September 2009

Kids Health: Best, Worst Cities for Families

Burlington, Vt., tops the list of the best places for families, according to a special report published by Rodale Inc. in its annual Children’s Health magazine.

The magazine analyzed cities around the country, weighing 30 factors, including crime and safety, education, jobs, housing cultural attractions, and health resources.

Cities at the top of the list:

1. Burlington, Vt.
2. Madison, Wis.
3. Fargo, N.D.
4. Lincoln, Neb.
5. Fremont, Calif.
6. Lexington, Ky.
7. Honolulu
8. Cheyenne, Wyo.
9. Omaha, Neb.
10. Yonkers, N.Y.

At the bottom of the list, from the worst to slightly better:

1. Detroit
2. Miami
3. Orlando
4. Memphis
5. Fresno, Calif.
6. Cleveland
7. Tampa
8. Phoenix
9. Las Vegas
10. Toledo, Ohio

Source: Rodale Inc. (09/14/2009)

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Credit Crunch Constrains International Buyers

Interest in U.S. real estate by international buyers declined due to the worldwide recession and severe credit crunch, according to the 2009 National Association of Realtors Profile of International Home Buying Activity.

The share of REALTOR® clientele who are foreign buyers is smaller than in previous years, but among those purchasing nearly half paid all cash – bypassing the mortgage process. Twenty-three percent of survey respondents served at least one international client in the 12-month period between the end of May 2008 and the end of May 2009, down from 26 percent in the 2008 study. During this period an estimated 154,000 homes were sold to foreign nationals, which is down from approximately 170,000 international transactions during the previous 12 months.

Pricing

The median price for a home paid by foreign buyers for the year ending in May 2009 was $247,100, higher than the overall national price of $198,100 in 2008. A significant number, 45.8 percent of foreign buyers, paid cash for their property, in part because obtaining a mortgage was more difficult than in prior years. The total dollar volume was $38.7 billion.

Lawrence Yun, NAR chief economist, said recent improvements in the credit market will help reverse the slide in foreign buyers. “Stock market gains and improving bank balance sheets will permit a greater amount of lending for second-home purchases,” he said. “In addition, expanding foreign economies for international buyers and favorable exchange rates give them more purchasing power, particularly in a period of record high affordability conditions in the United States. Property investment here generally builds wealth over the long term.”

Origin of Buyers

U.S. laws do not restrict or scrutinize most property purchases by foreign nationals. There are few barriers to owning property here, unlike transactions in many other countries, although immigration laws prohibit foreigners from remaining in the U.S. continuously for more than six months without a special visa. In addition, international investors are afforded the same property rights as those enjoyed by U.S. citizens.

The top five countries of origin for foreign buyers were:

1. Canada, 17.6 percent of buyers
2. United Kingdom, 10.5 percent
3. Mexico, 9.8 percent
4. India, 8.5 percent
5. China, 5.4 percent

The percentage of buyers from Canada, the U.K., and China declined from the previous study, while purchasers from Mexico and India increased. Although most buyers were from North America, Europe and Asia, buyers from Latin America, Africa, and Oceania also purchased U.S. real estate.

Most Popular States

Foreign buyers were active in every state and the District of Columbia, with the most popular states being Florida, which accounted for 23.0 percent of all foreign purchases; California, 13.0 percent; Texas, 10.7 percent; and Arizona, 7.1 percent. These states are major gateways into the U.S. from other countries and also offer relatively mild climates.

California saw a notable rise in foreign interest as affordability conditions improved markedly in the state last year. “Florida is the most popular state for European and Latin American buyers, while Asian buyers are drawn to California,” Yun said.

Property Types

The study shows 69 percent of international purchases were single-family homes, while condos accounted for 18 percent. Townhomes made up 8 percent of transactions, with commercial property at 4 percent. Nearly 46 percent of properties were in suburban areas and 25 percent in urban environments. The rest were evenly split between resorts and small towns or rural areas.

The prime purpose for purchasing a property in the U.S. is to use it for a vacation home, cited by 33.9 percent of respondents; for both investment and vacations, 23.5 percent; as a residential rental property for investment, 18.3 percent; and commercial property for investment, 3.5 percent. The 2009 NAR Profile of International Home Buying Activityis based on responses from 3,785 REALTORS® and describes international home buying activity in the U.S. over the 12-month period from the end of May 2008 to May 2009.

Source: NAR

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

10 Markets Where Building Is Booming

The building business—both commercial and residential—is a seeing a recovery in some markets, especially those where military, government, and energy jobs are driving demand.

Lake Charles, La., which leads the nation, is an anomaly—it’s recovering from hurricanes—but the other markets are largely driving by economic growth. For instance, building permits for apartments in Huntsville, Ala., near the expanding U.S. Space & Rocket Center, have jumped 400 percent so far in 2009.

Many of the contracts are going to smaller local builders, but some of the giants are getting back in the game as well. KB Home resumed construction in the Mid-Atlantic, including Washington D.C., after pulling back earlier this year.

The top 10 growth markets, based on building permits, are:

1. Lake Charles, La., 122.5 percent
2. Beaumont-Port Arthur, Texas, 65.8 percent
3. Salt Lake City, 36.6 percent
4. Huntsville, Ala., 30 percent
5. Jacksonville, N.C., 28.6 percent
6. Augusta-Richmond County, Ga.-S.C., 21.6 percent
7. Fayetteville, N.C., 12.2 percent
8. Las Cruces, N.M., 11.6 percent
9. Auburn-Opelika, Ala., 11.3 percent
10. Little Rock-North Little Rock, Ark., 7.7 percent

Source: BusinessWeek, Prashant Gopal (09/18/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Most Affordable Markets Ranked

In its annual survey of most- and least-affordable housing markets, BusinessWeek quoted a number of experts who believe that for many people, the current low interest rates and low housing prices have combined to offer a once-in-a-lifetime opportunity to buy a home.

Dennis Torres, executive director of real estate operations at Pepperdine University, says, “People are going to talk about this as ‘I could have, I should have’ for decades,” he said. “If you’re confident that you’ll stay in the location for seven years and you’re confident of your income, don’t walk, run.”

To calculate the most- and least-affordable areas, BusinessWeek considered the share of homes sold in the second quarter of this year that would have been affordable to a family earning the local median income. Housing costs were calculated using new and existing sales records supplied by First American Real Estate Solutions and include principal, interest, estimated property taxes, and insurance.

Here are the 10 most-affordable areas:

1. Kokomo, Ind.
2. Lansing-East Lansing, Mich.
3. Mansfield, Ohio
4. Elkhart-Goshen, Ind.
5. Lima, Ohio
6. Bay City, Mich.
7. Indianapolis-Carmel, Ind.
8. Saginaw-Saginaw Township North, Mich.
9. Youngstown-Warren-Boardman, Ohio-Pa.
10. Canton-Massillon, Ohio

Here are the 10 that are least affordable:

1. New York-White Plains, N.Y.-Wayne, N.J.
2. San Francisco-San Mateo-Redwood City, Calif.
3. San Luis Obispo-Paso Robles, Calif.
4. Ocean City, N.J.
5. Honolulu
6. Los Angeles-Long Beach-Glendale, Calif.
7. Santa Ana-Anaheim-Irvine, Calif.
8. Santa Cruz-Watsonville, Calif.
9. Nassau-Suffolk (Long Island), N.Y.
10. Flagstaff, Ariz.

Source: Business Week, Prashant Gopal (09/11/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
c- (404) 431-2117
Twitter – http://twitter.com/elliottrob

Credit Market Makes Economists Nervous

Interest rates are low and home prices are down, but banks continue to be stingy with loans.

At the height of the housing boom, seven out of 10 mortgages were approved. At the end of 2008, only five out of 10 got the green light. During the boom years, homebuyers could qualify for the cheapest rates with a credit score of 660. Today, they need 740 or better.

“Banks are going to be in a defensive posture for several years. Most borrowers can’t meet their criteria,” says Christopher Whalen, managing director at research firm Institutional Risk Analytics.

Consumers cut back borrowing by $21.6 billion from June to July, the biggest drop since the Federal Reserve began keeping records in 1943. That made some analysts nervous.

The reduction in borrowing could slow the economic recovery, says David Olson, president of Access Mortgage Research & Consulting.

“If they cut back, it would be catastrophic,” Olson says. “We could have a second downturn.”

Source: The Associated Press, Stevenson Jacobs (09/17/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage Fraud Keeping FBI Busy

The Federal Bureau of Investigation has more than 2,600 open cases of mortgage fraud, FBI Director Robert Mueller told Congress on Wednesday. Most of the cases involve losses of more than $1 million.

More than 300 special agents are assigned to mortgage fraud, which is up more than 200 percent from what it was three years ago, according to the FBI.

“The schemes have evolved with the changing economy, targeting vulnerable individuals, victimizing them even as they are about to lose their homes,” Mueller said in prepared remarks to the Senate Judiciary Committee.

Source: Reuters News (09/16/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Investors Wait for Commercial Opportunity

Investors looking to buy commercial properties on the cheap as the economy slams the commercial real estate industry have been disappointed so far.

Property values have declined on paper, but would-be buyers haven’t been able to walk off with offices, shopping centers, hotels, and warehouses at fire-sale prices, and very few properties are changing hands.

“Investors seem surprised at the lack of quality buying opportunities given the problems in the financial markets and the continued weakening of the industry’s fundamentals,” says Susan Smith, director of the real estate advisory practice at PricewaterhouseCoopers.

Investors are expected to keep waiting because many properties purchased during 2006 and 2007 are over-leveraged and lenders will eventually be forced to foreclose and sell them at a discount.

Source: Los Angeles Times, Roger Vincent (09/15/09)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

IRS Changes Rules to Ease Commercial Refis

The U.S. Internal Revenue Service announced changes to tax rules Tuesday that make it easier for commercial property owners to refinance.

The new guidelines allow commercial loans that are part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without penalties for investors.

The new regulations allow investors to keep tax savings that they would have lost under the old rules. The IRS is considering expanding the changes to other investment vehicles like real estate investment trusts (REITs).

“A stalemate now exists on commercial mortgage backed security (CMBS) loans that are not currently in default but need modification,” said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, a lobbying body for property owners and investors. “Today’s announcement should help break the stalemate.”

Sources: The Associated Press, Stephen Ohlemacher (09/15/2009) and The Wall Street Journal, Lingling Wei (09/16/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

Mortgage Demand Down as Summer Ends

Mortgage applications slowed as summer ended and potential first-time buyers wondered whether they would be able to settle in time to receive the federal home ownership tax credit, which expires Dec. 1.

The Mortgage Bankers Association index declined 8.6 percent last week on a seasonally adjusted basis, including an adjustment for the Labor Day holiday. On an unadjusted basis, the index declined 18.3 percent compared with the previous week and fell 18.7 percent compared with the same week a year ago when the Labor Day holiday fell nearly a week earlier.

Mortgage interest rates movements were as follows:

* 30-year fixed-rate mortgages increased to 5.08 percent from 5.02 percent.
* 15-year fixed-rate mortgages decreased to 4.41 percent from 4.45 percent.
* 1-year ARMs decreased to 6.61 percent from 6.69 percent.

Source: Mortgage Bankers Association (09/16/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

How to Spot Foreclosure-Prevention Scammers

Here’s how the most common foreclosure-prevention scams work:

The desperate home owner gets a letter that says something like, “We know you’re having a hard time. We have a pipeline to your lender and can help you save your home. Call this toll-free number now.”

Home owners call the number and agree to pay $1,200 to $1,500 upfront for help with their mortgage. Nothing happens. Their home still goes into foreclosure.

Harold Kirtz, a lawyer for the Federal Trade Commission who is prosecuting these scammers, says victims are often well educated and financially savvy, but they also are “in a very vulnerable state.”

Here are some red flags that should make a home owner run in the opposite direction:

* If the company guarantees success. Nobody can guarantee a lender won’t foreclose or will modify a loan.
* If the company wants money upfront. “We can’t say all advance fees are illegal,” Kirtz says, “But in most cases they’re probably bogus.”
* If the company wants the home owner to send mortgage checks directly to the modification firm. The only certainty there is that the company will cash the checks.

Source: Washington Post Writers Group, Kenneth R. Harney (09/13/2009)

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Elliott Robinson, JD – Associate Broker
Keller Williams Realty Metro Atlanta
315 West Ponce de Leon Ave., Ste. 100
Decatur, GA 30030
o- (404) 564-5560
Blog – http://elliottonrealestate.com
Twitter – http://twitter.com/elliottrob

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