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)
Tuesday, January 31, 2006
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.
Let's Play Bank
When Mom and Dad Are the Lender(January 23, 2006) --
The number of first-time homebuyers who use monetary gifts from family or friends to make down payments has increased to 25 percent from 20 percent over the past 10 years. If you're thinking of doing that for your children, be aware of tax and other issues that arise.
Given that the Internal Revenue Service taxes gifts of $12,000 or more, you might want to set up an intrafamily mortgage to help your offspring achieve homeownership.
Your children benefit from below-market interest rates--though they must pay the applicable federal rate of about 4.5 percent to avoid gift taxes--flexible payment schedules, the absence of credit checks, and lower closing costs. They also still can deduct the interest from their income taxes, provided that there is a deed of trust and the mortgage is recorded with the county clerk.
While you can benefit from steady cash flow during your retirement years, avoid such arrangements if you make the loan solely as an investment. You could achieve better investment returns elsewhere, and your emergency or retirement savings might be depleted by lending the money.
Source: Wall Street Journal (01/22/06); Gullapalli, Diya
The number of first-time homebuyers who use monetary gifts from family or friends to make down payments has increased to 25 percent from 20 percent over the past 10 years. If you're thinking of doing that for your children, be aware of tax and other issues that arise.
Given that the Internal Revenue Service taxes gifts of $12,000 or more, you might want to set up an intrafamily mortgage to help your offspring achieve homeownership.
Your children benefit from below-market interest rates--though they must pay the applicable federal rate of about 4.5 percent to avoid gift taxes--flexible payment schedules, the absence of credit checks, and lower closing costs. They also still can deduct the interest from their income taxes, provided that there is a deed of trust and the mortgage is recorded with the county clerk.
While you can benefit from steady cash flow during your retirement years, avoid such arrangements if you make the loan solely as an investment. You could achieve better investment returns elsewhere, and your emergency or retirement savings might be depleted by lending the money.
Source: Wall Street Journal (01/22/06); Gullapalli, Diya
Beware of the Wolf
Straw Homes: Not Just for a Little Pig(January 23, 2006) --
Straw-bale construction is gaining popularity around the country due to rising energy and building-materials costs, with as many as 600 straw homes being built in California.
Straw bales are recyclable and organic, so supporters tout such homes as being eco-friendly. They also have insulation ratings that are three times higher than conventional walls with fiberglass batting, and they are fire-resistant.
Though straw-bale walls could cost upwards of 15 percent more than traditional walls, homeowners benefit from lower heating prices in the long run. Straw homes can be built quickly by a professional, with the price varying based on the size of the home and the complexity of the design. However, do-it-yourselfers should plan to spend a few months to a year on the project; and they should be prepared to lift bales that weigh upwards of 85 pounds apiece.
Straw walls typically are covered with "earth plaster" to create a stucco look, but any breathable substance is suitable. Straw homes are mainly popping up in rural and semi-rural areas, as city codes make it difficult to build such structures in urban and suburban locales.
Source: Washington Post (01/21/06); Harder, Nick
Straw-bale construction is gaining popularity around the country due to rising energy and building-materials costs, with as many as 600 straw homes being built in California.
Straw bales are recyclable and organic, so supporters tout such homes as being eco-friendly. They also have insulation ratings that are three times higher than conventional walls with fiberglass batting, and they are fire-resistant.
Though straw-bale walls could cost upwards of 15 percent more than traditional walls, homeowners benefit from lower heating prices in the long run. Straw homes can be built quickly by a professional, with the price varying based on the size of the home and the complexity of the design. However, do-it-yourselfers should plan to spend a few months to a year on the project; and they should be prepared to lift bales that weigh upwards of 85 pounds apiece.
Straw walls typically are covered with "earth plaster" to create a stucco look, but any breathable substance is suitable. Straw homes are mainly popping up in rural and semi-rural areas, as city codes make it difficult to build such structures in urban and suburban locales.
Source: Washington Post (01/21/06); Harder, Nick
Stretching the Debt
Buying a Home on a Half-Century Plan(January 23, 2006) --
Home buyers have access to 40-year mortgages, which lower the monthly payment by stretching out the loan term beyond the traditional 30 years. Can a 50-year mortgage be far behind?
Though there is talk about a 50-year mortgage being offered in the near future, Fitch Ratings senior director Mark Douglass says no such loan is presently available.
However, 50-year mortgages would offer even lower monthly payments, as well as the security of a fixed-rate product. Douglass adds that most borrowers would move or refinance long before the 50-year term is up.
Source: Los Angeles Times (01/22/06); Umberger, Mary
Home buyers have access to 40-year mortgages, which lower the monthly payment by stretching out the loan term beyond the traditional 30 years. Can a 50-year mortgage be far behind?
Though there is talk about a 50-year mortgage being offered in the near future, Fitch Ratings senior director Mark Douglass says no such loan is presently available.
However, 50-year mortgages would offer even lower monthly payments, as well as the security of a fixed-rate product. Douglass adds that most borrowers would move or refinance long before the 50-year term is up.
Source: Los Angeles Times (01/22/06); Umberger, Mary
Monday, January 23, 2006
Historic Homes in Bridge's Path
It seems there's never an easy answer in the progress vs. history debate. I certainly understand the need to accomodate our transportation needs, but it doesn't make it any easier when unique properties are negatively affected.
Friday, January 20, 2006
Regional Homeownership
Home Ownership Highest in Midwest, South(January 20, 2006) --
The Midwest and South have the highest regional homeownership rates in the country, according to the U.S. Census Bureau.
The national homeownership rate jumped to 69.1 percent in 2004 from 55 percent in 1950. Home ownership in the Midwest and South is considerably higher at 73.8 percent and 71 percent, respectively.
The West and Northeast trail, with homeownership rates slightly above 64 percent—which can be attributed to stagnant income growth and soaring home prices. The homeownership rate in California—where the median home price stands at $211,500—currently stands at 56.9 percent, a slight gain from 54.3 percent in 1950.
New York's homeownership rate, meanwhile, rose only 6 percentage points over the same time span to slightly more than 50 percent.
Source: Bradenton Herald (FL) (01/15/06); Bradley, David
The Midwest and South have the highest regional homeownership rates in the country, according to the U.S. Census Bureau.
The national homeownership rate jumped to 69.1 percent in 2004 from 55 percent in 1950. Home ownership in the Midwest and South is considerably higher at 73.8 percent and 71 percent, respectively.
The West and Northeast trail, with homeownership rates slightly above 64 percent—which can be attributed to stagnant income growth and soaring home prices. The homeownership rate in California—where the median home price stands at $211,500—currently stands at 56.9 percent, a slight gain from 54.3 percent in 1950.
New York's homeownership rate, meanwhile, rose only 6 percentage points over the same time span to slightly more than 50 percent.
Source: Bradenton Herald (FL) (01/15/06); Bradley, David
Rates Down
Mortgage Rates Tumble for 6th Week(January 20, 2006) --
The national average commitment rate on a 30-year, fixed mortgage fell to 6.10 percent from 6.15 percent over the past week, according to Freddie Mac.
This marks the sixth consecutive weekly decline and the lowest since October. The national average commitment rate, along with fees and points charged by lenders, reflects the cost of obtaining a mortgage.
The national average commitment rate on a 15-year, fixed mortgage dropped to 5.67 percent from 5.71 percent over the same time span. The average five-year hybrid adjustable rate slipped to 5.75 percent from 5.76 percent, but the average one-year ARM rose to 5.18 percent from 5.15 percent.
Freddie Mac chief economist Frank Nothaft attributed the decreases to low inflation.
Source: Tacoma News Tribune (WA) (01/20/06); Crutsinger, Martin
The national average commitment rate on a 30-year, fixed mortgage fell to 6.10 percent from 6.15 percent over the past week, according to Freddie Mac.
This marks the sixth consecutive weekly decline and the lowest since October. The national average commitment rate, along with fees and points charged by lenders, reflects the cost of obtaining a mortgage.
The national average commitment rate on a 15-year, fixed mortgage dropped to 5.67 percent from 5.71 percent over the same time span. The average five-year hybrid adjustable rate slipped to 5.75 percent from 5.76 percent, but the average one-year ARM rose to 5.18 percent from 5.15 percent.
Freddie Mac chief economist Frank Nothaft attributed the decreases to low inflation.
Source: Tacoma News Tribune (WA) (01/20/06); Crutsinger, Martin
Housing Starts Down
December Housing Starts Declined Sharply(January 20, 2006) --
Housing starts in December dropped 8.9 percent to an annual pace of 1.93 million units, lagging behind economists' expectations of 2.04 million, the U.S. Commerce Department reports.
For 2005 as a whole, however, home building was up 5.6 percent to 2.06 million units—a pace not seen since 1972.
Nariman Behravesh, chief economist of Global Insight, attributes about one-third of the monthly decline to bad weather but insists that "an underlying trend of weakness in the housing market" is primarily responsible.
Regionally, housing starts plunged 23.6 percent in the Midwest, 21.7 percent in the West, and 14 percent in the Northeast but climbed 5.2 percent in the South, likely due to rebuilding following devastating hurricanes along the U.S. Gulf Coast last fall.
The report also shows a 4.4 percent dip in building permits to an annual rate of 2.07 million, marking an eight-month low.
Source: The New York Times (01/20/06); Bajaj, Vikas
Housing starts in December dropped 8.9 percent to an annual pace of 1.93 million units, lagging behind economists' expectations of 2.04 million, the U.S. Commerce Department reports.
For 2005 as a whole, however, home building was up 5.6 percent to 2.06 million units—a pace not seen since 1972.
Nariman Behravesh, chief economist of Global Insight, attributes about one-third of the monthly decline to bad weather but insists that "an underlying trend of weakness in the housing market" is primarily responsible.
Regionally, housing starts plunged 23.6 percent in the Midwest, 21.7 percent in the West, and 14 percent in the Northeast but climbed 5.2 percent in the South, likely due to rebuilding following devastating hurricanes along the U.S. Gulf Coast last fall.
The report also shows a 4.4 percent dip in building permits to an annual rate of 2.07 million, marking an eight-month low.
Source: The New York Times (01/20/06); Bajaj, Vikas
Monday, January 16, 2006
AP: Investors Moving to Stocks
This AP story says stocks looking more attractive than real estate for investment. I like both!
Friday, January 13, 2006
Rate Update
Mortgage Rates Fell in Latest Week(January 13, 2006) --
The national average commitment rate on a 30-year, fixed mortgage dipped to 6.15 percent from 6.21 percent over the past week, according to Freddie Mac.
The national average commitment rate on a 15-year, fixed mortgage fell to 5.71 percent from 5.76 percent over the same time span. The average rate on a one-year, adjustable-rate mortgage slipped to 5.15 percent from 5.16 percent, while the five-year hybrid ARM dipped to 5.76 percent from 5.78 percent.
Freddie Mac chief economist Frank Nothaft attributes the drop in mortgage rates to "some economic data releases that pointed toward more subdued inflation in the near term."
Source: The Wall Street Journal (01/13/06)
The national average commitment rate on a 30-year, fixed mortgage dipped to 6.15 percent from 6.21 percent over the past week, according to Freddie Mac.
The national average commitment rate on a 15-year, fixed mortgage fell to 5.71 percent from 5.76 percent over the same time span. The average rate on a one-year, adjustable-rate mortgage slipped to 5.15 percent from 5.16 percent, while the five-year hybrid ARM dipped to 5.76 percent from 5.78 percent.
Freddie Mac chief economist Frank Nothaft attributes the drop in mortgage rates to "some economic data releases that pointed toward more subdued inflation in the near term."
Source: The Wall Street Journal (01/13/06)
Energy Efficient Housing
'Zero-Energy' Home Features Pricey, Popular(January 12, 2006) --
"Zero-energy homes" are the latest trend in energy-efficient development. These so-called hybrid homes have solar tiles, tankless water heaters that heat water just prior to use, and the most energy-efficient windows.
Though owners benefit from zero net energy consumption, they will pay as much as $25,000 extra for the energy-efficient components. Another downside is that homeowners may move before they are able to recoup the costs. Even so, builders have been collaborating with states and the Department of Energy to build hundreds of zero-energy homes in California and the Southwest, with thousands more in the works.
About 10 percent of new homes have the Energy Star seal, meaning that they are 30 percent more efficient than traditional dwellings. Energy-efficient homes are gaining popularity as oil and natural gas prices rise.
The federal government is offering tax credits in 2006 and 2007 to homeowners who install new insulation, windows, and heating and cooling systems or make other residential energy upgrades.
Source: Christian Science Monitor (01/12/06)
"Zero-energy homes" are the latest trend in energy-efficient development. These so-called hybrid homes have solar tiles, tankless water heaters that heat water just prior to use, and the most energy-efficient windows.
Though owners benefit from zero net energy consumption, they will pay as much as $25,000 extra for the energy-efficient components. Another downside is that homeowners may move before they are able to recoup the costs. Even so, builders have been collaborating with states and the Department of Energy to build hundreds of zero-energy homes in California and the Southwest, with thousands more in the works.
About 10 percent of new homes have the Energy Star seal, meaning that they are 30 percent more efficient than traditional dwellings. Energy-efficient homes are gaining popularity as oil and natural gas prices rise.
The federal government is offering tax credits in 2006 and 2007 to homeowners who install new insulation, windows, and heating and cooling systems or make other residential energy upgrades.
Source: Christian Science Monitor (01/12/06)
Foreclosures For Sale
Previously Foreclosed Homes Flood the Market(January 12, 2006) --
Foreclosure activity ramped up at the close of 2005, reports Boca Raton-based Foreclosure.com.
The number of foreclosed homes available for sale in December surged 12.7 percent from the previous month to 91,905, while the rate of foreclosures listed for sale rose 7.7 percent to 24,124.
New foreclosures were highest in the U.S. South, followed by the Midwest, the Northeast, and the West.
"With lending institutions closing their books at the end of the year, it is somewhat common for the foreclosure inventory to rise," explained Foreclosure.com President and CEO Brad Geisen. "It is premature to predict that December's inventory indicates a foreclosure crisis in the U.S.; however, this rise in inventory, which is higher than in recent years, should be closely monitored as 2006 begins."
Geisen added that market fundamentals, including higher interest rates and ebbing investor confidence, make it likely that the foreclosure supply will remain high early in the year.
Source: All Headline News (01/11/06); Chase, Ayinde O.
Foreclosure activity ramped up at the close of 2005, reports Boca Raton-based Foreclosure.com.
The number of foreclosed homes available for sale in December surged 12.7 percent from the previous month to 91,905, while the rate of foreclosures listed for sale rose 7.7 percent to 24,124.
New foreclosures were highest in the U.S. South, followed by the Midwest, the Northeast, and the West.
"With lending institutions closing their books at the end of the year, it is somewhat common for the foreclosure inventory to rise," explained Foreclosure.com President and CEO Brad Geisen. "It is premature to predict that December's inventory indicates a foreclosure crisis in the U.S.; however, this rise in inventory, which is higher than in recent years, should be closely monitored as 2006 begins."
Geisen added that market fundamentals, including higher interest rates and ebbing investor confidence, make it likely that the foreclosure supply will remain high early in the year.
Source: All Headline News (01/11/06); Chase, Ayinde O.
Rates Down, Aps Up...What's Going On?
Mortgage Applications Rise as Interest Rates Slip(January 12, 2006) --
Demand for home-loan applications rose for the first time in five weeks in response to a drop in mortgage interest rates, according to the Mortgage Bankers Association.
During the week ending Jan. 6, activity rose to 9.9 percent.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.08 percent, down 0.07 percentage point from the previous week's 6.15 percent—marking its fifth consecutive weekly decline.
Source: San Diego Union-Tribune (01/12/06)
Demand for home-loan applications rose for the first time in five weeks in response to a drop in mortgage interest rates, according to the Mortgage Bankers Association.
During the week ending Jan. 6, activity rose to 9.9 percent.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.08 percent, down 0.07 percentage point from the previous week's 6.15 percent—marking its fifth consecutive weekly decline.
Source: San Diego Union-Tribune (01/12/06)
Wednesday, January 11, 2006
Landmark Mulloy Listing Hits Louisville Market!
1005 Alta Vista RoadI am excited to present this one of a kind property located on over five acres on one of Louisville's most prestigious streets: 1005 Alta Vista Road offered at $1,875,000.
This fabulous estate is comprised of a French Country stone two story primary dwelling with 5 bedrooms, 4 full baths, & 3 half baths. It boasts over 6,300 square feet of living space. The interior underwent major renovations five years ago, which provides the potential buyer with modern amenities while maintaining the charm & character that makes older homes so great. The interior features hardwood floors throughout (except for the tiled sunroom, 3 of the full baths, and one half bath), ten foot ceilings on both the first & second floors, a gourmet kitchen, butler's pantry, updated baths, magnificently maintained slate roof & copper gutter system, four terraces, five working fireplaces (4 w/gas logs), a partially finished basement with an updated half bath & laundry area, & four heating zones.
The separate 850 square foot remodeled 1-bedroom cottage has hardwood floors, a more than serviceable kitchen, living room, full bath, & laundry closet. It also has two patios, and is perfect for guests or investment.
The 4 car detached garage matches the construction materials & appeal of the main dwelling, and features a 2nd level carriage house & 1st floor spare storage room being used as an exercise area.
The 5 stall horse barn completes this remarkable estate.
Please click on the Mulloy Properties link to find out more information about this and other properties available.
Tuesday, January 10, 2006
2nd Mortgage Origination to Decline
Demand for 2nd Mortgages Could Go Down(January 10, 2006) --
Second mortgages could fall out of favor with first-time and moderate-income home buyers looking to get into a more expensive home should loan costs continue to rise.
In recent years, more borrowers have relied on second mortgages to avoid the higher cost of mortgage insurance for those unable to contribute a 20 percent down payment; but the Federal Reserve has raised short-term interest rates 13 times since June 2004, which has increased the cost of these so-called piggyback loans.
Moreover, the Fed has expressed concern over the growth of second mortgages, warning that the increase in debt taken on by consumers could ultimately lead to a surge in foreclosures.
Edwin Groshans, an analyst with Fox-Pitt, Kelton, a brokerage that specializes in financial institutions, believes that home buyers will continue to turn to second mortgages unless the federal funds rate is increased by another 1.75 percentage points, which then would make the average piggyback loan more expensive than mortgage insurance.
Source: News & Observer (01/10/06); Norton, Frank
Second mortgages could fall out of favor with first-time and moderate-income home buyers looking to get into a more expensive home should loan costs continue to rise.
In recent years, more borrowers have relied on second mortgages to avoid the higher cost of mortgage insurance for those unable to contribute a 20 percent down payment; but the Federal Reserve has raised short-term interest rates 13 times since June 2004, which has increased the cost of these so-called piggyback loans.
Moreover, the Fed has expressed concern over the growth of second mortgages, warning that the increase in debt taken on by consumers could ultimately lead to a surge in foreclosures.
Edwin Groshans, an analyst with Fox-Pitt, Kelton, a brokerage that specializes in financial institutions, believes that home buyers will continue to turn to second mortgages unless the federal funds rate is increased by another 1.75 percentage points, which then would make the average piggyback loan more expensive than mortgage insurance.
Source: News & Observer (01/10/06); Norton, Frank
Private Property vs. Gov't Jurisdiction
Michigan Will Vote on Eminent Domain(January 10, 2006) --
The Michigan House and Senate approved a resolution recently to put a proposed constitutional amendment prohibiting the taking of private property for economic development by eminent domain. The measure will appear on the ballot in November.
"We think this constitutional amendment will make it clear that private property cannot be taken," says Brad Ward, director of public policy and legal affairs at the Michigan Association of REALTORS®.
Ward adds that over the years, court rulings have varied on the use of eminent domain. In July 2004, the Michigan Supreme Court ruled in favor of private property rights in County of Wayne v. Hathcock [684, N.W. 2d 765 (Mich. 2004)]. That ruling overturned the long-standing Poletown Neighborhood Council v. City of Detroit decision [304 N.W. 2d 455 (Mich. 1981)], which had allowed the use of eminent domain to take private property for economic development.
—By Jane Adler for REALTOR® Magazine Online
The Michigan House and Senate approved a resolution recently to put a proposed constitutional amendment prohibiting the taking of private property for economic development by eminent domain. The measure will appear on the ballot in November.
"We think this constitutional amendment will make it clear that private property cannot be taken," says Brad Ward, director of public policy and legal affairs at the Michigan Association of REALTORS®.
Ward adds that over the years, court rulings have varied on the use of eminent domain. In July 2004, the Michigan Supreme Court ruled in favor of private property rights in County of Wayne v. Hathcock [684, N.W. 2d 765 (Mich. 2004)]. That ruling overturned the long-standing Poletown Neighborhood Council v. City of Detroit decision [304 N.W. 2d 455 (Mich. 1981)], which had allowed the use of eminent domain to take private property for economic development.
—By Jane Adler for REALTOR® Magazine Online
Market Outlook "Normal"
Housing Market to 'Normalize' in 2006(January 10, 2006) --
The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the NATIONAL ASSOCIATION OF REALTORS®.
David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy. “We don’t need to break a record every year for the housing market to be good—in fact, cooling sales are necessary for the long-term health of this vital sector,” Lereah says. “A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong.”
After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006—that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units—the highest since setting a record 1972—with a 6.6 percent slowing to 1.94 million this year.
“A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year,” Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year. “This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace.”
NAR President Thomas M. Stevens from Vienna, Va., says price appreciation should be at more normal levels across most of the country. “Buyers are no longer competing for a tight supply,” says Stevens, senior vice president of NRT Inc. “That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers.”
The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.
Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.
Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year. The unemployment rate is expected to drop to 4.8 percent by the end of the year.
Source: NAR
The key word for the housing market in 2006 is balance, with a return to a more normal rate of price growth, according to the NATIONAL ASSOCIATION OF REALTORS®.
David Lereah, NAR’s chief economist, says current trends in the housing sector are healthy. “We don’t need to break a record every year for the housing market to be good—in fact, cooling sales are necessary for the long-term health of this vital sector,” Lereah says. “A modest slowdown in home sales, coupled with improvements in housing inventory, means the market is in the process of normalization. That will help to bring balance between home buyers and sellers, yet sales will remain historically strong.”
After setting a fifth consecutive annual record, projected to be 7.10 million units for 2005, existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006—that also would be the second best year in history. Total housing starts for 2005 are seen at 2.07 million units—the highest since setting a record 1972—with a 6.6 percent slowing to 1.94 million this year.
“A lot of demand has been met over the last five years, and a modest rise in mortgage interest rates is causing some market cooling. Along with regulatory tightening on nontraditional mortgages, there will be fewer investors in the market this year,” Lereah says. The 30-year fixed-rate mortgage is likely to increase gradually to 6.7 percent during the second half of the year. “This will preserve generally favorable affordability conditions and keep the housing market at a more sustainable sales pace.”
NAR President Thomas M. Stevens from Vienna, Va., says price appreciation should be at more normal levels across most of the country. “Buyers are no longer competing for a tight supply,” says Stevens, senior vice president of NRT Inc. “That means home prices generally will rise much closer to long-term norms, which is the overall rate of inflation plus one or two percentage points. Lower price appreciation will keep the door open to first-time buyers while preserving the investment advantages of home ownership for sellers.”
The national median existing-home price for all housing types, projected to jump 12.9 percent to $209,100 for 2005, is forecast to rise 5.1 percent to $219,700 this year. The median new-home price, which should be up 4.6 percent to $231,300 for 2005, is expected to increase 6.0 percent this year to $245,200.
Inflation as measured by the Consumer Price Index is projected to rise 3.4 percent for 2005 and 3.0 percent in 2006. Inflation-adjusted disposable personal income is forecast to increase 1.3 percent for 2005 and 4.6 percent this year.
Growth in the U.S. gross domestic product is likely to be 3.6 percent for 2005, with GDP seen at 4.0 percent this year. The unemployment rate is expected to drop to 4.8 percent by the end of the year.
Source: NAR
Mortgage Specialists See Sharp Decrease
Slowdown: So Many Lenders, So Few Takers(January 9, 2006) --
Look for an 18.6-percent decline in originations this year, says the Mortgage Bankers Association.
Countrywide Financial Corp., National City Corp., and Ameriquest Capital Corp. are among the lenders that have already begun to downsize in response to a drop in mortgage demand.
Large, diversified financial companies should fare well this year, while lenders that handle only mortgages or that financed scores of subprime borrowers and made numerous exotic loans in recent years face high default rates and funding shortages as well as the prospect of corporate takeovers. According to Bank of America securities analyst Robert Lacoursiere, "We expect the declines in mortgage volumes will be a key catalyst for consolidation."
Source: Business Week (01/09/06); Hibbard, Justin
Ed.'s Note: This is only about the fifth notice that the "refi boom" is ending, so consider yourself warned. Seriously, however, I do not doubt that this type of decrease could, and probably should occur. Considering the number of borrowers who have refinanced their mortgages in the past five to six years just for the sake of refinancing, and a slowing in the real estate purchase market, lenders will have to tighten their collective belt.
Look for an 18.6-percent decline in originations this year, says the Mortgage Bankers Association.
Countrywide Financial Corp., National City Corp., and Ameriquest Capital Corp. are among the lenders that have already begun to downsize in response to a drop in mortgage demand.
Large, diversified financial companies should fare well this year, while lenders that handle only mortgages or that financed scores of subprime borrowers and made numerous exotic loans in recent years face high default rates and funding shortages as well as the prospect of corporate takeovers. According to Bank of America securities analyst Robert Lacoursiere, "We expect the declines in mortgage volumes will be a key catalyst for consolidation."
Source: Business Week (01/09/06); Hibbard, Justin
Ed.'s Note: This is only about the fifth notice that the "refi boom" is ending, so consider yourself warned. Seriously, however, I do not doubt that this type of decrease could, and probably should occur. Considering the number of borrowers who have refinanced their mortgages in the past five to six years just for the sake of refinancing, and a slowing in the real estate purchase market, lenders will have to tighten their collective belt.
Developers Seeing More Financing Choices
Cheaper Loans Give Building Projects a Lift(January 9, 2006) --
In the lending community, competition is intensifying to finance building construction, and developers are welcoming the increased attention, especially considering how high construction costs have risen in the last year.
Indeed, the U.S. Bureau of Labor Statistics reports that building materials spiked in 2005, with asphalt increasing 25 percent and plastic plumbing soaring 39 percent during the 12-month period ending on Nov. 30.
As the cost of building has climbed, so too has the cost of financing.
Entering the lending fray are several top Wall Street investment banks, offering loans at lower rates and more favorable terms than those offered by the commercial banks, which have played such a central role in construction lending over the years.
Mark Edelstein, head of Morrison & Foerster's real estate finance department, remarks, "When you talking about a large loan, paying 6.5 percent instead of 7.5 percent makes a big difference."
While bankers remain optimistic, the creation of a securities market based on construction loans faces a number of obstacles, including how these commercial mortgage-backed securities should be rated. However, these securities are expected to create a secondary market which could push down lending costs for borrowers.
Source: Crain's New York Business (01/08/06); Satow, Julie
In the lending community, competition is intensifying to finance building construction, and developers are welcoming the increased attention, especially considering how high construction costs have risen in the last year.
Indeed, the U.S. Bureau of Labor Statistics reports that building materials spiked in 2005, with asphalt increasing 25 percent and plastic plumbing soaring 39 percent during the 12-month period ending on Nov. 30.
As the cost of building has climbed, so too has the cost of financing.
Entering the lending fray are several top Wall Street investment banks, offering loans at lower rates and more favorable terms than those offered by the commercial banks, which have played such a central role in construction lending over the years.
Mark Edelstein, head of Morrison & Foerster's real estate finance department, remarks, "When you talking about a large loan, paying 6.5 percent instead of 7.5 percent makes a big difference."
While bankers remain optimistic, the creation of a securities market based on construction loans faces a number of obstacles, including how these commercial mortgage-backed securities should be rated. However, these securities are expected to create a secondary market which could push down lending costs for borrowers.
Source: Crain's New York Business (01/08/06); Satow, Julie
Monday, January 09, 2006
Experts Confounded by Rates
Mortgage Rates Keep Confounding Experts(January 6, 2006) --
Investor reaction to the minutes from last month's Federal Reserve policy-making meeting helped push the national average commitment rate on a 30-year, fixed mortgage down a notch to 6.21 percent this week from 6.22 percent a week ago, reports Freddie Mac.
The minutes suggested that the rate-raising initiative of the Fed could be coming to an end, according to Frank Nothaft, chief economist for the mortgage finance giant.
The national average commitment rate on a 15-year, fixed mortgage held steady at 5.76 percent, while the average rate on a one-year, adjustable-rate mortgage inched up to 5.16 percent from 5.15 percent.
Five-year hybrid ARMs, meanwhile, slipped to 5.78 percent from 5.79 percent.
While the average 30-year rate has fallen to its lowest level since late October, housing market observers are anticipating an increase in borrowing costs that they say will have a negative impact on home sales this year.
Source: Tacoma News Tribune (WA) (01/06/06); Aversa, Jeannine
Investor reaction to the minutes from last month's Federal Reserve policy-making meeting helped push the national average commitment rate on a 30-year, fixed mortgage down a notch to 6.21 percent this week from 6.22 percent a week ago, reports Freddie Mac.
The minutes suggested that the rate-raising initiative of the Fed could be coming to an end, according to Frank Nothaft, chief economist for the mortgage finance giant.
The national average commitment rate on a 15-year, fixed mortgage held steady at 5.76 percent, while the average rate on a one-year, adjustable-rate mortgage inched up to 5.16 percent from 5.15 percent.
Five-year hybrid ARMs, meanwhile, slipped to 5.78 percent from 5.79 percent.
While the average 30-year rate has fallen to its lowest level since late October, housing market observers are anticipating an increase in borrowing costs that they say will have a negative impact on home sales this year.
Source: Tacoma News Tribune (WA) (01/06/06); Aversa, Jeannine
Boomers are Nostalgic Regarding Homes
More Boomers Return to Childhood Homes(January 6, 2006) --
A growing number of baby boomers are purchasing their childhood homes. Some are going as far as using old pictures to restore the property to its former glory.
Gary Melton, director of the Clemson University Institute on Family and Neighborhood Life, attributes such nostalgia to the fact that the baby boomer generation lived in the same homes for several years, whereas U.S. Census Bureau data shows that today's children are relocated every five to seven years.
Kevin Keim, director of the Charles W. Moore Center for the Study of Place, believes childhood homes provide comfort at a time when broken families are more common. Others are buying from their parents to take advantage of price discounts and tax breaks; while yet others find it easier emotionally to simply move into a home inherited from a deceased parent than to sell it.
Source: The Wall Street Journal (01/06/06); Zaslow, Jeffrey
A growing number of baby boomers are purchasing their childhood homes. Some are going as far as using old pictures to restore the property to its former glory.
Gary Melton, director of the Clemson University Institute on Family and Neighborhood Life, attributes such nostalgia to the fact that the baby boomer generation lived in the same homes for several years, whereas U.S. Census Bureau data shows that today's children are relocated every five to seven years.
Kevin Keim, director of the Charles W. Moore Center for the Study of Place, believes childhood homes provide comfort at a time when broken families are more common. Others are buying from their parents to take advantage of price discounts and tax breaks; while yet others find it easier emotionally to simply move into a home inherited from a deceased parent than to sell it.
Source: The Wall Street Journal (01/06/06); Zaslow, Jeffrey
Indy is Most Affordable
Indianapolis Tops Housing Affordability List(January 6, 2006) --
The Indianapolis area ranks as the most affordable housing market among big metro areas, according to the third-quarter 2005 National Association of Home Builders/Wells Fargo Housing Opportunity Index.
The index charts housing costs in cities with populations of more than 500,000. In Indianapolis, 89.7 percent of the new and existing homes sold in third quarter 2005 were affordable to those earning the area median income of $64,000. The median home price was $125,000.
"Land is affordable here," says Beckie Agan, president of the Metropolitan Indianapolis Board of REALTORS® and broker-associate with Carpenter, REALTORS® in Mooresville, Ind.
Agan adds that while the area is affordable, it has a wide price range of homes, including $1 million-plus properties. “We’ve also always have nice, steady increases in property values,” she says.
The other top affordable markets also were in the Midwest. Youngstown-Warren-Boardman in Ohio and Pennsylvania ranked second and Detroit-Litonia-Dearborn in Michigan ranked third.
Los Angeles was the nation's least affordable housing market, where only 2.4 percent of all homes sold were affordable to those earning the median income of $54,500. The median sales price in Los Angeles was $495,000. Among small markets, Mansfield, Ohio, was the most affordable housing market.
—By Jane Adler for REALTOR® Magazine Online
The Indianapolis area ranks as the most affordable housing market among big metro areas, according to the third-quarter 2005 National Association of Home Builders/Wells Fargo Housing Opportunity Index.
The index charts housing costs in cities with populations of more than 500,000. In Indianapolis, 89.7 percent of the new and existing homes sold in third quarter 2005 were affordable to those earning the area median income of $64,000. The median home price was $125,000.
"Land is affordable here," says Beckie Agan, president of the Metropolitan Indianapolis Board of REALTORS® and broker-associate with Carpenter, REALTORS® in Mooresville, Ind.
Agan adds that while the area is affordable, it has a wide price range of homes, including $1 million-plus properties. “We’ve also always have nice, steady increases in property values,” she says.
The other top affordable markets also were in the Midwest. Youngstown-Warren-Boardman in Ohio and Pennsylvania ranked second and Detroit-Litonia-Dearborn in Michigan ranked third.
Los Angeles was the nation's least affordable housing market, where only 2.4 percent of all homes sold were affordable to those earning the median income of $54,500. The median sales price in Los Angeles was $495,000. Among small markets, Mansfield, Ohio, was the most affordable housing market.
—By Jane Adler for REALTOR® Magazine Online
"Improvement" of Housing Affordability
Housing Affordability Shows Long-Term Gains(January 6, 2006) --
Housing affordability has shown a pattern of improvement since the 1980s, according to data from the U.S. Census Bureau, Economy.com, and The New York Times.
Although U.S. residential prices have registered major gains, the country's home ownership rate has not suffered. As of last year's third quarter, 68.7 percent of Americans owned their homes—up from about 65 percent in 1980 and not far off the 40-year high of 69.4 percent documented in the second quarter of 2004.
Moreover, income levels are higher; while borrowing costs are lower. As a result, the share of pretax median income required to qualify for financing on a median-priced home is down from 25 years ago.
Borrowers in 2005 needed just 23.7 percent of their pretax earnings, compared to about 30 percent in 1980.
Some major metro areas are bucking the trend toward better affordability, however. Housing affordability has dipped to 12.5 percent in Detroit from 12.9 percent in 1985, for instance, while sinking to 14.6 percent from 29 percent in Dallas.
Source: Investor's Business Daily (01/06/06)
Housing affordability has shown a pattern of improvement since the 1980s, according to data from the U.S. Census Bureau, Economy.com, and The New York Times.
Although U.S. residential prices have registered major gains, the country's home ownership rate has not suffered. As of last year's third quarter, 68.7 percent of Americans owned their homes—up from about 65 percent in 1980 and not far off the 40-year high of 69.4 percent documented in the second quarter of 2004.
Moreover, income levels are higher; while borrowing costs are lower. As a result, the share of pretax median income required to qualify for financing on a median-priced home is down from 25 years ago.
Borrowers in 2005 needed just 23.7 percent of their pretax earnings, compared to about 30 percent in 1980.
Some major metro areas are bucking the trend toward better affordability, however. Housing affordability has dipped to 12.5 percent in Detroit from 12.9 percent in 1985, for instance, while sinking to 14.6 percent from 29 percent in Dallas.
Source: Investor's Business Daily (01/06/06)
Maryland's 3 Year Appreciation Rate
Md.: Housing Appraisals Increase 67% in 3 Years(January 6, 2006) --
The most recent property assessment in Maryland shows that home values rose an average of 67 percent over the last three years, marking the highest gain in more than two decades.
Much of the increase is tied to a supply-and-demand imbalance. Assessments shot up 68.7 percent in Anne Arundel County due to Fort Meade's expansion plans and 74.3 percent in Howard County due to a scarcity of developable land and top-performing public schools.
The largest gain was recorded in Worcester County, where assessments surged 80 percent. Poorer communities in Montgomery and Prince George's counties also benefited from the housing boom, with assessments climbing above 70 percent.
Although home prices continue to rise, observers note that homes are taking longer to sell. Meanwhile, lawmakers in several jurisdictions are joining Gov. Robert Ehrlich Jr. in a quest to lower property tax rates.
Source: Washington Post (01/05/06); Spivack, Miranda S.
The most recent property assessment in Maryland shows that home values rose an average of 67 percent over the last three years, marking the highest gain in more than two decades.
Much of the increase is tied to a supply-and-demand imbalance. Assessments shot up 68.7 percent in Anne Arundel County due to Fort Meade's expansion plans and 74.3 percent in Howard County due to a scarcity of developable land and top-performing public schools.
The largest gain was recorded in Worcester County, where assessments surged 80 percent. Poorer communities in Montgomery and Prince George's counties also benefited from the housing boom, with assessments climbing above 70 percent.
Although home prices continue to rise, observers note that homes are taking longer to sell. Meanwhile, lawmakers in several jurisdictions are joining Gov. Robert Ehrlich Jr. in a quest to lower property tax rates.
Source: Washington Post (01/05/06); Spivack, Miranda S.
Friday, January 06, 2006
Consequences of Influencing Value
Ameriquest Settles Lawsuit Involving Appraiser Pressure
In order to settle a lawsuit that alleges it overcharged customers and urged real estate appraisers to increase property values in 33 states, Ameriquest Mortgage Co. would pay $325 million and change some business practices, according to the Los Angeles Times.
Under the terms obtained by the Times, Ameriquest loan agents would be barred from discussing property appraisals with the people conducting the assessments. The company would also be prohibited from paying workers to increase loan fees and interest rates, and from adding penalties for early loan repayments.
In citing a copy of the settlement, the paper said that the company would repay $295 million to borrowers and an additional $30 million to cover the cost of the investigation. However, Chris Orlando, a spokesman for Ameriquest, said the version of the settlement obtained by the Times was "partial and incomplete" and doesn't "reflect the current state of discussions." He added, "We're working hard with the attorneys general to reach a comprehensive agreement that's good for consumers and fair to the company."
According to the Orange County (Calif.) Register, the current version is the fifth revision of the settlement, said Iowa Attorney General Tom Miller, leader of a multistate task force. Ameriquest had previously disclosed that it set aside $325 million to cover a settlement with the attorneys general.
NOTE: A friend sent me this on January 4, 2006. Not sure where he got it, but it's an expensive way of doing business.
In order to settle a lawsuit that alleges it overcharged customers and urged real estate appraisers to increase property values in 33 states, Ameriquest Mortgage Co. would pay $325 million and change some business practices, according to the Los Angeles Times.
Under the terms obtained by the Times, Ameriquest loan agents would be barred from discussing property appraisals with the people conducting the assessments. The company would also be prohibited from paying workers to increase loan fees and interest rates, and from adding penalties for early loan repayments.
In citing a copy of the settlement, the paper said that the company would repay $295 million to borrowers and an additional $30 million to cover the cost of the investigation. However, Chris Orlando, a spokesman for Ameriquest, said the version of the settlement obtained by the Times was "partial and incomplete" and doesn't "reflect the current state of discussions." He added, "We're working hard with the attorneys general to reach a comprehensive agreement that's good for consumers and fair to the company."
According to the Orange County (Calif.) Register, the current version is the fifth revision of the settlement, said Iowa Attorney General Tom Miller, leader of a multistate task force. Ameriquest had previously disclosed that it set aside $325 million to cover a settlement with the attorneys general.
NOTE: A friend sent me this on January 4, 2006. Not sure where he got it, but it's an expensive way of doing business.
Thursday, January 05, 2006
NAR: Market Slowing
Pending Sales Index Shows Housing Market Slowing(January 5, 2006) --
Pending home sales, a leading indicator for the housing sector, slowed for the third consecutive month in November, demonstrating that a market transition is firmly in place, according to the NATIONAL ASSOCIATION OF REALTORS®.
NAR's Pending Home Sales Index, based on contracts signed in November, slipped 2.5 percent to a reading of 120.6 from 123.7 in October, and is 2.5 percent lower than November 2004.
The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.
David Lereah, NAR’s chief economist, says the index remains at a historically high level.
“Although pending home sales are trending down from a record in August, the index remains well above a mark that is considered to be historically strong,” he says. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.
“We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales,” Lereah says. “In other words, home sales have been peaking for the last five years and we will land on a high plateau in 2006—a market that will be healthy for both buyers and sellers. Investment fundamentals for housing remain solid, preserving generally favorable affordability conditions while offering solid returns as well as a place to live.”
Regionally, the Pending Home Sales Index in the Midwest rose 3.4 percent in November to 116.0 but was 3.7 percent lower than November 2004. In the South, the index declined 1.9 percent to 132.8 in November but was 1.8 percent above a year ago. The index in the West fell 5.1 percent to 127.7 in November, and was 4.6 percent lower than a year ago. The index in the Northeast was down 8.3 percent to a level of 93.3, and was 8.0 below November 2004.
Source—NAR
Pending home sales, a leading indicator for the housing sector, slowed for the third consecutive month in November, demonstrating that a market transition is firmly in place, according to the NATIONAL ASSOCIATION OF REALTORS®.
NAR's Pending Home Sales Index, based on contracts signed in November, slipped 2.5 percent to a reading of 120.6 from 123.7 in October, and is 2.5 percent lower than November 2004.
The index is derived from pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed; pending home sales typically are finalized within one or two months of signing.
David Lereah, NAR’s chief economist, says the index remains at a historically high level.
“Although pending home sales are trending down from a record in August, the index remains well above a mark that is considered to be historically strong,” he says. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales.
“We are clearly experiencing a market transition, moving from a prolonged boom to a more balanced period of sustainable sales,” Lereah says. “In other words, home sales have been peaking for the last five years and we will land on a high plateau in 2006—a market that will be healthy for both buyers and sellers. Investment fundamentals for housing remain solid, preserving generally favorable affordability conditions while offering solid returns as well as a place to live.”
Regionally, the Pending Home Sales Index in the Midwest rose 3.4 percent in November to 116.0 but was 3.7 percent lower than November 2004. In the South, the index declined 1.9 percent to 132.8 in November but was 1.8 percent above a year ago. The index in the West fell 5.1 percent to 127.7 in November, and was 4.6 percent lower than a year ago. The index in the Northeast was down 8.3 percent to a level of 93.3, and was 8.0 below November 2004.
Source—NAR
Tuesday, January 03, 2006
The Value is in the Land
Buy a 700-Square-Foot Home for $1.2M in Las Vegas(January 3, 2006) --
The Naked City neighborhood in Las Vegas, so named because of the strippers that lived there and sunbathed nude in the 1950s, is gaining popularity among developers looking to cash in on the condominium craze.
Brian Gordon of Applied Analysis says 10,000 units in 15 complexes will be finished by late 2006. The frenzy has pushed up the cost of one acre of land in the area by 88 percent to $601,600 over the past year.
Among those hoping to profit is Colombian immigrant Manuel Corchuelo, who is selling a 700-square-foot home that he purchased in Naked City for $30,000 in 1978. Despite the fact that the home is small, poorly landscaped, and full of clutter, Corchuelo believes he can fetch $1.2 million in cash.
The property is located one block from Las Vegas Boulevard, in between the famed Strip and downtown, and a 41-story upscale condo structure is in the works across the street.
"The one thing we know is it's not going down in value," says Corchuelo's real estate agent, Paul Miotke.
Source: Investor's Business Daily (12/30/05)
Ed.'S Note: Can anyone believe this? I hope they follow up on what this plot of land ends up going for, and if/when they do, I will post the accepted price.
The Naked City neighborhood in Las Vegas, so named because of the strippers that lived there and sunbathed nude in the 1950s, is gaining popularity among developers looking to cash in on the condominium craze.
Brian Gordon of Applied Analysis says 10,000 units in 15 complexes will be finished by late 2006. The frenzy has pushed up the cost of one acre of land in the area by 88 percent to $601,600 over the past year.
Among those hoping to profit is Colombian immigrant Manuel Corchuelo, who is selling a 700-square-foot home that he purchased in Naked City for $30,000 in 1978. Despite the fact that the home is small, poorly landscaped, and full of clutter, Corchuelo believes he can fetch $1.2 million in cash.
The property is located one block from Las Vegas Boulevard, in between the famed Strip and downtown, and a 41-story upscale condo structure is in the works across the street.
"The one thing we know is it's not going down in value," says Corchuelo's real estate agent, Paul Miotke.
Source: Investor's Business Daily (12/30/05)
Ed.'S Note: Can anyone believe this? I hope they follow up on what this plot of land ends up going for, and if/when they do, I will post the accepted price.
An Honest Look at Value
During my layover in Minneapolis this past weekend, I read an article byKenneth Harney in the Washington Post regarding a realistic look at the housing market. I don't agree with everything he says in the piece, but the appraiser in me certainly can identify at times with his cynicism, which many might even call realism. He says, "Prices are headed south." I take a little bit of issue with this remark. I think it's fair to say that the current rate of appreciation is not what it was in the past few years, but saying that prices are falling is a bit too decisive. After all, such a phenomenon really will only affect the segments of the market that either are being forced to sell their principal residence in a relatively short time span after their initial purchase, such as those who buy & sell a piece of real estate within a two year time frame, which usually means the possibility of taking a loss no matter what the market, as well as those who are still speculating on big gains for no other reason than the "this market is SOOOOO HOT!" approach. Sellers under typical motivation will be largely unaffected by the slow down.
Prospects for landing Kia Factory in KY unknown
Here's an article that says little about much at all. Kia, the Korean automaker, appears to have reopened its search for a site on which to build its first American auto plant, but neither Kia authorities, nor Kentucky movers & shakers appear to know exactly how, if at all, the state's previously discussed location in Hardin County or in Hopkinsville fit in. Another gripe I have with the article is the fact that it doesn't mention what impact on job creation the plant would have.
Modernizing Downtown Louisville
Louisville's downtown revitalization effort continues with what appears to be one of the trendier ideas to come along in...well, ever. An Oldham Co. couple decided to pitch in by transforming three adjoining 19th Century buildings on Main St. into a 90-room hotel & art museum called 21c. Scheduled to open in February, the hotel utilized a variety of funding sources. Read the article, and book your room!
Early Economic Education
Well, the holidays are over, so I'm busy getting back in the swing of things after a week spending time with the in-laws in Iowa.
I was greeted with the following C-J article this morning, the topic of which is refreshingly positive. With the help of PNC Bank, some Jefferson County Public Schools are providing their young students (very young in some cases) with an introduction to economics & personal finance. If handled correctly, as Dave Ramsey often says, this is the type of instruction & information that has the power to "change your family tree". I'd love to find out more about the program & to hear some feedback regarding its subject matter.
I was greeted with the following C-J article this morning, the topic of which is refreshingly positive. With the help of PNC Bank, some Jefferson County Public Schools are providing their young students (very young in some cases) with an introduction to economics & personal finance. If handled correctly, as Dave Ramsey often says, this is the type of instruction & information that has the power to "change your family tree". I'd love to find out more about the program & to hear some feedback regarding its subject matter.
Monday, January 02, 2006
30 Year Rate Down Last Week
Average 30-Year Mortgage Dips to 6.22%(December 30, 2005) --
The national average commitment rate on a 30-year, fixed mortgage slipped to 6.22 percent from 6.26 percent the week before, according to Freddie Mac.
The agency reports that long-term mortgage costs fell in the latest week in response to recent government reports, including one implying that inflation is in check.
The national average commitment rate on a 15-year, fixed mortgage dropped to 5.76 percent from 5.79 percent.
Adjustable-rate mortgages were lower this week as well, with the average rate on a one-year, adjustable-rate mortgage sinking to 5.15 percent from 5.22 percent and the five-year hybrid ARM dipping to 5.79 percent from 5.82 percent.
Source: Chicago Tribune (12/30/05)
The national average commitment rate on a 30-year, fixed mortgage slipped to 6.22 percent from 6.26 percent the week before, according to Freddie Mac.
The agency reports that long-term mortgage costs fell in the latest week in response to recent government reports, including one implying that inflation is in check.
The national average commitment rate on a 15-year, fixed mortgage dropped to 5.76 percent from 5.79 percent.
Adjustable-rate mortgages were lower this week as well, with the average rate on a one-year, adjustable-rate mortgage sinking to 5.15 percent from 5.22 percent and the five-year hybrid ARM dipping to 5.79 percent from 5.82 percent.
Source: Chicago Tribune (12/30/05)
Predatory Lending
Groups Unite to Fight Predatory Lending(December 27, 2005) --
The Coalition for Responsible Lending estimates that abusive financing tactics cost Americans some $9 billion a year in unnecessary fees and interest, often leading to default and foreclosure.
In the state of Indiana--which the Mortgage Bankers Association cites as the No. 2 market nationwide for foreclosure activity during the second quarter--predatory terms cost consumers more than $148 million just in 2000.
In response to the trend, a number of groups in Indianapolis' Center Township are working together to wage a war on predatory lending. Under the Saving Homes in Center Township Legal Project, "victim rescue" specialists will check loan terms for signs of fraud. Cases where fraud is suspected will be flagged for review by the state attorney general's office or other agencies; or, in some instances, experts will seek to renegotiate fairer terms with the lender.
Participating in the effort with Indiana Legal Services are local organizations as well as the community development corporations serving the Southeast, Northwest, and Martindale-Brightwood areas.
Source: Indianapolis Star (12/27/05); Walton, Richard D.
The Coalition for Responsible Lending estimates that abusive financing tactics cost Americans some $9 billion a year in unnecessary fees and interest, often leading to default and foreclosure.
In the state of Indiana--which the Mortgage Bankers Association cites as the No. 2 market nationwide for foreclosure activity during the second quarter--predatory terms cost consumers more than $148 million just in 2000.
In response to the trend, a number of groups in Indianapolis' Center Township are working together to wage a war on predatory lending. Under the Saving Homes in Center Township Legal Project, "victim rescue" specialists will check loan terms for signs of fraud. Cases where fraud is suspected will be flagged for review by the state attorney general's office or other agencies; or, in some instances, experts will seek to renegotiate fairer terms with the lender.
Participating in the effort with Indiana Legal Services are local organizations as well as the community development corporations serving the Southeast, Northwest, and Martindale-Brightwood areas.
Source: Indianapolis Star (12/27/05); Walton, Richard D.
Subscribe to:
Posts (Atom)