M. Dean Vincent: Owners appear ready to sell

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A recent national poll shows a record high 77 percent of Americans believe now is a good time to sell a house while the number of people who think now is the time to buy continues to decline.

That’s called a market shift.

The survey, conducted by the National Association of Realtors, also found that a majority of consumers believe prices have and will continue to rise.

Half of all Americans strongly believe now is a good time to sell—compared to 46 percent last quarter—while 27 percent moderately believe this is the right time.

Respondents in the Western states are the most likely to think now is a good time, 85 percent, as are those who currently own a home, 82 percent. Only 22 percent believe that now is not a good time to sell, down from 29 percent in the second quarter.

Optimism that now is a good time to buy has declined slightly from last quarter. Sixty-three percent of respondents either strongly or moderately believe that now is a good time buy compared to 68 percent last quarter.

Among renters, positive feelings about purchasing continue to fall, dropping from 49 percent in the second quarter to 45 percent this quarter.

Optimism is highest among older U.S. households, 65 or over, and those with a household income of more than $100,000 a year, 70 and 68 percent, respectively.

Several consecutive years of strong home price growth are enticing homeowners to consider selling.

“Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast price gains could be coming to an end,” said Lawrence Yun, N.A. R. chief economist commenting on the third-quarter Housing Opportunities and Market Experience survey. “Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market.”

Respondents were also asked about their view of home prices in their neighborhoods.

Seventy percent believe that home prices have gone up in their area in the last 12 months, and will continue to increase in their communities in the next six months.

Reverse Mortgages Get New Rules
The Federal Housing Administration recently announced that it would require lenders originating new Home Equity Conversion Mortgages, commonly referred to as reverse mortgages, to provide a second property appraisal under certain circumstances.

FHA is instructing lenders to provide a second independent property appraisal in cases where FHA determines there may be inflated property valuations.

FHA’s new requirement takes effect for case numbers assigned on or after Oct. 1 through Sept. 30, 2019. FHA will periodically review this guidance and, based on the results, may renew these requirements beyond fiscal year 2019. FHA will perform a risk assessment of appraisals submitted for use in new HECM originations.

Based on the outcome of that assessment, FHA may require a second appraisal be obtained prior to approving the reverse mortgage for an insurance endorsement.

Under the new policy, lenders must not approve or close a HECM before FHA has performed the collateral risk assessment and, if required, a second appraisal is obtained.

Where a second appraisal is required by FHA, lenders must use the lower value of the two appraisals.

The appraisal validation policy announced today will further reduce risks to FHA’s Mutual Mortgage Insurance Fund and protect the health of the HECM program. The financial soundness of FHA’s reverse mortgage program is contingent on an accurate determination of a property’s value and condition.

The property value is used to determine the amount of equity that is available to the borrower and it is also used by FHA to determine the amount of insurance benefits available to a mortgagee.

M. Dean Vincent is the 2018 chairman of the Santa Clarita Valley Division of the 10,300-member Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty-related professionals.

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