Hurricanes Harvey and Irma Are Expected to Stall Real Estate Recovery

Black Knight Financial recently reported that though the recovery from the 2008 real estate crash has made significant strides forward.

Unfortunately, this progress is most likely going to stall as it is expecting up to 300,000 mortgages to become delinquent as a result of Hurricane Harvey.

The FEMA-declared disaster areas saw delinquencies jump 16%, from 5.37% before the storm, which made landfall on Aug. 25, to 6.22% by the end of August.

More than 6,700 new 30-day delinquencies can be attributed to Harvey, while an additional 1,000 borrowers who were already 30-days past due missed an additional mortgage payment in August as a result of the storm.

Notwithstanding, Black Knight’s July mortgage performance data was overall very positive.
» The national delinquency rate rose by 2.8% in July, on par with expected seasonal activity, though 90-day delinquencies stayed level from one month ago
» July’s 53,300 foreclosure starts marked the second lowest (next to April 2017) monthly volume since the start of 2005
» At just 21,000, first time foreclosure starts were the lowest since the turn of the century
» Following monthly gains in May and June, prepayment activity fell by nearly 10% in July and 20% below last year
» The monthly declines in prepayment activity were seen in a relatively uniform fashion across investor, credit and vintage bands
» Foreclosure inventory fell by 12,000 in July, bringing the total below 400,000 for the first time since February 2007
» Active foreclosure inventory has declined by 28% (more than 150,000) over the past 12 months

Flipping Part 1 – Inventory Shortage Or Market Shift

According to a story published by CNBC, “House flipping has seen a huge run-up in the past few years, as investors take advantage of tight supply in the market and fast-rising home prices.”

The story even credits the popularization of home renovation and house flipping shows as fueling the trend. The influx of many “frontier home-flippers” is actually having an impact upon the market.

After two consecutive years of gains, the rate of home flipping flattened in the second quarter of 2017, according to a new report from Attom Data Solutions.

CNBC reports that, “Nationwide, 53,638 single-family homes and condos were flipped in the second quarter, which is 5.6 percent of all home sales during the period. That rate was down from 6.9 percent in the previous quarter and unchanged from a year ago.”

The definition of a house flip is when a property is bought and sold within the same calendar year.

  • Home flippers saw an average gross return of $67,516 in the second quarter, representing a 48.4% return on investment.
  • Surprisingly, this is down from 49% in the previous quarter and down from 49.6% in the second quarter of 2016.
  • This marks the lowest return in nearly two years.
  • The peak return of 51.1% was recorded in the third quarter of 2016.
  • The average gross flipping returns nationwide have decreased for three consecutive quarters.

The reason attributed to the decrease in the return-on-investment is the rising cost to purchase a potential property to flip.

Home prices jumped by 6.7% in July on an annual basis.

According to Daren Blomquist, senior vice president at Attom Data Solutions, “Many flippers are gravitating toward lower-priced areas where discounted purchases are more readily available — often due to foreclosure or some other type of distress. Many of those lower-priced areas also have strong rental markets, giving flippers a consistent pipeline of demand from buy-and-hold investors looking for turnkey rentals.

Flippers are also relying on other forms of financing such as low down payment FHA mortgages and small groups of investors looking for a steady rate of return for the short-term. In the more expensive regions, like Denver, Seattle and Boston, more than half of flips were financed with mortgages.

Median Income Rises Again

The median income increased in the U.S. from 2015 to 2016 to the highest point ever, according to the latest Income, Poverty and Health Insurance Coverage in the United States: 2016 report from the U.S. Census Bureau.

Real median household income increased 3.2% to $59,039 from 2015 to 2016, according to the newly released report. This represents a second annual increase and is also the highest level ever recorded.

The U.S. Census Bureau announced today that real median household income increased by 3.2% between 2015 and 2016. During the same period, the official poverty rate decreased 0.8%.

Income Stats
■ Real median incomes in 2016 for family households ($75,062) and nonfamily households ($35,761) increased 2.7% and 4.5%, respectively, from their 2015 medians. This is the second consecutive annual increase in median household income for both types of households. The differences between the 2015 to 2016 percentage changes in median income for family and nonfamily households was not statistically significant.
■ Among the race groups, Asian households had the highest median income in 2016 ($81,431). The 2015 to 2016 percentage change in their real median income was not statistically significant.
■ Households with the highest median household incomes were in the Northeast ($64,390) and the West ($64,275).
■ Households in the South and West experienced an increase in real median income of 3.9% and 3.3%, respectively.
■ The poverty rate for families in 2016 was 9.8%, representing 8.1 million families, a decline from 10.4% and 8.6 million families in 2015.
■ The official poverty rate in 2016 was 12.7%, with 40.6 million people in poverty, 2.5 million fewer than in 2015.

Stretching Your Retirement Savings

Half of leading-edge baby boomers, those ages 61 to 69, have fully retired and about 15% of the U.S. population is now finished with work. 

Retired Americans receive $1.3 trillion in income. The vast majority of this income comes from two sources: Social Security (42%) and traditional pension and retirement plans (30%).

Some 41% of retirees have annual income less than $25,000, and of those, only 21% receive income from a pension or retirement plan.

Yet, with the fluctuations in the market and economy, there is a concern out there as to when to retire.

In the event that you are nearing retirement, there are things that you can still do to improve your financial health.

The first thing that you can do is plan on working longer; even if the position is part-time. Extending your ‘working career’ doesn’t make just financial sense, but by keeping active, your health will enjoy added benefits.

There are some who have been empty-nesters that have additional bedrooms that can be shared to defray certain costs like real estate taxes and insurance premiums.

Keep Working
It was just two decades ago when the average American man retired at 62. That average age is now bumping up to 64, according to certain statistics, will continue to go higher.

According to a Gallup poll, 74% of working U.S. adults are planning to work “past retirement.” Of that population, Gallup shows that 11% will continue to work past retirement age of 65.

It is further reported that 59% are planning to retire at age 65 or later; this reflects 26% who have set 70 as their projected retirement age.

Delay Social Security
By claiming your Social Security benefits at the current full benefit age of 66, you will collect 20% more than if you claimed at 62. What is more, if you delay claiming Social Security benefits until the age of 70, you will see your benefit increase by 76%.

Continue to Work
People who work after ‘officially’ retiring have found that they stay productive (79%), and enjoy greater flexibility and control over their time (70%). They also benefit by learning new skills and enjoy a greater sense of accomplishment.

Additionally, by working longer, the financial security of that individual improves – in some cases, this can delay the drawdown of your retirement assets.

There are also penalties for those who work and earn more than their $16,200 benefit.

An individual who works and earns $26,920 ($10,000 over the $16,920 limit) will see their Social Security income reduced by $5,000 ($1 for every $2 earned over the limit). This rule does not apply after reaching the full retirement age.

Toms River #1 Metro Area in Sales in NJ

According to RealtyTrac, the Toms River metro area ranked number one in sales for August 2017, recording 86 transactions.

In August, the number of properties that received a foreclosure filing in NJ was 6% higher than the previous month and 13% lower than the same time last year.

New Jersey Stats for August 2017
Median List Price:    $259,900     0% ( $100 ) vs Jul 2016
Median Sales Price: $222,900     7% ( $14,900 ) vs Jul 2016
Homes for Sale:          35,651
Recently Sold:            14,444
Overall, the number of home sales for July 2017 were down 25% as compared with June 2017, and down 7% when compared with 2016. The median sales price of a non-distressed home was $222,900.
NJ State Information
Population: 8,721,577
Schools: 3686
Household Median Income: $69,811
Unemployment: 4.30%
Percentage of vacant homes: 10.00%
RealtyTrac website: http://www.realtytrac.com/statsandtrends/nj

The Millionaire Habits

Rise and Shine – Get up early. Get ahead of the day.

Exercise Regularly – Exercise gives you focus, stamina and mental agility.

Personal Emotional & Spiritual Renewal – Reflection and renewal of one’s inner core is the backbone of all success.

Community – Invest not only in the stock market, but invest in one’s personal community. Relationships are the foundation for all personal growth.

Personal Development – Who you become tomorrow will hinge upon what you are reading and learning today.

Focus on the Important Things – Follow the 80/20 Rule that predicts that 80% of your results will come from 20% of your efforts. Know your 20%.

Find a Mentor/Be a Mentor – We all learn best from other people. Who are you learning from?

Have a Plan/ Have a Goal – The saying goes, “If you fail to plan, you are planning to fail!” stated Benjamin Franklin two centuries ago.

Anticipate Adversity – Fear, failure and uncertainty can never be eliminated from any initiative. Anticipate the adversity and learn from it.

ABOUT COUNSELLORS TITLE AGENCY
Since 1996, Counsellors Title Agency had provided swift, proven and knowledgeable title insurance settlement and search expertise for thousands of New Jersey’s attorneys, loan officers, Realtors, borrowers and purchasers. CTA’s detail-oriented team of professionals streamlines the complexities of a real estate transaction to make each one stress and glitch-free.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

First-Time Homebuyer Tip Sheet

As the current number of homes for sale stays below the traditional healthy level of a six-month supply threshold, first-time buyers need to bone-up on their home buying game plan. 

Homes are staying on the market on average about 60 days currently.

Knowing what, how and when to pull the trigger on a house is a lot like hunting: your ‘prey’ is alive and a moving target. Markets change faster than ever today.

  • Identify your home wish list.
  • Get pre-approved for your loan.
  • Work with a real estate agent who is familiar with your desired purchase neighborhood. Agents call this their farm; they are familiar with the nuances, the politics, the attorneys and appraisers for that neighborhood.
  • If you know or have an attorney, they can be invaluable to keep the home buying process moving ahead. Since first-time buyers don’t have the responsibility of selling a home, they able to close quickly. This makes them an attractive buyer especially if the seller finds that they are in a rush to sell.
  • Be on the lookout for a hungry seller. Signs of a motivated seller could be a series of price reductions, days on market, or change of listing agent.

ABOUT COUNSELLORS TITLE AGENCY
Since 1996, Counsellors Title Agency had provided swift, proven and knowledgeable title insurance settlement and search expertise for thousands of New Jersey’s attorneys, loan officers, Realtors, borrowers and purchasers. CTA’s detail-oriented team of professionals streamlines the complexities of a real estate transaction to make each one stress and glitch-free.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

 

The Pressure on the American Paycheck

According to a recent report from CareerBuilder, the number of full-time workers living paycheck-to-paycheck is increasing to a whopping 78% in 2017 up from 75% in 2016. This benchmark is concerning when the same study by CareerBuilder stated that 71% of all U.S. workers are now in debt. This is also higher than in 2016 when the figure was just 68%.

This trend of higher debt to income has increased despite the fact that household income has grown over the past decade; income has failed to keep pace with the increased cost-of-living over the same period.

Even the families with six-figure income showed that nearly 1 in 10 were living paycheck to paycheck, and 59% of those in that salary range said they were in the red.

Most financial experts recommend stashing at least a six-month cushion in an emergency fund to cover anything from a dental bill to a car repair — and more if you are the sole breadwinner in your family or in business for yourself.

In a Reuters article, it was reported that “Americans’ debt level notched another record high in the second quarter, after having earlier in the year surpassed its pre-crisis peak, on the back of modest rises in mortgage, auto and credit card debt, where delinquencies jumped.”

A Few Fast Facts

  • 46% said their debt is manageable
  • 56% said they were in over their heads
  • Approximately 56% of those surveyed save $100 or less each month
  • Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago
  • The proportion of overall debt that was delinquent was 4.8% according to the New York Federal Reserve
  • Total U.S. indebtedness is about 14% above the trough of household deleveraging of 2007-2009
  • Mortgage debt was $8.69 trillion in the second quarter, up $329 billion from 2016
  • Student loan debt was $1.34 trillion, up $85 billion
  • Auto loan debt was $1.19 trillion, up $55 billion

ABOUT COUNSELLORS TITLE AGENCY
Since 1996, Counsellors Title Agency had provided swift, proven and knowledgeable title insurance settlement and search expertise for thousands of New Jersey’s attorneys, loan officers, Realtors, borrowers and purchasers. CTA’s detail-oriented team of professionals streamlines the complexities of a real estate transaction to make each one stress and glitch-free.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Forbearance for Hurricane Homeowners Part 2

The effects of Hurricane Harvey in Texas and Louisiana was significant. 

The industry expert, Black Knight Financial Services, predicts that the mortgage industry could see approximately 300,000 new delinquencies as a result of the storm.

There could also be another 160,000 borrowers who could become significantly past due in their mortgage payments. This equates to a half a million mortgages that are in jeopardy.

Thankfully Fannie Mae and Freddie Mac stated before the Hurricanes arrived that they were temporarily suspending foreclosures and evictions within these regions. According to Black Knight, there are approximately 1.18 million mortgage properties that lie within the FEMA designated disaster areas.

The US government is becoming very proactive when coming to the aid of and supporting those owners who hold mortgages in these affected zones.

Already House of Representatives and the US Department of Urban Development are looking to take actions to assist homeowners in these areas.

ABOUT COUNSELLORS TITLE AGENCY
Since 1996, Counsellors Title Agency had provided swift, proven and knowledgeable title insurance settlement and search expertise for thousands of New Jersey’s attorneys, loan officers, Realtors, borrowers and purchasers. CTA’s detail-oriented team of professionals streamlines the complexities of a real estate transaction to make each one stress and glitch-free.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

A New Crisis Word – Forbearance

The new hot topic and ‘trigger-word’ in the coming months for the real estate and mortgage industry is the word Forbearance. The reason for the shift in the economic lexicon is due to the effects of the two historic hurricanes to hit the south: Harvey and Irma.

It is most likely that thousands of mortgages held by homeowners in the hurricane-stricken areas of Texas and now Florida hit by flood waters, could be hit by the financial waters. Many homeowners will be focused on survival and shelter, rather than paying their monthly bills which includes paying their mortgages.

There is a possibility that Fannie Mae and Freddie Mac and the Federal Housing Administration will offer forbearance for at least 90 days to borrow is in Texas and now what seems to be Florida following the Hurricane Irma.

The economic recovery of Texas will center around reestablishing the day-to-day life or family, home and school. At the bottom of the list will be paying their mortgage. But the billions of dollars of mortgages are a stark reality. Where will the money come from and how soon will it arrive will be pressing issues.

Forbearance
According to sources Fannie Mae Freddie Mac and the Federal Housing Authority which backs of vast majority of mortgages today will offer forbearance for at least 90 days to borrowers in the Houston area and they potentially could extend that for up to a year.

The forbearance means that borrowers will not have to make their monthly payments without a penalty period interest however will still accrue. The offer is not a solution but a stopgap.

It is estimated that up to 75,000 Houston borrowers could become unable to pay their mortgage over the next few months. In addition to that it is also believed that 45000 other mortgage holders would become seriously delinquent on their loans over the next few months according to Black Knight Financial.

This issue in Texas is only compounded by the problems experienced by the homeowners in Florida due to the arrival of Hurricane Irma.

In 2005, approximately 20% of borrowers in the Katrina area had less than 10% equity in their homes. Today in Houston the percentage is barely 4% which presents a real new problem, should I stay or should I go?

But where will the homeowners in Houston go? And now, where will the homeowners in Florida go to?

No one knows exactly what will occur because this has never happened to the country with two major hurricanes doing so much damage.

These two natural disasters coupled with the looming national debt can possibly represent a tipping point that no one wants to consider.

ABOUT COUNSELLORS TITLE AGENCY
Since 1996, Counsellors Title Agency had provided swift, proven and knowledgeable title insurance settlement and search expertise for thousands of New Jersey’s attorneys, loan officers, Realtors, borrowers and purchasers. CTA’s detail-oriented team of professionals streamlines the complexities of a real estate transaction to make each one stress and glitch-free.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

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