HomeRun Homes Rent to Own Homes Blog

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HomeRun Homes is a centralized marketplace which helps people Find or Sell a Rent to Own Home, both Nationwide and Globally to the thriving Rent to Own Market. http://www.lease2buy.com

July 29, 2012

Eminent Domain And The Real Estate Finance Market

Hi Folks,
   Welcome back and glad you are here with me, as well as about 2500 fellow readers of this Blog !

   "Eminent Domain" (called "Appropriation" in some U.S. States), which is the seizure of property by the Government for a variety of different reasons, has always been a hotly contested topic. This is particularly important to the Real Estate market, in light of all of the underwater mortgages (mortgage outstanding is higher than the actual value of the home).

   Once of the hardest hit states has been California.

   "California, once ground zero of the housing crisis, is and will continue working its way back to a stable real estate finance market.", writes David H. Stevens, in a recent article titled, "Property seizure is not the answer". Stevens, who is the President and CEO of the Mortgage Bankers Association, which is based in Washington, D.C.), uses the term, "radical", in referring to the use of eminent domain to take over underwater mortgages.

   Stevens cautions that the "property seizure program", which permits local governments to use their "eminent domain power to "condemn" underwater mortgages", presents a "spiraling effect of withdrawal of mortgage credit, declining home values and a threat to local economic recovery." What happens is that the actual lenders are paid the current market value, but then the mortgage is repackaged for investors to purchase at the lower value, explains Stevens.
 
   Some other fallout from the use of Eminent Domain, per Stevens, would be an increase in uncertainty, as well as a decrease in available credit and thus, a large impact on the real estate finance market, leading to decreasing home values, and ultimately, retirement savings. As Stevens writes, "many people, whether they know it or not, have retirement accounts that are invested in the same mortgage-backed securities. In other words, anyone with some form of retirement savings is likely invested in mortgage bonds that this proposal could devalue."

   The irony in all of this is summed up by Stevens, when he says that the "fear of government action will likely prevent homes from being purchased and halt any chance of economic recovery". He says that once the government begins "condemning and seizing mortgages", the investors, he says, who we depend on to buy mortgages, "Will likely believe that any mortgage can be interfered with and therefore the risk of loss to them will be too great to allow any loans to come from this affected market area."

   So what is the right way forward?

   The "policymakers should look to homebuyers of the future", says Stevens, who says that we need to do all that we can "to protect families wishing to stay in their homes during periods of economic uncertainty without harming the future of the same community to recover for the long term." He suggests that these policymakers "must consider any consequences to quick-fixes in the real estate market financial system".

   What will help us? Stevens lists a few items, such as eliminating uncertainty, reducing foreclosure backlogs, and in my opinion, one of his strongest proposals: "creating an environment for private capitol to reenter the market, and allowing access to credit for qualified homeowners", which is the fuel that is required in the tank to drive us to stability and further growth.

   Stevens aptly admits, "there is no silver bullet to recovery in the real estate finance markets". Do you agree with him? What other changes need to be implemented? What are your feelings on Eminent Domain. We'd like to know!


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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com


TAGS: #RealEstateFinance EminentDomain #underwatermortgage #housingcrisis #propertyseizure #retirementsavings #foreclosurebacklog #homevalues #mortgagecredit #housingcrisis

July 15, 2012

A Page Turns on The Housing Market

Hi All,
   Well, it finally happened. Finally. The hype and the media coverage about it's imminent return have all been fulfilled. The U.S. Housing Market has finally began crawling back up from the bottom.

   It's been a long time, about 7 years, and a lot of ugly things have happened during that time, but most of the home price indices are starting to head back up in the right direction. In a recent WSJ article by David Wessel titled, "Housing Passes a Milestone". David Blitzer of S&P stated that "We finally saw some rising home prices", and reported the first monthly increase in prices after seven months of declines.

   Aside from prices, we all know the impact of housing inventory. It's simple Supply and Demand Economics. In what was called a surprise, the inventory of existing homes for sale has fallen "close to the normal level of six months' worth despite all the foreclosed homes that lenders own", per this article, and adds two additional key points, which are that a fraction of homes that are vacant is "at its lowest level since 2006", and that the amount of existing homes that were sold in May 2012 was 10% higher that those sold in May 2011. Wessel notes that many of these homes were purchased by investors "who plan to rent them for now and sell them later", which he infers to as "an important sign of an inflection point". We can surmise from our angle that the amount of homes being sold via Rent to Own is trending upwards from what we are seeing from our Rent to Own Homes website.

But can this just be a statistical aberration?

   Wessel provides an additional reason why this seems to be the real deal. Aside from the reduced inventory of homes that will support the higher prices, he also points to the increase in construction of single-family homes. Comparing May 2012 to May 2011, "Builders began work on 26% more single-family homes in May 2012" than the previous time last year.

   There is still a long way to go. Wessel mentioned some things that we should not forget: Single-family housing starts are still 60% below the 2002 "pre-bubble pace", Americans' equity in homes 25%, less than it was in 2002, and more than one in every four mortgage borrowers "still has a loan bigger than the value of the house". But "the housing bust is over", which for many of us, is music to our ears.

   Have you seen any signs of the Housing Market turning around by you? We'd love to hear.


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Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #HousingMarket #homeprices #housinginventory #foreclosedhomes #existinghomes #builders #singlefamilyhomes #renttoown #mortgage #investors

July 5, 2012

Developers Say, "If You Build Them, They Will Rent Them"

Hi Folks,
   Hope you had a great July 4th, and if you were lucky enough to snare a 5-day weekend, then good for you !

   It always amazes me to see the things people do to adapt to the financial environment, but when you start looking at what large companies do to adapt, you quite often will see a slower response, as the inner mechanics all need to line up, however, that is not always true!

   With the bump in May building permits spanning both single and multi-family (apartment), this indicator of future construction made it to the best levels seen in about 4 years. With this market direction, a large number of Developers are building single family homes as rentals, per a recent article on CNBC.com, titled, "More Builders Are Turning to New Market: Rentals".

   The interesting point, the article says, is that, "Historically, builders did this largely in low-income, government-subsidized housing projects", but goes on to say that the "market is quite different today." One such developer mentioned was Joe Petersen of Insight Real Estate Strategies in Texas, who said that "there are so many people with mortgage issues … and just recognizing these issues will not go away soon, we felt like how could we deliver high quality rental housing in a product that single family homeowners would appreciate?”. The answer: high-end homes built specifically as rentals, which takes all of the variables into account (mortgage industry, economy, etc).

   Petersen is clearing land and raising money to build single family homes just outside Ft. Worth, and does mention that a lot will be different in this type of construction, including the maintenance and business plan, but he "believes demand is strong enough for him to be able to charge premium rents"

   Petersen is banking on the fact that since rent homes are typically "not the nicest homes", that he will be able to offer people something different, "having a professional staff on site, maintaining and managing it", in which they can "offer a lifestyle very different from a part-time Realtor or a homeowner who’s renting it because he can’t sell".

   Now, back to those "rent homes". Per the CNBC.com article, Beazer Homes recently launched a “pre-owned” business, “for the purpose of acquiring, improving, renting and ultimately reselling previously owned homes within select communities and markets which we operate,” according to its recent 10-Q.

   Taking this a step further, Beazer is "buying foreclosed homes", "rehabbing them, then renting them with the intention to ultimately sell.", so in other words, Rent to Own. Petersen is also keen on the Rent-to-Own option. He intends to build up to 300 homes, and will use the rent-to-own option just as other builders have; "to alleviate a backlog of unsold homes and reduce carrying costs."

   What are your thoughts on this strategy?

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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com

TAGS: #realestate #developer #buildingpermits #futureconstruction #builders #rentalhousing #renttoown #rent-to-own #foreclosedhomes #rehabbing #realtor #homeowner