Monthly Archives: September 2016

Attract international home buyers

As international buyers are increasing, they are also bringing new trends to the market. For example, the Chinese influence is affecting home values for street addresses that contain the Chinese lucky number – four.

Now, even the way homes are sold may need to change. Jack Ryan, founder of REX, an online brokerage, former partner at Goldman Sachs and a onetime opponent of President Barack Obama for the Illinois Senate seat, decided to do just that.

Home prices continue to increase, a trend that will continue into 2017, according to a new report from CoreLogic.

These increasing home prices are narrowing the scope of possible buyers on luxury homes, and increasing the possibility that it will be bought by an international buyer. That is exactly what Ryan realized when he decided to turn to virtual reality to sell a $57.5 million home in Malibu, California, according to an article by James Tarmy for Bloomberg.

From the article:

“For homes like this,” Ryan said, gesturing to the house’s fireplace, “there’s a 50 percent chance that the buyer is outside the U.S., in around 15 financial capitals—London, Shanghai, Paris, Beijing.”

To reach that elusive group of the super-rich, Ryan had to get creative, which is why he decided to pay a virtual reality company to map the house and create an interactive video.

Virtual reality allows viewers to see the home as though they were really there by looking through a view piece strapped onto their head. Several different agents have begun playing with virtual reality as a tool for selling homes or condos, but is it working?

From the article:

The video, he said, has been useful, though he considers VR one of several marketing tools. “I couldn’t give tangible results, like ‘five deals closed because we had VR,’” he [Adam Greene, vice president of residential development at Forest City Ratner] said. “I think it gives the whole experience of the sales center something a little bit different.” Indeed, multiple brokers all echoed the same point: VR is presently a tool that can get buyers excited, not an actual replacement for seeing the house in person.

Ryan’s virtual reality video cost in the low tens of thousands to produce, according to the article.

Expect home prices to start rising

Consumers became more optimistic about the housing market immediately following the election, according to Fannie Mae’s Home Purchase Sentiment Index. What’s more, the share of Americans who expect home prices will only continue to increase grew four percentage points to 35%, reversing the three-month downward trend.

The HPSI decreased in November for the fourth consecutive month, sliding down 0.5 points to 81.2. Four of the six components of the HPSI decreased. The election created a great divide in confidence levels from before and after election day.

“The November Home Purchase Sentiment Index outcome is difficult to interpret as the data collection period occurred across the Presidential election timeline,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election.”

Those who said now is a good time to buy a home decreased by one percentage point to 30%, while those who said now is a good time to sell fell by six percentage points to 13% in November. Those who said now is a bad time to sell even rose two percentage points to 38%.

“However, if mortgage rates continue their recent rise, we may see a dampening in home purchase attitudes,” Duncan said. “There are clear predecessors for rapid market changes that ultimately dissipated, which urges caution in the interpretation of stability in short-term rate changes.”

Those who say mortgage rates will go down over the next twelve months decreased by six percentage points to -51%, while those who say they are not concerned about losing their job fell five percentage points to 64%.

Americans who answered their household income is significantly higher than it was 12 months ago rose 11 percentage points to 15%, reversing the decrease seen in October.

Fannie Mae forecasts only modest growth in the next 12 months.

Bank reportedly fails fair lending requirement

The dark clouds surrounding Wells Fargo are about to get a lot darker, as the bank, which is already in hot water over its recent fake account scandal, is reportedly falling short in its fair lending requirements and faces additional sanctions.

Over the last few months, Wells Fargo has been in the crosshairs of various regulators after the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the city and county of Los Angeles fined Wells Fargo $185 million because more than 5,000 of the bank’s former employees opened approximately 2 million fake accounts in order to get sales bonuses.

In the fallout from the fake account scandal, Wells Fargo CEO John Stumpf lost his job, the bank lost business from several states, and the OCC slapped additional sanctions on it, including forcing the bank to ask the OCC for approval if it wants to make a change to its board of directors or its senior executive officers.

Now, according to a new report from Reuters, Wells Fargo is about to be more hot water with the OCC for reportedly failing to meet its requirements under the Community Reinvestment Act.

Under the Community Reinvestment Act guidelines, banks are legally required to meet the credit needs of low- and moderate-income communities.

From Reuters:

Wells Fargo is due to be deemed a bank that “needs to improve” under the Community Reinvestment Act (CRA), a law meant promote fair lending.

The move is a two-notch downgrade from the “outstanding” tag Wells Fargo has held since 2008 and the change would give regulators a greater say on day-to-day matters like opening new branches.

The ruling from the Office of the Comptroller of the Currency, the main regulator for national banks, is due by early January, said the sources with knowledge of the plans.

The ruling would be significant, considering Wells Fargo’s status as one of the largest (if not the largest) mortgage lenders in the country.

Reuters cautions that Wells Fargo could win an appeal of the downgrade. According to the Reuters report, that decision is still pending.

Northwest reaches all time low

Pending home sales hit an all-time high in the Northwest, but new listings took a plunge, according to the latest report from Northwest Multiple Listing Service.

The report, which covers 23 counties in and around Washington state, showed that new listings added during November dropped to an 11-month low. This could increase home prices as buyers fight over the dwindling inventory, which is now at an all-time low.

“Last year’s holiday season ended up being the best time to sell a home around King County as sellers took the winter months off, but buyers remained persistent,” said Robert Wasser, Northwest MLS director and Prospera Real Estate owner/broker. “The supply of homes for sale hit a post-recession low, and so far, this year is mirroring last winter’s trends.”

Inventory decreased by 13.2% in November, but pending home sales increased 94% in the Northwest. Prices increased by 11% compared to last year.

This left a housing supply of just 1.69 months, a new low. King Country showed the lowest level of supply at just 0.96 of a month.

Pending home sales totaled 8,217 for the month, compared to the 5,779 new listings.

The cause for the sudden surge could be the oncoming winter months, but there is also another factor causing borrowers to flood the market.

“November’s pending sales for the four-county area of King, Snohomish, Pierce and Kitsap were the highest since 2005,” said J. Lennox Scott, John L. Scott Real Estate chairman and CEO.

“There were 44% more pendings than new listings,” Scott said. “Every time interest rates increase 0.5% we see these surges because buyers become anxious about increasing rates – but on a historical basis rates are still amazing.”