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Texas Housing Insight

Here is a great post from Texas A&M Real Estate Center regarding home sales for March.

March 2019 Summary

Texas housing sales increased 1.6 percent during the first quarter amid lower mortgage rates and decreased price pressure. Single-family supply indicators were generally favorable with stable lot development, permit issuance, and housing starts. Single-family private construction values, however, contradicted this trend and extended a five-month slide. The average days on market (DOM) bumped above 61 days, primarily due to adjustments in the North Texas market. Lower mortgage rates provided incentives for prospective purchasers, but housing affordability remained a challenge across the state and weighed on homeownership rates. Despite tepid trends on both the demand and supply side, Texas’ robust economy and population growth maintained an overall healthy housing market.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, staggered as construction values trended downward. A slowdown in construction permits hindered the Residential Construction Leading Index, outweighing steady single-family activity. Lower interest rates and the extended economic expansion, however, should support the industry in coming months.

Supply-side activity remained stable at the earliest stage of the construction cycle as builders rushed to satisfy pent-up demand for homes priced less than $300,000. The number of new vacant developed lots (VDLs) balanced in Houston after sliding late last year, while jumping to a post-recessionary high in San Antonio. Growth in these metros occurred primarily in the $200,000-$300,000 sale-price range. Austin VDLs maintained solid year-over-year (YOY) growth but showed signs of cooling due to continued constraints at the lower end of the market. Dallas-Fort Worth (DFW) was the exception where last year’s sale slowdown led to decreased lot development across the price spectrum.

Single-family housing construction permits stabilized with VDLs after a sharp drop in December. In San Antonio, permits returned to typical levels (around 620 in March) after significant volatility to start the year. Houston and DFW remained the national leaders, issuing 3,168 and 2,679 monthly permits, respectively. North Texas development shifted toward the suburbs, supporting activity in Fort Worth. Austin ranked fifth nationally with nearly 1,300 monthly permits issued. Overall, Texas permit activity outpaced the rest of the nation, but growth has normalized compared with early 2018.

Total Texas housing starts trended upward amid solid single-family construction. Nearly 23,500 single-family homes broke ground in the Texas Urban Triangle during the first quarter, two-thirds of which were in DFW and Houston. Central Texas starts, however, posted double-digit quarterly growth with Austin and San Antonio outpacing the larger metros in per capita terms. In contrast, single-family private construction values fell across the state. While luxury-home construction has stalled over the past year, the new-home price distribution does not explain the persistent decline in construction values.

The supply expansion pushed Texas’ months of inventory (MOI) upward, but the metric held below four months. A total MOI around six months is considered a balanced housing market. The MOI for homes priced below $300,000 appears to be retracting after marginal relief last year. The supply of active listings dropped to 2.9 months for homes priced less than $200,000 and below 3.3 months in the $200,000-$300,000 range. A slowdown in the rate of Multiple Listing Service (MLS) listings hitting the market weighed on inventories at the lower end of the market.

New MLS listings fell for the second straight month across the major metros, putting downward pressure on the MOI. Austin’s supply of active listings dropped to a seven-month low at 2.6 months. The MOI expansion paused in North Texas, settling at 3.4 and 2.6 months in Dallas and Fort Worth, respectively. On the other hand, Houston and San Antonio’s MOI reached multiyear highs at 4.1 and 3.7 months, respectively.  

Demand

Texas total housing sales increased 1.6 percent during the first quarter as lower mortgage rates and more moderate price pressure provided some breathing room in constrained markets. The $200,000-$300,000 price cohort posted the strongest quarterly sales growth at 3 percent. New-home sales, however, continued to struggle and forced builders to shift toward lower-priced projects.

While the new-home market adjusted in North Texas, a rebound in resale transactions pushed up total sales in both Dallas and Fort Worth. Similarly, Austin’s resale market led to 3.8 percent growth in first-quarter closed listings. San Antonio activity increased in both the existing- and new-home markets, pushing quarterly sales up 6.5 percent. Houston was the only major metro to post a first-quarter decline, primarily due to stagnation in the $300,000-$500,000 price range.

While sales were positive, Texas’ average days on market ticked above 61 days for just the second month since 2014, increasing across the major metros. San Antonio’s DOM tracked the state-wide average, despite solid housing-market activity over the past year. Austin and Houston moved similarly, with homes averaging 58 days on the market. North Texas activity continued to normalize after a prolonged period of imbalances. The Dallas DOM surpassed 53 days for the first time since 2013 while Fort Worth reached a three-year high at 44 days.

Decreased affordability, ballooning student debt, and aging demographics pulled the first-quarter homeownership rate down to 64.3 and 61.8 percent in the U.S. and Texas, respectively. The Texas metric peaked around 67 percent before the housing crisis. Homeownership rates were lower in metros with waning affordability, falling to 57.2 and 59.5 percent in Austin and DFW, respectively. The Houston rate wavered but held just above 60 percent. San Antonio’s homeownership rate remained elevated at 64.4 percent and trended upward amid the current regional expansion.

Well-anchored inflation expectations combined with continued concerns of global economic growth pulled interest rates down for the fifth consecutive month. The ten-year U.S. Treasury bond yield fell to an annual low of less than 2.6 percent, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped below 4.3 percent. Texans capitalized on lower rates, pushing mortgage applications for home purchases up 14.6 percent in the first quarter. The impact should support housing demand, particularly in markets struggling with affordability constraints. Refinance mortgage applications, which are more sensitive to interest rate fluctuations, increased 33.4 percent over the same period.

Prices

In addition to lower mortgage rates, home price appreciation continued to moderate. The Texas median home price balanced around $235,800, just 2.3 percent above year-ago levels. While still increasing, home prices are no longer soaring at double-digit levels YOY like in 2017. Austin and Dallas maintained the highest median price at $300,700 and $285,500, respectively, but remained on a flat trajectory. The Houston ($239,900) and San Antonio ($226,600) median maintained steady YOY growth above 3 percent. On the other hand, the Fort Worth median price increased nearly $5,000 between February and March, surpassing a record-high $240,500 and 5 percent YOY growth.

The Texas Repeat Sales Index corroborated the moderation in price growth, balancing at 4.1 percent YOY. The Austin and Dallas indices rose 4.2 and 3.0 percent, respectively, despite little movement in median price. Houston (3.1 percent) and Fort Worth’s (4.8 percent) metric followed median-price movements. The San Antonio index increased 5 percent YOY, capturing more appreciation than indicated by the metro’s median.

Click here for the full report.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, and Paige Woodson (May 2, 2019)

    https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-In…

DFW Real Estate, Housing Market, Title Insurance, Title Company

The New Earnest Money Delivery Date Sample Timeline

FROM THE CONTRACT:

“IF THE LAST DAY TO DELIVER THE EARNEST MONEY FALLS ON A SATURDAY, SUNDAY, OR LEGAL HOLIDAY, THE TIME TO DELIVER THE EARNEST MONEY IS EXTENDED UNTIL THE END OF THE NEXT DAY THAT IS NOT A SATURDAY, SUNDAY, OR LEGAL HOLIDAY.”

IMPORTANT TIPS:

– EARNEST MONEY CANNOT BE DELIVERED ON A SATURDAY, SUNDAY OR LEGAL HOLIDAY. HOWEVER, YOU DO COUNT SATURDAY, SUNDAY AND LEGAL HOLIDAYS AS EFFECTIVE DAYS WHEN COUNTING THE THREE DAYS, BUT NOT AS THE DELIVERY DATE. THE DELIVERY DATE IS THE NEXT BUSINESS DAY.

– WHILE EARNEST MONEY IS NOT
REQUIRED TO BE DELIVERED UNTIL THE 3RD DAY, IT IS RECOMMENDED TO DELIVER THE CHECK DURING BUSINESS HOURS TO OBTAIN A RECEIPT OF EARNEST MONEY FOR THE DELIVERY.

 

Click here for printable version.

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What Is Earnest Money

What is Earnest Money

Earnest money is a deposit made to a seller that represents a buyer’s good faith to buy a home. The money gives the buyer extra time to get financing and conduct the title search, property appraisal and inspections before closing. In most cases, earnest money is delivered when the sales contract or purchase agreement is signed, but it can also be attached to the offer. Once deposited, the funds are typically held in an escrow account until closing, at which time the deposit is applied to the buyer’s down payment and closing costs. 

Earnest money is also known as an escrow deposit or good faith money.

Reasons to Pay Earnest Money

When a buyer decides to purchase a home from a seller, both parties enter into a contract. The contract doesn’t obligate the buyer to purchase the home, because reports from the home appraisal and inspection may later reveal problems with the house. The contract does, however, ensure the seller takes the house off the market while it’s inspected and appraised. To prove the buyer’s offer to purchase the property is made in good faith, the buyer makes an earnest money deposit (EMD).

When Earnest Money Is Refundable

The buyer may be able to reclaim the earnest money deposit if something that was specified ahead of time in the contract goes wrong. For instance, the earnest money would be returned if the house doesn’t appraise for the sales price or the inspection reveals a serious defect – provided these contingencies are listed in the contract.

Of course, earnest money isn’t always refundable. For example, the seller gets to keep the earnest money if the buyer decides not to go through with the home purchase for contingencies not listed in the contract, or if the buyer fails to meet the timeline outlined in the contract. And, not surprisingly, the buyer will forfeit the earnest money deposit if he or she simply has a change of heart and decides not to buy. 

Earnest money is always returned to the buyer if the seller terminates the deal.

How Much You Pay in Earnest Money

While the buyer and seller can negotiate the earnest money deposit, it often ranges between 1% and 2% of the home’s purchase price, depending on the market. If a home costs $250,000, a 1% earnest money deposit would be $2,500; at 2%, the deposit would be $5,000.

In addition to the local market rates, the size of the earnest money deposit depends on the level of interest other buyers have expressed, how hot the housing market is and how quickly a prospective buyer can close on his or her offering price. In hot housing markets, the earnest money deposit might range between 5% and 10% of a property’s sale price.

While the earnest money deposit is often a percentage of the sales price, some sellers prefer a fixed amount, such as $5,000 or $10,000. Of course, the higher the earnest money, the more serious the seller is likely to consider the buyer. Therefore, a buyer should offer a high enough earnest deposit to be accepted, but not so high as to put extra money at risk since there’s still a chance that the deal might not go through and the deposit not refunded.

Earnest money is usually paid by certified check, personal check or a wire transfer into a trust or escrow account that is held by a real estate brokerage, legal firm or title company. The funds are held in the account until closing, when they are applied toward the buyer’s down payment and closing costs. It’s important to note that escrow accounts, like any other bank account, can earn interest. Therefore, if the earnest funds in the escrow account earn interest of more than $5,000, the buyer must fill out tax form W-9 with the IRS to receive the interest.

Protecting Your Earnest Money Deposit

Prospective buyers can do several things to protect their earnest money deposits.

  • Make sure contingencies for financing and inspections are included in the contract. Without these, the deposit could be forfeited if the buyer can’t get financing or a serious defect is found during the inspection. 
  • Read, understand and abide by the terms of the contract. For example, if the contract states the home inspection must be completed by a certain date, the buyer must meet that deadline, or risk losing the deposit – and the house.
  • Make sure the deposit is handled appropriately. The deposit should be payable to a reputable third party, such as a well-known real estate brokerage, escrow company, title company or legal firm (never give the deposit directly to the seller). Buyers should verify the funds will be held in an escrow account and always obtain a receipt. 

Source: https://www.investopedia.com/terms/e/earnest-money.asp

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Texas Housing Insight

Here is a great post from Texas A&M Real Estate Center regarding home sales for February.

February 2019 Summary

Texas housing sales increased 5.2 percent from January amid lower mortgage rates and decreased price pressure. Supply indicators were mixed with single-family construction permits and total housing starts stabilizing after a shaky end to 2018, but single-family private construction values continued to slide. On the demand side, the typical Texas home continued to average just 60 days on the market and sold above 95 percent of the original list price. Lower mortgage rates provided incentives for prospective purchasers, but housing affordability remained a challenge across the state. Overall, the healthy labor market, population growth, and the economic expansion supported strong housing demand.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, inched downward as construction wages and employment calmed after a year of strong growth. The future outlook, however, remains positive as indicated by upticks in the Texas Residential Construction Leading Index. Lower interest rates and the extended economic expansion bolstered the industry outlook.

Single-family housing construction permits balanced for the second straight month after a sharp drop in December. San Antonio accounted for most of the positive growth with monthly permits doubling to a cycle high of 796. Despite a 14.6 percent decline, Houston led the nation with 2,846 permits followed by Dallas-Fort Worth (DFW) at 2,698. Austin ranked fifth nationally with nearly 1,400 monthly permits issued. Across the major metros, however, single-family permit issuance normalized compared with early 2018.

Total Texas housing starts recovered most of January’s losses, driven by growth in the apartment market. Single-family private construction values, however, continued to slide as the 4Q2018 drop in permit issuance caught up to building activity. The decline was most apparent in DFW where single-family construction values fell 8.8 percent in February. Values decreased for the third and fourth consecutive months in Austin and San Antonio, respectively, but balanced in Houston after a large November drop.

Texas’ months of inventory (MOI) inched upward but held below four months.  A total MOI around six months is considered a balanced housing market. Homes priced less than $200,000 and between $200,000 and $300,000 maintained MOI of 2.9 and 3.4 months, respectively. The rate of Multiple Listing Service (MLS) listings hitting the market, however, eased after surging through much of 2018. Fewer new listings and a recent uptick in sales could limit further MOI expansions.

Most of the major metros reached annual highs in MOI despite declines in new MLS listings. Dallas and San Antonio ticked up to 3.5 and 3.6 months, respectively, while Houston balanced at 4.1 MOI. Fort Worth maintained the lowest MOI at 2.7, up from 2.0 months in February 2018. Austin was the exception where steady sales snapped a six-month stretch of inventory increases.

Demand

Texas total housing sales increased 5.2 percent to its highest level since July as lower mortgage rates and decreased price pressure provided some breathing room to constrained markets. Resale transactions generated most of the improvement with activity increasing for the second straight month. A record-level of homes sold in the $200,000-$300,000 price range, while the bottom cohort (homes priced less than $200,000) posted its second straight monthly increase. These two cohorts account for more than 70 percent of single-family sales reported through MLSs. Furthermore, the luxury market (homes priced more than $500,000) posted an 11.9 percent monthly increase, recovering all of its 4Q2018 losses.

All of the major metros posted positive sales growth. Activity trended upward in Central Texas with sales increasing four out of the last five months in both Austin and San Antonio. Fort Worth posted the largest monthly growth at 12.4 percent after adjusting downward in the second half of 2018. Similarly, Dallas and Houston transactions stabilized, increasing 6.0 and 6.5 percent, respectively.

Despite slow and steady increases over the past year, the Texas average days on market (DOM) balanced at its four-year trend of 60 days and corroborated healthy housing demand. Austin and San Antonio accounted for most of the monthly decline as the DOM sank to 56 and 59 days, respectively. Houston homes averaged 57 days on the market but trended upward. The North Texas market continued to steady after a prolonged period of imbalances. The Dallas DOM surpassed 51 days for the first time since 2013 while Fort Worth reached a three-year high at 44 days.

Softer economic data, particularly in February’s U.S. employment report, decreased inflation expectations and weighed on interest rates. The ten-year U.S. Treasury bond yield fell to an annual low below 2.7 percent, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped to 4.4 percent. Texans capitalized on lower rates, pushing mortgage applications for home purchases up 11.2 percent in the first two months of 2019. Refinance mortgage applications, which are more sensitive to interest rate fluctuations, increased 20.2 percent year to date.

Prices

In addition to lower mortgage rates, home price increases continued to moderate after substantial post-recession appreciation. The Texas median home price balanced at $235,500, just 2.6 percent above year-ago levels. While still increasing, home prices are no longer soaring at double-digits levels YOY like in 2017. Austin maintained the highest median price but fell below $300,000 for the first time since spring 2018. Healthy activity in the $200,000-$300,000 cohort, which constitutes the lower end of the Austin market, provided the recent relief in price pressure. The median dipped for the third consecutive month in Dallas to $282,100 and fell below $238,000 in Houston. Fort Worth and San Antonio median prices, however, increased more than $3,000 between January and February, reaching $235,400 and $229,300, respectively.

The Texas Repeat Sales Indices corroborated movements in the major metro median prices. In Dallas, YOY growth slowed to 2.8 percent, the lowest in more than six years. The metro’s list-to-sale price balanced at 0.96, down from its peak of 0.98 in January 2017, indicating solid market fundamentals despite the recent price slide. Houston’s repeat sales index decelerated to 3.1 percent, while the Fort Worth index climbed above 5 percent. Central Texas observed steady annual price growth at 4.1 percent in both Austin and San Antonio. Despite the overall moderation, home-price appreciation continued to outpace wages and weighed on housing affordability.

Although Texas’ affordability remained favorable compared with other states, the gap is narrowing. This presents a significant challenge to Texas’ demographic advantages that have supported its economic prosperity over the past decade.

 

Click here for the full report.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, and Paige Woodson (April 3, 2019)    https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-In…

DFW Real Estate, Housing Market, Title Insurance, Title Company



ABCs of Title Commitment

A Commitment is a document the title company provides to all parties connected with a particular real estate transaction. It discloses the title of record to the property as well as all the liens, defects, burdens and obligations that affect the subject properties. It is comprised of four schedules.

Schedules A, B, C and D are as follows:

Actual Facts
Is the Who, What, Where and How Much section of the Commitment. You will see the names of the buyer, record owner (seller), a legal description of the property, the sales price and the name of the lender, if applicable. It is a good idea to double check this information with the contract.

Buyer Notification
This section lists the general and specific exceptions to the property. It will list
items such as survey matters, taxes, easements, setback lines and a variety of other items that will not be covered by the title policy. It is important to review and discuss any questions you have with your title company.

Clear in Order to Close
These items must be resolved in order to transfer title to the new owner. They might include such things as a mortgage that will be paid off at closing, liens for home improvements or unpaid taxes. All items shown on Schedule C should be discussed and resolved before the closing.

Disclosure
This section outlines the ownership of the title company and all the parties who will share in any part of the insurance premium collected to issue the policy. It includes underwriters, title agents and attorneys.
This information is not to be substituted as legal advice and is descriptive only. If you have any concerns about any portion of your title commitment or any portion of Schedule A,B,C, or D, please contact your attorney.

This information is not to be substituted as legal advice and is descriptive only. If you have any concerns about any portion of your title commitment or any portion of Schedule A,B,C, or D, please contact your attorney.

ABCs of Title Commitment

 

 

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Survey Deletion Coverage Q&A

What is Survey Deletion Coverage?

Survey Deletion Coverage is often also referred to as “Survey Deletion”, “Survey Amendment”, and “Survey Coverage.”  When survey deletion coverage is given in the title policy it offers Buyers protection for errors or omissions that may have been made by the surveyor and accepted by the title company by changing the language in the “standard exception” of the title policy to read “Shortages in Area” only.  The “standard survey exception” in a title commitment or policy (before being amended) reads:

“Any discrepancies, conflicts, or shortage in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements.”

 Upon receipt of an acceptable survey, the title company may amend this exception to read “Shortages in area” only.   Things that a title company will look at to determine if a survey will be acceptable include, but are not limited to, the following:  that items noted on the survey are listed in the title commitment, verify the legal description, check platted building lines and platted easements, and other matters such as the seal and signature of the engineer, date of the survey, and north directional arrow. 

Survey Deletion is addressed in paragraph 6. A. (8) of the TREC One to Four Family Residential Contract, where the parties select between the options of amending or not amending the standard exception in the title policy and who will be responsible for the payment of the premium.

There are other issues that may show up in the review of a survey, such as a building or driveway or fence over a building line, or into a platted easement.  When this happens, the title company may still accept the survey and amend the standard exception to read “Shortages in Area” only, but will generally add a special exception on Schedule B of the title commitment and owner’s title policy for any of these issues that were shown on the survey.              

The cost of survey deletion coverage on residential transactions is 5% of the Owners Title Policy Premium, and is 15% of the Owner Title Policy Premium in a commercial transaction.

For more information on Survey Deletion Coverage, download our Survey Deletion Coverage Q&A flyer 



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Helpful Terms for Buying/Selling Your Home

Buying or selling a home is one of the most important undertakings of a lifetime. When buying or selling a home, there are many real estate terms that may be unfamiliar to you. Check out this list of commonly used terms that you may find helpful during the process.

AIR:  Adjustable Interest Rate

AMORTIZATION SCHEDULE: A schedule showing the principal and interest payments throughout the life of the loan.

APPRAISED VALUE: An opinion of the value of a property at a given time, based on facts regarding the location, improvements, etc. of the property and surroundings.

CD/CLOSING DISCLOSURE: This form is a statement of final loan terms and closing costs. Sometimes referred to as ICD or Integrated Closing Disclosure.

COMMITMENT:  The document by which a title insurer discloses to all parties connected with  a particular real estate transaction all the liens, defects, and burdens and obligations that affect the subject property.

CREDIT REPORT: A report on the past ability of a loan applicant to pay installment payments.

DOCUMENT PREPARATION FEE: A charge by an attorney for preparing legal documents for transaction.

ESCROW FEE: A fee charged by the title company to service the transaction, to escrow monies, and cover documents. Usually split between buyer and seller.

ESCROW ACCOUNT: Funds held by the lender for payment of taxes and insurance when due. Usually does not include maintenance fees.

HOA ASSESSMENT FEES: Charged by the homeowner’s association as set out in subdivision restrictions.

HOMEOWNER’S INSURANCE:  Protects the property and contents in case of loss; must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater.

INSPECTIONS: An examination of property for various reasons such as termite inspections; to see if required repairs need to be made before funds are received, etc.

INTEREST: Money paid regularly at a particular rate for the use of money lent.

LOAN TITLE POLICY: Required by the lender to insure that the lender has a valid lien; does not protect the buyer.

ORIGINATION FEE:  A fee the buyer pays the lender to originate a new loan.

OWNER’S TITLE POLICY: Insures that the buyer has title to the property, that there are no other claims as to ownership. Among other matters, it also insures access to the property, the right to occupy the property, good and indefeasible title, and that there are not other types of specific liens against the property. 

POINT:  1% of the loan amount.

PREPAIDS: Items to be paid by the buyer in advance of the first scheduled payment of the loan (Homeowner’s Insurance Premium, Mortgage Insurance Premium, Prepaid Interest, Property Taxes and a maximum of three additional items).

PREPAYMENT PENALTY:  Charged by the lender for premature payment of a loan balance.

PRIVATE MORTGAGE INSURANCE: Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).

REALTOR FEES:  An amount paid to the REALTOR® as compensation for their services. RECORDING FEES: Charged by the County Clerk to record documents in the public records. RESPA:  Real Estate Settlement Procedures Act.

RESTRICTIONS: Certain limitations or conditions related to the future use of the property put on the property by a prior owner. These restrictions stay with the property until they expire or are amended as per certain procedures set forth in the restrictions.

SURVEY:  Confirms lot size and any encroachments or restriction violations.

TAX CERTIFICATES: Certificates issued by taxing authorities showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected at closing.

TAX PRORATION: Means that the payment of the taxes for the year of sale are divided between the Buyer and Seller, usually based on the amount of time the Seller owned the property during that year. Prorations, and how they are calculated, are typically addressed in the Contract of Sale.

TIL:  Truth in Lending.

TIP: Total Interest Percentage; the total amount of interest the borrower will pay over the loan term as a percentage of the loan amount.

TOTAL OF PAYMENTS: Total amount paid after all payments of principal, interest, mortgage insurance and loan costs are scheduled. 

To download our Helpful Terms for Buying/Selling Your Home flyer,  visit Helpful Terms for Buying and Selling Your Home.

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Republic Title Announces ALTA Best Practices Recertification

Republic Title of Texas, Inc. is proud to announce our completion of HA&W’s ComplianceSuccess® Program which certifies compliance with American Land Title Association (ALTA) Best Practices. ALTA’s Best Practices Framework includes:

1.      Licensing: Establish and maintain current License(s) as required to conduct the business of title insurance and settlement services

2.      Escrow Trust Accounting: Adopt and maintain appropriate written procedures and controls for Escrow Trust Accounts allowing for electronic verification of reconciliation.

3.      Protecting NPI: Adopt and maintain a written privacy and information security program to protect Non-public Personal Information as required by local, state and federal law.

4.      Settlement Processes: Adopt standard real estate settlement procedures and policies that help ensure compliance with Federal and State Consumer Financial Laws as applicable to the Settlement process.

5.      Policy Production: Adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance.

6.       Insurance Coverage: Maintain appropriate professional liability insurance and fidelity coverage.

7.      Consumer Complaints: Adopt and maintain written procedures for resolving consumer complaints.

For more information on ALTA’s Best Practices Framework and why it is important to do business with a company that implements these standards, visit www.alta.org/best-practices

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Texas Housing Insight for November

Here is a great post from Texas A&M Real Estate Center regarding home sales for November.

Note: Due to the ongoing Federal government shutdown, the release of multiple data series has been delayed, and they are not included in this report. The following analysis represents an overview of the Texas housing market based on the available data.

November 2018 Summary

Texas housing sales ticked down 1.1 percent in November and remained on a flat trajectory. The shortage of homes priced below $300,000 and rising interest rates continued to weigh on overall activity. Listing inventories inched forward but still remained tight relative to demand. Housing demand showed signs of normalizing, particularly in North Texas, after a multiyear period of unsustainable growth. Steady population and job growth, however, suggest healthy demand for the duration of the current economic expansion. The recent pause in sales activity calmed home-price appreciation, but rising interest rates hindered affordability across the state.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, reached its highest level since 2008 as construction employment and wages continued to elevate. Momentum, however, could moderate as indicated by recent declines in the Texas Residential Construction Leading Index (RCLI). Rising interest rates and sluggish residential construction activity over the past few months weighed on the housing market, but robust economic growth upheld a strong foundation.

Third quarter private bank loan data indicated a slowdown in residential construction investment, led by a decline in large multifamily loan values (buildings consisting of five or more units). Funds poured into this sector starting in 2013 but peaked earlier this year. Loans for one-to-four unit projects inched forward to a cycle-high but remained below 2007 levels. Despite the steady increase in loan volumes for small-unit structures, single-family private construction values flattened through most of the state (although October numbers were revised upward).

Sluggish sales provided some breathing room for the supply of active listings, but the Texas months of inventory (MOI) remained below four months. Around six months of inventory is considered a balanced housing market. A spike of new listings in the beginning of 2018 also supported inventory increases. Listing inventories of single-family homes priced at more than $400,000 exhibited the largest uptick this year, reaching 6.6 MOI after bottoming below 5.8 MOI in February. In the $200,000-$300,000 range, the MOI reached a four-year high of 3.3 months. The market for homes priced less than $200,000 remained exceptionally constrained below three MOI.

The MOI reached YTD highs in all the major metros but remained well below equilibrium levels. A steady stream of new MLS listings lifted the MOI up to 3.9 and 3.5 months in Houston and San Antonio, respectively. More homes hitting the market combined with a sales slowdown pushed the Austin and Dallas MOI up to 2.8 and 3.2 months, respectively. Fort Worth also noted an increase to 2.5 MOI, but new listings paused as sellers opted to wait out the market correction in North Texas.

Demand

Total housing sales ticked down 1.1 percent after double-digit growth in October, remaining on a flat trajectory. Most of the decline occurred for homes priced above $400,000. Single-family homes priced between $200,000 and $300,000 accounted for 32 percent of closed listings through an MLS, remaining the most active price cohort with a record-high 8,746 monthly sales. The bottom cohort (consisting of homes priced below $200,000) accounted for 37 percent of MLS sales, down from 69 percent in 2011. Nearly half of these transactions occurred outside the major metros.

Year-over-year sales decreased in all of the major metros following the October rebound. Dallas’ correction continued, with sales down 12.8 percent relative to November 2017. Fort Worth’s decline was more modest at 4.3 percent YOY. The North Texas slowdown marks an adjustment after multiple years of explosive growth, where home-price appreciation significantly outpaced earnings. A steady decline in the list-to-sale-price ratio over the past two years corroborates the transition away from hyper activity. This metric, however, stabilized above 0.96 in recent months, corroborating the solid foundation of the DFW housing market. The ratio also balanced in Austin and Houston despite a 0.2 and 2.8 percent decline YOY. San Antonio was the exception, where sales increased 5.2 percent YOY to a record-high 2,920.

Robust economic growth and the healthy labor market held Texas’ average days on market (DOM) below two months as homes continued to sell at a rapid clip. The DOM trended similarly at 60 days in Austin while averaging 57 and 58 days in Houston and San Antonio, respectively. The rate of sales growth continued to calm in North Texas, providing homebuyers some much-needed breathing room. The Dallas DOM elevated to 48 days, nearly two weeks longer than the record-low in September 2015. Fort Worth maintained the lowest DOM at 42 days but trended upward to more sustainable levels.

Interest rates held near a seven-year high due to the strong national economy, but the flattening yield curve drew investors’ attention. The two- and ten-year U.S. Treasury bond yields settled at 2.86 and 3.12 percent, respectively—hovering around their lowest spread since the Great Recession. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate rose for the fourth consecutive month to 4.87 percent, weighing on the housing affordability conditions. Higher interest rates disproportionately affected Texas refinance mortgage applications, which slid 38.5 percent since January. Purchase applications, which are less sensitive to mortgage rate fluctuations, rebounded with 5.7 percent YOY growth.

Prices

Lagging sales and upticks in inventory moderated home-price gains after substantial post-recession appreciation. The Repeat Sales Indices for the major metros continued to converge following the North Texas boom and Houston’s slowdown after the 2014 oil bust. In Dallas and Fort Worth, the repeat sales indices stabilized at 3.6 and 4.5 percent YOY growth, respectively. Annual price growth decelerated to 3 percent in Austin but picked up 4 percent in San Antonio. Healthy housing activity in Houston pushed the index above 3.4 percent for the second time in two years.

 

Despite the moderation, the Texas median home price hit a record high at $235,727. The Dallas median increased to $288,468, and San Antonio surpassed $227,750. On the other hand, Fort Worth’s and Houston’s medians ticked down to $233,258 and $237,144, respectively, while the Austin median dropped $9,000 to $304,700. Consumer preferences shifted toward smaller homes to combat affordability constraints, pushing the median price per square foot up across the major metros relative to last year. Until wage growth catches up to home-price appreciation, the market will shift toward higher-density housing in the form of reduced lot and home sizes or toward multifamily units.

 

Click here for the full report.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, and Paige Woodson (Nov. 4, 2018)     https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-In…

 

DFW Real Estate, Housing Market, Title Insurance, Title Company