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Real Estate Big Data

What TRID confusion has done to the market

TILA RESPA Integrated Documentation (TRID) rules changed this fall had have had a ripple effect, which we examine herein.

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Now pay attention because there may be a test later: On October 3rd, 2015, the two documents that were standard operating procedure for purchasing a home, the Good Faith Estimate (GFE) and the HUD-1/Truth-in-Lending document, were phased out to make way for the Loan Estimate, a document that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and the Closing Disclosure document that must be provided to the consumer at least three business days prior to consummation of the transaction.

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The joy of paperwork

Now, you wouldn’t think that phasing out two old forms for two new ones would be that big of a deal. If you already purchased a home you may or may not be familiar with the TILA RESPA Integrated Documentation (TRID) rules. In layman’s terms, TRID represents the somewhat meandering process the lender takes to approve the loan and the whole process used to take about 30 days.

Now, the TRID rules have changed and the process will take about 10 days longer. Outside of costing the potential homeowner more money (somewhere in the neighborhood of $100 to $300 dollars), the new TRID rules change seems to be more of an annoyance than anything else. Or is it?

TRID 101

According to economistoutlook.org, the new TRID rules have been in effect since October, but the closings that got impacted first are the ones that occurred in November 2015.

While lenders will generally be responsible for preparing and delivering the Loan Estimate and Closing Disclosure, the new TRID procedures and timelines, according to onetitle.com will have an impact on realtors, specifically the increased amount of time necessary to close a transaction. Obviously this is a pain-in-the-you-know-what. The realtor wants to close the deal and make his/her money. The buyer wants to close the deal so he/she can move into their new home.

Another thing onetitle.com points out about the TRID change is that it forces (encourages) buyers and sellers not to bury themselves in last minute details. “Real estate professionals should no longer expect to be able to make last-minute changes at the closing and professionals should prepare their clients not to demand last-minute changes.  In this new closing climate, the American Land Title Association (ALTA) is instructing real estate practitioners to work collaboratively to have all closing documents ready a full week before the closing date.”

There’s [Still] a White Picket Fence Out There

For the most part, the revamped TRID rules should be more or less cosmetic to the buyer. If anything it puts more heat on the realtor to facilitate a positive climate of collaboration between seller and buyer and the bank/lender.

On paper at least, purchasing a home is not supposed to be “that” complicated: you and your significant other look for and find the home of your dreams, you apply for a loan, the loan gets approved, the realtor facilitates the paperwork and you all live happily ever after. Ok, on second thought maybe the process is a bit more complicated than that.

Now you can add more paperwork into the mix. Just what the real estate industry needs.

#TRID

Real Estate Big Data

Housing starts stagnate, market conditions are rapidly shifting

Housing starts for April stagnated, marking the second consecutive months of declines, and more renters being left out of this shifting market.

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Housing starts stagnated in April, down 0.2% from the prior month, according to the U.S. Commerce Department.

The sentiment appears to be that although this marks the second straight month of dips, most are seeing today’s news as a positive, especially as construction of new homes was expected to fall 2.4% in April.

Further, housing starts are up 14.6% from April of last year, driven primarily by multifamily construction.

But it’s worth not getting overly excited, given that permits dipped 3.2% in April which is a forward-looking indicator, so expect starts to continue cooling in a time where we quite need the inventory.

Demand for housing inventory remains high, but the National Association of Home Builders reports today that confidence in the single-family housing market fell dramatically in May, marking the lowest level in two years.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors said in a statement, “The worst of the housing shortage is ending, but market equilibrium between supply and demand is still some ways off.”

He notes that as mortgage rates increase, builders “are chasing rising rents, with fewer homebuyers and more renters being forced to renew their leases,” noting that even prior to the interest rate increases, rents were rapidly rising and vacancy rates rapidly declining.

Pointing to another market shift, Dr. Yun notes that “Some degree of a return to the office is also fueling back-to-city living where high rises are concentrated.”

That’s a problem.

“Even as home sales look to trend back to pre-pandemic levels after the big surge of the past two years,” concludes Dr. Yun, “inventory will not return to pre-pandemic conditions. That means home prices will get pushed even higher in the upcoming months, albeit modestly, given the supply-demand imbalance.”

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Real Estate Big Data

Home prices jump double digits in majority of American metros [report]

(REAL ESTATE) Housing affordability was already a widespread challenge before current economic pressures were applied, but now home prices are skyrocketing.

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As home sales slide and mortgage rates rise, home prices in 70% of 185 measured metros saw a double digit annual increase in Q1, according to the newest data from the National Association of Realtors (NAR), up from 66% in the previous quarter.

The Southern region accounted for 45% of home sales in Q1, and experienced a 20.1% increase in annual home prices (compared to 14.3% just the quarter prior). Home prices in the Midwest jumped 8.5% annually in Q1, while The Northeast rose 6.7%, and the West increased 5.9%.

The median sales price of a single family existing home has now hit an astonishing $368,200.

“Prices throughout the country have surged for the better part of two years, including in the first quarter of 2022,” said NAR Chief Economist, Dr. Lawrence Yun. “Given the extremely low inventory, we’re unlikely to see price declines, but appreciation should slow in the coming months.”

Yun expects supply levels to improve, and for “more pullback in housing demand as mortgage rates take a heavier toll on affordability,” given that “there are no indications that rates will ease anytime soon.”

At first blush, price appreciation sounds lovely to anyone that owns a home, given that it is the largest investment most Americans will ever make.

But regarding today’s report, several homeowners told us that they now feel trapped, and that if they sold their current home, even if they purchased a new house at that same price, they would likely have to downgrade.

Affordability is an ongoing problem weighing down the housing sector. NAR reports that the monthly mortgage payment on a typical existing single-family home with a 20% down payment rose to $1,383 (up $319, or 30%, from one year ago). Families now typically spend 18.7% of their income on mortgage payments (but only spent 14.2% one year ago).

“Declining affordability is always the most problematic to first-time buyers, who have no home to leverage, and it remains challenging for moderate-income potential buyers, as well,” Dr. Yun observed.

Map of how home prices are behaving nationally

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Real Estate Big Data

Office occupancy is on the rise, but its knocking down morale

(BIG DATA) Despite work from home policies still in place and the flexibility some employers are offering, office occupancy is increasing steadily.

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Empty startup office with open floor plan, abandoned while working from home.

As coronavirus numbers dwindle and some officials begin calling for a fourth COVID-19 shot, more and more people previously working at home after being kicked out of shuttered office buildings are returning to the bullpen.

The National Association of Realtors reports that more than 80% of metro areas in the United States have seen an increase in in-person working.

Boston saw the largest office occupancy growth over the past year. Chicago, New York and Washington, D.C. have the most open space.

NAR researcher Scholastica Cororaton says office occupancy is also increasing in areas with a big tech presence. San Jose, San Diego, San Francisco and Seattle lead those areas.

“The rising occupancy in these tech metro areas indicates that tech companies are contributing to the demand for office space,” Cororaton wrote. “Even as nationally, 45% of mathematical and computer workers work from home for at least some part of the time.”

The way companies are returning to work vary and are sparking anger. For instance, Google employees must now be in the office three days a week. On the other hand, Apple begins its return to office plan next week. It starts with employees coming back one day a week which will eventually grow to two days and then three days a week. Apple employees have revolted against the idea and are have threatened to quit.

Many in leadership are pleased with the return to the office to boost productivity and collaboration. However, employees are finding they’re showing up in person to just log in to Zoom again, which has stirred up even more frustration.

On top of the redundancy of work that could be done at home, a study shows only 3% of white-collar employees want to work in the office all week. 86% want to stay home for at least a few days.

Plus, the return to the office drives up costs, with gas prices seeing soaring and inflation at a 40-year-high.

Since the second half of 2021, 30 million square feet of office space has been taken up, however, about 100 million square feet remain.

NAR reports filling that space up again could take through the end of 2024.

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