More buyers turning to Realtors for home advice

WASHINGTON – Sept. 17, 2015 – More consumers use the Internet during their home search, but buyers also increasingly rely on the knowledge and expertise of a real estate agent, according to the National Association of Realtors®‘ (NAR) Real Estate in a Digital Age report.

“Research proves (that consumers) are still seeing the value a Realtor brings to the transaction, from the initial search to well after the closing,” says NAR President Chris Polychron. “So while consumers have more technological tools available at their fingertips, Realtors are now more than ever a part of the home buying and selling equation.”

The report found that “finding the right property” ranked as the most difficult step in the home buying process, and 40 percent buyers looked for properties online as their first step in the home buying process, up from 36 percent in 2010.

However, 88 percent of buyers in 2014 purchased their home with assistance from a real estate agent, up from 83 percent in 2010.

Buyer ages
While 94 percent of millennials and 84 percent of baby boomers used online websites during their home search, only 65 percent of adults age 69 to 89 years did the same. Older boomers, those aged 60 to 68 years, used a mobile device to search for properties at less than half the rate of millennials (30 percent versus 66 percent).

Online features
When it comes to website listing features, photos and online property information were more important to millennials, while virtual tours and direct contact with a real estate agent were more important to baby boomers. Despite visual content growing in popularity and importance, older homebuyers found virtual tours more useful than younger buyers (45 percent among older adults and baby boomers compared to 36 percent among millennials).

Length of the home search
Internet users tended to look at more homes and shop longer than non-Internet users. Millennials typically looked for about 11 weeks to find a home, while baby boomers and members of the Silent Generation (adults older than 69) searched for eight weeks. Those who used the Internet to search homes looked at 10 homes over a 10-week period versus four homes in four weeks for those not looking on the web.

Where buyers found their future home
Forty-three percent of buyers first found the home they ended up purchasing on the web; that number was just 8 percent in 2001. In 2001, nearly half (48 percent) of buyers found the home they purchased from a real estate agent; today that number is 33 percent.

Realtor tech communication
Realtors prefer to communicate with clients via email (at 93 percent) as well as text messages (85 percent) and instant messaging (31 percent).

Social networking
Social media is also popular with Realtors, though 70 percent of female Realtors are active on social media compared to only 58 percent of male Realtors. Some social media platforms are more popular than others among Realtors: Facebook and LinkedIn are most utilized by Realtors at 80 percent and 71 percent, respectively. Realtors active on social media do so for visibility/exposure/marketing (81 percent), building relationships and networking (66 percent), advertising (59 percent) and promoting listings (51 percent).

Realtors must adapt to technology to better work with and understand clients, but it’s not always easy: 46 percent of all real estate firms cite keeping up with technology as one of the biggest challenges they face over the next two years. That number is even higher for commercial real estate firms at 53 percent.

© 2015 Florida Realtors®

Banks loosen their standards for jumbo loans

NEW YORK – Aug. 7, 2015 – As lenders compete to capture more of the high-end housing market, J.P. Morgan Chase announced that it’s loosening its underwriting standards for issuing jumbo mortgages – those loans that exceed $417,000 in most parts of the country and $625,500 in pricier areas.

The bank says it’s lowering its minimum credit score and downpayment requirements for mortgages up to $3 million. Chase’s jumbo mortgage decision follows similar steps from Bank of America Corp., Wells Fargo and other banks.

As a result, the jumbo market is getting bigger. Jumbo originations in the second quarter climbed to an eight-year high of $93 billion – a 58 percent increase year-to-year, according to Inside Mortgage Finance estimates. Jumbo mortgages issued by lenders last year accounted for about 20 percent of all first-lien mortgages, up from 5.5 percent in 2009.

“There’s no question that the jumbo market has probably recovered more than any sector of the mortgage market since the housing crisis,” says Guy Cecala, publisher of Inside Mortgage Finance.

J.P. Morgan plans to lower its minimum FICO credit scores for jumbo mortgages from 740 to 680 for loans on primary single-family purchases, second homes and some refinances. The bank is also allowing a 15 percent downpayment for loans up to $3 million – less than other banks such as Bank of America and PNC Financial Services Group Inc., which allow a 15 percent downpayment for jumbo loans up to $1 million and $1.5 million, respectively.

The housing recovery has been strong in the higher-priced tier. Existing single-family home sales priced between $750,000 and $1 million rose 21 percent in June from a year prior, according to the National Association of Realtors®. Meanwhile, sales of homes priced between $100,000 and $250,000 rose 12.5 percent. Homes priced lower saw sales fall 3 percent.

Source: “J.P. Morgan Loosens Terms for Jumbo Mortgages,” The Wall Street Journal (Aug. 4, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Homeownership rate drops but probably hit bottom

 WASHINGTON – Aug. 3, 2015 – The U.S. homeownership rate continued to fall in the second quarter, reaching a 35-year low, according to a new Commerce Department report.
The seasonally adjusted homeownership rate dropped to 63.5 percent, falling from its 2004 peak at 69.4 percent.
However, economists are upbeat that change is on the horizon.
“The trend (of fewer and fewer homeowners) is not going to continue,” says Andres Carbacho-Burgos, a senior economist at Moody’s Analytics. “We think that the homeownership rate is close to bottoming out, but we don’t expect it to start rising substantially before 2017.”
Carbacho-Burgos credits a tightened labor market as one major reason for optimism, with the unemployment rate at a seven-year low of 5.3 percent and nearing the 5 percent range that most economists consider full employment.
The improvement in the job market will help boost wages, which will then have the trickle effect of bringing more first-time buyers into the housing market.
The job market has already helped to lift household formation, but most of that has been centered in the rental market. The residential rental vacancy rate dropped to 6.8 percent in the second quarter, the lowest since 1985.
The homeownership rate in the second quarter rose among Americans aged 35 years and younger. However, the rate fell for every other age group.
“As the millennials age, it’s expected they will start buying more homes and hopefully this is a sign that this trend is beginning,” says Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa.
Source: “U.S. Home Ownership Hits 35-Year Low, Renting in Vogue,” Reuters (July 28, 2015)
© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Many renters, landlords don’t understand rental laws

SEATTLE – March 11, 2014 – Demand for rental housing remains strong, but a survey by Zillow finds a lot of confusion over existing rental laws among landlords and tenants.

On average, renters and landlords answered about half of the survey questions incorrectly (47 percent incorrect for renters/50 percent for landlords) when asked about their respective rights and responsibilities.

• 82 percent of renters and 76 percent of landlords lack understanding of laws on security deposits, credit and background checks
• 77 percent of renters and 69 percent of landlords lack understanding of privacy and access rights
• 62 percent of renters and 50 percent of landlords lack understanding of laws on early lease termination

The survey included people who rent the home they live in (renters) and those who own the home they live in and plus one or more additional homes that they lease (landlords).

Renters and landlords alike demonstrated the least amount of knowledge about credit and background checks, security deposits, early lease termination, and privacy and access rights.

Both renters and landlords showed the most knowledge around discriminatory advertising for rentals, responsibility for repairs and maintenance, and requirements for terminating month-to-month agreements.

“It’s concerning that so many renters and landlords are signing a legal contract without fully understanding their basic rights,” says Carey Armstrong, Zillow director of rentals. In doing so, landlords and renters could be setting themselves up for future disputes and legal costs.”

Two major rental misconceptions

Misconception 1: Security deposit laws
Eight-two percent of renters and three-quarters (76 percent) of landlords said they believe the landlord has 60 days after a lease ends to refund a security deposit (or provide an itemized deduction statement and refund the balance).

Truth: In most states security deposits must be returned between 14 and 30 days. In Florida, a landlord that does not intend to impose a claim on the security deposit has 15 days to return it together with interest if otherwise required.

Misconception 2: Early lease termination
Nearly two-thirds of renters (62 percent) and half of landlords (50 percent) said the landlord has the right to terminate a lease in order to rent the home to his or her family member.

Truth: Landlords may not evict a tenant during the term of the lease simply because they would prefer to rent the unit to a friend or family member, or even to someone willing to pay higher rent.

© 2014 Florida Realtors®

Study: Vacation rental owners making more money

AUSTIN, Texas – April 1, 2014 – In industry research from the “HomeAway Vacation Rental Report: Owner Edition,” HomeAway Inc. reports strong performance of its vacation rental owners during the 2013-2014 winter season, and predicts a strong 2014 summer season.

The top vacation markets with the highest traveler demand are, not surprisingly, in Florida, HomeAway says. It claims 39,159 vacation home listings in the Sunshine State.

Bookings and profits

• More than eight in 10 vacation rental owners (84 percent) report that this year’s bookings are about the same or better than the previous year.

• 93 percent of owners says they did not lower rental rates from last winter, and 21 percent of owners raised their rates.

• Owners who say winter is their peak rental season had a 70 percent occupancy rate. In comparison, Smith Travel Research reports that overall U.S. hotel occupancy rates averaged 57.5 percent booked in the fourth quarter of 2013 and 60.2 percent thus far in 2014 1.

• More than half (54 percent) of the owners surveyed who had a mortgage covered at least three quarters of their mortgage payment from renting their home – an increase of nine percent year-over-year from 2012. Additionally, about two-thirds (65 percent) cover at least half of their mortgage payment.

“What stands out to me from this year’s survey the most is not only the consistency we see year-over-year with successful bookings, but those bookings are taking place at gradually higher rental rates each year,” says Brian Sharples, co-founder and chief executive officer of HomeAway.

Vacation rental profits

• On average, HomeAway vacation rental owners charge a weekly rental rate of $1,520 ($217/night) and make their home available to guests for an average 36 weeks each year – an annual rental income of $27,360 for the average owner.

• 65 percent of owners says their goal for renting the vacation home is to “cover some” or “all of my expenses.” A profit is especially important to 19 percent of those owners.

Expenses and time

• The average owner spends $961 per year to market their vacation rental, which includes costs for listing site subscriptions, local print advertising, property manager fees and paid search efforts.

• Assuming an average annual income of $27,360, the cost to market a vacation rental is 3.5 percent of total rental revenue.

• Vacation rental owners spend an average of nine hours per week marketing and managing their vacation rental properties.

“It’s interesting to note just how much profit is made from the work our owners put into their vacation rental operations,” says Sharples. “With ROI as strong as $84 per hour, the efforts you’re putting into the marketing and management of your property reflect in your bottom line.”

Future retirement homes

• 14 percent of respondents purchased their vacation rental as a future retirement home.

• The average buyer age was 47 years – a drop of seven years compared to two years earlier.

• The average age when owners started renting their vacation home was 50 years – the same as in 2013 but six years younger than owners in 2012.

• 65 percent of owners spent more than two weeks in their vacation home over the last year.

Renter attributes

• 59 percent of owners cite the location of their homes in beach communities.

• Guests typically book a vacation rental 90 days before their trip, making March and April the prime summer booking months.

• Currently, more than half (52 percent) of owners have booked 50 percent or more of the upcoming summer season.

Florida rentals

• A few smaller Florida vacation markets have emerged on this summer’s list including, Mexico Beach, Cape San Blas and Cape Canaveral – all favored for families and groups.

This summer’s top growth markets for increases in vacation rentals stretch from coast to coast. Appearing on both the top markets for travelers and for increased vacation rental listings is Cape San Blas, Fla. and Lavallette, N.J., showing a strong rebound from Hurricane Sandy nearly a year-and-a-half ago.

Top 10 markets for overall rental demand

• Mexico Beach, Fla. (Panhandle)
• Cape San Blas, Fla. (Panhandle)

• Lavallette, N.J.
• Cape Canaveral, Fla.
• Moonridge, Calif. (Big Bear)
• Balboa Peninsula, Calif.
• Manteo, N.C. (Outer Banks)
• Cocoa Beach, Fla.
• Point Pleasant Beach, N.J.
• Crested Butte, Colo.

Top 10 markets seeing the greatest increase in rental demand

• Dauphin Island, Ala.
• Moab, Utah
• Cape San Blas, Fla. (Panhandle)
• Winter Park, Colo.
• Bryson City, N.C.
• South Padre Island, Texas
• Lavallette, N.J.
• Carolina Beach, N.C.
• Clearwater Beach, Fla.
• Park City, Utah

Fla. recreational, ranchland transactions down, prices up

LAKELAND, Fla. – April 3, 2014 – The volume of sales transactions for recreational and ranchlands in Florida is down 50 percent over the past year, but the median price per acre is higher, according to statewide 2013 land sales data compiled and reported in the 2014 “Lay of the Land” Market Report.

This and other key facts important to buyers, sellers and developers will be discussed during the Lay of the Land Conference on Friday, April 4, 2014, at the Streamsong Resort in Polk County.

Florida Realtors Research Economist Brad O’Connor will address Florida’s residential real estate market in 2014 as one of the featured speakers.

“Since 2010, we have been compiling and verifying sales of large tracts of Florida land to help buyers, sellers and developers understand their market value,” says Dean Saunders, owner/real estate broker of Coldwell Banker Commercial Saunders Real Estate. “This is the only verified data available to enable smart transactions when it comes to Florida land sales.”
 
The Lay of the Land Conference where the 2014 Market Report will be unveiled is held annually.

“The Lay of the Land Market Report is outstanding,” says Robert Thomas, chair of the Florida Land Council. “It provides concise and accurate information on a broad spectrum of land use and values and is an important and very valuable resource for Florida land owners.”

For more information about the Lay of the Land Conference, visit its website.

© 2014 Florida Realtors® 

U.S. foreclosure inventory down 35% year-to-year

IRVINE, Calif. – CoreLogic released its February 2014 National Foreclosure Report.

“Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories,” says Dr. Mark Fleming, chief economist for CoreLogic. “Every state has had double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory.”

“The stock of seriously delinquent homes and the foreclosure rate are back to levels last seen in the final quarter of 2008,” adds Anand Nallathambi, president and CEO of CoreLogic. “The shadow inventory has also declined year over year for the past three years as the housing market continues to heal, including double-digit declines for the past 16 consecutive months.”

Feb. National Foreclosure Report details

• The U.S. had 43,000 completed foreclosures in February, down from 51,000 in February 2013, for a year-over-year decrease of 15 percent.

• On a month-over-month basis, completed foreclosures decreased 13.1 percent from 50,000 in January.

• National residential shadow inventory – seriously delinquent, in foreclosure or held as REOs by mortgage servicers, but not yet listed on multiple listing services (MLSs) – was 1.7 million homes in January 2014 compared to 2.2 million year-to-year – a decrease of 23 percent.

• In February 2014, about 752,000 U.S. homes were in some stage of foreclosure, known as the foreclosure inventory (not completed foreclosures), compared to 1.2 million in February 2013 – a year-over-year decrease of 35 percent.

• Month-over-month, the foreclosure inventory was down 3.3 percent from January 2014.

• The February foreclosure inventory represented 1.9 percent of all homes with a mortgage, compared to 2.9 percent in February 2013.

• At the end of February, 1.9 million mortgages or 4.9 percent were in serious delinquency, defined as 90 days or more past due, including those loans in foreclosure or real estate owned (REO).

Regional highlights

• The five states with the highest number of completed foreclosures for the 12 months ending February 2014 were Florida (118,000), Michigan (50,000), Texas (39,000), California (37,000) and Georgia (34,000). Altogether, the five states accounted for almost half of the nation’s completed foreclosures.

• The District of Columbia (60 foreclosures), North Dakota (421), Hawaii (519), West Virginia (571) and Wyoming (705) had the lowest number of foreclosures.

• As a percentage of all mortgage homes, Florida ranked second (6 percent) compared to New Jersey (6.2 percent) in total foreclosure inventory, followed by New York (4.7 percent), Maine (3.4 percent) and Connecticut (3.2 percent).

• Wyoming (0.3 percent), Alaska (0.4 percent), North Dakota (0.5 percent), Nebraska (0.5 percent) and Colorado (0.6 percent) had the lowest foreclosure inventory.

Shadow inventory

• As of January, year-over-year inventory of seriously delinquent homes decreased in all states by double digits.

• Twenty-four states had year-over-year declines of at least 20 percent.

• Year-over-year, the shadow inventory is down 22 percent.
 
• For the year ending in January, shadow inventory has decreased at an average monthly rate of 41,000 units.

Florida has 15 percent of the nation’s distressed properties, with an additional four states – California, New York, New Jersey and Illinois – accounting for 42 percent.

© 2014 Florida Realtors® 

New buyer question: Is my data secure?

CHICAGO – April 7, 2014 – The issue of data security is hot in the nation’s capital – from the Data Security and Breach Notification Act of 2013 to the CEO of Target Corp being hauled to The Hill for grilling over his company’s recent security breach. Even the White House is getting involved, shopping around a consumer privacy bill of rights.

But it’s not just Washington. Americans stung by the loss of personal data have started to worry about the private information they give out, and many want to know how a Realtor protects that data from hackers.

During the first Tech Edge event held at the National Association of Realtors® (NAR) headquarters in downtown Chicago, NAR Senior Technology Policy Representative Melanie Wyne says, “Clients today are smart and savvy. They want to know what you’re doing to keep their data safe.”

Real estate professionals need to make sure they secure clients’ drivers license numbers, earnest money checks, HUD1 forms, rental applications, and any mortgage broker/lender information they may have on behalf of their customers.

“You’re responsible for the security of the information that you collect,” says Wyne.

Forty-six states currently have data breach laws on the books. But really, it doesn’t matter what state you live in, Wyne says. If an agent or broker is dealing with a client who lives in Indiana, they need to be sure they’re using that data in a way that complies with Indiana’s laws.

That’s why many in the business community, especially national companies, are for the most part happy to see Washington getting involved, Wyne says. “Industry is asking to be regulated … if you’re a business that is national, you’d rather deal with a national law.”

“I’m going to scare you a little bit… this is an issue that really no one in our industry is paying attention to,” Wyne says. “The good news is that there are tech tools that can help you.”

Wyne suggests employing a data encryption system, which basically “scrambles up your system” so that only someone with a passkey can read it. For those wanting to learn more about encryption, Wyne says do a quick search of lifehacker.com for encryption tools.

Another easy solution is to simply not collect as much data as you do, and only store it for as long as you absolutely need it. Just because there’s a space on the form for it, does it mean it’s necessary? “Think about what you’re collecting and why you’re collecting it,” she says.

Source: Meg White, Realtor® Magazine

© 2014 Florida Realtors®