Pending Home Sales, the Definition of Home Value, Occupancy Fraud & Affordable Housing After College

How is the definition of home value changing for buyers?

Is there a reason why pending home sales and existing home sales diverged in April?

Get answers to these questions by listening to this week’s Ilyce Glink Show. You can click the audio link below to listen to the full show, or download the podcast via iTunes.

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On this week’s show I talk to two guests: Gino Blefari, CEO of HSF Affiliates, and Tim Coyle, Senior Director of Financial Services and Global Real Estate for LexisNexis.

More About This Show

Pending Home Sales Hit Nine-Year High [1:05]
The National Association of Realtors Pending Home Sales Index continued its upward trend in April.

The pending home sales index (PHSI) includes existing homes with signed contracts that haven’t completed the closing process. Homebuyers and sellers generally complete the closing process within one to two months after a purchase contract is signed. However, sometimes a pending sale fails to make it to closing. For example, a homebuyer can renege if financing falls through or an inspection turns up something unexpected.

Generally, the PHSI is a pretty solid predictor of existing home sales one or two months into the future. But April’s existing home sales numbers failed to live up to the expectation created by February and March’s pending home sales numbers.

Location, Location… Investment?: Changing the Definition of Home Value [3:38]
Homeowners are perceiving home value in some new ways, but homeownership is primarily still about location and making the right investment.

I discuss the results from the annual Berkshire Hathaway Homeowner Sentiment Survey with Gino Blefari. He is the CEO of HSF Affiliates, which manages the Berkshire Hathaway HomeServices brand, as well as Prudential Real Estate and Real Living Real Estate. According to the survey, the definition of home value is evolving as Millennials continue moving into the housing market, but Millennials are also adjusting their homeownership goals in ways that reflect more traditional motives as they become homeowners themselves.

I also ask Gino about the explosive growth that the Berkshire Hathaway HomeServices brand is currently experiencing and what plans he has for continuing that growth.

Occupancy Fraud on the Rise [17:19]
There are a lot of ways to commit mortgage fraud. But occupancy fraud is among the hardest types for lenders to prevent.

So what is occupancy fraud? If you sign a mortgage contract stating that you intend to live in a new home as your primary residence when in fact you intend to use it as an investment property, then you’ve just committed occupancy mortgage fraud. And it’s easy to see why people do it. It’s much cheaper to finance a personal residence than it is to get a mortgage on an investment property.

I talk with Tim Coyle, Senior Director of Financial Services and Global Real Estate for the risk solutions business of LexisNexis. He’s also the co-author of LexisNexis’s annual Mortgage Fraud Report, and he’s got some great insight into the entire universe of mortgage fraud, including the swift increase in occupancy fraud cases nationally.

Where to Find Affordable Housing After Graduation [35:06]
When new college graduates head off to start their first real jobs, they face a dauntingly small market for affordable apartments in every major city.

Trulia’s Housing Economist, Ralph McLaughlin, crunched the numbers recently to find out just how difficult it is for a new college graduate to find an affordable apartment in each of the 25 largest U.S. cities. His analysis takes into account median earnings out of college, which vary considerably by city, and compares the average monthly income for a new college graduate in each city to the cost to rent an apartment in the same market. If the cost to rent an apartment including renter’s insurance is less than 31 percent of a monthly paycheck, then the apartment is considered affordable.

So which city is the most affordable for a new college graduate starting his or her first job?

 

If you have any questions about this show or in general, email me at questions@thinkglink.com.

Click the audio link below to listen to the full Ilyce Glink Show.

Thanks for listening!


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About Ilyce Glink

Author of 13 books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask. Writer of the nationally syndicated column, “Real Estate Matters.” Top-rated radio host in Atlanta. Writer for CBS MoneyWatch.com. Managing editor of the Equifax Personal Finance Blog.
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