Brexit and the U.S. Real Estate Market

A major topic in the recent media is Britain’s controversial decision to leave the European Union. The referendum, which was announced on June 24, sent a shockwave throughout the global economy.

But how does this impact the real estate market here in the United States?

When the vote was announced, stocks plummeted to their lowest rate in the past year, but recovered after a few days.  U.S. real estate, however, seems to be holding up amid the chaos. In fact, some sources claim that Brexit could actually benefit the national real estate market.

To start, mortgage rates are historically low at 3.32% for a 30-year fixed rate and 2.62% for a 15-year fixed rate. After the announcement, the Federal Reserve decided not to raise interest rates, and experts claim that there is no likely plan to do so at the July 26-27 meeting. Lawrence Yun, chief economist for the National Association of Realtors, claims that these lower rates “could provide a boost for lower-income U.S. buyers,” which could mean good news for millennials and other groups struggling to enter the market. These low interest rates also present a golden opportunity for current mortgage holders to refinance.

Several sources also speculate that the U.S. should see an influx of foreign investors moving their capital into U.S. real estate in response to the destabilization of the British and European markets. This could produce mixed results. On one hand, new infusions of capital could revitalize metro centers like New York and San Francisco, improving the value of properties including office spaces, hotels, and rentals. However, sources also indicate that the influx in foreign investors would drive up commercial real estate prices, as well as rent prices as investors turn their residential purchases into rental properties.

Overall, most sources agree that we shouldn’t experience the same turmoil as Britain and Europe in the real estate sector. The stock market, on the other hand, has seen some turbulence as a result of the vote, which could have a negative impact on homeowners with investments. As always, the process of buying a home and opening a mortgage should be treated thoughtfully and given careful weight. In lieu of the low interest rates, buyers are advised to carefully weigh their options and consider their short- and long-term financial situations before purchasing.

Read the article covering Register Ashe's Release and Forecast for FY16 written by Jim Kinney of The Republican

Mortgage foreclosures up in Pioneer Valley, 42% increase in Hampden County

By Jim Kinney | jkinney@repub.com 
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on July 21, 2016 at 6:51 AM

MORTGAGE FORECLOSURE

SPRINGFIELD — The number of completed mortgage foreclosures in Hampden County was up 42 percent for the fiscal year just completed, according to statistics released Wednesday by Hampden County Register of Deeds Donald E. Ashe.

There were 629 mortgage foreclosures completed in Hampden County in fiscal 2016, meaning from July 1, 2015, through June 30, 2016. That is compared with 442 completed foreclosures in fiscal 2015, which was from July 2014 through the end of June 2015.

There are likely more foreclosures on the horizon as well. Foreclosure orders of notice, a document filed in the early stages of a mortgage foreclosure, are up 41 percent from 942 in fiscal 2015 to 1,329 in fiscal 2016.

More foreclosures may be in indication, ironically, that the real estate market is improving, Ashe said. For years banks held off on foreclosing on loans even if borrowers were in arrears. One reason was that state and federal regulations were changing. 

Another reason was that banks were not sure they would be be able to find buyers once they took control of the homes, Ashe said. Now, with real estate sales up, bankers know there will be buyers.

"Will there be more foreclosures? Sure," Ashe said. "One other reason is that, while the unemployment rate for Hampden County is 5.2 percent, many of these jobs don't pay as well as the jobs that people lost in the recession. A lot of people are not making the same kind of money they made when they got their mortgage."

Overall, buyers spent nearly $1.39 billion on Hampden County real estate during the fiscal year. That figure includes housing, commercial property and vacant land. It's a 5.3 percent increase from the $1.32 billion spent in fiscal 2015.

That 2015 figure was up 14 percent compared with fiscal 2014, largely because of the $28.7 million MGM Springfield spent on real estate in Springfield's South End in the second half of calendar year 2014.

In neighboring counties:

Hampshire County: Completed foreclosures were up 50.7 percent to 113 for fiscal 2016 from 75 in fiscal 2015, according to Beth Callahan of the Hampshire County Registry of Deeds. A year ago, foreclosures were up 25 percent from 60 in fiscal 2014 to 75 in fiscal 2015.

The total amount spent on all real estate in Hampshire County in fiscal 2016 was $652.3 million. That was a 12.9 percent increase from $578 million in fiscal 2015. That $578 million itself was a 16 percent increase  from $497 million in fiscal 2014.

Franklin County:  Completed foreclosures were up 66.1 percent to 103 for fiscal 2016 from 62 in fiscal 2015, according to Jennifer A. Wood, deputy assistant register in Franklin County. Last year, they were up 5.1 percent from 59 in fiscal 2014.

The total amount spent on Franklin County real estate in fiscal 2016 was $241.4 million. That was a 4.7 percent decrease from the $253 million spent on Franklin County real estate in fiscal 2015. Last year, that amount was up 33.4 percent from $190 million in fiscal 2014.

In the forecast part of his report, Ashe said the real estate market's future in large part depends on millennials. As the largest generation in history, they could have a big impact.

But they are delaying the purchase of their first homes, pushing the average age of a new home buyer up to 31 years of age, the highest its been in years, Ashe said.

"More and more 18- to 35-year-olds are choosing to rent or cohabit with their
parents to save money, a result of a deadly combination of low wages, high education costs and student loan debt, and increased housing prices. Though the volume of millennial homeowners is still low for their population size and capability, it is expected that they will make a significant impact on the market once they have the means and confidence to purchase."

Hampden Register's Forecast FY16 by Jim Kinney on Scribd

Register's Release and Forecast: Media Coverage

Check out the local media's coverage of Wednesday's Release and Forecast for fiscal year 2016:

WWLP - 22 News

 Western Mass News

Register Releases Figures for Fiscal Year 2016

Today, Register Ashe held his semiannual Release and Forecast for fiscal year 2016. During this press conference, the Register released the amount of revenue collected by our office, the breakdown of documents recorded with the Hampden County Registry of Deeds, as well as his predictions for fiscal year 2017.

To read the report in its entirety, click here!