4 Buzzworthy Industry Conversations

Posted on | May 4, 2016

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Here are some conversations we hear buzzing in the market and on the newswire.

Inventory

Tight inventory continues to be a challenge for buyers. In many areas, this is especially difficult for first time home buyers as the entry-level to mid-priced homes are currently the hardest to find.

“Overall, the housing market nationwide has about a four-month supply of existing homes for sale, according to NAR. Most economists consider six months to be a more balanced, healthy housing market.”

The lack of homes on the market also creates challenges for real estate agents representing both buyers and sellers as they try to navigate the maze of multiple offers.

Home Prices

Directly tied to inventory is the upward movement of prices. These factors naturally go hand in hand as buyers duke it out for the homes that are available.

The Freddie Mac April, 2016 Outlook predicts, “Home prices will rise by 4.8 in 2016 and by another 3.5 percent in 2017”. This is a positive for homeowners who could see gains in their equity.

On many transactions everybody has to hold their breath as they wait for the appraisal, hoping it will support offers submitted over asking price and / or pushing the limits of market values.

A Growing Agent Force

With a strong market comes an influx of newly licensed real estate agents. Looking at historic data provided by NAR, we can see the number of agents peaked in 2006 and bottomed out in 2012. Since 2012 the numbers have been on the rise.

NumberofAgents
Data from NAR Monthly Membership Report

Inman conducted a recent survey over concerns about the failure rate of new agents.  They published their results in a special report: How to fix new-agent onboarding.

One of the key takeaways, “The area where new agents seem to struggle most is lead generation: 47 percent of respondents said including lead generation is critical in initial training, and 37.55 percent said lead generation was the most important area to work on in ongoing training.”

Identifying the areas of concern for new agents creates an opportunity to offer the help they need to succeed.

Know Before You Owe / TRID

As we’ve settled into a rhythm after the implementation of TRID in October, 2015 the industry is discovering what is working and what can be improved upon.

Richard Cordray, Director of CFBP has been collaborating with industry professionals and recently stated in a letter addressed to industry trades and their members, “We believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity. Accordingly, we have begun drafting a Notice of Proposed Rulemaking on the Know Before You Owe rule.” This rulemaking is targeted to be issued July, 2016.

While this implementation has greatly improved the clarity of information provided to borrowers, the way that title insurance premiums have to be calculated in about half of the states has proven to be very confusing.

ALTA issued a statement to CFBP: “ALTA’s primary goal for proposed adjustments to TRID (Know Before You Owe) this July is ensuring consumers receive clear information about their title insurance costs on the closing disclosure. The current disclosure calculation is inconsistent with the Bureau’s mission to inform consumers about the true costs of their real estate transaction.”

“ALTA appreciates Director Cordray and the CFPB stepping up to the plate and committing to provide more clarity on TRID. We value their openness in this process moving forward. We have worked closely with the Bureau for over five years on TRID. We are committed to continuing our conversation with Director Cordray and the CFPB staff to correct the calculation of title insurance policy premiums on the mortgage disclosures this summer.”

Alphabet Soup:

TRID: Truth in Lending + Real Estate Settlement Procedures Act + Integrated Disclosures

CFBP: Consumer Financial Protection Bureau

ALTA: American Land Title Association

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This content is provided for informational purposes only and is not to be construed as legal, financial, or real estate advice.

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