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March Home Sales Provided a “Happily Ever After” for Both Buyers and Sellers in 2019

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that buyers and sellers hit their stride in March 2019, resulting in more projected closed sales, fewer days on the market, and an increase in percent of original listing price received.

In March 2019, there were 4.9% more new listings than March 2018 and 25.2% more inventory of homes for sale than the year prior.

Homebuyers were ready to purchase the increased inventory, resulting in 4.5% more listings under contract than March 2018, 6.9% more projected closed sales than March 2018, and the fewest days on market (60) for the CCAR Pulse area since November 2018.

The increase in sales may be in part to the housing affordability index of 106 in March 2019; signifying that the median household income is 106% of what is necessary to qualify for the median-priced home under prevailing interest rates.  The index may have been boasted by a 1.1% decrease in the median sales price of homes in March 2019 ($313,854) compared to March 2018 ($317,500).

However, the decrease in median sales price should not discourage sellers. When compared to February 2019 ($300,000), the median sales price increased a significant 4.4% in one month’s time, continuing a two-month trend of month-over-month median sales price increase.

Sellers also received 96% of their original list price in March 2019, continuing a three-month upward trend of original list price received. An indication of well-informed sellers setting competitive prices, an additional factor contributing to increased projected closed sales in March 2019 and decreased days on the market.

The months supply of homes for sale is one data figure that continues to remain steady for the CCAR Pulse area. March 2019 reported 3.1 months supply of homes for sale—the median months of homes for sale for the past 11 months. This represents a steady sellers’ market, despite increased inventory and slowing of sales prices.

“Spring is historically thought of as the peak season for real estate and the March market performance in Collin County has indicated this year will not be the exception,” remarked David Alan Cox, CCAR President.

As sellers prepare their homes for the market and buyers qualify for their home loans this spring, signs indicate a happy ending for all parties involved.

CCAR Announces TREPAC-Supported Candidates for May Municipal Elections

Each election cycle, the Collin County Association of REALTORS® (CCAR) conducts candidate interviews in order to better understand candidates’ ideas and visions for when they may be elected to public office. The Texas REALTORS® Political Action Committee (TREPAC) may then choose to support the candidate who champions private property rights and upholds our REALTOR® members’ values.

In order to ensure transparency and participation from our members, CCAR invited you to join the Government Affairs and TREPAC Committees during these interviews by observing them. Over 20 CCAR volunteers interviewed over 50 candidate for local elected office for the May 4th municipal elections. CCAR understands the importance of public service and sincerely thanks all candidates at all levels of government for their willingness to serve and their involvement.

As a result of the interviews, the following are the official TREPAC-supported candidates:

Chris Schulmeister Allen City Council Place 4
Baine Brooks Allen City Council Place 6
Bill Webber Celina City Council Place 1
Chad Anderson Celina City Council Place 6
Shona Huffman Frisco City Council Place 2
Bill Woodard Frisco City Council Place 4
Rainey Rogers McKinney City Council District 2
Frederick Frazier McKinney City Council At Large
Rick Franklin McKinney City Council District 4
Rick Grady Plano City Council Place 3
Ron Kelley Plano City Council Place 5
Michael “Mike” Korbuly Prosper City Council Place 1
Meigs Miller Prosper City Council Place 4
Ray Smith Prosper Mayor
Keith Stevens Wylie City Council at Large 3
Jeffrey “Jeff” Forester Wylie City Council Place 6

PRESS RELEASE: COLLIN COUNTY MARKET TO BE PROMOTED AT MIPIM, THE WORLD’S PROPERTY MARKET CONFERENCE

COLLIN COUNTY – Feb. 6, 2019 – MIPIM, the world’s leading global real estate market, business conference and networking event, will welcome Texas Realtors to its 2019 event in Cannes, France. Collin County Association of Realtors (CCAR) will be part of the Texas Realtors exhibition at the USA Pavilion, hosted by the National Association of Realtors, the United States’ largest real estate trade organization. NAR will be among the 3,350 exhibiting companies at the 2019 event.

“With Collin County being such a dynamic and growing commercial real estate market, CCAR is excited by this opportunity to showcase several of our major cities at MIPIM,” says David Long, CCAR president-elect.

Once again, NAR has expanded its MIPIM exposition footprint in response to the growing U.S. presence and to accommodate new exhibiting partners. The NAR-sponsored USA Pavilion provides local and regional U.S. markets the ability to showcase opportunities for foreign investors.

“The U.S. remains the top-ranked market for real estate investors,” said Charlie Oppler, 2019 first vice president of the more than 1.3-million-member trade association. “Foreign investment in the United States remains strong and investors consistently identify the U.S. as the most stable market for real estate investment and the best opportunity for capital appreciation. Strong job creation and business expansion is fueling the U.S. commercial market, and the shortage of available commercial inventory is driving continued increases in transaction prices.

“The third quarter 2018 witnessed a resurgence of large transactions in the large cap market, leading to higher deal volume and prices,” said Oppler. “Investment volume in this space totaled $152.7 billion, a 17 percent jump from the same period in 2017.

“MIPIM provides a unique opportunity to showcase local property markets on a global scale,” continued Oppler. “With sales in both gateway cities and secondary markets advancing in 2018 and several smaller markets posting record sales, we’re excited to see more of our markets taking advantage of MIPIM to attract foreign investment dollars.”

“CCAR is presenting information and commercial opportunities from the cities of Plano, Frisco, Allen and McKinney, Texas,” notes Long.

In addition to Collin County and other Texas markets, markets featured in the USA Pavilion include the states of Georgia, Illinois, Missouri, New Jersey, New York, North Carolina, Rhode Island, Washington State, and the metro areas of Beverly Hills/Greater Los Angeles, Coastal Carolina/Myrtle Beach. Markets participating in the USA “zone,” adjacent to the USA Pavilion are Florida State, Miami and San Diego, along with the CCIM Institute and the Society of Office and Industrial Realtors.

Some 26,000 leading real estate executives from 100 countries, including more than 5,400 investors, are expected in Cannes for the four-day annual gathering of the global real estate industry. The event brings together investors, developers, occupiers, architects, hotel groups, public authorities, city mayors and property associations from around the world.

Government Affairs and TREPAC May 4 Municipal Candidate Interviews

Each election cycle, CCAR conducts candidate interviews for political offices in order to better understand the ideas and visions for when the candidates become elected to public office. TREPAC then may choose to support the candidate who champions private property rights and upholds our REALTOR® members’ values. In order to ensure transparency and participation from our members, CCAR invites you to join the Government Affairs and TREPAC Committees during these interviews by observing them. The schedule of interviews follows:

Allen February 28 12:30-3 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Frisco February 28 3-6 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
McKinney March 1 9-11:30 a.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Plano March 1 11:30 a.m.-5:30 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Prosper March 4 11 a.m.-2:30 p.m. RE/MAX Dallas Suburbs – 3915 McDermott Rd. #100 Plano, TX 75024
Wylie March 4 2:30-4:15 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Celina March 4 4:15-6 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Anna March 5 9 a.m.-1:45 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Princeton March 5 1:45-4:30 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024
Little Elm March 5 4:30-6 p.m. Lawyers Title – 5810 Tennyson Parkway #105, Plano, TX 75024

Note, these interviews are confidential and nothing discussed inside the room or during the interviews may be shared. Therefore, you will be required to sign a confidentiality agreement, among other disclosures, if you plan on attending. Further, you may only attend if you RSVP to Adam Majorie, Chief Advocacy Officer, at adam@ccar.net

*Schedule is subject to change, email adam@ccar.net to confirm times.

Are Student Loans Threatening the Goal of Home Ownership?

By Melissa Condensa (NMLS# 1149324), Producing Branch Manager – Guild Mortgage and Member – CCAR’s Affiliate Committee

Inventory is tight and interest rates are going up, but could student loan debt be one of the biggest threats to home ownership for millennials?  As our news feeds are filled with graduation pictures, it is worth taking a look at the amount of student loan debt that many young people are graduating with and the impact it can have on their ability to buy a home of their own.

The Wall Street Journal recently ran a story about the number of students who will graduate with over $1 million in student loan debt. The number of students with over $1 million in student loans for 2018 is estimated at 101, up from just 14 five years ago. That is clearly an extreme, but the average student graduates with $17,000 in student debt, and many are graduating with more debt than they will ever be able to pay off.

One reason people might never be able to pay off their debt is the program called Income Based Repayment. This repayment option allows people to make a small payment that is commensurate with their income. This payment is usually lower than an interest only payment, which results in a negatively amortizing loan. The lending institution wants their debt repaid, so the remaining unpaid interest is added onto the balance of the loan. While this makes the monthly debt more manageable, it also means the balance continues to grow each month.

How can student loans affect a person’s ability to purchase a home? First, there are potential buyers who will simply sit on the sidelines because they do not believe that they can afford to purchase a home due to their student loan debt. This may or may not be true, so it is always a good idea to have them meet with a loan officer to determine whether they can qualify.

There are also people who believe they can afford to buy a home, but in reality cannot because of their student loan payments. The ones most often impacted are people who are on an Income Based Repayment plan or whose loans are deferred. Most loan programs will not allow the payments on deferred student loans to be excluded from the debt to income calculation, and FHA for example, will not accept an Income Based Repayment plan for qualifying purposes. FHA requires that the lender use 1% of the outstanding loan balance, or the verified lowest fully amortizing payment to qualify the borrower to ensure the borrower can afford both their home and their student loans if they ever want to pay the student loans off.

Another major impact to someone’s ability to purchase a home are delinquent student loans. Potential homebuyers whose student loans are deferred, often allow them to become delinquent when they come out of deferment. Borrowers either do not realize, or are in denial about the fact that they need to start making payments or need to renew the deferral. Payment history makes up 30% of a credit score, so someone suddenly being 30, 60, 90 or more days delinquent on multiple student loans will see a dramatic decrease in their credit scores and limit someone’s ability to purchase a home.

There’s no arguing that a college education can set someone on the course for success in life, or that owning a home is a tremendous driver of wealth. We all need to find ways to help people manage both their debt and become homeowners. What can we do to facilitate both goals? First, let’s encourage young people not to borrow more than they absolutely need to borrow. Also, encourage everyone to do a cost benefit analysis on the degree they are earning and the amount they are going to have to spend to get it. Once they are out of school, we need to help them realize there are things they can do to ensure they can become homeowners. Rent adds up, so regardless of their situation, we should encourage young people to explore their options for home ownership.

Important Change to IRS Transcript Requirements

By Jake Perry, Fairway Independent Mortgage Corporation and Member, CCAR’s REALTOR®/Lender Committee
Have you ever been told by a lender: “We are approved, but we must have IRS Tax Transcripts before we close, this is going to delay closing”?
Good news – mortgage companies have recently changed their requirements regarding IRS transcripts. Prior to this change, many lenders would not allow a loan to close before receiving transcripts that matched the returns submitted to the lender by the borrower. This policy led to a countless number of delays and confused and dissatisfied borrowers. Borrowers could have faced a delay of days or weeks from closing on the home of their dreams.

What is this mysterious IRS tax transcript or Record of Account Transcript? It is an electronic record of a taxpayer’s IRS Tax Return. The IRS maintains records of exactly what an individual, couple, or business has filed every year. These records are kept so the government, a consumer, a CPA, or a mortgage company can go back and get a copy later.  They document the reported income to the IRS. Mortgage companies historically have required these records as one fraud prevention mechanism.

Prior to late 2017, mortgage companies were required, in most cases, to obtain transcripts that matched the returns.

The CCAR REALTOR®/Lender Committee is very excited to announce that many mortgage loans that previously required tax transcripts no longer do. Unfortunately, not all loans were excluded from the new transcript rules. For example, loans to self-employed borrowers still require transcripts. Also, borrowers must still sign the IRS form 4506T.

Here are the situations that no longer need transcripts:

  • Only hourly/salaried W2 or not employed, using documentation other than tax returns to qualify, such as Social Security or pension
  • Not employed by a family member
  • No tax returns in the file for any purpose
  • Conventional, VA, FHA

Here are situations that still require transcripts:

  • When a borrower is not required to file taxes, the lender must have a transcript that shows that there is no filed return
  • Self-employed borrowers using the income from self-employment
  • Manually underwritten loans
  • Bond
  • USDA
  • Jumbo
  • Non-arm’s length

The changes in the IRS transcript rule will remove some delays that could previously not be prevented. Will it prevent every IRS related delay? No! It’s the government, after all.

For these and other questions about lending, contact the REALTOR®/Lender Committee at RealtorLender@ccar.net.

Reminder: 2018 Annual Membership Renewal Dues

December 1, 2017 is the due date for 2018 Dues. The 2018 Annual REALTOR® dues and fees are $456. Following are the three ways to submit your payment:
  1. To view your invoice and/or pay online:   
    1. Go to www.ccar.net and select “Pay Dues” from the white “Supporting Your Success” box.
    2. Log-in with your seven-digit real estate license number. You will also need your MLS password. If you don’t remember your password, please click here.
    3. Affiliate members please use your member # and password assigned by Member Services. If you don’t know your member number or password, please contact membership@ccar.net
    4. Follow the step-by-step procedure to pay your invoice.
    5. PRINT your receipt page for your records.
    6. Auto-bill-pay credit card forms on file will be charged on December 1, 2017. NOTE: Members taking advantage of auto-bill-pay will continue to receive reminders until December 1, 2017.
  1. You may fax or email your credit card payment:
To fax in your credit card payment, complete this form: www.ccar.net/docs/membership/forms/credit_card_form.pdf
Fax the completed form to 972-491-3180, or email the completed form to membership@ccar.net
  1. You may also pay your dues by bringing or mailing a check payable to CCAR to:
Collin County Association of REALTORS®
6821 Coit Road
Plano, Texas 75024
If you pay local dues to CCAR as a Secondary Member, and you wish to make CCAR your primary association, please contact Member Services at 972-618-3800 or membership@ccar.net  Application fees for REALTORS® and Designated REALTORS® are waived if you are transferring membership from another association in Texas or joining CCAR as a Secondary Member.
December 1, 2017 is the due date for all 2018 Annual Membership Dues. For more information about your dues, please click here.
A $50 late fee will be assessed for all dues received at CCAR after December 15, 2017. 
Please pay online at www.ccar.net or remit to: CCAR – 6821 Coit Rd. – Plano, TX 75024-5417.
Collin County Association of REALTORS® is very pleased to have you as a member. It is our mission to aggressively provide the tools and resources for our members to succeed. For 17 years, CCAR has held the line on local dues costs while continuously improving the most responsive and personalized member services in the region. For personal attention to your dues or membership questions, please call us at 972-618-3800 or email membership@ccar.net.

Qualified No More: How Fall Events Wreck Havoc on Buyers’ Lending Status

By Sam Brock, Supreme Lending and Member, CCAR’s REALTOR®/Lender Committee

Your buyers have finally gotten an offer accepted on the perfect property, in the perfect neighborhood, with the perfect school district. Congratulations! They’ll be closing in September, you will have a new listing in their existing home, and you luckily have buyers ready for it as soon as it hits the market. When the contract is submitted to the lender with whom they prequalified in May, you receive an email reply simply saying, “Call me on this, ASAP please.” What could the lender need? They did the prequalification already; you know the lender does a great job, and you know the borrower looks good. What in the world has happened?

The months of August and September are wrought with opportunity for your buyers to damage their mortgage qualification status. Through what would normally be viewed as sound, financially prudent decisions, buyers can negatively affect their ability to qualify for some of today’s most widely used mortgage programs. Here’s how:

Credit Cards: Retailers flood consumers with ‘Back to School’ and ‘Labor Day Savings’ sale ads, and then pile on the discounts for opening a store credit card when they check out. For some buyers, a single inquiry can cause their FICO score to decrease below acceptable levels. For others, the new account’s monthly payment may increase their debt-to-income (DTI) ratio over what is allowed by guidelines. Even if the promotion states that there are ‘No Payments for 6 Months,’ the lender will have to ascertain what the new payment will be and add that to the list of monthly liabilities used in calculating the DTI. This can be especially detrimental with larger purchases such as appliances.

Auto loans: Traditionally, auto makers release their new models in September and October, which means dealerships are motivated to move their current inventory to make room for new models. There are often great deals to be had in August and September, and financing terms can be very attractive, but the DTI change can be a deal breaker. With many loan programs, an installment debt, such as a car loan, can be left out of the DTI calculation if there are 10 months or less remaining on the loan. If your borrower’s qualification includes a debt being omitted because of the length of time remaining, a new car loan, even with a lower payment than his or her existing car loan, will force the payment back into the DTI calculation, potentially causing that individual to exceed allowable guidelines. Again, the inquiries, especially if the buyer did what he or she should and shopped rates with multiple lenders, can cause his or her FICO score to decrease.

Student loans: Cosigning for a college-bound child’s student loans may appear relatively harmless, but changes to agency guidelines over the last few years now oblige lenders to include 1% or more of the outstanding balance in the DTI, depending on loan program. Even if the payments are deferred, lenders have to include a monthly payment in the DTI ratio. The payments that the parents and child have no intention of making until later can damage their qualification status.

Tax returns:  Many taxpayers file extensions for their personal and/or business tax returns in the spring, with the plan to file later in the year. As we all know, these extended returns must be file by October 15. If they haven’t gotten around to it yet, a loan closing in early October can easily be extended past that date. There are no exceptions available in most cases, and an unfiled return or a filed return with an outstanding balance due can cause a lender to keep a purchase from being able to fund.

The bottom line is that in the constantly evolving landscape of mortgage guidelines, everyone has to keep everyone else in the loop when making financial decisions.  Lenders, REALTORS®, and buyers have to be vigilant and communicate openly until the loan funds.  Through open, honest communication with all parties, great local lenders, like those in the CCAR REALTOR®/Lender Committee, can keep your buyer’s hopes of homeownership alive and well, no matter the season.

New Credit Reporting Changes To Impact Real Estate Closings Positively and Negatively

By Alexandra Swann, GenEquity Mortgage and Member, CCAR’s REALTOR®/Lender Committee

On July 1, the three major credit reporting agencies—Transunion, Experian, and Equifax—are going to implement some major changes to the way they report judgments and tax liens on individual credit reports. As with many new rules, this one has both positive and negative ramifications for your borrowers.

So what are these changes? In accordance with the National Consumer Assistance Plan, the three major bureaus will no longer be able to report public records—specifically civil judgments and tax liens—without verifying three pieces of consumer Personal Identifying Information (PII). These three items are:

  1. Name of consumer
  2. Address of consumer
  3. Social Security number and/or date of birth

Civil judgments and tax liens not containing all three elements must be deleted from consumer credit reports.

Additionally, the new standards require that the three agencies must update their records every 90 days with the courthouse. This means that changes to public records—such as a paid judgment—will show up sooner than they have in the past.

What does this mean for you and your clients?

The Good:

In the short term, it should mean that virtually all civil judgments (the official statement from the Consumer Data Industry Association says “a vast majority”) and about 50% of tax liens will be removed from credit files on July 1. Since public records have a negative impact on credit scores, the immediate result should be improved credit scores for borrowers who are plagued with public records.

Since the rule requires that public record reporting be updated every 90 days, we should also see paid judgments updating more quickly on credit reports. This can help scores to improve dramatically, and it can also allow more borrowers to get approved.

Going forward, John and Mary Smith should not have public records and tax liens from 10 other John and Mary Smiths reporting erroneously on their credit reports. The new requirements should eliminate some of the errors today that occur among people with common names and should help to protect the innocent from having their credit ruined just because they share a name with someone with credit problems.

The Bad:

The new law will also shield the guilty—at least for a while, and that may be very problematic. Although tax liens and civil judgments may be initially removed for a time, the attorneys and government entities can refile with proper information. That may result in a time lag between initial pre-qualification and final loan approval, where a judgment or tax lien that was initially removed has now reappeared on the credit report complete with all identifying information. Since lenders have to recheck credit as late as 48 hours before closing, this could cause serious issues for underwriting.

Also, even though the reporting requirements have changed with regard to tax liens and civil judgments, underwriting standards have not. No government agency or government-sponsored enterprise will make a loan to a consumer with an open tax lien or judgment. As part of the mortgage application process, the consumer is asked whether he or she has either tax liens or judgments against him or her. If a consumer is less than truthful, the loan originator may not know that there is a problem, since in the past, lenders have relied heavily on credit reporting information to fill in gaps in consumers’ memories, so the judgment or tax lien may not be discovered until well into the underwriting process. This could potentially kill some transactions that looked great at the point of pre-qualification.

How to Protect Yourself:

Whether you are a buyer’s agent or a listing agent, talk to the loan originator. Make sure he or she is asking the right questions. If the loan is a government loan—VA, FHA or USDA, ask if the loan originator has run the borrower information through CAIVRS—HUD’s Credit Alert System—prior to issuing a pre-qualification letter. This system catches many hidden issues that torpedo files.

Finally, recognize that the title company is going to be an increasingly important partner in the loan transaction. The title company can search for public records, liens and judgments and can help identify hidden issues.

For more information on this or any lending issues, please contact your REALTOR®/Lender Committee at realtorlender@ccar.net.