TheMReport — News and strategies for the evolving mortgage marketplace.
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50 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA A Better Title Industry, Built on Blockchain Blockchain could have significant applicability for title and settlement providers, but challenges remain. A s blockchain evolves as a fintech technol- ogy to look out for in the mortgage indus- try, a white paper by Premium Title makes the case for how, if implemented correctly, blockchain can ease automating the industry. It also looks at challenges that the title and escrow providers must overcome for this technol- ogy to be truly beneficial for the industry. The white paper revealed that the title industry can benefit from four aspects of blockchain's technology: 1. Transactional integrity—This allows a transaction to not change once it is logged on the blockchain. This is because blockchain transactions are confirmed and validated by getting cryptographically linked in blocks using hash algorithms that need to be changed in multiple blocks at the same time to change data. 2. Security—Since blockchain data is stored on distributed ledgers called nodes across a network, they are continuously updated and kept in sync. As a result, tampering with data on one node would be quickly identi- fied as an anomaly. 3. Elimination of third-party intermedi- aries—The reliability of block- chain records would eliminate the need to use transactional intermediaries. 4. Speed—Transactions related to the purchase and sale of real estate that sometimes takes weeks or months can be done in a matter of minutes through this technology. Giving an example of how this technology's four benefits can help the title industry, the white paper said that multiple conveyances that are even referred to as the chain of title were "ripe for blockchain innovation." However, it pointed out that while the industry could break new ground with blockchain, it would need to overcome some inherent challenges to really reap the benefits of this technology. One area would be "information on liens, judgments, taxes, unpaid utilities, and other matters that encumber the title of a property." While blockchain solutions could capture all those transactions in an ideal world, many times "these liens and judgments only reference the name of the person. A key feature of a truly disruptive solution is referencing a specific property when these liens, judg- ments, and other title encumbranc- es are created in the first place." The white paper pointed out that a usable platform must be cre- ated to search the blockchain for all transactions affecting a property for blockchain to be truly useful to automate the title process. The report also gave the benefits and challenges to implement block- chain in the escrow process. It con- cluded that with the challenges the industry faced right now, it could take "many years of concerted effort to overcome the obstacles" for the technology to become a real disruptor for this industry. Homebuyers: How They've Changed Demographics are evolving, so who are the groups currently driving the housing market? A n analysis from the National Association of Home Builders (NAHB) revealed that a total of 8.8 million households bought homes in the last two years. The analysis examined the character- istics of two home buyer subsets: first-time home buyers and trade- up buyers (those who previously owned a home), to provide deeper in- sight into the types of households driv- ing housing market activity. According to the analysis, of the 8.8 million homebuy- ers in 2017, 3.3 million were first- time buyers and 5.5 million were trade-up buyers. The level of home- buyers reached a cycle high of 11.6 million in the 2005 American Housing Survey (AHS). However, the rates dropped to a low of 6.8 million in 2011 after the recession hit. The number of home buyers has recorded an upward spike since then to 7.3 million in 2013, 7.9 million in 2015, and 8.8 million in 2017. NAHB's findings on demo- graphic characteristics of home- buyers also found that 37 percent were first-time buyers—slightly down from 39 percent—with a higher median household income increased from $86,623, up from a median of $78,739 in 2015. The median age of this group re- mained steady at 40 years old made up of 27 percent racial or ethnic minorities, down slightly from 26 percent in 2015. Eleven percent of recent homebuyers made purchases without a down payment, the same share as in 2015. The analysis also pointed out that 52 percent used savings or cash on hand for the down payment, a slight decrease from 54 percent in 2015. The median price of homes purchased went up 10 percent from $208,573 to $228,389, while the me- dian square footage was essentially unchanged—up 10 percent from 1,890 sq. ft. to 1,900 sq. ft. In general, trade- up and first-time buyers have higher average household sizes than non- moving owners as trade-up buyers and first-time buyers typically have higher rates of household formation—a fac- tor that promotes homeownership. Among reasons that compelled recent buyers to move, 55 percent of respondents stated moving for a 'better home' as the primary reason, followed by 46 percent who moved for better neighborhoods, and 39 percent who moved to form a new household. A larger share of first-time buyers stated forming a new household as a reason for moving at 61 percent compared to trade-up buyers at 25 percent. The shares of first-time and trade-up buyers who moved for a better neighborhood were 49 percent and 45 percent, respectively. 55% of respondents stated moving for a 'better home' as the primary reason, followed by 46 percent who moved for better neighborhoods and 39 percent who moved to form a new household.