Showing posts with label jacoma. Show all posts
Showing posts with label jacoma. Show all posts
Monday, February 27, 2012
Thursday, February 23, 2012
Study Calls Today’s Market Good Time to Buy
Researchers from several universities have just completed a paper that looks at what they call the hurdle rate. This is the point at which it’s equally smart to rent or buy if your only criterion is to build wealth. Based on today’s hurdle rate, it’s a better time to buy than to rent, because you can build more wealth owning than renting.
The study looks at what they call an indifferent renter. This is someone who is just as happy renting as buying depending on which choice is better at building wealth over a holding period, in this case eight years. The study assumes the renter puts the savings from renting into an investment to earn a return.
The hurdle rate is the point of equilibrium between renting and buying where it’s a wash in terms of wealth building. If today’s hurdle rate rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should be such that an individual will, on average, create more wealth through owning rather than renting. On the other hand, if today’s hurdle rate is higher than the average past property appreciation for a particular market, then this is a sign that ownership can be a drag on wealth creation.
“It’s not a perfect reason to buy, it’s just a test,” says Ken. H. Johnson of Florida International University in Miami, one of the authors of the study, called “The Rent vs. Buy Decision,” released about two weeks ago. “But it’s a good sign that the market’s turning.”
The paper is part of a series Johnson and some other researchers have been doing on the rent vs. buy decision. This paper just looks at the narrow topic of the hurdle rate; other papers look more broadly at whether it makes sense to rent or buy based on financial considerations. In one earlier paper, renting can make more sense in some instances, at least in the short run, if renters invest all of their savings over a period of time in an instrument that generates a yield comparable to what they would earn in appreciation on a house in their market. But since few renters could realistically invest all of their savings from renting, it’s more appropriate to assume renters don’t invest all of their savings. And in these cases, owning is the overwhelmingly better investment over the holding period.
You can learn more about the paper that looks at the hurdle rate in the two-minute video above. The paper was sponsored by the REALTOR® University Research Center, which is part of REALTOR® University.
Source: speakingofrealestate.blogs.realtor.org
The study looks at what they call an indifferent renter. This is someone who is just as happy renting as buying depending on which choice is better at building wealth over a holding period, in this case eight years. The study assumes the renter puts the savings from renting into an investment to earn a return.
The hurdle rate is the point of equilibrium between renting and buying where it’s a wash in terms of wealth building. If today’s hurdle rate rate is lower than the average past property appreciation rate for a particular market, then it makes sense to buy, because future property appreciation should be such that an individual will, on average, create more wealth through owning rather than renting. On the other hand, if today’s hurdle rate is higher than the average past property appreciation for a particular market, then this is a sign that ownership can be a drag on wealth creation.
“It’s not a perfect reason to buy, it’s just a test,” says Ken. H. Johnson of Florida International University in Miami, one of the authors of the study, called “The Rent vs. Buy Decision,” released about two weeks ago. “But it’s a good sign that the market’s turning.”
The paper is part of a series Johnson and some other researchers have been doing on the rent vs. buy decision. This paper just looks at the narrow topic of the hurdle rate; other papers look more broadly at whether it makes sense to rent or buy based on financial considerations. In one earlier paper, renting can make more sense in some instances, at least in the short run, if renters invest all of their savings over a period of time in an instrument that generates a yield comparable to what they would earn in appreciation on a house in their market. But since few renters could realistically invest all of their savings from renting, it’s more appropriate to assume renters don’t invest all of their savings. And in these cases, owning is the overwhelmingly better investment over the holding period.
You can learn more about the paper that looks at the hurdle rate in the two-minute video above. The paper was sponsored by the REALTOR® University Research Center, which is part of REALTOR® University.
Source: speakingofrealestate.blogs.realtor.org
Wednesday, February 22, 2012
Bank and Non-Profit Unite to Provide Homes to Service Members
Operation Homefront, a non-profit which assists families of service members, partnered with Chase to place at least 100 Wounded Warriors, military, and veteran families into permanent residences this year through the Homes on the Homefront program.
Chase is providing the homes, and Operation Homefront will provide ongoing transitional services to the families until properties are deeded to the recipients.
“These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier,” said JPMorgan Chase CEO of mortgage banking Frank Bisignano in a release.
Operation Homefront and Chase will match families served by the non-profit with homes in the bank’s inventory. In order to be an eligible applicant, one must be on active duty, the Guard or Reserve, or have been honorably discharged; one must not own a home; and one must be financially capable of sustaining a home.
Special priority will also be given to families who already live at an Operation Homefront Village, Wounded Warriors, surviving single spouses of those killed in action, and post 9/11 disabled veterans.
“Chase’s imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives,” said CEO of Operation Homefront Jim Knotts.
Military families can apply for the program online. A veteran of any era can apply.
Chase is providing the homes, and Operation Homefront will provide ongoing transitional services to the families until properties are deeded to the recipients.
“These individuals have made tremendous sacrifices for our nation, and as they move back into civilian life in a tough economic environment, we hope that a mortgage-free home will make that transition a little easier,” said JPMorgan Chase CEO of mortgage banking Frank Bisignano in a release.
Operation Homefront and Chase will match families served by the non-profit with homes in the bank’s inventory. In order to be an eligible applicant, one must be on active duty, the Guard or Reserve, or have been honorably discharged; one must not own a home; and one must be financially capable of sustaining a home.
Special priority will also be given to families who already live at an Operation Homefront Village, Wounded Warriors, surviving single spouses of those killed in action, and post 9/11 disabled veterans.
“Chase’s imaginative, nation-wide approach to providing quality homes to deserving service members and their families will make a huge difference in how these heroes can make that difficult transition and adjustment into productive civilian lives,” said CEO of Operation Homefront Jim Knotts.
Military families can apply for the program online. A veteran of any era can apply.
Moderate Growth Projected for 2012
Overall, growth is expected to continue for the year, but at a modest rate, according to the Fannie Mae February 2012 Economic Outlook report.
Economic growth is projected to be at 2.3 percent for 2012, an increase compared to 1.6 percent last year, according to the report.
For the first time in seven years, the housing market is projected to contribute to gross domestic product (GDP), the report also stated, but by a very modest amount.
“Risks to the forecast are more balanced between the upside and downside since our January forecast,” said Fannie Mae chief economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”
Duncan added that economic growth will remain constrained by various headwinds, including a potential spike in oil prices; an expected decline in net exports; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For 2011, the unemployment rate ended at 8.9 percent, and is projected to average at 8.4 percent in 2012, according to an economic forecast report released by the Mortgage Bankers Association (MBA).
The unemployment rate dropped to 8.3 percent in January, down 0.2 points from the previous month.
Mike Fratantoni, VP of research and economics for the MBA, said the organization has increased its estimate of economic growth, and nudged down expectations for the unemployment rate in 2012 considering the stronger job reports from the last two months.
The MBA report projects the 30-year fixed rate mortgage to average at about 4.3 percent for 2012. According to the February 16 Primary Mortgage Market Survey from Freddic Mac, the 30-year rate stayed at an all-time low of 3.87 percent since the first week of February.
Fratantoni also said purchase applications have come in weaker than anticipated, while refinance applications have come in considerably stronger.
According to an MBA report released February 15, the Market Composite Index, a measure of mortgage loan application volume, decreased 1 percent compared to the previous week. The Refinance Index increased 0.8 percent from the previous week, reaching its highest level since August 8, 2011. The refinance share of mortgage activity inched up to 81.1 percent of total applications, a slight increase from 80.5 percent for the previous week.
Foreclosures activity in 2012 is predicted to increase due to artificially low numbers in 2011 from foreclosure processing delays, according to the 2012 foreclosure market outlook report released by RealtyTrac. Foreclosure activity is not expected to return to the 2009 peak and is projected to decrease in 2013, according to the report.
Economic growth is projected to be at 2.3 percent for 2012, an increase compared to 1.6 percent last year, according to the report.
For the first time in seven years, the housing market is projected to contribute to gross domestic product (GDP), the report also stated, but by a very modest amount.
“Risks to the forecast are more balanced between the upside and downside since our January forecast,” said Fannie Mae chief economist Doug Duncan. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”
Duncan added that economic growth will remain constrained by various headwinds, including a potential spike in oil prices; an expected decline in net exports; and an expected increase in fiscal drag, including the fading of federal spending from the stimulus and a decline in defense spending for operations in Iraq and Afghanistan.
For 2011, the unemployment rate ended at 8.9 percent, and is projected to average at 8.4 percent in 2012, according to an economic forecast report released by the Mortgage Bankers Association (MBA).
The unemployment rate dropped to 8.3 percent in January, down 0.2 points from the previous month.
Mike Fratantoni, VP of research and economics for the MBA, said the organization has increased its estimate of economic growth, and nudged down expectations for the unemployment rate in 2012 considering the stronger job reports from the last two months.
The MBA report projects the 30-year fixed rate mortgage to average at about 4.3 percent for 2012. According to the February 16 Primary Mortgage Market Survey from Freddic Mac, the 30-year rate stayed at an all-time low of 3.87 percent since the first week of February.
Fratantoni also said purchase applications have come in weaker than anticipated, while refinance applications have come in considerably stronger.
According to an MBA report released February 15, the Market Composite Index, a measure of mortgage loan application volume, decreased 1 percent compared to the previous week. The Refinance Index increased 0.8 percent from the previous week, reaching its highest level since August 8, 2011. The refinance share of mortgage activity inched up to 81.1 percent of total applications, a slight increase from 80.5 percent for the previous week.
Foreclosures activity in 2012 is predicted to increase due to artificially low numbers in 2011 from foreclosure processing delays, according to the 2012 foreclosure market outlook report released by RealtyTrac. Foreclosure activity is not expected to return to the 2009 peak and is projected to decrease in 2013, according to the report.
Overdue Mortgages Number 6,082,000
New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
Overdue Mortgages Number 6,082,000
New data from Lender Processing Services (LPS) shows that as of the end of January, there were 6,082,000 mortgages in the U.S. going unpaid. That tally includes loans that are 30 or more days delinquent and loans in foreclosure.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
LPS’ mortgage performance statistics are derived from its loan-level database of nearly 40 million mortgage loans.
The national mortgage delinquency rate as of January month-end was 7.97 percent. LPS determines the delinquency rate as a measurement of all loans behind by at least one payment, excluding those already in the process of foreclosure.
The delinquency rate registered a decline, both for the month and the year, with January’s rate down 2.2 percent from December 2011 and down 10.5 percent from January 2011.
The total foreclosure inventory rate hit 4.15 percent last month – up 1.1 percent compared to December 2011, but down a slight 0.1 percent when comparing year-over-year numbers.
According to LPS’ report, there were 2,084,000 properties that were counted as part of the foreclosure inventory last month.
The number of properties with mortgages 30 or more days past due but not yet referred to a foreclosure attorney tallied 3,998,000. Of these, 1,772,000 had been delinquent for 90 days or longer.
LPS says Florida had the highest percentage of non-current mortgages last month, followed by Mississippi, Nevada, New Jersey, and Illinois.
Non-current totals combine foreclosures and delinquencies as a percent of all active loans in that state.
States with the lowest percentage of non-current loans in January included Montana, Alaska, Wyoming, South Dakota, and North Dakota.
Plans to Involve Private Investors Lessen Role of Fannie and Freddie
The Federal Housing Finance Agency (FHFA) released a three-part goal Tuesday to phase out the dominant role of Fannie Mae and Freddie Mac and allow for more private investors into the mortgage industry.
The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would be to contract the GSEs’ operations to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.
The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
Since entering the conservatorship, the GSEs have bought or guaranteed about three out of every four mortgages originated in the U.S., according to the letter.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.
The first part of the goal involves building a new infrastructure to allow the private sector to participate in the secondary market. The goal includes national standards for the mortgage securitization process that Congress and participants can use to develop the mortgage market, according to a letter from the FHFA explaining the strategic plan. The letter also states that the GSEs securitize $100 billion per month in new mortgages, and today, no private sector infrastructure exists that is capable of doing this.
The second goal would be to contract the GSEs’ operations to the private sector, gradually moving mortgage credit risk from the GSEs to private investors, according to the letter.
The last goal is to continue with programs and initiatives to prevent foreclosures and ensure mortgage credit is available.
In September of 2008, the GSEs were placed into a conservatorship by the U.S Treasury amidst the housing market crises to keep the two mortgage giants in operation. The conservatorship for the GSEs meant the government would oversee their operations temporarily.
Since that time, the GSEs have received more than $180 billion in taxpayer support, according to the letter.
“With the conservatorships operating for more than three years and no near-term resolution in sight, it is time to update and extend the goals and directions of the conservatorships,” said Edward J. DeMarco, acting director of the FHFA.
Since entering the conservatorship, the GSEs have bought or guaranteed about three out of every four mortgages originated in the U.S., according to the letter.
In order to shift mortgage credit risk from the GSEs to private investors, several plans are being considered or are already implemented, according to the letter.
One includes a gradual increase in guarantee fee pricing so that the price may become closer to the level expected if mortgage credit risk was based on private capital. In September 2011, the FHFA announced plans to continue towards gradual price increases based on risk and the cost of capital, and in December of that year, Congress required the FHFA to increase guarantee fees by at least an average of 10 basis points, according to the letter.
Currently, most GSE mortgage securities are fully guaranteed, but one idea proposes to establish loss-sharing arrangements and have private investors bear some or all of the credit risk.
Another plan under consideration is to expand mortgage insurance coverage on loans.
Proposal Gives Lenders Short Sale Response Deadline
A Senate proposal would expedite short sales by giving mortgage lenders or servicers 75 days to respond after receiving a home owner's written request.
Borrowers must submit a copy of a contract with a prospective buyer to the lender/servicer — which can accept it, reject it, or seek an additional three weeks to consider it.
For each instance where the lender/servicer fails to respond, borrowers would receive $1,000, along with other "appropriate relief," according to the bill sponsored by Sens. Lisa Murkowski (R-Alaska), Sherrod Brown (D-Ohio), and Scott Brown (R-Mass).
National Association of REALTORS®' 2012 President Moe Veissi said NAR supports "any effort to improve the process for approving short sales."
Source: "Senate Bill Requires Response to Short Sale Requests Within 75 Days," Housing Wire (02/20/12)
Borrowers must submit a copy of a contract with a prospective buyer to the lender/servicer — which can accept it, reject it, or seek an additional three weeks to consider it.
For each instance where the lender/servicer fails to respond, borrowers would receive $1,000, along with other "appropriate relief," according to the bill sponsored by Sens. Lisa Murkowski (R-Alaska), Sherrod Brown (D-Ohio), and Scott Brown (R-Mass).
National Association of REALTORS®' 2012 President Moe Veissi said NAR supports "any effort to improve the process for approving short sales."
Source: "Senate Bill Requires Response to Short Sale Requests Within 75 Days," Housing Wire (02/20/12)
Is the Downsizing Trend Fading?
Homes are getting bigger again. Census Bureau data shows that 2011 home starts were bigger with more features and amenities than those built in 2010.
According to the data, the average new-home size grew from 2,381 square feet in 2010 to 2,522 square feet in 2011. Forty-two percent of the new homes had four or more bedrooms, and 28 percent of the new homes had three or more full bathrooms.
However, housing experts are quick to point out that home construction last year saw its worst year on record, so the characteristics of new homes from last year is being pulled from a much smaller pool of homes than previous years.
Also, the average sales price for a new home also increased last year, going from $264,900 in 2010 to $274,400 in 2011.
Source: “Size Matters: Newly Constructed Home Trends in 2011,” RISMedia (Feb. 16, 2012)
According to the data, the average new-home size grew from 2,381 square feet in 2010 to 2,522 square feet in 2011. Forty-two percent of the new homes had four or more bedrooms, and 28 percent of the new homes had three or more full bathrooms.
However, housing experts are quick to point out that home construction last year saw its worst year on record, so the characteristics of new homes from last year is being pulled from a much smaller pool of homes than previous years.
Also, the average sales price for a new home also increased last year, going from $264,900 in 2010 to $274,400 in 2011.
Source: “Size Matters: Newly Constructed Home Trends in 2011,” RISMedia (Feb. 16, 2012)
Fewer Home Owners Behind on Payments
The number of home owners behind on their mortgage payments dropped to the lowest level in three years, according to a report of data from the fourth quarter of 2011 released by the Mortgage Bankers Association.
"Mortgage performance is also improving faster than the overall economy," says Jay Brinkmann, MBA's chief economist.
According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets.
Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still caution that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.
Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (Feb. 16, 2012)
"Mortgage performance is also improving faster than the overall economy," says Jay Brinkmann, MBA's chief economist.
According to MBA, 7.6 percent of residential mortgages were at least 30 days past due on their payments in the fourth quarter of 2011. Last year, the percentage was 8.3, and the peak of 10 percent was reached in early 2010. Mortgage delinquencies usually hover around 5 percent in more stable markets.
Still, while the lower delinquencies serve as an important sign needed for a healing housing market, MBA still caution that the number of loans in foreclosure remains high. About 4.4 percent of all loans were in foreclosure in the fourth quarter. The peak reached one year earlier was 4.6 percent.
Source: “Mortgage Delinquencies Hit Three-Year Low,” The Wall Street Journal (Feb. 16, 2012)
The 10 Most Popular Housing Markets
Chicago continues to hold on to the top-spot in January as the most widely searched housing market at Realtor.com. The following are the top searched housing markets from last month, according to Realtor.com data of 146 metro areas.
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
1. Chicago
Median list price: $186,000
2. Detroit
Median list price: $81,700
3. Los Angeles-Long Beach, Calif.
Median list price: $320,444
4. Philadelphia, Pa.-N.J.
Median list price: $221,995
5. Phoenix-Mesa, Ariz.
Median list price: $169,500
6. Atlanta
Median list price: $150,000
7. Tampa-St. Petersburg-Clearwater, Fla.
Median list price: $142,500
8. Dallas
Median list price: $189,900
9. Orlando, Fla.
Median list price: $155,000
10. Las Vegas, Nev.-Ariz.
Median list price: $121,500
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
| -A A +A Housing Inventories Drop, List Prices Rise
n a growing number of housing markets, sellers are facing less competition now compared to a year ago.
Inventory of for-sale homes has dropped by about 23 percent compared to this time last year, and fell by 6 percent alone from December 2011 to January 2012, according to Realtor.com data.
The age of the inventory is also declining, and is nearly 5 percent below levels last January.
The median age of for-sale housing inventory is lowest — 69 days or less — in Oakland, Calif.; Bakersfield, Calif.; Denver; Fresno, Calif.; Stockton-Lodi, Calif. and Phoexnis-Mesa, Ariz., according to January data from Realtor.com.
Meanwhile, as inventory is falling, the median list price has been on the rise: up nationally more than 3 percent year-over-year.
“Over the past year, an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year list price declines,” a statement by Realtor.com notes.
The metro areas with the highest increases to median list prices year-over-year, from January 2011 to January 2012 are:
1. Miami, Fla.: 32.75%
Median list price (in January 2012): $265,500
2. Fort Myers-Cape Coral, Fla.: 21%
Median list price: $229,900
3. Punta Gorda, Fla.: 19%
Median list price: $179,000
4. West Palm Beach-Boca Raton, Fla: 18.6%
Median list price: $224,150
5. Boise City, Idaho: 18.15%
Median list price: $151,228
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
Inventory of for-sale homes has dropped by about 23 percent compared to this time last year, and fell by 6 percent alone from December 2011 to January 2012, according to Realtor.com data.
The age of the inventory is also declining, and is nearly 5 percent below levels last January.
The median age of for-sale housing inventory is lowest — 69 days or less — in Oakland, Calif.; Bakersfield, Calif.; Denver; Fresno, Calif.; Stockton-Lodi, Calif. and Phoexnis-Mesa, Ariz., according to January data from Realtor.com.
Meanwhile, as inventory is falling, the median list price has been on the rise: up nationally more than 3 percent year-over-year.
“Over the past year, an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year list price declines,” a statement by Realtor.com notes.
The metro areas with the highest increases to median list prices year-over-year, from January 2011 to January 2012 are:
1. Miami, Fla.: 32.75%
Median list price (in January 2012): $265,500
2. Fort Myers-Cape Coral, Fla.: 21%
Median list price: $229,900
3. Punta Gorda, Fla.: 19%
Median list price: $179,000
4. West Palm Beach-Boca Raton, Fla: 18.6%
Median list price: $224,150
5. Boise City, Idaho: 18.15%
Median list price: $151,228
By Melissa Dittmann Tracey, REALTOR® Magazine Daily News
January Home Sales Up Again
Existing-home sales rose in January for the third time in the last four months, according to the National Association of Realtors (NAR).
January sales – completed transactions – were up 4.3 percent from December to a seasonally adjusted annual rate of 4.57 million. December’s total was revised downward to 4.38 million from 4.61 million. The January 2012 sales pace was up 0.7 percent from January 2011.
The median price of an existing-home was $154,700 in January, down 2 percent from January 2011, falling to its lowest level since November 2001. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.
According to the NAR, distressed homes – foreclosures and short sales, which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.
Price recovery depends on a reduction in the number of distressed properties on the market. All cash transactions, NAR
reported, accounted for 31 percent of sales.
Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.
The month-month increase – 190,000 —was the largest in both numbers and percentage since last August when sales increased 360,000, a jump of 8.9 percent. Despite the month-month increase in sales, the January pace was well below the pre-recession sales of 5.06 million existing homes sold and the cyclical peak of 6.49 million in November 2009 when the homebuyer tax credit boosted sales.
Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.
Regionally, existing-home sales in the Northeast rose 3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. The median price in the Northeast was $225,700, 4.2 percent below January 2011.
Existing-home sales in the Midwest increased 1.0 percent in December to 980,000, 3.2 percent higher than January 2011. The median price in the Midwest was $122,000, down 3.9 percent from a year ago.
In the South, existing-home sales rose 3.5 percent to 1.76 million in January, unchanged from a year ago. The median price in the South was $134,800, 0.3 percent below January 2011.
Existing-home sales in the West jumped 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. The median price in the West was $187,100, down 1.8 percent from a year ago.
By: Mark Lieberman, Five Star Institute Economist
January sales – completed transactions – were up 4.3 percent from December to a seasonally adjusted annual rate of 4.57 million. December’s total was revised downward to 4.38 million from 4.61 million. The January 2012 sales pace was up 0.7 percent from January 2011.
The median price of an existing-home was $154,700 in January, down 2 percent from January 2011, falling to its lowest level since November 2001. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.
According to the NAR, distressed homes – foreclosures and short sales, which sell at deep discounts – accounted for 35 percent of January sales (22 percent were foreclosures and 13 percent were short sales), up from 32 percent in December; they were 37 percent in January 2011.
Price recovery depends on a reduction in the number of distressed properties on the market. All cash transactions, NAR
reported, accounted for 31 percent of sales.
Total housing inventory at the end of January fell 0.4 percent to 2.31 million existing homes available for sale, a 6.1-month supply at the current sales pace, down from a 6.4-month supply in December.
The month-month increase – 190,000 —was the largest in both numbers and percentage since last August when sales increased 360,000, a jump of 8.9 percent. Despite the month-month increase in sales, the January pace was well below the pre-recession sales of 5.06 million existing homes sold and the cyclical peak of 6.49 million in November 2009 when the homebuyer tax credit boosted sales.
Total unsold listed inventory has trended down from a record 4.04 million in July 2007, and is 20.6 percent below a year ago.
Regionally, existing-home sales in the Northeast rose 3.4 percent to an annual pace of 600,000 in January and are 7.1 percent above a year ago. The median price in the Northeast was $225,700, 4.2 percent below January 2011.
Existing-home sales in the Midwest increased 1.0 percent in December to 980,000, 3.2 percent higher than January 2011. The median price in the Midwest was $122,000, down 3.9 percent from a year ago.
In the South, existing-home sales rose 3.5 percent to 1.76 million in January, unchanged from a year ago. The median price in the South was $134,800, 0.3 percent below January 2011.
Existing-home sales in the West jumped 8.8 percent to an annual pace of 1.23 million in January but are 3.1 percent below a spike in January 2011. The median price in the West was $187,100, down 1.8 percent from a year ago.
By: Mark Lieberman, Five Star Institute Economist
Tuesday, February 21, 2012
Ex-Bank President and Developer Both Charged With Mortgage Fraud
A former bank president and real estate developer were charged in a one count bill of information for conspiracy to commit mortgage bank fraud.
The case, which is being investigated by agents from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FBI, involves Reginald Harper, 58, former president and CEO of First Community Bank in Hammond, Louisiana, and Troy A. Fouquet, 43, developer based in Covington, Louisiana.
Both men were charged February 16 for their roles in a scheme involving the cover up of delinquent loans in place of “sham” loans.
“Rather than recognize losses on bad loans, Harper and Fouquet concocted a scheme to create and use sham loans to hide delinquent, non-performing loans,” said Christy
Romero, deputy special inspector general for SIGTARP. “Instead of living up to his fiduciary duties as president and CEO of the bank, Harper concealed the true status of the loans from the bank, regulators, and the U.S. Department of Treasury in the bank’s TARP application.”
In about 2004, Harper loaned Fouquet more than $2 million to purchase parcels of land, develop them into subdivisions, and then build homes on them to be bought by home buyers, according to court documents.
In 2005, it became difficult for Harper and Fouquet to find qualified buyers. To avoid reporting delinquency on loans made by Harper, the two developed various cover-up methods instead, according to the bill of information.
According to the bill of information, one scheme involved Harper making it appear to mortgage lenders that the prospective home buyers had more money than they did and another involved the use of “nominee” loans or “straw” borrowers to take out loans from First Community Bank, according to court documents. Nominee loans and straw buyers refers to a form of fraud involving the concealing of a borrower’s identity in place of a nominee’s name and credit history to take out a loan. Harper also accepted insufficient checks from Fouquet, crediting the loan payment in First Community Banks’s books and records, according to a release.
If Harper and Fouquet are convicted, the maximum penalty they face is up to five years in prison, a $250,000 fine, and a $100 special assessment, according to a release
By: Esther Cho
The case, which is being investigated by agents from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the FBI, involves Reginald Harper, 58, former president and CEO of First Community Bank in Hammond, Louisiana, and Troy A. Fouquet, 43, developer based in Covington, Louisiana.
Both men were charged February 16 for their roles in a scheme involving the cover up of delinquent loans in place of “sham” loans.
“Rather than recognize losses on bad loans, Harper and Fouquet concocted a scheme to create and use sham loans to hide delinquent, non-performing loans,” said Christy
Romero, deputy special inspector general for SIGTARP. “Instead of living up to his fiduciary duties as president and CEO of the bank, Harper concealed the true status of the loans from the bank, regulators, and the U.S. Department of Treasury in the bank’s TARP application.”
In about 2004, Harper loaned Fouquet more than $2 million to purchase parcels of land, develop them into subdivisions, and then build homes on them to be bought by home buyers, according to court documents.
In 2005, it became difficult for Harper and Fouquet to find qualified buyers. To avoid reporting delinquency on loans made by Harper, the two developed various cover-up methods instead, according to the bill of information.
According to the bill of information, one scheme involved Harper making it appear to mortgage lenders that the prospective home buyers had more money than they did and another involved the use of “nominee” loans or “straw” borrowers to take out loans from First Community Bank, according to court documents. Nominee loans and straw buyers refers to a form of fraud involving the concealing of a borrower’s identity in place of a nominee’s name and credit history to take out a loan. Harper also accepted insufficient checks from Fouquet, crediting the loan payment in First Community Banks’s books and records, according to a release.
If Harper and Fouquet are convicted, the maximum penalty they face is up to five years in prison, a $250,000 fine, and a $100 special assessment, according to a release
By: Esther Cho
Treasury Hosts Servicer Workshops for Florida Agents and Homeowners
The U.S. Treasury Department is heading to the coastal cities of Miami and Tampa, Florida, this week and setting up shop for a single day in each city in order to offer assistance to homeowners who are struggling to make their mortgage payments.
Treasury will host a “Help for Homeowners” community outreach event in each of the hard-hit Florida cities, giving homeowners there a chance to meet one-on-one with their loan servicers and with housing counselors to work toward resolving their mortgage problems and averting foreclosure.
Realizing that staying in the home is not always an option, Treasury has included several opportunities within each event’s agenda for real estate professionals and housing counselors to discuss short sales as a foreclosure prevention strategy.
The Miami event is Wednesday, February 22. “Help for Homeowners” moves to Tampa on Friday, February 24. Each event is opened up to homeowners from 1:00 – 8:00 p.m. Tim Massad, assistant Treasury secretary for financial stability is scheduled to speak at the Tampa event at 1:00 p.m.
Before those doors open, though, Treasury has set aside two-and-a-half hours for agents and other real estate professionals to participate in short sale workshops that Treasury says will “explore just about everything you need to know about executing short sales in today’s market.”
They’ll have the opportunity to hear directly from Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo about the most effective ways to get a short sale offer approved. The lenders will also share tips for navigating through the short sale process, provide assistance for working through difficult cases, and discuss ways agents can close the deal faster.
Treasury officials will also be on hand to talk about the Home Affordable Foreclosure Alternatives (HAFA) program. For real estate professionals unable to attend one of the Florida events in person, live footage of the short sale workshops will be streamed via a webinar which can be accessed through Treasury’s HAMP admin site.
The short sale workshops and live webinar are being offered to real estate professionals free of charge. “Get all of your questions answered,” Treasury prompts in the marketing material for the event posted to its admin site. The morning short sale workshop sessions are not open to homeowners.
Treasury is also giving real estate professionals a unique opportunity to meet on their clients’ behalf with one of the participating servicers: Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo, as well as OneWest/IndyMac and Seterus.
Registration for these servicer meetings has been closed according to the scheduling information available online. Additional details on each of the Florida “Help for Homeowners” events can be found on the MakingHomeAffordable.gov website.
By: Carrie Bay
Treasury will host a “Help for Homeowners” community outreach event in each of the hard-hit Florida cities, giving homeowners there a chance to meet one-on-one with their loan servicers and with housing counselors to work toward resolving their mortgage problems and averting foreclosure.
Realizing that staying in the home is not always an option, Treasury has included several opportunities within each event’s agenda for real estate professionals and housing counselors to discuss short sales as a foreclosure prevention strategy.
The Miami event is Wednesday, February 22. “Help for Homeowners” moves to Tampa on Friday, February 24. Each event is opened up to homeowners from 1:00 – 8:00 p.m. Tim Massad, assistant Treasury secretary for financial stability is scheduled to speak at the Tampa event at 1:00 p.m.
Before those doors open, though, Treasury has set aside two-and-a-half hours for agents and other real estate professionals to participate in short sale workshops that Treasury says will “explore just about everything you need to know about executing short sales in today’s market.”
They’ll have the opportunity to hear directly from Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo about the most effective ways to get a short sale offer approved. The lenders will also share tips for navigating through the short sale process, provide assistance for working through difficult cases, and discuss ways agents can close the deal faster.
Treasury officials will also be on hand to talk about the Home Affordable Foreclosure Alternatives (HAFA) program. For real estate professionals unable to attend one of the Florida events in person, live footage of the short sale workshops will be streamed via a webinar which can be accessed through Treasury’s HAMP admin site.
The short sale workshops and live webinar are being offered to real estate professionals free of charge. “Get all of your questions answered,” Treasury prompts in the marketing material for the event posted to its admin site. The morning short sale workshop sessions are not open to homeowners.
Treasury is also giving real estate professionals a unique opportunity to meet on their clients’ behalf with one of the participating servicers: Bank of America, CitiMortgage, GMAC, JPMorgan Chase, and Wells Fargo, as well as OneWest/IndyMac and Seterus.
Registration for these servicer meetings has been closed according to the scheduling information available online. Additional details on each of the Florida “Help for Homeowners” events can be found on the MakingHomeAffordable.gov website.
By: Carrie Bay
Treasury Increases Incentives for Principal Reductions
recently released Supplemental Directive from Treasury increases incentives for second lien investors when loans receive principal reductions.
The increased incentives apply to permanent HAMP modifications with principal reductions through the government’s Principal Reduction Alternative (PRA) that have trial period plans starting March 1 or later.
The incentives are also available when second liens are completely or partially eliminated through the Second Lien Modification Program (2MP) on loans modified starting June 1.
For loans no more than six months delinquent over the previous 12 months, investors may receive $0.63 per
dollar of written down principal between 105 percent and 115 percent market-to-market loan-to-value ratios (MTMLTVs), or $0.45 per dollar of written down principal between 115 percent and 140 percent MTMLTV.
For loans that have been more than six months delinquent sometime in the previous 12 months, investors may receive $0.18 per dollar of written down principal, irrespective of MTMLTV ratio.
Regarding second liens modified through 2MP that have not been more than six months delinquent in the previous year, investors may receive $0.12 per dollar of unpaid principal balance eliminated on second liens.
While servicers may reduce principal below 105 percent MTMLTV, they will not receive incentives on the portion of principal reduction that brings the MTMLTV below 105 percent, according to Treasury.
Investors may also receive $0.12 per dollar of eliminated unpaid principal balance on second mortgage liens more than six months delinquent in the year prior to the “date of extinguishment,” Treasury stated in the directive.
“This guidance does not apply to mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac, insured or guaranteed by the Veterans Administration or the Department of Agriculture’s Rural Housing Service or insured by the Federal Housing Administration,” the directive states.
By: Krista Franks Brock
The increased incentives apply to permanent HAMP modifications with principal reductions through the government’s Principal Reduction Alternative (PRA) that have trial period plans starting March 1 or later.
The incentives are also available when second liens are completely or partially eliminated through the Second Lien Modification Program (2MP) on loans modified starting June 1.
For loans no more than six months delinquent over the previous 12 months, investors may receive $0.63 per
dollar of written down principal between 105 percent and 115 percent market-to-market loan-to-value ratios (MTMLTVs), or $0.45 per dollar of written down principal between 115 percent and 140 percent MTMLTV.
For loans that have been more than six months delinquent sometime in the previous 12 months, investors may receive $0.18 per dollar of written down principal, irrespective of MTMLTV ratio.
Regarding second liens modified through 2MP that have not been more than six months delinquent in the previous year, investors may receive $0.12 per dollar of unpaid principal balance eliminated on second liens.
While servicers may reduce principal below 105 percent MTMLTV, they will not receive incentives on the portion of principal reduction that brings the MTMLTV below 105 percent, according to Treasury.
Investors may also receive $0.12 per dollar of eliminated unpaid principal balance on second mortgage liens more than six months delinquent in the year prior to the “date of extinguishment,” Treasury stated in the directive.
“This guidance does not apply to mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac, insured or guaranteed by the Veterans Administration or the Department of Agriculture’s Rural Housing Service or insured by the Federal Housing Administration,” the directive states.
By: Krista Franks Brock
Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure
To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.
Senators Lisa Murkowski (R-Arkansas), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer
will be limited to one extension of no more than 21 days.
The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”
Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.
When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.
In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.
Senators Lisa Murkowski (R-Arkansas), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer
will be limited to one extension of no more than 21 days.
The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”
Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.
When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.
In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.
Monday, February 20, 2012
Where Two Is Better Than One
NEARLY as soon as Daniel Zarabi, a builder in Port Washington, completed a pair of two-family homes on Manhasset Isle in Manorhaven, he rented out each duplex for $3,500 a month. He is eager to build more such housing nearby.
“There is always a demand for it,” Mr. Zarabi said. “It’s a nice size, and you get to use what the community has to offer,” including parks, a pool, golf and fine schools.
Despite calls across the Island for more multifamily housing, Manorhaven is one of only a handful of communities with zoning that allows for two-family construction. Most permit such housing only if it’s grandfathered in. Among buyers, the benefits include living in one half while renting out the other to cover property taxes, if not the mortgage. For renters who cannot or are not yet ready to buy, two-family homes often provide more space — for instance, the three bedrooms that are hard to come by in apartment buildings.
In fact, to hear Mr. Zarabi and others tell it, two-families are the answer to a number of the Island’s housing problems — a way to draw younger residents while avoiding the blight that can sometimes gain a foothold if a community has too many rentals.
The “young professionals” drawn to his housing, Mr. Zarabi said, often replace more “transient” tenants. And the popularity of two-families is only being bolstered by the strength of the rental market, with prices ranging from $2,800 to $3,800 a month for new construction depending on size, location and views.
Jonathan P. Fielding, the Manorhaven village clerk, says that code permits two-family houses on lots with a minimum of 4,000 square feet, and that single-family homes are eligible for conversion if they meet that standard. There are 1,550 properties in Manorhaven, he said, and the “lion’s share” are two-families.
In quite a few, “the owner lives in one unit and rents out the other unit,” Mr. Fielding said. “We have a lot of residents who rely on the income from renting out the other unit in their house to make ends meet.” With owner-occupied units, he pointed out, people have “that same pride in ownership. That doesn’t create a problem for a community the way you could have if you have all rentals.”
Mr. Zarabi, given the green light by the village board of trustees late last year on a pair of slightly larger two-families, recently knocked down a single-family on a corner lot in preparation. Replacing it will be a pair of Hamptons-style shingle postmodern two-family homes, each with 1,600 square feet over two stories, and two and a half baths, a basement and a porch to call its own. One will have three bedrooms; the other will be laid out for two bedrooms and an office. One tenant’s front door will be on Sintsink Avenue West and the other will face Mohegan Avenue, making the dual residences look more like single-family homes.
“We don’t like to put the two doors next to each other because it is not very private,” Mr. Zarabi said.
Ed Mayourian, a builder and a partner in Putnam Development, says his two-family homes in Manorhaven sell for $650,000 to $900,000. “The demand is there,” he said. “We have plenty of customers. We sell them; we rent them.” When first-time buyers eventually move up to a single-family residence, Mr. Mayourian said, they often keep the two-story home as an investment property.
On the South Shore in Long Beach, the Island’s other two-family-home stronghold, there has been a moratorium on two-family home construction since 1999, to stem overcrowding, except for properties grandfathered in. The Multiple Listing Service of Long Island has 55 two-families on the market there
According to Alex Rubin, an associate broker with Prudential Douglas Elliman, Long Beach’s multifamilies command a premium. Mr. Rubin’s recent listing for an owner-occupied contemporary two-story two-family home “in perfect shape” on a beach side street for $699,000, a short sale, received an accepted offer “fairly quickly,” he said. Rent for the lower level runs $2,000 a month; the upstairs, including a roof deck, commands $3,000.
He said two-family homes made sense for downsizers who sometimes have difficulty shedding enough belongings to move to a two-bedroom apartment from a five- or six-bedroom home. Many empty nesters are also concerned about common charges and assessments in co-ops or condominiums. In a two-family home, Mr. Rubin said, they feel “more in control.”
At the high end in Long Beach, Gosia Malgorzata Onufrik, a sales agent with Paul Gold Realty, has a $2.65 million listing for a new two-story two-family contemporary oceanfront home that replaced an older two-family home. Each unit has three bedrooms, two and a half baths, a deck, a tandem two-car garage and an elevator. Rent runs about $5,000 a month for the lower level and $6,500 for the upper.
In Brookhaven, meanwhile, a town code amended last year is opening up a new possibility for builders. In a new 10-lot subdivision in Port Jefferson Station called Sweet Woods by Island Estates, Len Axinn, a developer, just started framing a model home with an accessory apartment that can legally be rented.
“It is a two-family house,” Mr. Axinn said, “but it cannot be owned by an investor who seeks to rent out both parts.” The basic three-bedroom one-and-a-half-bath model runs $499,900, with the apartment on a walkout lower level with its own entrance.
“It is a house to grow into,” Mr. Axinn said, envisioning first-time buyers needing the rental income. During child-rearing years, the space can be converted for family use as an extra bedroom or a media room. Later, grown children returning to their parents’ nest can relish the privacy of a separate apartment. And downsizers have yet another option: “The homeowner could live in the apartment and rent out the main house,” Mr. Axinn said.
Source: Nytimes.com
“There is always a demand for it,” Mr. Zarabi said. “It’s a nice size, and you get to use what the community has to offer,” including parks, a pool, golf and fine schools.
Despite calls across the Island for more multifamily housing, Manorhaven is one of only a handful of communities with zoning that allows for two-family construction. Most permit such housing only if it’s grandfathered in. Among buyers, the benefits include living in one half while renting out the other to cover property taxes, if not the mortgage. For renters who cannot or are not yet ready to buy, two-family homes often provide more space — for instance, the three bedrooms that are hard to come by in apartment buildings.
In fact, to hear Mr. Zarabi and others tell it, two-families are the answer to a number of the Island’s housing problems — a way to draw younger residents while avoiding the blight that can sometimes gain a foothold if a community has too many rentals.
The “young professionals” drawn to his housing, Mr. Zarabi said, often replace more “transient” tenants. And the popularity of two-families is only being bolstered by the strength of the rental market, with prices ranging from $2,800 to $3,800 a month for new construction depending on size, location and views.
Jonathan P. Fielding, the Manorhaven village clerk, says that code permits two-family houses on lots with a minimum of 4,000 square feet, and that single-family homes are eligible for conversion if they meet that standard. There are 1,550 properties in Manorhaven, he said, and the “lion’s share” are two-families.
In quite a few, “the owner lives in one unit and rents out the other unit,” Mr. Fielding said. “We have a lot of residents who rely on the income from renting out the other unit in their house to make ends meet.” With owner-occupied units, he pointed out, people have “that same pride in ownership. That doesn’t create a problem for a community the way you could have if you have all rentals.”
Mr. Zarabi, given the green light by the village board of trustees late last year on a pair of slightly larger two-families, recently knocked down a single-family on a corner lot in preparation. Replacing it will be a pair of Hamptons-style shingle postmodern two-family homes, each with 1,600 square feet over two stories, and two and a half baths, a basement and a porch to call its own. One will have three bedrooms; the other will be laid out for two bedrooms and an office. One tenant’s front door will be on Sintsink Avenue West and the other will face Mohegan Avenue, making the dual residences look more like single-family homes.
“We don’t like to put the two doors next to each other because it is not very private,” Mr. Zarabi said.
Ed Mayourian, a builder and a partner in Putnam Development, says his two-family homes in Manorhaven sell for $650,000 to $900,000. “The demand is there,” he said. “We have plenty of customers. We sell them; we rent them.” When first-time buyers eventually move up to a single-family residence, Mr. Mayourian said, they often keep the two-story home as an investment property.
On the South Shore in Long Beach, the Island’s other two-family-home stronghold, there has been a moratorium on two-family home construction since 1999, to stem overcrowding, except for properties grandfathered in. The Multiple Listing Service of Long Island has 55 two-families on the market there
According to Alex Rubin, an associate broker with Prudential Douglas Elliman, Long Beach’s multifamilies command a premium. Mr. Rubin’s recent listing for an owner-occupied contemporary two-story two-family home “in perfect shape” on a beach side street for $699,000, a short sale, received an accepted offer “fairly quickly,” he said. Rent for the lower level runs $2,000 a month; the upstairs, including a roof deck, commands $3,000.
He said two-family homes made sense for downsizers who sometimes have difficulty shedding enough belongings to move to a two-bedroom apartment from a five- or six-bedroom home. Many empty nesters are also concerned about common charges and assessments in co-ops or condominiums. In a two-family home, Mr. Rubin said, they feel “more in control.”
At the high end in Long Beach, Gosia Malgorzata Onufrik, a sales agent with Paul Gold Realty, has a $2.65 million listing for a new two-story two-family contemporary oceanfront home that replaced an older two-family home. Each unit has three bedrooms, two and a half baths, a deck, a tandem two-car garage and an elevator. Rent runs about $5,000 a month for the lower level and $6,500 for the upper.
In Brookhaven, meanwhile, a town code amended last year is opening up a new possibility for builders. In a new 10-lot subdivision in Port Jefferson Station called Sweet Woods by Island Estates, Len Axinn, a developer, just started framing a model home with an accessory apartment that can legally be rented.
“It is a two-family house,” Mr. Axinn said, “but it cannot be owned by an investor who seeks to rent out both parts.” The basic three-bedroom one-and-a-half-bath model runs $499,900, with the apartment on a walkout lower level with its own entrance.
“It is a house to grow into,” Mr. Axinn said, envisioning first-time buyers needing the rental income. During child-rearing years, the space can be converted for family use as an extra bedroom or a media room. Later, grown children returning to their parents’ nest can relish the privacy of a separate apartment. And downsizers have yet another option: “The homeowner could live in the apartment and rent out the main house,” Mr. Axinn said.
Source: Nytimes.com
A Fixed-Rate Alternative
WITH interest rates at historically low levels, the vast majority of borrowers are finding value with a reliable fixed-rate mortgage. But borrowers who think they could be relocating in the near future, or need to shore up savings, might want to consider what some regard as the next best thing: an adjustable-rate mortgage that offers several years at a fixed interest rate.
These hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s. But they fell out of favor — along with the riskier ARMs with ultralow teaser rates and interest-only components — after the subprime mortgage crisis.
There were certain types of ARMs that didn’t work out that well,” said Keith T. Gumbinger, a vice president of HSH Associates, a financial publisher in Pompton Plains, N.J., “but hybrids predated those products by at least a decade or more. If you’re buying a home, and you’re good about saving money for the future, there are ways to take these hybrid products and save some cash or pay down the loans.”
Some adjustable-rate mortgages have an interest rate that changes every year, but a hybrid — also known as a delayed first-adjustment ARM — has a fixed interest rate for a period of time. In fact, most loan officers refer to a hybrid by the period during which the rate is fixed. A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 adjusts after seven years.
ARMs make up only a small segment of the overall mortgage market these days, financing just over 10 percent of home purchases, but market share is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac, a government buyer of home loans. The 5/1 hybrid was the most popular adjustable-rate loan product in the market, the survey found, followed by the 3/1 and 7/1. (The least popular: a 3/3 ARM, which adjusts once every three years.)
A common reason for choosing a hybrid ARM is projected length of homeownership: it’s a nice option for buyers who don’t expect to stay in their home for longer than, say, three to five years, perhaps because they anticipate transferring to a new city or starting a family.
And, “you might be an empty nester, a retiree,” said Lou-Ann Smith, a loan officer at Hamilton Home Loans in Ridgefield, Conn., “or somebody who knows they’re getting a big inheritance and won’t have a mortgage.”
Rates on hybrid ARMs are also attractive. As of Thursday, for example, the average rate on a 5/1 loan was 2.81 percent in the Northeast, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.
The interest rate is often tied to rates on Treasuries or to an index, like the London Interbank Offered Rate, or Libor.
“We continuously have interest in hybrid ARMs, especially in the jumbo marketplace, where there’s a huge rate differential,” said Melissa Cohn, the president of the Manhattan Mortgage Company. The rate on a 5/1 ARM could be as low as 2.5 percent, according to Ms. Cohn, while a 30-year fixed-rate loan costs 3.75 percent. So if you took out a $300,000 loan, you could save almost $4,000 a year with the hybrid ARM, she said.
She noted that the difference was even larger with nonconforming jumbo loans.
“Those are real numbers that make it worth the risk,” Ms. Cohn said. “We’re in an unusual financial period where interest rates are very low, and the indices by which the rates are set are also very low.”
A word of caution to borrowers, however: With rates starting at rock-bottom levels, there’s generally only one direction for them to go. And even though there are caps on the rate change amount, the jump could be as much as six percentage points.
Source: nytimes.com
These hybrid adjustable-rate mortgages, or ARMs, originated in the jumbo-loan marketplace at the end of the 1980s. But they fell out of favor — along with the riskier ARMs with ultralow teaser rates and interest-only components — after the subprime mortgage crisis.
There were certain types of ARMs that didn’t work out that well,” said Keith T. Gumbinger, a vice president of HSH Associates, a financial publisher in Pompton Plains, N.J., “but hybrids predated those products by at least a decade or more. If you’re buying a home, and you’re good about saving money for the future, there are ways to take these hybrid products and save some cash or pay down the loans.”
Some adjustable-rate mortgages have an interest rate that changes every year, but a hybrid — also known as a delayed first-adjustment ARM — has a fixed interest rate for a period of time. In fact, most loan officers refer to a hybrid by the period during which the rate is fixed. A 5/1 loan, for example, has a fixed rate for five years, then adjusts annually for the remainder of the term; a 7/1 adjusts after seven years.
ARMs make up only a small segment of the overall mortgage market these days, financing just over 10 percent of home purchases, but market share is expected to increase to 14 percent this year, according to an annual survey released last month by Freddie Mac, a government buyer of home loans. The 5/1 hybrid was the most popular adjustable-rate loan product in the market, the survey found, followed by the 3/1 and 7/1. (The least popular: a 3/3 ARM, which adjusts once every three years.)
A common reason for choosing a hybrid ARM is projected length of homeownership: it’s a nice option for buyers who don’t expect to stay in their home for longer than, say, three to five years, perhaps because they anticipate transferring to a new city or starting a family.
And, “you might be an empty nester, a retiree,” said Lou-Ann Smith, a loan officer at Hamilton Home Loans in Ridgefield, Conn., “or somebody who knows they’re getting a big inheritance and won’t have a mortgage.”
Rates on hybrid ARMs are also attractive. As of Thursday, for example, the average rate on a 5/1 loan was 2.81 percent in the Northeast, compared with 3.88 percent for a 30-year fixed-rate loan, according to Freddie Mac.
The interest rate is often tied to rates on Treasuries or to an index, like the London Interbank Offered Rate, or Libor.
“We continuously have interest in hybrid ARMs, especially in the jumbo marketplace, where there’s a huge rate differential,” said Melissa Cohn, the president of the Manhattan Mortgage Company. The rate on a 5/1 ARM could be as low as 2.5 percent, according to Ms. Cohn, while a 30-year fixed-rate loan costs 3.75 percent. So if you took out a $300,000 loan, you could save almost $4,000 a year with the hybrid ARM, she said.
She noted that the difference was even larger with nonconforming jumbo loans.
“Those are real numbers that make it worth the risk,” Ms. Cohn said. “We’re in an unusual financial period where interest rates are very low, and the indices by which the rates are set are also very low.”
A word of caution to borrowers, however: With rates starting at rock-bottom levels, there’s generally only one direction for them to go. And even though there are caps on the rate change amount, the jump could be as much as six percentage points.
Source: nytimes.com
Tracking the euro-zone economy in real time
THE short-term outlook for the world economy seems to hinge on whether a resolution to Europe's debt crisis can be found. A resolution, in turn, will be difficult to come by if the euro zone falls back into recession. If output is shrinking and unemployment rising, then austerity measures are likely to make economic conditions worse while raising very little new revenue. The euro zone may fall ever deeper into a hole.
That's an unnerving possibility given the outlook for the euro-zone economy. The euro-zone economy probably contracted in the fourth quarter, according to an analysis of recent data points by Now-Casting, which publishes "real-time" economic forecasts. You can see the information that goes into their forecast in the interactive chart below. A negative fourth quarter has been a real possibility since July. Recent data do suggest that the fourth-quarter decline may not have been as bad as once seemed possible, and output in the first quarter is close to returning to positive territory. Early signs indicate that expansion may be back in the cards as of the second quarter. Moderation in industrial output figures that not long ago were showing big declines helps explain some of the rebound. Improvement in the euro zone's trade balance also helped. Imports were flat in November, thanks to weak domestic conditions. But exports rose, pushing the euro area's November surplus to €6.9 billion, up from just €1 billion in October.
Source: The Economist.com
That's an unnerving possibility given the outlook for the euro-zone economy. The euro-zone economy probably contracted in the fourth quarter, according to an analysis of recent data points by Now-Casting, which publishes "real-time" economic forecasts. You can see the information that goes into their forecast in the interactive chart below. A negative fourth quarter has been a real possibility since July. Recent data do suggest that the fourth-quarter decline may not have been as bad as once seemed possible, and output in the first quarter is close to returning to positive territory. Early signs indicate that expansion may be back in the cards as of the second quarter. Moderation in industrial output figures that not long ago were showing big declines helps explain some of the rebound. Improvement in the euro zone's trade balance also helped. Imports were flat in November, thanks to weak domestic conditions. But exports rose, pushing the euro area's November surplus to €6.9 billion, up from just €1 billion in October.
Source: The Economist.com
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