Does National Wage Growth Improve Housing Affordability?

First American’s proprietary Real House Price Index (RHPI) looks at October 2016 data and includes analysis from First American Chief Economist Mark Fleming on the impact of rising mortgage rates on consumer house buying power and affordability heading in to 2017.

“While mortgage rates above 4 percent reduce affordability, accelerating wage growth and the expected slowdown in unadjusted price appreciation are both beneficial for affordability.”

“While we have yet to see the impact of the ‘Trump Bump’ and Yellen’s increase in mortgage rates on unadjusted house prices, I expect there to be an impact early next year. In 2013, we saw the significant slowing effect the ‘taper-tantrum’ had on unadjusted house prices. We expect unadjusted prices to respond similarly to the recent increases in mortgage rates, though to a lesser degree this time,” said Fleming. “While mortgage rates above 4 percent reduce affordability, accelerating wage growth and the expected slowdown in unadjusted price appreciation are both beneficial for affordability. I expect the net effect on consumer house-buying power to remain modest.”

The RHPI offers an alternative view of the change over time of house prices at the national, state and metropolitan area level. The traditional perspective on house prices is fixated on the actual prices and the changes in those prices, which overlooks what really matters to potential buyers - their purchasing power, or how much they can afford to buy. The RHPI adjusts prices for purchasing power by considering how income levels and interest rates influence the amount one can borrow.

For the original blog post, check out First American's Economic Blog Center. For more information on how Cambridge Title Company can help you with your title or lender policy needs, please contact us via phone at 224-330-1886 or via email at info@cambridgetitleco.com.

How is China Impacting the United States Real Estate Market?

In a recent Forbes article, it was reported that the Chinese State Council is now requiring it's government bodies to sign off on all foreign investments over $10 billion or on investments over $1 billion if the purchase is considered to be outside of the investor's core business.

In addition, the State Council also mandates that a halt on state-owned real estate purchases exceeding $1 billion. This decision was primarily sparked by the weakening of the Chinese currency, the yuan renminbi. The renminbi's depreciation is primarily attributed to a large capital outflow from China.

While these restrictions aren't said to have a major impact on large commercial real estate investors. However, "the impact for privately-held companies, smaller companies and wealthy buyers is likely to be a bit more noticeable". These effects have been seen in the purchase of pricier American real estate and the increased difficulty to transfer money from China to the United States.

Year-End Tax Tips for Small Business Owners

With 2017 on horizon, tax season is soon to follow. For business owners, paying taxes is rarely an enjoyable process, so Cambridge Title Company would like to introduce a few tips to alleviate any unnecessary headaches that the process creates.

Write Off Business Equipment

When acting as a business owner, you can take advantage of IRS-recommended write-offs for business-related equipment which was purchased and used within the year. However, because of depreciation, it may be advantageous for write-offs to take place over multiple years, as opposed to just the one.

Write Off Overhead Costs

In addition to writing off equipment, overhead costs can count towards tax deductions as well. These include regular payments, such as rent, electricity, telecommunication services, and other utilities. The best part is that this is still applicable if you pay in advance.

Defer Payments

When it comes to billing clients, you could potentially delay payment till after the new year. By doing so, you won’t have to pay taxes on said payment till the following year. This is useful when money is tight.

Contribute Towards Retirement

When planning for the long-term, keeping retirement top-of-mind is never a bad idea. Money deferred towards a qualified retirement plan is generally not taxable until money is withdrawn down the line. If you currently have a plan, consider dedicating extra finances towards it. If not, the end of the year is always a great time to start.

Take Care of Bad Debts

Nearly every business owner has a client or two, who fails to make payments. If you have evidence of efforts to retrieve a bad debt (while remaining unable to do so), you can write it off on your taxes as well.

While some of the aforementioned tips are easy to implement into tax payments, others mandate additional preparation. In either case, once tax season arrives, you’ll be glad you went the extra mile.

Chicago Real Estate Market in Question for 2017

The real estate market has been questionable throughout the United States since the crash of the housing market in 2007 and 2008. That said, some markets haven't recovered to this day.

Recently, Realtor.com released their 2017 National Housing Forecast report. The report illustrated five key trends for the coming year:

1. The housing market will be dominated by baby boomers and millennials.
2. Millennials will display a continued attraction to the Midwest.
3. Price appreciation will reach a slowdown.
4. Fewer homes will hit the market.
5. The West will continually head the United States in both property sales and prices.

Most importantly, Realtor.com listed the Chicago-Naperville-Elgin, Ill.-Ind.-Wis. at 100 out of 100 with the lowest price and sales increases at 1.95% and 2.27%, respectively. To find out how these trends may affect you, or to discuss your property's closing, reach out to us at Cambridge Title Company via phone at 224-330-1886 or email at info@cambridgetitleco.com.

Beware Cyber-Fraud Targeting Homeowners This Holiday Season

In a recent report by ABC 7, homeowners, Jimmy and Jackie Moore, fell victim to the latest cyber-fraud scheme, losing everything. A day prior to their home's closing, a new email was sent to the homeowners' real estate attorney. This email indicated that the attorney was to now use a different bank and account number when wiring over the homeowners' deposit and closing costs.

Although they verified the change with their real estate attorney, it was later revealed that the attorney had never contacted the title company to do the same. Thus, the Moore's faced over six-figures in damages. Once ABC 7's team joined the Moore's effort to reclaim their lost money, they managed to return just a little over 25%. This leaves the attorney and the title company to split the difference on the remaining payout.

But fortunately, instances like this one can be easily avoided. Cambridge Title Company works closely with its legal partners, ensuring clear-cut communication throughout the process of closing homes. For additional information on a title company you can trust, please contact Cambridge Title Company by calling 224-330-1886 or by sending an email to info@cambridgetitleco.com.