By Mark Sprague, State Director of Information Capital at Independence Title

Is the local housing market slowing?

Locally, regionally, and nationally, that seems to be a common question / theme. Locally, I can tell you that most of the Texas metros have been on a sustained, positive run, with Austin’s being the longest at over 9 years (6 years being the longest previously).

Real estate values and sales have done well in Texas over the last decade, with most cities achieving their highest values ever. So, why the pessimism? Part of it is so many were unprepared for the 2005 financial disaster and recession as well as the 2009 slowdown. It would be nice to be able to predict when the next one is. That said, so many missed the signs of overdevelopment in the last downturns. So why the questions? Our housing and real estate markets in the Texas metros (except Houston) have been so strong in all channels this year that if a property doesn’t sell right away, it may feel that the market has turned sour.

Despite the mostly good trends, worries are common as to whether or not the housing market has peaked and is ready for a slide. How steep and how fast? After all, existing home sales have fallen every month since June, save one. Additionally, housing starts, traditionally a good leading indicator of potential economic recession, tumbled in June from the prior month. Moreover, many Americans have painful, lingering memories of the home price crash, rising foreclosures, and 10 million net job losses from the housing market bust a decade ago (where over 55% of all foreclosures happened in the sand states, not Texas). Naturally, they want to know if there is even a remote possibility of a housing downturn.

First, what is happening in the market presently appears to be more of a seasonal slowing, prior to school starting. Second, two months is NOT a trend.

To see if the market is slowing, what are the signs? You need to look for lack of GDP growth, lack of job growth, easy mortgage financing (requiring little to no down and easy qualifying), new and resale inventory increasing, other real estate channels showing signs of overbuilding or slowing of values, etc. There are no indications of any of this happening. Quite the opposite, in fact.

The lack of supply and the accompanying real estate and home values rising quickly seem to be the main sources of most market headaches (that, and sellers getting ahead of the market). However, the supply shortage is a much better problem to have, compared to a demand shortage. The current problems do not equate to any meaningful price decline nor an impending foreclosure crisis. Rather, we see all the signs for continued solid home sales growth and commercial growth

In short, it is possible to deduce conclusions incorrectly, or be hypersensitive to small matters. Or, as I said earlier, two months doesn’t make a trend. So what should you do? Have a little more of whatever relaxes you: a couple of beers, a couple of glasses of wine, or in my case, a couple of bowls of Blue Bell. If you’re still concerned, come talk to me in six months if the condition persists.

Have you heard that we have a new app?  IndependenceTitleAgent One is now available!  Check out the video below on some of the new features!

If you have questions, contact your Independence Title Business Development Representative.

by Cassandra Majors

Pop Quiz: What industry grew by almost a billion dollars from 2016 to 2017? Hints: You wouldn’t want to invest in it, there are no publicly traded companies participating in it, but it’s still one of the fasting growing industries in the world. Give up? The answer may surprise you: it’s wire fraud, and the scammers behind it are getting better every day and making millions of dollars off vulnerable home buyers, sellers, and Realtors. Read on to find out how to help protect yourselves and your customers from this ever-growing threat.

Here’s how the scam usually works: The criminal will impersonate someone involved in the transaction (a real estate agent, the escrow officer, the lender’s loan officer, etc.) by sending a legitimate-looking email and/or making a direct phone call with phony wiring instructions to the buyer and insisting the money be wired as soon as possible. This is not an obvious “Please help a Nigerian prince wire money to the U.S.” sort of spam email we are all used to getting. These wire fraud emails are often indistinguishable from a genuine email, complete with company logos and graphics, signature blocks, and links to the company website.  Often the emails provide a local phone number to call for verification, and when the buyers call to verify, the professional-sounding scammer answers the call and verifies the false information.

Once the funds are wired to the scammer’s account, the money is quickly withdrawn and the account closed, and there’s little hope of recovery in most cases. Many buyers across the globe have lost hundreds of thousands or even millions of dollars to these types of scams, and they have little recourse once their banks have wired out the funds at their request. These scams are so profitable and the technologies that assist them are becoming so sophisticated that more and more fraudsters are joining the effort every day, and the number of daily wire fraud attempts is skyrocketing here in Texas and all over the U.S. as a result.

So how can you protect yourself and your clients from wire fraud? There are several easy ways to help eliminate the most risk of fraud, and Independence Title takes daily measures to keep our customers safe. Here are the top 5 ways you can help protect your funds from scammers:

1.  The best way to eliminate the risk of wire fraud is by bringing your closing funds in the form of a cashier’s check instead of wiring the funds. We’ll provide you with a statement showing the amount of money to bring for closing as soon as we’ve confirmed your settlement costs, and you’ll have peace of mind knowing you won’t be wiring your money to the wrong account
2. If you still prefer to send your funds via wire transfer, please call a member of your escrow team for instructions. We will NEVER provide wiring instructions unless you specifically ask for them, so if you receive an unsolicited email or a phone call from Independence Title giving you wiring instructions, you can be sure it IS a wire fraud attempt. Never respond to an email like this, and simply hang up the phone if you get a call. And on that subject:
3. Never call a phone number from an email—always go the company’s website directly (not from a link in the email) and find the phone number there to call and verify the information. Go to our website and use the easy search bar in the upper right-hand corner to find your escrow officer or closing branch, and if you’re unsure, just call the main number and someone will help you get in touch with the right team: 512-454-4500.
4. Always check the email address from your title company, real estate agent, or lender to make sure it’s legitimate. Fraudsters are smart enough to create and use an email address that is often so close to the real email address of your Realtor or title company, you may not catch it unless you are paying very close attention, such as changing an “I” to a “1,” adding one extra letter, or changing the email service provider.
5. Remember that our closing teams will NEVER text, email, or call you insisting that you wire your funds quickly—this is the fraudster’s trademark move. They want you to move quickly before anyone has a chance to realize what’s happening. Often the scammers will send an email or call you very near closing with urgent, last-minute changes. Our wiring instructions will NEVER change once we give them to you, our escrow bank will always be one located here in Texas, and the account name will always be Independence Title.

Independence Title encourages you to take every possible precaution to protect yourself from becoming a victim of fraud. If you close with us and follow the instructions above for safety, you can help protect your funds and your home closing transaction. These attempts now occur almost daily, so be cautious and careful so you’ll never fall victim to one of these scams.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

By Mark Sprague, Independence Title State Director of Information Capital

The House / Apartment You Look at Today Will Be Gone Tomorrow!
And it will certainly be more expensive. Not only is there not enough resale inventory, rates are increasing and the cost of building is up dramatically.

Lumber prices have risen by roughly 22% year-to-date as a result of newly imposed tariffs and demand. And that’s just lumber. All materials and labor or more expensive and forecasts show a 15 to 30% increase over the next 12 months.  This leads to higher housing prices through increased homebuilder costs.

Lumber prices are the highest they’ve ever been in the United States—let that sink in for a moment. Lumber futures contracts for 1,000 board feet of lumber are trading at $513. For perspective, according to Wood Markets, in the 1980s it was rare for average monthly prices to exceed $200 (it only happened in 14 months that decade); in the 1990s, U.S. prices managed to crack $400 for 14 months that decade; in the 2000s, the housing crisis put downward pressure on lumber prices, which only broke $400 8 months that decade, and dropped under $200 for 11 months.

We’ve told you before: If you’re betting against the U.S. economy without taking note of the strengthening in the US housing market  (which nationally, regionally and locally are not near pre-recession numbers), you’re asking for trouble. Evidence: Lumber values today and projected 12 months out. This week they hit a six-year high.

Source: Calculated Risk

A lot of this is good, old-fashioned supply and demand. U.S. home building is ramping up with Texas leading the way. Russian lumber output is weak. China is gobbling up a hefty chunk of U.S. wood. And Canadian lumber is dramatically more expensive.The cost of money is going up (federal reserve rate are projected to increase 1/2% this year), so yes, buying will be more expensive.  For every 1% increase in interest rates, you lose 12% buying power.

And don’t forget the continued increase in local regulation, driving costs up and causing most metro markets in Texas to be unable to supply near enough homes (we are way below units built per 1,000 than in previous years).So, yes, if you are waiting, it’s going to cost you….a lot.

Spring is here and it’s time for the new Independence Title Education Menu!  We have some exciting new classes and updates for you.

UPDATED! Facebook for Real Estate | 1 HR CE | Course#31968 What is your main goal when using Facebook? Engaging with clients? Marketing listings? Our goal is to help you overcome the challenges that come with Facebook’s recent changes, so you can effectively market your real estate business. In this class, you’ll learn how to engage with clients by using lists and groups. We’ll discuss increasing exposure to certain topics or events by using Facebook Live. Then we’ll leave you with tips and tricks to help you excel in the ever-changing world of Facebook.

UPDATED! Instagram for Real Estate | 1 HR CE | Course # 32730 Due to Instagram’s visual nature, more Realtors are using the social media platform to build their real estate brand. In this advanced class, we will discuss the importance of an Instagram Business Profile. Additionally, we will take a look at varying content and the proper use of hashtags. Lastly, we will examine clever ways to promote your listings and engage with your audience by utilizing unique Instagram features such as Instagram Stories.

UPDATED! Keeping Clients for Life | 1 HR CE | Course #31965 Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we’ll share ideas on how to personalize your follow-ups and touches, talk about gathering pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.

NEW! Mastering the Open House | 1 HR CE | Course#34035 Most Realtors dread the question, “When are you going to hold an open house on our property?” Sitting at an open house on a weekend; total waste of time, money and energy, right? Not so! We’ll walk you through open house goals, a strategic plan to maximize marketing efforts, and a solid follow-up plan. The open house serves as a prospecting opportunity; it’s a way to fill your pipeline with future business.

NEW! Real Estate Graphic Design with Canva | 1 HR CE | Course# 34143 Have you heard of Canva.com? It’s a free web-based graphic design platform that Realtors can use to create flyers, postcards, newsletters, and even social media graphics. This class will help you get started with the platform. Before you know it, you’ll be creating amazing DIY real estate marketing material!

Realtor Hacks | 1 HR CE | Course#33023 Do you know what a “hack” is? According to dictionary.com, a hack is: “a strategy or technique adopted in order to manage one’s time and daily activities in a more efficient way”.  The term most commonly used is “life hack”.  For example, did you know there is a website that will help you unsubscribe to junk mail? There is also an app that will correct lighting in your listing photos.  We will talk about these cool hacks and more in an effort to help you work smarter, not harder!

NEW! Social Media Advertising for Real Estate | 1 HR CE | Course #34137 Consumers today are looking online for a property they can call home. Therefore, it’s imperative for real estate agents to use social media to market their business and listings. While any Realtor can open a social media account, it’s not always clear how to use social media as a tool to send the right message, to the right audience and at the right time. In this class, we’ll teach Realtors how to effectively market on social media by creating different types of ads.

NEW! Social Media Basics for Real Estate | 1 HR CE | Course #34200 Are you new to the ways of social media? Not really sure how to use Facebook or Instagram to promote your Real Estate business? This class is the perfect way for beginners to get started down the right path. It will cover the benefits of using Facebook and Instagram for marketing your business and walk you through some basic tips and tricks on both platforms.

NEW! Stats in a Flash | 1 HR CE | Course#33237 Does the word “statistics” intimidate you? This class will take the fear out of statistics and will have you creating your own Stats in a Flash! We’ll define common terminology, show you where to locate statistics, teach you how to create your own, and demonstrate when to use statistics in your business. If you want to take your marketing to the next level, or if you just need data to support your negotiations, this class is for you!

If you are interested in any of these classes check out our upcoming classes or contact your Independence Title Business Development Rep!

Spring is here and it’s time for the new Independence Title Education Menu!  We have some exciting new classes and updates for you.

UPDATED! Facebook for Real Estate | 1 HR CE | Course#31968 What is your main goal when using Facebook? Engaging with clients? Marketing listings? Our goal is to help you overcome the challenges that come with Facebook’s recent changes, so you can effectively market your real estate business. In this class, you’ll learn how to engage with clients by using lists and groups. We’ll discuss increasing exposure to certain topics or events by using Facebook Live. Then we’ll leave you with tips and tricks to help you excel in the ever-changing world of Facebook.

UPDATED! Instagram for Real Estate | 1 HR CE | Course # 32730 Due to Instagram’s visual nature, more Realtors are using the social media platform to build their real estate brand. In this advanced class, we will discuss the importance of an Instagram Business Profile. Additionally, we will take a look at varying content and the proper use of hashtags. Lastly, we will examine clever ways to promote your listings and engage with your audience by utilizing unique Instagram features such as Instagram Stories.

UPDATED! Keeping Clients for Life | 1 HR CE | Course #31965 Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we’ll share ideas on how to personalize your follow-ups and touches, talk about gathering pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.

NEW! Mastering the Open House | 1 HR CE | Course#34035 Most Realtors dread the question, “When are you going to hold an open house on our property?” Sitting at an open house on a weekend; total waste of time, money and energy, right? Not so! We’ll walk you through open house goals, a strategic plan to maximize marketing efforts, and a solid follow-up plan. The open house serves as a prospecting opportunity; it’s a way to fill your pipeline with future business.

NEW! Real Estate Graphic Design with Canva | 1 HR CE | Course# 34143 Have you heard of Canva.com? It’s a free web-based graphic design platform that Realtors can use to create flyers, postcards, newsletters, and even social media graphics. This class will help you get started with the platform. Before you know it, you’ll be creating amazing DIY real estate marketing material!

NEW! Social Media Advertising for Real Estate | 1 HR CE | Course #34137 Consumers today are looking online for a property they can call home. Therefore, it’s imperative for real estate agents to use social media to market their business and listings. While any Realtor can open a social media account, it’s not always clear how to use social media as a tool to send the right message, to the right audience and at the right time. In this class, we’ll teach Realtors how to effectively market on social media by creating different types of ads.

NEW! Social Media Basics for Real Estate | 1 HR CE | Course #34200 Are you new to the ways of social media? Not really sure how to use Facebook or Instagram to promote your Real Estate business? This class is the perfect way for beginners to get started down the right path. It will cover the benefits of using Facebook and Instagram for marketing your business and walk you through some basic tips and tricks on both platforms.

NEW!Stats in a Flash | 1 HR CE | Course#33237 Does the word “statistics” intimidate you? This class will take the fear out of statistics and will have you creating your own Stats in a Flash! We’ll define common terminology, show you where to locate statistics, teach you how to create your own, and demonstrate when to use statistics in your business. If you want to take your marketing to the next level, or if you just need data to support your negotiations, this class is for you!

If you are interested in any of these classes check out our upcoming classes or contact your Independence Title Business Development Rep!

Spring is here and it’s time for the new Independence Title Education Menu!  We have some exciting new classes and updates for you.

UPDATED! Facebook for Real Estate | 1 HR CE | Course#31968 What is your main goal when using Facebook? Engaging with clients? Marketing listings? Our goal is to help you overcome the challenges that come with Facebook’s recent changes, so you can effectively market your real estate business. In this class, you’ll learn how to engage with clients by using lists and groups. We’ll discuss increasing exposure to certain topics or events by using Facebook Live. Then we’ll leave you with tips and tricks to help you excel in the ever-changing world of Facebook.

UPDATED! Instagram for Real Estate | 1 HR CE | Course # 32730 Due to Instagram’s visual nature, more Realtors are using the social media platform to build their real estate brand. In this advanced class, we will discuss the importance of an Instagram Business Profile. Additionally, we will take a look at varying content and the proper use of hashtags. Lastly, we will examine clever ways to promote your listings and engage with your audience by utilizing unique Instagram features such as Instagram Stories.

UPDATED! Keeping Clients for Life | 1 HR CE | Course #31965 Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we’ll share ideas on how to personalize your follow-ups and touches, talk about gathering pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.

NEW! Mastering the Open House | 1 HR CE | Course#34035 Most Realtors dread the question, “When are you going to hold an open house on our property?” Sitting at an open house on a weekend; total waste of time, money and energy, right? Not so! We’ll walk you through open house goals, a strategic plan to maximize marketing efforts, and a solid follow-up plan. The open house serves as a prospecting opportunity; it’s a way to fill your pipeline with future business.

NEW! Real Estate Graphic Design with Canva | 1 HR CE | Course# 34143 Have you heard of Canva.com? It’s a free web-based graphic design platform that Realtors can use to create flyers, postcards, newsletters, and even social media graphics. This class will help you get started with the platform. Before you know it, you’ll be creating amazing DIY real estate marketing material!

NEW! Social Media Advertising for Real Estate | 1 HR CE | Course #34137 Consumers today are looking online for a property they can call home. Therefore, it’s imperative for real estate agents to use social media to market their business and listings. While any Realtor can open a social media account, it’s not always clear how to use social media as a tool to send the right message, to the right audience and at the right time. In this class, we’ll teach Realtors how to effectively market on social media by creating different types of ads.

NEW! Social Media Basics for Real Estate | 1 HR CE | Course #34200 Are you new to the ways of social media? Not really sure how to use Facebook or Instagram to promote your Real Estate business? This class is the perfect way for beginners to get started down the right path. It will cover the benefits of using Facebook and Instagram for marketing your business and walk you through some basic tips and tricks on both platforms.

If you are interested in any of these classes check out our upcoming classes or contact your Independence Title Business Development Rep!

By Cassandra Majors

After I smoked my last cigarette five years ago, I quickly mutated into a twitchy, manic, raging lunatic for the next two weeks. I came up with 100 creative ways to murder most of the people who crossed my path during that time, mostly for minor infractions like taking too long at a stoplight or mispronouncing “New Braunfels.” Desperate to calm down, I went on furious speed-walks around the neighborhood; joggers, dog-walkers and stroller-moms would bolt across the street in terror when they saw me barreling down the sidewalk clenching my fists and chewing great wads of gum so hard that sparks shot out between my teeth. I felt like I could never just relax.

My smug non-smoking friends always liked to say, “I don’t understand why you smokers say that smoking relaxes you. Nicotine is a stimulant!” Yes, dear, nicotine is indeed a stimulant. Carbon monoxide, however, is definitely NOT a stimulant. Carbon monoxide is very, VERY relaxing, so relaxing in fact that if you get enough of it, you’ll relax yourself right to death and not even notice. The City of Austin has come out strongly against this ultimate relaxation recently in their new ordinance requiring carbon monoxide alarms in all residential and commercial buildings that have gas or fuel-burning appliances. What does this mean for us as real estate professionals?

Starting April 1^st * in the city limits of Austin, “residential and commercial structures with both sleeping areas (bedrooms) and gas or fuel-burning appliances are required to install and maintain carbon monoxide (CO) alarms. In a dwelling unit, a CO alarm must be installed outside of each separate sleeping area and in the immediate vicinity of each sleeping area” (source: City of Austin).

*Safety tip: Do not use carbon monoxide as part of an April Fool’s Day prank.

Listing a house for sale? This will now come up on the inspection, or if the home needs work that requires a building permit or work on any gas system, appliance, or fixture, so get your carbon monoxide alarms installed before the home goes on the market. Even if there are no gas appliances in the home, you’re still not off the hook, sorry. The ordinance also requires carbon monoxide alarms in any home with an attached garage, which are most of the single-family homes in Austin. On the bright side, many modern smoke alarms are actually combination alarms for both smoke and carbon monoxide, and those will absolutely fulfill the new requirement, so check to see if you might already be covered by the existing smoke alarm.

Building a new home, multifamily structure, or any commercial building with sleeping areas? New buildings require the alarms to get their power from the permanent building wiring with a battery backup, just as many smoke alarms are now wired. For existing structures, just battery-powered detectors are acceptable.

Is your home or listing outside the city limits of Austin? This new ordinance doesn’t apply (check the local codes where the home is), but it’s still a good idea to have one in every home. Carbon monoxide can be fun in small doses like cigarettes, but when it’s leaking in your home, it can really ruin your weekend. All of your weekends forever, actually.

Check out the video below from Austin’s Code Department for everything you need to know about where and how to install the carbon monoxide alarms.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

If you’ve been a Realtor® for several years, you’ve probably seen a few iterations of the Texas Real Estate Commission (TREC) contract forms. TREC strives to listen to input from license holders and to continually improve the forms that are used for Texas real estate transactions. Improvement usually means change, and change means there are a few things you need to know before you write your next contract.

TREC met on February 12th, 2018, and approved revisions to several current forms and also adopted two new forms. These forms are available for use now on the TREC website and have a mandatory use date of May 15th, 2018. Here’s what you need to know:

• You must use the Addendum for Reservation of Oil, Gas and Other Minerals if you want to reserve any mineral rights.
  Earnest money needs to be delivered to the escrow agent within 3 days of the contract Effective Date.
• If the buyer fails to deliver the earnest money within 3 days, the seller may terminate the contract.
  • There are conditions on how this termination can take place, and you can read more about the elements of earnest money receipt, including how TREC considers weekends and holidays as pertains to the 3-day deadline, here.
• Your buyer now has a defined “Cure Period” to notify the seller if they wish to terminate or waive any objections. Additional time periods can also be added if a revised commitment, survey or exception documents are received.
• Effective Date is now a defined term throughout the contract. You will now notice this term capitalized through all contract forms so that in case of any legal action, it will be legally recognized as a defined term.
• The receipt page now has separate areas for the contract and earnest money to be receipted.
• The escrow agent will need to indicate what time the earnest money is delivered on the earnest money receipt page (this impacts the seller’s right to terminate).
• And most importantly, there is no longer a need to include your Broker’s fax number on the receipt page!

For a complete review of the contract form changes please review A Summary of Contract Form Revisions.

Click here for a copy of the revised TREC Contract.

Along with these changes, there are also two new forms:

Addendum for Authorizing Hydrostatic Testing: This addendum gives license holders a promulgated form to comply with the requirement in the contract that the seller must authorize any hydrostatic testing in writing. The form also provides a space to indicate who will pay for any damages.

Addendum Concerning Right To Terminate Due To Lender’s Appraisal: This addendum is the long-awaited form that many license holders have requested. The form gives three options for the parties to agree how the contract will proceed if the lender’s appraisal does not meet the lender’s underwriting requirements. Keep in mind that this form can only be used for transactions involving conventional financing.

There’s one sentence in one section of the contract that always ruffles everyone’s feathers whenever we teach our class Navigating the 1-to-4 Family Contract. The last sentence of section 6 E(3) Statutory Tax District states that the seller must deliver the buyer a statutory tax district notice, i.e. a MUD or WCID notice.  This is not a shocker (it’s typically taken care of by the agents and then again at closing by the title company), but what ruffles the feathers is the part says this notice needs to be signed PRIOR to executing the contract. That certainly isn’t always easy to do!

We are often asked by agents, especially after this class, if we know of a good resource for identifying these taxing districts. There are some of the good old standby options, like Realist and the County Appraisal District websites, but those require looking at the details of a specific property. We wanted to find something a bit more interactive that had broader searching capabilities. We went to work, did some digging, and found a fantastic website through the Texas Commission on Environmental Quality’s website that will allow you to do just that! It’s not the most immediately intuitive website to navigate, but if you watch this video, you’ll be an expert in no time.

And don’t forget, another great resource will always be your escrow team at Independence Title. Our closers work daily with a tax research company, they can typically answer your tax questions within 24 hours.

At the TREC Commission meeting on November 13th, the Texas Association of Realtors, along with concerned real estate professionals around the state, sent in letters to express concerns about the proposed three-day requirement for delivery of earnest money (Paragraph 5). In the revised standard TREC contracts, the proposed language currently reads, “Within 3 days after the Effective Date, Buyer must deposit $___ as earnest money with __, as escrow agent, at __(address).” Critics argued against the ambiguity of the language, pointing out that weekends and federal holidays could easily make this deadline impossible for some buyers. Vicki Fullerton, 2017 TAR Chairman, pointed out the flaw: “First, the Association echoes the concerns expressed by several of the Commissioners at the August 7th meeting, chiefly that the three-day time period may be problematic in some transactions. For instance, if the contract is executed on the Friday evening before Labor Day and the title company is closed, despite the buyer’s intention to perform, the seller may be able to terminate because of a mere oversight.” Most of the letter-writers agreed, some in stronger terms than others, but most agreed that there should be some distinction between calendar days and business days.

The Commission took notice, and the TREC Broker Lawyer Committee added a sentence to clarify Paragraph 5. Below is the current version up for comment. In black text is the original language that will remain; in blue text is the new proposed language; in red is the old language to be removed, and in green is the most recent addition to address concerns about the three-day requirement.

One realtor submitted a letter to the Commission pointing out that “it is the case that many title companies now employ systems which allow earnest money to be deposited electronically, but these are not universal.” Independence Title was one of the first title companies in Texas to accept earnest money electronically through Zoccam, a game-changing app that processes earnest money simply by using the camera on your phone. We’ve been offering electronic earnest money delivery since mid-2016, and more and more agents have been taking advantage of the convenience it offers. Using Zoccam, agents can send earnest money and contracts from anywhere, and they receive immediate email notifications letting them know the earnest money was delivered. And since the data is encrypted from capture to delivery, there is no financial information or check image left on the smartphone, so you can feel completely secure while using it.

So what’s next? For now, nothing is changing. The Commission moved that the staff was authorized to withdraw the current proposal for all amendments, revise the language again, and submit for re-proposal.  To see all the proposed amendments, the minutes of the last TREC Commission meeting can be found here (click on Meeting Materials part 2 on the right to download and see amendments starting on page 113.) January 12th, the Broker Lawyer Committee will meet again and discuss this issue; afterward, they’ll publish a new version in the Texas Register for public comment. Currently, there’s no scheduled date for publication or deadline for comments, but we’ll keep you posted on new developments. In the meantime, TREC wants to hear from you, so feel free to submit comments and suggestions on this issue or any of the proposed amendments to general.counsel@trec.texas.gov.

By Cassandra Majors

Whether or not you were the right age to see the cult classic coming-of-age movie The Sandlot, you’ve probably had this iconic line thrown at you whenever an 80s or 90s kid is annoyed with you: “You’re killing me, Smalls!” The most important plot-driver in the film is a lack of baseballs. Baseballs are the most precious resource to the ragtag sandlot team, and once they’re gone and the team can’t play, there’s nothing to do but hunt for more.

The Sandlot has been on my mind lately because I’ve had a similar exclamation on my mind, as I’m sure many of you have, too: “You’re killing me, sales!” We’ve all noticed that the market is slowing, but is it just a blip on the radar, or a concerning trend? Though I can’t see into the future, there are some reasons to plan for an adjustment in the market.

Let me be clear: I’m not talking about a bubble bursting or the economy crashing (the U.S. economy is doing well overall by most accounts). Home prices are still appreciating at a very healthy pace, but when housing inventory and affordability are both as low as they’ve been for as long as they’ve been, the number of sales is bound to slow. Take a look at the major Texas metros in these graphs sourced from Texas A&M’s Real Estate Center data: Austin, Dallas, Houston, and San Antonio. You can see the exact same phenomenon in each metro—average and median prices reached all-time highs in 2017 and are still going up, but both sales and sales volume are clearly beginning to flatten or decline. It’s good news for homeowners in that their equity will continue to increase, but could present a challenge for those of us in real estate that benefit from higher numbers of transactions. And this is consistent with what’s happening in the nation: long periods of low inventory are raising home prices and leaving buyers with fewer affordable choices, especially considering that over the last ten years, wages have grown less than half as much as prices have increased. Last week, The Wall Street Journal reported that U.S. homeowners’ mobility rate is at a 30-year low, meaning homeowners are staying in their homes much longer before selling than they used to.

Keep in mind, even where inventory is starting to go up, it’s not necessarily a good sign—Austin’s recent increase in inventory and days-on-market, for example, seem to be symptoms of pricing that is too high for most buyers actively looking for homes. Increasing inventory itself doesn’t help unless more of that inventory is affordable for the average buyer.

Why do I suspect that this is a trend and not a blip? Here’s a non-comprehensive list of all the factors nationwide that may be contributing to the home-sale slowdown:

New Home Building Still Lags Far Behind Demand: A fantastic study by Trulia showed that the greatest contributor to low inventory nationwide is that there simply aren’t enough new homes being built. Homebuilding stagnated during the Great Recession for obvious reasons, and as much as it has picked up since the recovery, it’s very difficult to make up for that much lost time. And as any developer can tell you, it’s much more difficult than it used to be to garner loans for large-scale developments, further slowing down new housing starts.

Investors Now Command a Much Larger Chunk of Housing, and They’re Not Selling: The mortgage crisis and recession meant that many homes had to be put up for sale or foreclosed, creating an ideal opportunity for investors to grab up inventory. Though some flipped the properties, many more kept them to create rental income. Almost one in four single-family homes are now owned by investors, and as demand for rental housing skyrockets all over the country, the investors have every incentive to hang onto their assets.

Fewer Millennials Are Able to Afford Homes: Millennials are becoming the largest age group in the real estate market, but they face many obstacles in saving to buy their first homes, including stagnant wages, much higher college debt than past generations, and rising rents. Many spend such a high percentage of their incomes on rental housing that they find it difficult to save for a down payment to buy a house. Millennial demographics also affect their home-buying decisions, as many more young adults are waiting later to get married and have children, which are typical motivators to buy a home. And in growing urban regions of Texas, rapidly increasing property taxes definitely aren’t helping those struggling to afford monthly payments.

Negative Equity is Declining, But Still a Major Problem for Many: Don’t forget that the shadow of the Great Recession still looms over millions of homeowners even a decade later. Nearly one in five homeowners still have less than 20% equity in their homes, so even if they wanted to move, after factoring in down payments, closings costs, and moving costs, they would end up breaking even or paying more for the same amount of equity. But at least there’s good news here for our state as Texas has the highest percentage of positive equity in the country.

Past Low-Interest Rates and Currently Rising Interest Rates Are Both Limiting Buyers: Though interest rates have risen slowly and only recently at that, they are rising and will continue to do so. This means even as potential first-time homebuyers try to save for a down payment and home costs, interest rates will keep moving the goal post farther down the field as they decrease buying power. For every 1% interest rate increase, a buyer’s purchasing power decreases by 9-11%. But then consider the other side for current homeowners who bought in the last decade—interest rates have been historically low for so long that everyone who bought at a low rate will also be deterred from buying a new home with a new mortgage that will cost them significantly more in interest. The more interest rates go up, the harder it might become for those who bought at low rates to justify trading up to another home and sacrificing equity in the process.

Low Inventory Becomes a Self-Fulfilling Prophecy: One of the hazards of low housing inventory is how it eventually begins to reinforce itself. If I bought a starter home years ago with plans to upgrade in the future and I now have the means to do so, I’m suddenly too fearful that I won’t be able to find another house and just decide to stay put. This isn’t just a theory for me personally—I actually own a small condo that I bought at a good price and thought I’d eventually upgrade and put my condo on the market, but now after seeing what’s (not) available on the market, I’ll be sitting tight for the foreseeable future. I’ve become one of my own statistics! The gap between a starter home price and an upgrade home is widening all the time, which sinks turnover rates.

Far Fewer Workers Are Moving for Work: Many more homes used to change hands as workers migrated to other cities and states to take a new position or at least land in a better job market. Marketplace offers an excellent analysis you should read of what might explain this, so I won’t repeat all of their conclusions here, but some of the causes may include:

• Job switching overall is in decline (not just for jobs that require a move).
• More families have both spouses and/or parents working than they did in the past, meaning both must be able to find commensurate jobs in the new place, making the decision to move much more complex.
• Workers are more worried that jobs aren’t long-term or stable enough to risk moving a household for them.
• Cities with higher incomes also have increasingly higher costs of living that may negate the benefits of moving there for a better-paying job.

Vacation Rentals Snatch Inventory from the Market: The soaring popularity of vacation rentals from companies like Airbnb, HomeAway, and VRBO are also buckling the knees of an already weakened inventory. The economics are very easy to understand: say I own a three-bedroom house in central Austin that market forces tell me I can rent for $2,500 a month, but then I realize I can rent it out for $250/night on Airbnb. I only need to book ten nights a month to make the same profit, and I can probably book more than that because the house is in a great location in a vibrant, booming city that attracts endless visitors. I have no leases to fuss with, no costs to find good tenants or evict bad ones, and no turnover losses when tenants leave. Why wouldn’t I choose a short-term rental? As these homes disappear from the buying and renting markets, costs for renters and buyers in those neighborhoods can go up. One of the hot topics in the controversial CodeNext zoning plan for Austin is whether the city should make it easier to build Accessory Dwelling Units on existing properties to add inventory and ease affordability by boosting housing density. But what if more of these ADUs are built and most owners simply rent them out on Airbnb instead of adding them to the available housing stock? Especially for a smaller building like an ADU, I doubt the economics would favor long-term rentals over vacation rentals.

Seniors Want to “Age in Place”: The U.S. has a growing senior population (Baby Boomers are expected to make up 20% of the total population by 2030) and it looks like they’ll be yelling “Get off my lawn!” at potential home buyers for years to come. A recent survey by Realtor.com found that 85% of Baby Boomers have no plans to sell their homes in the next year. Life expectancies continue to increase, and those with health problems that used to force them into assisted living centers and nursing homes now have many more home-care options that allow them to stay comfortably in their own homes. More elderly Americans than ever before want to stay in their own homes, so many of those homes, that might have entered the market in days past may now stay out of inventory for longer.

So what can we as real estate professionals do? Here are a few positive things to keep in mind:

•  You’re in the right state! Texas is attracting more and more employers, its metros are exploding in population, and the state is creating more jobs than any other. DFW alone is creating 8,000-12,000 jobs a month, for example. Good jobs for skilled workers will mean an increase in home-buying in the long term. This means even if sales continue to be lower for the foreseeable future, we’re in a better place to weather the decline.
•  The U.S. economy is doing very well and wages are finally starting to rise after stagnating for many years, which will hopefully increase affordability for many more buyers.
•  American homebuilders are enthusiastically ramping up for the next few years, and many major cities are starting to realize and address that their zoning laws are hindering desperately needed urban development for large multi-family projects.

Spoiler alert! In the end, The Sandlot team uses all their combined brainpower to defeat the evil Beast (which turns out to be just an old grumpy dog) guarding a treasure trove of baseballs, and they have enough to play for years. There’s no doubt that Texas will triumph in the same way—there may be more competition for a fewer number of sales for a while, but our state’s economy will help us defeat this Beast. In the meantime, my strong recommendation for 2018 is to up your game: be creative in finding buyers and borrowers, make wise pricing decisions for listings, and keep your eye on the ball.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

By Mark Sprague and Cassandra Majors

Hurricane Harvey devastated Houston and the Texas coast, and we’re only beginning to imagine the full economic impact for the region in the years of recovery ahead. 2017’s hurricane season is only the 17th deadliest since the death tolls were first tracked in the year 1900, but it’s already on track to become the worst in terms of damage (highest estimate is now $200 billion). How will Houston recover, and what are the likely short and long-term effects on the region’s economy?

The Damage

• Out of 660,000 apartment units in Houston, 100,000 units were flooded. A lack of rental housing availability may push renters out of the area or drive up prices for those who stay.
• ABC News reports: “According to the latest numbers by DPS, 273,276 homes were damaged during the storm. Another 15,528 were destroyed.” The full extent of the damage will likely be even higher, however.
• CoStar reports that “as much as 600 million square feet of commercial real estate space in the Houston metropolitan area, or 38% of Houston’s total gross leasable area, may have been impacted by the recent floods.” It’s too soon to tell if this will affect companies’ decisions to open locations in Houston and the coastal region, but it very well may.
• Nearly 25% of U.S. oil capacity was affected due to 20 coastal refineries closing. CNN reports on the impact to the energy industry: “Five oil refineries remain shuttered as of Monday, according to S&P Global Platts, an energy research firm. Ten more are partially shut down as they attempt to recover from historic flooding. All told, about 2.4 million barrels of daily refining capacity in Texas is offline because of Harvey, Platts estimates. That is about 13% of the country’s total ability to turn oil into gasoline, jet fuel and other products.” CNBC reported that there are 3 to 4 million fewer barrels of oil per day than before the hurricane.
• Gas prices spiked at first after the flooding and some areas around Texas saw panic-induced gas shortages, but now prices seem to have leveled out nationwide and consumers are less nervous about supply.

Real Estate Investment and Economic Impact

Reuters reports that investors in the Houston area are chomping at the bit to buy up damaged inventory, fix it up, and sell at a profit. The article also points out that none of the previous hurricanes or flooding in Houston has stopped its growth, so there’s every reason to believe Houston will recover from Harvey and continue to boom. However, the author predicts that home prices and rents will rise with the decrease in inventory from damaged homes.
Community Impact interviewed Lawrence Dean, director of Metrostudy Houston, to learn more about what could happen to Houston businesses. Highlights from the interview:

• Small businesses are in worse trouble than large ones, due to limited resources and lack of flood insurance, and many may not be able to return.
• Home values for non-flooded areas have remained steady for now, but newly-built homes are expected to increase in price because of limited building materials.
• Though Houston has been overbuilt for apartments, occupancy rates of apartment complexes have now skyrocketed quickly as displaced residents pour into them.

That last point is an important one. Many were expecting a large influx from Houston to other Texas Metros already, but so far it’s been very limited. Because Houston was overbuilt by 62,000 housing units, those units helped resolve housing needs for many residents that might otherwise have moved. Moving to another city is also a big lifestyle change, so it may be a few years before we see the impact of any outward migration due to Harvey. However, if more catastrophic floods occur in close proximity, that could be a tipping point for some Houston residents.

What Happens Next

It’s important to remember that these are mostly predictions, and it’s too soon to confirm them. As time passes, we’ll be able to see the big picture of how Harvey will impact the Houston area. In the meantime, the Greater Houston Partnership shared some predictions for the next year:

• Repair/remodeling construction will explode over the next 12 months.
• Labor and material costs could surge 18% to 25% in this time.
• Apartment/housing vacancies will plummet in many Texas metros, though much of Houston’s housing needs will be addressed in the Houston metro itself. We may see a small amount of migration to other Texas metros over the next 12 to 36 months.
• Home prices may fall significantly in hard-hit areas and flood-prone areas. Non-flood prone values will likely improve.
• New home values will surge.
• Other Texas metros will see a slight increase of values.
• Flood and property insurance rates will escalate, potentially causing homeowners to reconsider home location.
• Expect one month of significant job losses, followed by 1 to 6 months’ recovery of job creation.

The Houston area has been one of the fastest-growing metros in the country for many years, and Harris County is still the second-fastest growing county in the nation. The storms and floods Houston has weathered in recent years hasn’t affected its ability to attract new residents and businesses, and there’s no reason to believe that resilient Houstonians won’t make it through this one and continue to thrive. Though Hurricane Harvey may have dealt a serious blow to Houston and Texas coastal cities, we all know you can’t keep a Texan down for long.

Mark Sprague serves as State Director of Information Capital at Independence Title. He has over 35 years of experience in executive level management, sales, negotiating, finance, land development, operations, production, administration, and marketing.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

As summer ends, we start getting excited about kids going back to school, leaves falling, pumpkin spice lattes, and most importantly, the new Independence Title Education Menu. Below are the new, exciting classes we now offer. If you’d like to order a printed copy of the menu or to schedule a class, please contact your ITC Business Development Representative.

• Feeding Your CRM (1 HR CE) Utilizing a Customer Relationship Management (CRM) system should be an integral part of every Realtor’s business. Unfortunately, most don’t understand what a CRM can and cannot do for them. In this class, we will discuss the basics of CRM, the types of information you should gather for your CRM, and how to “feed” your CRM by forming a successful CRM process. This understanding will show how much potential repeat and referral business you can gain through consistent use of a CRM.
• Getting the Most Out of RPR (1 HR CE) Are you looking for data to meet the demands of your clients? Have you heard of RPR? Learn how to use Realtors Property Resource (RPR) in your everyday business to access compelling property analytics, create captivating reports for your clients, perform both local and national property searches, utilize RPR’s unparalleled CMA tool, and much, much more!
• Keeping Clients for Life (1 HR CE) Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we will share ideas on how to personalize your follow-up by giving creative closing gifts, providing pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.
• Perfecting Your Online Presence (1 HR CE) Have you ever Googled your business? Are you utilizing your Realtor.com account? Do you feel overwhelmed by the complexities of online real estate profiles? Have no fear— we found the answers for you! In this class, you will learn how to complete important details across a variety of platforms, which can increase views and profile traffic. This class will also provide a detailed overview on profile syndication, a feature that allows for data sharing across platforms to get the most out of your profiles.
• Smart Homes for Smart Agents (1 HR CE) We live in a world where you can do almost anything from your phone: lock your front door, adjust your thermostat, turn off the lights, etc. Smart home technology is reshaping the way homes operate and is influencing the real estate industry. These devices are changing the way Realtors stage homes, hold open houses, set sales prices, and so much more. In this class, you will learn about smart home products so you can communicate with your clients about unique features these products have to offer, whether your clients are buying or selling a home.
• Speak Easy (2 HRS CE) Speak Easy reviews the basics of delivering an effective presentation before a group of people: audience and purpose, organizational structure, use of verbals/non-verbals, overcoming stage fright, and more. Through instruction and in-class practice, members of the real estate community will learn to “command their audience,” whether at a listing appointment, speaking at a seminar for the general public, or standing before their peers. The ability to speak effectively in public can provide instant credibility.
• Zeroing in on zipForm Plus (1 HR CE) zipForm Plus has become one of the most utilized platforms in real estate because of its ease in streamlining the transaction process. In this course, we will cover the recent changes to the program and walk you through a transaction from start to finish. You will learn how to create a transaction, add and edit documents, link your preferred e-signature solution to send contracts for signing, and stay on top of every task with zipForm Plus’ new interactive dashboard. Whether you are a new or advanced user, you will walk away from this class with new information you can use in every transaction

As summer ends, we start getting excited about kids going back to school, leaves falling, pumpkin spice lattes, and most importantly, the new Independence Title Education Menu. Below are the new, exciting classes we now offer. If you’d like to order a printed copy of the menu or to schedule a class, please contact your ITC Business Development Representative.

• Feeding Your CRM (1 HR CE) Utilizing a Customer Relationship Management (CRM) system should be an integral part of every Realtor’s business. Unfortunately, most don’t understand what a CRM can and cannot do for them. In this class, we will discuss the basics of CRM, the types of information you should gather for your CRM, and how to “feed” your CRM by forming a successful CRM process. This understanding will show how much potential repeat and referral business you can gain through consistent use of a CRM.
• Getting the Most Out of RPR (1 HR CE) Are you looking for data to meet the demands of your clients? Have you heard of RPR? Learn how to use Realtors Property Resource (RPR) in your everyday business to access compelling property analytics, create captivating reports for your clients, perform both local and national property searches, utilize RPR’s unparalleled CMA tool, and much, much more!
• Keeping Clients for Life (1 HR CE) Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we will share ideas on how to personalize your follow-up by giving creative closing gifts, providing pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.
• Mobile Apps for Mobile Agents (1 hr CE) Grab your smartphone or tablet and join us for an hour of mobile real estate apps! In this class, we’ll go over five mobile apps that will take you from searching for listings all the way to depositing earnest money, all with your smartphone. You’ll walk away with tools to streamline your day-to-day operations while on the go!
• Perfecting Your Online Presence (1 HR CE) Have you ever Googled your business? Are you utilizing your Realtor.com account? Do you feel overwhelmed by the complexities of online real estate profiles? Have no fear— we found the answers for you! In this class, you will learn how to complete important details across a variety of platforms, which can increase views and profile traffic. This class will also provide a detailed overview on profile syndication, a feature that allows for data sharing across platforms to get the most out of your profiles.
• Smart Homes for Smart Agents (1 HR CE) We live in a world where you can do almost anything from your phone: lock your front door, adjust your thermostat, turn off the lights, etc. Smart home technology is reshaping the way homes operate and is influencing the real estate industry. These devices are changing the way Realtors stage homes, hold open houses, set sales prices, and so much more. In this class, you will learn about smart home products so you can communicate with your clients about unique features these products have to offer, whether your clients are buying or selling a home.
• Tools for Target Marketing (1 HR CE) Have you ever wondered how to identify profitable neighborhoods to market to or how to calculate the turnover rate in an area? What if we told you the tools are at your fingertips? In this class, you will learn the answer to these questions as well as how to easily print mailing labels and utilize REiSource to find specific targets.
• Zeroing in on zipForm Plus (1 HR CE) zipForm Plus has become one of the most utilized platforms in real estate because of its ease in streamlining the transaction process. In this course, we will cover the recent changes to the program and walk you through a transaction from start to finish. You will learn how to create a transaction, add and edit documents, link your preferred e-signature solution to send contracts for signing, and stay on top of every task with zipForm Plus’ new interactive dashboard. Whether you are a new or advanced user, you will walk away from this class with new information you can use in every transaction

As summer ends, we start getting excited about kids going back to school, leaves falling, pumpkin spice lattes, and most importantly, the new Independence Title Education Menu. Below are the new, exciting classes we now offer. If you’d like to order a printed copy of the menu or to schedule a class, please contact your ITC Business Development Representative.

• A Guide to zipForm Plus and DocuSign (1 HR CE) zipForm Plus and DocuSign are the most utilized platforms in real estate. In this course, we will cover the NEW zipForm Plus platform all the way through to launching and getting your documents signed in DocuSign. What you need to know from start to finish!
• Feeding Your CRM (1 HR CE) Utilizing a Customer Relationship Management (CRM) system should be an integral part of every Realtor’s business. Unfortunately, most don’t understand what a CRM can and cannot do for them. In this class, we will discuss the basics of CRM, the types of information you should gather for your CRM, and how to “feed” your CRM by forming a successful CRM process. This understanding will show how much potential repeat and referral business you can gain through consistent use of a CRM.
• Getting the Most Out of RPR (1 HR CE) Are you looking for data to meet the demands of your clients? Have you heard of RPR? Learn how to use Realtors Property Resource (RPR) in your everyday business to access compelling property analytics, create captivating reports for your clients, perform both local and national property searches, utilize RPR’s unparalleled CMA tool, and much, much more!
• Keeping Clients for Life (1 HR CE)  Past clients are a real estate agent’s lifeline to generating a steady stream of repeat business and referrals. Do you know how to keep in touch without becoming a nuisance? Personalization may be the key to staying off your client’s “do not disturb” list. In this class, we will share ideas on how to personalize your follow-up by giving creative closing gifts, providing pertinent data post-closing, and so much more! Consistent application of these interactions will help you keep clients for life.
• Perfecting Your Online Presence (1 HR CE) Have you ever Googled your business? Are you utilizing your Realtor.com account? Do you feel overwhelmed by the complexities of online real estate profiles? Have no fear— we found the answers for you! In this class, you will learn how to complete important details across a variety of platforms, which can increase views and profile traffic. This class will also provide a detailed overview on profile syndication, a feature that allows for data sharing across platforms to get the most out of your profiles.
• Smart Homes for Smart Agents (1 HR CE) We live in a world where you can do almost anything from your phone: lock your front door, adjust your thermostat, turn off the lights, etc. Smart home technology is reshaping the way homes operate and is influencing the real estate industry. These devices are changing the way Realtors stage homes, hold open houses, set sales prices, and so much more. In this class, you will learn about smart home products so you can communicate with your clients about unique features these products have to offer, whether your clients are buying or selling a home.
• Stats in a Flash |(2 HRS CE) Does the word “statistics” intimidate you? This class will take the fear out of statistics and will have you creating your own Stats in a Flash! We’ll define common terminology, show you where to locate statistics, teach you how to create your own, and demonstrate when to use statistics in your business. If you want to take your marketing to the next level, or if you just need data to support your negotiations, this class is for you!
• Zeroing in on zipForm Plus (1 HR CE) zipForm Plus has become one of the most utilized platforms in real estate because of its ease in streamlining the transaction process. In this course, we will cover the recent changes to the program and walk you through a transaction from start to finish. You will learn how to create a transaction, add and edit documents, link your preferred e-signature solution to send contracts for signing, and stay on top of every task with zipForm Plus’ new interactive dashboard. Whether you are a new or advanced user, you will walk away from this class with new information you can use in every transaction

For an online copy of the new menu click!

By Cassandra Majors, Independence Title

Well, honey, you see…when two people love each other very, very much, sometimes the Home-Buying Stork brings them their very own bundle of joy…along with a huge chunk out of their savings, a Russian novel’s worth of legal disclosures, and 30 years of debt.

But how does the stork find them, Mommy?

Good question. Where are the buyers coming from these days? Or to ask the question more precisely: for home buyers in recent years, where were they BEFORE they bought their current homes? Renting an apartment? Leasing a house? Living with their parents? The Planet Krypton?

Luckily, the U.S. Census Bureau keeps track of this sort of thing for us, and not just every ten years. The American Housing Survey is conducted every two years and reports on a wide variety of housing and household characteristics, including “reasons for moving.” Dr. Paul Emrath, Vice President for Survey and Housing Policy Research for the National Association of Home Builders, has written an illuminating summary of the latest data from 2015 that has recently been made available to the public.

Highlights from the article:

• Over half of recent home buyers were former renters (52%), 20% were former owners, 19% are new households (moving from a home that someone else owned or rented), and 9% are unknown.
• For buyers of newer (built 2010+) homes however, 51% were former homeowners and tended to have the highest incomes out of the four groups (buyers of newer homes, buyers of older homes, renters of newer homes, renters of older homes).
• More than three out of every five recent movers stayed within a 50-mile radius of their former home.
• Buyers of newer homes are much more likely to say their new home is better than their previous home as compared to buyers of older homes (70% vs. 60%).

Click here to read the full article and fantastic graphs that show the different segments compared to one another. I also encourage you to take the time to learn to play with the Census Bureau’s many reports and datasets to find out almost anything you’d ever want to know about your area.

What does this all mean for our industry? If you’re a real estate agent, you’re still more likely to find buyers from the pool of current renters, but if you’re a builder, you may be equally as likely to find buyers from current homeowners as from current renters. Even for agents selling older homes, almost 40% of those buyers are likely to be current homeowners. Buyers trading up or making lateral housing moves are a larger share of the total market than they used to be. This might very well be a symptom of declining homeownership rates in the U.S., as 2016 saw the lowest national homeownership rate in 50 years (62.9%). If more renters must continue renting because they can’t afford a down payment or other costs of homeownership, a larger share of buyers will be current owners trading up. Thankfully, this trend seems to have bottomed out and now homeownership rates are inching back up over the last year (now at 63.7% as of July 2017).

• 46% of buyers will be increasing their housing costs by moving, and 24% will keep their costs about the same as before.
• Their primary reason for moving is likely to be that 1) they want a larger or better quality home (16% of those surveyed), 2) they want to form their own new household (15%), and 3) They want to live in a more desirable neighborhood (15%). Coming in fourth place, 10% of responders said they moved to be closer to family.
• Only one in five will likely be moving from more than 50 miles away from where they are now. The higher the income of the buyer, the more likely they are to move outside that 50-mile range.
• 5% will likely be immigrants or foreign investors
• Most will be moving from a house (53%), compared to 37% who will move from an apartment.
• Their ages are likely to fall in the 30-44 year range.

Of course, these are national statistics from one large survey, so we have to be careful about drawing too many sweeping conclusions. Still, both builders and agents can glean some general good tips on finding buyers:

• Target potential buyers living in houses, not just apartments—your future buyer is more likely to live in a house already.
• Don’t just focus on current renters or you risk neglecting a large pool of current homeowners looking to trade up in quality or location.
• Keep in mind that future buyers might not already be living on their own; many buyers are moving from a home owned or rented by another (usually family).
• Look for buyers in your own backyard—most buyers are staying relatively close to where they were before.

And now you know where buyers come from…or at least how the Home-Buying Stork finds them. Now go play outside, Mommy needs a nap.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

by Cassandra Majors, Independence Title

Ever since the meteoric rise of Austin’s real estate market in the last two decades, I’ve heard the same question asked in many different ways, from many different people. It usually takes one of three forms:

1. Is Austin in a real estate bubble?
2. When will Austin’s real estate bubble finally burst?
3. The latest data shows [insert statistic here], which is not as good as before, so does this mean the bubble has finally burst?

If you don’t feel like reading much today, I’ll make the answers quick for you and leave the explanation for those of you with more time on your hands. Here are the answers:

1. No.
2. It’s not a bubble.
3. No.

For the rest of you still with me, let’s dive deeper. Why is Austin not in a bubble?

Wander with me down to Florida to understand what a real bubble looks like. Don’t be scared–we’re going to Florida in the 20s, not Florida today. In the early 1920’s, the Florida real estate market was the hottest in the country. From coast to coast, advertisements filled with sunny white-sand coasts beckoned eager investors to the Sunshine State. Land values skyrocketed with such force and velocity that buyers could often expect a bountiful return on their investments in a matter of weeks. One historian illustrates the fervor with this example: “In Miami Beach, lots near swank Lincoln Road that Realtors listed for less than $7,500 in June 1925 commanded a price of $35,000 42 days later.” Not that impressed? Putting this increase in a current perspective by adjusting for inflation, that example is the equivalent of buying a $100,000 lot in Austin in June this year and then selling it in August for $467,000. Wow! How could investors resist those kinds of returns?

For anything you own, be it a house, a car, a fidget spinner, or a horse, there are two ways to measure its value. The use value, which is what the object is worth for you to actually use, and the exchange value, which is what you can get for it if you sell it. I can use a horse or a fidget spinner for riding or spinning (respectively, let’s hope), so they both have a certain amount of use value for me. If I need that horse not just to ride for fun but also to help me for working my ranch, its use value for me goes up even more. If I sell the horse to my cowboy friend (I’ll throw in the fidget spinner for free), he pays me the exchange value price. If the horse market goes up or down but the horse stays healthy, the cowboy loses or gains exchange value, but doesn’t lose use value. He can still use the horse even if horse prices go down; he just won’t be able to sell it for as much.

Real estate is no different. I live in a home and it provides me with shelter, warmth, and Netflix. So long as it’s livable and I have a rock-solid Independence Title insurance policy, it will always have value for me, but its exchange value will go up and down depending on market forces. Real estate bubbles happen when the exchange value of properties in a certain area become completely unhinged from the use value. As they did in 1920s Florida, investors don’t buy properties to live in or to rent out for income, they buy them for the sole purpose of holding onto them for a relatively short period of time before selling them at a steep profit. This is the simplest explanation of what speculation means, and a speculative market is THE thing that inflates the dreaded bubble.
It’s not hard to see why speculation hurtles a market ever closer to disaster—without a concern for use value, prices inflate artificially as one investor sells to another who sells to another and so on. No one is thinking about what happens at the end, they just want to buy and sell as quickly as possible. Then one day, something bad happens—the economy tanks or a natural disaster hits the area, for example—and all of a sudden, prices take a spectacular nosedive overnight. If you’re the unlucky one who just bought, you’ve just lost the game of Real Estate Speculation Hot Potato. The music stopped and you’re the one holding the potato…and no one wants to eat the potato anymore.

In Florida, that’s exactly what happened. The state ran into supply issues from a dispute with the railroads, had a shipping disaster block off a major port, and experienced some bad weather that destroyed many properties. In a heartbeat, the entire market crashed, investors lost millions, and the state’s economy took years to recover. And this little microcosm is actually a great way to understand the stock market crash in 1929 that preceded the Great Depression—the stock market was going up so fast that investors just had to buy and hold stocks briefly before they could sell at a wildly inflated price. The value, profit, and long-term prospects of the companies didn’t matter much, so what investors were actually trading was the delusion that prices would keep going up forever. And you already know how that story ended. Whenever pure exchange value becomes the driving force of a market, a crash always looms ahead.

Now you might say I’m just reaching for the low-hanging fruit by finding the most obvious example of an out-of-control bubble. But I really want to reveal the conditions that lead to a bubble, no matter what the size or severity, and the Florida land boom is a great way to see those conditions and see if they apply to Austin today. What are the conditions that create a real estate bubble? They’re easy to identify, but often difficult to see in the moment:

• Rapidly appreciating home values
• Easy and generous credit for buyers
• “Irrational exuberance”
• Speculation

Let’s go down the list. Do we have…

Rapidly appreciating home values? Check! Uh oh! But let’s keep going.

Easy and generous credit for buyers? Not so much. As we learned in 2008, when it’s easy for unqualified buyers to borrow large amounts of money, it leads to a collapse of our market that many parts of the country and world are still reeling from even today. In the U.S., new regulations and lessons learned by financial institutions have made getting a loan much more difficult. Loans for large commercial and development projects are even more difficult to secure.

Irrational exuberance? This is a term originally used by Robert Shiller and referenced by Alan Greenspan during the dot-com bubble in the 90s, and it describes a market with so much activity and enthusiasm that it quickly becomes overvalued. In Austin, yes, we’ve had some exuberance, and now we’re seeing that glow slightly fade a bit as prices stabilize. On the whole, however, home values are still appreciating nicely and our population is still booming, so our exuberance can’t really be described as irrational.

Speculation? Definitely not, and this is really the crux of the argument. Can you buy a house in Austin and sell it for a profit a few months later? A year later? In some cases, yes, but your returns are limited by significant closing and mortgage costs, higher property taxes, and all the costs associated with maintenance, improvement, and selling. Values have gone up a lot and quickly, but still very much within the reasonable bounds of supply and demand. Remember that speculation occurs when the use value and exchange value become unhinged from one another. People are moving here to live and work, and mostly buying homes for themselves and their families to use, not as an investment to sell quickly. Sure, you can buy a fixer-upper and flip it for a higher profit, but you’ve increased the use value of that home along with the exchange value. You didn’t just buy a dump and wait a few months to sell it for profit leaving it in the exact same condition. In the Florida land boom, many properties exchanged hands over and over with none of the investors ever having seen the property or even having been to Florida at all!

Will there be a day when we have a national economic downturn or a natural disaster and Austin real estate will suffer as prices drop? Yes, of course. But that is NOT a bubble bursting—it’s just an inevitable outcome of the economic cycles we’ll all have to live through in the course of our lives. Though there were (and still are) some pockets of speculation in our market, especially in the early days, it has always been a small percentage of the overall market. So long as people still want to live here and can find jobs, our housing market will always recover when the economy gets better. In an actual bubble, homes never truly regain their value, because their values were an illusion, completely disconnected from reality. In contrast, Austin’s reality has been a journey towards becoming an ever-more important, major American city with a great local and state economy, low unemployment, and booming industries. And people also just like to live here because central Texas is a wonderful place to be. So don’t fret about a bubble that doesn’t exist—Austin will continue to provide intrinsic use value for those of us lucky enough to call it home.

Cassandra Majors has been a market analyst and data guru in the Austin real estate industry for over a decade.

Have you noticed the “Try New Plus” button when you log into zipforms Plus?  They’ve made some changes and improvements to the platform.

What’s New in zipForm Plus?

Agent Dashboard: zipForm Plus has a new platform design! Not only does your homepage look different, but it feels different too. The dashboard is both interactive and responsive: it accesses real-time data on the progress of every transaction, and it makes zipForm Plus compatible with any device (computer, tablet, phone).  The dashboard also has some new widgets, like the “signature packets in progress” widget, and improved property and transaction type charts. Also, you can see what’s in the sales pipeline with the potential sales volume chart.

Data Integration: If you’re a Realtors Property Resource (RPR) user, we have good news! zipForm Plus’ integration with RPR simplifies property data entry. Start a transaction from inside of RPR to sync property information and save time.

 Transactions: Although the process for creating transactions remains the same, you’ll notice the biggest changes inside of each transaction.  Create a transaction from multiple places within zipForm Plus and enjoy the comprehensive transaction summary page. Here you’ll find easy to read property, listing, and purchase summaries.  You’ll also notice a brand new launch pad where you can easily add, share and sign documents. These functions also have a page of their own, accessible from your transaction summary page. Want some more good news? Completing information in the transaction parties launch pad auto-populates your buyer or seller’s information.

Share:  Remember the collaborate feature? It has a new name and new capabilities. Meet the “Share” tool, where you can privately or publicly share documents for viewing and filling.  Private share works like the old Collaborate feature—you can send clients viewer account setup emails so they can view and fill out forms, set viewer permissions, and create a stop sharing date. Public share allows an agent to easily send a link for viewing documents with no account setup required.

In our new class, Zeroing in on zipForm Plus,  we show you how to master these changes and maximize efficiency when using the platform.  If you are interested in scheduling a class with our Education Team, contact your ITC business development representative!