Weekly Economic & Real Estate Market Update

Economic News

The Value of Realtors?

An adage in the legal profession goes, "A man who represents himself has a fool for a client." In the housing industry--particularly realtors--feel the same way about those who attempt to sell their own homes. And yet, For Sale By Owner, or FSBO, persists, with the temptation to cut out an agent and the typical 6 percent commission that comes with them. Trulia, San Francisco, estimated 6.2 percent of all home listing in the U.S. are FSBO. But with such temptation comes risk, Trulia said. When it comes to actually listing the home, Trulia reported FSBO sellers are slightly more optimistic about the value of their home and list their homes at a 2 percent premium nationally.

"This sounds like great news for sellers, but there is a risk: FSBOs often see their homes sit on the market longer than agent-listed homes, sometimes by more than a month," Trulia said. So, is FSBO worth it? "Ultimately, it's not unreasonable for sellers to consider a FSBO listing considering the potential payoff," Trulia said. "But it's important to remember the value agents bring to the table. They have access to more listings and buyers, know a market's ins and outs and have experience negotiating a deal." More importantly, a listed price in many markets is just a starting point," Trulia said. "In some markets, properties can be priced lower to start bidding wars," it said. "FSBOs also run the risk of underpricing their homes." Additionally, Trulia said FSBO properties run the risk of languishing--perhaps due to the inexperience of the seller in finding and negotiating with a potential buyer. Source: The Mortgage Bankers Association

The Story Continues

With the release of last month's job numbers, we were able to get a glimpse of the major effects of three major hurricanes hitting within a few weeks. We have seen many pictures of devastation from Texas to Puerto Rico. The jobs report was one more picture which has made the national numbers look bad, even considering the drop in the national unemployment rate, but the national numbers still dwarf the drastic effects upon the local economies and millions of lives. 

This story will not be a short story. It will be a novel with many chapters. It starts with mass devastation and the delivery of food and water, as well as other supplies of survival. It will end differently for many. Some will relocate and many others will be part of the rebuilding process. That rebuilding process will create thousands upon thousands of jobs. This is likely to result in construction job shortages in other parts of the country.

How long will it take to recover? No one knows the answer to that question. Many economic reports will be skewed as these regions go through the process. Even the federal budget deficits will be affected by a slowing economy and increased funds spent on recovery efforts. Along with the budget deficits, there will be a spike in mortgage defaults. But again, the housing stock will be rebuilt. For market analysts, this will be a very interesting story, but not nearly as meaningful as those affected locally.

Real Estate News

Breaking. ATTOM Data Solutions, Irvine, Calif., reported nearly one-fourth of all purchase loans originated in the second quarter involved co-borrowers, up by nearly 3 percent from a year ago. The company's quarterly U.S. Residential Property Loan Origination Report said 2.033 million loans were originated on U.S. residential properties (1-4 units) in the second quarter, which was up 27 percent from a three-year low in the previous quarter, but still down 12 percent from a year ago. The report said 22.8 percent of all purchase loan originations on single family homes in the second quarter involved co-borrowers--multiple, non-married borrowers listed on the mortgage or deed of trust--up from 21.3 percent in the previous quarter and up from 20.5 percent a year ago. Homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete," said ATTOM Senior Vice President Daren Blomquist. "This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints." Source: The Mortgage Bankers Association

Residential loan delinquency rates slipped slightly in June, according to the monthly Loan Performance Insights report from CoreLogic, a property information, analytics and data-enabled solutions provider. Delinquencies slipped to 4.5% nationally in June, down 0.8 percentage points from last year when it was 5.3%. “The CoreLogic Home Price Index increased 6% and payroll employment grew by 2.2 million jobs in the year ending June 2017, supporting further declines in delinquency rates,” CoreLogic chief economist Frank Nothaft said. “The forecast for the coming year includes 5% home-price appreciation and further job growth, putting renewed downward pressure on delinquency rates.” The foreclosure inventory rate, which measures the share of home loans in some stage of the foreclosure process, dropped two percentage points annually to 0.7% in June. This represents the lowest level since July 2007, when the rate was also 0.7%. Early stage delinquencies are important for analyzing the health of the residential loan market. Home loans 30 to 59 days past due, declined from 2.1% last year to 2% in June while mortgages 60 to 90 days past due decreased 0.1 percentage point to 0.6%. Source: HousingWire

The industry's standards organization wants collaboration on new closing instruction standards. MISMO hopes that introducing a standard lender template - including information such as how funds are to be wired or dispersed and whether closing package should be sent - will improve communication and avoid delays during the closing process. "Closing instructions are critical for successful transactions, but there is no consistency in format from lender to lender," said Rick Hill, executive vice president of MISMO and MBA Vice President of Industry Technology. He added that it doesn’t mean lenders having the same instructions but a standard format would make it easier to find information. MISMO has set up a new Closing Instruction Workgroup responsible for creating the template, instructions for how to use it, and implementation guidance for lenders closing agents and vendors. There will also be a data exchange standard that permits electronic exchange of closing instructions. Source: Mortgage Professional America

For questions or comments please contact Brad directly at [email protected] or 203-221-2661.