Home values rising at fastest pace in 15 years
Intense demand for relatively tight supply pushed month-over-month and quarterly home value growth in October to levels not seen in 15 years, according to Zillow’s latest Real Estate Market Report. Typical home values now stand at $262,604. Meanwhile, rent appreciation differs by region, declining in major coastal metros and slowing down nationwide.
Home value growth increased from a 0.9% month-over-month growth in September to 1% in October, the fastest growth rate since 2005, and has barely been higher only on four occasions in the 24-year history of the Zillow Home Value Index – in June, July, August, and September of 2005.
The high-demand market also led to more homes changing owners. October’s seasonally adjusted annualized rate (SAAR) of home sales was 6.85 million, according to the National Association of Realtors, “the strongest pace since 2005.”
The SAAR rate is bound to remain elevated for the coming year, Zillow economists wrote, and average 6.42 million through September 2021. Analysts predict 2021 will be strongest year for sales since 2006.
“The red-hot housing market of this summer and fall is now clearly reflected in soaring home value appreciation,” said Jeff Tucker, senior economist at Zillow. “We haven’t seen such steep, short-term appreciation since the summer of 2005.”
How is this growth different from 15 years ago right before a tsunami of foreclosures were about to hit the market?
This time around, the exceptional home value growth “is driven by buyers with strong credit and incomes securing affordable fixed-rate mortgages, unlike the wave of poorly-vetted, exotic mortgages that financed the last boom,” explained Tucker. “The simple fact is that millions of well-qualified Millennials are seriously shopping for houses and they are competing for a shortfall of homes for sale.”
In October, quarterly growth reached 2.6%, the highest since November 2005, driving home values up 6.6% year-over-year and higher than the 3.9% annual growth rate reported in October 2019.
In September, quarterly growth for home values reached 2.3%, the largest increase since the summer of 2013 when the U.S. was recovering from the Great Recession, the report notes. “No major metro area witnessed a drop in home values from September to October.”
At the same time, analysts wrote, the rental market is weaker as rent prices dropped by 0.1% from September to October to $1,751. Nationwide, “as expensive coastal metros continued to cool,” typical annual rent growth is up just under 0.9% compared to October 2019 – and compared to annual growth of 3.4% in October 2019. Momentum in the rental market still favors Sun Belt and Midwestern cities
Knock Home Swap launches in NC
Housing startup Knock is offering Home Swap in Charlotte and Raleigh North Carolina – an equity trade program it reportedly perfected and re-launched this year after pioneering it in the Carolinas in 2017. Now available in eleven markets in six states, the Knock Home Swap program enables homeowners to purchase a new house before they sell their old home.
“We couldn’t be more excited to bring the Home Swap to Charlotte and Raleigh, two of our original Home Trade-In markets,” said Sean Black co-founder & CEO of Knock. “Like the Home Trade-In, the Home Swap allows consumers to unlock the equity in their current house to buy their dream home and move on their terms.”
The program reportedly provides homeowners an integrated, competitively priced mortgage alongside an interest-free bridge loan to cover the down payment and mortgage payments on the new home, alongside up to $25,000 to repair and sell their old house.
It ultimately makes both the property purchase and the home sale more convenient and cost effective for homeowners by empowering them “to make a non-contingent offer on the home they want and move before preparing and listing their old house for sale” for the best possible price.
An additional benefit Home Swap offers to these homeowners is access to a network of local real estate professionals trained as Knock Certified Agents, and the ability to work with their own agent.
Consumers in Charlotte and Raleigh can use the Home Swap to buy before they sell in Phoenix, Denver, Atlanta, Orlando, Tampa, Austin, Dallas/Fort Worth, Houston and San Antonio, the company said, through more than 40 brokerage firms with more than 27,000 agents.
As part of its Home Prep Concierge portal, Knock reportedly provides sellers access to its approved contractor network; manages the payment of all bills upon client-approved completion of work; and provides a backup offer on the old house “in the unlikely event that it doesn’t sell within six months,” as 90% of Knock homes sell in 90 days or less.
Knock is working with two local partners, Better Homes & Gardens Real Estate Paracle, and Wilkinson ERA Real Estate and ERA Live Moore that has over 850 agents in North and South Carolina who serve 11 states and helped closed over $1.4 billion in home sales in 2019, according to the company website.
“Inventory across the Carolinas remains tight,” said Eb Moore, CEO of Wilkinson ERA Real Estate and ERA Live Moore. “The Knock Home Swap program in our Charlotte and Raleigh markets will give our agents a compelling tool that will allow them to help their clients win in multiple offer situations. In addition, it will help to ease some of the stress of buying when you have a home to sell.”
Knock plans to expand to at least 21 markets by mid-2021.
Community State implements DocMagic paperless eClosing
Community State Bank has implemented the full suite of DocMagic, Inc., eClosing solutions across its footprint in Southeast Wisconsin. The partnership enables the $500 million asset, locally owned and operated community bank headquartered in Union Grove, WI since 1898 – to offer a 100% digital mortgage closing process.
All seven locations of Community State Bank have now implemented DocMagic Total eClose™ platform and are closing and funding residential home loans electronically, the company said in a statement. The eClose platform completely digitizes the mortgage closing process “including remote online notarizations (RON), eNote generation and secure eVault storage capabilities.”
Community State Bank reportedly is leveraging DocMagic’s document generation portal to maintain document consistency and to comply with Loan Estimates (LE) and Closing Disclosures (CD), eSignatures, eNotarizations in all 50 states, and eDelivery to Fannie Mae and Freddie Mac investors.
Total eClose generates a Mortgage Industry Standards Maintenance Organization (MISMO) Category 1 SMARTDoc eNote and has direct connectivity with the MERS eRegistry. Users also have access to a detailed audit trail with secure storage in DocMagic’s certified eVault – to ensure the Total eClose platform creates a fully paperless closing process.
“We’re happy to have partnered with DocMagic to provide our mortgage customers with a completely paperless and virtual experience from start to finish,” said Shakil Haider, Community State Bank vice president of mortgage operations.
Electing DocMagic as its single-source provider, “Community State Bank has put their customers’ needs at the forefront by implementing our automated, end-to-end lending platform,” said Dominic Iannitti, President and CEO at DocMagic. “We provide our clients with an agile and technology-forward mortgage process that ensures they can sustain and scale critical business processes.”
Community State Bank reportedly selected DocMagic, which specializes in fully compliant loan document preparation, regulatory compliance and comprehensive eMortgage services, to automate processes and protect its customers.
The bank specifically aimed to implement “technology that would help ensure the highest levels of customer safety during the pandemic,” and provide an easier, quicker and more efficient lending process for borrowers.
“During these times of uncertainty, it is extremely important that our team be able to adjust quickly in order to continue serving our customers safely,” said Scott Huedepohl, President and CEO of Community State Bank, and be able to provide a high-tech experience, “while still offering personalized service.”
Amilda is a journalist and branding consultant interested in how entrepreneurs turn brilliant ideas into products and services that advance business acumen and improve people’s lives in unprecedented ways. She has covered mortgage finance for over 15 years.