Here was my interview by Inman at the Real Estate Connect conference in New York just before I was set to speak on a panel.
United Van Lines has been publishing a report on traffic patterns of the moves [United Van Lines] that are ordered within the moving company each year. This report has been published annually since 1977.
Methodology: “For 2005, the accounting is based on the 226,353 interstate household moves handled by United among the 48 contiguous states, as well as Washington, D.C. In its study, United classifies each state in one of three categories — “high inbound” (55% or more of moves going into a state); “high outbound” (55% or more of moves coming out of a state); or “balanced.” Although the majority of states were in the “balanced” category last year, several showed more substantial population shifts.”
I thought it would be neat to try to correlate inbound and outbound traffic to housing demand. The idea that a state with high outbound traffic would have lower appreciation rates than states with higher inbound traffic. However, the census data does not fully correlate with this report. I can only assume that its a factor of the client demographic the moving company works with, or this is a flawed methodology.
Nevertheless, United Van Lines map concept is very cool.
US Census Division Map: Change in House Prices By Region
In this article by Steve Kerch, real estate editor for MarketWatch about Adjustable-rate mortgages he says:
Adjustable-rate mortgages have been maligned in recent years as some critics have contended that, in an era when fixed-rate loans were at historic lows, ARMs were only being used by marginal buyers who could not otherwise afford to buy houses. The implication was these were all risky loans that would eventually come back to haunt lenders and the housing market.
“The reality is quite a bit different. Yes, ARMs do account for a significant portion of the mortgage market — 32 % in 2005, Freddie Mac says, down only slightly from a 10-year high of 33% in 2004. But the most popular ARMs aren’t the risky ones everybody assumes.
Instead, the reason the ARM share of the market has remained so high while 30-year fixed rates have remained so low is that buyers have been flocking to hybrid ARMs, adjustable loans that don’t adjust right away but have a fixed-rate period for a number of years. The biggest among those hybrids is the 5/1 loan, which means the borrower has a fixed rate for five years before the mortgage begins to adjust every year. In fact, 5/1 ARMs accounted for 40% of all adjustable-loan applications in 2005, Freddie Mac said.”
“This idea of better matching your housing plans to the financing you put on the housing is a relatively new one, since these hybrid ARMs — you can find three-year, seven-year and 10-year versions as well — have only been around a few years. (Freddie Mac only began tracking the 5/1 hybrid rate in 2005.) But the practice makes perfect sense: Homes turn over in the U.S. every seven years on average and first-time buyers especially often plan a short stay in their “starter” home before moving up. “
See 5/1 ARM A Good Idea? [Urban Digs] for a rational discussion on the strategy of obtaining a hybrid mortgage.
These have become very popular as buyers have been forced to rethink traditional financing (aka 30-year fixed mortgages). The logic has become: if a homeowner plans to move in 5 years, why pay a premium for a 30-year fixed when the hybrid has a steady payment for the same period of time? Some say that you should select a hybrid that has a fixed term of 2 years longer than you plan on staying in the house.
Tags: Urban Digs
After the positive feedback received for last year’s panel discussion of the same name, Braddock & Purcell (Kathy Braddock and Paul Purcell) are again hosting the same panel members at the 92nd Street Y this fall.
Last year Paul Purcell asked tough questions of all three panelists: Pamela Liebman, Alan Rogers [former Chairman of Douglas Elliman] and yours truly. I have learned a lot from Pam, Alan and Paul over the years and anticipate that this second edition of the panel will be equally, if not more informative.
Apparently the 92nd Street Y did as well because they booked a larger auditorium!
A few years ago, I decided to be more outspoken about the predicament that appraisers are in. We really don’t have a collective voice over the issue of the flawed structure that currently exists in our profession. It is essentially this:
Bob Moon of the Marketplace show on American Public Media radio showed great interest in the story. He researched and put together a broadcast aired on National Public Radio on June 23, 2005.
At about 6 minutes, it was one of the longest stories they had done in the past year. That meant either I was a fascinating interviewee or the story was compelling. (I assume the latter but was secretly hoping it was the former).
American Public Media “Market Place” Radio Broadcast Appraising the appraisers
The Marketplace audio file link is broken so I don’t hope they mind me placing the audio file of the June 23, 2005 segment on my blog. This was the moment I came out on the situation appraisers were facing in public. If you’ve been following our industry or are part of it, the solutions set by Dodd-Frank have made the reliability of an appraisal done for a bank even worse.