Monthly Archives: June 2019

Enhance your professionalism as a C2EX Realtor

District 4 VP Stacy Stahl: NAR’s C2EX is a “comprehensive and valuable tool to help you develop and grow as a real estate professional.” C2EX.realtor now.

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Inexpensive ways to stage a home like a pro

WASHINGTON – June 6, 2019 – If you’re selling your house, the place has to look its best so buyers can see its potential and imagine themselves living there. That’s what home staging is all about.

A professional home stager will cost between $50 and $150 per hour, says Jessica Page, a broker with Innovative Real Estate in the Denver area.

The good news is that you can get it done for a lot less money. Page and real estate veteran Jennifer Radice of Coldwell Banker Residential Real Estate in Boca Raton, Fla., share these expert tips for staging your home at almost no cost:

Stash personal items

Packing away your personal stuff, such as pictures, sports memorabilia, even religious items, is one of the easiest, cheapest things you can do to stage your house.

“The reason you want to depersonalize your home is because you want buyers to view it as their potential home,” Page says. Prospective buyers may have a hard time envisioning themselves in the house if they’re surrounded by photos of your family.

“Pictures are extremely distracting,” says Radice.

Besides, when trying to attract a buyer, “you want the buyer’s agent to enjoy showing the home,” Radice says, because even if a particular buyer isn’t interested, the agent might represent someone who would be a good match.

Clear away clutter

Decluttering is another simple way to get buyers to focus on the bones of the house.

“After years of living in the same home, clutter collects in such a way that may not be evident to the homeowner. However, it does affect the way buyers see the home, even if you do not realize it,” Page says.

Radice recommends clearing off kitchen and bathroom countertops.

“If you have kids, get rid of the toys all around the house,” Radice says. “For all you know, the buyers could be empty nesters.”

She suggests packing that stuff in boxes and neatly stacking them in a corner of the garage. Anything extra should go in a small storage unit. Even better, ask a friend or relative to stash your items at no charge.

Rearrange, paint rooms and give them purpose

Rearrange the rooms in your home and make sure each room has a distinct purpose. Page suggests touring builders’ models to see how the rooms are furnished.

“Builders are experts on preparing their product for prospective buyers,” she says.

If your home has been painted recently, you’re ahead of the game. If not, take a paintbrush to the rooms that need it most. Sellers who paint the interior of their home will see a large return on the investment, Page says.

Scrub and deodorize

No one wants to visit a dirty house, especially prospective buyers. So make sure your house is squeaky clean.

“When buyers see an unkempt home or smell something when they first walk in, they become turned off immediately,” Page says. “They can rarely see past it to look at all of the great features in the home.”

Radice suggests having the house professionally cleaned so that everything is spotless. She also recommends baking cookies in the oven, bringing cinnamon sticks to a slow boil in a pot of water or using air freshener before each showing. Ridding the home of litter boxes is a must.

Enhance curb appeal

“Curb appeal is just as important as cleaning the inside of the home,” Page says. “It’s the buyer’s first impression of your home.”

Mow the lawn, make sure the sidewalk and driveway are free of clutter and debris, and make sure the house number is easy to see. You may need to pressure-clean your driveway and sidewalk.

Another valuable low-cost solution? Mulch. “It makes everything look trim and neat,” Radice says.

Copyright © 2019 Capital Gazette Newspapers, Melissa Neiman

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Mortgage rates drop due to Wall Street’s tariff fears

WASHINGTON – June 6, 2019 – A threat of Mexican tariffs could help homebuyers. Worried investors moved more money into bonds, which nudged the average 30-year fixed-rate mortgage down to 3.82% – a decline from last week’s 3.92%, the first to break below the 4.0% barrier.

A year ago, the average fixed-rate mortgage rate was 4.54%.

The average rate for 15-year, fixed-rate home loans also declined, dropping to 3.28% from last week’s 3.46%.

The recent sharp drop in mortgage rates hasn’t unlocked savings just for those looking to purchase a home – homeowners may also benefit. About 5.9 million borrowers could see their rates drop by at least 75 basis points by refinancing their mortgages, according to Black Knight, a mortgage software and analytics firm – 2 million more in the past month alone.

That’s the largest population of eligible borrower candidates in nearly three years for savings. The savings could add up to about $271 per month per borrower. If rates drop another quarter point, Black Knight estimates that 7 million borrowers could then potentially benefit from refinancing their home mortgage.

“When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home,” says Ben Graboske, president of Black Knight’s data and analytics division. “That’s the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%.”

Source: “As Mortgage Rates Plunge, Millions More Homeowners Can Benefit From Refinancing,” CNBC (June 3, 2019) and Black Knight, via Information Inc.

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Builders release list of their top legislative priorities

WASHINGTON – June 5, 2019 – Nearly 700 builders from across the U.S. converged on Capitol Hill today for the National Association of Home Builders (NAHB) 2019 Legislative Conference. While there, members plan to urge lawmakers to support policies that will increase their ability to build quality, affordable housing and keep the housing recovery moving forward.

“With housing affordability near a 10-year low, we’re sending a loud and clear message to members of Congress that there is an urgent need to implement innovative solutions to ease the nation’s affordability woes and enable more families to achieve homeownership or have access to suitable rental housing,” says NAHB Chairman Greg Ugalde.

Builders’ list of key housing issues

  • Workforce and immigration
    A chronic labor shortage is resulting in higher construction costs, increased home prices and lower economic growth, according to NAHB. It’s urging lawmakers to create a new, market-based guest worker program for the construction sector that will complement ongoing vocational training efforts and help fill labor gaps. Lawmakers were also encouraged to increase funding for job training programs to prepare individuals for careers in home building.
  • Trade policy
    Builders asked lawmakers to call on the administration to end tariffs on imports of softwood lumber, steel, aluminum and a wide variety of other goods used by the home building industry that, with the additional cost of tariffs, needlessly raise housing costs. NAHB also called on Congress to ensure swift ratification of the United States-Mexico-Canada Agreement, which holds the potential to lift the housing economy.
  • Housing finance reform
    Uncertainty about the housing finance system stymies investment and slows the housing market, NAHB says. It called on Congress to pass bipartisan housing finance legislation that would reform the current system and provide certainty to the marketplace, while maintaining an appropriate level of government support for housing in all economic and financial conditions.
  • Low-Income Housing Tax Credit
    To help spur production of affordable rental housing, NAHB urged lawmakers to pass the Affordable Housing Credit Improvement Act. Introduced in the House and Senate earlier this week, the bipartisan legislation would improve the Low-Income Housing Tax Credit by establishing a permanent minimum 4% credit floor for acquisition and bond-financed projects. NAHB says this would provide more flexibility in financing projects and significantly increase unit production.
  • National Flood Insurance Program
    To continue the stability and growth of the housing market, it is essential that the National Flood Insurance Program (NFIP) remains available, affordable and financially stable. NAHB called on lawmakers to pass a long-term NFIP reauthorization.
  • Building energy codes
    NAHB urged Congress to require any code or proposal supported by the Department of Energy to have a payback period of 10 years or less.
  • Cluster mailboxes
    NAHB says the U.S. Postal Service (USPS) instituted a de facto mandate requiring mail delivery to cluster mailbox units in new residential developments. NAHB says that any USPS reform effort should not be funded by home builders and homeowners. It urged House lawmakers to co-sponsor a House resolution (H. Res. 23) that calls on the USPS to preserve delivery of mail to the home or business.

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REBarCamp Orlando adds industry powerhouses

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Deals can die over petty buyer-seller disputes

CHICAGO – June 5, 2019 – Homebuyers and sellers sometimes disagree over seemingly frivolous issues – but the issues don’t seem quite as frivolous if they jeopardize a sale.

Realtor.com recently interviewed real estate professionals and asked about common petty issues that can pop up in a transaction.

  • Missing cover plates
    Agents said they hear “missing cover plates” a lot. “One of the funniest – and most annoying – requests I get is for sellers to replace missing cover plates on light switches and outlets,” Amy Berglund, a real estate professional in Denver, Colo., said. “Usually they’re missing in places such as laundry rooms and basements – think places that aren’t used that much. It is an incredibly affordable fix.”
  • Missing blinds
    Jen Horner, a real estate professional in Salt Lake City, knows this gripe well. The buyer makes an offer, but on the final walk-through, they’ll notice the seller took the blinds, rods and drapes with them. “When looking at a property, buyers incorporate window dressings into their overall impression of the house,” she said. “And if they are not clearly excluded in the contract, window dressings belong to the home. Most of the time, the seller will agree to replace or reimburse the missing items. But if a seller refuses, we’ve seen it become a contentious issue that threatens the entire deal – even though you’ve made it to the walk-through.”
  • An attempt to get freebies
    Sometimes buyers set their sights on seemingly little things inside the home that belong the seller and try to get them for free. “During a 2017 sale of a $1.2 million home in Utah, and after months of negotiations, the deal literally came down to a last-minute ask for a foosball table worth about one hundred bucks,” Horn said. “Through some professional real estate therapy on both sides, we were able to avoid this final barrier and close on the property. Most importantly, both the buyer and seller were pleased with the outcome.”

But the foosball incident taught Horn that completing an agreement between a buyer and seller can sometimes come down to “seemingly very small terms” in the contract.

“These types of issues, which might seem petty on the surface, are oftentimes rooted in buyers and sellers psychologically wanting to feel like they got a final win before the deal closes.”

Source: “6 Surprisingly Petty Issues That Can Sabotage a Home Sale,” realtor.com® (May 28, 2019)

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The essential guide to hurricane preparedness

ORLANDO, Fla. – June 5, 2019 – Until Hurricane Michael hit Florida’s Panhandle last year, that area of the state was considered less vulnerable than the eastward parts that jut out into the Atlantic Ocean’s preferred path for big storms.

Hurricane season begins on June 1st and lasts six months, with storm threats typically peaking in August and September. But a major storm can target any part of Florida at any time.

Hurricane knowledge

First, know your hurricane facts and understand common terms used during hurricane forecasts. Storm conditions can vary on the intensity, size and even angle.

Tropical depressions are cyclones with winds of 38 mph. Tropical storms vary in wind speeds from 39-73 mph while hurricanes have winds 74 mph and greater.

Storm terms

  • Tropical storm watch: Tropical storm conditions are possible in the area.
  • Hurricane watch: Hurricane conditions are possible in the area. Watches are issued 48 hours in advance of the anticipated onset of tropical storm force winds.
  • Tropical storm warning: Tropical storm conditions are expected in the area.
  • Hurricane warning: Hurricane conditions are expected in the area. Warnings are issued 36 hours in advance of tropical storm force winds.
  • Eye: Clear, sometimes well-defined center of the storm with calmer conditions.
  • Eye wall: Surrounding the eye, contains some of the most severe weather of the storm with the highest wind speed and largest precipitation.
  • Rain bands: Bands coming off the cyclone that produce severe weather conditions such as heavy rain, wind and tornadoes.
  • Storm surge: An often underestimated and deadly result of ocean water swelling as a result of a landfalling storm, and quickly flooding coastal and sometimes areas further inland.

Hurricane forecasts

Predicting a tropical cyclone’s path can be challenging – there are many global and local factors that come into play. Forecasters’ computers take huge amounts of data and try to predict where the storm will go and usually are 2-3 days out. This is where you hear the terms “computer models” and “spaghetti models” being used. Generally, the forecast track or path is given using the average consensus of these models.

The National Hurricane Center has the most up-to-date information on tropical cyclone developments, forecasts and weather alerts, discussions analyzing the data and more.

Hurricane kits

It’s important to create a kit of supplies you could take with you if forced to evacuate. This kit will also be useful if you are able to stay in your home but are affected by the storm, such as through a power loss. One common trend seen when hurricanes are approaching is a wide-spread panic. If you prepare a kit ahead of time, you can alleviate a lot of the potential stress of a very chaotic situation.

Recommended hurricane kit items

  • Non-perishable food (enough to last at least 3 days)
  • Water (enough to last at least 3 days)
  • First-aid kit (include prescription medication)
  • Personal hygiene items and sanitation items
  • Flashlights (have extra batteries)
  • Battery operated radio
  • Waterproof container with cash and important documents
  • Manual can opener
  • Lighter or matches
  • Books, magazines, games for recreation
  • Special needs items: pet supplies and baby supplies, if applicable
  • Cooler and ice packs
  • An evacuation plan

Securing a home

  • Cover all windows with hurricane shutters or wood. Note: While tape can prevent glass from shattering everywhere, it does not prevent the window from breaking
  • If possible, secure straps or clips to securely fasten your roof to the structure of your home.
  • Trim all trees and shrubs, and clear rain gutters.
  • Reinforce garage doors
  • Bring in outdoor furniture, garbage cans, decorations and anything else not tied down
  • If winds become strong, stay away from windows and doors, and close, secure and brace internal doors.

Power outages

In the event a storm leaves you without power, there are a few things to consider:

  • Gas: Make sure your car’s tank is full far in advance of an approaching storm. Most people wait until the last minute, rush to get extra gas for cars and generators, and gas stations can run out.
  • Money: ATMs can run out of money if everyone tries to use them quickly, and they can shut down completely if the power goes out.
  • Cell phones: Charge cell phones pre-storm and limit use if the power goes out.
  • A/C: Try to prevent as much light from entering and warming the house by covering up windows on the inside. If you have back-up or battery-operated fans, don’t run them unless you’re in the room.
  • Water: Fill bathtubs and large containers with water for washing and flushing only.
  • Food: Turn your fridge temperature down and/or freeze any food or drinking water that can be frozen if you expect a power outage.

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What I did for love? 1 in 4 adults moved

NEW YORK – June 4, 2019 – About a quarter of adults say they’ve moved for the person they loved to pursue a romantic relationship at some point in their lives, a new survey shows. It’s likely to pay off too, couples report.

Men are slightly more likely to relocate than women (27% versus 23%, respectively), and millennials are more willing to make a move for love than other generations, according to a survey of about 1,000 adults from HireAHelper, a moving and relocation firm.

But relocating for a relationship can be tricky. A third of adults say that the toughest part of the process was making up their mind whether to move for a romantic relationship. That was followed by the actual moving process. Homesickness was another commonly cited issue – the difficulty of movers adjusting to life in a new area and leaving their old lives behind, the survey found.

Men tended to have a more difficult time deciding to move than women (38% of men compared to 28% of women) and managing changes to the relationship after the move (13% versus 11%). Women found it more difficult to find housing in their new location (13% versus 7%).

But for most, the move was worth it. Almost three quarters who said they moved for a romantic partner are still together or were together for more than a year after the move, according to the survey. Two in three said they have no regrets about moving for a significant other. Not surprising, couples still together tend to be the happiest about their choice to move, but even when relationships didn’t last, many adults still said they were happy about their decision to relocate. Just over one-half of people who were together 6 months or less after relocating for a partner said they’re still glad they made the move, the survey found.

About 44% of adults said they’d be more willing to move for love if they had a long-distance partner. But in some cases, there may be a distance to how far that love will go: 46% said they would only be willing to move within their own city or state to be closer to a romantic partner; 44% said they’d be open to moving across state lines or even further.

Over two-thirds of adults (68%) would need to be together at least six months before even discussing a relocation, and 30% would be willing to make a decision in less time. However, 12% said they wouldn’t move for a romantic partner at all.

“Overall, Americans are fairly open to the idea of moving for love, and a quarter of adults have actually done so,” the survey researchers note. “And most people who relocate to pursue a romantic relationship … [find] resettling nearer to a romantic partner has a solid chance of succeeding, sustaining and paying off even when you don’t stay together.”

Source: “2019 Survey: Moving for Love Is Likely to Pay Off,” Hire a Helper (May 2019)

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New blogs: How to pair AirPods, how to get more leads

Florida Realtors Tech Helpline blog: How to pair AirPods with any device. Form Simplicity’s latest blog: How to turn happy homeowners into lead generators.

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Congress extends flood insurance through Sept.

WASHINGTON – June 4, 2019 – The National Flood Insurance Program (NFIP) that millions of people rely on has gotten another temporary extension, as members of Congress renew efforts to work out a long-term proposal.

The NFIP extension through the end of September was tucked into a $19 billion disaster aid package the U.S. House approved in a 354-58 vote Monday evening. It now heads to President Donald Trump, who is expected to sign it.

This is the 12th temporary extension in two years. U.S. Sen. Bill Cassidy has led a bipartisan group of senators in calling for a long-term solution, rather than the piecemeal approach Congress has taken since September 2017, when the last major authorization ended.

“This ridiculous process has created significant uncertainty and anxiety for homeowners, renters, and small business owners in our states,” the senators wrote in a joint letter last month.

House and Senate leaders from both parties have expressed optimism about the long-term talks. U.S. House Minority Whip Steve Scalise, R-Jefferson, said he believes a five-year agreement can be hashed out in the coming months before the program faces its next deadline.

In Cassidy’s letter, senators called for a broader overhaul that factors in more accurate risk assessments, affordability components, mitigation funding and other improvements, including addressing “repetitive loss properties” through buyouts, elevations and other flood-proofing measures.

Repetitive loss properties are those for which NFIP has paid at least two claims of more than $1,000 in any 10-year period since 1978. At 7,223 properties, Louisiana has significantly more than any other state with damages totaling $1.22 billion between 1978 and 2015, according to an analysis from the nonpartisan Natural Resource Defense Council.

The program provides flood coverage to more than 5 million policy holders across the country, but it also faces resistance among lawmakers who question its costs and efficiency.

The Government Accountability Office has included the NFIP on its “high risk list” because it hasn’t struck a sustainable balance between keeping insurance affordable and maintaining the program’s solvency, leading to premium rates that “in many cases do not reflect the full risk of loss and produce insufficient premiums to pay for claims.”

The NFIP had to borrow money from the Treasury to help cover major disasters, after the program became mired in debt following Hurricane Katrina in 2005.

The disaster aid package, which includes funding for more than three-dozen states that have experienced floods, wildfires, hurricanes and other disasters in the past year, was blocked from passing three times while Congress was on a week-long recess. Three Republicans who acted to block the legislation said they wanted a recorded voice vote in the Democrat-controlled chamber.

© 2019 The Advocate, Baton Rouge, La., Elizabeth Crisp. Distributed by Tribune Content Agency, LLC.

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$19.1B disaster aid bill ready for president’s signature

WASHINGTON – June 4, 2019 – A federal disaster-relief package, long sought by Florida officials and Panhandle residents recovering from the ravages of Hurricane Michael, received approval Monday from the U.S. House after three earlier attempts were blocked.

The 354-58 vote, which came after the House returned from a 10-day holiday recess, sends the $19.1 billion package to President Donald Trump. The Senate backed the measure 85-8 on May 23.

The money will originally intended to help Florida’s Panhandle recovery after Category 5 Hurricane Michael made landfall Oct. 10, 2018, and caused massive damage. But as the two political partiesin Washington bickered, and as days became weeks and months, additional disasters occurred, from flooding in Arkansas and Iowa to tornadoes in Ohio. As a result, the disaster-relief package ballooned from $7.8 billion.

After the Senate approved the disaster-relief bill, the House tried to pass it three times by “unanimous consent,” a move that does not require most members to be present. But Republican lawmakers blocked the bill each time while the House was in recess.

U.S. Rep. Neal Dunn, a Republican from Panama City, expressed frustration Monday with his GOP colleagues who blocked the measure, which includes $1.2 billion to rebuild Tyndall Air Force Base, one of the storm-battered region’s biggest economic drivers.

“Some of you will say your principles require a recorded vote, even though the contents of this bill have been known for months and debated for months,” Dunn said. “In fact, we had a chance to vote on the amendments to it just two weeks ago. For those upset at the cost, OK, spending in Washington is a problem, but are you actually willing to make an empty gesture about balancing the federal budget on the backs of Americans who have lost everything? Are you willing to force the airmen of Tyndall, the Marines at Camp Lejeune, to halt the work to repair their bases because they ran out of money over a month ago?”

Dunn added that the package he “hammered” Congress to approve for nearly eight months also assists Florida’s agriculture industry, which suffered nearly $1.5 billion in damages from Michael. Most of the agriculture damage was to Northwest Florida’s timber industry, which isn’t covered by federal crop insurance or other programs.

“Are we willing to bankrupt them? Because a no vote today does exactly that,” Dunn said.

State Agriculture Commissioner Nikki Fried issued a statement after the vote expressing thanks for the bill’s approval but also noting that the 2019 hurricane season has already begun and debris from Michael has increased the threat of wildfires.

“This disaster recovery is long-overdue – but, better late than never,” Fried said. “I’m thankful that the Panhandle communities will finally be on the path to recovery.”

U.S. Rep. Mario Diaz-Balart, a Republican from Miami, said the funding package will also assist “unmet housing, business and infrastructure needs” in the region.

The funding includes $1.4 billion for Puerto Rico, including $600 million for nutritional assistance.

U.S. Rep. Chip Roy, a Texas Republican who was one of the three congressmen – U.S. Reps. John Rose, R-Tenn., and Thomas Massie, R-Ky. were the others – who blocked the bill from being approved through unanimous consent, said it was important that Congress vote on the measure.

Roy also continued to express concern with the amount being spent.

“I am still troubled we’re poised to spend $19 billion that is not paid for when we are racking up $100 million an hour in national debt,” Roy said. “At some point, before it is too late, Congress will get serious about restraining out-of-control spending. We’ve racked up approximately $24 billion in additional debt since the recess. At least today we’re voting.”

U.S. Rep. Tom Cole, R-Okla., while supporting the relief package that will help more than 40 states, expressed displeasure that Congress couldn’t reach a deal to include $4 billion Trump sought for the southern border.

The bill also reauthorizes the National Flood Insurance Program through Sept. 30, 2019.

Source: News Service of Florida, Jim Turner

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$4.4T plan could make mortgages more affordable – or less

NEW YORK – June 3, 2019 – Few homeowners or real estate agents worry about mortgage-backed securities (MBS) – a Wall Street concern – but a change in MBS rules could have a big impact on future homebuyers.

In the mortgage industry, banks and other companies lend money to people who want to buy a home. They then take that mortgage and sell it to entities, though Fannie Mae and Freddie Mac are the biggest players and guarantee nearly half of U.S. residential mortgages. Once sold, the banks have more money to lend to more homebuyers.

Fannie and Freddie, in turn, turn the loans into mortgage-backed securities, which operate similarly to stocks in which individual investors buy them in exchange for an expected return. After this happens, Fannie and Freddie have more money to buy mortgages from banks.

But a new rule for mortgage-backed securities will virtually eliminate the distinction between bonds issued by Fannie Mae and Freddie Mac. It allows market participants putting mortgage bonds together to deliver loans backed by Fannie Mae, Freddie Mac or both when they settle trades in what the industry calls the to-be-announced (TBA) market.

The aim is to improve market liquidity, mitigate investor risk, and potentially make home loans more affordable nationwide. The TBA market is the most liquid of the MBS markets and second only to Treasuries in daily volume. In fact, volume in 30-year Fannie Mae TBAs this year through April averaged about $150 billion a day, the most since 2012.

Traditionally, Freddie Mac bonds have traded at a discount compared to Fannie Mae securities, but the Federal Housing Finance Agency (FHFA) says that by allowing both Fannie Mae and Freddie Mac TBA eligible pools to be delivered into the new uniform MBS, the trading value disparity between the securities will decrease while the overall liquidity of the TBA market is enhanced.

Skeptics, however, worry that the change could actually increase mortgage rates rather than lower them.

Two securities with broadly similar characteristics – such as the same coupon, average credit score and maturity, for instance – may be valued at vastly different prices if the prepayment speeds on the underlying mortgages turn out to be dissimilar. Should speeds diverge, critics suggest that investors may start to favor either Fannie’s or Freddie’s mortgages over the other and begin trading them separately again. That would result in a three-way split of the market among Fannie Mae, Freddie Mac and uniform securities, reducing overall liquidity of the mortgage market in the process.

To prevent problems, FHFA is releasing quarterly prepayment monitoring reports and has established so-called CPR bands that Fannie Mae and Freddie Mac pools must fall within to be considered in alignment.

On the other hand, perhaps both skeptics and proponents are both wrong and, once the dust settles, mortgage borrowers won’t see much difference at all.

Source: Bloomberg (05/30/19) Maloney, Christopher; Boston, Claire; Gillen, David

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Sellers: Want to make more money? Don’t move out

SEATTLE – June 3, 2019 – A recent report finds that the average vacant home sells for $11,306 less and sits on the market six more days than comparable occupied homes.

“Although vacant homes are easy for buyers to tour at their convenience, the fact that the sellers have already moved on is often a signal to buyers that they can take their time making an offer,” says Redfin Chief Economist Daryl Fairweather, the sponsor of the study.

“It’s also likely that sellers who are in a comfortable enough financial situation to own a property that’s sitting empty aren’t as motivated to get the highest possible price for their home as sellers who need the cash from their first home in order to buy the next one,” he adds.

According to the analysis, vacant homes sold for less money in every housing market studied, but the amount varied by location. The biggest discount was seen in relatively affordable inland areas, while the price differential was smaller in the expensive West Coast markets.

Source: HousingWire (05/20/19) Lloyd, Alcynna

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Coming soon: Florida Realtors’ new dynamic website

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The American dream makes a comeback

CELEBRATION, Fla. – June 3, 2019 – After Teresa and Mark Taunton short sold their $535,000 four-bedroom dream home in Celebration, Florida, at the end of the real estate meltdown in 2011, buying another house was the last thing on their minds.

“It makes you feel you could somehow end up in the same position,” says Teresa, 57, describing the anxiety the couple experienced after selling their house for less than what they owed the bank. “We were just so leery of everything.”

But in late February, five years after they were officially allowed to make another home purchase, they closed on a modest ranch house for less than half the price of their former Orlando-area unit and just minutes away.

“We were really tired of renting,” Teresa says. Of their new house, she adds, “It’s comfortable. It’s home.”

With rent, “You’re looking at (shelling out) $20,000 to $30,000 a year, and you have nothing in return,” Mark adds.

There are signs that a growing number of Americans who lost homes to foreclosure or a short sale during the housing crisis are emerging from their post-crisis bunkers and buying again or planning to do so in the near future.

The trend could allow millions of so-called boomerang buyers to build wealth again through homeownership. It also could provide support to a housing market that has sputtered lately. Existing home sales are down 6.6% so far this year compared with the year-ago period, according to the National Association of Realtors® (NAR).

“I think the next phase of the housing recovery will be partly driven by people in the prime age group” of 35 to 64 that have been hesitant to buy again after losing homes in the crisis, says Kwame Donaldson, an economist with Moody’s Analytics.

Young people largely have fueled the housing recovery so far. In March, first-time home buyers made up 33% of all existing home sales, up from 30% a year earlier, according to NAR. But from the fourth quarter of 2017 to the fourth quarter of 2018, the homeownership rate jumped from 58.9% to 61.1% for 35 to 44-year-olds, the largest increase on record for any age group, and from 69.5% to 70.1% for 45 to 54-year-olds, Census Bureau figures show.

Donaldson says he believes the leap for 35- to 44-year-olds was largely spurred by boomerang buyers who were 27 to 36 during the depths of the crisis.

Housing crisis hit less qualified

The housing bust was caused by lenders who doled out subprime mortgages to Americans who couldn’t qualify for conventional loans. Many of the mortgages required low interest-only payments initially that ballooned after a few years. The model worked as long as home prices kept soaring, allowing homeowners to refinance. It unraveled when prices plunged and the Great Recession caused millions of people to lose their jobs and fall behind on their mortgage payments.

From 2006 to 2014, there were 7.3 million housing foreclosures and 1.9 million short sales, according to CoreLogic, a housing research firm. After a foreclosure, a prospective buyer must typically wait seven years to qualify for a mortgage guaranteed by Fannie Mae or Freddie Mac. The wait can be three years in certain circumstances, or for a Federal Housing Administration loan, but people who wait seven years generally benefit from higher credit scores and lower interest rates.

A short seller generally must wait three years to buy again.

Of 2.8 million former homeowners whose foreclosures, short sales or bankruptcies dropped off their credit reports from January 2016 to November 2018, 11.5% have obtained a new mortgage, according to a study by credit rating agency Experian for USA Today.

Fifty-three percent of the remaining 2.5 million had prime or super-prime credit scores in November, notes Experian Vice President Michelle Raneri. “That’s 1.3 million people who have really good credit,” she says. “Maybe they don’t realize they would qualify now.”

Some economists say many of those affected who wanted to become homeowners again already have done so. “I’m less convinced this is going to move the market,” says Ralph McLaughlin, deputy chief economist of CoreLogic.

Michael Fratantoni, chief economist of the Mortgage Bankers Association, says young people will be a far greater force in the housing market than prime-age boomerang buyers the next few years. There are about 31.7 million 24- to 38-year-old renters in the U.S., according to CoreLogic.

But Moodys’ Donaldson notes that the typical pay of middle-aged Americans is 14% higher than the U.S. average, making them particularly good candidates to buy homes. Those who lost houses were financially and psychologically scarred, he says, and many could take longer than three- or seven-year waiting periods before feeling comfortable enough to make a purchase.

In the Denver area, some boomerang buyers tour homes but then get cold feet and pull back before reentering the market months later and finally buying, says Jessica Reinhardt, a broker at RE/MAX Alliance.

A NerdWallet survey, conducted for USA TODAY in January, found that 6% of Americans who lost a home due to a financial event the past decade plan to buy one this year. But a whopping 39% intend to buy over the next three years and 58% say they’ll purchase within five years. Nearly one-third said they’re afraid to own a home again.

Losing the ‘American dream’

The Tauntons, of Celebration, could have bought another house in 2014 when the three-year waiting period after their short sale ended. But, “the memory was still sore,” Mark says. “You’re still in the middle of what you lost.”

They lost the house they bought in 2005 in which they raised the five children of their blended family and that symbolized their attainment of “the American dream,” as Mark puts it. They had their own pool and the Disney-owned community sported a movie theater and spa, among other amenities.

They kept current on their mortgage even after Mark lost his job as manager of an exclusive men’s designer clothing store in the depths of the recession in 2008. But when their monthly payment jumped from $2,300 to $3,500 in 2010, they were on the verge of falling behind. Their lender advised them to stop making payments so they could get a loan modification, but it never came.

“We did everything right,” Mark says, noting they had never missed a payment. “It was traumatic.”

While they rented four apartments and homes, they squirreled money away and started thinking about buying again last November. Besides wanting to amass a retirement nest egg, they grew weary of renting because “you didn’t get to know your neighbors,” Teresa says.

This time, they resolved to spend no more than $250,000, rejecting several of the more lavish houses they visited. “You never want to go through that again,” says Mark, who is now a high school teacher.

Teresa, an accountant, asked lots of questions and took meticulous notes, and the couple provided extensive documentation. Last time, “The mortgage company made it so easy,” she says.

The couple, who used most of their savings to buy their previous house, “qualified for much more than the home” they purchased this time, says their Redfin agent, Mike Moore.

They made a down payment of 5% on the $247,000 house, giving them a monthly payment of $1,640. While they worry about getting hurt by another crash, “I feel a whole lot better about a $240,000 house than a $535,000 house,” Mark says. “I feel like I can still control it.”

Economy, wage growth aid buyers

There are concerns for boomerang buyers. Nationally, home prices have climbed 53% since their 2012 bottom and are now 11% above their 2006 peak, according to the S&P CoreLogic Case-Shiller index. That raises worries about another potential bubble and could keep already-wary former homeowners from making a purchase. But credit standards are much tighter now, “so there are fewer risky loans out there,” says Skylar Olsen, director of economic research for real estate site Zillow. “The national market is not headed towards a bubble popping,” she says.

In fact, home price increases have moderated since last year and mortgage rates have fallen even as wage growth has accelerated, creating a positive backdrop for boomerang and other buyers, Fratantoni says.

The economy’s steady recovery the past nine years has been a godsend for Art Fernandez, of Davie, Florida. In 2007, he and his wife Leanette leveraged an interest-only mortgage to buy a 10,000-square-foot house around the corner from their more modest home, seeking both their dream house and a sure-fire investment in the go-go years. They bought even before selling their existing house.

But the housing market seemed to crash the week they closed, Fernandez says, leaving them owing more on both homes than they were worth. Soon, Leanette had to leave her job as a mortgage broker and Art, a retail theft prevention manager, was laid off. They lost the first house through foreclosure and the second in a short sale. “It was very, very difficult,” Fernandez, 42, says.

But while they rented for three years, he got another theft-prevention job, as well as a part-time gig as a real estate broker. Leanette became a travel and lifestyle blogger.

When they decided to buy a 2,200-square-foot house in 2017 for $355,000, “It was like we had three full-time jobs,” Fernandez says. “We were confident and ready to find our ‘forever home.'”

In some areas hit hardest by the housing crisis, boomerang purchases are picking up, brokers say. In Las Vegas, Thomas Blanchard, managing broker of Orange Realty Group, estimates that 15% to 20% of sales handled by his firm are to boomerang buyers, up from 1% to 2% a few years ago.

In the Miami area, boomerang buyers make up four in 10 purchases, estimates Sonia “Gaby” Martinez, broker and owner of Xtreme International Realty. Sharply rising rents in Las Vegas and Miami are prodding more ex-homeowners to buy again, the brokers say.

Some want to do so before climbing prices make it impossible.

Kimberly Velasquez, 43, of Parker, Colorado, lost her four-bedroom, $320,000 house to foreclosure in 2011. After renting and going through a divorce, she decided to buy a $380,000 townhouse last August as soon as the foreclosure came off her credit report. Denver-area home prices have more than doubled since 2011.

“I decided I needed to do it now,” she says, “or it would be to the point where I’d be priced out of ever being able to buy a home.”

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