Voice for Real Estate – Conference, Tax Reform, Mortgage Market

House Republican tax reform legislation was introduced as REALTORS® met in Chicago for their 2017 Conference & Expo. NAR opposes the legislation because it will hurt homeowners. Also, a REALTOR® testified before Congress on how to improve the secondary mortgage market.

American Dream Revised: New Study Says Homeowners Shouldn’t Count on Property Appreciation Creating Wealth

Home Ownership Should be Seen More as Forced Savings, Says FAU Expert

Boca Raton, FL – Nov. 16, 2017 (PRNewswire-USNewswire) The American Dream of homeownership as the path to creating wealth may be due for a revision. A new study by faculty at Florida Atlantic University, Florida International University and the University of Wyoming finds that the property appreciation most homeowners expect when buying a home may be relatively meaningless in terms of building wealth.

The study, published in the Journal of Housing Research, found that households through their own actions have more control over their overall wealth than do uncontrollable market variables. That is, any gains from property appreciation have been historically offset by greater gains in the stock and bond markets.

“When considering buying and building wealth through equity appreciation versus renting and reinvesting in a portfolio of stocks and bonds, property appreciation does not change the results,” said study co-author Ken Johnson, Ph.D., real estate economist at FAU’s College of Business and co-developer of the Beracha, Hardin and Johnson Buy vs. Rent Index. “On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds.”

So, the old adage that those who choose not to buy a home are “throwing their money away on rent” isn’t necessarily true. That statement inherently assumes that any monies that someone would have used for a down payment and/or any rent savings are spent on consumption. But what if the renter instead reinvests those monies and earns a return?

“When you assume that those monies are reinvested at a rate of return, renting, on average, wins in terms of wealth creation,” Johnson said.

The analysis showed that households that are likely to not reinvest buy-rent cash differentials should mostly own rather than rent their primary residence as ownership forces them to save.

“The American Dream is alive and well but in need of revision,” Johnson said. “To that end, we suggest not all but most should own rather than rent due to ownership’s embedded commitment to save. Owning real estate should be sold as a strategy to create better set of risk-adjusted returns rather than create wealth alone.”

Seriously Underwater U.S. Properties Decrease By 1.4 Million From A Year Ago In Q3 2017

Biggest Year-over-Year Drop in Number of Seriously Underwater Since Q2 2015; Share of Equity Rich Properties Increases to New High of 26 Percent

Irvine, CA – Nov. 16, 2017 (PRNewswire) ATTOM Data Solutions, curator of the nation’s largest multi-sourced property database, today released its Q3 2017 U.S. Home Equity & Underwater Report, which shows that at the end of the third quarter of 2017 there were 4.6 million (4,628,408) U.S. properties that were seriously underwater (where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 800,000 properties from the previous quarter and down by more than 1.4 million properties from Q3 2016 — the biggest year-over-year drop since Q2 2015.


The 4.6 million seriously underwater properties at the end of Q3 2017 represented 8.7 percent of all U.S. properties with a mortgage, down from 9.5 percent in the previous quarter and down from 10.8 percent in Q3 2016.

“Accelerating home price appreciation this year is increasing the velocity at which seriously underwater homeowners are recovering home equity lost during the Great Recession,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013. Continued home price appreciation is also helping to grow the number of equity rich homeowners across the country compared to a year ago.”

26 percent of U.S. properties were equity rich in Q3 2017
There were more than 14 million (14,030,394) U.S. properties that were equity rich — where the combined loan amount secured by the property was 50 percent or less of the estimated market value of the property — down slightly from the previous quarter but still up by 905,000 compared to a year ago.

The 14 million equity rich U.S. properties represented 26.4 percent of all U.S. properties with a mortgage, up from 24.6 percent in the previous quarter and up from 23.4 percent in Q3 2016.

Highest share of equity rich properties in Hawaii, California, New York, Oregon, Washington
States with the highest share of equity rich properties were Hawaii (41.9 percent); California (41.4 percent); New York (35.7 percent); Oregon (34.0 percent) and Washington (33.6 percent).

Among 93 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of equity rich properties were San Jose, California (61.0 percent); San Francisco, California (56.4 percent); Los Angeles, California (45.3 percent); Honolulu, Hawaii (43.9 percent); and Oxnard-Thousand Oaks-Ventura, California (38.7 percent).

“The number of Seattle homeowners who are considered ‘seriously underwater’ continues to drop and is now at an all-time low of 3 percent,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Thanks to the strong appreciation of home prices in our area, I expect to see this number drop even further as we move into 2018. At the same time, the percentage of ‘equity rich’ homeowners in Seattle continues to rise, reporting a remarkable 103 percent increase since the end of 2013.”

Other metros where at least 35 percent of properties were equity rich at the end of Q3 2017 were Seattle, Washington (38.7 percent); San Diego, California (38.3 percent); Portland, Oregon (36.7 percent); Austin, Texas (35.8 percent); and Stockton, California (35.2 percent).

Highest share of seriously underwater properties in Baton Rouge, Scranton, Youngstown
States with the highest share of seriously underwater properties were Louisiana (19.2 percent); Iowa (14.2 percent); Pennsylvania (14.0 percent); Mississippi (13.8 percent); and Alabama (13.7 percent).

Among 93 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of seriously underwater properties were Baton Rouge, Louisiana (20.5 percent); Scranton, Pennsylvania (19.5 percent); Youngstown, Ohio (18.2 percent); New Orleans, Louisiana (17.4 percent); and Dayton, Ohio (16.4 percent).

Full Report & Methodology

About ATTOM Data Solutions
ATTOM Data Solutions is the curator of the ATTOM Data Warehouse, a multi-sourced national property database that blends property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, health hazards, neighborhood characteristics and other property characteristic data for more than 150 million U.S. residential and commercial properties. The ATTOM Data Warehouse delivers actionable including bulk file licenses, APIs and customized reports.

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House Passage of Flood Bill Critical Step Toward Reauthorization, Reform

Washington, D.C. – November 14, 2017 (nar.realtor) With less than a month left before the National Flood Insurance Program expires, the National Association of Realtors® is applauding the House of Representatives for passing what NAR believes is smart, much-needed support for the program.

NAR logo

“Realtors® know first-hand what happens when the NFIP expires, and it isn’t good for consumers, businesses or our communities” said NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty. “We appreciate the leadership that members of Congress have shown passing sound reforms, which will strengthen the program, protect property owners and deliver good results for taxpayers.”

The NFIP is responsible for providing the vast majority of flood insurance policies in over 20,000 communities nationwide. Without it, most consumers would be unable to purchase the flood insurance that’s required on mortgages in a flood plain. In the past, NAR has shown that 40,000 home sales are lost every month when the program is unavailable.

H.R. 2874, the “21st Century Flood Reform Act,” reauthorizes the NFIP for five years, while taking steps to reform the program. These reforms include:

  • Authorizing $1 billion to elevate, buy out or mitigate high-risk properties
  • Capping flood insurance premiums at $10,000 per year for homeowners
  • Removing hurdles to the private flood insurance market, which often offers better coverage at lower cost than the NFIP
  • Providing for community flood maps and a homeowner’s ability to appeal their flood designation
  • Better aligning NFIP rates to match a property’s true risk, particularly for in-land and lower-value properties
  • Improving the claims process for flood victims
  • Addressing repeatedly flooded properties, which account for 2 percent of NFIP policies but 25 percent of claim payments

These changes, Mendenhall said, would improve the NFIP’s financial health, put consumers on a stronger footing, and deliver certainty to current and prospective homeowners.

“The conversation happening in Washington on this issue is fundamentally about how we deliver the best results for consumers and taxpayers, and that’s a good conversation to have,” Mendenhall said. “Realtors® are simply asking that Congress swiftly deliver on the promise of this program so buyers can move forward without interruption and homeowners know their most important asset is protected. With December 8 around the corner, we’re hopeful the Senate will now step up to the plate and do their part by passing a flood reform and reauthorization package without delay.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.