3 Biggest Blockchain Myths Debunked

Despite its speed in verifying records and heightened online security, real estate professionals have been slow to adopt blockchain.

Natalia Karayaneva, CEO of Propy, a real estate marketplace that uses blockchain to facilitate transactions based in San Francisco, says there are a lot of misconceptions about the new technology. She’s debunking three perceived risks.

Myth 1: Blockchain isn’t as secure as we think.

Karayaneva says blockchains such as ethereum or bitcoin have never been hacked. The Decentralized Autonomous Organization (known as the DAO) and exchanges have been hacked, but the blockchain ledgers cannot be hacked because they will reject any record with altered data, she says.

Myth 2: Blockchain is a hotbed of illegal activity.

“Yes, criminals can use the blockchain for illegal activities. Criminals can also use highways to carry drugs, but no one is calling highways ‘hotbeds of illegal activity,’ because regular people use them to perform legal, necessary tasks,” Karayaneva says. “In the same way, the use of blockchain for legitimate purposes renders it irreplaceable.”

Myth 3: Blockchain is simply for trading cryptocurrency.

Because blockchains prevent errors in record-keeping and accelerate transactions by eliminating third-party verifications, Karayaneva says that the technology can enhance nearly any industry.

SOURCE: DAILY REAL ESTATE NEWS

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Why Clients May Be Asked to Write a ‘Comfort Letter’ to Their Lender

When an insurance company's underwriting department has questions about a borrower’s background, it's becoming common to ask the borrower to write a letter of explanation to their lender, dubbed a “comfort letter.” The lender may request a letter to gain clarity on the borrower’s circumstances that were not explained in their credit or employment documentation.

“We try to connect the dots using data, and we think that makes the application process more robust,” Bill Banfield, executive vice president of capital markets for Quicken Loans, told The Wall Street Journal. “But when you need a little help from the client to connect those dots, letters of explanation are a way to help the underwriter interpret something.”

When would a client be asked to write one? The Wall Street Journal offers up some scenarios, such as a borrower who wants to buy a new home far away from their current place of employment. The lender may ask the borrower to explain, like if they intending to telecommute or has a new job. The bank may also request one if the borrower makes an unusual large deposit. They may ask for a letter to document where the funds came from. A lender may also ask for an explanation if there was a gap within employment.

“It could be as simple as somebody had a child, and they left the workplace for a period of time,” Banfield told The Wall Street Journal . “What the underwriter is trying to get at is the stability and continuity of the income they’re using to qualify the client to ensure that they can actually afford the payments.”

For lenders who do ask for a letter, banks tell borrowers not to panic. It’s a common part of the mortgage-application process these days. This does not mean there is a problem with the application or that it will be denied. In the letter, WSJ advises making sure the borrower fully understands the question and addresses the underwriter’s concern with concise and accurate information when requested.

Banks, however, are not permitted by law to ask borrowers anything that is “prohibited bias,” like on medical privacy, gender, age, religious, or racial discrimination, says Allen White, senior vice president of mortgage lending at South State Bank in Seneca, S.C.

SOURCE: DAILY REAL ESTATE NEWS

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Wall Street Is Taking an Even Bigger Bet on Rentals

Investors are bullish that more Americans will choose to be renters, and they’re buying up even more single-family homes to make sure they are ahead of the trend. The number of homes purchased by major investors in 2017 was about 29,000, up 60 percent from the previous year, according to Amherst Capital Management LLC, a real estate investment firm. That is also the first time since 2013 that investors purchased more homes on an annual basis.

Investors are increasingly eyeing single-family homes over apartments. A rising number of apartments in recent years have increased vacancies and driven down rental yields. That has prompted investors to turn back to single-family homes for rentals.

Investors are reportedly raising billions of dollars to purchase more homes this year, and they are targeting areas like Atlanta, Phoenix, and other metros with fast-growing economies.

Pretium Partners LLC, an investment firm, announced Monday that it had raised more than $1 billion for its Progress Residential to add 26,000 rental homes to its portfolio.

In markets where there is little inventory to buy, some investors are building new. Transcendent Investment Management LLC , a south Florida firm, has secured more than $250 million to build thousands of rental homes in Southeast Florida.

"We're seeing a wider variety of investors coming into this asset class: sovereign-wealth funds, insurance companies, hedge funds, pensions, asset managers," Sandeep Bordia, Amherst's head of Research and Analytics, told The Wall Street Journal.

Investors are also targeting wealthier tenants for single-family home rentals. They tend to have children and need more bedrooms than apartments can offer, and they also may be more willing to weather rent increases in order to remain in a good school district.

Some of the fastest-growing markets for rental-home investments over the past year, according to ATTOM Data Solutions, a real estate data firm, are: Green Bay, Wis.; Myrtle Beach, S.C.; Sevierville, Tenn.; Syracuse, N.Y.; Anchorage, Alaska; and Charleston, W. Va.

SOURCE: DAILY REAL ESTATE NEWS

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Mobile Homes Could Fill Large Inventory Gaps

Home inventory of has fallen near record lows across the country, but more consumers are in need of a place to live. Some economists say manufactured homes—also known as mobile homes or trailers—may be the answer to relieve housing shortages in some markets starved for greater affordable housing.

About 5.6 percent of Americans—or 17.7 million—live in manufactured homes. These types of homes provide shelter for one in 10 households who live below the poverty line, according to a new report released by Apartment List, a real estate listing service.

Sydney Bennet, author of the report and a senior research associate at Apartment List, believes the number of people living in manufactured housing could grow significantly as the need for affordable housing grows more dire.

In the nation’s 100 largest metros, residents living in manufactured homes—either renting or owning—spend an average of 40 percent less on housing than those living in more traditional “stick-built” homes. The average monthly gross housing cost for a mobile home is $564, compared with $1,057 for a traditionally built home or apartment, according to the report by Apartment List. (The gross housing cost includes rent or mortgage payments and property taxes, lot rent for mobile homes, and utility costs.)

Seniors on fixed incomes may find the option more appealing. Upscale mobile home parks are popping up that are aimed at attracting the 55-plus crowd, offering spacious “double-wide” trailers, community centers, and pools, among other amenities.

But buying a mobile home is different than purchasing a stick-built home. Mobile homes are sold separate from the land in the trailer park. Also, mobile homes are classified as either a real estate property or personal property. Buyers can finance a purchase through a traditional mortgage if the property is classified as real estate. However, the majority of manufactured loans are financed as personal property with a chattel loan, which usually come with high rates and shorter loan terms.

Mortgage financing giants Fannie Mae and Freddie Mac are viewing manufactured housing as a potential solution to ease shortages of affordable homes. The government-sponsored enterprises announced plans in January to purchase more manufactured housing loans over the next three years.

SOURCE: DAILY REAL ESTATE NEWS

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Golf Course Closures Could Spur Construction

Younger people are not replacing older generations of golf enthusiasts, prompting many golf courses and clubs to shut down—and making room for new construction. The number of regular golfers dropped from 30 million to 20.9 million between 2002 and 2016, according to Pellucid Corp., a golf industry trade group. Now, because of golf facility closures, hundreds of thousands of acres of land nationwide is available for redevelopment, The Atlantic Monthly’s CityLab blog reports. 

The average 18-hole golf course sits on 150 acres, and at standard densities, that’s enough space for 600 single-family detached homes. But many golf courses are zoned for commercial use, so developers will have to find ways to include housing in redevelopment plans. In the meantime, developers are drafting up million-dollar commercial redevelopment plans to buy sections of foreclosed golf courses. For example, in a Kansas City suburb, one golf course is slated to become an industrial park. And in suburban Jacksonville, Fla., another golf course will be transformed into a mixed-use retail, office, and hotel development. 

“Golf probably isn’t coming back—at least not at the kind of scale it once boasted,” Nolan Gray, an urban planning researcher, writes in a column for CityLab. “Whether or not this bust can be a boon or a wash for suburbs and cities will likely be decided by hundreds of small zoning fights … over the decade. If recent pushes to downsize and preserve golf courses are any indication, it will take some effort and foresight on the part of planners and policymakers to get former greens productively redeveloped.”

SOURCE: DAILY REAL ESTATE NEWS

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3 Pros, 3 Cons of Buying New Construction

Many house hunters are under the mistaken impression that new construction is flawless, a perception that may be challenging to wrestle with if your seller’s home is surrounded by brand-new development. In reality, there can be just as many inspection issues with new builds as there are with resale properties. If you’re working with clients who are interested in purchasing new, it’s important to manage their expectations and let them know that no home no matter what age is perfect. On the other hand, new homes do have some advantages because they’re not worn. Here are three pros and three cons of new construction.

Pros

1. Less wear and tear. Buyers of new construction can expect fewer imperfections in the product, says Terrylynn Fisher, CRS, GRI, a professional stager and associate broker with Dudum Real Estate Group in Walnut Creek, Calif. Scratched floors and cracks in walls, for example, are more commonplace in resale homes than new ones. Finishes and design flourishes in new homes may also be brighter and more colorful because they are untouched.
2. Built-in technology. While many homeowners have been slow to adopt smart-home technology, developers are jumping on the bandwagon more quickly and incorporating smart features into their projects, says Sce Pike, founder and CEO of Portland, Ore.-based software company IOTAS. Smart door locks and thermostats are among the most popular products developers request, but some are eyeing more comprehensive packages that include smart humidity sensors and the ability to control access to a home remotely, Pike adds.
3. It’s a blank canvas. Buyers may feel more like they are designing a home specifically for them when starting from scratch with a brand-new home, which can be a big psychological motivator in a purchase decision, Fisher says. Though resale buyers, too, have the opportunity to make a home their own, they may not feel complete ownership of its style because they’re either adding to, morphing, or covering up the previous owner’s sense of style, says Christine Rae, founder of the Certified Staging Professionals International Business Training Academy.

Cons

1. Flaws due to building shortcuts. Builders may take shortcuts in the construction process to cut costs, and that can result in blemishes in the home. Fisher says one of her buyers recently bought a new home and discovered about six aesthetic problems that were caused during construction, including an unsightly gap at the top of a shower that made the framing behind the wall visible. “It was like a bad flip that appeared beautiful on the outside,” she says. “You’re going to have a more substantial house in an older home because it’s had owners that have cared for it.”
2. Style over functionality. Builders are hyperfocused on open floor plans, as it’s a top priority for today’s buyers. But that often requires sacrificing storage space, Rae says. To achieve a truly open space, builders often have to decrease the size of closets and other areas of the home designed for storage. That can be problematic for meeting the needs of buyers who envision purchasing a long-term residence.
3. Incomplete curb appeal. Many builders put all of their effort and investment into the front of the house so it looks good to potential buyers driving by. But they’ll sometimes leave the backyard unattended to, Fisher says. Many new-home buyers may have to assume all the costs of backyard landscaping, including planting grass or laying sod, as well as planting trees and other shrubbery. This can be a huge expense, too.

SOURCE: DAILY REAL ESTATE NEWS

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Freddie Expands 3% Down Loans for New Buyers

Freddie Mac is debuting a new 3 percent down payment option for qualified first-time buyers that could put it in direct competition with the Federal Housing Administration’s low down payment mortgage. The mortgage financing giant announced Thursday that it is rolling out a new conventional 3 percent down payment option called HomeOne, which will not have any geographic or income restrictions. 

Freddie’s expansion into small down payment loan products for new buyers will put it in competition against FHA, which offers mortgages to first-time buyers that similarly only require 3 percent down. 

Freddie Mac rolled out conventional mortgages with 3 percent down payments more than three years ago for qualified low- and moderate-income borrowers. Its HomeOne product will not replace its current Home Possible products, but instead serve as a complement to it, Freddie Mac officials say. 

HomeOne mortgages will be offered only for conforming fixed-rate mortgages that are secured by a one-unit primary residence. At least one of the borrowers must be a first-time buyer. Also, applicants are required to participate in homeownership education to qualify for the mortgage. The loan is available for single-family homes, condos, and townhomes. Manufactured homes are not eligible.

“Freddie Mac’s HomeOne mortgage is part of the company’s ongoing efforts to support responsible lending, provide sustainable homeownership and improve access to credit,” Danny Gardner, senior vice president of single-family affordable lending and access to credit at Freddie Mac, said in a statement. “HomeOne is a great solution for aspiring homebuyers to grab that first rung of the property ladder and enjoy the financial and social benefits of participating in homeownership.”

SOURCE: DAILY REAL ESTATE NEWS

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The Art Factor Boosts Housing

Public art has been linked to building booms and price increases for residential real estate. That's why developers and city planners alike are working to weave art throughout new real estate projects and public spaces.

“Developers are beginning to see that if they want to attract tenants, they have to offer them more than just four walls,” says Barbara Goldstein, a public art planner and consultant in San Jose, Calif. “We’re going to see more and more of this kind of thing.”

The art effect can be seen in real estate across the country. For example, Chicago’s Millennium Park, which opened in 2004, features open-air galleries and interactive public art. After its opening, the prices of nearby condo buildings skyrocketed. Some in the city credited the “Millennium Park factor” for the area’s real estate growth by about 10,000 new units over the following decade and $1.4 billion in residential development (as estimated by an economic impact study by URS and Goodwin Williams Group). 

A suburban Brookland neighborhood in northeast Washington, D.C. now features Monroe Street Market, which is a five-block mixed-use development that includes two buildings devoted to artists’ studios on the ground floor. The studios have glass doors and are part of an art walk in the community. When the development first opened in 2014, the median home list price in its ZIP code was $474,000. By 2017, the median price had jumped to $598,400, a 26.2 percent increase in three years, according to realtor.com® data. 

The High Line in New York is a one-mile park that reclaimed an abandoned elevated railroad track to become a tourist attraction. The park features art and attracts 1.3 million visitors each year. The real estate prices and development near it have soared since its opening in 2014.

“People really want to be near these great, iconic places or things that make a city recognizable,” says Scott Stewart, executive director of the Millennial Park Foundation in Chicago. “A lot of these spaces where you’ve created something spectacular out of something less than desirable … those are attractive. They naturally draw people to them.” 

SOURCE: DAILY REAL ESTATE NEWS

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How to Triumph in a Bidding War

With a record low number of listings this spring, more buyers may be finding themselves in a bidding war for the home they want. CNBC recently highlighted a few tips on how buyers can be successful in a bidding war, including: 

Set the maximum price from the start. Home shoppers should factor in the monthly mortgage payment, property taxes, homeowners insurance, and any homeowner association or condo fees. They’ll want to arrive at a general estimate of maintenance for the home, too, such as lawn care and repairs. When the bidding gets too high, buyers need to be prepared to walk away. 

Pay with cash. An all-cash offer is an advantage in a bidding war. Buyers who come with cash double their chances of winning at a bidding war, according to the real estate brokerage Redfin. Some buyers will even pay all cash to win the home and then take out a mortgage after the deal closes. 

Waive the financing contingency. Buyers who waive a contingency on their loan having to be approved by a lender first may better their chances. But this can be a gamble. Home buyers need to be careful that they don’t end up having to pay in cash if the loan doesn’t go through. Buyers should get a fully underwritten loan preapproved from a lender prior to submitting an offer. They’ll stand to possibly up their chances of winning a bidding war by 58 percent with a preapproval, according to Redfin’s analysis. 

Write a personal letter to the seller. Buyers can try to appeal to sellers’ emotions and let them know that they intend to take good care of their home. Young families may write about how they intend to raise their children in the home and the life they envision there. CNBC suggested not writing about how you intend to remodel the home or do a complete makeover.

SOURCE: DAILY REAL ESTATE NEWS

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Flood Insurance Premiums Are About to Go Up

Many homeowners and buyers in flood-prone areas will see higher flood insurance premiums starting April 1. The premium hikes, which are required by law, will be as little as 2 percent for some properties and as high as 24 percent for others. On average, the increase will be about 8 percent.

“The National Flood Insurance Program requires premiums to rise on certain classes of properties over a period of years until they’re paying the full actuarial rate on their risk,” say analysts with the National Association of REALTORS®. “The 8 percent average increase is right in the range of increases for the last couple of years, so there’s nothing unusual here. It’s just the standard rate increase.”

Under the change, the rate for a primary residence in an area deemed by the government to be a flood hazard will rise by 5 percent on average. That applies to so-called pre-FIRM properties, which are properties built or substantially improved before 1975 or before the initial Flood Insurance Rate Map was issued for the area by the federal government. Pre-FIRM properties that are second homes or used for business will see higher increases, possibly close to 25 percent. Those sharp increases have been in place since 2012.

Learn more about the rate changes in a bulletin released by the Federal Emergency Management Agency, which administers the National Flood Insurance Program.

SOURCE: DAILY REAL ESTATE NEWS

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3 Floor Plan Fads You’ll See More Often

Home floor plans can take much longer to evolve than design trends. Changes tend to occur over years, as some designers and architects look to push the envelope and take a gamble on what they believe will resonate with buyers. But a few trends are starting to emerge.

BUILDER recently weighed in on some of the hottest fads that could impact more floor plans in 2018, including:

1. Flexibility for multigenerational households. More homes are being built to accommodate multigenerational households, such as with a main-level bedroom suite or even an in-law unit to offer privacy to cohabiting relatives. Flexible layouts that can accommodate a variety of living arrangements are growing in demand, builders say. In 2014, 60.6 million Americans resided in multigenerational households, according to the Pew Research Center. Homeowners may not need the extra space quite yet, but they desire to use it one day. The extra bedroom on the main floor may be outfitted as an office or study until it’s needed.

2. The modern farmhouse. White farmhouses are in high demand. These homes are characterized by large windows, simple roof lines, and bright white siding that may be paired with dark windows. “The modern farmhouse aesthetic seems to have struck a chord with the American home buyer because it relates back to a more bucolic era while also embracing all the needs of modern life,” says Jonathan Hyman, architectural department manager at Donald A. Gardner Architects. “The simplicity and clean lines, along with a little nostalgia, help the modern farmhouse create a relaxing environment in our chaotic contemporary lives.” Some designers are experimenting with adding more color to the farmhouse look, like in soft pastels of light green or soft tan colors.

3. Greater storage options. Storage is getting more emphasis on floor plans. Mudrooms and laundry areas are showing up on more home layouts as separate spaces rather than combined areas. Homes with open layouts are finding more need for storage to tuck away items. Mudrooms are popular as drop zones for backpacks, coats, and shoes. Also, the placement of this storage is getting more consideration in regards to homeowners’ lifestyles. For example, some layouts from the Nelson Design Group in Jonesboro, Ark., feature master bedroom closets that open directly into the laundry room. Pets are also getting more thought. Design Basics, based in Omaha, Neb., includes “pet centers” in some of its floor plans, which feature dog-washing stations and other storage.

SOURCE: DAILY REAL ESTATE NEWS

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Foreign Buyers Coming to U.S. Are Changing

Residents from other countries are increasingly eyeing U.S. real estate as a good investment, and they’re making up a significant portion of buyers in some markets. But who is coming is changing.

Chinese buyers have been the biggest portion, spending the most of any foreign group on U.S. real estate. They spent $31.7 billion on residential real estate in the U.S. between April 2016 and March 2017, according to the National Association of REALTORS®. But mainland China has since tightened restrictions on how much capital residents can spend outside the country. That has caused some markets to see a drastic decrease of Chinese buyers.

“You turn off one faucet, and another one opens,” says Jonathan Genton, the founding partner and CEO of the Genton Property Group.

Buyers from other countries have been coming in to fill the gap. For example, Genton he’s seeing more buyers coming in from Taiwan, Vietnam, and Thailand and more investors from Dubai, Kuwait, Georgia, and Turkey.

“Everyone recognizes the stability and security of the U.S. market more than ever before,” Genton says. He adds that up to 70 percent of a 59-unit Four Seasons Private Residences project in Beverly Hills likely will be foreigners.

Mauricio Umansky, CEO and founder of The Agency, says he’s been seeing more buyers from Great Britain in the luxury L.A. market. Umansky says that foreign buyers purchased about 10 of the 35 homes that The Agency sold in the Southern California market for more than $20 million in 2017.

“At any given point, who the front runners are changes,” says Karmely. For example, in the 1980s, Japanese buyers were accounting for some of the biggest portion of real estate purchases from foreign buyers in the U.S. In 2017, they made up only 2 percent of foreign property purchases.

As the foreign buyer group changes, Karmely says it’s important to note how U.S.-based real estate still continues to expand and accelerate among international buyers. Their searches are broadening too. For example, in Miami, foreign buyers are looking beyond just the beach and downtown locales. “This change has been transformation,” Karmely says.

“Foreign buyers make up a significant presence in the U.S. luxury market that will only increase as generations come here to study and geopolitical and safety factors continue to play a role,” Shahab Karmely, the CEO of KAR Properties, a New York-based development firm, told Mansion Global.

SOURCE: DAILY REAL ESTATE NEWS

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Driverless Cars Could Fuel An Exurb Boom

Driverless cars may sound like an idea ripped from a sci-fi movie, but the technology is real and expected to hit roadways over the next decade in a big way. As more people warm up to the idea, driverless cars could have a big impact on where people decide to live, according to a new poll from the National Association of Home Builders.

Sixty-three percent of consumers recently surveyed said that if they owned a driverless car they would “definitely” or “maybe” feel more encouraged to move further away from their work. Younger people surveyed said they’d be more likely to move away from work if driverless cars became a safe and reliable commuting option. More than 60 percent of millennial and Generation X members said they might be encouraged to do so, compared to only 18 percent of seniors. 

“Real estate might be the industry that is most transformed by autonomous vehicles,” David Silver, who teaches self-driving engineering at Udacity Inc., told Bloomberg. “It could change real estate from a business that is all about location, location, location.”

Investors such as Ric Clark, chairman of Brookfield Property Partners LP, a large real estate investment firm, is already weighing options of what to do with the space that could one day be freed up by driverless car roadways. Brookfield’s $152 billion in real estate assets include about 175 malls across the U.S. where “the biggest physical acreage is surface parking lots or structured parking,” Clark says. “For years, we have seen this stuff and thought we would love to build apartments or maybe if there is a higher and better use we could build on it.”

Driverless cars could free up areas for entirely new neighborhoods. In New York, for example, parking covers an area equivalent to two Central Parks, according to estimates published by Moovel Lab.

David Williams, technical director at insurer Axa SA, travels more than three hours a day between the northern suburb of Bury St. Edmunds and his work in London. “Imagine if my entire journey was much more flexible, much more integrated—no waiting round on cold platforms and I could be doing something else from A to B,” Williams told Bloomberg. “Would that mean the city effect of increasing house prices spreads further out?”

SOURCE: DAILY REAL ESTATE NEWS

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