What is war good for? Buying a home.
We love Diana Olick. We really do. And her latest headline really made us raise our eyebrows: Unexpected side effect of Iran strike: Mortgage rates stay low as investors flock to bonds
Come again? Pending war is actually helping with the mortgage origination market? Click-baiting headline aside, Olick has a point, and does a good job of walking the reader through the causal relationship. (If you’re intrigued and want to learn even more, you’re in luck. First American’s Deputy Economist Odeta Kushi will spend time going over the relationship between global and world affairs, and the housing market and interest rates in her economic update at #NEXTWINTER20.)
During times of geopolitical uncertainty, institutional investors, that is big companies awash with cash but averse to risk, redirect investments into safe-haven asset classes. That is American Treasuries. The rate of the 10-year is largely seen as moving the same direction as mortgage rates, but a week earlier. Treasuries move up, mortgage rates tend to follow.
And, the article indicates mortgage rates may go even lower. “30-year fixed rates of 3.75% will be most prevalent for flawless scenarios, but 3.625% is definitely out there,” said Matthew Graham, chief operating officer of Mortgage News Daily, in the article.
Latest and greatest tech startups look to cut mortgage origination costs
While rates are likely to remain low, the cost of buying a home is still insanely high. The latest trend in tech is to launch platforms that reduce, not just the complexity, but the costs associated with closing a home loan, according to this piece from Fannie Mae.
“The average cost of a home transaction is 10.5% across the nation, which is insane,” said Chief Revenue Officer Tyler Baldwin of Reali in the piece, “Name any other industry where you’re charging 10.5% just to execute that transaction.” Reali is a tech-enabled real estate platform streamlining the process for home buyers and sellers: a promise so many make these days.
“Enter a small but growing industry of startups to wring the costs and complexity out of this process,” the piece states. “Each agreed that applying emerging technologies to the home transaction process can make it less expensive, simpler, and less stressful while lowering the barriers to entry to make housing more accessible and affordable.”
The piece details 3 approaches these startups are doing to accomplish this goal. Here is the summary:
- Provide an end-to-end transaction platform
- Change the way people buy homes
- Eliminate the paperwork
There is also this 30-minute+ YouTube video to go along with the piece, for those who don’t want to click and read.
Homeless population goes up in 2019
Reducing the cost of homeownership is generally not seen as a barrier to the process. To be honest, the ability to buy a home is a privilege, sadly, fewer Americans can partake in. The U.S. Department of Housing and Urban Development released its 2019 Annual Homeless Assessment report to Congress – and the numbers were pretty damning.
The report sent out by HUD Secretary Ben Carson found that 567,715 persons experienced homelessness on a single night in 2019. That’s an increase of 14,885 people from 2018. And this is the third consecutive year we’ve seen an increase in homelessness – in 2018 HUD’s report to Congress showed an increase of 0.3%, or 912 people.
In HUD’s report, it blames this year’s uptick entirely on California. Homelessness in California increased by 21,306 people, or 16.4%, which is more than the total national increase of every other state combined.
“As we look across our nation, we see great progress, but we’re also seeing a continued increase in street homelessness along our West Coast where the cost of housing is extremely high,” HUD Secretary Ben Carson said. “In fact, homelessness in California is at a crisis level and needs to be addressed by local and state leaders with crisis-like urgency. Addressing these challenges will require a broader, community-wide response that engages every level of government to compassionately house our most vulnerable fellow citizens.”
But is it California, and the rising costs of homeownership, or is it the policies set forth by this administration?
On a positive note, 37,085 veterans were reported homeless, a decrease of 2.1% from 2018 and down a full 50% since 2010. And the number of families with children experiencing homelessness was down nearly 5% annually in 2019.