CLARK: Future Changes

The Consumer Financial Protection Bureau (CFPB) last week announced a 60-day postponement to the rule of combining two mortgage disclosures. The revised effective date of this disclosure is now October 1, 2015. This is the rule which would create an “integrated disclosure” by combining the Truth in Lending Act requirements with those of the Real Estate Settlement Procedures Act.

The delay is being attributed to an “administrative error.” CFPB also realized the additional time would better address the interests of many consumers and providers. If the new rule had been instituted August 1, 2015 as planned, it would have affected many households getting ready for the new school year.

As home prices increase, more home owners are improving their equity positions; and will be more inclined to list their homes for sale. According to Corelogic, approximately 90% of residential properties with a mortgage have equity. This is a positive economic development as it will fuel consumption and investment expenditures. Corelogic forecasts: “The remaining homeowners with negative equity will see their home values rising in the near future while they pay down principal on their amortizing mortgage loan.”

The following states have the highest share of properties with homeowners having negative equity as of the first quarter of this year: Nevada (23.1%), Florida (21.2%), Illinois (16.8%), Arizona (16.8%) and Rhode Island (15.7%). The following states had the highest share of properties with homeowners having positive equity as of the first quarter of this year: Texas (97.7%), Hawaii (96.9%), Alaska (96.8%), Montana (96.8%) and North Dakota (96.2%). Overall the largest%age of positive-equity properties are centered at the higher price points of the market according to Corelogic.

Since the peak of the real estate market, baby boomers have bolstered the real estate market by continuing to purchase homes even through the financial crisis. According to a recent Harvard’s Joint Center for Housing Studies analysis, home ownership rates grew 2.5% between 1994 and 2014 for those ages 65 and above. However, home ownership rates for households between 35 and 44 decreased almost ten% since 2004; and households under the age of 35 decreased 7.3%. Households with those 65 years of age or older represented nearly 36% of household growth between 1994 and 2014. This market segment represented 70% of the home owners in 1994 and has remained at that level.

Baby boomers are down-sizing to smaller homes; and, in many cases, purchasing other homes to enjoy their interests. Many of the baby boomers larger homes are proving difficult to sell. They are too large for the millennials, not in sought after neighborhoods, require updating or otherwise do not meet the needs of the younger generation. In Greenwich, we continue to see buyers looking for properties close to town whether they are downsizing or first-time buyers.

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected]

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