Even with low inventory, expect a strong 2021 housing market

Even with low inventory, expect a strong 2021 housing market
Even prior to the pandemic, housing inventory had hit record lows, and the problem has only gotten worse as demand continues to rise. Total home sales are outpacing new listings by a wide margin every month, and real estate tech company Homesnap foresees the shortage continuing in 2021 unless more sellers enter the market.

The divide between supply and demand is striking: compared to last year, total new listings increased .22%, while total sales increased 19.29%. Homesnap said this trend could further drain inventory as 2021 approaches.

Home prices have risen as a result of the mismatch in homebuyer demand and housing inventory. The average list price for properties that sold rose 6.7% from September to October this year, which Homesnap said is significantly higher than the same figure in 2018 and 2019.

As median home prices keep rising, homeowners who originally planned to sell within the next three to five years might list their homes sooner, Homesnap said, freeing up more inventory.

Freddie Mac on the state of housing affordability

Join experts at Freddie Mac for a discussion on The State of Affordability. This panel will identify significant data and trends impacting the future and outline key challenges. Get up to speed on today’s housing market and discover how the industry can evolve to better serve tomorrow’s market, together.

Presented by: Freddie Mac

Homesnap predicts that even hampered by low inventory, the housing market will remain competitive in 2021, leading into a strong traditional spring home-buying season. Popular places to buy continue to evolve, with Homesnap agents reporting more homebuyers are searching in rural areas outside major city limits because they aren’t commuting to the office anymore and are looking for more space.

Guy Wolcott, founder of Homesnap, says buyers need to be realistic about their budgets, stay on top of new listings and be prepared to make quick decisions, especially in a competitive market. 
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Why CAR campaigned for California’s Proposition 19

Why CAR campaigned for California’s Proposition 19
The passage of Proposition 19 in California — which will generate wildfire relief funds while providing tax breaks for senior citizens — was a victory for the California Association of Realtors, which lobbied for its passage and put real dollars behind the effort.

The bill is expected to add $2 billion to California’s coffers annually, and homeowners with disabilities, seniors looking to move for health reasons, and empty nesters looking to downsize could receive property tax breaks when buying a new home, CAR officials said.

But nothing is free, and the money generated by Proposition 19 comes from tax changes on inherited property.

Proposition 19 eliminated the ability of homeowners to transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value if the property is being used as a rental house or second home. Even when the inherited property is being used as a principal residence, if it is sold for $1 million more than the property’s taxable value, the property assessment will increase.

This means some residents with inherited homes will see an increase in their property taxes and may find living in California increasingly unaffordable. Keeping inherited homes as rental properties, especially after California adopted state-wide rent control in January 2020, may become unprofitable as well.

But CAR, which supported the measure with $35.7 million, along with the National Association of Realtors, and the California Professional Firefighters, campaigned for the law given the windfall the state will receive because of it.

Becky Warren, CAR spokesperson for “Yes on 19,” said that funding earmarked for wildfire aid and senior citizen aid was a driving factor.

“It will help provide some relief to the state’s housing crisis, and help our vulnerable populations such as seniors, people with disabilities, and wildfire survivors be able to afford to move to a home that best fits their needs,” she said. “It will also provide dedicated new revenues, annually, to our communities — including wildfire relief funding, which helps our neighborhoods.”

Specifically, the law means those 55 years and older will be able to transfer the tax rate they pay on a current home to the next three homes they purchase, resulting in property tax savings that could reach thousands of dollars a year, state officials said. It will also increase housing churn as older Californians will no longer be afraid to lose their favorable tax rate.

“Based on the significant interest seen since the measure was supported by voters, we believe many seniors trapped in their homes will be able to now move to smaller homes closer to their families,” Warren said. “That will then increase available housing, which we need now more than ever.”

The expected open unit increase was highlighted by several California-based Realtors, who all agreed that demand is higher than available inventory.

“I work with first-time buyers throughout the county, and the majority of my clients are military and using their VA loans, so they don’t have a lot of liquidity,” said Alanna Strei, a California-based Realtor who said she has a “backlog” of first-time buyers looking to get into a home. “The more inventory available, the more they are able to compete with cash buyers and investors who snap up all the ‘good deals’. And allowing elderly, disabled, and those displaced by natural disasters to carry their tax basis with them across the state just makes sense.”

“[Passing Prop-19] is a game-changer,” added Monica Bryher, a broker-associate and Realtor in California. “Both in terms of properties being sold that would have been passed on through a family trust, or by the beneficiaries who decide they either can’t afford to pay property taxes based on a current assessed value, or just don’t want to pay the higher property taxes. The state’s going to make a lot of money.”

Educating the public on the ways to use Prop 19 to their benefit is crucial, Strei said. For example, senior citizens don’t have to “succumb to a reverse mortgage” and can instead sell their home and retain equity, she said. 

“They can use a portion of it to buy a smaller property appropriate for their current life circumstances, while maintaining their tax basis and being able to make their payments,” she said. “It is CAR’s job and our job as Realtors to continue to educate people who may have felt ‘stuck’ for decades as home prices have increased so dramatically.”

Wildfire-relief funding generated by the law is not expected to be dispersed until 2025, according to the Los Angeles Times. 
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Knight Barry adds Florida offices

Knight Barry adds Florida offices
Knight Barry Title opened three new locations across Florida on Dec. 1, giving the company 11 offices throughout the Sunshine State, the company announced. Read on for more details.
Source: thetitlereport.com

Orogen completes majority-stake acquisition of Westcor

Orogen completes majority-stake acquisition of Westcor
The Orogen Group and Westcor Land Title Insurance Co. have completed their previously announced transaction following the receipt of regulatory approval, the companies announced. Read on to learn what the top executives from both companies had to say.
Source: thetitlereport.com

SoftPro releases new sync application

SoftPro releases new sync application
SoftPro recently announced the release of a new sync application for use within its SoftPro 360 business exchange platform. Read on for more details.
Source: thetitlereport.com

Anderson Biro adds associates

Anderson Biro adds associates
Cleveland, Ohio-based executive recruiting firm Anderson Biro recently added two associates to its research team, the company announced. Read on for more.

 

 

 

 

Source: thetitlereport.com

Average IMB made over $5,500 in profit per loan in Q3

Average IMB made over ,500 in profit per loan in Q3
Independent mortgage banks (IMB) and mortgage subsidiaries of chartered banks saw an average net gain of $5,535 on each loan they originated in the third quarter of 2020, up dramatically from the $4,548 in profit-per loan they recorded just a quarter prior, according to a new report from the Mortgage Bankers Association.

“With the surge in mortgage production volume in the third quarter, net production profits among independent mortgage bankers increased, surpassing 200 basis points for the first time since the inception of MBA’s report in 2008,” said Marina Walsh, the trade organization’s vice president of industry analysis. “Soaring production revenues – led by strong secondary marketing gains – drove these results and more than offset an increase in production expenses.” 

Walsh noted that high origination volumes typically reduce production expenses, but that wasn’t the case in the third quarter. Costs actually rose. “One major reason for this increase was escalating personnel costs, including signing bonuses, incentives, overtime, and commissions that were pushed higher with the need and competition for workforce talent,” she said in a statement.

According to the MBA, the average pre-tax profit was 203 basis points (bps) in the third quarter, up from an average of 167 bps in the second quarter. The average quarterly pre-tax profit margin from Q3 2008 to Q3 2020 is 52 bps.

The average IMB generated $1.34 billion in origination volume in the third quarter, up from $1.02 billion sequentially. Total production revenue, which includes fee income, net secondary marking income and warehouse spread, increased to 475 bps in the third quarter, up from 429 bps a quarter prior. On a per-loan basis, production revenues increased to $12,987 per loan in the third quarter, up from $11,686 per loan in the second quarter.

WFG reports its highest volume months ever during Q2 and Q3 of 2020

As the company celebrates its 10th anniversary, WFG continues to look for new ways to serve its clients, consumers and industry.

Presented by: WFG

Here are some other pertinent statistics from the MBA’s quarterly mortgage bankers performance report:

Net secondary marketing income increased to 394 bps in the third quarter, up from 341 bps in the second quarter. On a per-loan basis, net secondary marketing income increased to $10,833 per loan in the third quarter from $9,355 per loan in the second quarter.The purchase share of total originations, by dollar volume, increased to 46 percent in the third quarter from 39 percent in the second quarter. For the mortgage industry as a whole, MBA estimates the purchase share was at 43% in this year’s third quarter.The average loan balance for first mortgages increased to a new study high of $282,659 in the third quarter, up from $282,309 in the second quarter.The average pull-through rate (loan closings to applications) was 72% in the third quarter, up from 71% in the second quarter.Total loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $7,452 per loan in the third quarter, up from $7,138 per loan in the second quarter. From the third quarter of 2008 to last quarter, loan production expenses have averaged $6,566 per loan.Personnel expenses averaged $5,124 per loan in the third quarter, up from $4,992 per loan in the second quarter.Productivity increased to 4.3 loans originated per production employee per month in the third quarter, up from 3.5 loans per production employee per month in the second quarter. Production employees includes sales, fulfillment, and production support functions.Servicing net financial income for the third quarter (without annualizing) was at a loss of $30 per loan, compared to a loss of $68 per loan in the second quarter. Servicing operating income, which excludes MSR amortization, gains/loss in the valuation of servicing rights net of hedging gains/losses and gains/losses on the bulk sale of MSRs, was $26 per loan in the third quarter, up from $23 per loan in the second quarter.Including all business lines (both production and servicing), 99% of the firms in the study posted pre-tax net financial profits in the third quarter, up from 96% in the second quarter.  

Eighty-four percent of the 347 companies that reported production data for the third quarter of 2020 to the MBA were independent mortgage companies, and the remaining 16% were subsidiaries and other non-depository institutions.
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Mortgage rates fall to new record low at 2.71%

Mortgage rates fall to new record low at 2.71%
The average U.S. mortgage rate for a 30-year fixed loan fell one basis point this week to 2.71%, Freddie Mac said in a report on Thursday – the lowest rate in the survey’s near 50-year history. This week’s rate broke the previous record set on Nov. 19.

The average fixed rate for a 15-year mortgage also fell last week to 2.26% from 2.28%.

With this week’s record drop, there have now been 18 consecutive weeks when average mortgage rates have been below 3%. This also marks the third time in the survey’s history that rates have fallen below 2.75%, and the 14th time this year rates have broken their own record.

According to Sam Khater, Freddie Mac’s chief economist, despite these persistently low mortgage rates, home sales are facing significant challenges.

“While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher sales can increase. Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment,” Khater said.

Reports of even lower rates circulated on Wednesday after United Wholesale Mortgage announced it was offering mortgage rates between 1.99% and 2.5% on FHA loans through its Conquest Program. Those rates will be available on FHA purchase mortgages, FHA rate and term refinances, and FHA streamline refinances, but not all borrowers will qualify for the products.

Into the final month of the year, economists are predicting low rates to hold out, but what 2021 will look like for the rate market is still up for debate.

On Wednesday, Mortgage Banker Association’s senior vice president and chief economist Mike Fratantoni said fiscal policy will play an important role in determining the direction of interest rates in 2021.

“While we think the economy, the job market, and distressed households and businesses need the support such a package could bring, the size of the debt and the required debt issuance needed to finance these supersized deficits, will likely put upward pressure on longer-term rates,” Fratantoni said.

This means a steeper yield curve in 2021, and since rates are priced off the longer end of the curve, the most likely outcome is somewhat higher interest rates.

If rates remain as low as they are, Fratantoni estimates borrowers to ride the current refinance wave for even longer. A recent report from Black Knight estimated at current rates, 19.4 million “high quality” candidates are up for refinance savings eligibility.
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Homes in Boise, Idaho are “flying off the market”

Homes in Boise, Idaho are “flying off the market”

Boise, Idaho was the No. 1 midsized housing market to watch in 2020, according to Zillow, because of its draw for young professionals, families, and retirees alike. In 2018, Forbes ranked the city No. 1 on its list of America’s Fastest Growing Cities.

The demand is clear — the Boise housing market has just 0.3 months worth of supply, according to Keller Williams Realty Boise, and homes typically stay on the market for just five days. That has led to a sharp increase in the median home price to $390,000, a 16.4% increase compared to this time last year.

Steven Caporale, founder and principal of Accel Realty Partners in Boise, has been in the industry for 25 years and said he’s never seen the housing market look like this.

“In high-demand areas where only one or two properties come on the market, maybe in a month, we’re seeing [buyers paying] upwards of $100,000 to $150,000 over asking price.”

It’s not uncommon to hear that bids on homes are that high, according to Stacie Herrig, a Realtor with Epic Realty in Meridian, Idaho, and sometimes she can see 10 to 20 offers on a home. Especially if a home has acreage, it will “fly off the market.”

Herrig said the demand leads to really quick turn times.

“I’ve talked to an agent and they’re like ‘Oh yeah, I had this coming soon and I already had an offer on it.’ They’ll just write an offer sight unseen,” she said.

In Ada County specifically, where Boise is located, the number of homes for sale dropped from 1,697 last October to just 355 in October 2020, a 79% decline. There’s 0.35 months worth of housing inventory, which is the lowest ever, the report from Keller Williams said. Notably, in 2011, existing home prices in Ada County were at $160,113. Now, in 2020, median existing home prices are at $410,414.

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Knock Home Swap expands presence in Florida market

Knock Home Swap expands presence in Florida market
Knock’s Home Swap solution is now available in three new markets in Florida: Homeowners in Miami, Fort Lauderdale and West Palm Beach can buy their next home before selling their current one. Knock entered the Florida market in October.

Late last month, Knock’s Home Swap launched in Charlotte and Raleigh, North Carolina. Now, the solution is available in 14 markets in the U.S., with plans to expand to 21 markets by mid-2021.

“We’re excited to expand the Knock Home Swap to the Miami, Fort Lauderdale and West Palm Beach markets,” said Knock Cofounder and CEO Sean Black. “At Knock, we are committed to helping people move more freely. The Home Swap is the perfect product in today’s highly competitive real estate market.”

Home Swap is offered exclusively through local real estate professionals who have been trained as Knock Certified Agents. In these markets, Home Swap will be offered through The Keyes Company and The Signature Real Estate Companies.

“The Knock Home Swap is a valuable tool that gives our agents a competitive edge in helping our customers buy and sell homes within their comfort zone quickly,” said Ben Schachter, broker-president and principal of The Signature Real Estate Companies. “Our nearly 1,400 Signature agents are buying into the Knock Home Swap, because it’s consistent with our own historic white-glove, concierge customer service.”

Via Home Swap, customers can take ownership of their new home while prepping and repairing their old house to sell. Knock provides consumers with a mortgage on the new home, an interest-free bridge loan to cover the down payment, coverage of mortgage payments on the old house, and up to $25,000 for home prep and repairs for the old house.

“Throughout our 94-year history, we have strived to deliver cutting-edge tools for our 3,000-plus associates and clients,” said Mike Pappas, president and CEO of The Keyes Company. “In this low inventory market, Knock Home Swap gives our sellers the edge in buying their dream home while allowing them to control their sales process.”
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