Wednesday, November 25, 2015

Investment Real Estate for Beginners

You've probably heard someone say "real estate is a good investment." While it certainly can be, the day-to-day realities of investment real estate are a bit more complicated than what you may expect. Buying an investment property isn't the same as buying a primary residence. Experience with stocks, bonds, and mutual funds also won't prepare you for some of the hurdles you may face as a real estate investor.
Nonetheless, real estate can indeed be a good long-term investment strategy. Shrewd real estate investors routinely reap not only significant financial rewards but can also gain personal fulfillment from their work. If you're thinking of getting your feet wet with real estate investment, here's what you should know before diving in.

Choose the Investment That's Right for You

According to U.S. News & World Report, there are two avenues for investing in real estate, real estate investment trusts (REITs) and direct ownership of property. The distinction comes down to how hands-on you want to be with your investments.
A REIT is the low maintenance approach, consisting of a portfolio of properties in which investors can buy shares. In this way, REITs are similar to stocks and bonds. However, REIT investment capital is pooled and used to purchase and manage real estate. The trusts are professionally managed, and investors make money both through dividend payouts — some of the highest available at 90 percent — from rents paid by property tenants as well as through moderate capital appreciation when properties in the portfolio are sold at a profit. REITs have been around since the '60s, when the National Association of Real Estate Investment Trusts (NAREIT) was formed. The NAREIT website boasts a wealth of information about REITs. 
In contrast, direct ownership means purchasing an investment property and managing it directly. If you want to get first-hand experience in the real estate business, this is the way to go. However, you can't simply buy an apartment building and start making money. You must choose your moves wisely in order reap the benefits of your investment.

Make a Plan, Then Find a Property That Fits

Planning is key. You wouldn't rent a retail space in a mall before knowing what you're going to sell or who's supposed to buy it, so before you even choose a property, determine your strategy. Smart investors make a plan first, and then look for properties that fit. When it comes to direct investment, there are plenty of options. For instance, you could:
     Get your feet wet with a duplex or triplex, living in one unit and renting the others.
     Buy one or more low-, middle-, or high-end single-family homes to rent.
     Buy homes to renovate and "flip" for a profit.
     Purchase a multi-family property, with a few units, or dozens.
     Set your sights on retail, office, or industrial property investments.
     Focus on nontraditional properties, including farms, self-storage, data centers, hotels or medical facilities, and student or senior housing properties.

Do Your Research Before You Buy

Once you know what types of properties you'll focus on, start researching. Investopedia recommends finding out everything you can about a perspective property and its neighborhood. Consider everything from floodplain locations to what's likely to need repairs. If there are neighborhood nuisance issues — a commercial construction project down the street, a lack of parking, so-so schools, high crime — make sure you're aware of them and how they factor into your property buying decision.
Ask the seller and their agent questions about why they're selling, how long they've owned the property, what's been updated or replaced and what's likely to need repairs. But don't just take the seller's word for it — do your own research to get an even more complete picture.
You can view public records for many areas online, including tax assessment, permits, and other property records. For some research, you may need to visit your local archives in person. Local newspaper and business journal archives can be valuable as well. Neighborhood development projects, tax proposals, and quality of life issues are often chronicled in news stories. Crime and school statistics are also available online.
Numerous real estate industry organizations, such as CoreLogic, Trulia, the National Association of Realtors, and others, create annual research reports on various facets of the industry.
Lastly, for any real estate investment, a professionally completed title report and purchase of an owner's title insurance policy is a must. Investors should know upfront of any liens, encroachments, easements, or ownership issues for any property they're considering buying. Zillow points out preliminary reports could also include important details about historic oversight or planning department rules that apply to the property. Purchasing an owner's policy will ensure your investment isn't threatened by any further title issues that come to light after the sale.

Plan for a Variety of Expenses

You'll find investment real estate expenses turn up unexpectedly and add up quickly. You may have planned renovations to get the property ready for tenants or its next owner. Regular maintenance for a commercial building can be more involved and costly. If you hand off management duties, you'll need income to cover it. Lastly, though there are a number of tax incentives investors can take advantage of, you'll still have your share of tax obligations. In order to come out ahead, your rental income or the property's price appreciation at the time of sale will have to outweigh these costs.
Again, research is key. If you plan to remodel, get estimates from contractors before you buy. If the building already has maintenance personnel, ask the seller about the cost. If you decide to hire a professional property management firm, expect to pay between five to 10 percent of gross monthly rent for these services. If you finance your purchase, part of your interest will be tax deductible, though not all. Your investment property will be subject to annual property tax as well as capital gains tax when sold. 

Assemble a Team

If your investment property is a duplex or a cluster of starter homes, you might be able to handle the everyday work on your own. If your property is any bigger, you're going to need some help. Bankrate advises assembling a team of go-to professionals to help with everyday property chores as well as renovation, financials, and realty matters. Include a real estate agent, appraiser, home inspector, attorney, mortgage lender, contractor, plumber, electrician, handyman, gardener, and cleaning service.
Hiring professionals may eat up more profit, however, the added expense may be offset by the efficiency of working with the same expert regularly or negotiating for better rates. Lastly, letting others work in your business allows you to focus on top level concerns or look for new investment opportunities.

Pick a Winning Investment Property

In the simplest terms, a rental investment property should pay for itself, notes Zillow. A buyer should work to find a property that balances rental income and operational expenses so that cash flow is positive. Surprisingly, a flashier investment property may not be the one that offers a positive return. Zillow has an excellent illustration of this concept using two hypothetical townhomes.
For every property you consider, crunch the numbers to make sure it's a sound investment. Online return-on-investment calculators, like this one from Rental Property Reporter, make it easy to see how much profit you can expect to make and how long you'll have to wait to see those returns. Many MLS listing services also include data for their multi-family listings, such as gross rental income, net rental income, and expenses, in order to show the listing is profitable. Other online tools, like Rentometer, help landlords compare neighborhood rental rates, ensuring their rates are competitive.

Where to Turn for Further Advice

You wouldn't want to jump into investment real estate without fundamentals like planning, research, and budgeting, yet the basics aren't enough to ensure you'll be successful. Real estate investment carries some risk, so it's important to learn as much as you can. Because your financial future is on the line, it's also important to seek advice from reputable sources.
The National Real Estate Investor Association is a good place to start. The organization offers online resources, a directory of local chapters, and information about classes. Investors can also use networking to their advantage. Consider reaching out to more experienced real estate investors in your area. Offer to buy lunch to get your questions answered.

Remember that investment real estate is a long-term strategy, even though you may see dividends and net profits fairly early. Before you dive in, commit to learning as much as you can. You'll have more success and less frustration with investments you've carefully considered.

Tuesday, November 10, 2015

What You Should Know Before Buying Your First Vacation Home

If you're considering buying your first vacation home, you aren't alone. More homeowners are moving into the vacation home market while interest rates are low and prices are still affordable. However, buying a vacation home isn't quite the same as buying a primary residence. The vacation market is different from the traditional housing market, financing requirements differ, and homebuyers have a different set of options to weigh. Here's what you should know before you buy. 

What the Vacation Home Market Looks Like Today

By most accounts, the vacation home market is doing quite well. Sales were the highest in a decade last year, with 1.13 million properties sold. That's six percent above the 2006 peak and 57 percent up from the 717,000 homes sold in 2013, according to the National Association of Realtors (NAR).
What hasn't reached peak 2006 levels are the prices second home buyers are paying. In 2005, the median second home price was $204,000. Today, a vacation home can be had for an appealingly low median price of $150,000.
Buyer confidence is also different today than it was before the recession. According to Urban Land Magazine, the perceived risk of buying a second home today is moderate to high. A decade ago, few second home buyers gave such risk a second thought. Yet spiking sales suggest buyers are still optimistic, even if they are a bit more cautious. 

Who Are Today's Buyers

These cautious yet optimistic buyers are a diverse group. A recent piece in the Fort Wayne Journal Gazette reports that baby boomer buyers are jumping into the market thanks to favorable price points, with beach resorts in the South and West being particularly appealing. However, the retirees aren't alone. In an Urban Land survey of Hawaii vacation homes, families with children at home represented the largest group of buyers, while buyers in their thirties were also well represented, making up 14 percent of sales.
Overall, today's vacation home buyers are taking up a big slice of the market. More than one out of five homes bought in 2014 was a vacation home, according to an NAR survey. The same survey found that today's typical second home buyer had a median household income of $94,380 and purchased a vacation property an average of 200 miles away from their primary residence. With 40 percent of the market, the South was the most popular place to buy, with vacation homes in the West, Northeast, and Midwest trailing behind. More than half of buyers went with a detached single-family home, and 40 percent opted for a beach home.

How Buyers Are Paying for Vacation Properties

When it comes to purchasing options, some buyers are choosing cash sales over financing. "Thirty percent of all vacation home sales [in 2014] were all-cash purchases," Jessica Lautz, director of surveys and communications for NAR, told the Journal Gazette. For buyers who financed, Lautz noted almost 50 percent made down payments of 30 percent or more.
However, an estimated 70 percent of buyers are financing their second homes. Urban Land Magazine's report found that even the wealthiest of buyers were financing vacation homes in order to take advantage of low interest rates.

How Second Home Financing Differs from First

For those readers considering a second home purchase with financing, it's worth pointing out second home financing differs somewhat from first home financing.
Notably, loan program options for a second home are more limited than for a primary residence. FHA loan programs, popular for the low down payment options they offer, aren't available — these are intended for primary residences only. That means conventional loans, which typically require higher down payments, are the main financing tool for second home buyers. With a conventional second home loan, buyers should also anticipate a higher interest rate and more stringent borrower requirements.
Vacation home buyers should be prepared to show a lender that they can handle the added debt, with mortgage payments for both a primary residence and a vacation home coming in below 28 percent of your pre-tax income. Lenders also want to see total monthly debts below 36 percent of pre-tax income. Investopedia notes vacation home borrowers may also need to meet higher credit requirements, with scores of 725 or 750, and some lenders may require a down payment of 30 percent or 35 percent, particularly if a second home purchase requires a jumbo loan.
However, one perk of financing your vacation home purchase is today's historically low interest rates. While a conventional or jumbo loan interest rate will be higher for a second home, it's still far below what a borrower would've paid before the recession.

What Other Options Vacation Home Buyers Should Consider 

Beyond the market and financing options, make sure the vacation home you pick suits your needs. Of course, each buyer's needs will be unique and different buyers will have different priorities. Here are some options to consider:
Detached home or condo? If you'd prefer a single-family home over a condo or row house, you're in good company. NAR found more than half of buyers, 54 percent, opted for a detached vacation home. Slightly more than a quarter chose a condo, while 18 percent chose a row house as their vacation property.
Beach or mountains? NAR's research found that 40 percent of vacation home buyers bought property near a beach in 2014. Seventeen percent opted for a home near the mountains. A buyer who enjoys hiking or boating should take a vacation home's locale into consideration. Which season you prefer to vacation in may also play a role in your choice. A ski resort home may not be the best pick if you prefer summer vacations.
City or country? Of course, it's also possible to buy very different beachfront or mountain properties. Consider Miami Beach versus Outer Banks, N.C., or Boulder, Co. versus the rural Appalachian Mountains. Urban Land reports 43 percent of vacation home purchases last year were in urban or resort areas, with the trend toward urban locations reportedly on the rise.
High insurance costs? Bankrate points out that a beautiful beachfront or lakefront home may come with significantly higher insurance costs due to the risk of flooding and storm damage. Bob Cabrera, a national consumer lending sales manager with Regions Mortgage, told Bankrate that it's become increasingly difficult and costly to get flood insurance in some coastal markets, a budgetary factor worth considering if you choose to go with a coastal home.
Personal use or rental use? Some vacation homes are strictly for vacations or family retreats — one in three according to NAR's survey. Other vacation home buyers may put their property to use as a rental when not in use. Bankrate notes that some states may impose higher property taxes for homes used as rental properties, and your ability to take mortgage interest deductions on your personal tax return may also be impacted.
Short-term or long-term ownership? Another important question to answer is how long you intend to own your vacation property. Buyers in the NAR survey reportedly planned to own their vacation homes for a median of six years. However, 19 percent said they wanted to use their vacation property as a primary residence at some point in the future.


Like any home purchase, buying a vacation home takes planning and research. With low interest rates and below-peak prices, now is a great time to buy. Finding a lender and real estate agent who are familiar with the unique circumstances of a vacation home purchase is a must, but with 20 percent of the market share now going to vacation home buyers, this shouldn't be too difficult. Make sure to prioritize what you’re looking for before jumping in, and work closely with your agent and lender to make sure the home you pick suits your needs.

Monday, November 2, 2015

Why Homeownership Is at a 48-Year Low

Can you count multiple friends or family members who, for whatever reason, just don't seem to be that interested in owning a home right now? If so, you're not alone. Homeownership is down. Way down, in fact.

Earlier this year, the U.S. homeownership level dipped down to a 48-year low. Just 63.4 percent of households owned their home in the second quarter. That's the lowest level since 1967, in records going back to 1965.
While a near fifty-year low may be shocking, it's important to point out we didn't get here overnight. As a recent Wall Street Journal graphic illustrates, homeownership peaked at 69.2 percent by the end of 2004, well before the housing bubble burst, and has been steadily declining ever since. And while the next question is "why?", there's no one easy answer. In this post, we'll take a closer look at some of the factors contributing to this declining homeownership rate, starting with the economy.

Wages and Jobs

When it comes to wages and job growth, the current economic picture has several sides. By August of this year, the latest jobs report was touting an unemployment rate of 5.3 percent — a much-appreciated seven-year low. Reuters speculated at the time that the numbers could bolster the case for a fall interest rate hike, though a hike didn't come to pass.
Yet unemployment is only part of the picture. The Wall Street Journal recently reported on the growth differences between high-, middle-, and low-wage jobs uncovered by Georgetown University's Center on Education and the Workforce. More than a million new high-wage jobs have been created since the recession. These are the jobs helping to fuel housing and economic booms in pocket markets across the country.
However, middle-wage jobs paint a different picture. According to the report, these jobs, with wages ranging from $32,000 to $53,000 a year, fell the most and have yet to recover all their losses. In many markets, first-time homebuyers would fall into this middle-wage job range.
These stats are reflected in worker sentiment. The MacArthur Foundation's 2015 Housing Matters Survey found 40 percent of Americans still felt the country was in the midst of a housing crisis. In follow-up calls, the Wall Street Journal reports many respondents suggested a higher minimum wage might help. Beyond just recession figures, such sentiment is also backed up by wage stagnation data, which hasn't shown notable improvement for a few decades.
The recession, small gains in middle-income jobs and overall wage stagnation don't account for the long-term decline of homeownership. The figure started falling before the bubble burst and the recession took hold. Homeownership climbed sharply beginning around 1995 for nearly a decade, despite middling wage growth. And the stark distinctions between job tiers after a recession is reportedly new, emerging after homeownership began to decline. Other factors appear to be at play. 

Price Rebounds

A fairly solid rebound of home prices may have also played a role. Home prices in June marked a 40-month climb nationally, rising 6.5 percent year-over-year. By August, a year-over-year price increase of 6.9 percent was reported by CoreLogic's Home Price Index. Currently, home values are only 6.3 percent below the index's April 2006 level, after falling and recovering double-digits in the recession and economic recovery. Meanwhile, the latest S&P/Case-Shiller Home Price Index shows Denver and Dallas home values above their pre-recession peaks.
Karen Krupsaw, vice president of real estate operations at Redfin, recently told the Wall Street Journal that buyers were "worried about too-high prices and are more cautious about making offers." That's especially true for buyers who may not be in strong financial situations due to the aforementioned jobs and wages setbacks. For these buyers, price may be a big reason they're not in the market, but it's hardly the only one.

Inventory Shortages and Building Cutbacks

Two factors driving the current years-long valuation increase is the slim inventory of existing homes and a lack of low-priced new construction. Anand Nallathambi, president and CEO of CoreLogic, singled out "supply constraints" as one of two factors that lead to "severe shortfalls" in affordable housing that may be pushing home prices up into 2016, and possibly beyond.
At a panel discussion earlier this summer, top economists for Redfin and Zillow voiced concerns that builders were neglecting the entry-level market when it came to new construction. The economists contended that spec building single-family homes is thought to be riskier now than before the recession, while a separate report found that new rules may be hampering new condo construction, a prime vehicle to homeownership for first-time buyers.
As finance blogger Bob Sullivan pointed out in August, a healthier housing market would provide a "wide spectrum" of housing options — including those for starter-home buyers. For now, it appears we're missing the lower end of that spectrum.

Rising Rents

CoreLogic's Nallathambi also mentioned a second factor leading to affordable housing shortfalls and lower homeownership — rising rental costs. Rising rents have been plaguing locations in the Bay Area, Los Angeles, and New York for some time, but the trend appears to be spreading. Even renters in cities like Denver, Atlanta, and Nashville are now feeling the heat.
And while some have posited that increasingly uncomfortable rents will spur more homeownership, that may remain difficult for Americans spending their down payment savings on rental increases and who lack other resources.
But even if all these factors weren't a problem, if more Americans could move into homeownership, would they want to right now? Isn't there a generational shift happening?

Generational Differences

Much digital ink has been spilled covering the quirks of the millennial generation over the last few years. Some of it can be dismissed as age-old "kids these days" critiques. However, there are some definite differences between Generation Y and their forebearers. It's frequently said that millennials, who now make up the largest segment of the U.S. workforce, are more into buying experiences than things. Car ownership among Gen Y has finally started to pick up, though millennials still drive less than their parents. Homeownership? That's a more nuanced picture that for now keeps evolving.


So which factor is responsible for U.S. homeownership's 48-year low? It's hard to say. Building starts are related to economic health and inventory shortages. Economic factors squeeze buyers from both sides, with rising rents and home prices locking some out of the market. Millennial sensibilities may also be a factor.

Whatever the cause for the current slowdown, it's hardly reason to lose hope. In many ways, 2015 has been a good year for real estate. The summer homebuying season was strong, home appreciation is helping current homeowners, and economic growth is indeed helping some segments of the population move into homeownership. Lastly, just because homeownership has declined to 1967 levels doesn't mean it can't or won't rebound to its 1970s, 1990s, or mid-2000s highs. It's climbed before and in all likelihood will do so again.

Tuesday, October 27, 2015

Why is Title Insurance Necessary During a Refinance?

If you're considering refinancing your home loan to take advantage of a lower rate or more favorable terms, it helps to know about the upfront costs. If you decide to refinance your home, even through the same lender that originated your current loan, you'll likely be expected to pay closing costs such as service fees, points, and title insurance fees.

What Is Title Insurance, Again?

Just what is title insurance? This can be a hard question to answer, even for people who've bought and sold several homes (and bought several title insurance policies along the way). This is partially because buying a home is a complex process. After a while, details of the purchase and its associated fees can start to blur together. Another reason is because title insurance differs from many other types of insurance.

When you purchase car insurance or health insurance, you're protecting yourself from a possible future negative event, like an accident or health problem. Car insurance requires the continuous payment of a premium to maintain coverage on the car, just as health insurance requires ongoing payment of a premium to protect against health issues. 

Title insurance works differently. When purchasing title insurance, you'll pay a one-time fee at closing for your title insurance policy. Compared to most other types of insurance, like auto and health, a title insurance policy comes at a significantly lower cost. That policy protects your investment, not from some future possible calamity, but from undiscovered past events which may otherwise jeopardize your ownership of the property. 

The title of your property is your proof of proper, legal ownership. With your home likely being one of the largest purchases you'll make in your lifetime, you certainly want to make sure you own the property you've paid for. 

This is where title insurance comes in. The two types of policies, the lender's policy and the owner's policy, provide protection to mortgage lenders and property owners, respectively, against unexpected problems affecting the title and ownership of the property.

Why Is It Necessary During a Refinance?

Title insurance protects a property investment at different points in the life of a property — when it's a new construction, when there is a property resale, and during refinance transactions. Each time a property changes hands, a new owner's policy can be purchased to protect the new owner's investment, but for transactions where a lender is involved, a title insurance lender's policy will always be required.

It's that last detail that explains why you'll need a new lender's policy with your home refinance. Rest assured, your lender isn't trying to pull one over on you. Even though it could be the same lender, the same property, and the same borrower (you) involved in the refinance as in the original loan, you must have title insurance to protect the lender's investment.

Whether it was six months or six years ago, a lot could have happened since you bought your home. New liens or legal judgements could have been placed on the property title and other title defects could have come to light. Your mortgage lender is able to protect its investment — and issue you a refinance loan — with much less risk, thanks to title insurance.

If you weren’t anticipating buying a new title insurance policy during refinancing, you’re not alone. Many homeowners are surprised by this requirement. That may have to do with common misunderstandings about what a home refinance is and isn't. A refinance loan isn't simply a revision to your initial loan agreement of either for a lower rate or different mortgage payment.

When you refinance your home, the original loan is paid off and a new refinance loan is originated. When the original loan is paid off, the original title insurance lender's policy goes with it. Without a new policy, the lender processing a refinance could be exposed to significant risk.

What About My Owner's Policy?

Here's the good news: If you purchased a title insurance owner's policy when you bought your home, that policy will remain in effect before, during, and after your refinance. These types of title insurance policies stay in force for as long as you or your heirs own the property. Unlike a lender's policy, your own title owner's policy doesn't just cover the value of your loan, it covers your whole investment in the property. So in case a title search doesn't turn up deed errors or omissions, examining records mistakes, forgeries, the existence of undisclosed heirs, or other problems, your owner's policy will still protect your property investment against these and other issues for as long as you own it.


While you may not have anticipated the added cost of a title insurance lender's policy when you decided to refinance, the purchase is a necessary requirement in order to complete your refinance. Refinance loans are new loans that require a new title insurance policy to protect the lender. Considering the significant amount of risk that would be assumed without a title insurance policy, the actual cost is significantly lower than you might expect. You may not have a choice about whether to purchase a new lender's policy, but you certainly can and should ask your lender about your options. You may even be able to save money depending on the refinance lender and title insurer you choose.

To get an even better understanding about the difference between a lender’s policy versus an owner’s policy of title insurance, click here.

Thursday, October 22, 2015

Pick-Up Day at Olson Park

Earlier this month, nearly one hundred team members from Title Source’s Pennsylvania office rolled up their sleeves and spent four hours in Olson Park cleaning up their mile and a quarter long trail. Team members grouped together to take on spreading new mulch, sanding and painting two bridges, planting bulbs and flowers, paving the way for a new trail and even climbing into the creek to remove tires and other debris.

Team members from the Coraopolis office have been volunteering at the trail on a regular basis for the past year and a half. Earlier this year, Vice President of Title Services Dan Studeny and Team Leader Tricia Somerville presented Moon Township with a donation to sponsor the trail.

Pick-Up Day in Olson Park was the largest volunteer event the office has put on and participated in to date. Director Kim Brown, had this to say about spending the day giving back to her community:

“The park cleanup helps the environment, the animals and the people who live in the community. We build relationships and bond with other teams and team members that we may not interact with on a daily basis. New team members, veteran team members, leaders and interns are all out in the community as one. If I had to sum it up in one word, I would say pride. It’s the pride in who we are as a Family of Companies, and the pride you feel when you look out and notice all of us working side by side, working together.”

Tuesday, October 13, 2015

How a Home's Surroundings Can Affect Its Value

When it comes to real estate values, it's all about location. In some cases, what's nearby can have as much effect on the value of a home as the qualities of the home itself. For homebuyers and investors, that's a lesson better learned sooner rather than later. But what kinds of amenities drive up home values? What local drawbacks could send values south, and by how much? In this post, we'll look at how to recognize an area's value-adding amenities as well as how to manage risks you may discover lurking next door to your dream home.

Value-Boosting Amenities

Most homebuyers are aware of the ways a location's perks can boost the value of a home. Top school districts are prized for boosting home values, weathering housing downturns and being advantageous when you're ready to sell.
High-end retail and specialty stores can boost values, too. A recent RealtyTrac analysis dove down further, finding property appreciation was slightly higher for homes near a Trader Joe's grocery than a Whole Foods. Even living within a half-mile of a 24-hour Wal-Mart is said to boost a home's value by as much as three percent.
A 2009 HouseLogic study found neighborhoods with good walkability could add anywhere from $4,000 to $34,000 for area homes, while a 2013 study also by HouseLogic found everything from golf courses to community gardens, professional sports arenas, and prime surfing spots could add significant value to a home.
Amenities like these tend to have a predictable — and positive — effect on property values. Natural surroundings and breathtaking views can also come at a premium price, yet nature also has the potential to be unpredictable in ways a high-end shopping district isn't.

When a Blessing Becomes a Curse

A lakefront cottage, a riverfront condo, a house in the hills. There's no question these types of homes command a premium price specifically for their desirable views and locations. Yet for homeowners and investors, it's important to remember such amenities do carry some risk.
Last month, the Associated Press broke the story of a worsening algae problem on St. Albans Bay in northwest Vermont. As a result, municipal authorities dropped the property valuations of several dozen lakefront homes by $50,000 each.
Occasionally, natural disasters can have even more serious effects on prices as well as the habitability of a home.

The Case of New Orleans After Katrina

It's been ten years since Hurricanes Katrina and Rita devastated New Orleans homes with unprecedented flooding. An estimated 112,000 occupied homes in low-lying areas in and around the city were severely devastated by the storms, according to a 2006 HUD analysis.
Surprisingly, the housing market didn't entirely go south following the storms. For homes on higher ground and those in areas that sustained minor damage, valuations actually increased. In the 12 months following the disaster, the average home sales price grew 14% to $225,000. In context, these homes were already in more desirable, elevated parts of the city, and — with a hundred thousand less fortunate residences left unlivable — demand rose above supply.
Making New Orleans a more complicated case, the city's patchwork assessment system complicated the process of determining just how much the disaster affected overall real estate values. However, the Times–Picayune does point out assessment values in the most damaged areas were lowered by as much as 70 to 80 percent, as both a reflection of the estimated $6 billion in damages sustained and in an attempt to aid recovery and redevelopment efforts. A Realtor Magazine feature from 2006 similarly found that local real estate sales persisted, albeit at depressed prices.

The Increasing Threat of Wildfires in the West

Further west, flooding may not be much of a concern, but wildfires increasingly are. A HousingWire report from 2013 claimed 1.2 million residential properties worth $189 billion scattered across 13 western states were at risk. The report came on the heels of a record-setting year of large wildfires. In 2012, 9.2 million acres — an area the size of Maryland — was scorched by 55,505 fires.
Experts first realized the danger posed by backcountry fires to populated areas back in 2003. That's the year the San Diego-area Cedar Fire burned more than 273,000 acres, spreading as fast as two acres a second, according to the San Diego Union–Tribune. The Cedar Fire spread westward from the Cleveland National Forest into a half-dozen picturesque hillside communities of Northeast San Diego. A staggering 2,232 homes were destroyed, and 15 lives lost. Damages were estimated at $2 billion.
Still, many residents were eager to return to the hills and rebuild. A USA Today report contended such wildfires haven't slowed a decades-long trend of growing populations in fire-prone areas. In fact, the paper noted in a 2004 report that 40 to 55 percent of homes in Washington, Oregon and California are situated in fire-risk areas. Los Angeles topped HousingWire's list of fire-prone metro areas, with 60,000 single-family homes — valued at $8.3 billion — in high-risk or very high-risk locations.
Housing sale and price data also indicate wildfires aren't slowing down the market. Trulia data for El Cajon, Julian, Lakeside and Scripps Ranch — four of the San Diego communities affected by the Cedar Fire — appears to show little effect for either median sales price or sales volume following the 2003 wildfire.

Managing the Risks Posed by a Home's Surroundings

Wherever your next dream home is located, it's likely the neighborhood will have a mixture of both positives and negatives. Knowing, managing and mitigating the risks posed by your surroundings can help you better enjoy your new home. Here are some tips to get you started.

Crunch the Data

Whether you're considering homes in a particular neighborhood or wanting to know more about the risks facing your current home, knowledge is power. Data firm CoreLogic produces a number of annual risk reports, from fire hazards to storm surges, charting the level of natural hazard risks for regions and individual properties across the country.

Get a Risk Assessment

While you can learn a lot on your own, some buyers may want to bring in an expert. For a thorough examination of a specific property, it's possible to get a "Records Search and Risk Assessment" (RSRA) from an environmental consultant. This can be particularly valuable for investors planning on the commercial use of a particular property.

Explore Insurance Options 

For your current home, take a closer look at your homeowner's insurance policy to see what it covers and what it doesn't. Most general policies offer modest coverage for home damage caused by inclement weather, but not for severe storm damage. However, you can purchase separate policy coverage for everything from earthquakes to volcanoes. Be aware, though –– if your dream home is near an area that experienced a disaster, even if your home was unaffected, your premium could rise significantly.

Consider Community Involvement

In the case of the Cedar Fire, a number of homes were saved by state building regulations and homeowner association brush-clearing policies. In Colorado, another state with elevated fire risks, USA Today reports that fewer policies are in place to minimize risks. No matter the type of natural hazard risk, steps can be taken to mitigate risks for individual properties and their communities. Getting involved in local discussions could help reduce the risk posed to your home.
In the end, no home purchase comes without some mix of benefits and risks. Understanding the positives and negatives that affect a home's value will help you make an informed decision about your real estate purchase and know what steps to take to minimize your exposure to any risks that exist.

Tuesday, October 6, 2015

Title Source Hosts Detroit Technology Conference “Data in the D”

Considering that Title Source is the largest independent provider of title insurance, property valuations and settlement services in the nation, it may come as a surprise to hear the company’s CEO, Jeff Eisenshtadt, state that title insurance is not the business they’re in.

“That might be the industry we’re in,” Eisenshtadt said. “But that’s not the business we’re in. We’re in the business of data, documents and dollars.”
The statement was made during Eisenshtadt’s opening address to attendees at Data in the D – a Detroit technology conference hosted by Title Source on September 18th. The event attracted over 130 registrants to the One Woodward Building in downtown Detroit, Michigan, where it was held. The guests were primarily college students, professors and IT professionals from a wide range of universities and businesses, all sharing a common interest in technology.

The conference’s central theme was big data – a term used in the IT world to describe the increasingly large and complex data sets that are being gathered and analyzed. Speakers delivered presentations on the importance of data analytics, growing trends associated with big data and predictions of what’s to come for the future.

Present among the event’s guests were numerous team members from within the Quicken Loans Family of Companies, including Title Source. Bryan Wang, leader of the Title Source Data Science team, spoke on the subject of his team’s work with data analytics and their role within the business.

“The conference was a great learning opportunity for our team members,” said Wang. “It fostered new ideas from highly trained experts, and inspired us to think differently and solve business problems in new ways.”
A large turnout, coupled with the positive feedback gathered from attendees after the conference, have opened the possibility for Title Source to turn Data in the D into an annual event.

“I look forward to the growing relationship between Title Source and academics,” said Wang. “Our connections to the academic community will provide the Data Science team with opportunities to continue leveraging the power of the latest big data analytics and improving business performance”