributable to the shift in the population demographics. Younger buyers are not held to seasonality and schools.

The urbanization of employment

Job growth – employment growth over past decade has been concentrated in urban areas. There is an employment drive in a lot of markets. The panel called this the Urbanization of employment – creating white collar jobs.

Creating “gray space”

We are seeing people moving further out and now seeing commuting as a more viable solution for home ownership. A good example of this is people moving from San Francisco to Antioch.

In Nashville the population grew by 10%, but housing stopped and home prices went up. People can’t afford to live there anymore. The Mayor is trying to put housing along transit roots to make more affordable home options.

There is an urban, suburban myth. Will urban searchers ever compromise on their urban dream, or will they move to the “gray space”? These are the “gray spaces” between urban and suburban popping up and picking up in demand. The future of housing could be the Long Island’s of the U.S.

Building wealth and potentially frustration

There is a shadow buyer demand – a lot of renters who got in their rental really wanted to buy. They had no other option and needed the extra space. People want the white picket fence, and are almost frustrated that they cannot get it.

Boomers have preached that the best way for middle class to build wealth is through home ownership. Buyers not yet on the market are asking themselves, “Will I have less wealth because I entered the market later in life compared to the baby boomer?” There is a common legacy of thinking that owning a house is a big deal, and we will see frustration around this.

It is getting harder to get into the market. Many potential homebuyers know that the longer they wait the harder it will be to get into the housing market. The market at the entry level is very competitive. The high end the market is slowing down a bit.

All of this will resolve itself through natural evolutions. LA was a low-cost alternative to NY. And now, Dallas is a low cost alternative to LA.

Ways of adapting to the shortage

  • Seeing more multigenerational, joint home investments.
  • The spillover effect – people will move further out and commute longer.
  • Mermaid effect – people are falling in love with their 2nd and 3rd home choices.
  • Macroeconomic play in effect that will make us have to wait it out.
  • Only feasible relief is through the homebuilders.

Despite all of this according to the panel, the U.S. real estate is one of the most attractive asset classes.

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SOURCE:
https://www.proteckservices.com/category/home-value-forecast/
https://www.zillow.com/research/about-us/aaron-terrazas/
http://research.realtor.com/

 

NAR HOME survey says 71 percent of homeowners believe it’s a good time to sell

The National Association of REALTORS® released their quarterly Housing Opportunities and Market Experience (HOME) survey yesterday, and “71 percent of homeowners believe it’s a good time to sell.”

This is not surprising with the rising home prices.  This is up from 69% last quarter and 61% more than a year ago.

The survey also revealed that 42 percent of respondents believe homes are affordable for almost all buyers, with those living in the Midwest being the most likely to believe homes are affordable (55 percent) — and not surprisingly — West respondents (29 percent) being least likely to think homes are affordable. And, 20% would consider moving to a more affordable community. Twenty-seven percent of these buyers make under $50,000 a year versus 16% who make more than $100,000.

According to Lawrence Yun, NAR chief economist, in the NAR press release “it’s apparent there’s a mismatch between homeowners’ confidence in selling and actually following through and listing their home for sale. There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy. As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.

Yun went on to say, “Perhaps this notable uptick in seller confidence will translate to more added inventory later this year. Low housing turnover is one of the roots of the ongoing supply and affordability problems plaguing many markets.

Click here to see the full press release on the survey’s findings, or here for the full survey.

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SOURCE:
https://www.nar.realtor/news-releases/2017/06/71-percent-of-homeowners-believe-it-s-a-good-time-to-sell-economic-and-financial-confidence-dips
https://www.nar.realtor/infographics/home-survey-june-2017
https://www.nar.realtor/reports/2017-q2-homeownership-opportunities-and-market-experience-home-survey

 

 

 

Buyer traffic on the rise

Each month the National Association of REALTORS® surveys 50,000 real estate practitioners on their expectations for home sales, prices and market conditions to create the REALTORS® Confidence Index. On April 21st, the new REALTOR® Confidence Index was released. The index reflects strong buyer traffic and tight supplies as we enter the peak housing market, and that REALTORS® are optimistic about the next six months. 88% of respondents reported higher prices than a year ago this due to the strong buyer traffic and reduced home inventory levels. Given this demand, REALTORS® believe home prices will continue to climb.

Lawrence Yun, Senior Vice President and Chief Economist highlighted the Confidence Index’s findings as follows:

  • First-time homebuyers accounted for 32 percent of sales.
  • Amid sustained job creation, the share of first-time homebuyers has been on a modest rise, up from 29 percent in 2014.
  • With fewer new foreclosures, distressed properties accounted for six percent of sales, purchases for investment purposes made up 15 percent of sales, and cash sales accounted for 23 percent of sales.
  • Amid tight supply, half of properties that sold in March 2017 were on the market for 34 days or less compared to 47 days in March 2016.
  • Lack of homes for sale was the main issue reported by REALTORS®.

Click here to download the full report.

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SOURCES:
https://www.nar.realtor/news-releases/2017/04/pending-home-sale-dip-08-in-march
https://www.nar.realtor/topics/pending-home-sales
https://www.nar.realtor/reports/realtors-confidence-index

 

ALTA urges CFPB to warn consumers about wire fraud schemes

From the American Land Title Association Title News Online.

In a letter to the Consumer Financial Protection Bureau (CFPB), ALTA urged the bureau to issue an alert warning consumers about wire fraud schemes attempting to steal funds for real estate closings.

“Despite efforts by the title industry and others to educate consumers about the risk, homebuyers continue to be targeted,” said Michelle Korsmo, ALTA’s chief executive officer. “With the spring homebuying season underway, it’s vital to continue raising awareness about these schemes. The CFPB should take this opportunity to protect consumers from criminals looking to steal their money.”

The alert should provide tips on how consumers can protect themselves and questions to ask to help determine if real estate professionals have procedures in place to protect their money. ALTA has educated its members over the past few years about these wire fraud schemes, but the best defense is to inform consumers about the danger.

“Unfortunately, these criminals frequently target homebuyers prior to the title company getting involved in the transaction,” Korsmo said. “In many instances, they obtain access to unsecure email accounts used by consumers or real estate professionals. They use this access to find transaction patterns and details to make their fraudulent communications seem legitimate. The criminals will instruct the buyers to send the funds to a different account and the money vanishes in minutes.”

RESOURCE:
http://www.alta.org/news/news.cfm?20170406-ALTA-Urges-CFPB-to-Warn-Consumers-About-Wire-Fraud-Schemes

Corpus Christi real estate activity is alive and well; City continues to turn on seasonal activity

It is that time of year to start planning your summer vacations. The days are longer, Spring Break is over, and now we can look forward to a sunny spring and summer. This planning brings to mind our Texas beaches. On that note, today I would like to highlight Corpus Christi.

The South Texas Economic Development Center Economic Pulse, 2017, Issue 4 on the “Housing Market Downswing?” covers how the Corpus Christi housing market has boomed since the beginning of the decade. According to the article, “recently, the local economy has stalled in the wake of falling oil prices. Still the area’s residential construction remains remarkably active, and home prices stay at historically high levels.”

Here is a snapshot of the article:

  • The housing market has grown without major interruptions since 2000. Even during the burst of the nationwide housing bubble and the subsequent recession of 2007-2009, local home prices merely slowed down.
  • Along with other metro areas in Texas, Corpus Christi was among the top cities in home price appreciation during the decade ending in 2016.
  • The area’s median home price grew nearly 40 percent over the 2006-2016 period, slightly below the 45 percent and 44 percent growth rates for Houston and Dallas, respectively.While the median home price of the Corpus Christi metro area tended to rise at a solid pace in the past decade, the housing conditions varied widely across its local communities.A real estate bubble might have developed and then burst recently in the Rockport-Fulton area—the major community of Aransas County. Construction of a large number of industrial sites around the Port of Corpus Christi seems to have boosted the housing markets of various communities in San Patricio County. Following a long period of swings in different directions, the median home prices of these three counties converged to about $160,000 by the end of 2016.
  • Developers responded to rising home prices by increasing the supply of home units.The column chart below shows the Real Estate Center’s Texas Home Affordability Index (THAI) for Corpus Christi and the state. The index indicates the ability of the typical household, measured by total earnings, to buy a house selling for the median home price. The higher is the index, the more affordable are homes in the area.The chart suggests that homes in both Corpus Christi and Texas are less affordable today than in 2012. Home prices across Texas have caught up with income growth, which has recently slowed down from the 2011-2014 period of economic boom. Still the latest THAI readings remain higher, meaning more affordable, than their respective readings at the previous housing boom ending in 2007.
  • Given its relatively large exposure to the oil and gas industry, Corpus Christi’s overall economic condition is tied to developments in the oil market. For the three years that local personal income per capita recorded a loss, the crude oil price also fell. Year 2016 was the most recent period that local income per capita shrank, after the collapse of the oil market beginning in early 2015.
  • Oil and gas drilling and production in South Texas began to rebound in late 2016, and based on the oil futures market, oil prices are expected to rise steadily at least in the next six months.
  • Should the current market trends continue under normal conditions, home prices would rise modestly through the end of this year.
  • Corpus Christi will likely continue to recover from the recent economic downturn, holding up home demand.

Let’s talk about seasonal activity.

According to the Texas A & M Corpus Christi South Texas Economic Development Center Corpus Christi employment and unemployment reflect remarkable seasonal fluctuations. This to me, is no surprise given the tourist attractiveness of the city. In this article, Jim Lee covers the seasonal variations in unemployment not only from tourism, but also other cyclical activities which greatly effect South Texas, like harvest seasons and how this effects the agricultural sector, as well as government job and hiring patterns and their contribution to seasonal fluctuations. The graph below shows the Corpus Christi MSA unemployment rates, both the original and then in blue the seasonally adjusted rates.

“The level of farm employment indeed shows considerable seasonal variations. For the United States as a whole, the peak months for farm employment are March and September. Another regular seasonally pattern occurs in retail sales, which tend to peak during the holiday season in November and December 2017.” For Corpus, “employment typically peaks in April, and dips the most in January with New Year holidays.”

To explain the dips in the latter summer months, Lee attributes this to local government. He states, “compared to the average for the first half of the year, employment in the local government sector fell about 1,500 positions on average in July and about 1,200 position in August. This regular pattern was attributable to the summer break taken by some of those 2,500 local grade school teachers. The public sector typically recovered most of the jobs lost from those two summer months in the latter part of the year beginning in September.”

The bottom line, Corpus Christi will continue to be a strong housing market. There is inventory, homes continue to be affordable and the city is on the upward swing of recovery from the energy crisis. And, we now have the seasonal activity to look forward to. Bring on the summer.

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SOURCES:
http://stedc.tamucc.edu/files/Econ_Pulse_2017_1.pdf
https://stedc.atavist.com/housing-market-downswing

 

Keeping it safe

Today safety is something we all think about and often worry about. We have alarm systems for our cars, homes, video surveillance, video doorbells and many other safety features to keep our family and our homes safe. For REALTORS® safety is a part of their daily job and a growing concern. Their own personal safety, as well as the safety of their clients and the homes that they have been entrusted to market and sell. REALTORS meet new people every day. They interact with unknown agents, show homes to people they may have never met before, and staff Open Houses and events for the general public. And, this all to help you market your home. Due to this high exposure, REALTORS must take precaution and approach safety first. Check out this video by the National Association of REALTORS® on personal safety protocols and what to expect when working with a REALTOR. This video is a great resource to share with clients and homebuyers to learn about the potential safety protocols you may encounter when working with a REALTOR®.

For more information on safety, visit REALTOR Safety provided by the National Association of REALTORS.

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RESOURCES:
https://www.nar.realtor/topics/realtor-safety/articles

Cybersecurity: NAR Email Best Practices

As promised, I will be outlining the National Association of REALTORS® Best Practices from their NAR Data Security and Privacy Toolkit.  The National Association of REALTORS Legal Affairs Department outline the following Best Practices on Email.

Unsecure email accounts are open doors to cyber criminals.  Follow these guidelines to help keep that door securely shut and locked tight.

·        Whenever possible, avoid sending sensitive information via email.

·        If you must send sensitive information via email, make sure to use encrypted email.

·        Never trust contact information in unverified emails.

·        If an email looks even slightly suspicious, do not click on any links in it, and do not reply to it.

·        Clean out your email account regularly.  You can always store important emails on your hard drive.

·        Do not use free wi-fi to transact business.

·        Avoid using free email accounts for business.

·        Use strong passwords.

·        Change your password regularly.

These are quick and easy reminders of good email practices. I cannot emphasize enough the importance of secure email. We are in a very transaction heavy business full of NPPI (non-public personal information), and the information that we share should abide by privacy laws including Gramm-Leach-Bliley Act, should not include NPPI, and must be transmitted via secure, encrypted email. Here is a guide from the Federal Trade Commission on how to comply with the Privacy of Consumer Financial Information Rule. And, as a bonus, here is a webcast offered by the American Land Title Association on Best Practices: Protecting Non-public, Personal Information.

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RESOURCES:
https://www.nar.realtor/sites/default/files/handouts-and-brochures/2015/protecting-from-cyberfraud-handout-2015-11-24.pdf
http://www.realtor.org/law-and-ethics/nars-data-security-and-privacy-toolkit
https://www.ftc.gov/system/files/documents/plain-language/bus67-how-comply-privacy-consumer-financial-information-rule-gramm-leach-bliley-act.pdf

Cybersecurity: Creating strong passwords

Last week I covered two cybersecurity topics Protecting your business and Protecting your cell phone. Today, I wanted to give you a quick tip on how to create strong passwords to help protect your accounts. Strong passwords help to prevent unauthorized users from using your computer, systems and applications. Check out the list of the worst passwords according to Forbes. Hopefully your passwords do not make the list. If they do, the tips below will help you to create a stronger password.

While not fool proof, creating a stronger passwords can help to reduce the chances of becoming a victim of a hacker according to a hacker himself in Advice from a Real Hacker.

  1. Choose a random set of characters that are the maximum that your system will accept. The longer the password, the harder it is to hack.
  2. Use at least 8 characters.
  3. Do not use a dictionary word. Dictionary words are easy to crack.
  4. Do not use your username or name in your password.
  5. Does not use a complete word.
  6. Use at least one of every character type in your password, i.e. uppercase, lowercase, a number and a special character.
  7. Never just use numbers. Don’t use a password made completely of numbers with not uppercase or lower case letter. The 10-digit number key pad do not provide many options for your password, and can be easily broken into.
  8. Use different passwords for different accounts. Using the same password across all of your account is just plain risky. Try varying your passwords, and using a system that works for you.
  9. Create a passphrase for your password where the character limits allow the space.

Remember your strong passwords are only as good as where you store them, so make sure to keep your passwords secure. And, do not leave them by your computer. If you have a hard time remembering all of your passwords, you can always use a trusted password manager. Check out Consumer Reports for more info on password managers, and see PC Magazine for the Best Password Managers of 2017.

Another way to protect yourself is to set-up two-factor authentication.

I hope you find this helpful. To receive updates from Tandy on Real Estate direct to your inbox, please subscribe here.

RESOURCES:
http://www.inman.com/2015/03/19/awa-access-without-authorization-hacking-and-what-it-means-to-real-estate/
https://null-byte.wonderhowto.com/how-to/advice-from-real-hacker-protect-yourself-from-being-hacked-0157218/
https://null-byte.wonderhowto.com/how-to/advice-from-real-hacker-create-stronger-passwords-0156907/
https://support.microsoft.com/en-us/instantanswers/9bd5223b-efbe-aa95-b15a-2fb37bef637d/create-a-strong-password
https://en.wikipedia.org/wiki/Passphrase
https://www.forbes.com/sites/ygrauer/2017/01/23/2016s-worst-passwords-are-just-as-bad-as-2015s-so-please-tell-me-yours-is-not-on-the-list/#2f0da6f33879
http://www.pcmag.com/article2/0,2817,2456400,00.asp
http://www.consumerreports.org/digital-security/everything-you-need-to-know-about-password-managers/
http://www.pcmag.com/article2/0,2817,2407168,00.asp

Cybersecurity: Protecting your cell phone

Where would we be without our smart phones today? You can basically conduct your business via your cell phone. It is amazingly convenient, easy to access and backup, and a powerful efficiency tool. But, it is also not without its security issues.

Today cell phone usage blurs the lines between our personal and business lives. From our contacts, online banking, social media accounts, fitness apps, games to our emails and business applications, our phones house access to our life’s operating system. And, with this they store a mass of sensitive information. The National Association of REALTORS says that, “more sensitive data about you and your work (passwords, credit card numbers, contacts, messages, e-mail) is accessible from your mobile device than any other piece of technology you have. Inman News says that REALTORS are walking around with a bulls eye on their back for hackers.

Here are 6 tips to protect your smart phone from The National Association of REALTORS:

  1. Enable your device’s screen lock and change the PIN regularly.
  2. Experts advise against saving passwords at individual sites, such as Amazon or Chase, because they can become saved deep in your phone’s memory. Instead, use an app designed specifically for saving passwords. Click here to learn about password managers.
  3. Update all your apps regularly. Updates provide needed security patches.
  4. Know and regularly review your phone’s security and permission settings. Have you given Facebook permission to access your e-mail contacts?
  5. Use public Wi-Fi with caution. When you’re on a café’s public Wi-Fi, for example, the café has access to everything you transmit, from text messages to data.
  6. Only download apps from a known app store to avoid apps filled with dangerous pieces of malware that could steal your sensitive data.

And, as a business owner RISMedia advises that you should also have the ability to remote track and wipe smart phones to protect your business.

I hope this is helpful to safeguard your smart phones. To receive updates from Tandy on Real Estate direct to your inbox, please subscribe here.

SOURCES:
https://www.nar.realtor/articles/legal-you-re-the-ideal-target-for-cybercrime
http://www.inman.com/2015/03/19/awa-access-without-authorization-hacking-and-what-it-means-to-real-estate/
http://rismedia.com/2014/08/07/3-cybersecurity-tips-that-can-pay-off-for-your-business/#close
https://en.wikipedia.org/wiki/Password_manager

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