Thursday, November 30, 2006
Time to Trim the Fat?
The Courier-Journal reports Louisville Metro Councilman,Dan Johnson, is going to propose an ordinance that prohibits Louisville area restaurants from using trans fatty acids in their menu offerings. Interesting...
Adjustable Rate Mortgages Continue to Get Pummeled
Looking at the news, much has been made about the so called housing bubble & the effect that exotic mortgages are having on the general housing market. Recently, the CEO of Countrywide, one of the largest mortgage lenders in the United States, offered his estimate of the level of understanding that he feels his customers have of Adjustable Rate Mortgages (ARMs) & other non-traditional mortgage products that have risen in popularity over the past few years. He feels that these products aren't as much of a mystery as some advocacy groups believe they are. What is also interesting is that there is fear that these types of loans are disproportionately hurting less affluent borrowers.
As a former mortgage loan officer, I admit that exotic mortgages were just beginning to gain in popularity when I made my exit from the profession, so I'm not as familiar as some, however, having shopped for an ARM myself, I think it is a bit curious to suggest that the pitfalls of exotic mortgages only affect the not-so-wealthy borrower.
My wife & I initially financed the purchase of our home back in 2004 with a 90/10 loan. This loan features a 90% First Mortgage locked for 5 years & a 10% Second Mortgage that adjusts after the first year. This mortgage product was attractive to us because it prevented us from paying Private Mortgage Insurance (PMI). We eventually needed to refinance the 2nd to pay off a few things, so that's when I began inquiring about an interest only loan. It's extremely important to point out that our total debt on the home was quite modest (less than $130,000). We looked into combining both mortgages on an interest only loan with about $7,000 additionally to pay off a debt or two. Come to find out, this type of scenario did nothing for our bottomline. It didn't reduce our monthly payment, and obviously, it didn't reduce our principal loan amount. Not that I needed him to tell me, but the mortgage professional I spoke with said that the deal didn't make sense.
I bring this up because it illustrates how an interest only ARM doesn't really benefit someone borrowing a nominal amount of money, i.e. a less affluent borrower. If we had purchased a more expensive home, then the monthly payment would have looked more attractive, but my wife & I would still have had to explore all the pros & cons regarding this product before making a decision. Obviously, in our case, the exotic mortgage didn't make sense because our total debt service was relatively cheap & stable enough that it didn't warrant much change, but even if the monthly payment had been cheaper, it wouldn't have saved us much each month. Similarly, less affluent buyers are not likely to be able to afford a home where an exotic would make sense either, so I'm not quite sure how ARMs can be said to disproportionately affect less wealthy borrowers in a negative fashion. It seems to me that borrowers who are finding themselves with huge payment increases were not all poor, but instead, they did not take into consideration all of the hurdles that might emerge later.
This brings me to my next point: It is absolutely crucial to do your homework when making crucial buying decisions. Find answers from someone you trust to be straight with you so that you can avoid dangers like predatory lending or merely keeping up with the Joneses. As I stated, the mortgage professional I spoke to said the deal didn't make sense. Furthermore, he didn't try to get me to see it another way in hopes of putting more money in his pocket. Instead, he referred me to someone else in his office to handle refinancing my second mortgage.
The bottomline is there are very few one-size-fits-all products available whether you're buying a belt or a mortgage. Exotic mortgages are a solution to some, but a nightmare to others. It would be over-simplifying the issue to say that all ARMs are bad, but given the huge magnitude of borrowing money, it only makes sense to balance the information available concerning the loan with what you know about your foreseeable future. The results might not be guaranteed, but at least your decision will be an educated one.
As a former mortgage loan officer, I admit that exotic mortgages were just beginning to gain in popularity when I made my exit from the profession, so I'm not as familiar as some, however, having shopped for an ARM myself, I think it is a bit curious to suggest that the pitfalls of exotic mortgages only affect the not-so-wealthy borrower.
My wife & I initially financed the purchase of our home back in 2004 with a 90/10 loan. This loan features a 90% First Mortgage locked for 5 years & a 10% Second Mortgage that adjusts after the first year. This mortgage product was attractive to us because it prevented us from paying Private Mortgage Insurance (PMI). We eventually needed to refinance the 2nd to pay off a few things, so that's when I began inquiring about an interest only loan. It's extremely important to point out that our total debt on the home was quite modest (less than $130,000). We looked into combining both mortgages on an interest only loan with about $7,000 additionally to pay off a debt or two. Come to find out, this type of scenario did nothing for our bottomline. It didn't reduce our monthly payment, and obviously, it didn't reduce our principal loan amount. Not that I needed him to tell me, but the mortgage professional I spoke with said that the deal didn't make sense.
I bring this up because it illustrates how an interest only ARM doesn't really benefit someone borrowing a nominal amount of money, i.e. a less affluent borrower. If we had purchased a more expensive home, then the monthly payment would have looked more attractive, but my wife & I would still have had to explore all the pros & cons regarding this product before making a decision. Obviously, in our case, the exotic mortgage didn't make sense because our total debt service was relatively cheap & stable enough that it didn't warrant much change, but even if the monthly payment had been cheaper, it wouldn't have saved us much each month. Similarly, less affluent buyers are not likely to be able to afford a home where an exotic would make sense either, so I'm not quite sure how ARMs can be said to disproportionately affect less wealthy borrowers in a negative fashion. It seems to me that borrowers who are finding themselves with huge payment increases were not all poor, but instead, they did not take into consideration all of the hurdles that might emerge later.
This brings me to my next point: It is absolutely crucial to do your homework when making crucial buying decisions. Find answers from someone you trust to be straight with you so that you can avoid dangers like predatory lending or merely keeping up with the Joneses. As I stated, the mortgage professional I spoke to said the deal didn't make sense. Furthermore, he didn't try to get me to see it another way in hopes of putting more money in his pocket. Instead, he referred me to someone else in his office to handle refinancing my second mortgage.
The bottomline is there are very few one-size-fits-all products available whether you're buying a belt or a mortgage. Exotic mortgages are a solution to some, but a nightmare to others. It would be over-simplifying the issue to say that all ARMs are bad, but given the huge magnitude of borrowing money, it only makes sense to balance the information available concerning the loan with what you know about your foreseeable future. The results might not be guaranteed, but at least your decision will be an educated one.
Wednesday, November 22, 2006
Happy Thanksgiving...
Thanksgiving is my favorite holiday. It's been the one holiday over the years that much of my extended family has circled on the calendar as the one where we all get together. I don't know what is more surprising: That we've chosen Thanksgiving as our annual reunion or that I actually look forward to seeing my extended family. Either way, I love this holiday. There's never been a better nap than the one that yearly follows Thanksgiving dinner. Another great thing is it's always on Thursday, so there's no complaining about getting snubbed on how many days off you get. It also brings home the point that I should be thankful more often. It's easy to look at it as one day of thanks, but I hope it challenges me to a higher level of gratefulness.
I also think the Presidential tradition of "pardoning" a turkey is hilarious. Yeah, it's hokie, but I get a kick out of it every time.
Cheers to you & yours...
Thursday, October 19, 2006
3rd Quarter Numbers
It's hard to believe that the third quarter of 2006 has come & gone, but it is true. I've crunched the statistics in the 40205, 40206, & 40207 zip codes here in Louisville, and what I've discovered is a bit surprising. Again, these are existing homes, and the numbers exclude condominiums.
3rd Quarter Sales, 2005
40205:
Total: 87
Low: $86,500
High: $1,000,000
Median: $195,000
Average: $234,761
Avg DOM: 48
40206:
Total: 63
Low: $64,500
High: $510,000
Median: $173,500
Average: $208,590
Avg DOM: 48
40207:
Total: 135
Low: $119,000
High: $1,550,000
Median: $215,900
Average: $311,010
Avg DOM: 49
3rd Quarter Sales, 2006
40205:
Total: 95 (+8)
Low: $102,000 (+15,500)
High: $925,000 (-75,000)
Median: $210,000 (+15,000)
Average: $243,605 (+8,844)
Avg DOM: 52 (+4)
40206:
Total: 40 (-23)
Low: $60,000 (-4,500)
High: $725,000 (+215,000)
Median: $170,000 (-3,500)
Average: $242,399 (+33,809)
Avg DOM: 56 (+8)
40207:
Total: 114 (-21)
Low: $130,000 (+11,000)
High: $1,850,000 (+300,000)
Median: $$228,000 (+12,100)
Average: $308,074 (-2,936)
Avg DOM: 58 (+9)
3rd Quarter Sales, 2005
40205:
Total: 87
Low: $86,500
High: $1,000,000
Median: $195,000
Average: $234,761
Avg DOM: 48
40206:
Total: 63
Low: $64,500
High: $510,000
Median: $173,500
Average: $208,590
Avg DOM: 48
40207:
Total: 135
Low: $119,000
High: $1,550,000
Median: $215,900
Average: $311,010
Avg DOM: 49
3rd Quarter Sales, 2006
40205:
Total: 95 (+8)
Low: $102,000 (+15,500)
High: $925,000 (-75,000)
Median: $210,000 (+15,000)
Average: $243,605 (+8,844)
Avg DOM: 52 (+4)
40206:
Total: 40 (-23)
Low: $60,000 (-4,500)
High: $725,000 (+215,000)
Median: $170,000 (-3,500)
Average: $242,399 (+33,809)
Avg DOM: 56 (+8)
40207:
Total: 114 (-21)
Low: $130,000 (+11,000)
High: $1,850,000 (+300,000)
Median: $$228,000 (+12,100)
Average: $308,074 (-2,936)
Avg DOM: 58 (+9)
Thursday, August 17, 2006
2nd Quarter Numbers: Highlands, Crescent Hill/Brownsboror Rd./St. Matthews
The numbers are in (and have been for some time, but I've just now posted them) on the three zip codes I follow most closely here in Louisville, KY. Just as in the first quarter, I compared closed sale numbers from 2006 with those of 2005 in measuring the following categories: Total number of sales, high sale, low sale, median sale price, average sale price, & average days on market. I also gathered pending sale numbers measuring the same categories as well as active listings as of June 30, 2006. These statistics are below.
The total number of sales in all three zip codes were up slightly over a year ago, with the 40206 zip code experiencing the biggest gain. Otherwise, total sale numbers are relatively unchanged, which is encouraging news & confirms that these markets are stable.
Average closed sale prices were down minimally compared to a year ago in 40206 & 40207, and up slightly in 40205.
The median sale prices were down slightly in 40205 & 40206, and up a smidge in 40207.
The outook in my view is certainly favoring buyers as inventory is up in most of the Louisville area. Prices will remain strong for homes that sell, but I see a lower total sale number in the third quarter and fewer interested buyers currently in the market. This is ironic because the environment is very good for buyers with levelling interest rates in the mid-6% range & so much to choose from. Granted, many potential buyers are possibly taking a wait & see approach since they too will have to sell in order to buy, but anyone not needing to sell might consider a move.
The total number of sales in all three zip codes were up slightly over a year ago, with the 40206 zip code experiencing the biggest gain. Otherwise, total sale numbers are relatively unchanged, which is encouraging news & confirms that these markets are stable.
Average closed sale prices were down minimally compared to a year ago in 40206 & 40207, and up slightly in 40205.
The median sale prices were down slightly in 40205 & 40206, and up a smidge in 40207.
The outook in my view is certainly favoring buyers as inventory is up in most of the Louisville area. Prices will remain strong for homes that sell, but I see a lower total sale number in the third quarter and fewer interested buyers currently in the market. This is ironic because the environment is very good for buyers with levelling interest rates in the mid-6% range & so much to choose from. Granted, many potential buyers are possibly taking a wait & see approach since they too will have to sell in order to buy, but anyone not needing to sell might consider a move.
Active Listings as of 6/30/06
40205
Total: 115
Low: $124,900
High: $1,025,000
Median: $249,900
Avg: $267,348
40206
Total: 73
Low: $85,000
High: $1,750,000
Median: $239,002
Avg: $358,747
40207
Total: 168
Low: $125,000
High: $2,350,000
Median: $239,650
Avg: $361,037
Total: 115
Low: $124,900
High: $1,025,000
Median: $249,900
Avg: $267,348
40206
Total: 73
Low: $85,000
High: $1,750,000
Median: $239,002
Avg: $358,747
40207
Total: 168
Low: $125,000
High: $2,350,000
Median: $239,650
Avg: $361,037
2nd Quarter Pending Sales, 2006
40205
Total: 38
Low: $119,500
High: $699,500
Median: $214,000
Avg: $272,793
40206
Total: 17
Low: $68,000
High: $595,000
Median: $162,500
Avg: $184,685
Avg DOM: 48
40207
Total: 42
Low: $134,900
High: $1,800,000
Median: $236,950
Avg: $307,109
Avg DOM: 50
Total: 38
Low: $119,500
High: $699,500
Median: $214,000
Avg: $272,793
40206
Total: 17
Low: $68,000
High: $595,000
Median: $162,500
Avg: $184,685
Avg DOM: 48
40207
Total: 42
Low: $134,900
High: $1,800,000
Median: $236,950
Avg: $307,109
Avg DOM: 50
Closed Sales, 2nd Quarter, 2005
40205
Total: 97
Low: $101,250
High: $1,050,000
Median: $205,000
Avg: $244,561
Avg DOM: 40
40206
Total: 46
Low: $43,000
High: $834,500
Median: $172,500
Avg: $217,857
Avg DOM: 53
40207
Total: 118
Low: $118,000
High: $2,050,000
Median: $215,000
Avg: $298,238
Avg DOM: 55
Total: 97
Low: $101,250
High: $1,050,000
Median: $205,000
Avg: $244,561
Avg DOM: 40
40206
Total: 46
Low: $43,000
High: $834,500
Median: $172,500
Avg: $217,857
Avg DOM: 53
40207
Total: 118
Low: $118,000
High: $2,050,000
Median: $215,000
Avg: $298,238
Avg DOM: 55
Closed Sales, 2nd Quarter, 2006
40205
Total: 104
Low: $102,000
High: $1,700,000
Median: $ $203,608
Avg: $252,641
Avg DOM: 47
40206
Total: 58
Low: $67,500
High: $1,138,000
Median: $163,950
Avg: $210,705
Avg DOM: 37
40207
Total: 115
Low: $114,000
High: $1,427,500
Median: $226,250
Avg: $290,964
Avg DOM: 59
Total: 104
Low: $102,000
High: $1,700,000
Median: $ $203,608
Avg: $252,641
Avg DOM: 47
40206
Total: 58
Low: $67,500
High: $1,138,000
Median: $163,950
Avg: $210,705
Avg DOM: 37
40207
Total: 115
Low: $114,000
High: $1,427,500
Median: $226,250
Avg: $290,964
Avg DOM: 59
Tuesday, June 20, 2006
Study: Downtown Louisville's Proposed Arena Would Boost Economy
My response is: Did we need a study to conclude that the proposed downtown arena will bolster the economy? More here.
Friday, June 16, 2006
More On Louisville's Hotel Front
A debate is underway as to whether or not the addition of a downtown Louisville arena warrants another downtown hotel, and if it does, then how many rooms will the market bear? More here from this morning's C-J.
Thursday, June 15, 2006
Downtown Marriott SOLD
The transaction is part of a four hotel deal in which Black Entertainment Television founder, Robert L. Johnson, is the "controller" of the purchasing group according to this morning's C-J. The deal includes another downtown Louisville newcomer & Marriott sibling, The Residence Inn Downtown Louisville.
Tuesday, June 06, 2006
Louisville Area Locales Considered for Historical Places Designation
More from Business First, the Louisville area looks to increase its already-impressive number of historic places when The Kentucky Historic Preservation Review Board meets on Wednesday, June 14 to consider Mockingbird Valley neighborhood among others.
Louisville the BEST
According to this Business First article, Louisville, KY was named the best city for relocating families.
Yeah, but Who Can Afford It???
Selling the Priciest House in All the Country(June 5, 2006) -- Anyone who wants to tour the house with the highest asking price in the country better be prepared to prove a net worth of $500 million or annual salary of $10 million.
The house is a 30,000-square-foot mansion known as Portabello perched on a cliff in Corona del Mar, Calif., south of Newport Beach. It’s priced at $75 million.
Some local real estate professionals are shaking their heads. ''Every agent in town is talking about it,'' says real estate associate Mark Whitehead, who sells homes in Corona del Mar. "It's a joke. It's an image thing. It's an ego trip to sell the most expensive home on the market.''
Bill Cote, owner of Cote Realty Group in Newport Beach, noted Portabello's asking price is 300 percent more than the highest amount paid for an Orange County home.
Listing agent, John McMonigle of Coldwell Banker Previews International, declined to comment but released a statement saying that the house was reasonably priced considering the land was worth $45 million and it would cost up to $1,500 per square foot to rebuild the home.
The estate belongs to Frank Pritt, who in 1982 founded software maker Attachmate Corp., a large privately held technology company in Bellevue, Wash.
Source: The Los Angeles Times, Mai Tran (06/04/2006)
The house is a 30,000-square-foot mansion known as Portabello perched on a cliff in Corona del Mar, Calif., south of Newport Beach. It’s priced at $75 million.
Some local real estate professionals are shaking their heads. ''Every agent in town is talking about it,'' says real estate associate Mark Whitehead, who sells homes in Corona del Mar. "It's a joke. It's an image thing. It's an ego trip to sell the most expensive home on the market.''
Bill Cote, owner of Cote Realty Group in Newport Beach, noted Portabello's asking price is 300 percent more than the highest amount paid for an Orange County home.
Listing agent, John McMonigle of Coldwell Banker Previews International, declined to comment but released a statement saying that the house was reasonably priced considering the land was worth $45 million and it would cost up to $1,500 per square foot to rebuild the home.
The estate belongs to Frank Pritt, who in 1982 founded software maker Attachmate Corp., a large privately held technology company in Bellevue, Wash.
Source: The Los Angeles Times, Mai Tran (06/04/2006)
Wednesday, May 31, 2006
An Alternate Take on Refinancing ARMs
Should ARM Borrowers Refinance or Stand Pat?(May 31, 2006) -- Home owners who took out adjustable-rate mortgages are facing big payment increases. But refinancing may not be the best solution, experts say.
ARMs made up 42 percent of all new home mortgages in 2005, up from 14 percent in 2003, according to LoanPerformance, a San Francisco-based research outfit.
As one example of how payments have increased, the starting rate on a 3/1 ARM — a loan with a fixed rate for three years — has risen to 6.17 percent from 3.80 percent in 2003. That translates into a $220-per-month increase.
But before they refinance to lower their payments, ARM borrowers should consider standing pat. If the annual adjustment is capped at 2 percent, the rate will rise to 5.8 percent in the first year — that's less than a 30-year fixed rate right now.
Plus, refinancing costs are high, says Keith Gumbinger, vice president of HSH Associates, which tracks the mortgage industry.And by the time another year rolls around, rates could go back down.
Gumbinger is among those who believe the Fed’s next move will be to push rates back down to jumpstart a slowing economy.
Source: SmartMoney, Reshma Kapadia (06/01/2006)
Lots of interesting stuff in there: I'm left wondering if all ARMs are capped at 2%. Also, are second mortgages counted in the 42% of all new home loans in 2005 that were ARMs? Mr. Gumbinger is the first person I've seen who feels that rates will be reduced any time soon.
ARMs made up 42 percent of all new home mortgages in 2005, up from 14 percent in 2003, according to LoanPerformance, a San Francisco-based research outfit.
As one example of how payments have increased, the starting rate on a 3/1 ARM — a loan with a fixed rate for three years — has risen to 6.17 percent from 3.80 percent in 2003. That translates into a $220-per-month increase.
But before they refinance to lower their payments, ARM borrowers should consider standing pat. If the annual adjustment is capped at 2 percent, the rate will rise to 5.8 percent in the first year — that's less than a 30-year fixed rate right now.
Plus, refinancing costs are high, says Keith Gumbinger, vice president of HSH Associates, which tracks the mortgage industry.And by the time another year rolls around, rates could go back down.
Gumbinger is among those who believe the Fed’s next move will be to push rates back down to jumpstart a slowing economy.
Source: SmartMoney, Reshma Kapadia (06/01/2006)
Lots of interesting stuff in there: I'm left wondering if all ARMs are capped at 2%. Also, are second mortgages counted in the 42% of all new home loans in 2005 that were ARMs? Mr. Gumbinger is the first person I've seen who feels that rates will be reduced any time soon.
Slighted Markets Look for Gains
Housing Analyst Says the Heartland's the Next Winner(May 30, 2006) --
A new statistical analysis of housing price cycles in 100 major metropolitan areas suggests that real estate action is shifting to areas that didn’t enjoy the recent housing boom.
Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, examined historical housing price movements and concluded that middle America markets like Columbus, Ohio; Indianapolis; Houston; San Antonio; Memphis, Tenn.; Atlanta; Cincinnati; Des Moines, Iowa; and Louisville, Ky., are due for above-average price increases and home building because of expanding employment bases and moderate housing prices.
Cagan also doesn’t believe what he calls the shooting stars of housing booms like most of California, Florida, Washington, D.C., New York City, or Boston are going to incinerate. He simply believes appreciation rates will dwindle to the low single digits or go flat for awhile as incomes catch up.
His bottom line: Figure out where your community is in the cycle and adapt.
Source: Washington Post Writers Group, Kenneth R. Harney (05/28/06)
A new statistical analysis of housing price cycles in 100 major metropolitan areas suggests that real estate action is shifting to areas that didn’t enjoy the recent housing boom.
Christopher L. Cagan, director of research and analytics for First American Real Estate Solutions, examined historical housing price movements and concluded that middle America markets like Columbus, Ohio; Indianapolis; Houston; San Antonio; Memphis, Tenn.; Atlanta; Cincinnati; Des Moines, Iowa; and Louisville, Ky., are due for above-average price increases and home building because of expanding employment bases and moderate housing prices.
Cagan also doesn’t believe what he calls the shooting stars of housing booms like most of California, Florida, Washington, D.C., New York City, or Boston are going to incinerate. He simply believes appreciation rates will dwindle to the low single digits or go flat for awhile as incomes catch up.
His bottom line: Figure out where your community is in the cycle and adapt.
Source: Washington Post Writers Group, Kenneth R. Harney (05/28/06)
Friday, May 26, 2006
Most Affordable Housing Markets
According to CNN.com. Louisville doesn't appear to have been part of the research. The only Kentucky area rated is Northern Kentucky/Greater Cincinnati.
Land Sale to be "Studied" After the "Fact"
I'm as confused as the next guy on this story from today's C-J which leaves more questions than answers regarding an aparent land sale in Frankfort. According to the article, a veterinarian in Frankfort recently purchased land from a church (including the church itself) for $450,000 with the intention of putting an animal hospital on the land. When her zoning change couldn't be secured, she appears to have sold the land seven weeks later to The Kentucky Retirement Systems, an entity that invests funds & administers benefits to employees & retirees of state & local government. The Kentucky Retirement Systems now wants to "study" the "sale" based on the hiked price, some unaccounted for personal property, & a $28,000 real estate commission. The seller, Caroline Bevins-Taylor, says she told the agency how much she would sell it for, and the agency agreed. However, no contract or bill of sale could be obtained with the details of the aparent transaction. If no contract exists, then it will be difficult to know what, if anything, has actually taken place. Not to mention, a church spokesman says the property had been listed for sale for quite some time when Ms. Bevins-Taylor purchased it producing the logical conclusion that the agency, had it wanted to, could have purchased the property only seven or eight weeks earlier for nearly $300,000 less than it paid.
As the facts roll in, I'll be sure to follow, but at this point, I'm scratching my head as what case the agency can make no matter how much "studying" they undertake. First, find out if a contract even exists, and then go from there. If one does exist, I don't see how that makes the sale any less viable. Undoubtedly, it will be interesting to see where the blame falls.
As the facts roll in, I'll be sure to follow, but at this point, I'm scratching my head as what case the agency can make no matter how much "studying" they undertake. First, find out if a contract even exists, and then go from there. If one does exist, I don't see how that makes the sale any less viable. Undoubtedly, it will be interesting to see where the blame falls.
90 More "High Tech, High Wage" Jobs Hopeful for Louisville
The expansion of BAE Systems, a defense plant that would make gun magazines, could mean 90 more jobs for Louisville according to this C-J blip. The plant would be built near River Road & Zorn Avenue on the Ohio River. These jobs will average more than $47,000 per worker per year.
Wednesday, May 24, 2006
Just Don't Sell the Beast!
Kings Island, a favorite amusement park in the Ohio Valley region, sold packaged with four other parks for $1.24 Billion. I only hope the Cincinnati-based park keeps its healthy supply of coasters!
National Housing Market News
The numbers are in on the national real estate market's 1st Quarter. As this Biz Journal article states, the thought of a "national" real estate market is a bit absurd. Undoubtedly, the craziness of the past few years in places like Las Vegas, Phoenix, & Boston is clearly sobering, however, much of the country's local real estate markets aren't likely to take a hit.
My research of three zip codes here in Louisville in the 1st Quarter of '06 vs. that of '05 is in the archives of this blog, and I am looking forward to looking at the 2nd, 3rd, & 4th Quarter numbers as they become available.
My own perception of the local market is that there are fewer buyers in the market at this time compared to last year. Inventory nearly everywhere appears to be up. Sale prices, however, remain strong. This news puts a premium on pricing accuracy. It will also be interesting to see if some of those priced out of housing in the former boom markets might look to relocate to area that never did really boom.
My research of three zip codes here in Louisville in the 1st Quarter of '06 vs. that of '05 is in the archives of this blog, and I am looking forward to looking at the 2nd, 3rd, & 4th Quarter numbers as they become available.
My own perception of the local market is that there are fewer buyers in the market at this time compared to last year. Inventory nearly everywhere appears to be up. Sale prices, however, remain strong. This news puts a premium on pricing accuracy. It will also be interesting to see if some of those priced out of housing in the former boom markets might look to relocate to area that never did really boom.
Big Ticket Homes Immune to Bubble Talk?
Well, not really, but it is an interesting occurence nonetheless:
The Multimillion $ Market is Still Hot, Hot, Hot(May 22, 2006) --
Despite a cooling real estate market, one segment that remains red hot is the multimillion-dollar market.
In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, a DataQuick analysis shows.
In Palm Beach, Fla., 10 homes sold for $5 million or more in the first quarter, up from eight last year. And in Jackson, Wyo., 21 homes, up from 17, sold for more than $3 million, according to Jackson Hole Real Estate and Appraisal.
Mark Zandi, chief economist at forecasting firm Moody's Economy.com, says the segment of high-end buyers "won't be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically."
Source: The Wall Street Journal, Troy McMullen (05/19/2006)
The Multimillion $ Market is Still Hot, Hot, Hot(May 22, 2006) --
Despite a cooling real estate market, one segment that remains red hot is the multimillion-dollar market.
In San Francisco, 18 homes in that range sold in the first quarter, up from 15 in the same period last year, a DataQuick analysis shows.
In Palm Beach, Fla., 10 homes sold for $5 million or more in the first quarter, up from eight last year. And in Jackson, Wyo., 21 homes, up from 17, sold for more than $3 million, according to Jackson Hole Real Estate and Appraisal.
Mark Zandi, chief economist at forecasting firm Moody's Economy.com, says the segment of high-end buyers "won't be immune from the unfolding travails of the rest of the market, but it will weather those difficulties much better than it has historically."
Source: The Wall Street Journal, Troy McMullen (05/19/2006)
Tuesday, May 23, 2006
OK, All Bets Are Off!
My Preakness prediction was a bit off as these results will surely attest. Diabolical was last! Bernardini looked incredible.
Of course, the story that has created the biggest noise is Barbaro's status. After breaking his ankle in two places, his future as a race horse is not viable & even his stallion retirement is in doubt. It made me sick to see the video replays of him running awkwardly as his hoof appeared to be almost detached & rubbery as Edgar Prado attempted to pull him back.
I told friends of mine that I couldn't see Barbaro losing unless something weird happened, and Barbaro's premature start & subsequent injury certainly qualify. I hope he makes it.
Of course, the story that has created the biggest noise is Barbaro's status. After breaking his ankle in two places, his future as a race horse is not viable & even his stallion retirement is in doubt. It made me sick to see the video replays of him running awkwardly as his hoof appeared to be almost detached & rubbery as Edgar Prado attempted to pull him back.
I told friends of mine that I couldn't see Barbaro losing unless something weird happened, and Barbaro's premature start & subsequent injury certainly qualify. I hope he makes it.
Friday, May 19, 2006
The Second Jewel of the Triple Crown
Well, here we are two weeks after Barbaro ran away with the Derby in Louisville against a field of 20 horses. It's Preakness Eve, so what's the story looking like in Baltimore? Barbaro will have a lot more room to operate since the Preakness field features only nine horses. The Kentucky Derby champ drew Post # 6 smack dab in between #5, Brother Derek, & #7, sweetnorthernsaint, which are the two horses probably most capable of beating the favorite. Brother Derek & sweetnorthernsaint ran 4th & 7th, respectively, in the Derby. I can't imagine how Barbaro loses the Preakness, but why bet on him? He's likely to be even money or worse, so I'm going to go with Diabolical for no other reason than he's a beefy 30-1 payoff.
Wednesday, May 17, 2006
Time for Some Sanity
I know it probably reads as though I'm desperately trying to dissuade the entire populace that a real, live real estate bubble is upon us, but thanks to Shawn Tully of Fortune Magazine/CNNMoney, a portrait of clarity does exist on this bubble madness. The following excerpt is probably one of the more important & leased disclosed statement ever regarding the so-called bubble:
"In either case, many individual homeowners have nothing to worry about:
They can simply stay put and ride out the cycle. The only thing they'll lose
is
the opportunity to brag about their paper profits. And in some places,
appreciation has been so sharp that a seller could see prices plunge 30
percent
and still make a hefty gain.
The real losers will be those
who bought recently at inflated prices and
are forced to sell, usually
because they're taking a job in another city or
can't make the payments when
their adjustable mortgage rate jumps. And
speculators who bought overpriced
condos in hope of a quick killing are going to
get hosed."
Economy Mixed?
I don't feel qualified to comment on much found in this C-J column except the part about...you guessed it...housing. It's not necessarily a bad thing that April housing starts for new construction are down nearly 7.5%. This is evidence that the market works. It is no wonder developers & builders are less inclined to build new when inventory is creeping up. The total number of home sales is down based on last year in some, but not all, locations across the country, which shouldn't come as a surprise either given the five consecutive years of housing sales records that preceded the decline.
There are some metros that are benefitting from the pie in the sky prices that are being asked in the "boom" markets. This should come as no surprise. Not everyone can live, nor should they want to live, on the West Coast or in other areas that saw heavy gains in the past five years. It only stands to reason that nice cities with strong economies will attract pools of buyers unwilling or incapable of purchasing in their "dream" location. Attractive affordable metros like Albuqurque, NM & Denver, CO are prime to see nice gains.
The news for Lousiville looks good as well. The recent decision by UPS to add nearly 5,000 new jobs in the coming months will certainly help to absorb a chunk of the housing inventory.
There are some metros that are benefitting from the pie in the sky prices that are being asked in the "boom" markets. This should come as no surprise. Not everyone can live, nor should they want to live, on the West Coast or in other areas that saw heavy gains in the past five years. It only stands to reason that nice cities with strong economies will attract pools of buyers unwilling or incapable of purchasing in their "dream" location. Attractive affordable metros like Albuqurque, NM & Denver, CO are prime to see nice gains.
The news for Lousiville looks good as well. The recent decision by UPS to add nearly 5,000 new jobs in the coming months will certainly help to absorb a chunk of the housing inventory.
UPS Expansion Means Business
United Parcel Service will hire around 5,000 more workers as part of its expansion in Louisville. The expansion includes adding 1,284 full-time workers as well as 3,787 part-timers. For more on the economic impact of the move, check out morethanderby contributor, Todd Earwood's take.
Tuesday, May 16, 2006
1st Quarter Numbers Nationwide
NAR: First Quarter State Existing-Home Sales Ease(May 15, 2006) --
Existing-home sales, including single-family and condo, remained historically high in the first quarter but have experienced a downtrend since hitting a record in the third quarter of last year. Even so, 26 states showed increases in sales activity from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
The latest report on total existing-home sales shows that the seasonally adjusted annual rate* was 6.80 million units in the first quarter, down 2.1 percent from the 6.94 million-unit level in the first quarter of 2005.
The biggest increase was in New Mexico, where existing-home sales rose 26.2 percent from the first quarter of 2005. Louisiana’s first-quarter resale pace rose 22.9 percent from a year earlier, while Montana experienced the third strongest gain, up 17.5 percent. Six other states recorded double-digit sales increases from a year ago. Twenty-one states and the District of Columbia experienced declines. Complete data for three states was not available.
David Lereah, NAR’s chief economist, said rising interest rates have dampened sales. “A steady rise in mortgage interest rates has slowed home sales in higher cost areas, yet job growth in some moderately priced markets is boosting sales in other areas,” he said. “The net effect is a modest decline in home sales for the nation as a whole, but sales remain historically strong and are providing a solid underlying base for the overall economy.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.24 percent in the first quarter, up from 6.22 percent in the fourth quarter; it was 5.76 percent in the first quarter of 2005.
NAR President Thomas M. Stevens from Vienna, Va., said the sales pattern is expected to level out. “We project home sales may soften a little further before picking up in the fourth quarter, but we’re not looking for any significant changes in the market moving forward,” said Stevens, senior vice president of NRT Inc. “This should provide stability in the market so that buyers and sellers will be on a fairly level playing field in most of the country.”
More detail is online.
Source: NAR
Existing-home sales, including single-family and condo, remained historically high in the first quarter but have experienced a downtrend since hitting a record in the third quarter of last year. Even so, 26 states showed increases in sales activity from a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
The latest report on total existing-home sales shows that the seasonally adjusted annual rate* was 6.80 million units in the first quarter, down 2.1 percent from the 6.94 million-unit level in the first quarter of 2005.
The biggest increase was in New Mexico, where existing-home sales rose 26.2 percent from the first quarter of 2005. Louisiana’s first-quarter resale pace rose 22.9 percent from a year earlier, while Montana experienced the third strongest gain, up 17.5 percent. Six other states recorded double-digit sales increases from a year ago. Twenty-one states and the District of Columbia experienced declines. Complete data for three states was not available.
David Lereah, NAR’s chief economist, said rising interest rates have dampened sales. “A steady rise in mortgage interest rates has slowed home sales in higher cost areas, yet job growth in some moderately priced markets is boosting sales in other areas,” he said. “The net effect is a modest decline in home sales for the nation as a whole, but sales remain historically strong and are providing a solid underlying base for the overall economy.”
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.24 percent in the first quarter, up from 6.22 percent in the fourth quarter; it was 5.76 percent in the first quarter of 2005.
NAR President Thomas M. Stevens from Vienna, Va., said the sales pattern is expected to level out. “We project home sales may soften a little further before picking up in the fourth quarter, but we’re not looking for any significant changes in the market moving forward,” said Stevens, senior vice president of NRT Inc. “This should provide stability in the market so that buyers and sellers will be on a fairly level playing field in most of the country.”
More detail is online.
Source: NAR
Friday, May 12, 2006
Downtown: Historic Portland Home Undergoing Makeover
It's National Preservation Month, and the Squire Earick House in Louisville's Portland Neighborhood is receiving restoration. More from today's C-J here.
In Case You Missed It...
Because I sure did, Ron Schoolmeester penned a great piece on Louisville for USA Today last week. Obviously, the timing was right considering the horse race that occurred on Saturday, but the majority of the article focuses on a Louisville that appears ready to embrace a more unique identity. Highlights include comments by Lynn as well as 21c proprietors, Steve Wilson & Laura Lee Brown.
Thursday, May 11, 2006
Downtown will Welcome Bluegrassers in August
This is great news. I am interested to see what the lineup looks like for The Kentucky Bluegrass Festival. I still have some nice recordings of some of my favorite 'grassers from when this was an annual festival held on the Belvedere in the '80s. Since Louisville lost the IBMA Festival & Awards Show to Nashville, it's nice to see that large quantities of banjos & fiddles will be returning to Louisville's downtown area this August 4 & 5.
Here's yesterday's blip from Business First. Once the lineup is introduced, I'll be sure to take yet another break from posting real estate related material & post who will be playing. Would love to see Sam, Bela, and/or Del, which would not be unheard of based on the kinds of quality this particular festival used to attract.
Here's yesterday's blip from Business First. Once the lineup is introduced, I'll be sure to take yet another break from posting real estate related material & post who will be playing. Would love to see Sam, Bela, and/or Del, which would not be unheard of based on the kinds of quality this particular festival used to attract.
Tuesday, May 09, 2006
Back to Work: Proposed Arena Will Push Luxury Box Limits
According to this morning's C-J, U of L's downtown arena would house up to 72 luxury suite boxes. It would be the most luxury suites offered for lease by any arena in the country that does not also feature a professional tenant. The probable price: $75,000-$80,000! I'll take two.
Sunday, May 07, 2006
Barbaro Victorious in Derby
OK, so I didn't pick the winner yesterday, nor did I have the trifecta. My horse, Jazil, began slowly just as I expected, and rallied to tie for fourth. Barbaro paid $14.20, $8.00, & $6.00, while 2nd place longshot Bluegrass Cat paid a hefty $28.40 & $15.40, and 3rd place Steppenwolfer paid $7.80 for the Show.
Next is the Preakness in two weeks. Can't wait.
Next is the Preakness in two weeks. Can't wait.
Friday, May 05, 2006
Break from Real Estate: Derby
So who do you like? According to the "experts", this year's Kentucky Derby field is rich in talent. Probably best to pick based on your favorit name. There's Sinister Minister & sweetnorthernsaint, and even Lawyer Ron to mediate between the two. Personally, I like Jazil. He's a closer, and would have benefitted from extra distance in the Wood Memorial when he finished 2nd after a furious rally. Churchill offers him that extra, so my money's on him ($2 across the board just to show you how sure I am).
Good Luck!
Good Luck!
Thursday, May 04, 2006
1st Quarter High Active Prices
1st Quarter 2006 Low Active Prices
1st Quarter 2006 Active Median Home Prices
1st Quarter 2006 High Pending Sale Prices
Current high pending sale price in 40205 is $1,875,000. That's ours!
Current high pending sale price in 40206 is $1,175,000
Current high pending sale in 40207 is $1,427,500
1st Quarter Low Pending Sales
Current low pending sale price in 40205 is $132,000
Current low pending sale price in 40206 is $89,500
Current low pending sale price in 40207 is $139,500
1st Quarter Median Pending Home Sales
Current median pending home price in 40205 is $239,900
Current median home price in 40206 is $205,900
Current median pending home price in 40207 is$224,950
1st Quarter High Home Sales: 2005 vs. 2006
1st Quarter 2006 high sale price in 40205 sold for $688,302
1st quarter 2005 high sale price in 40205 sold for $825,000
1st Quarter 2006 high sale price in 40206 sold for $510,000
1st Quarter 2005 high sale price in 40206 sold for $420,000
1st Quarter 2006 high sale price in 40207 sold for $675,000
1st Quarter 2005 sale price in 40207 sold for $850,000
Wednesday, May 03, 2006
1st Quarter Low Home Sales: 2005 vs. 2006
1st Quarter Low sale price 2006 in 40205 sold for $110,000
1st quarter Low sale price 2005 in 40205 sold for $101,500
1st Quarter Low sale price 2006 in 40206 sold for $68,800
1st Quarter Low sale price 2005 in 40206 sold for $21,600 (!)
1st Quarter Low sale price 2006 in 40207 sold for $129,000
1st Quarter Low sale price 2005 in 40207 sold for $136,000
Tuesday, May 02, 2006
1st Quarter Median Home Sales: 2005 vs. 2006
1st Quarter Median sale price 2005 in 40205 zip sold for $$186,250
1st Quarter Median sale price 2006 in 40205 zip sold for $190,000
1st Quarter Median sale price 2005 in 40206 zip sold for $165,500
1st Quarter Median sale price 2006 in 40206 zip sold for $174,750
1st Quarter Median sale price 2005 in 40207 zip sold for $208,450
1st Quarter Median sale price 2006 in 40207 sold for $198,000
So How are We Doing?: 1st Quarter Numbers
With all the housing bubble talk, I thought I'd take a look at a couple of areas in the Louisville market to see how the so-called bubble is affecting our local market. For examination, I've chosen three traditional zip codes that, if there is a bubble, it is most likely to affect these areas. The zip codes: 40205 (Highlands/Douglass Loop Area), 40206 (Crescent Hill), 40207 (St. Matthews/Brownsboro Rd.).
Here's what I found:
I looked at the first quarter of 2005 for total sales, average sale price, median sale price, low sale price, high sale price, and average days on market for the three zip codes. Then I did the same for the first quarter 2006. I then looked at current active inventory & pending sales.
40205: 1st quarter 2005
Sales: 70
Avg Sale Price: $224,406
Median: $186,250
Low: $101,500
High: $825,000
Avg DOM: 59
40205: 1st quarter 2006
Sales: 67
Average Sale Price: $209,011
Median: $190,000
Low: $110,000
High: $688,302
Avg DOM: 59
40205: Active Inventory
Total: 108
Avg Asking: $279,332
Median Asking: $251,000
Low Asking: $119,900
High Asking: $739,000*
40205: PENDING Sales
Total: 42
Average Price: $320,016
Median Price: $239,900
Low: $110,000
High: $1,875,000
40206: 1st quarter 2005
Sales: 42
Avg Sale Price: $188,919
Median Sale Price: $165,500
Low: $21,600
High: $420,000
Avg DOM: 56
40206: 1st quarter 2006
Sales: 28
Average Sale Price: $183,932
Median: $174,750
Low: $68,800
High: $510,000
Avg DOM: 87
40206: Active Inventory
Total: 84
Avg Asking: $320,522
Median Asking: $219,900
Low: $79,400
High: $2,200,000
40206: PENDING Sales
Total: 13
Average Price: $280,223
Median Price: $205,900
Low: $89,500
High: $1,175,000
40207: 1st quarter 2005
Sales: 93
Avg Sale Price: $271,999
Median Sale Price: $208,450
Low: $136,000
High: $850,000
Avg DOM: 56
40207: 1st quarter 2006
Sales: 73
Average Sale Price: $220,741
Median Sale Price: $198,000
Low: $129,000
High: $675,000
Avg. DOM: 71
40207: Active Inventory
Total: 137
Avg Asking: $365,555
Median Asking: $262,500
Low: $115,000
High: $1,975,000
40207: PENDING Sales
Total: 53
Average Price: $351,774
Median Price: $224,950
Low: $139,500
High: $1,427,500
*=There is a large one-of-a-kind estate home currently on the market in this zip for $7,500,000, but in order to keep from skewing the data too terribly, I did not include it.
Pending sales appear encouraging with regard to average price figures which are sure to drop some upon closing, but there's definitely a bit of a slow down. I'll be following up with a 2nd quarter update on these zips as well to see where we stand at mid-summer. My initial reaction is that there are less motivated buyers in the market at this time. Some of that is undoubtedly due to interest rate increases & as a reation to much of the negative publicity the housing market is receiving. There's no question that the national housing market is softening & has been for a few months. It will be interesting to see how low to mid-level markets fair as we head into peak buying time. Also, I'll be posting a few pictures of some of the houses included in this sample.
Thursday, April 27, 2006
Priciest Zip Codes Ranked by Forbes
Forbes Ranks Most-Expensive ZIP Codes(April 25, 2006) --
The list of the 500 most expensive ZIP codes compiled by Forbes.com is based on the highest median home prices in the country.
The ZIP code 11962 topped the list, as the median price in Sagaponack, N.Y. — located in the Hamptons — reached $2.8 million in 2005.
More than 50 percent of the 500 priciest ZIP codes were in California, and 20 percent were in New York. The remainder were mainly in Massachusetts, Connecticut, Arizona, Maryland, and Florida.
A few of the upscale ZIP codes belong to urban areas; but most are on the coast or in the mountains, with breathtaking views, spacious estates, country clubs, golf courses, and other luxury amenities.
Source: MSNBC, Sara Clemence (04/24/06)
The list of the 500 most expensive ZIP codes compiled by Forbes.com is based on the highest median home prices in the country.
The ZIP code 11962 topped the list, as the median price in Sagaponack, N.Y. — located in the Hamptons — reached $2.8 million in 2005.
More than 50 percent of the 500 priciest ZIP codes were in California, and 20 percent were in New York. The remainder were mainly in Massachusetts, Connecticut, Arizona, Maryland, and Florida.
A few of the upscale ZIP codes belong to urban areas; but most are on the coast or in the mountains, with breathtaking views, spacious estates, country clubs, golf courses, and other luxury amenities.
Source: MSNBC, Sara Clemence (04/24/06)
Thursday, April 20, 2006
Downtown Arena Authority Vote
The Riverfront site at Second Street & Main in downtown Louisiville remains lawmakers' choice for Louisville's downtown arena, but John Schnatter & David Jones, Sr. think there's a better way.
No matter the site, the arena must be built. Too much hinges on its completion. Downtown's vitality is higher than it's been in decades, and so much of that momentum has been gained from the promise of this arena.
No matter the site, the arena must be built. Too much hinges on its completion. Downtown's vitality is higher than it's been in decades, and so much of that momentum has been gained from the promise of this arena.
Tuesday, April 18, 2006
Auction: Grand Crescent Hill Victorian
Some houses attract all kinds of curiosity. Some garner attention for being uniquely an eye-soar, however, some for being uniquely gorgeous. This 19th Century Crescent Hil Victorian located on Hite Avenue falls into the latter category. If ever a house should be auctioned, this is it.
- What: Auction of historic Crescent Hill Victorian
- When: Saturday, April 22, 2006, 10:00 a.m.
- Where: 131 N. Hite Ave.
Downtown Louisville's Waterfront Park Update
The final piece of the immaculate Waterfront Park in downtown Louisville will be closed on Thursday, however, according to this C-J blip more funding is needed to improve the parcel of land consistent with what has already been developed. This final phase includes the walking bridge conversion from the currently abandoned railroad bridge. Given the fact that the conveyance of the land is nearly finalized, I'd say funding to complete the project will be secured.
Monday, April 17, 2006
Assassin's Boyhood Home Still Needs a Buyer
No Bidders for John Wilkes Booth's House(April 14, 2006) --
The Bel Air, Md., boyhood home of Abraham Lincoln assassin John Wilkes Booth failed to sell at auction yesterday.
Only 25 people showed up and only two were registered bidders. The auctioneers started the bidding at $875,000, but it dropped quickly until it hit $805,000 and was withdrawn.
The seller Robert Baker and his wife Beth, who own a landscaping business, bought the house at auction in 1999 for $415,000. The owners say they will now rely on a real estate professional to sell the property.
Source:[ The Baltimore Sun], Justin Fenton (04/13/06)
Ed.'s Note: Good luck is all I have to say. Not sure how the history regarding this particular house will serve its sales success.
The Bel Air, Md., boyhood home of Abraham Lincoln assassin John Wilkes Booth failed to sell at auction yesterday.
Only 25 people showed up and only two were registered bidders. The auctioneers started the bidding at $875,000, but it dropped quickly until it hit $805,000 and was withdrawn.
The seller Robert Baker and his wife Beth, who own a landscaping business, bought the house at auction in 1999 for $415,000. The owners say they will now rely on a real estate professional to sell the property.
Source:[ The Baltimore Sun], Justin Fenton (04/13/06)
Ed.'s Note: Good luck is all I have to say. Not sure how the history regarding this particular house will serve its sales success.
Friday, April 14, 2006
City Seeking Restoration of Historic Dwelling
Anyone up for a fixer-upper? If so, the restoration of this 1860s mansion could keep a handy-man busy for quite awhile.
Downtown Marriott a Success
From today's C-J, the hotel chain's downtown location is doing well for itself, in addition to doing well for other downtown hotels & the downtown area in general.
Thursday, April 13, 2006
Local Blog is a Feast for All Things "Louisville"
Granted, I write a predominantly "Real Estate-Themed" blog that attempts to focus mostly on real estate in Louisville, KY. However, I'd like to direct anyone interested in finding out more about the "guts & insides" of this city to visit a great local blog: Louisville's Water Cooler also better known as morethanderby.com. There you'll find lots of interesting info on a variety of topics that shape our city. Differing viewpoints abound, it's great fun, and it's run by blog champions Todd Earwine & Rob May among others.
Affordable Housing Alert: Get Out of L.A.
Half Million Dollars Doesn't Buy Much in L.A.(April 13, 2006) --
If you're looking for an affordable home, steer clear of Los Angeles. Southern California continues to be one of the most expensive places in the country to buy a house, new research shows.
Median prices in Los Angeles County passed $500,000 for the first time last month, according to DataQuick Information Systems, which analyzes property transactions. In March, the median hit $506,000, up 15 percent from a year earlier and 3 percent from February.
Orange and Ventura counties' medians sailed through the $600,000 level in the middle of last year, and San Diego's broke through the $500,000 point last fall.
$500,000 doesn’t buy a palace. Forget Beverly Hills. It might get you 1,500 square feet with three bedrooms and two baths in South Los Angeles.
To buy a house at the median price, a household would need an annual income of at least $120,000 to qualify for conventional financing with a 20 percent down payment. The Los Angeles County's median household income is $47,000.
Source: Los Angeles Times, Annette Haddad (04/13/2006)
Ed.'s Note: That statistic at the bottom of the paragraph is an interesting one, isn't it? My question remains, who then is buying up all these median priced homes in the $500,000 range? If they're merely priced there, then the situation will work itself out, but if they're also selling there, then to whom?
If you're looking for an affordable home, steer clear of Los Angeles. Southern California continues to be one of the most expensive places in the country to buy a house, new research shows.
Median prices in Los Angeles County passed $500,000 for the first time last month, according to DataQuick Information Systems, which analyzes property transactions. In March, the median hit $506,000, up 15 percent from a year earlier and 3 percent from February.
Orange and Ventura counties' medians sailed through the $600,000 level in the middle of last year, and San Diego's broke through the $500,000 point last fall.
$500,000 doesn’t buy a palace. Forget Beverly Hills. It might get you 1,500 square feet with three bedrooms and two baths in South Los Angeles.
To buy a house at the median price, a household would need an annual income of at least $120,000 to qualify for conventional financing with a 20 percent down payment. The Los Angeles County's median household income is $47,000.
Source: Los Angeles Times, Annette Haddad (04/13/2006)
Ed.'s Note: That statistic at the bottom of the paragraph is an interesting one, isn't it? My question remains, who then is buying up all these median priced homes in the $500,000 range? If they're merely priced there, then the situation will work itself out, but if they're also selling there, then to whom?
Here's an Idea for old Central State Hospital
Developers Turn Old Asylums Into New Homes(April 13, 2006) --
Despite their sometimes spooky histories, former hospitals for the mentally ill are finding new life as condominiums, apartments, and townhomes.
The former Danvers State Hospital in Massachusetts was once called “the scariest building in the world.” But today there’s not much left to be frightened of — except for the pricey rents of $1,400 a month.
Rents are even pricier at the former New York City Lunatic Asylum on Manhattan’s Roosevelt Island. Studio apartments start at $1,700.
And in Oregon, more than 600 people signed up for the first 60 homes built on the site the former Dammasch State Hospital, south of Portland, where the smallest townhouses sell for $250,000.
Source: Associated Press, Ken Maguire (04/12/2006)
Despite their sometimes spooky histories, former hospitals for the mentally ill are finding new life as condominiums, apartments, and townhomes.
The former Danvers State Hospital in Massachusetts was once called “the scariest building in the world.” But today there’s not much left to be frightened of — except for the pricey rents of $1,400 a month.
Rents are even pricier at the former New York City Lunatic Asylum on Manhattan’s Roosevelt Island. Studio apartments start at $1,700.
And in Oregon, more than 600 people signed up for the first 60 homes built on the site the former Dammasch State Hospital, south of Portland, where the smallest townhouses sell for $250,000.
Source: Associated Press, Ken Maguire (04/12/2006)
Wednesday, April 12, 2006
Tax Time: Mortgage Rate Deduction a Nice Break
Mortgage Interest Deduction Can Save Taxpayers Big(April 11, 2006) --
Believe it or not, home owners frequently don’t itemize deductions and as a result, they could be overpaying their federal taxes by as much as $1 billion a year.
The Government Accountability Office, the research arm of Congress, reports that about 2.2 million home owners last year took the standard deduction on their tax returns rather than itemizing deductions. They paid $945 million more in federal taxes than they needed to.
Home owners may not think they have enough write-offs to overcome the standard deduction. But if their mortgages are large or fairly new, they're probably wrong, says Larry Cox, owner of several Jackson Hewitt Tax Service franchises in the Denver area.
Why overlook this government gift? Some do-it-yourself taxpayers find itemizing deductions daunting; others may not have enough deductions to offset the increasingly generous standard deduction, speculated CPA Robert Burke of Jacksonville, Fla.
Source: Denver Post, Aldo Svaldi (04/09/06)
Believe it or not, home owners frequently don’t itemize deductions and as a result, they could be overpaying their federal taxes by as much as $1 billion a year.
The Government Accountability Office, the research arm of Congress, reports that about 2.2 million home owners last year took the standard deduction on their tax returns rather than itemizing deductions. They paid $945 million more in federal taxes than they needed to.
Home owners may not think they have enough write-offs to overcome the standard deduction. But if their mortgages are large or fairly new, they're probably wrong, says Larry Cox, owner of several Jackson Hewitt Tax Service franchises in the Denver area.
Why overlook this government gift? Some do-it-yourself taxpayers find itemizing deductions daunting; others may not have enough deductions to offset the increasingly generous standard deduction, speculated CPA Robert Burke of Jacksonville, Fla.
Source: Denver Post, Aldo Svaldi (04/09/06)
Tuesday, April 11, 2006
Replacing Old with New
The former site of the Clarksdale Public Housing Project is getting a new face. The row of rundown brick apartments along Clay Street on the fringe of downtown Louisville is being transformed into Liberty Green, an ecclectic mix of new lofts, apartments, townhomes, & single family homes.
Thursday, April 06, 2006
Thinking about Selling?
If you're one of the many who will attempt to sell their home this spring, everyone seems to have an opinion on what improvements or repairs should be made prior to listing the property. It's been my experience that the first $500 a seller spends in preparing his or her home for marketing that can be the biggest value-builder.
Some inexpensive ways to help your home stand out in a somewhat bloated market:
Some inexpensive ways to help your home stand out in a somewhat bloated market:
- Clean the clutter. Eliminate anything that appears to crowd your home. Reduce the amount of furniture in smaller rooms. Organize closets & reduce their contents.
- Clean the dirt & grime. This includes having windows & floor coverings professionally cleaned. I can't tell you how many homes I've shown that these steps haven't been taken, and what could be & probably is a perfectly good home shows poorly & gives the potential buyer the feeling that there's more wrong with it than its cleanliness.
- Manicure the landscaping. No need to go nuts & plant a flower garden, but instead improve on what is already in place. Minimal landscaping is fine as long as it is neat in its appearance.
- Have systems (electical, HVAC) examined/serviced by a professional.
- Patch, paint, & repair. Walls, floors, moldings, cabinets, counters, etc. can be made to look passable, if not great, with just a little work. Rarely do I recommend replacing floor coverings, counters, cabinets, etc. but again, take what is in place, and make it look outstanding.
- Ask your real estate professional if decor is fairly neutral or appealing to the profile of the potential buyer for your property. Most people think they should paint all the walls neutral. I disagree to a point. If your decor is fairly recent & not terribly bold, then keep it & shape it up to look brand new. Also, just because your decor is deemed "bold" by some, depending on what the likely profile of the buyer is for your house, you might want to keep it. That's why it's important to ask your agent what works & what doesn't.
If you're willing to spend around $500 in readying your home for sale, and you do it intelligently & with qualified guidance, you will probably realize thousands more in equity, and your house will sell much faster.
If you have further questions, please email me at cthomas@mulloyproperties.com
New Law Regarding Electrical Work on Personal Residences
This C-J blip outlines what electrical work requires a permit & what doesn't with regard to one's personal residence.
Wednesday, March 29, 2006
Condos/Patio Homes Picking Up Steam
At least as far as requests for building permits are concerned, the trend to live hassle-free in a condo or patio home is increasing in popularity. More...
Saturday, March 04, 2006
A Cheap Way to Improve Your Home's Appearance
According to this C-J article, interior paint is a great way to improve your home's look. Well, duh! I just had to remark about the super-simplified title, but it's an otherwise insightful piece about what's new in paint.
A Cheap Way to Improve Your Home's Appearance
According to this C-J article, interior paint is a great way to improve your home's look. Well, duh! I just had to remark about the super-simplified title, but it's an otherwise insightful piece about what's new in paint.
Thursday, March 02, 2006
First Lady Calls for Preservation of Portland Neighborhood
The West End's Portland neighborhood was tagged by First Lady, Laura Bush to receive matching funds regarding initiatives targeting the area's preservation. Read more here.
Wednesday, March 01, 2006
Home Sales Update from NAR
NAR: January Existing-Home Sales Ease( February 28, 2006) --
Sales of existing homes were down in January while home prices continued to appreciate at double-digit rates, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.8 percent to a seasonally adjusted annual rate1 of 6.56 million units in January from an upwardly revised pace of 6.75 million in December. Sales were 5.2 percent below the 6.92 million-unit level in January 2005.
David Lereah, NAR’s chief economist, said sales are tracking the trend in the association’s Pending Home Sales Index. “Our leading indicator, based on pending sales, has been trending down since hitting a record last August,” he said. “In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they’ll maintain a historically high pace.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in January, down from 6.27 percent in December; the rate was 5.71 percent in January 2005. In November, the 6.33 percent fixed rate was the highest in over three years.
The national median existing-home price2 for all housing types was $211,000 in January, up 11.6 percent from January 2005 when the median was $189,000. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Thomas M. Stevens from Vienna, Va., said home prices continue to show the long-term effects of tight supply. “Although housing inventory levels have been improving, it is far from being a buyer’s market in most of the country and we see the momentum of double-digit appreciation being sustained in home prices,” said Stevens, senior vice president of NRT Inc. “Even when home sales slow, they still supply solid returns. The longer you own, the bigger the gain.”
Total housing inventory levels rose 2.4 percent at the end of January to 2.91 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.Single-family home sales dipped 1.5 percent to a seasonally adjusted annual rate of 5.77 million in January from an upwardly revised 5.86 million in December, and were 4.8 percent lower than the 6.06 million-unit pace in January 2005. The median existing single-family home price was $210,500 in January, up 13.1 percent from a year earlier.
Source: NAR
Ed.'s Note: Mr. Stevens hit the nail on the head when he remarked, "The longer you own, the bigger the gain." The ability to make quick money on as grand a scale as we've been seeing in the last few years may be waning, but for homeowners purchasing for owner-occupation or rental income, the news is good. As the market softens, smart investors will likely look for good deals and hold property for rental income.
Sales of existing homes were down in January while home prices continued to appreciate at double-digit rates, according to the NATIONAL ASSOCIATION OF REALTORS®.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.8 percent to a seasonally adjusted annual rate1 of 6.56 million units in January from an upwardly revised pace of 6.75 million in December. Sales were 5.2 percent below the 6.92 million-unit level in January 2005.
David Lereah, NAR’s chief economist, said sales are tracking the trend in the association’s Pending Home Sales Index. “Our leading indicator, based on pending sales, has been trending down since hitting a record last August,” he said. “In the wake of interest rates peaking in November, I expect we are in a bit of a trough that may be followed by a modest rise and then a general plateau in the level of sales activity. Existing-home sales should stay below the record levels experienced over the last two years, but they’ll maintain a historically high pace.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.15 percent in January, down from 6.27 percent in December; the rate was 5.71 percent in January 2005. In November, the 6.33 percent fixed rate was the highest in over three years.
The national median existing-home price2 for all housing types was $211,000 in January, up 11.6 percent from January 2005 when the median was $189,000. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Thomas M. Stevens from Vienna, Va., said home prices continue to show the long-term effects of tight supply. “Although housing inventory levels have been improving, it is far from being a buyer’s market in most of the country and we see the momentum of double-digit appreciation being sustained in home prices,” said Stevens, senior vice president of NRT Inc. “Even when home sales slow, they still supply solid returns. The longer you own, the bigger the gain.”
Total housing inventory levels rose 2.4 percent at the end of January to 2.91 million existing homes available for sale, which represents a 5.3-month supply at the current sales pace.Single-family home sales dipped 1.5 percent to a seasonally adjusted annual rate of 5.77 million in January from an upwardly revised 5.86 million in December, and were 4.8 percent lower than the 6.06 million-unit pace in January 2005. The median existing single-family home price was $210,500 in January, up 13.1 percent from a year earlier.
Source: NAR
Ed.'s Note: Mr. Stevens hit the nail on the head when he remarked, "The longer you own, the bigger the gain." The ability to make quick money on as grand a scale as we've been seeing in the last few years may be waning, but for homeowners purchasing for owner-occupation or rental income, the news is good. As the market softens, smart investors will likely look for good deals and hold property for rental income.
New Albany is a Good Place for a Bargain
According to this C-J article, New Albany offers updated historic properties at a very "un-Louisville" kind of price. Get web access to these properties here.
Tuesday, February 28, 2006
New Downtown Grocery Set to Open
Timing is important, and this is an idea, in my estimation, whose time has come. Market on Market is set to open Wednesday, March 1. Assuming it can get by for a year or two, the outlook is promising. I have a feeling in a couple of years, however, many entrepreneurs will look back at opening a downtown grocery as the one that got away. It is located near Mercantile Gallery Lofts & the Main Street corridor where there is no shortage of new development.
Wednesday, February 15, 2006
More Art for Downtown
Located at 100 E. Main St., a new 24-hour a day art exhibition space is scheduled to be ready in September. The Main Street corridor continues to fill up. Very exciting stuff!
Tuesday, February 14, 2006
Monday, February 13, 2006
Busy Week for Downtown Louisville
There's ambitious news regarding the new development, Museum Plaza, but as this Business First article also notes, there are arena & bridge issues that make those of us hopeful for continued downtown revitalization progress to wonder how serious our great city is on the subject.
Friday, February 03, 2006
Urban Living Picking Up Steam
More People Moving Downtown( February 3, 2006) --
Even before the housing boom of the past few years got underway, the downtowns of U.S. cities were welcoming more residents.
After declining for 20 years, the Brookings Institution reports that the population in these center cities picked up 10 percent during the 1990s. More people between the ages of 25 and 34 took up residency in downtown markets, and the racial and ethnic composition of downtown residents became more diverse over time.
Today, more downtown dwellers are college graduates and home owners. The downtown areas that experienced the greatest level of growth during the previous decade include Seattle, with expansion of 76.9 percent, followed by Denver; Colorado Springs, Colo.; Albuquerque, N.M.; Portland, Ore.; San Francisco; Cleveland; Miami; and Chicago.
Tops among the downtown markets with the greatest home ownership rates as of 2000, meanwhile, was Chicago — where 40.7 percent of residents own their homes. The Windy City was followed in this category by Lafayette, La.; Denver; Austin, Texas; Miami; Philadelphia; Norfolk, Va.; Charlotte, N.C.; and Baltimore.
Investor's Business Daily (02/03/06)
Ed.'s Note: This is exciting news. Louisville is experiencing downtown residential success as well. Conversions from commercial or old apartment space is underway in several spots downtown.
Also, highrise luxury condos are emerging with Ohio River views. The success of one such new development is being measured now. Waterfront Park Place is an exciting upscale condominium community located at the corner of Floyd & Witherspoon Streets near the Great Lawn in downtown Louisville. A variety of prices, sizes, styles, & finishes populate this work in progress. Currently, there are 24 units available according to the local MLS system ranging in price between $397,500 for a one bedroom & $2,020,000 for a custom designed penthouse in which the purchaser receives license to choose the number of beds & baths with a built-in budget of around $140,000 for finishes.
More affordable versions of urban living can be found at 626 E Main, a conversion that is in process. The style modern with 15 foot exposed ceilings, steel beams, exposed furnaces, stainless steel kitchen appliances, light maple cabinetry, granite tops, earthy tiled baths, & hardwood floors. Prices vary, and creativity is encouraged in order to showcase a signature look.
Another option is The Mercantile Gallery Lofts located on East Floyd Street within walking distance to the Louisville Central Business District. There are a variety of floorplans from which to choose, and most are fairly efficient in size. Currently under construction, I do not currently have pricing information.
Given our downtown location, the revitalization efforts in Louisville are exciting to see. Please don't hesitate to contact me about these or other possible developments in progress.
Even before the housing boom of the past few years got underway, the downtowns of U.S. cities were welcoming more residents.
After declining for 20 years, the Brookings Institution reports that the population in these center cities picked up 10 percent during the 1990s. More people between the ages of 25 and 34 took up residency in downtown markets, and the racial and ethnic composition of downtown residents became more diverse over time.
Today, more downtown dwellers are college graduates and home owners. The downtown areas that experienced the greatest level of growth during the previous decade include Seattle, with expansion of 76.9 percent, followed by Denver; Colorado Springs, Colo.; Albuquerque, N.M.; Portland, Ore.; San Francisco; Cleveland; Miami; and Chicago.
Tops among the downtown markets with the greatest home ownership rates as of 2000, meanwhile, was Chicago — where 40.7 percent of residents own their homes. The Windy City was followed in this category by Lafayette, La.; Denver; Austin, Texas; Miami; Philadelphia; Norfolk, Va.; Charlotte, N.C.; and Baltimore.
Investor's Business Daily (02/03/06)
Ed.'s Note: This is exciting news. Louisville is experiencing downtown residential success as well. Conversions from commercial or old apartment space is underway in several spots downtown.
Also, highrise luxury condos are emerging with Ohio River views. The success of one such new development is being measured now. Waterfront Park Place is an exciting upscale condominium community located at the corner of Floyd & Witherspoon Streets near the Great Lawn in downtown Louisville. A variety of prices, sizes, styles, & finishes populate this work in progress. Currently, there are 24 units available according to the local MLS system ranging in price between $397,500 for a one bedroom & $2,020,000 for a custom designed penthouse in which the purchaser receives license to choose the number of beds & baths with a built-in budget of around $140,000 for finishes.
More affordable versions of urban living can be found at 626 E Main, a conversion that is in process. The style modern with 15 foot exposed ceilings, steel beams, exposed furnaces, stainless steel kitchen appliances, light maple cabinetry, granite tops, earthy tiled baths, & hardwood floors. Prices vary, and creativity is encouraged in order to showcase a signature look.
Another option is The Mercantile Gallery Lofts located on East Floyd Street within walking distance to the Louisville Central Business District. There are a variety of floorplans from which to choose, and most are fairly efficient in size. Currently under construction, I do not currently have pricing information.
Given our downtown location, the revitalization efforts in Louisville are exciting to see. Please don't hesitate to contact me about these or other possible developments in progress.
Thursday, February 02, 2006
Housing Affordability: Alternate View
Homes Got More Affordable Over Past Decade( February 1, 2006) --
Is the nation really facing a housing affordability crisis? According to Moody's Economy.com, the opposite is true: Houses have become more affordable over the last decade because of low interest rates, rising incomes, and an increased supply of housing.
The percentage of income needed to cover mortgage payments in the United States has declined, on average, from about 30 percent in 1982 to about 22 percent in 2005, Economy.com reports.
Nationwide, only a few areas are really unaffordable. Those include California coastal areas, Chicago, Boston, and metropolitan New York. In these areas the percentage of income required to buy a house exceeds 40 percent, Economy.com figures.
Source: Newsday, Clifford Sondock (1/31/06)
Is the nation really facing a housing affordability crisis? According to Moody's Economy.com, the opposite is true: Houses have become more affordable over the last decade because of low interest rates, rising incomes, and an increased supply of housing.
The percentage of income needed to cover mortgage payments in the United States has declined, on average, from about 30 percent in 1982 to about 22 percent in 2005, Economy.com reports.
Nationwide, only a few areas are really unaffordable. Those include California coastal areas, Chicago, Boston, and metropolitan New York. In these areas the percentage of income required to buy a house exceeds 40 percent, Economy.com figures.
Source: Newsday, Clifford Sondock (1/31/06)
Wednesday, February 01, 2006
New Louisville Website Offers More Info
According to this Business First article, the site will offer residents access to more services & information.
You can access the site by clicking http://louisvilleky.gov/ .
You can access the site by clicking http://louisvilleky.gov/ .
Louisville Ranks 31st Nationally...
...among hottest U.S. cities for relocation and/or expansion according to Business First .
Tuesday, January 31, 2006
HELOCs Dwindling
Home-Equity Loans Winding Down(January 31, 2006) --
The popularity of home-equity loans and refinances is declining as the economy cools. Here’s the evidence:
Freddie Mac reports that as interest-rates rise, prime borrowers (those with the best credit) are taking out fewer cash-out refinances.The volume of cash-out refis from prime mortgages is expected to drop to $114.5 billion this year from a record $204 billion in 2005. This year’s expected level is similar to 2002 levels, according to Freddie Mac.
For the first time since mid-1999, the total volume of revolving home-equity lines of credit also dropped this past fall. The volume has remained steady in recent months around $436 billion, according to the Federal Reserve Board's Flow of Funds report, which tracks loans to both prime and subprime borrowers (those with tarnished credit).
The total amount consumers are borrowing nationally through lines of credit and home-equity loans will continue to increase, but the increase is expected to slow to 12 percent this year from 20 percent growth in 2005, according to SMR Research Corp.
What will the impact of these changes be? Merrill Lynch economist David Rosenberg recently estimated that serious declines in such borrowing could shave as much as 1 percent off the country's inflation-adjusted GDP this year.
Wells Fargo Senior Economist Scott Anderson says he estimates home-equity extractions, including capital gains home owners banked when they sold homes, have been adding about 0.5 percent to the country's GDP for several years now — or about $500 billion last year, which is equivalent to what people in the United States spend each year on cars and car parts.
Source: St. Paul Pioneer Press, Jennifer Bjorhus (01/29/06)
The popularity of home-equity loans and refinances is declining as the economy cools. Here’s the evidence:
Freddie Mac reports that as interest-rates rise, prime borrowers (those with the best credit) are taking out fewer cash-out refinances.The volume of cash-out refis from prime mortgages is expected to drop to $114.5 billion this year from a record $204 billion in 2005. This year’s expected level is similar to 2002 levels, according to Freddie Mac.
For the first time since mid-1999, the total volume of revolving home-equity lines of credit also dropped this past fall. The volume has remained steady in recent months around $436 billion, according to the Federal Reserve Board's Flow of Funds report, which tracks loans to both prime and subprime borrowers (those with tarnished credit).
The total amount consumers are borrowing nationally through lines of credit and home-equity loans will continue to increase, but the increase is expected to slow to 12 percent this year from 20 percent growth in 2005, according to SMR Research Corp.
What will the impact of these changes be? Merrill Lynch economist David Rosenberg recently estimated that serious declines in such borrowing could shave as much as 1 percent off the country's inflation-adjusted GDP this year.
Wells Fargo Senior Economist Scott Anderson says he estimates home-equity extractions, including capital gains home owners banked when they sold homes, have been adding about 0.5 percent to the country's GDP for several years now — or about $500 billion last year, which is equivalent to what people in the United States spend each year on cars and car parts.
Source: St. Paul Pioneer Press, Jennifer Bjorhus (01/29/06)
Investors: It's Tax Season
Too Many Flips Back Investors Into Tax Corner(January 31, 2006) --
Flipping real estate is a popular strategy these days, but beware — the Internal Revenue Service is watching.
If anyone completes several real estate transaction in a short time, the IRS might consider the property transactions a business rather than an investment strategy, warns Lonnie Davis, a certified public accountant with the Philadelphia office of CBIZ Accounting, Tax and Advisory Services.
If that happens, instead of paying lower capital gains taxes, investors face paying ordinary income taxes, including self-employment tax. And they’ll be unable to perform like-kind exchanges.
What’s the rule of thumb?
"It's a facts-and-circumstances test," says Davis. "There's no rule of thumb that says: Buy three houses, you'll get capital gains; buy five, and you're a dealer-trader. The IRS looks at whether the activity is really a business.”
Davis urges people who buy and sell real estate to ask themselves these questions to avoid running afoul of the IRS:
How many properties have you bought and sold?
How often have you bought and sold them?
In terms of income, is it your primary business?
The IRS is looking to identify dealers because they put more money in the government’s coffers. "There's going to be a wake-up call for tens of thousands of people," says Mark Zilbert, broker-owner of Zilbert Realty Group in Miami.
Source: Bankrate.com, Kay Bell (01/03/06)
Flipping real estate is a popular strategy these days, but beware — the Internal Revenue Service is watching.
If anyone completes several real estate transaction in a short time, the IRS might consider the property transactions a business rather than an investment strategy, warns Lonnie Davis, a certified public accountant with the Philadelphia office of CBIZ Accounting, Tax and Advisory Services.
If that happens, instead of paying lower capital gains taxes, investors face paying ordinary income taxes, including self-employment tax. And they’ll be unable to perform like-kind exchanges.
What’s the rule of thumb?
"It's a facts-and-circumstances test," says Davis. "There's no rule of thumb that says: Buy three houses, you'll get capital gains; buy five, and you're a dealer-trader. The IRS looks at whether the activity is really a business.”
Davis urges people who buy and sell real estate to ask themselves these questions to avoid running afoul of the IRS:
How many properties have you bought and sold?
How often have you bought and sold them?
In terms of income, is it your primary business?
The IRS is looking to identify dealers because they put more money in the government’s coffers. "There's going to be a wake-up call for tens of thousands of people," says Mark Zilbert, broker-owner of Zilbert Realty Group in Miami.
Source: Bankrate.com, Kay Bell (01/03/06)
FHA Helps Fixers
FHA Program Gives Fixer-Uppers a Boost(January 30, 2006) --
FHA is allowing buyers to roll the costs of minor repairs on a property into their mortgage. The "limited repair" loan, known as Streamlined K, is a version of the agency's 203(k) renovation loan program. Its goal is to get properties with relatively minor problems into the hands of credit-worthy buyers.
Streamlined K is part of the U.S. Department of Housing and Urban Development's effort to make FHA relevant after finding its marketshare crimped by private lenders reaching out to borrowers who years before would've had trouble getting loans at a rate that made sense.
The Streamlined K program is designed to overcome the reluctance of many real estate professionals to accept contracts that called for FHA-insured loans because appraisers were requiring sellers to make what they considered to be nit-picking repairs or major fixes they didn't want to make.
A maximum of $35,000 in repair costs can be rolled into the mortgage, up to 110 percent of the appraised value of the property. Repair items eligible under the program are:
Repair or replacing roofs, gutters, downspouts, heating and air conditioning systems, plumbing and electrical systems, windows and doors, flooring, septic systems, wells, decks, patios, and porches.
Minor remodeling that does not involve structural repairs.
Exterior and interior painting.
Weatherization, including storm windows and doors, insulation and weather-stripping.
New appliances, including microwave ovens, washing machines, and clothes dryers.
Accessibility improvements for handicapped people.
Lead-based paint stabilization or abatement.
Basement remodeling or finishing that does not involve structural changes.
Re-siding.
Basement waterproofing.
Source: Lew Sichelman, United Feature Syndicate (01/30/06)
FHA is allowing buyers to roll the costs of minor repairs on a property into their mortgage. The "limited repair" loan, known as Streamlined K, is a version of the agency's 203(k) renovation loan program. Its goal is to get properties with relatively minor problems into the hands of credit-worthy buyers.
Streamlined K is part of the U.S. Department of Housing and Urban Development's effort to make FHA relevant after finding its marketshare crimped by private lenders reaching out to borrowers who years before would've had trouble getting loans at a rate that made sense.
The Streamlined K program is designed to overcome the reluctance of many real estate professionals to accept contracts that called for FHA-insured loans because appraisers were requiring sellers to make what they considered to be nit-picking repairs or major fixes they didn't want to make.
A maximum of $35,000 in repair costs can be rolled into the mortgage, up to 110 percent of the appraised value of the property. Repair items eligible under the program are:
Repair or replacing roofs, gutters, downspouts, heating and air conditioning systems, plumbing and electrical systems, windows and doors, flooring, septic systems, wells, decks, patios, and porches.
Minor remodeling that does not involve structural repairs.
Exterior and interior painting.
Weatherization, including storm windows and doors, insulation and weather-stripping.
New appliances, including microwave ovens, washing machines, and clothes dryers.
Accessibility improvements for handicapped people.
Lead-based paint stabilization or abatement.
Basement remodeling or finishing that does not involve structural changes.
Re-siding.
Basement waterproofing.
Source: Lew Sichelman, United Feature Syndicate (01/30/06)
Scouting for Safe Neighborhoods
Ways to Find Child-Friendly Places to Live(January 30, 2006) --
If you're in search of a child-friendly neighborhood, you can surf the Web or speak with your real estate professional, local law enforcement agencies, and the school system to get the information you need to make a purchase decision.
In addition to looking at the quality of the school system, consider such factors as the home's proximity to the school, student-teacher ratios, and test scores.
Also, look for playgrounds, community centers, churches, libraries, public transit, and a variety of retailers. Real estate professionals often recommend driving to the prospective home from work during rush hour to gauge the length of the commute, which is important for buyers who want to spend as much time as possible with their families. Asking existing residents about the neighborhood might also be useful.
Source: Washington Times, Carisa Chappell (01/30/06)
If you're in search of a child-friendly neighborhood, you can surf the Web or speak with your real estate professional, local law enforcement agencies, and the school system to get the information you need to make a purchase decision.
In addition to looking at the quality of the school system, consider such factors as the home's proximity to the school, student-teacher ratios, and test scores.
Also, look for playgrounds, community centers, churches, libraries, public transit, and a variety of retailers. Real estate professionals often recommend driving to the prospective home from work during rush hour to gauge the length of the commute, which is important for buyers who want to spend as much time as possible with their families. Asking existing residents about the neighborhood might also be useful.
Source: Washington Times, Carisa Chappell (01/30/06)
Popularity of Propane On the Rise
More Home Owners Warm Up to Propane(January 30, 2006) --
Home owners typically use propane only for their gas grills. If the propane industry has its way, that could change as more households use the gas throughout the home for heating, cooking, and fireplaces.
Over 6 million residences have propane heating systems, according to the U.S. Department of Energy. Jim Hitzemann of Ray Murray Inc. believes propane will gain popularity in suburban areas that are not linked to natural gas lines. Homeowners would spend less money if they used propane in gas-powered water heaters and gas-burning fireplaces, with the latter offering savings of 30 percent to 60 percent in comparison to wood-burning hearths, Hitzemann says.
Home owners do not have to have unsightly propane tanks on display, as the newest models are placed undergroundl. Propane also is considered more efficient than electric heat, as it maintains a consistent temperature and is not affected by outside air temperatures.
Hitzemann, whose company supplies customers in the Northeast and Mid-Atlantic, speculates that manufactured housing also could fuel greater demand for propane, because such homes are "set up for gas at the factory."
Source: Washington Post, David Bradley (01/30/06)
Home owners typically use propane only for their gas grills. If the propane industry has its way, that could change as more households use the gas throughout the home for heating, cooking, and fireplaces.
Over 6 million residences have propane heating systems, according to the U.S. Department of Energy. Jim Hitzemann of Ray Murray Inc. believes propane will gain popularity in suburban areas that are not linked to natural gas lines. Homeowners would spend less money if they used propane in gas-powered water heaters and gas-burning fireplaces, with the latter offering savings of 30 percent to 60 percent in comparison to wood-burning hearths, Hitzemann says.
Home owners do not have to have unsightly propane tanks on display, as the newest models are placed undergroundl. Propane also is considered more efficient than electric heat, as it maintains a consistent temperature and is not affected by outside air temperatures.
Hitzemann, whose company supplies customers in the Northeast and Mid-Atlantic, speculates that manufactured housing also could fuel greater demand for propane, because such homes are "set up for gas at the factory."
Source: Washington Post, David Bradley (01/30/06)
December Positive for New Home Sales
U.S. New-Home Sales Rise in December(January 30, 2006) --
New-home sales posted an annual sales gain of 3 percent to 1.269 million units in December from 1.233 million the previous month, a joint report from the U.S. Department of Housing and Urban Development and the U.S. Commerce Department shows.
New-home sales for all of 2005 rose 6.6 percent to 1.282 million from 1.203 million in 2004.
The median new-home price in December hit $221,800, while the average price reached $272,900.
Source: Industry Week, John McClenahan (01/30/06)
New-home sales posted an annual sales gain of 3 percent to 1.269 million units in December from 1.233 million the previous month, a joint report from the U.S. Department of Housing and Urban Development and the U.S. Commerce Department shows.
New-home sales for all of 2005 rose 6.6 percent to 1.282 million from 1.203 million in 2004.
The median new-home price in December hit $221,800, while the average price reached $272,900.
Source: Industry Week, John McClenahan (01/30/06)
Saturday, January 28, 2006
Friday, January 27, 2006
rentalhouses.com Gets New Boss
From Business First: Louisville company with national database of available rental properties looks to add a call center (an increase of up to 50 staff members) in a quest gain more of a foothold on the market share of the online listing of rental property.
Mortgage Debt Reduction
To Pay or Not to Pay Off Your Mortgage(January 27, 2006) --
Experts urge home owners with mortgage rates of 6 percent or less to sink their money into other investments.
Some home owners might be considering repaying their mortgage early in an attempt to shed the debt they accumulated via cash-out refinancings or home-equity loans at a time when property prices were rapidly appreciating. But that may not always be the best use of their money.
Anthony Webb, economist for Retirement Research Center, says home owners can achieve higher returns through IRAs, 401(k)s, and other tax-deferred accounts. Young home owners would be wise to put their extra cash toward retirement, adds Torrance, Calif.-based financial planner Phillip Cook.
However, those with excessive loan balances might want to pay down their mortgages to a more manageable level. Home owners nearing retirement age — who do not have adequate savings, do not plan to move, and do not need a mortgage deduction because they will soon be in a lower tax bracket — also might be good candidates for prepayment.
Source: USA Today, Mindy Fetterman (01/27/06)[
Ed.'s Note: Or just pay off the debt to be done with it. The economics of the scenario described above make sense in a perfect world, but there aren't too many stories of people who get into financial dire straits because they paid their mortgage off early instead of keeping it around like the rest of the world in favor of what sounded like a great, realistic idea at the time: The idea that the extra money coming in each month will actually end up being invested instead of spent. That's a nice thought, and I'm sure a minute portion of the population has the discipline & will power to do it, but the practice described certainly hasn't been overwhelmingly adopted.
Experts urge home owners with mortgage rates of 6 percent or less to sink their money into other investments.
Some home owners might be considering repaying their mortgage early in an attempt to shed the debt they accumulated via cash-out refinancings or home-equity loans at a time when property prices were rapidly appreciating. But that may not always be the best use of their money.
Anthony Webb, economist for Retirement Research Center, says home owners can achieve higher returns through IRAs, 401(k)s, and other tax-deferred accounts. Young home owners would be wise to put their extra cash toward retirement, adds Torrance, Calif.-based financial planner Phillip Cook.
However, those with excessive loan balances might want to pay down their mortgages to a more manageable level. Home owners nearing retirement age — who do not have adequate savings, do not plan to move, and do not need a mortgage deduction because they will soon be in a lower tax bracket — also might be good candidates for prepayment.
Source: USA Today, Mindy Fetterman (01/27/06)[
Ed.'s Note: Or just pay off the debt to be done with it. The economics of the scenario described above make sense in a perfect world, but there aren't too many stories of people who get into financial dire straits because they paid their mortgage off early instead of keeping it around like the rest of the world in favor of what sounded like a great, realistic idea at the time: The idea that the extra money coming in each month will actually end up being invested instead of spent. That's a nice thought, and I'm sure a minute portion of the population has the discipline & will power to do it, but the practice described certainly hasn't been overwhelmingly adopted.
Rates this Week
Average 30-Year Mortgage Rate Increases Slightly(January 27, 2006) --
The national average commitment rate on a 30-year, fixed mortgage increased to 6.12 percent from 6.10 percent this week, marking the first gain in six weeks, according to Freddie Mac.
The national average commitment rate on a 15-year, fixed mortgage rose as well, climbing to 5.70 percent from 5.67 percent.
The national average commitment rate, along with fees and points charged by lenders, reflects the cost of obtaining a mortgage.
The average rate on a one-year, adjustable-rate mortgage bumped up to 5.20 percent from 5.18 percent, while the five-year hybrid ARM held steady at 5.75 percent.
Freddie Mac chief economist Frank Nothaft attributes the rise in rates to the belief that the Federal Reserve will hike the federal-funds rate for the 14th straight time next week.
Source: New London Day (CT) (01/27/06); Crutsinger, Martin
The national average commitment rate on a 30-year, fixed mortgage increased to 6.12 percent from 6.10 percent this week, marking the first gain in six weeks, according to Freddie Mac.
The national average commitment rate on a 15-year, fixed mortgage rose as well, climbing to 5.70 percent from 5.67 percent.
The national average commitment rate, along with fees and points charged by lenders, reflects the cost of obtaining a mortgage.
The average rate on a one-year, adjustable-rate mortgage bumped up to 5.20 percent from 5.18 percent, while the five-year hybrid ARM held steady at 5.75 percent.
Freddie Mac chief economist Frank Nothaft attributes the rise in rates to the belief that the Federal Reserve will hike the federal-funds rate for the 14th straight time next week.
Source: New London Day (CT) (01/27/06); Crutsinger, Martin
Thursday, January 26, 2006
BB&T won't lend to Eminent Domain Seizures
BB&T's very bold move is refreshing to see. Whether you agree with eminent domain invocation for private projects or not, at least this bank makes its intentions known.
Doom & Gloom in "the Housing Sector"
After 2005's record year, some naysayers are chomping at the bit to crucify "the housing sector" in their predictions for '06. While I'm fairly certain '06 will not out-perform '05, I feel that it is necessary to cast doubt on poor logic when I get the chance.
From the article sourced above:
The danger is if home sales fall off by bigger amounts than analysts are forecasting.
That could cause investors, who have boosted sales with their purchases of rental properties and vacation homes, to start dumping homes onto the market, further depressing prices.
From the article sourced above:
The danger is if home sales fall off by bigger amounts than analysts are forecasting.
That could cause investors, who have boosted sales with their purchases of rental properties and vacation homes, to start dumping homes onto the market, further depressing prices.
First off, why are these two sentences even interjected? This is total speculation. These passages only verify that "danger" is essential to newswriting. It's ashame too because the article to that point had been fairly reasoned & supported. Beyond speculation, it's illogical to assume that seasoned investors--or even investors with half a brain--would dump their recently-purchased investment properties on the market when values are somewhat depressed. If they have to "dump" them, then that would lead me to believe they are "holding" them in the first place. If they are holding them for rental income, then they will not want to dump them because if interest rates are truly holding sales prices down, then they will certainly force more folks into renting. Now, if they bought a property they couldn't afford with intentions of flipping the property for a quick profit, then yes, there could be a problem. But to suggest that this "dumping" of investment properties might be widespread enough to have such a bold impact on the entire housing market is, if nothing else, premature.
Metro Parks Golf Fees to Increase
According to this morning's C-J, there is an increase in golf fees expected of roughly $2-$3 per round. Given the fact that Louisville routinely is ranked one of the cheapest places in the country to play golf, I think this is not such a bad thing. Especially if it means better ability to keep up the courses.
Legislators Poised to Screw Up Arena Deal
From today's C-J our various representatives are messing around with arena proposals for downtown Louisville. A debate about whether to build an arena at all is legitimate, as well as how it will be funded, but when it comes to location, I just don't quite grasp why a downtown location would ever be questioned. There is so much momentum downtown, and I can't see the point of undermining it. The upside for a downtown arena is huge. The upside for an arena built at the fairgrounds is not because the fairgrounds don't need a new arena to attract more livestock & boat shows. It's time for these "representatives" to wake up, and act like leaders of a city on the move.
Wednesday, January 25, 2006
California Market Unconscious in '05
Modest Homes Fetch Luxury Prices in California(January 25, 2006) --
Thanks to soaring home prices, the number of million-dollar homes sold in California rose 47 percent last year to almost 49,000, according to DataQuick Information Systems.
The median million-dollar property had just four bedrooms and three bathrooms, encompassing 2,480 square feet.
Almost all of the homes sold in Rancho Santa Fe were priced at $1 million or more, and properties in many non-resort communities also hit that benchmark.
DataQuick adds that 2,902 condominiums sold for $1 million-plus last year, marking a gain of 73 percent from 2004. The priciest condos were located in West Los Angeles, San Diego, and San Francisco.
Los Angeles Times, Annette Haddad (01/25/06)
Ed.'s Disbelief: This bit of news is truly incredible, and this my friends, is why there's such a hubub over the so-called real estate bubble. Sustaining this kind of growth is a bit ambitious, and undoubtedly a slower absorbtion rate is already upon red hot markets such as those outlined above. More moderate markets, however, will see less of an adjustment.
Thanks to soaring home prices, the number of million-dollar homes sold in California rose 47 percent last year to almost 49,000, according to DataQuick Information Systems.
The median million-dollar property had just four bedrooms and three bathrooms, encompassing 2,480 square feet.
Almost all of the homes sold in Rancho Santa Fe were priced at $1 million or more, and properties in many non-resort communities also hit that benchmark.
DataQuick adds that 2,902 condominiums sold for $1 million-plus last year, marking a gain of 73 percent from 2004. The priciest condos were located in West Los Angeles, San Diego, and San Francisco.
Los Angeles Times, Annette Haddad (01/25/06)
Ed.'s Disbelief: This bit of news is truly incredible, and this my friends, is why there's such a hubub over the so-called real estate bubble. Sustaining this kind of growth is a bit ambitious, and undoubtedly a slower absorbtion rate is already upon red hot markets such as those outlined above. More moderate markets, however, will see less of an adjustment.
A Luxury Mobile Home
Innovative Vehicle Called 'Urban Loft With Mobility'(January 25, 2006) --
A car under development by the General Motors boasts wireless Internet connections, wall-mounted televisions, solar panels, and a diesel-electric hybrid power system.
The drivable house, known as the GMC PAD (Portable Architectural Dwelling), was featured in 3-D computerized models at the recent Los Angeles Auto Show. The car is being called an "urban loft with mobility" by its designers and a "Living Activity Vehicle" by the auto show's judges.
It was designed as an answer to soaring home prices and urban sprawl, and it also could serve as temporary housing following a disaster, temporary housing at a construction site, or as accommodations for cast members during a movie shoot.
Before the GMC PAD can become a reality, a scale model must be built and partnerships with manufacturers of kitchen and bathroom appliances, among others, must be forged.
Similar in size to a large FedEx truck, the GMC PAD would cost between $250,000 and $300,000.
Inman News, Glenn Roberts Jr. (01/24/06)
Ed.'s Inquiry: But does it appreciate?
A car under development by the General Motors boasts wireless Internet connections, wall-mounted televisions, solar panels, and a diesel-electric hybrid power system.
The drivable house, known as the GMC PAD (Portable Architectural Dwelling), was featured in 3-D computerized models at the recent Los Angeles Auto Show. The car is being called an "urban loft with mobility" by its designers and a "Living Activity Vehicle" by the auto show's judges.
It was designed as an answer to soaring home prices and urban sprawl, and it also could serve as temporary housing following a disaster, temporary housing at a construction site, or as accommodations for cast members during a movie shoot.
Before the GMC PAD can become a reality, a scale model must be built and partnerships with manufacturers of kitchen and bathroom appliances, among others, must be forged.
Similar in size to a large FedEx truck, the GMC PAD would cost between $250,000 and $300,000.
Inman News, Glenn Roberts Jr. (01/24/06)
Ed.'s Inquiry: But does it appreciate?
Rates Still Cheap
Lower Rates Boosted Mortgage Demand Last Week(January 25, 2006) --
Thanks to the lowest long-term rates in three-and-a-half months, U.S. mortgage applications climbed steadily in January.
The Mortgage Bankers Association reports its seasonally adjusted index of mortgage application activity for the week ending Jan. 20 rose 7.7 percent to 660.5. Volume was driven by demand for new mortgages as well as refinancing.
Mortgage rates on a 30-year fixed-rate mortgage, excluding fees, averaged 6.04 percent, down 0.03 percentage points from the previous week’s high of 6.07 percent. Rates have fallen steadily since the week ending Nov. 11, when they reached a 2005 high of 6.33 percent.
Source: Reuters News (01/25/06)
Thanks to the lowest long-term rates in three-and-a-half months, U.S. mortgage applications climbed steadily in January.
The Mortgage Bankers Association reports its seasonally adjusted index of mortgage application activity for the week ending Jan. 20 rose 7.7 percent to 660.5. Volume was driven by demand for new mortgages as well as refinancing.
Mortgage rates on a 30-year fixed-rate mortgage, excluding fees, averaged 6.04 percent, down 0.03 percentage points from the previous week’s high of 6.07 percent. Rates have fallen steadily since the week ending Nov. 11, when they reached a 2005 high of 6.33 percent.
Source: Reuters News (01/25/06)
Tuesday, January 24, 2006
Primary Residence Tax Breaks
Home Sale Tax Breaks: Tricky to Compute(January 23, 2006) --
Homeowners typically are exempt from capital-gains taxes on a portion of their home-sale proceeds, but to be sure you compute your taxes correctly, it's a good practice to consult an attorney if you're unfamiliar with the exemption.
The exclusion for individual homeowners is $250,000, while married couples can avoid paying taxes on profits of up to double that amount. They can take the exclusion once every two years, but they must have resided in the home for no less than two of the last five years. Homeowners that meet certain criteria can get a partial exclusion, which is prorated by the number of days that the property was occupied. However, these homeowners must have sold their dwellings due to health problems, a job transfer that would have required them to travel 50 miles or more farther, or "unforeseen circumstances."
The Internal Revenue Service considers government condemnation, natural or man-made disasters, the death of one of the homeowners, unemployment, and divorce to be unforeseen circumstances, among others. Old rollover tax rules and substantial home-price gains due to appreciation can make the calculations even more complicated, so homeowners would be wise to consult a tax expert.
Source: Washington Post (01/21/06); Kass, Benny L.
Homeowners typically are exempt from capital-gains taxes on a portion of their home-sale proceeds, but to be sure you compute your taxes correctly, it's a good practice to consult an attorney if you're unfamiliar with the exemption.
The exclusion for individual homeowners is $250,000, while married couples can avoid paying taxes on profits of up to double that amount. They can take the exclusion once every two years, but they must have resided in the home for no less than two of the last five years. Homeowners that meet certain criteria can get a partial exclusion, which is prorated by the number of days that the property was occupied. However, these homeowners must have sold their dwellings due to health problems, a job transfer that would have required them to travel 50 miles or more farther, or "unforeseen circumstances."
The Internal Revenue Service considers government condemnation, natural or man-made disasters, the death of one of the homeowners, unemployment, and divorce to be unforeseen circumstances, among others. Old rollover tax rules and substantial home-price gains due to appreciation can make the calculations even more complicated, so homeowners would be wise to consult a tax expert.
Source: Washington Post (01/21/06); Kass, Benny L.
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