Declining First Time Home Buyers Slows Recovery

Bloomberg Personal Finance is reporting that Americans are being shut out of the housing recovery

because of rising prices and tougher credit standards. First-time buyers accounted for 26 percent of purchases in January, the lowest level recorded by the National Association of Realtors (NAR) since it began tracking the data in October 2008. The decline of these buyers threatens to slow the pace of the economic recovery.

Inventory Smaller

More moderately priced homes are usually the main inventory for first time home buyers, and that inventory has shrunk do to cash investors snapping them up for rentals. In December, 47 percent of U.S. purchases were paid for with cash, up from 27 percent a year earlier. In addition adding to the already shortened supply, thirty-nine percent of owners looking for better homes plan to keep their current house as a rental. Higher mortgage costs are also a burden for first timers. Rates for 30-year fixed loans climbed to 4.37 percent last week from a near-record low of 3.35 percent in early May.

Lender Issues

The FHA, the biggest source of financing for first-time buyers, has raised the cost of borrowing and tightened underwriting to cope with losses on mortgages it insured as the property bubble burst. The number of FHA borrowers purchasing their first homes declined by 38 percent last year. For buyers whom go with other lenders they are requiring higher FICO scores. More than 40 percent of borrowers in 2013 had FICO scores above 760, compared with about 25 percent in 2001. Because of these difficulties, new home owners aren't even applying for home loans.

Young People Home Ownership Down

The home ownership rate for people in their 20's and 30's fell to 42.2 percent in 2013, the lowest in 19 years of Census data. While purchases rose 8.2 percent for residences costing more than $250,000, they fell 10.7 percent for homes worth less. Leslie Appleton-Young, chief economist for the California Association of Realtors sees the decline as ‘a huge problem’. Another economic factor to add to the decline of first time home buyers is, housing prices are rising faster than incomes at this point. What’s a first time home owner to do? Focused strategy oriented planning is the best path for those interested in purchasing their first home. 

Leadership Begins With Your Heart Not Your Head

Posted on February 17, 2014 by admin at KW blog 

Dianna Kokoszka, CEO of KW MAPS Coaching and KWU, filled the room with magnetic energy today at her Family Reunion breakout session “Dianna Unplugged.” She moved the audience with her passion, integrity and enthusiasm and inspired attendees to lead with their hearts not their heads.

“Your business grows to the extent that you do. Why wouldn’t you choose to grow as a leader? Do you want success without limitations? YES?! Then fall in love with the process of becoming a leader and train your team to be great leaders! The biggest function of a leader is to create more leaders. Leaders set the temperature and turn up the HEAT. Get ready to WIN BIG!” said Kokoszka.

Kokoszka illustrated the Triangle of Power and Influence, which states effective communication is followed by recognition and will result in influential leadership by permission. A leader is responsible for the experience of their followers. When you communicate your vision in a clear and compelling it ignites passion in your team and motivates them to live by your example. Elected leaders have high standards, embody their mission and settle for nothing less than exceptional results.

Motivation also drives momentum and people grow into the conversations you have around them. Kokoszka encouraged leaders to compliment their team when they do well and “they will keep doing it right,” she said. Leaders believe in their people and talk to them from a place of integrity. Lift your team to exponential growth by:

•        Coaching
•        Manifesting goodwill
•        Inspiring enthusiasm
•        Saying “we”, not “I”
•        Solving breakdowns
•        Demonstrating how it’s done
•        Saying “let go”

“Logic makes them think and emotions make them act,” she said. When asked the questions addressed to every leader, move your team with your passion, not your position. People want to know:

•        Do you care about me?
•        Can you help me?
•        Can I trust you?
•        Will you help me grow?
•        Who and what do you stand for?

“People teach what they know and reproduce who they are,” Kokoszka continued. Lead by permission and skill using the four Es:

1.        Energy
2.        Energize
3.        Edge
4.        Execution

She finished the session imploring leaders to seize the moment. “When an opportunity comes it’s too late to prepare. Put your potential to work by leading with your Es, passion, integrity, high standards and embody your mission and vision daily. Settle for nothing less than exceptional and get ready to make SUCCESS rain!”

Why Agent Teams Are the New Model in Real Estate

Agent Teams are the fastest growing model in real estate. What works in this new business dynamic? What is an agent team? Watch the video and see some of the top producers in the business talk about why a team is good for the real estate business, and the consumer.

 “When you hire people who have your same core values and vision, the synergy is just incredible.” “The consumer gets a team of specialists” - CEO Sue Adler Team at Keller Williams Realty  

 “Its the future of Real Estate. Why, one its our fiduciary duty to consumers to provide the highest value possible, when we are selling their highest valued asset, and that comes from us treating our sales like we really are a negotiating and marketing firm.” - Ben Kinney, operating principal Keller Williams

Learn more about the Don Callahan Team here.

Homeowners Relieved After Senate Delays Insurance Hikes

Yesterday the Senate passed a bill to sharply delay the increases in flood insurance rates for millions of property owners in coastal and flood-prone areas. The bill effectively guts a 2012 law (“Responsible Implementation of Flood Insurance Reform Act”) that had aimed to overhaul the nearly bankrupt National Flood Insurance Program. The Program which subsidizes insurance for buildings in flood zones, had a $24 billion deficit following claims from Hurricane Sandy. The law’s aim was to raise revenues for the federal flood insurance program. The law had also required updating of federal flood zones, which could determine which property owners will be required to purchase flood insurance by their mortgage holders.

Although the bill delaying the rate increases had bi-partisan support it still drew criticism from a broad spectrum of outside groups.  “It will return the program to a state of insolvency,” and “General taxpayers will be footing the rest of the cost.” according to an article written in the New York Times that quoted Shai Akabas an analyst at the Bipartisan Policy Center, a Washington research group. The aim of the 2012 law was to shift the financial risk of insuring flood-prone properties to the private market from taxpayers. The debate over who will pay for the nation’s rapidly rising costs for flood damage remains unclear.

Over the past year, millions of coastal property owners were hit with flood insurance rate increases that sent their premiums soaring up to five or 10 times the previous amounts. As their insurance bills soared and their property values plummeted, homeowners begged lawmakers to block or delay the 2012 law. 

Most Tybee properties are located in the highest risk flood areas, known as V zone. With few exceptions, Tybee non-primary residences with a first floor not built off the ground would have seen a significant increase. Many other parts of Chatham County are also located in high flood risk zones, and many homes built before the creation of the National Flood Insurance Program have long been eligible for subsidized policies.

Savannah morning news reported: Russ Pennington, director of policy and public affairs with the Georgia Environmental Protection Division, said Tuesday the impact hasn’t been drastic so far.

“What we’ve seen in other parts of the state that have preceded Effingham area specifically, it seems to be a wash,” he said. “Some areas are found to no longer be in the flood zone; some new areas are found to be in the flood zone. That’s just a process that is working itself out.”

Find out more from FloodSmart.gov the official site of the National Flood Insurance Program.

Using Drones to Enhance Listings

Amazon isn't the only company to use new technology to set themselves apart from their competitors. Real estate agents are starting to use drones to enhance their listings. Technology has advanced to a degree that small, remote-controlled drone helicopters are more affordable than they once were, making aerial photography and video captured using drones an increasing phenomenon in a number of industries, including real estate. Video's have been used in real estate for some time now, but the use of drones for aerials brings a new perspective to the industry.

There are still many unanswered questions regarding the legality of drone usage for anything other than military needs. The commercial use of drones in real estate and other industries has picked up in the last year despite the fact the FAA's ruling in 2007, that said commercial use of drones is illegal. The FAA, which currently shuts down commercial drone operations when it learns of them, is expected to clarify rules for using drones that weigh less than 55 pounds sometime in 2014 and broader rules for drones in 2015. Currently the FAA permits recreational, personal use of drones, but they are not supposed to fly higher than 400 feet or near airports.

Increased use of drones for business is a concern to groups like the Electronic Privacy Information Center, a Washington, D.C., a group that focuses on the civil liberties and privacy issues raised by emerging technology.

Matt Murphy, founder and president of Boston Virtual Imaging, will ask the question 'what do drones mean for real estate?' at the Real Estate Connect conference in New York City on Jan. 15. He will be providing a demo of drones and share the latest news about their use.

 

Is It Possible Home Sales Are About To Climb?

Things are looking up for our economy according to today’s news. With mortgage rates hovering in the 4.25% range, unemployment down, and less foreclosures and bankruptcies, consumers are more likely to borrow. Below are some of the news sources that I tapped into.

The Fed’s uncertainty with bond buying and reducing asset purchases makes for a tough interest rate environment. The rates were flat most of last week until Friday when the rate rose slightly from 4.13 to 4.25 for a 30yr fixed loan. Read more at the Mortgage News Daily site: http://www.mortgagenewsdaily.com/consumer_rates/330213.aspx

Bloomberg reports today that Americans will cure their debt troubles by taking out loans because of a 5yr low in the unemployment rate. In addition the banks will be more inclined to loan due to a cleaning of their own balance sheets. Read more at Bloomberg news: http://www.bloomberg.com/news/2013-11-04/americans-debt-hangover-seen-ending-in-boost-to-growth-economy.html

Mortgages Rates Rising & QM Standards in 2014 are Loans Hard to Get?

An analysis of home loans showed that 1 in 5 current mortgages would not meet the qualified

mortgage safe harbor standard that goes into effect in January.

What the New Rule Means for Borrowers:

AOL Real Estate:  "Under a provision in the Dodd-Frank Act, lenders must verify a mortgage applicant's ability to repay the loan. A borrower's debt-to-income ratio must be 43 percent or lower, plus the mortgage rate needs to be close to the national average prime mortgage rate (within 1.5 percentage points for first-lien loans and within 3.5 percentage points for subordinate-lien loans).

The new QM thresholds take effect Jan. 10, 2014, which will not only impact lenders' liability, but also consumers' ability to qualify for home loans."
Read more: http://realestate.aol.com/blog/2013/10/23/dodd-frank-qualified-mortgage-standard/

Marketwatch: “The average credit score among borrowers who received a mortgage in September was 732, down from a peak of 750 a year prior…. To be sure, the bar to getting a mortgage remains high. Applicants who were denied a mortgage in September had an average FICO score of 696 …”
Read more: http://www.marketwatch.com/story/mortgage-lenders-ease-credit-score-standards-2013-10-16

The Toledo Blade: ”…the regulations also could have the unintended effect of making it more difficult for many working-class families to qualify for mortgage loans offered by major banks.”
Read more at http://www.toledoblade.com/Real-Estate/2013/10/13/Middle-class-buyers-may-feel-squeeze-of-new-mortgage-rules.html

How Are The Banks Doing? 

“SunTrust Banks said Tuesday it will eliminate 800 jobs nationwide, including in Charlotte, the result of a slowdown in its home-loan refinancing business.” “ … with mortgage rates rising this year, lenders have seen weakening demand for refinancing loans. That has led banks, including Charlotte-based Bank of America and San Francisco-based Wells Fargo, to trim the work force that processes those applications.”

Read more here: http://www.charlotteobserver.com/2013/10/15/4390442/suntrust-to-eliminate-charlotte.html#.UmfsWvkWKQA

Maybe now is the time to by before rates get higher and loan standards get tougher. Search the MLS for free here: http://www.realestateinsavannah.net/

Government Shutdown Hurting Our Industry?

Government Shutdown Won't Shutdown FHA – Inman News, Sep 30, 2013

Despite reports to the contrary, the Federal Housing Administration will not stop processing loan applications in the event of a government shutdown …
Read the article: http://www.inman.com/2013/09/30/government-shutdown-wont-shut-down-fha/

Government Shutdown Risks Hurting The Housing Recovery – Forbes, Oct. 1 2013

…. New loans will continue to push through most government agency pipelines. What will change is how long the process takes, as many agencies expect to experience delays. …

Read the article: http://www.forbes.com/sites/morganbrennan/2013/10/01/heres-how-the-government-shutdown-will-affect-housing/

10 Most Cities Most At Risk To A Government Shutdown - Forbes, Oct. 1 2013

…. Trulia chief economist Jed Kolko broke down the 10 cities that could be most affected, based on the percentage of total local wages that go to federal employees in the each of the 100 largest metro areas. ….

View the List with Photos http://www.forbes.com/pictures/mhj45efikd/introduction-62/

Get government shutdown updates from Realtor.com: http://www.realtor.org/articles/government-shutdown-updates 

It's All About Your Perspective and Your ONE Thing

As Realtors and agents we are aware of the daily challenges in the industry, specifically national issues beyond our control that impact our individual business. One of these of late is mortgage rates. Trying to keep up with the current news on the rates I find that opinions on where the rate is really varies.  It seems that it really is about perspective, which is a great lesson to adapt in our daily lives.

Mortgages Are Interesting

Here are some recent headlines from national real estate news sources:

Mortgage Professionals of America: 9/20/2013 -
Mortgage Applications Head Up as Rates Edge Down

Mortgage applications were up last week as interest rates crept down, according to a survey from the Mortgage Bankers Association. 

Read the article: . http://www.mpamag.com/mortgage-interest-rates/mortgage-applications-head-up-as-rates-edge-down-15796.aspx

Bloomberg News: 9/19/2013 Home Sales Climb as Americans Rush to Lock in Rates
Sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they increased further.

Read the article: http://www.bloomberg.com/news/2013-09-19/sales-of-u-s-existing-homes-unexpectedly-climb-to-six-year-high.html

Realtor Magazine: 9/23/2013 

Mortgage Rates Level Off 
Key fixed-rate mortgages held steady this week, remaining near two-year highs.
Read the article http://www.realtor.com/news/mortgage-rates-level-off/

No Matter Where the Rate Is At …

"No matter how success is measured, personal or professional, only the ability to dismiss distractions and concentrate on your ONE Thing stands between you and your goals. The ONE Thing is about getting extraordinary results in every situation." Gary Keller

Keller Williams: 9/19/2013 

Balanced Markets; Big Opportunities: Gary Keller’s Mid-Year Market Update Amounts to ONE Thing: More Sales

The annual pace of home sales in July was 17.2 percent higher than it was last year, putting the industry on pace for the best year in home sales since 2006. “The last time we saw this number was 2003,” said Jay Papasan.  http://blog.kw.com/2013/09/19/balanced-markets-big-opportunities-gary-kellers-mid-year-market-update-amounts-to-one-thing-more-sales/