Tandy On Real Estate

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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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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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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Cybersecurity: How businesses can help protect the consumer

A cybersecurity plan is not something that you create once. As a business owner and even a smart consumer, you should be aware of current cybersecurity issues, what to watch for and how to help protect yourself and your business. And, as we know in the real estate industry that if one of our real estate partners is at risk, everyone in the transaction can be exposed.

At the recent National Settlement Services Conference in San Antonio, TX on June 8th, the Federal Trade Commission and SunTitle presented on cybersecurity. Here is an overview of what was presented along with tips and tricks to help protect your business and your customers.

According to the panel:

  • 70% of organizations have been hit by cyberattacks in the past 12 months.
  • 60% of all targeted attacks strike small and medium businesses.
  • 50% of attacks result in insolvency within 6 months.

Companies have a blind spot both culturally and procedurally. Fraudsters are smart, connected and according to the FTC have unlocked the last few pieces of our business processes to fully understand how we do business. Fraudsters are playing the long game. After a data security breach they typically wait 200 days before acting. Fraudsters are in the system prior to fraud on average 150-180 days.

First they learn your business, look for opportunities they have while biding their time, and then sweep in. Recently the Wall Street Journal reported that out of all emails with attachments; 50% are malicious. This number is staggering. And, to top it off, fraudsters are preying on the social relationship.

We need to understand what we are up against. There are several types of fraud, including:

  • System penetration
  • Malware/ransomware
  • Social engineering

Threats to your business

Technological threats:

  • Brute force attacks (low tech solution – tries to get into your network by continuing to use credentials)
  • Targeted penetrations
  • The “entry point”
  • Installation of malware or ransomware
  • Screen scraping, mirroring, etc.

Process threats:

  • Timing
  • Inadequate funding and ID verification procedures
  • Acceptance of “new” information through a different process or that you are not expecting (This is the biggest concern right now for our industry.)

People threats:

  • Social engineering and Business Email Compliance (BEC)
  • “I got tricked”
  • Real-time interaction and compelling manipulation strategies


  • Hover over hyperlinks, do not just click links in emails.
  • Educate yourself, your employees and your real estate partners.
  • Review and implement the Federal Trade Commission Protecting your Personal Information: A Guide for Business
  • Create a culture of compliance:
    • Take stock – know what personal information you have in your files and on your computers.
    • Scale down – Keep only what you need in your business. Identify how long do you need the info, and understand that data is a liability.
    • Lock it – protect the information you keep (Physical security, electronic security, Employee training (biggest vulnerability), vendors
    • Pitch it – properly dispose of what you do not need.
  • Plan ahead – Create a plan for responding to security incidents.

Layer on Best Practices

To help defend your security and data, the panel recommended to layer on Best Practices for hardware, software, people and processes to protect your business. Please see the outlined best practices below:

Technological Best Practices:

  • Secure remote access and active sessions
  • Encrypt data in transit and at rest
  • Segregate data
  • Tether machines
  • Install firewall, VPN’s and other devices (Needs to be a pre-vetted device with VPNs. Can use multiple firewalls. Create a honey pot – a rouse to draw in fraudsters to keep info safe and protected.)
  • Don’t share devices
  • Restrict device activity
  • Third party penetration testing (ABSOLUTE MUST: Need to understand where your vulnerabilities lie. Vendors that can provide you a report.)
  • Complex passwords
  • 3rd party password manager
  • 2FA (2-factor authentitifcation)
  • Monitor networks in real time
  • Use email “spam” service
  • Limit permissions and rights

Process Best Practices:

  • Policies and procedures:
  • System access
  • Password management
  • Information receipt, custody, retention and destruction
  • Wire and ID confirmation
  • Restrictions on access
  • Suspicious and “surprising” emails must be screened and verified
  • Educate yourself and train your people

People Best Practices:

  • A culture of compliance and curiosity
  • Observe and react in real time
  • Never enter login info
  • Don’t click on attachments without verifying
  • Save information on the server not the computer
  • Secure all information
  • Be curious, skeptical and think before you act

Here are a few resources for you as you create your cybersecurity plan:

Don’t forget, your cybersecurity plan is not a “one and done”. It is a living document that continuously changes and is updated.

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Top 10 issues affecting real estate

The Counselors of Real Estate® (CRE) announced on June 14, 2017 the CRE 2017-2018 Top Ten Issues Affecting Real Estate at the National Association of Real Estate Editors Annual Conference in Denver last week. In the presentation Scott Muldavin, 2017 chair of The Counselors of Real Estate,  revealed the Top Ten issues, and then broke out the impact on both residential and commercial real estate. Today I will cover how the Top Ten affects residential real estate according to CRE.



  1. Political polarization and global uncertainty

Watch any bit of news or fake news, and you know this one to be true, but how does this impact real estate? As we continue to see uncertainty about changes to trade, travel and immigration policy threaten cross-border investing, hospitality properties, retail and manufacturing supply chains. Middle class how ownership will also be impacted as interest rates rise.

The impact on residential real estate:

  • Consumer price index rise
  • Interest rate rise
  • Mortgages less affordable
  • Polarized communities.
  1. The technology boom

We have seen the boom in apps. It is now at an inflection point where the use of technology will totally effect the real estate industry. In 2016 2.7 billion was spent in real estate tech. This boom will change every aspect of buying and selling real estate, as well as the homes that we live in.

The impact on residential real estate:

  • Smart homes (thermostats, lighting, security…)
  • Wireless access and bandwidth key
  • Health and wellness attributes on the rise
  • Suburbs could benefit from new transportation models
  1. Generational disruption

Babyboomers and millennials are now about the same. According to CRE The Baby Boomers generation of approximately 74 million (born between 1946 and 1964) is now smaller than the Millennial generations of approx. 75.4 million (born roughly between 1980 and 1997.) A significant number of today’s real estate decisions, as well as those connected to the workplace and consumer spending are now made by people under the age of 40. For the first time people are living and working together (both old and young). Boomers are wanting to move to inner suburbs and want more of an experiential lifestyle. “Surban” areas are the new it. These are suburban urban areas that feel urban-esque. People are looking for an urban feeling in suburban areas.

The impact on residential real estate:

  • Younger renters/buyers’ income limits
  • Marrying later, moving to suburbs
  • Older owners downsizing, selling, moving back to cities
  • Design, amenities differ by age group, yet they will live side-by-side in the same properties and neighborhoods
  • “Surban” communities thrive
  1. Retail disruption

According to CRE, there is a trend toward transforming retail in to “experiential” continues and is offsetting the shrinkage in the physical “bricks mortars” consumer goods platforms. Half of all U.S. households are members of Amazon Prime. There is a fundamental behavioral change in how people shop. The emphasis is on “timely, fast delivery of goods to consumers. May retailers are adopting an “Amazon-like approach, creating new warehouses; new distribution methods; and new fulfillment models while, ironically “disruptive retailers” such as Amazon are opening physical stores. With these changes, up to 30% of malls expected to close, but with this comes opportunities to repurpose the malls Retails is not dying, it is just changing. It is resilient. This disruption is similar to when Sears had to reinvent themselves because of Walmart.

The impact on residential real estate:

  • Walking distance retail demand is up
  • Unique destinations in high demand
  • Retail disruptions is a residential value determinant
  1. Infrastructure investment

We don’t really know what is going on with infrastructure now with the political polarization. It is clear that infrastructure investment is critical. 200 billion was spent over 10 years. 80% of which was state and local government. Mass transportation is being zeroed out. Don’t typically do tax reform or infrastructure spending in a time of growth.

The impact on residential real estate:

  • More infrastructure jobs = more income for housing
  • Better access to housing, work, shopping; improved utilities
  • Improved delivery of purchased goods
  • Potential higher costs for access to privately owned infrastructure (roads, utilities)
  1. Housing: The big mismatch

Affordability is a big issue. In Cleveland you can still buy a house for 80K. But, where jobs are being created there are huge affordability issues, i.e. Denver, West Coast… According to CRE, “Safe, decent, affordable housing has been shown to have a stabilizing effect on urban economies, crime, and public health.  A current lack of inventory has  generated a spike in home prices and, as a result, declining affordability for many home buyers, particularly those in lower income sectors.   A critical disparity exists between housing needs and housing supply. Although improving home prices, economic growth, mortgage accessibility and rental development have improved housing access and affordability in many areas, a confounding series of supply-demand mismatches continues to severely impact markets worldwide.  While the United States increasingly wrestles with the issue, a recent study of 300 metropolitan areas around the world ranked North America as a market with far fewer affordability problems than most.”

The impact on residential real estate:

  • Lack of inventory
  • Few “starter homes” for young buyers
  • Spike in home prices
  • Rising rents
  • Declining affordability
  • Poor market for older, larger homes in suburbs hinders Baby Boomer downsizing and moves
  1. Lost decades of the middle class

According to CRE, “After successive post-recession years of insignificant gains, median household incomes in the U.S. rose in 2015 by 5.2% to $56,516. Still, despite this welcome increase, middle class incomes have yet to recover their pre-recession highs ($57,403 in 2007), and are actually hovering below inflation-adjusted levels from almost two decades ago ($57,909).  Battered by automation and outsourcing, middle class jobs are still under pressure as the U.S. economy transitions from manufacturing to services.”

The impact on residential real estate:

  • Lack of funds for home purchases = postponed home buying
  • Debt and rents of more than 40% of income makes saving for down payment difficult
  • Little disposable income to support retail, restaurants…
  1. Real estate’s emerging role in health care

According to CRE, “Building occupants are increasingly demanding that the space they inhabit be designed, constructed, and operated in ways that advance positive health outcomes. It makes intuitive sense that buildings could help or hurt health in that people spend 90% of their time indoors. Research from the Mayo Clinic also concludes that only 20% of health comes from health care, with environmental and behavioral factors accounting for 40%.”

The impact of residential real estate:

  • Rising health care costs put a strain on household spending and saving
  • Potentially increased access to medical services at malls
  • May see health buildings/homes increase in desirability
  1. Immigration

According to CRE, “New immigrants tend to rent, boosting demand for multifamily housing, especially in gateway cities.  Recent surveys suggest that immigrant populations aspire to own homes and to move relatively freely from cities to suburbs and back in the search for employment. Labor mobility and homeownership rates will be constrained by limiting immigration. Industries like tech that demand highly skilled workers may be forced to innovate and substitute capital for labor if they cannot fill vacancies by recruiting foreign workers – constraining job growth. Longer term, if the entry of immigrant populations that tend to have larger households is curtailed, there will be a limit on the so-called demographic dividend for economic growth, with less of a labor force to support an aging population.”

The impact on residential real estate:

  • Fewer immigrants = fewer new household formations
  • Fewer renters
  • Fewer homebuyers
  • Fewer larger immigrant families = fewer larger homes needed
  • Affects urban and suburban areas alike
  1. Climate change

According to CRE, “In January 2017, the National Oceanic and Atmospheric Administration (NOAA) released a new report based on the most up to date scientific evidence on sea level rise that more than doubles the 2013 forecasts of potential sea level rise by 2100 from 2.2 to 4 feet to 6.6 to 8.6 feet.  Sea level rise is caused by both the thermal expansion of the oceans—as water warms up, it expands—and the melting of glaciers and ice sheets.  These dramatic rises were due largely to new research on the role of the Antarctic in sea rises as well as improved forecast models.  The Atlantic (Virginia Coast North) and western Gulf of Mexico Coasts’ sea rise is projected to be greater than the global average by .3 to .5 meters by 2100.  Alaska and the Pacific Northwest are projected to be 0.1 to 1 meter lower.

While a potential rise of sea level by 6.6 to 8.6 feet by 2100 may seem far in the future, NOAA also estimates that annual frequencies of disruptive and damaging flooding would increase 25-fold with only a 14-inch increase in local sea level rise.  Major cities such as Miami, New York, New Orleans, Tampa and Boston are projected to have the most costly problems, with South Florida and most coastal areas all exposed to differing levels of sea rise risk and cost.”

The impact on residential real estate:

  • Property value declines
  • Property insurance too costly or not offered in impacted areas
  • Potential early home sales before next climatic event to protect ‘nest egg” equity for retirement
  • Particularly in cities like Miami, NYC, New Orleans, Tampa, Boston, South Florida

CRE also identified three issues to watch including: tax reform and monetary policy, other policy issues and the cannabis.

The CRE Top Ten list is developed annually by members of the CRE organizations’ External Affairs group. The Counselors’ 1,100 members around the world undertake an extensive dialogue on current issue and trends to identify the final list. Click here to see the full list or follow #CRETopTen on Twitter.

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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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Communication is key

As I discussed in my last post on trust, the 2017 Edelman Trust Barometer revealed that only 37% of those surveyed have confidence in CEOs – the lowest in the history of the survey. They noted that the most important change CEOs and companies in general need to make is to do a much more effective job of communicating to their employees. In Edelman’s words: “Companies talk to their employees last, and that is a mistake, that’s crazy.”

People fear the unknown. If they do not know what is happening, they will not only worry about it, but they will also talk about it and make the problems that may not even be there seem bigger than they are. The “rumor mill” is alive and well in any company, it’s just a matter of what type of rumors are being spread.  If there is a vacuum of information or if the company fails to earn the trust of it’s employees with honest, complete and timely communication, then employees will naturally “fill in the blanks”. Forbes.com states that about “70% of all organization communication comes from the grapevine.” Further, according to Forbes, when there is a lack of honest communication, when the situation is ambiguous or uncertain, where there is a culture of silos, or where a company tries to manipulate the grapevine, then the rumor mill is even more active.

One of my favorite companies is Southwest Airlines.  Many times I’ve ridden the airport shuttle with a Southwest employee and simply asked them what it’s like to work for Southwest. I’ve never failed to get a smile and positive comment or even a fun story about working at Southwest. They no doubt have a “rumor mill”, but it is often filled with positive stories and fun comments about the company. Employees just always seem to be happy to be at work and focused on doing the best job possible. I suspect Southwest works hard at providing timely and honest communications to their employees as part of growing a positive company culture.

Here are some simple tips for effective communication:

1)     Establish how you are going to communicate. Employees want to know what they can expect from you and they want you to be consistent. Establish a consistent pattern of communication. Consistently respond to questions and concerns when they occur.

2)     Tell the truth. First and foremost – tell the truth. “Telling the truth” means that CEOs and managers must pay close attention to how their communications will be interpreted and avoid intentionally “spinning” the communication by word choices designed to misdirect. Employees are intelligent adults and can immediately sense when they are being lied to or when critical and relevant facts are purposefully being omitted. So, be the kind of person that employee’s want to work for by just telling the truth.

3)     Share your vision. By telling the truth employees will begin to trust and believe you. When people believe you, they will begin to believe in your vision. And, when they believe in your vision, it becomes a shared vision that they can contribute to and be part of. When a company has a shared vision and shared goals they can build something amazing. As a leader, you can then let your employees help lead the company in directions you never dreamed. This is very powerful. Our job as managers and leaders is as much about getting out of the way of the great people we hire so they can grow and flourish as it is about directly leading the company. Both are important and both depend on effective communication.

4)     Be transparent. Understand that sometimes you may not be able to tell the whole story, but be open and upfront. A good example of this is, “I cannot give you all of the details, as some things are confidential, but this is what I know today…As I have more information that will impact you, I will let you know as soon as I can.”

5)     Don’t lie by omission. Oftentimes managers paint themselves into a corner that they cannot get out of, and end up lying by omission. There may be times when you cannot share everything. Be upfront about this. Be open in your communication, but do not communicate confidential information. As you can share more information, do so, and do so in a timely manner.

6)     Be clear and easy to understand. Communicate (often) about the company and its direction in clear terms that everyone can understand. Choose your words carefully. Don’t use meaningless corporate BS language. Just talk like a real person. Show that you care about the company and its employees by clear and honest communication.

7)     Make the message mean something to employees. When you communicate, be real, and get down to what employees really care about. Why is what you are saying and doing important to them? How will this affect them? And, is there anything they can do to help or anything they should expect to see? By telling employees what they can expect, then showing consistent action toward a known goal, you are giving employees something they can depend on. This not only builds credibility with employees, but also their trust in you, the direction the company is going, and their trust in the company itself.

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Building trust

Each year since 2012, Edelman, surveys a large sample (33,000 for this year’s report) worldwide regarding trust. The trends revealed are grim. This year’s survey showed employee’s trust in CEOs’ has plummeted with a 12-percentage point drop from the year before.

Only 37% of those surveyed have confidence in CEOs – the lowest in the history of the survey.

And, what is the most important change companies needs to make?
“Treat employees well” ranked the highest for how businesses can build trust.  “Companies talk to their employees last, and that is a mistake, that’s crazy.” Edelman said.

The survey also identified what creates the most fear for employees:

  • 53% agree that the pace of change in business and industry is too fast.
  • Employees worry about losing their jobs due to lack of training or skills (60%) and automation (54%).

These are fears that can be addressed with honest communication and effective programs that directly address employee’s fears. CEO’s and managers just need to listen to their employees, follow-up with real solutions and clearly communicate along the way.

Studies link lack of engagement to poor management skills
Other surveys show similar trends. Twelve years of polling by Gallup show that barely 30% of the employees are engaged at work. That means 70% of employees don’t know or care what is going on with their company. The cause of such low involvement? Top executives and managers don’t know or appreciate who does the hard work or who tries to improve the company. According to multiple Gallup surveys, managers are disconnected from employees or are just plain unqualified to be a manager.

Gallup’s research found that “2 in 10 people have some characteristics of functioning managerial talent and can perform at a high level if their company coaches and supports them.” But, most companies don’t train, coach or support managers. Bad managers are not replaced, and promising managers are not nurtured. Gallup research shows that in large companies, CEOs cannot know everything that goes on with bad managers, great employees or problems at the ground level.  But, good CEOs can establish strategic decisions that are a win-win for both customers and employees. They can lead by example by promoting on merit and choosing qualified top managers who will in turn do the same.

How can CEOs and managers create a more trusting relationship with employees?
This is one of those questions that does not need a Gallup poll or worldwide survey (although those also exist).

CEOs and managers need to:

1)     Tell the truth and don’t lie by omission.

2)     Earn trust by telling the truth over a sustained amount of time. People do not and should not automatically trust. Trust has to be earned.

3)     Listen. Take Notes. Follow up with real solutions. Report on progress. Real listening is not a box to be checked. It’s a daily habit to be practiced.

4)     Communicate (often) about the company and its direction in clear terms that everyone can understand, be proud of and… trust.

5)     Choose your words carefully. Don’t use meaningless corporate BS language. Don’t use sports and weather analogies. Just talk like a real person who cares about the company and its employees.

6)     Actually CARE about employees. Lead by example by paying attention to your direct reports and those you interact with and those on your team. If employees see their CEO and their managers learning about the employees they interact with and genuinely caring about them, then those employees will naturally begin to do the same with those they interact with on a daily basis. That whole “paying it forward” thing.

Creating a caring company where people trust each other and work as a cohesive team is not about a “vision statement”, a “program” or a “slogan”. Trust or the lack thereof is defined by what employees do on an hourly, daily and weekly basis. Getting employees to like, trust and support each other takes hard work, a conscious effort, talent and wisdom on the part of CEOs and managers to gradually buildup trust and confidence within the company.

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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.”


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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