Real Estate News and Commentary

November 22, 2016October 20, 2020

A hot winter housing market

Winter is not usually a time of year when you would think of selling your home. After all, everyone gets into holiday and hibernation mode. Between Thanksgiving and New Year’s Day (during the winter housing market), home sale inventory is usually trimmed by an average of 50 percent and contract activity is significantly reduced.

But this winter will be different. Rising interest rates and pent up demand could make the housing market very active this winter.

Consider that mortgage interest rates are on their way up. Freddie Mac (freddiemac.com) reported last week about a mortgage interest “spike” that can get fence-sitters to jump into the winter housing market. The rate for the 30-year-fixed-rate mortgage averaged 3.94 percent, which jumped from the prior week’s average of 3.57 percent. On the face of it, the increase doesn’t seem significant. But the difference is about $70 per month on a $300,000 mortgage.

Last week’s interest rate surge could be the beginning of interest rate increases we’ve been anticipating (for five years). Speculation is that the bond market is anticipating and pricing in a Fed interest rate hike at next month’s Open Market Committee meeting. Of course, the next sixty days could be a lead up to new mortgage rate expectations, which could exceed 4.5 percent by the end of next year.

Historically low interest rates for a 30-year-fixed-rate mortgage have become part of our lives. Upward movement will be met with hyperbole and excitement from the media, claiming reduced home sales and a faltering real estate market. However, let’s put it in perspective. Mortgage rates averaged above 4 percent throughout 2014. The last time we had an average mortgage rate above 5 percent was 2010. In fact, the average mortgage rate at the height of the go-go market during 2006 was above 6 percent.

What does it mean for you if you’re planning a sale? Don’t wait until spring! Consider selling during the winter housing market. You won’t have much competition; and serious home buyers, who are sensitive to interest rates, will be looking through the holidays and winter.

If you decide to sell during the holidays and the winter housing market, make sure your home is ready. Decluttering is the most important aspect of home preparation. However, winter decluttering may be more difficult because of the colder weather and our desire to slow down during these months. Besides our inclination to “nest,” it’s easy to accumulate items in the house that make us cozy and comfortable. But winter clutter can be minimized by organization and a daily straightening-up for incoming buyers.

Check your home’s systems. Have licensed professionals inspect your furnace and roof. Besides keeping the house warm and dry for buyers who visit, checking these systems can prevent surprises when a home inspection is performed.

After a weather event, clear your walkways and driveway of ice and snow. Besides making it easier for home buyers to visit your home, it lessens the possibility of someone falling and getting hurt.

If your home is vacant, have a licensed professional winterize it. Winterizing your home can reduce the risk of bursting pipes and damaging plumbing fixtures. If you are out of town, have a trusted person check on the home regularly (even if you are listed with a real estate agent). Your “stand-in” should also be available to take care of any house related issues that occur in your absence during the winter housing market.

By Dan Krell
Copyright © 2016

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

November 17, 2016November 23, 2021

It’s Mr. Trump’s housing market now

Change is not always easy. Sometimes we choose to change and other times we are forced to change. The Great Recession forced massive change to many aspects of our lives – mostly financial. Many found themselves out of work because of the recession, and many home owners lost their homes to foreclosure; while the rest of us searched for ways to cope. It’s Mr. Trump’s housing market now.

As a result, the Dodd–Frank Wall Street Reform and Consumer Protection Act was quickly pieced together and signed into law in 2010. “Dodd-Frank”, contained over two-thousand pages of regulations and rules, many of which were to be created at a later time by many agencies and unelected bureaucrats. Dodd-Frank also created the Consumer Financial Protection Bureau, which took over RESPA, lending and consumer finance markets enforcement responsibilities. The CFPB created the “Qualified Residential Mortgage” and “Know Before You Owe” rules that significantly impacted the mortgage and housing industries.

The purpose of Dodd-Frank and the CFPB was well intentioned as Congress sought a solution to prohibit future crises. In the uncertain financial atmosphere that ensued, consumers wanted accountability from Wall Street and mortgage lenders. While some continue to generally blame Wall Street and the mortgage industry for the financial crisis, the reality is that the dynamics that created the financial crises were complex. And one can surmise from the many hearings, books, dissertations, and working papers that the crux of the financial crisis was widespread fraud that took advantage of a hot real estate market and easy money.

Six years after Dodd-Frank, the rules and regulations keep coming. Writing for the US Chamber of Commerce’s “Above the Fold,” J.D. Harrison pointed out that Dodd-Frank has created over 27,000 new federal regulations by thirty-two federal agencies impacting many industries (Dodd-Frank’s Regulatory Nightmare in One Rather Mesmerizing Illustration; uschamber.com). Compared to the previous Wall Street reform in 2002, which had two agencies issuing regulations to only five industries. Harrison stated that the Sarbanes-Oxley Act “basically sought more corporate transparency and accountability.”

Many have associated Dodd-Frank with the ongoing slow economic recovery, citing increased consumer costs and restricted lending – which effects the housing market, home buyers and sellers.

An example of increasing consumer costs is the CFPB’s TILA-RESPA Integrated Disclosure. The Mortgage Bankers Association (mba.org) recently reported that compliance with TRID costs on average $210 per mortgage, some of which is recouped from the consumer. The rule is also responsible for “slower application to closing times.”

A recent appellate case highlighted some of these Dodd-Frank outcomes. The CFPB sought fines against a mortgage lender for their years of compliance with HUD’s interpretation of a rule; the fines were imposed retroactively for not complying with a new CFPB reinterpretation of the same rule. Additionally, the court focused on the CFPB’s unilateral ability to impose rules and fines without oversight.

It’s Mr. Trump’s housing market now.

Repeal and Replace is a talking point that is not exclusively for the Affordable Care Act. Shortly after Donald Trump’s election as the forty-fifth President of the United States, many industry insiders and pundits are already anticipating the future of Dodd-Frank and the CFPB. Mr. Trump’s plan for financial services is posted to the President-Elect’s site (greatagain.gov) stating: “The Dodd-Frank economy does not work for working people. Bureaucratic red tape and Washington mandates are not the answer. The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.

November 11, 2016December 13, 2022

Realtors giving back

It was about one month ago when I received the call from a local public relations firm. The voice on the other end of the line wanted me to write a column about their real estate agent client. They wanted to draw attention to Realtors giving back, specifically to the fact that their client started a program where they will be donating a portion of their commission to a charity chosen by the home buyer or seller.

Although I was pressured to commit to write the piece as well as provide a publication date, it seemed (at least for the moment) that seeking publicity about one’s altruism was ironic. In the ensuing weeks, I received follow up calls to write the piece. But rather than saying “No,” I told them it would most likely be a piece that is generally about real estate agents’ charitability. After all, we’re headed into the holiday season, and the timing seems right about bringing attention to Realtors giving back.

Not to give the short shrift to the PR firm and their client, whose “Pay it Forward” initiative was announced in an October 19^th press release that their team of agents, processors and coordinators will donate a portion of each commission to a charity of their client’s choice. Although an amount or percentage to be donated was not specified in the press release that I received, they are committing a portion of every commission to charity throughout the year. The team’s plan of giving a portion of commission to charity is not their exclusive idea, nor is it a novel one; nonetheless, that real estate team deserves kudos for the move – welcome to the fold!

It should come as no surprise that real estate and charitable giving goes hand-in-hand. Nationwide, real estate companies, franchises, and agents have sought to give back to their respective communities. In 2007, Gerald Leonard, then owner of Coastal Elite Real Estate in San Clemente CA, announced he was pledging 50 percent of all commissions to charity. And in 2009 Laurie Loew of Give Realty (located in Austin TX) announced giving 25 percent of her commissions to charity.

RE/MAX has supported the Children’s Miracle Network Hospitals through year-round contributions from participating agents. Since 1992, RE/MAX agents have given an estimated $143 million, as reported by a recent post to the Children’s Hospital Foundation website (childrensnational.org/giving). Besides individual agent contributions, RE/MAX “also hosts a variety of fundraising events throughout the year.” Additionally, RE/MAX agents can designate specific homes as “Miracle Homes” – “those homes that have yard signs also indicating the agent’s commitment to improving local pediatric care.”

In addition to agent donations and national fundraising for the Children’s Miracle Network, local RE/MAX offices host fundraising events too. For example, RE/MAX Centre in Olney MD holds an annual Charity Gala, the tenth one recently raised more than $40,000. Last year, RE/MAX Gateway in Chantilly VA raised more than $30,000. And RE/MAX Town Center of Germantown MD holds an annual golf tournament.

Real estate agents don’t only donate money, they get involved; and are recognized by Realtor® Magazine’s Good Neighbor Awards. The Good Neighbor Awards was launched in 2000 and “has since recognized more than 160 Realtors® for their service to their communities…Good Neighbor charities have received more than $1,000,000 in donations. In addition, each winner receives national and local publicity, which generates additional donations…Realtors® are also recognized for their community service through state and local real estate associations.”

Original published at https://dankrell.com/blog/2016/11/11/realtors-giving-back/

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.

November 4, 2016November 4, 2016

35 years of home buying changes

Years of home buying changes? (infographic from keepingcurrentmatters.com)

This week’s release of the National Association of Realtors® Annual Profile of Home Buyers and Sellers marks the 35^th year of NAR’s analysis and description of home buyer and seller behaviors and attitudes. You may not remember what it was like in 1981, but the country was coming out of a deep recession. The economy was still scarred with double-digit unemployment, inflation and interest rates. The 35^th issue makes us think about home buying changes over the years.

According to the US Census Bureau (census.gov), the median price for a new home in 1981 was $68,900, while in 2010 the average new home price was $221,800. Freddie Mac’s (freddiemac.com) data indicates that the average mortgage interest rate in 1981 was 16.63 percent, and 4.69 percent in 2010. Surprisingly, the cost of housing (when financing 100 percent of the sale price) has only increased about 17.5 percent from 1981 to 2010!

People want their space and privacy. According to the American Enterprise Institute (aei.org), the median square feet per person in a home in 1981 was about 550sf, while in 2014 it was 987sf. This expansion in personal space was expressed in the home size. The median size of a home in 1981 1,550sf, while 2010 it was 2,169sf (according to the Census Bureau). Also consider that the typical home of 1981 only had one and a half bathrooms, and the expectation today is that a home should have at least two and a half bathrooms.

An October 18^th news release from the NAR (Five Notable Nuggets from NAR’s Home Buyer and Sellers Survey’s 35-Year History; realtor.org) provided some insight into how the housing market has changed through the years. One noticeable factor is the reduced number of first time home buyers entering the market due to underemployment, student debt, lack of down payment, or delaying family formation. Last year’s percentage of first time home buyers dropped the lowest rate since 1987; and “according to the U.S. Census Bureau, the homeownership rate for 18-35 year-olds is currently at 34.1 percent, the lowest level in records dating back to 1994.”

It’s becoming apparent that real estate agents are not being replaced by the internet. Although a majority of home buyers use the internet to assist them with the home buying process, the NAR reported that 90 percent of home buyers and sellers surveyed for this year’s profile worked with a real estate agent. As a result, for-sale-by-owner transactions were at the lowest level ever (FSBO transactions peaked during 2003-2004).

The home buying process now takes longer than it used to. Putting aside recent changes to the mortgage process, the 2016 Home Buyer and Seller Profile brings attention to the amount of time a home buyer needs to find a home. According to the NAR, the average time to find a home was relatively unchanged from the 1980’s to about 2007; which about seven to eight weeks. The duration of the home search peaked at twelve weeks from 2009 to 2013. However, since then the average time needed to find a home is about ten weeks. The increased search time is due to a number of factors. Brisk sales combined with periods of low inventory has not provided home buyers with much of a choice from which to select. Not to mention an unprecedented amount of available information that has created a savvy home buyer.

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.

October 28, 2016December 13, 2022

Home inspection surprises

The American Society of Home Inspectors (ASHI) often conducts surveys to measure home buyer satisfaction. Although most home buyers are typically satisfied with their home inspections, you should be prepared for home inspection surprises after you move into your new home.

A 2012 ASHI survey conducted by Harris Interactive indicated that home buyer confidence was boosted in eighty-eight percent of respondents who had a home inspection before buying. A 2011 ASHI survey revealed that about seventy-two percent of homeowner respondents indicated that their home inspection helped them avoid potential problems with their home.

Although the surveys suggest a majority of home buyers are usually satisfied with their home inspections, there are some that are not. It’s not unusual to read or hear about a home inspection that is not perfect. And sometimes the home inspection goes awry from the start. An agent once told me a story about a home inspector who flooded a condo because he wanted to check the fill rate of tub by closing the drain; he walked away and forgot about the quickly filling tub. Years ago, I witnessed how a home inspector almost caused a fire by turning on an oven – if the inspector first checked inside before turning the oven on, he would have noticed that is where the homeowner stored pans separated by paper towels.

There’s a lot going on during a home inspection to distract the inspector from their duties. And no one said home inspectors are supposed to super human or perfect; but there is an expectation that they are thorough. Not so much because they are paid professionals; but rather, they’re relied on for information about one of the highest cost purchases of a lifetime – your home.

When you first meet with your home inspector, they will tell you they are not perfect. However, they are supposed to follow “standards of practice.” Years before home inspectors were licensed, ASHI developed standards of practice as a means of establishing expectations placed on inspectors. Many of those standards have since been incorporated into state home inspector licensing laws.

Maryland’s home inspector licensing law (COMAR Title 9 Subtitle 36 Chapter 7) states that the inspector identify the scope of the inspection, and visually inspect “readily accessible areas” to determine it the items, components and systems are operating as intended, or are deficient. Further, to be in accord with the standards of practice, a home inspection: “Is intended to provide…objective information regarding the condition of the systems and components of a home at the time of the home inspection; Acts to identify visible defects and conditions that, in the judgment of the home inspector, adversely affect the function or integrity of the items, components, and systems inspected, including those items or components near the end of their serviceable life; May not be construed as compliance inspection…; Is not intended to be construed as a guarantee, warranty, or any form of insurance; Is not an express or implied warranty or a guarantee of the adequacy, performance, or useful life of any item, component, or system in, on, or about the inspected property…”

Given the limitations of the home inspection, home buyers are sometimes confronted with surprises about the condition of items that were not readily seen during the inspection, such as: the roof, chimney, foundation, and HVAC. However, you can limit subsequential issues by having a licensed contractor further examine those areas during the inspection period.

By Dan Krell
Copyright © 2016

If you like this post, do not copy; instead please:
reference the article,
like it at facebook
or re-tweet.