10 Biggest Threats Facing Real Estate

Daily Real Estate News | Friday, June 16, 2017

Global uncertainty and political polarization are the top issues facing the housing industry in 2017 and 2018, according to The Counselors of Real Estate’s annual list of the Top 10 Issues Affecting Real Estate. The list was compiled using feedback from 1,100 real estate advisers from around the world who met at a recent CRE conference.

Many of the issues are interconnected and reflect disruption in the economy and multiple real estate sectors, says 2017 CRE Chairman Scott Muldavin. “Despite this unsettling environment, opportunity remains embedded in every issue on the list,” the CRE report notes. Here are the top 10 issues cited in the report.

1. Political polarization and global uncertainty. “Uncertainty about changes to trade, travel, and immigration policy threaten cross-border investing, hospitality properties, retail, and manufacturing supply chains, among other effects,” the report notes. “Rising interest rates and retail inflation will make middle-class homeownership that much more difficult. Longer-term implications could be much more severe, as polarization prevents long-term fixes to issues such as infrastructure, affordable housing, local and state pension liabilities, and education.”

2. The technology boom. An unprecedented wave of commercial real estate technology innovations are expected to change the way real estate is bought, sold, and managed. Investments in commercial real estate tech startups hit $2.7 billion in 2016. About 1,600 of these startups now exist worldwide. Robots, big data, autonomous vehicles, and online retail are also expected to have a major impact.

3. Generational disruption. “Boomers’ and millennials’ divergent views of where they live, work, and play increasingly impact the property markets,” the report notes. “The generations are crossing paths everywhere: in the workplace, in housing, and at the local bar and grill, intersecting and sharing spaces despite their often disparate priorities when it comes to the built environment.”

4. Retail disruption. “The trend toward transforming retail into ‘experiences’ continues to develop and is offsetting shrinkage in the physical bricks-and-mortar consumer-goods platform,” the report says. “‘Experiential’ retail drives customer traffic to a more diverse and highly participatory environment targeted to a variety of age groups and interests. This sector has transitioned into a kind of ‘Omni Channel’—encompassing e-commerce, reduced or repurposed physical elements, and a host of previously unforeseen spaces, both physical and virtual—with a current emphasis evolved from bricks-and-mortar shopping to the timely, efficient transfer of goods from source to inventory to consumer.”

5. Infrastructure investment. The private sector is directing significant funds to infrastructure projects, recognizing the need and long-term rewards of investing in roads, bridges, tunnels, ports, and airports. Investors now oversee $376 billion in U.S. infrastructure dollars. “It is clear that the need for infrastructure investment is critical,” the report says. “The movement of goods, which involves everything from ports to airports to warehouses to roads, highways and railroads, is further straining an aging and highly vulnerable interior framework. Add to this the need for pipelines, electricity transmission, and water distribution, and the immediacy of infrastructure needs becomes even more pronounced.”

6. Housing disparity. “Safe, decent, affordable housing has been shown to have a stabilizing effect on urban economies, crime, and public health,” according to the report. “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.” The report cites a growing affordability gap and limited availability of housing in locations with significant job growth, such as major cities and coastal regions.

7. Threats to the middle class. In 2007, the average middle-class income was $57,403. Now it hovers below inflation-adjusted levels from nearly two decades ago at $57,909. These income levels have yet to return to their pre-recession highs, and stagnant income growth will continue to press on the middle class.

8. Emerging role of healthcare in real estate. The nation spends more than $3 trillion each year on healthcare costs—about $10,000 per person—which is double the average for developed countries worldwide. “The real estate industry has emerged as a major player to cost-effectively improve people’s health,” the report notes. “Building occupants are increasingly demanding that the space they inhabit be designed, constructed, and operated in ways that advance positive health outcomes.” A growing focus on healthy buildings is emerging, as people spend about 90 percent of their time indoors. Research from the Mayo Clinic shows that healthcare contributes 20 percent to maintaining people’s health, while environmental and behavioral factors account for 40 percent.

9. Immigration. As the Trump administration seeks to enact more restrictive immigration laws, some housing leaders are growing concerned about labor shortages in homebuilding. Demographers note that immigrant groups are a source of household formation. “New immigrants tend to rent, boosting demand for multifamily housing, especially in gateway cities,” according to the report. “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.”

10. Climate change. The National Oceanic and Atmospheric Administration released a report this year that shows sea level rises are expected to more than double from 2013 forecasts—to between 6.6 and 8.6 feet by 2100. “While a potential rise of sea level 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,” according to the report. “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 implications of potential sea level rise and related flooding on real estate values is positioned to explode due to dramatic increases in the volume and accessibility of information on the consequences of sea rise.”

Source: “Political Polarization, Global Uncertainty Top CRE 2017-2018 Top 10 Issues Affecting Real Estate List,” The Counselors of Real Estate (June 14, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Existing Home Sales Rise 1.1% in May; Median Sales Price Ascends to New High

WASHINGTON (June 21, 2017) — Existing-home sales rebounded in May following a notable decline in April, and low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low, according to the National Association of Realtors®. All major regions except for the Midwest saw an increase in sales last month.
Total existing-home sales1, https://www.nar.realtor/topics/existing-home-sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, climbed 1.1 percent to a seasonally adjusted annual rate of 5.62 million in May from a downwardly revised 5.56 million in April. Last month’s sales pace is 2.7 percent above a year ago and is the third highest over the past year.
Lawrence Yun, NAR chief economist, says sales activity expanded in May as more buyers overcame the increasingly challenging market conditions prevalent in many areas. “The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” he said. “Those able to close on a home last month are probably feeling both happy and relieved. Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher.
“The median existing-home price2 for all housing types in May was $252,800. This surpasses last June ($247,600) as the new peak median sales price, is up 5.8 percent from May 2016 ($238,900) and marks the 63rd straight month of year-over-year gains.
Total housing inventory3 at the end of May rose 2.1 percent to 1.96 million existing homes available for sale, but is still 8.4 percent lower than a year ago (2.14 million) and has fallen year-over-year for 24 consecutive months. Unsold inventory is at a 4.2-month supply at the current sales pace, which is down from 4.7 months a year ago.  “Home prices keep chugging along at a pace that is not sustainable in the long run,” added Yun. “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.
“Properties typically stayed on the market for 27 days in May, which is down from 29 days in April and 32 days a year ago; this is the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median of 94 days in May, while foreclosures sold in 48 days and non-distressed homes took 27 days. Fifty-five percent of homes sold in May were on the market for less than a month (a new high).Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in May were Seattle-Tacoma-Bellevue, Wash., 20 days; San Francisco-Oakland-Hayward, Calif., 24 days; San Jose-Sunnyvale-Santa Clara, Calif., 25 days; and Salt Lake City, Utah and Ogden-Clearfield, Utah, both at 26 days.
“With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month,” said Yun.
According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased for the second consecutive month, dipping to 4.01 percent in May from 4.05 percent in April. The average commitment rate for all of 2016 was 3.65 percent.
First-time buyers were 33 percent of sales in May, which is down from 34 percent in April but up from 30 percent a year ago. NAR’s 2016 Profile of Home Buyers and Sellersreleased in late 20164 — revealed that the annual share of first-time buyers was 35 percent.
Earlier this month, NAR hosted the Sustainable Homeownership Conference at University of California’s Memorial Stadium in Berkeley. A white paper titled, “Hurdles to Homeownership: Understanding the Barriers,” (link is external) was released, which honed in on the five main reasons why first-time buyers are failing to make up a greater share of the market.
“Of the barriers analyzed in the white paper, single-family housing shortages will be the biggest challenge for prospective first-time buyers this year,” said President William E. Brown, a Realtor® from Alamo, California. “Those hoping to buy an entry-level, single-family home continue to see minimal choices. The best advice for these home shoppers is to know what you can afford, lean on the guidance of a Realtor® and act fast once an ideal property within the budget is listed.”
All-cash sales were 22 percent of transactions in May, up from 21 percent in April and unchanged from a year ago. Individual investors, who account for many cash sales, purchased 16 percent of homes in May, up from 15 percent in April and 13 percent a year ago. Sixty-four percent of investors paid in cash in May.
Distressed sales5 — foreclosures and short sales — were 5 percent of sales in May, unchanged from April and down from 6 percent a year ago. Four percent of May sales were foreclosures and 1 percent were short sales. Foreclosures sold for an average discount of 20 percent below market value in May (18 percent in April), while short sales were discounted 16 percent (12 percent in April).

Single-family and Condo/Co-op Sales

Single-family home sales increased 1.0 percent to a seasonally adjusted annual rate of 4.98 million in May from 4.93 million in April, and are now 2.7 percent above the 4.85 million pace a year ago. The median existing single-family home price was $254,600 in May, up 6.0 percent from May 2016.Existing condominium and co-op sales climbed 1.6 percent to a seasonally adjusted annual rate of 640,000 units in May, and are 3.2 percent higher than a year ago. The median existing condo price was $238,700 in May, which is 4.8 percent above a year ago.

Regional Breakdown

May existing-home sales in the Northeast jumped 6.8 percent to an annual rate of 780,000, and are now 2.6 percent above a year ago. The median price in the Northeast was $281,300, which is 4.7 percent above May 2016.In the Midwest, existing-home sales fell 5.9 percent to an annual rate of 1.28 million in May, and are 0.8 percent below a year ago. The median price in the Midwest was $203,900, up 7.3 percent from a year ago.

Existing-home sales in the South rose 2.2 percent to an annual rate of 2.34 million, and are now 4.5 percent above May 2016. The median price in the South was $221,900, up 5.3 percent from a year ago.
Existing-home sales in the West increased 3.4 percent to an annual rate of 1.22 million in May, and are now 3.4 percent above a year ago. The median price in the West was $368,800, up 6.9 percent from May 2016.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
NOTE:  For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.1Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR rebenchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger data sample — about 40 percent of multiple listing service data each month — and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

2The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

3Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).

4Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors® Confidence Index, which include all types of buyers. Investors are under-represented in the annual study because survey questionnaires are mailed to the addresses of the property purchased and generally are not returned by absentee owners. Results include both new and existing homes.  5Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors® Confidence Index, posted at Realtor.org.

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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How Long Does It Take to Get a Mortgage?

Daily Real Estate News | Tuesday, June 13, 2017

Home shoppers may need to plan for more time than they realize when they’re starting the process of obtaining a mortgage.

“Today’s mortgage process is very involved, particularly with regard to the documentation required, third-party verifications, and the independent appraisal process,” says Whitney Fite, president of Angel Oak Home Loans in Atlanta. “All of these moving parts can cause a delay in processing if an issue arises.”

The entire process encompasses getting preapproved, a home appraisal, and getting the actual loan. Typically, the process takes about 30 days, on average, Fite says.

However, in busier times of year, consumers should expect a longer wait. For example, a duration of 45 to 60 days, depending on the lender, may be more of the norm, according to a recent article at realtor.com®.

Consumers may be best off making sure they get an early start to the mortgage process from the moment they even start thinking they may want to purchase a property. Many sellers require buyers now get preapproved for a mortgage before they’ll even accept an offer.

For a preapproval, lenders will check the consumer’s credit rating, debt-to-income ratio, and other financial information. That alone may take a week or even longer, depending on the borrower’s circumstances.

But buyers shouldn’t confuse a preapproval for having an actual mortgage loan. Borrowers still have to apply for the actual loan and also get through the appraisal process. Also, in the underwriting process, lenders will review all of their financial information and ensure the home buyer has not made any false or misleading claims on their application.

Fite says the most common reason for a mortgage-related delay is the borrower not turning in documents in a timely manner.

“The best advice I can give someone buying a home is to prepare to respond very quickly for any and all documentation requests,” Fite says.

Source: “How Long Does it Take to Get a Mortgage? Longer Than You Might Think,” realtor.com® (June 12, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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State house prices up 12.1% compared to the first quarter of last year

EMBARGO: May 16, 2017- 5:00pm

Washington state’s housing market showed the continuing effects of high demand in the first quarter of 2017 according to the Washington Center for Real Estate Research in the Runstad Center at the University of Washington. The statewide median sales price rose to $324,300 in the first quarter, 12.1 percent higher than the same time period last year. While this does not represent an all-time high for statewide house prices, this price represents the highest first quarter price ever recorded.

Similarly, the seasonally adjusted annual rate of existing home sales rose 12.2 percent from the
first quarter of 2016 to 107,590 homes. This indicates that the current annual rate of sales is well
below that witnessed in previous periods of high house price growth such as 2003. This is low
supply of existing homes listed for sale is likely a leading factor promoting rapid house price
growth throughout the state.

Breaking down trends by region reveals a high level of variance in house prices throughout the
state. Somewhat expectedly, median prices were highest in King County at $577,300 and a yearon-
year increase of 11 .1 %. The lowest median prices were found in Lincoln County at $70,000
with a low number of house sales recorded.

House prices in many other major markets rose significantly, with Spokane rising 8.0% to a
median of $208,100 and Whatcom County (Bellingham) rising 8.4% to $329,500. Perhaps not
surprisingly, median prices typically rose the fastest in the Puget Sound region. Interestingly,
however, the fastest growth in the region was fastest further out from King County than expected.
For example, median prices in Snohomish County grew by 10.6% while in Skagit County prices
grew by 14.0%. This indicates that some of the demand for housing is likely moving further away
from Downtown Seattle in search of more affordable prices.

Other regional markets posted significant price increases with Benton and Franklin Counties (The
Tri-cities) posting a median price of $232,400, a 6.9% increase on the same period last year.
Chelan County (Wenatchee) posted a median price of $264,100 (up 5.9% from the same period
last year) and Walla Walla posting a median price of $209,800 (up 4.4% from the same period
last year). Compared to last year, the Yakima median house price stood at $192,700 up 8.6% on
last year. An interesting development within regional house prices was the Olympic peninsula
where the median price in Jefferson County (Port Townsend) was up 19.1% on a median price of
$353,800 and Clallam County (Port Angeles) up 13.8% on a median price of $256,000.

Housing affordability was lower in the first quarter than both the first and fourth quarters of the
previous year. The index-where 1 00 means a middle-income family can just qualify for a medianpriced
home, given a 20 percent down payment and a 30-year fixed mortgage rate at prevailing
rates-was 124.3, down from 132.7 in the fourth quarter of 2016. This metric suggests that, given
the same down payment and mortgage, a middle-income family can afford a home selling for 24.3
percent above the median.

Statewide, the first-time buyer index showed a decrease of 4. 7 points, ending the quarter at 70.4.
This index assumes a less expensive home than a typical family, lower down payment and lower
income. Using the assumption that a first time buyer households would earn 70 percent of the
area median household income, out index reveals that they had 70.4 percent of the income
required to purchase a typical starter home.

With the overall house price increases noted statewide, it is not surprising that housing the number
of building permits has increased as builders respond to increased demand. In the first quarter of
2017, a total of 8,878 building permits were recorded, an increase of 11 .1% from the first quarter
of 2016.

The Washington Center for Real Estate Research produces home sales statistics in partnership
with Washington Department of Licensing and the Washington Real Estate Commission. Sales,
median home prices and affordability data for all Washington counties are available on the
Runstad Center’s website.

Media Contact: James Young, Research Director, Runstad Center for Real Estate Studies
Director, Washington Center for Real Estate Research, University of Washington
Email: jyoung4@uw.edu
Phone: (206) 685 -7088

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12M New Households, 1M Fewer Homeowners

Daily Real Estate News | Monday, June 12, 2017

What will it take to make homeownership a national priority? Despite the addition of about 11.8 million households between 2006 and 2016, there are roughly 1 million fewer homeowners today than a decade ago. Housing economists and other experts discussed the primary causes behind the falling homeownership rates—and potential solutions—at the National Association of REALTORS® day-long Sustainable Homeownership Conference last Friday at the University of California, Berkeley. “The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction, and must be reversed given the many benefits of homeownership to individuals, communities, and the nation’s economy,” says NAR President William E. Brown.

Among the most vexing challenges is the so-called “post-foreclosure stress disorder,” and it continues to have a significant impact on consumer’s financial decision-making, according to Berkeley Hass Real Estate Group Chair Ken Rosen. At the June 9 conference, Rosen shared research highlights from a white paper commissioned by NAR that explore five main barriers that are preventing people from buying homes.

The psychological effect of jobs and homes lost during the recession remains vivid for many Americans, especially young adults who experienced the hardships their families went through. While most Americans continue to have positive feelings about homeownership, Rosen said targeted programs addressing financial literacy and mortgage financing could help return-buyers and those who may have anxieties and other negative biases about owning.

In encouraging news that coincided with the conference, Fannie Mae recently announced rule changes that should open lending to more potential buyers. Fannie Mae, the country’s largest source of mortgage funds, will ease its debt-to-income requirements as of July 29, increasing the DTI ceiling from the current 45 percent to 50 percent. The changes are a welcome sign for the real estate industry.

“Given the current historically low mortgage default rates from over-cautious lending standards, there is clear room to expand credit availability,” says NAR Chief Economist Lawrence Yun, who also presented at the conference.

Concerns that the easing of DTI standards could contribute to worrisome “market bubble conditions” such as those that preceded the 2008 housing collapse are unfounded, Yun says. “The current credit scores of borrowers whose loans are approved are substantially higher than those from a decade ago,” he says, adding that current underwriting standards remain much tighter than those of the pre-housing crisis era.

Also, this spring Fannie Mae announced changes that will make it easier for buyers and homeowners with significant student debt to purchase their first home or do a cash-out refinance to retire those student loans.

“The average buyer’s credit profile has strengthened since the recession, but rising prices and limited supply have made it tough for everyone looking to purchase a home. We believe any responsible steps that can be taken to open the credit box, especially for young and first-time buyers, will help people enter the market,” Brown says.

Here are additional key findings from the white paper, “Hurdles to Homeownership: Understanding the Barriers,” discussed at the Berkeley conference:

  • Restricted mortgage availability. Creditworthy buyers are still not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards.
  • Student loan debt burden. Young adults are finding it very difficult to save money for down payments, qualify for a mortgage, and afford mortgage payments, especially in high-priced areas, because of onerous debt levels.
  • Single-family housing affordability. Lack of inventory, higher home prices, and investors putting a squeeze on supply levels have led to challenges with affordability in many areas.
  • Single-family housing supply shortages. Single-family home construction decreased dramatically during the recession and is still not keeping up with demand. “The insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years, Rosen says.

In order to make homeownership once again an affordable and realistic opportunity for young households, policy changes will be necessary to reduce the growth in college tuition costs, minimize borrowing costs, diminish the incidence of delinquency, and make repayment less burdensome, according to the white paper.

—Wendy Cole, REALTOR® Magazine

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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House Votes to Repeal Key Aspects of Dodd-Frank

Daily Real Estate News | Friday, June 09, 2017

The House voted on Thursday, mostly along partisan lines, to roll back many of the banking rules under the Dodd-Frank Act of 2010, which increased regulatory oversight of financial institutions. Some lawmakers argue the sweeping legislation had been preventing a true recovery from happening since the Great Recession and has made getting a mortgage too tough.

Under the new bill, known as the Financial CHOICE Act, big banks would face less scrutiny and many of the regulatory powers of the Consumer Financial Protection Bureau, an agency started under Dodd-Frank, would be stripped away.

The bill will now head to the U.S. Senate.

Shortly after taking office, President Donald Trump had signed an executive action ordering a sweeping review of the Dodd-Frank Act rules. The House bill sets to repeal many key aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who introduced the bill, is seeking to try to replace the Dodd-Frank Act.

“The Financial CHOICE Act offers economic opportunity for all and bank bailouts for none,” Hensarling says. “The era of ‘too big to fail’ will end and we will replace Dodd-Frank’s growth-strangling regulations on community banks and credit unions with reforms that expand access to capital so small businesses can create jobs and consumers have more choices and options when it comes to credit.”

One of the biggest moves under the bill is to strip the Consumer Financial Protection Bureau of most of its authority. The CFPB would be changed to the Consumer Financial Opportunity Agency, an executive agency in which the deputy director could be appointed and removed by the president. It also would no longer be able to write major rules regulating consumer financial companies, without first getting approval from Congress, and it would not not be able to levy fines against financial institutions for “unfair” or “deceptive” practices.

The House bill also would require banks to increase their emergency financial reserves if they want to avoid some of the regulatory burdens that were put in place from Dodd-Frank. Then, banks that do run into financial trouble would have enough money to survive on their own without a government bailout.

President Trump has voiced concerns about tight lending practices and this is viewed as one major step by his administration to try to ease banking regulations. Trump has argued that bank regulators, after the financial crisis, went too far in cracking down on lending practices, making it too difficult for consumers to get loans. He has argued that if banks would lend more money, the economy could grow more.

The bill eked out approval in the House with a vote of 233 to 196 but was mostly driven by partisan lines. Nearly all Republicans voted in favor of it. The bill is expected to face resistance in the Senate.

Democrats have mostly argued that banks need more oversight, not less. Some Democrats argued Thursday that the Financial CHOICE Act could spur another financial crisis. They also are voicing disagreement about curtailing the powers of the Consumer Financial Protection Bureau. Some lawmakers note that American banks still netted record profits last year, despite the government regulations in place.

“This bill turns the clock backwards on financial industry oversight by gutting the CFPB and would leave Americans vulnerable to financial fraud and rip-offs,” Pamela Banks, senior policy counsel for Consumers Union, said in a statement. “We can’t afford to take the financial cop off the beat and roll back the critical reforms adopted to protect our wallets.”

But many Republican lawmakers are arguing a change is needed and that Dodd-Frank, a 2,300-page bill passed in 2010, went too far in its regulations of the banking industry.

“All of the promises of Dodd-Frank were broken,” Hensarling said during a House debate on the bill on Thursday. “They promised us it would lift the economy … but instead we are still stymied in the weakest, slowest recovery in the postwar era. Have you tried to get a mortgage recently? They are hard to come by and cost hundreds of dollars more to close.”

Source: “House Passes Sweeping Legislation to Roll Back Banking Rules,” The Washington Post (June 8, 2017) and “House Votes to Abolish Dodd-Frank,” HousingWire (June 8, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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5 Surprising (and Useful!) Ways to Save for a Down Payment

One of the biggest misconceptions of homebuying? The 20% down payment. Here’s how to buy with a lot less down.

Buying your first home conjures up all kinds of warm and fuzzy emotions: pride, joy, contentment. But before you get to the good stuff, you’ve got to cobble together a down payment, a daunting sum if you follow the textbook advice to squirrel away 20% of a home’s cost.

Here are five creative ways to build your down-payment nest egg faster than you may have ever imagined.

1. Crowdsource Your Dream Home

You may have heard of people using sites like Kickstarter to fund creative projects like short films and concert tours. Well, who says you can’t crowdsource your first home? Forget the traditional registry, the fine china, and the 16-speed blender. Use sites like Feather the Nest and Hatch My House to raise your down payment. Hatch My House says it’s helped Americans raise more than $2 million for down payments.

2. Ask the Seller to Help (Really!)

When sellers want to a get a deal done quickly, they might be willing to assist buyers with the closing costs. Fewer closing costs = more money you can apply toward your deposit.

“They’re called seller concessions,” says Ray Rodriguez, regional mortgage sales manager for the New York metro area at TD Bank. Talk with your real estate agent. She might help you negotiate for something like 2% of the overall sales price in concessions to help with the closing costs.

There are limits on concessions depending on the type of mortgage you get. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.

No matter where they net out, concessions must be part of the purchase contract.

3. Look into Government Options

The U.S. Department of Housing and Urban Development, or HUD, offers a number of homeownership programs, including assistance with down payment and closing costs. These are typically available for people who meet particular income or location requirements. HUD has a list of links by state that direct you to the appropriate page for information about your state.

HUD offers help based on profession as well. If you’re a law enforcement officer, firefighter, teacher, or EMT, you may be eligible under its Good Neighbor Next Door Sales Program for a 50% discount on a house’s HUD-appraised value in “revitalization areas.” Those areas are designated by Congress for  homeownership opportunities. And if you qualify for an FHA-insured mortgage under this program, the down payment is only $100; you can even finance the closing costs.

For veterans, the VA will guarantee part of a home loan through commercial lenders. Often, there’s no down payment or private mortgage insurance required, and the program helps borrowers secure a competitive interest rate.

Some cities also offer homeownership help. “The city of Hartford has the HouseHartford Program that gives down payment assistance and closing cost assistance,” says Matthew Carbray, a certified financial planner with Ridgeline Financial Partners and Carbray Staunton Financial Planners in Avon, Conn. The program partners with lenders, real estate attorneys, and homebuyer counseling agencies and has helped 1,200 low-income families.

4. Check with Your Employer

Employer Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. In Pennsylvania, if you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance. The loan is interest-free and borrowers have 10 years to pay it back.

Washington University in St. Louis offers forgivable loans to qualified employees who want to purchase housing in specific city neighborhoods. University employees receive the lesser of 5% of the purchase price or $6,000 toward down payment or closing costs.

Ask the human resources or benefits personnel at your employer if the company is part of an EAH program.

5. Take Advantage of Special Lender Programs

Finally, many lenders offer programs to help people buy a home with a small down payment. “I would say that the biggest misconception [of homebuying] is that you need 20% for the down payment of a house,” says Rodriguez. “There are a lot of programs out there that need a total of 3% or 3.5% down.”

FHA mortgages, for example, can require as little as 3.5%. But bear in mind that there are both upfront and monthly mortgage insurance payments. “The mortgage insurance could add another $300 to your monthly mortgage payment,” Rodriguez says.

Some lender programs go even further. TD Bank, for example, offers a 3% down payment with no mortgage insurance program, and other banks may have similar offerings. “Check with your regional bank,” Rodriguez says. “Maybe they have their own first-time buyer program.”

Not so daunting after all, is it? There’s actually a lot of help available to many first-time buyers who want to achieve their homeownership dreams. All you need to do is a little research — and start peeking at those home listings!

“Visit HouseLogic.com for more articles like this.  Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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5 Crucial Questions Home Buyers Should Ask Sellers Before Moving In

| Jun 2, 2017

Moving into a home you’ve just bought is exciting—and sometimes exasperating. That’s because, although you might love your new place, you don’t know it all that well—which means that sooner or later, you’re bound to end up in a situation where you’re floundering cluelessly with the circuit breaker, or petting a neighbor’s seemingly adorable Pomeranian who nearly nips off a finger. Home, sweet home, right?

Yet you’d be surprised by how many of these unfortunate surprises home buyers can circumvent merely by asking the person who sold them the home some pointed questions before moving in. Sure, you’ll also be soaking up intel from the seller’s disclosure agreement, the home inspector who gave a thumbs-up to the place, and eventually even the neighbors. But truth be told, there’s nothing better than hearing about a home straight from someone who’s been living there for umpteen years. So go ahead and ask!

Just keep in mind that some sellers might feel tight-lipped if they think your questions might jeopardize the sale. As such, many of these questions are best asked near the end of the process—like during your walk-through or at closing.

A thorough inspector will point out any oddities that are unsafe or devalue the house, but only someone who’s lived there will have a handle on all the unique characteristics worth mentioning—light switches in unexpected places, doors and windows that stick up or down, poltergeists, you name it.  This question is most effectively asked during the final walk-through.

“A buyer might ask, ‘I’m wondering if you can tell me anything I might need to anticipate moving forward?’” says Bill Golden, a Realtor® with Re/Max Metro Atlanta Cityside in Atlanta, who’s spent more than 30 years nurturing buyer-seller relationships. Be subtle but persistent.

2. Have you had any past problems with the house that you’ve fixed?

True, sellers are often required to disclose most existing problems or issues related to the home. But what about past problems that have since been repaired?

As a buyer, Golden suggests saying, “I’ve read the disclosure statement. Is there anything else that has happened or that you’ve done that would be helpful to know?” Use the disclosure as a jumping-off point to learn about what’s not listed.

3. Where are the water shut-off valve, sump pump, circuit box, and more?

“Hopefully, the home inspector will locate all of these things and point them out to the new buyer as part of educating them about their new house,” says Golden. “But not all inspectors do that, so these are important safety questions.”

Ask the seller to show you not only the location of these valves, switches, and pumps, but also how they work. If you’re moving into an older home, chances are that many of the utility features will be unique in their operations, so rather than fumble around blindly, it’s a no-brainer to lean on the seller.

4. How is the neighborhood?

This is a great question to help establish rapport between buyer and seller, and is also best asked near the end of the buying process. Keep it light: You might simply ask the seller, “Tell me about the neighborhood.”

“I’ve found that the good, the bad, and the ugly will often tumble out if approached conversationally,” says Golden. While you’re at it,  if you’re new to the area, consider asking the seller for recommendations for everything from grocery stores to their favorite restaurants.

5. Is there anything you want to leave behind?

This one doesn’t so much help you get to know your home, but it might result in a few nice bonuses. Got your eye on that deer head mounted on the den wall? Or those gorgeous ferns by the window? It’s worth a shot to see if the seller is willing to part with large items he or she might not want to bother moving.

“Most things that are being left, such as appliances, are dealt with in the original contract,” Golden says. “But, as it gets closer to closing, sellers are often wanting to unload some other things, too. You might get lucky and wind up with something great.”

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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Homeowners Cash in on Equity in Droves

Daily Real Estate News | Thursday, June 01, 2017

Homeowners may be reluctant to sell, but they still want to see a piece of that equity in their homes now. They’re cashing out in levels that have not been seen since the financial crisis, Freddie Mac reports.

Nearly half of borrowers who refinanced their homes during the first quarter did a cash-out option, the highest level since the fourth quarter of 2008, according to Freddie Mac.

Still, the number of borrowers doing a cash-out refi remains well below the nearly 90 percent peak reached prior to the housing crash. But it is up significantly from the post-crisis 12 percent in the second quarter of 2012.

Rising home prices have helped increase the number of homeowners who now have equity in their homes. As such, more owners are finding they can refinance to get a lower mortgage rate and also take out some cash for other uses. In hot markets like Denver and Dallas, in which home prices have surged by some of the highest amounts in the country, more than half of refinancers opted to refinance for cash last year, according to Freddie Mac.

While the number of cash-out refis grows, Len Kiefer, Freddie Mac’s deputy chief economist, does not see this as playing out similarly to the run-up to the financial crisis when borrowers were using their homes like ATMs. Borrowers must follower stricter underwriting standards now when they refinance a mortgage or get a loan. Also, there is less money at stake than a decade ago, Kiefer notes.

Source: “Homeowners Are Again Pocketing Cash as They Refinance Properties,” The Wall Street Journal (May 27, 2017)

“Copyright National Association of REALTORS®. Reprinted with permission.”

 

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