Category: General

In a recent post on Inman.com, the author asked Matthew Shadbolt – director of real estate products at the New York Times – to list the three trends agents should look out for in 2016, and Mr. Shadbolt kindly replied with these items:

1. Virtual Reality: “We’ve reached a tipping point with virtual reality,” says Shadbolt and goes on to explain that he believes this technology will gain traction and have a significant impact on the business landscape at hand. He suggests this technology will be especially valuable to buyers who are relocating and adds that he foresees agents sending VR headsets to buyers to streamline the search.

2. Peak Content: The availability of information continues to grow – especially due to online media platforms and social networks – thus the challenge to determine what should and should not be shared continues to grow. Shadbolt suggests that an effective strategy for brokers is to “digitize what’s in your agents’ heads” to display their “unparalleled knowledge of neighborhoods.”

3. Curation: Much like the challenge presented in point #2 above, since consumers can access so much data online, that amount of data can be overwhelming. Agents should seize this opportunity and help both the buyers and sellers to receive the information that is most applicable to their needs – he calls this the “key point of differentiation between an agent and a portal.”

I believe Mr. Shadbolt is a really smart guy (the fact he left a very successful brokerage – The Corcoran Group – to go to work for the New York Times MIGHT cause some to question that), and I agree with the insights he shares above . . . to an extent. The second and third items he says are trends to watch out for in 2016, in my opinion, are things that good and great agents have already been doing for the past year or so – nevertheless, their importance will undoubtedly grow and those who embrace these behaviors will increase their ability to stand out from the crowd. I do, though, have a slight tweak to his prediction concerning virtual reality.

Even though technology and its availability to “the masses” is increasing by the day, I still believe it’s a bit cost prohibitive to have a number of headsets just lying around waiting to be sent to Mrs. Johnson in Akron, OH, and Mr. Daniels in Boca Raton, FL, to “view” a house here in our backyard. Sure, for the higher-end properties and the brokerages that represent those sellers, this is closer to being a reality than for the sizably larger group of homes that are listing at $250,000 in a middle-class neighborhood. There’s an alternative, though.

I recently met an agent who can take 3-D photos of your clients’ homes and publish them online so potential buyers can walk through the entire home – without the need for a VR headset. The pool of properties available to “walk through” for people looking to relocate just went from “kiddie” that can be filled with a garden hose to “Olympic”. Diving is allowed!

The National Association of Realtors – you may have heard of them – recently conducted a survey of renters who are 34 years of age or younger. Nearly all of those questioned say they want to own a home in the future. The NAR titled the survey Housing Opportunities and Market Experience – you read that right: HOME (points to their marketing department) – and it was designed to track topical real estate trends by asking consumers about two major topics: (1) whether or not it’s a good time to buy or sell a home, and (2) what are their expectations and experiences in the market. “Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” says NAR Chief Economist Lawrence Yun. The market conditions, according to Mr. Yun, are creating a “sizeable, pent-up demand for buying.”

According to the same survey, over half of renters who earn $50,000 or more annually have not tried but feel confident that they could succeed in obtaining a mortgage. Without a doubt, $50,000 is a sizable chunk of money, but here’s a bit of perspective: according to the Bureau of Labor Statistics, the median salary for women age 25-24 is $35,620; the median salary for men in the same age group is $40,560. Now, remember: “median” means the exact middle of a group. In this case of the information shared by the Bureau of Labor Statistics, this means that if you have 100,000 women between the age of 25 and 34, 50,000 of them make MORE than $35,000 – that’s A LOT of people who are confident that they could succeed in obtaining a mortgage. Now, there’s a second but closely related factor that needs to be considered.

Many people significantly lack a fundamental understanding about home-financing qualification criteria – this is especially true for renters who plan to buy a home within the next five years, according to a survey conducted by Fannie Mae’s Economic & Strategic Research Group. For example, many respondents thought the minimum down payment was 12% when Fannie Mae’s actual figure is 3%. As for minimum credit scores, many thought the requirement was above 650 for Fannie Mae – it’s actually a 620. We can go even lower than that, too!

Fannie Mae’s vice president of Applied Economic and Housing Research (what is it with these really long titles?), Mark Palim, observes, “Advancing from aspiration to sustainable home ownership is more likely to occur if consumers have an accurate understanding of the requirements to qualify for a home loan.” Thanks for that analysis, Captain Obvious!

All kidding aside, what are YOU doing to reach out to and let this new generation of buyers know homeownership is within their reach? We have some proven and successful ways to help – give us a call!

Recently, the National Association of Realtors posted a quiz on their website titled “Home Buyer Types” – it’s only five questions, so how hard could it be? Before we start, let’s lay down some ground rules: use a No. 2 pencil, don’t ask your neighbor or your neighbor’s Chihuahua for help, and don’t leave any hanging chads (too political?). Ready? Go:

1. What is the median age of first-time homebuyers?
a. 28
b. 31
c. 39
d. 42

2. What type of home is most frequently purchased by single women?
a. Single-family
b. Townhouse
c. Condo/apartment

3. What percentage of first-time homebuyers were married couples?
a. 23%
b. 45%
c. 56%
d. 62%

4. What was the most cited reason for the purchase of a multi-generational home?
a. Children/relatives over 18 moving back home
b. Health/caretaking of aging parents
c. Cost savings

5. What percentage of buyers of senior housing are first-time buyers?
a. 3%
b. 5%
c. 9%
d. 15%

So, how did you do? Aced it, right? Do you even need me to give you the answers? Twist my arm – here you go: (1) b – 31 years old; (2) a – single-family; (3) c – 56%; (4) b – aging parents; (5) b – 5%.

If you’re feeling pretty proud of yourself, here are a few essay questions – extra points for neatness:

1. How many different financing options are available to someone purchasing a multi-generational home?
2. For a first-time homebuyer, how will the financing differ between a single-family home for a married couple and senior housing?

Tell you what, on these last two questions, I’ll let you cheat just a little – you can give me a call. Don’t bother asking the neighbor’s Chihuahua – he’s a perpetual renter.

In last week’s edition of this award-winning publication (well, it won the “award” of being my grandmother’s favorite mortgage newsletter of all time), we tried to bring a little perspective to the mortgage world – the underlying message to it all was rather simple: keep calm, there’s no reason to panic. If last week’s edition of our newsletter were a movie, it would have been considered a blockbuster hit, so we’re doing what any major Hollywood studio would do: come out with a sequel as soon as possible to capitalize on its popularity.

You couldn’t turn on the television or fire up the Internet last week without being inundated with headlines like “China Shares Gyrate Wildly” (which sounds like an ‘80s New Wave band) and “Dow, Nasdaq Close Down Triple Digits in Correction on China Worries”. If you read the article, the tone was very dire as if the Apocalypse were expected to come on Thursday at 4:19 p.m. local time; if you watched a report tied to one of these stories, you might have wondered how the talking heads (a really great ‘80s New Wave band, by the way) were keeping it together – the severity of the news they were reporting would surely make their heads explode (which, depending on the particular news commentator, might have been fun to watch). Here’s what they weren’t telling you (because, frankly, shock and awe are far better for ratings and readership than just plain good news):

While the two are not directly and inseparably linked, the performance of stocks and mortgage rates have a casual relationship (nothing too serious – they want to date other people) that tells us something. Usually, when stocks perform poorly, investors get out of stocks and push their money into bonds. When bonds do well, this means mortgage interest rates tend to stay low or even improve. Similarly, when something happens in a market on the other side of the globe that causes tension, investors flock to the safe bet: bonds.

This, of course, is a VERY simplistic explanation of how the stock market affects mortgage rates, but the perspective enables us to take a step back, take a breath, and realize that mortgage rates are most likely NOT going to skyrocket in the near future. With that said, here’s another piece of good news or positive perspective to take away from all of this: Low interest rates encourage people to buy and sell homes, thus giving the housing market a healthy boost. Since housing is a major factor in improving the health of our economy, this tends to support an improving stock market. So, as a struggling stock market, at present, helps drive down interest rates, those low rates should help the stock market to bounce back. In plain English: it’s a good time to buy and sell; and once your property is in escrow, sit down, relax, and turn on the television in the hopes the guy on CNN will have a psychotic breakdown on the air.