The Pulse – A Housing Industry Blog

Increase in Wire Fraud Indicates Cyber Security More Important than Ever!

Tuesday, May 14, 2019

On April 28, a resident of Lacey Township reported that she received an email in reference to her home closing. The resident was asked to wire a $34,500 deposit into a bank account. Several days after the Lacey Township resident wired the money, she found out that the firm’s email account was hacked and the $34,500 was wired into an account unrelated to the firm. This case is under further investigation. Full Story…

Aaron Cole lost his $123,000 down payment in a wire scam in December of 2019. A cyber-criminal posed as someone from the title company Cole had been working with. Cole’s response to how he got scammed? “They sent me an email and I just clicked reply.” It’s as simple as that! Full Story…

Kristina Herbert and her husband Genaro Pimienta Rosales were days away from closing on their first home in Carmel Valley when Kristina received two emails one morning from what looked to be her escrow agent and her real estate agent. Kristina ended up sending a wire transfer of $180,974.31. The next day, her real estate agent called her and said the bank never received her down payment. It turns out the cyber-hackers obtained the names of her escrow and real estate agents and created a convincing email to reroute her payment. Kristina ended up going to the bank to try and stop the cyber-criminals from taking all her and her husband’s money (their life savings) and stopped the fraudsters, but not before the thieves took just under $66,000. Full Story…

According to FBI reports, in the real-estate/rental sector, more than 9,600 victims lost over $56 million in 2017 & the type of fraud with the highest reported loss was Business Email Compromise/Email Account Compromise, with losses totaling more than $675 million. The mere frequency of these attacks underscores how important cyber security really is. Full Story…

Valley Land Title Co. takes the emergence of phishing, wire fraud, and all matters of cyber security extremely serious. Here are a few proactive steps you can take to ensure you do not fall victim to phishing or wire fraud:

  1. Call and confirm wiring instructions by phone before transferring funds. Use the phone number directly from our website,, or from a business card.
  2. Be suspicious and alert:  Wiring instructions and information regarding payments don’t frequently change.
  3. Confirm the account number and the name on the account with your bank before sending a wire.
  4. Verify by calling your title professional or real estate agent to validate that the funds were received – if money has been sent to the wrong account, detecting it within 24 hours gives you the best chance of recovering your money.
  5. Forward, don’t reply. Criminals tend to use email addresses that are very similar to the real one. By manually typing in an email address, you make it easier to determine if someone attempting fraud is targeting you.

Market Projections

Thursday, February 7, 2019 

From American Land Title Association’s Title News, January 2019 Ed.

As these companies navigate technology options and the positive outlook for the potential of fintech, they’ll be doing so in a tightening market spurred by rising mortgage rates and high house prices.

CoreLogic Chief Economist Frank Nothaft reported that economic growth in the United States only needs to last six more months in order to set the record for the longest economic expansion in the country’s history, based on business cycle dates going back more than 160 years.

Nothaft sees growth starting to slow, but still pushing unemployment to 3.4 percent—marking a 50- year low. As unemployment creeps down, interest rates will continue to rise as the Federal Reserve continues to normalize the level of interest rates and keeps an eye on inflation. CoreLogic expects long-term yields to rise as well, nudging 30-year fixed mortgage rates up to an average of about 5.25 percent by next December—the highest in a decade. This will ultimately affect the housing market and title order volume.

“At the margin, homeowners who currently have lowrate mortgages will be incented to stay in their home rather than sell, keeping the new-listings flow relatively low,” Nothaft said. “The larger monthly payments that come with higher mortgage rates will likely soften buyer demand, leading to less pressure on home prices.”

For mortgage lending, higher rates mean even less refinancing in 2019. The Mortgage Bankers Association (MBA) predicts $1.24 trillion in purchase mortgage originations in 2019. This is a 4.2 percent increase from 2018. In addition, the MBA anticipates refinance originations will continue to trend lower next year, decreasing by 12.4 percent to $395 billion. Overall in 2019, total mortgage originations are forecasted to decrease to $1.63 trillion from $1.64 trillion this year.

“We are seeing some deceleration in the rate of home price growth, but believe this is a healthy pause for the market, as it will allow income growth to catch up to the recent run-up in home values,” said Mike Fratantoni, MBA chief economist and senior vice president for research and industry technology.

He added that housing demand should continue to grow over the forecast horizon, with the pace of home sales held back primarily by the constrained pace of new building. He expects that home purchase originations will increase each year through 2021, and that pace should continue to increase given the wave of millennial buyers beginning to hit the market. Nothaft added that growth in home equity and homeowners deciding to stay put rather than sell, should increase home remodeling expenditures and the origination of HELOCs for home improvement purposes.

“While the macroeconomic and housing market backdrops are, and should remain quite favorable, the mortgage industry continues to be challenged by the drop in origination volume, coupled with significant margin compression,” Fratantoni said. “Lenders of all types and sizes are seeing elevated costs, coupled with intensely competitive pricing, to capture more volume. This in turn is depressing revenues.”

Experts Predicting the Emergence of a Buyer’s Market

Thursday, October 11, 2018

Historically, experts have been discussing that the housing market has been a sellers’ market. When housing market experts talk about this they are referring to a buyer’s market versus a seller’s market. is a seller’s market. A seller’s market occurs when demand is actually greater than the supply of the market. When such a market emerges, sellers are able to sell their homes for a better price due to multiple buyers being interested in a single property, bidding wars, etc. On the opposite side of the spectrum, and the topic of this blog and which experts believe is emerging in today’s market, a buyer’s market is a housing market where supply, or properties available for sale, is greater than the demand, or the number of buyers in the market looking for properties to buy.1 A buyer’s market is ideal for homebuyers because you might be able to find a home at a lower cost than you would in a seller’s market.

Mark Fleming, First American Chief Economist, was recently on CNBC reporting that the housing market, while in the past several years has been a strong seller’s market due to low inventory, you now see the housing market shift towards a buyer’s market, or at the very least has shifted towards an equilibrium market.2 and the US Department of Housing and Urban Development reports on some key numbers at the end of September that supports this assessment.3, 4

The HUD report in particular noted that US homeownership rate increased in the second quarter – 64.3 percent, up from 63.7 percent one year ago. Part of the reason why experts are predicting that it is going to be a buyer’s market is because as a nation the homeownership rate has been steadily declining for a while. The strong economy as well as steadily rising rates are indicators that will determine whether this prediction will take. Likewise, the national homeownership rate will be another number that experts will closely look at. We will be tracking what they find out as these numbers come out.




Q1 Homeownership Rises While Number of Renters Declines

Wednesday, May 17, 2018

Homeownership rate for Americans under 35 in Q1 was 35.3%, a full percentage point higher than 1 year ago and the number of renters has fallen for four consecutive quarters. On a broader scope, the homeownership rate remained 64.2% (unchanged in Q1) but was higher than a year ago when it was 63.6% according to the Census Bureau. Under normal circumstances, the number of renters and homeowners both increase at once. Ralph McLaughlin, chief economist for Veritas Urbis Economics, sees these indicators as evidence of a shift in Millennials renting to owning, saying, “It really does lead me to believe this is a trend. It looks like people are making a switch. Millennials have told us they want to be owners, but they’ve faced headwinds… If they start buying homes en masse, the fact that they’re such a big cohort is going to have a ripple throughout the market.” For a while now, experts have indicated that Millennials could be the largest potential drivers for homeownership rate in America and numbers like these, even if they are increasing ever so slightly, are very promising. It’ll be interesting to see in the coming months if this trend of increasing homeownership/lower renting continues in light of possible future rate increases as well as an improving economy. Two other factors that will be quite significant when analyzing this current trend will be housing inventory and market affordability.



Emergent Threats in the Digital Age

Thursday, May 10, 2018

Before the digital age, title companies solely concerned their business on closing deals and searching titles. However, due to the ever-increasing use of digital communication and transactions, title companies such as Valley Land Title Co. have shifted their focus of concern to ensuring that customers are protected from phishing and wire fraud. Therefore it is important to us to provide you with a bit of information regarding the rise of phishing and wire fraud and how it may affect you now and in the future.

The start of wire fraud often begins well in advance through a process called phishing. Phishing is the fraudulent practice of criminals sending emails claiming to be something or someone they’re not. You may receive emails and/or phone calls from a person posing as a Realtor, title insurance professional, etc. when in reality it is a criminal attempting to obtain your personal information (i.e. login passwords, credit card numbers, and countless other sensitive information). A more targeted variation of phishing – called spear phishing – is aimed specifically at high-profile executives or personnel who manage wire transfers.

In Southlake, TX where down payments can be quite high, police issued a warning in March 2018 about scammers who hacked into the email accounts of real estate professionals who then posed as title company employees so they could steal a homebuyer’s down payment. The Southlake PD saw about 10 similar cases within the last six months where hackers attempted to steal a homebuyer’s high-dollar down payment. In cases like these, the hacker will send an email to the homebuyer pretending to be the title company selected for the closing. This email tells the buyer that “there has been a last-minute change to the wiring instructions,” and instructs the buyer to wire their money to a different account.

Valley Land Title Co. takes the emergence of phishing, wire fraud, and all matters of cybersecurity extremely serious. Here are a few proactive steps you can take to ensure you do not fall victim to phishing or wire fraud:
1. Call and confirm wiring instructions by phone before transferring funds. Use the phone number directly from our website,, or from a business card.
2. Be suspicious and alert: Wiring instructions and information regarding payments don’t frequently change.
3. Confirm the account number and the name on the account with your bank before sending a wire.
4. Verify by calling your title professional or real estate agent to validate that the funds were received – if money has been sent to the wrong account, detecting it within 24 hours gives you the best chance of recovering your money.
5. Forward, don’t reply. Criminals tend to use email addresses that are very similar to the real one. By manually typing in an email address, you make it easier to determine if someone attempting fraud is targeting you.



Household Net Worth Hits $100 Trillion

(Repost) Article by Scott Grannis (Chief Economist at Western Asset Mgmt Company from 1989 to 2007)

Wednesday, March 21, 2018

On Thursday, [March 8] the Fed released its quarterly estimate of household net worth. Things just keep getting better and better. Household net worth as of the end of last year was almost $99 trillion, having risen $7.1 trillion over the past year (+7.8%). As in recent years, gains have come mostly from financial assets (up $27.6 trillion since late 2007) plus real estate (up $2.8 trillion since the pre-Recession peak of 2006), offset by only a $1 trillion increase in debt (total liabilities rose from a Recession peak of $14.6 trillion in 2008 to $15.6 trillion at the end of 2017). Further details in the charts below:

Chart #1 summarizes the evolution of household net worth.

Chart #2 shows the long-term trend of real net worth, which has risen on average by about 3.5% per year over the past 65 years. I note, also, that recent levels of net worth do not appear to have diverged at all from long-term trends. That wasn’t the case in 2007, however, when stocks were in what we now know was a valuation “bubble.”

Chart #3 shows real net worth per capita. The average person in the U.S. today is worth just over $300,000, and that figure has been increasing by about 2.3% per year for the past 67 years. Regardless of who owns the country’s wealth, everyone benefits from the infrastructure, the equipment, the computers, the offices, the homes, the factories, the research facilities, the workers, the teachers, the families, and the brains that sit in homes and offices all over the country and arrange the affairs of the nation so as to produce almost $20 trillion of income per year.

Chart #4 shows that households have been extremely prudent in managing their financial affairs since the Great Recession. Household leverage (total debt as a % of total assets) has declined by one-third since its Q1 ’09 high. Leverage is now back to the levels which prevailed during the boom times of the mid-’80s and ’90s. Unfortunately, while households were busy strengthening their finances, the federal government was doing just the opposite: the burden of federal debt more than doubled from June ’08 to December ’17 (i.e., federal debt owed to the public rose from 35% of GDP to 75% of GDP).



Housing Market November Update

Homeownership Drops, Ideas to Bolster Homeownership Rate

Wednesday, December 20, 2017

Higher home sale prices continue to affect buyers in highly competitive, low-inventory markets. So far this trend has been a constant piece of data included in any analysis of the homeownership rate in the United States and experts at First American suggest that this trend will continue into 2018. The Rosen Consulting Group reported that the homeownership rate across the United States dropped to just below 64 percent in the third quarter in 2017 (usually compared to the peak of homeownership rate of 69 percent in the United States in 2004). First American also updated their Potential Home Sales model to reflect key data that has been released this month. Potential existing-home sales decreased to a 5.96 million seasonally adjusted annualized rate, a 2 percent decrease month-over-month. In November, the market potential for existing-home sales decreased by 1.5 percent from a year ago, a loss of 93,000 sales. Lastly, First American reports that the market for existing-home sales is underperforming its potential by 7.3 percent or an estimated 438,000 (seasonally adjusted annualized rates) sales.1

When looking at homeownership rate updates throughout this year, you may be wondering what ideas may positively impact the homeownership rate in America. The Rosen Consulting and the Fisher Center recently released a report called “Rebuilding the American Dream: Strategies to Sustainably Increase Homeownership,” listing its ideas for how to bolster the homeownership rate in the United States:2

1. Reducing restrictive housing and zoning codes at state and local levels is one suggestion the report makes. It also advocates increasing modular home construction to give lower-end buyers options to enter the homeownership market. Building housing units in box-like modules in an off-site factory could significantly reduce construction costs by up to 20 percent, while substantially increasing supply.

2. Another suggestion in finding ways to help people pay for houses is a down-payment savings program that would operate like a 401k or IRA; something that sets aside a portion of income toward the purchase of a home without a tax penalty.

3. Student debt burdens restrict millions of households from affording to buy a new home. The firm recommended creating a student debt mortgage program that adds outstanding student debt into new mortgages. The borrower would have one payment, lower than the two individual payments, promoting greater affordability and supporting first-time homebuyers.

One positive statistic that was reported by the Commerce Department recently (amongst many others) was that housing starts surged 13.7 percent to a seasonally adjusted annualized rate of 1.29 million units (highest since October 2016), in particular in the south they soared 17.2 percent in October to 621,000 units, and confidence among home builders in November is at the second-highest level since July 2005.3



Housing Market Data Update for August – September 2017

Part 3 of 3

Wednesday, October 18, 2017

The housing data that has come out regarding the breakdown in number of closings, inventory, etc. for the month of August tells us what we already know (inventory still underperforming, a key defining trend through 2017) as well as what sort of expectations we are in for (i.e. the impact regionally and nationally from several major hurricanes).

According to the National Association of Realtor’s (NAR) Existing-Home Sales report for August, the total available inventory almost unsurprisingly dropped 1.7 percent. This marks the fourth time in five months that a decline was recorded. Seasonally adjusted, the rate dropped from 5.44 million homes in July to 5.35 million homes in August. Another factor where we expect to see an impact from is the major hurricanes that hit the south. Regionally, sales were up in the Northeast and Midwest, but those numbers were overshadowed by declines in the South and West regions, causing the national average to fall. Experts say we will be able to see a fuller picture of the impact sometime in 2018. Lawrence Yun, Chief Economist at NAR says, “Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area. Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma. However, nearly all of the lost activity will likely show up in 2018.”

Year-over-year, existing home sales have dropped 6.5 percent from 2.01 million.1

There are some positive results to report as well for the month of August: FICO scores held steady in August with an average 724 on all closed loans; closing times became slightly faster, decreasing by one day to 42 days for all loans in August; and the time it took to close a refi dropped one day to 41 days while the time to close a purchase held steady at 43 days.2

First-time buyers were 31 percent of sales in August, which is down from 33 percent in July and is the lowest share since last August (also 31 percent). NAR’s 2016 Profile of Home Buyers and Sellers – released in late 2016 – revealed that the annual share of first-time buyers was 35 percent.3

As a final note, homeowners with mortgages continue to see their equity increase in their home, according to the Q2 2017 Home Equity analysis from CoreLogic, a property information, analytics and date-enabled solutions provider. Home equity for homeowners with a mortgage – 63% of all homeowners – increased 10.6% annually, or $766 billion since the second quarter of 2016. “Homeowner equity reached $8 trillion in the second quarter of 2017, which is more than double the level just five years ago. The rapid rise in homeowner equity not only reduces mortgage risk, but also supports consumer spending and economic growth.” (CoreLogic President and CEO Frank Martell)4

In our next blog, we will be discussing key trends that industry professionals see as up-in-coming. We will also be reporting any updates as more results come out regarding the impact of the major hurricanes on the housing industry.




Housing Market Data Update for June – July 2017

Part 2 of 3

Wednesday, October 4, 2017

Our last blog post highlighted the fact that, between March and April, the decline in real, purchasing-power was the largest month-over-month decline since July 2016. Looking at June 2017 data, First American Chief Economist Mark Fleming on the prevailing issue facing today’s housing market said, “Over the last eight years, housing demand has increased by 5.9 million, but the net new number of housing units has only increased by 3.5 million.” This means there is a shortage of 2.4 million housing units in the United States. That lack of supply has so far dominated the 2017 housing market story line. Also significant is the number of existing homes listed for sale (while actual sales have increased 0.2 percent from prior month) has been on a downward trend for over two years (25 consecutive months), representing a drop of 7.1 percent between June 2017 and July 2017 – Millennials are entering the housing market but are finding it more difficult finding entry-level homes to buy.

This is significant because not only is it more difficult to find entry-level homes to buy but this increase in demand and lack of supply is impacting affordability in the housing market. “This supply shortage will continue to put pressure on affordability and strain first-time home buyers entering the market.” (Fleming)

In our next post, we will highlight any housing market data for the month of August that experts say is significant in comparison with prior trend data.

To be continued Part 3…




Housing Market Data Update for April – May 2017

Part 1 of 3

Wednesday, September 6, 2017

After taking a brief hiatus for the summer, I will go through a few prominent topics that are straight from the experts (upcoming sources include National Association of REALTORS, First American, etc. are noted appropriately at the bottom of this post) highlighting important data figures that came out over the past few months. Let’s get started.

April 2017

Looking at the First American’s proprietary Real House Price Index (RHPI) for April 2017, Mark Fleming (Chief Economist at First American) had the following analyses regarding the impact of wages and lower interest rates on real house prices:

“Despite the monetary tightening policies of the Federal Reserve, a dip in the average rate for a 30-year, fixed-rate mortgage and wage gains increased consumer house-buying power sufficiently to offset the gain in unadjusted house prices. The decline in real, purchasing-power adjusted house prices between March and April was the largest month-over-month decline since July 2016.1

Remember, for the second time in three months at this point the Federal Reserve increased interest rates a quarter point due to rising confidence in the economy and predicted that there was a path of regular hikes in the future as well.2 To understand in greater depth how this affected homebuyers, take a look at the information on what the RHPI is and how/why First American uses this indicator (derived from official housing industry data) here:

May 2017

Continuing with the RHPI, Mark Fleming analyzed that consumer house-buying power improved during the month of May. This was because of a minor decline in the 30-year, fixed-rate mortgage coupled with a modest wage gains. Because of this improvement of buying power, the gains in unadjusted house prices were offset and, as a result, house affordability improved slightly.3 It should still be noted that “despite the tight supply and strong demand, real home prices remain well below housing boom peak levels.” (Mark Fleming, Chief Economist at First American)

To be continued in Part 2…



The 85th Session of the Texas Legislature Concludes


Our Safe and Stable System Preserved

Tuesday, May 30, 2017

The title industry is highly regulated by the government ( – in fact, Texas has the most tightly regulated title insurance industry in the United States. Therefore, it is extremely important for us at VLTC to be particularly aware and up-to-date with any updates to our regulatory system here in Texas. Texas Land Title Association (TLTA) helps us stay aware by providing a comprehensive program of regulatory and legislative advocacy on the state and federal level as well as the most up-to-date industry news and information through e-newsletters, website, and other resources (

The 85th Session of the Texas Legislature concluded with some very important positive amendments to bills affecting our industry. Here’s a quick recap of the bills TLTA was following and what to expect moving forward.

Information below provided by TLTA and Texas Association of Realtors.

Victory in Attack on Safe, Stable Title Insurance System

The hearing on HB 4239 – a bill that proposed to upend our stable rate system – received a lineup of expert title industry witnesses, who stated that it would increase costs for Texas homeowners, reduce competition by shuttering small businesses and increase risks and claims. The hearing drew a large crowd, with 142 people signing in as witnesses, the vast majority of whom registered in opposition. After hearing almost two hours of testimony, including extensive questioning by the committee members, HB 4239 was left pending, was never brought up for a vote, and eventually died in committee.

In addition, as reported on May 17, SB 372 by Sen. Bob Hall, that proposed a file-and-use rating system, was never set for a hearing by the Senate Committee on Business and Commerce.

Finally, SB 2203 by Sen. Kelly Hancock, dealing with disclosure and reporting in title insurance, was left pending in the Senate Committee on Business and Commerce.

One Bill Becomes Law, Other Pending Governor’s Signature

SB 1955 – a bill clarifying the lis pendens expungement statute so it can be relied upon by title agents and insurers – was signed into law on Friday, May 19. It had the honor of being one of the first 40 bills signed by Gov. Abbott. The bill was the result of a TLTA Board of Directors’ decision made just a few days before the bill filing deadline in response to a case being heard in the Texas Supreme Court and concern about its potential outcome. Sen. Bryan Hughes graciously agreed to file the bill on the deadline. Rep. John Wray agreed to do the same, championing the Senate bill through the House process and helping to send it to the governor over the weekend.

SB 1249, which relates to adverse possession amongst co-tenant heirs, passed the House on May 24 and is headed to the governor’s desk. This bill was drafted a few sessions ago by TLTA volunteers Richard Black and Roland Love at the behest of Sen. West who learned of the fate of many rural and inner city lower income individuals and families who could not receive Disaster Relief Assistance because they could not prove up title. After the bill failed to pass two sessions in a row on its own devices, TLTA made it a priority this session by adding it to its affirmative agenda. If the governor signs the bill, individuals and family members will now be able to adversely possess against co-tenants who are no longer in the picture. Often, property is passed down informally generation after generation and clear title is no longer possessed by a single or few individuals. Under the process outlined in the bill, clear title can now be achieved after a certain period of time. This will further bolster certainty in the Texas title system as this new mechanism becomes available and is implemented. TLTA is grateful for the leadership of Sen. West for initiating the discussion and filing the bill in the Senate and for Rep. Schofield for filing and championing the bill in the House.

Public Information Law – Major Victory in Ensuring Access to Records

HB 3107 – a bill that began as a significant threat to the title industry has resulted in a huge victory. The bill, which allows counties to create certain barriers to accessing public information through the public information process, specifically exempts the press, higher education and the title industry for the purpose of building and maintaining title plants. Public information requests are important tools for the building and maintaining of title plants. As filed, the bill could have frustrated these efforts. Fortunately, as amended, the bill sets forth a statutory recognition of the unique role and importance of abstract plants in the context of public information alongside higher education and the press. The bill passed the House on May 29 and is on its way to the governor.

Powers of Attorney – TLTA Worked to Mitigate Industry Concerns and Will Continue to Monitor

On May 18, the Senate Committee on State Affairs adopted a committee substitute on HB 1974/SB 926, incorporating TLTA’s suggestions relative to the certification of durable power of attorney. This bill has been greatly improved since its initial draft, which would have dramatically reduced title industry members’ treatment of powers of attorney and subjected them to significant liability. The bill, which passed the House on May 29 and is on its way to the governor, now is quite permissive and provides several avenues to give those considering the power of attorney the information they need for that decision. However, this complex piece of legislation will require some attention and evaluation during the interim by TLTA members.

TLTA staff thanks Rep. John Wray and Sen. José Rodriguez for working with the title industry to address these concerns.

Remote E-Notary Bill Signed Into Law – Title Industry Concerns Addressed in Final Legislation

HB 1217, a bill establishing the framework for remote e-notarization in Texas, passed the House and Senate and was recently signed into law. The Texas Mortgage Bankers Association brought this bill and worked closely with the notary industry, the Secretary of State’s office and the title industry to craft a bill that addressed the concerns of all the stakeholders. The goal was to craft a bill that could serve as a national model and address some of the problems identified with the new statutes in other states.

Shortly after learning of TMBA’s desire to pass a Texas bill this session and being aware that a national conversation led by major lenders was brewing, TLTA worked with ALTA to establish a national working group and requested guidance for the Texas bill from the national title industry. This ALTA-led workgroup, which involved lenders and other professionals, put in several hours that resulted in a set of agreed principles and guidelines for any state legislation. The Texas bill incorporated these principles and the feedback of other national and state stakeholders. TLTA appreciates the special efforts of TLTA member Randy Lee who worked diligently this session to ensure that the bill worked well for the title industry and allows for Texas companies to participate in the bourgeoning national marketplace.

Home Equity Constitutional Amendment Will Be on November Ballot – TLTA Supports

As reported on May 10, both the Texas House and Senate adopted SJR 60, a proposed constitutional amendment that would take effect Jan. 1, 2018 and would apply to a home equity loan made on or after the effective date and to an existing home equity loan that is refinanced on or after the effective date.

The amendment would:
• Exclude three fees from the fee limit (including title insurance)
• Enable home equity loans to be used on homesteads designated for agricultural use
• Lower the fee limit from three percent to two percent
• Allow a “seasoned” refinance of an equity loan to be a non-home equity loan
• Change the “Notice Concerning Extensions of Credit” to include these changes

Special thanks goes to the Texas Association of Realtors for putting together a one-pager on the legislation and letting TLTA share it.


Shifts in Home Loan Finance and Market Mobility

Wednesday, April 26, 2017

The differential in growth rates of loans financed by particular agencies show that there have been changes in the housing market. So by taking a closer look at the shifts in which agencies homes are bought through – using data provided by Edward Pinto, AEI, and Mark Fleming, First American Economist (full audio recording link below) – we will be able to see in more detail how homebuyers are financing their home purchases and how this affects the housing market.

Institutional financed loans grew from 60% in 2013 to 68% in 2016. This is primarily due to looser lending from institutions, lower mortgage rates, and an improving economy. National data still suggests rising income as well as a decrease in unemployment, both of which result in more people brought into the market.

Cash transactions are down from 36% (2013) to 28% (2016) and the reason for this varies. First, there are less international buyers currently in the market. Another reason is that house prices are rising, making a complete cash purchase transaction less likely – lower interest rates have been making institutional loans more manageable and attractive. Thirdly, there is less supply/fewer foreclosures over the year, which has led to fewer REO (Real Estate Owned, i.e. property owned by banks, government agencies, etc.) properties for sale – these type of properties are bought mainly with cash.

Notably, there has also been an increase in loans for government agency purchases and the average loan amount nationally increased by 7.3%. Mark Fleming from First American reports continued growth in the housing market, saying “most states have shown an increase in home sales with the greatest gains being within the less expensive markets with strong local economies.”

When looking at the housing market on a national level, it’s also good to take in account both economic theory versus market mobility. Economic theory suggests with frictional market mobility, households should move away from higher priced markets to lower priced markets. But there are household constraints to mobility: not finding the right job, non-economic considerations (i.e. being near family and friends, etc.). Mobility may be also constrained to current homeownership as well – this seems to currently be the case for more than half of existing homeowners: negative/insufficient equity below or current mortgage note rate, concern about being able to find something to buy, etc. These are mainly for existing homeowners so different mobility concerns for the increasingly dominating group of first time homebuyers will be revealed in time.

(Sources: AEI, International Center on Housing Risk,, and First American via

Click here to listen to the full audio recording of the March NHMI briefing call with Edward Pinto and Mark Fleming.


Home Sales Drop – Buyers’ Interest Solid

Wednesday, March 29, 2017

February’s numbers are in and industry professionals are already noticing some key changes in housing market indicators. For this post, I looked at housing data reports published by the National Association of Realtors regarding February’s numbers to continue our journey in analyzing changes in the 2017 housing market.

According to the National Association of Realtors, the number of home sales decreased 3.7% in the month of February. While home sales decreased, the national median home price of those homes that closed in February increased 7.7% from a year ago to $228,400. Data from the National Association of Realtors (NAR) found that the reason for this strong increase in home price is the same as last year – a shortage in inventory. NAR data indicates that buyers’ interest remains strong but that there isn’t enough available inventory on the market to supply this demand and, because of this, the national median home price increased. As far as the actual number of inventory on the housing market in the month of February goes, there were 1.75 million homes available nation-wide for sale – a decrease of 6.4% from 1 year prior.1

Just as well, the national median speed in which houses are placed and then sold on the market is a quick 45 days (the rate is even quicker – under 40 days – in Texas). One year ago, the national median speed was 59 days. National Association of Realtors Chief Economist Lawrence Yun sums this up as, “buyers’ interest remains solid and strong, but we have fewer closing transactions in February than January because of inventory shortage. We just don’t have enough inventory to satisfy buying interest.” However what’s interesting about this is that, “demand surprisingly remains resilient even though mortgage rates are up, sales price are up, and affordability is increasingly challenging.”2

The overlying fact remains that the limited amount of inventory on the national market continues to hold back potential for more home sales growth. There is no doubt that this will be a key factor that housing industry experts will be looking at closely in the months to come.

NAR Chief Economist Lawrence Yun talks about February pending home sales, high demand, low supply, and the sluggish recover of the homeownership rate:




Expectations of Housing Market in 2017

(pt. 2 of 2 – Assessing Market Potential)

Wednesday, February 15, 2017
Data Provided By: Mark Fleming – Chief Economist, First American Financial
Frequently quoted in WSJ, NYT, Housing Wire & frequent guest on CBS, CNBC, Fox Business News, NPR

In our last post (part 1 of 2 summary of a webinar we attended discussing the Expectations of the Housing Market in 2017) we discussed current trends affecting the homeownership rate. In part 2 of 2, we will use those trends to assess home sales potential and opportunities within the market.

Home sales potential is based on economics, demographics, pricing, interest rates, etc. Today, First American finds that we are underperforming in regards to potential home sales. The question is, why? One factor could be because of insufficient lifestyle change (REMEMBER – lifestyle drivers that affect homeownership are Income, Employment, Education, Children, Marriage, etc.) but another factor is insufficient inventory in the market and, in addition to insufficient inventory, Sellers who don’t list their home for sale but become a Buyer themselves. Moving forward in 2017, the question now evolves into, saying Mark Fleming (Chief Economist, First American Financial), “how do we address oncoming demand particularly from first-time homebuyers in Millennials aging into homeownership when many existing homebuyers are less incline to sell?” (NAR, FRB St. Louis, First American Calculations, September 2016)

One solution we can look to is new construction for increasing inventory (inventory being the total number of empty housing units). A current challenge we face is that we are well below historic norms in terms of housing being built – this could be due to various factors including cost of compliance, regulations in terms of ability to create new housing communities and make them economically viable. Currently we are building approx. 1 million housing units but that number is short approx. 200,000 to capitalize on potential home sales. And although we have seen a boom in rental apartments being built in response to Millennial demand, we will continue to fall short as aging Millennials transition from renting to owning. Fleming outlines, “an opportunity here is to convert rentals to condos in an around the same neighborhoods these Millennials like to live in and we may see a surge in conversions of rentals to condos.” (US Census Buereau, FRED, November 2016)

We’ve seen 30-year tailwind in the housing market in the form of falling mortgage rates. Since the 1980s, mortgage rates have been going down, especially towards the end of each recession. This creates incentive for turnover. i.e. “If you bought a home in the 1980s, then gained equity, even if your income doesn’t go up in 3-4 years and the mortgage rate has gone down 3 or 4%, there’s incentive to refinance or sell and move up because you can effectively buy more home based on monthly payment at start.” (Fleming) However, as we begin to move into a rising mortgage rate environment, this turnover will start to breakdown and many existing homeowners will begin to say “why move when I have i.e. 3% fixed mortgage rate when the market is now at 5%,” creating a “locking effect” because it will essentially cost you more to buy the same home back from yourself. The benefit here will lie in home-equity lending but this will also significantly impact inventory of existing homes for sale. (Freddie Mac, FRED, January 2016)

The housing bubble increased home prices by about 80%. Real house prices, as it pertains to the housing market, factors in income growth as well as mortgage rates/purchasing power. i.e. If income is up and mortgage rates are the same, a person can theoretically buy more; if mortgage rates go down, a person can also buy more, etc. With this in mind, “a combination of modest income growth and a mortgage rate as low as it currently is, we have significantly increased how much we can leverage income into home purchasing power.” (Fleming) Right now, homes are 20% less expensive than in 2000 and 40% less expensive than at the peak of the housing bubble; therefore, prices now are more affordable than they have ever been in this millennium. (Standard & Poors, First American, October 2016)

Nationally, while nominal prices for homes are currently high (at levels we’ve seen during the mid 2000s), incomes are also generally higher and are being leveraged by low mortgage rates – this creates large amounts of affordability. In an expected rising rate environment (possibly due to inflation that is driven by expansionary policies by the new administration) some of the affordability will be eroded and purchasing power will temporarily stay equal but may possibly decline with higher mortgage rates. When mortgage rates rise, house appreciation slows but the net effect is not that detrimental on affordability and, in the grander scheme, housing becomes more affordable in the historic levels context. (AEI International Center on Housing Risk, August 2016)

i.e. “A 5% mortgage rate increase coupled with a 2-3% income wage growth and a 3-4% house appreciation rise leaves an affordable housing market.” (Fleming) This is why we see the number of homebuyers closing on their first-time home increase dramatically from 50-51% in January 2016 to almost 54% in August 2016 – this rebounding effect that first-time homebuyers are having on demand can be attributed to the oldest Millennial buying and closing on their first home.

During the housing market trough (point of low activity) in 2012, the market was underperforming (in regards to housing health) when compared to its peak in 2006: nominal house prices (NHPI), real house prices (RHPI), and new and existing home sales (NHS, EHS) all decreased while foreclosures increased significantly. looking at recent data on the state of housing market health in 2016: foreclosures and REO sales are relatively back to normal levels, potential home sales are back on track, and homeownership rates are back in progress. Where we’re lacking comparatively are in new home sales, which can be largely attributed to homeowners experiencing “locking effects” (discussed earlier) as rates rise. As a result, the turnover rate we’ve seen effectively might not be as reliant as before.


Expectations of Housing Market in 2017

(pt. 1 of 2 – Analyzing Homeownership Rate)

Wednesday, January 25, 2017
Data Provided By: Mark Fleming – Chief Economist, First American Financial
Frequently quoted in WSJ, NYT, Housing Wire & frequent guest on CBS, CNBC, Fox Business News, NPR

Because digital and social media are means by which many go to gather information, one action Valley Land Title Co. is currently focused on and committed to in 2017 is demonstrating that we are in-tune with the emerging trends in the title industry and housing market through this newly formed blog, aptly named “The Pulse.” We feel it’s important to be in touch with the pulse of the overall housing industry so we may better serve and educate our existing and potential customers.

Our first post (part 1 of 2 summary of a webinar we attended discussing the Expectations of the Housing Market in 2017) is focused on analyzing the current trends that have affected the Homeownership Rate through data, provided by Mark Fleming (Chief Economist of First American Financial), pulled from various credible sources including the US Census Bureau, National Association of Realtors, First American, and others (noted within the post).

Some challenges that present themselves when discussing the housing market lie within preconceived biases. The research data presented herein by Mark Fleming (Chief Economist, First American Financial) may serve to dispel a number of conventional wisdoms out there to ultimately reveal the benefits of today’s housing market.

Homeownership rate from 1965 to mid-2000s rose from approx. 63% to approx. 69% at the height of the housing boom (US Census Bureau, Q3 2016).

The homeownership rate around 2015 was approx. 63%, a 50-year low and lead experts to ask, “are we moving towards a ‘renters society,’” and, “is the American dream dead?” Mark Fleming says while these make for good headlines, the reason homeownership rate was at this low was “half due to an economic correction from the housing bubble and half due to shifting demographics.”

Homeownership rate is measured as: # of Owned Households/Total # of Households

Since the recession, we have formed roughly 6 million rental households and we’ve lost approx. 1 million owned households—this shifted the homeownership rate. Two additional factors influencing the homeownership rate are the transition of housing being foreclosed, where homeowners are transitioning from being owners to renters, and the Millennial demographic. Looking deeper into these numbers, we must ask 1) who is doing the renting and 2) what are their reasons for renting (Census Bureau, FRED Q3 2016).

Homeownership rate for households under the age of 35 is lower now, at approx. 34%, than other generations were at when they were under the age of 35, causing current headlines to read “will Millennials never want to own a house again,” says Fleming. Historically, the homeownership rate for this same “under the age of 35” demographic in the 1980s hovered around approx. 38% to 41%; in the mid-1990s, the number ranged anywhere between 37% to 40%; and in the 2000s, during the housing boom, the homeownership rate was at a high, ranging from approx. 40% to 43% (Census Bureau CPS/HVS, 2015).

Next, Fleming compared drivers of homeownership rate (Homeownership, Income, Employment, Education, Children, Marriage) of individuals at the age of 30 between generations (Baby Boomers, Gen X, Millennials).

Gen X faired much better with income and employment than Baby Boomers while recent Millennials aren’t faring much better than Baby Boomers in these same categories, possibly because Millennials are coming out of/still recovering from an economic recession. Millennials show a significant increase in amount of higher education compared to other generations, however, they are statistically less likely to get married or have children at the age of 30 compared to prior generations. The data does not reveal that this will be the case perennially but rather that Millennials are making these lifestyle decisions at a later date. Research shows that lifestyle choices, such as getting married or having children, directly affect homeownership and, once this happens, the choice becomes “how much home can I buy given these life choices.” The delay of these lifestyle choices, coupled with the significant increase in higher education (which takes both time and money) is a factor as to why homeownership is so low amongst Millennials at the age of 30 (Census Bureau, 2013-2014).

Over the years, mean or median student loan payment-to-income ratio (how much you are paying on a monthly basis relative to your income) has remained quite stable since the late 1990s. Even though Millennials are borrowing more money, recent data is showing that 1) student loan interest rates are lower, 2) length of payback terms are longer (which reduces amount needed to pay per month), and 3) it is still relatively true that if a person completes their degree then their income is greater (ROI on income earned verses debt to repay is relatively high; higher income equals higher earning power).

Research shows that the ability to afford to buy a home for a person in their mid-twenties who finished college with student loan debt are less likely to own a home compared to those who finished college without student loan debt—however, the difference in ability to buy a home amongst those in their 30s who have finished college with or without student loan debt is negligible, leading to the conclusion that Millennials are simply delaying their decision to purchase a home rather than never doing it (ACS IPUMS, 2015).

Millennials will be the most educated in terms of Bachelor’s degrees (or higher) earned, approx. 40% of population between the ages of 26-32; Gen X hovers at approx. 35% by the age 30 while Baby Boomers are at approx. 20% by age 34 and 30% at age 44. If higher income is linked to higher education, this will be a benefit when dealing with Millennials for future homeownership, says Fleming (ACS IPUMS, 2015).

With age, you are more likely to have gone to college, get married, had children, bought a home between the ages of 45 to 55. Homeownership amongst all ethnicities keeps increasing from approx. the ages of 45-50 until about the age of 55. At age 55, homeownership amongst all ethnicities is above 60%. The importance is that, in regards to analyzing homeownership, we need to look at age distribution between ethnicities (i.e. the average age of a Hispanic person in the US is only in their mid-20s).

Mark Fleming (Chief Economist, First American Financial) ultimately predicts we will not become a “renters society.” Homeownership rate is likely to go down a little further but will go back up in near future, largely driven by the Millennnial population’s strong willingness for homeownership. Fleming continues, saying, “we need to allow these individuals to complete their education and gain income to pay off their student loans so to allow them to make these life decisions, after of which we should see a very strong surge. We’re already beginning to see the edge of that in the demand.”


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