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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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: #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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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: #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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Have a Great Week, and Happy Rent-to-Owning !
Regards,
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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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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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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TAGS: #RealEstate #NewResidentialSales #inventory #Realtor #California #Detroit #Florida

Sweet Deal? $16 For a $300,000 Home?

Hi Everyone,

   Welcome back !
   Well...Chalk this one up under the topic of "Oddball Topics!".

   Some guy in Texas walked paid a $16 filing fee and moved into an abandoned foreclosure home...and he is well within his legal rights to stay. According to a story by Stephen Clark, titled, "Texas Man’s $16 Property Seizure Throws Obscure Law Into Spotlight", the man used a legal maneuver known as "adverse possession", which "allows individuals to take property considered abandoned", is an old law on the books of most states, and dates back to the 1800's and British common law.

   Basically, as Clark writes, it was originally used to "deal with the boundaries of farmlands that weren't always clear". Larry Morandi, director of state policy research for the National Conference of State Legislatures, called it "kind of a quirky doctrine" designed to acknowledge that if you got "possession of a property and no one's been challenging it, you should have some type of title to it". But, nowadays, the concept has led to abuses, and as Clark writes, some scam companies have formed to seize properties and rent them out. Basically, a function of the sluggish economy and the increase in foreclosures.

   In this specific case in Texas, if this guy stays in the house for 3 years, he can obtain the title and become the owner. It's true! Some states can take 20 years, so he chose the right state to do this!

   Is he really safe there? Apparently, he told the news that the owner would have to pay off a "massive mortgage debt", and the bank would need to file a "complex lawsuit" (he does not see this happening). It seems that he did his homework, since he put up "no trespassing" signs, and therefore, the police cannot remove him since it's a "civil matter, not a criminal one."

   Some states are cracking down, but only Florida and Washington state have passed laws "tightening the requirements for claiming property through adverse possession." In Colorado, there was a change that allowed judges to force the adverse possessors to "compensate the original owners for back property taxes and interest". The crackdowns failed in many other states, which I find very odd, don't you?

   Apparently, Clark writes, "as long as it's in the open, it's not a crime", and adds that adverse possessors can even "register the bills in their name and notify the bank, previous homeowner or neighbors of their intent."

   This is definitely something that is hard to wrap your mind around. It's something I am sure most of us are not familiar with. What are your thoughts on this?


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Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #abandoned #foreclosure #Texas #adversepossession #Britishcommonlaw #mortgagedebt

The Bounce Continues, As Well As The Tug of War

Hi Folks,

   Friday has arrived, and not a moment too soon !

   OK, on Wednesday, we discussed the jump in Building Permits, Housing Starts, and Housing Completions from July 2010 to July 2011. In our summary from that Blog Post, we said; "To gain a better assessment on that very important piece of the market, we will have to see what the National Association of Realtors (NAR) posts for their Existing Home Sales Index for July". Those numbers were just released, and "the trend is our friend", as the saying goes.

   Existing Home Sales are up "Strongly From a Year Ago", says the National Association of Realtors® (NAR), in their Press Release. By the Numbers, Existing Home Sales are 21% above July 2010. Regionally, the big winner was the Midwest, which was 31.3% above July 2010, but all Regions posted double-digit gains from July 2010.

   Lawrence Yun, NAR chief economist, made a very interesting comment as to the tug and pull (I call it Tug of War), that is holding back a full-blown recovery vs. and uneven recovery. Yun said that even though the "“Affordability conditions this year have been the most favorable on record dating back to 1970", the issue is that many buyers are being "held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,”. Ron Phipps, NAR President and broker-president of Phipps Realty in Warwick, R.I. says that an "unacceptably high number of potential home buyers" are unable to complete transactions, and that “For both mortgage credit and home appraisals, there’s been a parallel pendulum swing from very loose standards which led to the housing boom, to unnecessarily restrictive practices as an overreaction to the housing correction”. Thus, the "Tug of War".

   We found out this week that since July of last year, Permits, Starts, Completions, and sales of Existing Homes have all increased substantially. What's next? New Residential Sales for July will be released next week, and it will certainly be important to analyze these figures. What do you think? Is this good news?


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Have a Great Weekend, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #ExistingHomeSales #NAR #BuildingPermits #HousingStarts #HousingCompletions

Housing Permits, Starts, And Completions All Rise

Hi Everyone,
   Hope you're having a productive and peaceful week. I come to you with some good housing news today!

   For the 12 months spanning July 2010 through July 2010, the 3 components of the New Residential Construction Housing statistics all showed an increase.

   From July 2010 through July 2011, Privately-owned housing units authorized by building permits jumped 3.8%, Privately-owned housing starts jumped 9.8%, and Privately-owned housing completions rose 9.5%, per the U.S. Census Bureau and the Department of Housing and Urban Development.

   What does this mean?

   This paints an overall picture of increased real estate activity from the same period a year ago. My opinion - this is a good thing. However, we are still sitting on a large inventory of existing homes, with a large percentage of that inventory as foreclosure/short sale properties. To gain a better assessment on that very important piece of the market, we will have to see what the National Association of Realtors (NAR) posts for their Existing Home Sales Index for July (due out Thursday Morning).

   Please Stay Tuned !

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
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TAGS: #residentialconstruction #buildingpermits #housingstarts #housingcompletions #realestate #foreclosure #shortsale

Danger Alert - For Anyone Showing Homes

Hi Folks,

   Hope You had a nice weekend, and welcome back.

   Today will be more of a Public Service Message, and it serves as a warning to anyone showing a home to relative strangers, male or female.

   "The attempted kidnapping and near sexual assault of a female Jackson real estate agent on Wednesday has reminded those in the industry about the dangers of their profession". This was taken from a recent story published in the JacksonSun website in Tennessee, written by Ned B. Hunter.

   The agent was showing a home to a man in the late afternoon, when he grabbed her and tied her up and put her in a closet, then left with her cell phone and purse. Fortunately, she was able to escape and call the police, resulting in the arrest of the suspect. She was very lucky, since it could have ended a lot worse for her.

   Earlier this year, I wrote a story in this Blog titled, "Home Security When Selling or Residing", in which we discussed these dangers. Jennifer A. Chiongbian, SVP and Licensed Associate Broker with Rutenberg Realty in New York City, suggests that you let your friends and neighbors know when you are showing a home. She also added another tip regarding your friends and neighbor; "have them call you afterwards to make sure everything is okay."

   Bottom Line...Be careful. You might be showing a lot of homes each day, but please don't get so entwined in the process that you overlook your safety and security. Any helpful suggestions for our friends here?


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TAGS: #realestateagent #danger #showingahome #Jackson #Tennessee

Homebuyers, Homebuyers...Please Come Back!

Hi Everyone,
   It's Friday, and I'm glad to have you back!

   Sometimes it fascinates me to see the ripple effect of the Economy (specifically, Housing and Employment). When Housing and Employment are in turmoil, some crazy things happen, for example...the creation of modern-day Ghost Towns...yes, Ghost Towns.

   According to a recent story on 247wallst.com ("The Eight States Running Out Of Homebuyers") by Douglas A. McIntyre, Michael B. Sauter, and Charles B. Stockdale, "Parts of Oregon, Georgia, and Arizona have become progressively more deserted.". As a matter of fact, they said that the "single biggest problem in the U.S. real estate market is simple: There are very few homebuyers.", and referred to a “buyers’ strike”.

   In order to find the hardest-hit states, 24/7 Wall St. used 6 factors which ranged from vacancy rates, foreclosure rates, unemployment rates, construction figures, population changes and price reductions.

   The Eight States that wound up on their list were Michigan, Nevada, Arizona, California, Illinois, Georgia, Oregon, Florida. Michigan had the worst Population Change (Decrease) from 2005-2010, which would have been substantially impacted by the car industry bankruptcies.

   Some other facts regarding the other states that were analyzed: Nevada had the worst 2010 Foreclosures, the worst Unemployment, and the worst decrease in Building Permits 2006 to 2010. Florida had the 2nd worst vacancy rates. Two states that did not make the list were Colorado (had one of the worst foreclosure rates) and South Carolina (one of the worst vacancy rates), but they stated that the populations in both states have "rebounded enough to make a strong case that their housing markets may recover moderately over time."

   What happens now?

   As we discussed the other day in "Really? They Are Doing THAT To Foreclosures?", this story also mentions that some homes will be "torn down in these pockets of high foreclosures" to drop supply and boost prices. Outside of that spark of hope, they don't feel overly optimistic regarding these areas, since, "jobless rates may never recover" and little chance that the "populations in these areas will ever rebound." Thus...Ghost Towns for now, and who even knows how long.

   Do you live near a newly-deserted region? How does it feel? What are your thoughts from your first-hand observations?

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Regards,
Rob Eisenstein
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TAGS: #GhostTown #vacancyrates #foreclosurerates #unemploymentrates #constructionfigures #populationchanges #Michigan #Nevada #Florida