Why Are Real Estate Transactions Public?

A good friend and longtime reader sent me a note this week asking why real estate transactions are public information.  Thanks, Jen!  I can always use inspiration for an article.  BTW, if you have a question about real estate and mortgage financing, send me an email.  My email address is listed above.  Just click on it, and you’re all set.

 

There are two repositories that keep real estate data.  The real estate people created the Multiple Listing Service (MLS).  There are over 500 MLS systems throughout the country.  Each MLS has its own service area.  In Hawaii, each county has their own MLS.  The second repository is the government.  Each state in the US has their version of a Bureau of Recordation or Conveyances.  In Hawaii, we call it the Bureau of Conveyances (BOC).

 

The MLS system is the system used by member real estate agents to list properties for sale.  Member agents are required to update the status of listed properties – from actively listed, to in escrow, and then sold.  They are required, when the property is finally sold, to record the final terms of the sale.

 

The BOC is the agency of record for the legal ownership of property, including any liens placed upon it.  The BOC is where all deeds and mortgages are officially recorded.

 

But why should that information be made public?  Why should your nosey neighbors know how much you paid for your home?  And why should anyone know how much of a mortgage you took out to buy or refinance your property?

 

The answer is simple, yet surprising.  The information is made public to benefit – you!

 

If all real estate sales information were private…

 

• How could anyone ever know what price to list a home for?

 

• How could anyone know what a fair offer to purchase would be?

 

• How could an appraiser determine the value of a property without knowing what other similar properties had sold for?

 

• How would the government know how much to charge you for property taxes?

 

 

By keeping this information public, it protects the public.  Being able to research the history of a property is very valuable information.  Yes, in some cases it can lead to fraud, but with the openness and availability of the information, it can also thwart criminal activity.

 

 

• Public records are essential for legal security and provide a basis for legal compliance.

 

• Public records can help resolve disputes between parties with competing claims to a property.

 

• Public records help maintain transparency in the real estate market.

 

• Public records help ensure that people are aware of who to sue if their property is damaged by another person's property.

 

• Public records are a valuable source of historical documentation.

 

 

Each county allows the public to review property tax records.  The web address for each county is [county]propertytax.com.  Oahu for example is honolulupropertytax.com.  They don’t allow you to search by name, but you can search by address or parcel number.  For my mortgage business, I need to do some deeper research.  I need a system with more robust capabilities.  I pay a 3^rd party company that maintains their own database.  Their system allows me to search by owners, prior owners, types of transactions, plus many more features.  Can I find Oprah’s address?  Yes, I can.  I won’t use the information to stop by her place for a visit, but I know what she paid for her property!

 

 

 

And now the week’s economic news…….

 

Fed Reaction

There was one final week this year packed with major economic news, and it was a wild one.  On the negative side for mortgage markets, the Fed sharply scaled back its outlook for monetary policy easing, and consumer spending exceeded expectations.  More favorably, the latest inflation data was lower than forecasted.  The net effect was that mortgage rates reached their highest levels in six months.

 

As expected, the Fed reduced the federal funds rate by 25 basis points on Wednesday to a target range of 4.25% to 4.50%, and the changes to the meeting statement were relatively minor.  Investors were focused on the dot plot projections for future rate cuts.  Officials scaled back their forecasts to just two additional 25 basis point rate cuts in 2025 from four 25 basis point rate cuts in their last set of dot plots released three months ago.  While the anticipated rate cut this week was priced into financial markets long ago, the outlook from officials was more hawkish (favoring tighter monetary policy) than expected, and this surprise caused mortgage rates to rise.

 

 

 

 

 

 

 

 

 

 

 

Fed officials keep a close eye on inflation, and the PCE price index is their favored indicator.  In November, Core PCE rose just 0.1% from October, below expectations.  Core PCE was 2.8% higher than a year ago, the same annual rate of increase as last month.  While far below its recent peak, further progress toward the 2.0% target of the Fed remains challenging, and this desired level has not been achieved since February 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

Despite higher prices and credit card rates, consumer spending has shown few signs of slowing in recent months.  In November, retail sales rose a solid 0.7% from October, above the consensus forecast, and were 3.8% higher than a year ago.  Particular strength was seen in autos (partly due to demand to replace cars damaged by hurricanes), online merchants, and sporting goods/hobbies.  Investors expect another strong holiday shopping season.

 

In November, sales of existing homes rose 5% from October and were 6% higher than a year ago.  The median existing-home price of $406,100 was up 5% from last year at this time.  Inventories remain stuck at historically low levels, standing at just a 3.8-month supply nationally, far below the 6-month supply typical in a balanced market.  On a brighter note, though, inventories were 18% higher than a year ago.

 

 

 

 

Next Week

Investors will continue to look for additional guidance from Fed officials on their plans regarding future monetary policy.  For economic reports, it will be a very light schedule for the remainder of the year.  New Home Sales and Durable Orders will come out on Tuesday.  Mortgage markets will close early on Tuesday and will be closed on Wednesday for Christmas.

 

 

 

Until next week…….