The cost of insuring the title to real estate is declining as a result of falling home prices, according to the largest trade organization of title officers. But the American Land Title Association says a rise in title insurance policies show housing markets are improving.
The industry trade group reported a 4.5% decrease in the amount it costs to insure property from defects and liens in 2009 nationally, falling to $9.6-billion paid for title insurance policies. Premiums had fallen for five consecutive years since the height of the housing boom in 2005 after reaching $16.9-billion.
Twenty-five states experienced hikes in year over year title insurance policies issued. An increase in home sales drove California to generate the highest number as home buyers turned out to buy lower priced properties, the largest amount of which were foreclosures experiencing an 8.4% spike in premiums to $1.5 billion for the year.
Pennsylvania closing agents offered $446-million in premiums, ranking the second highest number of policies issued as the housing market began a rebound from the downturn. But the state still ranked fifth in the percentage of increases compared to other states.
The first time home buyers federal tax credit and expansion of the program to move-up buyers spurred an increase in home sales in Alaska, resulting in a 26.3% year over year increase to $38-million. Wisconsin, Montana, Oregon and Hawaii also saw large increases.
However, three of the country’s other most populated and damaged housing market states, Texas, Florida and New York sustained declines in the number of policies written.
“The temporary tax incentives and Federal Reserve’s efforts to keep mortgage interest rates low helped bring more consumers into the housing market and modestly rejuvenated a dilapidated housing market,” said Kurt Pfotenhauer, CEO of ALTA. “While significant foreclosure activity remains a drag on overall housing prices, the incentives have benefited the title industry to some extent in 2009.”