Here’s a new word to add to your vocabulary: “surban”

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Reston Town Center, Virginia

A new term has been coined and trademarked by John Burns Real Estate Consulting, a company that provides research and consulting services relating to the housing market. The term is “surban”, and it is defined as “a suburban area that has the feel of urban, with walkability to great retail from a house or apartment.”

Even though the company trademarked the term, its website indicates everyone has permission to use the word without the trademark. The company just wanted credit for coining the phrase. I don’t see any examples in South Carolina from a list compiled by the company, not any in the South, for that matter.

Millennials are apparently the impetus for the new term as they look for a compromise between city living and suburban space. They typically enjoy the choices of the city: restaurants, bars, shops music, ball games and movies. But when they start pairing up and having children, they, like their predecessors, began seeking more room and lower housing costs. Not only are millennials raising families, they are often saddled with student loan debt and unable to afford the costs of city living. But they don’t want the strip malls and chain restaurants of the suburbs.

The compromise? A blended type of neighborhood that combines the energy and walkability of the city with the space and affordability of the suburbs. Millennials want pubs, microbreweries and nice restaurants. They want retail shopping, but not the big box variety. They prefer boutiques with unique choices.

Examples of surban areas, according to John Burns Real Estate Consulting, include:

  • Reston Town Center in Washington, DC, suburb of Reston, Virginia
  • Downtown Naperville, Illinois, in the suburbs of Chicago
  • Old Town Pasadena, California, in the suburbs of Los Angeles
  • A-Town in Anaheim, California, in a neighborhood around the Angels Major League Baseball park
  • Legacy Town Center in Plano, Texas, in the suburbs of Dallas
  • Santana Row in San Jose, California
  • City Centre in Houston, Texas
  • Downtown Tempe, Arizona, in the suburbs of Phoenix
  • Larkspur, California, north of San Francisco
  • Geneva, Illinois, in the suburbs of Chicago

Maybe there are examples in Atlanta, Charlotte, or even Charleston, Greenville or Columbia. Let me know if you know of any!

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Good news during Thanksgiving week for real estate agents…and us!

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Many real estate lawyers rely on their local real estate agent friends for the bulk of their residential closing business. When business is good for them, it’s good for us! Two recent stories in national publications are good signs for all of us.

First, an article from Housing Wire dated November 12, which you can read here, indicates more Americans are using real estate agents than ever before, including Millennials. The article cites a Harris Insights housing consumer study, which shows a full 90% of consumers use real estate agents to buy and sell their homes. These numbers are higher than those shown in previous similar studies, up 5 points from 2014 and 9 points from 2001.

We have all assumed that Millennials, ages 18 – 34, are replacing real estate agents with technology, but this study found the 91% of them use real estate agents in their transactions. According to this article, that number is higher among the Gen X group, ages 35 – 44, at 94%.

Surprising to me, this study indicates the older generations are more likely to cut real estate agents out of their transactions. Only 81% of consumers ages 55 and older indicate they use real estate agents in their transactions. And, apparently, more educated consumers enjoy the use of real estate agents in buying and selling their homes. High school graduates reported 83% use, while college educated consumers reported 94%. Higher income earners were also more likely to use real estate agents (98% of $75,000 – $100,000 earners vs. 79% of $50,000 or less earners.)

Read the article and the underlying study for more insight.

The second article that caught my attention is from Realtor Magazine on November 7. This article, entitled “Big Night of Midterm Wins for Realtors®”, reported that candidates across the country at federal, state and local levels won elections with the promise to benefit the real estate industry’s goals of strong communities and healthy residential and commercial property markets.

This article reports that the National Association of Realtors® supported hundreds of candidates they considered to be real estate champions, regardless of party affiliations.

It’s budget time for me, and our company is predicting a slight softening of residential and commercial markets in 2019. This positive news for our real estate agent partners makes me feel better about the year to come!

Here’s wishing everyone a very happy Thanksgiving with family and friends!

Thirty-year fixed-rate mortgages

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Are they still the most logical choice for all buyers?

Is the mortgage industry due for a facelift?

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I recently saw an interesting article from MReport via American Land Title’s Newsletter dated February 26, entitled, “A Mortgage Best Fit; Lenders are bypassing the 30-year fixed-rate mortgage in favor of loans that are tailored to specific borrower niches”. I recommend that all dirt lawyers read this article to understand that the mortgages you may be closing in the future may not be the same as the mortgages you closed in the past. You can read the article in its entirety here.

My husband and I built a house and closed a mortgage loan in 2011, and, although we told the lender and real estate agent we intended to pay the loan off quickly, both insisted on the old-fashioned 30-year fixed rate mortgage with a twenty-percent down payment. The lender didn’t even offer alternatives. In 2011, the housing market was just returning from the financial debacle that began in 2007, so everyone was being extremely careful. (I remember being questioned about why our income tax picture had changed in the years leading up to 2011 and having to write a letter explaining that children grow up and leave home.) I’m not sure we would be approached in the same way today, based on this article.

First-time buyers often choose 30-year mortgages because no one explains other options and because it’s the product their parents understand and recommend. The traditional mortgage is generally the safest option because of its reliable, consistent monthly payment. Interest rates have been low for many years now, and this fact also supports the wide-spread use of the traditional mortgage. Why risk a variable rate when the fixed rate is low?

This article suggests, however, that millennials and other first-time buyers may now be more inclined to select shorter-term and adjustable-rate options. Someone who is just entering into the housing market may envision living in their starter home for only a few years and may prefer an adjustable rate mortgage to take advantage of the low interest rate up front. This article suggests that millennials may be saddled with student debt and may be a more transient group, so they don’t want to commit to anything that lasts thirty years. Few envision themselves working for a single company for any length of time. They believe they must change jobs to increase their incomes. This article also suggests that millennials may not be loyal to a geographic area.

In addition to variable rate mortgages, this article suggests the concept of the equity-sharing mortgage, where an investor shares in the appreciation in the home value in exchange for down payment assistance or lower payments. These new-fangled products may enable low- and moderate- income borrowers to enter the housing market.

Some lenders are recognizing that these trends mean that the entire underwriting process needs to be reexamined to accommodate the millennial market. And they also recognize that veterans may have difficulty getting the service and products they need to buy homes because VA loans are a little more expensive for lenders to close. More education for veterans and training for loan officers may be needed to accommodate the veteran population. Online and mobile-friendly mortgages are also likely to change the face of the mortgage industry in the future.