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10 best and worst markets for first-time homebuyers right now

As the industry gears up for the spring home-buying season, first-time homebuyers are once again stuck trying to gauge exactly how affordable their market is, along with if it’s even one they are able to jump into.

Experts recently weighed in on what this year’s housing market will look like, projecting another year of extremely tight inventory and rising interest rates, which doesn’t paint a positive picture for first-time homebuyers.

But not all markets are created equal, and this new report from Bankrate shows what markets are ideal for Millennials, who make up the majority of first-time homebuyers.

And of course, there are the states that rank at the bottom of the list, making up the worst markets for first-time homebuyers.

The chart below, which includes all 50 states, ranks the toughest and easiest states for first-time homebuyers based on five key measures:

  1. Housing affordability
  2. The job market for young adults
  3. Housing market tightness
  4. Credit availability
  5. Homeownership among the under-35 crowd

Following the chart below, there will be a more thorough explanation of the different ranking methodologies. The five different methodologies are important since even though a state ranked low overall, it still could have a higher ranking in at least one methodology.

The chart shows the five different measures, along with an overall score.

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(Source: Bankrate)

1. Affordability

Affordability is a huge issue for first-time buyers, especially in states with large and growing metro areas, says Rolf Pendall, co-director of the Metropolitan Housing and Communities Policy Center at the Urban Institute.

According to Bankrate, principal and interest payments in the least affordable states consumed more than a third of household income, versus just 13 percent in the most affordable states.

  • Top three states for affordability: Iowa, Ohio, West Virginia
  • Bottom three: Hawaii, California, Oregon

2. Credit availability

To find out how access to home financing varies across states, Bankrate looked at data from millions of mortgage applications available under the Home Mortgage Disclosure Act.

  • Top three states for credit availability: Alaska, Minnesota, Nebraska.
  • Bottom three: West Virginia, Mississippi, Louisiana.

3. Job market

Bankrate analyzed the 2016 government employment data, giving states with low unemployment rates for workers in the prime first-time homebuyer demographic of 25-34 the highest marks.

  • Top three states for 25-34 employment: North Dakota, South Dakota, Utah.
  • Bottom three: Alabama, West Virginia, New Mexico.

4. Housing market tightness

When there’s an inventory shortage, it typically makes it difficult for first-time homebuyers to jump in. Bankrate analyzed Census data to calculate how tight the housing market is.

  • Three states with least tight housing markets: Alaska, Vermont, New Mexico.
  • Three tightest: Colorado, California, Texas.

5. Homeownership among the under-35 crowd

This last measure looks at how many other Millennials have already successful purchased a home. Using Census data one again, Bankrate calculated the percentage of households under 35 living in owner-occupied housing.

  • Top three states for millennial homeowners: Minnesota, Iowa, Utah.
  • Bottom three: Hawaii, California, New York.
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Property cash sales to hit pre-crisis levels this Summer

While previous estimates showed cash and distressed sales hitting their pre-crisis marks in 2018 or even 2019, the newest report estimates that the market could see pre-crisis levels as soon as this Summer, according to a new report from CoreLogic.

Cash sales accounted for 32.4% of total home sales in November, which, while up from October’s 31.8%, is down 4.5% annually.

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(Source: CoreLogic)

Before the housing crisis, cash sales averaged about 25%, a rate cash sales could hit by mid-2017 if the rate continues to fall at the same pace it did in November.

Real estate owned sales held the highest share of cash sales in November at 60.2%, followed by resales with 32.3%, short sales with 31.9% and newly constructed homes at 15.5%.

While cash sales make up many of the sales in the REO category, its share in the market continues to decrease. In fact, distressed sales made up 7.5% of the market share in November, the lowest share for any month since September 2007. Before the housing crisis distressed sales hovered near 2%. At the current annual rate of decrease, distressed sales could hit that mark by the end of 2017.

Most states, all but eight, saw decreases in their distressed sales, however some states continue to see higher rates than others. Maryland saw the largest share of distressed sales at 18.4%, followed by Connecticut with 18.2%, New Jersey with 15.8%, Illinois with 14.3% and Michigan with 14%.

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(Source: CoreLogic)

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U.S. to continue investigating money laundering by foreign real estate buyers

The federal government will continue investigating whether foreign buyers are using high-end U.S. real estate to launder money after an expanded investigation found that potentially illicit activity is behind as many as one in three cash purchases from foreign buyers in select markets.

Last year, the Treasury Department’s Financial Crimes Enforcement Network said it was “concerned about illicit money” being used to buy luxury real estate in Manhattan and Miami-Dade County, and planned to launch an investigation into the unknown buyers who used shell companies to hide their identities.

The results of that initial investigation showed more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” that is also subject of a “suspicious activity report,” which is an indication of possible criminal activity.

Those results led FinCEN to expand the investigation beyond those two areas, adding all of New York City, Los Angeles, San Francisco and several other areas.

The extended investigation was due to end this month, but FinCEN announced Thursday that it is extending the investigation by another 180 days after finding compelling evidence that warrants further investigation.

The extended investigation involved the issuance of a “Geographic Targeting Order,” which required title insurance companies in the designated areas to identify the actual person behind shell companies used to pay all cash for high-end residential real estate.

According to FinCEN, its investigation found that about 30% of the transactions covered by that GTO involve a “beneficial owner or purchaser representative that is also the subject of a previous suspicious activity report.”

FinCEN said that these results corroborate the agency’s concerns about the use of shell companies to buy luxury real estate in “all-cash” transactions.

“These GTOs are producing valuable data that is assisting law enforcement and is serving to inform our future efforts to address money laundering in the real estate sector,” said FinCEN Acting Director Jamal El-Hindi. “The subject of money laundering and illicit financial flows involving the real estate sector is something that we have been taking on in steps to ensure that we continue to build an efficient and effective regulatory approach.”

Under the terms of the new GTO, title insurance companies in the following markets will be required to reveal the individual behind all-cash, high-end real estate transactions:

  • All boroughs of New York City
  • Miami-Dade County and the two counties immediately north – Broward and Palm Beach
  • Los Angeles County, California
  • The three counties comprising part of the San Francisco area – San Francisco, San Mateo, and Santa Clara counties
  • San Diego County, California
  • Bexar County, Texas, which includes San Antonio

The monetary thresholds for each area are different, and reflective of the real estate market in the area.

In Manhattan, for instance, title insurance companies will be required to reveal the individual behind a cash transaction on all sales of $3 million and above, while in the San Antonio area, the threshold for reporting is $500,000.

See the chart below for the relevant dollar thresholds.

High-end real estate cash threshold

(Click to enlarge)

While the burden of identifying the actual buyers behind these cash deals falls on title companies, FinCEN said that title companies are not the target of the investigation, and adds that it appreciates the title companies’ assistance.

“FinCEN is covering title insurance companies because title insurance is a common feature in the vast majority of real estate transactions,” FinCEN said in a release.

“Title insurance companies thus play a central role that can provide FinCEN with valuable information about real estate transactions of concern,” FinCEN continued.

“The GTOs do not imply any derogatory finding by FinCEN with respect to the covered companies,” FinCEN added. “To the contrary, FinCEN appreciates the continued assistance and cooperation of the title insurance companies and the American Land Title Association in protecting the real estate markets from abuse by illicit actors.”

The new GTO takes effect on Feb. 24, 2017 and lasts 180 days.

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This is how much you need to buy a home in these top 10 cities

It’s not hard to find headlines of home prices reaching new heights in metros across the country – we have many of our own seen here, here and here, to name a few.

And even rising mortgage rates isn’t enough to slow down home prices, the Federal Housing Finance Agency showed in its fourth quarter 2016 House Price Index report.

But exactly how much would homebuyers need to earn in order to buy a home? SmartAsset, a financial technology company, put together data from the U.S. Census Bureau and its own mortgage calculator to do just that.

However, keep in mind that the income required in each city is based on putting a 20% down payment, however many banks offer 3% down options for 30-year fixed-rate mortgages.

SmartAsset also assumed a 4% interest rate for 80% of the home value, the balance after the down payment, an annual home value increase of 2%, annual inflation of 2% and that buyers will have annual homeowners insurance of 0.5%.

Here are the income levels potential buyers need to buy a home in these top 10 largest cities across the U.S., and the median home prices in those cities, according to data from real estate website Trulia.

10. Phoenix, Arizona

Annual Income needed: $26,803

Median sales price: $209,900

Arizona

9. Houston, Texas

Annual Income needed: $27,067

Average listing price: $392,985

Houston

8. Dallas, Texas

Annual Income needed: $27,505

Average listing price: $718,471

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7. Chicago, Illinois

Annual Income needed: $44,244

Median sales price: $244,000

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6. Austin, Texas

Annual Income needed: $47,523

Average listing price: $558,967

Austin skyline

5. San Diego, California

Annual Income needed: $75,816

Median sales price: $512,000

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4. Los Angeles, California

Annual Income needed: $77,230

Median home price: $702,500

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3. New York City, New York

Annual Income needed: $96,993

Median sales price: $1,186,649

New York City Statue of Liberty

2. San Jose, California

Annual Income needed: $99,963

Median sales price: $750,000

San Jose

1. San Francisco, California

Annual Income needed: $128,598

Median sales price: $1,136,000

san francisco houses

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FHFA: Rising interest rates not slowing down home prices…yet

Home prices increased during the fourth quarter and, despite rising interest rates, showed no sign of a slowdown, according to the Federal Housing Finance Agency’s House Price Index.

Home prices increased 1.5% from the third quarter and 6.2% from the fourth quarter of 2015, the report showed. FHFA’s seasonally adjusted monthly index increased 0.4% from November to December.

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fhfa hpi

(Source: FHFA)

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Because of this, the selection excludes high-end homes bought with jumbo loans or cash sales.

“Although interest rates rose sharply during the fourth quarter, our data show no signs of a home price slowdown,” FHFA Deputy Chief Economist Andrew Leventis said.

“Although it will certainly take more time for the full effects of the elevated interest rates to be felt, there is no evidence of a normalization in the unusually low inventories of homes available for sale, which has been the primary force behind the extraordinary price gains,” Leventis said.

The states with the highest home price increases included Oregon at 11%, Colorado at 10.6%, Florida at 10.4%, Washington at 10.2% and Nevada at 8.9%.

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FHFA HPI

(Source: FHFA)

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Want to be on the cover of HousingWire Magazine? Here’s your chance

Have you ever wanted to be on the cover of a magazine?

Just think about it. You get to hold those glossy pages, stare at your beautiful mug and think, damn, I look good.

You get to show off to all your friends, family, and colleagues – many of whom will likely come traipsing into your office and begrudgingly ask for your autograph.

Have you ever wanted to the envy of the entire housing industry?

Well, here’s your chance to do both.

HousingWire is currently accepting nominations for our fourth annual HousingWire Rising Stars award program, which honors the next generation of leaders in lending, servicing, investments, and real estate.

By next generation, we mean folks who are 40 or younger, as of June 1, 2017.

And what makes the Rising Stars award different than any of our other awards is that one of the Rising Stars is featured on the cover of HousingWire Magazine.

All by themselves.

It’s just them. No one else.

Here’s a look at each of our previous Rising Star covers.

Last year, we honored Ori Zohar, the co-founder of Sindeo.

HousingWire Magazine June 2016

In 2015, we featured Matt Barba, the co-founder and CEO of Placester.

HousingWire Magazine June 2015

And in 2014, Laura Ferris, vice president at Green River Capital, graced the cover.

HousingWire Magazine July 2014

The June 2017 cover of HousingWire Magazine is waiting for you.

But it won’t be a handout.

We’ve gotten some incredibly strong applications so far. It’s looking like an incredibly tough choice to pick the list of Rising Stars winners, let alone who belongs on the cover.

But we’re ready for you to make it even harder on us.

And, luckily, there’s still time left to get your application in.

Although there’s not much time left. The deadline is quickly approaching. You only have until Friday, February 24.

So, click here for more information about what it takes to be a Rising Star.

What are you waiting for?!?!?!?!?

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OrangeGrid changes up leadership team with four new hires

FitchOrangeGrid, which implements software solutions for businesses in any market or industry, made several changes to its executive team with four new hires.

These hires include Adam Fitch [top left] as chief marketing officer, Brian Johns [top right] as senior vice Johnspresident of business development, Chet Barr [bottom left] as director of information technology and Bradley Sweetser [bottom right] as the company’s financial controller.

Fitch previously served as chief marketing officer for Albertelli Law. Before that, he led marketing and business development efforts of ALAW subsidiaries such as PREO Auction, PREO Mortgage, Brightline National Title, U.S. Legal Pubs and the company’s real estate law firm.

Industry veteran Johns served in several executive-level positions including division manager at North American National Title Solutions and vice president of major accounts for First American Title Insurance. Johns also brings experience in technology management from Barrhis time as director of information technology for Fidelity National Financial, where he worked for 10 years.

As director of information technology, Barr brings experience in operational and compliance management. Previously he served in the financial services technology sector with companies such as Wells Fargo, AmirQuest, Citi and Equator. His most recent Bradposition was vice president of shared security and compliance information technology at RES.NeET.

The company appointed Sweetser as accounting and finance controller following his most recent assignment as senior auditor at Deloitte.

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Completed foreclosures drop 40% in December

Completed foreclosures decreased 40% in December, according to the December 2016 National Foreclosure Report released by CoreLogic, a property information, analytics and data-enabled solutions provider.

Completed foreclosure dropped from 36,000 in December 2015 to 21,000 in December 2016. And foreclosure inventory also dropped significantly by 30% annually, according to the report.

“Foreclosure and delinquency trends continue to head in the right direction powered principally by increasing employment levels, stringent underwriting standards and higher home prices over the past few years,” CoreLogic President and CEO Anand Nallathambi said.

“We expect to see further declines in delinquency and foreclosure rates in 2017,” Nallathambi said. “As the foreclosure inventory diminishes, we must look ahead and tackle tight housing supply and growing affordability issues which are keeping many potential homebuyers, especially first-time buyers, on the sidelines.”

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(Source: CoreLogic)

The foreclosure inventory represents the number of homes at some stage of the foreclosure process while completed foreclosures reflect the total number of homes lost to foreclosure.

Foreclosure inventory dropped to just 0.8% of all homes with a mortgage in December, down from 1.2% in December 2015.

Homes in serious delinquency, defined as those 90 days or more past due including loans in foreclosure and REO, decreased 19.4% annually in December. In fact, these 1 million seriously delinquent mortgages, or 2.6% of all mortgages, hit the lowest level since August 2007.

“While the decline in serious delinquency has been geographically broad, some oil-producing markets have shown the effects of low oil prices on the housing market,” CoreLogic Chief Economist Frank Nothaft said. “Serious delinquency rates rose in Louisiana, Wyoming and North Dakota, reflecting the weakness in oil production.”

The states with the highest number of completed foreclosures in December 2016 included Florida with 45,000, followed by Michigan with 30,000, Texas with 24,000, Ohio with 21,000 and California with 19,000.

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(Source: CoreLogic)

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[Photos] Meet Aspen’s highest priced home sale since 2015

Aspen, Colorado just saw its highest priced home sale since the end of 2015 with the sale of a $24.406 million home.

Home prices continue to increase across the nation, but Aspen saw especially high home prices. The median sales price in the area hit $937,500, according to data from Trulia.

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home

(Source: Coldwell Banker)

Median rent per month came in at $35,000 compared to an average annual household income of just over $70,000. But these incredibly high home prices did not seem to hold back homeownership, which was higher than the national average at 61%.

The over $24 million home sale marked the highest sale since December 2015, according to Coldwell Banker Mason Morse, the real estate company that represented the buyer in the sale.

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home

(Source: Trulia)

“This closing represents the highest price residential sale in the area in almost two years and serves as a testament to the momentum we’ve experienced at the onset of the New Year,” said Brooke Peterson, Coldwell Banker Mason Morse CEO.

The property sits on five acres and is made up of 14,000 square feet. The property holds a lake and is surrounded by mountains. It contains eight bedrooms and eleven bathrooms, an in-home theater and an indoor and outdoor pool and spa.

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home

(Source: Trulia)

To see more photos of this million-dollar home, click here.

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Realtor.com: These are the top 10 suburban housing hotspots

Some of America’s top suburban hotspots are becoming more popular amid rising home prices, according to a new study from realtor.com

As home buyers increasingly look outside urban areas, home prices, home sales and more competition continues to rise in the suburbs.

“Suburbs are traditionally viewed as meccas for young families, willing to trade in shorter commute times and urban nightlife for better schools and larger homes,” realtor.com Chief Economist Jonathan Smoke said. “But the relationship between the suburbs and urban areas is far more intertwined.”

“In recent years, rising home prices and inventory shortages in urban centers have made affordable suburban home prices more appealing for buyers,” Smoke said. “Our analysis indicates 50% of buyers planning to purchase a home this spring indicated they preferred a home in the suburbs.”

And while the commute will be longer for these homebuyers in the suburbs, the good news is economists expect gas prices to remain low over the next two years, creating less of a strain on their budget.

“OPEC is unlikely to sustain the production cuts which it implemented in January, but we expect a combination of rising global demand and increased US shale production to keep prices fairly stable for the next year or two,” said Andrew Kenningham, Capital Economics chief global economist. “For the world as a whole, this would probably be the ideal outcome.”

Realtor.com, an online homebuyer-focused real-estate listing service, created a list of the top suburbs in the nation’s 50 largest metropolitan areas. These suburbs were then ranked based on a score measuring household growth, listing price growth and housing supply and demand.

10. Friendship/Apex, North Carolina

Metro: Raleigh, North Carolina

This number of households in the suburb grew 25.2% from 2010 and 2017. A typical property in the suburb spent 34 days on the market, 25 days less than average in the study. Listing prices grew by 14% annually over the past three years.

North Carolina

9. Williamsburg/Waterhill/White Haven/Blackman, Tennessee

Metro: Nashville-Davidson-Murfreesboro-Franklin, Tennessee

This number of households in the suburb grew 16.3% from 2010 and 2017. A typical property in the suburb spent 34 days on the market, 25 days less than average in the study. Listing prices grew by 14% annually over the past three years.

Tenn

8. Milpitas, California

Metro: San Jose-Sunnyvale-Santa Clara, California

This number of households in the suburb grew 15.5% from 2010 and 2017. A typical property in the suburb spent 23 days on the market, 36 days less than average in the study. Listing prices grew by 12.8% annually over the past three years.

San Jose

7. Cutler Bay/Lakes by the Bay, Florida

Metro: Miami-Fort Lauderdale-West Palm Beach, Florida

This number of households in the suburb grew 12.3% from 2010 and 2017. A typical property in the suburb spent 50 days on the market, nine days less than average in the study. Listing prices grew by 16.3% annually over the past three years.

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6. Vista East/Vista Park, Florida

Metro: Orlando-Kissimmee-Sanford, Florida

The suburb attracts those with an active lifestyle with its hiking trails, lakes and short commute to the ocean. It is also just 30 minutes from Disney World and Universal. Listing prices grew by 13.8% annually over the past three years.

Florida

5. Orient Park/Progress Village/Palm River-Clair Mel, Florida

Metro: Tampa-St. Petersburg-Clearwater, Florida

The suburb attracts many first-time buyers due to its affordable housing options. A typical property in the suburb spent 47 days on the market, 12 days less than average in the study. Listing prices grew by 19.8% annually over the past three years.

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4. Daffan/Hornsby Bend, Texas

Metro: Austin-Round Rock, Texas

A typical property in the suburb spent 45 days on the market, 14 days less than average in the study. Listing prices grew by 27.1% annually over the past three years, making it the second highest suburb for home price growth.

Austin skyline

3. Dublin/Dougherty, California

Metro: San Francisco-Oakland-Hayward, California

This number of households in the suburb grew 25.6% from 2010 and 2017. A typical property in the suburb spent 24 days on the market, 35 days less than average in the study, and listings received 2.1 times more views than the average home in the study.

California

2. Wylie/St. Paul, Texas

Metro: Dallas-Fort Worth-Arlington

This number of households in the suburb grew 12.3% from 2010 and 2017. A typical property in the suburb spent 41 days on the market, 18 days less than average in the study. Listing prices grew by 18.7% annually over the past three years, and listings recieved 2.4 times more views than the average home in the study.

Dallas skyline

1. Northeast/Montebello, Colorado

Metro: Denver-Aurora-Lakewood, Colorado

A typical property in the suburb spent 19 days on the market, 40 days less than average in the study. Listing prices grew by 20.6% annually over the past three years, and listings received 1.7 times more views on realtor.com than other homes in the study.

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