A nationwide increase in median home values coupled with low inventory indicates a stronger post-recession market. However, more Americans are becoming wary of this upward trajectory, according to ValueInsured’s recent Modern Homebuyer survey. In fact, a majority of participants believe the country is headed for another market correction.
DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 27, 2016
It might not be all low inventory and high prices. It seems Americans have a confidence problem when it comes to the housing market. They’re increasingly apprehensive to move forward, citing concerns over the economy and job security, according to the latest ValueInsured Modern Homebuyer Survey, a measure of confidence in the health of the housing market among more than 1,000 home owners and buyers.
Amid uncertainties around the global economy, national security and the national presidential campaign, Americans’ confidence in the housing market remains sturdy and, in fact, is on the rise, according to the latest ValueInsured Modern Homebuyer Survey.
The ValueInsured Housing Confidence Index was 68.7 points in June, up slightly from 67 points in March. This 1.7-point rise in confidence is consistent with improvements in the government’s June jobs report
The average home stays on the market for about 75 days before a sales contract. If you sell real estate, wouldn’t it be nice to consistently beat that average? And to have more buyers bidding your sale prices up?
Of course. The real question is where do you find these new buyers?
Well, a lot of them are sitting on the sidelines wishing for a home but leery of what they saw (or experienced firsthand) in the housing market collapse of 2007. A good number of them have down payments in hand – either in their savings accounts or starter home equity – but they’re loath to risk their hard-earned nest eggs.
Economists have spelled out the solution for decades: Buyers simply need the same level of protection everyone else in the transaction enjoys. Specifically, they need down payment protection.
Now it's here...
For the first time, buyers can purchase insurance that protects their downpayment if real estate values fall. One Florida bank offers it now, but more should follow.
Developed for modern homebuyers who experienced a drop in real estate prices during the Great Recession, the downpayment protection insurance was created to give skittish buyers some peace of mind.
Amalgamated Bank, which operates in some Florida cities, currently offers the plan by ValueInsured. Going forward, buyers may have to pay for the coverage at closing depending on the bank. The coverage guarantees that they'll receive at least part of their downpayment back if real estate values fall, subject to coverage rules.
NEW YORK, April 13, 2016 – ValueInsured and Amalgamated Bank today made available a unique new financial product that protects homebuyers’ down payments from falling market values.
+Plus by ValueInsured down payment protection is available for the first time on all eligible Amalgamated Bank mortgages. It is also now exclusively available at no cost in the bank’s First-Time Homebuyer +Plus program, covering down payments of up to 5 percent of the home’s purchase cost. Amalgamated Bank is the first bank to offer down payment protection to its homebuyers.
“The idea behind embedding down payment protection in First-Time Homebuyer +Plus is simply to empower our customers to achieve the American Dream of homeownership,” said Keith Mestrich, president and CEO of Amalgamated Bank. “Working people shouldn’t have to worry about losing the financial control and flexibility that comes with renting when they make the decision to buy. If they need to sell their home, they may be able to do that even if their local housing values are lower than when they purchased. That’s why we’re working with ValueInsured, an innovative company that shares our commitment to building trust and opportunity for the people we serve.”
Developed for modern homebuyers who have experienced housing differently from previous generations, down payment protection provides a long-awaited sense of security.
“The gyrations of the housing market have made homebuyers acutely aware of the rewards and the risks of homeownership,” said James A. Wilcox, professor of economics and finance at Berkeley-Haas. “Down payment protection helps safeguard homebuyers’ hard-earned savings, assuring them that they can get their down payment back whenever they want to move. This will give homebuyers peace of mind, flexibility, and control.”
Fairness Delivered
It will also put homebuyers on equal footing. For decades, lenders have protected themselves from risk through the private mortgage insurance that homebuyers have been obligated to pay. The homebuyer, however, has been without similar protection from loss, which can occur when market value changes.
Also for decades, economists have called for new ways to help homeowners protect their down payment. Hedging home value has been called “the greatest idea never sold,” and today it is being delivered.
“At last, the homebuyer is protected,” said Joe Melendez, CEO of ValueInsured, whose company created the new down payment protection product. “It’s fitting that Amalgamated Bank, which has long stood for innovation and customer empowerment, is the first bank to offer this important new protection directly to homebuyers. It helps keep home buying fair, safe and transparent.”
The American Dream
Down payment protection frees consumers to act on their bedrock values. Owning a home is an important part of the American Dream for more than four in five millennials (83 percent), according to the new ValueInsured Modern Homebuyer Survey.[1] In fact, homeownership was the number one personal definition of the American Dream for millennials, ahead of financial security, success at my job and raising a family of my own.
Other findings:
Amalgamated Bank – with offices in New York City, Washington, D.C., and Pasadena, Calif. – is the first of many financial institutions that will offer down payment protection through ValueInsured nationwide.
The era of white picket fences, two-story homes, and garages housing new (or almost new) cars is a thing of the past. It’s the ‘American Dream,’ a concept that has been ingrained deep into the middle class psyche over the past several generations, which more or less means that the United States is founded upon a meritocracy – that hard work and dedication will deliver what you desire. It’s built into the nation’s fabric.
A recent survey of American homeowners and renters released by Harris Poll on behalf of ValueInsured found that while Americans embrace the dream of homeownership, the possibility of losing a hard-earned down payment is discouraging them from buying. More than half (55 percent) of renters are confident they will get their down payment back if they were to buy today and have to sell in the next 2-7 years.
