Come BLOG With Us!

Has The Real Estate Market Bottomed?

Wed, 04 Nov 2009 17:55:00 -0400

Has The Real Estate Market Bottomed?

Alexandra Zendrian, 10.29.09, 02:10 PM EDT

Some local markets have seen the bottom, while others still have a ways to go. Minneapolis housing prices are up.

Some positive housing statistics have come out recently. The Case-Shiller index, which tracks changes in the values of residences in 20 metropolitan areas in the U.S., is up 2.9% in the second quarter. The previous quarter it was down 7.9%. The consumer confidence index was 54.5 in August, up from 47.4 in July. But does this data mean the market is turning around? Housing experts say in certain areas yes, while in others not so much.

According to the index, Charlotte, Cleveland and Las Vegas were the only areas that had higher declines in housing value month to month from July to August with 0.4%, 0.5% and 0.3% declines respectively. Minneapolis had the greatest monthly increase in values; it's up 3.2%, followed closely by San Francisco at 2.8%.

As many real estate market watchers note, real estate markets need to be analyzed locally as each market functions differently. Paul Brigandi, portfolio manager at Direxion Funds, says locales with a lot of foreclosures will snap back faster than the rest of the market because of the demand for low-priced housing. Foreclosures went up 5% in the third quarter to 937,840 properties, according to RealtyTrac. Nevada, Arizona and California had the top foreclosure rates statewide. One in 23 houses got a foreclosure filing last quarter in Nevada, which is six times the national average, according to RealtyTrac.

Follow Intelligent Investing On Twitter.

Nationally speaking, Mickey Cargile, managing partner of Cargile Investments, says that the bottom is in place for housing prices and they will start to go up in a year to 18 months.

INTELLIGENT INVESTING

Videos

· Sell Stocks, Buy Treasuries

· The New Pickens Plan

· Intelligent Investing: Rebuilding Capitalism

· Harrison Sees A Dollar Boom

Features

· Has The Housing Market Really Bottomed?

· Buy Into Exporters

· Banks: Winners And Losers

· What The Dow at 10,000 Means

Rate This Story

· Your Rating

· Overall Rating

Reader Comments

Post a Comment

The commercial real estate market will probably continue to see falling property prices for the next year, as the commercial real estate market usually lags the residential one by a year, says Michael Stubben, senior vice president of Cole Real Estate Investments. The office and industrial commercial real estate properties are tough to price now because of a high number of vacancies, he says, which will take two years to flush out of the system.

Martin Weiss, chairman of the Weiss Group, sees many reasons for a positive long-term outlook. "There are a lot of forces that were driving housing prices lower. Those have been mitigated to a great degree," he says. But that positive outlook could be changed by another recession or a surge in interest rates, he adds.

Vahan Janjigian, Forbes chief investment strategist, is concerned the government is propping up the real estate market. "They've artificially driven down the mortgage rates, and they're offering this big incentive to first time buyers," Janjigian says of the first-time home buyer tax credit of $8,000. Because of this potentially lift from the government, it's hard to tell how the market would have done otherwise and will do in the future, he says.

Sherry Chris, chief executive officer of Better Homes and Gardens real estate, saw a busy housing market in the early fall largely because of the home buyer tax credit. She is working to have the credit extended beyond its Dec. 1 deadline. "I see housing sales falling off in the later part of this year and into 2010 if there is no extension," she says. Approximately 1.4 million people have used that tax credit so far, Chris says.

"There is legitimate demand because prices have come down, there are a lot of people who were taking advantage of the tax credit and the low mortgage rates," says Ken Shubin Stein, founder of Spencer Capital Management. He adds that this demand seems like an "alphabet soup" created almost entirely by the government.

Though the government tax cuts have helped firm up housing prices and demand in the short-term, Janjigian is concerned that long-term the real estate market can't recover until unemployment comes down substantially. The unemployment rate is currently 9.8%.

Apart from buying houses themselves, there are other attractive real estate investments. Brigandi says within the next several years home builder stocks, such as D.R. Holton ( DHI - news - people ) and Hovnanian Enterprises ( HOV - news - people ), will be good buys as more risk appetite and demand comes back to the market. His firm also manages two leveraged exchange-traded funds that investors can use depending on their views of the real estate market. These funds are the Direxion Daily Real Estate Bull 3X (DRN), which is three times leveraged to the MSCI real estate investment trust index, and the Direxion Daily Real Estate Bear 3X (DRV), which is tied to the MSCI real estate index.

Buying A Foreclosed Home

Wed, 04 Nov 2009 17:51:00 -0400

Buying A Foreclosed Home

Asher Hawkins, 10.29.09, 06:00 PM EDT

Year-end deals will abound for smart shoppers.

Thinking of buying a home? Act before year's end and you just might be able to make the most of the glut of foreclosed properties currently up for sale. That's because, while banks traditionally have been unwilling to come down on the list prices of foreclosed properties, a year-end push to clear their books of foreclosure backlogs could be a boon for haggle-happy homebuyers.

"With the end of the year coming, the banks are going to dump a lot of stuff," says Richard Zwick, a real estate agent from DeLand, Fla. "The prices will keep coming down and down as the banks are forced to take less and less." In the area of central Florida Zwick covers, price tags on many foreclosed homes are as much as 50% lower than they would have been six months ago.

Before you start focusing your energy on finding a foreclosed home, here are a few ideas to keep in mind.

First off, try to get a sense of how many foreclosures there are in your area. Places like Phoenix, Las Vegas and central Florida are hot spots with massive inventories.

In contrast, foreclosure rates in many rural areas have barely gone up since the recession hit. And even if there are a number of foreclosures in the neighborhood you've got your eye on, factors such as high-quality schools could lead to hefty competition for each one.

Next, become familiar with the different categories of foreclosure sales. "Short sales" usually occur when homeowners are behind on their mortgages and their home is worth less than what is owed to the bank. The homeowner requests that the bank agree to a short sale in order to escape the overly burdensome payments without getting the blot on their credit record that a foreclosure would leave. Banks usually go along with these deals because they figure they will face smaller write-downs and fewer administrative costs than with a foreclosure. The catch with this type of sale is that the current homeowner's mortgage lender, who gets to approve the new buyer, might take as long as two months to sign off on an offer.

That gets very frustrating for those involved," says Timothy Warren, head of a Boston firm that publishes information on foreclosure sales in the New England states.

Once a home is foreclosed on, it's auctioned off at a public event. Most of the time it's the lender of the original mortgage that buys the property. (That was the case 95% of the time in Massachusetts last year, according to Warren.) Why do individual buyers tend to stay away? At this point in the foreclosure process, the financially beleaguered original homeowner is often still living in the foreclosed property, which makes it extremely difficult to arrange a thorough property inspection. And when amateurs do try their luck at an auction, they tend to make rookie mistakes.

"Most people get so excited, they overbid," Zwick says.

After the original mortgage lender purchases a foreclosed property, it typically puts it up for sale as-is. These sales are known as REOs, for "real-estate owned." The thing to watch out for here is that banks are quick to yank a prospective buyer's deposit for failing to strictly abide by deadlines.

"I've heard of people about to buy an REO losing their deposits because they don't follow the inspection deadlines or the mortgage deadlines," Zwick warns.

Another possibility, albeit a relatively remote one: key paperwork concerning your new REO's previous mortgage was mislaid as investors traded it like a baseball card during the mortgage securitization boom. More and more state court judges have been ruling that such slip-ups create a reason to invalidate a foreclosure. That would jeopardize your claim to the foreclosed property you just purchased.

It's tempting to believe you can navigate the foreclosure sale process on your own. Much of the information you need is public. The downside is that it can be difficult to track down, let alone do so fast enough to ensure you're getting the jump on the competition. The petitions for foreclosure that precede a short sale often have to be dug out of courthouse record rooms.

Foreclosure auction information comes from hard-to-read-type in the back of major newspapers, or from subscription services like the one Warren operates. As for REOs, lenders tend to have favored networks of brokers they tip off about the best deals. The result? A DIY approach to buying a foreclosed home "is really not for the faint of heart, and requires a lot of patience," Warren says. There are plenty of real estate agents who specialize in setting up buyers with foreclosed homes. Consider hiring one if you're interested in the foreclosures market.

Homebuyer Tax Credit Extension Probable

Wed, 04 Nov 2009 17:47:00 -0400

Homebuyer Tax Credit Closer to Extension

November 3rd, 2009

An $8,000 federal tax credit for first-time homebuyers that is set to expire at the end of the month inched another step closer to getting extended until April. The Senate voted 85-2 yesterday to move the bill to a final vote, and senior members of Congress said that they expected the bill to pass next week.

In what officials say is a move to stimulate the economy, the measure might even be expanded to give a $6,500 tax credit to homebuyers who have lived in their previous home for at least 5 years.

Prolonging the tax credit is sure to be welcomed by home builders like Toll Brothers and KB Homes, as well as financial institutions like U.S. Bank, whose mortgage-revenue rose nearly 5% last quarter.

The vote comes only weeks after tax officials testified that they received 90,000 bogus claims for the $8,000 credit. Some 1.4 million legitimate claims have been filed, totaling approximately $18 billion in tax credits.

Tax Break When Selling Land Adjacent To Your Residence

Wed, 04 Nov 2009 17:40:00 -0400

Plan for Qualified Lot Sales

IRS regulations specifically allow you to use the federal income tax home sale gain exclusion privilege to shelter profit from selling vacant land adjacent to your house - even if the land sale occurs in one or more transactions that are completely separate from the sale of your house. Although this sounds too good to be true, it is true!

Gain Exclusion Qualification Rules

    If you're unmarried, you can potentially sell your principal residence for a gain of up to $250,000 without owing anything to the U.S. Treasury. If you're married and file jointly, you can potentially exclude up to $500,000 of home sale gain. To qualify, you generally must pass both of the following tests:
    1. You must have owned the property for at least two years during the five-year period ending on the sale date (the ownership test).
    2. You must have used the property as a principal residence for at least two years during the same five-year period (the use test).
    To be eligible for the $500,000 joint-filer exclusion, at least one spouse must pass the ownership test, and both spouses must pass the use test.
    If you excluded a gain from an earlier principal residence sale under these rules, you generally must wait at least two years before taking advantage of the break again. For joint filers, the $500,000 exclusion is only available when both you and your spouse have not claimed an exclusion for an earlier sale within two years of the sale date in question.
    Capital gains in excess of your exclusion are generally taxed at a maximum federal rate of no more than 15 percent. State tax may also apply.

To take advantage of this break, however, there are some restrictions:

The land must be adjacent to the parcel that contains your house, and it must be used as part of your principal residence (as opposed to being used for business or rental purposes).
The house must also be used as your principal residence.
The adjacent land must be sold within two years before or after the sale of the parcel that contains your house, and you must meet certain timing requirements for both the sale of the house and the sale, or sales, of the land. (See right-hand box for timing qualifications.)

Assuming you pass all the tests, you can use whichever gain exclusion amount applies ($250,000 for single filers or $500,000 for joint filers) to shelter from federal (and sometimes state) capital gains tax the combined profit from selling the parcel containing your house and the adjacent land.

How Much Land Can You Sell?

Based on an example in the IRS regulations, you could sell at least 29 acres without being challenged by the government (maybe more because there are no specific guidelines for the amount of land that can be considered part and parcel of your principal residence).

What happens when the adjacent land is sold in a year before or after the year you sell the parcel containing your house? If you sell the parcel with your house after the due date of the return for the earlier year when the land was sold, you must report the land sale gain on your Schedule D (your gain equals the difference between the sale price for the land and your tax basis in that part of the property). Then after you've completed the sale of the parcel that contains your house, you file an amended return on Form 1040X to use part of your gain exclusion (up to $250,000 or $500,000 if you file jointly) to shelter all or part of the profit from the land sale. You will then be due a tax refund for the year of the land sale.

If you sell the parcel with your house before the due date of the return for the preceding year when the land was sold, simply use part of your gain exclusion to shelter all or part of the land sale gain on the earlier year's return. In the later year, you can use your remaining gain exclusion to shelter all or part of the profit from selling the parcel that contains your house.

Your tax adviser can help you take advantage of the home sale gain exclusion for sales of land next to your house. Advance planning may be necessary to maximize your tax savings.

Education vs Ignorance

Sat, 21 Mar 2009 09:46:00 -0400

Recently, I’ve been hearing, again, a familiar refrain from some who really don’t reflect the whole and true picture regarding the cost of training in real estate investing. (I suspect the same would hold true of other types of training as well.)

First, there are always those among us who want something for nothing and fail to acknowledge that there are costs incurred in bringing training to them.

Second, there are usually present those who exploit this irrational attitude by claiming a “different” approach and disparaging others’ efforts in order to promote their own agendas. Those agendas, if explored, inevitably have some form of revenue to support them. Don’t be fooled.

If we consider those who have made a success in real estate investing, every single one of them have purchased books, tapes or other products or services in order to educate themselves. There is a saying, “If you think education is expensive, try ignorance!” What you don’t know CAN hurt you and cost you your entire business.

That said, not every program, like any other product, is necessarily worthy of your money. Like any other major business category, real estate investing attracts a lot of different types of characters. Some are excellent citizens with a true and professional ethic. Others are exploiters. It happens wherever there is a growth and lucrative business. Caveat emptor applies here, as it does in anything you purchase, and that applies to those who suggest that they are better.

At IRCA our goal is to provide access to the best educators for specific topics and systems. We also seek out those with unique systems and ideas not commonly known to give our members and associates an added scope to make their choices.

The challenge we face in helping our industry is not to avoid the training but to try to insure that students APPLY what is taught. It is not necessarily the quantity of training but the taking action on the new knowledge that is important.

Over the last five months, IRCA has been fine tuning our new NextLevel Real Estate Investing Academy designed to accomplish all of the above principles and to take our students all the way through the process to actually completing their first (or more) deals.

Recently, some of our slogans, which have been revealed in some of our emails, have been co-opted by others, but that’s OK. We view that as a compliment, and we will continue to use them and to state our true purpose. You decide the relative value of our programs.

BEWARE Of Lending Your Money

Sat, 28 Feb 2009 10:31:00 -0400

There are a number of "opportunities" to become a private lender. I've been seeing groups popping up approaching investor "newbies" with the proposition that you can lend them money for real estate deals and not have to be an active real estate investor. While this is a very valid idea, it is a ripe opportunity for fraud, or at the least, highly risky in who you are dealing with. This is NOT to say that you should never entertain this idea, just be VERY careful. There are sharks in the water!

Learning Can Be Fun!

Mon, 12 Jan 2009 20:19:00 -0400

What If You Could Have Fun, Eat Pizza and Improve Your Skills?
We do that when we play Cash Flow learning the risk/reward relationship in investing successfully and profitably. We play the Robert Kiyosaki inspired board game that employs real life strategies while risking only play money. It helps to develop confidence in decision making and deal analysis and IT WORKS! Join us and have some fun while improving your skills. It's all done at the monthly Cash Flow Follies and Casino Night. Pizza and beverages are provided, and there is a cash payout to winners at the end of the night to add a little something extra to the drama of the evening. Please comment with ideas about the game or questions about it.

Larry and Pete In The Same Room

Sun, 11 Jan 2009 16:06:00 -0400

Put Larry Goins and Pete Youngs in the same room and you can't stop laughing. We had a lot of fun at last Thursday's IRCA meeting.

And if you haven't seen Larry Goins lately, you're really missing a really important leader in our business. Larry's success and subsequent growth of his teaching program are outstanding. If you weren't there, I'm sorry. It's your loss, and those who were there got some great info and quite a few surprises.

Watch for more news of Larry.

Professional Courtesy

Wed, 07 Jan 2009 09:45:00 -0400

Time to vent (express my personal viewpoint) on something I consider one of the most basic of business (or personal) practices.

Simple professional courtesy dictates that we respond appropriately when contacted by whatever means, i.e. phone, email, etc. I don't mean unsolicited junk mail, intrusive "robo phone calls" et al, but contacts from our known friends and associates.

Everyone is busy, that's pretty much a given, but it goes for the person who contacts us as well, and I think it is a good practice to assume that they have a reason for trying to contact us, right?

If you don't want to have communications with someone, that's okay, but have the courtesy to say so in a reply. Then future lack or response is justified.

Meanwhile, practice good and courteous business relations by returning calls or emails in a timely manner. It's the professional thing to do.

That's how I see it. How about you?

"Ability is important in our quest for success, but dependability is critical."

-Zig Ziglar

Marketing Is A Four-Letter Word!

Mon, 05 Jan 2009 14:44:00 -0400

MARKETING IS A FOUR LETTER WORD!

How many times have you heard someone, in any industry, say that they know that marketing and advertising are important, but……………..? “Business is down, and I can’t afford to advertise, so I’ll wait ‘til things pick up.” “My real estate business is just not all that good, right now, but I’ll start doing mailings just as soon as it picks up.”

Zebras Don’t Have Stripes

And You Don’t Need Marketing!

Yeah, right. Well most would agree that zebras do have stripes, and without marketing your business will fail. That’s a pretty fair assessment. You can be the best service or offer the best product at the best prices, but if no-one knows it, what do you get? Another day older and deeper in debt. Some of you might recognize that phrase.

Now, it’s a fact that you have a lot of competition out there if you simply count every Tom, Dick and Harry with a “We Buy Houses” business card. So, how do you distinguish yourself from the horde? That’s where marketing comes in, and it is not as simple as running an ad or two in the paper. Anything worthwhile will almost certainly require some effort. It’s a hard fact of life. It will require some thought to determine which of your skills and personal qualities should serve you best when advertised to your prospects. Copying someone else’s ad or sign or letter and then running one ad or sending two letters and probably never getting around to putting out the signs will probably get you pretty dismal results.

Effective marketing is as much about consistency and repetition as anything else. Once you’ve settled on your message, then you’ve got to get it out multiple times to each prospect. That means a series of ads over time. It means a scheduled series of letters over time. And, by the way, when you’re doing this, the horde of competitors no longer exists. You have outdistanced them, because they’re still stuck in the rut you were in before. You now appear much different to the person who is facing foreclosure or whatever their motivator is. If you’re not getting the results you expected, then take a hard look at what you’re doing about it.

If A Frog Had Wings

He Wouldn’t Land So Hard!

Failure at anything is tough, but failure at a career effort like investing in real estate can be like a crash landing. In addition to monetary losses, self esteem takes a real beating, but it doesn’t have to be.

There are many educators who specialize in marketing real estate. They may vary slightly in details, but they all agree on the basic principles and that consistency and repetition are key.

Like the frog, you don’t have wings, but you can avoid the hard landing by getting yourself trained in the finer points of marketing. It will mean some work on your part, and some expense. The expense part can be eased a great deal, however, in learning the tips many of the educators can provide on how to maximize exposure while minimizing costs. Many of you probably do not know that the US Postal Service has some terrific and low cost printing and mailing services. That’s just one little tidbit that every investor should know if they want to properly market their business.

So don’t be waiting around for business to pick up before you get your marketing machine cranked up.

Don’t be caught

Sittin’ On The Dock o’ The Bay

Watchin’ The Deals Drift Away!

OK, so this is pretty hokey stuff, I admit it, but the message here is serious. Without an effective marketing program in place, the likelihood of failure is geometrically greater. Most of us would probably rather not have to do mailings, flyers, signs, etc. or deal with lists. Sorry, but we must. If you’d like to know more about how to do it with the least amount of pain and aggravation and learn of the various sources of time saving services, stay tuned for our series of meetings and workshops as we continue to bring you the right programs and trainers for the market we live in.

And, by all means, you MUST get yourself set up with a web site and learn, or hire out a service, to maximize its exposure. We have lots of good help for this, and it becomes more affordable every day, even to having a lot of FREE help. If you don’t do this, you might as well write your contracts on a stone tablet!

We Were Warned!

Mon, 05 Jan 2009 14:30:00 -0400

Some more retrospective on the "melt down" in real estate. Back in 2006 this article appeared in Fortune.

NEW YORK (FORTUNE) - The lesson that equity can evaporate quickly is something Brooks and Judy Butler of Coral Springs, Fla., learned the hard way.

In 1989, Brooks, a sales executive for software company DataCore and a former IBMer, bought a condo in Hartford, right around the corner from the Mark Twain and Harriet Beecher Stowe homesteads. Housing prices had soared by more than 90 percent in the previous four years, and a few weeks after he plunked down $98,000, a similar condo sold for $125,000, which made him feel pretty good.

But then the insurance industry went into a slump, and Hartford's population declined. As the years went on, units in his building started to change hands for less and less.

Brooks thought about selling when he was $4,000 down, but he couldn't afford to lose that kind of money. The next time he thought about it, he was $25,000 in the hole.

When he finally cashed out in 1998, he had to bring a $40,000 check to the table. "It was awful," he says. (The condo, he heard, sold two years ago for $82,000 -- still short of its 1989 level.)

Which is why, as a matter of family philosophy, Brooks and Judy refuse to believe their current house in Florida is worth a single penny more than $210,000 -- the price they paid five years ago -- even though comparable dwellings on the street are going for close to $500,000.

Their rule: Never allow outstanding loans against the house to surpass the purchase price. In fact, their mortgage and the $9,000 they took out on a home-equity line of credit are considerably less, they say.

And where did they put that $9,000? Back into the house. They refurbished the deck and the driveway and purchased hurricane shutters. "That's a conservative approach," says Brooks. "If we stick to it, we'll be safe."

Americans have increased their home equity in the past five years by 60 percent, or more than $3.6 trillion. They have also tapped it -- to the tune of $600 billion in 2004 alone.

Some of this cash has been spent wisely: to put the kids through college, for instance. But plenty has gone toward vacations and new wheels. Great for the economy; bad for many personal balance sheets.

"A new kitchen is fine because it adds real value to your home," says Leamer. "But to buy an SUV and go out to fancy meals with expensive wines, that's spending money you may never have."

Clearly, the message of the forecast is that appreciation may not always support such spending. Some 60 percent of homeowners, according to one recent survey, expect at least 5 percent annual price growth during the next several years.

That may not sound extreme, but in dollar terms, on today's already hefty home prices, it certainly adds up.

And -- surprise -- it's way out of touch with historical norms: Home prices have risen slightly more than 1 percent annually after inflation. Chances are, appreciation in the future will look more like that, at best, than like the heady figures we've seen in recent years.

The takeaway: "Your home isn't worth as much as you think it is," says Economy.com's Zandi. "So borrow as if it were worth measurably less, because it is."

Real Estate Retrospective

Mon, 05 Jan 2009 14:11:00 -0400

Sometimes it is useful, or at least interesting, to look back at what was foretold versus what actually happened as we now know it. This is an article from FORTUNE back in 2005.

Real Estate: Is the party over?
Exclusive forecasts for the 100 largest markets.
December 16, 2005
By Ellen Florian Kratz, FORTUNE

NEW YORK (FORTUNE) -- Everybody from Los Angeles to Boston -- your mom, your doctor, your dry cleaner -- is puzzling over which way the nation's real estate market is headed. Up or down? Bubble or not?

It's a debate that's been raging for years, and recently that there have been clear signs of a slowdown. It's unlikely, however, that the housing market will come to a screeching halt.

To get a clearer picture of how things may play out, FORTUNE turned to Moody's Economy.com and home property-valuation service Fiserv CSW.

The researchers crunched numbers on the 100 largest metropolitan regions in the country, and the results of their analysis appear in the table below.

Nationally, the overall outlook seems reasonable: 7 percent appreciation for 2006 and flat for 2007. But markets that have seen the greatest appreciation over the past five years appear to be vulnerable.

Indeed, at some point in the next two years, according to the forecast, a third of the nation's 100 largest metro areas (accounting for 60 percent of the U.S. population) are expected to see modestly falling house prices.

Real estate bear markets often come in the form of steady declines over many years, rather than sudden sharp drops.

As inflation gradually gnaws away at the value of nominal home prices, regular folks might not take much notice. But in the long run the loss of wealth becomes all too real. From 1989 to 1997, for instance, Los Angeles residential real estate dropped more than 40 percent in inflation-adjusted terms.

The nation's most perilous regional market, according to the forecast data: Las Vegas, a speculator-infested hot spot. Prices there are projected to deflate by 7.9 percent next year, the year after by another 5 percent. For newcomers to the market and those with low-money-down deals who may have overleveraged themselves with adjustable-rate mortgages, even a modest downturn could mean financial jeopardy.

Click on column headings to re-sort. Click on city name for in-depth statistics.

Rank	Metro Area	State	Median home price	Projected growth 2006	Projected growth 2007
1	San Antonio	TX	$129,900	8.30%	7.00%
2	Jacksonville	FL	$164,700	8.10%	2.50%
3	El Paso	TX	$107,100	8.10%	7.10%
4	Little Rock-North Little Rock	AR	$115,700	7.80%	7.20%
5	Baton Rouge	LA	$133,800	7.60%	3.80%
6	Richmond	VA	$191,800	7.40%	3.30%
7	Virginia Beach-Norfolk-Newport News	VA	$193,100	7.30%	1.00%
8	Nashville-Davidson-Newport News	TN	$157,300	7.10%	6.70%
9	Houston-Sugar Land-Baytown	TX	$139,800	7.00%	6.60%
10	Memphis	TN	$147,600	7.00%	6.50%
11	Allentown-Bethlehem-Easton	PA	$247,400	6.90%	1.20%
12	Oklahoma City	OK	$116,900	6.90%	6.00%
13	Birmingham-Hoover	AL	$152,500	6.90%	5.40%
14	Albuquerque	NM	$166,700	6.50%	6.10%
15	Columbia	SC	$133,200	6.40%	5.40%
16	Fort Worth-Arlington	TX	$125,700	6.30%	5.00%
17	Syracuse	NY	$109,400	6.20%	5.40%
18	Dayton	OH	$116,500	6.10%	5.60%
19	McAllen-Edinburg-Mission	TX	$71,000	6.10%	6.20%
20	Salt Lake City	UT	$165,700	6.10%	3.40%
21	Austin-Round Rock	TX	$161,800	6.10%	5.00%
22	Tulsa	OK	$116,600	6.10%	6.20%
23	Pittsburgh	PA	$113,000	6.00%	5.00%
24	Cincinnati-Middletown	OH	$146,200	6.00%	6.60%
25	Albany-Schenectady-Troy	NY	$176,700	6.00%	4.50%
26	Dallas-Plano-Irving	TX	$155,500	5.90%	6.30%
27	St. Louis	MO	$134,900	5.80%	4.10%
28	Toledo	OH	$116,400	5.70%	5.00%
29	Greenville	SC	$141,300	5.70%	5.00%
30	Sarasota-Bradenton-Venice	FL	$314,300	5.60%	-3.60%
31	Indianapolis	IN	$121,700	5.60%	5.40%
32	Wichita	KS	$107,200	5.50%	4.80%
33	Columbus	OH	$150,700	5.50%	6.00%
34	Akron	OH	$117,600	5.40%	5.30%
35	Buffalo-Niagara Falls	NY	$96,400	5.40%	5.30%
36	Knoxville	TN	$140,100	5.40%	5.20%
37	New Orleans-Metairie-Kenner	LA	$149,100	5.40%	6.60%
38	Rochester	NY	$111,200	5.30%	6.80%
39	Raleigh-Cary	NC	$183,100	5.20%	5.10%
40	Philadelphia	PA	$199,400	5.10%	0.50%
41	Charlotte-Gastonia-Concord	NC	$172,800	5.10%	5.50%
42	Louisville	KY	$134,800	5.00%	4.60%
43	Milwaukee-Waukesha-West Allis	WI	$210,900	4.80%	2.50%
44	Tampa-St. Petersburg-Clearwater	FL	$193,700	4.80%	-0.50%
45	Greensboro-High Point	NC	$145,100	4.80%	5.50%
46	Kansas City	MO/KS	$154,600	4.70%	4.10%
47	Poughkeepsie-Newburgh-Middletown	NY	$265,000	4.60%	0.80%
48	Youngstown-Warren-Boardman	OH	$83,400	4.50%	5.30%
49	Gary	IN	$127,300	4.40%	3.40%
50	Cleveland-Elyria-Mentor	OH	$142,800	4.30%	5.10%
51	Omaha-Council Bluffs	NE	$136,100	4.30%	4.10%
52	Lake County, Kenosha County	IL/WI	$259,100	4.20%	1.90%
53	Atlanta-Sandy Springs-Marietta	GA	$165,300	4.20%	4.00%
54	Honolulu	HI	$570,400	4.00%	-1.00%
55	Orlando-Kissimmee	FL	$226,400	3.80%	-0.50%
56	Grand Rapids	MI	$137,300	3.60%	2.90%
57	Fort Lauderdale-Pompano Beach-Deerfield Beach	FL	$356,600	3.10%	-4.50%
58	Springfield	MA	$197,900	3.00%	1.20%
59	Portland-Beaverton-Vancouver	OR/WA	$234,600	3.00%	-0.70%
60	Baltimore-Towson	MD	$249,100	2.90%	-0.80%
61	Tucson	AZ	$220,900	2.90%	-4.00%
62	Camden	NJ	$210,800	2.70%	0.80%
63	Denver-Aurora	CO	$244,800	2.60%	2.50%
64	Wilmington	DE	$231,000	2.50%	1.70%
65	Seattle-Bellevue-Everett	WA	$335,500	2.50%	1.00%
66	Tacoma	WA	$222,700	2.30%	0.60%
67	W. Palm Beach-Boca Raton-Boynton Beach	FL	$386,200	2.10%	-3.90%
68	Phoenix-Mesa-Scottsdale	AZ	$238,100	2.00%	-3.70%
69	Warren-Farmington Hills-Troy	MI	$196,000	1.90%	0.80%
70	Washington-Arlington-Alexandria	DC/VA	$404,900	1.80%	-3.40%
71	Hartford-West Hartford-East Hartford	CT	$257,600	1.80%	0.60%
72	Miami-Miami Beach-Kendall	FL	$343,700	1.80%	-5.50%
73	Detroit-Livonia-Dearborn	MI	$120,100	1.60%	2.00%
74	Newark-Union	NJ	$407,000	1.50%	-1.80%
75	New Haven-Milford	CT	$280,300	1.40%	0.60%
76	Worcester	MA	$287,800	1.30%	-0.30%
77	Edison	NJ	$387,900	1.20%	-2.90%
78	Chicago-Naperville-Joliet	IL	$264,900	1.10%	0.20%
79	Cambridge-Newton-Framingham	MA	$448,800	0.80%	0.00%
80	Minneapolis-St. Paul-Bloomington	MN	$234,600	0.70%	0.70%
81	Bridgeport-Stamford-Norwalk	CT	$472,500	0.40%	-1.30%
82	New York City-White Plains-Wayne	NY/NJ	$504,800	0.10%	-3.50%
83	San Francisco-San Mateo-Redwood City	CA	$766,000	0.10%	-2.90%
84	Bethesda-Gaithersburg-Frederick	MD	$444,500	0.00%	-0.50%
85	Boston-Quincy	MA	$422,900	-0.10%	-1.40%
86	Essex County	MA	$380,600	-0.20%	-0.70%
87	Stockton	CA	$423,100	-0.30%	-5.90%
88	San Jose-Sunnyvale-Santa Clara	CA	$720,900	-0.40%	-3.90%
89	Oxnard-Thousand Oaks-Ventura	CA	$480,300	-0.70%	-5.00%
90	Oakland-Fremont-Hayward	CA	$651,300	-0.70%	-4.40%
91	Fresno	CA	$340,800	-0.80%	-2.80%
92	Bakersfield	CA	$286,300	-0.80%	-3.00%
93	Providence-Fall River-New Bedford	RI/MA	$292,800	-1.10%	-2.20%
94	Sacramento-Arden-Arcade-Roseville	CA	$372,900	-1.20%	-5.10%
95	Los Angeles-Long Beach-Glendale	CA	$412,900	-1.60%	-6.30%
96	Nassau-Suffolk counties	NY	$461,300	-2.00%	-4.20%
97	Riverside-San Bernardino-Ontario	CA	$362,800	-2.60%	-6.80%
98	Santa Ana-Anaheim-Irvine	CA	$682,300	-3.10%	-6.10%
99	San Diego-Carlsbad-San Marcos	CA	$598,700	-3.40%	-5.70%
100	Las Vegas-Paradise	NV	$296,000	-7.90%	-5.00%

What happened? What's being done about it?

Mon, 05 Jan 2009 13:44:00 -0400

An article written by Benny Kass for INMAN NEWS covers the financial "melt down", some of its causes and an insight into current and proposed "fixes" in place. It's news you will find interesting, informative and useful in looking ahead to 2009 and beyond. Some things you NEED to know NOW.

Problems can creep up in foreclosures, HOAs, sales contracts

Benny L. Kass

Inman News

Another phrase has been added to the real estate lexicon: "mortgage meltdown."

Many of us used to call some of the practices that led to the meltdown "predatory lending." But because most of the people who were preyed upon were poor, uneducated and often minorities, our national leaders largely ignored the problem. We kept hearing that no one really could define the concept of "predatory."

But now that millions of Americans are facing foreclosure, governments at all levels are trying to find solutions. Recently, President Bush announced that his administration has brokered a deal with the mortgage industry whereby certain loans would be frozen for up to five years. Certain adjustable-rate mortgages that were originated between Jan. 1, 2005, and July 30, 2007 -- and were scheduled to be increased between Jan. 1, 2008, and July 31, 2010 -- would remain at the original rate. According to Bush, the government "should not bail out lenders, real estate speculators or those who made the reckless decision to buy a home they knew they could never afford. Yet there are some responsible homeowners who could avoid foreclosure with some assistance. …"

Accordingly, a private-sector group of lenders, loan servicers and mortgage counselors have created the "HOPE NOW Alliance," whose function is to help "struggling homeowners find a way to refinance" their existing subprime or adjustable-rate mortgage. (For more information call 1-888-995 HOPE, or visit www.hopenow.com.)

The tax code has been a major problem facing homeowners who arrange with their mortgage lender to forgive a portion of their debt. To add insult to injury, our tax laws required those taxpayers to pay income tax (called "phantom income") on the money they did not have to pay their lender.

Congress finally got its act together and on Dec. 20, President Bush signed into law a temporary change to the tax code. For the period Jan. 1, 2007, through Dec. 31, 2009, homeowners will not have to pay tax on any debt that is cancelled.

The law does not protect speculators or investors. It applies only to principal residences -- that is situations where the taxpayer has owned and lived in the house for two or more years. And only the original loan can be cancelled debt free; if you have a second deed of trust (mortgage) the "phantom income" tax will still apply.

The law also extended the right to deduct private mortgage insurance for three more years.

All of these actions will help solve the current "mortgage meltdown" crisis. But as we enter into a new year, there are other real estate issues confronting consumers. Here are some New Year's resolutions Iam recommending for legislators, lenders, appraisers, title companies, and -- most important -- consumers.

Are you are in the market to buy a house (whether it is a single-family, condominium or cooperative)? Shop around for your mortgage. Many new-home builders will offer you a cash discount if you use the lender's "preferred lender" and its "preferred title company." Sometimes these discounts are worthwhile, but sometimes the extra charges imposed by that lender and the title company exceed the amount of the discount. You may be able to save more money by using your independent lender and title company -- even without the discount.

Are you thinking about buying into a community association -- whether it is newly developed or an existing property? Read the legal documents carefully. In many jurisdictions, a seller of a condominium unit or homeowner-association house must provide you with a package of documents, including the operating rules and regulations, the budget, and an updated financial accounting. This is important information. Especially today, when delinquencies and foreclosures are on the rise, you want to assure yourself that the association is in good financial shape. The last thing you want is to learn -- shortly after you become a member of the association -- that there will be a large special assessment to cover any shortfall.

Are you planning to capitalize on the financial problems of others? There are a lot of people who are looking to buy homes either from a bank that has taken title by way of foreclosure or directly from homeowners who are desperate to sell so as to avoid foreclosure. Indeed, many speculators and investors are starting to show up at foreclosure sales hoping to get a good deal.

If this is something you are considering, you must do your homework very carefully. Make sure that you carefully inspect the house. If the current owner is reluctant to give you this opportunity, move on to another property. I have recently been contacted by several investors who bought a house sight unseen, only to learn that the occupants are refusing to move or that when they left the property, they took a lot of the major appliances with them. There is nothing that I can do to help these new homeowners.

You also have to have a complete title search done before you go to closing -- even if you plan to pay all cash. Distressed properties can carry a lot of problems -- such as tax liens, unpaid assessments, or judgments against the current owners.

Are you planning to buy a new-built home from a developer? Is the home ready for occupancy or will the builder complete the house only after you sign a sales contract? If the home has not been finished, your contract must contain an absolute, firm settlement date. Many new-home sales contracts contain what is known as a "force majeure" clause, which basically is a catch-all phrase for developers to say, "Sorry, your house won't be ready for several more months, because of matters outside of my control." I recommend deleting that concept from all new-home (or condominium) sales contracts.

Additionally, most new-home contracts are, in my opinion, completely one-sided in favor of the developer. For example, although the house may not be ready for settlement for several months, you are obligated to get firm financing immediately. Should interest rates increase -- as they may very well in the coming year -- you may be stuck with a monthly mortgage payment that you did not anticipate or cannot afford. You should be required to get a mortgage loan commitment only when the builder is ready to sell it to you. You can, however, get a preliminary letter from your lender (I call it a "comfort letter"), which will satisfy the seller that you are a serious buyer; but this is not a firm loan commitment.

Are you on the board of directors of your community association? If so, is your money secure? This past year, there have been several cases throughout the country where the property manager embezzled millions of dollars of association funds. There are a number of steps that must be taken to protect those funds, such as:

all checks over a certain amount must be co-signed by a board member;

all reserve accounts can be accessed only by two board members, and not the property manager, and

proper insurance coverage must be in place. You should consult your insurance agent for more details.

Finally, I have to repeat my longstanding plea to mortgage lenders. Please simplify your legal documents so that every consumer can understand the terms and conditions that are imposed by the promissory note and the deed of trust. And why not go back to the good old days when potential homeowners had to sign only four documents: the note, the mortgage, the settlement sheet (called a HUD-1) and the Truth-in-Lending statement?

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

***

What's your opinion? Send your Letter to the Editor to opinion@inman.com.

Getting started in BLOGGING

Sun, 04 Jan 2009 21:24:00 -0400

I'm new to this, and I've never kept a diary (I'm told that that would have been a good start!), however I'm not shy about sharing opinions, ideas and so forth, so I'm looking forward to it.

Of course, your participation will be critical to the success and value.

This will be a venue for sharing anything relative to investing and entrepreneurship. We will offer tips, caveats and generally anything deemed important and/or merely interesting. Fun stuff, too, always in good taste, please.

Sources for financing are very topical concerns currently, so I'm sure there will be a lot of lively discussions on that, including informal bits about our new sourcing program.

Subject for your consideration: what would you recommend we do to spur associates into taking the plunge to do their first deal?

Please subscribe to our BLOG and participate in reading and replying with your own views.