Across the real estate landscape, optimism is on the rise, according to the First American Real Estate Sentiment Index (RESI).
The report finds that confidence for transaction volume growth over the next 12 months increased 0.5 percent from Q3 2017—experiencing an increase by 5.3 percent compared with a year ago.
Moreover, confidence in refinancing transaction volume growth increased by 4.6 percent month-over-month. Refinance transaction volume experienced an additional increase year-over-year of 2.7 percent.
As for purchase transaction volume, confidence for growth over the next 12 months decreased 2.7 percent from last quarter. However, the confidence was still up year-over-year—with an increase of 7.6 percent.
The report notes that prices across all property types are expected to decrease by 0.5 percentage points over the next 12 months, compared to Q3.
“Optimism among title agents and real estate professionals increased this quarter, as they expressed confidence that transaction volume will grow in the coming year,” said Mark Fleming, Chief Economist at First American. “Supply-side challenges may be the reason for the decline in optimism for the residential purchase market.”
Another aspect the report highlighted was the effectiveness in closing real estate transactions with fintech. According to Fleming, title agents and real estate professionals saw clear value in automated loan approval and electronic data collection technology to facilitate the digital mortgage and reduce the burden of document signing.
“Interestingly, the difference in favorable responses to the two different forms of eSigning (in-person or online/remote/webcam) highlights the current debate over the role of a notary public in the closing process,” Fleming noted.
In an ever-changing digital world, the successful servicers will learn to adapt to the new technologies at the forefront of the industry. But with new innovations comes a new set of obstacles—so what’s the best way to implement a plan of action?
What emerges from Washington in the way of tax reform remains a wild card for the business in 2018, however the final bill that may eventually emerge from a bicameral conference must encourage capital formation and help maintain the strength of real estate.
Moreover, Flemming noted that the “digitally native” millennial generation has never known a world without web-based technology and the real estate finance industry is investing to meet the digital expectations of the millennial home buyer.
According to data from PitchBook, over $1 billion of venture capital was invested in real estate start-up companies in 2016 and more than $800 million was invested in just the first three quarters of 2017.
“The question is whether all of the technology investments are making a difference to the millennial home buyer experience?” Fleming said.
Real estate professionals surveyed in the fourth quarter were asked if millennial home buyers are better prepared for the home buying process because of their access to real estate-related technology.
“The results indicate this is a polarizing topic, as not quite half of respondents (approximately 48 percent) agreed that millennial home buyers are better prepared, but more than a third (34 percent) believed that they were not,” said Fleming.