The big news this week is of course Jeff Bezos’ purchase of the Washington Post. Why would the man who predicted the demise print media pay $250 million for a regional newspaper and a handful of associated local papers?
If the real estate business is a window into how media plays a role in the daily lives of the average American, then Bezos’ purchase might be a head scratcher. Over the last five years, the National Association of Realtors® annual Profile of Home Buyers and Sellers (realtor.org) has demonstrated how the internet has increasingly played a role in how home buyers actively searched for homes. In 2007, the Profile of Home Buyers and Sellers indicated that about 60% of home buyers completely relied on the internet to search for their home, while about 21% did not use the internet at all in their search. Compare those statistics to the 2012 Profile, which reported that 90% of home buyers used the internet to search for homes; and home buyers who were younger than 44 years of age, the use of the internet is reported to be 96%!
It seems as if home buyers relied on the weekend real estate sections of the paper for a leg up on new home listings and open houses. Real estate agents and brokers happily paid to have their listings included in what seemed to be the weekly catalog of homes for sale. In addition to the home listings, print real estate sections also included other related information (such as decorating, renovation, and buying/selling tips).
However, as the NAR’s Profile of Home Buyers and Sellers indicated, there was a sharp increase in the reliance of the internet to search for homes from 2007 -2012. The time frame is no coincidence; besides the exponential increase in technology and computing power during this period, it also covers the housing bust and subsequent foreclosure crisis. This was a time of tight advertising budgets and the search for efficient advertising modes; the internet offered a bigger bang for the advertising dollar, offering a more robust real estate platform than print could ever offer.
And although there was a colossal increase in the reliance of the internet for real estate listing information in the last five years, there was a consolidation and reorganization of online real estate content during that time frame as well. As the housing market declined in 2007, many sites stopped syndicating their own content and instead partnered with one of the high profile, well organized real estate portals.
It might seem as if the purchase of the Washington Post by an internet visionary who had once foretold the death of printed news might be confusing. But if you understand the Amazon.com business model and how it revolutionized the purchase and delivery of print and recorded media, you would not speculate that the purchase of the venerable news organization was to expand an internet empire to the newsstand – but rather you might believe that the purchase was to acquire a widely recognized brand that generates a considerable amount of content that can be packaged and sold through Bezos’ established model.
Just as the internet revolutionized real estate content and home listings, you might imagine how Bezos’ novel news paradigm could increase the robustness of content and distribution of home and open house listings.
This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.
Home buyers would like to consider themselves as being financially savvy. Of course, I often hear the question about buying a home without title insurance, which usually arises from the advice they may receive from some questionable source debating the necessity of title insurance. However, the importance of title insurance is highlighted by recent ownership disputes that have occurred in the last five years due to foreclosures, improperly recorded deeds and mortgage modifications.
Historically, title insurance came about as a necessity. According to the American Land Title Association (alta.org), title insurance resulted from a landmark court case in Pennsylvania in 1868, which found that home seller was not be responsible for a erroneous title opinion. Subsequently, the first title insurance company was formed in 1876 in Philadelphia. The company promoted itself by claiming that they would insure “the purchasers of real estate and mortgages against losses from defective title, liens and encumbrances;” thus increasing the speed and accuracy of the property transfer process.
Prior to the availability of title insurance, title examinations were conducted similarly to how they are today with the purpose of ensuring title marketability (ensuring title is free of unpaid liens, mortgages, and other encumbrances). However, prior to the offering of title insurance, property owners were often held responsible for title blemishes. Of course, unresolved tile disputes were often settled in court.
Initially, title insurance was often a local process. However, the title insurance industry surged along with an expanded housing market after World War II ended. Additionally, the use of lender’s title insurance grew along with the secondary mortgage market; because as the number of nationwide mortgage holders increased, lenders found that title insurance was necessary to protect their interests.
Researching a property’s title relies on the “recordation system.” Although the recordation system has been in use in most of United States in some cases before the formation of the country, many countries use a land registration. Land registration systems used in some countries typically do not provide the same recourse as does the recordation system when disputes arise; where the registering government may resolve these disputes.
Title insurance is a result of our recordation system that continues to this day, where property ownership can usually be determined by conveyance. Although the recordation system relies on transfer instruments that indicate a grantor, grantee, and property description; the system is not perfect. Issues can arise from unrecorded deeds, as well as erroneously recorded documents; fraud may also occur by recording falsified transfer documents with a complicit or unsuspecting clerk.
There are two types of title insurance that are offered: lender’s and owner’s. A lender’s policy is usually required by a mortgage lender and is thought to protect the interests of the lender by validating the lender’s validity and enforceability of the mortgage. The lender’s policy is typically issued for the mortgage amount and coverage decreases as the principal is paid down.
An owner’s title insurance policy is understood to protect the owner’s interest in the property, however there may be limitations. You should consult with your title attorney about the policy coverage and limitations. Policy coverage varies– so check with your title agent for pricing and coverage levels.
A Consumer Guide to Title Insurance is available from the Maryland Insurance Administration, the local State agency that regulates title insurance producers (insurance.maryland.gov).
Buyers aren’t the only ones looking for a deal. Home sellers are also looking for a good deal – which means they want to sell their home for the most money. As it seemed as if the housing market had strong sales this year, some sellers are still trying to decide the best time to sell. But unfortunately, timing the market may not be as easy as it seems.
Some say that spring is the best time of year to list and sell a home, while others believe that summer is better. Old time real estate agents will tell you about a time when there was a traditional selling season, which basically started in March and ran through June. In recent history, it seems as if the boom/bust market from 2005-2008 rewrote those rules. During the “go-go” market, the spring selling season couldn’t start early enough; home buyers made their New Year’s resolutions and shook off the winter fog in early January to begin their home search. For several years, it seemed as if home buyers started their real estate searching earlier each year to stake their claims on real estate before other buyers got wind of the listing.
However, once the bubble busted, home buyer activity significantly slowed, those who wanted to buy a home became increasingly methodical about their purchase as well as starting their search later in the year. It seemed as if the best time to list and sell shifted from the spring time to summer months.
Since the downturn of the housing market, sales activity peaked in the summer months. June has been a consistent contender for year high sale totals – until this year. The July 22nd news release from the National Association of Realtors® (realtor.org) indicated that June sales “slipped” about 1.9% from May. Granted, June’s sales are significantly higher than June of 2012, but the slowdown may just be a fluke or an indication of something else.
Maybe the combination of increased inventory (NAR reported that housing inventory was slightly elevated from May to about a 5.2 month supply) along with rising mortgage rates (Freddie Mac’s June national average commitment rate for a 30-year fixed rate mortgage rose to 4.07%) is making home buyers pause.
And surely home prices are making buyers have second thoughts; bargain hunters are having difficulty finding bargains. June’s national median existing home sale price increased 13.5% compared to last June. Distressed home sales, foreclosures and short sales that typically sell at lower prices, accounted for 15% of June’s figures (compared to last June’s 26%) and are at the lowest levels since 2008. And although it may sound like great news, the double-digit jumps in the average home sale price may be a statistical artifact due to declining distressed home sales.
If you’re waiting to list your home for sale this year, you may have mistimed this year’s market.
Research has demonstrated that attempting to time the market may not always yield the best results – timing the market is much easier in hind sight. Market timing appears to be much more than looking at selling activity cycles. You should rely on the expertise of your real estate professional for neighborhood sales data and trends to assist you in deciding the price and the timing of listing and selling your home.
This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.
How we describe ancient homes gives a glimpse into how we will be depicted.
If you’ve ever read the accounts of archeologists describing the homes and lifestyles of the ancients, it might make you wonder how future archeologists might describe how we lived in our homes. Would their description early twenty-first century living be accurate, or would their hypothesis fit their conception of their future homes and lifestyles?
Reading the accounts of archeologist Ralph Solecki in a July 11th item in the Wall Street Journal (Archeologist Ralph Solecki Recalls His Neanderthal Cave Discovery) about his excavations in Iraq, a description of a Neanderthal home site emerged. It appears that life and death revolved around a 3,000 square foot cave. Described to be roomier than the average single family home, it sounds as if the cave may have had futuristic style with its large flexible space and a 20 foot ceiling. Of course, the cave was engineered by nature and may have served as a shelter among other things; it appears as if the Neanderthal cave was where life and death was centered.
The home of modern humans seems to have evolved to encompass life by incorporating necessary spaces for various functions; such as separating areas for food (kitchen, dining room), sleeping, and congregating (living room, family room).
Technology has also played a major role in home development and design. Indoor plumbing and recent advances in fiber optic communications are examples of features and amenities that have been included as technology has advanced. Additionally, technology has also allowed for high density living; up until the late nineteenth century, building materials and techniques may not have allowed for the high rise building.
Lifestyle has been the driving force of home design since the industrial revolution and emergence of the middle class. By comparing homes built during various modern eras, you can observe changes in how we lived over the last one hundred years; the pre-war era home is different from today’s two-story modern house (which most homebuyers today consider a colonial). Today’s homes are increasingly informal and relaxed. It might have been thought to be ill-mannered to see the interior of the kitchen from other rooms during the late nineteenth century and early twentieth century; however, today it is common to have the kitchen open to other rooms. Additionally, the average home size has increased significantly through the years, increasing from an average size of about 980sf during the 1950’s to over 2,400sf in today’s average home.
High density living has also become progressively comfortable as well, which has become increasingly attractive to many who seek care free living. Since the first high rise, technology has introduced elevators, air conditioning, and other necessary amenities to today’s lifestyle – such as fitness and business centers.
Homes will continue to transform according to our needs and technological advances. Future homes will undoubtedly offer “flexible” spaces that can be used for various purposes, depending on your lifestyle. Rooms may be used for entertainment and work centers, and also allow for informal dining. It may be possible that the kitchen may become a flexible space as well, as we cook less in our homes.
As future homes could become the open space with 20ft ceiling, it may be that future archeologists would be more familiar with Neanderthal home than ours. And just as we have characterized Neanderthal living as “difficult,” future archeologists might also describe our lifestyle as “difficult” when they excavate our homes.
This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.
Over the last few weeks, the 30 year fixed rate mortgage has slowly climbed from the historical low we have become accustomed over the last few years to well above 4%, as reported by Freddie Mac’s Monthly Average Commitment Rate as of July 3rd. And although it’s still relatively low and not bad as interest rates go; keep in mind that the mortgage rate averaged over the last 40 years is much higher – some report it to be 8.75%.
If you haven’t noticed, average mortgage rates have been below 7% for about ten years. And even when the housing market was bubbling, rates were not as low as where rates are today. After the financial crisis, mortgage rates were kept low by the Federal Reserve’s commitment to purchasing mortgage backed securities; which was an attempt to stimulate interest in real estate purchases at a time when the housing market all but screeched to a halt. Shortly after the Fed ended the mortgage backed securities purchase program, a broader securities buying program began with the intent to stimulate the overall economy; commonly called quantitative easing, this was considered the second round, which targeted the purchase of U.S. Treasury Bonds. The Quantitative Easing program was extended into a third phase (QE3) through 2013, which many are speculating will begin tapering off by end of the year.
Recent Fed comments may have hinted to tapering off the QE program, which could have been the source of some Wall Street panic earlier this month that resulted in a volatile market; besides affecting your 401k, the result has been a jump in mortgage interest rates.
Of course, many experts are worried about mortgage rate increases and the effect on home buyers, citing a decreased home buying ability as well as the possibility of suppressing existing homes sales. For some home buyers, it might be true that increased interest rates could be a wrench in their home buying plans; however, the reality may be that increasing mortgage rates are a sign that the housing market is healthier than some think.
Although mortgage interest rates are just one aspect of a multi-factor dynamic housing market; housing demand is not necessarily gauged by mortgage interest rates alone. For instance, the height of the housing bubble, mortgage interest rates were much higher than they are today. One sign that slightly increased mortgage rates have not negatively affected the overall market is a recent report by the National Association of Realtors (realtor.org) that May 2013 existing home sales (completed sales) increased about 11.4% compared to May 2012. Additionally, the NAR reported that existing home sales are the highest since 2009.
There has been criticism that the “artificially” low interest rates have helped home sale prices jump, especially during a time when there has been little housing inventory; some are concerned that increases in mortgage rates will pressure home sale prices lower. But just like the housing demand concern, these factors alone are not in a vacuum; factors today may warrant mortgage rate increases to thwart abnormal housing price spikes (which are common in bubble markets).
Of course, rising mortgage rates and the thought of paying more for a mortgage is not always good news to home buyers. However, given the circumstances and looking at the broader perspective, the result may be much better than anyone could imagine – a stable housing market. But that is yet to be seen.
The big news this week is of course Jeff Bezos’ purchase of the Washington Post. Why would the man who predicted the demise print media pay $250 million for a regional newspaper and a handful of associated local papers?
The big news this week is of course Jeff Bezos’ purchase of the Washington Post. Why would the man who predicted the demise print media pay $250 million for a regional newspaper and a handful of associated local papers?
