Guardian Residential Lending Industry News, March 21-28, 2019

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In the Know: A Roundup of This Week’s Local and National Real Estate Stories 

Spring buying season is here; Mortgage rates just had the largest one-week drop in 10 years, and more…

Hello refis? Mortgage rates just had the largest one-week drop in 10 years (HW, March 28)

Interest rates haven’t been this low since January 2018

Just over six months ago, it appeared that refinance demand had all but dried up thanks to mortgage interest rates that were pushing past 4.5%. But my how the tables have turned.

According to newly released data from Freddie Mac, mortgage rates just experienced the largest one-week decline in a decade, and are now trending back toward percentages that begin with “3” instead of “4.”

Freddie Mac’s report showed that the 30-year fixed-rate mortgage averaged 4.06% in the last week, a massive drop of 22 basis points from the previous week’s total of 4.28%.

That’s the largest single-week decline in 10 years. In fact, mortgage rates are now at their lowest point since January 2018. One year ago, mortgage rates averaged 4.4%.

READ MORE…

 

HUD charges Facebook with housing discrimination in ads (CNN, March 28)

The Department of Housing and Urban Development is charging Facebook with violating the Fair Housing Act.

HUD on Thursday said the social media giant is violating the federal act by “encouraging, enabling, and causing” housing discrimination through its advertising platform.

“Facebook is discriminating against people based upon who they are and where they live,” HUD Secretary Ben Carson said in a statement. “Using a computer to limit a person’s housing choices can be just as discriminatory as slamming a door in someone’s face.”

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Mortgage applications increase on larger-than-expected drop in rates (National Mortgage News, March 27)

“The spring buying season is off to a strong start. Thanks to an unexpectedly large drop in mortgage rates following last week’s FOMC meeting, purchase applications jumped 6% and refinance applications surged over 12%,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.

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Redfin: Housing market bidding wars shrink further in March (HW, March 27)

Only 16% of Redfin offers faced a bidding war in January

As the housing market continues to slow down, new data from Redfin indicates that housing market competition is following suit.

According to the company, only 16% of offers written by Redfin agents faced a bidding war in the first three weeks of March. This is a drastic drop from 61% in the first three weeks of March 2018.

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Trump officially calls for end to Fannie Mae, Freddie Mac conservatorship (HW, March 27)

White House issues release calling for “overdue reform of the housing finance system”

President Donald Trump is officially calling for an end to the conservatorship of Fannie Mae and Freddie Mac, according a White House release issued Wednesday.

Trump is expected to sign a memorandum later today issuing “overdue reform of the housing finance system,” the White House said, which includes the end of conservatorship and the improvement of the regulatory oversight of both entities.

The statement said that Fannie and Freddie have grown in size and reach, yet face no competition from the private sector, and that the Department of Housing and Urban Development programs are exposed to too much risk while relying on outdated processes.

In the announcement, Trump called for reform that “promote[s] competition in the housing finance market and create[s] a system that encourages sustainable homeownership and protects taxpayers against bailouts.”

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Case-Shiller: Home price gains are shrinking, further escalating a housing market slowdown (HW, March 26)

Las Vegas continues to lead the nation in annual gains

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Housing market cools down as home building takes a dive (HW, March 26)

Single-family construction down 17% from previous month

Housing starts fell 8.7% in the month of February, according to the latest report from the U.S. Dept. of Housing and Urban Development and the U.S. Dept. of Commerce. The one bright spot seems to be an increase in multifamily permits, where the overwhelming majority of which will feed the rental market.

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For millennials, this is the greatest hurdle to homeownership (CNBC, March 26)

More than a quarter of young adults say buying a home is the life milestone they’re shooting for the most, even over getting married, having children and retiring, according to a survey.

However, sky-high rents and unprecedented student loan debt reduce the likelihood of being able to afford a down payment.

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FHA says as many as 50,000 mortgages will be affected by new lending rules (HW, March 25)

4-5% of FHA borrowers may no longer qualify

An FHA official told The Wall Street Journal that approximately 40,000 to 50,000 loans a year will likely be affected, which amounts to about 4-5% to all the mortgages the FHA insures on an annual basis.

“We have continued to endorse loans with more and more credit risk,” said FHA’s Chief Risk Officer Keith Becker. “We felt that it was appropriate to take some steps to mitigate the risks we’re seeing.”

The WSJ points out that the move is a complete reversal of the agency’s 2016 decision to loosen underwriting standards, nixing an old rule that required manual underwriting for loans with credit scores below 620 and a debt-to-income ratio above 43%.

READ MORE…

 

iBuyer Offerpad’s latest funding round brings total capital raise to nearly $1 billion (HW, March 25)

Arizona-based company lays major plans for growth

Offerpad is part of a new wave of so-called iBuyers, which seek to simplify the way Americans buy and sell homes by streamlining and digitizing the process, eliminating the middlemen along the way.

Offerpad’s strategy is to buy homes directly from sellers – submitting an offer within 24 hours and completing all the paperwork entirely online – and then making any necessary improvements to the property before selling it.

Currently, the company operates in Atlanta, Charlotte, Dallas-Fort Worth, Houston, Las Vegas, Los Angeles, Orlando, Phoenix, Raleigh, Salt Lake City, Tampa, Tucson and – just recently – San Antonio.

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Rent control likely to push investors out, tighten supply of rental housing in Oregon (PBJ, March 27)

Guest columnist Greg Frick, co-founder of HFO Real Estate Investment, argues that elected officials are making it harder for developers and property owners, despite the need for new housing at all income levels.

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Zillow pilots app for self-guided house tours (HW, March 25)

Makes headway in iBuying space with app that puts consumers in control

The app, called Tour it Now, provides users directions to the property, unlocks the doors when they arrive, and allows them the opportunity to tour the house on their own time.

Zillow rolled out the program March 5 in the Phoenix area and is currently only offering tours of properties that it owns.

Users can tour the homes any time between 7 a.m. and 7 p.m. The company said the properties are equipped with sensors that take pictures and detect movement, and if motion is detected when there shouldn’t be any, the tour is disabled and the property is flagged for inspection by a Zillow team member.

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How tech companies are changing homebuying (Curbed, March 21)

Imagine everything you need to do to buy a new home. If you already own a property, you’ll probably need a broker to sell it. You may also need a broker to find you a new place. You’ll need a mortgage lender to finance the purchase. You’ll have to buy title insurance and home insurance, and then find a moving company to haul all your stuff to the new digs.

Now imagine being able to get all of these services from one company. And better yet, imagine that this company will coordinate the timing of each stage of the transaction so that moving from one place to another becomes virtually seamless. Several real estate tech companies are racing to make this dream a reality.

Has tech-world “disruption” finally come for the cumbersome process of buying and selling a home? Algorithm-driven home-flipping companies like Opendoor, along with strategic shifts by major companies like Zillow and consolidations across the industry, seem to say yes.

“A lot of people are out there trying to build this end-to-end consumer ecosystem where consumers can do everything in one space,” said academic and real estate tech consultant Mike DelPrete. “You look at the leaders in the field doing that, like Opendoor, it’s just about reducing that friction in the whole process.”

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Facts about Marriage and Homeownership:

– Marriage increases the chance of homeownership by 18%

– The median age for a first marriage is 30 years old.

 

Thanks for reading!