According to the Federal Reserve’s Flow of Funds report released This Week in Real Estate the value of U.S. owner-occupied homes increased to a record of $29.2 trillion in the third quarter of 2019. Home values rise as mortgage rates remain low. Fannie Mae believes the average fixed rate in 2020 will probably be 3.6% and if so, will be the lowest annual average ever recorded in Freddie Mac records going back to 1973. Below are a few highlights from the first full week of 2020…
* U.S. Home Values Rise to Record $29.2 Trillion, Fed Says. The value of all U.S. owner-occupied homes increased to a record $29.2 trillion in the third quarter, according to a Federal Reserve report known as the Flow of Funds. That was a gain of 4.2% from a year earlier, the slowest annualized increase since 2012. The collective value of U.S. homes is now 21% higher than the bubble peak reached in 2006. The Fed’s tally of home values for all U.S. residential real estate, whether occupied by homeowners or not, was $32.9 trillion, the report said.
* U.S. Mortgage Debt Hits a Record $15.8 Trillion. Outstanding U.S. mortgage debt rose to $15.8 trillion in the third quarter of 2019, according to the Federal Reserve. The biggest chunk of debt was held on homes, at $11.1 trillion, followed by commercial, with $3 trillion of loans, multifamily at $1.6 trillion and farms at $254.1 billion, according to the Fed data. Mortgage debt is rising as U.S. real estate values gain. Low mortgage rates boost real estate prices, and hence the volume of loans, because cheaper financing means buyers qualify for higher-balance mortgages and can bid more for properties they want. The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973.
* Homebuying Sentiment Up Sharply From 2018. Fannie Mae’s Home Purchase Sentiment Index (HPSI) finished out the year with little change from November to December, but with a strong increase over the December 2018 version. “The continued strength in the HPSI attests to the intention among consumers to purchase homes. This is consistent with the Fannie Mae forecast for 2020,” said Doug Duncan, Senior Vice President and Chief Economist. “The HPSI hit and remained near an all-time high in 2019, driven by the 16-percentage point year-over-year increase in the share of consumers believing it is a good time to buy. The HPSI’s strength supports our prediction of a healthy housing market in 2020, as well as consumers’ appetite and ability to absorb the expected increase in entry-level inventory.”
Buying and/or Selling a home can be a confusing process. There are lots of moving parts and lots of terms you may or may not fully understand… Escrow, Title Insurance, Preliminary Title Report… to name a few. To help you better understand the process, I’m sitting down with industry experts to breakdown the process for you. This week on Real Estate 101 we’re discussing closing and escrow with Janette Tims, an escrow officer at Western Title and Escrow in Eugene, Oregon.
What is Escrow?
Escrow is the process in which buyers and sellers of a piece of property establish terms and conditions for the transfer of ownership of the property. These terms and conditions are given to a third party known as the escrow holder. In turn, the escrow holder has the responsibility of seeing that the terms of the escrow are carried out. The escrow is an independent neutral account and the vehicle by which the mutual instructions of all parties to the transaction are compiled with.
What is Title Insurance
The purchase of a home is often the single largest investment people will make in a lifetime; therefore, the importance of fully protecting such an investment cannot be over stressed. Title insurance is protection which assures that the rights and interests to the property are as expected, that the transfer of ownership is smoothly completed and that the new owner receives protection from future claims against the property. It is the most effective, most accepted and least expensive way to protect property ownership rights.
What is a Preliminary Title Report
Before issuing a policy of title insurance, the title company must review the numerous public records concerning the property being sold and financed. The purpose of this title search is to identify and clear all problems before the new owner takes title or the lender loans money. The research helps determine if there are any rights or claims that may have an impact upon the title such as unpaid taxes, unsatisfied mortgages, judgements, tax liens against the current or past owners, easements, restrictions and court actions. These recorded defects, liens and encumbrances are reported in a preliminary report to applicable parties.
If you are thinking about buying or selling, be sure to build a team you can trust. People who will communicate clearly and keep the transaction on track, as well as, a team who will keep your best interests in mind. Excellent customer service is at the HEART of what I do. If you don’t have a lender, I’m happy to recommend several to choose from whom I trust and do business with regularly.
Whether you’re a first time buyer or a seasoned home buyer, there are several loan options available. I chat with local lender Todd Zimmerman of Finance of America to breakdown the details of some of the more popular loans including FHA, USDA, VA and Conventional loans. Let’s take a quick look!
Call, text, email or contact me on my website and I’ll be happy to help you start your home search. I work with some of the best lenders in the area to make sure you’re taken care of every step of the way. Excellent customer service is at the HEART of what I do!