Title

New Needs For a New Era

• by Brian Edwards
• Comment Off
• 897 views

Why Providers with Local Expertise and Industrial Scale are Thriving in 2022 By Brian Edwards America’s household formation has been experiencing a seismic shift accelerated by the pandemic as the nation’s population began to “de-urbanize” by looking to migrate away from densely populated cities into less populated suburban areas throughout the Southern and Western states. The effects from the pandemic fueled this migration by mobilizing a large segment of the population that found themselves suddenly untethered to the traditional centralized workforce model. No longer was it necessary to live within a commutable distance to an office that is located in a crowded population center. According to an Owl Labs study done in 2021, 55% of workers reported that they work more hours from home than in the office, and almost one-third of all employees surveyed said they would rather find a new job than to go back to a traditional office setting. With this newfound flexibility, America’s workforce is rethinking how they want to live. People are migrating away from the crowded metro areas of the Northeast and Midwest and looking to follow sunshine and open spaces to the South and West. The 2020 U.S. Census found that nine out of ten states with the highest population growth were located in the South and West. The Need for Affordable Housing This large migration creates a need for affordable housing. Potential homebuyers moving to these areas are forced to make a decision. Do they take the risk and buy immediately in a new place amid an overheated market, where rising interest rates have been eroding affordability, or should they rent for a period of time to get a footing into their new location? Capital investors have been moving in to help. The single-family rental (SFR), build-to-rent, and rent-to-own sectors have been growing rapidly since the Great Recession first created an opportunity for investors to pursue returns while helping to stabilize the housing market. Since that time, the shortage of available single-family housing and increased demand has sharply driven up asset prices which have further fueled the market. A recent Walker and Dunlop study found that 5-10% of all single-family new construction is built-to-rent. Although still representing a small minority of the overall single family rental investor profile, large investors continue to generate and hold single-family properties. Not only has the SFR asset class been outperforming other real estate sectors, it has performed as well as any asset class. And we expect this trend will likely continue for the foreseeable future. Redfin recently reported that the average monthly rent in the United States increased 15% year over year to a record high of more than $2,000 in May of 2022. What does it all mean for the housing market as a whole? There are ongoing debates about the impact of ongoing participation of institutional investors in the single-family housing rental space. But one thing is crystal clear: The size and scope of this new group of real estate investors has created an opportunity for service providers to adjust their offerings to better serve the market. Institutional investors require providers that can deliver services nationwide with an industrial approach to match the speed and scale at which they are operating. At the same time, real estate is still very much local. Rules and practices are micro when it comes to efficiently acquiring and managing real estate. In order to be effective, investors need partners that can provide the experience and expertise needed to make sure that they are adhering to all local rules and requirements. The Service Provider of the Future Service providers who can bridge these two worlds will be in high demand. Companies that can be both a master of local market knowledge and a macro-level operator with scalable, multi-geographical capabilities are poised to thrive. These dual capabilities have proven to be especially valuable in the title space, where requirements differ from state to state, and county to county level. While title insurance policies tend to be similar, the title search and examination process varies significantly depending on locale. Real estate investors who currently operate in multiple states or are looking to expand their territory need a title partner with macro and micro capabilities, including: »          Centralized captive underwriting operations with local escrow officers »          Digitized communication and notifications for transparency throughout the process »          Modern technology and automation that enables sharing, accessing, verifying authenticity, and maintaining an audit trail for each document »          Robust encryption and security to protect data and funds »          Services that cover the original acquisition of the asset through securitization »          Financial strength and stability to pay future claims With titlegenius by Radian, we have embraced this hybrid model to serve investors of all sizes with quality underwriting at an affordable cost, industrial-scale operations and tech, and local escrow officers that are able to efficiently manage transactions in their market. For service providers like us, a critical question for our current moment is: As market participants and market conditions change, have we adjusted our approach so that we are adding as much value as we can? And for investors of all sizes, a corollary question is: Do our providers have the adaptive mindset and multifaceted capabilities that will help us grow in this changing market? The organizations that have the best answers to those questions are the ones that will thrive in this complex and exciting new era for residential real estate.