People Plus Property Equals Interesting Real Estate News

Hi Folks,
   Monday again! That was fast !

   A few interesting and cool things going on in the world of Real Estate, and I figured that you might find these items interesting, too.

   A "Real Estate Cafe"...yes, you heard it right ! "The Maggio Shields Real Estate Cafe in Rehoboth Beach is a fusion restaurant of a different kind; it melds real estate with breakfast and lunch", writes Diana Dwyer, in a story on Delmarvanow.com. The restaurant/office hybrid appeals to hungry people - hungry for food or property. Managing chef Aric Roork commented that the saying around The Cafe is: "Have your cake and condo, too!", The Cafe serves soups, salads, sandwiches and pastries. This concept has been catching on in other countries, as well, so they may be onto something here!

   A "Real Estate Bus Tour"...you cannot make this stuff up! The national bus tour called "Home Ownership Matters", writes Claire Simms in an article on firstcoastnews.com, aims to "educate consumers about the real estate market and changes that could be coming to the industry", and further, to "raise awareness" of possible down-payment requirement changes and about the home buying process.

   Own a Home in China? You are en eligible bachelor! "China has a strange condition these days in which a man must buy a house before a woman will agree to marry him", says a recent article on TaiwanNews.com. What is the result of this? Due to the "gap between rich and poor", the story says, "many young people are unable to afford a house and thus not able to get married", which is likely to continue in the future. Apparently, Chinese officials are "scrambling to find a way around this impasse".

   It's a big world out there with a lot of property. There's a whole world of interesting news when people collide with property ! What do you think?

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Have a Great Week, 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: #China #Rehoboth #Delmarva #downpayment #Taiwan #property #RealEstate

Home Builder Ingenuity

Hi All,
   Welcome back!

   On the heels of my post this past Wednesday, titled, "Buy it, Build it, or None of the Above?", where we looked at the New Residential Construction Figures vs. Existing Home Sales, and the results showed the clear winner as Existing Homes, we have a new spin with perfect timing

   "Builders generally seem to agree that their stiffest competition is coming not from within their ranks but from the resale housing market and its foreclosed houses and from houses sold for less than their mortgages as short sales." Ironic, isn't it? This comes from a story on the Press-Enterprise site, and it leads us to the following question: For the Builders that are on the short end of the New Residential Construction figures, how can they get people to buy more New Homes and thus, generate more Building Permits, Housing Starts, and Housing Completions? To add some irony, the name of the story I quoted from above is titled, "Builders band together to showcase homes".

   This very well-timed and aptly named article says that for the first time in memory, "home builders who historically compete for buyers are launching a joint promotion to draw consumers to their sales offices". These free seminars, presented by the Building Industry Association of Southern California and the Greater Sales and Marketing Council, range from topics such as interior design trends, energy efficiency and barbecuing techniques.

   I think this is a great idea to strike up business for Builders and for New Construction (the purpose of the seminars is to show off homes and "whip up business").

  "Ingenuity 101"...it's what keeps us going and growing in light of difficult Economic conditions. What do you think?

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Have a Great Week, 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: #Construction #ExistingHomes #homebuilders #resalehousing #California

Buy it, Build it, or None of the Above?

Hi Everyone,

   Hope you are all doing well.

   Today, I'd like to shift gears and try to make sense of the most recent releases of both the New Residential Construction figures for August, along with the NAR Existing Home Sales figures for August. Just as the title asks - "Buy it, Build it, or None of the Above?". Let's see if we can gain a clear response to this question.

   Our first stop - New Residential Construction for August. Building Permits were up this past month and over the past 12 months, Housing Starts were down from July and also down from last August, and Housing Completions were down since July, but were up 2.6% from August of 2010.

   Our next stop - Existing Home Sales for August. Where do we begin? In sum, Existing Home Sales were up 7.7% from July to August, and more than 18.5% since August of 2010. These figures were released by the National Association of Realtors, or "NAR", and the chief economist for NAR, Lawrence Yun, said that "favorable affordability conditions and rising rents are underlying motivations", despite disruptions from Hurricane Irene, which pounded the Northeast at the end of August and took a toll on the Regional figures for the Northeast. However, despite that major storm, the numbers were promising.

   In comments from Ron Phipps, NAR President and broker-president of Phipps Realty in Warwick, R.I., he called the market "remarkably affordable" , but he named some large factors holding home sales back, such as mortgages being denied to creditworthy buyers, and "appraised valuations below the negotiated price." These low appraised valuations are a major contributing factor to contract failures/cancellations, and have increased since July and have soared since last August.

   Now, as if you did not already have a sense of the "winner" between New Residential Construction and Existing Home Sales, here are some more key points: Existing Home Sales in the West soared over 18% from July to August, and over the longer-term (since last August), the big winner was the Midwest, with almost a 27% jump in prices. Additionally, the Existing Home Sales release showed that Investors accounted for 22% percent of August Purchases vs. just 18% in July.

   The word on the Street is "Buy it". When both "Build it" and "Buy it" are hot, we will be making big tracks in our Recovery. What do you think?

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Have a Great Week, 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: #ResidentialConstruction #ExistingHomeSales #Realtor #NAR #lowappraisal #risingrent

The Rent to Own Juggernaut

Hi Folks,
   Welcome back to one and all.

   We have caught some flack over the past couple of years for keeping the title of this blog as, "HomeRun Homes Real Estate and Rent to Own Homes Blog", but the fact is that the Real Estate Market, Housing Numbers, Economic Conditions, etc., all have an effect on the gaining popularity and increasing momentum of the "Rent to Own Juggernaut", as I like to call it. Therefore, when it appears I am writing about Existing Homes Sales or Home Prices, these all tie in to the main title of this Blog. The sum of the parts are greater than the whole...

   On that note, today, we are staring directly into the face of the Juggernaut, as we are seeing more and more publicity on this form of Real Estate agreement. Some of the publicity is just an explanation of how the process works, but the point is, by educating the public, that is "publicity" !

   Our most recent example is a story in the Sioux City Journal, titled, "Rent-to-own transactions popular", by Jim Woodard. In this particular article, Woodard explains the process; "The homeowner agrees to rent his home for a specified period of time, usually from one to three years. At the same time, the tenant receives an option to buy the property at any time during the rental period at an agreed-on price.". Woodard also discusses the option fee and the rent credit (which vary by regional laws and between different homeowners).

   Woodard also points to some benefits to buyers that are perhaps cash-strapped or cannot qualify for a mortgage until their credit and financial status improves, however, they can move into the home and purchase it when their financial health improves.

   On the other side of the deal table, Woodard says that this can be a "wise option for the homeowner", who might need to wait quite some time in this sluggish market, and if the seller already owns a second home, they can "avoid making two mortgage payments each month without any revenue generated from his previous residence."

   Of course, there are caveats on both sides of the table (the buyer needs to make sure the seller's home is free of any liens of pending foreclosure, and seller needs to do some due-diligence on the buyer). As always, with any Real Estate deal, consult a local attorney or title company that is familiar with the local laws regarding these deals.

   Educating the public on Rent to Own Homes is a fantastic was to put it into the mainstream of the Real Estate market and start changing the Housing Market and the Economy for the better...what do you think?

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Have a Great Week, 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: #RenttoOwnHomes #RealEstate #HousingNumbers #EconomicConditions #pendingforeclosure #titlecompany

Investors vs. Home Buyers in the Foreclosure Arena

Hi Folks,

   Glad you're back with me.

   It had to happen. It was inevitable. Investors and Home buyers are going head to head. "Home buyers find themselves aced out by investors", a recent article from Eve Mitchell of the Contra Costa Times, states that home buyers are being "edged out" by a growing number of "absentee buyers" (those who don't plan to live in them).

   How is this happening? Real Estate Investors are gravitating toward low-end properties, says Mitchell, and says that these are the same homes that first-time and move-up buyers want. Linnette Edwards, an East Bay associate broker with Better Homes and Gardens Real Estate, adds that "Most of the investors are buying into the first-time home buyer price range of $200,000 to $400,000". Mike Sibilia, a South Bay broker with Keller Williams, points to the all-cash purchasing factor, and says that "The investor has the cash wherewithal to be able to close on the property without the risk of the seller worrying about whether the buyer can get the loan or not". Sellers that own foreclosure properties and banks that own foreclosure properties, or "REOs", prefer all-cash buyers because "the deal can close faster than a transaction involving a loan, say real estate professionals".

   As difficult the competition is for these home buyers, Mitchell informs us that this trend is clearing out some of "the glut of foreclosures dragging down home prices". According to Housingwire.com, there is and will be more "glut "coming.

   Jon Prior wrote a recent article titled, "Foreclosure starts spike in August", which looked at recent figures released by RealtyTrac which indicated that mortgage servicers started the foreclosure process on 33% more homes in August than the month before, which was the biggest monthly increase in four years. James Saccacio, the CEO of RealtyTrac, stated that the increase in new foreclosure actions may be "a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems", and that "it also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process."

   Advice for home buyers? Stick it out, hang in there, and keep "Swimming with sharks", as Mitchell's article named it. Advice for banks? Loosen up a little credit and lend some money !

   I welcome your comments !
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Rob Eisenstein
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TAGS: #RealEstateInvestors #Foreclosurestarts #mortgageservicers #bankrepossessions #absenteebuyers

NAHB Hits a HomeRun With A New Comprehensive Index

Welcome Back,

   As you all know, from time to time, I break down the Housing numbers that are released to help you check the pulse of the Real Estate Market on a National basis. Along with these updates, I add an occasional rant (such as a rant about the need for an Index measuring Rent to Own activity). So far, though, that one has fallen on deaf ears, but something else has been created that I think is fantastic.

   Let me give you an example; if you take a photo of someone standing by the side of a building, you really can only see the person. If you back up a few steps and take the photo, you can see the building. If you step back a little more, you can also see the background, and perhaps the sky/clouds/weather. This example leads us to the newly created NAHB/First American Improving Markets Index (IMI), which was just launched by the NAHB (National Association of Home Builders), and includes three important factors to paint the big picture of the Housing market.

   According to an article by Claire Easley from Builder Magazine ("NAHB Launches New Index to Track Improving Markets"), the new index will be released monthly and will be "dedicated entirely to tracking metropolitan areas that have consistently shown signs of improvement".

   How can a Metropolitan area make the list? The area must have shown "at least six months of improvement from its trough" in the three factors that make up the index; housing permits, employment, and home prices. The Big Picture, basically!

   All 3 factors were deemed by the NAHB to be "key to determining the pulse of the housing market", will be drawn data from the "Bureau of Labor Statistics for employment growth numbers, house price appreciation data from Freddie Mac, and single-family permit numbers from the U.S. Census Bureau".

   In the article, the NAHB Chairman, Bob Nielsen, was quoted as saying that "Housing conditions are local and do not always reflect the national picture", and that they created the new index to "shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."

   Who made the first release of the Index? The 12 Metro area that made it were: Alexandria, La.; Anchorage, Alaska.; Bangor, Maine; Bismarck, N.D.; Casper, Wyo.; Fairbanks, Alaska.; Fayetteville, N.C.; Houma, La.; Midland, Texas; New Orleans; Pittsburgh; and Waco, Texas".

   As an interesting side note, in the same article, the Chief Economist for NAHB (David Crowe), said that last year at this time "there was not a single market that showed improvement using these criteria." What are your thoughts on this composite index? Do you think they hit the target, or there should be more than these three factors?

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Have a Great Week, 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: #NAHB #ImprovingMarketsIndex #IMI #RealEstateMarket #housingpermits #employment #homeprices

Feds Finally Keen on Rent to Own Housing

Good Morning Friends,

   I'm glad to have you back another week to examine the Real Estate Market, look at some options that are open to you as a buyer or a seller, and to interpret the moves that the Government is making toward improving the Housing Market and the Economy.

   Today, we are actually going to hit all 3 of the above points in one Blog Post, and some of this information will surprise you!

   For quite some time, Rhode Island Senator Jack Reed has been, "calling on Fannie Mae and Freddie Mac to rent out their massive, 250,000-strong inventory of foreclosed homes in order to 'shrink the inventory of government-owned homes'", as Carol VanSickle points out in her story ("Federal Rental Program Update: White House Supports Rental Program"). Reed believes that by the Government taking on a landlord role, it would help "diminish the glut of foreclosures".

   According to Federal Reserve Chairman Ben Bernanke, per a recent article by Christina M Johnson ("Rent To Own - Forecast Bright As Home Sales Continue To Be Gloomy"), he believes the U.S. Housing Market is a strong factor that is hurting the broader economy, and believes that the massive amount of foreclosures selling below cost are "one of our country's biggest economic drains".

   Johnson, who was been privately buying and selling homes for 20 years, says that as we have seen, "foreclosures offered at below market pricing forces all housing prices to continue downward", and that this is one never ending cycle. Exacerbating this are the lending restrictions (lowering the bar on potential buyers), along with decreasing home prices. Johnson fears that we could become a nation of renters with only the "rich few as the exclusive property owners", and she cites data from Realty Trac, Inc. and CoreLogic that estimates millions of homes either in foreclosure or very close to going into foreclosure...currently!

   The following question was raised by Johnson; "Could the rent to own home sale market help pull the U.S. out of its economic slump?". Could the Government acting as a landlord help us? As VanSickle writes, "Previously, the idea of a landlord-government has been met with strong resistance."

   The "Winds of Change"...

   "Reed finally has some real support in the form of a call to action from the White House", says VanSickle, and says that the Obama administration has announced that "the government-controlled GSEs should partner with private investors in order to make Reed’s proposed rental program a reality", and the president said that the administration is “soliciting ideas” on how to put Reid’s concept into action. In an article titled, "Feds seek ideas on renting government-owned foreclosed homes" on the Seattle Times Website, Officials from the Obama administration and the Federal Housing Finance Agency (oversees Fannie Mae and Freddie Mac), said they hoped for innovative solutions to the "severe oversupply of single-family homes".

   The Seattle Times story says that Federal officials are "seeking ideas from investors and others about how to rent some of the nearly 250,000 foreclosed homes owned by government-backed entities such as Fannie Mae". VanSickle writes that the end goal is to "“turn the federal government’s inventory of foreclosed houses into rental properties that could be managed by private enterprises or sold in bulk”, and Johnson writes that Government incentives would "generate even more interest from other professionals related to the home sales industry, offering their help and expertise to help facilitate a successful rent to own transaction". This would, in turn, help the related fields and related services that are depending on Housing to get back on it's feet.

   U.S. Treasury Secretary Timothy Geithner recently said that they are "Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets and support neighborhood and home-price stability", as Louis Aguilar writes in The Detroit News story, "Feds aim to revive Michigan's foreclosed homes".

   Aguilar writes that among the strategies on which agencies are "seeking comment" are rent-to-own programs and "ways the properties can be used to support affordable housing". He adds that the program might have a "big impact on Michigan", which, as per the U.S. Housing and Urban Development, or "HUD", ranks fifth in the nation for foreclosed properties (There is a new foreclosure properties website called the "REO PORTAL" located on the Huduser website). Along with Aguilar, both the Seattle Times story, as well as Johnson's story, both mention Rent to Own as an option gaining popularity.

   Johnson says that if the Government encourages private Rent to Own purchases via "tax breaks and financial incentives", this will reduce the amount of homes in foreclosure (and lower inventory), will stabilize prices, and would add a layer of "privatized protection". She said that the risks must also be addressed, such as potential property damage and costly evictions. Two of the most important points, however, are ensuring that the Buyer is working with someone to fix their credit (so they can actually buy the home at the end of the lease period), and on the flip side, making sure the Seller is current and does not have existing liens or a pending foreclosure on the actual home!

   In order to counter the lack of an outright sales commission due to a Real Estate Agent or Broker at the successful completion of an outright sale, Johnson has a suggestion; Real Estate Agents and Brokers could expand their services to property management, collecting the monthly rent, etc. Of course, each one of these would need to be cleared with the local Real Estate Board and also not cross over any fine lines drawn by RESPA or other Federal agencies.

   "Action on the issue might take a while", says the Seattle Times story, and says that the HUD and the FHFA announced a "request for information" that is open to all interested parties (Aguilar points to the FHFA website, where potential investors can click on "Request for Information: REO Asset Disposition"). The deadline for information requests is Sept. 15, so act fast !

   My thoughts? I've been servicing Rent to Own for over 9 years and watching how it helps buyers and sellers...but I pose the following question; "Why did it take the Government so long to open their eyes to this option?" Do you have any ideas to share on this?

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Have a Great Week, 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: #FHFA #foreclosure #renttoown #Obama #Government #rentalprogram #HUD #RealEstate #FannieMae #FreddieMac

In Memory of the September 11th Anniversary

Dear Friends,

   We would like to use today's Blog Post as a literary "Moment of Silence" out of respect for the people that suffered and lost love ones during the cowardly acts of terror, 10 years ago this Sunday 9/11.

   We hope you reflect on these events, what we have learned since then, and how we can honor the fallen and always know these families are not alone.

Thanks and I wish you a peaceful weekend with family and friends.

Regards,
Rob Eisenstein
HomeRun Homes

Share Your Home Equity Appreciation To Avoid Foreclosure

Hi Folks,

   Welcome back. We have a cool topic to discuss today, and I want to dive right in so we can get to your opinions, thoughts, comments.

   "Lenders could write down mortgages in exchange for claims on future appreciation – potentially making it a win not only for homeowners but also for lenders and investors". This comes from an article from Fortune/CNN titled, "A mortgage fix for lenders and homeowners: Shared equity" by Nin-Hai Tseng.

   Yes, perhaps this is something you toyed around with in your head before and said to yourself; "Wait...this can't be legal". News Flash - Harvard University's Kenneth Rogoff and Massachusetts Institute of Technology's Bill Wheaton have made this proposal, in which, as they suggest that "the government should facilitate mortgage write-downs in exchange for claims on a percentage of future appreciation – potentially making it a win not only for homeowners who owe more on their homes than their properties are worth, but also a win for lenders and investors who would eventually be repaid for giving borrowers a break."

   Taking a step back to look at the bigger picture, Real Estate correlates with the larger Economy and spending and growth. As Tseng writes, the Obama administration is studying a variety of options, and as reported by the New York Times, this includes the potential to allow "millions of homeowners with government-backed mortgages to refinance them at today's lowest interest rate of about 4%", and also includes the possibility of "tweaking existing refinancing programs so that more homeowners take part."

   And now...back to the Proposal.

   Tseng provides a hypothetical example of someone with a home that they purchased for $100,000, which is now worth $60,000, and which puts them on the ugly side by $40,000 ("underwater mortgage"). The proposal would be for the mortgage company to restructure the loan for the borrower at $60,000, which would keep the borrower in the home, and in exchange for the lower payments, there mortgage company would have a stake in the "future appreciation" of the home. So, for a 50% stake, if the price of the home appreciated to $90,000 and was sold, the appreciation would be $30,000, and 50% of the sales proceeds ($15,000) would go to the mortgage company.

   Taking this one step further, if that same property increases in value to $140,000, that would be an $80,000 appreciation, of which $40,000 would go to the mortgage company, thus, as Wheaton says, the lender would recover all its money.

   But there are some variables to take into account here. Tseng pointed out in the article that the speculation regarding the substantial rise in home value presented in the article above is a big "if". Also, it was mentioned that the lender could potentially, "put a clause into the loan that keeps the owner in the home until the value of the property recovers a designated amount", and says that this could "make the deal more complicated and potentially less attractive for the homeowner". Tseng also adds that home prices need to "actually appreciate" for this to work (Tseng provides the example of a high-volume of housing inventory that will keep prices down for a while), and that the lender could still see losses (perhaps not as much as in a foreclosure).

   Nevertheless, Tseng says, "the idea of shared equity between lender and borrower is worth a serious look", and points to previous programs that were not decisive in stemming foreclosures (i.e. Hope for Homeowners in 2008 and Making Home Affordable Plan, or HAMP, in 2009). Nothing has really had enough bite, so far.

   A very important point raised by Manuel Adelino, a real estate finance professor at Dartmouth University, as to why we are not seeing more loan modifications, was that the banks, "don't really know who to give them to", and he adds that if the banks decide to give them only to people who are delinquent on their mortgage payments, then it gives them and others "the incentive to be delinquent".

   So, who could this proposed plan benefit right now, given the current market and the excess housing inventory mentioned above? Borrowers and Lenders. Tseng said that it could lessen the impact of losses occurred from foreclosure to both borrowers and lenders.

   Tseng also said that it does not let borrowers "off the hook, at least not easily", and says that if Wall Street got its bailout ("even if unwillingly"), "shouldn't Main Street get a chance?".

   I think this is a great idea, if for no other reason than cutting foreclosure losses for both sides, eliminating the stigma of the foreclosure process, and putting the framework in place for when home prices do rebound.

   Never mind what I think...What do you think?

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Have a Great Week, 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: #sharedequity #foreclosure #refinancingprogram #underwatermortgage #HAMP #mortgagepayment #homeprices

Far-Reaching Impact of the HST on Canadian Real Estate

Hi Everyone,

   Happy Labor Day to you and your family. I hope you are resting and relaxing with your family and friends and enjoying some quality time together.

   As you all may know, our website and our company are headquartered in New York, but we cover the entire globe in terms of Rent to Own deals. After the United States market, the second largest market for Rent to Own deals is in Canada. As a matter of fact, just to let you know how large that market is, last summer I was interviewed for the esteemed "Canadian Real Estate Magazine" for a story on Rent to Own in Canada (FULL ARTICLE HERE). Apart from those that reside within Canada, there are also a substantial number of buyers and sellers of Canadian Real Estate that reside in the United States. Some of these buyers and sellers are Real Estate Investors with offices in Canada, so I felt it important to discuss a hot-button topic of our northern neighbors; the Harmonized Sales Tax, or "HST", for short.

   According to the website hstincanada, the HST is the "combination of Provincial Sales Tax (PST) and Goods and Services Tax (GST) into one unified tax", and in the Spring of 1997, New Brunswick, Newfoundland and Nova Scotia implemented a 15% HST (which has dropped slightly since then). However, despite the relative uniformity, the HST is not as cut and dry as it may seem, and as mentioned on the same website, some reports have shown that "implementing HST in the eastern provinces caused consumer prices to fall". Canada is a large country with multiple Provinces with diverse industries and requirements, and not all of the provinces favor the HST. The HST Controversy Hot-Spot is British Columbia (referred to commonly as "BC).

   Just last month, 55% of voters in BC elected to reject the HST, per a story titled "HST is Officially Defeated in BC" on hstincanada. What happens next? The former taxation system will be reinstated, but this will be quite expensive, costing an estimated $3 billion to repay "transitional funding" to Ottawa and to also bring back the administrative structure to process the PST. As is the case in every country, that money will be recouped by trimming some programs and adding new taxes.

   In regards to the relationship between the HST and the Real Estate market, let's review some background on the HST as it applies to the Real Estate Industry in Canada (Building and Construction, Realtors, Renovations, Existing Homes, etc.), since this will help paint a very clear picture of which ones are impacted by the HST.

   Earlier this year, Canada added some new mortgage rules, to stabilize high ratio mortgages and decreasing household debt, per the hstincanada article titled, "HST Impact on Housing Market". These new rules raised concerns over the affordability of housing, due to "two-punch combo of HST and regulations", as it was referred to in the article.

   The first punch of the of the "two-punch combo" - The mortgage rules translate into higher income requirements for buyers for higher ratio mortgages, and thus, higher monthly payments.

   Punch #2 - The HST, which is applied to the purchase of new homes (new homes, not existing homes), and is applied to "any amount over $400,000 with a rebate of up to $20,000", per hstincanada, and is also applied to "any legal fees, closing costs, and processing fees associated with buying a new home", as well as realtor fees and home inspections.

   In an article written by Sally MacDonald for the Daily Townsman ("HST vote a blow for real estate"), BC Realtor Jason Wheeldon points out the HST is "not applicable to existing housing", but says that "there is a lot of the market out there that believe that even if they buy a house that's two years old, they are going to be subject to HST, and there isn't any. It's only on new homes offered by the developer or the builder".

   Apparently, as told by hstincanada, the "added tax has been reportedly stalling new home projects and causing a decrease in the purchase of new homes in both Ontario and BC", and evidently, in the article by MacDonald, this has translated into confusion, says Wheeldon. He goes further and says that "market confusion" could stall the real estate market while the province reverts back to the PST. "I think people are going to review their big spending decisions and see if they are going to hold off for 18 months".

   It is important to note that from MacDonald's article, we are reminded that Real Estate is exempt under PST as well as the HST, and that the "return to the PST in 2013 will be positive for out-of-province homeowners", as per Wheeldon. He said that when it restores back, "it will benefit home owners, particularly recreational real estate. Recreational buyers were subject to the full HST with no rebates whatsoever".

   From the angle of Housing Construction, MacDonald's article says that housing construction will suffer a blow over the next 18 months, and that the cost of labor (i.e. home renovations), will get hit with the full 12% HST (but not the 7% PST). Also, in the same story, Peter Simpson of the Greater Vancouver Home Builders' Association expects consumers will delay renovation projects until the PST is back in place (very similar to what Wheeldon mentioned above). Simpson recommends a system that "makes it neutral whether you do it now or wait".

   Things do not look much better from the perspective of foreign investment, as hstincanada points out that in BC, it is still a concern that "foreign investment will be lost and businesses will see a rise in expenses with the former taxation system reinstated which in turn will translate into higher consumer costs". To balance this out, they are hoping for the "supposed influx of provincial investments to balance out the economy".

   Are you either a buyer or seller of Canadian Real Estate or Real Estate in British Columbia? If you are, I would love to hear your "inside scoop" on what is really going on up there and what people are thinking. Even if you are a foreign Real Estate Investor and you buy homes in Canada, your insight would be incredibly helpful here.


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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #HST #Canada #CanadianRealEstate #RealEstateInvestor #BritishColumbia #BuyHomesCanada #RenttoOwn

Is the HAFA Short Sale Program Working?

Hi All,

   The days of summer, heat, humidity, bugs, etc, are dwindling down. Prepare your parkas and get ready to pick some pumpkins!

   "Foreclosure Crisis"

   Just reading those words will make many folks shudder, thinking about the possibility that they can potentially lose their home. For those folks that can and want to stay put during the process vs give the deed back to the bank in lieu of foreclosure ("Deed in lieu of foreclosure"), the would probably be considering a Short Sale, or selling the house "short" of what is owed on the home.

   The long-running issue with Short Sales is that they can drag on and take months or even longer to complete, and they can be quite painful for both buyer and seller. As a matter of fact, back in July, we did a post titled, "Lengthy Short Sale Process a Painful Reality" (BLOG POST HERE or PODCAST MP3 HERE), and in sum, the Short Sale Process is like a modern day "Wild West".

   Then comes HAFA...

   "HAFA is an acronym for Home Affordable Foreclosure Alternatives" writes Elizabeth Weintraub for About.com in her story titled, "Is the HAFA Short Sale Program Right for You?". Weintraub says that the HAFA short sale program, which is part of President Obama's Making Home Affordable Program. is designed to "help underwater sellers either modify their loans or sell their homes as a short sale to avoid foreclosure". The program was created with a limited lifespan (effective from April 5, 2010, through December 31, 2012), but the goodies are in what the program promises, and as Weintraub writes, "HAFA promises short sale approval within 10 days and gives the seller up to $3,000 in cash at closing". Whimsically, Weintraub says that the program "has been touted as the answer to every short sale agent's nightmare." Let's take a closer look at the program and some of the benefits.

   Some of the key benefits provided by the plan are as follows, per Weintraub; Lenders must agree not to foreclose during the short sale process, Second lenders can no longer try to force a seller to commit short sale mortgage fraud by demanding payments outside of escrow, and Sellers will receive a government payment of $3,000 at close of escrow to cover relocation expenses. One of the most interesting benefits is that the Lenders that participate in HAFA waive the right to a deficiency judgment, and for someone selling a home for $100,000 below the mortgage amount, that is huge ! At interest to Real Estate Investors, all parties involved in HAFA would need to sign an "arm's length affidavit" (Seller cannot sell a friend or relative and buyer cannot sell the property for 90 days).

   Before a borrower can apply for HAFA, they first need to apply to HAMP (Home Affordable Modification Program), which requires all 5 rules be met in order to be eligible (only personal residences with a pre 1/1/2009 mortgage of below $729,750, with monthly mortgage payments of greater than 31% of the borrower's gross monthly income, coupled with some form of borrower hardship). Each of the 5 rules must apply. As Weintraub says, "If any one of the 5 rules do not apply, then the borrower is not eligible for HAMP."

   Now, this is where things get tricky. Weintraub says that "Eligibility and qualification for HAMP are two different animals", and that "If you are eligible for HAMP, it does not mean that you will qualify for HAMP". She adds a valuable insight; "Your goal, if you want to do a short sale, is to hope that HAMP will turn you down"..."Then you will be eligible for HAFA". If you are accepted into HAMP, she adds, and you stop making your loan modification payments, you can also apply to HAFA. "HAFA is a government-sponsored program, it's a lot more complicated than that", Weintraub says.

   To check eligibility, find out if your Lender participates in HAMP, since as Weintraub says, "lenders that participate in HAMP also participate in HAFA.". Who does participate? As of this post, Fannie Mae lenders, Freddie Mac lenders, and quite a large amount of other lenders (Bank of America, NA, CitiMortgage, Inc, etc.)

   If you are rejected for HAMP, then you can apply for the HAFA short sale program or Deed in-Lieu-of Foreclosure, but as Weintraub writes, "I don't know why anybody in their right minds would do a deed in-lieu". Basically, for HAFA, they pre-approve the price and permit 4-months to sell the home short via a Realtor. Similar to the HAMP, this is also only for personal residences with a pre 1/1/2009 mortgage of below $729,750, and in addition, the seller must be behind in payments or close to it, and previously rejected by HAMP.for HAMP.

   Is it Working? Is it Functional?

   According to a story by Jon Prior on HousingWire.com, the "Servicers completed 10,438 short sales through the government's Home Affordable Foreclosure Alternatives program since it launched in April 2010, according to the Treasury Department". The big loan services handling the majority of these deals were JPMorgan Chase (approximately 3600 completed), Wells Fargo, and Bank of America, to round out the top 3. It definitely looks like it's working...there is a story behind each deal, for sure.

   In terms of on-the-ground and in-the-trenches reality, Weintraub says it's "interesting to point out that very few borrowers tend to qualify for a loan modification", and says that, in fact, "almost every single short sale that I do in Sacramento is for a seller who was rejected for a loan modification."

   In the article from HousingWire.com, Prior added some comments from Pam Marron, a senior loan officer with Gold Start Mortgage Financial Group in Tampa Bay, Fla.". Marron said that "more and more homeowners in negative equity view a short sale as their only way out. Many, she said, are defaulting because banks require them to do so in order to qualify for a short sale". Marron also says that the growing problem in Florida is the "alarming increase in the number of short sale listings that are coming onto the market", with people that are "still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes".

   One of the most interesting, yet disturbing, quotes from Marron was as follows"; "Banks are requiring homeowners to default in order to qualify for the short sale". It's crazy!

   Apparently, I think the program is working, but it should be extended, and Realtors and Real Estate Attorneys should be letting more homeowners know about the program. It's not news that is spread around as much as it should be. Hopefully, this post can help towards notifying more struggling families, friends, and neighbors that there are options for them.

   Can you help spread the word?

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Have a Great Week, 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: #HAFA #HAMP #Foreclosure #ShortSales #DeedinLieu #loanmodification #bank #mortgage #realestateinvestor

Short-Term Bumps, Long-Term Jumps

Hi Folks,

   Welcome Back, and I join you on this special day (it's my son's 5th birthday, and ice cream cake with the inevitable sugar rush might render me comatose by tonight). But it is a fun day !

   Back to Real Estate (what you came here for!)

   Obviously, Home Sales and Home Prices are critical to the Real Estate market, and we had a couple of figures released this week that we'd like to discuss with you today, coincidentally Pending Home Sales and Standard & Poors/Case-Shiller Home Prices.

   Per the National Association of Realtors®, or NAR, the Pending Home Sales Index was Down 1.3% in from June to July of this year, but it was Up 14.4% from July 2010 to July 2011. The NAR reports that all regions showed monthly declines, with the West showing the "highest level of sales contract activity", with a 3.6% increase from June-July of this year, and an amazing 20.6% from July 2010.

   As for Home Prices, the Standard and Poors/Case-Shiller Home Price Index reported that nationally, Home Prices Went Up 3.6% from Q1 to Q2 of this year, but dropped 5.9% From Q2 of 2010 to Q2 of 2011, and they added that, Nationally, "home prices are back to their early 2003 levels".

   David M. Blitzer, Chairman of the Index Committee at Standard & Poors Indices, stated that shifts in pricing amongst different regions suggests that, "we are back to regional housing markets, rather than a national housing market where everything rose and fell together."

   Lawrence Yun, NAR chief economist, said that the market can move into a "healthy expansion", with a return to normalcy in mortgage underwriting standards. As the Pending Home Sales Index is a "forward-looking indicator based on contract signings", and the data reflects contracts but not closings, Yun also made a point to say that "not all sales contracts are leading to closed existing-home sales", and says that "other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.”

   On a positive note, Yun says that “The underlying factors for improving sales are developing", and points to "rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge", but reiterates that it is "now a question of lending standards", along with consumers "having the necessary confidence to enter the market.”

   Here is my 2-cent opinion: I like to look at changes over the long-haul, i.e., from the same time 2010 vs the same time 2011. With that thought in mind, we jumped 14.4% in Pending Home Sales but Home Prices (Index of Prices) dropped 5.9%. Just as the title of this post suggests; Short-Term Bumps, Long-Term Jumps...!

   What are your opinions on these new figures? What does it mean to you?

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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #HomeSales #HomePrices #RealEstate #shortsales #CaseShiller #NAR #mortgageunderwriting

Rent, Own, or the Hybrid of Rent to Own?

Hi Folks,
   Welcome back, and I hope all of you made it safely through Hurricane Irene, and ironically, this weekend was the 6-Year anniversary of Hurricane Katrina. I am still without power, as I post this from a laptop with draining power and through my wireless Droid hotspot. But...the show must go on...

   Oftentimes, when people are renting a home, they get to a point where they realize that they are paying their landlord's mortgage, putting the landlord's kids through college, or any of a million other ways to spin it. But with the complete change in the "norm" that has taken place over the last few years, these thoughts need to be seriously weighed in light of many other factors.

   David Getson, a Realtor with Coldwell Banker Residential in the District of Columbia, was recently quoted in a story by Michele Lerner ("Rent-vs.-own equation changing"), and said that the decision to buy a home vs. rent a home is, “Usually this is an emotional decision rather than a financial one, based on their desire for a dog, to start a family, to put down roots or just to have the ability to paint their walls whatever color they want.”

   Lerner writes that the decision to move from renter to homeowner was "simpler in 2005 for two reasons", which she points to as the "trajectory" of real estate prices that made buyers "comfortable that the property purchase would be a good investment", coupled with the fact that mortgage lenders "made it easy for buyers to qualify, even if they lacked cash and had yet to demonstrate a pattern of creditworthiness." However, she writes, the decision nowadays required "more measured thinking about the emotional impact and the financial implications of purchasing a home."

   Getson advises that potential buyers must look at their lifestyle today and the lifestyle they expect to have in 5+ years. In the same story, Bennett Whitlock, a financial adviser and managing director of Whitlock and Associates in Lake Ridge, Va., said, "becoming a homeowner should be part of an overall financial plan rather than a simple rent-versus-own decision."

   Lerner says that instead of contacting a Realtor as a first step (as most potential buyers do), they really should visit a lender and estimate how much they can borrow. Mark Goldstein, president of Capitol Funding in Rockville, adds that some important factors are Job Security, the amount of time the buyers plan to stay in the home, and suggests that buyers should assume 5+ years in the home to recoup costs and see appreciation (similar to the comments of Getson).

   Financially, Getson says that buyers today, "seem to recognize that their comfort level with the monthly payment is more important than borrowing as much as they are approved for". With that in mind, Whitlock suggests to avoid spending more than 33% of your gross monthly income on housing costs. As for a security cushion to cover home maintenance and repairs, Goldstein recommends that you keep some cash reserves on hand.

   Goldstein suggests that one way he advises buyers to prepare for homeownership is to, "take the difference between their current rent and their prospective mortgage payment and put that money in a savings account each month”, and adds that this helps the prospective buyer "get used to the monthly payment and make sure they are comfortable with it, rather than finding out six months after they bought a house that they are paying too much for their mortgage". Definitely a fantastic idea!

   Rent or Own? Decisions, Decisions...! How about the best of both worlds...Rent to Own? Great idea? Yes, I know...shameful promotion time...Rent to Own Homes via our website (HomeRun Homes). OK, sometimes we plug the site...the idea is not to abuse it !

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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #landlord #mortgage #realtor #renter #homeowner #lender #renttoown

Home Remodeling Spike Indicates Signs Of Life

Hi Folks,
   Welcome Back, and Happy Friday !!

   On Wednesday, we spoke about some cool ways to look at the median age of the inventory of homes available for sale ("Young Inventory Translates To Quick Markets"), and we had some pretty solid direct and also some offline feedback on the topic (Thanks!).

   Another very interesting tidbit that crossed my path was that homeowners are starting to remodel their homes, which is an incredibly good sign. One of the most telling factors is from Home Depot, which, according to a story titled, "Home Depot profits rise on repair trends" by Liz Enochs, saw a 14.3% jump in 2Q net income. Enoch writes that the core purchases are, "indicative of a focus on repairs and renovation, a point Blake touched on in a comment to analysts". Additionally, Home Depot is also seeing an "increased demand for rental property repair supplies", writes Enoch, and this bolsters the idea that rental properties are being renovated and perhaps receiving some overdue maintenance.

   There is also some higher-level info that bolsters the increase in remodeling, and that info comes from the BuildFax Remodeling Index. This index, according to Glenn Mandel of Red Fan Communications, indicated that "national remodeling activity reached a record level in June".

   Come to think of it, for the past couple of years, even during the Spring and Summer, the usually super-crowded Home Stores (Home Depot, Lowes, etc) had been relatively "empty", but over the same span of time for this year, the crowds have certainly returned. This could be a good thing. What do you think?

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TAGS: #homeremodeling #repair #rentalproperty #homeowners #HomeDepot #Buildfax

Young Inventory Translates To Quick Markets

Good Morning Folks,

   As we all know, there are a wide variety of measures and indices that gauge the health of the Real Estate market. One of the most important of there are the New Residential Sales figures, which incidentally, were up 6.8% from July 2010 to July of this year.

   Another such measure, and quite an interesting one, is one that was recently discussed in an article on Inman News ("11 fastest-moving real estate markets in July"). As described in the article, "Realtor.com released a list of metros with the lowest median age of inventory at the site -- a measurement of how long a property from a given metro area typically spends on the site". Essentially, the logic is that if homes are not sitting in inventory for too long while waiting to be sold, this indicates quick turnover, and thus, a fast-moving market.

   The biggest winner in this category, per the Realtor.com site, was Denver (median age of inventory was 32 days, which was the lowest among the Metros). Additionally, 6 California metros appeared in the list, and Detroit made the list, which is a good sign for their struggling Housing Market.

   Now, the converse of this measure would be the Metros with the highest median age of inventory, thus, slow-moving markets. The slowest one? Naples, Florida, with the highest median age of 153 days. Naples was not lonely in the list, as 7 of the 10 Metros tagged as the slowest-moving markets were in Florida.

   Inventory data is definitely not a new concept, but when it is examined from this perspective, it certainly paints a picture of the markets that are moving, shaking, and in some cases, sleeping.

   What are your thoughts/comments on this?

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Rob Eisenstein
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TAGS: #RealEstate #NewResidentialSales #inventory #Realtor #California #Detroit #Florida