Demand will remain high and the cost of homebuying will increase for homebuyers in the Washington, DC metro area.
LIMITED HOUSING INVENTORY is the biggest driver of the DC region’s housing market, says Federal Title & Escrow Company’s founder, and as long as supply is limited the market in 2014 will look a lot like last year.
Houses with multiple offers selling for tens of thousands dollars above asking price in some cases – it happened frequently enough in 2013 that the editors at Urban Turf created a new column called Above Asking.
“You’ve got a migration of folks from all over the country trying to crack the DC [housing] market,” said Todd Ewing, whose company handled more than 1,400 purchase closings in 2013. “That trend will continue.”
Higher interest rates should not affect the region
Some real estate experts are predicting mortgage rates in 2014 will rise above 5% for the first time since 2010, but the increase is not expected to greatly impact the DC region’s housing market.
Homeowners who were planning to refinance have already done so by now, Ewing said, and the federal government continues to attract new people to the region who are in need of housing, driving demand.
“There are still homebuyers out there looking, most two-income households,” said Ewing, who’s been handling real estate settlements and observing market cycles since the mid-90s. “I don’t see a rising interest rate having much of an impact on whether a homebuyer moves forward.”
Increased oversight from CFBP will increase closing costs
Expect the Consumer Financial Protection Bureau (created through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) to crack down on enforcement of the Real Estate Settlement Procedure Act, a piece of legislation from the 1970s meant to protect consumers from unethical business practices, including excessive fees.
“If the CFPB does what its charter sets forth, such as the enforcement of anti-kickback laws, and remains vigilant of those in the industry who engage in such practices at the expense of the consumer, then this crack down could ultimately be beneficial to the consumer,” Ewing said.
But any benefit to the consumer will come at a price that will most likely get passed along to the consumer, as additional training, staffing and implementation new technology will add to the cost conducting a real estate closing.
Phasing out the HUD-1 Settlement Statement
The HUD-1 Settlement Statement will become extinct in August 2015, and the Closing Disclosure will take its place, according to a ruling of the CFPB last November. The new document is five pages and will essentially combine the Truth in Lending Disclosure with the HUD-1.
This year title companies will be looking to completely overhaul their software systems in preparation of change, which may lead to added costs for the consumer.
Federal Title anticipated the CFPB’s ruling on the Closing Disclosure and incorporated it into Close It!, an iOS and Web app that accurately determines how much cash will cross the closing table during any given real estate settlement.
Tech developments from Federal Title
Speaking of technological developments at Federal Title, Ewing who has been pleased with the initial performance of the iOS app said he plans to announce the release of a new product later this year. Since launching in May 2013, Close It! has garnered nearly 10,000 downloads and the tablet version was nominated for a Tabby Award last fall, Ewing said.
“It’s a popular tool with agents and lenders, and it’s way ahead of its time in that it produces a Closing Disclosure,” Ewing said. “Going forward we intend to keep on innovating, and we’re excited to roll out something new for real estate professionals [later this year].”