Weekly Mortgage and Real Estate Blog – Week of August 22, 2016

ECONOMIC COMMENTARY
The Election Rhetoric Heats UpAs one would expect, as the date of the presidential election draws near, the words are heating up from both sides. And while we don’t take sides with regard to these words, we must point out that these heated exchanges can affect the performance of the markets. Certainly, strong statements can affect consumer behavior. For example, if both sides claim that if you elect their opponent the economy will be a disaster, then logic would tell you that the economy will be a disaster either way.

Of course, intellectually, you know that this can’t be the case. But that does not mean that strong statements like these can’t affect consumer behavior in the short run. And with the Olympics over, we also know that the presidential election will be occupying more and more of the news. At least until the football season starts! As we get closer to the election, the rhetoric is likely to get even stronger, especially from the side which is behind in the polls at that time.

We pointed out previously that the timing of the election can also affect the timing of decisions to raise rates or make strong statements coming from the Federal Reserve Board. If you believe that the Fed will avoid taking action right before the election, then September is their last chance to raise rates because their November meeting is one week before the election takes place. This is not to say that this makes the Fed more likely to raise rates in September. We did get a strong employment report for July, but there have been weak reports as well, such as the retail sales data. Our guess is that we would need a really strong jobs report for August in order to prompt the Fed to raise rates in September.

REAL ESTATE NEWS
  As technology grows in the housing industry, so does the need for real estate agents, with the two working in conjunction with each other rather than against each other, Chris Heller, CEO of Keller Williams, explained in an interview after an earnings release. “Even with more technology and a stronger market, we are seeing fewer people doing it on their own,” Heller said. “Buyers and sellers still need advice and interpretation of the data that is available to them, and they still need that expert guiding them through the transaction.” Due to the emergence of technology, the role of a real estate agent changed, but definitely is not going away. The National Association of Realtors® noted in a survey last year that even though the Internet is a top source of where Millennials found their home, they still used an agent to purchase their home. And for those potential buyers unsure of whether they would use a real estate agent or not, Heller said his advice to the industry would be, regardless of whether it’s his sister or a stranger, “find a great agent to help you. A great agent will save you more time and energy than they could possibly cost you.” Source: HousingWireRenters are paying more for less. New apartments hitting the market this year are 8 percent smaller than they were a decade ago, according to a new report by RentCafe, an online rental marketplace. But that doesn’t mean renters are paying any less for them: Rents for all apartments have jumped 7 percent in the last five years. The square footage of all new apartments combined — including studios, one-bedrooms, and two-bedrooms — averaged 934 square feet. A decade ago, new units averaged 1,015 square feet. What’s more, the average rent in 2016 is $1,296; in 2011, rent averaged $977. New studio apartments are shrinking the fastest, having been downsized nearly 18 percent since 2006. The average size is now 504 square feet. One-bedroom apartments have shrunk by 5 percent, from 794 square feet 10 years ago to 752 square feet today. Two-bedroom apartments, however, have mostly held steady over the past 10 years, actually increasing 1 percent to 1,126 square feet. Source: CNN/Money

When home buyers go to the closing, it’s unlikely they’re thinking about what happens if they die before their mortgage gets paid off. “It’s the last thing on their minds,” says Bernard A. Krooks, founding partner and elder law specialist with New York-based Littman Krooks LLP. “They’re thinking about whether or not an inspection went well or when the contractors will get repairs done.” But while nobody wants to think about dying, borrowers should take advance steps to ensure an outstanding home loan doesn’t become a burden for loved ones. Unlike credit-card debt, the home loan is secured by the house, says Nanci L. Weissgold, a partner in the Washington, D.C., office of Alston & Bird. Unless heirs are cosigned on a home loan, nonpayment can’t damage their credit score, but they should continue to pay the loan if they are able, since missed payments could incur penalties and/or lead to foreclosure, Ms. Weissgold says. She adds that when lenders are promptly notified of the borrower’s death, they usually are understanding about time needed to resolve estate issues to avoid foreclosure. Source: The Wall Street Journal

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