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Economics

Texas tops the list of best states to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

According to the National Association of Realtors (NAR), the median value of a single-family home rose 6.0 percent from the final quarter of 2013 to the last quarter of 2014, but SelfStorage.com acknowledges that “home prices aren’t the only factor in selecting a place to buy. Economic and job growth matter, too, as do availability and affordability of housing. And don’t forget real estate taxes,” so for the 60 biggest metro areas in the U.S., they examined these and other factors.

The top 12 places to buy a home in America

The study indicates that the biggest metro areas in Texas dominate the list, and a handful of other states join the list as well, with Austin taking the cake:

  1. Austin, TX
  2. Houston, TX
  3. Raleigh, NC
  4. Las Vegas, NV
  5. San Antonio, TX
  6. Dallas, TX
  7. Charlotte, NC
  8. Orlando, FL
  9. Atlanta, GA
  10. Phoenix, AZ
  11. Portland, OR
  12. Salt Lake, UT

Is your city on the list? Should it be? What do you think of the overall list?

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Economics

How does this soft jobs report impact the housing market?

(REAL ESTATE NEWS) When we see a soft jobs report, does that hurt or help the housing market? We talk to two economists about it.

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In a year of political uncertainty, the release of any jobs report is polarizing. Political figures and armchair policy wonks will read into the data as they wish, but not housing economists.

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That’s who we look to in these times, because we all know that jobs is the cure-all for a recovering economy, but payroll growth slumped in September as the U.S. Labor Department reports that employers added only 156,000 jobs.

This fell short of the 172,000 originally projected by economists surveyed by Bloomberg.

Hidden positives in the report

Dr. Ralph McLaughlin, Chief Economist at Trulia said, “While the September jobs report came in below expectations, the continued addition of jobs to the US economy will help buoy demand for homes, both on the for-sale and rental side of the market.”

He observed another positive hidden in the Labor Department result. “In addition, wage growth kicked up again, which will help bolster the savings of first-time homebuyers trying to scrape together a downpayment.”

Real estate remains unchanged

“Given no major surprise in the data, the national outlook for real estate market remains essentially unchanged, with home sales expected to squeak out slight gains in 2016 and 2017 while commercial building vacancy rates should continue to fall,” said NAR Chief Economist, Dr. Lawrence Yun.

Yun adds that “we should note that men have been underperforming as 68.4% of adults have jobs, down from historic norm of around 75%. Meanwhile, 55.8% of women have jobs, roughly matching the historic norms.”

Pointing out that the data is being “digested” through the perspective of the upcoming election, Dr. Yun notes that, “among men, those with a college degree 72% of adults are working while only 54% of those with only a high school degree are working.”

Dr. Yun observes, “There will surely be a big divergent voting patterns among men versus women and among those with college education and those without in November.”

#jobsVhousing

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Economics

Mortgage companies hiring time travelers to uncover missing documents?

(MORTGAGE NEWS) – Mortgage companies are hiring for an interesting new position that may speak to their role in the economic crash of 2008.

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During the Great Recession of 2008, it’s been estimated that around seven million Americans lost their home. Many of the homes that went into foreclosure did so because people lost their jobs, and just gave up on their home. In some, people got kicked out based on false documentation, faulty paperwork or just downright illegal mortgage servicing. Numerous lawsuits have been filed and won by homeowners who were wrongfully evicted.

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In California, in Yvanova v. New Century Mortgage Corporation, the California Supreme Court ruled that plaintiffs held the right to contest foreclosures when documentation (in this case, a mortgage transfer that was allegedly void) was not handled correctly. The Court didn’t determine validity of the document in Yvanova’s case, just that she had the right to contest the foreclosure.

New jobs in mortgage documentation

According to David Dayen, who wrote Chain of Title, this phenomenon has brought new jobs to the market. Career Builder lists a job for a “Default Breach Specialist” posted by a recruiting firm in Jacksonville, Florida. The primary characteristics for this position:

“The Default Breach Specialist responsibilities include ensuring all breach letters are issued as required by investors, insurers and/or State Law.  Responsible for ordering title, reviewing title and all security documents to identify missing assignments needed to complete the chain of title prior to foreclosure referral.”

Seeking time travelers

According to Dayen, all the assignments of mortgage should have been prepared and recorded at the time of the sale or transfer. He questions why any mortgage company would need to order these documents.

In Yvanova’s case, it’s alleged that the mortgage was not converted into the trust in a legal fashion. In many of the cases involving foreclosure, third parties were hired to produce the paperwork that conveyed a mortgage into the trust. Dayen alleges that many of these companies “mocked up” documentation.

Although it is possible that the mortgage company is simply looking for someone to make sure everything is in the case file, it’s also possible (some would say highly likely) that some documents may never be found because they don’t exist.

The failure to follow the law as it pertains to property records is so bad that companies are now hiring chain of title specialists to manage the problem. This does not put the real estate industry in the best light.

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Economics

Will the Federal Reserve hike interest rates again in 2016? A consensus is forming

Interest rates were bumped up at the end of 2015 after years and years of no change – so will 2016 be a year of more increases? It’s looking likely.

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As a little going away present for 2015, the Federal Reserve raised rates in December. Although they hadn’t been touched for many, many years, it was no surprise to economists. Now the question is, will the Fed raise rates in 2016, and if so, by how much?

Most market analysts are forming a consensus, expecting three to four hikes in 2016. Let’s discuss.

Slowly but surely the hikes will roll in

According to Tim Duy’s Fedwatch, the Federal Reserve “will to [slowly] hike rate. Economic conditions will be sufficient for the Federal Reserve to justify 100bp of rate hikes in 2016, although the Fed will not want to appear mechanical in its normalization process. Thus, they will likely find themselves hiking every other meeting beginning in March 2016.

Duy goes on to say that the Federal Reserve will be slow to begin the process of normalizing the balance sheet. Although they will be fully engaged in that process by the middle of the year. That conversation will take on more urgency if they have difficulty controlling short rates with their new tools.

The minutes of the December FOMC meeting were released in the first week of January.

Fred Duy maps out that “regarding the medium-term outlook, inflation was projected to increase gradually as energy prices and prices of non-energy imports stabilized and the labor market strengthened.” Furthermore, comments Duy, “taking into account economic developments and the outlook for economic activity and the labor market, the Committee is now reasonably confident in its expectation that inflation would rise, over the medium term, to its 2 percent objective.”

A small move, but a hike nonetheless

According to the Federal Times the hike represents a very small move. “It will be reflected in some changes in borrowing rates. Longer term interest rates, loans that are linked to longer term interest rates, are unlikely to move very much. The impact of a single quarter-point interest rate hike is virtually inconsequential.” That said,  this [hike] could be the start of a series of interest rate hikes, and the cumulative effect of those could be significant over the course of the next couple of years.

What of mortgages?

Of particular interest is mortgages. The FT points out that “the rules for mortgages are roughly the same as those for student loans: if you have a fixed rate mortgage, you needn’t worry. If you have yet to take out a mortgage but plan to do so in the future, you will receive a slightly higher rate than you would have if you had locked in your rate.”

Conversely, if you or your clients have (or are considering) an adjustable-rate mortgage, expect the rate to go up.

The Fed will remain cautious

Calculated Risk’s Bill McBride notes, “If inflation picks up, then four rate hikes is probably “in the ballpark”. If inflation stays low, then we will see fewer rate hikes.”

That’s about what our team is hearing from various sources. McBride adds, “I’ve seen several people arguing the Fed will be cutting rates by the end of 2016 – I think that is unlikely. Instead I think the Fed will be cautious – and they will not want to reverse course. Right now I think something around three rate hikes in 2016 is likely.”

It’s not just black and white

The decision to raise rates probably seems easy on paper. But actually implementing those rate is a bit more complicated. As always, taxpayers are the ones that feel the brunt of change.

#InterestRates

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