New home starts slow, but remain steady

The U.S. economy has been slow to pull out of the Great Recession. Household spending is lower in large part because consumers remain cautious. Many families that were confident with their financial situation prior to the housing market collapse, had their lives disrupted in some way. Another factor hindering consumer spending is rising rent prices across the country. A Harris poll commissioned by Freddie Mac found that saving for a down payment ranked fourth on the list of priorities for most renters. Respondents were more focused on their children's education, saving for retirement, and being prepared for unexpected emergencies.

Rents expected to rise throughout 2016
David Brickman is executive vice president for Freddie Mac Multifamily. Brickman recently said on CNBC that rising rents are keeping many previous home owners from buying again and keeping a new crop of first-time buyers on the sidelines. National Association of Realtors Chief Economist Lawrence Yun said in his 2016 economic and housing forecast that rent prices rising faster than income combined with rising interest rates will slow the momentum of new home starts. The slow new home starts will drive up prices of existing homes. Yun predicts home prices and rents will increase in 2016.

New home permits hit one-year low in March 2016
Reuters reports that new home starts totaled just 1.09 million units for March of 2016 instead of the predicted 1.17 million. That was down from February's 1.19 million units and the lowest level since October of 2015. Still, the February number of new starts for single-family homes was the highest amount since October of 2007. Economists say the construction sector behaved like many other business sectors in Q1 2016. Retail sales, business spending and international trade all appeared to stall as the U.S. dollar dropped against the euro. The positive economic news is that there are more jobs available for millennials and more young people are moving out on their own to form new households.

Title insurance on new constructions
Some home buyers question whether they need an owner's title insurance policy on newly built homes. The lender always requires a policy for the amount of the mortgage. This protects the lender's interest in the property, but does not provide any protection to the homeowner. An owner's title insurance policy is most often for the total amount of the purchase price. This owner's policy protects the purchaser for the entire time they own the property and any of their heirs inheriting the home after their death. In addition to that long-term coverage, the title insurance will identify potential risks prior to a sales transaction.

Protection from mechanic's liens and other undiscovered items
New homes are built on lots that were recently part of a larger parcel. That parcel can have issues that affect all the lot owners. Also, builders with decades of financial stability have encountered hard times and not made agreed payments to contractors like roofers, plumbers electricians, etc. When these contractors file mechanic's liens, the lien attaches to the property, even if the home is built for someone else and already changed ownership. While some builders offer a title policy through an affiliated title company, the Real Estate Settlement Procedures Act (RESPA) gives home buyers the right to shop and compare policies and choose a title company for themselves based on price and policy features that best suit their needs.

Buying with confidence
The National Association of Home Builders (NAHB) provides some helpful advice for people of all ages who are planning to purchase a new constructed home. There are different factors and other considerations with buying a new home that are not involved with purchasing an existing home. Regardless, buyers should talk with a title insurance professional about the type of policy and coverage that will provide full protection of their financial investment and their family's future.

Technology, Walkability, and Resilience are the Key Housing Words for 2016

As building companies get back to the business of constructing houses, they find the housing landscape has changed significantly. While the economy and housing market has been sluggish, technology has surged right along. Young people embrace technology and are less inclined to seek employment working with their hands. To remain competitive, builders must not only attract young buyers, but also find ways to attract them as workers to help build homes. To do both, construction companies and builders must learn to utilize technology to their advantage. A top feature young buyers want is walkability. Another issue that is always a major concern for every home owner is how well their house can withstand inclement weather. Builders and REALTORS  must understand the issues currently relevant to home buyers and those issues that will continue being important in future years.

Technology

According to the National Association of REALTORS report "Real Estate in a Digital Age," 68 percent of first-time home buyers are Millennials. Thirty-two percent of all home buyers are between the ages of 25 and 34. These buyers begin their search online and are connected to the internet 24/7. Many older generations also rely on technology to find homes and research things like title insurance and mortgages. Even old marketing techniques like open houses that were near extinction a few years ago are finding new life thanks to technology. Savvy builders and REALTORS use Twitter and Facebook to post live updates and promotions that will entice all potential buyers in the nearby area to stop by. The QR code has little worthwhile use in many industries, but it provides a wealth of information about a home for sale to interested buyers. Every real estate agent and builder who has filled one of those little plastic information boxes with flyers, only to get an angry caller the following day complaining it is again empty, understands the value of providing pertinent information on-site at all hours of the day. Technology can do that in a variety of ways. Increasingly, buyers are expecting builders to use technology for communication and showing things like elevations, floor plans, and site maps.

Walkability

The American Institute of Architects (AIA) conducted a Home Design Trends Survey in the third quarter of 2015. Their survey found more buyers seeking a sense of community and opting to located in or near one of the many expanding metro areas across the United States. Some of the community design trends that are currently gaining strength and expected to remain popular for the foreseeable future include walkable neighborhoods, access to public transportation, multi-generational housing,  and mixed-use buildings. AIA Chief Economist Kermit Baker said there has been a significant change in driving habits of the population in recent years. More people use public transportation and want to be near their employment and other commercial activities. For single family homes, these buyers look for contemporary-style with low-maintenance features. Some traditional wants like single-story layouts and front porches remain popular. Regardless, owners still need quality title insurance to protect their investment. A growing number of households are single adults with or without children. They like smaller, simple spaces with an emphasis on aesthetics.


Resilience

Presenters at the recent BUILDER Sustainability Summit emphasized the need for community leaders to think about resiliency before disasters occur. Threats like hurricanes, tornadoes, flooding, and heavy snow can affect people in all parts of the United States. Regardless of where a home is located, it needs title insurance and must be able to withstand one or more of these natural disasters. Alex Wilson is an architect who believes resilient design doesn't have to be expensive. Wilson listed ways builders can construct houses that are better able to withstand disasters:

• Include timber framing and hurricane straps on houses in storm-prone areas.
• Improve living conditions of homes that lose power with better insulation and passive solar features.
• Limit the need for mechanical cooling by orienting homes on an east/west axis, install better windows with some shading, attach awnings, use larger overhangs, reflective roofs, and natural ventilation.
• Have flood barriers along driveways in low-lying areas.

Walkable communities are more resilient. When disaster strikes, it is much easier to provide needed services in areas that are pedestrian friendly. Just as home owners must protect their investment with title insurance, community leaders must protect their local area through resiliency planning before the natural disaster occurs.

Coastal Home Owners Need to Brace for Hurricane Season

It seems the storms get more severe every year and the financial toll keeps climbing with every hurricane season. For many Americans, the hurricane season is something they only see on the news. But for owners of coastal homes, it is a part of life. The hurricane season runs from June 1st to November 30th. Some years are worse than others, but people living on the coast or planning to purchase a coastal home must always be prepared for the worst case scenario.

Before the hurricane season
A below-normal hurricane season doesn't mean people living near the coast are going to avoid the catastrophic impact tropical storms can cause. The should always be ready to respond quickly and have some basic supplies readily available.

• Know what evacuation route you will use. Keep in mind that thousands of other drivers will probably be using the same roads.
• Have a disaster kit for each family member and be sure they know where it is. It should include a flashlight, batteries, first aid supplies, food, cash and identification. It is a good idea to have a crank charger and spare battery for cell phones and flashlights.
• Be prepared to remain in your home for several days without power or supplies from the store. You may want to seriously consider a backup generator that is capable of powering the entire home.
• During times of crisis, communication is always difficult and cell towers are pushed to their maximum capacity. Prepare a family communication plan well in advance of any emergency.
• Many coastal communities have alert systems to send emergency notifications by text or email. When moving to a new area sign up for these alerts by searching the community name plus "alerts" on the internet or contacting the area fire department and first responders.

Preparing your home
A person's home is often their place of comfort and protection during life's many storms. But these well-built structures are vulnerable to forces of hurricanes and severe storms. Some advanced planning can reduce risks and minimize the financial toll when storm damage occurs.

• Evaluate your home insurance policy for adequate coverage. Most standard policies do not include flood insurance. You should also add coverage for any exterior buildings or other features that could be costly to replace.
• Routinely inspect your rain gutters and down spouts. They should be clear of debris and securely attached to properly divert water away from your home during heavy rains.
• Have wood cut to size for quickly boarding up windows. Storm shutters are the best protection, but more costly. Taping windows and doors provides absolutely no protection.
• Doors should have multiple locking mechanisms to prevent them from flying open during a storm. Open windows and doors increase internal pressure under the roof and can lift it off the house.
• Consider installing hurricane straps that will securely attach the roof to the rest of the structure for added strength.

The inevitability of hurricane season does not mean people can't enjoy the many benefits of living near the coast. Everyone has to prepare for emergencies. Everyone's life has some storms. There are lessons to be learned during sunny weather and things to learn during storms that will enhance a person's life. In addition to protecting your own home and preparing your family for emergencies, participate in community events and take part in helping others prepare for hurricane season. A strong and resilient community needs your participation. By participating in community activities, you help minimize the disruption a storm can cause and help thing get back on track sooner. Remember to include your pets in the disaster planning and have some extra food on hand for them.