Title companies: Market will continue to grow in 2017
CEOs expect housing market to be highly competitive, fast-moving in West Michigan.
Two West Michigan-based title companies are looking ahead to 2017 and seeing an encouraging outlook. Home values will rise, commercial and residential construction will be up, and the purchase market will continue to grow.
Sun Title is headquartered at 1410 Plainfield Ave. NE — with other locations in Rockford, Cedar Springs, Grandville, Ionia and Grand Haven — and has approximately 80 employees. The company saw a solid year in 2015, with revenue of $7 million, a year-over-year increase of $2 million compared to 2014.
Sun Title CEO and co-founder Tom Cronkright II said most of that growth in title and insurance purchases is due to the increase in commercial and residential construction, and the commercial rehab industry also is robust.
“Property values have increased in most markets on a double-digit basis year over year,” Cronkright said.
Lighthouse Group, located at 877 16th St. in Holland with 10 other West Michigan locations, saw West Michigan revenue of $7.81 million in 2015 compared to $7.46 million in 2014.
President Bob Wuerfel said for 2017, his underwriters have predicted a “slight increase over 2016.”
“Since the election, I have been in conversations with all five of our underwriters on what 2017 will look like in our industry,” he said.
“The dust is still settling, but from the conversations had, we are looking at a purchase market that will go up 4 percent, along with a 3.9 percent increase in the home values of the homes being sold, while the refinance sector will go down approximately 30 percent due to an anticipated increase in the interest rates.”
Cronkright said buyers should expect the 2017 housing market to be highly competitive and fast-moving, as a positive West Michigan job market, growing population and diverse economy are driving residential buying.
“What buyers will face next year is the lack of housing inventory, so they’ll be forced to make a decision much more quickly than they would like because housing is scarce,” he said. “For instance, if I put a house in Rockford on the market at noon today, it’s likely that it will be under contract within hours, not days.
“If the house is listed at lunchtime, there’ll be at least a dozen buyers there that night with their agents, and they’ll bring purchase agreements with them and sign them in the car.”
Cronkright said a trend that has continued since the Great Recession is consolidation within the title industry — smaller companies being absorbed by the larger ones. He said part of this is due to tighter regulations.
“There are just very few small players in the marketplace, in large part because the new regulations are harder to satisfy,” he said. “You have to have all the different corporate, workflow security and lending structures that the regulators have come to expect.”
Wuerfel said one of the trends he sees for 2017 is a potential easing of those regulations.
“Based on the November election, the political climate is positioned to ease (the Dodd-Frank Wall Street Reform and Consumer Protection Act),” he said. “While banks favor a paring back of the Dodd-Frank regulations, they tend to think in practical terms, rather than ideologically. And their core message seems to be: Make regulation simpler and less costly, but don’t return banking to the unregulated days that preceded the financial crisis.”
Whichever way the regulations go, both Lighthouse Group and Sun Title are predicting growth for their companies in 2017.
“We still have a lot of growth to do in the footprint we have,” Cronkright said. “Our footprint will expand throughout Michigan in the next few years, but we’re not going to rush it. We’re staying mindful of the speed of growth, and we’re interested in maintaining the close-knit culture among our staff.”
Wuerfel said Lighthouse expects to grow beyond Michigan.
“As we move forward, I can see us growing into more states as opportunities permit,” he said. “A key will be to make sure we do so while still doing it the ‘Lighthouse Way,’ keeping our team engaged and empowered, which has gotten us this far and successful.”