Home Rentals
written by Tom Witzel
Last Updated: Wednesday, September 08, 2010
This article is taken from Inside Real Estate News by John Rebchoock.
Home rentals scarce
Vacancies for-rent condos, single-family homes, and other small properties across metro Denver fell year-over-year to 3.8 percent during the second quarter, shows a state report released today. According to a report released by the Colorado Department of Local Affairs’ Division of Housing, the vacancy rate was 5.2 percent during the second quarter of 2009, and was 3.1 percent during the first quarter of this year. The second quarter’s vacancy rate is the lowest second-quarter rate reported since the report was started in 2003.
The trend of low vacancies and rising rents likely will continue, experts said today.
“There’s been a lot of conversation about multi-family (apartment) rentals growing in popularity, but that is true about rental, single-family homes, too,” said Gordon Von Stroh, a University of Denver business professor and author of the report. Von Stroh said that the population grows; there are not enough new apartments being built to meet the demand, while at the same time new-home construction is a fraction of what it has been when measured by historic levels.
Also, many people who lost their homes either through a foreclosure or a short sale – when a bank accepts less than the mortgage amount – rent another house, instead of an apartment, said Robert Alldredge, principal of Jericho Properties, a residential property rental company in Lakewood. Indeed, three and four bedroom homes have the lowest overall vacancy rates, he said, because they can accommodate families. In some cases, they may even include “extended families,” such as grandparents living under one roof with their children’s’ families, he said.
The lowest vacancy rates were found in Arapahoe County and Douglas County, both of which reported average rates of 2.9 percent. The highest vacancy rate, likely driven by rental houses left behind by students during the summer break, was 8.6 percent in the Boulder/Broomfield area.
Vacancy rates for all counties surveyed were: Adams, 4.2 percent; Arapahoe, 2.9 percent; Boulder/Broomfield, 8.6 percent; Denver, 3.4 percent; Douglas, 2.9 percent; and Jefferson, 3.3 percent.
Rents rise
The average rent for single-family and similar properties rose year-over-year to $1027.78, rising from 2009’s second-quarter rate of $1016.35. The second quarter’s average rent was down from this year’s first quarter average rent of $1035.56.
“In general, average rents continue to go, up, but not at a rapid pace,” said Ryan McMaken a spokesperson for the Colorado Division of Housing. “With such a low vacancy rate, we’d expect to see more rent growth, but the employment situation is putting some downward pressure on rents.”
Another Government Program
written by Tom Witzel
Last Updated: Tuesday, September 07, 2010
this is from the Certified Distressed Property Institute.
Short Refinance Program Initiated
Posted: 06 Sep 2010 02:01 PM PDT
In an effort to help homeowners who owe more on their homes than they’re currently worth, the government will initiate its “short refinance” program on Tuesday, September 7, 2010.
According to an August 6 Mortgagee Letter released by HUD (click here to download the entire letter), the program will allow “borrowers who are current on their mortgage to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.”
While lender consent is required and program participation voluntary, the FHA has stated the program could modify between 500,000 and 1.5 million upside-down mortgages.
Following are a few of the eligibility requirements detailed in the Mortgagee Letter:
1. Homeowner must have negative equity, be current on the existing mortgage, and have a FICO score greater than or equal to 500
2. It must be for the homeowner’s primary residence
3. Existing loan can’t be FHA-insured
4. First lien holder must write off at least 10 percent of the unpaid principal balance
5. Refinanced mortgage must have a loan-to-value ratio (LTV) no greater than 97.75 percent
6. Second liens must be re-subordinated so the new loan does not exceed a combined LTV of 115 percent
Because of this last requirement, this program may have difficulty when confronted with situations involving second lien holders.
Pending Homes Sales Increase
written by Tom Witzel
Last Updated: Friday, September 03, 2010
This article is from RISMedia and there may be some light at the end of the tunnel. Have a great Labor Day Weekend!
RISMEDIA, September 3, 2010—Following a sharp drop in the months immediately after the expiration of the home buyer tax credit, pending home sales have modestly risen, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator, rose 5.2% to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1% below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Yun added, “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”
The PHSI in the Northeast rose 6.3% to 62.5 in July but is 21.1% below a year ago. In the Midwest the index increased 4.1% to 66.7 but remains 25.7% below July 2009. Pending home sales in the South rose 1.2% to an index of 86.3, but are 15.6% lower than a year ago. In the West the index jumped 11.6% to 95.0 but is 17.6% below July 2009.
The national index had fallen 29.9% in May and another 2.8% in June.
FHA Mortgage Insurance
written by Tom Witzel
Last Updated: Thursday, September 02, 2010
This is from RISMedia and has some great information about the mortgage insurance premium increases.
RISMEDIA, September 2, 2010—“The Federal Housing Administration (FHA) is giving homeowners and buyers until October 4, 2010 to lock in a low monthly insurance premium,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that trains and certifies mortgage bankers and brokers. “After October 4, the monthly insurance premiums on FHA loans will increase by over 63%.”
What does this mean for home buyers?
A home buyer purchasing a $200,000 home using a $193,000 FHA mortgage before October 4 would pay an insurance premium of $88.46 per month. If the same home buyer waits until after October 4, the insurance premium would jump to $148.01.
“In this example, the home buyer would lose $59.55 per month, or $7,146 over a ten year timeframe,” Nicholas said. “Although the upfront mortgage insurance premium is going down after October 4, the real impact to the home buyer is actually a net increase in their out of pocket costs because the monthly premium is going up by 63%. Remember, sellers can pay the upfront premium or it can be financed into the loan amount, so home buyers rarely pay the upfront premium out of pocket. On the other hand, the increase in the monthly premiums will be paid right out of the home buyer’s pocket with their mortgage payment each month.”
Ironically, home buyers who plan to be in the mortgage for less than three years and decide to pay the upfront fee themselves (instead of having the seller pay it for them), may actually save money by waiting until after October 4 to apply for an FHA loan. “Home buyers with a short term time horizon may actually benefit from this change because the upfront premium will be reduced to 1% from 2.25%,” Nicholas said. This change will impact over 30% of the home buyers in today’s market who use FHA-insured financing. Home buyers considering an FHA loan should find and contact a CMPS professional in their area to discuss their options and what this means for their situation. Also, you can follow CMPS Institute on Twitter to stay updated on these and other mortgage and housing industry developments.
A Cure for the Home Sellers Blues?
written by Tom Witzel
Last Updated: Wednesday, September 01, 2010
This article is from RISMedia, check out the book and let me know what you think.
RISMEDIA, September 1, 2010—With existing U.S. home sales diving to 15-year lows and millions of homes stagnant on the market, home sellers are suffering increasing anxiety, uncertainty and financial stress. To address these symptoms, motivational author Joan Gale Frank has published Home Seller’s Blues (And How To Beat Them).
“This is the first book of its kind to cheer people on and up when their home isn’t selling,” says Frank, a long-time real estate investor domestically and abroad. “It also provides hundreds of practical tips on how to sell a home faster using buyer/seller psychology.”
When her own Arizona home didn’t sell for a year, Frank gathered extensive home selling advice from top real estate experts, home stagers, landscape artists, psychologists and marketing whizzes. Her research paid off. Frank said, “I was able to pinpoint potential buyers and appeal directly to them, which helped sell my house faster. I also discovered how to be happy instead of miserable while waiting for a buyer.”
Home Seller’s Blues was created to share Frank’s findings with other frustrated home sellers. It features comprehensive home selling tips, including quick, inexpensive ways to make a house memorable, attracting more buyers, finding the best Realtor, win/win pricing, easy ways to get a house ready to show in minutes and identifying little problems that cause home rejection.
Several chapters of the book are dedicated to overcoming negative emotions ranging from fear and frustration to insomnia and helplessness. The book also emphasizes how to enjoy life during the entire home selling experience. “Ms. Frank’s insights into the emotions, psychology and real estate strategies of home selling are right on,” says Alexis Halmy, a Portland, Oregon Realtor.
Home Seller’s Blues is available for $9.99 at the Apple iBookstore, on Amazon’s Kindle, and at http://www.homesellersblues.com. Frank also provides inspiration and often humorous home selling advice on her blog, http://www.housesellingblues.com.
Stats in the Real Estate Industry
written by Tom Witzel
Last Updated: Tuesday, August 31, 2010
The following article is from the Certified Distressed Property Expert blog.
A Season of Real Estate Statistics
Posted: 27 Aug 2010 06:34 AM PDT
Some of the most valuable assets for agents assisting distressed homeowners are statistics … and industry players have released a ton of them lately. Following is a breakdown of some of the major, recent reports on the real estate industry:
CoreLogic’s August 2010 Short Sale Research Study:
§ Short sales have more than tripled since 2008, and multiple indications point to short sales continuing as a significant factor in the industry.
§ Investors involved in short sales are good! They provide the industry with necessary liquidity.
§ 1.9% of short sales studied were part of an egregious flip.
The National Association of REALTORS® (NAR) existing home sales data though July 2010:
§ Existing-home sales (single-family, townhomes, condominiums and co-ops) dropped 27.2 percent.
§ Seasonally adjusted annualized rate of existing-home sales dropped to 3.83 million (down from 5.26 million) – the weakest showing in 15 years.
§ Single-family sales are at their lowest levels since May 1995.
The Mortgage Bankers Association’s Second Quarter 2010 National Delinquency Survey:
§ 13.97% of loans are in foreclosure or at least one payment past due (or more than 1 in 7 mortgages).
§ Foreclosure starts for prime fixed loans – previously the safest loan product (based on historic default rates) – increased to 0.71 percent, tying the survey’s record high.
§ Year over year, the non-seasonally adjusted delinquency rate increased for: prime fixed loans, prime ARM loans, subprime fixed loans, and subprime ARM loans.
Downward pressure on the real estate market primarily comes from high unemployment and slow economic/business growth, and this is now more apparent with the release of these reports. Real estate agents, armed with this information, have an unprecedented opportunity to help struggling homeowners avoid foreclosure.
Seniors & Loan Modifications
written by Tom Witzel
Last Updated: Monday, August 30, 2010
This is a good article concerning seniors and loan modifications from RISMedia.
By Mary Shankli
RISMEDIA, August 30, 2010—(MCT)—Maria Olmo doesn’t like her chances of paying off her new, 40-year mortgage. “I’ll die before it’s paid off,” said Olmo, who got her 30-year mortgage modified because she was at risk of losing her home to foreclosure. “This is the most ridiculous thing I’ve heard in years. They didn’t take my age or my income into consideration.” Since last year, companies servicing delinquent mortgages have been under orders from the federal government to modify the loans rather than foreclose on them.
The goal is to cut the monthly mortgage payments so they are less than 30% of the homeowner’s income.
More than half of the 390,000 mortgages already permanently modified through the federal government’s Making Home Affordable Program have lengthened loan terms—in most cases extended from 30 years to 40 years, according to lenders and federal reports.
Just six months earlier, in January, only about 42% of the loans modified at that point had been similarly lengthened. The U.S. Treasury Department has not released the number of struggling homeowners who have been put into 40-year loans, but lenders say that’s the predominant new term for modified mortgages.
Meanwhile, the number of mortgages that have been changed by trimming the principal on “underwater” houses held steady during that time between 27 and 28% of all modifications. All of the modified loans have had their interest rates reduced.
Orlando lawyer Matt Englett, who specializes in foreclosures, said he advises his older clients against lengthening their terms to four decades. “If you’re 60 and you’re in a 40-year note, you’re really just renting it from the bank, and you’re paying more than you would from someone else you could be renting from,” Englett said. “This is what the car dealers sell—they sell payments. That’s what the mortgage industry has gotten into.”
Rocky Stubbs, Chase vice president for homeowner preservation, said lenders participating in federal foreclosure-prevention programs are opting for interest-rate reductions and longer loan terms before principal write-offs because the government called for that specific, stepped approach to modifying home loans.
He noted that mortgage companies are prohibited by the federal Equal Opportunity Credit Act from considering the age of homeowners when putting them into loan products.
“We cannot look at the credit application of a 30-year-old customer any differently than we would a 90-year-old customer,” he said during a recent interview.
Homeowners who have agreed to go from a 30-year mortgage to a 40-year home loan can always pay more than the monthly minimum if they want to treat it like a 30-year loan and pay off the mortgage sooner, Stubbs added. The modifications typically don’t have any prepayment penalties.
But in east Orlando, Olmo said she can hardly afford her home’s new, $1,300-a-month loan payments because she is struggling with less income since her husband is now unemployed. Rather than adding years onto the mortgage, she said, her lender should have accepted that the house has lost value and should have cut some of the loan’s principal.
Englett, the foreclosure lawyer, said 40-year loans make little sense financially, particularly for seniors who face paying the upfront interest possibly for the rest of their lives.
“If you look at the numbers, if someone is 60 years old and they extend their mortgage to 40 years, oftentimes they’re paying 50 percent more to own the house than they would pay if they were renting in the same neighborhood,” he said. “And when they go to sell, they still won’t have enough to pay it off.”
Despite such warnings, Englett said, most older clients opt for the reduced interest rate and longer term—”they get attached to the house and want to stay there.”
(c) 2010, The Orlando Sentinel (Fla.).
Foreclosure Filings Down
written by Tom Witzel
Last Updated: Friday, August 27, 2010
The number of foreclosure filings have decreased for the fourth month in a row. Foreclosure filings in the Denver metro counties fell 29.5 % from the same time last year and the number of foreclosure sales by the public trustees declined 15.4%. There were 2,718 new foreclosure filings in July of 2010 compared to 3,855 in July of 2009. These numbers are still high however I think we may be starting to get on the right track. Hope you have a great weekend! As always call if I can help you in any way.
5 Tips for Buying a New Home
written by Tom Witzel
Last Updated: Thursday, August 26, 2010
The following article is from RISMedia and has some great tips if you are thinking of buying a new home.
Considering New Construction? Top 5 Tips for Buying a Newly Built Home
By Dan Stewart
RISMEDIA, August 26, 2010—Newly built homes, often in recently developed communities, are regaining popularity and are more affordable than in years past. New homebuilders are using desirable, open floor plans and are helping buyers get into new homes despite the nationwide credit crunch.
As with any major transaction, it’s critical that the buyer enter the home purchase fully informed and educated. Follow these important tips in a new home transaction to ensure that the outcome is a success.
1. Choose a Realtor Who Has New Home Sales Experience
Hire a buyer’s agent to represent you. Most of the time, your agent will be paid by the seller, but sometimes the responsibility for the agent’s fee is open for discussion. Even if you have to directly pay your agent, you can probably add that fee to the sales price, which would be worthwhile since a strong Realtor negotiating on your behalf can save you thousands more than the commission.
The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.
Your own agent will represent you, act as your fiduciary and disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.
If your contract contains a contingency to sell your existing home before buying, again, hire your own seller’s agent to list your home. Be aware that buying before selling is not always in your best interest as hard bargaining goes out the window once you’ve emotionally already left your home.
2. Carefully Evaluate the Seller’s Lender before Committing
Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder.
However, a builder’s lender might not offer you the best deal. This is particularly true if the builder actually owns the lending company.
Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives – that you use their lender. There are many problems that may crop up when you pigeon-hole yourself to one lender – higher rates and higher closing costs are the two biggest.
Ask to see a copy of your credit report and FICO cores. You can also order your own free credit report before shopping for a new home.
Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.
3. Check out the Builder’s Reputation
If a buyer has a bad experience with a builder, word spreads rapidly throughout a community. However, accurately and fairly assessing a builder’s history is the appropriate path- check public records for lawsuits or complaints and evaluate their resolutions.
Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?
Learn if the builder limits investor purchases – this ensures that the neighborhood doesn’t turn into a “rental” neighborhood, which may appear less well-maintained and reduce property value.
4. Hire a Home Inspector
Many people who buy new construction homes don’t bother to get a home inspection. Most new homes come with a one year “bumper to bumper” warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.
If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.
An inspection provides education about the property, and offers the validation of a trained, independent third party assessment of the structure and systems.
5. Obtain Legal Advice before Buying a Brand New Home
Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer.
Ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because it’s a valid concern and other buyers have gone to court over it.
Dan Steward is president, Pillar To Post.
Government Intervention
written by Tom Witzel
Last Updated: Wednesday, August 25, 2010
The news yesterday made a big deal about the 27% drop in resale homes and the stock market reacted negatively on the numbers. The drop in home sales for the month of July reminded me of the drop in car sales after the cash for clunkers ended. I believe that every time the government intervenes in any market we see negative numbers after the government program ends. The people in congress & the senate need to learn to stay out of the markets and let the markets correct itself!
Houses are a Bargain!
written by Tom Witzel
Last Updated: Tuesday, August 24, 2010
With the economy not where we want it to be, the price of homes in many areas across the country are a bargain. This is the best time many of us will ever see to purchase a home and with interest rates at record lows this is a perfect time to purchase a home or refinance your current mortgage. I am enclosing an article from RISMedia with proof of that. Contact me if you have any questions.
RISMedia, August 24, 2010—Bolstered by favorable interest rates and low house prices, housing affordability remained near its highest level nationwide for the sixth consecutive month since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).
The HOI indicated that 72.3% of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the second quarter was slightly more affordable than the previous quarter and almost equaled the record-high 72.5% set during the first quarter of 2009. Until 2009, the HOI rarely topped 67% and never reached 70%.
“Homeownership is within reach of more households than it has been for almost a generation,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Interest rates continue to hover at historic low levels, the economy is beginning to rebound and with house prices starting to stabilize, conditions are beginning to draw home buyers back into the market, which is a positive step on the path to recovery.”
Syracuse, N.Y., was the most affordable major housing market in the country, edging out Indianapolis-Carmel, Ind., which had held the top ranking for nearly five years. In Syracuse, 97.2% of all homes sold were affordable to households earning the area’s median family income of $64,300.
Also near the top of the list of the most affordable major metro housing markets were Detroit-Livonia-Dearborn, Mich.; Youngstown-Warren-Boardman, Ohio-Pa.; and Buffalo-Niagara Falls, N.Y.
Among smaller housing markets, the most affordable was Springfield, Ohio, where 96.6% of homes sold during the second quarter of 2010 were affordable to families earning a median-income of $56,800. Other smaller housing markets near the top of the index included Mansfield, Ohio; Bay City, Mich.; Monroe, Mich.; and Lansing-East Lansing, Mich., respectively.
New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as its least affordable major housing market during the second quarter of 2010. There, 19.9% of all homes sold during the quarter were affordable to those earning the New York area’s median income of $65,600. This was the ninth consecutive quarter that the New York metropolitan division has occupied this position.
The other major metro areas near the bottom of the affordability scale included San Francisco-San Mateo-Redwood City; Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale, Calif.; and Honolulu, all metro areas that have lingered among the bottom rankings for several quarters.
San Luis Obispo-Paso Robles, Calif., was the least affordable of the smaller metro housing markets in the country during the second quarter. Others near the bottom included Santa Cruz-Watsonville, Calif.; Ocean City, N.J; Santa Barbara-Santa Maria-Goleta, Calif.; and Napa, Calif.
Reverse Mortgage Questions
written by Tom Witzel
Last Updated: Monday, August 23, 2010
This article from RISMedia shows some of the pros & cons of reverse mortgages. If you have further questions about a reverse mortgage please contact me and I can put you in contact with an expert.
RISMEDIA, August 23, 2010—(Real Estate Center) — Some parents are warning their kids not to bank on inheriting the homestead. Why? Because some parents are considering a reverse mortgage. Such mortgages may not be beneficial for everyone, but their popularity is definitely on the rise.
“Reverse mortgages are based on the home’s current value, borrower’s age and existing interest rates,.” said Dr. James Gaines, research economist for the Real Estate Center at Texas A&M University. “Borrowers can choose to receive loan proceeds in a single, lump-sum payment, as periodic predetermined payments, a line of credit or both.
Writing in the July issue of Tierra Grande magazine, the Center’s flagship periodical, Gaines explained the pros and cons of reverse mortgages.
Pros of a Reverse Mortgage
• A reverse mortgage has no fixed due date.
• No repayment is required as long as the home remains the borrower’s principal residence.
• Loans become payable upon death, sale, ceasing to live in the home or failure to keep taxes, insurance or maintenance current.
• Borrowers cannot be foreclosed on.
• Reverse mortgages are nonrecourse loans. The amount owed can never exceed the selling price.
• Borrowers continue to hold title to the property.
• There are flexible payment options.
• Loan proceeds are not taxable.
• Underwriting and approval do not depend on the borrower’s current income or employment status.
• Would-be borrowers are required to meet with an independent financial counselor prior to getting a loan.
• The lender’s lien on the property is removed if the lender fails to make loan advances according to the agreement.
Cons of a Reverse Mortgage
• Homeowners must be at least 62 years old, own their home outright or have high home equity.
• Reverse mortgages provide around 65 percent of the home’s value. Loan-to-value ratios as high as 80 percent may be available to older homeowners, but higher closing costs and fees and shorter life expectancy offset some of this advantage.
• When the borrower dies, the loan and all accrued interest and costs become due and payable, typically necessitating the sale of the home. Heirs wanting the house must repay the entire amount due, which could be greater than the home’s value at the time. Inheritance planning is tricky.
• Relatively high up-front costs mean borrowers need to stay in the home longer (at least ten years) to make the loan financially attractive. This disadvantage has been offset by some lenders eliminating origination fees, setting aside service fees or both.
• Borrowers are responsible for all other ownership costs.
• Homes can be foreclosed on if borrowers cease to live in them for 12 consecutive months or default on any obligation, such as maintenance, taxes or insurance.
• Borrowers may be targets for aggressive sales pitches for other expensive and potentially inappropriate products or services.
• Reverse mortgages are fundamentally different than forward purchase mortgages or home equity loans. Generally, reverse mortgages have more complicated terms and conditions.