On the strength of a rise in per-file fee income for residential and commercial files, Stewart Information Services Corp. saw its title operating income hold steady.

[caption id="attachment_7239" align="alignleft" width="150"] An increase in file fees helped Stewart's financial performance.[/caption]

The domestic residential fee per file increased 10% to around $2,200, a result of the shift to more purchase transactions; and the commercial fee per file increased 43% to around $8,400 due to increased transaction sizes. All told, title revenue in the third-quarter 2018 ($486 million) were comparable to the prior year quarter ($485.4 million), a result of higher commercial and independent agency revenues, which a decline in non-commercial direct title revenues offset in part.

"Stewart delivered solid third-quarter results as increased fee-per-file levels in both commercial and residential operations offset lower order counts," stated Matthew Morris, chief executive officer at Stewart. "Even though order counts were down year-over-year as interest rates rose through the quarter, the growing mix of purchase transactions in our residential business and larger transaction sizes in our commercial business helped keep title revenues flat with the third-quarter 2017.”

Included in non-commercial domestic revenues were revenues from purchase transactions, which were roughly flat year-over-year, and centralized title operations (processing primarily refinancing and default title orders), which declined $5.7 million in the third-quarter compared to the third-quarter  2017. Also, gross and net revenues from independent agency operations increased 2 percent, compared to the third-quarter 2017.

Commercial revenues rose $7.3 million, or 16 percent, compared with the prior year.

Employee costs for the third-quarter 2018 were $138.3 million, a decrease of 1 percent compared to $140.1 million in the same quarter one year earlier. Average employee counts decreased around 8 percent in title and ancillary services in the third-quarter 2018, compared to the third-quarter 2017.

The reduced employee counts resulted in an 8 percent decrease in salaries and other employee benefits, which was partially offset by increased commissions on commercial title compensation. As a percentage of total operating revenues, employee costs for the third-quarter 2018 improved 40 basis points, or 27.7 percent compared to the same period a year earlier.

Third-quarter 2018 results included $6.8 million of third-party advisory expenses from the Fidelity National Financial merger transaction and $3.4 million of net unrealized gains relating to changes in fair value of equity investments.

“Our senior management team remains focused on the merger process as we continue to work with the FTC and the appropriate state regulators, and, as our results illustrate, all associates remain focused on delivering solid operating results," said Morris.

A research report predicts that value of U.S. construction starts will be even next year.

Construction starts for 2019 are predicting to be $808 billion, unchanged with the $807 billion estimated for 2018, according to the Dodge Construction Outlook from Dodge Data and Analytics.

“Over the past three years, the expansion for the U.S. construction industry has shown deceleration in its rate of growth, a pattern that typically takes place as an expansion matures,” stated Robert Murray, chief economist for Dodge Data & Analytics. “After advancing 11% to 14% each year from 2012 through 2015, total construction starts climbed 7% in both 2016 and 2017, and a 3% increase is estimated for 2018.

“There are, of course, mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works,” said Murray.

Single family housing will be unchanged in dollar terms, alongside a modest 3% drop in housing starts to 815,000. There will be a slight decline in homebuyer demand, resulting from higher mortgage rates, diminished affordability, and reduced tax advantages for home ownership as the result of tax reform.

Multifamily housing will slide 6% in dollars and 8% in units to 465,000. Market fundamentals such as occupancies and rent growth had shown modest erosion prior to 2018, which then paused this year due to the stronger economy. However, that erosion in market fundamentals is expected to resume in 2019.

Ribbon has raised $225 million, funding the mortgage technology startup’s national expansion. It received the funding from existing investors Bain Capital Ventures, Greylock, NFX and NYCA.

Ribbon will be expanding into 10 new markets by the end of 2019 and has already expanded into Charlotte, Cary and Asheville, N.C., and recently into Fort Mill and Indian Land, S.C. The firm is focused on markets where homebuyers are having the hardest time securing homes and where they face stiff local competition from investors and corporate buyers.

Ribbon backs homebuyers and their realtors with the power of a Ribbon Offer, which is all-cash, and guaranteed to close. Buyer affordability and home valuations are fully approved, same day, making the offer experience fast, transparent and predictable. If a homebuyer can't close with a mortgage on time, Ribbon will buy and reserve the home on behalf of the homebuyer. It backs  valuations by committing to buy the home up to the Ribbon Max Value, or appraised value.

With Ribbon, homebuyers have greater than a 90% chance of having their offer accepted, saving thousands of dollars in cash discounts and receiving a 100% ontime closing.

"If you are a first-time homebuyer or you need to sell your existing home prior to buying a new home, the current homebuying process is an intimidating and stressful experience," said Shaival Shah, CEO of Ribbon. "We solve this problem by buying and reserving a home for a family, so they can secure their mortgage in peace without the risk of losing the home they love.”