CU Program

More Americans Choose Real Estate as the Best Investment Than Ever Before
This image is shot using a drone.

Americans’ opinion on the value of real estate as an investment is climbing. That’s according to an annual survey from Gallup. Not only is real estate viewed as the best investment for the ninth year in a row, but more Americans selected it than ever before.

The graph below shows the results of the survey since Gallup began asking the question in 2011. As the trend lines indicate, real estate has been gaining ground as the clear favorite for almost a decade now:

If you’re thinking about purchasing a home, let this poll reassure you. Even when inflation is high like today, Americans recognize owning a home is a powerful financial decision.

How an Investment in Real Estate Can Benefit You During High Inflation

Because inflation reached its highest level in 40 years recently, it’s more important than ever to understand the financial benefits of homeownership. Rising inflation means prices are increasing across the board, and that includes goods, services, housing costs, and more. When you purchase your home, you lock in your monthly housing payments, effectively shielding yourself from increases on one of your biggest budgetary items each month.

If you’re a renter, you don’t have that same benefit, and you aren’t protected from these increases, especially as rents rise. As Danielle Hale, Chief Economist at realtor.com, notes:

“Rising rents, which continue to climb at double-digit pace . . . and the prospect of locking in a monthly housing cost in a market with widespread inflation are motivating today’s first-time homebuyers.”

When Inflation Has Risen in the Past, Home Prices Have Too

Your house is also an asset that typically increases in value over time, even during inflation. That‘s because as prices rise, the value of your home does too. Mark Cussen, Financial Writer for Investopedia, puts it like this:

“There are many advantages to investing in real estate. . . . It often acts as a good inflation hedge since there will always be a demand for homes, regardless of the economic climate, and because as inflation rises, so do property values. . . .”

And since rising home values help increase your equity, and by extension your net worth, homeownership is historically a good hedge against inflation.

Bottom Line

Buying a home is a powerful decision. It’s no wonder why so many people view it as the best long-term investment, even when inflation is high. When you buy, you help shield yourself from increases in your housing costs and you own an asset that typically gains value with time. If you want to better understand how buying a home could be a great investment for you, let’s connect today.

Are There More Homes Coming to the Market?
Old circa 1750 Canadiana style fieldstone house facade with brown stained wooden windows, door and Tulipa – Tulips in front yard in spring, Quebec, Canada. This image is property released. CUPR0314

According to a recent survey from the National Association of Realtors (NAR), one of the top challenges buyers face in today’s housing market is finding a home that meets their needs. That’s largely because the inventory of homes for sale is so low today.

If you’re looking to buy a home, you may have noticed this yourself. But there is good news. Recent data shows more sellers are listing their houses this season, which may give you more options for your home search.

Early Signs Inventory May Be Growing

The latest data from realtor.com shows the number of listings coming onto the market, known in the industry as “new listings,” has increased since the start of the year (see graph below):

This indicates more sellers are listing their homes for sale each month this year. And according to realtor.com, this growth is expected to continue. Their research finds the majority of potential sellers plan to list their homes over the next six months. Realtor.com says:

“. . . markets may see a noticeable bump in the number of homes for sale as we move through spring and into summer. A majority of homeowners planning to sell this year indicated that they aim to list in the next six months, with almost 10% having already placed their properties on the market.”

Homes Are Still Selling Quickly

But while new listings are increasing, it’s important to know they’re also selling quickly. The latest Realtors Confidence Index from NAR shows the median days on market for recently sold homes since the beginning of the year (see chart below). The time on market has decreased month-over-month. That means homes are selling even faster than they did the previous month.

What That Means for You

While a low-inventory market is difficult to navigate as a buyer, there is hope. The growing number of new listings and the expectation more sellers will list their homes in the coming months is great news if you’ve had a hard time finding a home that fits your needs. Just remember, those new listings are going fast. That means you’ll want to keep your foot on the gas and be ready to act if you find a home you love this season.

Your agent can help you stay on top of the latest listings in your area so you can find the home that’s right for you and submit your strongest offer as quickly as possible.

Bottom Line

If you’ve been having a hard time finding your dream home, stick with your search. More options are coming to market and your ideal home could be one of them. Let’s connect so you can stay up to date on the latest listings in our market, so you can be ready to move fast when you find the one that’s right for you.

What You Actually Need To Know About the Number of Foreclosures in Today’s Housing Market

While you may have seen recent stories about the volume of foreclosures today, context is important. During the pandemic, many homeowners were able to pause their mortgage payments using the forbearance program. The goal was to help homeowners financially during the uncertainty created by the health crisis.

When the forbearance program began, many experts were concerned it would result in a wave of foreclosures coming to the market, as there was after the housing crash in 2008. Here’s a look at why the number of foreclosures we’re seeing today is nothing like the last time.

1. There Are Fewer Homeowners in Trouble

Today’s data shows that most homeowners are exiting their forbearance plan either fully caught up on payments or with a plan from the bank that restructured their loan in a way that allowed them to start making payments again. The graph below depicts those findings from the Mortgage Bankers Association (MBA):

The same MBA report mentioned above estimates there are approximately 525,000 homeowners who remain in forbearance today. Thankfully, those people still have the chance to work out a suitable repayment plan with the servicing company that represents their lender.

2. Most Homeowners Have Enough Equity To Sell Their Homes

For those who are exiting the forbearance program without a plan in place, many will have enough equity to sell their homes instead of facing foreclosures. Due to rapidly rising home prices over the last two years, the average homeowner has gained record amounts of equity in their home.

Marina Walsh, CMB, Vice President of Industry Analysis at MBA, says:

“Given the nation’s limited housing inventory and the variety of home retention and foreclosure alternatives on the table across various loan types, . . . Borrowers have more choices today to either stay in their homes or sell without resorting to a foreclosure.”

3. There Have Been Fewer Foreclosures over the Last Two Years

One of the seldom-reported benefits of the forbearance program was it gave homeowners facing difficulties an extra two years to get their finances in order and work out a plan with their lender. That helped prevent the foreclosures that normally would have come to the market had the new forbearance program not been available.

Even as people leave the forbearance program, there are still fewer foreclosures happening today than before the pandemic. That means, while there are more foreclosures now compared to last year (when foreclosures were paused), the number is still well below what the housing market has seen in a more typical year, like 2017-2019 (see graph below):

4. The Current Market Can Easily Absorb New Listings

When the foreclosures in 2008 hit the market, they added to the oversupply of houses that were already for sale. It’s exactly the opposite today. The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals:

“Total housing inventory at the end of March totaled 950,000 units, up 11.8% from February and down 9.5% from one year ago (1.05 million). Unsold inventory sits at a 2.0-month supply at the present sales pace, up from 1.7 months in February and down from 2.1 months in March 2021.”

A balanced market would have approximately a six-month supply of inventory. At 2.0 months, today’s housing market is severely understocked. Even if one million homes enter the market, there still won’t be enough inventory to meet the current demand.

Bottom Line

If you see headlines about the increasing number of foreclosures today, remember context is important. While it’s true the number of foreclosures is higher now than it was last year, foreclosures are still well below pre-pandemic years.

If you have questions, let’s connect to talk through the latest market conditions and what they mean for you.

Happy Father’s Day
little girl with dad dressed in super heroes, happy loving family, father and daughter playing outdoors, family values

It is 2022 and dad doesn’t want a tie and probably hasn’t since 1955. According to TheShelf.com, in 2020 ties were finally beaten as the most frequently gifted Father’s Day item. The pandemic caused self-care gifts for dad to be the new king of gifts.

So, what does dad really want now?

Fatherhood today is a study of evolution. Dads lead, guide, protect and love more than ever. Most new dads know how to play Minecraft and are willing to battle creepers and morning traffic to give kids what they need. So it makes sense that ties and razors are no longer the most desired gifts.

Dads today are more apt to appreciate brands like Lego and Levi’s over Barbasol and Gillette. But what they really want is time and experiences with people who matter to them. You’re better off giving your presence for a cool family experience (think – a day by the water or a trip to an artisan ice cream shop).

When asked, most dads indicated they’d love to have a meal with their kids. It doesn’t even have to be somewhere special; the go-to family restaurant or diner is just fine.

Whether you are celebrating a dad who is 26 or 60, it seems that the gift of time with family and friends will never go out of style.

Happy Father’s Day!

Appraisal Changes Coming January 2015. Read This and Understand How To Be Prepared. Don’t Read This and Learn The Hard Way!

I have had a lot of questions lately in regards to the upcoming changes to the appraisal process, known as the CU Program, with Fannie Mae.  Many of you watched this link:

http://thenationalrealestatepost.com/appraisal-time-bomb-coming-in-january-2015/

and after watching my email was full of questions on how this would effect upcoming transactions.  I decided to dig in and talk to the head of our appraisal department.  The key item to remember when dealing with HomeStreet is we own and operate our appraisal department, so our appraisers are hand selected by HomeStreet for the panel and have to pass rigorous standards in order to be a part of our panel.  “Our appraiser panel nearly rejects 1/3 of its applicants, so most of our panel has already been weeded out” as  per our head of appraisal department.  With that said what we believe at HomeStreet is the companies that do not own/operate their AMC’s, Appraisal Management Companies, will have issues due to lack of experience and whom is sitting behind the desk trying to review these appraisals and interpret this new change.  Below you will read the commentary straight from the head of all appraisal at HomeStreet and how we interpret the changes. Bottom line, HomeStreet Bank is positioned very, very well to tackle these changes and we can protect your sellers and buyers.

Tip:  If you are listing agent accepting offers you are looking pre approval letters from lenders whom own operate their appraisal panel.  Typically your large banks, brokers, and most correspondent lenders do not.  They use a 3rd party AMC typically.

Tip#2:  If you are working with buyers I would also make sure the lenders they are pre approved with have the above criteria as well.

Tip#3:  If you are working my team and HomeStreet Bank we will make sure to let the listing agents know on the offer going in we can help both their seller and agent navigate this new uncharted territory.

Here is the email from the head our appraisal department, Clark Dickson, in response to the upcoming CU changes:  (READ THIS)

My thoughts are that it is simply too early to determine how this all will affect appraisals/appraisers/mortgages, going forward.  As usual, there are always “The sky is falling” folks in the mix who always predict doom and gloom.

 

None of us here at the bank in the appraisal department has actually “seen” what CU will actually be.  All of us are aware of it and our compliance officer has been in any number of meetings and seminars to determine how it may affect us moving forward.

 

When I was in Las Vegas in November listening to the head FNMA appraiser discuss the implications of this “CU” program, he was downplaying it’s immediate influence.  The way he described it was as a double-check against appraiser’s choosing inferior comps, to inflate values and additionally, some minor level of insurance that the appraisers at least considered the most appropriate comps.

 

Generally, I believe that good appraisers, doing good appraisals, will be just fine, doing what they have historically done, provided that they explain what they did and why they did it.  To that end, we just finished an all-day seminar in both Carlsbad and Pasadena (and Fairfield/Dublin-Cathy), where we strongly encouraged appraisers to stop being form-fillers and gave them permission to become appraisers again.  This seminar was CA-approved for continuing education credits for appraisers.  We gave them specific language and techniques to more-strongly support their appraisals, along with a myriad of other issues.  Between the four venues, we had nearly 300 HomeStreet-only appraisers in, to re-learn how to work for us and provide well supported, credible appraisals for the secondary market.

 

FNMA appears to be trying to weed out weaker appraisers.  Our appraiser panel rejects nearly 1/3 of it’s applicants, so most of our panel has already been weeded out.

 

One of the assumptions made by the article below, is that AMC’s don’t have access to local data for ROV purposes and won’t be able to respond to the now-available 20 additional “low risk” comps.   Our experienced appraisal review team all have over 20 years of technical appraisal experience each, and we have MLS access to data for almost every area that we service.  In addition, our review team is residentially certified in all states that we serve.  We have three dedicated, experienced review appraisers stationed in or near Southern CA with MLS data for all So Cal counties.  We have three more in Northern CA.

 

It is a sure bet that many cost conscious AMCs will use low cost unlicensed staff to ‘review’ these computer generated comparables and ask for the originating appraiser to respond to any that have a lower ‘risk rank’ than the comparables selected by the appraiser.  This is not the case with us.  We will read the appraisal to determine if the appraisal has performed a reasonable analysis and supported his/her assertions in a credible manner, irrespective of computer generated printouts.  Based on all of the appraisal, we will question or have the appraiser respond to issues, based on sound reasoning and not a printout.

 

The directives from FNMA are that the neighborhood IS the neighborhood and that the data from the 1004MC (market conditions report) is dependent upon the actual sales data.  Irrespective of how they think they will be able to use CBG (Census Book Groups) to determine neighborhood data, they won’t.  It’s an apples-to-oranges comparison, which will never fit.

 

Every one of our HomeStreet appraisers on staff is already registered for THREE different units of FNMA training in January/February to become expert in CU.  Our compliance officer will keep us up to date and compliant.  But the sky is not yet falling and there is always a knee-jerk, over-reaction when these edicts come out from FNMA.

 

If there are truly issues to be addressed, then we will do so in a rational, compliant manner, leaving the sky where it belongs.  There is truly no need to panic at this point, although the dooms-dayers are already at it.