Everyone Should Take Interest in California's Housing Crisis

With a gross state product of (GSP) of more than $2.3 trillion, California has an economy that rivals that of most countries and is the largest state economy in America. Home to almost 40 million people, the state has a median home value of $371,400, according to the US Census. Median gross rent is $1,243. All of that with a median household income of $61,489 and a per capita income of approximately $29,906. You do not have to be an economist to see that those numbers add up to millions of people having difficulty finding affordable housing.

Home prices skyrocketed in the early 2000s with easily obtainable mortgages. When banks tightened their lending requirements in early 2007, prices dropped. This brought many cash buyer investors into the market. Now, with the median price at about $650,000 for the San Francisco Bay Area and the most affordable region being the Central Valley at a median home value of around $290,000, California has one of the lowest Housing Affordability Indexes in the country. It also is the most expensive state in the country to lease a home.

The California Economic Summit

Early in April of 2016, housing experts came together with builders, lawmakers, city planners, and environmentalists at the California Economic Summit to address the housing crisis that is affecting millions of Californians. Their goal is to find a way that people of all income levels can afford quality housing. It is crucial to the health of the state's overall economy that California address its low Housing Affordable Index. By finding ways to lower the percentage of annual income a household must devote to housing, they free up billions of dollars to be spent in other areas of the economy. For years separate groups have been advocating affordable housing for seniors, the homeless population, and veterans. The reality is that California's housing crisis is affecting everyone. New numbers for 2016 show that the housing crisis goes beyond people with minimum wage jobs. It is hitting middle class people and altering their lifestyle and spending.

Why the rest of the country should care

Many people never thought about title insurance before the housing market collapse. The quick shifting of ownership by banks after foreclosure led to many title issues. Approximately one of every three title searchers reveals a cloud on the title or some other defect in the public record that needs clearing to close the real estate transaction. The national housing crisis shined a spotlight on the need for homeowners to have their own title insurance policy, in addition to the lenders coverage. A recent report by the Public and Affordable Housing Research Corporation (PAHRC) reveals another problem growing beneath the radar for every state in the country. While federal programs are providing homes for approximately 5 million American families, there are many more applying for assistance who can't even get on a waiting list for aid.

There are 2.76 million families on the existing waiting lists for housing vouchers. Analyst estimate that an additional 9.5 million households would apply for housing vouchers were there no caps on the waiting lists. Housing agencies have closed their waiting list due to limited resources and vouchers. These numbers do not take into consideration the eligible families who do not seek federal assistance, but are still struggling to keep a roof over their heads.

One in four renters across the US pay over half of their income toward housing. Even for people living in the Eastern United States, California's housing problems are closer than many people realize. We have all seen how one sector of the economy affects the total economy and lifestyle of all Americans. To seriously address issues like poverty and the needs of our aging population, we must consider affordable housing for everyone. It is the only way to protect future generations of hard-working Americans in every state from having their dreams of home ownership evaporate away before their eyes.

Title insurance protects the current home owner and their heirs. A standard title insurance policy will usually protect against fraud, forgeries, and other title issues. For more complete coverage, talk to your title insurance representative.

Older Homes Have Hidden Value Along With Hidden Costs

 When the housing market is discussed in the news, the new home start numbers and building permit numbers are used to indicate the strength or weakness of the market. Fannie Mae predicts a strong housing market for 2016 and the increase in housing starts that many Realtors have been hoping for since the United States began pulling out of the Great Recession.

Title insurance for old and new homes

Many buyers don't understand the need for Title Insurance on new constructions. Even though they are the original owner of the home, they still need Title Insurance to protect against possible hidden problems with the land or existing liens. With older homes, the need for title insurance is more clear. These homes have had many owners and possibly fell into foreclosure at some time. But these older homes can be hidden gems that still have many benefits for buyers of every age group.

Quality construction of older homes

Someone is going to say it anytime a Realtor is showing an older home to potential buyers: "They don't build them like this anymore." It is true. Homes constructed 50 or more years ago were built with old growth trees. That wood is not in ample supply these days, and the vast majority of new homes have wood from hemlock fir hybrid trees. These trees are scientifically engineered to grow quickly. However, the wood lacks the character of the wood used in older homes and does not have the same durability. A lot of wood used in new homes is what's called "construction grade." It is designed to be covered by paint.
Construction has improved in many areas over the years. Builders began incorporating features like energy-efficient windows during the energy crisis of the 1970s. Modern windows save homeowners thousands of dollars each year in energy costs and are virtually maintenance free. These multi-pane windows are metal or vinyl clad, easy to keep clean, and easy to repair if broken.
It is possible to get the best of both worlds in an older home that has been upgraded. But, potential buyers should know that most tax credits that were available for making energy-efficient improvements to existing homes have expired.

Other difficulties with existing homes

Older homes have those tiny bathrooms and small kitchens. People like being comfortable in every room of their home these days. Even mobile homes and homes in the lower prices ranges have luxurious bathrooms and kitchens with islands, plenty of counter space and outlets for small appliances. Buyers need to consider possible structural limitations to remodeling older homes. And a complete upgrade of the electrical system is often necessary.

Some things that can't be changed

Many millennials prefer being located near the city and are willing to trade having a spacious yard for having the convenient location. The municipal parks are enough recreational space for them. For home buyers who have a large lot with existing shade trees as a top priority, older homes are probably their only option. Homes that are more than 40 years old have trees in the yard that are over 40 years old. These stately trees are a mixed blessing. They do provide a canopy of shade to keep the house cool and enhance the enjoyment of outdoor activities, but they produce a large quantity of gutter-clogging leaves and the large limbs can be a liability. Each year these old trees damage homes (and neighbor's homes) when they succumb to high winds or loose limbs due to disease. Like people, trees are more prone to disease as they get older.

Upfront savings can cost a lot over time

Many first-time buyers are anxious to get as much house as they can possibly afford. A new construction will cost about 15 percent to 30 percent more than an older home with comparable square footage. But, the new home comes with adequate insulation and a new, highly efficient HVAC system to save on monthly bills. It will have vinyl exterior that does not require painting and new appliances.
Novice buyers often take on more than they can handle when they buy an older home with the intention of doing much of the needed work themselves. According to the NAR report Real Estate in a Digital Age, 68 percent of first-time buyers are millennials and 32 percent of all home buyers are between the ages of 25 and 34. With the vast majority of first-time home buyers being young professionals with busy lives, older homes are typically the right choice for just a small percentage of buyers who understand the costs and responsibilities that come with them.

The CFPB Continues Striving For Transparency in Mortgage Market Practices

The Consumer Financial Protection Bureau (CFPB) strives to empower consumers by providing them with the information they need to make prudent decisions about their finances. Part of that mission involves simplifying the industry jargon and legalese associated with contracts and most financial documents. Their primary purpose is to educate consumers about abusive practices. They also

actively supervise the conduct of lending institutions and other financial service companies. The CFPB analyzes market information and consumer data to determine the best policies for protecting consumers. The CFPB has just updated rules for loan disclosure and mortgage market practices.

The Integrated Disclosure Rule Rollout

There were vocal critics of the Integrated Disclosure Rule when details were first released in 2013. Combining the Truth in Lending Act (TILA) with the Real Estate Settlement Practices Act (RESPA), it became known as Integrated Disclosure, or TRID. Despite approximately two years to prepare for the implementation, the rollout was not as smooth as the CFPB had hoped. The rule was delayed by two months because the CFPB felt the lending industry needed more time to prepare. There remains some uncertainty of how to best lock interest rates for borrowers on closings that may be delayed to comply with the integrated disclosure rule. Historically, most rate locks were for 30 days and at not cost to the borrower. To meet with the "Know Before You Owe" requirements, some closings are delayed and require rate locks of 45 and 60 days. For a borrower to lock an interest rate for that term, they may incur hundreds or thousands of dollars in additional fees.

Prior to the integrated disclosures rule, many lenders were accused of bumping up interest rates on home loans just prior to closing and tacking on additional fees like prepayment penalties. TRID prevents any last-minute changes by giving borrowers three days to review all loan documents prior to signing. Consumers can also walk away from transactions without penalty, under some circumstances.

The CFPB has just updated rules about lending practices and understands that TRID is the biggest change the mortgage industry has had in the past 40 years. Full implementation requires updates to existing software and changes in how vendors supply market data interest rate information to banks and other lending institutions. The CFPB is expected to re-evaluate implementation and report on progress of adapting the TRID rule later in 2016.

Updates to the Home Mortgage Disclosure Act

The CFPB has just updated rules regarding the Home Mortgage Disclosure Act (HMDA). The rule was enacted over 40 years ago by Congress in response to the allegation that banks were not properly servicing some communities. The HMDA addresses this concern in three ways:

It shows whether or not lenders are properly serving the housing needs of their community.

Provides information to public officials so they can make informed decisions on policies for the local area.

Reveals any lending patterns that may be considered discriminatory.
The CFPB has just updated rules to the HMDA that should improve lending data for local, regional and national housing markets. Lenders will be required to report property value, loan terms, an prepayment penalties, and the specifics of any introductory interest rates or teasers. Additionally, lenders mus provide more information than they did previously on underwriting policies. The new data requirements will be effective on January 1, 2018. The compiled data, edited to maintain privacy of applicants and borrowers, will be available to the public in 2019.

When individuals apply for a loan, they will be asked to provide their race, ethnicity, sex, and income. This information is used by consumer groups, researchers, and regulators to ensure all people are receiving fair treatment and an equal opportunity to realize the American dream of home ownership.

Recent Report Provides Some Insights on Smart Home Technology

Despite technical glitches and privacy concerns, more Americans are embracing smart home technology. The likelihood of installing such products increase by about 93 percent when people see what the advanced electronics and automation can do for them first-had, according to the Icontrol Networks State of the Smart Home Report for 2015. The report also finds that protection of personal property and security for family are the main reasons 90 percent of North Americans said they purchase any connected products for their home.

Not surprising, millennials are the largest group of smart home device purchasers, with their parents coming in second. Icontrol Networks reports that about half of the general population is excited about emerging technologies for the home. Most want simple devices that make their day-to-day lives easier.
Bob Hagerty is CEO of Icontrol Networks. His company has been in the smart home sector for over ten years. He says interest in smart home technology and devices has increased dramatically over the past two years. Most interest is in security features and devices that allow home owners to monitor their property while away. Consumers are also looking for products that help them save energy like connected thermostats and programmable lights. When asked about which devices excited them the most, 72 percent of home owners checked self-adjusting thermostats on their questionnaire. Seventy-one percent selected doors capable of being locked remotely. Indoor lights that can be programmed to adjust themselves were of interest to 69 percent of respondents. Sixty-five percent said they are excited about self-adjusting outdoor lights. Sixty-five percent of home owners responded they were very excited about cameras for monitoring their house.

Who is buying smart home products?

The report finds that the vast majority of home owners want some help with the installation and programming of their smart home equipment (74 percent). A little over half of respondents (52 percent) said they wanted a professional to handle all of the installation and programming for them. Half of the people responding to the Icontrol Networks' survey felt smart home products in their elderly parent's home would provide them peace of mind. Over 70 percent of the respondents between the ages of 25 and 34, who also identified themselves as parents, felt this way about having smart home technology in their parent's home.

Perhaps surprisingly, only about 25 percent said they would be most likely to install smart home equipment when purchasing a new home or moving, compared with 42 percent of people saying they would be more inclined to purchase such technology when renovating their current home or updating rooms.

Interest by region

Home owners in the Northeast are the most excited about capabilities of smart home equipment. This same area of the country also has the highest number of respondents who know someone with a connected home. This confirms the primary finding of the 2015 State of the Smart Home Report that seeing smart home products in person increases the probability of that individual installing smart devices in their own home. It was Southerners who said they were most interested in having a connected thermostat for their home (77 percent). Half of all respondents from the Midwest said they were most excited about the possibility of having smart devices in their kitchen. Home owners in western states like California were 100 percent more likely than people from other areas of the U.S. to name sprinklers as the device they would most want to be capable of reading the home owner's mind and operating autonomously.

As Realtors know from working with home buyers, the comfort and security of family members and care for aging parents remain the top priorities for all home buyers and home owners. If smart home devices are going to help them with these things, home owners are more likely to incorporate them into their daily lives, regardless of any concerns they may have about new technology in general.

Multigenerational Housing Trends

Living in multi-generational households is common in many cultures. It has long been stigmatized in the United States. When the Great Recession led to significant unemployment numbers for young adults, many reluctantly moved back to their childhood home to live with their parents. Once there, many have warmed to the idea of keeping family under one roof to maintain more control over their finances.

Aging Americans

As the economy began to recover, the percentage of multi-generational households continued to increase. The rising cost of retirement home living and in-home health care providers has led many older Americans to move in with children or spend some portion of the year living with each offspring. With improvements in medical science and statistics showing increased life expectancy, one might think older Americans were the group driving multi-generational housing number. But, since 2012, young adults between 25 and 35 have been the group most likely to live in a multi-generational home.

Numbers increased in all age groups but one

Though the percentage of homes that have more than one generation residing there has increased at a slower rate post-recession, the increase continues across all ethnic, racial groups, and genders. For seniors, the women who outlived their husbands are most likely to be living in a multi-generational home. For young adults, men are way more likely than women to be living under the same roof with their parents. According to the Pew Research Center, the only age group that has had a decrease in the percentage of people living in multi-generational homes is people ages 65 to 84. They had a very small decrease between the years of 2010 and 2012.

Numbers have doubled since 1980

According to an analysis of data from the U.S. Census Bureau, Pew Research Center finds the number of individuals with a multi-generational home increased from 28 million in 1980 to 57 million in 2012. The numbers have increased steadily each decade, going from 35 million in 1990 to 42 million in 2000. For the first decade of the 21st century, the number of people residing in multi-generational houses increased from 42 million to 54 million. The upward trend has slowed, but numbers continue to increase.

Will continue being a significant portion of the housing market

The National Association of Realtors reports that 14 percent of homes purchased in 2014 were for the purpose of accommodating multiple generations of occupants under the same roof. Just under 25 percent of those buyers said it was due to boomerang kids. That is people over the age of 18 who once moved out and then moved back home to their parents. That number is 33 percent for buyers aged 59 to 67. Thirty-eight percent of those multi-generational home buyers between 49 and 58 bought to accommodate their boomerang kids.

What it means to the housing market

The traditional 3 bed, 2 bath house is less desirable to more buyers. More buyers want two master bedrooms on the main floor. The ideal design is a split floor plan with bedrooms on the main floor and added privacy for the living area of family members. More buyers seek large dining rooms than large kitchens. The dining room was almost considered obsolete a few years back. It now provides and additional room for the extra occupants to create their own little home within the home. It frequently serves as a second living room, where the family member(s) can have their own TV, computer, etc.
Regional and national builders are already mindful of the impact multi-generational home buyers will have on the real estate market. They change house designs to match the current economic conditions and trends. Home sellers and real estate agents should also consider how they can make room for this growing segment of home buyers.

Video Marketing in Real Estate

Real estate agents are often early adopters of new technology. If it makes the home shopping process easier for their buyers or gives their seller clients a competitive edge, they will invest the time and money to make it a part of their marketing plan. While some methods are little more than schemes to make money off of gullible agents, one method of marketing for real estate agents has been around in some variation for many years; it continues to give agents who use it the upper hand. That tool is property video marketing.


Advantages of video marketing
Real estate agents typically have different opinions on the best marketing practices. Some embrace new technology, others stay rigidly with what they learned from their mentor or broker decades ago. Things like including as many photos of the property as possible and yard signs are undeniable essentials. Here are a few benefits of property video marketing.

• Video marketing for real estate agents opens up additional marketing channels like YouTube.
   
• By virtually taking potential buyers inside a property, it connects with them earlier.
   
• Helps weed out potential buyers who are not really interested in the house and ensures buyers have a better understanding of the home prior to viewing it in person.
   
• Sellers are more likely to list with you because you have a greater arsenal of marketing tools.
   
• It increases the excitement about the subject property by providing buyers with an easily share able and intriguing presentation of the home.
   
• Video is a compelling and powerful method of marketing to an international audience.

Not just for high-end properties anymore
Video as a business tool is used by every industry. As technology advances, the cost of production decreases. Practically all homes have internet that is fast enough for unlimited video streaming. Many people now take for granted streaming videos on their smart phones and tablets while they are on the go. You do not have to spend a lot of money for professional productions on every home you list. For some properties, the cost may outweigh the benefits. Many agents do quality video presentations themselves on every home they list. It takes some time to learn to do it right, but their clients appreciate them being personally involved in the process and the added effort the agent puts into showcasing their home in every possible way.

A few key considerations
Video marketing for real estate agents is one of those things that needs to be done well or not done at all. Just as it can be a powerful method of making a good impression, it can equally give a negative impact when done poorly. You want every aspect of your business and marketing to exude professionalism and attention to detail. Sloppy, blurry, and rushed property videos convey that you do not put much value on the listing. The potential buyers will not either, and your sellers will not place much value on your services. If you work with a professional production company on a regular basis, they should offer you economical pricing on videos for all your properties.
Video marketing for real estate agents will help you stand out when done right. As the years go by and more agents begin incorporating it into their listing strategy, it becomes less an enhancement and more an expected service. When done economically and strategically, it elevates you in the eyes of buyers and sellers. For subdivision developments and builders, the progressive videos and updates on progress keep buyers interested and returning to your site. Selling homes is still a people business. The best videos include a presenter who highlights various features of the home. By telling a compelling story with your video, you help the potential buyer think of the property as their home. That is ultimately your goal with all aspects of your marketing, and few other tools can do that as effectively as video.