Hurricane Season, Record Sales, & Positive Equity
Recent flooding in Maryland and New Jersey were a reminder of how Mother Nature can really mess up your day.
According to FEMA, the National Flood Insurance Program (NFIP) was established to reduce the impact of flooding by providing affordable insurance to homeowners and by encouraging communities to adopt and enforce floodplain management. Not a bad plan. But like so many other federal programs, something went awry.
The funding for the NFIP is set to expire on July 31st, and by its own account is about $1.4B in the hole. Not a great place to be as we enter this year’s hurricane season.
Sure, everyone that has coverage in place would eventually have their losses covered — but those buying and selling this July could see some home sales conditioned on having private flood insurance in place. Others might not close without the NFIP. While Congress will likely come through with another short term funding package, it is really time for a comprehensive long term solution.
In other news, Trulia is reporting that in April 2018 it took just 64 days from listing to closing to sell the average home. That is a record and 9 days faster than a year ago. All great news for home sellers, real estate professionals, and mortgage lenders.
While the exact impact of Embrace’s Approved to Move™ program on shaving days to closing could not be measured, there are some much less positive factors driving the change and impacting buyers. While sales and inventory constraints have driven home prices up, there are still about 2.5 million borrowers or 4.7% of all homeowners that are still underwater — but that is down dramatically in the first quarter of 2018. In that time period, 84,000 borrowers regained a positive equity position. If that trend continues, that is a fair number of potential home sellers to help alleviate some of inventory constraints in many areas.
When the economy is good, if affordable, many in a negative equity position just hunker down. With the change in equity, some may be willing to move on to plans they had put off. While it won’t solve the inventory problem, it could help.