Weekly Mortgage and Real Estate Report – Week of June 18, 2018

The Fed’s Announcement 

As expected, the Federal Reserve Board’s Open Market Committee met last week and announced that they would be raising short-term rates by 0.25%. Since the move was anticipated, there was no major reaction by the markets, excepting for the usual increase in rates in anticipation of the decision and subsequently a little easing as the meeting grew closer. This was the seventh time the Fed had raised rates by 0.25% in the past three years during their period of rate “normalization” from the historic lows of the recession and slow recovery.

The big concern for the markets was the statement which accompanied the announcement. As usual, the markets were looking for an assessment of the economy, as well as hints of the pace of future rate increases this year. It seems that the members of the committee are ready to continue increasing rates as much as two more times this year. Some were searching for a hint that rates are coming close to what the Fed considers a normalized level, but that was nowhere to be found. As we have discussed previously, it is an open question where that level is located. When the Fed defines that level, then we will have a better idea of where rates will eventually settle if the economy does not falter.

There was one more important meeting last week. This was the summit with North Korea. Though it was not expected that any breakthroughs were to come from this meeting, it was expected that a positive process would begin. Certainly, the statements made after the meeting were quite hopeful and the meeting itself was a breakthrough. Between international trade and other tensions in the spotlight this year, there has been a lot of caution in the markets contributing to the volatility we have seen. Any easing of tensions could be helpful in this regard.

 Homebuyers carrying a lower credit score can wind up paying $21,000 more than a buyer with an excellent credit score. On a national level, recent data shows that a borrower with an “excellent” credit score could get a home loan with an annual percentage rate approximately 0.6% lower than a borrower with a “fair” credit score. The borrower with the “fair” credit score would thus spend $700 more per year for the typical home. In pricier housing markets, the extra dollars paid would be significantly greater. “When you buy a home, your financial history determines your financial future,” said Zillow Senior Economist Aaron Terrazas. “Homebuyers with weaker credit end up paying substantially higher costs over the lifetime of a home loan. Of course, homeowners do have the option to refinance their loan if their credit improves, but as interest rates rise this may be a less attractive option.” Source: Zillow — Need information on how to improve your credit score? Contact us for a free consultationBuyers — beware and curb your enthusiasm! The seller may be watching. And listening. A growing number of home sellers are using security cameras and microphones to spy on potential buyers as they tour their houses or condos. They then may use what they hear or see as leverage in price negotiations. The trend has been fueled by the spread over the past five years of inexpensive Wi-Fi enabled cameras and mics that homeowners can buy and set up themselves for home security. Motion sensors notify them by text or email that a visitor is in their house, and they can then observe a prospective buyer on a computer, laptop or smartphone through the Internet. Alternatively, they can view a recording later. “Recording devices are cheaper and more readily available,” says Leslie Walker, deputy general counsel of the National Association of Realtors. In a survey conducted by Harris Poll for NerdWallet, 15% of Americans who have ever sold a home said they’ve use surveillance cameras to monitor potential home buyers. And 67% say they would use such cameras if they were selling a home that already had them. “In a competitive housing market, everything is fair game,” says Holden Lewis, a housing analyst for NerdWallet, a personal finance website. Source: USA Today

Home features—particularly those that are technology-based—have a stronger pull on millennial home shoppers than the promotion of brand names, according to a new survey by John Burns Real Estate Consulting, conducted with 20,000 new home shoppers. Millennials tended to show a preference for tech-focused amenities that could make their lives simpler. Young adults born in the 1980s and 1990s are half as likely as their parents’ generation to rank brand as the most important factor when selecting products in the home. They do check reviews online before buying, so the survey showed online reputation is also important to them. The young adults born in the 1990s are more likely to pay an extra $3,500 for a smart-tech refrigerator than older adults. Younger adults may have less income to spend, but they showed a higher preference for technology, according to the survey. Source: John Burns Real Estate Consulting


Weekly Mortgage and Real Estate Report – Week of June 11, 2018

The Fed Meets Today 

This week the Federal Reserve Board’s Open Market Committee meets with analysts expecting another hike in rates. While the overwhelming sentiment is for a hike, the enthusiasm for such a move is slightly lower than it was a few weeks ago. Since then there has been a flurry of international news causing both concern and optimism. On the domestic front, economic growth for the first quarter was pedestrian at best, but the May jobs report came in stronger than expected.

If the Fed raises rates, it would be the seventh increase within the past 30 months. Yet, short-term rates would still be well below where they were at the start of the recession. At that time the Fed started lowering short-term rates by 0.50% to .75% at a time, much different from the tame 0.25% increases we are witnessing as part of their present “gradual” approach.

Whether they raise rates or not, analysts will be watching carefully for the Fed’s statement which will be released on Wednesday along with the rate decision. This statement may give us a clue of what the Fed is thinking about rate increases for the rest of the year and perhaps even into next year. A major question to answer will be at what level will they consider rates “normalized.” The next meeting of the Fed is at the end of the July.

 Institutional landlords are back in action. Institutional investors bought more single-family rental homes in 2017 than in the previous year, the first increase since 2013, according to data compiled by Amherst Holdings LLC. Large firms rushed into the single-family rental business when U.S. housing markets were reeling from the foreclosure crisis and homes were available and cheap. The feeding frenzy was short-lived. By 2014, big landlords were already paring back their purchases as foreclosures dried up and they tackled the challenge of managing widespread homes. Now they’re buying again, at a time when single-family landlords are raising rents faster than apartment owners. While multifamily landlords face pricing pressure from new supply, very few single-family homes are built specifically for leasing. Demand for rental houses “feels like it’s insatiable,” Gary Berman, chief executive officer of Tricon Capital Group Inc., said in an interview. There’s another factor driving Wall Street’s renewed acquisitiveness. Now with their businesses well-established, the large landlords are having an easier time financing purchases, said Greg Rand, CEO of OwnAmerica, an online platform for buying and selling rental houses. The combination of cheaper credit and more-efficient operations have made investors comfortable paying higher prices for properties. “If your cost of capital is lower and the asset class has been proven, you don’t need to buy at a big discount,” Rand said. Source: BloombergHome purchases, new business starts and stock market investment are accelerating among the U.S. Hispanic population in spite of political headwinds, according to the 2018 Annual Report from The Hispanic Wealth Project, a non-profit organization supported by the National Association of Hispanic Real Estate Professionals (NAHREP). Based on the report, the Hispanic homeownership rate rose in 2017 for the third consecutive year to 46.2 percent, an increase from 45.6 percent in 2015. However, the current political environment and uncertain immigration policies have caused many Hispanics– even those with permanent residency status– to hold off on making long-term financial commitments, such as retirement savings or purchasing a home, the report found. The report, released today at The Hispanic Wealth & Real Estate Conference and Latina Wealth Building Series in Miami, also found the median net worth of Hispanics rose dramatically from $13,700 in 2013 to $20,600 in 2016. The report cited data from the Census Bureau and other government entities but noted that consistent data on household wealth is still lacking. The report highlights positive trends in homeownership and entrepreneurship including the facts that Hispanics are the only ethnic demographic to have increased their homeownership rate for three consecutive years and women entrepreneurs represented 50 percent of all Hispanic small business starts. However, there is still progress to be made in the arena of savings & investments, as the report notes 83 percent of all Hispanic Millennials have nothing saved for retirement. “With the youngest population and the highest work force participation in America, it is clear that the financial well-being of the Hispanic community is critical to the economic strength of the whole country,” said Jerry Ascencio, Chairman of the Hispanic Wealth Project. Source: STL News

The idea of “living small” has blanketed TV and social media for the past few years. The “tiny house” has surged in popularity. But now a new survey suggests that people may not be happy living in 400 square feet or less. Forty-four percent of more than 2,000 adults recently surveyed by the real estate website Trulia said they had housing regrets—and the biggest regret among homeowners centered on the size of their home. One in three homeowners surveyed said they wished they had chosen a home that was larger. Only 9 percent of owners surveyed wished they had downsized. But there are still plenty of tiny-home proponents who continue to emphasize the perks of this way of life. They argue that living tiny has several benefits, including being more budget-friendly, requiring fewer materials, and allowing for more simple living. Source: Country Living

Weekly Mortgage and Real Estate Report – Week of June 4, 2018

Early Jobs Report 

It is unusual for the monthly employment report to be released on the first day of the month. Friday, the first day of June, was an exception. Logically, you would think that data released this early would be subject to a higher level of revisions, but we have no statistics to support that theory. What we do know is that rates have been rising all year and this report was released approximately seven business days before the Federal Reserve Board’s next meeting. A meeting in which they will consider raising rates again.

The minutes of the previous meeting of the Fed was recently released, and some analysts believe that the members were starting to hedge on predictions of more than one additional rate increase this year. The lack of inflationary wage pressures was cited as a possible justification for moving more slowly. The question is — could this jobs report change the Fed’s thinking in any way?

The addition of 223,000 jobs in May and an unemployment rate of 3.8% provide plenty of evidence for the Fed to support a rate hike. The increase of wages of 2.7% annually was within expectations, and this would provide some evidence for the Fed to support holding off for now. The Fed also indicated that the labor participation rate had moved down one-tenth of one percent to 62.7%, which contributed to the lower unemployment rate. Many believe that we would need an increase in the participation rate before we experience additional wage pressure. Everything considered, it was a strong report and the Fed will find evidence to support whichever decision they make, but most analysts are still looking for a rate increase next week.

 For homeowners considering a move, some experts are recommending they get a home maintenance inspection before they list their home for sale. Such an inspection can provide a full picture of any repairs that need to be performed before they become negotiating points in a transaction. A home maintenance inspection is similar to a home inspection that is done by buyers, says Frank Lesh, president of the American Society of Home Inspectors. A licensed inspector can check on the main systems of the home, such as the roof, walls, foundation, HVAC, electrical, and plumbing. “You might not even notice a problem [with your home],” says Lesh. An inspector may be able to spot small problems before they become bigger, more expensive problems. They can also advise clients on the regular maintenance tasks they should be doing on their home to keep everything in tip-top shape. An inspector can walk homeowners around the property to show them any potential problems they spot. Homeowners will receive a report that details anything the inspector finds, which can serve as a to-do list to address, if they so choose. “Every three to five years, you should have a home inspector come out and do a maintenance inspection,” advises Lesh. “Like changing your furnace filter, you should do it before it gets so bad [that it becomes] a problem. … A home inspector isn’t trying to sell you anything … and isn’t going to make any money off doing the repairs.” Source: realtor.com®Aiming to simplify consumer access to real estate listings, CoreLogic announced a partnership to offer consumer-facing real estate websites to its multiple listing services clients. CoreLogic, a global information analytics and data-enabled solutions provider is set to partner with Homes.com, which was recently rated as one of the top real estate websites in the U.S. by the Consumer Affairs research team. The agreement will provide CoreLogic clients access to the Homes.com’s Fusion Portal Solution, a public website platform for multiple listing organizations. “The Homes.com Fusion Portal solution offers organizations everything they need to launch a premier real estate web portal in their local market,” Homes.com President David Mele said. Organizations taking advantage of this offer can deploy a search solution that simplifies consumer access to real estate listings. “The enhanced web presence combined with the most accurate multiple listing data, advanced search capabilities, and a contemporary and responsive interface will help multiple listing organizations expand their local presence while driving consumer inquiries back to their members,” Mele said. After a stream of acquisitions in the valuations space, it seems CoreLogic is beginning to move into the real estate territory. Could it be taking aim at Trulia, Zillow, or other MLS sites? Source: HousingWire

The National Association of Home Builders recently surveyed homeowners who have been living in their homes for a decade or longer to find out why they are choosing to stay put. Seventy percent of respondents said they weren’t moving because they like their home and are comfortable in it. Others said they did not want to go through the hassle and expense of finding another home and moving (21 percent), and one-tenth of respondents said there were no homes on the market they would want to buy or could afford. “This last finding suggests that a not-so-trivial 10 percent of people living in their homes for a decade or more could be enticed to move if only there were more homes on the market to choose from,” according to NAHB’s Eye on Housing blog. Meanwhile, NAHB’s survey found that some of the least important factors in keeping homeowners from moving were to hold onto a low interest rate (5 percent) and because their home is still worth less than their current mortgage (3 percent). Source: National Association of Home Builders

Weekly Mortgage and Real Estate Report – Week of May 28, 2018

  Rates: The New Normal? 

Interest rates have been rising this year. This is not surprising considering the fact that the economy continues to expand, we have added a tax cut into the equation and the Federal Reserve has been raising interest rates for the past two years. Most analysts are predicting rates to continue to increase. On the other hand, rates rose during the winter of 2016-2017, and rose in 2015 as well. Analysts predicted that those increases would also lead to further higher rates.

What makes this time different? For one, the extra stimulus of tax reform, but also the fact that the economic recovery is more mature. We have gradually reached full employment and commodity prices, such as oil, are rising. Thus, while we can’t say rates will go up from here, it would be reasonable to at least ponder the next significant question — how high could rates go from here if they continue to rise? After all, in the past we have experienced rates on home loans over six percent for decades at a time.

On the other hand, rates have been so low for such a long time, that we might experience the possibility of a new normal. While very low rates may not be needed now to stimulate the economy, the interest rates supporting a normal economy might be lower than we have experienced before. Recently, San Francisco Fed President/NY Fed President Nominee John Williams called this a potential “new normal.” With today’s higher housing prices, having a new “lower” normal for interest rates would be a very welcome development. If rates continue to rise, this assumes that this “new level” will be substantively less than what we have experienced historically.

 According to analysis from Veritas Urbis Economics, as well as data from the U.S. Census Bureau, American home buyers aren’t who they used to be. Ralph McLaughlin, chief economist at Veritas Urbis, summed it up. “Home sales are on the rise, but the trend in buying isn’t among who you might think,” he said. “It is increasingly female, graying and childless, not male, young and with a family.” More than 46 percent of all home buyers last year were women, and almost 20 percent were single women, buying on their own. That’s up from 9.1 percent just three decades ago. According to McLaughlin, higher levels of education is part of what’s allowing more female buyers to enter the market. The number of women with a bachelor’s degree or higher hit 25.1 percent last year, up from just 11 percent in 1981. Women are also working more, McLaughlin said. “The share of adult women at work increased to a near-record high of 42.5 percent in 2017 from a near-low of 35.3 percent in 1981,” McLaughlin wrote. “What’s more, the increase in female-headed householders – both alone and with partners – far exceeds their changing demographic composition.” Older home buyers are on the rise, too. Buyers 55 and older made up 27.8 percent of all home sales last year, nearly doubling from 1981. Buyers under the age of 35 fell to an all-time low in 2017, hitting 33.7 percent. The analysis also showed that having children is less of an impetus for home buying than it once was. Just 40.7 percent of buyers last year had children, while 21.2 percent were single. In 1981? More than half of all buyers had kids and just 15 percent were unmarried. According to McLaughlin, these stark demographic shifts mean big news for sellers and builders. “Graying homebuyers may be more attuned to the accessibility of a property, both inside and out, while single, childless homebuyers may demand fewer rooms but more communal spaces (think open lounges and kitchens rather than bedrooms),” McLaughlin said. Source: The Mortgage ReportsBathrooms have overtaken kitchens as the most popular remodeling project, according to a newly released survey by the National Association of Home Builders. “Small-scale renovations are slowly becoming just as popular as large-scale projects, as seen with bathroom remodeling becoming more common than kitchens,” says 2018 NAHB Remodelers Chair Joanne Theunissen. “Home owners are finding cost-effective and [faster] upgrades can also add comfort and value to their homes.” Remodelers surveyed reported the most common projects in 2017 included bathroom remodeling (81%) and kitchen remodeling (78%). Adding in green home features is a growth area in remodeling. The most common green building product installed by residential remodelers: low-E windows, according to a separate survey by the NAHB. Programmable thermostats and high-efficiency HVAC systems also ranked among the most common green building products. Source: National Association of Home Builders

There will soon, within a few decades, be an important demographic turning point in U.S. history. By 2035, there will be 78.0 million people 65 years and older compared to 76.4 million under the age of 18, according to the U.S. Census Bureau’s 2017 National Population Projections. By 2030, all baby boomers will be older than age 65. This will mean that 1 in every 5 residents will be retirement age. “The aging of baby boomers means that within just a couple decades, older people are projected to outnumber children for the first time in U.S. history,” said Jonathan Vespa, a demographer with the U.S. Census Bureau. The 2030s are projected to be a transformative decade for the U.S. population on several measures. The population is expected to grow at a slower pace, age considerably and become more racially and ethnically diverse. Net international migration is projected to overtake natural increase in 2030 as the primary driver of population growth in the United States, another demographic first for the country. Although births are projected to be nearly four times larger than the level of net international migration in coming decades, a rising number of deaths will increasingly offset how much births are able to contribute to population growth. Between 2020 and 2050, the number of deaths is projected to rise substantially as the population ages and a significant share of the population, the baby boomers, age into older adulthood. As a result, the population will naturally grow very slowly, leaving net international migration to overtake natural increase as the leading cause of population growth, even as projected levels of migration remain relatively constant. By 2060, the United States is projected to grow by 78 million people, from about 326 million today to 404 million. The population is projected to cross the 400-million threshold in 2058. In coming years, the rate at which the U.S. population grows is expected to slow down. The population is projected to grow by an average of 2.3 million people per year until 2030. But that number is expected to decline to an average of 1.8 million per year between 2030 and 2040 and continue falling to 1.5 million per year from 2040 to 2060. Source: The Insurance Journal

Weekly Mortgage and Real Estate Report – Week of May 21, 2018

       Foreign Affairs 

Foreign diplomacy has certainly hit the center stage during the past several weeks. The sabre rattling has stopped and now we are talking with North Korea. We are meeting with China in order to avert an all-out trade war. And we are pulling out of the Iran nuclear deal. We have seen that potential conflicts have upset the markets and we have seen efforts at diplomacy bring joy to the markets as well.

When there is noise coming from the Middle East, certainly oil prices will be in focus. This year we have had a pretty good run-up in oil prices, which is interesting because last year most market analysts were predicting lower prices for 2018 — as we are producing more oil domestically. The markets for all commodoties are global and what is happening around the world can affect our prices just as much or more than what is taking place within our own country.

And as the world is inter-connected, so are the prices of different instruments. It is no surprise that the price of oil has risen as interest rates are going up. The same factors which influence the world’s demand for oil also affect the cost of money. The next question is — if the price of oil fell, would interest rates go down? The answer to that question would depend upon more than one factor and certainly would hinge upon the explanation of why the price of oil was falling. If oil prices do not moderate, then we can expect our summer road trips to be a bit more expensive than last year.

 Seventy-Five percent of Americans say buying a home is a priority, according to a new NerdWallet survey conducted online by Harris Poll. For this report, NerdWallet analyzed data from that December 2017 survey of more than 2,000 U.S. adults, as well as the NerdWallet mortgage calculator, the Consumer Financial Protection Bureau and other sources to develop a snapshot of current home buyer sentiments, concerns and outlooks. The costs of purchasing a home are a top concern for Americans who rent. But these financial concerns aren’t putting a hard stop on sales — approximately 15% of Americans report having purchased a home in the past five years, and 32% intend to do so in the next half-decade. Both of these groups — recent and prospective buyers — are optimistic, citing the investment potential of their home as a top reason for purchasing, according to the survey. The survey results also indicate millennials (ages 18-34) aren’t counting themselves out of homeownership — they prioritize homebuying at rates higher than other generations, contrary to the misconception they’re uninterested in putting down roots. The most common reason Americans prioritize buying a home, across all generations, is that they believe it’s a good investment — 64% of those who prioritize it cite this reason. Just 17% of Americans say they prefer renting over homeownership, and many of their reasons suggest their choice is out of financial necessity rather than preference. Source: NerdWalletHomeowners looking for a remodeling project may be smart to tackle a kitchen renovation—that is, if they’re looking for projects with the strongest buyer appeal and high returns on their investment at resale. Kitchen renovations and upgrades are among the top remodeling projects most likely to add value to a home at resale and most likely to appeal to home shoppers, according to the 2017 Remodeling Impact Report, conducted by the National Association of REALTORS®. The report takes a look at the cost of the most common exterior and interior remodeling and replacement projects and gauges how much appeal they have to buyers at resale. Fifty-four percent of REALTORS® surveyed reported suggesting to sellers that they complete a kitchen upgrade before attempting to sell. Twenty-three percent of real estate pros also said a kitchen renovation helped to close a sale. The Remodeling Impact Report estimates that homeowners stand to recover 57 percent—or $20,000—of the $35,000 or so of the cost to take on a kitchen upgrade. The kitchen upgrade might include adding new energy-efficient appliances, sink, faucet, and vinyl flooring; repainting the walls and ceiling; and refacing cabinets with cherry veneer and new hardware. Source: NAR

Want to know why housing inventories are so low? According to Bankrate, New York, one reason is that people simply aren’t planning to move. A new Bankrate survey reported 62 percent of current homeowners do not “ever” plan to move; the remainder anticipate staying in their current home for a median of five years. The survey said while a clear majority of homeowners (79%) do not plan on moving in the next half-decade, 35% say they are likely to remodel, upgrade or add to their current home during that time. Over the next five years, the likelihood of making improvements to the current home exceeds the likelihood of moving to a new home across all age and income brackets. The survey also reported 21% of Americans own their primary home without a loan, while another 32% are currently paying one off. Bankrate.com commissioned YouGov Plc to conduct the survey. Source: The Mortgage Bankers Association

Weekly Mortgage and Real Estate Report – Week of May 14, 2018

      Another Milestone 

The economic recovery recently hit an important milestone. It is now officially the second longest expansion in our history. For much of the expansion, the recovery has felt more painful than others. For one, the Great Recession was extremely deep and painful. Therefore, most Americans needed a long-term for their personal recovery from the recession. Secondly, the recovery was quite slow. Sometimes it was so slow it did not seem like a recovery at all.

On the other hand, the slow pace of the recovery brought some major advantages to the equation. Interest rates were able to remain low for a longer period of time. We had a sale on money that has lasted most of the previous decade. Additionally, the long life of the recovery can be attributed to the fact that the economy has not overheated during the recovery.

Overheated economies bring inflation and rapidly rising interest rates which can turn the economy south in a hurry. Even as rates have risen in the past two years, it has been a slow and gradual process. As a matter of fact, long-term rates have taken their time to react to the Federal Reserve Board’s short-term rate hikes. Of course, the next question is–how long will the recovery keep going? We know it can’t last forever. Our hope is that when the recovery does pause, it does so in a very mild way, in contrast to the last recession. For now, the old guy is just trudging along.

 It used to be that homebuyers had to pay off their past-due federal taxes to obtain financing. But no more, at least not when the home loan is being purchased by Fannie Mae. Under new rules from the government-sponsored company, as long as you have an approved payment plan with the Internal Revenue Service, you can qualify for a home loan. But realize that the monthly payments under the IRS plan will be counted as debt when your lender calculates your all-important debt-to-income ratio. Consequently, you may not be able to borrow as much as you would like. It may help to try to renegotiate your agreement with the IRS, so you have smaller payments and a longer payoff period. It’s the monthly debt that counts against you, not how long you have to pay it, so this step should allow you to borrow more. Alternatively, pay your entire tax debt off as soon as possible before entering the housing market. Unless you have the cash on hand right now, you may have to wait a while to buy, but it could be worth it. As usual, there are rules that come with Fannie Mae’s new guidelines: First and foremost, a Notice of Federal Tax Lien cannot have been filed against you in the county in which the property is located. Also, at least one payment under the IRS agreement must have been made prior to closing. The lender must obtain extra documentation, including: An approved IRS installment agreement with the terms of repayment and proof the borrower is current on that contract. Source: Lew Sichelman, uExpressCoreLogic released its latest Single-Family Rent Index, which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for January 2018 shows a national rent increase of 2.8 percent, compared to 2.6 percent in January 2017. Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The Rent Index shows that single-family rent prices have climbed between 2010 and 2018; however, year-over-year rent price increases have slowed since February 2016, when they peaked at 4.1 percent. National rent growth in January 2018 was pulled down by high-end rentals, which are defined as properties with rent prices 125 percent or more of a region’s median rent. High-end rent prices increased 2.4 percent year over year in January 2018, up from a gain of 1.5 percent in January 2017. Rent prices among low-end rentals (properties with rent prices less than 75 percent of the regional median) increased 3.8 percent in January 2018, down from a gain of 4.7 percent in January 2017. Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. “Single-family rent price growth remained solid in January,” said Molly Boesel, principal economist for CoreLogic. “High demand and low supply for entry-level properties drove lower-priced rentals to have faster price growth than higher-priced rentals, revealing affordability pressures in this segment of the rental market.” Source: CoreLogic

In the absence of legislative reform by Congress, there’s only so much the Federal Emergency Management Agency can do to encourage the growth of private flood insurance. But FEMA, which oversees federal flood insurance, has come up with a few small but meaningful program changes that will make it easier for households to switch to private insurance if they can get a better deal that way. First, the agency has lifted the requirement that households retain their federal coverage if they switch to private insurance before their coverage term is up. Prior to this change, households had to maintain their federal coverage even after switching to private coverage, which meant they had to pay two sets of premiums if they made the switch. And second, insurance companies that offer federal coverage can now also offer private coverage as well, either their own or another company’s. Prior to this change, if a company offered the federal option, it was prohibited from providing a private alternative. The agency has also made two other small changes to make life easier for homeowners who appear to be in a flood zone. First, if a homeowner’s state uses what’s known as LiDAR technology to collect elevation data, owners can now use that data to demonstrate they don’t need flood insurance. That can save them as much as $2,000 on the cost of a separate elevation certificate. And second, FEMA’s procedures for newly mapped flood areas will be extended to apply to more properties. That means more owners will be able to start their premiums at a lower rate and only gradually reach responsibility for full premiums. Source: REALTOR® Magazine

Weekly Mortgage and Real Estate Report – Week of May 7, 2018

The Markets as a PredictorIf you were looking at the market’s actions heading into a busy first week of May, you would have predicted that the Federal Reserve was going to raise interest rates and we were going to get a “bounce-back” jobs report. Interest rates started rising about two weeks before the Fed was scheduled to meet– and April’s job numbers were going to be released. Thus, even though market analysts were not sold on the prospects of a rate increase, it looked like the markets were hedging their bets.

With regard to the meeting of the Federal Reserve, the decision to leave interest rates unchanged was not totally unexpected. And it was not surprising that interest rates and stocks did not react much after the announcement. The markets showed indifference to the Fed’s decision on rates, and also their statement regarding the economy. The Fed statement came in pretty much as expected, with predictions of gradual rate increases this year as inflation continues to gradually increase as well. The Fed called the risks to the economy “in balance” — which means that there is an equal risk of overheating vs. experiencing a slowdown.

Regarding the economy, April’s job numbers will obviously influence the Fed when they meet again in mid-June. News of the economy adding 164,000 jobs will be analyzed, as well as the moderate 2.6% increase in wage inflation. It should also be noted that the previous month’s job gains were revised upward by approximately 35,000, making up for the shortfall in jobs added this month when compared to expectations and initially the stock market reacted positively to the news with rates rising again. The headline number of a 3.9% unemployment rate was better than expected and the lowest in almost two decades. The Fed will be able to chew on this report for over a month and will also have May’s numbers in hand before they meet again. As for the markets, expect them to get antsy again as the meeting approaches. That seems to be par for the course.

 Because of improved standards for utilizing new and existing public records, the three major credit reporting companies are now excluding all tax liens from credit reports. That means some scores will head higher. Credit scores, notably those from FICO, one of the largest credit scoring companies, generally range from 300 to 850. A good credit score generally is above 700, and those over 760 are considered excellent. Credit reporting and scores play a key role in most Americans’ daily life. The process can determine the interest rate a consumer is going to pay for credit cards, car loans and home loans — or whether they will get a loan at all. The new rules come following a study by the Consumer Financial Protection Bureau that found problems with credit reporting and recommended changes to help consumers. Incorrect information on a credit report is the top issue reported by consumers, according to the bureau. Last July, credit reporting companies removed nearly 100 percent of civil judgment data and about 50 percent of tax lien data from credit reports. Effective mid-April, the rest has been removed. LexisNexis Risk Solutions predicts that about 11 percent of the population will have a judgment or lien removed from their credit file, according to the company’s own estimate. Once that information is stripped out, credit scores may go up by as much as 30 points overall, LexisNexis found. LexisNexis also provides lenders with data to make decisions on consumer loans. Other industry groups have said these changes will have less of an impact. “Analyses conducted by the credit reporting agencies and credit score developers FICO and VantageScore show only modest credit scoring impacts,” Eric Ellman, a senior vice president of the Consumer Data Industry Association, said in a statement when the changes were first announced. The association represents Equifax, Experian and TransUnion, the three largest credit reporting companies. Source: CNBCFor many first-time buyers, buying a home can be a scary experience. They know they’ll be maintaining or improving a home with little to no maintenance experience, so the solution is to buy a home in perfect condition. So, they hire a home inspector to point out all the flaws. The problem is — no perfect home exists. Air conditioners break, plumbing pipes leak, and roof tiles blow off in the wind. If you’re buying a home, start with a reasonable expectation of what home inspectors can do. Their job is to inform you about the integrity and condition of what you’re buying, good and bad. A home inspection should take several hours, long enough to cover all built-in appliances, all mechanical, electrical, gas and plumbing systems, the roof, foundation, gutters, exterior skins, windows and doors. An inspector doesn’t test for pests or sample the septic tank. For those, you need industry-specific inspectors. Do make sure the inspector you hire is licensed. The responsibilities of home inspectors vary according to state law and their areas of expertise. It is also important to ask what the inspection covers. Source: RealtyTimes

The number and share of Americans living in multigenerational family households have continued to rise, despite improvements in the U.S. economy since the Great Recession. In 2016, a record 64 million people, or 20% of the U.S. population, lived with multiple generations under one roof, according to a new Pew Research Center analysis of census data. Multigenerational family living is growing among nearly all U.S. racial groups, most age groups and both men and women. The share of the population living in this type of household – defined as including two or more adult generations or including grandparents and grandchildren younger than 25 – declined from 21% in 1950 to a low of 12% in 1980. Since then, multigenerational living has rebounded. The number and share of Americans living in these households increased sharply during and immediately after the Great Recession of 2007-2009. Since then, growth has slowed a little but has remained much more rapid than the growth before the recession. Growing racial and ethnic diversity in the U.S. population helps explain some of the rise in multigenerational living. The Asian and Hispanic populations overall are growing more rapidly than the white population, and those groups are more likely than whites to live in multigenerational family households. Source: Pew Research Center