Industry veteran Patrick Stone offered his insight on what’s to come for title agents in the ever-changing real estate landscape during his session at the National Settlement Services Summit. Read on for his predictions in the first of a two-part series on the discussion.
When it comes to pulling out the crystal ball, some industry members prefer to avoid it altogether.
However, Patrick Stone, industry veteran and president and chief executive officer of newly launched title insurance underwriter Williston Financial Group, dedicated an entire session to predicting the future of the title agent at the 2010 National Settlement Services Summit (NS3) held by The Title Report’s parent company, October Research Corp., June 15-16 in Cleveland.
Stone’s session “The Future of the Title Agent” touched upon a variety of questions, the answers to which he said will dictate to a reasonable degree where the industry is headed. To start with, he tackled a substantial indicator — the market and whether there is one.
“We are at or near the bottom of the market,” Stone said. “It is becoming at least somewhat predictable on a month-to-month basis and the size of the market is intriguing.”
Taking a look at dollar premiums since 1999, Stone said he realized that what has been reported so far in 2010 is close to what was noted in 2001. “I can remember 2001 wasn’t a fantastic year, but it was a pretty good year. So there is some relativity here, but what has changed is the mix of business,” he said.
With rental vacancies remaining high right alongside home vacancies, Stone said numbers indicate there is not enough demand for the supply of homes on the market, especially as fewer new households are created each year due to children remaining at home with their parents and waning immigration.
“It is going to take a while to run through this vacancy. You can talk about foreclosures, you can talk about employment, you can talk about all the factors, but if you get to the 50,000 foot level and look at this, it is simply a function of supply and demand. We have a lot of vacant housing units and it’s going to take a lot to use them up,” he said.
So while premiums are in line with the decent performance noted in 2001, Stone said the new business mix will also prevent significant absorption of those vacancies with about 50 percent of business today going to refinances, 25 percent to defaults and less than 5 percent to new home purchases.
“The mix is a lot different and each of you is confronting a different mix in your market. But it’s not the old business. It may be the same amount of title premium, but it’s a lot more institutional now and a lot less relationship-based,” he said.
On the negative side, Stone said credit remains tight and bank lending is down significantly from 2008. In addition to those factors, first-quarter household debt averaged 20 percent of total assets compared to 15 percent in the mid-90s, as the national debt skyrockets into the trillions.
On the positive end, however, Stone said that inflation remains at the lowest rate seen since the 1960s and interest rates are projected to stay at their own lows for a long time.
“If you can prosper in the next 18 months, you will own your market in 2015. If I can leave you with some really positive thoughts, think about prospering in the next 18 months. This is crunch time. This is the Super Bowl of the title insurance and settlement services industry,” he said.
Between now and 2013, Stone said title and settlement professionals should expect defaults and foreclosure work will become a permanent part of the market and need addressed appropriately through products and services.
However, by 2013, Stone said he believes volume will begin to change shape in a meaningful manner with a real turnaround in values by 2015.
Don’t miss the second installment from Patrick Stone’s NS3 session, in which he touches upon the future of the agent-underwriter relationship and the strategies that will be necessary for the industry to remain viable.