FHA mortgage insurance premium cut

The National Association of Realtors believes that the Trump administration’s recent decision to suspend a reduction in the Federal Housing Administration’s annual mortgage premiums will keep as many as 40,000 potential homebuyers from becoming actual homebuyers in 2017, and wants the premium cut reinstated “as soon as possible,” the trade organization said last week.

In one of the Trump administration’s first actions after President Donald Trump took the oath of office, the Department of Housing and Urban Affairs suspended a cut to the FHA’s mortgage insurance premiums, which was announced by the outgoing Obama administration in early January.

The cut had not taken effect when the Trump administration announced its intention to suspend the MI premium reduction, but in a letter addressed to Ben Carson, Trump’s choice to lead HUD, NAR said that the suspension of the FHA mortgage insurance premium cut caused “uncertainty and confusion” in the housing market and cost many consumers the opportunity to buy a home this year.

“NAR estimates that the premium reduction would have reduced costs for 750,000 to 850,000 homebuyers in 2017 with mortgages backed by the FHA. In addition, it would have made homeownership possible for an additional 30,000 to 40,000 homebuyers,” the trade organization said in its letter to Carson.

“The suspension of the premium reduction has created uncertainty and confusion for a significant number of borrowers, sellers, lenders and underwriters who entered into a new or refinance mortgage transaction in reliance on the reduced rates,” NAR continued. “These borrowers must face an increase in the cost of their loans and some may no longer qualify to purchase the home they intended to buy due to the increase in the premium rates.”

When the Obama administration announced the MI premium cut, some observers argued that the cut would put the FHA’s flagship fund, the Mutual Mortgage Insurance Fund, in danger of becoming depleted again.

“It seems the Obama administration’s parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout,” House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said at the time.

As Hensarling noted, the FHA needed a $1.7 billion bailout in 2013, due to the significant shortages in the FHA’s MMI Fund, but the fund then turned in four years of growth, exceeding its Congressionally mandated target in each of the last two fiscal years.

In its letter, NAR said that suspending the premium cut will have an impact the FHA’s MMI fund as well.

Housing with top young leaders

Well, it’s that time of year again.

HousingWire is proud to announce the fourth annual HousingWire Rising Stars award program, which honors the next generation of leaders in lending, servicing, investments, and real estate.

They help run major corporations, and are the entrepreneurs building tomorrow’s great businesses. They work in any and every area of the housing economy: lenders, servicers, investors, and real estate. They come from diverse backgrounds but share one common trait: an outsized impact on the industry and their businesses.

But this award isn’t for Baby Boomers or industry lifers. It’s for those younger leaders already making their mark on the industry.

So if you’re an almost Millennial, a cuspy Millennial, or a full-blown Millennial, this award is for you. That’s right, this award is for people 40 or younger, as of June 1, 2017.

But the award isn’t for everyone, even if you are an almost Millennial, a cuspy Millennial, or a full-blown Millennial. The Rising Stars award is for the elite of the elite. The pick of the litter. The cream of the crop. The bawse among bosses.

“Buyer interest stayed elevated in most areas thanks to mortgage rates under 4% for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” NAR Chief Economist Lawrence Yun said. “At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

This is more than the third quarter, when 87% of metros reported annual price increases. Also, of the metros that saw price gains, 17% of them were in the double digits, compared to 14% in the third quarter.

“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets,” Yun said. “The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

The national median existing single-family home price in the fourth quarter was $235,000, which is up 5.7% from the fourth quarter of 2015’s $222,300.

While home prices were reaching new highs, housing inventory was reaching new lows. At the end of the fourth quarter there were 1.65 million existing homes available for sale, a decrease of 6.3% from the 1.76 million homes a year before to the lowest level since NAR began tracking home supply in 1999. The average supply during the fourth quarter was 3.9 months, down from 4.6 months the year before.

Funding team up to target rental property

Aiming to capitalize on the growing single-family rental market, Renters Warehouse, a property management company that specializes in managing rental houses, announced Wednesday that it is partnering with 5 Arch Funding to offer increased funding options for rental property investors.

According to information provided by Renters Warehouse, 5 Arch Funding, a private mortgage company for residential real estate investors, offers “fast and flexible” access to funding for use to buy and/or repair single-family homes to be used as rental properties.

Through the partnership, 5 Arch Funding will offer Renters Warehouse clients a “special financing rate” for investing in rental properties, the companies said.

“We are making a more concerted effort to support and inspire our current clients with the tools, resources and trusted partners to grow their portfolio,” Kevin Ortner, CEO of Renters Warehouse, said.

“5 Arch Funding provides the robust level of customer service and exceptional value that our everyday homeowners and investors have come to expect from Renters Warehouse, so naturally we felt there was a great fit here.” Ortner added. “We’re excited to offer 5 Arch Funding as one of our preferred lending partners.”

Gene Clark, the president of 5 Arch Funding, said the deal provides a sense of security for investors.

“At 5 Arch Funding, we put the borrower in the center of our business, providing flexible lending products through a hassle-free, personalized rental property loan process,” Clark said.

“They also deserve the best in property management once they have made the decision to invest,” Clark continued. “Partnering with an industry leader like Renters Warehouse will make the decision to invest in residential properties even easier, and it will allow our clients to reap the benefits of property investment with no hassles.”

Home price peaks

Home prices soared in 2016 as they struggled with higher demand and lower housing inventory. In fact, some markets even hit new highs in home prices.

Out of 201 metropolitan areas in the U.S. with populations of at least 200,000, 89, or 44%, reached new all-time highs in home prices in 2016, the National Association of Realtorsannounced, using new data from ATTOM Data Solutions.

“Much of this is due to a growing economy and the shift from a manufacturing economy to a service-based economy,” said Matthew Watercutter, HER REALTORS senior regional vice president and broker of record. “Median home prices in our markets reached its highest peaks in 2016, largely due to lack of inventory, and supply and demand.”

HER REALTORS is based in Ohio, where several markets, including Dayton, Columbus and Cincinnati saw new peaks.

“Buyers are moving and relocating, causing a great deal of competition for quality inventory, and causing homes to sell quickly, and at a higher price than in recent years,” Watercutter said.

Among those markets, NAR points out five hot markets which saw new highs in 2016:


1. Dallas-Fort Worth, Texas: $230,571

It’s no surprise that this rising hotbed for housing would be among the top metros to see new highs in 2016. In fact, it constantly lands in lists of the hottests markets in the U.S.

2. Houston, Texas: $214,795

But Dallas isn’t the only Texas city to reach new heights in 2016. As it turns out, all of Texas is experiencing tremendous growth, and many companies are expanding in the state as a result.

3. Atlanta, Georgia: $181,000

Home of the Atlanta Falcons, that is if they let the team come back after this year’s Super Bowl. Too soon? This city is seeing substantial growth and is even tied as one of the second fastest markets in the nation for time to recuperate costs it takes to buy a home.

Trumps push for Dodd-Frank overhaul

As one might expect, the reactions to President Donald Trump’s initiation of the overhaulof the Dodd-Frank Wall Street Reform Act came in fast and furious after Trump signed an executive order on Friday that calls for the Secretary of the Department of the Treasury to begin reviewing Dodd-Frank.

And unsurprisingly, those reactions varied wildly, with left-leaning people and organizations calling the move an outrage and other assorted adjectives, and those that lean right having the polar opposite reaction.

As HousingWire previously reported, one big supporter of the move is House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, who stood next the president as he signed the order.

“Dodd-Frank failed to keep its promises, but President Trump is following through on his promise to the American people to dismantle Dodd-Frank,” Hensarling said.

“That’s not what Wall Street wants, but it is what hardworking Americans need to have a healthy economy with more opportunities so they can achieve financial independence,” Hensarling added. “Republicans are eager to work with the President to end and replace the Dodd-Frank mistake with legislation that holds Wall Street and Washington accountable, ends taxpayer-funded bailouts forever, and unleashes America’s economic potential.”

On the other end of the political spectrum is Sen. Elizabeth Warren, D-Massachusetts, who went scorched earth in declaring her opposition to Trump’s move.

“Donald Trump talked a big game about Wall Street during his campaign – but as President, we’re finding out whose side he’s really on,” Warren said in a statement.

“Today, after literally standing alongside big bank and hedge fund CEOs, he announced two new orders – one that will make it easier for investment advisors to cheat you out of your retirement savings, and another that will put two former Goldman Sachs executives in charge of gutting the rules that protect you from financial fraud and another economic meltdown,” Warren continued. “The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis – and they will not forget what happened today.”

Tim Pawlenty, the former Republican Party presidential candidate and current CEO of the Financial Services Roundtable, said that the president’s executive order is a good first step.

“Modernizing America’s financial regulatory system in ways that will grow the economy, create jobs and protect consumers as well as taxpayers is a key ingredient to boosting financial opportunities for America’s families and businesses,” Pawlenty said.

And back on the left, Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, said that Trump’s move shows his true colors.

Blacks should buy homes during the Trump administration

One expert explains why African Americans should purchase property now under President Donald Trump’s administration as a means to generate wealth.

AIA Group Chairman, and capital markets investor, Shawn Baldwin, explains that real estate investment is one of the best ways to accumulate wealth, according to an article by Selena Hill for Black Enterprise.

The internationally-renowned investor explained that African Americans should buy homes in urban areas and re-develop them, potentially as rental properties.

From the article:

“For most people, the acquisition of real estate is one of the best ways for them to become wealthier,” he told BE. “For the average person, their wealth is concentrated in their home and non-depreciating assets,”—unlike a car or retail jewelry, which is purchased at a markup and not worth as much as fine jewelry. However, now is a prime time for people of color to invest in urban re-development, which he says will be a primary focus under Trump’s administration. In turn, this will create opportunities for people of color.

“The acquisition of additional real estate can create wealth—mainly because [Trump] will try to make the focus of the development of communities a priority—this is going to create two opportunities: One, to add to your balance sheet, [and] two, to create places where other people of color are going to want to come and live.”

Baldwin explained that investing in property and using it as a stream of revenue is more accessible than a small business loan.

From the article:

He continued, “They’re not going to give us money that they deem is risky. [Banks] are going to want to give a loan that is based on collateral,” he said, adding that 25 percent of all bank activities are commercial real estate based. “Most of the time, the loans that most people of color can get is a home or real estate loan.”

Baldwin added that Ben Carson, U.S. Department of Housing and Urban Development secretary nominee, will be looking to improve the inner cities, which supports his argument that African Americans should buy real estate in those areas now.

Personal finance optimism reaches 7 year high

Americans are more confident in the housing market, reversing a five-month trend of declines in optimism, according to Fannie Mae’s Home Purchase Sentiment Index.

In January, the HPSI increased by two percentage points from the previous month to 82.7, reversing the previous five-month decline. This is up 1.2 percentage points annually. Within the index, four of the six components increased in January.

“Three months after the presidential election, measures of consumer optimism regarding personal financial prospects and the economy are at or near the highest levels we’ve seen in the nearly seven-year history of the National Housing Survey,” said Doug Duncan, Fannie Mae senior vice president and chief economist.

The net share of Americans who believe home prices will increase over the next year rose by seven percentage points to 42%, and those who reported significantly higher household income increased by five percentage points to 15%. Those who say it’s a good time to sell a home increased by two percentage points 15%.

However, those who say it’s a good time to buy a home decreased by three percentage points to 29%. Also, consumers were slightly more confident about not losing their jobs, up one percentage point to 69%, but those who believe mortgage rates will go down remained unchanged.

“However, any significant acceleration in housing activity will depend on whether consumers’ favorable expectations are realized in the form of income gains sufficient to offset constrained housing affordability,” Duncan said. “If consumers’ anticipation of further increases in home prices and mortgage rates materialize over the next 12 months, then we may see housing affordability tighten even more.”

High home prices hit these 10 markets hardest

Shortage of inventory and high home prices continue to make headlines, and the gap between what buyers want and what is available on the market continues to grow.

Home buyers are encountering difficulty in locating a home in their price range. In fact, 58.5% of Americans in the market to buy a home over the past two years said the process was either somewhat or very competitive, according to a new report from Trulia.

Trulia rated the top 10 mismatched markets to show the difficulty homebuyers face when finding a home. Market mismatch is the company’s measure of search interest versus available listings. It’s the difference between the price point where the bulk of searches occur and the average price point of listed properties. For example, if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, the market mismatch score for starter homes would be 20.

The greatest deficit occurred in starter homes and trade-up homes with shortfalls of 5.7 and 5.3 percentage points respectively. In the premium price category, however, there was a surplus of 11 percentage points.

Of the largest 100 metros in the U.S., here are the top 10 most mismatched markets and their score:

10. Tampa, St. Petersburg, Florida – 12.2

  • Percentage of searches for starter homes: 28.9%
  • Versus starter home listings: 16.7%
  • Percentage of searches for trade-up homes: 30.9%
  • Versus trade-up home listings: 24.8%
  • Percentage of searches for premium homes: 40.2%
  • Versus premium home listings: 58.5%

Real Estate Record revenue and traffic

Zillow Group, the online real estate giant that includes brands like Zillow, Trulia, SreetEasy, HotPads, and Naked Apartments, just turned in its best year ever from a revenue and traffic perspective, but still posted a net loss for the year, the company said Tuesday afternoon.

Zillow Group reported its fourth quarter and full-year 2016 financial results on Tuesday, and the company stated that it brought in more revenue than ever before in 2016.

For the full year, Zillow Group’s revenue was $846.6 million, up 31% from 2015 when its revenue was $644.7 million. For the fourth quarter, Zillow Group’s revenue was $227.6 million, up 34% year-over-year.

But despite bringing in record revenue in 2016, Zillow Group still posted a net loss for the year.

According to Zillow’s report, its GAAP net loss for 2016 was $220.4 million, which represented 24% of its revenue. The net loss was impacted by the $130 million settlementwith Move, which operates Realtor.com for the National Association of Realtors and is owned by News Corp.

The settlement stemmed from allegations that Errol Samuelson, who was once Move’s chief strategy officer, stole trade secrets and proprietary information from Move before joining Zillow in 2013.

Overall, Zillow’s 2016 net loss was up from 2015’s GAAP net loss of $148.9 million.

In the fourth quarter, Zillow reported a GAAP net loss of $23.5 million, or 10% of revenue, compared to GAAP net loss of $25.7 million, or 15% of revenue, in the same period last year.

Those results are a reversal from the previous quarter, when the online real estate giant turned in its largest profit ever.

In the third quarter of 2016, Zillow actually ended a nearly three-year run in the red, posting its first quarterly profit since the fourth quarter of 2013.

According to Zillow, it posted GAAP net income of $6.8 million, or 3% of its revenue, in the third quarter of 2016, compared to GAAP net loss of $26 million, or 15% of revenue, in the same period last year.

But now, Zillow is back in the red, at least for now.

While the bottom line still may be a bit of a struggle, one place Zillow isn’t struggling is in traffic.

According to Zillow, more than 140 million average monthly unique users visited Zillow Group’s various websites during the fourth quarter of 2016, an increase of 13% year-over-year.

Traffic to Zillow Group brands’ mobile apps and websites reached an annual seasonal peak of more than 171 million unique users in May 2016, the company said.

According to Zillow Group CEO Spencer Rascoff, those figures represent record traffic for Zillow.

Chief economist for Vice President Mike Pence

Mark Calabria, a long-time housing reform advocate, will serve as the chief economist to Vice President Mike Pence, according to a report from Politco’s Lorraine Woellert.

Calabria previously served as the director of financial regulation studies at the Cato Institute, a think tank that is “dedicated to the principles of individual liberty, limited government, free markets and peace.”

Before joining the Cato Institute in 2009, Calabria worked on Capitol Hill as a member of the senior professional staff of the Senate Committee on Banking, Housing, and Urban Affairs.

In that position, Calabria focused on issues related to housing, mortgage finance, economics, banking and insurance for Ranking Member Sen. Richard Shelby, R-Alabama.

Earlier in his career, Calabria also served as deputy assistant secretary for regulatory affairs at the Department of Housing and Urban Development.

Calabria also held positions at Harvard University’s Joint Center for Housing Studies, the National Association of Home Builders, and the National Association of Realtors.

In his role within Pence’s office, Calabria could play a big role and be a sizable voice for housing finance reform.

From Woellert’s report:

(Calabria) gives President Donald Trump’s White House “a voice around the table that will give them their philosophical true North,” said Jim Parrott, a senior adviser to former President Barack Obama’s National Economic Council.

He takes on a role similar to the one held by Jared Bernstein, who served as chief economist to former Vice President Joe Biden. Bernstein was a strong voice and public face for the Obama administration, speaking frequently on employment, economic inequality and the middle class.

“Bernstein was in exactly the same role and was pretty influential in our world,” said Parrott. “He played the role on our team of representing an economist version of Biden.”

As Woellert notes, Calabria has spoken about housing finance reform in many forms, including on the pages of HousingWire, in his career.

Woellert also points to a blog posted this week by Calabria, found here, where he addresses the Mortgage Bankers Association’s plans for the future of Fannie Mae and Freddie Mac.

And now, Calabria will bring his points of view to Pence’s staff, perhaps another indicationthat reforming the government-sponsored enterprises is indeed high on the Trump administration’s to-do list.