Monthly Archives: November 2018

Fed shifts gears, may not push interest rates much higher

WASHINGTON – Nov. 29, 2018 – Federal Reserve Chairman Jerome Powell ignited a market rally yesterday by saying interest rates are “just below” broad estimates of a level considered neutral – a setting designed to neither speed nor slow economic growth.

Investors welcomed his remarks because they appeared to retreat from a comment he made in early October describing the Fed’s benchmark rate as a “long way” from a neutral level. For some listeners, that statement implied that Powell planned to keep raising rates for a while.

However, his remarks Wednesday appeared to suggest to this audience that he might stop sooner or move more slowly.

Powell did not provide any more guidance on the likely path for rates, and he noted they remain low by historical standards. In addition, he offered nothing to dispel market expectations of another rate increase at the Fed’s policy meeting on Dec. 18-19.

For homebuyers, the Fed’s interest rate increases directly affect the rate charge on adjustable rate mortgages. The impact on fixed-rate mortgages is less reliable, but they also tend to go up generally as short-term rates increase.

A Fed slowdown in rate increases could bring some new stability to the mortgage market going forward.

Source: Wall Street Journal (11/29/18) Timiraos, Nick

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

NAR: Pending home sales slip 2.6% in October

WASHINGTON – Nov. 29, 2018 – Pending home sales declined slightly in October in all regions but the Northeast, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index – a forward-looking indicator based on contract signings – decreased 2.6 percent to 102.1 in October, down from 104.8 in September. However, year-over-year contract signings dropped 6.7 percent, making this the tenth straight month of annual decreases.

Ten straight months of decline certainly isn’t favorable news for the housing sector.

“The recent rise in mortgage rates have reduced the pool of eligible homebuyers,” says Lawrence Yun, NAR chief economist.

Yun notes that a similar period of decline occurred during the 2013 Taper Tantrum when interest rates jumped from 3.5 percent to 4.5 percent. After 11 months – November 2013 to September 2014 – sales finally rebounded when rates decreased.

“But this time, interests rates are not going down; in fact, they are probably going to increase even further,” Yun notes.

While the short-term outlook is uncertain, Yun stressed that he’s very optimistic about the long-term outlook. The current home sales level matches sales in 2000.

“However, mortgage rates are much lower today compared to earlier this century, when mortgage rates averaged 8 percent,” he says. “Additionally, there are more jobs today than there were two decades ago. So, while the long-term prospects look solid, we just have to get through this short-term period of uncertainty.”

All four major regions saw a decline compared to a year ago, with the West seeing the most pronounced drop. Yun said that decline is not at all surprising. “The West region experienced the fastest run-up in home prices in a short time and, therefore, has essentially priced out many consumers,” Yun says.

Yun says that the Federal Reserve could be less aggressive in raising rates, and an announcement from the Fed on the same day as NAR’s pending sales release suggests that might happen. Yun cites the collapse in oil prices and the decrease in gasoline prices as a reason to slow the increases.

“The inflationary pressure is all but disappearing,” he says. “Given that condition, there is less of a need to aggressively raise interest rates. Looking at the broader economy and keeping in mind that the housing sector is a great contributor to the economy, it would be wise for the Federal Reserve to slow the raising of rates to see how inflation develops.”

Yun expects existing-home sales this year to decrease 3.1 percent to 5.34 million, and the national median existing-home price to increase 4.7 percent. Looking ahead to next year, existing sales are forecast to decline 0.4 percent and home prices to drop roughly 2.5 percent.

October pending home sales regional breakdown
The PHSI in the Northeast rose 0.7 percent to 92.9 in October, and is now 2.9 percent below a year ago. In the Midwest, the index fell 1.8 percent to 100.4 in October and is 4.9 percent lower than October 2017.

Pending home sales in the South fell 1.1 percent to an index of 118.9 in October, which is 4.6 percent lower than a year ago. The index in the West decreased 8.9 percent in October to 84.8 and fell 15.3 percent below a year ago.

© 2018 Florida Realtors®

Listing presentation bottom line: What’s my home worth?

CHICAGO – Nov. 29, 2018 – According to the 2018 Realtor State of the Listing Presentation, 84 percent of Realtors say an accurate home valuation is an “extremely important” part of the listing presentation.

The survey also found that 40 percent of homeowners ask for their home valuation before the appointment, and 50 percent of Realtors oblige.

Even homeowners who don’t ask about value before a meeting usually bring it up early during the one-on-one appointment.

“The survey indicates home valuations are the subject of one of the most-asked questions during a listing presentation,” says Realtors Property Resource Vice President of Marketing Reggie Nicolay. “Valuations are confusing to many sellers, and a listing presentation is the perfect opportunity for Realtors to educate clients on how valuations are calculated.”

The survey also found that 93 percent of presentations are in-person, emphasizing the value of human interaction – and most Realtors follow up via phone.

Source: RISMedia (11/07/18) De Vita, Suzanne

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

FHFA increases max loan rates for 2019

WASHINGTON – Nov. 28, 2018 – In response to rising home prices, the Federal Housing Finance Agency (FHFA) will raise the national conforming loan limit for 2019 by 6.9 percent – from $453,100 this year to $484,350 next year.

In addition, the high-cost limit – an amount used in areas with notably high home prices, such as San Francisco – will rise from $679,650 to $726,525.

In Florida, Monroe and Miami-Dade counties may be able to access higher-limit conventional loans. For an overview of maximum loans by U.S. county, visit FHFA’s website. Overall, loan limits will be higher in all but 47 counties or county equivalents across the country beginning Jan. 1, 2019.

In addition, Federal Housing Administration (FHA) loans generally adopt the same loan limits set by FHFA, though 2019 changes have not yet been announced.

The conforming loan limit determines the maximum size of a mortgage that government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can buy or “guarantee.” Non-conforming (higher than this maximum) or “jumbo loans” typically have tighter underwriting standards and sometimes carry higher mortgage interest rates than conforming loans.

“The National Association of Realtors® is pleased to see the Federal Housing Finance Agency raise its national conforming loan limits for 2019,” says NAR President John Smaby. Today’s decision reflects rising or near-record-high home prices in many U.S. markets, and the move helps keep the American Dream within reach for countless families working with Fannie Mae and Freddie Mac. Without this assurance that loan limits keep up with home price growth, borrowers across the country risk being pushed out of the market altogether as mortgage rates and rising home prices continue to hold back potential homebuyers.”

At the end of each year, FHFA updates the national and high-cost limits based on the FHFA’s national price index.

© 2018 Florida Realtors®

Which Fla. county has cheapest homeowners insurance rates?

Senators focus on keeping flood insurance program open

WASHINGTON – Nov. 28, 2018 – With their plan to make major reforms bottled up, a bipartisan group of senators from Louisiana, New Jersey and Florida now is battling just to keep the National Flood Insurance Program in business beyond the end of the month.

If Congress does nothing, the Federal Emergency Management Agency would have no authority starting Dec. 1 to issue new flood polices. Existing policies would remain in force and claims would be paid, but a lapse could disrupt home sales because federally backed mortgages for homes in flood zones are required by law to have flood insurance.

To prevent that, a “very frustrated” Sen. John Kennedy, R-La., introduced a six-month extension last week that would push the problem into the next Congress. His bill was co-sponsored by Democratic Sen. Bob Menendez of New Jersey and Republican Sens. Bill Cassidy of Louisiana and Marco Rubio of Florida.

Kennedy said he had been trying to get the chairman of the banking committee, Idaho Sen. Mike Crapo, to hold a hearing where senators could decide on the parameters of a long-term renewal. But with competing plans pending, and some senators and conservative advocacy groups seeking to shut down the program entirely, Crapo said he wanted a consensus before he would schedule a hearing.

“I know he wants a consensus, but people in hell want ice water, too,” Kennedy said. “I’m convinced for the foreseeable future, a consensus is not to be had.”

Menendez said a bill to revamp the program that he and Kennedy unveiled in June 2017 offered the best chance of consensus, with co-sponsors ranging from Rubio to Massachusetts Democratic Sen. Elizabeth Warren. “The real question is why Republican Leader Mitch McConnell won’t bring up my bipartisan bill,” Menendez said. “We will maintain and continue to build our coalition next year, and with a new Democratic majority in the House acting as a better partner, hopefully break the logjam.”

If approved, the six-month extension would be the eighth short-term measure since the last multi-year law expired in September 2017. Kennedy said McConnell is supportive but has not promised to bring the bill up when the Senate returns Monday, Nov. 26. Menendez said if it is brought up, it would pass overwhelmingly.

Kennedy said his backup plan is to try to attach the extension to a budget bill that has to be passed in early December to prevent a partial government shutdown.

“The problem with putting it on the budget bill is that the [flood] program expires Nov. 30 and the budget bill wouldn’t be effective until Dec. 7. I know that’s a very small gap, but I don’t want to see the program expire at all. It’ll just cause panic,” Kennedy said.

Federal flood insurance covers about 5 million homes and businesses nationwide, but about half of them are in just five states: Florida, Texas, Louisiana, California and New Jersey.

The National Association of Realtors estimated last year that if there is a one-month lapse in the program, sales of 40,000 homes would be disrupted.

© 2018 Suburban Trends, North Jersey Media Group, Inc. All Rights Reserved.

Brokers: Give your agents a branded 31-hour training program

Flood insurance’s big problem: Habitually rebuilding same home

WASHINGTON, N.C. – Nov. 27, 2018 – Floodwaters rose about 15 inches into Danielle Rees’ home in September when Hurricane Florence drenched this tidewater city on the Pamlico River and overwhelmed a local creek and marshland. The first floor was a sopping mess of gritty, swampy water in three bedrooms, a bathroom and a laundry.

“It’s part of living close to the river, and Washington is really low land,” said Rees, a graphic designer who grew up in the city.

But she anticipates her $2,000-a-year policy through the taxpayer-subsidized National Flood Insurance Program will help her rebuild the home about a quarter-mile from the river, just as it did in 2011 after Hurricane Irene – and as it did, under previous ownership, after floods in 1996, 1998 and 1999, according to her property history provided by the Federal Emergency Management Agency. The program has done something similar, over and over, for others.

Records at FEMA, which operates the program, show that nearly 37,000 properties from the Carolinas to California have repeatedly flooded and been rebuilt – some dozens of times – with help from a federal insurance program that is, itself, financially underwater. About 18,000 of those are currently covered by policies, and 15,000 of those haven’t taken voluntary steps to reduce the risk of future damage to their property, FEMA said this week.

The National Flood Insurance Program was $20 billion in the red before the start of the current hurricane season, even after Congress last year wrote off an additional $16 billion. The program must be reauthorized by Congress this month.

The repeatedly flooded properties cost nearly $7.4 billion in claims before the start of the current hurricane season.

Rees’ home isn’t included on the official “severe repetitive loss” list because the 1996 and 1998 hurricanes didn’t cause damage exceeding $5,000. It takes at least four of those $5,000-plus occurrences to put properties on the list.

Last year was the 40-year-old flood program’s second-worst, with more than $10 billion in claims, following hits from Hurricanes Harvey in Texas and Maria in Puerto Rico. Annual losses have risen and fallen with the weather since a record in 2005, when Hurricane Katrina swamped the Gulf Coast and triggered more than $16 billion in payouts.

Some critics say the situation will only worsen as global climate change generates more extreme weather and raises ocean levels.

The properties that have suffered severe and repetitive losses “are the canary in the coal mine for the millions of properties in the U.S. that are going to be in the exact same situation in future decades,” said Rob Moore, water and climate director at the Natural Resources Defense Council.

The environmental group favors FEMA giving homeowners more financial help to move to higher ground rather than rebuilding flooded properties over and over.

With more than 5 million policies, the nation’s main source of flood insurance generated $4.3 billion in annual premiums in 2016 and paid claims of at least $3.7 billion, the Congressional Budget Office reported last year. The median cost of a year of residential coverage was $520 that year.

The federal coverage is available to homeowners, renters and business owners if their community adopts required flood-plain management measures, such as elevating buildings and preventing construction on land where water drains away.

As of May, the 10 states with the most repeatedly flooded insured properties follow the Gulf and East Coasts as far north as New York, but also include Missouri along the Mississippi River, according to FEMA data provided to the Natural Resources Defense Council after the group said it sued the agency three years ago. The group gave the data to The Associated Press.

Louisiana has had the most repeatedly flooded properties over the past 40 years, with 23 percent of the total, the FEMA records show. That includes two single-family homes in Slidell and New Orleans that have each been compensated for flood losses two dozen times.

When Hurricane Florence poured up to 30 inches (75 centimeters) of rain onto eastern North Carolina in September, towns along rivers and sounds were swamped again. They included Belhaven and Washington, which lead the state in the number of severe, repeatedly flooded properties.

Rees learned in late October that she can expect some extra help – $30,000 through a flood mitigation plan for repetitively damaged, insured properties. She hopes her insurance payout and her own savings will help her pay to add a bedroom on stilts to her existing home and move her living spaces off the ground floor.

“I’m trying to hurricane-proof my house,” Rees said. “Next time, I know I’m going to have water in it.”

With more than 3.8 million households altogether, North Carolina has only about 134,000 flood insurance policies. The state has 1,132 structures from Carolina Beach to Charlotte on the “severe repetitive loss” list.

Eighty-two percent of the flooded properties that have been bailed out repeatedly are single-family homes, said Moore. Those homes were worth an average of $115,000, but have incurred $150,000 in damage claims, he said.

“Many people that find themselves in a situation of living in a repeatedly flooded house would like nothing more than to never file another flood insurance damage claim ever again. But the only assistance that’s readily available to them after a flood is to rebuild if they have flood insurance. So they’re kind of trapped,” Moore said.

The flood program and its ability to borrow money expire at the end of this month as hurricane season ends, unless Congress approves another extension. FEMA last year urged Congress to consider limiting payouts that far exceed a property’s total value. Efforts to reform the program, including how it treats repeatedly flooded properties, are again on the table.

But partisanship and the opposition of Louisiana’s two Republican senators mean the likeliest result is a short-term renewal of the insurance program, said R.J. Lehmann, insurance policy director at the free-market think tank R Street in Washington.

“There won’t be really any reforms at all this year,” he said.

© 2018 Everett Daily Herald, Emery P. Dalesio. All rights reserved.

Good and not-so-good ideas for listing promotions

HOUSTON – Nov. 27, 2018 – To draw more attention to a languishing listing, a Houston real estate professional hired two fitness models to pose half-nude in the property photos. She had the models doing everyday household tasks, such as cooking or changing a light bulb

On the upside, the marketing ploy exponentially increased buyer interest. On the downside, public complaints about the risqué listing prompted a local real estate portal to remove it.

“After 40 days on the market and several open houses, we still weren’t getting traffic. So, I had an idea,” says Kristin Gyldenege of Home Pros Real Estate Group to Fox News. “I wanted to show a young couple enjoying the home they just bought. I knew I wanted to appeal to 20- and 30-somethings, first-time home buyers. I also knew using just regular people would not get the attention it deserved, so I recruited two fitness models and posed them throughout the home.”

Gyldenege’s client approved the marketing plan, she adds.

The home had been on the market for 40 days with no offers before the steamy photos were put online, Gyldenege says. Within 24 hours, the listing had been viewed 20,000 times, though it still has not received an offer. However,, a residential property search website in Texas, says it removed the listing after receiving 100 complaints about the photo content. Other online portals continue to surface the listing.

Other listings featuring photos with odd characters – such as inflatable dinosaurs, unicorns, and pandas – have garnered recent media attention as well. “I figured if you can put a dinosaur costume on, and that’s going to go viral, why can’t I just put attractive people?” says Gyldenege.

Gyldenege says no publicity is bad publicity, and she’s satisfied with the traffic the photos are generating. Potential buyers “may not look like [the models],” she says, “but if they think they could look like that in this house, they would be more attracted to at least see it.”

Source: “REALTOR® Takes Heat for Using Partially Clothed Models to Attract Home Buyers,” FOX News (Nov. 24, 2018) and “REALTOR® Stages Sexy People in Home Listing,” (Nov. 21, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

NAR’s Realtor Relief Foundation: $400K for hurricane victims

Hurricane Michael victims, including non-Realtors, may apply for a $1,500 housing grant from NAR even if they’ve already applied for aid from other groups.

Case-Shiller: Home prices rise more slowly amid weaker sales

WASHINGTON (AP) – Nov. 27, 2018 – U.S. home prices increased more slowly in September from a year ago as higher mortgage rates weighed on sales.

The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, rose 5.1 percent from a year earlier. That’s down from a 5.5 percent yearly gain in the previous month. It was the sixth straight month that home price increases have slowed.

The weaker price gains reflect a broader slowdown in the nation’s housing market. Sales of existing homes rose modestly in October, snapping a six-month streak of declines. But sales are still 5.1 percent lower than they were a year ago. New home sales have fallen for four straight months.

The declines can be mostly traced to higher mortgage rates, which have jumped in the past year. The average rate on a 30-year fixed mortgage was 4.8 percent last week, up from 3.9 percent a year ago.

Home prices, even with the slowdown, are still rising more quickly than incomes. Combined with higher borrowing costs, that has made a home purchase less affordable for many Americans.

Nine of the 20 cities tracked by the index reported lower prices in September compared with the previous month, according to the index.

The largest yearly price increases were in Las Vegas, San Francisco and Seattle, where prices rose 13.5 percent, 9.9 percent and 8.4 percent, respectively. The smallest were in New York, Washington, D.C., and Chicago, where they increased 2.6 percent, 2.9 percent and 3 percent.

There are signs that Seattle’s housing market is finally cooling after years of double-digit price increases. Its home prices fell in September from the previous month for the third month in a row.

Nationwide, a shortage of homes for sale has plagued potential buyers for the past couple of years, but the inventory of unsold homes has crept higher in recent months. Ralph McLaughlin, deputy chief economist at CoreLogic, a real estate data firm, said that is bringing supply and demand more into balance.

Still, “years of price growth outpacing income growth, as well as rising mortgage rates, is making the cost of buying homes increasingly expensive,” McLaughlin said.

AP Logo Copyright © 2018 The Associated Press, Christopher Rugaber. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Mortgage rates fell last week – 30-year hit 4.81%

WASHINGTON (AP) – Nov. 26, 2018 – U.S. long-term mortgage rates recorded the biggest drop in nearly four years last week but remain much higher than they were a year ago.

Mortgage giant Freddie Mac said Wednesday that the average rate on the benchmark 30-year, fixed-rate mortgage fell to 4.81 percent last week, down from 4.94 percent a week earlier. It was the biggest weekly drop since January 2015. But the 30-year rate was still up from 3.92 percent a year ago.

The rate on 15-year, fixed-rate loans fell to 4.24 percent from 4.36 percent a week ago. The rate stood at 3.32 percent a year ago.

A strong U.S. economy has lifted rates over the past year. But Freddie Mac chief economist Sam Khater says rates were pushed lower last week by tumbling oil prices and stock prices.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages fell to 0.4 point last week from 0.5 point. The fee on 15-year mortgages rose to 0.5 point from 0.4 point last week.

The average rate for five-year adjustable-rate mortgages slid to 4.09 percent from 4.14 percent last week. The fee remained at 0.3 point.

AP Logo Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

New Congress is a ray of hope for flood insurance extension

WASHINGTON – Nov. 26, 2018 – The National Flood Insurance Program (NFIP) has lurched along for more than a year as lawmakers on Capitol Hill have deadlocked over how to overhaul the debt-laden federal program that underwrites most of the nation’s flood coverage.

But Louisiana’s lawmakers are looking forward to January, optimistic that fresh blood on key congressional committees will crack the gridlock.

Politicians and lobbyists say retirements and a new Democratic majority in the House will likely favor homeowners and flood-threatened communities when lawmakers hash out major changes to the program, which is tens of billions of dollars in debt after massive payouts following a series of catastrophic hurricanes dating back to Hurricane Katrina in 2005.

Gone will be U.S. Rep. Jeb Hensarling, a Texas Republican who’s used his control of the House Financial Services Committee to push for rate hikes on subsidized NFIP policyholders and far tighter rules on high-risk homes. The Texan is retiring from Congress at the end of the year.

U.S. Rep. Maxine Waters, a California Democrat who’s focused more on keeping flood premiums affordable for homeowners, is set to take over the committee gavel and steer the rewrite of the program.

“We probably couldn’t ask for more motivated and informed leadership than Maxine Waters right now,” said Michael Hecht, the president of Greater New Orleans Inc., a regional economic development group that leads a national lobbying effort on flood insurance issues.

A deadline to extend the National Flood Insurance Program or risk a lapse in its authorization looms on Nov. 30. Those who spoke with The Advocate anticipate a short-term deal to extend the program into 2019.

The potential stakes of changes in the insurance program could have major consequences for homeowners in south Louisiana, where frequent flooding leaves many reliant on NFIP-backed coverage.

Hensarling and a handful of allies over the past year have aimed at the program’s built-in subsidies, arguing that the federal government should jack up rates on homeowners to reflect the actual risk of flooding and deny coverage to some particularly high-risk properties altogether.

Those changes, lawmakers from flood-threatened areas have argued, would make insurance unaffordable for many families. That in turn could drive down property values and wipe out home equity in high-risk areas.

That nearly played out after Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012, which sought to unwind some of the NFIP’s subsidies for high-risk homes and properties that had flooded multiple times.

The changes would’ve dramatically hiked rates on many policyholders. The resulting political backlash led Congress to roll back many of the Biggert-Waters changes before they ever went into effect.

Hecht, the GNO Inc. president, said Waters learned a lot from the failed modifications that bore her name. The California congresswoman, Hecht said, reached out to groups in flood-hit areas like New Orleans to learn how to avoid unintended consequences like astronomical premiums in future reform efforts.

Hecht said destructive floods across the country in the years since the Biggert-Waters act have also built more political support for a flood insurance program that prioritizes affordable coverage.

Louisiana’s congressional delegation has pushed for reforms designed to draw more property owners into the program – shoring up its finances with more premium dollars – and for additional federal investment in flood protection to cut down on future payouts.

Among the policies Hecht’s group is pushing is an opt-out default for NFIP coverage, meaning homebuyers would automatically purchase coverage unless they chose to opt out of the program. Hecht said he hopes a change like that would lead more homeowners – especially in low-risk areas – to buy into the program.

Louisiana lawmakers like U.S. Reps. Cedric Richmond, D-New Orleans, and Garret Graves, R-Baton Rouge, said they’ve spent much of the past year fighting against cutbacks pushed by Hensarling and his allies instead of what they consider positive reforms.

But Graves said Waters and Rep. Patrick McHenry, a North Carolina congressman who’ll likely take over as the top House Republican on the committee, seem much more interested in integrating flood prevention and focusing on affordability.

Having McHenry and Waters in charge of the bill in 2019 “would put Louisiana in a better spot than we are right now with Chairman Hensarling,” Graves said.

“The way you solve this,” Graves said, is by investing in flood protection projects, buying out frequently flooded properties and helping homeowners beef up defenses to cut down on payouts from future storms.

“It’s not to sit here and charge people unaffordable rates.”

Waters is “going to be very supportive and she’s going to be great on flood insurance,” said Richmond, the state’s lone Democrat in Washington. “We’ll get it done.”

“Any new chairperson must recognize that people who live in flood zones rely on the NFIP for affordable, accessible insurance,” said Cole Avery, a spokesman for U.S. Rep. Ralph Abraham, R-Alto, “and any long-term reauthorization must meet those standards.”

Hensarling, the outgoing chairman, has been increasingly willing to cut a deal on flood insurance as his time remaining in Congress dwindles, according to multiple congressional aides familiar with negotiations.

But a wide gap remains between Hensarling’s vision for the NFIP and the sort of changes being pushed by coastal lawmakers, sources said. With a packed calendar and friendlier leadership arriving in January, there’s almost no chance of major modifications to the flood insurance program this year.

GOP Whip Steve Scalise, of Jefferson Parish, the No. 2 Republican in next year’s Congress, tried to hammer out a deal with Hensarling over flood insurance.

A compromise Scalise struck to soften many of Hensarling’s changes passed the House of Representatives a year ago but went nowhere in the U.S. Senate, where coastal lawmakers hold much more power.

In a statement, Scalise said he’ll continue fighting for affordable flood coverage. He also noted that flood insurance issues don’t line up neatly along party lines.

“Anywhere it rains, there is a risk of flood. NFIP is not a partisan issue and the reforms we have long sought cut across party lines. In fact, I’ve enjoyed strong bipartisan working relationships with members of both parties in the House and Senate,” Scalise said.

© Copyright 2018, The Advocate/Capital City Press LLC, Bryn Stole. All Rights Reserved.

It’s getting tougher to buy a brand-new home

NEW YORK – Nov. 26, 2018 – Housing affordability concerns are sparking a slowdown in new-home construction. Single-family housing starts fell 1.8 percent in October compared to the previous month, the U.S. Commerce Department reported Tuesday.

“This month’s decrease in single-family starts isn’t a surprise given the drop in our builder confidence index,” says Randy Noel, chairman of the National Association of Home Builders. “Builders are showing caution as mounting housing affordability concerns are forcing some consumers to delay making a home purchase.”

Rising mortgage rates and home prices continue to outstrip disposable income, UBS analysts wrote in a recent note. “Housing affordability has dropped notably since peaking in 2012,” UBS analysts say. However, on a historic basis, housing does remain relatively affordable nevertheless. A strong economy has UBS analysts unsure why such a slowdown is occurring in housing, but they predict the real estate market will stay weaker through at least the first part of next year.

“If you’re looking for a new, single-family home, the news this morning wasn’t good,” Robert Frick, corporate economist with the Navy Federal Credit Union, told HousingWire about the latest new-home numbers. “Builders are seeing a turn in the market for new homes and are less likely to build.”

Single-family housing starts began the year strong but weakened over the summer and are remaining soft, says Robert Dietz, the NAHB’s chief economist. “Despite this softness, 2018 construction volume is set to be the best since the downturn,” Dietz says. “A growing economy and positive demographic tailwinds are supporting housing demand as interest rates rise. However, policymakers should take note of the November decline in builder confidence as a sign that housing affordability conditions will weigh on the housing market going forward.”

Overall, construction in the new-home market did eke out a 1.5 percent increase in October, due to an uptick in multifamily housing starts, which include apartment buildings and condos. Multifamily starts rose 10.3 percent month over month in October. As such, housing starts were 5.6 percent higher than a year ago.

But builders remained concerned. Permits, a gauge of future housing production, registered a 0.6 percent drop in October to 1.26 million. Single-family permits dropped 0.6 percent, while multifamily permits decreased 0.5 percent.

Regionally, combined single-family and multifamily housing starts were strongest in October in the West, rising 13.5 percent month over month, and by 5.5 percent in the South, the Commerce Department reports. However, housing starts dropped 0.6 percent in the Midwest and by 4.8 percent in the Northeast last month.

Source: National Association of Home Builders and “Housing Starts Rebound in October But Single-Family Drought Lingers,” MarketWatch (Nov. 20, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

Create a master real estate marketing plan

NEW YORK – Nov. 26, 2018 – The most successful real estate agents create written marketing plans at least once a year, and December is often the month to do it as business slows for the holidays.

They create a plan to give themselves direction, motivation and achievable goals. An effective plan is clear, concise and comprehensive.

Master marketing plan creation involves several steps.

First, agents should define objectives, then reinforce the vision for achieving those objectives by setting specific, measurable goals. Next, they should determine their target market and audience, research competing agents to determine what makes them unique, and choose a message to present to their target market. That message should offer solutions and valuable information.

They should also determine which types of media they’ll use to get their message out and, once selected, develop marketing campaigns that work with those media choices.

It’s also important for agents that have a schedule and budget to ensure consistency and brand recognition. They should measure the results of each marketing strategy, re-valuate their goals and strategies as necessary throughout the year, and remember that it’s important to stay flexible as the industry evolves around them.

Source: Better Homes and Gardens Real Estate Blog (09/10/2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

New home construction rose 1.5% in Oct.

WASHINGTON (AP) – Nov. 20, 2018 – U.S. home construction improved a slight 1.5 percent in October, but in a troubling sign, ground breakings for single-family houses fell.

The Commerce Department said Tuesday housing starts rose to a seasonally adjusted annual rate of 1.23 million, up from 1.21 million in September. The gains came entirely from apartments. Starts for single-family houses slipped 1.8 percent last month.

Housing has stumbled in recent months as mortgage rates have climbed, putting the ability to buy a home or move up to a nicer property out of reach for more Americans. A sharp increase in mortgage rates has led to a marked decline in home construction since May, such that ground breakings have fallen 2.6 percent over the past 12 months.

“The housing construction cycle has peaked, but we’re not expecting a meltdown,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Some construction in the South might have been disrupted by Hurricane Florence striking the Carolinas in September and Hurricane Michael then hitting Florida and Georgia in October. But ground breakings recovered somewhat in the South last month, increasing 4.7 percent.

Homebuilders are feeling slightly less confident, even if they expect to keep building.

The National Association of Home Builders and Wells Fargo housing market index was released Monday and fell 8 points – the biggest monthly drop since 2014 – to 60 points in November. Any reading above 50 points to continued growth.

The average 30-year fixed rate mortgage has shot up a full percentage point in the past year to 4.94 percent, according to mortgage buyer Freddie Mac. This benchmark rate is at its highest average since February 2011.

Permits, an indicator of future activity, declined 0.6 percent to an annual rate of 1.26 million.

This pullback in construction has occurred as sales of new homes have begun to stall.

New-home purchases have plummeted for the past four months, including a steep 5.5 percent drop in September, according to a Commerce Department report last month. The annual rate of home sales has declined 15.3 percent since May, a striking reversal from the growth seen during the first five months of 2018.

AP Logo Copyright 2018 The Associated Press, Josh Boak. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Small biz can sometimes get Amazon-like real estate deals

NEW YORK (AP) – Nov. 20, 2018 – A company doesn’t need to be as big as Amazon to get a good deal on real estate.

Whether a small business wants to buy or rent, it may have leverage with landlords or local governments to get breaks on rent or taxes. It’s especially doable if a company can be a drawing card that helps boost local commerce or has significant job creation plans. The key is often to look for real estate in an area that needs an economic boost.

Even the smallest and newest businesses may be able to negotiate, says Seth Kaplowitz, who teaches real estate courses at San Diego State University. For example, a young doctor or dentist willing to start a practice in an area that needs more medical or dental services may be able to get financial help in buying and/or setting up an office.

Small businesses can also band together and negotiate as a bloc, Kaplowitz says.

“They can say, ‘This is what we’re bringing to the downtown. What can you do to help us?'” he says.

Amazon, which plans headquarters in New York’s Long Island City section and Arlington, Virginia, each employing 25,000 people, won a promise from New York officials for at least $2.8 billion in tax credits and grants and expects $573 million in breaks from Virginia.

Amazon, which is moving into a formerly industrial boat basin in New York, pledged money to fund job training programs for public housing residents, provide space for a new school and pay into a city fund that will be used for projects that benefit the community, Mayor Bill de Blasio says.

When businesses that cater to consumers are looking to rent, they can get favorable leasing terms and help with renovations and repairs if they have an attractive or unique brand that’s likely to draw shoppers or other businesses to a neighborhood or small shopping center. A retailer or service provider who offers “something nobody else has in the neighborhood” will appeal to a landlord, Kaplowitz says.

Owners are also likely to get a better deal in a neighborhood that’s been depressed but is showing signs of turning around.

But even companies that cater to other businesses can get a deal. If they are willing to rent in a building that’s sat empty for some time, landlords are likely to make more concessions.

Owners need to first figure out if they want to buy or rent. If they’re interested in buying, they should consider if the business is likely to outgrow a property within a few years. And if it does, is it feasible to add on to the space?

Owning a building means being responsible for its upkeep. Does the owner have the time or available staffers to deal with maintenance and emergencies? And financial resources for unexpected expenses like damage from severe weather?

Does the business have predictable or stable cash flow? If it does, buying may be best, Kaplowitz says.

“If you’re going to be around for a while, you want to own,” he says. “If you’re willing to wait out the up and down cycles, ownership is the way to travel.”

AP Logo Copyright 2018 The Associated Press, Joyce M. Rosenberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Make the media listen to you

CHICAGO – Nov. 20, 2018 – A media quote is worth hundreds or thousands of dollars in free advertising – but it may take time to convince local reporters and editors that you have something worth saying.

“You’re probably not going to get picked up in the news the first time you put out a press release,” warns Lion & Orb’s Audie Chamberlain.

Chamberlain says agents must have patience and determination. They should keep contacting journalists until their name is recognizable. Once they do get through, their media pitch should cover the what, when, where and why of their story in the first 50 words. They should deliver numbers and facts about their listing or business to emphasize why their pitch is newsworthy.

A pitch should also contain an emotional or human interest element to show why readers would care.

“Maybe the flooring in your listing is repurposed from another property that had historical value,” Chamberlain says. “That’s a compelling story that will make people listen.”

Source: Realtor (11/18) Wood, Graham

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

More homeowners add ADUs, make improvements

NEW YORK – Nov. 20, 2018 – Homeowners appear to be spending more on property improvements while waiting for the right time to sell.

In October, expenditures on existing homes, including renovations, additions, and alterations, rose 2.9 percent year-over-year, according to a report from BuildFax, a firm that provides property condition and history data.

Home prices are outpacing wage growth significantly. Along with rising mortgage rates, more homeowners are feeling stuck in place.

“As a result, homeowners, unable to re-enter the housing market, are reinvesting in their existing properties,” says BuildFax CEO Holly Tachovsky. “Homeowners may feel unprepared to enter the housing market, but they are making larger investments in the health of their existing property.”

Home maintenance activity may signal the most active housing markets, according to BuildFax. Minnesota has seen some of the most significant maintenance activity over the past year, leading the nation in per capita maintenance volume since 2013. New listings in Minnesota have also fallen the past three years – but the average sales price of properties has risen more than 5 percent annually in that time, the report notes.

Some homeowners are adding accessory dwelling units, also known as granny flats – which are small living spaces designed to house a family member or renter. California has seen the most growth in ADU construction and maintenance, where they’ve grown by nearly 54 percent so far in 2018 compared to a year ago. Oregon and Washington are also seeing a large uptick of ADUs.

Source: BuildFax

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

Study: Homeownership delay hurts long-term financial health

NEW YORK – Nov. 20, 2018 – Millennials who put off homeownership may be severely curtailing their ability to build wealth over their lifetimes, warns a new report from the Urban Institute.

Buying a home at an early age offers a “big bang for their housing buck,” concludes the report’s authors, Hyun Choi and Laurie Goodman.

Researchers tracked individuals since 1968 to identify how homeownership has affected their finances. Of those who reached age 60 between 2003 and 2015, the group that first purchased a home between the ages of 25 and 34 had a median housing wealth of $150,000. However, those who waited until age 35 to 44 to buy their first home had $72,000 less. Individuals who didn’t become first-time homebuyers until 45 or older had at least $100,000 less, according to the study.

However, those who bought their first home between 25 and 34 seemed to make the most. The youngest buyer group studied – those that purchased a first home before the age of 25 – had $130,000 median equity, according to the study. Researchers said they likely didn’t have the most equity due to their younger age, lower incomes and less education at that point in their lives.

Still, even the pre-25-year-old buyers had more home equity by age 60 than adults who waited until they were 35 to become first-time buyers.

The differences in housing wealth among the age groups is due to home appreciation and paying down their mortgage debt, the researchers note.

While the study shows how ownership benefits adults over time, the timeframe focuses on an era when Americans tended to buy more homes at younger ages. Half of the older adults in the study’s sample bought their first home between ages 25 and 34, and 27 percent purchased their first home before age 25.

In 2016, however, only 37 percent of those between the ages of 25 and 34 owned a home and 13 percent between ages 18 and 24.

The delay in homeownership for millennials could have long-term economic consequences. For most people, home equity is usually the largest single source of personal wealth.

“While people make the choice, to own or rent, that suits them at a given point, maybe more young adults should take into account the long-term consequences of renting when homeownership is an option,” the researchers say in the report.

Source: “Millennials Could Be Foregoing Equity Wealth,” Mortgage News Daily (Nov. 14, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

Why did Amendment 1, a new homestead exemption, fail?

TALLAHASSEE, Fla. – Nov. 20, 2018 – It seemed like a slam dunk – of course Florida voters would approve a new tax break. Who doesn’t like to save money?

That’s what the Florida Legislature was banking on when it voted to place Amendment 1 on the 2018 ballot. The purpose: create a new homestead exemption for a property’s assessed value between $100,000 and $125,000.

It turns out the amendment was the only one out of 12 that failed to reach the required 60-percent approval for passage. Unofficial results as of Wednesday showed the amendment got 58.07 percent.

Why did Amendment 1 fail while others got significant support?

It’s not that other proposals had great merit. Amendment 10, for example, is a confusing cluster of four proposals, ranging from changing the beginning of the legislative session, to forcing some counties to elect their sheriff and tax collectors. The proposal received 63 percent of the votes.

Amendment 1 would have benefited fewer homeowners than most people probably imagined. It could have potentially raised taxes for property owners without a homestead exemption. Counties and municipalities likely would have cut services or raised taxes because of the lost tax revenue.

Maybe voters had that in mind before heading to the polls.

Or could it be voter confusion?

Or maybe the reason is much simpler: most voters don’t read the full amendment, often just the title, and many might have been confused about Amendment 1, said Susan MacManus, an expert in Florida politics and a distinguished political science professor at University of South Florida.

Amendment 1’s title read: “Increased Homestead Property Tax Exemption.” Many people, especially those who don’t own homes, don’t know what a homestead exemption is (the tax break homeowners get on their primary residence), she told me.

If that was a factor, so was the lack of an organized statewide campaign to pass the amendment. It seems the Republican-controlled Legislature assumed the words “tax” and “exemption” alone would win over voters. The proposal was largely a political move by House Speaker Richard Corcoran, who was planning to run for governor when the Legislature approved it.

Local governments did their part

Local governments did a good job explaining the negative impact a new property tax exemption would have on their budgets: a $753 million revenue loss statewide in the first year. They told voters: we’ll either cut services or raise tax rates. The latter would have hit properties without a homestead exemption (commercial and rentals) the hardest, which explains why many experts considered Amendment 1 a tax shift that would have burdened non-homestead properties.

It’s hard to get in the minds of voters, so I asked them to explain their vote on Facebook. Many said the tax savings – an average of $270 per year – weren’t worth sacrificing local government services.

“I voted against Amendment 1 because I understand that Brevard County needs the money to fund its current programs including repairs to our roads,” wrote Vince Lamb, a member of the Indian River Lagoon Coalition. “I prefer not having tax increases, but I am okay with keeping rates the same.”

“I thought about voting for amendment 1 since I have just become a homeowner,” wrote Steven Heisler, who ran unsuccessfully for the Titusville City Council. “But the exemption would not apply to my house.”

Heisler brings up a good point: 71 percent of Florida families would not have benefited from the exemption, according to Florida Tax Watch, a government watchdog organization that opposed the measure. That’s largely because the amendment doesn’t apply to people who rent, non-homestead properties and homestead properties whose assessed value is less than $100,000. The assessed value, used for tax purposes, is often much lower than the market value. That’s largely because Florida caps the annual increase of assessed values for longtime homeowners.

Across Florida, 57 percent of homestead properties would have qualified for the new exemption one under Amendment 1. In Brevard County, 60 percent would have qualified.

If my Facebook commenters are an indication of the large electorate, then one thing is clear: voters like tax cuts but they also like the parks, libraries and decent roads that counties and municipalities need money to provide.

© 2018 Journal Media Group; Isadora Rangel is FLORIDA TODAY’s public affairs and engagement editor and a member of the Editorial Board.

Nov. builder confidence drops as affordability issues rise

WASHINGTON, Nov. 19, 2018 – Growing affordability concerns resulted in builder confidence in the market for newly-built single-family homes falling eight points to 60 in November. However, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), builder sentiment still remains in positive territory despite the sharp drop.

“Builders report that they continue to see signs of consumer demand for new homes, but that customers are taking a pause due to concerns over rising interest rates and home prices,” says NAHB Chairman Randy Noel.

“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” adds NAHB Chief Economist Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”

With the prospect of future interest rate hikes in store, Dietz said that builders have adopted a more cautious approach to market conditions and urged policymakers to take note.

“Recent policy statements on economic conditions have lacked commentary on housing, even as housing affordability has hit a 10-year low,” says Dietz. “Given that housing leads the economy, policymakers need to focus more on residential market conditions.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All of the major HMI indices posted declines. The index measuring current sales conditions fell seven points to 67, the component gauging expectations in the next six months dropped 10 points to 65, and the metric charting buyer traffic registered an eight-point drop to 45.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 58. The Midwest edged one point lower to 57, the South declined two points to 68 and the West dropped three points to 71.

© 2018 Florida Realtors®

Economy likely to cool – but how much?

WEST PALM BEACH, Fla. – Nov. 29, 2018 – The economy is firing on all cylinders now, but executives and economists expect a slowdown in 2019 and 2020.

The big question: When will the next recession hit? Many economists see a cooling but no contraction on the horizon, while a few predict a recession in 2020.

After a decade of slow-but-steady expansion, U.S. economic growth finally topped 3 percent in 2018, and national unemployment has fallen to its lowest level in decades. In Palm Beach County, the unemployment rate plunged to 3.1 percent in September, an all-time low.

Michael Neal, chief executive of Kast Construction of West Palm Beach, said his company’s revenue soared from $30 million in 2011 to $550 million in 2017. While Neal doesn’t anticipate a crash, he does expect economic growth to plateau over the next year.

“I’m not going to scale my company up going into 2020. I’m going to plan for a slowing,” Neal said. “A lot of other CEOs are probably thinking the same thing – let’s batten down the hatches, and let’s not hire a bunch of people thinking growth is going to continue at the same rate.”

Neal’s approach reflects the consensus among economists. National Association of Realtors® Chief Economist Lawrence Yun, for instance, predicts that economic growth will dip below 3 percent in 2019 and 2020 but will remain above 2.5 percent.

“We have a good economic backdrop,” Yun said.

Yun points to a number of reasons for optimism. Job growth remains a bright spot, wages have begun to increase and consumer debt – with the exception of student loans – remains manageable.

Yun disputed the notion that, after a decade of growth, it’s simply time for a downturn.

“If economists are making the reasoning that we are in a 10-year economic expansion and therefore we are due for one, I think that’s a wrong way,” Yun said. “There’s always a trigger as to why there’s a recession.”

A downturn could be spurred by a trade war or another factor, Yun said, but he doesn’t expect economic growth to be derailed in the near future.

The Mortgage Bankers Association likewise forecasts no recession, but it expects growth to downshift to just 1.5 percent by 2020.

“We do see the rate of growth slowing in 2019 and 2020,” said Mike Fratantoni, the group’s chief economist. “The fast growth we’re seeing is largely due to the tax bill that passed last year.”

Once the effects of tax break are absorbed into the economy, growth should slow to 1.5 percent in 2020, Fratantoni said.

“We’re not forecasting a recession, but we’ve been highlighting that you can’t have certainty about anything,” Fratantoni said.

One of the pessimists is Mark Boud, chief economist at Metrostudy, a housing research firm. He expects the U.S. economy to enter a mild recession in 2020.

Boud points to a number of warning signs – the inverted yield curve (financial jargon for long-term interest rates that are lower than short-term rates), rising inflation, international volatility and the fast-expanding national debt. On the bright side, Boud says, the next correction won’t be as devastating as the deep downturn of a decade ago.

He expects the economy to shrink by perhaps 1 percent to 2 percent a year, in contrast to the 8 percent decline in 2009. That crash was sparked by a housing bubble characterized by frenzied buying and overly optimistic building.

The latest expansion has been marked by rising real estate prices but comparatively cautious construction.

“Last time, we had a valuation bubble and a supply bubble,” Boud says. “We’re building a valuation bubble, but we have nothing close to a supply bubble.”

© 2018 The Palm Beach Post (West Palm Beach, Fla.), Jeff Ostrowski. Distributed by Tribune Content Agency, LLC.

WalletHub creates ‘best cities for Florida families’ list

Oviedo, Fruit Cove, Horizon West, Parkland and Palm Valley top WalletHub’s best-for-families list that ranked 180 Fla. cities based on 21 key metrics.

Student loan debt hurts millennials and women most

NEW YORK – Nov. 19, 2018 – Consumers drowning in student loan debt say that it’s delaying their purchase of a home – a concern most often faced by women and millennials, according to the sixth annual NeighborWorks America at Home report, a survey of about 1,000 U.S. adults.

Rising costs have prompted overall student loan debt to climb 130 percent since 2008. It now surpasses $1.5 trillion and makes up 42 percent of all consumer debt, according to the report. Of that, women carry about two-thirds of the total debt – nearly $900 billion.

Twenty-nine percent of women say they’re “burdened” by student loan debt compared to 23 percent of men, and minority women have nearly double the amount of debt as white women. As a result, 38 percent of women say they know someone who delayed buying a home because of student loan debt.

Millennials also face heavy debt from student loans: 57 percent surveyed say they’re burdened by student debt, and 59 percent say either they or someone they know has delayed a home purchase because of that debt.

“It’s important for people to have the tools and resources they need to be informed consumers from the moment they consider owning a home,” says Karen Hoskins, acting vice president of homeownership programs and lending at NeighborWorks America. “A housing counselor can guide them through what often seems a daunting, confusing process.”

The report suggests financial counseling through nonprofit housing groups or downpayment assistance programs to help people who struggle with student loan debt but want to buy a home.

A separate study in 2017 by the National Association of Realtors® found that 83 percent of non-homeowners cited student loan debt as the chief factor delaying them from buying a home. That delay to buy was about seven years. Further, 22 percent of consumers surveyed say they were delayed by at least two years in moving out of a family member’s home after college because of their student loans.

Source: “2018 America at Home Survey,” NeighborWorks America (2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

Study: Housing market underperforming by 6.5%

SANTA ANA, Calif. – Nov 19, 2018 – The First American Potential Home Sales Model for the month of October 2018 finds that the housing market is underperforming by 6.5 percent due largely to the lack of inventory.

“The primary culprit for the housing market’s performance gap remains severe supply shortages – homebuyers can’t buy what’s not for sale,” says Mark Fleming, chief economist at First American.

On the one hand, potential home sales increased month-to-month by 0.5 percent. However, thanks to home price and interest-rate increases, potential sales decreased 0.4 percent year-to-year.

The October report finds that the market for existing-home sales is underperforming its potential by 6.5 percent, or an estimated 391,600 seasonally adjusted annualized rate sales (SAAR).

“While the housing market continues to underperform its potential by 6.5 percent, the gap between actual existing home sales and the market potential for home sales narrowed by 1 percent in October compared with September, according to our Potential Homes Sales model,” says Fleming. “The housing market has the potential to support more than 391,000 additional home sales at a seasonally adjusted annualized rate (SAAR).

Fleming says rising mortgage rates impact the sellers’ side of transaction more than the buyers’ side.

“Rising mortgage rates create a financial disincentive for existing homeowners with low mortgage rates from selling their homes,” he says. “This phenomenon impacts both sides of the supply and demand dynamic – those who don’t sell, don’t buy either.”

While some buyers may drop out of the market as prices and interest rates rise, demand remains strong.

“The housing market is experiencing a wave of first-time home buyer demand, as millennials age into homeownership,” says Fleming. “According to the latest release of the American Enterprise Institute’s first-time home buyer index, more than 50 percent of all homes were purchased by first-time home buyers as of July 2018.”

The market potential for home sales has now outpaced actual sales for five years, according to the First American analysis. “However, this month, the market potential for home sales also saw its first year-over-year decline in over three years,” Fleming says. “It begs the question: What is driving the decline in the market potential for existing-home sales?”

© 2018 Florida Realtors®

More buyers reaching for ARMs in high-priced markets

SAN FRANCISCO – Nov. 19, 2018 – As mortgage rates rise, more buyers in expensive metros are turning to adjustable-rate mortgages (ARMs) to curb costs.

But the potential savings between a fixed-rate mortgage and an adjustable-rate mortgage is narrowing. The average rate on the 30-year fixed-rate mortgage and 5/1 adjustable-rate mortgage have both jumped by about 70 basis points from August 2017 to August 2018, according to Freddie Mac. ARMs, however, still do typically offer a slightly lower initial interest rate that then rises after a set period, such as five or seven years.

ARMs are more common in expensive metros and among homebuyers borrowing larger balances on their mortgage loans, according to CoreLogic, a real estate data firm.

“As ARMs have a lower initial interest rate than [fixed-rate mortgages], buyers see bigger monthly savings in the initial payment, especially for bigger loans,” CoreLogic notes on its Insights blog.

For example, the ARM share is highest in metros like San Jose, which had the highest average sales price. San Jose had the largest share of ARMs in 2018, according to CoreLogic.

ARMs accounted for 51 percent of the dollar volume among mortgages of more than $1 million that were originated during August 2018. Among mortgages in the $400,001 to $1 million range, the ARM share was about 21 percent; in the $200,001 to $400,000 range, ARMs accounted for just 7 percent of the mortgages.

As of August 2018, ARMs comprised about 15 percent of the dollar volume of conventional single-family mortgage originations. The ARM share has remained relatively stable since 2010 but has risen in some geographic areas and at certain higher price points.

ARMs earned a bad reputation during the housing crash when homeowners faced resets from their initial interest rate and could no longer afford their monthly payments. In mid-2005, the ARM share was more than 50 percent but then dropped to a low 4 percent in early 2009.

Stricter underwriting requirements from lenders in recent years may have discouraged ARM volume from taking off again, CoreLogic notes.

Source: “Are Adjustable-Rate Mortgages More Popular as Mortgage Rates Rise?” CoreLogic Insights Blog (Nov. 14, 2018)

© Copyright 2018 INFORMATION INC., Bethesda, MD (301) 215-4688

New Florida Realtors Rewards product: RentSpree

Agents give RentSpree a prospect tenant’s email address and receive a completed rental application and tenant screening in return – request a free demo.

Flood insurance expiration threatens 1,300 closings per day

WASHINGTON – Nov. 13, 2018 – Millions of small business and homeowners currently depend on the National Flood Insurance Program (NFIP) to protect their property against flooding, the most costly and common natural disaster in the United States.

To continue providing flood insurance after Nov. 30, Congress must reauthorize the National Flood Insurance Program before that date.

Without the NFIP, more property owners could become uninsured, and buyers that require a flood insurance policy to close would either have to find private coverage, postpone closing or potentially lose the sale. Flood insurance is required for a mortgage in more than 20,000 communities nationwide.

The National Association of Realtors® (NAR) supports reauthorizing and gradually strengthening the NFIP so it is sustainable over the long run. In addition to long-term reauthorization of the NFIP, NAR supports improving flood map accuracy.

Policyholders in more than 22,000 communities across the country depend on the NFIP to protect homes and businesses from flooding, according to NAR officials. Without the reauthorization, the NFIP cannot issue new policies or renew existing residential or commercial policies that expire. That is bad for consumers and potential homebuyers, as well as the broader economy.

When the NFIP last expired, NAR estimated that 1,300 home sales were disrupted every day as a result. That is 40,000 sales every month.

Although the National Flood Insurance Program has been extended through Nov. 30, it needs reforms that will make it solvent and sustainable in the long term.

The National Association of Realtors will continue fighting for these reforms as the next NFIP reauthorization discussions loom later this year, according to officials.

Despite years of debate and proposals to fix the program, reforms have stalled. Instead, Congress has passed six short-term extensions of the program.

Lawmakers also let the program lapse in 2017 and 2018. The House passed legislation with reforms more than a year ago; the Senate has yet to do so.

In July 2018, Congress avoided a lapse in the federal flood insurance program. After the House voted to temporarily reauthorize the program, the Senate voted 86-12 to extend authorization for the program by four months to Nov. 30. The reauthorization did not include any reforms.

“Although the National Flood Insurance Program is currently authorized through November, the National Association of Realtors remains focused on ensuring Congress and the White House enact long-term reauthorization and reforms to strengthen the program’s sustainability,” National Association of Realtors President Elizabeth Mendenhall said in a statement.

Mendenhall said Congress and the president need to act before the flood insurance program expires.

Copyright © 2018 Cooke Communications LLC – The Daily Reflector