Upbeat Commercial Real Estate

In the News   Presented by Prairie Title  

February 22, 2018

         

Can CRE Lead the Way?

Last year’s federal tax legislation has begun to sink in, with employers adjusting withholding levels to match the new IRS charts and many employees seeing larger paychecks as a result. It’s hard to tell what effect the tax changes will have on the economy overall, and the real estate market in particular, but there is hope that changes affecting real estate LLCs will boost commercial real estate this year.

In a slideshow posted on nreionline.com, six economists give their generally positive views on the state of CRE in 2018. For instance, Ryan Severino, chief economist at JLL asserts: “The recent tax cuts are likely to benefit real estate significantly and should have a far more substantial impact than either changes to immigration policy or infrastructure policy."

We may need commercial to lead the way this year as housing continues to be a puzzle despite January housing construction news termed “terrific” by NAR Chief Economist Laurence Yun. “This rise in single-family housing construction will help tame home price growth,” Yun said.

As Reuters reported: “Housing starts jumped 9.7 percent to a seasonally adjusted annual rate of 1.326 million units in January. …Economists polled by Reuters had forecast housing starts rising to a pace of 1.234 million units last month after a previously reported rate of 1.192 million units. Building permits surged 7.4 percent to a rate of 1.396 million units in January.”

Will January’s construction numbers provide a push for housing? We hope so, but continued lack of inventory and high prices are keeping the overall housing market flat at best. And it remains to be seen if the elimination of federal deductibility of state and local taxes will negatively impact housing.

Good news out of Washington: The House recently passed bipartisan ALTA-supported legislation that corrects the inaccurate disclosure of title insurance premiums on the TILA-RESPA Integrated Disclosures (TRID) form and will help consumers understand the true cost of their real estate transaction. Here’s hoping the Senate follows suit and the fix becomes law.

A final thought. We’re moving more and more toward a digital mortgage/closing process from start to finish. It won’t happen overnight but there are signs of movement. Just last month Chase announced its intention to soon offer digital mortgages on smartphones. Also, I found this article on operationalizing the digital mortgage process in Housing Wire to be an interesting read.

Finally, finally. I recently authored an article in an Illinois State Bar publication titled, “The Bond that’s not: How to convey real estate in an unprobated estate.” For those interested in the subject matter, or others who might suffer from insomnia, I thought you might find it helpful.

Let’s close out the first quarter strong!

In The News

In the News   Presented by Prairie Title  

September 21, 2017

         

Housing Inventory Still an Issue

Prices remain high, interest rates are low, inventory is not adequate, existing home sales are sluggish  — those are the hallmarks of the residential real estate market as we enter the final quarter of this year. The news is ever-confusing and contradictory, even in the same week. Overall, it’s not a pretty picture.
For a variety of reasons, prominent among them lost equity following the recession which began nine years ago, many households that we would have expected to move up from starter and mid-range homes have stayed put, reducing available inventory. Also, many mid-life families who want to move up have been caught in the middle between second home purchasers who are not selling their homes and millennials who are slow to get into the starter home market, many of whom are held back by crushing student debt.  
Taken together, these factors combine to prolong a shortage of residential real estate inventory, which drives up prices and keeps large numbers of potential home buyers from getting into the market or moving up. There is some light in the tunnel, however. Encouraging data recently shows that move up buyers are starting to get into the market in greater numbers. At the same time, mortgages with less than 10 percent down are available now, and that may bring more millennials to get into the market.

Also on a positive note, commercial real estate remains on “sound fundamentals” NAR reports, while the National Retail Federation notes that retail store openings increasing this year. Even with new supply, solid absorption led to increases in rents,” the NAR report said. “Office demand was stable in the second quarter of 2017, fueled by higher tenant interest in technology, advertising and marketing, healthcare and life sciences sectors. Net absorption totaled 8.8 million square feet.”

An important final point: The recent Equifax data breach is yet another reminder of the critical importance of cybersecurity. In our business, building awareness about wire fraud schemes among consumers is a key component of preventing data theft – and in this case the direct theft of thousands of dollars from unsuspecting home purchasers. To help, ALTA has created both a video and an infographic that you can use with your customers to help them be vigilant.

ALTA has many other helpful tools for consumers on homeclosing101.org. Be sure to point your clients to the site to answer all their questions about title insurance and closings.

What’s your point of view? Call or email me, or write a comment below. Let’s keep the conversation going.