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Case-Shiller: Renting could become more attractive than home buying in 2018

Home prices increased in October, and experts are beginning to fear 2018 could lock many potential buyers out of the housing market, forcing them to rent, according to the latest report released by S&P Dow Jones Indices and CoreLogic.

Home prices increased 6.2% annually in October, up from September’s annual increase of 6.1%, according to the latest S&P CoreLogic Case-Shiller Indices report.

The 10-City Composite increased 6% annually, up from its increase of 5.7% the month before and the 20-City Composite increased 6.4% year-over-year, up from an increase of 6.2% in September.

The chart below shows the National Home Price Index already surpassed its previous peak and continues to hit new highs, while the 10-City and 20-City Composites remain below their 2006 peak, but are quickly catching up.

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Case-Shiller

(Source:  S&P Dow Jones Indices, CoreLogic)

“Home prices continue their climb supported by low inventories and increasing sales,” said David Blitzer, at S&P Dow Jones Indices managing director and chairman of the Index Committee. “Nationally, home prices are up 6.2% in the 12 months to October, three times the rate of inflation.”

“Sales of existing homes dropped 6.1% from March through September; they have since rebounded 8.4% in November,” Blitzer said. “Inventories measured by months-supply of homes for sale dropped from the tight level of 4.2 months last summer to only 3.4 months in November.”

Of the top 20 cities, Seattle, Las Vegas and San Diego reported the highest annual increases. Seattle lead the way with an annual increase of 12.7%, followed by Las Vegas with an increase of 10.2% and San Diego with an increase of 8.1%.

Before seasonal inflation, the National index, 10-City and 20-City Composites all posted a monthly gain of 0.2% in October. After seasonal adjustment, all three indices increased 0.7% during the month.

Eleven of the nation’s top 20 cities posted a gain before seasonal adjustment, while all 20 reported increases after seasonal adjustment.

“Underlying the rising prices for both new and existing homes are low interest rates, low unemployment and continuing economic growth,” Blitzer said. “Some of these favorable factors may shift in 2018. The Fed is widely expected to raise the Fed funds rate three more times to reach 2% by the end of the New Year.”

“Since home prices are rising faster than wages, salaries, and inflation, some areas could see potential home buyers compelled to look at renting,” he said. “Data published by the Urban Institute suggests that in some West coast cities with rapidly rising home prices, renting is more attractive than buying.”

As home prices continue to increase, they push affordability lower, which remains at its lowest in 10 years in spite of recent improvements.

Despite increasing home prices, housing affordability improved in many markets the third quarter of 2017, but the national average remains at a decade-low, according to the Q3 2017 U.S. Home Affordability Index from ATTOM Data Solutions, a multi-sourced property database.

One expert explained the housing market is currently going strong, but it may not be able to continue at its current pace, saying it is questionable if the “good times” will last into 2018.

“The last few months of 2017 have clearly demonstrated the extent to which the housing market refuses to be knocked off its stride,” Zillow Senior Economist Aaron Terrazas said. “Sales of existing homes have risen strongly and unexpectedly, despite a severe and worsening shortage of homes actually available to buy. An economy that keeps adding jobs and wages that continue to grow both have consumers feeling confident.”

“The housing market’s resistance to these headwinds is a testament to the enduring value Americans place on homeownership,” Terrazas said. “Whether and how long the housing market can continue to defy gravity, and whether the good times last into 2018, remain open questions. But for now, the fundamentals driving the market today look unlikely to change any time soon.”

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Phil DaCosta named VP of business development at Cook & James

Veteran executive Phil DaCosta recently joined Cook & James as vice president of business development.

Based in the Atlanta suburb of Alpharetta, Cook & James attorneys serve real estate closing needs in Georgia, New York, Connecticut and South Carolina. The firm was recently added as a network partner with national real estate eClosing software platform, Pavaso. phil_dacosta

DaCosta will be responsible for the firm’s market expansion and will foster relationships to heighten its recognition among Realtors, builders, developers as well as with executives in the financial sector. According to a release, DaCosta has an extensive background in process improvement, customer service, supply chain innovation, marketing and call center logistics.

During his career, DaCosta has seen significant results in the work he has done, including increasing the net worth of Cbeyond. While serving as the company’s customer experience director, its net worth increased from $100 million to $700 million. As senior manager of online operations for Home Depot, he streamlined a $24 million integration project that helped the company move from $450 million to $3.5 billion in revenue. DaCosta also previously served as a process improvement manager with Bellsouth, where he helped the company save $200 million prior to its merger with AT&T.

“We are thrilled to welcome Phil and know his rich business experience will further position Cook & James for continued success,” said Heather James, co-founding partner at Cook & James. “With Phil’s strong team leadership and award-winning track record, we are confident we can penetrate new verticals, compounding our recently-reinvigorated business development initiatives.”

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FHFA: Home prices continue to soar on West Coast

Home price increases picked up the pace once again in October, especially in the Pacific region, according to the latest House Price Index from the Federal Housing Finance Agency.

Home prices increased in October, up 0.5% from the previous month, the HPI showed. September’s estimate was revised up from an increase of 0.3% to an increase of 0.5%. Annually, home prices increased a full 6.6%.

But in some regions, that increase was much higher.

The chart below shows home prices continue to rise, unchecked since 2012, and have long since surpassed their previous high.

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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.

Regionally, the increases from September to October ranged from a drop of 0.4% in the West North Central division to an increase of 2.8% in the East South Central division. But annually, all regions saw an increase, ranging from an increase of 4.8% in the West North Central division to an increase of 8.7% in the Pacific division.

Here is a list of which states are in each of those divisions:

West North Central: North Dakota, South Dakota, Minnesota, Nebraska, Iowa, Kansas, Missouri

East South Central: Michigan, Wisconsin, Illinois, Indiana, Ohio

Pacific: Hawaii, Alaska, Washington, Oregon, California

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Guaranteed Rate Affinity now up and running and ready to boom

Guaranteed Rate Affinity is now up and running and about to boom.

The joint venture, which markets Guaranteed Rate mortgages across the Realogy real estate network, is now up and running.

The JV, called Guaranteed Rate Affinity, is now closing all transactions on its own, the company reports and it is expected to boom in 2018.

Need proof? GRA just brought in a brand new executive vice president of national sales and HousingWire readers are now the first to know.

“David Dickey (pictured, below) has joined the Guaranteed Rate Affinity team as EVP, National Sales. David, who will be based out of Texas, will be responsible for the production, profitability and overall performance. With more than 25 years in mortgage banking, David brings with him a wealth of experience and a deep understanding of the industry,” GRA said in an email to HousingWire.

Most recently with Capital One, Dickey held executive positions at Wells Fargo, Countrywide, Bank of America and Citibank.

“He brings with him an excellent reputation in residential mortgage lending for building cultures that foster both associate growth and best in class service experience for consumers,” the company added.

The new JV is expected to add billions of dollars in originations over the next several years and to be highly incremental to the company’s earnings:

In 2017, over 75% of the Guaranteed Rate’s transactions were for purchase transactions and, with the addition of the GR Affinity platform, no other mortgage lender in the country is as well-positioned to thrive in the coming years as refinance transactions dwindle and housing strengthens.

David Dickey

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New home construction continues to impress, rises to highest rate since October 2016

Housing starts increased in November, rising nearly 13% from the year before to the highest pace since October last year, according to the latest report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Privately owned housing starts increased in November to a seasonally adjusted annual rate of 1.3 million, up 3.3% from the revised October estimate of 1.26 million and 12.9% above the November 2016 rate of 1.15 million.

Of those, single-family housing starts increased 5.3% from last month to 930,000, up from 883,000 in October.

One expert explained this surpassed analysts expectations, but could still be elevated due to the recent hurricanes.

“November housing starts edged analysts estimates, coming in at 1,297,000,” said Robert Frick, Navy Federal Credit Union corporate economist. “This slightly elevated number may still be builders making up for delays caused by hurricanes Harvey and Irma. Playing catch up caused starts to rocket ahead in October after three months of declines.”

However another expert said this increase was not due to the hurricanes, but shows builders are rising up to meet growing homebuyer demand.

“Housing starts and permits for November both exceeded consensus estimates, boosted by the highest number of single family starts since September of 2007,” PwC Principal Scott Volling said. “This is a positive sign as it shows builders continuing to shift focus to the pent up demand in the single family segment, which should benefit consumers as more inventory enters a tight market.”

“With the impacts from hurricanes Harvey and Irma now largely in the rearview mirror for builders, this is the second straight month of strength in both starts and permits and a trend we expect to continue into what may be the strongest spring selling season since before the recession,” Volling said.

The chart below shows that besides the increase around October 2016, housing starts remain higher than any other point since November 2012.

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starts

(Source: HUD, U.S. Census Bureau)

However, privately owned housing units authorized by building permits decreased slightly in November, falling 1.4% from last month’s 1.32 million permits to an annual rate of 1.3 million. But this is up 3.4% from 1.26 million permits in November 2016.

And single-family authorizations still increased 1.4% from last month’s 850,000 to 862,000 in November.

One expert explained that while the developing trend is positive, there is still room for more growth.

“A welcoming trend is developing in the housing sector as builders are able to bring more supply to the market on a consistent basis,” said Lawrence Yun, National Association of Realtors chief economist. “The latest monthly figure of near 1.3 million annualized housing starts is solid, and the growth is mostly coming both in the West and for single-family homes.”

“There is still more room for improvement, as the latest figure is still not yet at the long-term 50-year average of producing 1.5 million units per year,” Yun said. “If this rising trend continues, the worst of the supply shortage could soon end, which would help slow price appreciation in 2018. That would be a huge, welcoming relief for renters seeking to become homeowners.”

Privately owned housing completions came in at a seasonally adjusted annual rate of 1.12 million in November. This is down 6.1% from Octobers 1.19 million and 7.2% below the November 2016 rate of 1.2 million completions.

Even single-family completions decreased, falling 4.6% from October’s revised rate of 788,000 completions to 752,000 in November.

And one expert pointed out that despite the decrease in housing starts and permits, the year will finish higher than 2016.

“Homebuyers hoping for a large boost in new housing supply as a holiday gift are likely disappointed with today’s homebuilding numbers, as both permits and completions were down in November,” Trulia Chief Economist Ralph McLaughlin said. “However, they should despair not: each indicator – permits, starts, and completions – is on pace to finish 2017 at higher levels than last year, which should help boost inventory in 2018.”

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CoreLogic: Home prices surge 7% annually in October

Home prices increased across the U.S. from last month and last year, according to the latest Home Price Index from CoreLogic, a property information, analytics and data-enabled solutions provider.

Home prices increased a full 7% from October 2016 to October this year and 0.9% from September to October, the CoreLogic HIP showed.

“Single-family residential sales and prices continued to heat up in October,” CoreLogic Chief Economist Frank Nothaft said. “On a year-over-year basis, home prices grew in excess of 6% for four consecutive months ending in October, the longest such streak since June 2014. This escalation in home prices reflects both the acute lack of supply and the strengthening economy.”

The chart below shows that, until recent months, home price increases hovered near 5%.

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CoreLogic

(Source: CoreLogic)

In fact, home prices are up so much that out of the nation’s 100 largest metropolitan areas, 37% are now considered overvalued based on the area’s housing stock. In October, 26% of markets were undervalued and 37% were at value.

But these surging home prices will not continue into 2018, according to the CoreLogic HPI forecast. Home prices will increase by 4.2% from October 2017 to October 2018, and will increase just 0.2% from October to November.

The CoreLogic HPI Forecast is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighting indices according to the number of owner-occupied households for each state.

“The acceleration in home prices is good news for both homeowners and the economy because it leads to higher home equity balances that support consumer spending and is a cushion against mortgage risk,” CoreLogic President and CEO Frank Martell said.

“However, for entry-level renters and first-time homebuyers, it leads to tougher affordability challenges,” Martell said. “According to the CoreLogic Single-Family Rent Index, rents paid by entry-level renters for single-family homes rose by 4.2% from October 2016 to October 2017 compared with overall single-family rent growth of 2.7% over the same time.”

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2017 HW Vanguard: Nate Baker

Under co-founder and CEO Nate Baker’s leadership, real estate closing platform Qualia has successfully launched a platform centralizing the closing process and expanded its usage to thousands of title companies, lenders and brokers. 

Over the past 12 months, Baker was instrumental in scaling the business and achieving its impressive growth trajectory, extending the platform from 15 to 50 states. As part of this effort, Baker grew the company’s team from 20 to more than 60 people. baker

To maintain the highest standards, Baker never wavered from his commitment to developing personal relationships with prospects, new hires and long-term employees. He believes this focus on hiring right for talent, culture and vision creates an atmosphere where everyone is engaged with the company’s mission and dedicated to creating a better real estate closing experience.

“Together, we’re building the tools that empower closing teams that include title companies, lenders and brokerages. Everyone is so smart and so invested in being part of Qualia’s upward trajectory. We’re solving a massive coordination problem that has existed for years with real estate transactions which is no small task. We’re lucky to have an incredible team that genuinely enjoys working together to reimagine the closing process from the ground up.” 

Baker was integral in accelerating the company’s financial growth by securing funding from top venture capital firms including Formation 8 and Bienville Capital. Their economic support and technology industry insights have been invaluable to Qualia. 

What’s has been your secret to success?

“It’s our people. Together, we’re building the tools that empower closing teams that include title companies, lenders and brokerages. Everyone is so smart and so invested in being part of Qualia’s upward trajectory.”

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2017 HW Vanguard: Alex Elezaj

New to the industry in 2015, Alex Elezaj has made a tremendous impact at Class Appraisal and the industry in a short period of time. Under his tenure as CEO, Class Appraisal has more than tripled its annual revenue and built strategic business partnerships with more than a thousand of the nation’s top performing appraisers. elezaj

Now the company is doing business with more than 300 lenders, including several of the Top 25 financial institutions in the country. 

Since Elezaj took the reins, Class Appraisal has introduced several new technologies, such as Lead Time Calculator, a web-based interface that allows users to check on the lead time for an appraisal in a certain area. The information is based on collected historical data and provides a snapshot of what is happening in a particular area. 

Over the past three years, Class Appraisal has experienced annual growth rate increases of more than 70%, and is expecting to continue their momentum over the course of the next several years.

In the last year, Class Appraisal revenue is up more than 40%, and the company is set on being the No. 1 appraisal management company in the country. Elezaj’s leadership is all about his focus on people, culture, and building the ultimate client experience. 

“Treating people well, always doing the right thing, and being in the weeds of your business are an absolute requirement to leading a company,” Elezaj said. “Many leaders lose sight as to how important it is to know all of the little things that are going on in their respective business.”

What has been your secret to success?

“Treat people well, always do the right thing, and be in the weeds of your business.”

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2017 HW Vanguard: Colleen Lambros

Leveraging more than 20 years of proven marketing experience in the real estate industry, Colleen Lambros leads Auction.com’s marketing organization, creating innovative campaigns to drive visibility and increase engagement. In the past 12 months, Lambros spearheaded Auction.com’s comprehensive brand evolution, oversaw the continued growth of the platform and initiated a new strategy aimed to hyper-localize the company’s brand and products within each of the 3,100 counties it serves. Lambros

As Auction.com evolved, the original brand no longer reflected the company’s deep culture of innovation, the relentless commitment to the customers and communities it serves it and most importantly the depth of experience, talent and service that has made it the largest and most trusted estate platform. 

Lambros identified this gap and launched a year-long campaign to develop and implement a new brand, while also ensuring the revised brand would pay respect to the past 10 years of partnership and innovation to the industry. As a result of her leadership, Auction.com unveiled its new brand look with the tagline “Beyond the bid” in August of 2017, demonstrating the commitment Auction.com has established to provide for its buyers, sellers and communities. 

Marketing is most often viewed within the framework of a strategy to sell more products or services; however, Lambros understood the value of extending marketing capabilities to the buyers and sellers of real estate themselves, bringing buyers the best properties that match their interests and portfolios, while enabling sellers to develop optimal disposition strategies based on data intelligence focused on the buyer market.  

What has been your secret to success?

“Focus your work and energy in areas that are your personal strength and give you great joy.”

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2017 HW Vanguard: Chad Mosley

As the chief operating officer of MCS Solutions, Chad Mosley leads the company’s business development, marketing and new client onboarding, in addition to overseeing the valuations, title and security divisions. 

MosleyUnder Mosley’s leadership, the company’s Ruston, Louisiana, operations center’s headcount has grown 21% in the past year. MCS has added eight new processes to its Ruston site, helping to drive company performance in the areas of quality and timeliness. Mosley partners daily with the onsite management team to ensure there is continuity between sites and they have the tools needed for success every day. 

MCS continues to grow with new and existing clients fueled by support of MCS’ business development, marketing and client onboarding teams. Under Mosley’s leadership, the company has built a sales team comprised of experienced and expert operators from the business. MCS also utilizes its proprietary onboarding process to ensure that all new field services, valuations and title clients are successfully onboarded at the beginning of each relationship to ensure performance goals are met.

In the last year, MCS acquired two companies, adding to MCS’ existing valuations platform as well as an initial entry to the title and closing space. These businesses were successfully integrated into the MCS family under Mosley’s leadership. 

Mosley believes in striving to lead downline, upline and with peers across an entire organization. This is evident as he utilizes his responsibility as a leader to help develop new leaders and be a positive influence for the next generation of leadership for MCS.

What’s has been your secret to success?

“Any success I have achieved has been positively impacted by our team members, vendor partners and the management team we have built. I believe in hiring exceptionally talented individuals, giving them the tools and support needed to be successful.”