NAR Report Indicates a Strong Summer for Home Sales

Many home buyers and builders watched the 2015 housing market with cautious optimism. It now appears that after 10 consecutive months of sluggish sales numbers, the housing market could be poised for a strong summer. The recent NAR Pending Home Sales Index shows the number of houses under contract increased by 3.5 percent in February of 2016. That put pending home sales at their highest level since July of 2015. Industry analysts say pending sales reached a nine-year high in April of 2015. This recent uptick surprised many economists and comes as welcome news to real estate agents, builders, title insurance companies, and others employed in the housing sector.



Lenders more welcoming of home buyers

According to Bankrate, a 30-year fixed rate mortgage currently has an interest rate of about 3.70 percent. Additionally, some of the mortgage guidelines implemented after the housing market collapse are now relaxed. Programs like HomeReady™ help low-income and moderate-income home buyers obtain low-downpayment home loans. It also has expanded eligibility for houses located in areas hit by disaster, that are designated as low-income, and minority-heavy areas. This program is backed by the U.S. government through Fannie Mae and available from most mortgage lenders. The HomeReady™ program can also be used for refinancing up to 95 percent loan-to-value (LTV). Perhaps best of all, HomeReady™ is not limited to first-time buyers. Borrowers with a credit score of at least 620 may qualify.

Title insurance a key component of successful transactions

Lending institutions understand the importance of title insurance to protect themselves, but many individual home buyers still do not understand why they should have their own policy. Title insurance protects buyers in the event there are any undisclosed liens or easements on the property. The title insurance policy required by lenders only protects the lending institution's financial position in the property, not the home buyer. Title insurance is more important to home buyers now and in the future than it has ever been. The loose lending standards that led up to the housing market collapse resulted in countless second and third mortgages on homes with sketchy paperwork and little likelihood of proper disposition. Foreclosures were rushed and titles to real estate changed hands numerous times. All of this can create complications and clouds on titles. A owner's title insurance policy is every home buyer's best protection against the possible defects of a title that may be missed by a public records search.

Rising rents make homeownership more appealing

According the the U.S. Census, the number of households renting their primary residence is steadily increasing. The renter share of all U.S. households was approximately 34 percent in 2009. That number had increased to 37 percent in 2014. Many young people saw their parents struggle to maintain ownership of their home. What was once a deeply entrenched component of living a full life appeared more of a burden and source of stress to newly forming households. Millennials are more open to a community lifestyle and renting rather than putting down roots. Another factor adding to the increase in renter numbers is the aging population. More seniors are opting to move from high-maintenance homes to retirement communities that take care of maintenance and basic upkeep. The slight increase in demand quickly resulted in a rise in rent prices.

Home buyers more empowered today
The Consumer Financial Protection Bureau (CFPB) is helping make home buying a simpler and safer investment for people. As more people find it less expensive to purchase a home than rent, more households embrace the many benefits and freedoms that are unique to home owners. Over 6 million homes are expected to change hands in 2016. These home buyers have an abundance of programs and information available to them that can help facilitate a smooth transaction they will feel good about for many years to come.