According to an article from Housingwire.com yesterday, title insurance premiums declined across the board in the second quarter of 2010, decreasing 8.5 percent on a year-over-year basis. This is a result of the decreasing number of home purchases that are occurring. Sometimes title insurance is purchased during a mortgage refinance, although such sales generate far smaller premiums than from a purchase.
Title insurance is a type of indemnity insurance that protects homeowners from losses due to inaccuracies in real estate titles or issues stemming from property liens. Title insurance is generally purchase when a borrowers buys a new home.
From the article:
“The latest market share analysis reflects an on-going recession in the housing market, with further downward pressure on home prices,” said Pfotenhauer. “While an abundance of affordable homes and low interest rates make the market attractive, people need jobs to obtain credit and purchase homes.”
This decline in title insurance premiums is just another symptom of the weak housing market. While near record low mortgage rates have encouraged many people to refinance their mortgages, they have not prompted many people to purchase new homes. Part of this is due to tighter credit conditions and underwriting standards, and part of it is due to the ongoing weak economy and soft labor market.
It appears that it will be some time before the housing market recovers, as there is still a massive overhang of housing supply as well as weak demand for houses. We should probably expect to see further declines in housing prices before the housing market truly hits bottom sometime in the next two years or so.
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