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235 Articles Found

US foreclosure rate falls to 12-year low as borrowing grows

Friday, August 17, 2018

Two reports on the state of housing finance this week show that mortgage borrowers are still faring well financially despite some recent economic headwinds. The national foreclosure rate reached its lowest point since 2006, according to a report on May 2018 figures from CoreLogic. Meanwhile, outstanding household debt of any type reached a new all-time high of $13.3 trillion in the second quarter of the year, driven primarily by home loan growth according to The Federal Reserve Bank of New York.

That means U.S. households aren’t just borrowing more, they are finding it easier to pay off those loans, a reflection of a stronger economy and increased financial confidence. CoreLogic found that in May, only 4.2 percent of mortgage borrowers at the time were 30 or more days behind on payments, the lowest rate of delinquency seen since the financial crisis began around a decade ago. Matching strength in the home loan market, the New York Fed reported that the delinquency rate on any type of household debt, including auto, student and personal loans, reached the lowest levels seen since the bank began collecting that data in 2003.

The new lows seen in delinquency rates were the result of “an improved labor market and increased participation in various income-driven repayment plans,” according to a statement from Wilbert van der Klaauw, senior vice president at New York Fed.

Just as previous mortgage default and delinquency reports have shown, only areas in Texas and Florida showed significant growth in the number of late mortgage payments, a result of last year’s record-breaking hurricane season. Florida was the only state to see its overall delinquency rate increase, according to CoreLogic, from 5.2 percent in May 2017 to 6.2 percent in May 2018. The combined metro area of Miami-Fort Lauderdale-West Palm Beach again saw the highest overall delinquency rate of any metro surveyed, at 7.8 percent. Houston, another city recovering from last year’s hurricanes, posted the second-highest rate of 6.6 percent.

 

NAR secures ‘a big win’ on new tax break for agents

Thursday, August 16, 2018

Updated guidance from the IRS related to federal tax cuts passed at the end of 2017 confirmed that many real estate professionals should be able to claim a substantial income deduction once they file their 2018 tax returns, in what NAR called “a big win for Realtors.”

As part of the Tax Cuts and Jobs Act that took effect this year, several new laws and provisions were introduced that would reduce the tax liability of many corporations, small businesses and sole proprietorships. However, until the IRS issued its updated guidance on the changes Aug. 8, it was unclear whether real estate agents would be able to take advantage of a new 20 percent deduction on income for owners of “pass-through businesses,” the legal classification under which many real estate professionals operate.

While business groups lobbied hard in Congress for the passage of the tax cut package last year, NAR continued to work with the IRS and the Office of Management and Budget afterward to ensure that Realtors were included in subsequent revisions.

“Your association made a forceful case — both in a detailed letter it sent on June 19 and in a face-to-face meeting with IRS officials in early August — that certain limitations on specified service businesses were not intended by Congress to apply to real estate professionals,” NAR communications director Robert Freedman wrote in a news update. “And that’s the interpretation the IRS has ended up taking.”

According to the latest version of Section 199A, individual owners of certain sole proprietorships, S corporations and partnerships — which are often called pass-through businesses and comprise a majority of business entities registered in the U.S. — may claim the 20 percent deduction if they earned less than $157,500 in 2018 (or less than $315,000 for married couples filing jointly).

Even with the updated rules, the NAR noted that the details surrounding the 20 percent pass-through business income deduction remain complex. Freedman explained that the association would be releasing additional guidance for Realtors using the deduction by mid-September.

“It’s a complicated provision and how it works for you will depend on many factors unique to your business structure and your income,” Freedman wrote. “As always, consult with your accountant or tax attorney on how this deduction should be applied in your situation.”

 

US housing stock ages as construction backlog grows

Thursday, August 16, 2018

More Americans are becoming homeowners, particularly young adults. But the homes they are living in are generally older. Data from the U.S. Census Bureau’s most recent American Community Survey showed that in 2016, the median age of all owner-occupied homes in the U.S. was 37. That means half of the nation’s existing housing stock was built before 1980. For comparison, the median age of American homes was 31 years old in 2005.

Another Census Bureau data set focused on home sales only found an even wider gap in home age between now and a decade ago. Homes sold in 2017 posted a median age of 34 years old — in 2007, this figure was 21 years old nationally.

The aging of America’s housing stock is another result of the longstanding backlog of new residential construction, and has a variety of implications. In the long-term, forward-looking view, these data factor into the recent surge in remodeling activity, according to the National Association of Homebuilders. Even further out, it suggests that demand for new construction will only trend upward.

On the other hand, as Zillow points out, data on America’s aging housing stock proves that the post-recession housing boom seen in many cities was hardly a blip in historical terms. Even after a surge in permitting and construction since 2008, homebuilding activity has failed to reach pre-recession levels. If the housing crisis never happened and the rate of permit issues had persisted at pre-2008 levels, as many as 2.3 million more single-family homes would be standing today, according to Zillow’s analysis. That would’ve made the nation’s homes significantly more modern on average, too.

“In 2006, 10 percent of homes were built in the last 10 years and 32 percent were older than 56 years,” the Zillow report explained. “By 2016, only 4 percent were built in the last 10 years and 39 percent were older than 56 years.”

Between the nation’s largest cities, this downward trend in construction means hundreds of thousands of single-family home permits are essentially “missing.” Miami could have had nearly 145,000 new homes built since 2008 if pre-recession building trends had continued. Only a few major cities, including Chicago and Houston, issued residential construction permits at the same rate or higher than the historical rate over the last 10 years.

NAHB noted that a majority of homes in the study’s most recent vintage (built between 2010 and 2016) were owned by millennials and members of Generation X. Baby boomers, meanwhile, owned more than half the housing stock built before 1969, as well as the largest share of homes built in the 1970s.

 

HUD looks for public comments on possible fair housing rule changes

Thursday, August 16, 2018

The Department of Housing and Urban Development recently announced that it is looking for public comments regarding plans on “streamlining” the Affirmatively Furthering Fair Housing Rule, an Obama-era rule on desegregation.

The rule was designed to help cities and counties identify causes behind housing segregation and discrimination and create plans to improve and address the problems. HUD has previously discussed how the regulations provide an unnecessary burden on certain smaller communities.

“As we have already witnessed, this rule disproportionally places a heavier burden on smaller communities who could be denied funds unless they make radical, sweeping changes to their well-established zoning laws that are compliant with the Fair Housing Act. This rule simply represents a continuation of the previous administration’s radical pursuit of using disparate impact theory to punish communities that are not as demographically diverse as they would have wished,” HUD said in a statement back in July.

While HUD has said it would like to roll back regulations, it has not provided any specific details about the changes that would be made.

“HUD believes very deeply in the purposes of the Fair Housing Act and that states, local governments, and public housing authorities further fair housing choice. HUD’s 2015 rule often dictated unworkable requirements and actually impeded the development and rehabilitation of affordable housing,” Secretary Ben Carson said in a statement. “We do not have to abandon communities in need. Instead we believe we can craft a new, fairer rule that creates choices for quality housing across all communities.”

However, many housing advocates believe that the rule is effective and worry about potential changes that could be made.

“This proposed action reveals yet again that the current administration fails to understand its civil rights obligations and the importance of the Fair Housing Act for the communities it is supposed to serve,” said Megan Haberle, the deputy director of the Poverty & Race Research Action Council. “Until suspended by HUD, the current rule was benefiting numerous localities by helping them construct meaningful fair housing goals, address discrimination, and broaden housing choice in ways that made sense for each community.”

 

Florida MLS becomes first to offer Spanish option

Wednesday, August 15, 2018

My Florida Regional MLS (MFRMLS) announced its Matrix multiple listing service will become the first in the U.S. to offer a Spanish language option, according to an Aug. 13 press release.

With this, the state’s largest MLS by member count will be able to better support Spanish-speaking agents and their customers. MFRMLS counts 57,000 users of the platform. The report notes that MFR worked closely with five other MLSs to create a Spanish version of the RESO Data Dictionary, as well as with the National Association of Hispanic Real Estate Professionals consulting group for translation work needed for the new version of Matrix.

“We are constantly looking for ways to create new opportunities for our brokers and agents to serve their customers,” said Merri Jo Cowen, CEO of MFRMLS. “Offering Matrix in Spanish provides the opportunity for our members to enhance the buying experience for their Spanish-speaking customers.”

CoreLogic was also a partner in the MFRMLS project. The new Matrix Spanish option is set to be available to members before the end of the month.

“It was a natural fit for us to work with our multiple listing platform provider, CoreLogic, in light of the ability of the Matrix platform to offer language translation options,” said MFRMLS chief technology officer, Patrick Williamson.

 

How Miami-area demographics are changing

Wednesday, August 15, 2018

The nation experienced a certain shift in age distributions over the last decade. With baby boomers moving on to retirement, millennials and Gen Xers began to make up the bulk of the working population.

To determine where the different demographic groups are more concentrated, Trulia created a report to see where the youngest and oldest places are in America. The report broke down county demographics into three categories: young (ages 0-19), working age (ages 20-64) and elderly (65+ years). The report also compared the demographic makeup of each U.S. county in 2017 to that of 2010 to provide a look at how certain areas have gained or lost residents of various ages.

On average, people in the elderly population concentrated towards the South. There was also a significant amount of older Americans in the Pacific Northwest and parts of New England. Utah was the state with the highest concentration of children ages 0 to 19, in line with the state’s higher-than-average birth rate.

Miami-Dade County had a large working age population for the area at 61.5 percent, a 0.3 percent increase from 2010. The young population dropped from 24.7 percent to 22.6 percent by 2017, while the share of elderly residents increased from 14.1 percent to 16 percent. The median home value for Miami-Dade County was $293,800 in 2017.

Broward County had a slightly higher young and elderly population. The young demographic in the area dropped from 24.8 percent to 23.4 percent. The share of elderly residents increased from 14.3 percent to 16.2 percent. The working age group only saw a slight drop of 0.5 percent to 60.4 percent in 2017. Broward County had a median home value of $255,200 in 2017.

 

Luxury market sees record growth in July

Tuesday, August 14, 2018

As the homebuying season reaches its peak for the year, sales in the luxury market continued to grow at a record pace in July. Prices in 19 major luxury markets saw double digit growth, according to the realtor.com 2018 Luxury Home Index.The total number of sales at or above $1 million rose 13 percent over the last year, and at a faster pace than any other July since relator.com began tracking metrics in 2012.

Sales still spiked in July despite substantial price increases. According to Redfin, prices were up specifically in lower-tax states like Florida and Nevada. Luxury prices of homes analyzed by Redfin rose more than 5 percent in the last year to an average $1.9 million in the second quarter of 2018.

Homes are also being sold faster than ever before. Realtor.com reports that the combined median age of inventory in the 91 luxury markets surveyed was 108 days, down 11 days or 9.3 percent year-over-year. Similarly, two-thirds of the luxury market are moving inventory quicker than last year.

“Demand for luxury homes in the U.S. has strengthened this year because stock-market gains and tax reform put more money in the pockets of the wealthy,” said Sheharyar Bokhari, senior economist at Redfin. “Yet the inventory shortage is ongoing–even among multi-million-dollar homes. As a result, we are seeing luxury homes sell in record time.

In a majority of the markets analyzed by realtor.com, the current entry point of the luxury tier is at least $1 million. In this tier, total sales rose 12 percent since last year.

“The strong economy is bolstering demand for luxury homes,” said Danielle Hale, chief economist for realtor.com. “They are selling fast and demand for these homes has pushed the entry level price point to more than $1 million in half of the markets studied. Although there are some pockets of weaker performance, we’ve seen double-digit price growth in 19 markets for the first time in four years.”

The top fastest growing markets are spread from coast to coast. California and Colorado collectively claim half of the top 20.

Zillow also reports that 23 new cities are expected to join the list of those with a median home value of $1 million or more. Of the newcomers, 14 are in California while nine are in the Bay Area. Just 197 of more than 10,000 markets analyzed by Zillow snagged a spot on this list, many of which are located near finance and tech hubs.

 

Construction industry job openings reach post-recession high

Tuesday, August 14, 2018

For those under the age of 24, a career in construction is a rare goal. According The Wall Street Journal, many parents these days may feel they have failed their child if they do not receive a college education.

However, the reality is that the construction industry is suffering from a lack of labor, particularly young labor. Recent data from the National Association of Home Builders showed yet another increase in construction job openings in June to 263,000 unfilled positions, a post-Great Recession high. Although layoffs have seen a decrease, hiring rates remains the same despite a growing demand for construction.

In June, the construction industry saw a 3.5 percent increase in its open position rate (new job openings as a percentage of total employment plus current job openings). During the post-recession building boom, the open position rate peaked at just below 2.7 percent.

The real estate industry has undergone a significant demand for supply in the previous months, and construction companies are struggling to keep up. Single-family home starts in 2017 were under pre-recession levels, only reaching 63 percent of the average number of starts prior to the recession. When construction companies are unable to produce at the rate of market demand, buyers are stuck with growing median home prices.

“Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand,” said Lawrence Yun, NAR chief economist.

The housing shortage is reaching significant levels in metro areas. NAR uses a monthly housing tracker index that compares number of permits issued compared to number of new construction jobs to determine which metro areas are struggling the most. Topping the top 10 list is New York, with an index of 14.8. Seven of the top 10 cities are in California. Boston has a relatively high index of 8.8, but compared to last year’s figure of 9.8, housing supply conditions are improving.

The return of vocational training programs in high schools may bring some hope to the construction industry’s lack of young workers. Allowing students to take courses and pursue internships in construction has already brought about some success. Increasing wages for construction workers could also bring more growth, but due to land, material and regulatory costs the industry is already operating on tight margins.

 

Real Estate in Brief: Millennials worry about prices, Spruce raises $15.6 million and more

Tuesday, August 14, 2018

Millennials want to buy a home, but they continue to view homeownership as unattainable amid rapidly increasing prices and increasingly limited inventory across the market, according to the CoreLogic Home Price Index (HPI) and HPI Forecast for June 2018.

Home prices rose 6.8 percent from June 2017 to June 2018, while they rose just 0.7 percent since May 2018. That being said, affordability is the No. 1 thing that millennials believe is impeding their ability to own a home, as noted by CoreLogic. About 63 percent of millennials who said they were uninterested in buying a home reported that the high price of a down payment was holding them back.

“One-third of millennial renters reported feeling they cannot afford a down payment to buy a home,” said Frank Martell, president and CEO of CoreLogic. “With home prices rising quickly over the past few years and supplies low, first-time homebuyers face ever-growing challenges to find and buy affordable entry-level homes. More needs to be done to help our first-time buyers join the homeownership class.”

CoreLogic’s data suggests that national home prices are expected to increase more than 5 percent in the next year. In the next month, the HPI Forecast predicts prices will remain flat. The National Association of Realtors reports the median price of a single-family home is $264,800.

In other U.S. real estate news:

  • Real estate tech startup Spruce raised $15.6 million in an effort to expand its national footprint and platform, according to HousingWire. The title company’s financial gains caught the attention of investors such as Bessemer Venture Partners and Collaborative Fund, which brought up the total cash raised in its Series A funding round to $19.1 million. “We are building the modern solution to the current challenges faced by homeowners, mortgage lenders, and real estate companies alike. And thanks to our latest funding, we’ll have the opportunity to work with more people than ever before,” Spruce Co-Founder and CEO Patrick Burns said in a statement to HousingWire. Currently in 36 states, Spruce is set to make it to market in 48 states by the end of 2018.
  • More than 5.5 million U.S. properties were seriously underwater at the end of 2018’s second quarter, according to ATTOM Data Solutions Q2 U.S. Home Equity & Underwater Report. This means that one in 10 of all U.S. properties with a mortgage fall in this category. The report also notes that more than 13.6 million properties (almost a quarter of all properties) were equity-rich in the second quarter. “The share of seriously underwater properties has dropped well below 10 percent in bellwether housing markets such as California, Washington, Texas, Colorado and New York, but the underwater rate remains stubbornly high in markets where price appreciation has not been as strong during the housing recovery of the last six years,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Nationwide the number of equity rich homeowners is more than twice the number of seriously underwater homeowners, but the gap between home equity haves and have-nots persists because home price appreciation is certainly not uniform across local markets or even within local markets.” The Midwest and Southeastern regions account for the highest share of underwater properties.
  • In the wake of strong international activity, Realtors will attend the 2018 National Real Estate Conference in Hanoi, Vietnam from September 6-10. Realtors will get a chance, for the fourth consecutive year, to learn, share, connect and transact, according to the National Association of Realtors. “Realtors understand better than anyone that the U.S. real estate market continues to be seen as a safe, secure and profitable place to invest in property. IREC brings together NAR partner associations from all over the world to discuss cross-border opportunities and the many benefits of investing in the U.S. real estate market,” said NAR president Elizabeth Mendenhall. Talks from speakers and hot topic discussions are among the various programs scheduled to be held at the conference.
  • HomeLight, the housing marketplace, recently announced its collaboration with U.S. News & World Report. The two companies will work together to create an agent recommendation tool, providing market trends and editorial content in the real estate section of U.S.News.com. “People come to USNews.com because they’re in the process of making an important decision,” said Chad Smolinski, chief product officer for U.S. News. “Our collaboration with HomeLight gives them the tools and information they need to better understand real estate trends in their local market and connect directly with agents that can support their goals.”
  • The Weichert Family of Companies announced that Denise Smith, after 29 years with the company, has been promoted to president of real estate services for Weichert, Realtors, according to RISMedia. Smith will oversee Weichert, Realtors and support the President of Residential Brokerage Carlo Siracusa as well as all regional vice presidents. She will also continue to oversee the growth and success of many Weichert branches. “We are tremendously honored to promote Denise to this valuable and highly respected role within our organization,” said James Weichert Jr., vice chairman of Weichert Companies. “Under Denise’s fervent leadership, I am confident our organization will continue to achieve incredible goals that would not otherwise be met without her constant dedication and determination. We look forward to continue celebrating Denise’s accomplishments in this position.”
  • RE/MAX recently announced the promotion of Abby Lee to senior vice president of marketing and communications, Amy Somerville to senior vice president of training and education and Anne Miller to vice president of luxury and commercial, according to a RE/MAX report. “Abby, Amy and Anne have played critical roles in the recent achievements and growth of RE/MAX and Motto Mortgage,” said RE/MAX CEO Adam Contos. “Under their leadership, our world-class marketing, corporate communications, education, luxury and commercial initiatives have become even stronger, greatly benefiting our affiliates and their clients. Congratulations to each of them and I look forward to their continued success.”
 

Where jobs, and homeowners, are moving across the US

Monday, August 13, 2018

The dynamics of the U.S. workforce and the housing market are intricately entwined. Local employment trends have significant implications for a city’s real estate market, not to mention the economic competition between states and metro areas that’s always evolving. According to the Bureau of Labor Statistics, Americans now change jobs every four years on average.

To get a better pulse on the relationship between job growth, domestic migration and housing, the National Association of Realtors created interactive graphics on these topics to allow for easy visualization of the forces at work. NAR combined its own local market data with insights from LinkedIn Workforce Reports, monthly summaries of where job seekers are moving based on the professional social network’s data.

Nationally, Denver claimed the top spot for the most incoming workers of any other major U.S. city. Based on data from LinkedIn’s collection of more than 149 million professional profiles, 706,000 job seekers moved to Denver in just the last 12 months. The majority of that group, nearly 96,000, came from Chicago, while significant numbers also migrated from New York City and San Francisco.

The number of workers leaving Denver is a fraction of the number of incoming job seekers reported by LinkedIn. That helps explain why NAR market statistics for the city paint a picture of very high housing demand amid low supply. Denver’s most recent median home price stood at $441,500, an 11.5 percent increase from last year, with listings spending just 31 days on the market on average. A Denver household earning $100,000 per year can afford just 42.5 percent of listings on the market today.

The dynamics in Miami were hardly comparable to those in Denver, NAR found. The top source of new Miami residents was New York City, which added 26,000 new Miami residents based on LinkedIn user data. Two of Miami’s top 10 sources of new workers were not U.S. cities but countries: Brazil and Colombia. But Miami tended to lose more workers than it gained, mostly to other Florida markets like Orlando (43,400) and West Palm Beach (42,600). While the city wasn’t suffering an extreme influx of residents like Denver, affordability was still stretched thin. Miami’s median list price hit $340,000, according to the report, and a household would need to earn a total annual income of at least $125,000 to afford more than half of the active listings in the city.

Use the interactive graphics from NAR to see how job migration is impacting other major U.S. cities in terms of home prices and market activity.

 

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235 Articles Found

Saturday, August 18, 2018

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US foreclosure rate falls to 12-year low as borrowing grows
Two reports on the state of housing finance this week show that mortgage borrowers are...

HUD looks for public comments on possible fair housing rule changes
The Department of Housing and Urban Development recently announced that it is looking for...

US housing stock ages as construction backlog grows
More Americans are becoming homeowners, particularly young adults. But the homes they are...