National Economic Trends and the Real Estate Professional

RE34RC03

Jody OBrien

Legacy from 2005 and beyond

New MA Foreclosure Law} Eaton Affadavit} Loan modifications} 150 day wait} Must Activly persue loan modification} Certain Mortgage Loans (CML)

} A 3 Year (or less) ARM.} Interest only feature (equity lines excluded).} Negative amortization feature.} Did not require full documentation of income or assets.} Contains prepayment fees.} LTV >=90 and DTI > 38%.} CLTV >95%.

} Pre qualification versus Pre Approval} Metro Brokers Blog - Does Your Buyer’s Pre-Qualification

Hold Water? by Judy Jones

TRID- TILA-RESPA Integrated Disclosure} Good Faith Estimates (GFEs) and Truth in Lending

Disclosures will no longer exist. Those forms have been combined into what is called the “Loan Estimate” also known as the “LE”} This will primarily affect lenders, and will require the lenders to be held

accountable to the exact charges listed in this form.

} It also requires that the form be provided to the consumer within three days after receiving the following items: the consumers name; the consumer’s income; the consumer’s Social Security Number; the address of the property, the estimated value of the property; and the loan amount.

TRID- TILA-RESPA Integrated Disclosure

} The HUD-1 Settlement Statement will no longer exist. This form is being replaced by the “Closing Disclosure” also known as the “CD”} This form will contain similar information to the LE, and will

allow the consumer to compare the two documents} This form will have to be delivered to the consumer THREE full

days prior to closing. If changes to the document are necessary within this three-day period, closings could be delayed.

TRID- TILA-RESPA Integrated Disclosure} Recommend a 15 day extension to current time line} No back to back closings} Pay attention to the details } Get the bills in on time} MAR Integrated Disclosure

Interest Rates

Interest Rates

} Below 6% for five years} Hovered around 6% for over a decade} Interest rates will rise

All Cash Buyers

Average

Unemployment/underemployment

} Good news: the number of people who are unemployed for more than 6 months is falling.

} Bad news: the number of people with part-time jobs due to lack of full-time work remains high with no measurable declines.

Massachusetts  Housing  Market

VOLUME

$

Single-Family July 2015 July 2014 %Change

Sales 6,614 5,533 +19.5%

Median Price $365,000 $360,000 +1.4%

July  Closed  Sales:

Homeownership

Homeownership Rate} Homeownership Rates Have Fallen Across the Board, But

More Sharply Among the Young} Homeownership Rates Are Close to Historic Lows

for Most Age Groups, } Continued High Ownership Among Seniors Will Buoy

Overall Rate

Homeownership/ Boomers

} 51% of Boomers said they are ready to sell} 47% will stay in same area

Harvard  Elderly  Housing  Study• One  in  Five  Americans  will  be  65  or  over  by  2030

• Homeowners who  have  paid  off  mortgages  before  retirement  have  lower  housing  costs  and  have  equity  cushion  health  care  expenses

• Renters face  high  housing  costs  and  force  millions  of  low-­income  older  adults  to  sacrifice  spending  other  necessities,  including  food  and  health  care

Do  Elderly  have  Mortgage?

Effects of Rental Market

• Household  growth  is  heavily  skewed  toward  renters

Monthly  Pending  Sales  Index  …  Making  Upward  U-­Turn

(Seasonally  Adjusted)

Source:  NAR

Nationwide  Home  Price  Recovery(Almost  Doubled  over  20  years)

FHFA  Home  Price  Index

Second Homes/Investment Real Estate

} Largest amount of real estate equity} 25% own second piece of real estate} 5% own a vacation home} 39% say they intend to make their seasonal home their

primary residence

} U.S. homeownership rate dropped to 65 percent in the first quarter of 2013, its lowest point since 1995 - It peaked at 69.2 percent in the second quarter of 2004

} The rate was highest for people 65 and older, at 80.4 percent, and lowest for people under 35 years, at 36.8 percent.

U.S. Census Bureau

Household  Net  Worth($5,500  vs.  $195,500)

Source:  Federal  Reserve   Survey  of  Consumer  Finances

Homeowner  Households  from  2010  (Decreased  by  1  million)

In  thousands

Renter  Households   from  2010(Increased  by  4  million)  

In  thousands

Homeownership  Rate

Household Demographics} U.S. population } 2006 282 Million} 2050 420 Million} Need to add 90 Million housing units} Home sales of existing homes will rise from 7 million to

12 million in 2050

Household Demographics - MA

} Second highest personal income} Below average in new housing units} 47th in building permits} 1980 - 9% of the workforce was immigrants} 2004 - 17% of the workforce was immigrants

The Baby Boom Important Influence on the Shape of Housing Demand

Projected  Household  Growth  2010-­2020   (Thousands)  

Source:  JCHS  Working  Paper  W10-­9.

Home Price Trend} Supply v Demand

Source:  National  Association  of  REALTORS®

Age of Repeat Home Buyers HasSteadily Increased Nationally…

Aggregate Months Supply

Visible Existing Home Inventory(6-year lows)

Buyers and Sellers need:} Regain confidence} Hear a positive message} Be educated} Fiscally responsible} Hold the key to economic recovery

Thank you for Attending

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} Questions may be directed to training@commonmoves.com

} A copy of the presentation can be downloaded at www.slideshare.net/ReEducationCompany

Jody O’BrienThe RE/Education Company

Committed to Professionalism in Real Estate through Education

Blogwww.reeducator.wordpress.comPresentationwww.slideshare.net/ReEducationCompanySocial Mediawww.twitter.com/reeducatorwww.youtube.com/msreeducatorwww.facebook.com/reeducatorwww.linkedin.com/in/reeducator

Thank you for Attending