CFPB Takes Action Against Reverse Mortgage Lenders

The CFPB has long warned against deceptive reverse mortgage advertising

By Jeff Sorg, OnlineEd Blog

stack of 100 dollar bills(December 7, 2016) –  Today the Consumer Financial Protection Bureau (CFPB) took action against three reverse mortgage companies for deceptive advertisements, including claiming that consumers could not lose their homes. The CFPB is ordering American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial to cease deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay penalties.

“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” said CFPB Director Richard Cordray. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”

A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for payment of taxes, insurance and home maintenance, among other obligations.

The Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from engaging in deceptive acts or practices, including with regard to advertising of consumer financial products or services.

American Advisors Group – American Advisors Group, headquartered in Orange, Calif., is licensed in 49 states and the District of Columbia. It is the largest reverse mortgage lender in the United States. The company ran television advertisements almost daily and disseminated its information kit to approximately 1 million consumers. The information kit included a DVD and several brochures with information about reverse mortgage products.

Through its investigation, the CFPB found that since January 2012 American Advisors Group’s advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The company also falsely told potential customers that they would have no monthly payments and that with a reverse mortgage they would be able to pay off all debts. In fact, consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance. Moreover, a reverse mortgage is a debt and therefore cannot be used to eliminate all of a consumer’s debt.

Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $400,000.

Reverse Mortgage Solutions – Reverse Mortgage Solutions, headquartered in Houston, Texas, is licensed to conduct business in 48 states. The company marketed its product through various media, including television, radio, print, direct mail, and the Internet.

Through its investigation, the CFPB found that since January 2012 Reverse Mortgage Solutions’ advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The company also falsely told potential customers that they would have no payments with a reverse mortgage and that they would “always retain ownership” and “can’t be forced to leave.” In fact, consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance.

The CFPB also alleges that the company misrepresented that heirs would inherit the home, without disclosing any conditions of the inheritance. In fact, heirs frequently are not able to keep the home after the death of a consumer with a reverse mortgage. Heirs are only allowed to retain ownership of the home after the consumer’s death if they either repay the reverse mortgage or pay 95 percent of the assessed value of the home.

The company also created a false sense of urgency to buy the reverse mortgage product and misrepresented that time limits constrained the availability of a reverse mortgage. For example, one call script required representatives to tell potential customers that if they didn’t call back by close of business, they would “turn your file down and you will miss out on a tremendous money-saving opportunity.” In fact, it was not a limited time offer. Lastly, the company misrepresented that a reverse mortgage could “eliminate debt.” In fact, a reverse mortgage is a debt and therefore cannot be used to eliminate all of a consumer’s debt.

Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $325,000.

Aegean Financial – Aegean Financial, headquartered in El Segundo, Calif., is licensed to conduct business in California, Louisiana, Oregon, Texas, and Washington. The company also operates under multiple names in the jurisdictions in which it is licensed. Under the name Jubilados Financial, the company advertises reverse mortgages to Spanish-speaking consumers in California. Under the name Reverse Mortgage Professionals, the company advertises reverse mortgages in California, Oregon, Washington, and Texas. Aegean Financial markets its product across various media, including print, direct mail, radio, and the Internet.

Through its investigation, the CFPB found that since 2012, Aegean Financial’s advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The reverse mortgage broker also falsely told potential customers that they would have no payments with a reverse mortgage and claimed that consumers would not be subject to costs associated with refinancing a reverse mortgage. In fact, consumers who refinance reverse mortgages do incur costs, including credit report fees, flood certification fees, title insurance costs, appraisal costs, and other closing costs. And consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance.

The CFPB also alleges that the company falsely affiliated itself with the government in its Spanish-language advertisements. For example, one advertisement said, “if you are 62 years old or older and you own a house, we have good news for you; you qualify for a reverse mortgage from the United States Housing Department.” In fact, although the Department of Housing and Urban Development provides insurance for the most popular type of reverse mortgage, a reverse mortgage is not a government benefit or a loan from the government. Nor is the product endorsed or sponsored by the government. The disclosures associated with Aegean Financial’s advertisements were in small type or rapidly recited at the end of commercials. The CFPB also alleges that the company failed to keep records of its advertisements as required by law.

Under the terms of today’s consent order, the company cannot imply affiliation with the government, must make clear and prominent disclosures in its reverse mortgage advertisements, implement a system to ensure it is following all laws, and maintain complete and accurate records. It will also pay a civil penalty of $65,000.

A copy of the American Advisors Group consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_AmericanAdvisorsGroup-consentorder.pdf

A copy of the Reverse Mortgage Solutions consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_ReverseMortgageSolutions-consentorder.pdf

A copy of the Aegean Financial consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_AegeanFinancial-consentorder.pdf

The CFPB has long warned of the dangers associated with misleading and deceptive reverse mortgage advertising given the complexity of the product and the consumers to whom the product is offered. For example, in a June 2012 Report to Congress on Reverse Mortgages, the CFPB stated that “[f]alse and misleading advertising poses a serious risk to consumers.” The CFPB also published a June 2015 study, and accompanying advisory warning, reaffirming the risk to consumers as a result of deceptive and misleading reverse mortgage advertising.

[Source: CFPB press release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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How The Buyer Broker Gets Paid Their Fee

canstockphoto16101186-commissionA buyer broker is allowed to negotiate for a larger fee than offered through the multiple listing service

By Jeff Sorg, OnlineEd Blog

(December 7, 2016) – In Oregon, the source of the commission is not determinative of the agency relationship and a principal broker representing a buyer is free to receive compensation from the buyer or seller, the seller’s principal broker, or any combination thereof.

In the normal residential transaction, the listing principal broker contracts with the seller for a percentage of the sales price as compensation for the seller and buyer brokers. The seller pays this fee to the listing principal broker through escrow, usually from the proceeds of the sale. The listing principal broker then gives escrow instructions to pay the selling principal broker the fee the listing principal broker offered through their Multiple Listing Service (MLS), or as otherwise may be agreed to between the two principal brokers.

The buyer broker is allowed to negotiate for a larger fee from the listing principal broker than may be offered through the multiple listing service.

The amount the listing principal broker pays the buyer’s principal broker is usually offered through the MLS when the listing broker inserts the listing into its database, but the buyer broker is free to negotiate with the listing broker for a higher fee. Regardless of the fee offered, a buyer broker is required to show all properties meeting their buyer’s parameters. Because the listing principal broker might not offer any fee to the buyer’s broker, it’s good practice for buyer brokers to enter into buyer broker agreements with each buyer and to specify the minimum fee the broker will accept for their work. With a properly drafted buyer broker agreement, if the minimum fee is not covered by the fee offered by the listing principal broker, the buyer will owe the balance to their broker. When a buyer agrees to pay a fee and part or all of the fee is paid from another source, the amount paid from that source must be disclosed to the buyer and used to reduce the amount of the fee the buyer agreed to pay.

In Oregon, a real estate sale agreement written by a real estate broker should not be conditioned upon payment of a real estate commission or a certain amount to be paid to the buyer’s principal broker. Real estate sale agreements are between the buyer and seller and commission agreements or co-broker fee agreements are to be independent of contracts between the broker’s principals.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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Redfin Housing Demand Index Cooled in October

After a Strong September, Fewer Buyers Toured Homes and Made Offers in October

By Jeff Sorg, OnlineEd Blog

canstockphoto11274308-looking-at-houses(December 1, 2016) – The Redfin Housing Demand Index declined 3.5 percent to a seasonally-adjusted level of 100 in October, according to Redfin (www.redfin.com), the next-generation real estate brokerage.

A level of 100 represents the historical average for the three-year period from January 2013 to December 2015, meaning that current demand is at recent historical norms.

In October, the number of Redfin customers requesting home tours fell 3.7 percent from September, and the number of customers writing offers on homes fell 5.9 percent. Both of these measures posted double-digit increases in September.

One likely culprit is a shortage of homes to choose from, something that has put a damper on homebuyer enthusiasm month after month. Across the 15 metro areas tracked by the Demand Index, the number of homes listed in October was 9.5 percent lower than a year earlier. Those numbers dovetail with the shortages of homes reported in the most recent Redfin Real-Time Housing Market Tracker.

To read the full report, complete with charts, metro-level data and insights from local agents, please visit: https://www.redfin.com/blog/2016/11/housing-demand-cooled-in-october-dropping-to-a-three-year-average.html

Source: Redfin

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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Santa’s North Pole Home Now on Zillow

 Follow Santa’s Christmas Eve journey via the Official NORAD Santa Tracker from Santa’s home details page on Zillow

By Jeff Sorg, OnlineEd Blog

canstockphoto22717197santa-laptop(November 30, 2016) –  Today, Zillow announces that one of the most famous homes in the world — Santa Claus’ North Pole house — is now on Zillow.  With a Zestimate® home value of $656,957, Santa’s home is one of the most valuable residential properties in the Arctic.

Zillow was able to calculate a special Zestimate value for Santa’s one-of-a-kind house using comparable homes in remote locations and applying a Santa premium. The home has never been sold and is not on the market.

Santa Claus’ log cabin has three bedrooms and two bathrooms and measures 2,500 square feet — about 1,000 square feet larger than the average U.S. home. It sits on a unique, 25-acre lot in the North Pole and features a river rock fireplace, a gourmet kitchen and a wood-burning stove in one of the guest suites. The property also boasts a sleigh parking garage, stables and a world-class toy workshop.

“Santa’s home in the North Pole is one of the most famous homes in the world, so we’re thrilled it’s now on Zillow,” said Zillow Chief Marketing Officer Jeremy Wacksman. “Millions of kids are looking forward to a visit from Santa this year, and now they have the opportunity to virtually visit Santa’s house themselves.”

To see Santa’s home, type “Santa’s house” into the search bar on Zillow.com. Visitors can flip through a photo gallery of the home and watch a video walkthrough to get a sense of the home’s flow. Santa’s house is not for sale, but by claiming his home, Santa was able to update his home’s facts and add photos, which can impact his Zestimate value.

Additionally, children can start following Santa’s Christmas Eve trek delivering presents around the world via the Official NORAD Santa Tracker, right from Santa’s home detail page on Zillow. This feature is a result of Zillow’s partnership with NORAD Tracks Santa, which has been following Santa’s annual journey for the past 61 years.

“We track Santa as he makes his journey around the world every holiday season and ensures he returns home safely,” said Preston Schlachter, spokesperson for NORAD Tracks Santa. “Santa puts a lot of miles on his sleigh delivering gifts all over the country, and we’re excited to partner with Zillow this holiday season to give families around the world a behind the scenes look at Santa’s home base.”

Zillow forecasts that Santa’s home will appreciate 2.2 percent over the next year, in line with forecasted home value growth in the United States.

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Zillow and Zestimate are registered trademarks of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Home Purchase Sentiment Index Drops Again

Consumers Say Now is a Good Time to Buy or Sell a Home

(November 9, 2016) – WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) dipped 1.1 points to 81.7 in October, the third decrease in as many months. Four of the six components that comprise the HPSI fell during the month. The share of consumers reporting significantly higher income over the past year experienced the largest drop, decreasing eight percentage points on net. The net share of consumers expecting home prices to go up in the next year fell three percentage points, and those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by one percentage point in October. However, more consumers said they believe now is a good time to buy and a good time to sell a home – increasing two and four points on net, respectively.

“The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March. Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate. Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index. However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future.”

Source: Fannie Mae news release.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Real Estate Brokers Influence Lender Choices for Their Clients


Eighty-four percent of real estate professionals have a select group of lenders to which they generally refer their clients

By Jeff Sorg, OnlineEd Blog

(Novreal estate continuing educationember 7, 2016) – Most real estate professionals refer clients to a select group of lenders and they choose those companies based on the ease of doing business with them, their reputations, an
d the strength of those relationships, according to a survey commissioned by Freddie Mac (OTCQB: FMCC).
Eighty-four percent of real estate professionals have a select group of lenders to which they generally refer their clients. Of these, 73 percent have 1-3 lenders in their network and 24 percent work with 4-6 lenders. More than three-quarters (76 percent) say their clients always or often use their recommended lender referrals. This figure climbs to 87 percent among those who sell more than 20 properties per year.

In advance of the National Association of REALTORS® annual conference taking place in Orlando, FL, Freddie Mac commissioned a survey of licensed U.S. real estate professionals about a variety of topics including the challenges of growing their business and their views on the role they play in the homebuying process.

More than 80 percent of real estate professionals said their clients trust their knowledge of the area, their ability to help them find a home and their ability to show them the right homes for their needs. Seventy-eight percent see themselves as an advisor capable of assisting clients with their navigation of the homebuying process.

At the same time, 35 percent said they feel challenged by clients’ lack of understanding of the homebuying process.

Only 38 percent of real estate professionals said their clients would find them to be a trusted advisor who could help refer them for housing counseling if they need or want more education on the process.

Real estate professionals are somewhat less confident when it comes to educating buyers on the mortgage process (50 percent) and down payment assistance program options (30 percent).

When asked to identify the challenges they were experiencing in their jobs, here were real estate professionals’ top 5 responses*:
Attracting potential buyers 55 percent
Attracting potential sellers 55 percent
Selling within the length of time planned 32 percent
Establishing the right listing price 28 percent
Helping potential buyers navigate the home buying process 25 percent
When asked to identify the challenges they were experiencing with potential homebuyers, here were their top 5 responses*:
Not enough homes available for buyers in their price range 55 percent
Clients having unrealistic expectations of what they can afford 52 percent
Clients not having enough money for a down payment 42 percent
Potential homebuyers not qualifying for a mortgage due to a poor credit history 38 percent
Clients’ lack of understanding of the home buying process 35 percent
*Responses do not add up to 100 because survey participants were allowed to select multiple responses.

“The survey reaffirms just how important real estate professionals are to families throughout the homebuying process,” said Jeffrey S. Markowitz, Freddie Mac’s Vice President of Government and Industry Relations. “We want to help them clear the path to the closing table by providing information that may allow them to provide even more options to their clients and grow their business.”

The Freddie Mac Real Estate Professionals Resource Center provides information to help individuals boost referrals, including customizable marketing templates, and educational materials about the homebuying process in English and Spanish. It offers descriptions of available mortgage products for a variety of client needs as well as an overview of down payment assistance programs by state. For those interested in expanding their businesses, the site also provides information on how to sell or list a foreclosed property.

For more information, conference attendees are invited to visit Freddie Mac at booth #1285 at the Orange County Convention Center.

GfK conducted an online survey on behalf of Freddie Mac Sept. 6-20, 2016, resulting in 502 online interviews completed by U.S. real estate professionals who were focused on the residential real estate market (or residential and commercial markets equally) and who were at least somewhat knowledgeable about the mortgage process. The survey results discussed above are based, in part, on conclusions reached by GfK through analysis of the consolidated responses.

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Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for approximately one in four home borrowers and is the largest source of financing for multifamily housing. Additional information is available at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

White and Asian Borrowers More Likely to be Approved for a Conventional Loan

Black and Hispanic applicants twice as likely to be denied mortgages

By Jeff Sorg, OnlineEd Blog

(November 3, 2016 – Zillow) White and Asian borrowers are more likely to be approved for a conventional loan than black or Hispanic borrowers, according to the latest federally released data from the Home Mortgage Disclosure Act (HMDA). The disparity persists despite improvements in mortgage access for borrowers over the last few years.

In 2015, 22.4 percent of black applicants were denied conventional loans according to HMDA data. In 2010, 30.5 percent of black applicants were denied. Among Hispanic applicants, 17.3 percent were denied in 2015, down from 25 percent in 2010.

By comparison, 10.4 percent of all conventional loan applications were denied in 2015, a drop from 14.2 percent in 2010.

“Even though conditions have improved over the past few years, getting approved for a mortgage is still a significant barrier for some would-be buyers,” said Zillow Chief Economist Dr. Svenja Gudell. “Owning a home is an important way for the middle class to build personal wealth. It’s encouraging to see more black and Hispanic borrowers getting approved for mortgages, but there’s still a lot of progress that needs to be made.”

The problem is so entrenched that last week Fannie Mae and Freddie Mac announced programs designed to improve access to credit for these groups, which have historically had the lowest homeownership rates even though they are more likely to place a higher value on owning a home.

According to the Zillow® Housing Confidence Index, 68 percent of Hispanic respondents and 65 percent of black respondents considered homeownership necessary to living the American Dream. By comparison, 59 percent of white respondents and 58 percent of Asian respondents felt the same.

Homeowners are becoming increasingly diverse, data from the Zillow Group Consumer Housing Trends Report show. Even so, the homeownership gap between black and white households is as wide in 2016 as it has been for the past century[iii].

Metro Denial Rates for All Conventional Applications in 2015 Denial Rates for Conventional Loans from Asian Applicants in 2015 Denial Rates for Conventional Loans from Black Applicants in 2015 Denial Rates for Conventional Loans from Hispanic Applicants in 2015 Denial Rates for Conventional Loans from White Applicants in 2015
United States 10.4% 11.1% 22.4% 17.3% 8.7%
Atlanta, GA 9.6% 9.6% 18.9% 13.1% 7.1%
Baltimore, MD 8.1% 10.0% 16.6% 11.9% 6.2%
Boston, MA 7.0% 7.9% 17.2% 14.9% 6.0%
Charlotte, NC 8.8% 9.1% 16.0% 16.2% 7.0%
Chicago, IL 9.7% 10.7% 24.7% 18.6% 7.6%
Cincinnati, OH 8.6% 8.1% 19.8% 11.9% 7.9%
Cleveland, OH 7.7% 8.8% 19.4% 11.8% 6.7%
Columbus, OH 9.0% 10.6% 15.6% 22.0% 8.0%
Dallas-Fort Worth, TX 8.3% 9.5% 16.6% 11.9% 6.3%
Denver, CO 6.7% 8.2% 13.3% 10.3% 5.7%
Detroit, MI 9.9% 11.1% 21.0% 11.1% 8.6%
Houston, TX 9.9% 12.0% 17.7% 14.6% 6.9%
Indianapolis, IN 6.9% 9.7% 16.5% 16.0% 5.8%
Kansas City, MO 6.3% 9.9% 16.0% 14.3% 5.2%
Las Vegas, NV 12.8% 15.6% 17.3% 13.3% 10.3%
Los Angeles-Long Beach-Anaheim, CA 11.0% 11.1% 16.6% 12.9% 9.9%
Miami-Fort Lauderdale, FL 18.1% 18.7% 25.9% 20.4% 13.9%
Minneapolis-St Paul, MN 5.2% 7.2% 14.5% 13.1% 4.4%
Nashville, TN 6.9% 9.7% 16.5% 14.4% 5.9%
New York, NY 12.8% 13.8% 24.0% 19.7% 10.5%
Orlando, FL 13.6% 17.5% 22.5% 19.0% 10.7%
Philadelphia, PA 8.2% 11.4% 20.2% 13.8% 6.3%
Phoenix, AZ 9.5% 9.9% 16.8% 13.2% 8.3%
Pittsburgh, PA 7.2% 6.6% 11.7% 6.5% 6.8%
Portland, OR 6.1% 8.9% 10.3% 11.4% 5.2%
Riverside, CA 11.6% 14.8% 15.3% 13.4% 9.0%
Sacramento, CA 9.4% 13.0% 14.9% 12.8% 7.8%
San Antonio, TX 11.5% 9.2% 16.1% 16.7% 8.3%
San Diego, CA 10.2% 10.4% 16.0% 14.6% 9.6%
San Francisco, CA 8.5% 10.2% 17.6% 13.1% 6.6%
San Jose, CA 9.0% 9.3% 7.7% 11.8% 7.2%
Seattle, WA 8.1% 9.8% 19.2% 11.8% 7.2%
St. Louis, MO 8.0% 11.2% 25.0% 15.2% 6.7%
Tampa, FL 14.2% 15.9% 26.6% 18.1% 12.4%
Washington, DC 7.5% 8.8% 15.4% 12.3% 5.0%

SOURCE Zillow

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Zillow is a registered trademark of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

First-time Buyers, Single Women Gain Traction in NAR’s 2016 Buyer and Seller Survey

 For-sale-by-owner transactions remained at an all-time low for the second straight year

canstockphoto4568934woman-moving

(November 1, 2016) – WASHINGTON  — The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.

This is according to the National Association of Realtors®’ annual Profile of Home Buyers and Sellers, which also found that for-sale-by-owner transactions remained at an all-time low of 8 percent for the second straight year. Nearly 90 percent of all respondents worked with a real estate agent to buy or sell a home.

The 2016 edition of NAR’s Profile of Home Buyers and Sellers continues the longest-running series of national housing data evaluating the demographics, preferences, motivations, plans and experiences of recent home buyers and sellers; the survey dates back to 1981. Results are representative of owner-occupants and do not include investors or vacation homes.

After slipping for three straight years, the share of sales to first-time home buyers 1 in the 2016 survey ticked up to 35 percent, which is the highest since 2013 (38 percent) and a revival from the near 30-year low of 32 percent in 2015. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent.

Lawrence Yun, NAR chief economist, says more new homeowners were able to break through what continues to be a laborious market for many trying to enter. “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” he said. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise. These factors were why more first-time buyers (67 percent) said a desire to own a home of their own was the primary reason for their purchase (64 percent in 2015; 53 percent in 2014).”

Added Yun, “Even with the affordability challenges many buyers face, the allure of homeownership is not lost among the younger generation. Those under age 35 made up 61 percent of first-time buyer transactions.”

Although the increase in new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low 2.

“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” added Yun.

Single female buyers on the mend, age of first-time buyers on the rise

As in year’s past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent years (based on household composition). After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases (highest since 2011 at 18 percent).

“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” said Yun. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”

The median age of first-time buyers in this year’s survey was 32, matching the all-time high last set back in 2006, and up from 31 the past five years. The typical first-time buyer had a higher household income ($72,000) than last year ($69,400) and purchased a slightly larger home (1,650-square-feet; 1,620-square-feet in 2015) that was more expensive ($182,500; $170,000 in 2015).

The typical repeat buyer was 52 years old (53 in 2015), earned $98,000 ($98,700 in 2015) and purchased a 2,000-square-foot home (2,020 square-feet in 2015) costing $250,000 ($246,400 in 2015).

Financing the purchase: buyers carrying more student debt; difficulty obtaining a mortgage on the decline

Down payment sizes have roughly stayed the same in recent years. In this year’s survey it was 6 percent for first-time buyers (third straight year) and 14 percent for repeat buyers (third time in four years). Fifty-nine percent of buyers financed their purchase with a conventional mortgage, and 33 percent of first-time buyers took out a low-down payment Federal Housing Administration-backed mortgage, which is down from 54 percent in 2011.

“Fewer first-time buyers (40 percent) compared to a year ago (45 percent) indicated that the mortgage application and approval process was somewhat or much more difficult than they expected,” highlighted NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “Those with healthy credit scores and manageable or little debt should talk to a lender to see if they qualify. They’ll likely discover that obtaining a mortgage isn’t quite the confusing and tiring inquisition it was in the years immediately after the downturn.”

Personal savings ranked first for both first-time buyers and repeat buyers as the primary source of their down payment. The second most popular source for first-timers was a gift from a friend or relative (24 percent; 27 percent in 2015), and for repeat buyers it was the sales proceeds from their previous residence.

Respondents reported that debt (all types) delayed saving for a down payment for a median of three years. For first-time buyers, 40 percent indicated they’re carrying student debt, with a typical amount of $26,000 ($25,000 in 2015). Furthermore, of the 26 percent of first-time buyers who said saving for a down payment was the most difficult task in the buying process, 55 percent said student debt delayed saving.

As NAR survey findings discovered earlier this year, even those financially able to make on-time payments on their student loans are struggling to save for a down payment, and many expect to be delayed from buying a home by over five years,” said Yun. “Repaying student debt could slow the path to homeownership even more for those living in markets with steep rents and home prices.”

The home search: buyers rely heavily on the internet and real estate agents; single-family homes are a top choice

This year’s survey convincingly proved once again that the two most popular resources for home buyers remain the internet (95 percent) and real estate agents (92 percent). Despite a record-high 51 percent of buyers saying they found the home they purchased online, most buyers who used the internet still ended up purchasing their home through an agent (90 percent).

Not surprisingly, mobile devices and tablets are increasingly becoming a resource for home buyers. Their usage lifted to 72 percent in this year’s survey, which is up from 61 percent a year ago and 45 percent in 2013. Furthermore, 58 percent of buyers indicated they found the home they purchased on a mobile app.

“Regardless of the plethora of online resources readily available at the click of a mouse or the swipe of a thumb, consumers serious about buying a home continue to seek the expertise and market insights that only a Realtor® can provide,” said Salomone. “Given the numerous competitive markets with minimal supply, it’s no surprise that both first-time and repeat buyers sought an agent for assistance finding the right home and negotiating the terms of the sale.”

Similar to recent years, the most common housing type continues to be a detached single-family home (83 percent for second straight year) and one in a suburban area (54 percent; 52 percent in 2015). Meanwhile, purchases of townhouses or row houses remained at 7 percent for the third straight year; only four percent of buyers purchased a condo.

Overall, the typical home bought was built in 1991 and had three bedrooms and two bathrooms. The share of buyers who purchased new home was at an all-time survey low of 14 percent.

Selling a home: seller use of an agent remains at all-time high; wanting a bigger house primary reason for selling

For the second straight year, 89 percent of sellers sold their home with an agent. This in turn — also for the second year in a row — kept for-sale-by-owner sales to their lowest share (8 percent) since the survey’s 1981 inception and below 10 percent since 2012.

“Although the imbalance of supply in relation to demand in recent year’s continues to put many sellers in the driver’s seat, they’re still looking for a Realtor® now more than ever to price their home competitively, market their home to the widest number of eyes possible and ultimately help close the deal within a given timeframe,” added Salomone.

The typical seller over the past year was 54 years old (unchanged since 2014), had a household income of $100,700 ($104,100 in 2015), and was in the home for 10 years before selling — a year longer than 2015 and matching the all-time high in 2014. Fewer sellers indicated they wanted to sell earlier but were stalled because their home had been worth less than their mortgage (12 percent versus 14 percent a year ago); the figure was 17 percent in 2014.

Sellers realized a median equity gain of $43,100 ($40,000 in 2015) — a 24 percent increase (23 percent last year) over the original purchase price. Homes sold after 21 years of ownership had the largest equity gain (124 percent or $127,600); underlining the volatility during the downturn, equity gains fell to 3 percent for owners who bought between eight and 10 years ago.

Back in the 2012 survey, it typically took respondents 11 weeks to sell their home. With tight inventory conditions gripping most markets once again over the past year, sellers were considerably more successful finding a buyer in a shorter amount of time, with homes typically on the market for only a month.

A tad more sellers traded up (44 percent) compared to last year (42 percent) and slightly more, at 32 percent, traded down (31 percent in 2015). Sellers moved a median distance of 20 miles — 72 percent stayed in the same state — and the most popular reason given for selling their home was it being too small (18 percent).

Feedback from sellers underscored once again that referrals and repeat business remain a large source of new opportunities for real estate agents. Nearly two-thirds of responding sellers either found their real estate agent through a referral by a friend, neighbor or relative, or used their agent from a previous transaction. Additionally, 85 percent of sellers indicated that they would definitely or probably use their agent again or recommend him or her to others.

NAR mailed a 132-question survey in July 2016 using a random sample weighted to be representative of sales on a geographic basis to 93,171 recent home buyers. Respondents had the option to fill out the survey via hard copy or online; the online survey was available in English and Spanish. A total of 5,465 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 5.9 percent. The sample at the 95 percent confidence level has a confidence interval of plus-or-minus 1.32 percent.

The recent home buyers had to have purchased a home between July of 2015 and June of 2016. All information is characteristic of the 12-month period ending in June 2016 with the exception of income data, which are for 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Source: National Association of REALTORS® press release

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Portland, Dallas, and Seattle Report the Highest Year-Over-Year Home Value Appreciation

Rents in Seattle are up just over 9 percent and in Portland, rents are up 7 percent

By Jeff Sorg, OnlineEd Blog

rising housing prices 1(October 20, 2016) –  U.S. home values are up 5.5 percent over the past year according to the September Zillow® Real Estate Market Reports. This is the fastest pace of appreciation in more than two years. The median value of a U.S. home is now $189,400.

Portland, Dallas, and Seattle reported the highest year-over-year home value appreciation among the 35 largest metros across the country. In Portland, home values rose almost 15 percent to a median value of $342,100. Home values in Dallas and Seattle appreciated 12 and 11 percent, respectively. For the first time, the median home value in the Seattle surpassed $400,000 and is now at $401,100.

Inventory has been falling steadily, with about 4 to 6 percent fewer homes for sale over the past several months. However, the bigger driver of home prices is increased demand. Sales have increased substantially since 2011, despite fewer homes on the market.

Bidding wars are commonplace in many housing markets across the country, as multiple buyers compete for the same home. According to the Zillow Group Consumer Housing Trends Report, only 46 percent of buyers get the first home on which they make an offer, and the home search takes an average of 4.2 months.

“Increasingly strong demand has been contributing to dwindling inventory stocks across the nation,” said Zillow Chief Economist Dr. Svenja Gudell. “Healthy demand for for-sale homes amidst low inventory has been driving the market, which is another sign that the housing market is recovering nicely. Buyers in the nation’s fastest moving markets can expect the search process to last a few months, as market conditions are often extremely competitive with homes selling for above asking price and receiving multiple offers. It’s definitely a seller’s market right now, with some homes being more expensive than ever.”

Rents are rising across the nation, but have slowed considerably over the past year. In September 2015, median rents were up 5.3 percent year-over-year but have since slowed to 1.5 percent annual appreciation. The median rent in the U.S. is now $1,403.

Seattle, Portland, and Sacramento reported the highest year-over-year rent appreciation among the 35 largest U.S. housing markets. Rents in Seattle are up just over 9 percent and in Portland, rents are up 7 percent. For the fourth month in a row, Seattle has the fastest year-over-year rent appreciation among the 35 largest U.S. housing markets.

Nationally, there are 6 percent fewer homes for sale than a year ago, with Indianapolis and Boston reporting the greatest drop in inventory. In Indianapolis, there are 26 percent fewer homes to choose from than a year ago, and 25 percent fewer in Boston.

Souce: Zillow®

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Zillow and Zestimate are a registered trademark of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Half of Today’s Home Buyers are Under 36

Millennials driving the housing market

By Jeff Sorg, OnlineEd Blog

canstockphoto36767385-millennial-male-1(October 18, 2016) –  Half of today’s U.S. home buyers are under 36 and reflect an increasingly racially diverse middle-class according to the first annual Zillow Group Report on Consumer Housing Trends.

As the U.S. housing market nears full recovery and the Millennial generation matures, 47 percent of people buying and 63 percent of those selling a home are doing so for the first time. These new buyers, sellers, and homeowners have old-fashioned aspirations, seeking a home that is both a good investment and a reflection of themselves. And they instinctively turn to internet research and social networks on and offline, approaching home ownership with both savviness and caution.

The 200-page Zillow Group Report on Consumer Housing Trends, which is free and available to the public, is a deep dive into the characteristics, aspirations and priorities of U.S. consumers when it comes to their homes. The report challenges longstanding conventional wisdom across all generations and sheds light on major demographic and economic trends and how they will affect the future of real estate.

“We knew the Millennial generation was playing an increasingly large role in the housing market,” said Zillow Chief Economist Dr. Svenja Gudell, “But this consumer research allows us to get a fascinating, behind-the-scenes look at how their expectations and approach are playing out in the housing market. These young adults came of age during a recession, but they are buying their first homes in a high-priced and fast-paced market. They’re using every available resource, including online research and real estate professionals, and taking on the challenge with gusto.”

“Young home buyers and sellers share their grandparents’ romantic notions about homeownership, and we’re finally seeing their home buying dreams come true in the data,” said Jeremy Wacksman, Zillow Group chief marketing officer. “These savvy consumers are doing things differently: they juggle shopping for homes to buy and rent at the same time, and they bring deep research and their vast social networks to the process.”

Here are some key findings from the report:

  • While shopping for a home, 52 percent of buyers said they also considered renting, and only 46 percent of buyers got the first home on which they made an offer, demonstrating that in today’s fast-moving market, disappointment and competition are now part of the process.
  • While 56 percent of buyers save up for a down payment a little at a time, 32 percent find savings are not enough and rely on other sources, such as gifts, loans, and cashing in their retirement savings.
  • Millennials, who will define the future of real estate, include their social networks in their real estate transactions and expect their real estate agents to help with more than logistics – looking to them for strategic advice and remodeling ideas.
  • First-time buyers rent longer than previous generations. When they do buy, they typically spend just as much as Baby Boomers on a home that is only slightly smaller than homes purchased by repeat buyers.
  • It’s not just Millennials who are shopping online for real estate. Nine out of 10 buyers and sellers under 65 depend on both real estate agents and online sites and apps.
  • Most Americans (83 percent) want a single-family home, and more than half (52 percent) live in the suburbs. Of home-owning Millennials, 47 percent live in the suburbs.
  • Renters are disproportionately women and people-of-color, and most make less than $50,000 a year. Their top concerns are budget, safety, and finding a home that allows pets.
  • The first annual Zillow Group Report is the largest-ever survey of U.S. home buyers, sellers, owners and renters, and asked more than 13,000 U.S. residents aged 18 to 75 about their homes – how they search for them, pay for them, maintain and improve them, and what frustrations and aspirations color their decisions.

Source: Zillow Group

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Zillow® is a Registered Mark of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark